Magnolia Oil & Gas Corporation Class A

participating in Magnolia Oil and Gas Corporation's fourth quarter 2023 earnings conference call. My name is Andrea, and I will be your moderator for today's call. At this time, all participants will be placed in a listen-only mode as our call is being recorded. I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question and answer session. Please go ahead.

Thank you, Andrea, and good morning, everyone. Welcome to Magnolia Oil and Gas's fourth quarter earnings conference call. Participating on the call today are Chris Stavros, Magnolia's president and chief executive officer, and Brian Corrales, senior vice president and chief financial officer. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ is available in the company's annual report on Form 10-K filed with the SEC. A full safe harbor can be found on slide two of the conference call slide presentation with the supplemental data on our website. you can download Magnolia's fourth quarter 2023 earnings press release, as well as the conference call slides from the investor section of the company's website at www.magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stomrus.

Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our fourth quarter and full year 2023 financial and operating results. I plan to briefly speak to strong year for Magnolia and during which we took several actions to improve our overall business. I will also discuss our business model and our core principles in the context of some of last year's accomplishments and note how Magnolia stacks up compared to many other E&P companies on several key financial metrics. Lastly, I will provide an update on Magnolia's 2024 capital and operating plan, which follows the same principles on which the company was founded nearly six years ago. Brian will then review our fourth quarter and full year financial results in greater detail, along with some additional first quarter guidance before we take your questions. Starting on slide three of the investor presentation and looking at some of the highlights, Magnolia ended 2023 on a high note with fourth quarter production volumes of 85.4,000 barrels of oil equivalent per day, bringing full year 2023 production to 82.3,000 BOE per day. This represented year-over-year production growth of 16% for the fourth quarter and full year 2023 volume growth of more than 9%. Production at our Giddings asset grew 55% compared to the prior year fourth quarter, reaching 63,000 BOE per day, which included oil production growth of 59%. Giddings production represented approximately 71% of overall Magnolia volumes last year, And the Giddings area continues to see operating efficiency improvements in the field, such as fewer drilling days per well and realizing significant gains in stimulation stages per day. DNC capital totaled $91 million for the quarter and $422 million for the year, representing 47% of adjusted EBITDAX for the year and leading to free cash flow generation of $413 million, roughly 10% of our current enterprise value. We returned 74% of this free cash flow to shareholders through our dividend and share of purchase programs, with the remaining allocated to our balance sheet, which helps support attractive bolt-on oil and gas property acquisitions geared toward improving the overall business. Turning to slide four, Magnolia's business model remains unique since it was devised in 2018 with the objective to create a highly investable, attractive E&P business that is enduring and focused on generating absolute per share value over the long term. As we've often expressed, Magnolia's primary objectives are to be the most efficient operator of best-in-class oil and gas assets, generating the highest returns on those assets while employing the least amount of capital for drilling and completing wells. Our high-quality asset base allows for a low reinvestment rate while still providing moderate growth for the business over time. This results in significant free cash flow generation sustainable, and growing dividend. Some of the excess cash may accrue to the balance sheet, helping us to opportunistically pursue attractive bolt-on oil and gas property acquisitions that improve the business, which help to sustain our returns and enhance the dividend per share payout capacity. We continue to adhere to our core principles and believe this is a sound formula for creating long-term value for our shareholders. I'd like to spend a moment reviewing how this model has helped us achieve our goals over the past several years and as our operating program has shifted more to our Giddings asset. Slide 5 shows that Magnolia has had one of the lowest capital reinvestment rates compared to most other E&P companies while achieving a superior compound annual rate of growth in terms of production per share over the past three years. This is a powerful combination allowing us to maximize our free cash flow generation. Turning to slide six, our corporate level returns, or return on capital employed, continue to be some of the best in the upstream energy sector, highlighting our strategy of disciplined capital spending, including last year's success in reducing our well costs and the beneficial impact of our ongoing share purchases. Our cost reduction efforts 2022 levels. Two key elements of our business model are maintaining our low leverage and generating high operating margins. Slides 7 and 8 demonstrate that Magnolia is best in class when coupling one of the lowest leverage profiles in the industry with some of the highest operating margins. This is compared to E&P companies of similar size to Magnolia as well as much larger companies and is a testament to our underlying asset quality and the characteristics Turning to our 2024 guidance shown on slide 9, we expect this year's plan to deliver similarly strong results in current product prices. Magnolia's capital and operating plan is expected to deliver high single-digit percentage growth this year, or approximately 7% to 9%, on both an oil and on a BOE basis, with a capital budget estimated in the range of $450 million to $480 million. This would result in a spending level below 55% of our EBITDAX for 2024, assuming current pricing for products. Total production for the first quarter is estimated to be approximately 84,000 to 85,000 BOE per day, which includes production of facilities downtime caused by severe winter weather conditions during a portion of mid-January. Despite the transitory weather impact last month, our production is fully recovered and is running normally, and we are confident in our full-year plan and guidance of high single-digit production growth for the year. We expect first quarter D&C capital expenditures to be approximately $130 million and anticipate this to be the highest quarterly rate of spending for the year. Most of the full-year 2024 production growth is expected to come from our development program in our Giddings area, and as the main driver, we'll receive approximately 80% of our overall capital and include some activity on our recently acquired assets. We plan to operate two drilling rigs and one completion crew during 2024 and expect to maintain this level of activity throughout the year. While this activity level is similar to last year's operating plan, lower well costs combined with improved operating efficiencies allow for more net wells to be drilled, completed, and turned in line, helping to support Magnolia's overall high-margin growth. Most of the development activity will consist of multi-well development pads and giddings with a smaller amount of development planned in the Carnes area in addition to some appraisal wells. For this year's development activity and giddings, we currently expect to drill multi-well pads with somewhat longer lateral lengths of approximately 8,500 feet. We continue to run a focused business and in an industry where operational execution and financial discipline are essential. The actions we took last year to reduce Our well costs help to significantly reduce our capital, improve our operating margins, and generate additional free cash flow. Together with the acquisitions completed last year, these accomplishments have strengthened our position into 2024 when we expect high single-digit growth, high margin, and high margin total company production growth with our oil volumes growing at similar rates. We have a strong five-year history of demonstrated operating financial results and expect our business model to enhance per share value over time. I'll now turn the call over to Brian to provide more details on our fourth quarter 2023 financial and operating results.