Core Insights - Magnolia Oil & Gas Corp reported quarterly earnings of $0.43 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, but down from $0.56 per share a year ago, representing an earnings surprise of +7.50% [1] - The company achieved revenues of $318.98 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.67%, although this is a decrease from $336.73 million in the same quarter last year [2] - Magnolia Oil & Gas has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44, with expected revenues of $320.01 million, and for the current fiscal year, the EPS estimate is $1.83 on revenues of $1.31 billion [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting potential challenges for stocks within this sector [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]

[Q2 2025 Earnings Release](index=1&type=section&id=Magnolia%20Oil%20%26%20Gas%20Corporation%20Announces%20Second%20Quarter%202025%20Results) Magnolia Oil & Gas Corporation reports strong Q2 2025 results, highlighting record production and increased full-year guidance [Financial & Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Magnolia achieved record Q2 2025 production, generated significant free cash flow, and raised full-year production guidance | Financial Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net income | $81.0 million | $105.1 million | (23)% | | Adjusted net income | $80.9 million | $104.3 million | (22)% | | Earnings per share - diluted | $0.41 | $0.51 | (20)% | | Adjusted EBITDAX | $223.2 million | $246.1 million | (9)% | | Average daily production (thousand boe/d) | 98.2 | 90.2 | 9% | | D&C Capital expenditures | $95.2 million | $123.4 million | (23)% | - Total production volumes grew **9% YoY** to a record **98.2 thousand boe/d**, with oil production up **5%** to a record **40.0 thousand bbls/d**[4](index=4&type=chunk) - Generated **$107.5 million** of free cash flow, with D&C capital representing **43%** of adjusted EBITDAX[4](index=4&type=chunk) - Full-year 2025 production growth guidance was increased to approximately **10%** from a prior range of **7-9%**, with no change to the D&C capital budget[4](index=4&type=chunk) - The Giddings development area was increased by **20%** to approximately **240,000 net acres**, driven by successful appraisal and bolt-on acquisitions[4](index=4&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Chris Stavros emphasized record production, disciplined capital reinvestment, and the successful Giddings development strategy, leading to increased full-year production guidance - The company now expects full-year 2025 production growth of approximately **10%** due to improved well performance and capital efficiencies, while maintaining the capital spending range of **$430 million to $470 million**[5](index=5&type=chunk) - In Q2, the company generated **$107 million** of free cash flow and returned **72%** of it to shareholders through dividends and share repurchases[5](index=5&type=chunk) - The company's strategy of 'appraise, acquire, grow, and further exploit' in Giddings led to a **20%** increase in the development area to **240,000 net acres**, supported by recent bolt-on acquisitions totaling **~$40 million** for **~18,000 net acres**[6](index=6&type=chunk) [Operational Update & Capital Program](index=2&type=section&id=Operational%20Update) Record Q2 2025 production was driven by the Giddings area, with the company maintaining a consistent drilling and completion program for the remainder of the year | Metric | Q2 2025 Value | | :--- | :--- | | Total Production | 98.2 thousand boe/d (+9% YoY) | | Giddings Production | 77.4 thousand boe/d (+11% YoY) | | Giddings % of Total | 79% | | D&C Capital Spending | $95.2 million | - The company plans to continue operating two drilling rigs and one completion crew for the remainder of 2025[9](index=9&type=chunk) - Approximately **75% to 80%** of the 2025 activity is expected to consist of multi-well development pads in the Giddings area, combined with some appraisal wells[9](index=9&type=chunk) [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) Magnolia returned **72%** of its free cash flow to shareholders in Q2 2025 through share repurchases and dividends, maintaining a strong liquidity position | Shareholder Return Activity | Q2 2025 Value | | :--- | :--- | | Total