Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 22, 2019 | Jun. 29, 2018 | |
Entity Information [Line Items] | |||
Entity Registrant Name | Magnolia Oil & Gas Corp | ||
Entity Central Index Key | 1,698,990 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 704.8 | ||
Class A | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 156,332,733 | ||
Class B | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 93,346,725 |
Consolidated and Combined Balan
Consolidated and Combined Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 135,758 | |
Accounts receivable | 140,284 | |
Accounts receivable - related party | 0 | |
Drilling advances | 12,259 | |
Other current assets | 4,058 | |
Total current assets | 292,359 | |
PROPERTY, PLANT AND EQUIPMENT | ||
Oil and natural gas properties | 3,250,742 | |
Other | 360 | |
Accumulated depreciation, depletion and amortization | (177,898) | |
Total property, plant and equipment, net | 3,073,204 | |
OTHER ASSETS | ||
Deferred financing costs, net | 10,731 | |
Equity method investment | 18,873 | |
Intangible assets, net | 38,356 | |
TOTAL ASSETS | 3,433,523 | |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 196,357 | |
Asset retirement obligations | 1,004 | |
Derivative liability | 0 | |
Total current liabilities | 197,361 | |
LONG-TERM LIABILITIES: | ||
Long-term debt, net | 388,635 | |
Asset retirement obligations, net of current | 84,979 | |
Long-term derivative liability | 0 | |
Deferred taxes, net | 54,593 | |
Other long term liabilities | 0 | |
Total long-term liabilities | 528,207 | |
COMMITMENTS AND CONTINGENCIES (Note 14) | ||
STOCKHOLDERS’ EQUITY | ||
Additional paid-in capital | 1,641,237 | |
Retained earnings | 35,507 | |
Noncontrolling interest | 1,031,186 | |
PARENTS’ NET INVESTMENT | 0 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 3,433,523 | |
Predecessor | ||
CURRENT ASSETS: | ||
Cash | $ 0 | |
Accounts receivable | 100,512 | |
Accounts receivable - related party | 13,692 | |
Drilling advances | 0 | |
Other current assets | 332 | |
Total current assets | 114,536 | |
PROPERTY, PLANT AND EQUIPMENT | ||
Oil and natural gas properties | 1,731,696 | |
Other | 0 | |
Accumulated depreciation, depletion and amortization | (166,159) | |
Total property, plant and equipment, net | 1,565,537 | |
OTHER ASSETS | ||
Deferred financing costs, net | 0 | |
Equity method investment | 8,901 | |
Intangible assets, net | 0 | |
TOTAL ASSETS | 1,688,974 | |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 74,536 | |
Asset retirement obligations | 0 | |
Derivative liability | 6,764 | |
Total current liabilities | 81,300 | |
LONG-TERM LIABILITIES: | ||
Long-term debt, net | 0 | |
Asset retirement obligations, net of current | 3,929 | |
Long-term derivative liability | 3,052 | |
Deferred taxes, net | 2,724 | |
Other long term liabilities | 131 | |
Total long-term liabilities | 9,836 | |
COMMITMENTS AND CONTINGENCIES (Note 14) | ||
STOCKHOLDERS’ EQUITY | ||
Additional paid-in capital | 0 | |
Retained earnings | 0 | |
Noncontrolling interest | 0 | |
PARENTS’ NET INVESTMENT | 1,597,838 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 1,688,974 | |
Class A Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 16 | |
Class A Common Stock | Predecessor | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 0 | |
Class B Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 9 | |
Class B Common Stock | Predecessor | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 0 |
Consolidated and Combined Bal_2
Consolidated and Combined Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Jul. 31, 2018 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,300,000,000 | |
Common stock, shares issued (in shares) | 156,333,000 | |
Common stock, shares outstanding (in shares) | 156,333,000 | |
Class B | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 225,000,000 | |
Common stock, shares issued (in shares) | 93,346,000 | |
Common stock, shares outstanding (in shares) | 93,346,000 |
Consolidated and Combined State
Consolidated and Combined Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUES: | ||||
Total revenues | $ 433,218 | |||
OPERATING EXPENSES | ||||
Lease operating expenses | 30,753 | |||
Gathering, transportation and processing | 14,445 | |||
Taxes other than income | 23,170 | |||
Exploration expense | 11,882 | |||
Asset retirement obligation accretion | 1,668 | |||
Depreciation, depletion and amortization | 177,890 | |||
Amortization of intangible assets | 6,044 | |||
General and administrative expenses | 28,801 | |||
Transaction related costs | 24,607 | |||
Total operating costs and expenses | 319,260 | |||
OPERATING INCOME | 113,958 | |||
OTHER INCOME (EXPENSE): | ||||
Income from equity method investee | 773 | |||
Interest expense | (12,454) | |||
Loss on derivatives, net | 0 | |||
Other income (expense), net | (8,374) | |||
Total other income (expense) | (20,055) | |||
INCOME BEFORE INCOME TAXES | 93,903 | |||
Income tax expense | 11,455 | |||
NET INCOME | 82,448 | |||
LESS: Net income attributable to noncontrolling interest | 43,353 | |||
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK | $ 39,095 | |||
NET INCOME PER COMMON SHARE | ||||
Basic (in dollars per share) | $ 0.25 | |||
Diluted (in dollars per share) | $ 0.25 | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 154,527 | |||
Diluted (in shares) | 158,232 | |||
Predecessor | ||||
REVENUES: | ||||
Total revenues | $ 449,186 | $ 403,194 | $ 110,926 | |
OPERATING EXPENSES | ||||
Lease operating expenses | 23,513 | 27,520 | 11,638 | |
Gathering, transportation and processing | 12,929 | 16,259 | 5,484 | |
Taxes other than income | 23,763 | 20,193 | 6,448 | |
Exploration expense | 492 | 700 | 13,123 | |
Asset retirement obligation accretion | 104 | 232 | 94 | |
Depreciation, depletion and amortization | 137,871 | 129,711 | 33,123 | |
Amortization of intangible assets | 0 | 0 | 0 | |
General and administrative expenses | 12,710 | 18,568 | 12,157 | |
Transaction related costs | 0 | 0 | 0 | |
Total operating costs and expenses | 211,382 | 213,183 | 82,067 | |
OPERATING INCOME | 237,804 | 190,011 | 28,859 | |
OTHER INCOME (EXPENSE): | ||||
Income from equity method investee | 711 | 113 | 0 | |
Interest expense | 0 | 0 | 0 | |
Loss on derivatives, net | (18,127) | (8,488) | (6,717) | |
Other income (expense), net | (50) | (21) | 2 | |
Total other income (expense) | (17,466) | (8,396) | (6,715) | |
INCOME BEFORE INCOME TAXES | 220,338 | 181,615 | 22,144 | |
Income tax expense | 1,785 | 2,741 | 673 | |
NET INCOME | 218,553 | 178,874 | 21,471 | |
LESS: Net income attributable to noncontrolling interest | 0 | 0 | 0 | |
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK | 218,553 | 178,874 | 21,471 | |
Oil revenues | ||||
REVENUES: | ||||
Total revenues | $ 342,093 | |||
Oil revenues | Predecessor | ||||
REVENUES: | ||||
Total revenues | 399,124 | 350,204 | 97,125 | |
Natural gas revenues | ||||
REVENUES: | ||||
Total revenues | 42,979 | |||
Natural gas revenues | Predecessor | ||||
REVENUES: | ||||
Total revenues | 22,135 | 25,916 | 7,677 | |
Natural gas liquids revenues | ||||
REVENUES: | ||||
Total revenues | $ 48,146 | |||
Natural gas liquids revenues | Predecessor | ||||
REVENUES: | ||||
Total revenues | $ 27,927 | $ 27,074 | $ 6,124 |
Combined Statement of Changes i
Combined Statement of Changes in Parents' Net Investment and Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Tranche I | Tranche II | Tranche III | Total Stockholders’ Equity | Common StockClass A Common Stock | Common StockClass A Common StockTranche I | Common StockClass A Common StockTranche II | Common StockClass A Common StockTranche III | Common StockClass B Common Stock | Common StockClass B Common StockTranche I | Common StockClass B Common StockTranche II | Common StockClass B Common StockTranche III | Common StockClass F Common Stock | Additional Paid-in Capital | Accumulated Deficit/Retained Earnings | Noncontrolling Interest |
Balance at beginning of period (Predecessor) at Dec. 31, 2015 | $ 121,484 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Parents’ contribution, net | Predecessor | 1,218,963 | ||||||||||||||||
Net income | Predecessor | 21,471 | ||||||||||||||||
Balance at end of period (Predecessor) at Dec. 31, 2016 | 1,361,918 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Parents’ contribution, net | Predecessor | 57,046 | ||||||||||||||||
Net income | Predecessor | 178,874 | ||||||||||||||||
Balance at end of period (Predecessor) at Dec. 31, 2017 | 1,597,838 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Parents’ contribution, net | Predecessor | 62,641 | ||||||||||||||||
Net income | Predecessor | 218,553 | ||||||||||||||||
Balance at end of period (Predecessor) at Jul. 30, 2018 | 1,879,032 | ||||||||||||||||
Balance at end of period (in shares) at Jul. 30, 2018 | 3,052 | 0 | 16,250 | ||||||||||||||
Balance at end of period at Jul. 30, 2018 | 4,784 | $ 4,784 | $ 0 | $ 0 | $ 2 | $ 8,370 | $ (3,588) | $ 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Class A Common Stock released from possible redemption (in shares) | 61,948 | ||||||||||||||||
Class A Common Stock released from possible redemption | 619,479 | 619,479 | $ 6 | 619,473 | |||||||||||||
Class A Common Stock redeemed (in shares) | (1) | ||||||||||||||||
Class A Common Stock redeemed | (9) | (9) | (9) | ||||||||||||||
Conversion of Common Stock from Class F to Class A at closing of the Business Combination (in shares) | 16,250 | (16,250) | |||||||||||||||
Conversion of Common Stock from Class F to Class A at closing of the Business Combination | 0 | $ 2 | $ (2) | ||||||||||||||
Common Stock issued as part of the Business Combination (in shares) | 31,791 | 83,939 | |||||||||||||||
Common Stock issued as part of the Business Combination | 1,423,484 | 391,029 | $ 3 | $ 9 | 391,017 | 1,032,455 | |||||||||||
Class A Common Stock issuance in private placement (in shares) | 35,500 | ||||||||||||||||
Class A Common Stock issuance in private placement | 355,000 | 355,000 | $ 4 | 354,996 | |||||||||||||
Earnout consideration issued as part of the Business Combination | 149,700 | 41,371 | 41,371 | 108,329 | |||||||||||||
Non-compete consideration | 44,400 | 44,400 | 44,400 | ||||||||||||||
Changes in ownership interest adjustment | 0 | 206,966 | 206,966 | (206,966) | |||||||||||||
Changes in deferred tax liability | (52,787) | (52,787) | (52,787) | ||||||||||||||
Balance at end of period (in shares) at Jul. 31, 2018 | 148,540 | 83,939 | 0 | ||||||||||||||
Balance at end of period at Jul. 31, 2018 | 2,544,051 | 1,610,233 | $ 15 | $ 9 | $ 0 | 1,613,797 | (3,588) | 933,818 | |||||||||
Balance at beginning of period (Predecessor) at Jul. 30, 2018 | 1,879,032 | ||||||||||||||||
Balance at beginning of period (in shares) at Jul. 30, 2018 | 3,052 | 0 | 16,250 | ||||||||||||||
Balance at beginning of period at Jul. 30, 2018 | 4,784 | 4,784 | $ 0 | $ 0 | $ 2 | 8,370 | (3,588) | 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income | 82,448 | ||||||||||||||||
Balance at end of period at Dec. 31, 2018 | 0 | ||||||||||||||||
Balance at end of period (in shares) at Dec. 31, 2018 | 156,333 | 93,346 | 0 | ||||||||||||||
Balance at end of period at Dec. 31, 2018 | 2,707,955 | 1,676,769 | $ 16 | $ 9 | $ 0 | 1,641,237 | 35,507 | 1,031,186 | |||||||||
Balance at beginning of period (in shares) at Jul. 31, 2018 | 148,540 | 83,939 | 0 | ||||||||||||||
Balance at beginning of period at Jul. 31, 2018 | 2,544,051 | 1,610,233 | $ 15 | $ 9 | $ 0 | 1,613,797 | (3,588) | 933,818 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Issuance of earnout share consideration (in shares) | 1,244 | 1,244 | 1,105 | 3,256 | 3,256 | 2,895 | |||||||||||
Issuance of earnout share consideration | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
Common Stock issued as part of the Business Combination (in shares) | 4,200 | ||||||||||||||||
Common Stock issued as part of the Business Combination | 58,212 | 58,212 | $ 1 | 58,211 | |||||||||||||
Stock based compensation expense | 1,851 | 1,851 | 1,851 | ||||||||||||||
Net income | 82,448 | 39,095 | 39,095 | 43,353 | |||||||||||||
Changes in ownership interest adjustment | 0 | (54,015) | (54,015) | 54,015 | |||||||||||||
Changes in deferred tax liability | 21,393 | 21,393 | 21,393 | ||||||||||||||
Balance at end of period at Dec. 31, 2018 | 0 | ||||||||||||||||
Balance at end of period (in shares) at Dec. 31, 2018 | 156,333 | 93,346 | 0 | ||||||||||||||
Balance at end of period at Dec. 31, 2018 | $ 2,707,955 | $ 1,676,769 | $ 16 | $ 9 | $ 0 | $ 1,641,237 | $ 35,507 | $ 1,031,186 |
Consolidated and Combined Sta_2
Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 82,448 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and depletion | 177,890 | |||
Amortization of intangible assets | 6,044 | |||
Exploration expense, non-cash | 567 | |||
Asset retirement obligations accretion expense | 1,668 | |||
Amortization of deferred financing costs | 1,461 | |||
Non-cash interest expense | 10,085 | |||
(Gain) loss on derivatives, net | 0 | |||
Cash settlements of matured derivative contracts | 0 | |||
Deferred taxes | 12,128 | |||
Contingent consideration change in fair value | 6,700 | |||
Stock based compensation | 1,851 | |||
Other | (773) | |||
Changes in assets and liabilities: | ||||
Account receivable | (50,610) | |||
Prepaid expenses and other assets | (2,551) | |||
Accounts payable and accrued liabilities | 68,929 | |||
Drilling advances | (9,559) | |||
Other assets and liabilities, net | (808) | |||
Net cash provided by (used in) operating activities | 305,470 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Proceeds withdrawn from trust account | 656,078 | |||
Additions to oil and gas properties | (141,619) | |||
Purchase of and contributions to equity method investment | 0 | |||
Payment of contingent consideration | (26,000) | |||
Other investing | (350) | |||
Net cash used in investing activities | (877,640) | |||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||
Parents’ contribution, net | 0 | |||
Issuance of common stock | 355,000 | |||
Proceeds from issuance of long term debt | 400,000 | |||
Repayments of deferred underwriting compensation | (22,750) | |||
Cash paid for debt issuance costs | (23,336) | |||
Other financing activities | (1,009) | |||
Net cash provided by financing activities | 707,905 | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 135,735 | |||
CASH AND CASH EQUIVALENTS – Beginning of period | 23 | |||
CASH AND CASH EQUIVALENTS – End of period | 135,758 | $ 23 | ||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid for income taxes | 0 | |||
Cash paid for interest | 889 | |||
Supplemental non-cash investing and financing activity | ||||
Accruals or liabilities for capital expenditures | 50,633 | |||
Contributions of assets to purchase equity method investment | 0 | |||
Contingent consideration issued in Business Combination | 149,700 | |||
Non-compete | 44,400 | |||
Equity issuances in connection with business combinations | 1,481,692 | |||
EnerVest properties | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Contingent consideration change in fair value | (6,700) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisitions | (1,219,217) | |||
Other | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisitions | (146,532) | |||
Predecessor | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | 218,553 | $ 178,874 | $ 21,471 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and depletion | 137,871 | 129,711 | 33,123 | |
Amortization of intangible assets | 0 | 0 | 0 | |
Exploration expense, non-cash | 0 | 0 | 0 | |
Asset retirement obligations accretion expense | 104 | 232 | 94 | |
Amortization of deferred financing costs | 0 | 0 | 0 | |
Non-cash interest expense | 0 | 0 | 0 | |
(Gain) loss on derivatives, net | 18,127 | 8,488 | 6,717 | |
Cash settlements of matured derivative contracts | (27,617) | (1,097) | (3,178) | |
Deferred taxes | 324 | 2,052 | 615 | |
Contingent consideration change in fair value | 0 | 0 | 0 | |
Stock based compensation | 0 | 0 | 0 | |
Other | (796) | (397) | 2 | |
Changes in assets and liabilities: | ||||
Account receivable | (61,405) | (70,822) | (20,358) | |
Prepaid expenses and other assets | 0 | 0 | 0 | |
Accounts payable and accrued liabilities | 36 | 10,522 | (8,092) | |
Drilling advances | 0 | 0 | 0 | |
Other assets and liabilities, net | (385) | (192) | 64 | |
Net cash provided by (used in) operating activities | 284,812 | 257,371 | 30,458 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Proceeds withdrawn from trust account | 0 | 0 | 0 | |
Additions to oil and gas properties | (197,314) | (247,426) | (25,963) | |
Purchase of and contributions to equity method investment | 0 | (8,338) | 0 | |
Payment of contingent consideration | 0 | 0 | 0 | |
Other investing | 0 | 0 | 0 | |
Net cash used in investing activities | (347,453) | (314,417) | (1,249,421) | |
CASH FLOW FROM FINANCING ACTIVITIES: | ||||
Parents’ contribution, net | 62,641 | 57,046 | 1,218,963 | |
Issuance of common stock | 0 | 0 | 0 | |
Proceeds from issuance of long term debt | 0 | 0 | 0 | |
Repayments of deferred underwriting compensation | 0 | 0 | 0 | |
Cash paid for debt issuance costs | 0 | 0 | 0 | |
Other financing activities | 0 | 0 | 0 | |
Net cash provided by financing activities | 62,641 | 57,046 | 1,218,963 | |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 0 | 0 | 0 | |
CASH AND CASH EQUIVALENTS – Beginning of period | $ 0 | 0 | 0 | 0 |
CASH AND CASH EQUIVALENTS – End of period | 0 | 0 | 0 | |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid for income taxes | 336 | 43 | 0 | |
Cash paid for interest | 0 | 0 | 0 | |
Supplemental non-cash investing and financing activity | ||||
Accruals or liabilities for capital expenditures | 38,028 | 53,274 | 51,435 | |
Contributions of assets to purchase equity method investment | 0 | 450 | 0 | |
Contingent consideration issued in Business Combination | 0 | 0 | 0 | |
Non-compete | 0 | 0 | 0 | |
Equity issuances in connection with business combinations | 0 | 0 | 0 | |
Predecessor | EnerVest properties | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisitions | 0 | 0 | 0 | |
Predecessor | Other | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Acquisitions | $ (150,139) | $ (58,653) | $ (1,223,458) |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Organization and General Magnolia Oil & Gas Corporation (formerly TPG Pace Energy Holdings Corp.) (the “Company” or “Magnolia”) was incorporated in Delaware on February 14, 2017 (“Inception”). On March 15, 2018, the Company formed three indirect wholly owned subsidiaries; Magnolia Oil & Gas Parent LLC (“Magnolia LLC”), Magnolia Oil & Gas Intermediate LLC (“Magnolia Intermediate”), and Magnolia Oil & Gas Operating LLC (“Magnolia Operating”). All three entities are Delaware limited liability companies and were formed in contemplation of the Business Combination (as defined herein). Business Combination On July 31, 2018 (the “Closing Date”), the Company and Magnolia LLC consummated the previously announced acquisition of the following: • certain right, title and interest in certain oil and natural gas assets located primarily in the Karnes County portion of the Eagle Ford Shale in South Texas (the “Karnes County Assets” and, such business the “Karnes County Business”) pursuant to that certain Contribution and Merger Agreement (as subsequently amended, the “Karnes County Contribution Agreement”), by and among the Company, Magnolia LLC and certain affiliates (the “Karnes County Contributors”) of EnerVest Ltd. (“EnerVest”); • certain right, title and interest in certain oil and natural gas assets located primarily in the Giddings Field of the Austin Chalk (the “Giddings Assets”) pursuant to that certain Purchase and Sale Agreement (the “Giddings Purchase Agreement”) by and among Magnolia LLC and certain affiliates of EnerVest, Ltd. (the “Giddings Sellers”); and • a 35% membership interest (the “Ironwood Interests” and together with the Karnes County Assets and the Giddings Assets, the “Acquired Assets”) in Ironwood Eagle Ford Midstream, LLC (“Ironwood”), a Texas limited liability company, which owns an Eagle Ford gathering system, pursuant to that certain Membership Interest Purchase Agreement (the “Ironwood MIPA” and, together with the transactions contemplated by the Karnes County Contribution Agreement and the Giddings Purchase Agreement, the “Business Combination Agreements” and the transactions contemplated thereby, the “Business Combination”), by and among Magnolia LLC and certain affiliates of EnerVest (the “Ironwood Sellers”) and, together with the Karnes County Contributors and the Giddings Sellers, (the “Sellers”). The Company consummated the Business Combination for aggregate consideration of approximately $1.2 billion in cash, 31.8 million shares of the Company’s Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), and 83.9 million shares of the Company’s Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”) and a corresponding number of units in Magnolia LLC (the “Magnolia LLC Units”), as well as certain earnout rights payable in a combination of cash and additional equity securities in the Company. In connection with the Business Combination, Magnolia issued and sold 35.5 million shares of Class A Common Stock in a private placement to certain qualified institutional buyers and accredited investors for gross proceeds of $355.0 million (the “PIPE Investment”). In addition, Magnolia Operating and Magnolia Oil & Gas Finance Corp., a wholly owned subsidiary of Magnolia Operating (“Finance Corp.” and, together with Magnolia Operating, the “Issuers”), issued and sold $400.0 million aggregate principal amount of 6.0% Senior Notes due 2026 (the “2026 Senior Notes”). The proceeds of the PIPE Investment and the offering of 2026 Notes were used to fund a portion of the cash consideration required to effect the Business Combination. Business Operations and Strategy Magnolia is an independent oil and natural gas company engaged in the acquisition, development, exploration, and production of oil, natural gas, and NGL reserves. The Company’s oil and natural gas properties are located primarily in Karnes County and the Giddings Field in South Texas, where the Company primarily targets the Eagle Ford Shale and Austin Chalk formations. Magnolia’s objective is to generate stock market value over the long term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow. Basis of Presentation As a result of the Business Combination, the Company is the acquirer for accounting purposes