MGY - Earnings call transcript Q1 2019 | Magnolia Oil & Gas Corporation

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Operator

Good morning and welcome to the Magnolia Oil & Gas First Quarter 2019 Earnings Release and Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Corales. ahead. go Please

Brian Corales

President and Officer. & Kate, Participating everyone. to President Magnolia's Welcome the Chris Officer; Thank Executive Stavros, First good Quarter Oil Vice Chairman, Chazen, Steve Gas' today Chief Call. Chief XXXX Magnolia Executive call and Financial you, and are morning and Earnings on Conference

may These statements meaning of that the As a contains actual call and the conference cause subject certain projections risks securities differ within those laws. statements to reminder, today's and are to other in materially forward-looking or expressed results federal these uncertainties from statements. implied

information can the could on cause company's be X of found Additional A call filed results in on factors report SEC. available XX-K on presentation data Form Slide is the supplemental on conference with the annual with our the risk harbor to slide safe that website. the differ full

You the Chazen. company's can well turn first conference as Magnolia's will Steve I over the call the XXXX section release, press now call Investor to quarter earnings now at www.magnoliaoilgas.com. download Mr. slides of from as website the

Steve Chazen

Thank a you. of the the update the year, and and your Good business take joining into questions. overall brief go Chris provide and will on additional the going to details you guidance for us. some for I'm morning of some provide financials thank before we

quarter full one to Gas & than Oil our and strategy Magnolia together reporting initial the when compared as deal is ago. corporate are unchanged second was We year more our put

flow generated our generate free cash and our part flow cash we inception a plan flow going cash generating forward. last business, from since this core free focused year this of start, said means year is the cash are we've philosophy. We've free to As and flow free

we're it us, or and options shareholders. there, the there, We free to we flow creates either to get business to already the return for generate cash striving supplement to are not existing

importance the we also small a to recognize grow. As company,

So capital add our and annual cash view each production we for this undesignated. of to boe We have flow X,XXX day base flow XX% cash organically of growing year. expect remaining our the towards a designated of the XX% as we to

evolve, to flow this While the may with over or the of allocate free philosophy generate stock value is these goal cash change time. management to use market

First quarter of the period Magnolia, for year. lay foundation remainder XXXX for of was the it a as good a helped

would of our product two response quarter rigs, we last As rigs increase mentioned call, occurred for run one our and in but took also made for this at action, in operated we that on at lower highest in the be activity. of with decision the non-operated quarter three the the the the to the indicated began We quarter's capital level drop part We the first quarter. prices hot in time, partly Karnes, due to which later anticipated the to year.

slight plan. completions decline EBITDAX. the for a sequential XX% through was should with total of increase and capital XXXX within our and drilling Production we continue of Our capital quarter the expect line year to be our in day for per to and the our saw remainder

and in first provide of should over production the Karnes We quarters. operated had in activity The quarter programs. next couple both non-operated the a capital a period, meaningful in program increase our from of our lot process during

footprint total our of to be more We've months which agreed year the on X% the to the for Most successor been to growth compared of net remainder X,XXX bring started drilling of quarter. already acres production have in between acquire X% the and represents third agreed few closed quarter per year, robust volumes or more nearly represents M&A our flow the a we since active production Magnolia acquisition expect and the XX% We add anticipated. to boe third area during bolting should quarter These through third Karnes providing than last in XX,XXX our expect end the a production the and acres a the acquire XXXX locations. expected last on than another than several day X,XXX we also the After transactions, with additions increase day. to we around opportunities acres, XX,XXX months, boe XX% Karnes deal X,XXX production approximately net quarter numerous third quarter increase Last more organic attractive we've in oil and period. two in our also gas smaller we in outlook is in that production second to for rise to our net year. of Karnes, in position more towards than properties bolt-on

to second close expect transactions cost We in approach end acquisition these Each quarter. to the this of disciplined process. than by $XXX our million. the We remain less significantly

paid second first recent party than we the ending For expect offer. successful quarter. purchases, over spite will cash quarter in more amount in a in increase the balance the the example, sheet In acquisition, we our twice balance the

organic active this and creates continue our expect we year's deals. boe third later to already fourth and year the production. to production Acquisitions To opportunities compared summarize, for We to we've large for flow the more year. potential closed current exit public expect add an X,XXX with And are additional – to small than additional deal company boe on X,XXX quarter. quarter agreed to avoid the to exit of last properties

new without completing We expect to drilling XX% by adding of wells all spending within and accomplish this and any debt. EBITDAX, our