Cash Returned | $77.9 million | | % of Free Cash Flow Returned | 72% | | Share Repurchases | 2.2 million shares for $48.7 million | | Dividend Declared | $0.15 per share | - The company has **7.4 million** Class A Common shares remaining under its current share repurchase authorization[10](index=10&type=chunk) - Magnolia ended the quarter with **$251.8 million** of cash on the balance sheet and an undrawn **$450 million** revolving credit facility[10](index=10&type=chunk) [Full-Year 2025 & Q3 2025 Guidance](index=3&type=section&id=Additional%20Guidance) The company increased its full-year 2025 production growth guidance to **10%** while providing specific production and capital expenditure forecasts for Q3 2025 | Guidance Metric | Full-Year 2025 | Q3 2025 (Estimate) | | :--- | :--- | :--- | | Total Production Growth | ~10% | ~99 thousand boe/d | | D&C Capital Spending | $430 million - $470 million | ~$115 million | | Lease Operating Expenses (LOE) | - | ~$5.25 per boe | | Diluted Share Count | - | ~191 million shares | - The company remains completely unhedged for all its oil and natural gas production[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the company's consolidated financial performance and position for the reported periods [Operating Highlights](index=5&type=section&id=Operating%20Highlights) Q2 2025 saw increased total production but decreased revenues due to lower oil prices, alongside improved lease operating expenses per barrel of oil equivalent Production Volumes | Production | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total (thousand boe) | 8,939 | 8,209 | | Average Daily (boe/d) | 98,229 | 90,207 | Revenues and Average Sales Prices | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $319.0 million | $336.7 million | | Avg. Oil Price ($/Bbl) | $62.20 | $79.74 | | Avg. Gas Price ($/Mcf) | $2.55 | $1.24 | | Avg. Total Price ($/boe) | $35.68 | $41.02 | Operating Costs per boe | Cost per boe | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Lease operating expenses | $4.88 | $5.40 | | Gathering, transport & processing | $1.84 | $1.03 | | DD&A | $11.98 | $12.76 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 total revenues and operating income decreased year-over-year, resulting in a lower net income of **$81.0 million** and **$0.41** diluted earnings per share Income Statement Summary (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $318,981 | $336,725 | | Total Operating Expenses | $211,167 | $202,374 | | Operating Income | $107,814 | $134,351 | | Net Income | $81,028 | $105,113 | | Net Income Attributable to Class A | $78,117 | $95,559 | | Diluted EPS | $0.41 | $0.51 | [Summary Cash Flow Data](index=7&type=section&id=Summary%20Cash%20Flow%20Data) Net cash from operating activities decreased in Q2 2025, with significant cash used in investing and financing activities, ending the quarter with **$251.8 million** in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $198,701 | $269,398 | | Net cash used in investing activities | ($116,497) | ($260,139) | | Net cash used in financing activities | ($78,001) | ($132,893) | | Net change in cash | $4,203 | ($123,634) | | Cash and cash equivalents – End of period | $251,761 | $275,683 | [Summary Balance Sheet Data](index=8&type=section&id=Summary%20Balance%20Sheet%20Data) As of June 30, 2025, total assets increased slightly to **$2.86 billion**, with **$251.8 million** in cash and **$392.9 million** in long-term debt Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $251,761 | $260,049 | | Total assets | $2,860,648 | $2,820,835 | | Current liabilities | $288,620 | $290,261 | | Long-term debt, net | $392,880 | $392,513 | | Total liabilities and equity | $2,860,648 | $2,820,835 | [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures [Reconciliation of Net Income to Adjusted EBITDAX](index=9&type=section&id=Reconciliation%20of%20net%20income%20to%20adjusted%20EBITDAX) Adjusted EBITDAX for Q2 2025 decreased to **$223.2 million**, representing a key non-GAAP measure used to evaluate operating performance - Adjusted EBITDAX is defined as net income before interest expense, income taxes, DD&A, exploration expenses, and accretion of asset retirement obligations, with other adjustments. Management believes it is useful for evaluating operating