and the Karnes County Business, the Giddings Assets, and the Ironwood Interests are the acquirees. The Karnes County Business, including as applicable, its ownership of the Ironwood Interests, was deemed the Predecessor (the “Predecessor”) for periods prior to the Business Combination, and does not include the consolidation of the Company and the Giddings Assets. Although the Karnes County Contributors are not under common control, each are managed by the same managing general partner, EnerVest, and as such, these Predecessor financial statements have been presented on a combined basis for financial reporting purposes. The assets, liabilities, revenues, expenses and cash flows related to the Karnes County Business were not previously separately accounted for as a standalone legal entity and have been carved out of the overall assets, liabilities, revenues, expenses, and cash flows from the Karnes County Contributors as appropriate. In addition, the Parents’ Net Investment represents the Karnes County Contributors’ interest in the recorded net assets of the Karnes County Business and represents the cumulative net investment of the Karnes County Contributors’ in the Karnes County Business through the dates presented, inclusive of cumulative operating results. The Karnes County Contributors utilize EnerVest’s centralized processes and systems for its treasury services and the Karnes County Business’ cash activity was commingled with other oil and gas assets that were not part of the Contribution. As such, the net results of the cash transactions between the Karnes County Business and the Karnes County Contributors are reflected as Parents’ Net Investment in the accompanying Predecessor balance sheet. The Predecessor financial statements also include a portion of indirect costs for salaries and benefits, rent, accounting, legal services and other expenses. In addition to the allocation of indirect costs, the financial statements reflect certain agreements executed by the Karnes County Contributors for the benefit of the Karnes County Business, including price risk management instruments. The allocations methodologies for significant allocated items include: Corporate G&A — EnerVest, as managing general partner, provides management, accounting, and advisory services to the Karnes County Contributors in exchange for a quarterly management fee based on the Karnes County Contributors’ investor commitments, which were used, in part, to acquire the Karnes County Business as well as other oil and natural properties that were not part of the Contribution. As such, the management fee was allocated to the Karnes County Business using a ratio of asset acquisitions value to total asset acquisitions completed by the Karnes County Contributors, for the years ended December 31, 2016 and 2017, and the period from January 1, 2018 to July 30, 2018. Derivatives — Certain Karnes County Contributors entered into financial instruments to manage the Karnes County Business’ exposure to changes in commodity prices for the Karnes County Business as well as other oil and natural gas properties that were not part of the Contribution, on a combined basis. The commodity derivative activity was allocated to the Karnes County Business using a ratio of expected crude oil and condensate, natural gas liquids (“NGLs”), and natural gas volumes produced, on an equivalents basis, by the Karnes County Business to the Karnes County Contributors’ total expected crude oil and condensate, NGLs, and natural gas produced, on an equivalents basis, for the years ended December 31, 2016 and 2017, and the period from January 1, 2018 to July 30, 2018. Indebtedness — The Karnes County Business’ did not historically have outstanding indebtedness, but its oil and natural gas properties were collateral to various credit facilities held by the Karnes County Contributors/EnerVest. Amounts outstanding on these credit facilities have not been allocated to the Karnes County Business as they were not directly attributable to the Karnes County Business. Management believes the allocation methodologies used are reasonable and result in an allocation of the indirect costs and other items to operate the Karnes County Business as if it were a stand-alone entity. These allocations, however, may not be indicative of the cost of future operations or the amount of future allocations. Direct costs were included at the historical amounts related to each reported period. For the period on or after the Business Combination, the Company, including the combination of the Karnes County Business, the Giddings Assets, and the Ironwood Interests is the Successor (the “Successor”). The financial statements and certain footnote presentations separate the Company’s presentations into two distinct periods, the period before the consummation of the Business Combination, which includes the period from January 1, 2018 to July 30, 2018 (the “2018 Predecessor Period”), the year ended December 31, 2017 (the “2017 Predecessor Period”), the year ended December 31, 2016 (the “2016 Predecessor Period”); and together with the 2018 Predecessor Period and the 2017 Predecessor Period, (the “Predecessor Period”); and the period on and after the consummation of the Business Combination, which is from July 31, 2018 to December 31, 2018 (the “Successor Period”). The Business Combination was accounted for using the acquisition method of accounting and the Successor financial statements reflect a new basis of accounting that is based on the fair value of assets acquired and liabilities assumed. As a result of the inclusion of the Giddings Assets, the new basis of accounting, and certain other items that affect comparability, the Company’s financial information prior to the Business Combination is not comparable to its financial information subsequent to the Business Combination. The accompanying consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation (Successor) The consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain reclassifications of prior period financial statements have been made to conform to current reporting practices. The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated. The Company reflects a noncontrolling interest representing the interest owned by the Karnes County Contributors through their ownership of Magnolia LLC Units in the consolidated financial statements. The noncontrolling interest is presented as a component of equity. See Note 10—Stockholders’ Equity for further discussion of noncontrolling interest. Variable Interest Entities Magnolia LLC is a variable interest entity (“VIE”). The Company determined that it is the primary beneficiary of Magnolia LLC as the Company is the sole managing member and has the power to direct the activities most significant to Magnolia LLC’s economic performance as well as the obligation to absorb losses and receive benefits that are potentially significant. At December 31, 2018, the Company had an approximate 62.6% economic interest in Magnolia LLC and 100% of Magnolia LLC’s assets and liabilities and results of operations are consolidated in the Company’s consolidated financial statements contained herein. At December 31, 2018, the Karnes County Contributors had approximately 37.4% economic interest in Magnolia LLC; however, the Karnes County Contributors have disproportionately fewer voting rights, and are shown as noncontrolling interest holders of Magnolia LLC. See Note 10—Stockholders’ Equity for further discussion of noncontrolling interest. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and changes in these estimates are recorded when known. Significant estimates with regard to these financial statements include the fair value determination of acquired assets and liabilities, the assessment of asset retirement obligations, the estimate of proved oil and gas reserves and related present value estimates of future net cash flows, and the estimates of fair value for long-lived assets. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the historical carrying amount net of write-offs and an allowance for doubtful accounts. The carrying amount of the Company’s accounts receivable approximates fair value because of the short-term nature of the instruments. The Company routinely assesses the collectability of all material trade and other receivables. The Company’s receivables consist mainly of receivables from oil and natural gas purchasers and from joint interest owners on properties the Company operates. The Company accrues a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any reserve may be reasonably estimated. The Company had no allowance for doubtful accounts as of December 31, 2018 (Successor), or December 31, 2017 (Predecessor). Oil and Natural Gas Properties The Company follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, exploration costs such as exploratory geological and geophysical costs, delay rentals, and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead, and similar activities are expensed as incurred. If an exploratory well provides evidence to justify potential development of reserves, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. At the end of each quarter, management reviews the status of all suspended exploratory well costs in light of ongoing exploration activities; in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts. If management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. Unproved properties are assessed for impairment at least annually and are transferred to proved oil and gas properties to the extent the costs are associated with successful exploration activities. Unproved properties are assessed for impairment based on the Company’s current exploration plans. Costs of expired or abandoned leases are charged to exploration expense, while costs of productive leases are transferred to proved oil and gas properties. Costs of maintaining and retaining unproved properties, as well as impairment of unsuccessful leases, are included in exploration expense in the consolidated and combined statements of operations. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of crude oil and natural gas, are capitalized. Depreciation of the cost of proved oil and gas properties is calculated using the unit-of-production method. The reserve base used to calculate depreciation for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate the depreciation for capitalized costs for exploratory and development wells is the sum of proved developed reserves only. Estimated future abandonment costs, net of salvage values, are included in the depreciable cost. Oil and gas properties are grouped for depreciation in accordance with the Accounting Standards Codification (“ASC”) ASC 932 “Extractive Activities—Oil and Gas” (“ASC 932”). The basis for grouping is a reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a reservoir or field. When circumstances indicate that proved oil and gas properties may be impaired, the Company compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on the Company’s estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is generally estimated using the income approach described in ASC 820, “Fair Value Measurements” (“ASC 820”). If applicable, the Company utilizes prices and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, and capital investment plans, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants. Asset Retirement Costs and Obligations Asset retirement obligations (“ARO”) represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producing properties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, well life, inflation, and credit-adjusted risk-free rate. The inputs are calculated based on historical data as well as current estimates. When the liability is initially recorded, the carrying amount of the related long-lived asset is increased. Over time, accretion of the liability is recognized each period, and the capitalized cost is amortized over the useful life of the related asset using the unit of production method and is included in “Depreciation, depletion and amortization” in the Company’s consolidated and combined statements of operations. If the ARO is settled for an amount other than the recorded amount, a gain or loss is recognized. To estimate the fair value of an asset retirement obligation, the Company employs a present value technique, which reflects certain assumptions, including its credit‑adjusted risk‑free interest rate, inflation rate, the estimated settlement date of the liability, and the estimated cost to settle the liability. Changes in timing or to the original estimate of cash flows will result in changes to the carrying amount of the liability and related long lived asset. Intangible Assets (Successor) Concurrent with the closing of the Business Combination, the Company and EnerVest entered into a Non-Compete pursuant to which EnerVest and certain of its affiliates are restricted from competing with the Company in certain counties comprising the Eagle Ford Shale. The Company recorded an estimated cost of $44.4 million for the Non-Compete as intangible assets on the consolidated balance sheet of the Successor. These intangible assets have a definite life and are subject to amortization utilizing the straight-line method over their economic life, currently estimated to be two and one half to four years. Magnolia assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment is recognized in the consolidated statements of operations if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. For the year ended December 31, 2018 , no impairment was recorded. For more discussion on the Non-Compete, refer to Note 6 - Intangible Assets. Fair Value Measurements ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value. The three levels of the fair value hierarchy under ASC 820 are as follows: Level I—Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used. Level II—Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level III—Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation. In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment. Equity Method Investment The Company accounts for its investment in Ironwood using the equity method of accounting. Accordingly, the Company recognizes its proportionate share of Ironwood’s net income in the consolidated and combined statements of operations as “Income from equity method investee.” Any distributions by Ironwood would decrease the Company’s investment in Ironwood. The Company evaluates its investment in Ironwood for potential impairment whenever events or changes in circumstances indicate that there may be a loss in the value of Ironwood that was other than temporary. Income Taxes (Predecessor) The Karnes County Contributors, on behalf of the Predecessor, had elected under the Internal Revenue Code provisions to be treated as individual partnerships for tax purposes. Accordingly, items of income, expense, gains, and losses flowed through to the partners and were taxed at the partner level. Accordingly, no tax provision for federal income taxes was included in the financial statements. The Predecessor was subject to the Texas margin tax, which is considered a state income tax, and was included in “Income Tax Expense” on the statements of operations. The Predecessor recorded state income tax (current and deferred) based on taxable income, as defined under the rules for the margin tax. The Predecessor analyzed each income tax position using a two-step process. A determination was first made as to whether it was more likely than not that the income tax position would be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position was expected to meet the more likely than not criteria, the benefit recorded in the combined financial statements equaled the largest amount that was greater than 50% likely to be realized upon its ultimate settlement. The Predecessor considered its exposure for uncertain tax positions at the state tax level and did not record any liabilities for uncertain tax positions for the years ended December 31, 2017 or December 31, 2016. The Predecessor recorded income tax, related interest, and penalties, if any, as a component of income tax expense. The Predecessor did not incur any interest or penalties on income for the period from January 1, 2018 to July 30, 2018 or during the years ended December 31, 2017 and December 31, 2016. None of the Karnes County Contributors’ state tax returns are currently under examination by the relevant authorities. Income Taxes (Successor) Under ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to net operating losses, tax credits, and temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. The Company reports a liability or a reduction of deferred tax assets for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. When applicable, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. Derivatives (Predecessor) The Karnes County Contributors, on behalf of the Predecessor, monitored the exposure to various business risks, including commodity price risk, and used derivatives to manage the impact of certain of these risks. The Karnes County Contributors used energy derivatives for mitigating risk resulting from fluctuations in the market price of oil, natural gas and natural gas liquids and their policies did not permit the use of derivatives for speculative purposes. The Predecessor elected not to designate its derivatives as hedging instruments. Changes in the fair value of derivatives were recorded immediately to earnings as “Loss on derivatives, net” in the combined statements of operations. Purchase Price Allocation Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the acquired business and recording deferred taxes for any differences between the allocated values and tax basis of assets and liabilities. Any excess of the purchase price over the amounts assigned to assets and liabilities is recorded as goodwill. The purchase price allocation is accomplished by recording each asset and liability at its estimated fair value. Estimated deferred taxes are based on available information concerning the tax basis of the acquired company’s assets and liabilities and tax-related carryforwards at the merger date, although such estimates may change in the future as additional information becomes known. The amount of goodwill recorded in any particular business combination can vary significantly depending upon the values attributed to assets acquired and liabilities assumed relative to the total acquisition cost. When estimating the fair values of assets acquired and liabilities assumed, the Company must apply various assumptions. The most significant assumptions relate to the estimated fair values assigned to proved and unproved crude oil and natural gas properties. To estimate the fair values of these properties, the Company prepares estimates of crude oil and natural gas reserves. Estimated fair values assigned to assets acquired can have a significant effect on results of operations in the future. Commitments and Contingencies Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Refer to Note 14 - Commitments and Contingencies for additional information. Revenue Recognition (Predecessor) Oil, natural gas, and NGL revenues were recognized when production was sold to a purchaser at a fixed or determinable price, when delivery had occurred and title had transferred, and collectability of the revenue was reasonably assured. The Predecessor followed the sales method of accounting for revenues. Under this method of accounting, revenues were recognized based on volumes sold, which may have differed from the volumes entitled based on the Karnes County Business’ working interest. There were no material gas imbalances during the periods presented. Revenue Recognition (Successor) In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers.” This ASU and the associated subsequent amendments (collectively, “ASC 606”), superseded virtually all of the revenue recognition guidance in generally accepted accounting principles in the United States. The core principle of the five-step model is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. Effective December 31, 2018, the Company ceased to be an emerging growth company and adopted ASC 606 for the Successor Period, using a modified retrospective approach. There were no significant changes to the timing of revenue recognized for sales of production. However, the adoption of the new guidance resulted in certain changes to the classification of processing and other fees between revenue and gathering, transportation, and processing expense. The amounts reclassified are immaterial to the financial statements and Predecessor Periods have not been restated and continue to be reported under the accounting standards in effect for those periods. Adoption of the new standard is not anticipated to have a material impact on the Company’s net earnings on an ongoing basis. Magnolia’s revenues include the sale of crude oil, natural gas, and NGLs. These sales are recognized as revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, natural gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million Btu (MMBtu) of natural gas, gallon of NGLs, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. The Company’s oil production is primarily sold under market-sensitive contracts that are typically priced at a differential to the New York Mercantile Exchange (“NYMEX”) price or at purchaser posted prices for the producing area. For oil contracts, the Company generally records sales based on the net amount received. For natural gas contracts, the Company generally records wet gas sales (which consists of natural gas and NGLs based on end products after processing) at the wellhead or inlet of the gas processing plant (i.e., the point of control transfer) as revenues net of gathering, transportation, and processing expenses if the processor is the customer and there is no redelivery of commodities to the Company at the tailgate of the plant. Conversely, the Company generally records residual natural gas and NGL sales at the tailgate of the plant (i.e., the point of control transfer) on a gross basis along with the associated gathering, transportation, and processing expenses if the processor is a service provider and there is redelivery of one or several commodities to the Company at the tailgate of the plant. All facts and circumstances of an arrangement are considered and judgment is often required in making this determination. For processing contracts that require noncash consideration in exchange for processing services, the Company recognizes revenue and an equal gathering, transportation, and processing expense for commodities transferred to the service provider. Customers are invoiced once the Company’s performance obligations have been satisfied. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days . There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers. Accordingly, the Company’s product sales contracts do not give rise to material contract assets or contract liabilities. The Company’s receivables consist mainly of receivables from oil and natural gas purchasers and from joint interest owners on properties the Company operates. Receivables from contracts with customers totaled $100.1 million as of December 31, 2018 and $89.7 million as of July 31, 2018. Accounts receivable are stated at the historical carrying amount net of write-offs and an allowance for doubtful accounts. The Company has concluded that disaggregating revenue by product type appropriately depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors and has reflected this disaggregation of revenue on the Company’s consolidated and combined statements of operations for all periods presented. The Company does not disclose the value of unsatisfied performance obligations for contracts as all contracts are either with an original expected length of one year or less or the entire future consideration is variable and allocated entirely to a wholly unsatisfied performance obligation. Net Income Per Share of Common Stock (Successor) The Company’s basic earnings per share ("EPS") is computed based on the weighted average number of shares of Class A Common Stock outstanding for the period. Diluted EPS includes the effect of the Company’s outstanding restricted stock units, performance-based stock units, warrants for Class A Common Stock and exchanges of Class B Common Stock if the inclusion of these items is dilutive. Refer to Note 12 - Earnings Per Share for additional information and the calculation of EPS. Stock Based Compensation (Successor) Magnolia has established a long-term incentive plan for certain employees that includes granting restricted stock units ("RSUs") and performance stock units ("PSUs"). Stock based compensation awards granted are valued on the date of grant using the quoted market price of Magnolia's Class A Common Stock and are expensed on a straight-line basis over the requisite service period. The Company records expense associated with the fair value of stock based compensation under the fair value recognition provisions of ASC Topic 718, “Compensation-Stock Compensation” and is included within general and administrative expense in the accompanying consolidated statements of operations. The Company accounts for forfeitures as they occur. These plans and related accounting policies are defined and described more fully in Note 11- Stock Based Compensation. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which will require lessees to recognize a right of use asset and a lease liability on their balance sheet for all leases, including operating leases, with a term of greater than 12 months. Currently the guidance would be applied using a modified retrospective transition method, which requires applying the new guidance to leases that exist or are entered into after the beginning of the earliest period in the financial statements. However, in July 2018, the FASB issued ASU 2018-11, which adds a transition option permitting entities to apply the provisions of the new standard at its adoption date instead of the earliest comparative period presented in the consolidated financial statements. Under this transition option, comparative reporting would not be required, and the provisions of the standard would be applied prospectively to leases in effect at the date of adoption. This standard is effective in the first quarter of 2019 and will be applied using the optional transition method provided by ASU 2018-11. The Company plans to elect the practical expedients provided in the standard that allow entities to not reassess under the new standard the Company’s prior conclusions about lease identification and classification related to contracts that commenced prior to adoption and allows the new guidance to be applied prospectively to all new or modified land easements and rights-of-way. The Company also intends to elect a policy to not recognize right of use assets and lease liabilities related to short-term leases. The Company has determined its portfolio of leased assets and is completing its review of all related contracts to determine the impact the adoption will have on its consolidated financial statements and related disclosures. Upon adoption, the Company will recognize right of use assets and lease liabilities for certain commitments related to real estate, vehicles, and field equipment that are currently accounted for as operating leases. To track these lease arrangements and facilitate compliance with this ASU, the Company has implemented a third-party lease accounting software solution and is in the process of designing processes and internal controls. The adoption of this ASU will increase asset and liability balances on the consolidated balance sheets due to the required recognition of right of use assets and corresponding lease liabilities, however, the overall financial impact to the consolidated financial statements is not expected to be material. The Company expects the adoption of this ASU to result in changes to the Company’s existing accounting policies, business processes, and internal controls. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain transactions are classified in the statements of cash flows. ASU 2016-15 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017 for public companies and for fiscal years beginning after December 15, 2018 for all other entities. The Company ceased to be an emerging growth company on December 31, 2018 and adopted the standard on December 31, 2018 . The adoption of this guidance did not impact the Company’s financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which clarifies the definition of a business to provide guidance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 provides a screen to determine when a set of assets is not a business, requiring that when substantially all fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set of assets is not a business. A framework is provided to assist in evaluating whether both an input and a substantive process are present for the set to be a business. ASU 2017-01 is effective for interim and annual periods after December 15, 2017 for public companies and annual periods beginning after December 15, 2018 for all other entities. No disclosures are required at transition. The Company early adopted ASU 2017-01 upon the closing of the Business Combination. There was no material impact to the Company's financial statements as a result of this adoption, however the new standard may result in more transactions being accounted for as acquisitions (and dispositions) of assets rather than businesses in the future. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions EnerVest Business Combination As discussed in Note 1 - Description of Business and Basis of Presentation , on July 31, 2018, the Company consummated the Business Combination contemplated by the Business Combination Agreements. The Business Combination Agreements and the Business Combination were approved by the Company’s stockholders on July 17, 2018. At the closing of the Business Combination, the Karnes County Contributors received 83.9 million shares of the Company’s Class B Common Stock and an equivalent number of Magnolia LLC Units, which, together, are exchangeable on a one -for-one basis for shares of the Company’s Class A Common Stock; 31.8 million shares of Class A Common Stock; and approximately $911.5 million in cash. The sales price per the Karnes County Contribution Agreement was adjusted for customary purchase price adjustments to reflect the economic activity from the effective date of January 1, 2018 to June 30, 2018. The Company is entitled to an additional cash purchase price adjustment for the revenues after expenses (and other purchase price adjustments) attributable to the Acquired Assets from July 1, 2018 through July 31, 2018. The Giddings Sellers received approximately $282.7 million in cash, after customary purchase price adjustments. The Ironwood Sellers received $25.0 million in cash in exchange for the Ironwood Interests. The final adjustments to the respective purchase price agreements have not yet been made. The Business Combination has been accounted for using the acquisition method. The acquisition method of accounting is based on ASC 805 “Business Combination” (“ASC 805”), and uses the fair value concepts defined in ASC 820. ASC 805 requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by the Company. Contingent Consideration Pursuant to the Karnes County Contribution Agreement, for a period of five years following the Closing Date, the Karnes County Contributors were entitled to receive an aggregate of up to 13.0 million additional shares of Class A Common Stock or Class B Common Stock based on certain EBITDA and free cash flow or stock price thresholds. As of December 31, 2018 , the Company had met the defined stock price thresholds for all three tranches as defined in the Karnes County Contribution Agreement and issued an aggregate of 3.6 million additional shares of Class A Common Stock and 9.4 million additional shares of Class B Common Stock to the Karnes County Contributors. Pursuant to the Giddings Purchase Agreement, until December 31, 2021, the Giddings Sellers were entitled to receive an aggregate of up to $47.0 million in cash earnout payments based on certain net revenue thresholds. On September 28, 2018 the Company paid the Giddings Sellers a cash payment of $26.0 million to fully settle the earnout obligation. In conjunction with this payment, Magnolia recognized a loss of $6.7 million included in “Other income (expense)” in the consolidated and combined statements of operations. The purchase consideration for the Business Combination was as follows: (in thousands) At July 31, 2018 Preliminary Purchase Consideration: Cash consideration $ 1,219,217 Stock consideration (1) 1,423,483 Fair value of contingent earnout purchase consideration (2) 169,000 Total purchase price consideration $ 2,811,700 (1) At closing of the Business Combination, the Karnes County Contributors received 83.9 million shares of Class B Common Stock and 31.8 million shares of Class A Common Stock. (2) Pursuant to ASC 805, ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”, the Karnes County earnout consideration has been valued at fair value as of the Closing Date and has been classified in stockholders’ equity. The Giddings earnout has been valued at fair value as of the Closing Date and has been classified as a liability. The fair value of the earnouts was determined using the Monte Carlo simulation valuation method based on Level 3 inputs in the fair value hierarchy. The following table summarizes the allocation of the purchase consideration to the assets and liabilities assumed: (in thousands) At July 31, 2018 Estimated fair value of assets acquired Accounts receivable $ 89,674 Other current assets 2,853 Oil and natural gas properties (1) 2,805,159 Ironwood equity investment 18,100 Total fair value of assets acquired 2,915,786 Estimated fair value of liabilities assumed Accounts payable and other current liabilities (56,315 ) Asset retirement obligations (34,132 ) Deferred tax liability (13,639 ) Fair value of net assets acquired $ 2,811,700 (1) The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. These inputs required significant judgments and estimates by management at the time of the valuation and may be subject to change. The total purchase consideration and the related purchase consideration allocation above are preliminary as the Company has not yet completed all the necessary fair value assessments, including the assessments of property, plant and equipment, intangible assets, contingent consideration, and the related tax impacts on these items. Any changes within the measurement period in the estimated fair values of the assets acquired, liabilities assumed, and the working capital adjustments may change the allocation of the purchase consideration. The fair value and related tax impact assessments are to be completed within twelve months of the Closing Date and could have a material impact on the components of the total purchase consideration and the purchase consideration allocation. Transaction costs incurred by the Company associated with the Business Combination were $24.3 million for the Successor Period. The Company also incurred a total of $23.5 million of debt issuance costs in connection with the consummation of the Business Combination related to the establishment of the RBL Facility (as defined herein) and the issuance of the 2026 Senior Notes. Non-Compete On the Closing Date, the Company and EnerVest, separate and apart from the Business Combination, entered into the Non-Compete restricting EnerVest and certain of its affiliates from competing with the Company in certain counties comprising the Eagle Ford Shale following the Closing Date. An affiliate of EnerVest will have the right to receive up to 4,000,000 shares of Class A Common Stock issuable in two and half to four years provided EnerVest does not compete with Magnolia in the Eagle Ford Shale until the later of July 31, 2022 and the date the Services Agreement is terminated. For more discussion on the Non-Compete, refer to Note 6 - Intangible Assets . Unaudited Pro Forma Operating Results The following unaudited pro forma combined financial information has been prepared as if the Business Combination and other related transactions had taken place on January 1, 2017. The information reflects pro forma adjustments based on available information and certain assumptions that the Company believes are reasonable, including depletion of the Company’s fair-valued proved oil and gas properties, and the estimated tax impacts of the pro forma adjustments. Additionally, pro forma net income attributable to Class A Common Stock excludes $37.1 million of transaction related costs, $11.0 million related to a one time purchase of a seismic license continuation, and a $6.7 million loss related to the settlement of the Giddings earnout obligation. The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Business Combination taken place on January 1, 2017; furthermore, the financial information is not intended to be a projection of future results. (in thousands) Year Ended December 31, 2018 Year Ended December 31, 2017 Total Revenues $ 978,431 $ 555,714 Net income attributable to Class A Common Stock 188,934 70,491 Income per share - basic $ 1.22 $ 0.54 Income per share - diluted $ 1.19 $ 0.51 Harvest Acquisition On August 31, 2018, the Company completed the acquisition to purchase substantially all of the South Texas assets of Harvest Oil & Gas Corporation for approximately $133.3 million in cash and 4.2 million newly issued shares of the Company’s Class A Common Stock for a total consideration of $191.5 million . The acquisition added an undivided working interest across a portion of Magnolia’s existing Karnes County Assets and all of the Company’s existing Giddings Assets. The following table summarizes the allocation of the purchase consideration to the assets and liabilities assumed: (in thousands) At August 31, 2018 Estimated fair value of assets acquired Other current assets $ 1,290 Oil and natural gas properties (1) 200,035 Total fair value of assets acquired 201,325 Estimated fair value of liabilities assumed Asset retirement obligations and other current liabilities (9,812 ) Fair value of net assets acquired $ 191,513 (1) The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. These inputs required significant judgments and estimates by management at the time of the valuation and may be subject to change. The total purchase consideration and the related purchase consideration allocation above are preliminary as the Company has not yet completed all the necessary fair value assessments, including the assessments of property, plant and equipment. Any changes within the measurement period in the estimated fair values of the assets acquired and liabilities assumed and the working capital adjustments may change the allocation of the purchase consideration. The fair value assessments are to be completed within twelve months of the Closing Date and could have a material impact on the components of the total purchase consideration and the purchase consideration allocation. Acquisitions (Predecessor) Subsequent GulfTex Acquisition On March 1, 2018, the Predecessor acquired certain oil and natural gas properties located in the Eagle Ford Shale from GulfTex Energy III, L.P. and GulfTex Energy IV, L.P. for an adjusted purchase price of approximately $150.1 million , net of customary closing adjustments (the “Subsequent GulfTex Acquisition”). The recognized fair value of identifiable assets and acquired liabilities assumed in connection with the Subsequent GulfTex Acquisition is as follows: (in thousands) Purchase price allocation: Accounts receivable $ 10,501 Proved oil and natural gas properties 118,572 Unproved oil and natural gas properties 22,802 Accounts payable and accrued liabilities (1,679 ) Asset retirement obligations (57 ) $ 150,139 Subsequent BlackBrush Acquisition On January 31, 2017, the Predecessor acquired assets from BlackBrush Karnes Properties, LLC for aggregate consideration of approximately $58.7 million , net of customary closing adjustments (the “Subsequent BlackBrush Acquisition”). The recognized fair value of identifiable assets and acquired liabilities assumed in connection with the Subsequent BlackBrush Acquisition is as follows: (in thousands) Purchase price allocation: Accounts receivable $ 2,193 Proved oil and natural gas properties 57,263 Unproved oil and natural gas properties 1,552 Accounts payable and accrued liabilities (2,244 ) Asset retirement obligations (111 ) $ 58,653 Initial BlackBrush Acquisition On July 6, 2016, the Predecessor acquired certain assets from BlackBrush Karnes Properties, LLC for aggregate consideration of approximately $682.5 million . Subsequently during 2016, the Predecessor acquired additional working interests in the “the Initial BlackBrush Assets” from unrelated parties for aggregate consideration of approximately $45.5 million . (in thousands) Purchase price allocation: Accounts receivable $ 4,387 Proved oil and natural gas properties 653,480 Unproved oil and natural gas properties 72,705 Accounts payable and accrued liabilities (538 ) Asset retirement obligations (2,051 ) $ 727,983 Initial GulfTex Acquisition On April 27, 2016, the Predecessor acquired certain assets from GulfTex Karnes EFS, LP for aggregate consideration of approximately $495.5 million . (in thousands) Purchase price allocation: Accounts receivable $ 12,252 Proved oil and natural gas properties 423,383 Unproved oil and natural gas properties 73,953 Accounts payable and accrued liabilities (13,667 ) Asset retirement obligations (446 ) $ 495,475 The Predecessor accounted for these acquisitions as business combinations. The assets acquired and the liabilities assumed have been measured at fair value based on various estimates. These estimates are based on key assumptions related to the business combination, including reviews of publicly disclosed information for other acquisitions in the industry, historical experience of the companies, data that was available through the public domain, and due diligence reviews of the acquired business. Any acquisition related transaction costs are not included as components of consideration transferred, but are accounted for as expenses in the period in which the costs are incurred. The results of operations for these acquisitions are included in the Predecessor combined financial statements from the date of closing of each acquisition. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities (Predecessor) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities (Predecessor) The Company’s activities expose it to risks associated with changes in the market price of oil, natural gas and natural gas liquids. As such, future earnings are subject to fluctuation due to changes in the market price of oil, natural gas and natural gas liquids. The Company has not engaged in any hedging activities and does not expect to engage in any hedging activities with respect to the market risk to which the Company is exposed. The Karnes County Contributors, on behalf of the Predecessor, used derivatives to reduce the risk of volatility in the prices of oil, natural gas and natural gas liquids and their policies did not permit the use of derivatives for speculative purposes. The Predecessor elected not to designate any of its derivatives as hedging instruments. Accordingly, changes in the fair value of the Predecessor's derivatives were recorded immediately to earnings as “Loss on derivatives, net” in the combined statements of operations. During the period from January 1, 2018 through July 30, 2018, the Predecessor terminated substantially all of its derivative contracts which, together with regular monthly settlements, resulted in total cash settlement payments of approximately $27.6 million . The following table sets forth the fair values and classification of the outstanding derivatives entered into by the Karnes County Contributors, on behalf of the Predecessor, as of December 31, 2017 : (in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative asset $ 180 $ (180 ) $ — Long-term derivative asset 48 (48 ) — Total $ 228 $ (228 ) $ — (in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative liability $ 6,944 $ (180 ) $ 6,764 Long-term derivative liability 3,100 (48 ) 3,052 Total $ 10,044 $ (228 ) $ 9,816 The Predecessor entered into master netting arrangements with its counterparties. The amounts above are presented on a net basis in the Predecessor’s combined balance sheet when such amounts are with the same counterparty. In addition, the Predecessor has recorded accounts payable and receivable balances related to settled derivatives that are subject to the master netting agreements. These amounts are not included in the above table; however, under the master netting agreements, the Predecessor has the right to offset these positions against forward exposure related to outstanding derivatives. