Key Takeaways Magnolia Oil & Gas will report Q3 2025 earnings on Oct. 29, with EPS estimated at 41 cents.Q3 revenues are projected at $319.2M, down 4.2% year over year on lower realized oil prices.Production growth and stronger natural gas prices may partially offset higher operating costs.Magnolia Oil & Gas Corporation (MGY) is set to report third-quarter 2025 earnings on Oct. 29. The Zacks Consensus Estimate for earnings is pegged at 41 cents per share and the same for revenues is pinned at $319.2 million ...

The market expects Magnolia Oil & Gas Corp (MGY) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to ...

Core Insights - Magnolia Oil & Gas (NYSE: MGY) is positioned to perform well in a low oil price environment despite being unhedged, due to its minimal leverage and the maturity of its unsecured notes not occurring until December 2032 [1]. Company Overview - Magnolia Oil & Gas operates with a low level of financial risk, indicated by its minimal leverage [1]. - The company has unsecured notes that are not due until December 2032, providing a stable financial outlook in the near term [1]. Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks [2]. - Chow co-founded a mobile gaming company that was acquired by PENN Entertainment and has significant experience in designing economic models for mobile applications [2]. - The investing group Distressed Value Investing, founded by Chow, focuses on value opportunities and distressed plays, particularly in the energy sector [2].

Core Insights - Magnolia Oil & Gas (NYSE: MGY) is positioned to perform well in a low oil price environment despite being unhedged, due to its minimal leverage and the maturity of its unsecured notes not occurring until December 2032 [1]. Company Overview - Magnolia Oil & Gas has a low level of leverage, which enhances its resilience in fluctuating market conditions [1]. - The company’s unsecured notes are set to mature in December 2032, providing a long-term buffer against immediate financial pressures [1]. Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks [2]. - Chow co-founded a mobile gaming company that was acquired by PENN Entertainment, showcasing his experience in both analytical and modeling skills [2]. - The investing group Distressed Value Investing, founded by Chow, focuses on value opportunities and distressed plays, particularly in the energy sector [2].

Industry Overview - The Zacks Oil and Gas - Exploration and Production - United States industry is experiencing tightening margins and soft investor sentiment due to rising global output and easing production cuts by OPEC+ [1] - The industry is characterized by companies focused on the exploration and production of oil and natural gas, with cash flow primarily determined by realized commodity prices [2] - The industry faces exploration risks and is vulnerable to historically volatile energy market prices [2] Key Trends - Oversupply Threat: The global oil market is tilting toward oversupply as OPEC+ relaxes production curbs, increasing the risk of inventory buildup and putting downward pressure on prices [3] - Demand Outlook: Economic uncertainty, high interest rates, and weak industrial activity are dampening oil consumption forecasts, raising risks for exploration and production companies [4] - Natural Gas Support: The natural gas market remains constructive, supported by strong LNG exports and balanced inventories, with futures prices holding above $3 [5] - Transition to Clean Energy: The rise of electric vehicles and cleaner fuels is expected to slow global oil demand growth sharply after 2026, introducing long-term uncertainty for oil prices [6] Industry Performance - The Zacks Oil and Gas - US E&P industry ranks 225 out of 243 Zacks industries, placing it in the bottom 7% [7] - The industry's earnings estimates for 2025 have decreased by 34.1% over the past year, and estimates for 2026 have fallen by 38% [9] - The industry has underperformed the S&P 500 and the broader Zacks Oil – Energy sector, declining by 23.9% over the past year compared to a 0.4% decrease in the sector and an 18% gain in the S&P 500 [11] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 11.06X, significantly lower than the S&P 500's 18.69X but above the sector's 5.14X [14] - Over the past five years, the industry has traded as high as 16.02X and as low as 3.56X, with a median of 6.28X [14] Notable Companies - **Cheniere Energy**: A leading player in LNG exports with a strong growth outlook, currently has a Zacks Rank 1 (Strong Buy) [17][18] - **Coterra Energy**: Focused on natural gas production with a projected earnings growth rate of 30.1% over the next three to five years, holds a Zacks Rank 3 (Hold) [19][20] - **APA Corporation**: Engaged in oil and gas exploration with significant drilling success in Suriname and the Permian Basin, has a market capitalization of approximately $8.8 billion [22][23] - **Magnolia Oil & Gas**: Operates in high-return regions with low breakeven costs, has a market capitalization of about $4.6 billion and a Zacks Rank 3 [25][26]