performance[30](index=30&type=chunk)[31](index=31&type=chunk) Adjusted EBITDAX Reconciliation (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $81,028 | $105,113 | | Adjustments (Interest, Tax, DD&A, etc.) | $142,201 | $140,966 | | Adjusted EBITDAX | $223,229 | $246,079 | [Reconciliation of Net Income to Adjusted Net Income](index=10&type=section&id=Reconciliation%20of%20net%20income%20to%20adjusted%20net%20income) Adjusted net income for Q2 2025 was **$80.9 million**, a non-GAAP measure used to compare underlying business performance by excluding specific items Adjusted Net Income Reconciliation (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $81,028 | $105,113 | | Adjustments | ($104) | ($800) | | Adjusted Net Income | $80,924 | $104,313 | [Reconciliation of Revenue to Adjusted Cash Operating Margin](index=11&type=section&id=Reconciliation%20of%20revenue%20to%20adjusted%20cash%20operating%20margin) Adjusted cash operating margin was **$24.98 per boe** (70% of revenue) in Q2 2025, reflecting profitability after excluding non-cash costs Margin Analysis (in $/boe) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue per boe | $35.68 | $41.02 | | Total adjusted cash operating costs per boe | ($10.70) | ($11.10) | | Adjusted cash operating margin per boe | $24.98 | $29.92 | | Adjusted cash operating margin (%) | 70% | 73% | | Operating income margin (%) | 34% | 40% | [Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow](index=12&type=section&id=Reconciliation%20of%20net%20cash%20provided%20by%20operating%20activities%20to%20free%20cash%20flow) Free cash flow increased to **$107.5 million** in Q2 2025, a non-GAAP measure representing cash from operations less capital expenditures - Free cash flow is defined as cash flows from operations before net change in operating assets and liabilities, less additions to oil and natural gas properties and associated working capital changes[42](index=42&type=chunk) Free Cash Flow Reconciliation (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $198,701 | $269,398 | | Less: Capital Expenditures & Working Capital | ($106,727) | ($136,034) | | Add back: Net change in operating assets | $15,500 | ($36,665) | | Free cash flow | $107,474 | $96,699 |

Core Viewpoint - Magnolia Oil & Gas Corporation (MGY) is expected to report second-quarter 2025 earnings on July 30, with earnings estimated at 40 cents per share and revenues at $310.2 million [1]. Group 1: Recent Performance - In the last reported quarter, MGY achieved a net profit of 55 cents per share, exceeding the Zacks Consensus Estimate by 2 cents, driven by increased production volumes from the Giddings asset [2]. - Total revenues for the last quarter were $350.3 million, surpassing the Zacks Consensus Estimate by $7 million, with MGY beating earnings estimates in each of the last four quarters, averaging a surprise of 7.1% [2]. Group 2: Estimate Revisions - The Zacks Consensus Estimate for second-quarter 2025 earnings has increased by 2.6% in the past week, indicating a year-over-year decrease of 28.6% [3]. - Revenue estimates for the same quarter show a decline of 7.9% compared to the previous year [3]. Group 3: Production and Revenue Expectations - Total production is projected to reach 8.8 million barrels of oil equivalent (MMboe) in the second quarter, reflecting a 7.3% increase from 8.2 MMboe in the same quarter last year [5]. - Oil production is expected to rise by 11.4% year-over-year to 3.9 thousand barrels (MBbls), while natural gas liquids (NGL) production is forecasted to increase by 8.7% to 2.5 MBbls [5]. - Revenue from NGL is anticipated to grow by 8.4% year-over-year to $46.4 million, and revenues from natural gas are expected to more than double to $42.5 million compared to $18.6 million last year [6]. Group 4: Cost Management - General and administrative expenses are projected to decrease by 20.2% to $18.2 million in the second quarter, down from $22.8 million in the previous year, which may positively impact the bottom line [7]. Group 5: Earnings Prediction - The model predicts an earnings beat for MGY, supported by a positive Earnings ESP of +0.50% and a Zacks Rank of 3 (Hold) [8][10]. - The expected earnings of 40 cents per share represent a 28.6% decline from the prior-year quarter, while production is projected to rise by 7.3% [9].

