Core Insights - Magnolia Oil & Gas Corp (MGY) reported quarterly earnings of $0.49 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, but down from $0.50 per share a year ago, resulting in an earnings surprise of 6.52% [1][2] - The company generated revenues of $326.61 million for the quarter ended December 2024, slightly missing the Zacks Consensus Estimate by 0.01%, but up from $322.63 million year-over-year [2] - The stock has underperformed the S&P 500, gaining about 0.5% since the beginning of the year compared to the S&P 500's 4% increase [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $332.34 million, and for the current fiscal year, it is $2.08 on revenues of $1.37 billion [7] - The estimate revisions trend for Magnolia Oil & Gas Corp is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Fourth quarter 2024 net income was $88.7 million, a decrease of 22% from $113.9 million in Q4 2023, with adjusted net income at $95.4 million, down 11% year-over-year [2][5]. - Full year 2024 net income totaled $397.3 million, a 10% decrease from $442.6 million in 2023, while adjusted net income was $400.9 million, down 9% [3][5]. - Net income for the quarter ended December 31, 2024, was $88.7 million, a decrease of 22.1% from $113.9 million in the same quarter of 2023 [28]. - Net income attributable to Class A common stock for the quarter was $85.6 million, down from $98.4 million in the same quarter of 2023, a decrease of 13.5% [26]. - The company reported an operating income of $124.1 million for the quarter, down from $138.1 million in the same quarter of 2023, a decrease of 10.1% [26]. - Adjusted EBITDAX for the year ended December 31, 2024, was $953.3 million, up 6.0% from $899.2 million in 2023 [36]. Production and Reserves - Average daily production for Q4 2024 was 93.1 Mboe/d, a 9% increase from 85.4 Mboe/d in Q4 2023, with full year production averaging 89.7 Mboe/d, also up 9% [2][9]. - Magnolia added 44.3 MMboe of proved developed reserves in 2024, achieving a replacement ratio of 135% of production, with organic proved developed finding and development costs at $10.77 per boe [10][13]. - Oil production for the quarter was 3,572 MBbls, representing a 9.4% increase compared to 3,263 MBbls in the same quarter of 2023 [23]. - Magnolia's average daily natural gas production increased to 167,079 Mcf/d, up from 154,848 Mcf/d, reflecting an 8% growth year-over-year [23]. - Proved developed reserves increased by 14.1 million barrels of oil equivalent (MMboe) to 149.3 MMboe for the year ended December 31, 2024, compared to 135.2 MMboe in 2023 [32]. Cash Flow and Expenditures - Free cash flow generated in Q4 2024 was $90.3 million, with total free cash flow for the year at $430.2 million, representing 88% of total free cash flow returned to shareholders [5][10]. - Capital expenditures for drilling and completions in Q4 2024 were $131.6 million, a 44% increase from $91.5 million in Q4 2023, with full year expenditures at $477.0 million, up 13% [2][10]. - Net cash provided by operating activities for the year ended December 31, 2024, was $920.9 million, an increase of 7.6% compared to $855.8 million in 2023 [28]. - The company reported a net cash used in investing activities of $655.1 million for the year ended December 31, 2024, down from $814.9 million in 2023 [28]. Shareholder Returns - A 15% increase in the quarterly dividend to $0.15 per share was approved, marking the fourth consecutive year of dividend growth [7][10]. - Magnolia repurchased 2.2 million shares for $55.8 million in Q4 2024, totaling 11.0 million shares repurchased for the year, leading to a 5% reduction in diluted weighted average shares outstanding [10][12]. - The company repurchased $55.2 million of Class A Common Stock during the quarter, compared to $53.6 million in the same quarter of 2023 [28]. Operational Efficiency - The company plans to maintain two drilling rigs and one completion crew in 2025, expecting total production growth of 5% to 7% for the year [12][14]. - The company anticipates continued growth in production and revenue, driven by ongoing operational efficiencies and market demand [23]. Revenue and Costs - For the quarter ended December 31, 2024, Magnolia Oil & Gas Corporation reported total revenues of $326.6 million, a slight increase from $322.6 million in the same quarter of 2023 [23]. - Total operating expenses for the quarter were $202.5 million, compared to $184.5 million in the same quarter of 2023, an increase of 9.8% [26]. - Lease operating expenses rose to $45.9 million from $40.4 million year-over-year, marking a 12.4% increase [26]. - Total revenues per barrel (boe) for Q4 2024 were $38.13, a decrease of 4.5% from $41.06 in Q4 2023 [43]. - Adjusted cash operating margin for Q4 2024 was $27.51 per boe, down 10.3% from $30.51 per boe in Q4 2023 [43]. - Total adjusted cash operating costs for Q4 2024 were $10.62 per boe, slightly up from $10.55 per boe in Q4 2023 [43]. - Operating income margin for Q4 2024 was $14.48 per boe, down from $17.56 per boe in Q4 2023 [43].

