Magnolia Oil & Gas Corporation Q4 FY2025 earnings call

• Magnolia delivered strong performance in 2025 despite elevated product price volatility, with steady execution of a capital-efficient business model. - The company generated strong free cash flow and returned capital to shareholders through base dividends and share repurchases. - In 2025, Magnolia added approximately 50 million BOE of proved developed reserves, with organic proved developed finding and development costs of $9.25 per BOE. - The 2026 plan includes moderate production growth with capital spending expected to be flat year-over-year, focusing on capturing low-cost resources across acreage positions. - The business model emphasizes low capital reinvestment rate, above-average per share growth, high operating margins, and minimal debt, leading to strong corporate returns.

In 2025, total company production grew by 11% to approximately 100,000 barrels of oil equivalent per day, with oil production growing by 4% and averaging nearly 40,000 barrels per day. Field level cash operating expenses declined by 7% to $5.12 per BOE during 2025. For the fourth quarter, Magnolia achieved a new company record for production, averaging nearly 104,000 barrels of oil equivalent per day and 40,700 barrels of oil per day, both marking a sequential increase of 3%. The revenue contribution from oil and gas production segments is tied to these production figures, with the overall business model centered around high-quality assets and capital discipline.

• 2026 capital spending is expected to be in the range of $440 million to $480 million, with the midpoint similar to prior year's capital cost despite planning more wells. - First quarter D&C capital expenditures are anticipated to be approximately $125 million, the highest quarterly rate of spending for the year. - Total full year 2026 production growth is expected to be approximately 5%. - Oil price differentials are anticipated to be approximately $3 per barrel discount to Magellan East Houston, and Magnolia remains completely unhedged for all of its oil and natural gas production. - The fully diluted share count for the first quarter of 2026 is expected to be approximately 187 million shares, 4% lower than first quarter 2025 levels. - Effective tax rate is expected to be approximately 21%, with all being deferred.

• Commodity price volatility, which can impact financial results. - Competition in the M&A market, particularly for larger, PDP-heavy assets which can be costly and less beneficial. - Service cost pressures that could affect operational costs. - Stock price volatility, which may influence the timing and amount of share buybacks.

Q: Noah Hungness asks about 2026 capital guide and GP&T.

A: Brian Corales says capital guide range is due to product price uncertainty, and GP&T is expected to be relatively similar to past quarters with slight potential for increase.

Q: Carlos Escalante asks about D&C cost gains and maintenance capital.

A: Christopher Stavros and Brian Corales discuss that industrial approach with consistent rigs and crews contributes to cost gains, and maintenance capital is roughly $400 million-ish, with production up despite stable capital spend.

Q: Phillips Johnston asks about working interest and cycle times.

A: Brian Corales responds working interest in Giddings is in the low 80s, and cycle times are around 28 gross wells per rig year.

Q: Charles Meade asks about acquisition market and oil price scenarios.

A: Christopher Stavros says less interested in PDP-heavy Eagle Ford, and extra cash from higher oil prices would go to dividends, share repurchases, or opportunistic acquisitions.

Q: Timothy Moore asks about Giddings future outcomes and EUR.

A: Christopher Stavros is confident in future outcomes due to appraisal and exploration in Giddings area, with expected reliable results.

Q: Timothy Moore follows up on ramping drilling in Giddings.

A: Christopher Stavros says they could flex but won't chase growth, instead using extra cash for shareholder returns.

Q: Zach Parham asks about productivity sustainability.

A: Christopher Stavros says productivity is likely to gradually improve due to consistency and understanding in drilling and completion.

Q: Paul Diamond asks about drilling feet improvement.

A: Christopher Stavros expects gradual improvement in drilling feet due to ongoing experience and understanding in the business.