Magnolia Oil & Gas Corporation Announces First Quarter 2019 Results

Magnolia Oil & Gas Corporation (“Magnolia,” “we,” “our,” or the
“Company”) (NYSE: MGY) (NYSE: MGY.WS) today announced its financial and
operational results for the first quarter of 2019.

First Quarter 2019 Summary Financial Results:

• Total reported net income: $22.7 million
• Earnings per share - diluted: $0.08
• Adjusted net income¹: $23.0 million; Weighted average total
  shares outstanding²: 251.5 million
• Adjusted EBITDAX¹: $160.1 million
• Capital expenditures - drilling and completions: $139.8 million
• Acquisition expenditures: $53.3 million
• Changes in working capital: $(37.9) million
• Cash balance as of March 31, 2019: $76.3 million

First Quarter 2019 Highlights:

• Magnolia reported first quarter net income attributable to Class A
  Common Stock of $13.0 million, or $0.08 per diluted share. Total net
  income including noncontrolling interest was $22.7 million.
• Total production averaged 62.4 thousand barrels of oil equivalent per
  day ("Mboe/d") for the first quarter of 2019, a slight increase
  compared to fourth quarter of 2018 of 61.9 Mboe/d and in line with our
  guidance.
• Adjusted EBITDAX was $160.1 million during the first quarter of 2019,
  with drilling and completions capital expenditures of $139.8 million
  for the period. Total capital for drilling and completions is expected
  to decline both absolutely and as a percentage of adjusted EBITDAX in
  the second quarter and during the remainder of the year.
• We continue to use excess cash flow generated by the business to make
  opportunistic and accretive bolt on acquisitions that match our
  business model and further strengthen our asset base. During the first
  half of 2019, we have closed on or entered into definitive agreements
  to acquire approximately 4,600 net acres³ in the Karnes
  area, which should provide more than 4 Mboe/d of total production to
  the Company by the end of the second quarter.
• Higher capital outlays in our operated areas as well as from our
  non-op partners in the Karnes area during the first quarter are
  expected to result in increased organic production for the remainder
  of 2019. Our total production for the second quarter is estimated to
  grow by 3 to 5 percent sequentially, and we expect a further increase
  in the third quarter with volumes to exceed 70 Mboe/d.
• Our average realized oil price was $59.07 per barrel for the first
  quarter of 2019, or 108 percent of the average NYMEX WTI benchmark
  price during the period.
• Magnolia ended the first quarter of 2019 with $76.3 million of cash on
  the balance sheet, an undrawn revolving credit facility with $550.0
  million of capacity, and $400.0 million of principal debt outstanding.

“Magnolia is off to a very good start so far this year as we continue to
execute on our business plan with an overriding objective to create
stock market value," said Magnolia Chairman, President and CEO, Steve
Chazen. "Adjusted net income, accounting for both Class A and B Common
Stock outstanding was $0.09 per share in the first quarter. We
accomplished several important goals during only our second full quarter
of operating the South Texas assets we acquired last year. First, we
continued to strengthen our asset base by using our free cash flow to
make small and midsize accretive acquisitions. These transactions
provide current production as well as additional drilling opportunities
in the Karnes area. Higher spending by our non-op partners in the first
quarter and, the timing of numerous well completions, when combined with
the acquisitions, is expected to boost our overall production and cash
flow during the second half of the year. Finally, we continue to make
strong progress with our appraisal and exploration program in the
Giddings field and are encouraged by what we have learned through our
efforts. Based on our continued successful results and pending the
outlook for product prices, we would evaluate adding a second rig in
Giddings later in the year to further enhance our delineation program.
We expect our overall capital spending for drilling and completing wells
this year to be within 60 percent of adjusted EBITDAX."