Group 1 - Magnolia Oil & Gas (NYSE: MGY) is recognized for its unique position in the industry, as it manages to grow production while simultaneously repurchasing shares and paying dividends [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] Group 2 - The analysis of oil and gas companies focuses on identifying undervalued entities, examining their balance sheets, competitive positions, and development prospects [1]

Group 1 - TimesSquare Capital Management's "U.S. Small Cap Growth Strategy" reported a gross return of 11.28% and a net return of 11.02% for Q2 2025, underperforming the Russell 2000 Growth Index which returned 11.97% [1] - The fund's performance was attributed to double-digit returns in equities driven by improved global economic activity [1] - Magnolia Oil & Gas Corporation (NYSE:MGY) was highlighted as a key stock, with a one-month return of 0.99% and a 52-week gain of 2.06%, closing at $24.28 per share with a market capitalization of $4.586 billion on September 10, 2025 [2] Group 2 - Magnolia Oil & Gas Corporation's stock experienced a decline of -10% in Q2 2025, despite raising full-year production guidance due to improved well productivity [3] - The company is categorized as an independent oil and natural gas firm, focusing on low-cost exploration and production [3] - Magnolia Oil & Gas Corporation was held by 34 hedge fund portfolios at the end of Q2 2025, a decrease from 40 in the previous quarter, indicating a shift in hedge fund interest [4]

