Magnolia Oil & Gas Corp (MGY)·Q3 2025 Earnings Summary

Executive Summary

• Record total production of 100.5 Mboe/d; revenue $324.9M (-2% YoY), diluted EPS $0.40, operating income margin 31%, adjusted EBITDAX $218.8M, and free cash flow $133.9M .
• Consensus comparison: Q3 EPS modest beat (Primary EPS 0.421 vs 0.414), revenue slight beat ($324.9M vs $323.0M), but EBITDA a notable miss ($213.9M vs $223.3M) — bold miss on EBITDA; estimates from S&P Global.*
• Guidance reinforced: FY25 production growth ~10% (raised from initial 5–7%); FY25 D&C capital ~$454M; Q4 production ~101 Mboe/d, LOE ~$5.20/boe, fully diluted share count ~189M; company remains unhedged; effective tax rate ~21% with zero cash taxes expected for FY25 .
• Shareholder returns: Returned ~$80M (60% of FCF) via $51M buybacks (2.15M shares) and $29M dividends; cash ended at $280M with $450M undrawn revolver .

What Went Well and What Went Wrong

What Went Well

• Record volumes with disciplined spend: Production reached 100.5 Mboe/d (+11% YoY); reinvestment rate held at 54% of adjusted EBITDAX; free cash flow $134M . CEO: “We…maximize free cash flow…from our high-quality assets” .
• Strong gas/NGL realizations supported margins despite lower oil prices: Operating income margin 31%; management cited “strong natural gas and NGL price realizations” underpinning revenue/EBITDAX .
• Giddings outperformance driving growth: Giddings production +15% YoY; oil +5% YoY; management deferred several completions to 2026 to save ~5% capital and preserve flexibility .

What Went Wrong

• Pricing-driven margin compression: Revenue/boe fell to $35.14 from $39.92 YoY; operating income margin declined to 31% from 39%, largely due to lower oil prices .
• Gathering/processing costs higher YoY: GTP costs rose to $1.92/boe from $1.28/boe YoY, pressuring adjusted cash operating margin (68% vs 73%) .
• EBITDA missed Street: Q3 EBITDA ~$213.9M vs consensus ~$223.3M; the miss likely reflects lower oil price realizations and higher GTP costs — bold miss noted; estimates from S&P Global.*

Financial Results

Q3 vs Q3 2024 (YoY) snapshot:

Segment/Asset Production Breakdown:

Per-BOE Pricing and Cost KPIs:

Guidance Changes

Dividend/Buyback context:

• Quarterly dividend $0.15/share declared for payment Dec 1, 2025; annualized $0.60/share .
• 5.2M shares remain under buyback authorization .

Earnings Call Themes & Trends

Management Commentary

• CEO framing: “Magnolia’s primary goals…are to be the most efficient operator of best-in-class oil and gas assets…A substantial portion of our free cash flow is returned to investors through our secure and growing cash dividend and ongoing share repurchases” .
• Strategy and outlook: “We expect to close this year on a strong note…record total production and oil production in the fourth quarter…we do not plan to add incremental activity at current product prices” .
• Capital flexibility: “Our low reinvestment rate helped generate…free cash flow…We ended the quarter with $28 million of additional cash…$280 million at quarter end” .
• CFO highlights: Q3 adjusted net income $78M (~$0.41/share), adjusted EBITDAX $219M, capex $118M (54% of EBITDAX), FCF $134M; cash $280M and liquidity ~$730M .

Q&A Highlights

• Growth vs capex: Management reiterated preference to stay “true to the business model” rather than accelerate activity, using appraisal to realize efficiencies over time .
• Karnes appraisal: “Would not write Karnes off…we will test [upside]…economics drive decisions” .
• M&A market: South Texas assets getting “gassier” with waning quality; smaller packages more likely to transact given bid-ask dynamics .
• LOE outlook: Q4 LOE ~$5.20/boe; seasonal uptick early 2026 then down modestly; ongoing water/fluids/chemicals efficiencies .
• DUCs/deferrals: No plan to carry DUCs beyond normal WIP; six deferred completions carried into 2026 but expected to normalize .

Estimates Context

Q3 2025 Consensus vs Actual (S&P Global):

Notes:

• Company-reported diluted EPS was $0.40 ; S&P “Primary EPS” actual differs due to normalization methodology.*
• Company-reported EBITDA was $213.3M .

Values retrieved from S&P Global.*

Where estimates may adjust:

• EBITDA miss vs Street suggests downward revisions to near-term EBITDA/margin assumptions absent a pricing rebound; revenue and EPS beats were modest and likely driven by gas/NGL realizations .*

Key Takeaways for Investors

• Execution remains strong: Record volumes with disciplined reinvestment (54% of EBITDAX) and robust FCF generation, supporting buybacks and dividend growth .
• Mix and realizations matter: Strong gas/NGL realizations offset pressure from lower oil prices; monitor GTP costs and margin trajectory into Q4/Q1 .
• Guidance credible and conservative: FY25 ~10% growth reiterated with lower capex; Q4 production record expected; LOE trending slightly lower — supportive for near-term prints .
• Unhedged strategy: No hedges leaves results more sensitive to commodity volatility; management emphasizes flexibility and appraisal-led efficiency .
• EBITDA miss vs consensus: Be mindful of valuation and estimate revisions; Street may trim EBITDA despite EPS/revenue beats — potential near-term stock overhang.*
• Balance sheet optionality: $280M cash, $0 drawn revolver, low net leverage (~0.1x annualized adj. EBITDAX) provide capacity for opportunistic bolt-ons and buybacks .
• 2026 setup: Mid-single-digit growth plan with two rigs/one completion crew; deferrals create cushion; watch service costs (OCTG tariffs vs vendor softness) and LOE trajectory .

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Appendix: Additional Cash/Bal Sheet Snapshot

• Liquidity ~$730M; net debt ~$120M; 6.875% senior notes due 2032; Net Debt/Adj. EBITDAX (Q3 annualized) 0.1x .
• Balance sheet: Total assets $2,924M; total equity $2,006M at 9/30/25 .