Magnolia Oil & Gas(US:MGY)2025-07-31 20:02PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in equity, and cash flows, with accompanying notes detailing accounting policies and financial matters Consolidated Balance Sheets As of June 30, 2025, total assets increased slightly to $2.86 billion from $2.82 billion at year-end 2024, primarily driven by an increase in net oil and natural gas properties, while total equity grew to nearly $2.0 billion from $1.97 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Current Assets | $416,737 | $410,824 | | Total Property, Plant and Equipment, net | $2,355,555 | $2,306,034 | | Total Assets | $2,860,648 | $2,820,835 | | Total Current Liabilities | $288,620 | $290,261 | | Total Long-Term Liabilities | $573,682 | $563,248 | | Total Liabilities | $862,302 | $853,509 | | Total Equity | $1,998,346 | $1,967,326 | Consolidated Statements of Operations For the second quarter of 2025, total revenues decreased to $319.0 million from $336.7 million year-over-year, mainly due to lower oil prices, leading to a reduction in net income attributable to Class A common stock to $78.1 million ($0.41 per diluted share) Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $318,981 | $336,725 | $669,282 | $656,142 | | Operating Income | $107,814 | $134,351 | $243,636 | $258,909 | | Net Income Attributable to Class A Common Stock | $78,117 | $95,559 | $181,044 | $180,645 | | Diluted EPS | $0.41 | $0.51 | $0.95 | $0.97 | Consolidated Statements of Changes in Equity Total equity increased from $1.97 billion at the end of 2024 to $2.00 billion as of June 30, 2025, driven by net income of $187.7 million, partially offset by $100.7 million in Class A common stock repurchases and $57.3 million in dividends Key Equity Changes - H1 2025 (in thousands) | Item | Amount | | :--- | :--- | | Balance, December 31, 2024 | $1,967,326 | | Net Income | $187,676 | | Class A Common Stock Repurchases | $(100,661) | | Dividends Declared | $(57,261) | | Balance, June 30, 2025 | $1,998,346 | Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities was $423.2 million, a decrease from $480.3 million in the prior-year period, resulting in a net cash decrease of $8.3 million after investing $262.6 million and financing $168.9 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $423,188 | $480,329 | | Net Cash Used in Investing Activities | $(262,567) | $(387,446) | | Net Cash Used in Financing Activities | $(168,909) | $(218,321) | | Net Change in Cash | $(8,288) | $(125,438) | | Cash at End of Period | $251,761 | $275,683 | Notes to Consolidated Financial Statements The notes detail key financial activities and policies, including $39.7 million in bolt-on acquisitions, $400 million in Senior Notes due 2032, 7.4 million shares remaining for repurchase, and $0.15 per share quarterly dividends - During the first six months of 2025, the Company completed various bolt-on property acquisitions of certain oil and natural gas assets totaling $39.7 million47 - As of June 30, 2025, long-term debt consisted of $400.0 million in 6.875% Senior Notes due 2032, with no outstanding borrowings under the RBL Facility616970 - As of June 30, 2025, 7.4 million shares of Class A Common Stock remained available for repurchase under the authorized 50.0 million share program86 - On July 29, 2025, the board declared a quarterly cash dividend of $0.15 per share of Class A Common Stock, payable on September 2, 2025111 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a strategy focused on disciplined capital allocation, moderate production growth, and shareholder returns, maintaining a strong liquidity position of $701.8 million despite lower realized oil prices Business Overview Magnolia operates primarily in the Karnes and Giddings areas of South Texas, targeting the Eagle Ford Shale and Austin Chalk formations, with an objective to generate long-term value through steady organic production growth and high margins, achieving 98.2 Mboe/d total production for Q2 2025 - The company's objective is to generate stock market value through steady organic production growth, high full cycle operating margins, an efficient capital program, and significant free cash flow116 - As of June 30, 2025, total production was 98.2 thousand barrels of oil equivalent per day for the second quarter119 Results of Operations Total production for Q2 2025 increased by 9% year-over-year to 98.2 Mboe/d, but a 22% decrease in average realized oil prices to $62.20/bbl led to a 5% drop in total revenue to $319.0 million, partially