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Certain of the Company’s assets and liabilities are carried at fair value and measured either on a recurring or non-recurring basis. The Company’s fair value measurements are based either on actual market data or assumptions that other market participants would use in pricing an asset or liability in an orderly transaction, using the valuation hierarchy prescribed by GAAP. See Note 2 - Summary of Significant Accounting Policies for more information regarding the valuation hierarchy. Fair Values - Recurring (Predecessor) The Predecessor’s derivatives consisted of over-the-counter (“OTC”) contracts which were not traded on a public exchange. As the fair value of these derivatives was based on inputs using market prices obtained from independent brokers or determined using quantitative models that used as their basis readily observable market parameters that are actively quoted and can be validated through external sources, including third party pricing services, brokers and market transactions, the Predecessor categorized these derivatives as Level 2. The Predecessor valued these derivatives using the income approach using inputs such as the forward curve for commodity prices based on quoted market prices and prospective volatility factors related to changes in the forward curves. Estimates of fair value have been determined at discrete points in time based on relevant market data. Furthermore, fair values were adjusted to reflect the credit risk inherent in the transaction, which may have included amounts to reflect counterparty credit quality and/or the effect of the Predecessor’s creditworthiness. The following table presents the fair value hierarchy table for the Predecessor’s assets and liabilities that were required to be measured at fair value on a recurring basis: (in thousands) Level 1 Level 2 Level 3 Total Fair Value As of December 31, 2017 (Predecessor): Assets: Oil, natural gas and natural gas liquids derivatives $ — $ 228 $ — $ 228 Liabilities: Oil, natural gas and natural gas liquids derivatives $ — $ 10,044 $ — $ 10,044 Fair Values - Nonrecurring The fair value measurements of assets acquired and liabilities assumed in a business combination are measured on a nonrecurring basis on the acquisition date using an income valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and gas properties includes estimates of: (i) reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices, including price differentials; (v) future cash flows; and (vi) a market participant-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation. Refer to Note 3 - Acquisitions for additional information. Debt Obligations Carrying values and fair values of financial instruments that are not carried at fair value in the accompanying consolidated balance sheet as of December 31, 2018 are as follows: December 31, 2018 (in thousands) Carrying Value Fair Value Long-term debt $ 388,635 $ 387,000 The fair value of the 2026 Senior Notes at December 31, 2018 was based on unadjusted quoted prices in an active market, which are considered a Level 1 input in the fair value hierarchy. The Company has other financial instruments consisting primarily of receivables, payables and other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in the Business Combination and asset retirement obligations. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Non-Compete Agreement On the Closing Date, the Company and EnerVest, separate and apart from the Business Combination, entered into the Non-Compete, which prohibits EnerVest and certain of its affiliates from competing with the Company in the Eagle Ford Shale (the “Market Area”) until the later of July 31, 2022 and the date the Services Agreement is terminated. Under the Non-Compete, an affiliate of EnerVest will have the right to receive up to 4.0 million shares of Class A Common Stock, subject to the achievement of certain stock price thresholds that were met by October 4, 2018. The shares are issuable in two and one half to four years provided EnerVest does not compete in the Market Area. The Company recorded an estimated cost of $44.4 million for the Non-Compete as intangible assets on the consolidated balance sheet of the Successor. These intangible assets have a definite life and are subject to amortization utilizing the straight-line method over its economic life, currently estimated to be two and one half to four years. The Company includes the amortization in “Amortization of intangible assets” on the Company’s consolidated statement of operations. The Company’s estimated amortization expense related to the intangible assets will be $14.5 million in 2019, $14.5 million in 2020, $6.2 million in 2021, $3.2 million in 2022. (in thousands) December 31, 2018 (Successor) Non-compete intangible assets $ 44,400 Accumulated amortization (6,044 ) Intangible assets, net $ 38,356 Weighted average amortization (years) 3.25 |
Asset Retirement Obligations
Asset Retirement Obligations | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Asset Retirement Obligations The following table summarizes the changes in the Company’s asset retirement obligations for the periods presented: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 through July 30, 2018 Year Ended December 31, 2017 Asset retirement obligations, beginning of period $ — $ 3,929 $ 2,421 Revisions to estimates 39,584 — 805 Liabilities incurred and assumed through acquisitions 44,897 553 774 Liabilities settled (166 ) (85 ) (303 ) Accretion expense 1,668 104 232 Asset retirement obligations, end of period $ 85,983 $ 4,501 $ 3,929 Asset retirement obligations reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and land restoration in accordance with applicable local, state and federal laws. Inherent in the fair value calculation of ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates and timing of settlement. To the extent future revisions to these assumptions impact the value of the existing ARO liability, a corresponding offsetting adjustment is made to the oil and natural gas property balance. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision (benefit) consisted of the following components: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 Year Ended December 31, 2017 Year Ended December 31, 2016 Current: Federal $ (1,054 ) $ — $ — $ — State 381 1,461 689 58 (673 ) 1,461 689 58 Deferred: Federal 11,431 — — — State 697 324 2,052 615 12,128 324 2,052 615 Total provision $ 11,455 $ 1,785 $ 2,741 $ 673 The Company is subject to U.S. federal income tax as well as the margin tax in the state of Texas. No amounts have been accrued for income tax uncertainties or interest and penalties as of December 31, 2018 . The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is open to possible income tax examinations by its major taxing authorities since Inception. A reconciliation of the statutory federal income tax expense to the income tax expense or benefit from continuing operations provided at December 31, 2018 , is as follows: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 Year Ended December 31, 2017 Year Ended December 31, 2016 Income tax expense at the federal statutory rate $ 19,706 $ — $ — $ — State income tax expense, net of federal income tax benefits 1,028 1,785 2,741 673 Noncontrolling interest in partnership (9,103 ) — — — Other (176 ) — — — Income tax expense $ 11,455 $ 1,785 $ 2,741 $ 673 The tax effects of temporary differences that give rise to significant positions of the deferred income tax assets and liabilities are presented below: Successor Predecessor (in thousands) December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carryforwards $ 7,336 $ — Capitalized transaction costs 6,677 — Other assets 102 — Total deferred tax assets 14,115 — Deferred tax liabilities: Investment in partnership (63,110) — Oil and natural gas properties (5,598) (2,724 ) Other liabilities — — Total deferred tax liabilities (68,708) (2,724 ) Net deferred tax asset (liabilities) $ (54,593 ) $ (2,724 ) As of December 31, 2018 , the Company had $34.9 million of U.S. federal net operating loss, which has an indefinite carryforward. The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets, including net operating loss carry forwards. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years. As of December 31, 2018 , in part because the Company achieved cumulative pre-tax income, management determined that sufficient positive evidence exists as of December 31, 2018 , to conclude that it is more likely than not that the deferred tax assets will be realized. The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations. The Company gives financial statement recognition to those tax positions that it believes are more-likely-than-not to be sustained upon the examination by the Internal Revenue Service or other governmental agency. As of December 31, 2018 , the Company did not have any accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. Interest and penalties related to uncertain tax positions are reported in income tax expense. The Company’s annual effective tax rate as of December 31, 2018 was 12.2% . The primary differences between the annual effective tax rate and the statutory rate of 21.0% were income attributable to noncontrolling interest, state taxes, and non-deductible expenses. |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Long Term Debt (Successor) The Company’s debt is comprised of the following: (in thousands) Successor Revolving credit facility $ — 6.0% Senior Notes due 2026 400,000 Total long-term debt 400,000 Less: unamortized deferred financing cost (11,365 ) Total debt, net $ 388,635 Credit Facility In connection with the consummation of the Business Combination, Magnolia Operating entered into a senior secured reserve-based revolving credit facility (the “RBL Facility”) among Magnolia Operating, as borrower, Magnolia Intermediate, as holdings, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Citibank, N.A., as administrative agent, collateral agent, issuing bank and swingline lender, providing for maximum commitments in an aggregate principal amount of $1.0 billion with a letter of credit facility with a $100.0 million sublimit. The borrowing base as of December 31, 2018 was $550.0 million . The RBL Facility is guaranteed by certain parent companies and subsidiaries of Magnolia LLC and is collateralized by certain of Magnolia’s oil and natural gas properties and has a borrowing base subject to semi-annual redetermination. Borrowings under the RBL Facility bear interest, at Magnolia Operating’s option, at a rate per annum equal to either the adjusted LIBOR rate or the alternative base rate plus the applicable margin. Additionally, Magnolia Operating is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the RBL Facility. The applicable margin and the commitment fee rate are calculated based upon the utilization levels of the RBL Facility as a percentage of the borrowing base then in effect. The RBL Facility contains certain affirmative and negative covenants customary for financings of this type, including compliance with a leverage ratio of 4.00 to 1.00 and, if the leverage ratio is in excess of 3.00 to 1.00, current ratio of 1.00 to 1.00. As of December 31, 2018 , the Company was in compliance with all covenants (including the financial covenants) under the RBL Facility. Deferred financing costs incurred in connection with securing the RBL Facility were $ 11.7 million which will be amortized on a straight-line basis over a period of five years and included in “Interest expense” in the Company’s consolidated statement of operations. During the Successor Period ended December 31, 2018 , the Company recognized interest expense of $1.9 million , related to the RBL Facility. The unamortized portion of the deferred financing costs are included in “Deferred financing costs, net” on the accompanying consolidated balance sheet as of December 31, 2018 . The Company did not have any outstanding borrowings under its RBL Facility as of December 31, 2018 . 2026 Senior Notes On the Closing Date, the Issuers closed the previously announced private offering of $ 400.0 million aggregate principal amount of 2026 Senior Notes. The 2026 Senior Notes were issued under the Indenture, dated as of the Closing Date, by and among the Issuers and Deutsche Bank Trust Company Americas, as trustee. The 2026 Senior Notes are guaranteed on a senior unsecured basis by the Company, Magnolia Operating, and Magnolia Intermediate and may be guaranteed by certain future subsidiaries of the Company. The 2026 Senior Notes will mature on August 1, 2026. The Notes bear interest at the rate of 6.0% per annum, payable semi-annually in arrears on each February 1st and August 1st, commencing February 1, 2019. At any time prior to August 1, 2021, the Issuers may, on any one or more occasions, redeem all or a part of the 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a “make whole” premium on accrued and unpaid interest, if any, to, but excluding, the date of redemption. Deferred financing costs incurred in connection with securing the 2026 Senior Notes were $11.8 million which were capitalized and will be amortized using the effective interest method over the term of the 2026 Senior Notes and included in “Interest expense” in the Company’s consolidated statement of operations. The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the 2026 Senior Notes which have been recorded as Long-term debt, net on the consolidated balance sheet as of December 31, 2018 . During the Successor Period, the Company recognized interest expense of $10.5 million , related to the 2026 Senior Notes. Affiliate Guarantors All of the Company’s wholly owned subsidiaries are guarantors under the terms of its Senior Notes and RBL Facility. The parent guarantees may be released upon the request of Magnolia Operating. Magnolia’s consolidated financial statements reflect the financial position of these subsidiary guarantors. As the parent company, Magnolia has no independent operations, assets, or liabilities. The guarantees are full and unconditional (except for customary release provisions) and joint and several. There are restrictions on dividends, distributions, loans or other transfers of funds from the subsidiary guarantors to the Company. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Stockholders’ Equity (Successor) Class A Common Stock In connection with the closing of the Business Combination, the Company increased the number of authorized shares of Class A Common Stock to 1.3 billion . At December 31, 2018 , there were 156.3 million shares of Class A Common Stock issued and outstanding. The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters and are entitled one vote for each share held. There is no cumulative voting with respect to the election of directors, which results in the holders of more than 50% of the shares being able to elect all of the directors, s ubject to voting obligations under the shareholders agreement. In the event of a liquidation, dissolution or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s common stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock. Class B Common Stock In connection with the closing of the Business Combination, the Company authorized 225.0 million shares of Class B Common Stock. At December 31, 2018, there were 93.3 million shares of Class B Common Stock issued and outstanding. Holders of Class B Common Stock will vote together as a single class with holders of Class A Common Stock on all matters properly submitted to a vote of the stockholders. The holders of Class B Common Stock generally have the right to exchange all or a portion of their Class B Common Stock, together with an equal number of Magnolia LLC Units, for the same number shares of Class A Common Stock or, at Magnolia LLC’s option, an equivalent amount of cash. Upon the future redemption or exchange of Magnolia LLC Units held by any holder of Class B Common Stock, a corresponding number of shares of Class B Common Stock held by such holder of Class B Common Stock will be canceled. In the event of a liquidation, dissolution or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s common stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock. Warrants As of December 31, 2018 , the Company had 31.7 million warrants outstanding, consisting of 21.7 million public warrants originally sold as part of the units sold in the initial public offering (the “IPO”) of TPG Pace Energy Holdings Corp., a Delaware corporation that later became Magnolia after the completion of the Business Combination, and 10.0 million warrants (the “Private Placement Warrants”) sold in a private placement concurrently with the IPO to the TPG Pace Energy Sponsor LLC, a Delaware limited liability company (the “Sponsor”). Each whole warrant entitles the holder to purchase one whole share of Class A Common Stock for $11.50 per share. The warrants became exercisable on August 30, 2018 and will expire on July 31, 2023 or earlier upon redemption or liquidation. The Company may redeem the outstanding warrants at a price of $0.01 per existing warrant, if the last sale price of Magnolia’s Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on the third business day before Magnolia sends the notice of redemption to the warrant holders. The Private Placement Warrants, however, are non-redeemable so long as they are held by the Sponsor or its permitted transferees. Noncontrolling Interest The noncontrolling interest relates to Magnolia LLC Units that were issued to the Karnes County Contributors in connection with the Business Combination. The noncontrolling interest percentage is affected by various equity transactions such as issuances of Class A Common Stock, exercise of warrants and conversion of Class B Common Stock to Class A Common Stock. As of December 31, 2018 , the Company owned approximately 62.6% of the interest in Magnolia LLC and the noncontrolling interest was 37.4% . Net income attributable to Class A Common Stock for the Successor Period includes one-time transaction costs of $24.3 million incurred in connection with Business Combination as well as all of the federal income tax expense of $10.4 million . |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Stock Based Compensation On October 8, 2018, the Company’s board of directors adopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (the “Plan”), effective as of July 17, 2018. A total of 11.8 million shares of Class A Common Stock have been authorized for issuance under the Plan, and as of December 31, 2018 , the Company had 10.5 million shares of Class A Common Stock available for future grants. The Company granted employees stock based compensation awards in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to enhance the Company and its affiliates’ ability to attract, retain and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new common shares. Stock based compensation expense is recognized within general and administrative expense on the consolidated statement of operations. The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense. Restricted Stock Units The Company grants service-based RSU awards to employees and non-employee directors, which generally vest ratably over a three -year service period. RSUs represent the right to receive shares of Class A Common Stock at the end of the vesting period equal to the number of RSUs granted. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient is no longer an employee or director of the Company for any reason prior to vesting of the award. The Company granted RSU awards with respect to 807,431 shares during the period October 8, 2018 through December 31, 2018 . Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period, the vesting period, for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. Weighted average grant date fair value for RSUs granted was $13.97 per share for the year ended December 31, 2018 . None of the RSUs issued by the Company have vested for the year ended December 31, 2018 . Unrecognized compensation expense related to unvested restricted shares at December 31, 2018 was $10.2 million , which the Company expected to recognize over a weighted average period of 1.6 years . Performance Stock Units For the year ended December 31, 2018 , the Company awarded PSUs to certain of its employees under the Plan that are subject to market-based vesting criteria as well as a three -year service period. The performance period covered by the PSU agreements is August 1, 2018 through July 31, 2021. On October 8, 2018, the Company granted PSUs with respect to 316,875 shares of Class A Common Stock. Once the performance condition was met, the Company granted additional PSUs with respect to 158,438 shares of Class A Common Stock. Since a service condition is still required in order for the PSUs to fully vest, the PSUs will be accounted for using the same approach as the Company’s RSUs and will be expensed ratably over the requisite service period, which mirrors the vesting period. Total outstanding PSUs with respect to 475,313 shares of Class A Common Stock are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient is no longer an employee of the Company for any reason prior to vesting of the award. Compensation expense for the PSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period, the vesting period, for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. Weighted average grant date fair value for PSUs granted was $14.58 per share for the year ended December 31, 2018 . None of the PSUs issued by the Company have vested for the year ended December 31, 2018 . Unrecognized compensation expense related to unvested PSUs at December 31, 2018 was $6.2 million , which the Company expected to recognize over a weighted average period of 2.2 years . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share A reconciliation of the numerators and denominators of the basic and diluted per share computations follows. No such computation is necessary for the Predecessor periods as the Predecessor was not previously accounted for as a standalone legal entity and did not have publicly traded shares. Successor (in thousands) July 31, 2018 through December 31, 2018 Basic: Net Income attributable to Class A Common Stock $ 39,095 Weighted average number of common shares outstanding during the period 154,527 Net income per common share - basic $ 0.25 Diluted: Net Income attributable to Class A Common Stock $ 39,095 Basic weighted average number of common shares outstanding during the period 154,527 Add: Dilutive effect of warrants and stock based compensation 3,705 Diluted weighted average number of common shares outstanding during the period 158,232 Net income per common share - diluted $ 0.25 The calculation for weighted average shares reflects shares outstanding over the reporting period based on the actual number of days the shares were outstanding. For the period presented, the Company excluded 90.9 million shares of Class A Common Stock issuable upon conversion of the Company’s Class B Common Stock (and the corresponding Magnolia LLC Units) as the effect was anti-dilutive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As of December 31, 2018 , EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership, and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership, both entities which are part of the Karnes County Contributors group as defined in Note 1 - Description of Business and Basis of Presentation , each held more than 10% of the Company’s common stock and qualified as principal owners of the Company, as defined in ASC 850, “Related Party Disclosures.” Amended and Restated Limited Liability Company Agreement of Magnolia LLC On the Closing Date, the Company, Magnolia LLC and certain of the Karnes County Contributors entered into Magnolia LLC’s amended and restated limited liability company agreement, which sets forth, among other things, the rights and obligations of the holders of units in Magnolia LLC. Under the Magnolia LLC Agreement, the Company became the sole managing member of Magnolia LLC. Registration Rights Agreement At the closing of the Business Combination, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Karnes County Contributors, the Sponsor, and the Company’s four independent directors prior to the Business Combination (collectively, the “Holders”), pursuant to which the Company is obligated, subject to the terms thereof and in the manner contemplated thereby, to register for resale under the Securities Act all or any portion of the shares of Class A Common Stock that the Holders hold as of July 31, 2018 and that they may acquire thereafter, including upon conversion, exchange or redemption of any other security therefor. Under the New Registration Rights Agreement, Holders also have “piggyback” registration rights exercisable at any time that allow them to include the shares of Class A Common Stock that they own in certain registrations initiated by the Company. On August 10, 2018, the Company filed a Registration Statement on Form S-3 (subsequently amended by Amendment No. 1 on August 28, 2018, the “Registration Statement”) to register the Private Placement Warrants and shares of the Company’s Class A Common Stock, including all of shares of Class A Common Stock held by Holders as of July 31, 2018. The Registration Statement was declared effective by the Securities and Exchange Commission on August 30, 2018. On December 21, 2018, Sponsor completed a distribution of shares of the Company’s common stock and warrants (the “Distribution”) by Sponsor to TPG Pace Energy Sponsor Successor, LLC (“Sponsor Successor”) and certain other of its members, including Stephen Chazen and Michael MacDougall (the “Specified Members”). Related to that Distribution, on February 25, 2019, the Company entered into the First Amendment to the Registration Rights Agreement, with Sponsor Successor and the Specified Members, pursuant to which Sponsor Successor would become a party to the Registration Rights Agreement with the same rights and obligations that Sponsor had under the Registration Rights Agreement. The Specified Members were also provided with certain rights and obligations that were a subset of the rights Sponsor had under the Registration Rights Agreement prior to the Distribution. Stockholder Agreement On the Closing Date, the Company, Sponsor, and the Karnes County Contributors entered into the Stockholder Agreement (the “Stockholder Agreement”). Under the Stockholder Agreement, the Karnes County Contributors were entitled to nominate two directors, one of whom shall be independent under the listing rules of the New York Stock Exchange, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002, for appointment to the board of directors of the Company (the “Board”) so long as they collectively own at least 15% of the outstanding shares of Class A Common Stock and Class B Common Stock, (on a fully diluted basis, including equity securities exercisable into common stock, and on a combined basis), and one director so long as they owned at least 2% of the outstanding shares of Class A Common Stock and Class B Common Stock (on a fully diluted basis, including equity securities exercisable into common stock, and on a combined basis). Sponsor is entitled to nominate two directors for appointment to the Board so long as it owns at least 60% of the voting common stock that it owns at the Closing Date (including any shares of common stock issuable upon the exercise of any Private Placement Warrants held by Sponsor), and one director so long as it owns at least 25% of the voting common stock that it owns at the Closing Date (including any shares of common stock issuable upon the exercise of any Private Placement Warrants held by Sponsor). The Karnes County Contributors and Sponsor are each entitled to appoint one director to each committee of the Board (subject to applicable laws and stock exchange rules). Contingent Consideration Pursuant to the Karnes County Contribution Agreement, for a period of five years following the Closing Date, the Company agreed to issue to the Karnes County Contributors up to 13.0 million additional shares of the Company’s stock upon satisfaction of certain EBITDA and free cash flow or stock price thresholds in three tranches. As of December 31, 2018 , the Company had met the defined stock price thresholds for all three tranches as defined in the Karnes County Contribution Agreement and issued an aggregate of 3.6 million additional shares of Class A Common Stock and 9.4 million additional shares of Class B Common Stock to the Karnes County Contributors. Predecessor Transactions EnerVest, as managing general partner of the Karnes County Contributors, provides management, accounting and advisory services to the Karnes County Contributors in exchange for a quarterly management fee based on the Karnes County Contributors' investor commitments. The management fees incurred have been allocated to the Predecessor using a ratio of asset acquisitions value to total asset acquisitions completed by the Karnes County Contributors. The management fees and other costs allocated to the Predecessor and included in "General and administrative expenses" in the combined statements of operations were $11.0 million for the period of January 1, 2018 through July 30, 2018, $17.2 million for the year ended December 31, 2017, and $9.6 million for the year ended December 31, 2016. The Karnes County Contributors also entered into operating agreements with EnerVest Operating, LLC (“EVOC”), a wholly-owned subsidiary of EnerVest, to act as contract operator of the Predecessor’s oil and natural gas wells. The Predecessor reimbursed EVOC for direct expenses incurred. A majority of such expenses were charged on an actual basis (i.e., no mark-up or subsidy is charged or received by EVOC). These costs are included in “Lease operating expenses” in the combined statements of operations in the Predecessor Period. Additionally, in its role as contract operator, EVOC also collected proceeds from oil, natural gas and natural gas liquids sales and distributed them to the Predecessor and other working interest owners. Accounts receivable from EVOC and other related parties was $13.7 million at December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Matters The Company is involved in disputes or legal actions in the ordinary course of business. For example, certain of the Karnes County Contributors have been named as defendants in a lawsuit where the plaintiffs claim to be entitled to a minority working interest in certain Karnes County Business properties. The litigation is in the discovery stage. The exposure related to this litigation is currently not reasonably estimable. The Karnes County Contributors retained all such liability in connection with the Business Combination. In the Successor Period, the Company does not believe the outcome of any such disputes or legal actions will have a material effect on its financial statements. No amounts were accrued with respect to outstanding litigation at December 31, 2018 or December 31, 2017. Environmental Matters The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state, local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks. Commitments At December 31, 2018 , contractual obligations for long-term operating leases and purchase obligations are as follows: Net Minimum Commitments (4) (in thousands) Total 2019-2020 2021-2022 2023 & Beyond Purchase obligations (1) $ 4,821 $ 4,317 $ 263 $ 241 Operating lease obligations (2) 1,817 1,527 213 77 Service fee commitment (3) 37,309 37,309 — — Total Net Minimum Commitments $ 43,947 $ 43,153 $ 476 $ 318 (1) Amounts represent any agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms. These include minimum commitments associated with firm transportation contracts, natural gas throughput agreements, and frac sand commitments. The costs incurred under these obligations were $5.3 million , $0.5 million , and $0.5 million for the 2018 Predecessor Period, the 2017 Predecessor Period, and 2016 Predecessor Period, respectively. (2) Amounts include long-term lease payments for compressors, vehicles and office space. (3) On the Closing Date, the Company and EVOC entered into a Services Agreement (the “Services Agreement”), pursuant to which EVOC, under the direction of the Company’s management, provides the Company services identical to the services historically provided by EVOC in operating the Acquired Assets, including administrative, back office and day-to-day field-level services reasonably necessary to operate the business of the Company and its assets, subject to certain exceptions. As consideration for the services provided under the Services Agreement, the Company pays EVOC a fixed annual service fee of approximately $23.6 million . The annual service fee may be (a) increased or decreased to account for asset acquisitions and dispositions of assets, (b) increased to account for an increase in the rig count attributable to the assets and (c) decreased if the Company must perform any of such services itself because EVOC is unable or fails to do so. The term of the Services Agreement is five years , but the Services Agreement is subject to termination by either party after two years . (4) For the Successor Period, the costs incurred under these obligations were $ 15.7 million . Risks and Uncertainties The Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for oil and natural gas, which depend on numerous factors beyond the Company’s control such as overall oil and natural gas production and inventories in relevant markets, economic conditions, the global political environment, regulatory developments and competition from other energy sources. Oil and natural gas prices historically have been volatile, and may be subject to significant fluctuations in the future. |
Major Customers
Major Customers | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Major Customers | Major Customers Successor For the Successor Period, two customers, including their subsidiaries, accounted for 42.2% and 19.1% , respectively, of the combined oil, natural gas and natural gas liquids revenue. The Company is exposed to credit risk in the event of nonpayment by counterparties. The creditworthiness of customers and other counterparties is subject to continuing review, including the use of master netting agreements, where appropriate. Predecessor For the period from January 1, 2018 to July 30, 2018, three customers accounted for 47.6% , 14.5% and 12.2% respectively, of the combined oil, natural gas and natural gas liquids revenues. In 2017, four customers accounted for 28.8% , 22.3% , 18.9% , and 10.2% respectively, of the combined oil, natural gas and natural gas liquids revenues. In 2016, four customers accounted for 35.8% , 19.5% , 17.0% , and 14.4% respectively, of the combined oil, natural gas and natural gas liquids revenues. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation As a result of the Business Combination, the Company is the acquirer for accounting purposes and the Karnes County Business, the Giddings Assets, and the Ironwood Interests are the acquirees. The Karnes County Business, including as applicable, its ownership of the Ironwood Interests, was deemed the Predecessor (the “Predecessor”) for periods prior to the Business Combination, and does not include the consolidation of the Company and the Giddings Assets. Although the Karnes County Contributors are not under common control, each are managed by the same managing general partner, EnerVest, and as such, these Predecessor financial statements have been presented on a combined basis for financial reporting purposes. The assets, liabilities, revenues, expenses and cash flows related to the Karnes County Business were not previously separately accounted for as a standalone legal entity and have been carved out of the overall assets, liabilities, revenues, expenses, and cash flows from the Karnes County Contributors as appropriate. In addition, the Parents’ Net Investment represents the Karnes County Contributors’ interest in the recorded net assets of the Karnes County Business and represents the cumulative net investment of the Karnes County Contributors’ in the Karnes County Business through the dates presented, inclusive of cumulative operating results. The Karnes County Contributors utilize EnerVest’s centralized processes and systems for its treasury services and the Karnes County Business’ cash activity was commingled with other oil and gas assets that were not part of the Contribution. As such, the net results of the cash transactions between the Karnes County Business and the Karnes County Contributors are reflected as Parents’ Net Investment in the accompanying Predecessor balance sheet. The Predecessor financial statements also include a portion of indirect costs for salaries and benefits, rent, accounting, legal services and other expenses. In addition to the allocation of indirect costs, the financial statements reflect certain agreements executed by the Karnes County Contributors for the benefit of the Karnes County Business, including price risk management instruments. The allocations methodologies for significant allocated items include: Corporate G&A — EnerVest, as managing general partner, provides management, accounting, and advisory services to the Karnes County Contributors in exchange for a quarterly management fee based on the Karnes County Contributors’ investor commitments, which were used, in part, to acquire the Karnes County Business as well as other oil and natural properties that were not part of the Contribution. As such, the management fee was allocated to the Karnes County Business using a ratio of asset acquisitions value to total asset acquisitions completed by the Karnes County Contributors, for the years ended December 31, 2016 and 2017, and the period from January 1, 2018 to July 30, 2018. Derivatives — Certain Karnes County Contributors entered into financial instruments to manage the Karnes County Business’ exposure to changes in commodity prices for the Karnes County Business as well as other oil and natural gas properties that were not part of the Contribution, on a combined basis. The commodity derivative activity was allocated to the Karnes County Business using a ratio of expected crude oil and condensate, natural gas liquids (“NGLs”), and natural gas volumes produced, on an equivalents basis, by the Karnes County Business to the Karnes County Contributors’ total expected crude oil and condensate, NGLs, and natural gas produced, on an equivalents basis, for the years ended December 31, 2016 and 2017, and the period from January 1, 2018 to July 30, 2018. Indebtedness — The Karnes County Business’ did not historically have outstanding indebtedness, but its oil and natural gas properties were collateral to various credit facilities held by the Karnes County Contributors/EnerVest. Amounts outstanding on these credit facilities have not been allocated to the Karnes County Business as they were not directly attributable to the Karnes County Business. Management believes the allocation methodologies used are reasonable and result in an allocation of the indirect costs and other items to operate the Karnes County Business as if it were a stand-alone entity. These allocations, however, may not be indicative of the cost of future operations or the amount of future allocations. Direct costs were included at the historical amounts related to each reported period. For the period on or after the Business Combination, the Company, including the combination of the Karnes County Business, the Giddings Assets, and the Ironwood Interests is the Successor (the “Successor”). The financial statements and certain footnote presentations separate the Company’s presentations into two distinct periods, the period before the consummation of the Business Combination, which includes the period from January 1, 2018 to July 30, 2018 (the “2018 Predecessor Period”), the year ended December 31, 2017 (the “2017 Predecessor Period”), the year ended December 31, 2016 (the “2016 Predecessor Period”); and together with the 2018 Predecessor Period and the 2017 Predecessor Period, (the “Predecessor Period”); and the period on and after the consummation of the Business Combination, which is from July 31, 2018 to December 31, 2018 (the “Successor Period”). The Business Combination was accounted for using the acquisition method of accounting and the Successor financial statements reflect a new basis of accounting that is based on the fair value of assets acquired and liabilities assumed. As a result of the inclusion of the Giddings Assets, the new basis of accounting, and certain other items that affect comparability, the Company’s financial information prior to the Business Combination is not comparable to its financial information subsequent to the Business Combination. The accompanying consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the SEC. |
Principles of Consolidation | Principles of Consolidation (Successor) The consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain reclassifications of prior period financial statements have been made to conform to current reporting practices. The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated. The Company reflects a noncontrolling interest representing the interest owned by the Karnes County Contributors through their ownership of Magnolia LLC Units in the consolidated financial statements. The noncontrolling interest is presented as a component of equity. See Note 10—Stockholders’ Equity for further discussion of noncontrolling interest. |
Variable Interest Entities | Variable Interest Entities Magnolia LLC is a variable interest entity (“VIE”). The Company determined that it is the primary beneficiary of Magnolia LLC as the Company is the sole managing member and has the power to direct the activities most significant to Magnolia LLC’s economic performance as well as the obligation to absorb losses and receive benefits that are potentially significant. At December 31, 2018, the Company had an approximate 62.6% economic interest in Magnolia LLC and 100% of Magnolia LLC’s assets and liabilities and results of operations are consolidated in the Company’s consolidated financial statements contained herein. At December 31, 2018, the Karnes County Contributors had approximately 37.4% economic interest in Magnolia LLC; however, the Karnes County Contributors have disproportionately fewer voting rights, and are shown as noncontrolling interest holders of Magnolia LLC. See Note 10—Stockholders’ Equity for further discussion of noncontrolling interest. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and changes in these estimates are recorded when known. Significant estimates with regard to these financial statements include the fair value determination of acquired assets and liabilities, the assessment of asset retirement obligations, the estimate of proved oil and gas reserves and related present value estimates of future net cash flows, and the estimates of fair value for long-lived assets. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the historical carrying amount net of write-offs and an allowance for doubtful accounts. The carrying amount of the Company’s accounts receivable approximates fair value because of the short-term nature of the instruments. The Company routinely assesses the collectability of all material trade and other receivables. The Company’s receivables consist mainly of receivables from oil and natural gas purchasers and from joint interest owners on properties the Company operates. The Company accrues a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any reserve may be reasonably estimated. The Company had no allowance for doubtful accounts as of December 31, 2018 (Successor), or December 31, 2017 (Predecessor). |