Just against optimism well year. increased and have is program XXX,XXX Giddings, gross of a our this not approximately exploration our drawn In to and proceeding where for current time acres. position we do anything results recent resource, quite any appraisal around have expect this have line our clarity, we our

acreage Giddings production. entirely is position Our almost by held

and our have appraisal, the to and with better able we being application to microseismic. the drilling acreage, methodically So assess proceed benefit the of science of more

for we've to deal relatively period second great we in the product understanding prices, time. adding successful early rig short a a evaluate results later in a on the improved and still of in Giddings year. plan outlook and Based in learned our our pending While program,

Although, of stages this the we've and the are so and I'll early now encouraged results the the year. achieving are over the progress we remain company, made in goals far, quite with call we towards our turn to Chris. optimistic

Chris Stavros

go some it around Thank quarter and before you, the I over highlights first good and provide everyone. results some morning then additional will turning through guidance questions. Steve, the for of

From quarter the than easier remarks quarter reference, year. variance reporting For periods my first to of be the will somewhat first a understand standpoint, prior reporting and in XXXX. to more related to compared was quarter last the any fourth during straightforward

to result that's income per our of $XX use net website. presentation Broadly Class share, quarter to adjusted income Total fourth of and GAAP income or the share million for diluted of decline includes net posted product most the Looking at per us of non-controlling quarter of X A Slide million per similar attributable We Class A income common the of comparing analysts should speaking, or share first $X.XX which net EPS $XX and of the $XX $X.XX million on reported stock lower the XXXX. calculating the and the which excluding for diluted was and for XXXX. $X.XX diluted was interest in net period, This costs, approximately sequential the prices. or of the includes adjusted to income total B when compares stock. companies. method common Investors both transaction

guidance. first quarter, during production the averaged day in boe and increase quarterly representing our per previous XX.XXXX total with Our sequential slight a line

X. to totaled prices. the Revenues sequentially, quarter, is to primarily which first realized oil due million Turning Slide down in $XXX lower

averaging were to to barrel premium gas or particularly $X.XX NGL per WTI first sharp realizations to Although a compared in Relative the quarter. make drop averaging product the the XXX% quarter. our quarter, the benchmark benchmark WTI, mainly decline I'd first One with oil the is barrel final receive NGLs prices of XX% we on declined sequentially, prices. or the of due prices prices in XX% weak in point to quarter. in fourth a natural continue during during $XX.XX

Turning costs, X. looking Slide to and at

per quarter due per quarter to Giddings. Karnes expenses Our both in was LOE and prior $X.XX the in workover the fourth higher during $X.XX boe to compared boe,

second XXXX. LOE to boe lower our per expect for year trend the the of and boe expense half in We $X.XX per approximately average

NGLs. was rate DD&A adjustment in mainly oil quarter to and $XX.XX fourth quarter, lower per for first boe, prices the in and a to $XX.XX on FCC product Our compared reserves small due based

microseismic, of to per the exploration DD&A to increase or our about per to Exploration quarter expense program prior rate due expect boe the first to boe is in $XX $X.XX The $X.X $X.XX in – mainly appraisal million our for boe a or was average the We application $X.XX in quarter. and compared XXXX. related Giddings.

or were expenses per boe boe, services. million cost $XX.X which for $X.XX $XX.X declined G&A professional lower quarter or compared million other per $X.XX quarter to and due and First partly consulting last to

higher expect quarter, for increase approximately was $X G&A in these to and a the the some to fluctuate prior corporate year. the incur XX% The about to basis, compared costs The as our additional a and costs period-to-period structure will G&A due of boe quarter systems, first average quarter we rate effective non-cash related slight IT expense. also to tax taxes. $X.X On although unit stock include compensation first build-out we a million the full partly state from expenses of

XXXX We the full to XX% accounting rate to about treatment the year non-controlling of expect interests. the tax be due

