Magnolia Oil & Gas Corp., Houston, plans to increase production by about 10% in 2023 through a 2-rig operated drilling program and one completion crew on an estimated drilling and completion budget of $490-520 million. The budget includes an estimate of non-operated capital currently expected to be similar to 2022 levels, the company said in an earnings report Feb. 14.
Most of the production growth is expected to come from development at Giddings oil field in South Texas where the company holds about 460,000 net acres.
One rig will continue to drill multi-well development pads in the Giddings area, and the second rig will drill a mix of wells in both the Karnes County (Eagle Ford and Austin Chalk) and Giddings areas, including some appraisal wells at Giddings. For the Giddings acreage this year, Magnolia expects to average about 4 wells/pad with average lateral lengths of about 8,000 ft.
The majority of the 2023 drilling and completions capital will be utilized in this year’s first quarter ($140-150 million) with production of 80,000-82,000 boe/d expected in the quarter.
Fourth quarter, full year 2022
Magnolia reported fourth quarter net income of $231.7 million and full-year 2022 net income of $893.8 million. Net cash provided by operating activities was $268 million in fourth-quarter 2022 and $1.297 billion during full-year 2022.
Total production in fourth-quarter 2022 grew 6% from fourth-quarter 2021 to 73,800 boe/d. Full year production averaged 75,400 boe/d representing year-over-year volume growth of more than 14%.
Production at Giddings and elsewhere in the quarter grew 20% compared to the fourth-quarter 2021 to 43,100 boe/d including oil production growth of 26%. Last year’s growth at Giddings was supported by operating efficiency gains such as fewer drilling days per well, an improvement in stimulation stages per day, and longer laterals, the company said.
Production volumes in the fourth quarter were negatively affected by freezing temperatures, which impacted both Karnes and Giddings assets during late December and a single large pad that was brought online later than expected (OGJ Online, Jan. 5, 2023).