Q1 2025 Magnolia Oil & Gas Corp Earnings Call

May 1, 2025

Speaker Change: Okay.

Operator: For participating in Magnolia Oil & Gas Corporation's Q1 2025 Earnings Conference Call. My name is Megan. I will be your operator for today's call. At this time, all participants will be placed in a listen-only mode as our call is being recorded. I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question-and-answer session.

Gas Corporation's first quarter 2025 earnings Conference call. My name is Megan and I will be your operator for today's call. At this time, all participants will be placed in a listen only mode. As our call is being recorded I will now turn the call over to Magnolia is management for their prepared remarks, which will be followed.

I will be your operator for today's call at this time, all participants will be placed in a listen only mode as our call is being recorded.

Good morning, everyone and thank you for participating in Magnolia oil <unk> gas Corporation's first quarter 2025 earnings Conference call. My name is Megan and I will be your operator for today's call.

Speaker Change: I'll now turn the call over to Magnolia is management for their prepared remarks, which will be followed by a brief question and answer session.

This time, all participants will be placed in a listen only mode as our call is being recorded.

Chris Stavros: Thank you Megan and good morning, everyone welcome to Magnolia oil and gas as first quarter earnings conference call participating on the call today are Chris Stavros, <unk>, President and Chief Executive Officer, and Brian <unk>, Senior Vice President and Chief Financial Officer.

A brief question and answer session.

Speaker Change: I will now turn the call over to Magnolia is management for their prepared remarks, which will be followed by a brief question and answer session.

Chris Stavros: Thank you Megan and good morning, everyone welcome to Magnolia oil <unk> gas first quarter earnings conference call participating on the call today are Chris Stavros make noise, President and Chief Executive Officer.

Tom Fitter: Thank you, Megan, and good morning everyone. Welcome to Magnolia Oil & Gas's Q1 earnings conference call. Participating on the call today are Chris Stavros, Magnolia's President and Chief Executive Officer, and Brian Corales, Senior Vice President and Chief Financial Officer. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ is available in the company's annual report on Form 10-K filed with the SEC. That full safe harbor can be found on slide two of the conference call slide presentation with supplemental data on our website.

Speaker Change: Thank you Megan and good morning, everyone welcome to Magnolia oil <unk> gas first quarter earnings conference call participating on the call today are Chris established by noise, President and Chief Executive Officer.

Chris Stavros: As a reminder, today's conference call contains certain projections and other forward looking statements within the meaning of the federal Securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements additional information.

Chris Stavros: Brian <unk> Senior Vice President and Chief Financial Officer as a reminder, today's conference call contains certain projections and other forward looking statements within the meaning of the federal Securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statement.

Speaker Change: Ian Corral Senior Vice President and Chief Financial Officer as a reminder, today's conference call contains certain projections and other forward looking statements within the meaning of the federal Securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements.

Chris Stavros: Formation on risk factors that could cause results to differ is available on the company's annual report on Form 10-K filed with the SEC.

Chris Stavros: <unk>.

Chris Stavros: Additional information on risk factors that could cause results to differ is available in the company's annual report on Form 10-K filed with the SEC.

Chris Stavros: A full safe harbor can be found on slide two of the conference call slide presentation with supplemental data on our website you can download Magnolia is first quarter 2025 earnings press release as well as the conference call slides from the investors section of the company's website at Www Dot Magnolia oil and gas Dot com.

Speaker Change: Additional information on risk factors that could cause results to differ is available on the company's annual report on Form 10-K filed with the SEC.

Speaker Change: A full safe harbor can be found on slide two of the conference call slide presentation with supplemental data on our website you can download Magnolia is first quarter 2025 earnings press release as well as the conference call slides from the investors section of the company's website at Www Dot Magnolia oil and gas Dot Com I will now turn.

Speaker Change: A full safe harbor can be found on slide two of the conference call slide presentation with supplemental data on our website you can download <unk> first quarter 2025 earnings press release as well as the conference call slides from the investors section of the company's website at Www Dot Magnolia oil and gas Dot Com I will now turn the.

Tom Fitter: You can download Magnolia's Q1 2025 earnings press release, as well as the conference call slides from the investor section of the company's website at www.magnoliaoilandgas.com. I will now turn the call over to Mr. Chris Stavros.

Chris Shoppers: I'll now turn the call over to Mr. Chris shoppers.

Chris Shoppers: Thank you Tom and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2025 financial and operating results.

Chris Stavros: The call over to Mr. Chris shoppers.

Speaker Change: Thank you Tom and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2025 financial and operating results.

Chris Stavros: Thank you, Tom, and good morning everyone. We appreciate you joining us today for a discussion of our Q1 2025 financial and operating results. I plan to speak to our Q1 results, which puts Magnolia on a very solid foundation to start the year and in a strong position with extensive flexibility to maneuver through the current product price volatility and macroeconomic uncertainty. I will briefly discuss how our asset quality, notably in Giddings, continues to drive our operational execution and providing us with further confidence in our plan for this year. I'll conclude by giving a brief update of Magnolia's 2025 capital and operating plan, where we now expect to see higher production growth with lower capital spending, resulting in a more capital-efficient program and in accordance with our business model discipline.

Chris Shoppers: Planning to speak to our first quarter results, which puts Magnolia on a very solid foundation to start the year and in a strong position with extensive flexibility to maneuver through the current product price volatility and macroeconomic uncertainty.

Chris Schott: All over to Mr. Chris Schott.

Chris Schott: Thank you Tom and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2020 financial and operating results.

Speaker Change: I plan to speak to our first quarter results, which puts Magnolia on a very solid foundation to start the year and in a strong position with extensive flexibility to maneuver through the current product price volatility and macroeconomic uncertainty.

Speaker Change: Ryan to speak to our first quarter results, which puts Magnolia on a very solid foundation to start the year and in a strong position with extensive flexibility to maneuver through the current product price volatility and macroeconomic uncertainty.

Chris Shoppers: Briefly discuss how our asset quality, notably in Giddings continues to drive our operational execution and providing us with further confidence in our plan for this year.