Core Insights - Magnolia Oil & Gas (NYSE: MGY) reported strong production results for Q2 2025, exceeding guidance by approximately 1% and maintaining D&C capex below expectations [2] Group 1: Company Performance - Magnolia's continued production outperformance has led to an increase in its full-year total production forecast [2] Group 2: Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is a top-rated analyst on TipRanks, previously co-founding a mobile gaming company acquired by PENN Entertainment [2]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in equity, and cash flows, with accompanying notes detailing accounting policies and financial matters [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased slightly to **$2.86 billion** from **$2.82 billion** at year-end 2024, primarily driven by an increase in net oil and natural gas properties, while total equity grew to nearly **$2.0 billion** from **$1.97 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Total Current Assets** | $416,737 | $410,824 | | **Total Property, Plant and Equipment, net** | $2,355,555 | $2,306,034 | | **Total Assets** | **$2,860,648** | **$2,820,835** | | **Total Current Liabilities** | $288,620 | $290,261 | | **Total Long-Term Liabilities** | $573,682 | $563,248 | | **Total Liabilities** | **$862,302** | **$853,509** | | **Total Equity** | **$1,998,346** | **$1,967,326** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) For the second quarter of 2025, total revenues decreased to **$319.0 million** from **$336.7 million** year-over-year, mainly due to lower oil prices, leading to a reduction in net income attributable to Class A common stock to **$78.1 million** ($0.41 per diluted share) Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $318,981 | $336,725 | $669,282 | $656,142 | | **Operating Income** | $107,814 | $134,351 | $243,636 | $258,909 | | **Net Income Attributable to Class A Common Stock** | $78,117 | $95,559 | $181,044 | $180,645 | | **Diluted EPS** | $0.41 | $0.51 | $0.95 | $0.97 | [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20(unaudited)) Total equity increased from **$1.97 billion** at the end of 2024 to **$2.00 billion** as of June 30, 2025, driven by net income of **$187.7 million**, partially offset by **$100.7 million** in Class A common stock repurchases and **$57.3 million** in dividends Key Equity Changes - H1 2025 (in thousands) | Item | Amount | | :--- | :--- | | **Balance, December 31, 2024** | $1,967,326 | | Net Income | $187,676 | | Class A Common Stock Repurchases | $(100,661) | | Dividends Declared | $(57,261) | | **Balance, June 30, 2025** | **$1,998,346** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) For the first six months of 2025, net cash from operating activities was **$423.2 million**, a decrease from **$480.3 million** in the prior-year period, resulting in a net cash decrease of **$8.3 million** after investing **$262.6 million** and financing **$168.9 million** Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $423,188 | $480,329 | | **Net Cash Used in Investing Activities** | $(262,567) | $(387,446) | | **Net Cash Used in Financing Activities** | $(168,909) | $(218,321) | | **Net Change in Cash** | $(8,288) | $(125,438) | | **Cash at End of Period** | $251,761 | $275,683 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) The notes detail key financial activities and policies, including **$39.7 million** in bolt-on acquisitions, **$400 million** in Senior Notes due 2032, **7.4 million** shares remaining for repurchase, and **$0.15 per share** quarterly dividends - During the first six months of 2025, the Company completed various bolt-on property acquisitions of certain oil and natural gas assets totaling **$39.7 million**[47](index=47&type=chunk) - As of June 30, 2025, long-term debt consisted of **$400.0 million** in 6.875% Senior Notes due 2032, with no outstanding borrowings under the RBL Facility[61](index=61&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - As of June 30, 2025, **7.4 million shares** of Class A Common Stock remained available for repurchase under the authorized 50.0 million share program[86](index=86&type=chunk) - On July 29, 2025, the board declared a quarterly cash dividend of **$0.15 per share** of Class A Common Stock, payable on September 2, 2025[111](index=111&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a strategy focused on disciplined capital allocation, moderate production growth, and shareholder returns, maintaining a strong liquidity position of **$701.8 million** despite lower realized oil prices [Business Overview](index=28&type=section&id=Business%20Overview) Magnolia operates primarily in the Karnes and Giddings areas of South Texas, targeting the Eagle Ford Shale and Austin Chalk formations, with an objective to generate long-term value through steady organic production growth and high margins, achieving **98.2 Mboe/d** total production for Q2 2025 - The company's objective is to generate stock market value through steady organic production growth, high full cycle operating margins, an efficient capital program, and significant free cash flow[116](index=116&type=chunk) - As of June 30, 2025, total production was **98.2 thousand barrels of oil equivalent per day** for the second quarter[119](index=119&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Total production for Q2 2025 increased by **9%** year-over-year to **98.2 Mboe/d**, but a **22%** decrease in average realized oil prices to **$62.20/bbl** led to a **5%** drop in total revenue to **$319.0 million**, partially offset by a **106%** increase in natural gas prices Production and Pricing Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Production (Mboe/d)** | 98.2 | 90.2 | +9% | | **Average Oil Price ($/Bbl)** | $62.20 | $79.74 | -22% | | **Average Natural Gas Price ($/Mcf)** | $2.55 | $1.24 | +106% | | **Total Revenues ($M)** | $319.0 | $336.7 | -5% | - Lease operating expenses per boe decreased by **10%** to **$4.88** in Q2 2025 from **$5.40** in Q2 2024, driven by higher production and cost reduction initiatives[133](index=133&type=chunk) - Gathering, transportation, and processing (GTP) costs increased to **$1.84/boe** in Q2 2025 from **$1.03/boe** in Q2 2024, driven by higher natural gas and NGL prices and changes to gathering contracts[134](index=134&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity source is cash from operations, totaling **$423.2 million** in H1 2025, with total liquidity at **$701.8 million** as of June 30, 2025, primarily used for capital expenditures of **$225.7 million**, share repurchases of **$100.9 million**, and dividends of **$57.3 million** - As of June 30, 2025, the Company had total liquidity of **$701.8 million**, consisting of **$251.8 million** in cash and cash equivalents and **$450.0 million** of borrowing capacity under the RBL Facility[144](index=144&type=chunk) Sources and Uses of Cash - H1 2025 (in thousands) | Category | Amount | | :--- | :--- | | **Net Cash from Operations** | $423,188 | | **Uses of Cash:** | | | Additions to oil & gas properties | $(231,455) | | Acquisitions | $(39,653) | | Class A Stock Repurchases | $(100,932) | | Dividends Paid | $(57,261) | - Drilling and completion capital expenditures for H1 2025 were **$225.7 million**, down from **$242.3 million** in H1 2024[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is commodity price volatility, where a **$1.00 per barrel** change in oil prices would impact annualized revenues by approximately **$14.3 million**, and a **$0.10 per Mcf** change in natural gas prices would impact revenues by **$6.7 million** - A **$1.00 per barrel** change in the weighted average oil price would have impacted the Company's annualized revenues by approximately **$14.3 million**[155](index=155&type=chunk) - A **$0.10 per Mcf** change in the weighted average natural gas price would have impacted the Company's annualized revenues by approximately **$6.7 million**[155](index=155&type=chunk) - The company is subject to interest rate risk on its RBL Facility, but had no borrowings outstanding as of June 30, 2025, mitigating this risk[154](index=154&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the principal executive officer and principal financial officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[156](index=156&type=chunk) - There were no changes in the system of internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control[157](index=157&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation incidental to its business, including a specific lawsuit concerning working interests in certain Karnes County Assets, but management does not anticipate a material adverse effect on financial condition - The Company is party to certain legal actions and claims arising in the ordinary course of business, which are not expected to have a materially adverse effect on its financial position[159](index=159&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, stating that there have been no material changes to these risk factors since that filing - There have been no material changes to the Company's risk factors since its 2024 Form 10-K[160](index=160&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2025, the company repurchased **2.21 million shares** for approximately **$48.7 million**, totaling **4.36 million shares** for the first six months, with approximately **7.4 million shares** remaining available under the existing program Share Repurchase Activity - 2025 | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Q1 2025 | 2,150,000 | $24.18 | | Q2 2025 (Apr-Jun) | 2,210,000 | $22.04 (calculated) | | **Total H1 2025** | **4,360,000** | **$23.09** | - As of the end of June 2025, **7,383,105 shares** remained available for purchase under the publicly announced repurchase program[161](index=161&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None reported - None[162](index=162&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[163](index=163&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no director or officer of the company adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - During the three months ended June 30, 2025, no director or officer of Magnolia adopted, modified, or terminated any Rule 10b5–1 trading arrangement or any non-Rule 10b5-1 trading arrangement[164](index=164&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the CEO and CFO certifications required under the Sarbanes-Oxley Act and the XBRL interactive data files