Oil and Natural Gas Properties | Oil and Natural Gas Properties The Company follows the successful efforts method of accounting for its oil and gas properties. Under this method of accounting, exploration costs such as exploratory geological and geophysical costs, delay rentals, and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead, and similar activities are expensed as incurred. If an exploratory well provides evidence to justify potential development of reserves, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. At the end of each quarter, management reviews the status of all suspended exploratory well costs in light of ongoing exploration activities; in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts. If management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. Unproved properties are assessed for impairment at least annually and are transferred to proved oil and gas properties to the extent the costs are associated with successful exploration activities. Unproved properties are assessed for impairment based on the Company’s current exploration plans. Costs of expired or abandoned leases are charged to exploration expense, while costs of productive leases are transferred to proved oil and gas properties. Costs of maintaining and retaining unproved properties, as well as impairment of unsuccessful leases, are included in exploration expense in the consolidated and combined statements of operations. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of crude oil and natural gas, are capitalized. Depreciation of the cost of proved oil and gas properties is calculated using the unit-of-production method. The reserve base used to calculate depreciation for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate the depreciation for capitalized costs for exploratory and development wells is the sum of proved developed reserves only. Estimated future abandonment costs, net of salvage values, are included in the depreciable cost. Oil and gas properties are grouped for depreciation in accordance with the Accounting Standards Codification (“ASC”) ASC 932 “Extractive Activities—Oil and Gas” (“ASC 932”). The basis for grouping is a reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a reservoir or field. When circumstances indicate that proved oil and gas properties may be impaired, the Company compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on the Company’s estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is generally estimated using the income approach described in ASC 820, “Fair Value Measurements” (“ASC 820”). If applicable, the Company utilizes prices and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, and capital investment plans, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants. |
Asset Retirement Costs and Obligations | Asset Retirement Costs and Obligations Asset retirement obligations (“ARO”) represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producing properties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, well life, inflation, and credit-adjusted risk-free rate. The inputs are calculated based on historical data as well as current estimates. When the liability is initially recorded, the carrying amount of the related long-lived asset is increased. Over time, accretion of the liability is recognized each period, and the capitalized cost is amortized over the useful life of the related asset using the unit of production method and is included in “Depreciation, depletion and amortization” in the Company’s consolidated and combined statements of operations. If the ARO is settled for an amount other than the recorded amount, a gain or loss is recognized. To estimate the fair value of an asset retirement obligation, the Company employs a present value technique, which reflects certain assumptions, including its credit‑adjusted risk‑free interest rate, inflation rate, the estimated settlement date of the liability, and the estimated cost to settle the liability. Changes in timing or to the original estimate of cash flows will result in changes to the carrying amount of the liability and related long lived asset. |
Intangible Assets | Intangible Assets (Successor) Concurrent with the closing of the Business Combination, the Company and EnerVest entered into a Non-Compete pursuant to which EnerVest and certain of its affiliates are restricted from competing with the Company in certain counties comprising the Eagle Ford Shale. The Company recorded an estimated cost of $44.4 million for the Non-Compete as intangible assets on the consolidated balance sheet of the Successor. These intangible assets have a definite life and are subject to amortization utilizing the straight-line method over their economic life, currently estimated to be two and one half to four years. Magnolia assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment is recognized in the consolidated statements of operations if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. For the year ended December 31, 2018 , no impairment was recorded. For more discussion on the Non-Compete, refer to Note 6 - Intangible Assets. |
Fair Value Measurements | Fair Value Measurements ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value. The three levels of the fair value hierarchy under ASC 820 are as follows: Level I—Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used. Level II—Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level III—Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation. In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment. |
Equity Method Investment | Equity Method Investment The Company accounts for its investment in Ironwood using the equity method of accounting. Accordingly, the Company recognizes its proportionate share of Ironwood’s net income in the consolidated and combined statements of operations as “Income from equity method investee.” Any distributions by Ironwood would decrease the Company’s investment in Ironwood. The Company evaluates its investment in Ironwood for potential impairment whenever events or changes in circumstances indicate that there may be a loss in the value of Ironwood that was other than temporary. |
Income Taxes | Income Taxes (Predecessor) The Karnes County Contributors, on behalf of the Predecessor, had elected under the Internal Revenue Code provisions to be treated as individual partnerships for tax purposes. Accordingly, items of income, expense, gains, and losses flowed through to the partners and were taxed at the partner level. Accordingly, no tax provision for federal income taxes was included in the financial statements. The Predecessor was subject to the Texas margin tax, which is considered a state income tax, and was included in “Income Tax Expense” on the statements of operations. The Predecessor recorded state income tax (current and deferred) based on taxable income, as defined under the rules for the margin tax. The Predecessor analyzed each income tax position using a two-step process. A determination was first made as to whether it was more likely than not that the income tax position would be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position was expected to meet the more likely than not criteria, the benefit recorded in the combined financial statements equaled the largest amount that was greater than 50% likely to be realized upon its ultimate settlement. The Predecessor considered its exposure for uncertain tax positions at the state tax level and did not record any liabilities for uncertain tax positions for the years ended December 31, 2017 or December 31, 2016. The Predecessor recorded income tax, related interest, and penalties, if any, as a component of income tax expense. The Predecessor did not incur any interest or penalties on income for the period from January 1, 2018 to July 30, 2018 or during the years ended December 31, 2017 and December 31, 2016. None of the Karnes County Contributors’ state tax returns are currently under examination by the relevant authorities. Income Taxes (Successor) Under ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to net operating losses, tax credits, and temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. The Company reports a liability or a reduction of deferred tax assets for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. When applicable, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. |
Derivatives | Derivatives (Predecessor) The Karnes County Contributors, on behalf of the Predecessor, monitored the exposure to various business risks, including commodity price risk, and used derivatives to manage the impact of certain of these risks. The Karnes County Contributors used energy derivatives for mitigating risk resulting from fluctuations in the market price of oil, natural gas and natural gas liquids and their policies did not permit the use of derivatives for speculative purposes. The Predecessor elected not to designate its derivatives as hedging instruments. Changes in the fair value of derivatives were recorded immediately to earnings as “Loss on derivatives, net” in the combined statements of operations. |
Purchase Price Allocation | Purchase Price Allocation Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the acquired business and recording deferred taxes for any differences between the allocated values and tax basis of assets and liabilities. Any excess of the purchase price over the amounts assigned to assets and liabilities is recorded as goodwill. The purchase price allocation is accomplished by recording each asset and liability at its estimated fair value. Estimated deferred taxes are based on available information concerning the tax basis of the acquired company’s assets and liabilities and tax-related carryforwards at the merger date, although such estimates may change in the future as additional information becomes known. The amount of goodwill recorded in any particular business combination can vary significantly depending upon the values attributed to assets acquired and liabilities assumed relative to the total acquisition cost. When estimating the fair values of assets acquired and liabilities assumed, the Company must apply various assumptions. The most significant assumptions relate to the estimated fair values assigned to proved and unproved crude oil and natural gas properties. To estimate the fair values of these properties, the Company prepares estimates of crude oil and natural gas reserves. Estimated fair values assigned to assets acquired can have a significant effect on results of operations in the future. |
Commitments and Contingencies | Commitments and Contingencies Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Refer to Note 14 - Commitments and Contingencies for additional information. |
Revenue Recognition | Revenue Recognition (Predecessor) Oil, natural gas, and NGL revenues were recognized when production was sold to a purchaser at a fixed or determinable price, when delivery had occurred and title had transferred, and collectability of the revenue was reasonably assured. The Predecessor followed the sales method of accounting for revenues. Under this method of accounting, revenues were recognized based on volumes sold, which may have differed from the volumes entitled based on the Karnes County Business’ working interest. There were no material gas imbalances during the periods presented. Revenue Recognition (Successor) In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers.” This ASU and the associated subsequent amendments (collectively, “ASC 606”), superseded virtually all of the revenue recognition guidance in generally accepted accounting principles in the United States. The core principle of the five-step model is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. Effective December 31, 2018, the Company ceased to be an emerging growth company and adopted ASC 606 for the Successor Period, using a modified retrospective approach. There were no significant changes to the timing of revenue recognized for sales of production. However, the adoption of the new guidance resulted in certain changes to the classification of processing and other fees between revenue and gathering, transportation, and processing expense. The amounts reclassified are immaterial to the financial statements and Predecessor Periods have not been restated and continue to be reported under the accounting standards in effect for those periods. Adoption of the new standard is not anticipated to have a material impact on the Company’s net earnings on an ongoing basis. Magnolia’s revenues include the sale of crude oil, natural gas, and NGLs. These sales are recognized as revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, natural gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million Btu (MMBtu) of natural gas, gallon of NGLs, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. The Company’s oil production is primarily sold under market-sensitive contracts that are typically priced at a differential to the New York Mercantile Exchange (“NYMEX”) price or at purchaser posted prices for the producing area. For oil contracts, the Company generally records sales based on the net amount received. For natural gas contracts, the Company generally records wet gas sales (which consists of natural gas and NGLs based on end products after processing) at the wellhead or inlet of the gas processing plant (i.e., the point of control transfer) as revenues net of gathering, transportation, and processing expenses if the processor is the customer and there is no redelivery of commodities to the Company at the tailgate of the plant. Conversely, the Company generally records residual natural gas and NGL sales at the tailgate of the plant (i.e., the point of control transfer) on a gross basis along with the associated gathering, transportation, and processing expenses if the processor is a service provider and there is redelivery of one or several commodities to the Company at the tailgate of the plant. All facts and circumstances of an arrangement are considered and judgment is often required in making this determination. For processing contracts that require noncash consideration in exchange for processing services, the Company recognizes revenue and an equal gathering, transportation, and processing expense for commodities transferred to the service provider. Customers are invoiced once the Company’s performance obligations have been satisfied. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days . There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers. Accordingly, the Company’s product sales contracts do not give rise to material contract assets or contract liabilities. The Company’s receivables consist mainly of receivables from oil and natural gas purchasers and from joint interest owners on properties the Company operates. Receivables from contracts with customers totaled $100.1 million as of December 31, 2018 and $89.7 million as of July 31, 2018. Accounts receivable are stated at the historical carrying amount net of write-offs and an allowance for doubtful accounts. The Company has concluded that disaggregating revenue by product type appropriately depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors and has reflected this disaggregation of revenue on the Company’s consolidated and combined statements of operations for all periods presented. The Company does not disclose the value of unsatisfied performance obligations for contracts as all contracts are either with an original expected length of one year or less or the entire future consideration is variable and allocated entirely to a wholly unsatisfied performance obligation. |
Net Income Per Share of Common Stock | Net Income Per Share of Common Stock (Successor) The Company’s basic earnings per share ("EPS") is computed based on the weighted average number of shares of Class A Common Stock outstanding for the period. Diluted EPS includes the effect of the Company’s outstanding restricted stock units, performance-based stock units, warrants for Class A Common Stock and exchanges of Class B Common Stock if the inclusion of these items is dilutive. Refer to Note 12 - Earnings Per Share for additional information and the calculation of EPS. |
Stock Based Compensation | Stock Based Compensation (Successor) Magnolia has established a long-term incentive plan for certain employees that includes granting restricted stock units ("RSUs") and performance stock units ("PSUs"). Stock based compensation awards granted are valued on the date of grant using the quoted market price of Magnolia's Class A Common Stock and are expensed on a straight-line basis over the requisite service period. The Company records expense associated with the fair value of stock based compensation under the fair value recognition provisions of ASC Topic 718, “Compensation-Stock Compensation” and is included within general and administrative expense in the accompanying consolidated statements of operations. The Company accounts for forfeitures as they occur |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which will require lessees to recognize a right of use asset and a lease liability on their balance sheet for all leases, including operating leases, with a term of greater than 12 months. Currently the guidance would be applied using a modified retrospective transition method, which requires applying the new guidance to leases that exist or are entered into after the beginning of the earliest period in the financial statements. However, in July 2018, the FASB issued ASU 2018-11, which adds a transition option permitting entities to apply the provisions of the new standard at its adoption date instead of the earliest comparative period presented in the consolidated financial statements. Under this transition option, comparative reporting would not be required, and the provisions of the standard would be applied prospectively to leases in effect at the date of adoption. This standard is effective in the first quarter of 2019 and will be applied using the optional transition method provided by ASU 2018-11. The Company plans to elect the practical expedients provided in the standard that allow entities to not reassess under the new standard the Company’s prior conclusions about lease identification and classification related to contracts that commenced prior to adoption and allows the new guidance to be applied prospectively to all new or modified land easements and rights-of-way. The Company also intends to elect a policy to not recognize right of use assets and lease liabilities related to short-term leases. The Company has determined its portfolio of leased assets and is completing its review of all related contracts to determine the impact the adoption will have on its consolidated financial statements and related disclosures. Upon adoption, the Company will recognize right of use assets and lease liabilities for certain commitments related to real estate, vehicles, and field equipment that are currently accounted for as operating leases. To track these lease arrangements and facilitate compliance with this ASU, the Company has implemented a third-party lease accounting software solution and is in the process of designing processes and internal controls. The adoption of this ASU will increase asset and liability balances on the consolidated balance sheets due to the required recognition of right of use assets and corresponding lease liabilities, however, the overall financial impact to the consolidated financial statements is not expected to be material. The Company expects the adoption of this ASU to result in changes to the Company’s existing accounting policies, business processes, and internal controls. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain transactions are classified in the statements of cash flows. ASU 2016-15 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017 for public companies and for fiscal years beginning after December 15, 2018 for all other entities. The Company ceased to be an emerging growth company on December 31, 2018 and adopted the standard on December 31, 2018 . The adoption of this guidance did not impact the Company’s financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which clarifies the definition of a business to provide guidance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 provides a screen to determine when a set of assets is not a business, requiring that when substantially all fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set of assets is not a business. A framework is provided to assist in evaluating whether both an input and a substantive process are present for the set to be a business. ASU 2017-01 is effective for interim and annual periods after December 15, 2017 for public companies and annual periods beginning after December 15, 2018 for all other entities. No disclosures are required at transition. The Company early adopted ASU 2017-01 upon the closing of the Business Combination. There was no material impact to the Company's financial statements as a result of this adoption, however the new standard may result in more transactions being accounted for as acquisitions (and dispositions) of assets rather than businesses in the future. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Purchase Consideration for Business Combination | The purchase consideration for the Business Combination was as follows: (in thousands) At July 31, 2018 Preliminary Purchase Consideration: Cash consideration $ 1,219,217 Stock consideration (1) 1,423,483 Fair value of contingent earnout purchase consideration (2) 169,000 Total purchase price consideration $ 2,811,700 (1) At closing of the Business Combination, the Karnes County Contributors received 83.9 million shares of Class B Common Stock and 31.8 million shares of Class A Common Stock. (2) Pursuant to ASC 805, ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”, the Karnes County earnout consideration has been valued at fair value as of the Closing Date and has been classified in stockholders’ equity. The Giddings earnout has been valued at fair value as of the Closing Date and has been classified as a liability. The fair value of the earnouts was determined using the Monte Carlo simulation valuation method based on Level 3 inputs in the fair value hierarchy. |