Speaker Change: Briefly discuss how our asset quality, notably in Giddings continues to drive our operational execution and providing us with further confidence in our plan for this year.

Chris Shoppers: I'll conclude by giving a brief update of Magnolia is 2025 capital and operating plan. We now expect to see higher production growth with lower capital spending, resulting in a more capital efficient program and in accordance with our business model discipline.

Chris Schott: I will briefly discuss how our asset quality, notably.

Chris Schott: Continuing to drive our operational execution and providing us with further confidence in our plan for this year.

Speaker Change: I'll conclude by giving a brief update of Magnolia is 2025 capital and operating plan. We now expect to see higher production growth with lower capital spending, resulting in a more capital efficient program and in accordance with our business model discipline.

Chris Schott: I'll conclude by giving a brief update of Magnolia is 2025 capital and operating plan. We now expect to see higher production growth with lower capital spending, resulting in a more capital efficient program and in accordance with our business model discipline.

Chris Shoppers: Brian will then review our first quarter financial results in greater detail and provide some additional guidance before we take your questions.

Brian: Brian will then review our first quarter financial results in greater detail and provide some additional guidance before we take your questions.

Chris Shoppers: Focusing on slide three of the Investor presentation, Magnolia delivered strong operational and financial results. During this year's first quarter, we achieved a record quarterly production rate at 96 5000 barrels of oil equivalent per day during the quarter, which was well ahead of our earlier guidance. We made a tactical decision to bring a couple of multi.

Chris Stavros: Brian will then review our Q1 financial results in greater detail and provide some additional guidance before we take your questions. Focusing on slide 3 of the investor presentation, Magnolia delivered strong operational and financial results during this year's Q1. We achieved a record quarterly production rate of 96.5 thousand barrels of oil equivalent per day during the quarter, which was well ahead of our earlier guidance. We made a tactical decision to bring a couple of multi-well pads online in Q1 that are in a gassier portion of Giddings, and to take advantage of higher natural gas prices historically seen during the winter months. The wells not only exceeded our performance expectations, but are also exhibiting a shallower decline profile.

Chris Schott: Brian will then review our first quarter financial results in greater detail and provide some additional guidance before we take your questions.

Brian: Focusing on slide three of the Investor presentation, Magnolia delivered strong operational and financial results. During this year's first quarter, we achieved a record quarterly production rate of $96 5000 barrels of oil equivalent per day during the quarter, which was well ahead of our earlier guidance. We made a tactical decision to bring a couple of multi.

Chris Schott: Focusing on slide three at the Investor presentation, Magnolia delivered strong operational and financial results. During this year's first quarter, we achieved a record quarterly production rate of $96 5000 barrels of oil equivalent per day during the quarter.

Chris Shoppers: Well pads online in the first quarter that are in a cashier portion of giddings and to take advantage of higher natural gas prices historically seen during the winter months.

Brian: Well pads online in the first quarter that are in a cashier portion of giddings.

Chris Schott: Well ahead of our earlier guidance, we made a tactical decision to bring a couple of multi well pads online in the first quarter that are in a cashier portion of getting them.

Chris Shoppers: The wells not only exceeded our performance expectations, but are also exhibiting a shallower decline profile.

Brian: Take advantage of higher natural gas prices historically seen during the winter months.

Brian: Well, it's not only exceeded our performance expectations are also exhibiting a shallower decline profile.

Chris Shoppers: Yeah performance from these wells help drive the first quarter year over year total production growth of 14%. In addition, the oil production growth of 4%.

Chris Schott: To take advantage of higher natural gas prices historically.

Chris Schott: The winter months.

Chris Schott: Well, it's not only exceeded our performance expectations are also exhibiting a shallower decline profile.

Yup performance from these wells helped drive the first quarter year over year total production growth to 14%. In addition, the oil production growth of 4%.

Chris Stavros: The outperformance from these wells helped drive the Q1 year-over-year total production growth to 14%, in addition to oil production growth of 4%. Total production at Giddings grew by 25% compared to the prior-year quarter, with Giddings oil volumes growing by 17%. Our Q1 financial results were also strong, with total adjusted net income for the quarter of $106 million and adjusted EBITDA of $248 million, both up 9% compared to the year-ago period. Operating income margins were 39% in the quarter and our annualized return on capital employed was 23%. Our D&C capital spending was $130 million, with a reinvestment rate of 53% during Q1.

Chris Shoppers: Total production at Giddings grew by 25% compared to the prior year quarter with Giddings oil volumes growing by 17%.

Chris Schott: The outperformance from these wells help drive the first quarter year over year total production growth of 14%. In addition to oil production growth of 4%.

Brian: Total production at Giddings grew by 25% compared to the prior year quarter with Giddings oil volumes growing by 17%.

Chris Shoppers: Our first quarter financial results were also strong with total adjusted net income for the quarter of $106 million and adjusted EBITDAX of $248 million.

Chris Schott: Total production at Giddings grew by 25% compared to the prior year quarter, but getting spoiled volumes growing by 17%.

Brian: Our first quarter financial results were also strong with total adjusted net income for the quarter of $106 million and adjusted EBITDAX of $248 million.

Chris Shoppers: That's up 9% compared to the year ago period.

Chris Schott: Our first quarter financial results were also strong with total adjusted net income for the quarter.

Chris Shoppers: Operating income margins were 39% in the border and our annualized return on capital employed was 23%.

Brian: Both up 9% compared to the year ago period.

Chris Schott: And adjusted EBITDAX of $248 million, both up 9% compared to the year ago period.

Brian: Operating income margins were 39% in the border and our annualized return on capital employed was 23%.

Chris Shoppers: Our D&C capital spending was $130 million with a reinvestment rate of 53% during the first quarter.

Chris Schott: Operating income margins for 39% in the quarter and our annualized return on capital employed was 22%.

Brian: Our D&C capital spending was $130 million with a reinvestment rate of 53% during the first quarter.

Chris Shoppers: First quarter rate of capital outlays is expected to be the high quarterly highest quarterly spending rate for the year.

