10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-38083

Magnolia Oil & Gas Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware		81-5365682
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Nine Greenway Plaza, Suite 1300		77046
Houston,	Texas
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (713) 842-9050

Securities registered pursuant to section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001	MGY	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of May 8, 2020, there were 166,579,165 shares of Class A Common Stock, $0.0001 par value per share, and 85,789,814 shares of Class B Common Stock, $0.0001 par value per share, outstanding.

GLOSSARY OF CERTAIN OTHER TERMS

The following are definitions of certain other terms that are used in this Quarterly Report on Form 10-Q:

2026 Senior Notes. 6.0% Senior Notes due 2026.

Business Combination. The acquisition which closed on July 31, 2018 of certain right, title, and interest in certain oil and natural gas assets located primarily in the Karnes County portion of the Eagle Ford Shale in South Texas; certain right, title, and interest in certain oil and natural gas assets located primarily in the Giddings Field of the Austin Chalk; and a 35% membership interest in Ironwood Eagle Ford Midstream, LLC.

Class A Common Stock. Magnolia’s Class A Common Stock, par value $0.0001 per share.

Class B Common Stock. Magnolia’s Class B Common Stock, par value $0.0001 per share.

The Company or Magnolia. Magnolia Oil & Gas Corporation (either individually or together with its consolidated subsidiaries, as the context requires).

EnerVest. EnerVest Ltd.

Giddings Assets. Certain right, title, and interest in certain oil and natural gas assets located primarily in the Giddings Field of the Austin Chalk formation.

Issuers. Magnolia Operating and Magnolia Oil & Gas Finance Corp., a wholly owned subsidiary of Magnolia Operating.

Karnes County Assets. Certain right, title, and interest in certain oil and natural gas assets located primarily in the Karnes County portion of the Eagle Ford Shale in South Texas.

Karnes County Contributors. EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership, EnerVest Energy Institutional Fund XIV-WIC, L.P., a Delaware limited partnership, EnerVest Energy Institutional Fund XIV-2A, L.P., a Delaware limited partnership, EnerVest Energy Institutional Fund XIV-3A, L.P., a Delaware limited partnership, and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership.

Magnolia Intermediate. Magnolia Oil & Gas Intermediate LLC.

Magnolia LLC. Magnolia Oil & Gas Parent LLC.

Magnolia LLC Units. Units representing limited liability company interests in Magnolia LLC.

Magnolia Operating. Magnolia Oil & Gas Operating LLC.

RBL Facility. Senior secured reserve-based revolving credit facility.

Services Agreement. That certain Services Agreement, by and between the Company and EnerVest Operating LLC (“EVOC”), pursuant to which EVOC provides certain services to the Company as described in the agreement.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations (unaudited)	2
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited)	3
	Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II.	OTHER INFORMATION	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	24
Item 6.	Exhibits	24
Signatures		25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Magnolia Oil & Gas Corporation

Consolidated Balance Sheets

(In thousands)

	March 31, 2020			December 31, 2019
ASSETS	(Unaudited)			(Audited)
CURRENT ASSETS
Cash and cash equivalents	$	146,492		$	182,633
Accounts receivable	77,744			105,775
Drilling advances	863			299
Other current assets	4,146			4,511
Total current assets	229,245			293,218
PROPERTY, PLANT AND EQUIPMENT
Oil and natural gas properties	2,050,470			3,815,221
Other	3,391			3,087
Accumulated depreciation, depletion and amortization	(844,255		)	(701,551		)
Total property, plant and equipment, net	1,209,606			3,116,757
OTHER ASSETS
Deferred financing costs, net	7,806			8,390
Equity method investment	20,171			19,730
Intangible assets, net	20,225			23,851
Other long-term assets	3,776			4,460
TOTAL ASSETS	$	1,490,829		$	3,466,406
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	86,154		$	79,428
Other current liabilities (Note 7)	84,546			95,780
Total current liabilities	170,700			175,208
LONG-TERM LIABILITIES
Long-term debt, net	390,147			389,835
Asset retirement obligations, net of current	97,008			93,524
Deferred taxes, net	3,181			77,834
Other long-term liabilities	903			1,476
Total long-term liabilities	491,239			562,669
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY
Class A Common Stock, $0.0001 par value, 1,300,000 shares authorized, 168,473 shares issued and 166,473 shares outstanding in 2020 and 168,318 shares issued and 167,318 shares outstanding in 2019	17			17
Class B Common Stock, $0.0001 par value, 225,000 shares authorized, 85,790 shares issued and outstanding in 2020 and 2019	9			9
Additional paid-in capital	1,703,996			1,703,362
Treasury Stock, at cost, 2,000 shares and 1,000 shares in 2020 and 2019, respectively	(16,760		)	(10,277		)
Retained earnings (Accumulated deficit)	(1,144,070		)	82,940
Noncontrolling interest	285,698			952,478
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,490,829		$	3,466,406

The accompanying notes are an integral part to these consolidated financial statements.

1

Magnolia Oil & Gas Corporation

Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
REVENUES
Oil revenues	$	154,686		$	171,654
Natural gas revenues	16,175			27,375
Natural gas liquids revenues	10,504			19,645
Total revenues	181,365			218,674
OPERATING EXPENSES
Lease operating expenses	24,163			21,518
Gathering, transportation, and processing	8,020			9,315
Taxes other than income	10,018			14,401
Exploration expense	556,427			2,476
Impairment of oil and natural gas properties	1,381,258			—
Asset retirement obligation accretion	1,438			1,328
Depreciation, depletion and amortization	142,671			115,946
Amortization of intangible assets	3,626			3,626
General and administrative expenses	18,080			16,196
Transaction related costs	—			353
Total operating costs and expenses	2,145,701			185,159
OPERATING INCOME (LOSS)	(1,964,336		)	33,515
OTHER INCOME (EXPENSE)
Income from equity method investee	440			388
Interest expense, net	(6,757		)	(7,416		)
Other income (expense), net	(472		)	1
Total other income (expense)	(6,789		)	(7,027		)
INCOME (LOSS) BEFORE INCOME TAXES	(1,971,125		)	26,488
Income tax expense (benefit)	(75,826		)	3,775
NET INCOME (LOSS)	(1,895,299		)	22,713
LESS: Net income (loss) attributable to noncontrolling interest	(668,289		)	9,687
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON STOCK	$	(1,227,010	)	$	13,026
NET INCOME (LOSS) PER SHARE OF CLASS A COMMON STOCK
Basic	$	(7.34	)	$	0.08
Diluted	$	(7.34	)	$	0.08
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic	167,149			156,322
Diluted	167,149			158,140

The accompanying notes are an integral part of these consolidated financial statements.

2

Magnolia Oil & Gas Corporation

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)

	Class A Common Stock				Class B Common Stock				Additional Paid In Capital			Retained Earnings		Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
	Shares		Value		Shares		Value
Balance, December 31, 2018	156,333		$	16	93,346		$	9	$	1,641,237		$	35,507	$	1,676,769		$	1,031,186		$	2,707,955
Stock based compensation expense	—		—		—		—		2,432			—		2,432			—			2,432
Changes in ownership interest adjustment	—		—		—		—		(919		)	—		(919		)	832			(87		)
Final settlement adjustment related to Business Combination	(496	)	—		(1,556	)	—		(6,095		)	—		(6,095		)	(19,150		)	(25,245		)
Contributions from noncontrolling interest owner	—		—		—		—		—			—		—			8,809			8,809
Net income	—		—		—		—		—			13,026		13,026			9,687			22,713
Balance, March 31, 2019	155,837		$	16	91,790		$	9	$	1,636,655		$	48,533	$	1,685,213		$	1,031,364		$	2,716,577

	Class A Common Stock			Class B Common Stock			Additional Paid In Capital			Treasury Stock				Retained Earnings/ Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
	Shares	Value		Shares	Value					Shares	Value
Balance, December 31, 2019	168,319	$	17	85,790	$	9	$	1,703,362		1,000	$	(10,277	)	$	82,940		$	1,776,051		$	952,478		$	2,728,529
Stock based compensation expense, net of forfeitures	—	—		—	—		2,879			—	—			—			2,879			—			2,879
Changes in ownership interest adjustment and in deferred tax liability	—	—		—	—		(1,793		)	—	—			—			(1,793		)	1,793			—
Common stock issued related to stock based compensation, net	154	—		—	—		(452		)	—	—			—			(452		)	—			(452		)
Class A Common Stock repurchase	—	—		—	—		—			1,000	(6,483		)	—			(6,483		)	—			(6,483		)
Distributions to noncontrolling interest owners	—	—		—	—		—			—	—			—			—			(284		)	(284		)
Net loss	—	—		—	—		—			—	—			(1,227,010		)	(1,227,010		)	(668,289		)	(1,895,299		)
Balance, March 31, 2020	168,473	$	17	85,790	$	9	$	1,703,996		2,000	$	(16,760	)	$	(1,144,070	)	$	543,192		$	285,698		$	828,890

The accompanying notes are an integral part to these consolidated financial statements.

3

Magnolia Oil & Gas Corporation

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,895,299	)	$	22,713
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	142,671			115,946
Amortization of intangible assets	3,626			3,626
Exploration expense, non-cash	555,189			483
Impairment of oil and natural gas properties	1,381,258			—
Asset retirement obligations accretion expense	1,438			1,328
Amortization of deferred financing costs	896			871
Deferred tax expense (benefit)	(74,654		)	3,415
Stock based compensation	2,879			2,432
Other	(447		)	(393		)
Changes in operating assets and liabilities:
Accounts receivable	28,031			5,012
Accrued liabilities	(16,547		)	(29,955		)
Accounts payable	6,726			(6,729		)
Drilling advances	(563		)	(599		)
Other assets and liabilities, net	(326		)	(1,588		)
Net cash provided by operating activities	134,878			116,562
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of EnerVest properties	—			4,250
Acquisitions, other	(69,390		)	(53,326		)
Additions to oil and natural gas properties	(94,210		)	(134,435		)
Other investing	(200		)	197
Net cash used in investing activities	(163,800		)	(183,314		)
CASH FLOW FROM FINANCING ACTIVITIES
Contributions from noncontrolling interest owners	—			7,301
Distributions to noncontrolling interest owners	(284		)	—
Class A Common Stock repurchase	(6,483		)	—
Other financing activities	(452		)	—
Net cash provided by (used in) financing activities	(7,219		)	7,301
NET CHANGE IN CASH AND CASH EQUIVALENTS	(36,141		)	(59,451		)
Cash and cash equivalents – Beginning of period	182,633			135,758
Cash and cash equivalents – End of period	$	146,492		$	76,307
SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental non-cash operating activity:
Cash paid for interest	$	12,540		$	12,571
Supplemental non-cash investing and financing activity:
Accruals or liabilities for capital expenditures	$	47,903		$	61,778
Supplemental non-cash lease operating activity:
Right-of-use assets obtained in exchange for operating lease obligations	$	—		$	2,516

The accompanying notes are an integral part of these consolidated financial statements.

4

Magnolia Oil & Gas Corporation

Notes to Consolidated Financial Statements

1. Description of Business and Basis of Presentation

Organization and Nature of Operations

Magnolia is an independent oil and natural gas company engaged in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (“NGL”) reserves. The Company’s oil and natural gas properties are located primarily in Karnes County and the Giddings Field in South Texas where the Company targets the Eagle Ford Shale and Austin Chalk formations. Magnolia’s objective is to generate stock market value over the long term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures normally included in an Annual Report on Form 10-K have been omitted. The consolidated financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s consolidated and combined financial statements and related notes included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated and combined financial statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019.

In the opinion of management, all normal, recurring adjustments and accruals considered necessary to present fairly, in all material respects, the Company’s interim financial results, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year.

Certain reclassifications of prior period financial statements have been made to conform to current reporting practices. The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated.  The Company reflects a noncontrolling interest representing primarily the interest owned by the Karnes County Contributors through their ownership of Magnolia LLC Units in the consolidated financial statements. The noncontrolling interest is presented as a component of equity. See Note 11—Stockholders’ Equity for further discussion of the noncontrolling interest.

2. Summary of Significant Accounting Policies

As of March 31, 2020, the Company’s significant accounting policies are consistent with those discussed in Note 2 - Summary of Significant Accounting Policies of its consolidated and combined financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, with the exception of Accounts Receivable and Allowance for Expected Credit Losses.

Accounts Receivable and Allowance for Expected Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” For public business entities, the new standard became effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Magnolia adopted this standard on January 1, 2020. The standard changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires entities to use a new forward-looking expected loss model that will result in earlier recognition of allowance for losses. The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates. The majority of these receivables have payment terms of 30 days or less. For receivables due from joint interest owners, the Company generally has the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. From an evaluation of the Company’s existing credit portfolio, historical credit losses have been de minimis and are expected to remain so in the future assuming no substantial changes to the business or creditworthiness of Magnolia’s business partners. As expected, there was no material impact on the Company’s unaudited consolidated financial statements or disclosures upon adoption of this ASU.

5

3. Revenue Recognition

Magnolia’s revenues include the sale of crude oil, natural gas, and NGLs. Oil, natural gas, and NGL sales are recognized as revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, natural gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million Btu of natural gas, gallon of NGLs, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated.

The Company’s oil production is primarily sold under market-sensitive contracts that are typically priced at a differential to the New York Mercantile Exchange (“NYMEX”) price or at purchaser posted prices for the producing area. For oil contracts, the Company generally records sales based on the net amount received.

For natural gas contracts, the Company generally records wet gas sales (which consists of natural gas and NGLs based on end products after processing) at the wellhead or inlet of the gas processing plant (i.e., the point of control transfer) as revenues net of gathering, transportation, and processing expenses if the processor is the customer and there is no redelivery of commodities to the Company at the tailgate of the plant. Conversely, the Company generally records residual natural gas and NGL sales at the tailgate of the plant (i.e., the point of control transfer) on a gross basis along with the associated gathering, transportation, and processing expenses if the processor is a service provider and there is redelivery of one or several commodities to the Company at the tailgate of the plant. The facts and circumstances of an arrangement are considered and judgment is often required in making this determination. For processing contracts that require noncash consideration in exchange for processing services, the Company recognizes revenue and an equal gathering, transportation, and processing expense for commodities transferred to the service provider.

Customers are invoiced once the Company’s performance obligations have been satisfied. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. There are no judgments that significantly affect the amount or timing of revenue from contracts with customers. Accordingly, the Company’s product sales contracts do not give rise to material contract assets or contract liabilities.

The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates. Receivables from contracts with customers totaled $68.7 million as of March 31, 2020 and $100.4 million as of December 31, 2019. See Note 2 - Summary of Significant Accounting Policies for more information on the Company’s allowance for expected credit losses policy.

The Company has concluded that disaggregating revenue by product type appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors and has reflected this disaggregation of revenue on the Company’s consolidated statements of operations for all periods presented.

Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title.

The Company does not disclose the value of unsatisfied performance obligations for contracts as all contracts have either an original expected length of one year or less, or the entire future consideration is variable and allocated entirely to a wholly unsatisfied performance obligation.

4. Acquisitions

2020 Acquisitions

On February 21, 2020, the Company completed the acquisition of certain non-operated oil and natural gas assets located in Karnes and DeWitt Counties, Texas, for approximately $71.3 million in cash, subject to customary closing adjustments. The transaction was accounted for as an asset acquisition.

2019 Acquisitions

On May 31, 2019, the Company completed the acquisition of certain oil and natural gas assets located in the Company’s Karnes County Assets for approximately $36.3 million in cash and approximately 3.1 million shares of the Company’s Class A Common Stock. The transaction was accounted for as an asset acquisition.

6

On February 5, 2019, Magnolia Operating formed a joint venture, Highlander Oil & Gas Holdings LLC (“Highlander”), to complete the acquisition of a 72% working interest in the Eocene-Tuscaloosa Zone, Ultra Deep Structure gas well located in St. Martin Parish, Louisiana and 31.1 million royalty trust units in the Gulf Coast Ultra Deep Royalty Trust from McMoRan Oil & Gas, LLC. Highlander paid cash consideration of $50.9 million for such interests. MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 85% of the units in Highlander. The transaction was accounted for as an asset acquisition.

5. Fair Value Measurements

Certain of the Company’s assets and liabilities are carried at fair value and measured either on a recurring or nonrecurring basis. The Company’s fair value measurements are based either on actual market data or assumptions that other market participants would use in pricing an asset or liability in an orderly transaction, using the valuation hierarchy prescribed by GAAP under ASC 820.

The three levels of the fair value hierarchy under ASC 820 are as follows:

Level I - Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.

Level II - Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level III - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.

Fair Value of Financial Instruments

Debt Obligations

The carrying value and fair value of the financial instrument that is not carried at fair value in the accompanying consolidated balance sheet at March 31, 2020 and December 31, 2019 is as follows:

	March 31, 2020				December 31, 2019
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	390,147	$	228,000	$	389,835	$	412,000

The fair value of the 2026 Senior Notes at March 31, 2020 and December 31, 2019 was based on unadjusted quoted prices in an active market, which are considered a Level 1 input in the fair value hierarchy.

The Company has other financial instruments consisting primarily of receivables, payables, and other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in business combinations and asset retirement obligations.

Nonrecurring Fair Value Measurements

The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its non-financial assets and liabilities, including oil and natural gas properties. These assets and liabilities are not measured at fair value on a recurring basis but are subject to fair value adjustments when facts and circumstances arise that indicate a need for remeasurement. 

During the first quarter of 2020, Magnolia recorded impairments of $1.9 billion related to proved and unproved properties as a result of the sharp decline in commodity prices. Proved property impairment of $1.4 billion is included in “Impairment of oil and natural gas properties” and unproved property impairment of $0.6 billion is included in “Exploration expense” on the Company’s consolidated statement of operations for the three months ended March 31, 2020. Proved and unproved properties that were impaired had aggregate fair values as of the most recent date of impairment for the three months ended March 31, 2020, of $0.8 billion and $0.3 billion, respectively. The fair values of oil and natural gas properties were measured using the income approach based on inputs that are not observable in the market, and therefore, represent Level 3 inputs. The Company calculated the estimated fair values of its oil and natural gas properties using a discounted future cash flow model. Significant inputs associated with the calculation of discounted future net cash flows include estimates of future commodity prices based on NYMEX strip pricing adjusted for price differentials, estimates of proved oil and natural gas reserves and risk adjusted probable and possible reserves, estimates of future expected operating and capital costs, and a market participant based weighted average cost of capital of 10% for proved property impairments and 12% for unproved property impairments.