Summary of Allocation of Purchase Consideration to Assets and Liabilities Assumed | The recognized fair value of identifiable assets and acquired liabilities assumed in connection with the Subsequent GulfTex Acquisition is as follows: (in thousands) Purchase price allocation: Accounts receivable $ 10,501 Proved oil and natural gas properties 118,572 Unproved oil and natural gas properties 22,802 Accounts payable and accrued liabilities (1,679 ) Asset retirement obligations (57 ) $ 150,139 The following table summarizes the allocation of the purchase consideration to the assets and liabilities assumed: (in thousands) At August 31, 2018 Estimated fair value of assets acquired Other current assets $ 1,290 Oil and natural gas properties (1) 200,035 Total fair value of assets acquired 201,325 Estimated fair value of liabilities assumed Asset retirement obligations and other current liabilities (9,812 ) Fair value of net assets acquired $ 191,513 (1) The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. These inputs required significant judgments and estimates by management at the time of the valuation and may be subject to change. (in thousands) Purchase price allocation: Accounts receivable $ 12,252 Proved oil and natural gas properties 423,383 Unproved oil and natural gas properties 73,953 Accounts payable and accrued liabilities (13,667 ) Asset retirement obligations (446 ) $ 495,475 The recognized fair value of identifiable assets and acquired liabilities assumed in connection with the Subsequent BlackBrush Acquisition is as follows: (in thousands) Purchase price allocation: Accounts receivable $ 2,193 Proved oil and natural gas properties 57,263 Unproved oil and natural gas properties 1,552 Accounts payable and accrued liabilities (2,244 ) Asset retirement obligations (111 ) $ 58,653 The following table summarizes the allocation of the purchase consideration to the assets and liabilities assumed: (in thousands) At July 31, 2018 Estimated fair value of assets acquired Accounts receivable $ 89,674 Other current assets 2,853 Oil and natural gas properties (1) 2,805,159 Ironwood equity investment 18,100 Total fair value of assets acquired 2,915,786 Estimated fair value of liabilities assumed Accounts payable and other current liabilities (56,315 ) Asset retirement obligations (34,132 ) Deferred tax liability (13,639 ) Fair value of net assets acquired $ 2,811,700 (1) The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. These inputs required significant judgments and estimates by management at the time of the valuation and may be subject to change. (in thousands) Purchase price allocation: Accounts receivable $ 4,387 Proved oil and natural gas properties 653,480 Unproved oil and natural gas properties 72,705 Accounts payable and accrued liabilities (538 ) Asset retirement obligations (2,051 ) $ 727,983 |
Schedule of Pro Forma Combined Financial Information | The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Business Combination taken place on January 1, 2017; furthermore, the financial information is not intended to be a projection of future results. (in thousands) Year Ended December 31, 2018 Year Ended December 31, 2017 Total Revenues $ 978,431 $ 555,714 Net income attributable to Class A Common Stock 188,934 70,491 Income per share - basic $ 1.22 $ 0.54 Income per share - diluted $ 1.19 $ 0.51 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Predecessor) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Values and Classification of Outstanding Derivative Assets | The following table sets forth the fair values and classification of the outstanding derivatives entered into by the Karnes County Contributors, on behalf of the Predecessor, as of December 31, 2017 : (in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative asset $ 180 $ (180 ) $ — Long-term derivative asset 48 (48 ) — Total $ 228 $ (228 ) $ — (in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative liability $ 6,944 $ (180 ) $ 6,764 Long-term derivative liability 3,100 (48 ) 3,052 Total $ 10,044 $ (228 ) $ 9,816 |
Fair Values and Classification of Outstanding Derivative Liabilities | The following table sets forth the fair values and classification of the outstanding derivatives entered into by the Karnes County Contributors, on behalf of the Predecessor, as of December 31, 2017 : (in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative asset $ 180 $ (180 ) $ — Long-term derivative asset 48 (48 ) — Total $ 228 $ (228 ) $ — (in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities Presented in the Balance Sheet Derivatives As of December 31, 2017 (Predecessor): Derivative liability $ 6,944 $ (180 ) $ 6,764 Long-term derivative liability 3,100 (48 ) 3,052 Total $ 10,044 $ (228 ) $ 9,816 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Hierarchy for Assets and Liabilities Required to be Measured at Fair Value on a Recurring Basis | The following table presents the fair value hierarchy table for the Predecessor’s assets and liabilities that were required to be measured at fair value on a recurring basis: (in thousands) Level 1 Level 2 Level 3 Total Fair Value As of December 31, 2017 (Predecessor): Assets: Oil, natural gas and natural gas liquids derivatives $ — $ 228 $ — $ 228 Liabilities: Oil, natural gas and natural gas liquids derivatives $ — $ 10,044 $ — $ 10,044 |
Schedule of Carrying Values and Fair Values of Financial Instruments Not Carried at Fair Value | Carrying values and fair values of financial instruments that are not carried at fair value in the accompanying consolidated balance sheet as of December 31, 2018 are as follows: December 31, 2018 (in thousands) Carrying Value Fair Value Long-term debt $ 388,635 $ 387,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | (in thousands) December 31, 2018 (Successor) Non-compete intangible assets $ 44,400 Accumulated amortization (6,044 ) Intangible assets, net $ 38,356 Weighted average amortization (years) 3.25 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Summary of Changes in Asset Retirement Obligations | The following table summarizes the changes in the Company’s asset retirement obligations for the periods presented: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 through July 30, 2018 Year Ended December 31, 2017 Asset retirement obligations, beginning of period $ — $ 3,929 $ 2,421 Revisions to estimates 39,584 — 805 Liabilities incurred and assumed through acquisitions 44,897 553 774 Liabilities settled (166 ) (85 ) (303 ) Accretion expense 1,668 104 232 Asset retirement obligations, end of period $ 85,983 $ 4,501 $ 3,929 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Provision (Benefit) | The Company’s income tax provision (benefit) consisted of the following components: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 Year Ended December 31, 2017 Year Ended December 31, 2016 Current: Federal $ (1,054 ) $ — $ — $ — State 381 1,461 689 58 (673 ) 1,461 689 58 Deferred: Federal 11,431 — — — State 697 324 2,052 615 12,128 324 2,052 615 Total provision $ 11,455 $ 1,785 $ 2,741 $ 673 |
Reconciliation of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory federal income tax expense to the income tax expense or benefit from continuing operations provided at December 31, 2018 , is as follows: Successor Predecessor (in thousands) July 31, 2018 through December 31, 2018 January 1, 2018 Year Ended December 31, 2017 Year Ended December 31, 2016 Income tax expense at the federal statutory rate $ 19,706 $ — $ — $ — State income tax expense, net of federal income tax benefits 1,028 1,785 2,741 673 Noncontrolling interest in partnership (9,103 ) — — — Other (176 ) — — — Income tax expense $ 11,455 $ 1,785 $ 2,741 $ 673 |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant positions of the deferred income tax assets and liabilities are presented below: Successor Predecessor (in thousands) December 31, 2018 December 31, 2017 Deferred tax assets: Net operating loss carryforwards $ 7,336 $ — Capitalized transaction costs 6,677 — Other assets 102 — Total deferred tax assets 14,115 — Deferred tax liabilities: Investment in partnership (63,110) — Oil and natural gas properties (5,598) (2,724 ) Other liabilities — — Total deferred tax liabilities (68,708) (2,724 ) Net deferred tax asset (liabilities) $ (54,593 ) $ (2,724 ) |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Components of Debt | The Company’s debt is comprised of the following: (in thousands) Successor Revolving credit facility $ — 6.0% Senior Notes due 2026 400,000 Total long-term debt 400,000 Less: unamortized deferred financing cost (11,365 ) Total debt, net $ 388,635 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerators and Denominators for Basic and Diluted Per Share Computation | A reconciliation of the numerators and denominators of the basic and diluted per share computations follows. No such computation is necessary for the Predecessor periods as the Predecessor was not previously accounted for as a standalone legal entity and did not have publicly traded shares. Successor (in thousands) July 31, 2018 through December 31, 2018 Basic: Net Income attributable to Class A Common Stock $ 39,095 Weighted average number of common shares outstanding during the period 154,527 Net income per common share - basic $ 0.25 Diluted: Net Income attributable to Class A Common Stock $ 39,095 Basic weighted average number of common shares outstanding during the period 154,527 Add: Dilutive effect of warrants and stock based compensation 3,705 Diluted weighted average number of common shares outstanding during the period 158,232 Net income per common share - diluted $ 0.25 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Contractual Obligations for Long-term Operating Leases and Purchase Obligations | At December 31, 2018 , contractual obligations for long-term operating leases and purchase obligations are as follows: Net Minimum Commitments (4) (in thousands) Total 2019-2020 2021-2022 2023 & Beyond Purchase obligations (1) $ 4,821 $ 4,317 $ 263 $ 241 Operating lease obligations (2) 1,817 1,527 213 77 Service fee commitment (3) 37,309 37,309 — — Total Net Minimum Commitments $ 43,947 $ 43,153 $ 476 $ 318 (1) Amounts represent any agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms. These include minimum commitments associated with firm transportation contracts, natural gas throughput agreements, and frac sand commitments. The costs incurred under these obligations were $5.3 million , $0.5 million , and $0.5 million for the 2018 Predecessor Period, the 2017 Predecessor Period, and 2016 Predecessor Period, respectively. (2) Amounts include long-term lease payments for compressors, vehicles and office space. (3) On the Closing Date, the Company and EVOC entered into a Services Agreement (the “Services Agreement”), pursuant to which EVOC, under the direction of the Company’s management, provides the Company services identical to the services historically provided by EVOC in operating the Acquired Assets, including administrative, back office and day-to-day field-level services reasonably necessary to operate the business of the Company and its assets, subject to certain exceptions. As consideration for the services provided under the Services Agreement, the Company pays EVOC a fixed annual service fee of approximately $23.6 million . The annual service fee may be (a) increased or decreased to account for asset acquisitions and dispositions of assets, (b) increased to account for an increase in the rig count attributable to the assets and (c) decreased if the Company must perform any of such services itself because EVOC is unable or fails to do so. The term of the Services Agreement is five years , but the Services Agreement is subject to termination by either party after two years . (4) For the Successor Period, the costs incurred under these obligations were $ 15.7 million . |
Description of Business and B_2
Description of Business and Basis of Presentation - Narrative (Details) $ / shares in Units, shares in Millions | Jul. 31, 2018USD ($)$ / sharesshares | Mar. 15, 2018subsidiary | Dec. 31, 2018USD ($)$ / shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of indirect wholly owned subsidiaries formed | subsidiary | 3 | ||
Senior Notes | 6.0% Senior Notes due 2026 | |||
Business Acquisition [Line Items] | |||
Aggregate principal amount of debt issued and sold | $ | $ 400,000,000 | ||
Stated interest rate | 6.00% | 6.00% | |
Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
Business Combination | |||
Business Acquisition [Line Items] | |||
Aggregate consideration, cash | $ | $ 1,219,217,000 | $ 1,219,217,000 | |
Business Combination | Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Aggregate consideration, common stock (in shares) | 31.8 | ||
Business Combination | Class A Common Stock | Private Placement | |||
Business Acquisition [Line Items] | |||
Shares issued and sold (in shares) | 35.5 | ||
Gross proceeds from shares issued and sold | $ | $ 355,000,000 | ||
Business Combination | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Aggregate consideration, common stock (in shares) | 83.9 | ||
Business Combination | Magnolia LLC Units | |||
Business Acquisition [Line Items] | |||
Aggregate consideration, common stock (in shares) | 83.9 | ||
Ironwood | |||
Business Acquisition [Line Items] | |||
Percentage of membership interest | 35.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Variable Interest Entities (Details) - Variable Interest Entity, Primary Beneficiary - Magnolia LLC | Dec. 31, 2018 |
Variable Interest Entity [Line Items] | |
Percentage of economic interest | 62.60% |
Percentage of economic interest owned by noncontrolling interest holders | 37.40% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ 0 | |
Predecessor | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Intangible Asset (Details) - Non-Compete Agreement | 5 Months Ended |
Dec. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated cost of intangible assets | $ 44,400,000 |
Impairment recorded | $ 0 |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated economic life of intangible assets | 2 years 6 months |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated economic life of intangible assets | 4 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) | Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Contingency [Line Items] | ||||
Liabilities for uncertain tax positions | $ 0 | |||
Interest or penalties on income incurred during the period | $ 0 | |||
Predecessor | ||||
Income Tax Contingency [Line Items] | ||||
Liabilities for uncertain tax positions | $ 0 | $ 0 | ||
Interest or penalties on income incurred during the period | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Jul. 31, 2018 | |
Accounting Policies [Abstract] | ||
General required payment period | 30 days | |
Receivables from contracts with customers | $ 100.1 | $ 89.7 |
Acquisitions - Narrative (Deta
Acquisitions - Narrative (Details) $ in Thousands | Sep. 28, 2018USD ($) | Aug. 31, 2018USD ($)shares | Jul. 31, 2018USD ($)shares | Mar. 01, 2018USD ($) | Jan. 31, 2017USD ($) | Jul. 06, 2016USD ($) | Apr. 27, 2016USD ($) | Dec. 31, 2018USD ($)trancheshares | Dec. 31, 2016USD ($) | Jul. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($)tranche |
Business Acquisition [Line Items] | |||||||||||||
Cash payment to fully settle earnout obligation | $ 26,000 | ||||||||||||
Loss related to settlement of Giddings earnout obligation | (6,700) | ||||||||||||
Transaction costs incurred | $ 24,607 | ||||||||||||
Predecessor | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash payment to fully settle earnout obligation | $ 0 | $ 0 | $ 0 | ||||||||||
Loss related to settlement of Giddings earnout obligation | 0 | 0 | 0 | ||||||||||
Transaction costs incurred | 0 | 0 | 0 | ||||||||||
Non-Compete Agreement | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated economic life of intangible assets | 2 years 6 months | ||||||||||||
Non-Compete Agreement | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated economic life of intangible assets | 4 years | ||||||||||||
EnerVest Business Combination | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 1,219,217 | $ 1,219,217 | |||||||||||
Loss related to settlement of Giddings earnout obligation | 6,700 | ||||||||||||
Transaction costs incurred | 24,300 | $ 37,100 | |||||||||||
Debt issuance costs incurred in connection with consummation of Business Combination | 23,500 | ||||||||||||
One time purchase of seismic licenses | $ 11,000 | ||||||||||||
Total purchase price consideration | $ 2,811,700 | ||||||||||||
EnerVest Business Combination | Predecessor | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 0 | $ 0 | $ 0 | ||||||||||
EnerVest Business Combination | Non-Compete Agreement | Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated economic life of intangible assets | 2 years 6 months | ||||||||||||
EnerVest Business Combination | Non-Compete Agreement | Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated economic life of intangible assets | 4 years | ||||||||||||
EnerVest Business Combination | Giddings Purchase Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Loss related to settlement of Giddings earnout obligation | $ 6,700 | ||||||||||||
EnerVest Business Combination | Class B Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 83,900,000 | ||||||||||||
EnerVest Business Combination | Magnolia LLC Units | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 83,900,000 | ||||||||||||
EnerVest Business Combination | Class A Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 31,800,000 | ||||||||||||
EnerVest Business Combination | Class A Common Stock | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Number of shares authorized for issuance based on achievement of certain stock price thresholds (in shares) | shares | 4,000,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 911,500 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Karnes County Contribution Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Term of contribution agreement | 5 years | ||||||||||||
Number of tranches | tranche | 3 | 3 | |||||||||||
EnerVest Business Combination | Karnes County Contributors | Earnout Shares | Karnes County Contribution Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 13,000,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Class B Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 83,900,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Class B Common Stock | Karnes County Contribution Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Additional shares issued upon meeting stock price thresholds (in shares) | shares | 9,400,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Magnolia LLC Units | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 83,900,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Class B Common Stock together with Magnolia LLC Units | Exchange of Class B Common Stock and Magnolia LLC Units for Class A Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Exchange ratio for equity interests issued | 1 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Class A Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 31,800,000 | ||||||||||||
EnerVest Business Combination | Karnes County Contributors | Class A Common Stock | Karnes County Contribution Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Additional shares issued upon meeting stock price thresholds (in shares) | shares | 3,600,000 | ||||||||||||
EnerVest Business Combination | Giddings Sellers | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 282,700 | ||||||||||||
EnerVest Business Combination | Giddings Sellers | Giddings Purchase Agreement | Affiliate | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Aggregate amount of cash earnout payments authorized | 47,000 | ||||||||||||
Cash payment to fully settle earnout obligation | $ 26,000 | ||||||||||||
EnerVest Business Combination | Ironwood Sellers | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 25,000 | ||||||||||||
Harvest Acquisition | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration | $ 133,300 | ||||||||||||
Total purchase price consideration | $ 191,500 | ||||||||||||
Harvest Acquisition | Class A Common Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Equity interests issued in business combination (in shares) | shares | 4,200,000 | ||||||||||||
GulfTex Acquisition | Predecessor | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price consideration | $ 150,100 | $ 495,500 | |||||||||||
Blackbrush | Predecessor | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Total purchase price consideration | $ 58,700 | $ 682,500 | $ 45,500 |
Acquisitions - Schedule of Pur
Acquisitions - Schedule of Purchase Consideration for Business Combination (Details) - USD ($) $ in Thousands, shares in Millions | Jul. 31, 2018 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||
Stock consideration | $ 1,481,692 | |
EnerVest Business Combination | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 1,219,217 | $ 1,219,217 |
Stock consideration | 1,423,483 | |
Fair value of contingent earnout purchase consideration | 169,000 | |
Total purchase price consideration | 2,811,700 | |
EnerVest Business Combination | Karnes County Contributors | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 911,500 | |
EnerVest Business Combination | Class B Common Stock | ||
Business Acquisition [Line Items] | ||
Equity interests issued in business combination (in shares) | 83.9 | |
EnerVest Business Combination | Class B Common Stock | Karnes County Contributors | ||
Business Acquisition [Line Items] | ||
Equity interests issued in business combination (in shares) | 83.9 | |
EnerVest Business Combination | Class A Common Stock | ||
Business Acquisition [Line Items] | ||
Equity interests issued in business combination (in shares) | 31.8 | |
EnerVest Business Combination | Class A Common Stock | Karnes County Contributors | ||
Business Acquisition [Line Items] | ||
Equity interests issued in business combination (in shares) | 31.8 |
Acquisitions - Summary of Allo
Acquisitions - Summary of Allocation of Purchase Consideration to Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Jul. 31, 2018 | Mar. 01, 2018 | Jan. 31, 2017 | Dec. 31, 2016 | Apr. 27, 2016 |
EnerVest Business Combination | ||||||
Estimated fair value of assets acquired | ||||||
Accounts receivable | $ 89,674 | |||||
Other current assets | 2,853 | |||||
Oil and natural gas properties | 2,805,159 | |||||
Ironwood equity investment | 18,100 | |||||
Total fair value of assets acquired | 2,915,786 | |||||
Estimated fair value of liabilities assumed | ||||||
Accounts payable and other current liabilities | (56,315) | |||||
Asset retirement obligations and other current liabilities | (34,132) | |||||
Deferred tax liability | (13,639) | |||||
Fair value of net assets acquired | $ 2,811,700 | |||||
Harvest Acquisition | ||||||
Estimated fair value of assets acquired | ||||||
Other current assets | $ 1,290 | |||||
Oil and natural gas properties | 200,035 | |||||
Total fair value of assets acquired | 201,325 | |||||
Estimated fair value of liabilities assumed | ||||||
Asset retirement obligations and other current liabilities | (9,812) | |||||
Fair value of net assets acquired | $ 191,513 | |||||
GulfTex Acquisition | Predecessor | ||||||
Estimated fair value of assets acquired | ||||||
Accounts receivable | $ 10,501 | $ 12,252 | ||||
Proved oil and natural gas properties | 118,572 | 423,383 | ||||
Unproved oil and natural gas properties | 22,802 | 73,953 | ||||
