Magnolia Oil & Gas(MGY) - 2024 Q4 - Annual Report

Reserves and Production - As of December 31, 2024, Magnolia's total proved reserves amounted to 191.7 million barrels of oil equivalent (MMboe), consisting of 77.2 million barrels of oil, 336.8 billion cubic feet (Bcf) of natural gas, and 58.3 million barrels (MMBbls) of natural gas liquids (NGLs) [77] - Magnolia's proved undeveloped reserves increased by 7.8 MMboe during the year ended December 31, 2024, totaling 42.4 MMboe, which includes 14.2 MMBbls of oil, 78.4 Bcf of natural gas, and 15.1 MMBbls of NGLs [79] - The company converted 28.8 MMboe of proved undeveloped reserves to proved developed reserves as a result of drilling activities completed during 2024 [79] - Magnolia operated two rigs during 2024, achieving total production of 89.7 thousand barrels of oil equivalent per day (Mboe/d) [64] - Approximately 43% of Magnolia's production was attributable to oil, 30% to natural gas, and 27% to NGLs for the year ended December 31, 2024 [64] - The company reported crude oil production of 14.0 million barrels in 2024, up from 12.6 million barrels in 2023, and natural gas production of 58.7 billion cubic feet, an increase from 55.1 billion cubic feet in 2023 [86] - Magnolia's total production for the year ended December 31, 2024, was 89.7 Mboe/d, with approximately 43% from oil, 30% from natural gas, and 27% from NGLs [64] - Crude oil production increased to 14.0 MMBbls in 2024, up from 12.6 MMBbls in 2023, representing an 11.1% growth [86] - Natural gas production rose to 58.7 Bcf in 2024, compared to 55.1 Bcf in 2023, marking a 6.5% increase [86] Financial Performance and Strategy - The company incurred costs of approximately $271.6 million to convert reserves associated with 38 net proved undeveloped locations to 28.8 MMboe of proved developed reserves [80] - Magnolia's business model emphasizes prudent capital allocation, aiming to spend within cash flow while maintaining low financial leverage [60] - The company targets moderate annual organic production growth and aims to generate significant free cash flow after capital expenditures [62] - Magnolia's long-term strategy focuses on generating moderate annual organic production growth and maintaining a conservative financial leverage profile [62] - The company plans to effectively reinvest free cash flow to maximize shareholder returns while maintaining an efficient capital program [62] Operational Activities - In 2024, Magnolia operated two rigs and drilled a total of 53 net productive development wells, an increase from 45 in 2023 and 50 in 2022, representing a 17.8% increase year-over-year [83] - As of December 31, 2024, Magnolia had 63 gross (23 net) development wells in the process of being drilled, completed, or awaiting completion operations [81] - Magnolia's assets cover a total leasehold position of 817,907 gross acres, with significant holdings in the Karnes and Giddings areas of South Texas [64] - The company has demonstrated strong economic viability in its drilling activities, particularly in the Giddings area, due to recent improvements in drilling and completion technologies [65] Regulatory and Environmental Compliance - Magnolia is subject to new federal regulations aimed at reducing methane emissions, which may impact operational costs and compliance requirements [100] - The company plans to invest in additional direct measurement technologies to improve the accuracy of methane emissions reporting, aligning with new EPA guidelines [100] - The company faces increased regulatory scrutiny regarding methane emissions and may incur costs to comply with new federal regulations [100] Employee and Community Engagement - In 2024, Magnolia contributed$ 252,000 towards employee-directed donations to local and national non-profits, supporting various causes [124] - Magnolia's field teams set a program record by contributing more than $43,500 to over 30 local non-profit organizations in 2024 [125] - As of December 31, 2024, 23% of Magnolia's total employee population was female, and 29% identified as members of a minority group [119] - Magnolia's employees received an average of approximately 60 hours of safety training in 2024, focusing on enhancing their skills [122] - The Company was recognized as a top workplace in the annual Houston Chronicle Top Workplaces survey, placing tenth among mid-sized companies in the greater Houston area [116] - Magnolia's commitment to safety includes tracking key safety metrics and implementing proactive measures to minimize health and safety risks [120] - The Company continues to offer a workplace flexibility program, allowing eligible employees to telecommute for up to two days a week [115] - Magnolia's Human Capital Philosophy emphasizes attracting and retaining qualified individuals to enhance its position as an employer of choice [113] Safety and Governance - Magnolia's Environmental, Social, and Governance (ESG) policies are overseen by the Nominating and Corporate Governance Committee, focusing on safety, social responsibility, and human capital issues [113] - The company tracks key safety metrics, including total recordable incident rate and contractor recordables, to ensure employee safety [120] - The company maintains comprehensive emergency response and crisis communication plans at both field and corporate levels [123] - Magnolia's Think Like a Magnolia Owner CEO Award program continued in 2024 to recognize projects that generated shareholder value [115]