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6. Intangible Assets

Non-Compete Agreement

On July 31, 2018, the Company and EnerVest, separate and apart from the Business Combination, entered into a non-compete agreement (the “Non-Compete”), which prohibits EnerVest and certain of its affiliates from competing with the Company in the Eagle Ford Shale (the “Market Area”) until the later of July 31, 2022 or the date the Services Agreement is terminated. Under the Non-Compete, an affiliate of EnerVest will have the right to receive 4.0 million shares of Class A Common Stock in two tranches of 2.0 million shares in two and one half and four years from July 31, 2018 provided EnerVest does not compete in the Market Area.

The Company recorded an estimated cost of $44.4 million for the Non-Compete as intangible assets on the Company’s consolidated balance sheet. These intangible assets have a definite life and are subject to amortization utilizing the straight-line method over their economic life, currently estimated to be two and one half to four years. The Company includes the amortization in “Amortization of intangible assets” on the Company’s consolidated statements of operations.

(In thousands)	March 31, 2020			December 31, 2019
Non-compete intangible assets	$	44,400		$	44,400
Accumulated amortization	(24,175		)	(20,549		)
Intangible assets, net	$	20,225		$	23,851
Weighted average amortization period (in years)	3.25			3.25

7. Other Current Liabilities

The following table provides detail of the Company’s other current liabilities for the periods presented:

(In thousands)	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	47,903	$	40,722
Other	36,643		55,058
Total other current liabilities	$	84,546	$	95,780

8. Long Term Debt

The Company’s debt is comprised of the following:

(In thousands)	March 31, 2020			December 31, 2019
Revolving credit facility	$	—		$	—
6.0% Senior Notes due 2026	400,000			400,000
Total long-term debt	400,000			400,000
Less: Unamortized deferred financing cost	(9,853		)	(10,165		)
Total debt, net	$	390,147		$	389,835

Credit Facility

In connection with the consummation of the Business Combination, Magnolia Operating entered into the RBL Facility among Magnolia Operating, as borrower, Magnolia Intermediate, as its holding company, the banks, financial institutions, and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Citibank, N.A., as administrative agent, collateral agent, issuing bank, and swingline lender, providing for maximum commitments in an aggregate principal amount of $1.0 billion with a letter of credit facility with a $100.0 million sublimit. The borrowing base as of March 31, 2020 was $550.0 million. In April 2020, the borrowing base capacity was reduced to $450.0 million. The RBL Facility is guaranteed by certain parent companies and subsidiaries of Magnolia LLC and is collateralized by certain of Magnolia Operating’s oil and natural gas properties and has a borrowing base subject to semi-annual redetermination.

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Borrowings under the RBL Facility bear interest, at Magnolia Operating’s option, at a rate per annum equal to either the LIBOR rate or the alternative base rate plus the applicable margin. Additionally, Magnolia Operating is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the RBL Facility. The applicable margin and the commitment fee rate are calculated based upon the utilization levels of the RBL Facility as a percentage of the borrowing base then in effect.

The RBL Facility contains certain affirmative and negative covenants customary for financings of this type, including compliance with a leverage ratio of less than 4.00 to 1.00 and, if the leverage ratio is in excess of 3.00 to 1.00, a current ratio of greater than 1.00 to 1.00. As of March 31, 2020, the Company was in compliance with all covenants under the RBL Facility.

Deferred financing costs incurred in connection with securing the RBL Facility were $11.7 million, which are amortized on a straight-line basis over a period of five years and included in “Interest expense, net” in the Company’s consolidated statements of operations. The Company recognized interest expense of $1.1 million during the three months ended March 31, 2020 and 2019 related to the RBL Facility. The unamortized portion of the deferred financing costs are included in “Deferred financing costs, net” on the accompanying consolidated balance sheet as of March 31, 2020.

The Company did not have any outstanding borrowings under its RBL Facility as of March 31, 2020.

2026 Senior Notes

On July 31, 2018, the Issuers issued and sold $400.0 million aggregate principal amount of 2026 Senior Notes. The 2026 Senior Notes were issued under the Indenture, dated as of July 31, 2018 (the “Indenture”), by and among the Issuers and Deutsche Bank Trust Company Americas, as trustee. The 2026 Senior Notes are guaranteed on a senior unsecured basis by the Company, Magnolia Operating, and Magnolia Intermediate and may be guaranteed by certain future subsidiaries of the Company. The 2026 Senior Notes will mature on August 1, 2026 and bear interest at the rate of 6.0% per annum.

At any time prior to August 1, 2021, the Issuers may, on any one or more occasions, redeem all or a part of the 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the 2026 Senior Notes redeemed, plus a “make whole” premium on accrued and unpaid interest, if any, to, but excluding, the date of redemption. After August 1, 2021, the Issuers may redeem all or a part of the 2026 Senior Notes based on principal plus a set premium, as set forth in the Indenture, including any accrued and unpaid interest.

The Company incurred $11.8 million of deferred financing costs related to the issuance of the 2026 Senior Notes, which were capitalized. These costs are amortized using the effective interest method over the term of the 2026 Senior Notes and are included in “Interest expense, net” in the Company’s consolidated statements of operations. The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the 2026 Senior Notes, which have been recorded as “Long-term debt, net” on the consolidated balance sheet as of March 31, 2020. The Company recognized interest expense of $6.3 million for the three months ended March 31, 2020 and 2019 related to the 2026 Senior Notes.

Affiliate Guarantors

The Company, Magnolia LLC (together with the Company, the “Parent Guarantors”), and the direct parent company of Magnolia Operating and certain subsidiaries of Magnolia Operating are guarantors under the terms of its 2026 Senior Notes and RBL Facility. The Parent Guarantors may be released upon the request of Magnolia Operating. Magnolia’s consolidated financial statements reflect the financial position of these subsidiary guarantors. As the parent company, Magnolia has no independent operations. The guarantees are full and unconditional (except for customary release provisions) and joint and several. There are restrictions on dividends, distributions, loans, or other transfers of funds from the subsidiary guarantors to the Company.

9. Commitments and Contingencies

Legal Matters

The Company is involved in disputes or legal actions in the ordinary course of business. For example, certain of the Karnes County Contributors and the Company have been named as defendants in a lawsuit where the plaintiffs claim to be entitled to a minority working interest in certain Karnes County Assets. The litigation is in the pre-trial stage. The exposure related to this litigation is currently not reasonably estimable. The Karnes County Contributors retained all such liability in connection with the Business Combination. At March 31, 2020, the Company does not believe the outcome of any such disputes or legal actions will have a material effect on its consolidated statements of operations, balance sheet, or cash flows. No amounts were accrued with respect to outstanding litigation at March 31, 2020 or March 31, 2019.

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Environmental Matters

The Company, as an owner or lessee and operator of oil and natural gas properties, is subject to various federal, state, local laws, and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and natural gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks.

Risks and Uncertainties 

The Company’s revenue, profitability, and future growth are substantially dependent upon the prevailing and future prices for oil and natural gas, which depend on numerous factors beyond the Company’s control such as overall oil and natural gas production and inventories in relevant markets, economic conditions, the global political environment, regulatory developments, and competition from other energy sources. Oil and natural gas prices historically have been volatile and may be subject to significant fluctuations in the future. 

The coronavirus disease 2019 (“COVID-19”) pandemic and related economic repercussions have created significant volatility, uncertainty, and turmoil in the oil and natural gas industry. Oil demand has significantly deteriorated as a result of the virus outbreak and corresponding preventative measures taken around the world to mitigate the spread of the virus. Furthermore, in the midst of the ongoing COVID-19 pandemic, the competition between Russia and Saudi Arabia for crude oil market share caused a substantial increase in supply. The implications of these unprecedented events continue to unfold and may have further negative effects to the Company’s business, such as production curtailment, reduced storage capacity, and reductions to its operating plans.

10. Income Taxes

The Company estimates its annual effective tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act includes several significant business tax provisions that, among other things, allow businesses to carry back net operating losses (“NOL”) arising in 2018, 2019, and 2020 to the five prior tax years. Applying the NOL carryback provision results in an income tax benefit of $1.2 million in the first quarter of 2020 and the difference in the U.S. federal rate of 35% in 2017 compared to 21% in 2018 and thereafter results in a discrete benefit to the tax provision of approximately $0.5 million for the period ended March 31, 2020.

The income tax expense or benefit recorded for the period is based on applying an estimated annual effective income tax rate to the net income or loss for the quarters ended March 31, 2020 and March 31, 2019. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the Company’s expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, the effect of noncontrolling interest, permanent and temporary differences, and the likelihood of recovering deferred tax assets in the current year. The accounting estimates used to compute the income tax expense or benefit may change as new events occur, more experience is obtained, additional information becomes known, or as the tax environment changes. The Company’s annual effective tax rate for the three months ended March 31, 2020 and 2019 was 3.8% and 14.2%, respectively. The primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest, the recognition of a valuation allowance on federal and state deferred tax assets, and state taxes. During the first quarter of 2020, Magnolia’s effective tax rate was primarily impacted by the recognition of valuation allowances for its deferred tax assets from non-cash impairments of the carrying value of the Company’s oil and natural gas properties and the net deferred tax assets generated in this period.

During the first quarter of 2020, the Company moved from a net deferred tax liability position to an estimated net deferred tax asset position of $208.8 million resulting primarily from oil and natural gas impairments. Management assessed whether it is more-likely-than-not that it will generate sufficient taxable income to realize its deferred income tax assets, including the investment in partnership and net operating loss carryforwards. In making this determination, the Company considered all available positive and negative evidence and made certain assumptions. The Company considered, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years. As of March 31, 2020, the Company assessed the realizability of the deferred tax assets and recorded a full valuation allowance of $208.8 million.

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The Company’s income tax provision consists of the following components:

(In thousands)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Current:
Federal	$	(1,172	)	$	177
State	—			183
	(1,172		)	360
Deferred:
Federal	(68,877		)	3,361
State	(5,777		)	54
	(74,654		)	3,415
Total provision	$	(75,826	)	$	3,775

The Company is subject to U.S. federal income tax, the margin tax in the state of Texas, and Louisiana corporate income tax. No amounts have been accrued for income tax uncertainties or interest and penalties as of March 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examinations by its major taxing authorities for all periods.

11. Stockholders’ Equity

Class A Common Stock

At March 31, 2020, there were 168.5 million shares of Class A Common Stock issued and 166.5 million shares of Class A Common Stock outstanding. The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters and are entitled one vote for each share held. There is no cumulative voting with respect to the election of directors, which results in the holders of more than 50% of the shares being able to elect all of the directors, subject to voting obligations under the Stockholder Agreement (defined herein). In the event of a liquidation, dissolution, or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The holders of the Class A Common Stock have no preemptive or other subscription rights, and there are no sinking fund provisions applicable to such shares.

Class B Common Stock

At March 31, 2020, there were 85.8 million shares of Class B Common Stock issued and outstanding. Holders of Class B Common Stock vote together as a single class with holders of Class A Common Stock on all matters properly submitted to a vote of the stockholders. The holders of Class B Common Stock generally have the right to exchange all or a portion of their Class B Common Stock, together with an equal number of Magnolia LLC Units, for the same number of shares of Class A Common Stock or, at Magnolia LLC’s option, an equivalent amount of cash. Upon the future redemption or exchange of Magnolia LLC Units held by any holder of Class B Common Stock, a corresponding number of shares of Class B Common Stock held by such holder of Class B Common Stock will be canceled. In the event of a liquidation, dissolution, or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The holders of the Class B Common Stock have no preemptive or other subscription rights, and there are no sinking fund provisions applicable to such shares.

Share Repurchase Program

On August 5, 2019, the Company’s board of directors authorized a share repurchase program of up to 10 million shares of Class A Common Stock. The program does not require purchases to be made within a particular timeframe. As of March 31, 2020, the Company had repurchased 2.0 million shares under the plan at a cost of $16.8 million.

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Noncontrolling Interest

Noncontrolling interest in Magnolia’s consolidated subsidiaries include amounts attributable to Magnolia LLC Units that were issued to the Karnes County Contributors in connection with the Business Combination. The noncontrolling interest percentage is affected by various equity transactions such as issuances of Class A Common Stock, the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) for Class A Common Stock, or cancellation of Class B Common Stock (and corresponding Magnolia LLC Units). As of March 31, 2020, Magnolia owned approximately 66% of the interest in Magnolia LLC and the noncontrolling interest was 34%. In the first quarter of 2019, Magnolia Operating formed Highlander as a joint venture where MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 85% of the units in Highlander, with the remaining 15% attributable to noncontrolling interest.

12. Stock Based Compensation

On October 8, 2018, the Company’s board of directors adopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (the “Plan”), effective as of July 17, 2018. A total of 11.8 million shares of Class A Common Stock have been authorized for issuance under the Plan. The Company grants stock based compensation awards in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to eligible employees and directors to enhance the Company and its affiliates’ ability to attract, retain, and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” on the consolidated statements of operations and was $2.9 million and $2.4 million for the three months ended March 31, 2020 and 2019, respectively. The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense.

Restricted Stock Units

The Company grants service-based RSU awards to employees and non-employee directors, which generally vest ratably over a three-year service period, in the case of awards to employees, and vest in full after one year, in the case of awards to directors. RSUs represent the right to receive shares of Class A Common Stock at the end of the vesting period equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company for any reason prior to vesting of the award. Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. Unrecognized compensation expense related to unvested RSUs at March 31, 2020 was $13.6 million, which the Company expects to recognize over a weighted average period of 2.2 years.

The table below summarizes RSU activity for the three months ended March 31, 2020:

	Restricted Stock Units		Weighted Average Grant Date Fair Value
Unvested RSUs, beginning of period	1,099,901		$	12.97
Granted	686,345		7.45
Vested	(213,846	)	12.68
Forfeited	—		—
Unvested RSUs, end of period	1,572,400		$	10.60

Performance Stock Units

During the three months ended March 31, 2020, the Company granted PSUs to certain employees. Each PSU, to the extent earned, represents the contingent right to receive one share of Class A Common Stock and the awardee may earn between zero and 150% of the target number of PSUs granted based on the total shareholder return (“TSR”) of the Class A Common Stock relative to the TSR achieved by a specific industry peer group over a three-year performance period, the last day of which is also the vesting date. In addition to the TSR conditions, vesting of the PSUs is subject to the awardee’s continued employment through the date of settlement of the PSUs, which will occur within 60 days following the end of the performance period. Unrecognized compensation expense related to unvested PSUs at March 31, 2020 was $7.5 million, which the Company expects to recognize over a weighted average period of 2.0 years.

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The table below summarizes PSU activity for the three months ended March 31, 2020:

	Performance Stock Units		Weighted Average Grant Date Fair Value
Unvested PSUs, beginning of period	701,128		$	14.31
Granted	401,958		6.14
Vested	(8,334	)	14.58
Forfeited	—		—
Unvested PSUs, end of period	1,094,752		$	11.31

The grant date fair value of the PSUs granted during the three months ended March 31, 2020 and 2019 was $2.5 million and $3.6 million, respectively, calculated using a Monte Carlo simulation. The following table summarizes the assumptions used to calculate the grant date fair value of these PSUs.

Grant Date Fair Value Assumptions	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Expected term (in years)	2.85	2.85
Expected volatility	33.50%	33.61%
Risk-free interest rate	1.16%	2.48%

13. Earnings (Loss) Per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:

(In thousands, except per share data)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Basic:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Net income (loss) per share of Class A Common Stock - basic	$	(7.34	)	$	0.08
Diluted:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Add: Dilutive effect warrants, stock based compensation, and other	—			1,818
Weighted average number of common shares outstanding during the period - diluted	167,149			158,140
Net income (loss) per share of Class A Common Stock - diluted	$	(7.34	)	$	0.08

The calculation for weighted average shares reflects shares outstanding over the reporting period based on the actual number of days the shares were outstanding. The Company excluded the following from the computation of diluted earnings or loss per share because the effect was anti-dilutive as a result of the net loss for the quarter ended March 31, 2020: (i) 85.8 million weighted average shares of Class A Common Stock issuable upon exchange of the Class B Common Stock (and the corresponding Magnolia LLC Units), (ii) 4.0 million contingent shares of Class A Common Stock issuable to EnerVest, provided EnerVest does not compete in the Market Area, and (iii) 0.3 million RSUs and PSUs. For the quarter ended March 31, 2019, the Company excluded 93.3 million weighted average shares of Class A Common Stock issuable upon the exchange of the Class B Common Stock (and the corresponding Magnolia LLC Units) as the effect was anti-dilutive.

14. Related Party Transactions

As of March 31, 2020, EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership, and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership, both of which are part of the Karnes County Contributors, each held more than 10% of the Company’s common stock and qualified as principal owners of the Company, as defined in ASC 850, “Related Party Disclosures.”

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This report 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 historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although Magnolia believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, Magnolia’s assumptions about:

• the length, scope and severity of the recent coronavirus disease 2019 (“COVID-19”) pandemic, and the impacts of the competition between Russia and Saudi Arabia for crude oil market share, including the effects of related public health concerns and the impact of actions taken by governmental authorities and other third parties in response to the pandemic and its impact on commodity prices, supply and demand considerations, and storage capacity;

• the market prices of oil, natural gas, natural gas liquids (“NGLs”), and other products or services;

• the supply and demand for oil, natural gas, NGLs, and other products or services;

• production and reserve levels;

• drilling risks;

• economic and competitive conditions;

• the availability of capital resources;

• capital expenditures and other contractual obligations;

• weather conditions;

• inflation rates;

• the availability of goods and services;

• legislative, regulatory, or policy changes;

• cyber attacks;

• occurrence of property acquisitions or divestitures;

• the integration of acquisitions; and

• the securities or capital markets and related risks such as general credit, liquidity, market, and interest-rate risks.