Estimated fair value of liabilities assumed | ||||||
Accounts payable and other current liabilities | (1,679) | (13,667) | ||||
Asset retirement obligations and other current liabilities | (57) | (446) | ||||
Fair value of net assets acquired | $ 150,139 | $ 495,475 | ||||
Blackbrush | Predecessor | ||||||
Estimated fair value of assets acquired | ||||||
Accounts receivable | $ 2,193 | $ 4,387 | ||||
Proved oil and natural gas properties | 57,263 | 653,480 | ||||
Unproved oil and natural gas properties | 1,552 | 72,705 | ||||
Estimated fair value of liabilities assumed | ||||||
Accounts payable and other current liabilities | (2,244) | (538) | ||||
Asset retirement obligations and other current liabilities | (111) | (2,051) | ||||
Fair value of net assets acquired | $ 58,653 | $ 727,983 |
Acquisitions - Schedule of Pro
Acquisitions - Schedule of Pro Forma Combined Financial Information (Details) - EnerVest Business Combination - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Total Revenues | $ 978,431 | $ 555,714 |
Net income attributable to Class A Common Stock | $ 188,934 | $ 70,491 |
Income per share - basic (in dollars per share) | $ 1.22 | $ 0.54 |
Income per share - diluted (in dollars per share) | $ 1.19 | $ 0.51 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Predecessor) - Narrative (Details) - USD ($) $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative [Line Items] | ||||
Total cash settlement payments | $ 0 | |||
Predecessor | ||||
Derivative [Line Items] | ||||
Total cash settlement payments | $ 27,617 | $ 1,097 | $ 3,178 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities (Predecessor) - Fair Values and Classification of Outstanding Derivatives (Details) - Predecessor $ in Thousands | Dec. 31, 2017USD ($) |
Derivatives | |
Gross Amounts of Recognized Assets | $ 228 |
Gross Amounts Offset in the Balance Sheet | (228) |
Net Amounts of Assets Presented in the Balance Sheet | 0 |
Derivatives | |
Gross Amounts of Recognized Liabilities | 10,044 |
Gross Amounts Offset in the Balance Sheet | (228) |
Net Amounts of Liabilities Presented in the Balance Sheet | 9,816 |
Derivative asset | |
Derivatives | |
Gross Amounts of Recognized Assets | 180 |
Gross Amounts Offset in the Balance Sheet | (180) |
Net Amounts of Assets Presented in the Balance Sheet | 0 |
Long-term derivative asset | |
Derivatives | |
Gross Amounts of Recognized Assets | 48 |
Gross Amounts Offset in the Balance Sheet | (48) |
Net Amounts of Assets Presented in the Balance Sheet | 0 |
Derivative liability | |
Derivatives | |
Gross Amounts of Recognized Liabilities | 6,944 |
Gross Amounts Offset in the Balance Sheet | (180) |
Net Amounts of Liabilities Presented in the Balance Sheet | 6,764 |
Long-term derivative liability | |
Derivatives | |
Gross Amounts of Recognized Liabilities | 3,100 |
Gross Amounts Offset in the Balance Sheet | (48) |
Net Amounts of Liabilities Presented in the Balance Sheet | $ 3,052 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy (Details) - Predecessor $ in Thousands | Dec. 31, 2017USD ($) |
Assets: | |
Oil, natural gas and natural gas liquids derivatives | $ 0 |
Liabilities: | |
Oil, natural gas and natural gas liquids derivatives | 9,816 |
Recurring | |
Assets: | |
Oil, natural gas and natural gas liquids derivatives | 228 |
Liabilities: | |
Oil, natural gas and natural gas liquids derivatives | 10,044 |
Recurring | Level 1 | |
Assets: | |
Oil, natural gas and natural gas liquids derivatives | 0 |
Liabilities: | |
Oil, natural gas and natural gas liquids derivatives | 0 |
Recurring | Level 2 | |
Assets: | |
Oil, natural gas and natural gas liquids derivatives | 228 |
Liabilities: | |
Oil, natural gas and natural gas liquids derivatives | 10,044 |
Recurring | Level 3 | |
Assets: | |
Oil, natural gas and natural gas liquids derivatives | 0 |
Liabilities: | |
Oil, natural gas and natural gas liquids derivatives | $ 0 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Not Carried at Fair Value (Details) - Level 1 $ in Thousands | Dec. 31, 2018USD ($) |
Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt | $ 388,635 |
Fair Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt | $ 387,000 |
Intangible Assets - Narrative
Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Estimated amortization expense related to intangible assets in 2019 | $ 14,500 | |
Estimated amortization expense related to intangible assets in 2020 | 14,500 | |
Estimated amortization expense related to intangible assets in 2021 | 6,200 | |
Estimated amortization expense related to intangible assets in 2022 | 3,200 | |
Non-Compete Agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated cost of intangible assets | $ 44,400 | |
Non-Compete Agreement | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated economic life of intangible assets | 2 years 6 months | |
Non-Compete Agreement | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated economic life of intangible assets | 4 years | |
EnerVest properties | Non-Compete Agreement | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated economic life of intangible assets | 2 years 6 months | |
EnerVest properties | Non-Compete Agreement | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated economic life of intangible assets | 4 years | |
EnerVest properties | Class A Common Stock | Affiliate of EnerVest | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of shares authorized for issuance based on achievement of certain stock price thresholds (in shares) | 4,000,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Asset (Details) $ in Thousands | 5 Months Ended |
Dec. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Accumulated amortization | $ (6,044) |
Intangible assets, net | $ 38,356 |
Weighted average amortization (years) | 3 years 3 months |
Non-Compete Agreement | |
Finite-Lived Intangible Assets [Line Items] | |
Non-compete intangible assets | $ 44,400 |
Asset Retirement Obligations -
Asset Retirement Obligations - Changes in Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Asset retirement obligations, beginning of period | $ 0 | ||||
Revisions to estimates | 39,584 | ||||
Liabilities incurred and assumed through acquisitions | 44,897 | ||||
Liabilities settled | (166) | ||||
Accretion expense | 1,668 | $ 1,668 | |||
Asset retirement obligations, end of period | $ 85,983 | 85,983 | |||
Predecessor | |||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Asset retirement obligations, beginning of period | $ 4,501 | $ 3,929 | $ 2,421 | ||
Revisions to estimates | 0 | 805 | |||
Liabilities incurred and assumed through acquisitions | 553 | 774 | |||
Liabilities settled | (85) | (303) | |||
Accretion expense | 104 | 232 | $ 94 | ||
Asset retirement obligations, end of period | $ 4,501 | $ 3,929 | $ 2,421 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | ||||
Federal | $ (1,054) | |||
State | 381 | |||
Current income tax provision (benefit) | (673) | |||
Deferred: | ||||
Federal | 11,431 | |||
State | 697 | |||
Deferred income tax provision (benefit) | 12,128 | |||
Total provision | $ 11,455 | |||
Predecessor | ||||
Current: | ||||
Federal | $ 0 | $ 0 | $ 0 | |
State | 1,461 | 689 | 58 | |
Current income tax provision (benefit) | 1,461 | 689 | 58 | |
Deferred: | ||||
Federal | 0 | 0 | 0 | |
State | 324 | 2,052 | 615 | |
Deferred income tax provision (benefit) | 324 | 2,052 | 615 | |
Total provision | $ 1,785 | $ 2,741 | $ 673 |
Income Taxes - Narrative (Deta
Income Taxes - Narrative (Details) | 5 Months Ended |
Dec. 31, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Amount accrued for income tax uncertainties | $ 0 |
Amount accrued for income tax interest and penalties | $ 0 |
Operating Loss Carryforwards [Line Items] | |
Effective tax rate | 12.20% |
U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss with indefinite carryforwards | $ 34,900,000 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Federal Income Tax Expense to Income Tax Expense or Benefit from Continuing Operations (Details) - USD ($) $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Expense (Benefit) [Line Items] | ||||
Income tax expense at the federal statutory rate | $ 19,706 | |||
State income tax expense, net of federal income tax benefits | 1,028 | |||
Noncontrolling interest in partnership | (9,103) | |||
Other | (176) | |||
Total provision | $ 11,455 | |||
Predecessor | ||||
Income Tax Expense (Benefit) [Line Items] | ||||
Income tax expense at the federal statutory rate | $ 0 | $ 0 | $ 0 | |
State income tax expense, net of federal income tax benefits | 1,785 | 2,741 | 673 | |
Noncontrolling interest in partnership | 0 | 0 | 0 | |
Other | 0 | 0 | 0 | |
Total provision | $ 1,785 | $ 2,741 | $ 673 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 7,336 | |
Capitalized transaction costs | 6,677 | |
Other assets | 102 | |
Total deferred tax assets | 14,115 | |
Deferred tax liabilities: | ||
Investment in partnership | (63,110) | |
Oil and natural gas properties | (5,598) | |
Other liabilities | 0 | |
Total deferred tax liabilities | (68,708) | |
Net deferred tax asset (liabilities) | $ (54,593) | |
Predecessor | ||
Deferred tax assets: | ||
Net operating loss carryforwards | $ 0 | |
Capitalized transaction costs | 0 | |
Other assets | 0 | |
Total deferred tax assets | 0 | |
Deferred tax liabilities: | ||
Investment in partnership | 0 | |
Oil and natural gas properties | (2,724) | |
Other liabilities | 0 | |
Total deferred tax liabilities | (2,724) | |
Net deferred tax asset (liabilities) | $ (2,724) |
Long Term Debt - Components of
Long Term Debt - Components of Debt (Details) - USD ($) | Dec. 31, 2018 | Jul. 31, 2018 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 400,000,000 | |
Less: unamortized deferred financing cost | (11,365,000) | |
Total debt, net | 388,635,000 | |
Line of Credit | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0 | |
Senior Notes | 6.0% Senior Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 400,000,000 | |
Stated interest rate | 6.00% | 6.00% |
Long Term Debt - Credit Facili
Long Term Debt - Credit Facility Narrative (Details) | 5 Months Ended |
Dec. 31, 2018USD ($) | |
Line of Credit Facility [Line Items] | |
Interest expense | $ 12,454,000 |
Outstanding borrowings | 400,000,000 |
Line of Credit | RBL Facility | |
Line of Credit Facility [Line Items] | |
Deferred financing costs incurred in connection with securing the RBL Facility | $ 11,700,000 |
Amortization period | 5 years |
Interest expense | $ 1,900,000 |
Outstanding borrowings | 0 |
Line of Credit | RBL Facility | Magnolia Operating | |
Line of Credit Facility [Line Items] | |
Maximum commitments, aggregate principal amount | 1,000,000,000 |
Initial borrowing base | $ 550,000,000 |
Leverage ratio | 4 |
Leverage ratio, minimum threshold for current ratio | 3 |
Current ratio | 1 |
Line of Credit | Letter of Credit Sublimit | Magnolia Operating | |
Line of Credit Facility [Line Items] | |
Maximum commitments, aggregate principal amount | $ 100,000,000 |
Long Term Debt - 2026 Senior N
Long Term Debt - 2026 Senior Notes Narrative (Details) - USD ($) | 5 Months Ended | |
Dec. 31, 2018 | Jul. 31, 2018 | |
Debt Instrument [Line Items] | ||
Interest expense | $ 12,454,000 | |
Senior Notes | 6.0% Senior Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 400,000,000 | |
Stated interest rate | 6.00% | 6.00% |
Redemption price, percentage of principal amount of Notes redeemed | 100.00% | |
Deferred financing costs incurred in connection with securing the 2026 Senior Notes | $ 11,800,000 | |
Interest expense | $ 10,500,000 |
Stockholders' Equity - Narrati
Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands | Dec. 31, 2018vote$ / sharesshares | Dec. 31, 2018USD ($)voteday$ / sharesshares | Dec. 31, 2018USD ($)vote$ / sharesshares |
Class of Stock [Line Items] | |||
Warrants outstanding (in shares) | 31,700,000 | 31,700,000 | 31,700,000 |
Transaction related costs | $ | $ 24,607 | ||
Federal income tax expense | $ | 10,400 | ||
Business Combination | |||
Class of Stock [Line Items] | |||
Transaction related costs | $ | $ 24,300 | $ 37,100 | |
Variable Interest Entity, Primary Beneficiary | Magnolia LLC | |||
Class of Stock [Line Items] | |||
Percentage of economic interest | 62.60% | ||
Percentage of economic interest owned by noncontrolling interest holders | 37.40% | 37.40% | 37.40% |
Public Warrants | |||
Class of Stock [Line Items] | |||
Warrants outstanding (in shares) | 21,700,000 | 21,700,000 | 21,700,000 |
Private Placement Warrants | |||
Class of Stock [Line Items] | |||
Warrants outstanding (in shares) | 10,000,000 | 10,000,000 | 10,000,000 |
Common Class A Warrant | |||
Class of Stock [Line Items] | |||
Number of shares each warrant entitles the holder to purchase (in shares) | 1 | 1 | 1 |
Exercise price (in dollars per share) | $ / shares | $ 11.50 | $ 11.50 | $ 11.50 |
Common Class A Existing Warrant | |||
Class of Stock [Line Items] | |||
Redemption price (in dollars per share) | $ / shares | 0.01 | 0.01 | 0.01 |
Minimum last sale price of common stock in order to redeem outstanding warrants at reduced rate (in dollars per share) | $ / shares | $ 18 | $ 18 | $ 18 |
Threshold trading days | day | 20 | ||
Measurement period for threshold trading days, ending on the third business day before notice of redemption is sent to warrant holders | day | 30 | ||
Class A Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 1,300,000,000 | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued (in shares) | 156,333,000 | 156,333,000 | 156,333,000 |
Common stock, shares outstanding (in shares) | 156,333,000 | 156,333,000 | 156,333,000 |
Number of votes for each share held | vote | 1 | 1 | 1 |
Class B Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 225,000,000 | 225,000,000 | 225,000,000 |
Common stock, shares issued (in shares) | 93,346,000 | 93,346,000 | 93,346,000 |
Common stock, shares outstanding (in shares) | 93,346,000 | 93,346,000 | 93,346,000 |
Number of votes for each share held | vote | 1 | 1 | 1 |
Stock Based Compensation - Nar
Stock Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 08, 2018 | Dec. 31, 2018 | Dec. 31, 2018 |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Granted (in shares) | 807,431 | ||
Weighted average grant date fair value for awards granted (in dollars per share) | $ 13.97 | ||
Awards vested in period (in shares) | 0 | ||
Unrecognized compensation expense | $ 10.2 | $ 10.2 | |
Weighted average period over which unrecognized compensation expense is expected to be recognized | 1 year 7 months 6 days | ||
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Weighted average grant date fair value for awards granted (in dollars per share) | $ 14.58 | ||
Awards vested in period (in shares) | 0 | ||
Unrecognized compensation expense | $ 6.2 | $ 6.2 | |
Weighted average period over which unrecognized compensation expense is expected to be recognized | 2 years 2 months 12 days | ||
Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for issuance (in shares) | 11,800,000 | ||
Shares available for future grant (in shares) | 10,500,000 | 10,500,000 | |
Class A Common Stock | PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 316,875 | 158,438 | |
Total outstanding shares (in shares) | 475,313 | 475,313 |
Earnings Per Share - Reconcili
Earnings Per Share - Reconciliation of Numerators and Denominators for Basic and Diluted Per Share Computation (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 5 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Basic: | |
Net Income attributable to Class A Common Stock | $ | $ 39,095 |
Weighted average number of common shares outstanding during the period (in shares) | 154,527 |
Net income per common share - basic (in dollars per share) | $ / shares | $ 0.25 |
Diluted: | |
Net Income attributable to Class A Common Stock | $ | $ 39,095 |
Weighted average number of common shares outstanding during the period (in shares) | 154,527 |
Add: Dilutive effect of warrants and stock based compensation (in shares) | 3,705 |
Diluted weighted average number of common shares outstanding during the period (in shares) | 158,232 |
Net income per common share - diluted (in shares) | $ / shares | $ 0.25 |
Class A Common Stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Shares of common stock issuable upon conversion of Class B Common Stock excluded due to effect being anti-dilutive (in shares) | 90,900 |
Related Party Transactions - N
Related Party Transactions - Narrative (Details) $ in Thousands | Jul. 31, 2018directorshares | Dec. 31, 2018USD ($)trancheshares | Jul. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Related Party Transaction [Line Items] | |||||
Accounts receivable from EVOC and other related parties | $ | $ 0 | ||||
Predecessor | |||||
Related Party Transaction [Line Items] | |||||
Accounts receivable from EVOC and other related parties | $ | $ 13,692 | ||||
EnerVest Business Combination | Class B Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares authorized for issuance (in shares) | shares | 83,900,000 | ||||
EnerVest Business Combination | Class A Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares authorized for issuance (in shares) | shares | 31,800,000 | ||||
Karnes County Contributors | EnerVest Business Combination | Class B Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares authorized for issuance (in shares) | shares | 83,900,000 | ||||
Karnes County Contributors | EnerVest Business Combination | Class A Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares authorized for issuance (in shares) | shares | 31,800,000 | ||||
Registration Rights Agreement | |||||
Related Party Transaction [Line Items] | |||||
Number of independent directors prior to Business Combination | director | 4 | ||||
Stockholder Agreement | Affiliate | Karnes County Contributors | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate to each committee of the Board | director | 1 | ||||
Stockholder Agreement | Affiliate | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate to each committee of the Board | director | 1 | ||||
Stockholder Agreement | Affiliate | Higher End of Stock Ownership Threshold | Karnes County Contributors | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate if stock ownership threshold is achieved | director | 2 | ||||
Higher stock ownership threshold | 15.00% | ||||
Stockholder Agreement | Affiliate | Higher End of Stock Ownership Threshold | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate if stock ownership threshold is achieved | director | 2 | ||||
Higher stock ownership threshold | 60.00% | ||||
Stockholder Agreement | Affiliate | Lower End of Stock Ownership Threshold | Karnes County Contributors | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate if stock ownership threshold is achieved | director | 1 | ||||
Lower stock ownership threshold | 2.00% | ||||
Stockholder Agreement | Affiliate | Lower End of Stock Ownership Threshold | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Number of directors entitled to nominate if stock ownership threshold is achieved | director | 1 | ||||
Lower stock ownership threshold | 25.00% | ||||
Karnes County Contribution Agreement | Affiliate | Karnes County Contributors | EnerVest Business Combination | |||||
Related Party Transaction [Line Items] | |||||
Term of contribution agreement | 5 years | ||||
Number of tranches | tranche | 3 | ||||
Karnes County Contribution Agreement | Affiliate | Karnes County Contributors | EnerVest Business Combination | Class B Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares issued upon meeting stock price thresholds (in shares) | shares | 9,400,000 | ||||
Karnes County Contribution Agreement | Affiliate | Karnes County Contributors | EnerVest Business Combination | Class A Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Additional shares issued upon meeting stock price thresholds (in shares) | shares | 3,600,000 | ||||
Karnes County Contribution Agreement | Affiliate | Karnes County Contributors | EnerVest Business Combination | Earnout Shares | |||||
Related Party Transaction [Line Items] | |||||
Additional shares authorized for issuance (in shares) | shares | 13,000,000 | ||||
Management Fees | Affiliate | Karnes County Contributors | Predecessor | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction expenses | $ | $ 11,000 | $ 17,200 | $ 9,600 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Jul. 31, 2018 | Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Loss Contingencies [Line Items] | |||||
Amounts accrued with respect to outstanding litigation | $ 0 | ||||
Purchase obligations | |||||
Total | 4,821,000 | ||||
2019-2020 | 4,317,000 | ||||
2021-2022 | 263,000 | ||||
2023 & Beyond | 241,000 | ||||
Operating lease obligations | |||||
Total | 1,817,000 | ||||
2019-2020 | 1,527,000 | ||||
2021-2022 | 213,000 | ||||
2023 & Beyond | 77,000 | ||||
Service fee commitment | |||||
Total | 37,309,000 | ||||
2019-2020 | 37,309,000 | ||||
2021-2022 | 0 | ||||
2023 & Beyond | 0 | ||||
Total Net Minimum Commitments | |||||
Total | 43,947,000 | ||||
2019-2020 | 43,153,000 | ||||
2021-2022 | 476,000 | ||||
2023 & Beyond | 318,000 | ||||
Service Fee Commitment [Line Items] | |||||
Costs incurred under obligations | $ 15,700,000 | ||||
Predecessor | |||||
Loss Contingencies [Line Items] | |||||
Amounts accrued with respect to outstanding litigation | $ 0 | ||||
Service Fee Commitment [Line Items] | |||||
Costs incurred under obligations | $ 5,300,000 | $ 500,000 | $ 500,000 | ||
EVOC | |||||
Service Fee Commitment [Line Items] | |||||
Amount of fixed annual services fee payments | $ 23,600,000 | ||||
Term of Services Agreement | 5 years | ||||
Period after which Services Agreement is subject to termination by either party | 2 years |
Major Customers (Details)
Major Customers (Details) - Oil, Natural Gas and Natural Gas Liquids Revenue - Customer Concentration Risk | 5 Months Ended | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Customer A | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 42.20% | |||
Customer A | Predecessor | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 47.60% | 28.80% | 35.80% | |
Customer B | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 19.10% | |||
Customer B | Predecessor | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 14.50% | 22.30% | 19.50% | |
Customer C | Predecessor | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 12.20% | 18.90% | 17.00% | |
Customer D | Predecessor | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 10.20% | 14.40% |