Financial Data and Key Metrics Changes - Magnolia reported total adjusted net income of $81 million for Q2 2025, with adjusted EBITDAX of $223 million and D&C capital expenditures of $95 million, resulting in a reinvestment rate of 43% [6][15] - The company generated free cash flow of $107 million and returned 72% of that to shareholders through dividends and share repurchases, totaling approximately $78 million [7][15] - Annualized return on capital employed was 18%, with pretax operating margins at 34% [6][19] Business Line Data and Key Metrics Changes - Total production volumes reached 98,200 barrels of oil equivalent per day, reflecting a 9% year-over-year growth, with oil production at a record 40,000 barrels per day, also a 5% year-over-year increase [7][8] - The company raised its full-year 2025 production growth guidance to approximately 10%, up from a prior range of 7% to 9% [8][19] Market Data and Key Metrics Changes - Total revenue per BOE declined approximately 13% year-over-year due to price fluctuations, partially offset by increases in natural gas and NGL prices [18] - Total adjusted cash operating costs decreased by 4% to $10.7 per BOE, with LOE at a low of $4.88 per BOE during the quarter [18] Company Strategy and Development Direction - Magnolia continues to pursue a strategy of appraising, acquiring, growing, and exploiting its assets, particularly in the Giddings area, which has seen a 20% increase in development acreage [9][10] - The company aims to maintain balance sheet strength and capital discipline while generating high pretax operating margins and returning significant free cash flow to shareholders [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Giddings field's potential for further capital efficiencies and production growth, emphasizing the importance of achieving the best wells with minimal capital [26][28] - The company anticipates minimal cash taxes for 2025 and 2026 due to recent legislative changes, which should benefit future cash flows [36][20] Other Important Information - Magnolia completed multiple bolt-on acquisitions totaling about $40 million, adding approximately 18,000 net acres in Giddings and increasing production by roughly 500 BOE per day [9][10] - The company maintains a strong liquidity position with $252 million in cash and an undrawn $450 million revolving credit facility, totaling approximately $700 million in liquidity [17] Q&A Session Summary Question: Free cash flow trends and capital efficiency - Management acknowledged the importance of balancing growth and capital efficiency, noting that they are focused on generating the highest free cash flow with the least capital [24][25] Question: Product mix and capital allocation - Management clarified that while there are variations in the Giddings area, the focus remains on drilling good wells across the field to optimize returns [30][31] Question: Minimal cash taxes due to new budget bill - Management confirmed that cash taxes for 2025 are expected to be negligible, with similar expectations for 2026 under current pricing conditions [35][36] Question: Oil production trajectory and growth expectations - Management indicated that oil production is expected to continue growing in the second half of the year, with a slight increase anticipated for 2026 [43][44] Question: M&A outlook and future acquisitions - Management expressed optimism about ongoing smaller acquisition opportunities in core areas, while larger acquisitions may present complexities [46][47] Question: Appraisal wells and expansion criteria - Management stated that appraisal wells typically account for about 10% of overall activity, with ongoing efforts to identify new opportunities [73][74] Question: Deferred completions and spare capacity - Management confirmed that about six completions are deferred into 2026, with plans to utilize spare capacity depending on market conditions [78][80]