Slide and commodity EBITDAX, lower adjusted decrease for was X, first the sequential Our the as shown due $XXX million was largely to prices. quarter, on

drilling which $XXX.X associated was with accruals. includes completing during Our first capital capital the and wells quarter, million

– operations X. flows first of in We capital was Slide $XXX cash and our cash change the for had on a flow in million. negative changes $XX million first our at from Looking our working capital quarter before working at

ended balance our on undrawn and capital $XXX $XX us execute drilling spent for ample spending, outlays cash oil the cash including sheet strategy. of an on providing acquiring million gas and continue and $XX to We million cash $XXX we quarter with Our to and liquidity million million were the credit with properties. of first facilities, facility,

shown Our in to approximately with expect line [indiscernible] is end is Slide XXXX, our at guidance March which million. as We long-term remarks. in Shifting $XXX policy as debt mentioned was maintaining his first the for not quarter leverage. the and low on some thoughts of indebtedness, sheet increase X. of XX balance Steve to of on Summary our do

the acquisitions, capital and activity of terms first spending the rest a amount this year. capital you of process on in In to activity Karnes, to had is and pads the of a significant new of new heavier as build-out preparation quarter during We why bring the was our related related is set and wells. This the and really ready first capital quarter has and lot to recently, in partly for the the quarter. table first of get

is of mainly So due this benefiting and second the timing cadence in our to start us expected to quarter. the activity,

However, the third the of activity total be impact won't fully evident this until quarter.

and the second for Moving sequentially our for to both we're quarter of to greater production grow Based XX,XXX Slide organic quarter X% day. and production be acquisitions, X% XX. should per on the to expecting third than activity boe XXXX

production, the was oil of quarter, of the the first second during proportion XX% expected Our be is year. in to XX% half about which

is little aspect operational As we to transactions. acreage familiar and net our be impact net Karnes of the XX,XXX XX,XXX a acres In well. business asset of had acres not characteristics the common to by over bolt-on they position expected expect they about and we August, financial beginning acquisitions the may the on strategy base. The increase to but second stated, existing material, XXXX. focus level positive similar smaller these collectively XX% – these to our we end a of fit to often do and have have from meaningful our have quarter approximately net that continue Magnolia an Individually, of

at second volumes the least close Steve acquired the referenced our expected closed, the in We day quarter. are in comments end the third of his expect quarter. X,XXX in the production to to boe Slide transactions of by per to assets Once that and add XX shown

continue Our of XXXX to expected to capital and be wells the year that within spending decline remainder capital for of our to through XX% drilling full the EBITDAX. as we our completing expect XXXX is year,

of by were example, quarter, what multiply get and rest for you So, in to sort to spend consensus what use we the subtract for of feel XXXX for spent for the the we're likely EBITDAX first year. X.X and you a if

and the Our sort what our million total combination related with $X that of per quarter, change his price stock transaction roughly barrel first taxes a basis on earnings before $X.XX we've basis XX, in changes during change approximately to in end final point income since both every gas prices. B $X for for an natural settlement wrap current oil to A at X up, EnerVest. the done on prices, the by Product a shares shares the prices an with per annualized million cash where shows outstanding, affect last business of I million in comments, by eight To the of all fell which months Steve you began at annualized the due common been with August. $XX Class and MCF we've Slide to

have of we organic your production not be any Our and production is XX% ready to to additional generated properties. combination We're by debt. higher, incurred acquired climb expected our to And a now growth take questions. at is expected –

Operator

We the is SunTrust. question [Operator Instructions] Dingmann will question-and-answer from go session. ahead. of begin first The Neal now Please

Neal Dingmann

morning, My just Good you, just, around around details. Steve is nice or question Chris, M&A.

Karnes You second been adding this guys closed I'm the the either, forward, one it, in going around and have whole quarter, even wondering about general appetite the the call is just opportunities Karnes after see, around you successful here area. area.

