Magnolia Oil & Gas(US:MGY)2023-11-02 20:01Financial Performance - Magnolia reported net income attributable to Class A Common Stock of $102.0 million for Q3 2023, down from $117.5 million in Q3 2022, representing a decrease of 13.1%[114]. - Total revenues for Q3 2023 were $315.7 million, a decline of 34.6% compared to $483.0 million in Q3 2022, primarily due to lower oil and natural gas prices[120]. - Total revenues for the nine months ended September 30, 2023, were $904.4 million, a decrease of 33% from $1.35 billion in the same period of 2022[1]. - Net cash provided by operating activities was $608.9 million for the nine months ended September 30, 2023, down from $1.03 billion in 2022[5]. Production and Revenue Breakdown - Average daily production for Q3 2023 was 82,651 boe/d, an increase of 1.4% from 81,529 boe/d in Q3 2022[120]. - Oil revenues accounted for 77% of total revenues in Q3 2023, down from 66% in Q3 2022, with oil production contributing 40% of total production volume[120]. - Natural gas revenues decreased by 73% to $27.1 million in Q3 2023, primarily due to a 75% drop in average price[121]. - NGL revenues were $45.0 million in Q3 2023, down 31.4% from $65.6 million in Q3 2022, with a 40% decrease in average price impacting revenues[122]. - Oil production increased by 1% to 9,345 MBbls for the nine months ended September 30, 2023, compared to 9,216 MBbls in 2022[1]. - Natural gas revenues decreased by $166.4 million, primarily due to a 71% decrease in average price, despite a 7% increase in production[2]. - NGL revenues were $122.8 million for the nine months ended September 30, 2023, down $67.9 million from the previous year, with a 45% decrease in average price[3]. Operating Expenses - Total operating expenses for Q3 2023 were $167.5 million, slightly lower than $171.2 million in Q3 2022, with lease operating expenses increasing by 3.4%[124]. - Total operating expenses increased to $508.0 million for the nine months ended September 30, 2023, compared to $469.6 million in 2022[4]. Shareholder Returns and Capital Management - The company declared cash dividends totaling $66.3 million to Class A Common Stock holders during the nine months ended September 30, 2023[115]. - Cash dividends declared for Class A Common Stock totaled $66.3 million in the nine months ended September 30, 2023, up from $56.4 million in the same period of 2022[158]. - The company repurchased 7.1 million shares for approximately $152.9 million during the nine months ended September 30, 2023, compared to 6.6 million shares for $144.0 million in the same period of 2022[155]. - As of September 30, 2023, Magnolia had repurchased 28.3 million shares at a cost of $470.8 million, with 11.7 million shares remaining under its repurchase authorization[116]. Capital Expenditures and Investments - Magnolia's capital spending is aligned with its business model, aimed at providing operational and financial flexibility in a challenging commodity environment[112]. - Total capital expenditures for Q3 2023 were $106.7 million, a decrease of 8.3% from $116.1 million in Q3 2022[154]. - The company paid $53.8 million for acquisitions during the nine months ended September 30, 2023, including a $40.0 million acquisition in the Giddings area[7]. Financial Position and Liquidity - As of September 30, 2023, the company had $618.5 million in cash and cash equivalents and $1.1 billion in total liquidity[6]. - The company anticipates its current cash balance and cash flows from operations will be sufficient to meet its cash requirements[8]. - As of September 30, 2023, the company had no borrowings outstanding under the RBL Facility, mitigating interest rate risk exposure[159]. Operational Strategy - The company operated a two-rig program during Q3 2023, with drilling rig numbers dependent on commodity prices and spending strategy[154]. - Leasehold acquisition costs for Q3 2023 were $2.4 million, compared to $1.6 million in Q3 2022[154]. - Magnolia owned approximately 89.5% of the interest in Magnolia LLC as of September 30, 2023, with a noncontrolling interest of about 10.5%[157]. Impairments - The company recognized a $15.7 million impairment related to the Highlander property during the nine months ended September 30, 2023[4]. Price Sensitivity - A $1.00 per barrel increase in the weighted average oil price would increase revenues by approximately $12.5 million annually, while a $0.10 per Mcf increase in natural gas price would increase revenues by approximately $5.4 million annually[160].