All of Magnolia’s forward-looking information is subject to risks and uncertainties that could cause actual results to differ materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties include the risk factors and the timing of any of those risk factors identified in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on February 26, 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s unaudited consolidated financial statements and the related notes thereto.

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Overview 

Magnolia Oil & Gas Corporation (the “Company” or “Magnolia”) is an independent oil and natural gas company engaged in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (“NGL”) reserves that operates in one reportable segment located in the United States. The Company's oil and natural gas properties are located primarily in Karnes County and the Giddings Field in South Texas, where the Company primarily targets the Eagle Ford Shale and the Austin Chalk formations.

Magnolia’s objective is to generate stock market value over the long term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow. Magnolia’s business model prioritizes free cash flow, financial stability, and prudent capital allocation, and is designed to withstand challenging environments such as the one the Company is currently experiencing.

COVID-19 Pandemic and Market Conditions Update

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Governments have tried to slow the spread of the virus by imposing social distancing guidelines, travel restrictions, and stay-at-home orders, which have caused a significant decrease in activity in the global economy and the demand for oil and natural gas. Furthermore, in the midst of the ongoing COVID-19 pandemic, the competition between Russia and Saudi Arabia for crude oil market share caused a substantial increase in supply. As a result, the price of oil has remained extremely depressed and available storage and transportation capacity for production is increasingly limited and may be completely unavailable in the near future. The imbalance between the supply of and demand for oil, lack of available storage, as well as the uncertainty around the extent and timing of an economic recovery, have caused extreme market volatility and a substantial adverse effect on commodity prices.

Magnolia’s business, like many oil and natural gas producers, has been, and is expected to continue to be, negatively affected by the crisis described above, which is ongoing and evolving. The Company has not entered into any hedging arrangements with respect to the commodity price risk to which the Company is exposed and the prices ultimately realized for oil, natural gas, and NGLs are based on a number of variables, including prevailing index prices attributable to the Company’s production and certain differentials to those index prices. Magnolia is unable to reasonably predict when, or to what extent, commodity prices and the overall markets and global economy will stabilize, and the pace of any subsequent recovery for the oil and gas industry. Further, the ultimate impact that these events will have on Magnolia’s business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous evolving factors that cannot be predicted, including the duration of the pandemic.

Magnolia has taken steps and continues to actively work to mitigate the evolving challenges and growing impact of both the COVID-19 pandemic and the industry downturn on its operations, financial condition, and people. Magnolia’s business model prioritizes free cash flow, financial stability, and prudent capital allocation, and is designed to withstand challenging environments. The Company’s ongoing plan is to spend within cash flow on drilling and completing wells while maintaining low leverage. Magnolia currently expects its drilling and completion capital outlays for the remainder of the year to be less than those in the first quarter of 2020. As a result, the Company has reduced its rig count to one rig in the Giddings assets. If the current commodity price environment persists, Magnolia expects to cease its remaining drilling and completion activity across its asset base. The Company is well positioned to reduce operations given the significant flexibility within its capital program, as its operated drilling rig is on a short-term contract and the Company has no long-term service obligations. Moreover, Magnolia does not have any contractual drilling obligations and nearly all the Company’s acreage is held by production. In response to the COVID-19 pandemic and industry downturn, Magnolia has initiated a corporate-wide cost reduction program to help decrease costs throughout every aspect of the Company. The Company has made reductions in general and administrative expense by reducing corporate salaries by approximately ten percent, renegotiating the fees with the Services Agreement, and continues to work with many of its other vendors and suppliers to reduce the cost of their services in order to improve the Company’s margins. Magnolia believes these measures, taken together with its significant liquidity and lack of near term debt maturities, will provide additional flexibility in navigating the current volatile environment; however, given the tremendous uncertainty and turmoil, there is no certainty that the measures Magnolia takes will be sufficient.

As a producer of oil and natural gas, Magnolia is recognized as an essential business and has continued to operate while taking steps to protect the health and safety of its workers. Magnolia and its contractors have implemented protocols to reduce the risk of an outbreak within its operations, and these protocols have not reduced production or efficiency in a significant manner. Magnolia’s non-field level employees have the option to temporarily work remotely, and Magnolia has been able to maintain a consistent level of effectiveness through these arrangements, including maintaining day-to-day operations, financial reporting systems, and internal control over financial reporting.

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Business Overview

As of March 31, 2020, Magnolia’s assets in South Texas included 42,968 gross (23,535 net) acres in Karnes, Gonzales, DeWitt, and Atascosa Counties, Texas, and 630,787 gross (428,778 net) acres in the Giddings Field. As of March 31, 2020, Magnolia held an interest in approximately 1,792 gross (1,181 net) wells, with total production of 68.4 thousand barrels of oil equivalent per day (“Mboe/d”) for the three months ended March 31, 2020. In the first quarter of 2020, Magnolia operated a one-rig program for the Karnes County Assets and a one-rig program for the Giddings Assets.

Magnolia recognized a net loss attributable to Class A Common Stock of $1.2 billion, or $7.34 per diluted common share, for the three months ended March 31, 2020. Magnolia recognized a net loss of $1.9 billion, which includes noncontrolling interest of $0.7 billion related to the Magnolia LLC Units (and corresponding Class B Common Stock) held by certain affiliates of EnerVest for the three months ended March 31, 2020.

On August 5, 2019, the Company’s board of directors authorized a share repurchase program of up to 10 million shares of Class A Common Stock. The program does not require purchases to be made within a particular timeframe. As of March 31, 2020, the Company had repurchased 2.0 million shares under the plan at a cost of $16.8 million, 1.0 million of which were repurchased in the first quarter of 2020 at a cost of $6.5 million.

As a result of the sharp decline in commodity prices during the first quarter of 2020, Magnolia recorded impairments of $1.9 billion related to proved and unproved properties. Proved property impairment of $1.4 billion is included in “Impairment of oil and natural gas properties” and unproved property impairment of $0.6 billion is included in “Exploration expense” on the Company’s consolidated statement of operations for the three months ended March 31, 2020.

Results of Operations

Factors Affecting the Comparability of the Historical Financial Results

Magnolia’s historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, as a result of the following factors:

• The Company incurred a net loss of $1.9 billion for the quarter ended March 31, 2020 compared to net income of $22.7 million for the quarter ended March 31, 2019. The net loss was primarily a result of impairments of $1.9 billion related to proved and unproved oil and natural gas properties for the quarter ended March 31, 2020;

• On February 21, 2020, the Company completed the acquisition of certain non-operated oil and natural gas assets located in Karnes and DeWitt Counties, Texas, for approximately $71.3 million in cash, subject to customary closing adjustments;

• On May 31, 2019, the Company completed the acquisition of certain oil and natural gas assets located in the Company’s Karnes County Assets for approximately $36.3 million in cash and approximately 3.1 million shares of the Company’s Class A Common Stock; and

• On February 5, 2019, Magnolia Operating formed a joint venture, Highlander Oil & Gas Holdings LLC (“Highlander”), to complete the acquisition of a 72% working interest in the Eocene-Tuscaloosa Zone, Ultra Deep Structure gas well located in St. Martin Parish, Louisiana (the “Highlander Well”), in which MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 85% of the units, with the remaining 15% attributable to noncontrolling interest.

As a result of the factors listed above, the historical results of operations and period-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results.

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Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

Oil, Natural Gas and NGL Sales Revenues. The following table provides the components of Magnolia’s revenues for the periods indicated, as well as each period’s respective average prices and production volumes. This table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a ratio of six Mcf to one barrel. This ratio may not be reflective of the current price ratio between the two products.

(In thousands, except per unit data)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Production:
Oil (MBbls)	3,391		2,906
Natural gas (MMcf)	10,053		9,763
NGLs (MBbls)	1,155		1,084
Total (Mboe)	6,222		5,617
Average daily production:
Oil (Bbls/d)	37,259		32,289
Natural gas (Mcf/d)	110,475		108,478
NGLs (Bbls/d)	12,688		12,044
Total (boe/d)	68,360		62,413
Revenues:
Oil revenues	$	154,686	$	171,654
Natural gas revenues	16,175		27,375
Natural gas liquids revenues	10,504		19,645
Total revenues	$	181,365	$	218,674
Average Price:
Oil (per barrel)	$	45.62	$	59.07
Natural gas (per Mcf)	1.61		2.80
NGLs (per barrel)	9.09		18.12

Oil revenues were 85% and 78% of the Company’s total revenues for the three months ended March 31, 2020 and 2019, respectively. Oil production was 55% and 52% of total production volume for the three months ended March 31, 2020 and 2019, respectively. The oil revenues for the three months ended March 31, 2020 were $17.0 million lower than the three months ended March 31, 2019 due to a 23% decrease in average prices partially offset by 17% higher production.

Natural gas revenues were 9% and 13% of the Company's total revenues for the three months ended March 31, 2020 and 2019, respectively. Natural gas production was 27% and 29% of total production volume for the three months ended March 31, 2020 and 2019, respectively. Natural gas revenues for the three months ended March 31, 2020 were $11.2 million lower than the three months ended March 31, 2019 due to 43% lower average prices partially offset by 3% higher natural gas production. The higher production volumes are primarily attributable to the Highlander Well being included for all of the quarter ended March 31, 2020.

NGL revenues were 6% and 9% of the Company’s total revenues for the three months ended March 31, 2020 and 2019, respectively. NGL production was 19% of total production volume for both the three months ended March 31, 2020 and March 31, 2019. NGL revenues for the three months ended were March 31, 2020 $9.1 million lower than the three months ended March 31, 2019 due to 50% lower average prices partially offset by 7% higher production. The higher production volumes are primarily attributable to recent acquisitions and continued development.

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Operating Expenses and Other Income (Expense). The following table summarizes the Company’s operating expenses and other income (expense) for the periods indicated.

(In thousands, except per unit data)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Operating Expenses:
Lease operating expenses	$	24,163		$	21,518
Gathering, transportation, and processing	8,020			9,315
Taxes other than income	10,018			14,401
Exploration expenses	556,427			2,476
Impairment of oil and natural gas properties	1,381,258			—
Asset retirement obligations accretion	1,438			1,328
Depreciation, depletion and amortization	142,671			115,946
Amortization of intangible assets	3,626			3,626
General and administrative expenses	18,080			16,196
Transaction related costs	—			353
Total operating costs and expenses	$	2,145,701		$	185,159
Other Income (Expense):
Income from equity method investee	$	440		$	388
Interest expense, net	(6,757		)	(7,416		)
Other expense, net	(472		)	1
Total other expense	$	(6,789	)	$	(7,027	)
Average Operating Costs per boe:
Lease operating expenses	$	3.88		$	3.83
Gathering, transportation, and processing	1.29			1.66
Taxes other than income	1.61			2.56
Exploration expense	89.43			0.44
Impairment of oil and natural gas properties	222.00			—
Asset retirement obligation accretion	0.23			0.24
Depreciation, depletion and amortization	22.93			20.64
Amortization of intangible assets	0.58			0.65
General and administrative expenses	2.91			2.88
Transaction related costs	—			0.06

     Lease operating expenses are costs incurred in the operation of producing properties, including expenses for utilities, direct labor, water disposal, workover rigs, workover expenses, materials, and supplies. Lease operating expenses for the three months ended March 31, 2020 were $2.6 million higher than the three months ended March 31, 2019 primarily due to recent acquisitions and continued development bringing new wells online. The per boe cost for the three months ended March 31, 2020 remained consistent with the three months ended March 31, 2019.

Gathering, transportation, and processing costs are costs incurred to deliver oil, natural gas, and NGLs to the market. These expenses can vary based on the volume of oil, natural gas, and NGLs produced as well as the cost of commodity processing. The gathering, transportation, and processing costs for the three months ended March 31, 2020 were $1.3 million lower than the three months ended March 31, 2019 primarily due to lower gas production from the Karnes County Assets and Giddings Assets. The decreased cost per boe in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to recent acquisitions that have a lower cost per boe.

Taxes other than income include production and ad valorem taxes. These taxes are based on rates primarily established by state and local taxing authorities. Production taxes are based on the market value of production. Ad valorem taxes are based on the fair market value of the mineral interests or business assets. Taxes other than income and related cost per boe were lower for the three months ended

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March 31, 2020 compared to the three months ended March 31, 2019 primarily due to a decrease in revenues following the recent decline in commodity prices.

Exploration expenses are geological and geophysical costs that include unproved property impairments, seismic surveying costs, costs of unsuccessful exploratory dry wells, costs of expired or abandoned leases, and delay rentals. The exploration costs for the three months ended March 31, 2020 were $554.0 million higher than the three months ended March 31, 2019 and $88.99 higher on a boe basis as a result of a $555.2 million impairment related to Magnolia’s unproved oil and natural gas properties due to the sharp decline in commodity prices primarily driven by the COVID-19 pandemic and oversupply by producers relating to oil price and production controls. For more information, please see Note 5 “Fair Value Measurements” to the Company’s consolidated financial statements included in this Quarterly Report on Form 10-Q.

For the three months ended March 31, 2020, Magnolia recognized $1.4 billion of impairment included in “Impairment of oil and natural gas properties” in the consolidated statement of operations related to its proved oil and natural gas properties. The impairment was primarily driven by the sharp decline in commodity prices. For more information, please see Note 5 “Fair Value Measurements” to the Company’s consolidated financial statements included in this Quarterly Report on Form 10-Q.

Depreciation, depletion and amortization (“DD&A”) during the three months ended March 31, 2020 was $26.7 million higher than the three months ended March 31, 2019. The DD&A and DD&A rate per boe for the three months ended March 31, 2020 were higher than the three months ended March 31, 2019 due to a higher cost basis and fewer reserves. As a result of the non-cash impairment in the first quarter of 2020, Magnolia expects the DD&A rate to be lower for the remainder of the year.

General and administrative (“G&A”) expenses during the three months ended March 31, 2020 were $1.9 million higher than the three months ended March 31, 2019 primarily as a result of increased corporate payroll expenses related to increased employee headcount.

Interest expense, net, incurred for the three months ended March 31, 2020 and 2019 is due to interest and amortization of debt issuance costs related to the Company’s 6.0% Senior Notes due 2026 (the “2026 Senior Notes”) and the Company’s secured reserve-based revolving credit facility (the “RBL Facility”). The interest expense, net, incurred during the first quarter of 2020 was lower than the first quarter of 2019 due to higher interest income.

Liquidity and Capital Resources

Magnolia’s primary source of liquidity and capital has been its cash flows from operations. The Company’s primary uses of cash have been for acquisitions of oil and natural gas properties and related assets, development of the Company’s oil and natural gas properties, and general working capital needs.

The Company may also utilize borrowings under other various financing sources available to Magnolia, including its RBL Facility and the issuance of equity or debt securities through public offerings or private placements, to fund Magnolia’s acquisitions and long-term liquidity needs. Magnolia’s ability to complete future offerings of equity or debt securities and the timing of these offerings will depend upon various factors, including prevailing market conditions and the Company’s financial condition.

The Company anticipates its current cash balance, cash flows from operations, and its available sources of liquidity to be sufficient to meet the Company’s cash requirements. However, as the impact of recent declines in worldwide crude oil and natural gas prices and the impact of COVID-19 on the economy evolves, the Company will continue to assess its liquidity needs. In the event of a sustained market deterioration, Magnolia may need additional liquidity, which would require the Company to evaluate available alternatives and take appropriate actions.

As of March 31, 2020, the Company had $400.0 million of principal debt related to the 2026 Senior Notes outstanding and no outstanding borrowings related to the RBL Facility. As of March 31, 2020, the Company had $696.5 million of liquidity comprised of the $550.0 million of borrowing base capacity of the RBL Facility and $146.5 million of cash and cash equivalents. In April 2020, the borrowing base capacity of the RBL facility was reduced to $450.0 million.

Cash and Cash Equivalents

At March 31, 2020, Magnolia had $146.5 million of cash and cash equivalents. The Company’s cash and cash equivalents are maintained with various financial institutions in the United States. Deposits with these institutions may exceed the amount of insurance provided on such deposits. However, the Company regularly monitors the financial stability of its financial institutions and believes that the Company is not exposed to any significant default risk.

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Sources and Uses of Cash and Cash Equivalents

The following table presents the sources and uses of the Company’s cash for the periods presented:

(In thousands)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Sources of cash and cash equivalents
Net cash provided by operating activities	$	134,878		$	116,562
Other	—			11,748
	$	134,878		$	128,310
Uses of cash and cash equivalents:
Acquisitions, other	$	(69,390	)	$	(53,326	)
Additions to oil and natural gas properties	(94,210		)	(134,435		)
Class A Common Stock repurchase	(6,483		)	—
Other	(936		)	—
	(171,019		)	(187,761		)
Increase (decrease) in cash and cash equivalents	$	(36,141	)	$	(59,451	)

Sources of Cash and Cash Equivalents

Net Cash Provided by Operating Activities

Operating cash flows are the Company’s primary source of liquidity and are impacted, in the short term and long term, by oil and natural gas prices. The factors that determine operating cash flows are largely the same as those that affect net earnings or net losses, with the exception of certain non-cash expenses such as DD&A, the non-cash portion of exploration expense, impairment of oil and natural gas properties, asset retirement obligation accretion, and deferred income tax expense.

Net cash provided by operating activities totaled $134.9 million and $116.6 million for the three months ended March 31, 2020 and 2019, respectively. Cash provided by operating activities was positively impacted in the first quarter of 2020 by the timing of collections, payment of liabilities, and lower production tax payments, partially offset by decreased revenues from reduced oil and natural gas prices.

Uses of Cash and Cash Equivalents

Acquisitions

During the three months ended March 31, 2020, the Company completed various leasehold and property acquisitions, primarily comprised of a $71.3 million acquisition of certain non-operated oil and natural gas assets located in Karnes and DeWitt Counties, Texas. During the three months ended March 31, 2019, the Company incurred $53.3 million primarily comprised of the formation of the Highlander joint venture.

Additions to Oil and Natural Gas Properties

The following table sets forth the Company’s capital expenditures for the three months ended March 31, 2020 and 2019:

(In thousands)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Drilling and completion	$	100,611	$	139,763
Leasehold acquisition costs	780		5,929
Total capital expenditures	$	101,391	$	145,692

As of March 31, 2020, Magnolia was running a one-rig program for the Karnes County Assets and a one-rig program for the Giddings Assets. The activity during the three months ended March 31, 2020 was largely driven by the number of operated and non-operated drilling rigs. The number of operated drilling rigs is largely dependent on commodity prices and the Company’s strategy of maintaining spending to accommodate the Company’s business model.