Core Viewpoint - Magnolia Oil & Gas Corp (MGY) is anticipated to report a year-over-year decline in earnings due to lower revenues for the quarter ended June 2025, with a consensus EPS estimate of $0.40, reflecting a -28.6% change from the previous year, and revenues expected to be $310.15 million, down 7.9% [1][3][19] Earnings Expectations - The earnings report is scheduled for release on July 30, and if the results exceed expectations, the stock may rise; conversely, a miss could lead to a decline [2] - The consensus EPS estimate has been revised 4.8% higher in the last 30 days, indicating a reassessment by analysts [4][19] Earnings Surprise Prediction - Magnolia Oil & Gas Corp has a positive Earnings ESP of +0.50%, suggesting analysts are optimistic about the company's earnings prospects [12][19] - The company holds a Zacks Rank of 3 (Hold), indicating a likelihood of beating the consensus EPS estimate [12][20] Historical Performance - In the last reported quarter, the company exceeded the expected EPS of $0.53 by delivering $0.55, resulting in a surprise of +3.77% [13] - Over the past four quarters, Magnolia Oil & Gas Corp has consistently beaten consensus EPS estimates [14] Industry Context - Within the Zacks Oil and Gas - Exploration and Production - United States industry, Magnolia Oil & Gas Corp is positioned to report earnings of $0.40 per share for the quarter ended June 2025, with a revenue expectation of $310.15 million [18][19]

Core Insights - Magnolia Oil & Gas (NYSE: MGY) reported Q1 2025 production results that exceeded guidance by approximately 3% [2] - Due to strong well performance and enhanced capital efficiency, Magnolia has increased its full-year total production guidance [2] Company Overview - Magnolia Oil & Gas operates in the energy sector, focusing on oil and gas production [2] - The company has demonstrated a strong analytical background through its leadership, with Aaron Chow having over 15 years of experience in analytics and a history of successful ventures [2] Analyst Background - Aaron Chow, known as Elephant Analytics, is a highly rated analyst on TipRanks and has co-founded a mobile gaming company that was acquired by PENN Entertainment [2] - The investing group Distressed Value Investing, led by Chow, emphasizes value opportunities and distressed plays, particularly in the energy sector [2]

Core Insights - Magnolia Oil & Gas Corporation (MGY) reported a first-quarter 2025 net profit of 55 cents per share, exceeding the Zacks Consensus Estimate of 53 cents and up from 49 cents in the same quarter last year [1] - The company's total revenues reached $350.3 million, surpassing the Zacks Consensus Estimate of $342 million and reflecting a 9.7% increase from $319.4 million in the prior year, driven by strong performance in natural gas and natural gas liquids [2] - Magnolia achieved $224.5 million in net cash from operating activities and a free cash flow of $110.5 million during the quarter [3] Financial Performance - The average daily total output was 96,549 barrels of oil equivalent per day (boe/d), a 13.9% increase from 84,784 boe/d in the year-ago quarter, exceeding the Zacks Consensus Estimate of 93,975 boe/d [5] - Oil volumes were reported at 39,078 barrels per day (bpd), up 4.1% from the previous year, slightly above the estimate of 39,045 bpd [5] - Natural gas volumes reached 183,248 thousand cubic feet per day (Mcf/d), a 21.3% increase from the first quarter of 2024, surpassing the expectation of 170,196 Mcf/d [6] Revenue Breakdown - Natural gas revenues were $51.4 million, more than doubling from $21.1 million in the year-ago quarter and exceeding the consensus estimate of $45.2 million [2] - Natural gas liquids revenues totaled $53.4 million, up from $39.1 million in the previous year, also surpassing the consensus estimate of $47.6 million [2] - The average realized crude oil price was $69.81 per barrel, an 8% decrease from $75.89 a year ago, while the average realized natural gas price increased significantly to $3.11 per Mcf from $1.53 [7] Shareholder Returns - Magnolia declared a cash dividend of 15 cents per share of Class A Common stock and a cash distribution of 15 cents of Class B unit, payable on June 2, 2025 [3] - The company repurchased 2.2 million Class A Common shares for $52 million, with 9.6 million shares remaining under its current repurchase authorization [4] - Magnolia returned 74% of its free cash flow to shareholders through share repurchases and dividends [4] Balance Sheet and Capital Expenditure - As of March 31, 2025, Magnolia had cash and cash equivalents of $247.6 million and long-term debt of $392.7 million, resulting in a debt-to-capitalization ratio of 16.5% [9] - The company spent $130.4 million on its capital program during the reported quarter, with operating expenses increasing to $214.5 million from $194.9 million in the previous year [9] Future Guidance - Magnolia raised its year-over-year production growth guidance for 2025 from 5%-7% to a range of 7%-9%, driven by improved well performance and capital efficiency [10] - The company decreased its drilling and completion (D&C) capital spending midpoint for 2025 to a range between $430 million and $470 million from an initial outlook of $460 million to $490 million [10] - For the second quarter of 2025, Magnolia anticipates D&C capital spending to be about $110 million, with production volume expected to remain flat at around 97 Mboe/d [11]