^{(1) Adjusted net income and adjusted EBITDAX are non-GAAP financial
measures. For reconciliations to the most comparable GAAP measures,
please see "Non-GAAP Financial Information" at the end of this press
release.
(2) Weighted average total shares outstanding include
diluted weighted average shares of Class A Common stock outstanding
during the period and shares of Class B Common Stock, which are
anti-dilutive in the calculation of weighted average number of common
shares outstanding.
(3) 250 net acres of which we expect to sign
and close on during the second quarter of 2019.}

Operational Update

Production averaged 62.4 Mboe/d during the first quarter of 2019,
representing a small sequential increase and in line with our
expectations. Production in the Karnes area declined slightly on a
sequential basis, averaging 40.5 Mboe/d during the first quarter, due to
the timing of completions and fewer wells brought online. Production
from Giddings and other increased sequentially to 21.9 Mboe/d from 20.6
Mboe/d due to the partial quarter benefit of acquired volumes.
Approximately 90 percent of this production is related solely to
Giddings.

Although we are still in the early stage of the appraisal program in
Giddings, what we have learned so far has increased our confidence in
this resource. Our application of science and micro-seismic in drilling
wells has improved our understanding of the opportunity we see
throughout our approximate 650,000 gross acre position in the Giddings
field. Our plan is to continue our appraisal and exploration program at
Giddings at least through the remainder of the year.

We dropped one operated rig in Karnes during the latter part of the
first quarter as planned and are currently running one operated rig in
each of our Karnes and Giddings assets. We continue to use one
completion crew between our assets to optimize efficiencies. We
currently expect our overall drilling and completion activity in 2019 to
be similar to our 2018 program, supported by the increased pace of
non-operated activity in Karnes. Production is expected to increase over
the next two quarters driven by a combination of greater operated and
non-operated wells turned in line in Karnes as well as acquired
properties.

Acquisitions

During the first half of 2019, we have closed on or entered into
definitive agreements to acquire approximately 4,600 net acres in the
Karnes area, which we expect to add more than 4 Mboe/d of total
production. Since Magnolia’s inception last year, we have added or
expect to add more than 7,000 net acres to our Karnes position and
currently hold approximately 17,300 net acres in this area. These
transactions continue to demonstrate our ability to use our free cash
flow to enhance our overall business. We continue to seek small to
midsize acquisition opportunities that fit our business model and have
similar operating and financial characteristics to our current assets.
We see the potential for additional transactions in the Karnes area to
further enhance our production later in the year.

Updated Guidance

The higher levels of both operated and non-operated capital spending
seen during the first quarter and higher in-process activity are
expected to provide the foundation for growing organic production over
the next few quarters. Production is expected to be further supplemented
through acquisitions as noted above. We expect our production in the
second quarter of 2019 to increase by approximately 3 to 5 percent
sequentially, rising to more than 70 Mboe/d in the third quarter of
2019. Our third quarter of 2019 production forecast represents more than
a 20 percent increase over third quarter 2018 Successor Period volumes.
Our updated guidance accelerates our previously stated 2019 exit rate
for production by more than a full quarter. We estimate that our oil
production should be between 52 to 54 percent of total production
through the remainder of the year, increasing to the higher end of that
range during the second half of the year.

We are currently running one operated rig in each of our assets,
although the non-operated activity in Karnes continues to run at a
higher pace. Pending the outlook for product prices and based on
continued successful results, we would evaluate adding a second rig at
Giddings later this year to further emphasize our appraisal program.
While our 2019 capital plan was front-end loaded, we expect our capital
spending for drilling and completions to decline through the remainder
of the year and to be within 60 percent of our adjusted EBITDAX for the
full year of 2019.

Quarterly Report on Form 10-Q

Magnolia's financial statements and related footnotes will be available
in its Quarterly Report on Form 10-Q for the three months ended March
31, 2019, which is expected to be filed with the U.S. Securities and
Exchange Commission ("SEC") on May 7, 2019.

Upcoming Investor Conference

Magnolia’s senior management is scheduled to participate in the
following conference:

Citi’s 2019 Global Energy and Utilities Conference on Tuesday, May 14th.