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Capital Requirements

Repurchase of Class A Common Stock

On August 5, 2019, the Company’s board of directors authorized a share repurchase program of up to 10 million shares of Class A Common Stock. The program does not require purchases to be made within a particular timeframe and whether the Company undertakes these additional repurchases is ultimately subject to numerous considerations, market conditions, and other factors. During the first quarter of 2020, the Company repurchased 1.0 million shares for a total cost of approximately $6.5 million.

Off-Balance Sheet Arrangements

As of March 31, 2020, there were no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

For variable rate debt, interest rate changes generally do not affect the fair market value of such debt, but do impact future earnings and cash flows, assuming other factors are held constant. The Company is subject to market risk exposure related to changes in interest rates on borrowings under the RBL Facility. Interest on borrowings under the RBL Facility is based on the LIBOR rate or alternative base rate plus an applicable margin as stated in the agreement. At March 31, 2020, the Company had no borrowings outstanding under the RBL Facility.

Commodity Price Risk

The Company has not engaged in, and does not expect to engage in, any hedging activities with respect to the market risk to which it is exposed.

Magnolia’s primary market risk exposure is to the prices it receives for its oil, natural gas, and NGL production. The prices the Company ultimately realizes for its oil, natural gas, and NGLs are based on a number of variables, including prevailing index prices attributable to the Company’s production and certain differentials to those index prices. Pricing for oil, natural gas, and NGLs has historically been volatile and unpredictable, and this volatility is expected to continue in the future. The prices the Company receives for production depend on factors outside of its control, including physical markets, supply and demand, financial markets, and national and international policies. As the impact of recent declines in worldwide crude oil and natural gas prices and the impact of COVID-19 on the economy evolves, the Company will continue to assess its market risk exposure as appropriate. A $1.00 per barrel increase (decrease) in the weighted average oil price for the quarter ended March 31, 2020 would have increased (decreased) the Company’s revenues by approximately $13.6 million on an annualized basis and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the quarter ended March 31, 2020 would have increased (decreased) Magnolia’s revenues by approximately $4.0 million on an annualized basis.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, Magnolia has evaluated, under the supervision and with the participation of the Company’s management, including Magnolia’s principal executive officer and principal financial officer, the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2020. Based on such evaluation, Magnolia’s principal executive officer and principal financial officer have concluded that as of such date, its disclosure controls and procedures were effective. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by it in reports that it files under the Exchange Act is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC.

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Changes in Internal Control Over Financial Reporting

There were no changes in the system of internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not currently expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.

Item 1A. Risk Factors

Please refer to Part I, Item IA - Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q. Any of these factors and the factors described below could result in a significant or material adverse effect on Magnolia’s business, results of operations, or financial condition. There have been no material changes to the Company’s risk factors since its Annual Report on Form 10-K for the year ended December 31, 2019, except as updated below. Additional risk factors not presently known to the Company or that the Company currently deems immaterial may also impair its business, results of operations, or financial condition.

Recent COVID-19 and other pandemic outbreaks could negatively impact Magnolia’s business and results of operations.

The company may face additional risks related to the recent outbreak of COVID-19, which has been declared a “pandemic” by the World Health Organization. International, federal, state, and local public health and governmental authorities have taken extraordinary and wide-ranging actions to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. To the extent COVID-19 continues or worsens, governments may impose additional similar restrictions. The full impact of COVID-19 is unknown and rapidly evolving. The outbreak and any preventative or protective actions that the Company or its customers may take in response to this virus may result in a period of disruption, including the Company’s financial reporting capabilities, its operations generally, and could potentially impact the Company’s customers, distribution partners, and third parties. In addition, most of the Company’s non-operational employees are now working remotely, which could increase the risk of security breaches or other cyber-incidents or attacks, loss of data, fraud, and other disruptions. Any resulting impacts from the outbreak cannot be reasonably estimated at this time, and may materially affect the business and the Company’s financial condition and results of operations. The extent and duration of such impacts will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

The supply and demand imbalance created by the outbreak of COVID-19 and recent actions of various oil producers relating to oil price and production controls could adversely affect Magnolia’s business, financial condition, results of operations, and ability to meet its expenditure obligations and financial commitments.

The prices Magnolia receives for its oil, natural gas, and NGL production will heavily influence its revenue, profitability, access to capital, future rate of growth, and the carrying value of its properties. Oil, natural gas, and NGLs are commodities, and their prices may fluctuate widely in response to market uncertainty and to relatively minor changes in the supply of and demand for oil, natural gas, and NGLs. Historically, oil, natural gas, and NGL prices have been volatile. Likewise, NGLs, which are made up of ethane, propane, isobutane, normal butane, and natural gasoline, each of which has different uses and pricing characteristics, have suffered significant recent declines in realized prices. In the three months ended March 31, 2020, benchmark prices for oil and natural gas declined significantly.  These volatile conditions extended into the second quarter negatively impacting Magnolia’s realized price differentials. Should this volatility persist, Magnolia’s price realizations and production volumes could be negatively impacted.

The imbalance between the supply of and demand for oil, as well as the uncertainty around the extent and timing of an economic recovery, has caused extreme market volatility and a substantial adverse effect on commodity prices. The commodity price environment is expected to remain depressed based on over-supply, decreasing demand, and a potential global economic recession, as is evidenced by lower prices in the forward curve for oil for several years. Sustained periods of lower commodity prices, or further decreases, may

22

reduce Magnolia’s cash flow and borrowing ability and may result in write-downs of the carrying value of its properties. If Magnolia is unable to obtain needed capital or financing on satisfactory terms, its ability to develop future reserves could be adversely affected. Also, using lower prices in estimating proved reserves may result in a reduction in proved reserves volumes due to economic limits. In addition, sustained periods with lower oil and natural gas prices may adversely affect drilling economics and Magnolia’s ability to raise capital, which may require it to re-evaluate and postpone or eliminate its development program, and result in the reduction of some proved undeveloped reserves and related standardized measure. If Magnolia curtails its drilling program, the Company may be unable to hold leases that are scheduled to expire, which may further reduce reserves.

As a result, a substantial or extended decline in commodity prices may materially and adversely affect Magnolia’s future business, financial condition, results of operations, liquidity, and ability to finance planned capital expenditures. Furthermore, to the extent the COVID-19 pandemic adversely affects the Company’s business and financial results, it may also have the effect of heightening many of the other risks set forth in Part I, Item 1A - Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The marketability of Company production is dependent upon market demand, vehicles, transportation and storage facilities, and other facilities, most of which the Company does not control. If these vehicles or facilities are unavailable, or if the Company is unable to access such vehicles or facilities on commercially reasonable terms, operations could be interrupted, production could be curtailed or shut in, and revenues could be reduced.

The marketing of oil, natural gas, and NGL production depends in large part on the availability, proximity, and capacity of trucks, pipelines, and storage facilities, gas gathering systems, and other transportation, processing, and refining facilities, as well as the existence of adequate markets. Because of the significantly reduced demand for oil and natural gas as a result of the COVID-19 pandemic and the current oversupply of oil and natural gas in the market, available storage and transportation capacity for the Company’s production may be limited or completely unavailable in the future. If there is insufficient capacity, if the capacity is unavailable to the Company, or if the capacity is unavailable on commercially reasonable terms, the prices Magnolia receives for its production could be significantly depressed.

As a result of continued or further storage and/or market shortages, the Company could be forced to shut in some or all of its production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons while the Company constructs or purchases its own facilities or system. If the Company is forced to shut in production, it will likely incur greater costs to bring the associated production back online. Cost increases necessary to bring the associated wells back online may be significant enough that such wells may become non-economic at low commodity price levels, which may lead to decreases in proved reserve estimates and potential impairments and associated charges to earnings. If the Company is able to bring wells back online, there is no assurance that such wells will be as productive following recommencement as they were prior to being shut in.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth the Company’s share repurchase activities for each period presented.

Period	Number of Shares of Class A Common Stock Purchased	Average Price Paid per Share		Total Number of Shares of Class A Common Stock Purchased as Part of Publicly Announced Program (1)	Maximum Number of Shares of Class A Common Stock that May Yet be Purchased Under the Program
January 1, 2020 - January 31, 2020	—	$	—	—	9,000,000
February 1, 2020 - February 29, 2020	100,000	7.55		100,000	8,900,000
March 1, 2020 - March 31, 2020	900,000	6.36		900,000	8,000,000
Total	1,000,000	$	6.48	1,000,000	8,000,000

(1) In August 2019, the Company’s board of directors authorized a share repurchase program of up to 10 million shares of Class A Common Stock. The program does not require purchases to be made within a particular time frame.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:

Exhibit Number	Description
3.1*	Second Amended and Restated Certificate of Incorporation of the Company, dated as of July 31, 2018 (incorporated herein by reference to Exhibit 3.1 filed with the Current Report on Form 8-K filed on August 6, 2018 (File No. 001-38083)).
3.2*	Bylaws of the Company (incorporated herein by reference to Exhibit 3.3 filed with the Registration Statement on Form S-1 filed on April 17, 2017 (File No. 333-217338)).
10.1**	Form of 2020 Non-Employee Director Restricted Stock Unit Grant Notice and attached Restricted Stock Unit Agreement under the Magnolia Oil & Gas Corporation Long Term Incentive Plan.
10.2**	Magnolia Oil & Gas Corporation Stock Purchase Program.
10.3**	First Amendment to Services Agreement, by and between Magnolia Oil & Gas Corporation and EnerVest Operating LLC, dated as of May 1, 2020.
31.1**	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1***	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.
104**	Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Incorporated herein by reference as indicated.

** Filed herewith.

*** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MAGNOLIA OIL & GAS CORPORATION
Date: May 11, 2020	By:	/s/ Stephen Chazen
		Stephen Chazen
		Chief Executive Officer (Principal Executive Officer)
Date: May 11, 2020	By:	/s/ Christopher Stavros
		Christopher Stavros
		Chief Financial Officer (Principal Financial Officer)

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EX-10.1

Exhibit 10.1

MAGNOLIA OIL & GAS CORPORATION

LONG TERM INCENTIVE PLAN

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT GRANT NOTICE

Pursuant to the terms and conditions of the Magnolia Oil & Gas Corporation Long Term Incentive Plan, as amended from time to time (the “Plan”), Magnolia Oil & Gas Corporation (the “Company”) hereby grants to the individual listed below (“you” or the “Participant”) the number of Restricted Stock Units (“RSUs”) set forth below in this Restricted Stock Unit Grant Notice (this “Grant Notice”). This award of RSUs (this “Award”) is subject to the terms and conditions set forth herein, in the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), in the Plan attached hereto as Exhibit B and, if timely completed and submitted by you, in the applicable Non-Employee Director Restricted Stock Unit Settlement Election Form (the “Settlement Election Form”), each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.

Participant:	__________________________________
Date of Grant:	__________________________________
Total Number of Restricted Stock Units:	__________________________________
Vesting Commencement Date:	______________________________ (“Vesting Commencement Date”)
Vesting Schedule:	Subject to the terms and conditions of this Grant Notice, the Agreement, and the Plan, the RSUs shall vest on the earlier to occur of: (i) the day preceding the next annual meeting of stockholders of the Company at which directors are elected or (ii) the first anniversary of the Vesting Commencement Date, in each case, so long as you remain a director or service provider to the Company or an Affiliate, as applicable, from the Date of Grant through such date. Notwithstanding the foregoing, in the event that, in connection with or following a Change in Control, you cease to serve as a director or a service provider to the Company or an Affiliate, the RSUs will vest in full upon such cessation of service. In accordance with of Section 7(b) the Plan, you may elect to defer settlement of the RSUs until you are no longer a director or service provider to the Company or an Affiliate or the occurrence of a Change in Control. Any deferral election must be made pursuant to a Settlement Election Form in compliance with such rules and procedures as the Committee deems advisable.

1

Settlement Event: Stock will become issuable and Dividend Equivalents payable on the date elected by you on a timely submitted Settlement Election Form or, if no such form is timely submitted by you, then on the date of vesting of the RSUs (such date or event, a “Settlement Event”). Absent a provision in the Agreement or the Plan to the contrary, Stock and Dividend Equivalents with respect to vested RSUs will be delivered to you no later than 60 days following the applicable Settlement Event.

By clicking to accept, you agree to be bound by the terms and conditions of the Agreement, the Plan and this Grant Notice. You acknowledge that you have reviewed in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations arising under the Agreement, the Plan or this Grant Notice.

In lieu of receiving documents in paper format, you agree, to the fullest extent permitted by applicable law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, account statements, annual and quarterly reports and all other forms of communications) in connection with this Award. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which you have access. You hereby consent to all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents.

You acknowledge and agree that clicking to accept this Award constitutes your electronic signature and is intended to have the same force and effect as your manual signature.

[Remainder of Page Intentionally Blank; Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, effective for all purposes as provided above.

MAGNOLIA OIL & GAS CORPORATION

By:

Title:

Name:

[Signature Page]

3

EXHIBIT A

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (together with the Grant Notice, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice (the “Date of Grant”) by and between Magnolia Oil & Gas Corporation, a Delaware corporation (the “Company”), and [________________] (the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.

1. Award. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the Date of Grant, the Company hereby grants to the Participant the number of RSUs set forth in the Grant Notice on the terms and conditions set forth in the Grant Notice, this Agreement, and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control. To the extent vested, each RSU represents the right to receive one share of Stock, subject to the terms and conditions set forth in the Grant Notice, this Agreement and the Plan. Unless and until the RSUs have become vested in the manner set forth in this Agreement, the Participant will have no right to receive any Stock or other payments in respect of the RSUs. Prior to settlement of this Award, the RSUs and this Award represent an unsecured obligation of the Company.

2. Vesting of RSUs.

(a) The RSUs shall vest in accordance with the vesting schedule set forth in the Grant Notice. Unless and until the RSUs have vested in accordance with such vesting schedule, the Participant will have no right to receive any dividends or other distributions with respect to the RSUs. Except in the event of a qualifying termination of service as set forth in the Grant Notice, in the event of the termination of the Participant’s service prior to the vesting of all of the RSUs, all unvested RSUs (and all rights arising from such RSUs and from being a holder thereof) will terminate automatically without any further action by the Company and will be forfeited without consideration or notice.

(b) Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 2 and any written agreement entered into by and between the Participant and the Company or an Affiliate, as applicable, the terms of such agreement shall control.

3. Dividend Equivalents. In the event that the Company declares and pays a dividend in respect of its outstanding shares of Stock and, on the record date for such dividend, the Participant holds RSUs granted pursuant to this Agreement that have not been settled or forfeited as of such record date, the Company shall record a Dividend Equivalent in a bookkeeping account for the Participant in an amount equal to the cash dividends the Participant would have received if the Participant was the holder of record, as of such record date, of the number of shares of Stock related to the portion of the Participant’s RSUs that have not been settled or forfeited as of such record date. Such account shall constitute an unfunded account and neither this Section 3 nor any action taken pursuant to or in accordance with this Section 3 shall be construed to create a trust of any kind. Any Dividend Equivalent will be subject to the same vesting schedule as the RSU to which it relates and will be paid to the Participant in cash on (or within 60 days following) the date

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that the RSU to which it relates is settled in accordance with Section 4. Any Dividend Equivalent (including all rights arising from such Dividend Equivalent and from being a holder thereof) that relates to an RSU that (a) does not become vested or (b) becomes vested and is subsequently forfeited will terminate automatically without any further action by the Company and will be forfeited without consideration or notice at the same time the RSU is forfeited. No interest will accrue on the Dividend Equivalents between the declaration and payment of the applicable dividends and the settlement of the Dividend Equivalents.

4. Settlement of RSUs. No shares of Stock shall be issued to the Participant prior to the applicable Settlement Event as set forth in the Notice of Grant. After the Settlement Event, but in no event later than 60 days after such Settlement Event, the Company shall deliver to the Participant a number of shares of Stock equal to the number of vested RSUs. All shares of Stock issued hereunder shall be delivered either by delivering one or more certificates for such shares to the Participant or by entering such shares in book-entry form, as determined by the Committee in its sole discretion. In the event the Participant would otherwise become vested in a fractional portion of an RSU (a “Fractional RSU”) based on the vesting terms set forth in Section 2, the Fractional RSU shall instead remain unvested until the final vesting date provided in the Grant Notice; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final vesting date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final vesting date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU. The value of shares of Stock shall not bear any interest owing to the passage of time.

5. Non-Transferability. None of the RSUs, the Dividend Equivalents or any interest or right therein may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares of Stock underlying the RSUs have been issued, and all restrictions applicable to such shares have lapsed. Neither the RSUs nor any interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect against the Company and its Affiliates, except to the extent that such disposition is expressly permitted by the preceding sentence.

6. Compliance with Applicable Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of shares of Stock hereunder will be subject to compliance with all requirements of applicable law with respect to such securities and with the requirements of any stock exchange or market system upon which the Stock may then be listed. No shares of Stock will be issued hereunder if such issuance would constitute a violation of any applicable law or regulation or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, shares of Stock will not be issued hereunder unless (a) a registration statement under the Securities Act is in effect at the time of such issuance with respect to the shares to be issued, (b) in the opinion of legal counsel to the Company, the shares to be issued are permitted to be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act or (c) the Company has attained from any regulatory body having jurisdiction the requisite authority, if any, deemed by the Company’s legal counsel to be necessary for the lawful issuance and sale of any shares of Stock hereunder. As a condition to any issuance

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of Stock hereunder, the Company may require the Participant to satisfy any requirements that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance.

7. Rights as a Stockholder. The Participant shall have no rights as a stockholder of the Company with respect to any shares of Stock that may become deliverable hereunder unless and until the Participant has become the holder of record of such shares of Stock, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares of Stock, except as otherwise specifically provided for in the Plan or this Agreement.

