Magnolia Oil & Gas(US:MGY)2025-05-01 20:01PART I. FINANCIAL INFORMATION Financial Statements 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 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 Texas3438 - In Q1 2025, the company completed various bolt-on property acquisitions for a total of $24.1 million46 - 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 Facility616869 - The company's share repurchase program has 9.6 million shares of Class A Common Stock remaining for repurchase as of March 31, 202584 - On April 29, 2025, the company declared a quarterly cash dividend of $0.15 per share108 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 flow114 - 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 2024117124 - 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 Facility139 Results of Operations 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 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 2024146 - 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 stockholders147149 Quantitative and Qualitative Disclosures About Market Risk 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 NGLs151 - A $1.00/bbl change in oil price would impact annualized revenue by ~$14.1 million151 - A $0.10/Mcf change in natural gas price would impact annualized revenue by ~$6.6 million151 - As of March 31, 2025, the company had no borrowings outstanding under its variable-rate RBL Facility, minimizing interest rate risk150 Controls and Procedures 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, 2025152 - 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 controls153 PART II. OTHER INFORMATION Legal Proceedings 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 dismissed75 - Management does not believe the outcome of any current legal actions will have a material effect on its consolidated financial statements76155 Risk Factors 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 filed156 Unregistered Sales of Equity Securities and Use of Proceeds 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 shares157 Defaults Upon Senior Securities None - None159 Mine Safety Disclosures Not applicable - Not applicable160 Other Information 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, 2025161 Exhibits 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