Chris Schott: Our D&C capital spending was $130 million with reinvestment rate of 53% during the first quarter.

Brian: First quarter rate of capital outlays is expected to be the high quarterly highest quarterly spending rate for the year.

Chris Shoppers: Magnolia generated free cash flow of $111 million and we returned 70, 74% of the free cash or approximately $82 million to our shareholders through our growing base dividend and ongoing share repurchase program.

Chris Stavros: Q1 rate of capital outlays is expected to be the highest quarterly spending rate for the year. Magnolia generated free cash flow of $111 million, and we returned 70.74% of the free cash, or approximately $82 million, to our shareholders through our growing base dividend and ongoing share repurchase program. Much of the outperformance seen from the wells I mentioned earlier originated from a newer area of Giddings, which we had previously appraised, ultimately leading to the acquisition of additional acreage and the completion of our first multi-well pads late last year and into early 2025. In addition to the strong performance and lower than expected declines, these wells also generate strong financial returns with quick payback periods. Other areas within Giddings also saw strong oil production performance with meaningful associated gas volumes.

Chris Schott: First quarter rate of capital outlay is expected to be at a high quarterly highest quarterly spending for the year.

Brian: Magnolia generated free cash flow of $111 million and we returned 70, 74% of the free cash or approximately $82 million to our shareholders through our growing base dividend and ongoing share repurchase program.

Chris Schott: Magnolia generated free cash flow of $111 million and we returned 77, 4% of the free cash of approximately $2 million to our shareholders through our growing base dividend and ongoing share repurchase program.

Chris Shoppers: Much of the outperformance seen from the wells I mentioned earlier originated from a newer area of Giddings, which we had previously appraised ultimately leading to the acquisition of additional acreage and the completion of our first multi well pads late last year and into early 2025.

Brian: Much of the outperformance seen from the wells I mentioned earlier originated from a newer area of Giddings, which.

Brian: Which we had previously appraised ultimately leading to the acquisition of additional acreage and the completion of our first multi well pads late last year and into early 2025.

Chris Schott: Much of the outperformance from the wells I mentioned earlier originated from a newer area of getting which we had previously appraised ultimately leading to the acquisition of additional acreage and the completion of our first multi well pads late last year and into early 2025.

Chris Shoppers: In addition to the strong performance and lower than expected declines. These wells also generate strong financial returns with quick payback periods.

Brian: In addition to the strong performance and lower than expected declines. These wells also generate strong financial returns with quick payback periods.

Chris Shoppers: Other areas went in Giddings also shop saw strong oil production performance with meaningful associated gas volumes.

Chris Schott: In addition to the strong performance and lower than expected declines. These wells also generate strong financial returns with quick payback periods.

Brian: Other areas, winning Giddings also shop saw strong oil production performance with meaningful associated gas volumes.

Chris Shoppers: The outperformance we experienced this past quarter and getting it's not a new phenomenon for us rather we have more commonly and consistently seen the results in giddings puzzled positively surprises in terms of well performance and productivity as we have deployed more modern completions design and technology to this older vintage field.

Chris Schott: Other areas when in Giddings also shop saw strong oil production performance with meaningful associated gas volumes.

Brian: Outperformance, we experienced this past quarter in Giddings is not a new phenomenon for us rather we have more commonly and consistently seen the results in giddings puzzled positively surprise us in terms of well performance and productivity as we have deployed more modern completions design and technology to this older vintage field.

Chris Stavros: The outperformance we experienced this past quarter in Giddings is not a new phenomenon for us. Rather, we have more commonly and consistently seen the results in Giddings positively surprise us in terms of well performance and productivity as we have deployed more modern completion design and technology to this older vintage field. Our subsurface team has done an outstanding job of advancing our knowledge of the Austin Chalk reservoir. Our drilling completion crews continue to execute on time and below budget, and our production group ensures that the wells are producing in the most efficient manner. These factors have been critical to the successful execution of our business model by maximizing our high return growth to our Giddings asset and with the Karnes area providing significant free cash flow.

Chris Schott: Outperformance, we experienced this past quarter in getting there is not a new phenomenon for us rather we have more commonly and consistently seen the results and getting puzzled positively surprised us in terms of well performance and productivity as we have deployed more modern completion designs and technologies. This older vintage field.

Chris Shoppers: Our subsurface team has done an outstanding job of advancing our knowledge of the Austin Chalk reservoir, our drilling and completion crews continue to execute on time and below budget on our production group ensures that the wells are producing in the most efficient manner.

Brian: Our subsurface team has done an outstanding job of advancing our knowledge of the Austin Chalk reservoir, our drilling and completion crews continue to execute on time and below budget on our production group ensures that the wells are producing in the most efficient manner. These.

Chris Schott: Our subsurface team has done an outstanding job of advancing our knowledge of the Austin Chalk reservoir.

These factors have been critical to the successful execution of our business model by maximizing our high return growth work getting asset and with the karnes area, providing significant free cash flow.

Chris Schott: Drilling and completion crews continue to execute on time and below budget on our production group insurance that the wells are producing in the most efficient manner.

Brian: These factors have been critical to the successful execution of our business model by maximizing our high return growth towards giddings asset and with the karnes area, providing significant free cash flow.

Chris Shoppers: As a result of the stronger than expected well performance and which has continued into the second quarter. We are increasing our full year 2025 production growth guidance range to 7% to 9% from a range of 5% to 7% previously.

Chris Schott: Factors have been critical to the successful execution of our business model by maximizing our high return growth to our giddings assets.

Brian: As a result of the stronger than expected well performance and which has continued into the second quarter. We are increasing our full year 2025 production growth guidance range to 7% to 9% from a range of 5% to 7% previously.

Chris Stavros: As a result of the stronger than expected well performance and which has continued into Q2, we are increasing our full-year 2025 production growth guidance range to 7% to 9% from a range of 5% to 7% previously. At the same time, we are lowering the range for our 2025 capital spending to $430 to $470 million, a reduction of approximately $25 million or more than 5% from the midpoint of our original spending plan. Capital discipline continues to be one of the core principles of Magnolia's business model. Within the backdrop of current macroeconomic uncertainty and weaker product prices, we see no reason to be overly heroic in terms of pursuing and generating even higher production growth through our original capital spending and activity levels.