8. Execution of Receipts and Releases. Any issuance or transfer of shares of Stock or other property to the Participant or the Participant’s legal representative, heir, legatee or distributee, in accordance with this Agreement shall be in full satisfaction of all claims of such person hereunder. As a condition precedent to such payment or issuance, the Company may require the Participant or the Participant’s legal representative, heir, legatee or distributee to execute (and not revoke within any time provided to do so) a release and receipt therefor in such form as it shall determine appropriate; provided, however, that any review period under such release will not modify the date of settlement with respect to vested RSUs.

9. No Right of Continued Board Service or to Awards. Nothing in the adoption of the Plan, nor the grant of the RSUs thereunder pursuant to the Grant Notice and this Agreement, shall confer upon the Participant the right to continued service with the Board or the board of directors of any Affiliates. Nothing in the Plan or in this Agreement shall affect any right which the Company or any of its Affiliates may have to terminate the Board service of the Participant. The grant of the RSUs is a one-time benefit and does not create any contractual or other right to receive a grant of Awards or benefits in lieu of Awards in the future.

10. Agreement to Furnish Information. The Participant agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.

11. Entire Agreement; Amendment. This Agreement, the Grant Notice, the Settlement Election Form (if applicable), and the Plan constitute the entire agreement of the parties with regard to the subject matter hereof, and contain all the covenants, promises, representations, warranties and agreements between the parties with respect to the RSUs granted hereby; provided¸ however, that the terms of this Agreement shall not modify and shall be subject to the terms and conditions of any service, consulting and/or severance agreement between the Company (or an Affiliate or other entity) and the Participant in effect as of the date a determination is to be made under this Agreement. Without limiting the scope of the preceding sentence, except as provided therein, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. The Committee may, in its sole discretion, amend this Agreement from time to time in any manner that is not inconsistent with the Plan.

12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of law principles thereof.

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13. Successors and Assigns. The Company may assign any of its rights under this Agreement without the Participant’s consent. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein and in the Plan, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom this Award may be transferred by will or the laws of descent or distribution.

14. Clawback. Notwithstanding any provision in this Agreement, the Grant Notice, the Settlement Election Form (if applicable), or the Plan to the contrary, to the extent required by (a) applicable law and/or (b) any policy that may be adopted or amended by the Board from time to time, all shares of Stock issued hereunder shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such law(s) and/or policy.

15. Severability. If a court of competent jurisdiction determines that any provision of this Agreement (or any portion thereof) is invalid or unenforceable, then the invalidity or unenforceability of such provision (or portion thereof) shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

16. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the RSUs granted pursuant to this Agreement are intended to comply with or be exempt from the applicable requirements of the Nonqualified Deferred Compensation Rules and shall be limited, construed and interpreted in accordance with such intent. Notwithstanding the foregoing, the Company and its Affiliates make no representations that the RSUs provided under this Agreement are exempt from or compliant with the Nonqualified Deferred Compensation Rules and in no event shall the Company or any Affiliate be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with the Nonqualified Deferred Compensation Rules. The Participant’s service shall terminate on the date that he or she experiences a “separation from service” as defined under the Nonqualified Deferred Compensation Rules.

[Remainder of Page Intentionally Blank]

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EXHIBIT B

MAGNOLIA OIL & GAS CORPORATION LONG TERM INCENTIVE PLAN

[SEE ATTACHED]

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EX-10.2

Exhibit 10.2

Magnolia Oil & Gas Corporation

Stock Purchase Program

1.     Purpose. This Magnolia Oil & Gas Corporation Stock Purchase Program (this “SPP”), effective as of May 1, 2020, is a sub-plan pursuant to Section 6(h) of the Magnolia Oil & Gas Corporation Long Term Incentive Plan, as it may be amended from time to time (the “LTIP”), and is intended to provide employees of Magnolia Oil & Gas Corporation, a Delaware corporation (the “Company”), and its Affiliates with the opportunity to periodically purchase shares of Stock from the Company. Capitalized terms used but not otherwise defined herein shall have the meanings given in the LTIP. In the event of any inconsistency between the LTIP and this SPP, the terms of the LTIP, which are incorporated by reference herein, shall control. The SPP is not intended to be an “employee stock purchase plan” under section 423 of the Code.

2.     Eligible Employees; Participation. All employees who are employed by the Company or an Affiliate on a given Offering Period Commencement Date (as defined below), or at such other time on or before the applicable Offering Period Commencement Date as determined by the Plan Administrator (as defined below), shall be eligible to participate in and receive Purchase Rights (as defined below) for the Offering Period (as defined below) under the SPP (each, an “Eligible Employee”). Participation in the SPP by any Eligible Employee is voluntary.

3. Stock Subject to the SPP.

(a)     The maximum aggregate number of shares of Stock that may be sold pursuant to Purchase Rights under the SPP is 250,000 for all Offering Periods, subject to adjustment in accordance with Section 8 of the LTIP. For the avoidance of doubt, any shares sold pursuant to this SPP shall also reduce the number of shares available for delivery under the LTIP.

(b)     If any Purchase Right received under the SPP expires, terminates, or otherwise ceases for any reason to be exercisable in whole or in part, the unpurchased shares subject to such Purchase Right shall again be available under the SPP and the LTIP. If the number of shares of Stock available for any Offering Period is insufficient to satisfy all purchase requirements for that Offering Period, the available shares for that Offering Period shall be apportioned among Participants (as defined below) in proportion to their Purchase Rights.

(c)     The shares of Stock purchased under the SPP shall be purchased directly from the Company from its authorized but unissued shares of Stock, from Stock held in the treasury of the Company, or from shares reacquired by the Company (including shares purchased by the Company in the open market).

4. Authorization of Payroll Deductions.

(a)     An Eligible Employee may participate in the SPP for an Offering Period (each, a “Participant”) by submitting a written election, substantially in the form attached hereto as Exhibit A (a “SPP Election Form”), to the Company’s human resources department, authorizing payroll deductions from his or her Base Pay (as defined below) with respect to each regular pay date (each, a “Pay Date”) occurring during the Offering Period. A Participant’s “Base Pay” is equal to, for any pay period, such Participant’s regular, straight-time earnings or base salary, excluding payments for overtime, shift differentials, incentive compensation, bonuses, and other special payments, fees, allowances, or similar compensation. The SPP Election Form for a given Offering Period will apply to all Pay Dates and all Purchase Dates (as defined below) occurring during the Offering Period and must be submitted during the applicable submission period indicated in Section 5(a) of this SPP, unless otherwise determined by the Plan Administrator.

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(b)     A Participant shall specify in the SPP Election Form a flat dollar amount of payroll deductions applicable to each Pay Date occurring during the Offering Period. For any Pay Date, the amount of payroll deductions that may be credited to a Participant’s SPP account (i) will not be less than $300 nor greater than $5,000, and (ii) may not exceed the amount of Participant’s Base Pay otherwise payable on such Pay Date, less all applicable taxes, garnishments and other benefit deductions (“Net Base Pay”). For the avoidance of doubt, if the flat dollar amount elected by a Participant in his or her SPP Election Form exceeds the Participant’s Net Base Pay for a Pay Date, then the amount of payroll deductions with respect to that Pay Date will be reduced to an amount equal to such Participant’s Net Base Pay. For an Offering Period, the Company will credit to each Participant’s SPP account in a ledger established for that purpose the applicable amount of payroll deductions, in accordance with the Participant’s SPP Election Form and subject to the foregoing limitations, beginning with the first Pay Date occurring on or after the Offering Period Commencement Date and ending on the last Pay Date occurring on or prior to the Offering Period Termination Date (as defined below), subject to Section 8 of this SPP. A Participant may not make any additional payments into his or her SPP account and, unless otherwise determined by the Plan Administrator, payroll deductions may not be increased or decreased during an Offering Period.

(c) Unless an Eligible Employee timely files a new SPP Election Form, or withdraws from the SPP, his or her payroll deductions and purchases, in accordance with the most recent SPP Election Form on file with the Company, shall continue as long as the SPP remains in effect.

5. Offering Periods and Purchase Rights.

(a)     The Committee has the authority to determine the duration of the periods under the SPP during which Purchase Rights may be received and exercised (each, an “Offering Period”) and may change the duration of future Offering Periods in its discretion. Unless the Committee determines otherwise in writing, Offering Periods under the SPP shall generally commence and end, and SPP Election Forms for a given Offering Period must be submitted, as follows:

SPP Election Form Submission Period	Offering Period Commencement Date  (first day of an Offering Period)	Offering Period Termination Date (last day of an Offering Period)
10-day period commencing on the third trading day after the date of public disclosure of the Company’s financial results for the third quarter of the preceding calendar year	January 1 of the calendar year	March 31 of the calendar year
10-day period commencing on the third trading day after the date of public disclosure of the Company’s year-end financial results for the preceding calendar year	April 1 of the calendar year	June 30 of the calendar year
10-day period commencing on the third trading day after the date of public disclosure of the Company’s financial results for the first quarter of the calendar year	July 1 of the calendar year	September 30 of the calendar year
10-day period commencing on the third trading day after the date of public disclosure of the Company’s financial results for the second quarter of the calendar year	October 1 of the calendar year	December 31 of the calendar year

Notwithstanding the foregoing, with respect to the initial Offering Period under this SPP: (i) the SPP Election Form submission period shall be the 10-day period commencing on the third trading day after the date of public disclosure of the Company’s financial results for the first quarter of the 2020 fiscal year; (ii) the Offering Period

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Commencement Date shall be June 1, 2020; and (iii) the Offering Period Termination Date shall be September 30, 2020. In no event shall any Offering Period extend for more than 24 months.

(b)     The Company will issue to each Participant, on the applicable Offering Period Commencement Date, a right to purchase (each, a “Purchase Right”), on each Pay Date occurring during the Offering Period (each, a “Purchase Date”) at a per share price equal to the closing price per share of Stock on the Purchase Date (the “Purchase Right Exercise Price Per Share”), a number of shares of Stock equal to the amount of payroll deductions accumulated in the Participant’s SPP account as of each such Purchase Date, divided by the applicable Purchase Right Exercise Price Per Share, rounded down to the nearest full share (such number of shares, the “Purchased Share Amount”). The Committee may change the timing and frequency of future purchase dates in its discretion.

6. Exercise of Purchase Rights.

(a)     Subject to Section 8 below, on each Purchase Date, a Participant shall be deemed to have automatically exercised his or her applicable Purchase Right and to have purchased from the Company the applicable Purchased Share Amount. Only full shares of Stock may be purchased.

(b)     Any balance remaining in a Participant’s SPP account after a Purchase Date will be carried forward and applied at the next Purchase Date; provided, that, in no event will the amount of the unused payroll deductions carried forward exceed the applicable Purchase Right Exercise Price Per Share, unless the number of shares of Stock available for any Offering Period is insufficient to satisfy all purchase requirements for that Offering Period, in which case, the amount of excess unused payroll deductions for any Participant shall be refunded as soon as administratively practicable, without interest. For the avoidance of doubt, any balance remaining in a Participant’s SPP account at the Offering Period Termination Date will be carried forward and applied at the next Purchase Date, even if such Purchase Date is under a new Offering Period (provided the Participant has elected to participate in such subsequent Offering Period).

(c)     As soon as administratively practicable following the last day of each month, or at such other time determined by the Plan Administrator (but not less frequently than once each Offering Period), the Company shall deliver (by electronic or other means) to the Participant the Stock purchased under the SPP during such month (or other applicable period) in the form determined by the Plan Administrator.

7.     Withdrawal. A Participant may withdraw from the SPP and withdraw all (but not less than all) of the unused payroll deductions credited to his or her SPP account, by submitting a written withdrawal notification to the human resources department in accordance with this Section 7. Unless otherwise determined by the Plan Administrator, submission of a withdrawal notification will not impact the Participant’s payroll deductions and Purchase Rights for the current Offering Period, and withdrawal will be effective for the next Offering Period provided the Participant properly submits his or her withdrawal notification during the applicable SPP Election Form submission period indicated for that Offering Period in Section 5(a) of this SPP. Upon withdrawal, the Company will refund as soon as administratively practicable the entire balance remaining in the Participant’s SPP account, without interest, and no further payroll deductions will be made on the Participant’s behalf, unless and until such individual reenrolls in the SPP in accordance with Section 4 hereof.

8.     Termination of Employment. A Participant’s participation in, and any outstanding Purchase Right or other rights under, the SPP will terminate automatically when he or she ceases to be an employee of the Company or one of its Affiliates for any reason. All unused payroll deductions remaining in the Participant’s SPP account as of the date of such termination will be refunded as soon as administratively practicable, without interest, to the Participant (or his or her beneficiary).

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9.     Termination of and Amendments to SPP. The SPP may be terminated at any time by the Committee or, if sooner, will terminate when all of the shares of Stock reserved for purposes of the SPP have been sold. Upon any termination of the SPP, all unused payroll deductions remaining in a Participant’s SPP account will be refunded, without interest. The Committee may adopt amendments to the SPP from time to time in accordance with the terms of Section 10 of the LTIP.

10.     Plan Administration. The Committee may delegate to one or more officers of the Company or a committee of officers or employees of the Company the day-to-day administration of the SPP (the “Plan Administrator”). Without limitation, subject to the terms and conditions of this SPP, the Plan Administrator shall be authorized to determine the methods through which Eligible Employees may elect to participate, amend their participation, or withdraw from participation in the SPP, establish enrollment processes, determine the means of issuance of Stock, and approve certain exceptions under the SPP. The proceeds received by the Company for the purchase of Stock pursuant to Purchase Rights under the SPP may be used for any corporate purpose, and the Company shall not be obligated to segregate Participants’ payroll deductions, unless required by applicable law. As soon as administratively practicable after the end of each Offering Period, the Plan Administrator shall prepare and distribute to each Participant information concerning, for such Offering Period: (a) the amount of the Participant’s total payroll deductions, (b) any Purchase Right Exercise Price Per Share paid, (c) the total number of shares of Stock purchased by the Participant, and (d) the amount of any unused payroll deductions either to be carried forward or returned to the Participant.

11.     Adjustments. Outstanding Purchase Rights and the applicable Purchase Right Exercise Price Per Share are subject to adjustment in accordance with Section 8 of the LTIP.

12.     Tax Withholding. Notwithstanding anything to the contrary herein, at any time, the Company or one of its Affiliates may, but shall not be obligated to, withhold from a Participant’s compensation (including any payroll deductions accumulated hereunder) the amount necessary for the Company or an Affiliate to meet any applicable withholding obligations.

13. Miscellaneous.

(a)     With respect to Eligible Employees subject to Section 16 of the Exchange Act, the SPP is intended to constitute a “stock purchase plan” within in the meaning of, and transactions under the SPP are intended to otherwise comply with applicable conditions of, Rule 16b-3 under the Exchange Act.

(b)     The SPP shall be governed by and construed in accordance with the laws of the State of Delaware (except its choice of law provisions).

(c)     Each provision of this SPP may be severed. If any provision is determined to be invalid or unenforceable, that determination shall not affect the validity or enforceability of any other provision.

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EXHIBIT A

Magnolia Oil & Gas Corporation

Stock Purchase Program

Election Form

Name:      ____________________________________________________________________________

Address: ___________________________________________________________________________

Offering Period Commencement Date: ___________________________________________________

Election Form Submission Period: _______________________________________________________

1.     I hereby elect to participate in the Magnolia Oil & Gas Corporation Stock Purchase Program (the “SPP”) for the Offering Period that begins on the Offering Period Commencement Date specified above and subscribe to purchase shares of Stock in accordance with this election form (the “Election Form”) and the SPP, which is incorporated herein by reference. Capitalized terms used but not otherwise defined herein have the meanings given in the SPP.

2.     In accordance with the SPP, I hereby authorize payroll deductions from my paycheck for each Pay Date occurring during the Offering Period in the amount of $_____________ from each such paycheck. I understand that the amount specified in the foregoing sentence may not be less than $300 nor greater than $5,000 and that, if such amount specified exceeds my Net Base Pay for the applicable Pay Date, the amount of payroll deductions from that paycheck will be equal to my Net Base Pay.

3.     I understand that such payroll deductions will be accumulated for the purchase of shares of Stock on each applicable Purchase Date occurring during the Offering Period at the applicable Purchase Right Exercise Price Per Share determined in accordance with the SPP. I further understand that the accumulated payroll deductions will be used to automatically exercise my Purchase Right to purchase shares of Stock under the SPP on each such Purchase Date, and that I may not withdraw my participation in the SPP for this Offering Period.

4. Shares of Stock purchased for me under the SPP should be issued in the name(s) of: _______________________________________________________________________________________ (Eligible Employee and Eligible Employee’s spouse only).

5.     I have received a copy of the complete SPP and its accompanying prospectus. I understand that my participation in the SPP is completely voluntary and is in all respects subject to the terms of the SPP. I hereby agree to be bound by the terms of the SPP and this Election Form.

I understand that the election I am making for the Offering Period that begins on the Offering Period Commencement Date specified above must be submitted during the Election Form Submission Period specified above and is irrevocable for the entire Offering Period. I ALSO UNDERSTAND THAT THIS ELECTION FORM WILL REMAIN IN EFFECT THROUGHOUT SUBSEQUENT OFFERING PERIODS UNLESS TIMELY CHANGED BY ME IN WRITING OR UNLESS I TIMELY WITHDRAW IN WRITING FROM THE SPP FOR A SUBSEQUENT OFFERING PERIOD.

_________________________________________    _____________________________

Signature of Eligible Employee     Date

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EX-10.3

Exhibit 10.3

FIRST AMENDMENT TO SERVICES AGREEMENT

This FIRST AMENDMENT TO SERVICES AGREEMENT (this “Amendment”) is executed and agreed to effective as of May 1, 2020, by and among Magnolia Oil & Gas Corporation (formerly known as TPG Pace Energy Holdings Corp.), a Delaware corporation (“Parent”), Magnolia Oil & Gas Operating LLC (formerly known as TPG Pace Energy Operating LLC), a Delaware limited liability company (“Owner”), and EnerVest Operating, L.L.C., a Delaware limited liability company (“Service Provider”). Parent, Owner, and Service Provider are hereinafter each referred to as a “Party” and are collectively referred to as the “Parties”. Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the Services Agreement (as defined below).