Core Viewpoint - Magnolia Oil & Gas Corporation (MGY) is expected to report fourth-quarter earnings on February 18, with earnings estimated at 46 cents per share and revenues at $330.02 million [1]. Group 1: Previous Performance - In the last reported quarter, MGY achieved a net profit of 52 cents per share, exceeding the Zacks Consensus Estimate by 4 cents, primarily due to increased production volumes [3]. - Total revenues for the last quarter were $333.1 million, surpassing the Zacks Consensus Estimate by $2.1 million [3]. - MGY has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 5.52% [3]. Group 2: Estimate Revisions - The Zacks Consensus Estimate for fourth-quarter 2024 earnings has remained unchanged over the past week, indicating an 8% year-over-year decrease [4]. - Conversely, the revenue estimate shows a 2.29% increase compared to the previous year [4]. Group 3: Revenue and Production Expectations - MGY's revenues are projected to increase to $327.9 million in the upcoming quarter, up from $322.6 million year-over-year, driven by strong contributions from oil and natural gas [6]. - Oil segment revenues are expected to rise by 1.3% year-over-year to $255.9 million, while natural gas segment revenues are predicted to increase by 17.1% to $30.9 million [6]. - Total production is anticipated to reach 8.6 million barrels of oil equivalent (MMboe), an 8.3% increase from 7.9 MMboe in the same quarter last year [7]. - Oil production is expected to rise by 8.5% to 3.5 thousand barrels of oil (MBbls), and natural gas production is predicted to grow by 13.6% to 16.2 million cubic feet [7]. Group 4: Cost Management - MGY's cost management efforts are likely to positively impact profitability, with gathering, transportation, and processing expenses expected to decrease by 20.7% to $8.7 million from $10.9 million year-over-year [8]. - The combination of increased production and effective cost management is expected to lead to higher revenues and improved profitability in the fourth quarter [8]. Group 5: Earnings Prediction - The model predicts an earnings beat for MGY, supported by a positive Earnings ESP of +1.73% and a Zacks Rank of 3 (Hold) [9][10].

Core Insights - Magnolia Oil & Gas Corp (MGY) is positioned to continue its earnings-beat streak, having a history of surpassing earnings estimates, particularly in the last two quarters with an average surprise of 9.07% [1][2] Earnings Performance - For the most recent quarter, Magnolia reported earnings of $0.52 per share against an expectation of $0.48, resulting in a surprise of 8.33%. In the previous quarter, the company reported $0.56 per share compared to a consensus estimate of $0.51, achieving a surprise of 9.80% [2] Earnings Estimates - Recent estimates for Magnolia have been increasing, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat, especially when combined with its Zacks Rank [3][6] Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise, suggesting that out of 10 such stocks, approximately 7 may beat consensus estimates [4] Earnings ESP Definition - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions, which may be more accurate than earlier predictions [5] Current Earnings ESP - Magnolia Oil & Gas Corp currently has an Earnings ESP of +0.82%, indicating bullish sentiment among analysts regarding its near-term earnings potential. The next earnings report is anticipated on February 18, 2025 [6]

Magnolia Oil & Gas Corp (MGY) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released o ...

Investors in Magnolia Oil & Gas Corporation (MGY) need to pay close attention to the stock based on moves in the options market lately. That is because the March 21, 2025 $15 Call had some of the highest implied volatility of all equity options today.What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. I ...

Laura Starks is the founder and CEO of Starks Energy Economics, LLC (since 2007). She has a degree in chemical engineering and an MBA with a concentration in finance which she has used for many years to invest personally and to share her ideas about energy companies. Her coverage includes utilities, independent power producers, energy service companies and contractors, a few petrochemical companies, and all sectors of oil and natural gas: upstream, midstream, and downstreamAnalyst’s Disclosure: I/we have a ...