Chris Schott: Karnes area, providing significant free cash flow.

Chris Schott: As a result of the stronger than expected well performance and which has continued into the second quarter. We are increasing our full year 2025 production growth guidance range of 7% to 9% from a range of 5% to 7% previously.

Chris Shoppers: At the same time, we are lowering the range for our 2025 capital spending to $430 million to $470 million.

Brian: At the same time, we are lowering the range for our 2025 capital spending to.

Duction of approximately 25 million or more than 5% from the midpoint of our original spending clients.

Brian: $430 million to $470 million.

Chris Schott: At the same time, we are lowering the range for our 2025 capital spending.

Brian: Our production of approximately 25 million or more than 5% from the midpoint of our original spending plan.

Chris Shoppers: Capital discipline continues to be one of the core principles of Magnolia is business model within the backdrop of current macroeconomic uncertainty and weak product prices. We see no reason to be overly heroic in terms of pursuing are generating even higher production growth to our original capital spending and activity levels, the higher growth rate and improved off.

Chris Schott: $430 million to $470 million.

Chris Schott: A reduction of approximately $25 million or more than 5% from the midpoint of our original spending plan.

Brian: Capital discipline continues to be one of the core principles of Magnolia is business model within the backdrop of current macroeconomic uncertainty and weak product prices. We see no reason to be overly heroic in terms of pursuing are generating even higher production growth.

Chris Schott: Capital discipline continues to be one of the core principles of Magnolia is business model within the backdrop of current macroeconomic uncertainty and weak product prices. We see no reason to be overly heroic in terms of our selling and generating even higher production growth to our original capital spending and activity levels.

Chris Shoppers: <unk> a flexibility that we now expect to achieve in 2025, it's primarily a function of the outperformance of the wells and operational efficiencies. We have captured through the first part of this year.

Brian: Our original capital spending and activity levels, the higher growth rate and improved operational flexibility that we now expect to achieve a 2025, it's primarily a function of the outperformance of the wells and operational efficiencies. We are captured through the first part of this year.

Chris Stavros: The higher growth rate and improved operational flexibility that we now expect to achieve in 2025 is primarily a function of the outperformance of the wells and operational efficiencies we have captured through the first part of this year. The reduction to our capital and activity plan will lead to deferring the completion of several wells into next year. To summarize, and at current product prices, we now expect to see somewhat higher production in 2025 compared to our previous forecast and with less capital spending, while maintaining a high level of flexibility within our activity program for the remainder of the year. Magnolia's operations remain consistent and steady, and we continue to execute a differentiated, focused, and investable E&P business model that is enduring.

Chris Schott: Higher growth rate and improved operational flexibility that we now expect to achieve in 2025, it's primarily a function of the outperformance of the wells and operational efficiencies. We have captured during the first part of this year.

Chris Shoppers: The reduction to our capital and activity plan will lead to deferring the completion of several wells into next year.

Brian: The reduction to our capital and activity plans will meet differing the completion of several wells into next year.

Chris Shoppers: To summarize and at current product prices, we now expect to see somewhat higher production in 2025 compared to our previous forecast and with less capital spending while maintaining a high level of flexibility within our activity program for the remainder of the year.

Chris Schott: The reduction to our capital and activity planned beach deferring the completion of several wells in tax year.

Brian: To summarize and at current product prices, we now expect to see somewhat higher production in 2025 compared to our previous forecast and with less capital spending while maintaining a high level of flexibility within our activity program for the remainder of the year.

Chris Schott: To summarize.

Chris Schott: Current product prices, we now expect to see somewhat higher production in 2025 compared to our previous forecast and with less capital spending.

Chris Shoppers: I think the only as operations remain consistent and steady and we continue to execute a differentiated focused and investable E&P business model that is enduring.

Brian: And not only his operations remain consistent and steady and we continue to execute a differentiated focused and investable E&P business model that is enduring.

Chris Schott: Maintaining a high level of flexibility within our chip activity program for the remainder of the year.

Chris Shoppers: Our objective as always is to be the most efficient operator of best in class oil and gas assets generating the highest returns on those assets, while employing the least amount of capital for drilling and completing wells.

Chris Schott: I think the only as operations remain consistent and steady and we continue to execute a differentiated focused and in basketball.

Brian: Our objective as always is to be the most efficient operator of best in class oil and gas assets generating the highest returns on those assets, while employing the least amount of capital for drilling and completing wells.

Chris Stavros: Our objective, as always, is to be the most efficient operator of best-in-class oil and gas assets, generating the highest returns on those assets while employing the least amount of capital for drilling and completing wells. As we noted earlier this year, our teams took proactive measures during the last couple of years to reduce both our field-level operating costs as well as working with our key oil field service providers and material vendors to lower our overall well costs. These early efforts, taken during a period of higher product prices, has reduced our overall cost structure, placing us in a continued strong position should product prices continue to weaken.

Chris Schott: Alright.

Chris Schott: Our objective as always is to be the most efficient operator of best in class oil and gas assets generating the highest returns on those assets, while employing the least amount of capital for drilling wells.

Chris Shoppers: As we noted earlier this year our teams took proactive measures during the last couple of years to reduce both our field level operating costs as well as working with our key oilfield service providers material vendors to lower our overall well costs.

Brian: As we noted earlier this year our teams took proactive measures during the last couple of years to reduce both our field level operating costs as well as working with our key oilfield service providers material vendors to lower our overall well costs.

Chris Schott: As we noted earlier this year our teams took proactive measures during the last couple of years to reduce both our field level operating costs as well as working with our key oilfield service providers material vendors to lower.

Chris Shoppers: These early efforts taken during a period of higher product prices has reduced our overall cost structure, placing us in a continued strong position should product prices continue to weaken.

These early efforts taken during a period of higher product prices has reduced our overall cost structure, placing us in a continued strong position should product prices continue to weaken.