RECITALS

WHEREAS, the Parties have previously executed that certain Services Agreement dated as of July 31, 2018 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Services Agreement”); and

WHEREAS, the Parties desire to amend the Services Agreement as set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.The Services Agreement is hereby amended by replacing all instances of “TPG Pace Energy Holdings Corp.” with “Magnolia Oil & Gas Corporation” and all instances of “TPG Pace Energy Operating LLC” with “Magnolia Oil & Gas Operating LLC”.

2.Section 3.1(a) of the Services Agreement is hereby deleted in its entirety and replaced in its entirety with the following:

Owner shall pay to Service Provider, (i) as the sole consideration for the Services provided by Service Provider, an amount equal to (x) for the period beginning on July 31, 2018 and ending on April 30, 2020, $23,563,531 per year during the Term and (y) for the period beginning on May 1, 2020 through the end of the Term (and, if applicable during any Transition Services Period), $20,029,001.35 per year (reflecting a 15% reduction in the Services Fee described in clause x), in each case, prorated for any partial year in which the Services are provided (such amount, as applicable and as modified from time to time pursuant to this Section 3.1, the “Services Fee”), plus (ii) to the extent such costs and expenses have not been previously paid by Owner or out of Owner funds or otherwise reimbursed to Service Provider by Owner, reimbursement for all Owner Group Costs incurred by Service Provider in performing the Services, plus (iii) any COPAS overhead fees related to the Assets operated by Owner Group that are received by Owner Group and any COPAS overhead fees payable directly by Owner Group under joint operating agreements applicable to the Assets operated by Owner Group (and for Assets operated by Owner Group not covered by a joint operating agreement, an amount equal to $8,500 per drilling well and $812 per producing well in the Austin Chalk producing area and $8,500 per drilling well and $844 per producing well in the Eagle Ford producing area, in both cases reduced to reflect Owner Group’s working interest, and as adjusted in accordance with COPAS MFI-47 (“Adjustment of Overhead Rates”)) (collectively, the “COPAS Payment”). Owner shall pay to

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Service Provider with respect to each Calendar Month during the Term and the Transition Services Period an amount equal to one-twelfth of the excess of the applicable Services Fee over the sum of any amount incurred directly by the Owner Group for Asset-level insurance in accordance with Section 2.9, and any amount Owner is entitled to deduct in accordance with Section 2.1(e), prorated for any partial Calendar Year in which the Services are provided (such amount, the “Monthly Services Fee”).

3.Schedule 1-B to the Services Agreement is hereby deleted in its entirety and replaced in its entirety with Schedule 1-B attached hereto.

4.This Amendment shall not constitute an amendment or waiver of any provision of the Services Agreement not expressly referred to herein. Except as otherwise provided herein, the Services Agreement is hereby ratified and confirmed in all respects and shall remain in full force and effect, unaltered and unchanged, subject to the provisions hereof and as amended hereby, provided that, in the event of a conflict between the terms and conditions of this Amendment and the terms and conditions of the Services Agreement, the terms and conditions of this Amendment shall prevail to the extent of such conflict. Without limiting the foregoing, this Amendment is made subject to the Services Agreement (as amended hereby and without otherwise limiting the provisions hereof).

5.This Amendment, the Services Agreement, and the exhibits and schedules hereto and thereto collectively constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations, and discussions, whether oral or written, of the Parties pertaining to the subject matter hereof.

6.The provisions set forth in Article X of the Services Agreement (other than Sections 10.16 and 10.18 of the Services Agreement) shall apply mutatis mutandis to this Amendment.

[Signature pages follow]

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized representatives as of the date first written above.

SERVICE PROVIDER:

ENERVEST OPERATING, L.L.C.

By:    /s/ Alex Zazzi

Name:    Alex Zazzi

Title:    President & Chief Executive Officer

Signature Page to First Amendment to Services Agreement

OWNER:

MAGNOLIA OIL & GAS OPERATING LLC

By:    /s/ Stephen Chazen

Name:    Stephen Chazen

Title:    President and Chief Executive Officer

PARENT:

MAGNOLIA OIL & GAS CORPORATION

By:    /s/ Stephen Chazen

Name:    Stephen Chazen

Title:    President and Chief Executive Officer

Signature Page to First Amendment to Services Agreement

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen Chazen, Chief Executive Officer of Magnolia Oil & Gas Corporation, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Magnolia Oil & Gas Corporation (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 11, 2020	By:	/s/ Stephen Chazen
		Stephen Chazen
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher Stavros, Chief Financial Officer of Magnolia Oil & Gas Corporation, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Magnolia Oil & Gas Corporation (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 11, 2020	By:	/s/ Christopher Stavros
		Christopher Stavros
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Magnolia Oil & Gas Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Stephen Chazen and Christopher Stavros, Principal Executive Officer and Principal Financial Officer, respectively, of the Company, certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 11, 2020	By:	/s/ Stephen Chazen
		Stephen Chazen
		Chief Executive Officer (Principal Executive Officer)

Date: May 11, 2020	By:	/s/ Christopher Stavros
		Christopher Stavros
		Chief Financial Officer (Principal Financial Officer)

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Stock Based Compensation - Schedule of Assumptions Used to Calculate Grant Date Fair Value of PSUs (Details) - PSUs	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	2 years 10 months 6 days	2 years 10 months 6 days
Expected volatility	33.50%	33.61%
Risk-free interest rate	1.16%	2.48%

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Income Taxes - Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Current:
Federal	$ (1,172)	$ 177
State	0	183
Current income tax provision	(1,172)	360
Deferred:
Federal	(68,877)	3,361
State	(5,777)	54
Deferred income tax provision	(74,654)	3,415
Total provision	$ (75,826)	$ 3,775

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (1,895,299)	$ 22,713
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	142,671	115,946
Amortization of intangible assets	3,626	3,626
Exploration expense, non-cash	555,189	483
Impairment of oil and natural gas properties	1,381,258	0
Asset retirement obligations accretion expense	1,438	1,328
Amortization of deferred financing costs	896	871
Deferred tax expense (benefit)	(74,654)	3,415
Stock based compensation	2,879	2,432
Other	(447)	(393)
Changes in operating assets and liabilities:
Accounts receivable	28,031	5,012
Accrued liabilities	(16,547)	(29,955)
Accounts payable	6,726	(6,729)
Drilling advances	(563)	(599)
Other assets and liabilities, net	(326)	(1,588)
Net cash provided by operating activities	134,878	116,562
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of EnerVest properties	0	4,250
Acquisitions, other	(69,390)	(53,326)
Additions to oil and natural gas properties	(94,210)	(134,435)
Other investing	(200)	197
Net cash used in investing activities	(163,800)	(183,314)
CASH FLOW FROM FINANCING ACTIVITIES
Contributions from noncontrolling interest owners	0	7,301
Distributions to noncontrolling interest owners	(284)	0
Class A Common Stock repurchase	(6,483)	0
Other financing activities	(452)	0
Net cash provided by (used in) financing activities	(7,219)	7,301
NET CHANGE IN CASH AND CASH EQUIVALENTS	(36,141)	(59,451)
Cash and cash equivalents – Beginning of period	182,633	135,758
Cash and cash equivalents – End of period	146,492	76,307
Supplemental non-cash operating activity:
Cash paid for interest	12,540	12,571
Supplemental non-cash investing and financing activity:
Accruals or liabilities for capital expenditures	47,903	61,778
Supplemental non-cash lease operating activity:
Right-of-use assets obtained in exchange for operating lease obligations	$ 0	$ 2,516

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 146,492	$ 182,633
Accounts receivable	77,744	105,775
Drilling advances	863	299
Other current assets	4,146	4,511
Total current assets	229,245	293,218
PROPERTY, PLANT AND EQUIPMENT
Oil and natural gas properties	2,050,470	3,815,221
Other	3,391	3,087
Accumulated depreciation, depletion and amortization	(844,255)	(701,551)
Total property, plant and equipment, net	1,209,606	3,116,757
OTHER ASSETS
Deferred financing costs, net	7,806	8,390
Equity method investment	20,171	19,730
Intangible assets, net	20,225	23,851
Other long-term assets	3,776	4,460
TOTAL ASSETS	1,490,829	3,466,406
CURRENT LIABILITIES
Accounts payable	86,154	79,428
Other current liabilities (Note 7)	84,546	95,780
Total current liabilities	170,700	175,208
LONG-TERM LIABILITIES
Long-term debt, net	390,147	389,835
Asset retirement obligations, net of current	97,008	93,524
Deferred taxes, net	3,181	77,834
Other long-term liabilities	903	1,476
Total long-term liabilities	491,239	562,669
COMMITMENTS AND CONTINGENCIES (Note 9)
Additional paid-in capital	1,703,996	1,703,362
Treasury Stock, at cost, 2,000 shares and 1,000 shares in 2020 and 2019, respectively	(16,760)	(10,277)
Retained earnings (Accumulated deficit)	(1,144,070)	82,940
Noncontrolling interest	285,698	952,478
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	1,490,829	3,466,406
Class A Common Stock
Common stock	17	17
Class B Common Stock
Common stock	$ 9	$ 9

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Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
General required payment period	30 days
Receivables from contracts with customers	$ 68.7	$ 100.4

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures normally included in an Annual Report on Form 10-K have been omitted. The consolidated financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s consolidated and combined financial statements and related notes included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated and combined financial statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019.

In the opinion of management, all normal, recurring adjustments and accruals considered necessary to present fairly, in all material respects, the Company’s interim financial results, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year.

Certain reclassifications of prior period financial statements have been made to conform to current reporting practices. The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated.  The Company reflects a noncontrolling interest representing primarily the interest owned by the Karnes County Contributors through their ownership of Magnolia LLC Units in the consolidated financial statements. The noncontrolling interest is presented as a component of equity. See Note 11—Stockholders’ Equity for further discussion of the noncontrolling interest.

Accounts Receivable and Allowance for Expected Credit Losses

Accounts Receivable and Allowance for Expected Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” For public business entities, the new standard became effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Magnolia adopted this standard on January 1, 2020. The standard changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires entities to use a new forward-looking expected loss model that will result in earlier recognition of allowance for losses. The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates. The majority of these receivables have payment terms of 30 days or less. For receivables due from joint interest owners, the Company generally has the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. From an evaluation of the Company’s existing credit portfolio, historical credit losses have been de minimis and are expected to remain so in the future assuming no substantial changes to the business or creditworthiness of Magnolia’s business partners. As expected, there was no material impact on the Company’s unaudited consolidated financial statements or disclosures upon adoption of this ASU.

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Long Term Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Components of Debt

The Company’s debt is comprised of the following:

(In thousands)	March 31, 2020			December 31, 2019
Revolving credit facility	$	—		$	—
6.0% Senior Notes due 2026	400,000			400,000
Total long-term debt	400,000			400,000
Less: Unamortized deferred financing cost	(9,853		)	(10,165		)
Total debt, net	$	390,147		$	389,835

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Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Other Liabilities Disclosure [Abstract]
Accrued capital expenditures	$ 47,903	$ 40,722
Other	36,643	55,058
Total other current liabilities	$ 84,546	$ 95,780

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Acquisitions - Narrative (Details) - USD ($) shares in Millions, $ in Millions				3 Months Ended
	Feb. 21, 2020	May 31, 2019	Feb. 05, 2019	Mar. 31, 2019
Highlander Oil & Gas Holdings LLC (Highlander) | MGY Louisiana LLC
Business Acquisition [Line Items]
Percentage of units held			85.00%	85.00%
Karnes and DeWitt County Assets
Business Acquisition [Line Items]
Cash payments to acquire certain oil and natural gas properties	$ 71.3
Karnes County Assets
Business Acquisition [Line Items]
Cash payments to acquire certain oil and natural gas properties		$ 36.3
Karnes County Assets | Class A Common Stock
Business Acquisition [Line Items]
Shares issued as consideration to acquire certain oil and natural gas properties (in shares)		3.1
Highlander Acquisition | Highlander Oil & Gas Holdings LLC (Highlander)
Business Acquisition [Line Items]
Cash consideration paid for asset			$ 50.9
Eocene-Tuscaloosa Zone, Ultra Deep Structure Gas Well | Highlander Oil & Gas Holdings LLC (Highlander)
Business Acquisition [Line Items]
Percent working interest acquired			72.00%
Gulf Coast Ultra Deep Royalty Trust | Highlander Oil & Gas Holdings LLC (Highlander)
Business Acquisition [Line Items]
Number of units acquired (in shares)			31.1

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Commitments and Contingencies (Details) - USD ($)	Mar. 31, 2020	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Amounts accrued with respect to outstanding litigation	$ 0	$ 0

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Other Current Liabilities

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

Other Current Liabilities

The following table provides detail of the Company’s other current liabilities for the periods presented:

(In thousands)	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	47,903	$	40,722
Other	36,643		55,058
Total other current liabilities	$	84,546	$	95,780

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Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Class A Common Stock

At March 31, 2020, there were 168.5 million shares of Class A Common Stock issued and 166.5 million shares of Class A Common Stock outstanding. The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters and are entitled one vote for each share held. There is no cumulative voting with respect to the election of directors, which results in the holders of more than 50% of the shares being able to elect all of the directors, subject to voting obligations under the Stockholder Agreement (defined herein). In the event of a liquidation, dissolution, or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The holders of the Class A Common Stock have no preemptive or other subscription rights, and there are no sinking fund provisions applicable to such shares.

Class B Common Stock

At March 31, 2020, there were 85.8 million shares of Class B Common Stock issued and outstanding. Holders of Class B Common Stock vote together as a single class with holders of Class A Common Stock on all matters properly submitted to a vote of the stockholders. The holders of Class B Common Stock generally have the right to exchange all or a portion of their Class B Common Stock, together with an equal number of Magnolia LLC Units, for the same number of shares of Class A Common Stock or, at Magnolia LLC’s option, an equivalent amount of cash. Upon the future redemption or exchange of Magnolia LLC Units held by any holder of Class B Common Stock, a corresponding number of shares of Class B Common Stock held by such holder of Class B Common Stock will be canceled. In the event of a liquidation, dissolution, or winding up of the Company, the common stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The holders of the Class B Common Stock have no preemptive or other subscription rights, and there are no sinking fund provisions applicable to such shares.

Share Repurchase Program

On August 5, 2019, the Company’s board of directors authorized a share repurchase program of up to 10 million shares of Class A Common Stock. The program does not require purchases to be made within a particular timeframe. As of March 31, 2020, the Company had repurchased 2.0 million shares under the plan at a cost of $16.8 million.

Noncontrolling Interest

Noncontrolling interest in Magnolia’s consolidated subsidiaries include amounts attributable to Magnolia LLC Units that were issued to the Karnes County Contributors in connection with the Business Combination. The noncontrolling interest percentage is affected by various equity transactions such as issuances of Class A Common Stock, the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) for Class A Common Stock, or cancellation of Class B Common Stock (and corresponding Magnolia LLC Units). As of March 31, 2020, Magnolia owned approximately 66% of the interest in Magnolia LLC and the noncontrolling interest was 34%. In the first quarter of 2019, Magnolia Operating formed Highlander as a joint venture where MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 85% of the units in Highlander, with the remaining 15% attributable to noncontrolling interest.

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Income Taxes - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Tax effects of the CARES Act, recognized as discrete income tax benefit	$ 1,200,000
Discrete benefit due to difference in U.S. federal tax rate	$ 500,000
Annual effective tax rate	3.80%	14.20%
Net deferred tax asset position	$ 208,800,000
Valuation allowance	208,800,000
Liabilities for uncertain tax positions	0
Amounts incurred for interest and penalties	$ 0

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Long Term Debt - Components of Debt (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019	Jul. 31, 2018
Debt Instrument [Line Items]
Total long-term debt	$ 400,000,000	$ 400,000,000
Less: Unamortized deferred financing cost	(9,853,000)	(10,165,000)
Total debt, net	390,147,000	389,835,000
Line of Credit | Revolving credit facility
Debt Instrument [Line Items]
Total long-term debt	0	0
Senior Notes | 6.0% Senior Notes due 2026
Debt Instrument [Line Items]
Total long-term debt	$ 400,000,000	$ 400,000,000
Stated interest rate	6.00%		6.00%

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Fair Value Measurements (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairments recorded related to proved and unproved oil and natural gas properties	$ 1,900,000
Proved property impairment	1,381,258	$ 0
Unproved property impairment	$ 600,000
Weighted Average | Cost of Capital | Market Participant Based
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Market participant based weighted average cost of capital for proved property impairments	0.10
Market participant based weighted average cost of capital for unproved property impairments	0.12
Carrying Value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 390,147		$ 389,835
Fair Value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	228,000		$ 412,000
Fair Value, Nonrecurring | Fair Value | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proved properties impaired, fair values as of the most recent date of impairment	800,000
Unproved properties impaired, fair values as of the most recent date of impairment	$ 300,000

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Intangible Assets

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Non-Compete Agreement

On July 31, 2018, the Company and EnerVest, separate and apart from the Business Combination, entered into a non-compete agreement (the “Non-Compete”), which prohibits EnerVest and certain of its affiliates from competing with the Company in the Eagle Ford Shale (the “Market Area”) until the later of July 31, 2022 or the date the Services Agreement is terminated. Under the Non-Compete, an affiliate of EnerVest will have the right to receive 4.0 million shares of Class A Common Stock in two tranches of 2.0 million shares in two and one half and four years from July 31, 2018 provided EnerVest does not compete in the Market Area.

The Company recorded an estimated cost of $44.4 million for the Non-Compete as intangible assets on the Company’s consolidated balance sheet. These intangible assets have a definite life and are subject to amortization utilizing the straight-line method over their economic life, currently estimated to be two and one half to four years. The Company includes the amortization in “Amortization of intangible assets” on the Company’s consolidated statements of operations.

(In thousands)	March 31, 2020			December 31, 2019
Non-compete intangible assets	$	44,400		$	44,400
Accumulated amortization	(24,175		)	(20,549		)
Intangible assets, net	$	20,225		$	23,851
Weighted average amortization period (in years)	3.25			3.25

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company estimates its annual effective tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act includes several significant business tax provisions that, among other things, allow businesses to carry back net operating losses (“NOL”) arising in 2018, 2019, and 2020 to the five prior tax years. Applying the NOL carryback provision results in an income tax benefit of $1.2 million in the first quarter of 2020 and the difference in the U.S. federal rate of 35% in 2017 compared to 21% in 2018 and thereafter results in a discrete benefit to the tax provision of approximately $0.5 million for the period ended March 31, 2020.