offset by a 106% increase in natural gas prices Production and Pricing Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Production (Mboe/d) | 98.2 | 90.2 | +9% | | Average Oil Price ($/Bbl) | $62.20 | $79.74 | -22% | | Average Natural Gas Price ($/Mcf) | $2.55 | $1.24 | +106% | | Total Revenues ($M) | $319.0 | $336.7 | -5% | - Lease operating expenses per boe decreased by 10% to $4.88 in Q2 2025 from $5.40 in Q2 2024, driven by higher production and cost reduction initiatives133 - Gathering, transportation, and processing (GTP) costs increased to $1.84/boe in Q2 2025 from $1.03/boe in Q2 2024, driven by higher natural gas and NGL prices and changes to gathering contracts134 Liquidity and Capital Resources The company's primary liquidity source is cash from operations, totaling $423.2 million in H1 2025, with total liquidity at $701.8 million as of June 30, 2025, primarily used for capital expenditures of $225.7 million, share repurchases of $100.9 million, and dividends of $57.3 million - As of June 30, 2025, the Company had total liquidity of $701.8 million, consisting of $251.8 million in cash and cash equivalents and $450.0 million of borrowing capacity under the RBL Facility144 Sources and Uses of Cash - H1 2025 (in thousands) | Category | Amount | | :--- | :--- | | Net Cash from Operations | $423,188 | | Uses of Cash: | | | Additions to oil & gas properties | $(231,455) | | Acquisitions | $(39,653) | | Class A Stock Repurchases | $(100,932) | | Dividends Paid | $(57,261) | - Drilling and completion capital expenditures for H1 2025 were $225.7 million, down from $242.3 million in H1 2024150 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is commodity price volatility, where a $1.00 per barrel change in oil prices would impact annualized revenues by approximately $14.3 million, and a $0.10 per Mcf change in natural gas prices would impact revenues by $6.7 million - A $1.00 per barrel change in the weighted average oil price would have impacted the Company's annualized revenues by approximately $14.3 million155 - A $0.10 per Mcf change in the weighted average natural gas price would have impacted the Company's annualized revenues by approximately $6.7 million155 - The company is subject to interest rate risk on its RBL Facility, but had no borrowings outstanding as of June 30, 2025, mitigating this risk154 Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the principal executive officer and principal financial officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025156 - There were no changes in the system of internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control157 PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine litigation incidental to its business, including a specific lawsuit concerning working interests in certain Karnes County Assets, but management does not anticipate a material adverse effect on financial condition - The Company is party to certain legal actions and claims arising in the ordinary course of business, which are not expected to have a materially adverse effect on its financial position159 Risk Factors This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, stating that there have been no material changes to these risk factors since that filing - There have been no material changes to the Company's risk factors since its 2024 Form 10-K160 Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, the company repurchased 2.21 million shares for approximately $48.7 million, totaling 4.36 million shares for the first six months, with approximately 7.4 million shares remaining available under the existing program Share Repurchase Activity - 2025 | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Q1 2025 | 2,150,000 | $24.18 | | Q2 2025 (Apr-Jun) | 2,210,000 | $22.04 (calculated) | | Total H1 2025 | 4,360,000 | $23.09 | - As of the end of June 2025, 7,383,105 shares remained available for purchase under the publicly announced repurchase program161 Defaults Upon Senior Securities None reported - None162 Mine Safety Disclosures Not applicable - Not applicable163 Other Information During the second 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 - During the three months ended June 30, 2025, no director or officer of Magnolia adopted, modified, or terminated any Rule 10b5–1 trading arrangement or any non-Rule 10b5-1 trading arrangement164 Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the CEO and CFO certifications required under the Sarbanes-Oxley Act and the XBRL interactive data files