Chris Schott: Oh well cost.

Chris Shoppers: Our low level of debt business model oriented towards capital discipline, and our high quality assets are valuable characteristics, particularly during periods of greater uncertainty and allow magnolia to operate from a position of strength to manage through periods of weak product prices or potential market instability.

Chris Schott: These early efforts taken during a period of higher product prices has reduced our overall cost structure, placing us in a continued strong position should product prices continue to weaken.

Brian: Our low level of debt business model oriented towards capital discipline, and our high quality assets are valuable characteristics, particularly during periods of greater uncertainty and allow magnolia to operate from a position of strength to manage through periods of weak product prices where potential market instability.

Chris Stavros: Our low level of debt, business model oriented toward capital discipline, and our high-quality assets are valuable characteristics, particularly during periods of greater uncertainty, and allow Magnolia to operate from a position of strength and manage through periods of weaker product prices or potential market instability. Despite the lower product commodity price environment, we will continue to limit our reinvestment rate to 55% of our gross cash flow or even tax, allowing for significant return of free cash to shareholders through our base dividend and ongoing share repurchases. Any additional free cash accrues to the balance sheet, allowing us to opportunistically pursue accretive bolt-on oil and gas property acquisitions that can improve our opportunity set and enhance the durability of our business model.

Chris Schott: Our low level of debt business model oriented towards capital discipline, and our high quality assets are valuable characteristics, particularly during periods of greater uncertainty and allow magnolia to operate from a position of strength and manage through periods of weak product prices potential market instability.

Chris Shoppers: Despite the lower product commodity price environment, we will continue to limit our reinvestment rate to 55% of our gross cash flow or EBITDAX, allowing for significant return of free cash to shareholders through our base dividend and ongoing share repurchases.

Brian: Despite the lower product commodity price environment, we will continue to limit our reinvestment rate to 55% of our gross cash flow or EBITDAX, allowing for significant return of free cash to shareholders through our base dividend and ongoing share repurchases.

Chris Schott: Despite the lower product commodity price environment, we will continue to limit our reinvestment rate to 55% of our gross cash flow or EBITDAX, allowing for significant return of free cash to shareholders through our base dividend and ongoing share repurchases.

Chris Shoppers: Any additional free cash accrues to the balance sheet, allowing us to opportunistically pursue accretive bolt on oil and gas property acquisitions that can improve our opportunity set and enhance the durability of our business model.

Brian: Any additional free cash accrues to the balance sheet, allowing us to opportunistically pursue accretive bolt on oil and gas property acquisitions that can improve our opportunity set and enhance the durability of our business model.

Chris Schott: Any additional free cash accrued to the balance sheet, allowing us to opportunistically pursue accretive bolt on oil and gas property acquisitions that can improve our opportunity set.

Speaker Change: As Ive emphasized Mcdonald is consistently strong execution sports the competitive advantage. We have we have in South, Texas Eagle Ford and Austin Chalk and we will continue to focus our attention and capital in these areas to further generate and compound value for our shareholders.

As Ive emphasized Mcdonald is consistently strong execution sports the competitive advantage we.

Chris Stavros: As I've emphasized, Magnolia's consistently strong execution supports the competitive advantage we have in South Texas Eagle Ford and Austin Chalk, and we will continue to focus our attention and capital in these areas to further generate and compound value for our shareholders. I'll now turn the call over to Brian to provide some further details on our Q1 2025 results and additional guidance for the second quarter.

Chris Schott: The durability of our business model.

Brian: We have in South, Texas Eagle Ford and Austin Chalk and we will continue to focus our attention and capital in these areas to further generate and compound value for our shareholders.

Chris Schott: Emphasized mcdonnell use consistently strong execution of course, the competitive advantage we have.

Speaker Change: I'll now turn the call over to Brian to provide some further details on our first quarter 2025 results additional guidance for the second quarter.

We have in South, Texas Eagle Ford and Austin Chalk and we will continue to focus our attention and capital in these areas to further generate and compound value for our shareholders.

I'll turn the call over to Brian to provide some further details on our first quarter 2025 ourselves additional costs for the second quarter.

Brian: Thanks, Chris and good morning, everyone I'll review some items from our first quarter results and refer to the presentation slides found on our website.

Brian: I'll now turn the call over to Brian to provide some further details on our first quarter 2025 herself additional guys from second quarter.

Brian: Thanks, Chris and good morning, everyone I'll review some items from our first quarter results and refer to the presentation slides found on our website.

Brian: Also provide some additional guidance for the second quarter of 2025, and the remainder of the year before turning it over for questions beginning.

Brian Corales: Thanks, Chris, and good morning, everyone. I will review some items from our Q1 results and refer to the presentation slides found on our website. I'll also provide some additional guidance for Q2 2025 and the remainder of the year before turning it over for questions. Beginning on slide 5, Magnolia had a strong start to 2025 as we continue to adhere to the business model through these uncertain times. During Q1, we generated total net income of $107 million, with total adjusted net income of $106 million or $0.54 per diluted share. Our adjusted EBITDAX for the quarter was $248 million, with total capital associated with drilling completions and associated facilities of $130 million, representing approximately 53% of our adjusted EBITDAX.

Brian: Thanks, Chris and good morning, everyone I'll review some items from our first quarter results and refer to the presentation slides found on our website.

Brian: Also provide some additional guidance for the second quarter of 2025, and the remainder of the year before turning it over for questions beginning.

Brian: Beginning on slide five and I know you had a strong start to 2025 as we continue to adhere to the business model through these uncertain times during the first quarter. We generated total net income of $107 million with total adjusted net income of $106 million or 54 cents per diluted share.

Brian: Also provide some additional guidance for the second quarter of 2025, and the remainder of the year before turning it over for questions beginning.

Brian: Beginning on slide five I know you had a strong start to 2025 as we continue to adhere to the business model through these uncertain times during the first quarter. We generated total net income of $107 million with total adjusted net income of 106 million or <unk> 54 per diluted share.