Steve Chazen

a around well who drilled plans that or that – small large players, are companies known not – wells they a and what players There's but of – they've number knows couple are of their were. public well

disciplined at don't to them. And pretty in we need continue so, to everything. We own this. look We're

at buy the cash values where get below we are multiples trade. for and we So, locations well values PDP PDP free. basically, flow

flow, So by; to build locations that little add be accretive to cash and were bit. to acquisition earnings, every we some designed inventory is the metrics flow, a measured cash free

a splash So here. to big looking we're not make

of base, thing. spread sort Just build overhead and that over the

as as doing We it's well. So far you quite should M&A. at deal, look large-scale likelihood the but look large for not say of would a everything, I

Neal Dingmann

over a areas. we progresses just Steve how to sort should of progressing? and terms, of Okay. I'm of And view that on in about maybe there, the of large as moving or of position obviously amount fair then you're next I'm again, just some it you year about know broader should sort focused or sort into progress asset I how massive wondering, how kind there. there. on have Giddings, think production think key do year, we coming of you wondering benchmarks

Steve Chazen

So plan focus our to trying this out what year principally on what figure is to we own.

us and We where one have that wells trying be we're other and fine. are, predict make to and the a to allows less lot wells model would the are of or good acreage where good a the

plan that's year. really this the business So

or we're lot we tested find there's companies acreage. we to before, drilled we buying – they they're around something, but As before and areas working, be that if leased appear will go of hadn't times on talking them, about leases not

have acreage guess want we talk the because fairly all drive cautious or in don't costs manner discussing acreage, So shape, once then, any it. to But, can until form. about we we the that, be we'll up about I

success to but and continue mean, we'll be successful worse position. else. then to somebody we've nothing we'll around So – occurs, lease than build where find been benefit a and something looking I as

the be should We're production. and So isn't take in and have expensive, completion building I completion that wells is we lumpy, are our think one pretty leasing It's not while able going you be to but the track mostly crew cautious. crews – – Karnes. – we're a to because

little slowly come sometimes required to state, report completions the a to eventually, other we than slower results are times. but the and well So the

we our to are. is figure out where I So objective think

to few able the the next forward quarters. You'll production be go over see

as progressing So way it. not than than I the think maybe better better it's as probably I we – expected, had well, good we to is but hoped, say guess

Neal Dingmann

That’s fair activity. guys. to Thanks the enough. Look forward

Steve Chazen

Thanks.

Operator

question Raymond The Lenny next Please Johnson Rice. is ahead. from go of

Lenny Raymond

my Thanks taking guys, question. for

business that model And to in messaging you remarks in job great do. evolve. you might achieving a the to else done company the you going alluded everything are have guys your You said and prepared

model point like shift a time? you at in might strategy that strategy have different and to to what look what at business that the So

Steve Chazen

Well, exactly. don't know I

EBITDA press the but something current, billion, not of We acquisition XX% that, like that will business to your $X We're say, decline the growth I going passes the from rate large bunch acquisitions say might the to think else. a do. will as to dirt in some put throw ear,

always it guessing I evolution a think dividend. then Buying to a and time dividends we thinly in wife shift but a at the and process into larger were we And My then will so we in so regular small looking if as has this particularly thoughtful build pay a dividends. increasing – to I'm repurchases, play. you're next at paying dividends I sort then, dividends. some up will yes, shares, the – don't strategy. year, won't start over share the we'll a probably over couple strategy a point think dividends change be that special but liked be come traded currently are, as principally, some of If it's of might years – way of to some dividend cash,

Our the MLP. is not an to goal way, by have,

the and for stock dividends Our greasing just appreciation the are the skids. goal is

Lenny Raymond

you. That’s the great, I today. questions and that’s all have Thank

Steve Chazen

you. Thank

Operator

question Grampp is Northland from next The Capital Markets. Please Jeff of go ahead.