The presentation materials used at the conference will be available the
morning of the event on Magnolia's website at www.magnoliaoilgas.com
under the Investors tab.

Conference Call and Webcast

Magnolia will host an investor conference call on Tuesday, May 7, 2019
at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss these operating
and financial results. Interested parties may join the webcast by
visiting Magnolia's website at www.magnoliaoilgas.com/investors/events-and-presentations
and clicking on the webcast link or by dialing 1-866-807-9684. A replay
of the webcast will be posted on Magnolia's website following completion
of the call.

About Magnolia Oil & Gas Corporation

Magnolia (MGY) is a publicly traded oil and gas exploration and
production company with operations primarily in South Texas in the core
of the Eagle Ford Shale and Austin Chalk formations. Magnolia focuses on
generating value for shareholders through steady production growth,
strong pre-tax margins, and free cash flow. For more information, visit www.magnoliaoilgas.com.

Cautionary Note Regarding Forward-Looking Statements

The information in this press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements, other than statements of present or
historical fact included in this press release, regarding Magnolia’s
strategy, future operations, financial position, estimated revenues, and
losses, projected costs, prospects, plans and objectives of management
are forward looking statements. When used in this press release, the
words could, should, will, may, believe, anticipate, intend, estimate,
expect, project, the negative of such terms and other similar
expressions are intended to identify forward-looking statements,
although not all forward looking statements contain such identifying
words. These forward-looking statements are based on management’s
current expectations and assumptions about future events and are based
on currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law, Magnolia
disclaims any duty to update any forward-looking statements, all of
which are expressly qualified by the statements in this section, to
reflect events or circumstances after the date of this press release.
Magnolia cautions you that these forward-looking statements are subject
to all of the risks and uncertainties, most of which are difficult to
predict and many of which are beyond the control of Magnolia, incident
to the development, production, gathering and sale of oil, natural gas
and natural gas liquids. In addition, Magnolia cautions you that the
forward looking statements contained in this press release are subject
to the following factors: (i) the outcome of any legal proceedings that
may be instituted against Magnolia; (ii) Magnolia’s ability to realize
the anticipated benefits of its business combination, which may be
affected by, among other things, competition and the ability of Magnolia
to grow and manage growth profitably; (iii) changes in applicable laws
or regulations; and (iv) the possibility that Magnolia may be adversely
affected by other economic, business, and/or competitive factors. Should
one or more of the risks or uncertainties described in this press
release occur, or should underlying assumptions prove incorrect, actual
results and plans could different materially from those expressed in any
forward-looking statements. Additional information concerning these and
other factors that may impact the operations and projections discussed
herein can be found in Magnolia’s filings with the SEC, including its
Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Magnolia Oil & Gas Corporation
Non-GAAP Financial
Measures

Reconciliation of net income to Adjusted EBITDAX

In this press release, we refer to Adjusted EBITDAX, a supplemental
non-GAAP financial measure that is used by management and external users
of our consolidated and combined financial statements, such as industry
analysts, investors, lenders and rating agencies. We define Adjusted
EBITDAX as net income (loss) before interest expense, income taxes,
depreciation, depletion and amortization, amortization of intangible
assets, accretion of asset retirement obligations, non-cash stock based
compensation expense, exploration costs, and certain transaction costs.
Adjusted EBITDAX is not a measure of net income as determined by GAAP.