The income tax expense or benefit recorded for the period is based on applying an estimated annual effective income tax rate to the net income or loss for the quarters ended March 31, 2020 and March 31, 2019. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the Company’s expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, the effect of noncontrolling interest, permanent and temporary differences, and the likelihood of recovering deferred tax assets in the current year. The accounting estimates used to compute the income tax expense or benefit may change as new events occur, more experience is obtained, additional information becomes known, or as the tax environment changes. The Company’s annual effective tax rate for the three months ended March 31, 2020 and 2019 was 3.8% and 14.2%, respectively. The primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest, the recognition of a valuation allowance on federal and state deferred tax assets, and state taxes. During the first quarter of 2020, Magnolia’s effective tax rate was primarily impacted by the recognition of valuation allowances for its deferred tax assets from non-cash impairments of the carrying value of the Company’s oil and natural gas properties and the net deferred tax assets generated in this period.

During the first quarter of 2020, the Company moved from a net deferred tax liability position to an estimated net deferred tax asset position of $208.8 million resulting primarily from oil and natural gas impairments. Management assessed whether it is more-likely-than-not that it will generate sufficient taxable income to realize its deferred income tax assets, including the investment in partnership and net operating loss carryforwards. In making this determination, the Company considered all available positive and negative evidence and made certain assumptions. The Company considered, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years. As of March 31, 2020, the Company assessed the realizability of the deferred tax assets and recorded a full valuation allowance of $208.8 million.

The Company’s income tax provision consists of the following components:

(In thousands)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Current:
Federal	$	(1,172	)	$	177
State	—			183
	(1,172		)	360
Deferred:
Federal	(68,877		)	3,361
State	(5,777		)	54
	(74,654		)	3,415
Total provision	$	(75,826	)	$	3,775

The Company is subject to U.S. federal income tax, the margin tax in the state of Texas, and Louisiana corporate income tax. No amounts have been accrued for income tax uncertainties or interest and penalties as of March 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company’s tax years since its formation remain subject to possible income tax examinations by its major taxing authorities for all periods.

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Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

Organization and Nature of Operations

Magnolia is an independent oil and natural gas company engaged in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (“NGL”) reserves. The Company’s oil and natural gas properties are located primarily in Karnes County and the Giddings Field in South Texas where the Company targets the Eagle Ford Shale and Austin Chalk formations. Magnolia’s objective is to generate stock market value over the long term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures normally included in an Annual Report on Form 10-K have been omitted. The consolidated financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s consolidated and combined financial statements and related notes included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated and combined financial statements included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019.

In the opinion of management, all normal, recurring adjustments and accruals considered necessary to present fairly, in all material respects, the Company’s interim financial results, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year.

Certain reclassifications of prior period financial statements have been made to conform to current reporting practices. The consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany transactions and balances. The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated.  The Company reflects a noncontrolling interest representing primarily the interest owned by the Karnes County Contributors through their ownership of Magnolia LLC Units in the consolidated financial statements. The noncontrolling interest is presented as a component of equity. See Note 11—Stockholders’ Equity for further discussion of the noncontrolling interest.

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Treasury stock (in shares)	2,000,000	1,000,000
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,300,000,000	1,300,000,000
Common stock, shares issued (in shares)	168,473,000	168,318,000
Common stock, shares outstanding (in shares)	166,473,000	167,318,000
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	225,000,000	225,000,000
Common stock, shares issued (in shares)	85,790,000	85,790,000
Common stock, shares outstanding (in shares)	85,790,000	85,790,000

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Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Basic:
Weighted average number of common shares outstanding during the period - basic (in shares)	167,149	156,322
Diluted:
Weighted average number of common shares outstanding during the period - basic (in shares)	167,149	156,322
Weighted average number of common shares outstanding during the period - diluted (in shares)	167,149	158,140
Class A Common Stock
Basic:
Net income (loss) attributable to Class A Common Stock	$ (1,227,010)	$ 13,026
Weighted average number of common shares outstanding during the period - basic (in shares)	167,149	156,322
Net income (loss) per share of Class A Common Stock - basic (in dollars per share)	$ (7.34)	$ 0.08
Diluted:
Net income (loss) attributable to Class A Common Stock	$ (1,227,010)	$ 13,026
Weighted average number of common shares outstanding during the period - basic (in shares)	167,149	156,322
Add: Dilutive effect of warrants, stock based compensation, and other (in shares)	0	1,818
Weighted average number of common shares outstanding during the period - diluted (in shares)	167,149	158,140
Net income (loss) per share of Class A Common Stock - diluted (in shares)	$ (7.34)	$ 0.08
Class A Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded due to antidilutive effect (in shares)	85,800	93,300
Contingent Shares of Class A Common Stock Issuable to EnerVest
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded due to antidilutive effect (in shares)	4,000
RSUs and PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded due to antidilutive effect (in shares)	300

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Stockholders' Equity (Details) $ in Thousands		3 Months Ended		8 Months Ended
	Feb. 05, 2019	Mar. 31, 2020 USD ($) vote shares	Mar. 31, 2019	Mar. 31, 2020 USD ($) vote shares	Dec. 31, 2019 shares	Aug. 05, 2019 shares
Class of Stock [Line Items]
Total cost of shares repurchased | $		$ 6,483
Highlander
Class of Stock [Line Items]
Percentage of economic interest owned by noncontrolling interest holders			15.00%
VIE, Primary Beneficiary | Magnolia LLC
Class of Stock [Line Items]
Percentage of economic interest owned		66.00%
Percentage of economic interest owned by noncontrolling interest holders		34.00%		34.00%
MGY Louisiana LLC | Highlander
Class of Stock [Line Items]
Percentage of units held	85.00%		85.00%
Class A Common Stock
Class of Stock [Line Items]
Common stock, shares issued (in shares)		168,473,000		168,473,000	168,318,000
Common stock, shares outstanding (in shares)		166,473,000		166,473,000	167,318,000
Number of votes for each share held | vote		1		1
Number of shares authorized to be repurchased (in shares)						10,000,000
Number of shares repurchased (in shares)				2,000,000.0
Total cost of shares repurchased | $				$ 16,800
Class B Common Stock
Class of Stock [Line Items]
Common stock, shares issued (in shares)		85,790,000		85,790,000	85,790,000
Common stock, shares outstanding (in shares)		85,790,000		85,790,000	85,790,000
Number of votes for each share held | vote		1		1

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party TransactionsAs of March 31, 2020, EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership, and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership, both of which are part of the Karnes County Contributors, each held more than 10% of the Company’s common stock and qualified as principal owners of the Company, as defined in ASC 850, “Related Party Disclosures.”

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Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

The following table provides detail of the Company’s other current liabilities for the periods presented:

(In thousands)	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	47,903	$	40,722
Other	36,643		55,058
Total other current liabilities	$	84,546	$	95,780

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Reconciliation of Numerators and Denominators for Basic and Diluted Per Share Computation

A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:

(In thousands, except per share data)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Basic:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Net income (loss) per share of Class A Common Stock - basic	$	(7.34	)	$	0.08
Diluted:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Add: Dilutive effect warrants, stock based compensation, and other	—			1,818
Weighted average number of common shares outstanding during the period - diluted	167,149			158,140
Net income (loss) per share of Class A Common Stock - diluted	$	(7.34	)	$	0.08

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Stock Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

Stock Based Compensation

On October 8, 2018, the Company’s board of directors adopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (the “Plan”), effective as of July 17, 2018. A total of 11.8 million shares of Class A Common Stock have been authorized for issuance under the Plan. The Company grants stock based compensation awards in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) to eligible employees and directors to enhance the Company and its affiliates’ ability to attract, retain, and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” on the consolidated statements of operations and was $2.9 million and $2.4 million for the three months ended March 31, 2020 and 2019, respectively. The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense.

Restricted Stock Units

The Company grants service-based RSU awards to employees and non-employee directors, which generally vest ratably over a three-year service period, in the case of awards to employees, and vest in full after one year, in the case of awards to directors. RSUs represent the right to receive shares of Class A Common Stock at the end of the vesting period equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company for any reason prior to vesting of the award. Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. Unrecognized compensation expense related to unvested RSUs at March 31, 2020 was $13.6 million, which the Company expects to recognize over a weighted average period of 2.2 years.

The table below summarizes RSU activity for the three months ended March 31, 2020:

	Restricted Stock Units		Weighted Average Grant Date Fair Value
Unvested RSUs, beginning of period	1,099,901		$	12.97
Granted	686,345		7.45
Vested	(213,846	)	12.68
Forfeited	—		—
Unvested RSUs, end of period	1,572,400		$	10.60

Performance Stock Units

During the three months ended March 31, 2020, the Company granted PSUs to certain employees. Each PSU, to the extent earned, represents the contingent right to receive one share of Class A Common Stock and the awardee may earn between zero and 150% of the target number of PSUs granted based on the total shareholder return (“TSR”) of the Class A Common Stock relative to the TSR achieved by a specific industry peer group over a three-year performance period, the last day of which is also the vesting date. In addition to the TSR conditions, vesting of the PSUs is subject to the awardee’s continued employment through the date of settlement of the PSUs, which will occur within 60 days following the end of the performance period. Unrecognized compensation expense related to unvested PSUs at March 31, 2020 was $7.5 million, which the Company expects to recognize over a weighted average period of 2.0 years.

The table below summarizes PSU activity for the three months ended March 31, 2020:

	Performance Stock Units		Weighted Average Grant Date Fair Value
Unvested PSUs, beginning of period	701,128		$	14.31
Granted	401,958		6.14
Vested	(8,334	)	14.58
Forfeited	—		—
Unvested PSUs, end of period	1,094,752		$	11.31

The grant date fair value of the PSUs granted during the three months ended March 31, 2020 and 2019 was $2.5 million and $3.6 million, respectively, calculated using a Monte Carlo simulation. The following table summarizes the assumptions used to calculate the grant date fair value of these PSUs.

Grant Date Fair Value Assumptions	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Expected term (in years)	2.85	2.85
Expected volatility	33.50%	33.61%
Risk-free interest rate	1.16%	2.48%

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Acquisitions

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Acquisitions

Acquisitions

2020 Acquisitions

On February 21, 2020, the Company completed the acquisition of certain non-operated oil and natural gas assets located in Karnes and DeWitt Counties, Texas, for approximately $71.3 million in cash, subject to customary closing adjustments. The transaction was accounted for as an asset acquisition.

2019 Acquisitions

On May 31, 2019, the Company completed the acquisition of certain oil and natural gas assets located in the Company’s Karnes County Assets for approximately $36.3 million in cash and approximately 3.1 million shares of the Company’s Class A Common Stock. The transaction was accounted for as an asset acquisition.

On February 5, 2019, Magnolia Operating formed a joint venture, Highlander Oil & Gas Holdings LLC (“Highlander”), to complete the acquisition of a 72% working interest in the Eocene-Tuscaloosa Zone, Ultra Deep Structure gas well located in St. Martin Parish, Louisiana and 31.1 million royalty trust units in the Gulf Coast Ultra Deep Royalty Trust from McMoRan Oil & Gas, LLC. Highlander paid cash consideration of $50.9 million for such interests. MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 85% of the units in Highlander. The transaction was accounted for as an asset acquisition.

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Long Term Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Long Term Debt

Long Term Debt

The Company’s debt is comprised of the following:

(In thousands)	March 31, 2020			December 31, 2019
Revolving credit facility	$	—		$	—
6.0% Senior Notes due 2026	400,000			400,000
Total long-term debt	400,000			400,000
Less: Unamortized deferred financing cost	(9,853		)	(10,165		)
Total debt, net	$	390,147		$	389,835

Credit Facility

In connection with the consummation of the Business Combination, Magnolia Operating entered into the RBL Facility among Magnolia Operating, as borrower, Magnolia Intermediate, as its holding company, the banks, financial institutions, and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Citibank, N.A., as administrative agent, collateral agent, issuing bank, and swingline lender, providing for maximum commitments in an aggregate principal amount of $1.0 billion with a letter of credit facility with a $100.0 million sublimit. The borrowing base as of March 31, 2020 was $550.0 million. In April 2020, the borrowing base capacity was reduced to $450.0 million. The RBL Facility is guaranteed by certain parent companies and subsidiaries of Magnolia LLC and is collateralized by certain of Magnolia Operating’s oil and natural gas properties and has a borrowing base subject to semi-annual redetermination.

Borrowings under the RBL Facility bear interest, at Magnolia Operating’s option, at a rate per annum equal to either the LIBOR rate or the alternative base rate plus the applicable margin. Additionally, Magnolia Operating is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the RBL Facility. The applicable margin and the commitment fee rate are calculated based upon the utilization levels of the RBL Facility as a percentage of the borrowing base then in effect.

The RBL Facility contains certain affirmative and negative covenants customary for financings of this type, including compliance with a leverage ratio of less than 4.00 to 1.00 and, if the leverage ratio is in excess of 3.00 to 1.00, a current ratio of greater than 1.00 to 1.00. As of March 31, 2020, the Company was in compliance with all covenants under the RBL Facility.

Deferred financing costs incurred in connection with securing the RBL Facility were $11.7 million, which are amortized on a straight-line basis over a period of five years and included in “Interest expense, net” in the Company’s consolidated statements of operations. The Company recognized interest expense of $1.1 million during the three months ended March 31, 2020 and 2019 related to the RBL Facility. The unamortized portion of the deferred financing costs are included in “Deferred financing costs, net” on the accompanying consolidated balance sheet as of March 31, 2020.

The Company did not have any outstanding borrowings under its RBL Facility as of March 31, 2020.

2026 Senior Notes

On July 31, 2018, the Issuers issued and sold $400.0 million aggregate principal amount of 2026 Senior Notes. The 2026 Senior Notes were issued under the Indenture, dated as of July 31, 2018 (the “Indenture”), by and among the Issuers and Deutsche Bank Trust Company Americas, as trustee. The 2026 Senior Notes are guaranteed on a senior unsecured basis by the Company, Magnolia Operating, and Magnolia Intermediate and may be guaranteed by certain future subsidiaries of the Company. The 2026 Senior Notes will mature on August 1, 2026 and bear interest at the rate of 6.0% per annum.

At any time prior to August 1, 2021, the Issuers may, on any one or more occasions, redeem all or a part of the 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the 2026 Senior Notes redeemed, plus a “make whole” premium on accrued and unpaid interest, if any, to, but excluding, the date of redemption. After August 1, 2021, the Issuers may redeem all or a part of the 2026 Senior Notes based on principal plus a set premium, as set forth in the Indenture, including any accrued and unpaid interest.

The Company incurred $11.8 million of deferred financing costs related to the issuance of the 2026 Senior Notes, which were capitalized. These costs are amortized using the effective interest method over the term of the 2026 Senior Notes and are included in “Interest expense, net” in the Company’s consolidated statements of operations. The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the 2026 Senior Notes, which have been recorded as “Long-term debt, net” on the consolidated balance sheet as of March 31, 2020. The Company recognized interest expense of $6.3 million for the three months ended March 31, 2020 and 2019 related to the 2026 Senior Notes.

Affiliate Guarantors

The Company, Magnolia LLC (together with the Company, the “Parent Guarantors”), and the direct parent company of Magnolia Operating and certain subsidiaries of Magnolia Operating are guarantors under the terms of its 2026 Senior Notes and RBL Facility. The Parent Guarantors may be released upon the request of Magnolia Operating. Magnolia’s consolidated financial statements reflect the financial position of these subsidiary guarantors. As the parent company, Magnolia has no independent operations. The guarantees are full and unconditional (except for customary release provisions) and joint and several. There are restrictions on dividends, distributions, loans, or other transfers of funds from the subsidiary guarantors to the Company.

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Long Term Debt - 2026 Senior Notes Narrative (Details) - Senior Notes - 6.0% Senior Notes due 2026 - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Jul. 31, 2018
Debt Instrument [Line Items]
Aggregate principal amount			$ 400,000,000.0
Stated interest rate	6.00%		6.00%
Redemption price, percentage of principal amount of Notes redeemed	100.00%
Deferred financing costs incurred in connection with securing the 2026 Senior Notes	$ 11,800,000
Interest expense	$ 6,300,000	$ 6,300,000

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Intangible Assets - Schedule of Intangible Asset (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ (24,175)	$ (20,549)
Intangible assets, net	$ 20,225	$ 23,851
Weighted average amortization period (in years)	3 years 3 months	3 years 3 months
Non-Compete
Finite-Lived Intangible Assets [Line Items]
Non-compete intangible assets	$ 44,400	$ 44,400	$ 44,400

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Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Total Stockholders’ Equity	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid In Capital	Treasury Stock	Retained Earnings/ Accumulated Deficit	Noncontrolling Interest
Balance at beginning of period (in shares) at Dec. 31, 2018			156,333	93,346
Balance at beginning of period at Dec. 31, 2018	$ 2,707,955	$ 1,676,769	$ 16	$ 9	$ 1,641,237		$ 35,507	$ 1,031,186
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense, net of forfeitures	2,432	2,432			2,432
Changes in ownership interest adjustment and in deferred tax liability	(87)	(919)			(919)			832
Final settlement adjustment related to Business Combination (in shares)			(496)	(1,556)
Final settlement adjustment related to Business Combination	(25,245)	(6,095)			(6,095)			(19,150)
Contributions from noncontrolling interest owner	8,809							8,809
Net income (loss)	22,713	13,026					13,026	9,687
Balance at end of period (in shares) at Mar. 31, 2019			155,837	91,790
Balance at end of period at Mar. 31, 2019	2,716,577	1,685,213	$ 16	$ 9	1,636,655		48,533	1,031,364
Balance at beginning of period (in shares) at Dec. 31, 2019			168,319	85,790		1,000
Balance at beginning of period at Dec. 31, 2019	2,728,529	1,776,051	$ 17	$ 9	1,703,362	$ (10,277)	82,940	952,478
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation expense, net of forfeitures	2,879	2,879			2,879
Changes in ownership interest adjustment and in deferred tax liability	0	(1,793)			(1,793)			1,793
Common stock issued related to stock based compensation, net (in shares)			154
Common stock issued related to stock based compensation, net	(452)	(452)			(452)
Class A Common Stock repurchase (in shares)						1,000
Class A Common Stock repurchase	(6,483)	(6,483)				$ (6,483)
Distributions to noncontrolling interest owners	(284)							(284)
Net income (loss)	(1,895,299)	(1,227,010)					(1,227,010)	(668,289)
Balance at end of period (in shares) at Mar. 31, 2020			168,473	85,790		2,000
Balance at end of period at Mar. 31, 2020	$ 828,890	$ 543,192	$ 17	$ 9	$ 1,703,996	$ (16,760)	$ (1,144,070)	$ 285,698

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Cover Page - shares	3 Months Ended
	Mar. 31, 2020	May 08, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-38083
Entity Registrant Name	Magnolia Oil & Gas Corp
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-5365682
Entity Address, Address Line One	Nine Greenway Plaza, Suite 1300
Entity Address, City or Town	Houston,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77046
City Area Code	713
Local Phone Number	842-9050
Title of 12(b) Security	Class A Common Stock, par value $0.0001
Trading Symbol	MGY
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001698990
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Class A Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		166,579,165
Class B Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		85,789,814

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Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Magnolia’s revenues include the sale of crude oil, natural gas, and NGLs. Oil, natural gas, and NGL sales are recognized as revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, natural gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million Btu of natural gas, gallon of NGLs, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated.