Jeff Grampp

guys. morning, Good

Steve Chazen

morning. Good

Jeff Grampp

on, maybe the in another guess tree commentary strategy Steve, I versus Giddings talk the looking decision a about think that kind you about and here at Giddings. one two you on adding you do and adding the at of guess I what Can to drilling? maybe rig Curious view or about, – the versus as guys Karnes guys back going how rig rigs other,

Steve Chazen

lot Karnes. there's – activity a non-op of one in Yes,

more to it two were effectively we even one we're of running maybe we're So sort and rig, if more analytically. running though only do

So a get time not some The in when the drill about wells have in it, production. every drilling worried while well, Karnes completion the shut going I'm that you on. Karnes is issue you is around

moderate. And – see we understand what Giddings, see I wait acquire working afraid go and if now, we right if grow, now before to the are there's are more are And some models am costs so too to we will lose long, as production. well, opportunity In want I lease up. you they see that doing if back our

think And and it's because the we I Giddings look So you doing sure together at will in Locations amount we currently we – test there of non-op we make opportunity what we're that and going work it, at delivering, with more as are Karnes evolve, as think to activity are away. the look it, we than growth. different about of right we'll how doing, in is the theories sort areas find what think. may of aren't parts

Jeff Grampp

it. Got

I Okay, just guys in sense. to interpreting think I developmental on definitely of have appraisal makes sounds it program. more that past lot a to maybe to but this continue talked in right. rig, a sure like second want is was rig guess, that rig, the I second about be I And being a, going you focused of make

Steve Chazen

were don't rig now program I probably probably think sort are think I there's There to development think part and areas, are year, appraisal some that much with second year bought of next and a for more would to from later, an acquire. I up – which probably of. Yes, year go this

then mistake start, and we later. should one guys the is done to have areas, years the to rig So old the shift it time things is get about the always – say at you into appraisal made I we'll didn't. think got probably ago the think but I stuff, And before those fuse where

aggressive should it into I lot have went more we been when the was Permian, cheap. really So when a

to mistake don't I the So same make here. of kind want

Jeff Grampp

Understood. Appreciate time, guys. the

Steve Chazen

Yes. Thanks.

Operator

Imperial The go with next ahead. question is from Capital. Irene Haas Please

Irene Haas

And I the us this the did feel would confident been to would make acres, high of effort? to ask like you you graded you net because microseismic about the to with XXX,XXX has what specifically share more of you percentage able be Giddings? did that for

Steve Chazen

or XX%. – it there from anything is about Yes, and or is, narrow question think that. in maybe, you into second so XX%. now, But and area. your people this what drain it is there's historically might not to about find little answer area could more because that read predictable anything production. fractures, may much much done is, a this with they've a miracle doesn't the fracture or need and don't Microseismic, the the more, or up large the small work point. And mean but have come to came that I bit at you other where wider fractures XX% XX%, production be production on Giddings Well, be a

see our So that we're to The orient it fracture at out process. if drains. well, figure in and look patterns trying friend, can so to fractures frankly, we the the how are

out. levels the it what decline start say, process, the and future in allows the get point just sort very less. over what some is, wells. has better this much better rate is also the at us is weaker that decline to then that out they microfracture in. and microseismic months the The Karnes Giddings isn't high coming fracing better first, we're production that And of six wells saying a we fractures So By is, but and make through – see wells drain well

we We we're better those going not we figure locations, can to able And wells. want we a of to if boost do deterministic so picking our can job be out, odds. everything better to just know drill

Irene Haas

question? that fourth was on color you just follow-up year. might Any out? a I this have I be for May you. left volume, Got what quarter that the curious

Steve Chazen

We’re third pretty so thought we quarter lucky that. I good, the – was can do we can

It don't XX,XXX day. we So more know. be to a than really supposed

Irene Haas

you. Okay. Great. Thank

Operator

Tuohy of Investment. Campbell Jeffrey Please from go Brothers ahead. is question next The

Jeffrey Campbell

Chris, Hi, and congratulations an quarter. active on and Steve

to do a – just want the flow of Giddings breakeven on your wondering standard might I'm cash add CapEx that's neutral. You've acreage you if is you test to try be determine second when said rig? past the that in as look you you sort at

Steve Chazen

like an negative go quarter We talked the the managers. I But – portfolio of think is analogy used in on we've about much. basis, for answer a annual something past, might again, this the that. I've or Pretty

your You billion say, give best book and you've whole me got ideas, a them. portfolio full give manager of $XX

If no, really million, I sort get two ideas. you you said of $XX meant

looking ideas two our And the of so we're for geologists. out

Jeffrey Campbell

Okay. Thank you.

wondering acreage equity the there some because me sellers the just you've the stock? Magnolia in actually any was in was I mix, in Regarding acquisitions that requested as quarter, prior past I recall, told the

