Magnolia Oil & Gas(MGY) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Magnolia Oil & Gas Corporation reports strong Q2 2025 results, highlighting record production and increased full-year guidance Financial & Operational Highlights 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] - Generated $107.5 million of free cash flow, with D&C capital representing 43% of adjusted EBITDAX[4] - 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] - The Giddings development area was increased by 20% to approximately 240,000 net acres, driven by successful appraisal and bolt-on acquisitions[4] Management Commentary 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] - In Q2, the company generated $107 million of free cash flow and returned 72% of it to shareholders through dividends and share repurchases[5] - 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] Operational Update & Capital Program 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] - 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] Shareholder Returns 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] - Magnolia ended the quarter with $251.8 million of cash on the balance sheet and an undrawn $450 million revolving credit facility[10] Full-Year 2025 & Q3 2025 Guidance 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] Financial Statements This section presents the company's consolidated financial performance and position for the reported periods Operating Highlights 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 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 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 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 This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures Reconciliation of Net Income to Adjusted EBITDAX 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][31] 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 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 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 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] 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 |