Magnolia Oil & Gas(US:MGY)2025-10-30 16:00Financial Data and Key Metrics Changes - Magnolia achieved adjusted net income of $78 million or $0.41 per diluted share for the third quarter of 2025, with adjusted EBITDAX of $219 million and operating income margins of 31% [14][19] - Free cash flow for the quarter was $134 million, with a capital reinvestment rate limited to 54% of adjusted EBITDAX [9][14] - The company ended the quarter with a cash balance of $280 million, the highest level of the year, and total liquidity of approximately $730 million [10][19] Business Line Data and Key Metrics Changes - Total production reached a record of 100.5 thousand barrels of oil equivalent per day, representing year-over-year growth of 11% [6][14] - Oil production at Giddings grew by nearly 5% compared to the prior year, contributing to an expected full-year production growth of approximately 10% [6][7] Market Data and Key Metrics Changes - Total revenue per BOE declined approximately 12% year over year due to lower oil prices, partially offset by an increase in natural gas prices [19] - Price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, with Magnolia remaining unhedged on all oil and natural gas production [20] Company Strategy and Development Direction - Magnolia's strategy focuses on generating consistent and sustainable free cash flow through disciplined capital allocation and profitability, with no plans to increase activity at current product prices [5][12] - The company aims to enhance its asset base through bolt-on acquisitions and continues to operate with a disciplined capital spending philosophy [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to a volatile product price environment, emphasizing a commitment to its business model and operational flexibility [12][20] - The company plans to maintain capital spending at approximately 55% of adjusted EBITDAX for 2026, with expectations for mid-single-digit total production growth [11][20] Other Important Information - Magnolia returned 60% of its free cash flow to shareholders through share repurchases and dividends, with a quarterly dividend of $0.15 per share announced earlier this year [9][17] - The company has repurchased 79.4 million shares since the program began, reducing the weighted average diluted share count by approximately 26% [16] Q&A Session Summary Question: Can operational efficiencies lead to accelerated production? - Management indicated that while they could increase production, they prefer to stay true to their business model, focusing on maximizing free cash flow rather than rushing production [25][26] Question: Is there still potential for strategic bolt-on acquisitions? - Management confirmed there is still a fair amount of white space for acquisitions, but any potential deals must align with Magnolia's business model and improve the company [29][30] Question: What is the outlook for Karnes and appraisal activities? - Management remains optimistic about Karnes, stating that good rock has a long life and they will continue to explore appraisal opportunities [40][41] Question: How will the appraisal program be managed in a weak oil price environment? - Management expressed reluctance to cut the appraisal program significantly, emphasizing its importance for resource expansion and flexibility in response to market conditions [46][49] Question: How does Magnolia view service pricing and its alignment with oil prices? - Management noted that service pricing has softened but remains stable, with some upward pressure from steel tariffs offset by overall market conditions [99][100] Question: What is the plan for deferred completions and DUCs in 2026? - Management clarified that they do not typically carry planned DUCs, and the focus will be on timing rather than maintaining a specific number of DUCs [102][103]