Brian: Adjusted EBITDAX for the quarter was $248 million with total capital associated with drilling completions and associated facilities.

Brian: Our adjusted EBITDAX for the quarter was $248 million with total capital associated with drilling completions and associated facilities.

Brian: $30 million, representing approximately 53% of our adjusted EBITDAX.

Brian: Our adjusted EBITDAX for the quarter was 248 million the total capital associated with drilling completions and associated facilities.

Brian: First quarter capital is expected to be the highest quarterly outlook for the year.

$30 million, representing approximately 53% of our adjusted EBITDAX.

Brian: Sportswear for first quarter production volumes grew 14% year over year to $96 5000 barrels of oil equivalent per day, while generating free cash flow of $111 million.

Brian: First quarter capital is expected to be the highest quarterly outlay for the year.

Brian: $30 million, representing approximately 53% of our adjusted EBITDAX first quarter capital is expected to be the highest quarterly outlay for the year.

Brian Corales: Q1 capital was expected to be the highest quarterly outlay for the year. Q1 production volumes grew 14% year-over-year to 96.5 thousand barrels of oil equivalent per day, while generating free cash flow of $111 million. Looking at the quarterly cash flow waterfall chart on slide 6, we started the year with $260 million of cash. Cash flow from operations before changes in working capital was $232 million, with working capital changes and other small items impacting cash by $7 million. During the quarter, we paid dividends of $30 million and allocated $52 million towards share repurchases. We had $24 million of small bolt-on acquisitions during the quarter, comprised of working interests, royalties, and some additional surface acreage, and this did not come with any production.

Brian: Sportswear for first quarter production volumes grew 14% year over year to $96 5000 barrels equivalent per day, while generating free cash flow of $111 million.

Brian: Looking at the quarterly cash flow waterfall chart on slide six we started the year with $260 million of cash cash flow from operations before changes in working capital was $232 million with working capital changes and other small items impacting cash by $7 million.

Brian: For first quarter production volumes grew 14% year over year to 96 5000 barrels of oil equivalent per day, while generating free cash flow of $111 million.

Brian: During the quarter, we paid dividends of $30 million and allocated $52 million towards share repurchases, we added $24 million of small bolt on acquisitions during the quarter comprised of working interest royalties and some additional certification surface acreage and this did not come with any production.

Brian: During the quarter, we paid dividends of $30 million and allocated $52 million towards share repurchases, we added $24 million of small bolt on acquisitions during the quarter comprised of working interest royalties and some additional surface surface acreage and this did not come with any production.

Brian: During the quarter, we paid dividends of $30 million allocated $52 million towards share repurchases, we had $24 million in small bolt on acquisitions during the quarter comprised of working interest royalties and some additional surface surface acreage and this did not come with any production.

Brian: We incurred $131 million on drilling completions associated facilities, and leasehold and ended the quarter with $248 million of cash.

Brian Corales: We incurred $131 million on drilling completions, associated facilities, and leasehold, and ended the quarter with $248 million of cash. Looking at slide 7, this chart illustrates the progress in reducing our total outstanding shares since we began our repurchase program in the second half of 2019. Since that time, we have repurchased 75 million shares, leading to a change in weighted average diluted shares outstanding of 24% net of issuances. Magnolia's weighted average diluted share count declined by approximately 2 million shares sequentially, averaging 194.2 million shares during Q1. We currently have 9.6 million shares remaining under our repurchase authorization, which are specifically directed toward repurchasing Class A shares in the open market.

Brian: Looking at Slide seven this chart illustrates the progress in reducing our total outstanding shares since we began our repurchase program in the second half of 2019.

Brian: We incurred 131 million on drilling completions and associated facilities and leasehold and ended the quarter with $248 million of cash.

Brian: Looking at Slide seven this chart illustrates the progress in reducing our total outstanding shares since we began our repurchase program in the second half of 2019.

Brian: Since that time, we have repurchased 75 million shares leading to a change in weighted average diluted shares outstanding of 24% net of issuances.

Brian: Looking at Slide seven this chart illustrates the progress in reducing our total outstanding shares since we began our repurchase program in the second half of 2019 since that time, we have repurchased 75 million shares leading to a change in weighted average diluted shares outstanding of 24% net of issuances.

Brian: At that time, we have repurchased 75 million shares leading to a change in weighted average diluted shares outstanding of 24% net of issuances.

Brian: Weighted average diluted share count declined by approximately 2 million shares sequentially, averaging $194 2 million shares during the first quarter.

Brian: Like nobody is weighted average diluted share count declined by approximately 2 million shares sequentially, averaging $194 2 million shares during the first quarter.

Brian: We currently have $9 6 million shares remaining under our repurchase authorization authorization, which are specifically directed toward repurchasing class a shares in the open market.

Brian: Like nobody is weighted average diluted share count declined by approximately 2 million shares sequentially, averaging $194 2 million shares during the first quarter. We currently have nine 6 million shares remaining under our repurchase authorization authorization, which are specifically directed towards repurchasing class a shares in the open market.

Brian: We currently have $9 6 million shares remaining under our repurchase authorization authorization, which are specifically directed towards repurchasing class a shares in the open market.

Brian: Turning to slide eight our dividend has grown substantially over the past few years, including a 15% increase announced earlier this year to 15 cents per share on a quarterly basis. Our next quarterly dividend is payable on June 2nd and provides an annualized dividend payout rate of <unk> 60 per share.

Brian: Turning to slide eight our dividend has grown substantially over the past few years, including a 15% increase announced earlier this year to <unk> 15 per share on a quarterly basis. Our next quarterly dividend is payable on June 2nd and provides an annualized dividend payout rate of <unk> 60 per share.

Brian Corales: Turning to slide 8, our dividend has grown substantially over the past few years, including a 15% increase announced earlier this year to $0.15 per share on a quarterly basis. Our next quarterly dividend is payable on 2 June and provides an annualized dividend payout rate of $0.60 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by overall strategy of achieving moderate annual production growth, reducing our outstanding shares, and increasing the dividend payout capacity of the company. Magnolia continues to have a very strong balance sheet, and we ended the quarter with $248 million. Our $400 million dollars of senior notes do not mature until 2032.