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) For the quarter ended March 31, 2025, Magnolia reported total revenues of **$350.3 million** and net income of **$106.6 million**, an increase from **$319.4 million** and **$97.6 million** respectively in the prior year period. Diluted EPS rose to **$0.54** from **$0.46**. The balance sheet shows total assets increased to **$2.87 billion**. Cash flow from operations was strong at **$224.5 million**, up from **$210.9 million** year-over-year Q1 2025 Key Financial Highlights (vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $350.3 million | $319.4 million | | Operating Income | $135.8 million | $124.6 million | | Net Income | $106.6 million | $97.6 million | | Net Income Attributable to Class A Common Stock | $102.9 million | $85.1 million | | Diluted EPS | $0.54 | $0.46 | Key Balance Sheet Data (as of March 31, 2025) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $247.6 million | $260.0 million | | Total Assets | $2.87 billion | $2.82 billion | | Long-term debt, net | $392.7 million | $392.5 million | | Total Equity | $1.99 billion | $1.97 billion | Q1 2025 Cash Flow Summary (vs Q1 2024) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $224.5 million | $210.9 million | | Net cash used in investing activities | ($146.1 million) | ($127.3 million) | | Net cash used in financing activities | ($90.9 million) | ($85.4 million) | | Net change in cash | ($12.5 million) | ($1.8 million) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, revenue sources, acquisition activities, debt structure, and shareholder equity movements. Key highlights include **$24.1 million** in bolt-on acquisitions in Q1 2025, the structure of the **$400 million** 2032 Senior Notes, an ongoing share repurchase program with **9.6 million shares** remaining, and a quarterly dividend of **$0.15 per share** declared subsequent to the quarter's end - The company operates in a single reportable segment: the acquisition, development, exploration, and production of oil and natural gas properties, primarily in the Karnes and Giddings areas of South Texas[34](index=34&type=chunk)[38](index=38&type=chunk) - In Q1 2025, the company completed various bolt-on property acquisitions for a total of **$24.1 million**[46](index=46&type=chunk) - As of March 31, 2025, the company had **$400.0 million** in principal of 6.875% Senior Notes due 2032 and no outstanding borrowings under its RBL Facility[61](index=61&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - The company's share repurchase program has **9.6 million shares** of Class A Common Stock remaining for repurchase as of March 31, 2025[84](index=84&type=chunk) - On April 29, 2025, the company declared a quarterly cash dividend of **$0.15 per share**[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a disciplined capital allocation strategy focused on free cash flow generation. Total production increased to **96.5 thousand barrels of oil equivalent per day** in Q1 2025, up from **84.8 thousand barrels of oil equivalent per day** in Q1 2024, driven by development in the Giddings area. Higher natural gas and NGL prices and volumes boosted revenues, offsetting lower oil prices. Operating costs per boe generally decreased due to cost reduction initiatives and higher production volumes. The company maintains a strong liquidity position of **$697.6 million** and continues to return capital to shareholders through dividends and buybacks - The company's objective is to generate long-term stock market value through steady production growth, high margins, an efficient capital program, and significant free cash flow[114](index=114&type=chunk) - Total production for Q1 2025 was **96.5 thousand barrels of oil equivalent per day (Mboe/d)**, an increase from **84.8 Mboe/d** in Q1 2024[117](index=117&type=chunk)[124](index=124&type=chunk) - As of March 31, 2025, the company had total liquidity of **$697.6 million**, consisting of **$247.6 million** in cash and **$450.0 million** of borrowing capacity under its RBL