Our management believes that Adjusted EBITDAX is useful because it
allows them to more effectively evaluate our operating performance and
compare the results of our operations from period to period and against
our peers without regard to our financing methods or capital structure.
We also believe that securities analysts, investors and other interested
parties may use Adjusted EBITDAX in the evaluation of our Company. We
exclude the items listed above from net income in arriving at Adjusted
EBITDAX because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and book
values of assets, capital structures and the method by which the assets
were acquired. Adjusted EBITDAX should not be considered as an
alternative to, or more meaningful than, net income as determined in
accordance with GAAP or as an indicator of our operating performance or
liquidity. Certain items excluded from Adjusted EBITDAX are significant
components in understanding and assessing a company’s financial
performance, such as a company’s cost of capital and tax structure, as
well as the historic costs of depreciable assets, none of which are
components of Adjusted EBITDAX. Our presentation of Adjusted EBITDAX
should not be construed as an inference that our results will be
unaffected by unusual or non-recurring items. Our computations of
Adjusted EBITDAX may not be comparable to other similarly titled
measures of other companies.

The following table presents a reconciliation of net income to Adjusted
EBITDAX, our most directly comparable financial measure calculated and
presented in accordance with GAAP:

Magnolia Oil & Gas Corporation
Non-GAAP Financial
Measures

Reconciliation of net income attributable to Class A Common Stock
to adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share
are non-GAAP measures because they exclude the effect of certain items
included in Income Attributable to Class A Common Stock. Management uses
adjusted earnings and adjusted earnings per share to evaluate our
operating and financial performance because it eliminates the impact of
certain items that management does not consider to be representative of
the Company’s on-going business operations. As a performance measure,
adjusted earnings may be useful to investors in facilitating comparisons
to others in the Company’s industry because certain items can vary
substantially in the oil and gas industry from company to company
depending upon accounting methods, book value of assets, and capital
structure, among other factors. Management believes excluding these
items facilitates investors and analysts in evaluating and comparing the
underlying operating and financial performance of our business from
period to period by eliminating differences caused by the existence and
timing of certain expense and income items that would not otherwise be
apparent on a GAAP basis. However, our presentation of adjusted earnings
and adjusted earnings per share may not be comparable to similar
measures of other companies in our industry.

Magnolia Oil & Gas Corporation
Non-GAAP Financial
Measures

Reconciliation of net income to adjusted net income

Our presentation of adjusted net income is a non-GAAP measures because
it excludes the effect of certain items included in Net Income.
Management uses adjusted net income to evaluate our operating and
financial performance because it eliminates the impact of certain items
that management does not consider to be representative of the Company’s
on-going business operations. As a performance measure, adjusted net
income may be useful to investors in facilitating comparisons to others
in the Company’s industry because certain items can vary substantially
in the oil and gas industry from company to company depending upon
accounting methods, book value of assets, and capital structure, among
other factors. Management believes excluding these items facilitates
investors and analysts in evaluating and comparing the underlying
operating and financial performance of our business from period to
period by eliminating differences caused by the existence and timing of
certain expense and income items that would not otherwise be apparent on
a GAAP basis. However, our presentation of adjusted net income may not
be comparable to similar measures of other companies in our industry.

Magnolia Oil & Gas Corporation
Non-GAAP Financial
Measures

Reconciliation of operating margin to adjusted operating margin

In this press release, we refer to adjusted operating margin per Boe, a
supplemental non-GAAP financial measure that is used by management. We
define adjusted operating margin per Boe as total revenues per Boe less
operating expenses per Boe adjusted for certain unusual or non-recurring
items per Boe that management does not consider to be representative of
the Company's on-going business operations. Management believes that
adjusted operating margin per Boe provides relevant and useful
information, which is used by our management in assessing the Company’s
profitability and comparability of results to our peers.

As a performance measure, adjusted operating margin may be useful to
investors in facilitating comparisons to others in the Company’s
industry because certain items can vary substantially in the oil and gas
industry from company to company depending upon accounting methods, book
value of assets, and capital structure, among other factors. Management
believes excluding these items facilitates investors and analysts in
evaluating and comparing the underlying operating and financial
performance of our business from period to period by eliminating
differences caused by the existence and timing of certain expense and
income items that would not otherwise be apparent on a GAAP basis.
However, our presentation of adjusted operating margin and adjusted
operating margin per Boe may not be comparable to similar measures of
other companies in our industry.

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