Magnolia Oil & Gas Corp Q4 FY2024 earnings call

• Magnolia ended 2024 with strong financial and operational performance, including record quarterly production volume in the fourth quarter (93.1 thousand BOE per day) and full-year production of 89.7 thousand BOE per day, a 9% annual growth. - Total adjusted net income for 2024 was approximately $401 million, adjusted EBITDA was $953 million, and D&C capital spending was $477 million with a reinvestment rate of 50%, generating free cash flow of $430 million. - Returned 88% of free cash flow to shareholders via dividend and share repurchases. - Board approved a 15% increase in quarterly dividend to 15 cents per share and a 10 million share increase in share repurchase program. - 2025 capital plan includes $460 million to $490 million in D&C spending, aiming for 5%-7% production growth, with 75%-80% of activity in Giddings multi-well development pads and 20%-25% in Karnes area.

Magnolia Oil & Gas Corporation had strong segment performance in 2024. The Giddings segment saw a 16% growth in total production during 2024, with oil production growing 21%. Full-year 2024 total production was 89.7 thousand BOE per day, representing a 9% annual production growth and 11% oil production growth. The Karnes area assets generated significant free cash flow, with approximately 20% to 25% of the company's capital allocated to this asset in 2025, including development and appraisal activity. In terms of revenue contribution, Giddings was a key driver with a large portion of the company's production and growth.

• 2025 D&C capital spending expected to be $460 million to $490 million, including non-op capital similar to 2024. - First-quarter D&C capital expenditures estimated at $135 million, highest quarterly rate of the year. - Total production for first quarter estimated at ~94 MBOE per day, full-year production growth expected 5%-7%. - Oil price differentials anticipated at ~$3 per barrel discount to Magellan East Houston, and completely unhedged for production. - Fully diluted share count expected ~195 million in Q1 2025, 5% lower than Q1 2024. - Effective tax rate expected ~21%, cash tax rate 7%-9% for 2025.

• Commodity price fluctuations could impact financial results. - Operational challenges in drilling and completing wells could affect production targets. - Uncertainty around the success of appraisal activities in Giddings and Karnes areas could impact future growth.

Q: Neal Dingmann asked about well cost and shareholder return.

A: Chris Stavros responded that well cost is more pure development now in Giddings and that cash can be held on balance sheet until attractive opportunities arise.

Q: Oliver Huang inquired about gassy inventory and well cost in Karnes.

A: Chris Stavros said cost structure improvements make some areas more viable, and they revisit areas for optimization. On well cost, they examine economics and test concepts in Giddings.

Q: Carlos Escalante asked about 2025 capital program and rigs.

A: Chris Stavros said comfortable with $460M-$490M capital range, and no immediate plan to drop a rig unless oil price below $60.

Q: Zachary Parham asked about production trajectory.

A: Chris Stavros said production expected to grow ratably through the year, with first quarter CapEx high and growth continuing through the year.

Q: Noah Hungness asked about M&A in Eagle Ford and CapEx split.

A: Chris Stavros said M&A opportunities in Eagle Ford are oilier, and CapEx split between Giddings and Karnes is within a range with no significant shift expected.

Q: Neil Mehta asked about Giddings operational milestones and dividend sustainability.

A: Chris Stavros said they hope to provide more color on Giddings appraisal work later in the year and that dividend is sustainable due to stress testing and balance with share repurchases.

Q: Geoff Jay asked about significance of Giddings appraisal work.

A: Chris Stavros said appraisal work in Giddings could have a significant impact on resource and drilling inventory over time.