Facility[139](index=139&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) In Q1 2025 versus Q1 2024, total revenues increased by **9.7%** to **$350.3 million**, driven by a **12.6%** increase in total production. A **103%** surge in natural gas prices and a **13%** rise in NGL prices significantly contributed to revenue growth, offsetting an **8%** decline in oil prices. Operating expenses per boe saw a decrease in several key categories, including Lease Operating Expenses (down **9.4%**) and DD&A (down **3.2%**), reflecting improved efficiencies and cost controls Q1 Production and Revenue Analysis (2025 vs 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Production (Mboe/d)** | **96.5** | **84.8** | **+13.8%** | | Oil Production (Bbls/d) | 39,078 | 37,531 | +4.1% | | Natural Gas Production (Mcf/d) | 183,248 | 151,086 | +21.3% | | NGL Production (Bbls/d) | 26,930 | 22,072 | +22.0% | | **Total Revenues ($M)** | **$350.3** | **$319.4** | **+9.7%** | | Oil Average Price ($/Bbl) | $69.81 | $75.89 | -8.0% | | Natural Gas Average Price ($/Mcf) | $3.11 | $1.53 | +103.3% | | NGL Average Price ($/Bbl) | $22.03 | $19.49 | +13.0% | Average Operating Costs per boe (2025 vs 2024) | Expense Category | Q1 2025 ($/boe) | Q1 2024 ($/boe) | Change | | :--- | :--- | :--- | :--- | | Lease operating expenses | $5.42 | $5.98 | ($0.56) | | Gathering, transportation and processing | $1.72 | $1.11 | $0.61 | | Depreciation, depletion and amortization | $12.18 | $12.58 | ($0.40) | | General and administrative expenses | $2.83 | $3.05 | ($0.22) | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity source is cash from operations, which totaled **$224.5 million** in Q1 2025. Key uses of cash included **$131.2 million** for additions to oil and gas properties (capital expenditures) and **$81.3 million** for shareholder returns (**$52.4 million** in buybacks and **$28.9 million** in dividends). The company operated two rigs during the quarter and plans to continue spending within cash flow Q1 2025 Sources and Uses of Cash | Category | Amount (in thousands) | | :--- | :--- | | **Source:** | | | Net cash provided by operating activities | $224,490 | | **Uses:** | | | Additions to oil and natural gas properties | ($131,168) | | Class A Common Stock repurchases | ($52,393) | | Dividends paid | ($28,911) | | Acquisitions | ($24,144) | - Capital expenditures for drilling and completion were **$130.4 million** in Q1 2025, up from **$119.0 million** in Q1 2024[146](index=146&type=chunk) - During Q1 2025, the company repurchased **2.2 million shares** for approximately **$52.0 million** and paid **$28.9 million** in dividends to Class A common stockholders[147](index=147&type=chunk)[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is commodity price volatility for its oil, natural gas, and NGL production. A sensitivity analysis indicates that a **$1.00 per barrel** change in oil price would impact annualized revenues by approximately **$14.1 million**, and a **$0.10 per Mcf** change in natural gas price would impact annualized revenues by about **$6.6 million**. Interest rate risk is minimal as there were no outstanding borrowings under the variable-rate RBL Facility as of March 31, 2025 - The company's main market risk exposure is from the prices of oil, natural gas, and NGLs[151](index=151&type=chunk) - A **$1.00/bbl** change in oil price would impact annualized revenue by **~$14.1 million**[151](index=151&type=chunk) - A **$0.10/Mcf** change in natural gas price would impact annualized revenue by **~$6.6 million**[151](index=151&type=chunk) - As of March 31, 2025, the company had no borrowings outstanding under its variable-rate RBL Facility, minimizing interest rate risk[150](index=150&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[152](index=152&type=chunk) - No changes in the system of internal control over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal controls[153](index=153&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in litigation from time to time in the ordinary course of business. Management does not currently expect these matters to have a materially adverse effect on the company's financial position or results. A specific lawsuit regarding a mineral owner's challenge to a well permit was settled in January 2025 - A lawsuit where a mineral owner challenged a well permit was settled in January 2025, and all pending court actions were dismissed[75](index=75&type=chunk) - Management does not believe the outcome of any current legal actions will have a material effect on its consolidated financial statements[76](index=76&type=chunk)[155](index=155&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to the Company's risk factors have occurred since its 2024 Form 10-K was