Magnolia to continue two-rig program following year-over-year production increase

Feb. 17, 2022
Magnolia Oil & Gas will continue a two-rig drilling program expected to generate high single digit full-year production growth following a 7% increase in year-over-year production after moving its Giddings asset in South Texas to full development.

Magnolia Oil & Gas Corp., Houston, will continue a two-rig drilling program expected to generate high single digit full-year production growth following a 7% increase in year-over-year production after moving its Giddings asset in South Texas to full development.

The company provided the outlook as part of its full-year 2021 and fourth-quarter 2021 results Feb. 16.

One rig will continue to drill multi-well development pads in the Giddings area consisting primarily of wells with greater than 7,000-ft laterals and with four wells per pad. The second rig will drill a mix of wells in both the Karnes and Giddings areas of South Texas, including some appraisal wells in Giddings.

Production at Giddings field is expected to average about 40,000 boe/d during the year.

Capital

Based on the 2-rig drilling plan for full-year 2022, the company expects a drilling and completion capital budget of about $350 million.

Non-operated capital is expected to be similar to last year’s level.

For first-quarter 2022, the company expects drilling and completion capital of $85-90 million and total production to be about 70,000-72,000 boe/d.

2021 production

Magnolia had fourth quarter and full-year 2021 net income attributable to Class A common stock of $150.2 million, and $417.3 million, respectively. Fourth-quarter and full-year 2021 total net income was $192.1 million and $559.7 million, respectively.

Net cash provided by operating activities was $260.5 million in the fourth quarter and $788.5 million for full-year 2021.

Total production in the fourth quarter grew 15% from fourth-quarter 2020 to 69,400 boe/d, a 3% sequential increase from third-quarter 2021 and growth of 15% from the prior year’s fourth quarter. Fourth quarter 2021 turn-in lines were more weighted to the Karnes area which resulted in a sequential quarterly production increase of 9% to 33,400 boe/d.

Production for full-year 2021 averaged 66,000 boe/d representing year-over-year volume growth of 7%.

Production at Giddings and other in the fourth quarter grew 27% compared to the prior year fourth quarter to 36,000 boe/d including year-over-year oil production growth of more than 40%.

Magnolia added 31,000 boe/d of proved developed reserves, excluding acquisitions and price-related revisions, representing the reserve additions from its 2021 drilling program.