Steve Chazen

we One of has yet, them requested requested has closed some, haven't one some. but

be And some. we're the a buying this the us, he Because so because – there real and aside at doesn't have will of very because guy of any low cash liquidity multiple flow of sort the from nature asset. has

So it's them taken a but a lock pretty It's stock. small some they for up we're and in while, lot. to have in not stock

Jeffrey Campbell

of If from one, wondered locations you effect length that the can have ultimate drill? X.XK and bolt-on you're the I aside acres just ask the if, getting lateral any wells I the could that one Karnes, with the last on will production additional in it

Steve Chazen

pretty It in cases, we're length satisfied here. the with lateral but might a generally few

we're You so not think think the pretty work that much while will different, where And much this practically we where know, we best. if we're lateral with we there not not owned lengths all, couple – have even be be think might I satisfied is I sure am we a the longer, economics – I because but it that's it's now.

Jeffrey Campbell

Thanks the appreciate it. great. Okay, for I color,

Operator

of go Brian Downey Citigroup. from is ahead. The Please next question

Brian Downey

taking for questions. the Thanks Great.

comments that in somewhere remainder cut additional Following grouping the We Giddings XX% of color looks the it Magnolia's up you're appreciate for cut together. harder the we ballpark cut the I or production. quarter, quarter believe last it's on at oil the Giddings, a you Giddings, to around other that and I of like noticed discern more of around oil maybe the see XX% It's was little it on by now if trending embedded year? same oil you what's the at Giddings. out know in but you corporate oil XX% noisy acquired it's remainder gas how bringing well as Giddings well, to some comment you're of for this development? back the could But on year.

Steve Chazen

Yes, I supposed to not The way going probably is it rest true can if do XX% go every no, will oil, this year. of to, It rise it oil. well through the that's Giddings up. about the it's new way, wells, was a worked well, the it underlying back

Brian Downey

that's… so Okay,

Steve Chazen

So, thing got obviously. the in got wells. got from yes, the And XX to it get underlying you've the the The XX% whole – holds gas, to those we But as million it well, you all – Highlander and leak remember, the not gas acreage. we're as going that for you've – was new got gas

that over think the you go the don't provides production have the the you're up So Giddings. I the doesn't provides will that – run to rest cash cash going business, at time, because – base full to – to it just to put won't any of full you're capital go always and go percentage have will flow decline. XX, XX up, equivalent it. flow It gas And but thing going day a to in a of

Brian Downey

cut somewhere Makes incremental sounds like assuming XX% production sense. But you're it there? around

Steve Chazen

Yes.

Brian Downey

taking for right. question. All the Perfect. Thanks Okay.

Operator

next Suisse. The of Jiang Credit is from Betty question

Betty Jiang

get Steve, the give of acquired able then morning. on whether quarter? you assets, to acquisition operated, current can any on second the any us would Good a be the we existing for acreage or color whether nature at of spend the versus just chance less sense the expected it's magnitude developed all and more

Steve Chazen

said we're going – going and told production – Well, to we're build cash. to it's we – the we you that

basically the are We buying values.

you're – So times it operated EBITDA under uncertainly some buying and isn't four probably operated. less, and some is

deals. series the to mix, it's non-op a a interest are we with and it. sort operate go we of Some pretty buying It's of small

Chris Stavros

And we'll cash and build said on the as – build we before, revolver. won't draw we we won't

So yes.

Steve Chazen

it. mostly I a coming cash generating with with locations activity mean, sort it's flow the of

Betty Jiang

Got it.

trending you during more bit and to – on through lower expect XQ. Could CapEx a on forward, non-operated going the CapEx earlier just we activity give more you'd Chris, talked spend, then, get facility a us comfort elevated operated mentioned And Okay. year? bit facility about on the detail the differences

Chris Stavros

Yes, you and new you lumpiness pads the on. in facilities, of said, so prepare bring with that just I that as associated as capital– the to timing Karnes, really we're a doing sort of lot if wells will, the is

And so there's just recently pads second in quarters third it and in sort in first and later production it's gravitate that the will and in even be – of that'll and that the down, lumpiness. additional but preparation will the really you're quarter function manifested a of year, in

that you thinking what about he in can we I saw rest. when what year, So the far quarter the first the in think answer the should said, for whatever you're look, you terms you think and capital spent about XX% do is as provided and EBITDAX, of as it of

Betty Jiang

That’s it. clear Got you. enough, Thank okay.

