Magnolia Oil & Gas(MGY)2025-02-19 19:31Financial Data and Key Metrics Changes - Magnolia Oil & Gas Corporation ended 2024 with record quarterly production volume of 93.1 thousand barrels of oil equivalent per day, lifting full-year total production to 89.7 thousand BOE per day, representing a 9% annual growth for the second consecutive year [10][11] - Total adjusted net income for the year was approximately 953 million [11][29] - The company generated free cash flow of 378 million, to shareholders through dividends and share repurchases [12][13] Business Line Data and Key Metrics Changes - Total production at Giddings grew 16%, with oil production increasing by 21%, supported by strong well productivity and expansion of the development area [11] - The company successfully lowered lease operating costs by 10% per BOE, contributing to a return on capital employed of 22% [12][21] Market Data and Key Metrics Changes - Magnolia's total revenue per BOE declined year-over-year due to lower oil prices, with total adjusted cash operating costs at 10.62 per BOE in Q4 2024 [35] - The company remains completely unhedged for all oil and natural gas production, allowing it to accrue significant excess cash flow during periods of higher product prices [18][38] Company Strategy and Development Direction - Magnolia's business model focuses on operating a highly efficient E&P business, generating absolute per share value over the long term, with a low reinvestment rate and significant free cash flow generation [14][15] - The company plans to operate two drilling rigs and one completion group in 2025, with total D&C capital spending anticipated between 460 million to 1.6 billion to shareholders since inception, representing approximately 35% of its current market capitalization [22] - The company plans to allocate approximately 20% to 25% of its capital to Karnes area assets in 2025, alongside appraisal activities [26][37] Q&A Session Summary Question: On well costs and development programs - Management indicated that the focus has shifted more towards development in Giddings, with limited scientific testing as they have gained substantial knowledge over the years [41][42] Question: On shareholder returns and cash management - Management is comfortable holding cash for a short period, deploying it when attractive opportunities arise, rather than letting it sit idle for long [44][46] Question: On gas inventory and appraisal work - Management acknowledged improvements in cost structure and indicated ongoing evaluations of gas acreage, with potential for future development as economics improve [48][50] Question: On capital spending and rig activity - Management expressed confidence in the planned capital spending range for 2025, indicating no immediate plans to drop a rig unless oil prices fall significantly [62] Question: On production trajectory and growth expectations - Management expects production to grow ratably throughout the year, with potential for strong volumes in the second half of 2025 [66][68] Question: On M&A opportunities in Eagle Ford - Management noted several opportunities in the Eagle Ford, primarily focusing on quality assets that can enhance their resource set [75][77] Question: On Giddings appraisal work and potential impact - Management highlighted the significant potential of appraisal work in Giddings, which could lead to substantial increases in resource estimates over time [96][98]