Core Viewpoint - Magnolia Oil & Gas Corporation (MGY) reported a third-quarter 2024 net profit of 52 cents per share, exceeding the Zacks Consensus Estimate of 48 cents, driven by increased production volumes despite a year-over-year decline from 54 cents due to rising operating expenses [1][2]. Financial Performance - Total revenues for the quarter were $333.1 million, surpassing the Zacks Consensus Estimate of $331 million, and reflecting a 5.5% increase from $315.7 million in the same period last year, primarily due to higher oil revenues of $266 million [2][3]. - The company generated $217.9 million in net cash from operating activities and achieved a free cash flow of $126.1 million, with operating income constituting 39% of revenues [3]. Shareholder Returns - Magnolia declared a cash dividend of 13 cents per share for both Class A and Class B stock, payable on December 2, to shareholders of record as of November 8 [4]. - In the third quarter, the company repurchased 2.5 million shares for $61.7 million, returning approximately $87.8 million to shareholders, which represents 70% of its free cash flow [5]. Production and Prices - Average daily total output was 90,702 barrels of oil equivalent per day (boe/d), up from 82,651 boe/d year-over-year, although it fell short of the estimate of 91,000 boe/d [6]. - Oil production reached 38,902 barrels per day (bpd), an 18.4% increase from the previous year, exceeding the estimate of 37,200 bpd, while natural gas volumes were 159,170 thousand cubic feet per day (Mcf/d), up 1.7% but below the expected 173,600 Mcf/d [7]. - The average realized crude oil price was $74.23 per barrel, down 7.9% from $80.56 a year ago, and also below the expected $75.21 per barrel [7][8]. Balance Sheet and Capital Expenditure - As of September 30, Magnolia had cash and cash equivalents of $276.1 million and long-term debt of $394.8 million, with a total debt-to-total capital ratio of 16.8% [9]. - The company spent $103.1 million on its capital program during the quarter, with operating expenses rising to $204.1 million from $167.5 million year-over-year [9]. Guidance and Future Plans - Magnolia plans to maintain two drilling rigs and one completion crew, with an additional four well pads to be drilled in Giddings during the fourth quarter, enhancing operational flexibility for 2025 [10][11]. - The company expects fourth-quarter drilling and completion capital to be $125 million, bringing total capital spending for the year to approximately $470 million, aligning with its budget range [11]. - Projected total production volumes for the fourth quarter are about 93 thousand boe/d, indicating a high single-digit year-over-year increase, with oil production growth expected to exceed this rate [12].

Financial Data and Key Metrics Changes - Magnolia Oil & Gas reported total net income of $106 million and adjusted net income of $100 million, equating to $0.51 per diluted share for Q3 2024 [24] - Adjusted EBITDAX for the quarter was $244 million, with total capital associated with drilling and completions at $103 million, representing just 42% of adjusted EBITDAX [24] - Total production volumes grew 10% year-over-year to 90,700 barrels of oil equivalent per day, with a diluted share count decreasing by 5% year-over-year to 198.4 million shares [25] Business Line Data and Key Metrics Changes - Total company production during Q3 was approximately 91,000 barrels of oil equivalent per day, with oil production nearly 39,000 barrels per day, reflecting an 18% increase from the previous year [12][13] - Production in the Giddings area was 68,700 barrels of oil equivalent per day, growing 12% year-over-year, with Giddings oil production increasing by 24% [13] - Field level operating costs were reduced to $5.33 per BOE, an 11% decline compared to Q1 2024, exceeding the target of a 5% to 10% reduction [16] Market Data and Key Metrics Changes - The company experienced unplanned third-party midstream facility outages that impacted natural gas and NGL production by approximately 1,000 BOE per day during the quarter [12] - Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, with Magnolia remaining completely unhedged for all oil and natural gas production [33] Company Strategy and Development Direction - Magnolia aims to be the most efficient operator of best-in-class oil and gas assets, focusing on generating high returns while employing minimal capital for drilling and completing wells [7] - The company plans to utilize excess cash for attractive bolt-on acquisitions to enhance overall business sustainability and increase dividend payout capacity [8][10] - The strategy includes returning a substantial portion of free cash flow to shareholders through dividends and share repurchases [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued execution of the 2024 plan and highlighted strong operational performance despite challenges [6][11] - The company anticipates high single-digit year-over-year total production growth for 2024, with oil production expected to exceed BOE growth [14][33] - Management acknowledged concerns about reliability related to power and midstream facilities but remains optimistic about operational flexibility moving into 2025 [41][72] Other Important Information - Magnolia completed several small transactions totaling $15 million during Q3, enhancing future development locations [20] - The company ended the quarter with $276 million in cash and $400 million in senior notes, indicating a strong balance sheet [30] Q&A Session Summary Question: Continued growth in Giddings area - Management attributed growth to a talented team and ongoing learning from drilling activities, emphasizing the importance of acquisitions to expand knowledge [36][39] Question: Concerns about midstream outages - Management acknowledged the unpredictability of midstream providers and expressed concerns about power reliability but noted that current issues have been resolved [41][72] Question: LOE and GP&T cost trends for 2025 - Management indicated that while they aim to maintain current cost levels, they expect modest improvements and will continue to push for efficiency [46][47] Question: Service costs alignment with oil and gas commodities - Management noted that service costs have softened and they anticipate mid-single-digit savings in various categories moving into 2025 [50][53] Question: M&A opportunities in Giddings and Eagle Ford - Management sees a mix of small and larger acquisition opportunities and remains focused on enhancing the quality of their asset portfolio [66][68] Question: Philosophy on hedging - Management prefers to remain unhedged to allow full exposure to commodity prices, viewing hedging as unnecessary given their low debt levels [74][76] Question: Future challenges with midstream facilities - Management expressed confidence in resolving current midstream challenges but acknowledged the potential for future issues related to power and infrastructure [72][78]