Brian: Our plan for annualized dividend growth is an important part of Magnolia investment proposition and supported by overall strategy of achieving moderate annual production growth.

Brian: Our plan for annualized dividend growth is an important part of Magnolia is investment proposition and supported by overall strategy of achieving moderate annual production growth, reducing our outstanding shares and increasing the dividend payout capacity of the company.

Brian: Using our outstanding shares and increasing the dividend payout capacity of the company.

Brian: Important part of Magnolia is investment proposition and supported by overall strategy of achieving moderate annual production growth, reducing our outstanding shares and increasing the dividend payout capacity of the company.

Yeah.

Brian: I know he continues to have a very strong balance sheet and we ended the quarter with $248 million of cash and a $400 million of senior notes do not mature until 2032 <unk>.

Brian: I know he continues to have a very strong balance sheet and we ended the quarter with $248 million of cash a $400 million of senior notes do not mature until 2032 <unk>.

Brian: Including our first quarter, ending cash balance of $248 million and our undrawn $450 million revolving credit facility. Our total liquidity is approximately $700 million.

Brian: I know it continues to have a very strong balance sheet and we ended the quarter with $248 million of cash a $400 million of senior notes do not mature until 2032 <unk>.

Brian: Including our first quarter, ending cash balance of $248 million and our undrawn $450 million revolving credit facility. Our total liquidity is approximately $700 million.

Brian Corales: Including our Q1 ending cash balance of $248 million and our undrawn $450 million revolving credit facility, our total liquidity is approximately $700 million. Our condensed balance sheet as of March 31 is shown on slide 9. Turning to slide 10 and looking at our per unit cash costs and operating income margins. Total revenue per BOE declined approximately 3% year-over-year due to the decline in oil prices and partially offset by an increase in natural gas and NGL prices. Our total adjusted cash operating costs, including G&A, were $11.74 per BOE in Q1 2025. Operating income margin for Q1 was $15.63 per BOE, or 39% of our total revenue and in line with Q1 2024 levels.

Brian: Its balance sheet as of March 31st as shown on slide nine.

Brian: Including our first quarter, ending cash balance of $248 million and our undrawn $450 million revolving credit facility. Our total liquidity is approximately $700 million.

Brian: Turning to slide 10, and looking at our per unit cash costs and operating income margins.

Brian: <unk> balance sheet as of March 31st as shown on slide nine.

Brian: Total revenue per BOE declined approximately 3% year over year due to the decline in oil prices and partially offset by an increase in natural gas and NGL prices. Our total adjusted cash operating costs, including G&A or $11 74 per Boe in the first quarter of 2025.

Brian: Turning to slide 10, and looking at our per unit cash cost and operating income margins.

Brian: <unk> balance sheet as of March 31, as shown on slide nine.

Brian: Turning to slide 10, and looking at our per unit cash costs and operating income margins.

Brian: Total revenue per BOE declined approximately 3% year over year due to the decline in oil prices and partially offset by an increase in natural gas and NGL prices, our total adjusted cash operating costs incurred.

Brian: Operating income margin for the first quarter was $15 63 per Boe or 39% of our total revenue and in line with first quarter 2024 levels.

Brian: Our year over year revenue per BOE declined a dollar $1.09 due to decline in oil prices yet.

Brian: Our year over year revenue per BOE declined a dollar $1.09 due to the decline in oil prices yet.

Brian: Our operating income margin only declined by 52 cents per Boe.

Brian Corales: Our year-over-year revenue per BOE declined $1.09 due to decline in oil prices. Yet our operating income margin only declined by $0.52 per BOE. This highlights our success reducing our lease operating expenses last year, enabling us to preserve our margin percentage in a lower price environment. Q1 per barrel LOE is expected to be the highest level of the year. Turning to guidance. We have lowered our 2025 drilling, completion, and facilities capital spending to be in the range of $430 to 470 million from a prior range of $460 to 490 million. A decrease of slightly more than 5% at the midpoint.

Brian: This highlights our success, reducing our lease operating expenses last year, enabling us to preserve our margin percentage and a lower price environment first.

Brian: Our operating income margin only declined by 52 per Boe.

Brian: This highlights our success, reducing our lease operating expenses last year, enabling us to preserve our margin percentage and a lower price environment first.

Brian: First quarter per barrel is expected to be the highest level of the year.

Brian: Turning to guidance, we have lowered our 2025 drilling completion facilities capital spending to be in the range of $430 million to $470 million from our prior range of $460 million to $490 million.

Brian: First quarter per barrel LOE is expected to be the highest level of the year.

A decrease of slightly more than 5% at the midpoint. This includes an estimate of non operated capital that is about the same as 2024 levels importantly, due to the output well outperformance at Chris described we are increasing our full year production guidance to 79% from our prior range of 5% to 7%.

Chris Stavros: A decrease of slightly more than 5% at the midpoint. This includes an estimate of non operated capital that is about the same as 2024 levels importantly, due to the Alco well outperformance at Chris described we are increasing our full year production guidance to 79% from our prior range of 5% to 7%.

Brian Corales: This includes an estimate of non-op-operated capital that is about the same as 2024 levels. Importantly, due to the well outperformance that Chris described, we are increasing our full-year production guidance to 7 to 9% from a prior range of 5 to 7%. Total production for Q2 is expected to be similar to the Q1 levels or approximately 97,000 barrels equivalent a day, with Q2 D&C capital expenditures to be approximately $110 million. Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, and Magnolia remains completely unhedged for all its oil and natural gas production.

Brian: Total production for.

Brian: For the second quarter is expected to be similar to the first quarter levels or approximately 97000 barrels equivalent a day with second quarter D&C capital expenditures to be approximately $110 million.

Brian: Total production for.

Brian: Oil price differentials are anticipated to be approximately a $3 per barrel discount to magellan's East Houston, and Magnolia remains completely unhedged for all its oil and natural gas production.

<unk> million dollars.