Operator

question next ahead. go Oppenheimer. The from Rezvan Tim of Please is

Tim Rezvan

good folks. of My I reason Ford prospective And that for pervasive first ask acreage do guarded believe that of and as morning, Eagle is Karnes? the the the fairly you buying, is, on Hey, Karnes sort EOG all you're to the how under continues question is be Chalk well? that about

Steve Chazen

for the some – really Austin mystical Chalk. for Eagle out about mediocre pretty sort A all not turned be some isn't baked Ford not way. We Chalk Chalk. acreage by have is – area roductivity is out, thing, to it Ford to the everywhere This good parts it's answer the you really Eagle is for complicated expect that it's no. prospective the generally for good do mediocre acreage and Chalk. and it's figure, The not in of

stays and same. So, so gets I good better the mean the good not

great but the right. people And and not they EOG's the everywhere. about will everywhere, you have our it's it it's probably – data everywhere, So, Based think really talk not not view not correct. you I of is tell are it's wells, – clearly talk everywhere, on we are

Eagle PDP by So prospective you we're for the some Chalk, them – but production Ford nothing would are large these and and is get basically based acquisitions. just are we be Chalk. mostly pricing on Basically, Ford this saying Eagle wells and in

Tim Rezvan

the correctly, $XXX acquisition you. million bit in saw year. to first Thank $XX up sounds year. for and wanted We I Okay. the may follow I little for under heard you quarter, just And that cash be color. a in, the Thank front. if the the like it come it million in balance on

internal flow But because We kind your of the free the think A&D more more you is company? shareholders is, free for cash generation on the of acquisitions muddying do, what thesis some generation. limit you're flow expect there sort kind the organic of cash may budget an

Steve Chazen

people's we and go really metric skills nothing our is don't Right be lot for is would know – interest. to we'll a stock and that look like continue If and acquisitions our said and small at keep that to out acquisitions that, of was find – cumulative all said we in on I that we from as $XXX beginning are We we can at because over stock than large the and acquire we'll values. to will more, and but thesis metrics, below now there whatever a spread – making that, There trading well done. Our I overhead where accretive can long you that's total there rather continue values, no is acquire think things the its passed can to do pick do works be we driven million the our do we won't it, very that based when technical where will as just pass. continue total. that. up. on can small number that, add we to And accretive that's stuff acreage we be,

understand in I of So should, generally early that. people think the company stages especially the

cash different do a really come to model point company a in will grows the to flow that switch can't we anymore. the So where the

Tim Rezvan

Thank you.

Steve Chazen

Sure.

Operator

Jeffrey Please go follow-up a is of Campbell Brothers. ahead. Tuohy Next from

Jeffrey Campbell

a real for me together things were quick. back. of that to And said couple just Thanks pull I letting wanted

activity are at priority also release just line continues or mentioned non-op lot today least mentioned, talked exceed wonder in – that activity. wanted you you to order press the of to CapEx CapEx below going if EBITDA upside expectations? you've and of – the about annual what's to the non-op EBITDA You the I keep XX% a keep

Steve Chazen

rigs. What's our in which control, our is

Jeffrey Campbell

Okay.

activity So tailor you activity? non-op, – the you'll your it operated will and comes take your then up

Steve Chazen

anywhere. locations our are going all because they aren't held Yes, production. And by

year, because well prices annual on we it's an Generally, spending of on shift Permian. goes in sort the well And any quarterly non-op when when more are to a are while the activity cost the they they basis, the typically not Next find predictable prices basis. activity, it's product when the strong, down, their predictable Karnes, at spend weaker, product work for areas high us. like non-asset

Jeffrey Campbell

Okay, you. appreciate it. I great. Thank

Operator

This presentation. today's concludes the for question-and-answer session and today's conference attending call. Thank you

You may now disconnect.

Magnolia Oil & Gas (MGY) 11 May 192019 Q1 Earnings call transcript