The Company’s oil production is primarily sold under market-sensitive contracts that are typically priced at a differential to the New York Mercantile Exchange (“NYMEX”) price or at purchaser posted prices for the producing area. For oil contracts, the Company generally records sales based on the net amount received.

For natural gas contracts, the Company generally records wet gas sales (which consists of natural gas and NGLs based on end products after processing) at the wellhead or inlet of the gas processing plant (i.e., the point of control transfer) as revenues net of gathering, transportation, and processing expenses if the processor is the customer and there is no redelivery of commodities to the Company at the tailgate of the plant. Conversely, the Company generally records residual natural gas and NGL sales at the tailgate of the plant (i.e., the point of control transfer) on a gross basis along with the associated gathering, transportation, and processing expenses if the processor is a service provider and there is redelivery of one or several commodities to the Company at the tailgate of the plant. The facts and circumstances of an arrangement are considered and judgment is often required in making this determination. For processing contracts that require noncash consideration in exchange for processing services, the Company recognizes revenue and an equal gathering, transportation, and processing expense for commodities transferred to the service provider.

Customers are invoiced once the Company’s performance obligations have been satisfied. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. There are no judgments that significantly affect the amount or timing of revenue from contracts with customers. Accordingly, the Company’s product sales contracts do not give rise to material contract assets or contract liabilities.

The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates. Receivables from contracts with customers totaled $68.7 million as of March 31, 2020 and $100.4 million as of December 31, 2019. See Note 2 - Summary of Significant Accounting Policies for more information on the Company’s allowance for expected credit losses policy.

The Company has concluded that disaggregating revenue by product type appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors and has reflected this disaggregation of revenue on the Company’s consolidated statements of operations for all periods presented.

Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title.

The Company does not disclose the value of unsatisfied performance obligations for contracts as all contracts have either an original expected length of one year or less, or the entire future consideration is variable and allocated entirely to a wholly unsatisfied performance obligation.

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Stock Based Compensation - RSU, PSU Activity (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Restricted Stock Units
Units
Unvested stock units, beginning of period (in shares) | shares	1,099,901
Granted (in shares) | shares	686,345
Vested (in shares) | shares	(213,846)
Forfeited (in shares) | shares	0
Unvested stock units, end of period (in shares) | shares	1,572,400
Weighted Average Grant Date Fair Value
Unvested stock units, beginning of period (in dollars per share) | $ / shares	$ 12.97
Granted (in dollars per share) | $ / shares	7.45
Vested (in dollars per share) | $ / shares	12.68
Forfeited (in dollars per share) | $ / shares	0
Unvested stock units, end of period (in dollars per share) | $ / shares	$ 10.60
Performance Stock Units
Units
Unvested stock units, beginning of period (in shares) | shares	701,128
Granted (in shares) | shares	401,958
Vested (in shares) | shares	(8,334)
Forfeited (in shares) | shares	0
Unvested stock units, end of period (in shares) | shares	1,094,752
Weighted Average Grant Date Fair Value
Unvested stock units, beginning of period (in dollars per share) | $ / shares	$ 14.31
Granted (in dollars per share) | $ / shares	6.14
Vested (in dollars per share) | $ / shares	14.58
Forfeited (in dollars per share) | $ / shares	0
Unvested stock units, end of period (in dollars per share) | $ / shares	$ 11.31

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Fair Values of Financial Instruments Not Carried at Fair Value

The carrying value and fair value of the financial instrument that is not carried at fair value in the accompanying consolidated balance sheet at March 31, 2020 and December 31, 2019 is as follows:

	March 31, 2020				December 31, 2019
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	390,147	$	228,000	$	389,835	$	412,000

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Components of Income Tax Provision (Benefit)

The Company’s income tax provision consists of the following components:

(In thousands)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Current:
Federal	$	(1,172	)	$	177
State	—			183
	(1,172		)	360
Deferred:
Federal	(68,877		)	3,361
State	(5,777		)	54
	(74,654		)	3,415
Total provision	$	(75,826	)	$	3,775

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

As of March 31, 2020, the Company’s significant accounting policies are consistent with those discussed in Note 2 - Summary of Significant Accounting Policies of its consolidated and combined financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, with the exception of Accounts Receivable and Allowance for Expected Credit Losses.

Accounts Receivable and Allowance for Expected Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” For public business entities, the new standard became effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Magnolia adopted this standard on January 1, 2020. The standard changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, and requires entities to use a new forward-looking expected loss model that will result in earlier recognition of allowance for losses. The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates. The majority of these receivables have payment terms of 30 days or less. For receivables due from joint interest owners, the Company generally has the ability to withhold future revenue disbursements to recover non-payment of joint interest billings. From an evaluation of the Company’s existing credit portfolio, historical credit losses have been de minimis and are expected to remain so in the future assuming no substantial changes to the business or creditworthiness of Magnolia’s business partners. As expected, there was no material impact on the Company’s unaudited consolidated financial statements or disclosures upon adoption of this ASU.

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Stock Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Oct. 08, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 2.9	$ 2.4
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 13.6
Weighted average period over which unrecognized compensation expense is expected to be recognized	2 years 2 months 12 days
RSUs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
RSUs | Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Unrecognized compensation expense	$ 7.5
Weighted average period over which unrecognized compensation expense is expected to be recognized	2 years
Settlement date, period following performance period	60 days
Grant date fair value	$ 2.5	$ 3.6
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for issuance (in shares)			11,800,000
Class A Common Stock | PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contingent right to receive common stock, number of shares receivable for each PSU (in shares)	1
Class A Common Stock | PSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	0.00%
Class A Common Stock | PSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	150.00%

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Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
REVENUES
Total revenues	$ 181,365	$ 218,674
OPERATING EXPENSES
Lease operating expenses	24,163	21,518
Gathering, transportation, and processing	8,020	9,315
Taxes other than income	10,018	14,401
Exploration expense	556,427	2,476
Impairment of oil and natural gas properties	1,381,258	0
Asset retirement obligation accretion	1,438	1,328
Depreciation, depletion and amortization	142,671	115,946
Amortization of intangible assets	3,626	3,626
General and administrative expenses	18,080	16,196
Transaction related costs	0	353
Total operating costs and expenses	2,145,701	185,159
OPERATING INCOME (LOSS)	(1,964,336)	33,515
OTHER INCOME (EXPENSE)
Income from equity method investee	440	388
Interest expense, net	(6,757)	(7,416)
Other income (expense), net	(472)	1
Total other income (expense)	(6,789)	(7,027)
INCOME (LOSS) BEFORE INCOME TAXES	(1,971,125)	26,488
Income tax expense (benefit)	(75,826)	3,775
NET INCOME (LOSS)	(1,895,299)	22,713
LESS: Net income (loss) attributable to noncontrolling interest	(668,289)	9,687
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON STOCK	$ (1,227,010)	$ 13,026
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic (in shares)	167,149	156,322
Diluted (in shares)	167,149	158,140
Class A Common Stock
NET INCOME (LOSS) PER SHARE OF CLASS A COMMON STOCK
Basic (in dollars per share)	$ (7.34)	$ 0.08
Diluted (in dollars per share)	$ (7.34)	$ 0.08
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic (in shares)	167,149	156,322
Diluted (in shares)	167,149	158,140
Oil revenues
REVENUES
Total revenues	$ 154,686	$ 171,654
Natural gas revenues
REVENUES
Total revenues	16,175	27,375
Natural gas liquids revenues
REVENUES
Total revenues	$ 10,504	$ 19,645

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

(In thousands)	March 31, 2020			December 31, 2019
Non-compete intangible assets	$	44,400		$	44,400
Accumulated amortization	(24,175		)	(20,549		)
Intangible assets, net	$	20,225		$	23,851
Weighted average amortization period (in years)	3.25			3.25

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of RSU Activity

The table below summarizes RSU activity for the three months ended March 31, 2020:

	Restricted Stock Units		Weighted Average Grant Date Fair Value
Unvested RSUs, beginning of period	1,099,901		$	12.97
Granted	686,345		7.45
Vested	(213,846	)	12.68
Forfeited	—		—
Unvested RSUs, end of period	1,572,400		$	10.60

Schedule of PSU Activity

The table below summarizes PSU activity for the three months ended March 31, 2020:

	Performance Stock Units		Weighted Average Grant Date Fair Value
Unvested PSUs, beginning of period	701,128		$	14.31
Granted	401,958		6.14
Vested	(8,334	)	14.58
Forfeited	—		—
Unvested PSUs, end of period	1,094,752		$	11.31

Schedule of Assumptions Used to Calculate Grant Date Fair Value of PSUs

The following table summarizes the assumptions used to calculate the grant date fair value of these PSUs.

Grant Date Fair Value Assumptions	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Expected term (in years)	2.85	2.85
Expected volatility	33.50%	33.61%
Risk-free interest rate	1.16%	2.48%

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Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Certain of the Company’s assets and liabilities are carried at fair value and measured either on a recurring or nonrecurring basis. The Company’s fair value measurements are based either on actual market data or assumptions that other market participants would use in pricing an asset or liability in an orderly transaction, using the valuation hierarchy prescribed by GAAP under ASC 820.

The three levels of the fair value hierarchy under ASC 820 are as follows:

Level I - Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.

Level II - Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level III - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.

Fair Value of Financial Instruments

Debt Obligations

The carrying value and fair value of the financial instrument that is not carried at fair value in the accompanying consolidated balance sheet at March 31, 2020 and December 31, 2019 is as follows:

	March 31, 2020				December 31, 2019
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	390,147	$	228,000	$	389,835	$	412,000

The fair value of the 2026 Senior Notes at March 31, 2020 and December 31, 2019 was based on unadjusted quoted prices in an active market, which are considered a Level 1 input in the fair value hierarchy.

The Company has other financial instruments consisting primarily of receivables, payables, and other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in business combinations and asset retirement obligations.

Nonrecurring Fair Value Measurements

The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its non-financial assets and liabilities, including oil and natural gas properties. These assets and liabilities are not measured at fair value on a recurring basis but are subject to fair value adjustments when facts and circumstances arise that indicate a need for remeasurement. 

During the first quarter of 2020, Magnolia recorded impairments of $1.9 billion related to proved and unproved properties as a result of the sharp decline in commodity prices. Proved property impairment of $1.4 billion is included in “Impairment of oil and natural gas properties” and unproved property impairment of $0.6 billion is included in “Exploration expense” on the Company’s consolidated statement of operations for the three months ended March 31, 2020. Proved and unproved properties that were impaired had aggregate fair values as of the most recent date of impairment for the three months ended March 31, 2020, of $0.8 billion and $0.3 billion, respectively. The fair values of oil and natural gas properties were measured using the income approach based on inputs that are not observable in the market, and therefore, represent Level 3 inputs. The Company calculated the estimated fair values of its oil and natural gas properties using a discounted future cash flow model. Significant inputs associated with the calculation of discounted future net cash flows include estimates of future commodity prices based on NYMEX strip pricing adjusted for price differentials, estimates of proved oil and natural gas reserves and risk adjusted probable and possible reserves, estimates of future expected operating and capital costs, and a market participant based weighted average cost of capital of 10% for proved property impairments and 12% for unproved property impairments.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Matters

The Company is involved in disputes or legal actions in the ordinary course of business. For example, certain of the Karnes County Contributors and the Company have been named as defendants in a lawsuit where the plaintiffs claim to be entitled to a minority working interest in certain Karnes County Assets. The litigation is in the pre-trial stage. The exposure related to this litigation is currently not reasonably estimable. The Karnes County Contributors retained all such liability in connection with the Business Combination. At March 31, 2020, the Company does not believe the outcome of any such disputes or legal actions will have a material effect on its consolidated statements of operations, balance sheet, or cash flows. No amounts were accrued with respect to outstanding litigation at March 31, 2020 or March 31, 2019.

Environmental Matters

The Company, as an owner or lessee and operator of oil and natural gas properties, is subject to various federal, state, local laws, and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and natural gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks.

Risks and Uncertainties 

The Company’s revenue, profitability, and future growth are substantially dependent upon the prevailing and future prices for oil and natural gas, which depend on numerous factors beyond the Company’s control such as overall oil and natural gas production and inventories in relevant markets, economic conditions, the global political environment, regulatory developments, and competition from other energy sources. Oil and natural gas prices historically have been volatile and may be subject to significant fluctuations in the future. 

The coronavirus disease 2019 (“COVID-19”) pandemic and related economic repercussions have created significant volatility, uncertainty, and turmoil in the oil and natural gas industry. Oil demand has significantly deteriorated as a result of the virus outbreak and corresponding preventative measures taken around the world to mitigate the spread of the virus. Furthermore, in the midst of the ongoing COVID-19 pandemic, the competition between Russia and Saudi Arabia for crude oil market share caused a substantial increase in supply. The implications of these unprecedented events continue to unfold and may have further negative effects to the Company’s business, such as production curtailment, reduced storage capacity, and reductions to its operating plans.

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:

(In thousands, except per share data)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Basic:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Net income (loss) per share of Class A Common Stock - basic	$	(7.34	)	$	0.08
Diluted:
Net income (loss) attributable to Class A Common Stock	$	(1,227,010	)	$	13,026
Weighted average number of common shares outstanding during the period - basic	167,149			156,322
Add: Dilutive effect warrants, stock based compensation, and other	—			1,818
Weighted average number of common shares outstanding during the period - diluted	167,149			158,140
Net income (loss) per share of Class A Common Stock - diluted	$	(7.34	)	$	0.08

The calculation for weighted average shares reflects shares outstanding over the reporting period based on the actual number of days the shares were outstanding. The Company excluded the following from the computation of diluted earnings or loss per share because the effect was anti-dilutive as a result of the net loss for the quarter ended March 31, 2020: (i) 85.8 million weighted average shares of Class A Common Stock issuable upon exchange of the Class B Common Stock (and the corresponding Magnolia LLC Units), (ii) 4.0 million contingent shares of Class A Common Stock issuable to EnerVest, provided EnerVest does not compete in the Market Area, and (iii) 0.3 million RSUs and PSUs. For the quarter ended March 31, 2019, the Company excluded 93.3 million weighted average shares of Class A Common Stock issuable upon the exchange of the Class B Common Stock (and the corresponding Magnolia LLC Units) as the effect was anti-dilutive.

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Long Term Debt - Credit Facility Narrative (Details)	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Apr. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Line of Credit Facility [Line Items]
Outstanding borrowings	$ 400,000,000			$ 400,000,000
Line of Credit | RBL Facility
Line of Credit Facility [Line Items]
Deferred financing costs incurred in connection with securing the RBL Facility	$ 11,700,000
Amortization period	5 years
Interest expense	$ 1,100,000	$ 1,100,000
Outstanding borrowings	0			$ 0
Line of Credit | RBL Facility | Magnolia Operating
Line of Credit Facility [Line Items]
Maximum commitments, aggregate principal amount	1,000,000,000.0
Borrowing base	$ 550,000,000.0
Leverage ratio (less than)	4.00
Leverage ratio, minimum threshold for current ratio	3.00
Current ratio (greater than)	1.00
Line of Credit | RBL Facility | Magnolia Operating | Subsequent Event
Line of Credit Facility [Line Items]
Maximum commitments, aggregate principal amount			$ 450,000,000.0
Line of Credit | Letter of Credit Sublimit | Magnolia Operating
Line of Credit Facility [Line Items]
Maximum commitments, aggregate principal amount	$ 100,000,000.0

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Intangible Assets - Narrative (Details) $ in Thousands		3 Months Ended
	Jul. 31, 2018 tranche shares	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Non-Compete
Finite-Lived Intangible Assets [Line Items]
Estimated cost of intangible assets | $		$ 44,400	$ 44,400	$ 44,400
Non-Compete | Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated economic life of intangible asset		2 years 6 months
Non-Compete | Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated economic life of intangible asset		4 years
EnerVest Business Combination | Non-Compete | Tranche One
Finite-Lived Intangible Assets [Line Items]
Estimated economic life of intangible asset	2 years 6 months
EnerVest Business Combination | Non-Compete | Tranche Two
Finite-Lived Intangible Assets [Line Items]
Estimated economic life of intangible asset	4 years
EnerVest Business Combination | Class A Common Stock | Affiliate of EnerVest
Finite-Lived Intangible Assets [Line Items]
Number of shares authorized for issuance based on achievement of certain stock price thresholds (in shares)	4,000,000.0
Number of tranches | tranche	2
EnerVest Business Combination | Class A Common Stock | Affiliate of EnerVest | Tranche One
Finite-Lived Intangible Assets [Line Items]
Number of shares authorized for issuance based on achievement of certain stock price thresholds (in shares)	2,000,000.0
EnerVest Business Combination | Class A Common Stock | Affiliate of EnerVest | Tranche Two
Finite-Lived Intangible Assets [Line Items]
Number of shares authorized for issuance based on achievement of certain stock price thresholds (in shares)	2,000,000.0