Magnolia Oil & Gas Corporation Class A

Good morning, everyone, and thank you for participating in Magnolia Oil and Gas Corporation's first quarter 2024 earnings conference call. My name is Megan, and I will be your moderator for today's call. At this time, all participants will be placed in a listen-only mode as their 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.

Thank you, Megan, and good morning, everyone. Welcome to Magnolia Oil and Gas's first 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 meeting 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 first quarter of 2024 earnings press release magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stavros.

Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2024 financial and operating results. I will provide some comments on our first quarter, noting the progress of our development plan so far this year, discuss an important bolt-on acquisition that we recently completed, and highlight some actions we're taking at the field level to reduce our cash operating costs. Brian will then review our first quarter financial results in greater detail and provide some additional guidance before we take your questions. Starting on slide three of the investor presentation, Magnolia delivered a strong first quarter with total adjusted net income of $101 million. In keeping with our consistent business model, we continued our capital efficient DNC program by spending $119 million, or 52% of adjusted EBITDAX, while generating $117 million of free cash flow. As part of our goal to return a significant portion of our free cash flow to our shareholders, we returned 68% of our free cash to our ongoing share repurchase program and our recently increased dividend payment. Total company production was toward the top end of our guidance at 84.8 thousand barrels of oil equivalent per day, representing year-over-year production growth of 7%. Production at Giddings was 61.4,000 BOE per day, providing overall growth of 17% compared to last year's first quarter, including oil production growth of 16%. Total company oil production during the quarter was ahead of expectations, coming in at 37.5,000 barrels of oil per day, benefiting from strong oil performance, activity in CARNS, and solid performance from the assets we acquired late last year. We had planned for this year's program to be a little oilier than last year, and our first quarter production provides some early evidence of that plan. Last week, we closed on a very meaningful bolt-on acquisition of oil and gas properties in the heart of our Giddings acreage. These assets were acquired from a private operator for $125 billion and have similar attractive operational financial characteristics to our core acreage position at Giddings. As I've often mentioned, a key part of our strategy is to use some of the excess cash generated by the business to seek out attractive bolt-on acquisition opportunities with the goal of making Magnolia better, not by simply replacing the oil and gas that is produced, but to improve the future opportunity set of our overall business and enhance the capability and sustainability of our high returns. This latest bolt-on acquisition adds new, high-quality acreage that is contiguous to our existing core footprint in Giddings. while also increasing our working interest in some of our current acreage. The transaction leverages the significant knowledge we have gained through operating in this field and extends our deep inventory of high return development opportunities in Giddings from both new locations and incremental working interests. As shown on slide four, the majority of the properties are located in the core of Giddings with acreage in Washington, Lee, and Fayette counties, representing an additional 27,000 net acres spanning over 80,000 total gross acres. The properties include a relatively small amount of base production of approximately 1,000 BOE per day and about 35% oil, with Magnolia operating most of the volumes. This is an ideal acquisition for Magnolia, which significantly enhances our position in Giddings and strengthens the company moving forward. Magnolia continues to operate two drilling rigs and one completion group with the majority of this year's activity planned in Giddings. Our full year 2024 guidance for DNC spending remains unchanged and is expected to be in the range of $450 to $480 million. Following on last year's success in reducing our well cost by nearly 20%, our drilling and completions have gotten off to a strong start in 2024 and we continue to drive further operating efficiencies. While this year's program includes drilling somewhat longer laterals, we have realized considerable recent improvement in reducing our drilling days per well. Lower well costs combined with improved operating efficiencies allow for more wells to be drilled, completed, and turned in line during 2024, helping to support Magnolia's overall high margin growth. As I mentioned earlier, we expect this year's development program to be oilier than last year, and our strong first quarter oil lines support the plan. We anticipate that this year's oil production should remain resilient as a portion of our activity will focus on some of the oilier assets acquired last year. Some of our drilling activity leaned away from natural gas early in the year due to very weak prices, and we expect that our natural gas production should reassert its growth as the year progresses with the view that gas prices would see some recovery later in the year. Lastly, our operations and supply chain teams have initiated a field-level optimization and cost reduction program throughout our assets. Part of these efforts will employ improved field management systems that will increase efficiencies and optimize processes across the field and targeting such areas such as contract labor utilization, surface repair and maintenance, and procurement, just to name a few, while capturing synergies from the acquired assets. These and other initiatives to lower our cash costs are expected to deliver a 5% to 10% reduction in our cash LOE per BOE during the second half of the year compared to the first quarter. As Magnolia has grown and learned while operating our assets over the past six years, we believe this is an appropriate time in our evolution to embark on this program. Our goal is to improve on our track record for generating high operating margins while providing additional free cash flow to either return to our shareholders or efficiently reinvest in the business, and these actions should help us achieve these objectives. I'll now turn the call over to Brian to provide more details on our first quarter financial and operating results.