filed[156](index=156&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2025, the company repurchased **2.15 million shares** of its Class A Common Stock for a total cost of approximately **$52.0 million**. In February 2025, the board increased the total share repurchase authorization to **50.0 million shares**. As of March 31, 2025, **9.59 million shares** remained available for repurchase under the program Q1 2025 Share Repurchase Activity | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 500,000 | $25.09 | | Feb 2025 | 585,000 | $23.71 | | Mar 2025 | 1,065,000 | $24.00 | | **Total** | **2,150,000** | **$24.18** | - On February 12, 2025, the board of directors increased the share repurchase authorization by an additional **10.0 million shares**, bringing the total authorization to **50.0 million shares**[157](index=157&type=chunk) [Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - None[159](index=159&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[160](index=160&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) During the first 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 - No director or officer adopted, modified, or terminated any Rule 10b5–1 trading arrangement or any non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[161](index=161&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO and XBRL data files

Financial Data and Key Metrics Changes - Magnolia achieved a record quarterly production rate of 96,500 barrels of oil equivalent per day, exceeding earlier guidance, with a year-over-year total production growth of 14% and oil production growth of 4% [5][6] - Total adjusted net income for the quarter was $106 million, and adjusted EBITDAX was $248 million, both up 9% compared to the previous year [6][14] - Operating income margins were 39%, and the annualized return on capital employed was 23% [6][14] - Free cash flow generated was $111 million, with 74% returned to shareholders through dividends and share repurchases [7][14] Business Line Data and Key Metrics Changes - Total production at Giddings grew by 25% compared to the prior year quarter, with Giddings oil volumes increasing by 17% [6][10] - The company expects to see higher production growth with lower capital spending, resulting in a more capital-efficient program [4][10] Market Data and Key Metrics Changes - The company noted that natural gas prices were historically higher during winter months, which influenced the decision to bring multi-well pads online [5][6] - Total revenue per BOE declined approximately 3% year-over-year due to lower oil prices, partially offset by increases in natural gas and NGL prices [18][19] Company Strategy and Development Direction - Magnolia is focused on maintaining capital discipline while increasing production growth guidance for 2025 to 7% to 9% from a previous range of 5% to 7% [10][20] - The company plans to defer the completion of several wells into the next year, allowing for flexibility in capital allocation [10][11] - Magnolia aims to be the most efficient operator of best-in-class oil and gas assets, generating high returns while employing minimal capital [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current product price volatility and macroeconomic uncertainty [4][10] - The company has taken proactive measures to reduce operating costs, positioning itself strongly in a potentially weaker price environment [12][11] - Management emphasized the importance of operational efficiencies and the strong performance of wells in Giddings, which has positively impacted production growth expectations [10][12] Other Important Information - The company ended the quarter with $248 million in cash and a total liquidity of approximately $700 million, including an undrawn revolving credit facility [17][18] - Magnolia's dividend has grown significantly, with a 15% increase announced earlier this year, resulting in an annualized payout rate of $0.60 per share [17][18] Q&A Session Summary Question: What is the significance of the new wells and their performance? - Management indicated that the new wells in a gassier area have shown strong financial returns and payback periods, contributing positively to production growth expectations [24][28] Question: How will sustaining capital be affected by updated drilling guidance? - Management noted that some completions would be deferred into next year, providing flexibility and potentially lowering sustaining capital requirements [33][34] Question: What is the outlook for capital allocation between gassier and oilier areas? - Management stated that the company has the flexibility to balance production between gas and oil, depending on market conditions, without a strategic shift towards one over the other [38][40] Question: What is the current M&A outlook in the market? - Management mentioned that while evaluating smaller bolt-on opportunities, the heightened level of uncertainty has slowed down M&A activity, with a widening bid-ask spread [43][44] Question: How will GP and T costs trend through 2025? - Management indicated that GP and T costs generally move in tandem with gas prices, and any fluctuations in gas prices would likely impact these costs [67][68]

