Magnolia Oil & Gas' Q3 Earnings Lag Y/Y, Revenues Beat Estimates

Core Viewpoint - Magnolia Oil & Gas Corporation (MGY) reported a third-quarter 2024 net profit of 52 cents per share, exceeding the Zacks Consensus Estimate of 48 cents, driven by increased production volumes despite a year-over-year decline from 54 cents due to rising operating expenses [1][2]. Financial Performance - Total revenues for the quarter were $333.1 million, surpassing the Zacks Consensus Estimate of$331 million, and reflecting a 5.5% increase from $315.7 million in the same period last year, primarily due to higher oil revenues of$266 million [2][3]. - The company generated $217.9 million in net cash from operating activities and achieved a free cash flow of$126.1 million, with operating income constituting 39% of revenues [3]. Shareholder Returns - Magnolia declared a cash dividend of 13 cents per share for both Class A and Class B stock, payable on December 2, to shareholders of record as of November 8 [4]. - In the third quarter, the company repurchased 2.5 million shares for $61.7 million, returning approximately$87.8 million to shareholders, which represents 70% of its free cash flow [5]. Production and Prices - Average daily total output was 90,702 barrels of oil equivalent per day (boe/d), up from 82,651 boe/d year-over-year, although it fell short of the estimate of 91,000 boe/d [6]. - Oil production reached 38,902 barrels per day (bpd), an 18.4% increase from the previous year, exceeding the estimate of 37,200 bpd, while natural gas volumes were 159,170 thousand cubic feet per day (Mcf/d), up 1.7% but below the expected 173,600 Mcf/d [7]. - The average realized crude oil price was $74.23 per barrel, down 7.9$80.56 a year ago, and also below the expected $75.21 per barrel [7][8]. Balance Sheet and Capital Expenditure - As of September 30, Magnolia had cash and cash equivalents of$276.1 million and long-term debt of $394.8 million, with a total debt-to-total capital ratio of 16.8$103.1 million on its capital program during the quarter, with operating expenses rising to $204.1 million from$167.5 million year-over-year [9]. Guidance and Future Plans - Magnolia plans to maintain two drilling rigs and one completion crew, with an additional four well pads to be drilled in Giddings during the fourth quarter, enhancing operational flexibility for 2025 [10][11]. - The company expects fourth-quarter drilling and completion capital to be $125 million, bringing total capital spending for the year to approximately$470 million, aligning with its budget range [11]. - Projected total production volumes for the fourth quarter are about 93 thousand boe/d, indicating a high single-digit year-over-year increase, with oil production growth expected to exceed this rate [12].