MGY

Overall Second Quarter 2026 Financial and Operating Performance

• Adjusted net income reached $184 million ($0.99 per diluted share), with adjusted EBITDAX of $370 million
• Drilling and completion (D&C) capital was $125 million, resulting in a 34% reinvestment rate of adjusted EBITDAX, the lowest quarterly reinvestment rate since 2022
• Pretax adjusted operating income margin was a robust 51%; generated $235 million in free cash flow
• Returned $80 million in free cash flow to shareholders via base dividends and share repurchases, buying back 1.7 million shares in the quarter
• Total company production grew 8% year over year to 106 thousand BOE/d, a new quarterly record, beating prior guidance; oil production grew 5% to 41.9 thousand barrels per day, also a new quarterly record
• Total adjusted cash operating costs (including G&A) were $11.55 per BOE, and annualized return on capital employed was 39%
• Ended the quarter with $296 million in cash, a $172 million increase from the start of the quarter
• Increased the quarterly dividend by 9% to $0.18 per share, for an annualized payout rate of $0.72 per share

Wildfire Energy Acquisition Update

• Signed a definitive agreement to acquire Wildfire Energy for total consideration of $4.06 billion
• The acquisition adds 110 thousand net acres to Magnolia's Giddings position and 53 thousand BOE/d of production (including 37 thousand barrels per day of oil), creating a combined 1.25 million net acre position in Giddings with development upside across the Austin Chalk, Eagle Ford, and Woodbine benches
• The acquisition is a strategic fit with 70% of Magnolia's existing acreage benefiting from the transaction via overlap or adjacency; it is expected to be immediately accretive to per-share cash flow, free cash flow, and earnings, and will improve the company's D&C reinvestment rate
• Executed financing transactions to fund the acquisition: raised $1.23 billion in net proceeds from a public equity offering of 53.3 million new shares, and issued $500 million of 6 5/8% senior notes due 2034; the transaction will use a balanced half equity / half debt funding structure and remains on track to close in late Q3 2026
• Post-closing, the company will assume Wildfire's $600 million senior notes due 2029, and increase its credit facility to a $2 billion borrowing base with $1.75 billion in elected commitments, providing ample liquidity

Post-Acquisition Business Model and Capital Allocation Strategy

• Magnolia's core disciplined business model remains unchanged post-acquisition: D&C spending will be capped at 55% of adjusted EBITDAX to generate consistent free cash flow and deliver moderate annual production and oil growth
• Management targets reducing net debt to less than 1x net debt to EBITDA by the end of 2027 (or sooner) to return to the company's historical conservative leverage profile
• The company expects to maintain 10% long-term annual dividend compounding growth, and continue share repurchases of at least 1% of outstanding shares per quarter; share repurchases will resume after this earnings call following a transaction-related restriction period

• Magnolia standalone 2026 full-year total production growth guidance is raised to 6% year over year, up from the prior 5% guidance, driven by better-than-expected well performance in the Giddings segment
• Q3 2026 standalone D&C capital expenditures are expected to be approximately $115 million
• Q3 2026 total production is expected to be similar to Q2 levels, at approximately 106 thousand barrels of oil equivalent per day
• Q3 2026 oil realizations are expected to carry a $3 per barrel discount to the Magellan East Houston benchmark pricing
• The fully diluted share count after the Wildfire acquisition closes is expected to be approximately 269 million shares
• The effective tax rate for 2026 is expected to be approximately 21%, with minimal cash taxes for the full year

Magnolia Oil and Gas operates two core production segments: 1) Giddings: Second quarter 2026 total production increased 10% year over year to 85.5 thousand barrels of oil equivalent per day (BOE/d), with oil production growing 7% year over year to 29 thousand barrels per day. Giddings accounts for 81% of Magnolia's total company production volumes, and was the primary driver of the firm's overall production growth in the quarter. 2) Karnes: Second quarter 2026 production was relatively flat year over year at just over 20 thousand BOE/d. The segment continues to generate significant free cash flow for the company, and management expects production to remain flat at this level for many years.

Forward-looking statements about the Wildfire acquisition, expected cost synergies, future debt reduction, production growth, and future shareholder returns are subject to inherent risks and uncertainties that could cause actual results to differ materially from projections. Key risk factors are disclosed in the company's most recent Form 10-K filed with the SEC. No additional material operational risks or failures were discussed during the call.

Q: What will the combined D&C activity plan look like post-closing for Magnolia and Wildfire, and how will capital for free cash flow beyond the return of capital program be allocated? / A: A simple starting point is combining the existing activity levels of both firms: 2 rigs and 1 completion crew each, for a total of 4 rigs and 2 crews. Management expects to improve operational efficiency on a combined basis, but will not release a detailed plan until after the transaction closes. Most excess free cash flow will be prioritized for debt reduction first. Only small, opportunistic bolt-on acquisitions of additional working interest or royalties within the existing combined Giddings footprint are expected; no large, out-of-footprint acquisitions are planned. (328 characters)

Q: What upside exists for Austin Chalk development across Wildfire's acquired footprint, and what cost savings will the acquired sand mine deliver? / A: Wildfire has only completed limited testing and drilling across its large acreage position, so there is significant untapped upside across the identified high-potential areas (Robertson, Burleson, Washington, and Eastern Brazos Counties). Magnolia will leverage its existing Austin Chalk expertise to develop this upside through 2027 and beyond. While specific per-well savings have not been quantified, the sand mine is expected to deliver several million dollars in total annual synergies and cost savings, as Magnolia already sourced most of its sand demand from this operation. (397 characters)

Q: What will the development mix between Austin Chalk and Eagle Ford be over the next 12 months post-closing, and what is Karnes' ongoing strategic role? / A: Management expects a roughly even balanced mix of Austin Chalk and Eagle Ford development over the first 12 months post-closing. The balanced mix will allow Magnolia to increase Austin Chalk activity relative to Wildfire's historical levels, leveraging Magnolia's existing Chalk expertise to unlock additional value. Karnes remains a core high-quality free cash flow generative "cash cow" asset that provides stability and ballast to the overall business; management expects it to maintain flat production for many years and still holds untapped long-term development upside. (401 characters)

Q: Will share repurchases resume in Q3 2026, are there any remaining restrictions, and how aggressive will debt repayment be post-closing? / A: All transaction-related restrictions on share repurchases have been lifted, as all required disclosures have been made and there is no remaining material non-public information. Magnolia will resume repurchases immediately, and will be more aggressive if the share price does not reflect the value of the Wildfire acquisition. Rapid debt reduction is a top post-closing priority; debt will decline steadily each quarter, and management expects to reach a net debt to EBITDA ratio below 1x sooner than the currently guided year-end 2027 target if commodity prices hold at current levels. (389 characters)