Financial Data and Key Metrics Changes - Magnolia achieved a record quarterly production rate of 96,500 barrels of oil equivalent per day, exceeding earlier guidance and reflecting a year-over-year total production growth of 14% and oil production growth of 4% [5][6] - Total adjusted net income for the quarter was $106 million, and adjusted EBITDAX was $248 million, both up 9% compared to the previous year [6][13] - Operating income margins were 39%, with an annualized return on capital employed of 23% [6][14] - Free cash flow generated was $111 million, with 74% of this amount returned to shareholders through dividends and share repurchases [7][14] Business Line Data and Key Metrics Changes - Production at Giddings grew by 25% year-over-year, with oil volumes increasing by 17% [6][7] - The company made a tactical decision to bring multi-well pads online in a gassier portion of Giddings, capitalizing on higher natural gas prices during winter [5][6] Market Data and Key Metrics Changes - Total revenue per BOE declined approximately 3% year-over-year due to lower oil prices, partially offset by increased natural gas and NGL prices [17][18] - Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, with Magnolia remaining unhedged for all its oil and natural gas production [20] Company Strategy and Development Direction - Magnolia is focused on maintaining capital discipline, reducing capital spending to a range of $430 million to $470 million for 2025, down from previous estimates [9][19] - The company aims to achieve higher production growth with lower capital spending, reflecting a more capital-efficient program [4][9] - Magnolia continues to prioritize operational efficiencies and has seen strong financial returns from new wells in Giddings, which have exhibited shallower decline profiles [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current product price volatility and macroeconomic uncertainty, emphasizing a strong operational execution and asset quality [4][10] - The full-year 2025 production growth guidance has been increased to 7% to 9% from a previous range of 5% to 7% due to stronger-than-expected well performance [9][19] - Management noted that the company is well-positioned to manage through periods of weaker product prices due to its low debt levels and high-quality assets [11][12] Other Important Information - The company has repurchased 75 million shares since the program's inception, leading to a 24% reduction in weighted average diluted shares outstanding [15] - Magnolia's dividend has grown significantly, with a 15% increase announced earlier this year, resulting in an annualized payout rate of $0.60 per share [16] Q&A Session Summary Question: Inquiry about new wells and their implications for Magnolia - Management indicated that the new wells have shown strong performance, producing approximately 500 barrels of oil per day in addition to gas, and have favorable financial returns [24][28] Question: Clarification on sustaining capital in light of updated drilling guidance - Management stated that efficiencies gained this year would benefit next year's capital requirements, with some completions deferred to provide flexibility [33][34] Question: Capital allocation strategy between gassier and oilier areas - Management noted that the company can balance production between oil and gas without a strategic shift, as both streams provide good returns [39][40] Question: Acquisition outlook in the current market - Management highlighted a focus on smaller bolt-on opportunities in familiar areas, but noted that market activity has slowed due to increased uncertainty [43][44] Question: Thoughts on capital allocation and potential activity curtailment - Management expressed confidence in current operations and flexibility, indicating no immediate need to drop rigs or significantly alter activity levels [50][51] Question: Trends in GP and T costs - Management indicated that GP and T costs generally move in tandem with gas prices, and any increases in gas prices would likely lead to similar increases in GP and T costs [66]

The information in this press release 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 present or historical fact included in this press release, regarding Magnolia's strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward looking statement ...