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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.
−Removed: 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.
+Added: There have been no material changes to the Company’s risk factors since its 2019 Form 10-K, 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.
−Removed: Recent COVID-19 and other pandemic outbreaks could negatively impact Magnolia’s business and results of operations.
−Removed: 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.
+Added: COVID-19 and other pandemic outbreaks could negatively impact Magnolia’s business and results of operations.
+Added: The company may face additional risks related to the ongoing 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.
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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.
−Removed: In addition, many 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.
+Added: In addition, many of the Company’s non-operational employees have been 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Historically, oil, natural gas, and NGL prices have been volatile.
−Removed: 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.
−Removed: During the six months ended June 30, 2020, benchmark prices for oil and natural gas were significantly depressed which resulted in a decrease in revenue in the second quarter.
−Removed: Should this volatility persist, Magnolia’s price realizations and production volumes could be negatively impacted further.
−Removed: 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.
−Removed: The commodity price environment is expected to remain depressed based on over-supply, decreasing demand, and a potential global economic recession, as
−Removed: is evidenced by lower prices in the forward curve for oil for several years.
−Removed: Sustained periods of lower commodity prices, or further decreases, may reduce Magnolia’s cash flow and borrowing ability and may result in write-downs of the carrying value of its properties.
−Removed: If Magnolia is unable to obtain needed capital or financing on satisfactory terms, its ability to develop future reserves could be adversely affected.
−Removed: Also, using lower prices in estimating proved reserves may result in a reduction in proved reserves volumes due to economic limits.
−Removed: 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.
−Removed: If Magnolia curtails its drilling program, the Company may be unable to hold leases that are scheduled to expire, which may further reduce reserves.
−Removed: In the second quarter of 2020, the Company temporarily shut in some low producing wells due to depressed commodity prices.
−Removed: Additionally, some of the Company’s non-operated wells were shut in.
−Removed: Many of the wells have returned to production and there was not a significant impact on net production, however, should sustained periods of lower oil and natural gas prices persist, the Company may further shut in wells or curtail production.
−Removed: 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.
−Removed: 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.
+Added: As of October 1, 2020, the substantial majority of Magnolia employees have returned to the office.
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.
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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.
−Removed: 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 unavailable in the future.
+Added: If there is a resurgence of the outbreak across the United States and other locations across the world and the related social distancing guidelines, travel restrictions, and stay-at-home orders due to the COVID-19 pandemic and such resurgence reduces demand for oil and natural gas, available storage and transportation capacity for the Company’s production may be limited or 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.
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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.
−Removed: In the second quarter of 2020, the Company temporarily shut in some low producing wells due to depressed commodity prices.
+Added: For example, in the second quarter of 2020, the Company temporarily shut in some low producing wells due to depressed commodity prices.
Additionally, some of the Company’s non-operated wells were shut in.
−Removed: Many of the wells have returned to production and there was not a significant impact on net production, however, should sustained periods of lower oil and natural gas prices persist, the Company may further shut in wells or curtail production.
+Added: Many of the wells have returned to production and there was not a significant impact on net production, however, should sustained periods of lower oil and natural gas prices return, the Company may further shut in wells or curtail production.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.