Magnolia Oil & Gas Corporation Q2 FY2025 earnings call

• Chris Stavros highlighted strong second quarter results, noting consistent execution and a more capital-efficient program. • Bolt-on acquisitions completed within the last month were emphasized for benefiting operational and financial performance. • Brian Corales reviewed second quarter financial results, including cash flow details, share repurchases, and dividend growth. • Magnolia's balance sheet remains strong with $700 million in total liquidity, including a $450 million revolving credit facility and $252 million in cash at quarter end. • The company has repurchased 77.2 million shares since 2019, reducing weighted average diluted shares outstanding by 25%.

During the second quarter, Magnolia Oil & Gas delivered strong financial and operational results. Total adjusted net income was $81 million with adjusted EBITDAX of $223 million. D&C capital was $95 million, representing 43% of adjusted EBITDAX. Production volumes grew 9% year-over-year to 98,200 barrels of oil equivalent per day. Second quarter total oil production was 40,000 barrels per day, a new company record with 5% year-over-year growth. The Giddings area saw 11% production growth year-over-year.

• Raised full-year 2025 production growth guidance to approximately 10% from the prior range of 7%-9%. • 2025 capital spending remains in the range of $430 million to $470 million. • Third quarter 2025 production expected to be approximately 99,000 barrels of oil equivalent per day. • Third quarter D&C capital expenditures expected to be approximately $115 million. • Oil price differentials anticipated to be approximately a $3 per barrel discount to Magellan East Houston. • Effective tax rate expected to be approximately 21% with minimal cash taxes for 2025 and 2026.

• Product price volatility could impact financial performance. • Operational failures in drilling, completions, or field operations could disrupt production. • Uncertainties related to balance sheet management and debt obligations. • Complexities in M&A activities, especially with larger transactions, which may introduce additional risks.

Q: Carlos Escalante with Wolfe Research asked about free cash flow trending and the conversation around 2026 and beyond growth versus capital efficiency.

A: Chris Stavros discussed that while it's early to focus on 2026, the Giddings field has significant upside potential with continued capital efficiencies and production growth.

Q: Peyton Dorne with UBS inquired about taxes and operating costs.

A: Chris Stavros mentioned minimal cash taxes for 2025 and 2026 due to new legislation, and operating costs are expected to normalize towards $5-$5.25 per BOE with broad improvements in field operations.

Q: Zach Parham with JPMorgan asked about oil production trajectory and M&A outlook.

A: Chris Stavros stated oil production is expected to grow in the second half of 2025 and into 2026, and there are ongoing smaller M&A opportunities in core areas.

Q: Oliver Huang from Tudor, Pickering, Holt asked about criteria for shifting acreage into the development bucket.

A: Chris Stavros said the decision is based on low entry points and upside potential of the acreage in the core Giddings area.

Q: Tim Moore with Clear Street asked about Giddings acreage exploitation and drilling efficiencies.

A: Chris Stavros mentioned ongoing optimization of acreage through downspacing, more wells per pad, and further development as they learn more about the area.

Q: Noah Hungness with Bank of America asked about completions deferred into 2026 and their use.

A: Chris Stavros said about a half-dozen completions are deferred, and they will likely be completed in 2026 depending on the environment.

Q: Tim Rezvan with KeyBanc Capital Markets asked about well results and drilling flexibility.

A: Chris Stavros discussed tactical drilling decisions, like pivoting to gassier areas for better pricing, and the plan to revisit such areas in the future.