Financial Performance - For the three months ended September 30, 2024, Magnolia reported net income attributable to Class A Common Stock of $99.8 million, or $0.52 per diluted share, compared to $280.4 million, or $1.50 per diluted share for the nine months ended September 30, 2024[95]. - Oil revenues for the three months ended September 30, 2024 were $265.7 million, an increase of $22.1 million compared to the same period in 2023, driven by an 18% increase in oil production[104]. - Natural gas revenues for the three months ended September 30, 2024 decreased by $4.9 million to $22.2 million, primarily due to a 19% decrease in average prices[106]. - NGL revenues for the three months ended September 30, 2024 were $45.2 million, a slight increase of $0.2 million compared to the same period in 2023, supported by a 7% increase in NGL production[107]. - Total operating expenses for the three months ended September 30, 2024, were $204.1 million, an increase of 21.8% compared to $167.5 million for the same period in 2023[108]. - Income tax expense for the three months ended September 30, 2024, was $26.5 million, a decrease of 15.4% from $31.2 million in 2023[117]. - The net change in cash and cash equivalents for the nine months ended September 30, 2024, was a decrease of $125.0 million, compared to a decrease of $57.0 million in 2023[122]. Production and Operations - Total production for the three months ended September 30, 2024 was 90.7 thousand barrels of oil equivalent per day, an increase from 82.7 thousand boe/d for the same period in 2023, representing a 9.9% increase[94]. - Lease operating expenses for the three months ended September 30, 2024, were $44.4 million, up from $35.9 million in 2023, reflecting a 23.5% increase[108]. - Gathering, transportation, and processing costs for the three months ended September 30, 2024, were $10.7 million, slightly higher than $10.3 million in 2023, but $0.07 per boe lower[110]. - Depreciation, depletion, and amortization for the three months ended September 30, 2024, was $107.3 million, compared to $81.2 million in 2023, marking a 32.2% increase[112]. - The Company is running a two-rig program, with drilling rig numbers dependent on commodity prices and business strategy[125]. Capital Expenditures and Acquisitions - The company acquired oil and gas producing properties in the Giddings area for approximately $264.1 million in November 2023, with additional contingent cash consideration of up to $40.0 million based on future commodity prices[100]. - Acquisitions for the nine months ended September 30, 2024, amounted to $165.0 million, significantly higher than $53.8 million in 2023[122]. - Total capital expenditures for the three months ended September 30, 2024, were $104.9 million, compared to $106.7 million for the same period in 2023[125]. Shareholder Returns - The company declared cash dividends totaling $72.5 million to holders of its Class A Common Stock during the nine months ended September 30, 2024[96]. - Cash dividends declared and paid to holders of Class A Common Stock totaled $72.5 million during the nine months ended September 30, 2024, up from $66.3 million in the same period of 2023[128]. - Magnolia's board of directors authorized a share repurchase program of up to 40.0 million shares, with 36.1 million shares repurchased at a cost of $652.0 million as of September 30, 2024[97]. - The Company repurchased 5.3 million shares for approximately $127.0 million during the nine months ended September 30, 2024, compared to 7.1 million shares for $152.9 million in the same period of 2023[126]. - Magnolia LLC repurchased and canceled 3.5 million units for $89.7 million during the nine months ended September 30, 2024[127]. - The future amount and frequency of dividends are subject to the discretion of the Company's board of directors, influenced by earnings and capital expenditures[128]. Financial Position - The company had $726.1 million in liquidity as of September 30, 2024, consisting of $450.0 million in borrowing capacity and $276.1 million in cash[120]. - As of September 30, 2024, the Company had no borrowings outstanding under the RBL Facility, indicating a low financial leverage position[129]. Price Sensitivity - A $1.00 per barrel increase in the weighted average oil price would increase the Company's revenues by approximately $13.9 million on an annualized basis[130]. - A $0.10 per Mcf increase in the weighted average natural gas price would increase the Company's revenues by approximately $5.8 million on an annualized basis[130]. Business Strategy - Magnolia's business model emphasizes disciplined capital allocation and aims for moderate and predictable annual volume growth while returning capital to shareholders through dividends and share repurchases[92].