From a prior range of $460 million to $490 million of.

A decrease of slightly more than 5% at the midpoint. This includes an estimate of non operated capital that is about the same as 2024 levels.

Brian: The fully diluted share count for the second quarter of 2025 is expected to be approximately 193 million shares which is 4% lower than second quarter 2024 levels. We expect our effective tax rate to be approximately 21% and our cash tax is expected to be between 7% to 9%.

Partly due to the output well outperformance at Chris described we are increasing our full year production guidance to 7% to 9% from our prior range of 5% to 7% total production.

Brian Corales: The fully diluted share count for Q2 2025 is expected to be approximately 193 million shares, which is 4% lower than Q2 2024 levels. We expect our effective tax rate to be approximately 21%, and our cash tax is expected to be between 7% to 9% for the full year 2025. We're now ready to take your questions.

Brian: For the full year 2025.

For the second quarter is expected to be similar to the first quarter levels or approximately 97000 barrels equivalent a day with second quarter D&C capital expenditures to be approximately $110 million.

Brian: We are now ready to take your questions.

Brian: For the full year of 2025.

Brian: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: We are now ready to take your questions.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad hearings.

Oil price differentials are anticipated to be approximately a $3 per barrel discount to magellan's East Houston, and Magnolia remains completely unhedged for all its oil and natural gas production.

Brian: MS Speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Carlos Escalante with Wolfe Research. Please go ahead.

Brian: Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: He leaves Ms Speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Hi, My question has been addressed and you would like to withdraw your question. Please press Star then two.

The fully diluted share count for the second quarter of 2025 is expected to be approximately 193 million shares which is 4% lower than second quarter 2024 levels. We expect our effective tax rate to be approximately 21% and our cash tax is expected to be between 7% to 9%.

Brian: At this time, we will pause momentarily to assemble our roster.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: Yeah.

Speaker Change: Our first question comes from Carlos <unk> with Wolfe Research. Please go ahead.

Speaker Change: Hey, good morning team good morning, Chris and Brian.

For the full year 2025.

We are now ready to take your questions.

Speaker Change: First of all congratulations on the on the milestone for for the year certainly great to see them very encouraging. My first question is to perhaps explore a little bit about what's going on with these new wells and what this means for Magnolia so it seems to us that.

Speaker Change: Hey, good morning team good morning, Chris and Brian.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad hearings Ms. Speakerphone. Please pick up your handset before pressing the keys.

Carlos Escalante: Hey, good morning, team. Good morning, Chris and Brian. First of all, congratulations on the milestone for the year. It's certainly great to see and very encouraging. My first question is to perhaps explore a little bit about what's going on with these new wells and what this means for Magnolia. It seems to us that the incremental wells on the area have some existing prior activity by industry that hasn't been specifically touched by you or minimally where you've been minimally active. How should we interpret the general area in terms of inclusion to your definition of development acres versus undeveloped acres? Subsequent to that is this an area you would prioritize developing versus your more usual getting development in a way weighted with a bias perhaps to a little more of liquids?

Speaker Change: First of all congratulations on the on the milestone for for the year.

Speaker Change: It's certainly great to see them very encouraging my first question is to perhaps explore a little bit about what's going on with these new wells and what this means for mcmillian. So it seems to us that.

Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: The incremental wells on the area of some existing prior activity by industry that hasn't been specifically touched by you or or minimally where you've been minimally active.

At this time, we will pause momentarily to assemble our roster.

Speaker Change: The incremental wells on the area of some existing prior activity by industry, but it hasn't been specifically touched by you or or minimally where you've been minimally active.

Yeah.

Speaker Change: Should we interpret the general area in terms of inclusion so your definition of development acres versus undeveloped acres and subsequent to that is.

Our first question comes from Carlos Escalante with Wolfe Research. Please go ahead.

Speaker Change: Should we interpret the general area in terms of inclusion so your definition of development acres versus undeveloped acres and subsequent to that is.

Speaker Change: Is this an area you would prioritize developing versus your more usual giddings development in a way weighted with a biased perhaps too little more liquids.

Hey, good morning team good morning, Chris and Brian.

First of all congratulations on the on the milestone for for the year.

Speaker Change: Is this an area you would prioritize developing versus your more usual giddings development in a way weighted with a bias, perhaps too little more liquids.

It's certainly great to see them very encouraging my first question is to perhaps explore a little bit about what's going on with these new wells and what this means for Magnolia so it seems to us that.

Speaker Change: Yeah.

Speaker Change: Thanks, Carlos for the questions. So [laughter].

Speaker Change: Yeah.

Speaker Change: The.

The incremental wells on the area had some existing prior activity by industry that hasn't been specifically touched by you or minimally where you've been minimally active how should we interpret the general area in terms of inclusion through your definition of development acres versus undeveloped acres.

Thanks, Carlos for the questions. So.

Speaker Change: To answer some some of the questions that I sort of have to assume that your what you're guessing on it in terms of the area is correct and based on your the characteristics that you mentioned.

Brian Corales: Thanks, Carlos, for the questions. To answer some of the questions, I sort of have to assume that what you're guessing on in terms of the area is correct. Based on the characteristics that you mentioned, you would not be correct. I'll answer it the way where we can answer it. I'm not gonna tell you know, unfortunately for you, I'm not gonna tell you exactly for competitive reasons, exactly where this is, or we're just not gonna disclose that. What I will say is that this is a new area, as we talked about. It is in what I would call now our development area.

Speaker Change: The.

Speaker Change: To answer some some of the questions that I sort of have to assume that your what youre guessing on it in terms of the area is correct and based on your the characteristics that you mentioned.

Speaker Change: You would not be correct. So [laughter].

Speaker Change: So I'll answer it the way we can answer it I'm not I'm not going to I'm not going to tell you you know Unfortunately for you I'm not going to tell you exactly for.

And subsequent to that is.

Speaker Change: You would not be correct. So.

Is this an area you would prioritize developing versus your more usual giddings development in a way weighted with a biased perhaps too little more of liquids.

Speaker Change: I'll I'll answer it the way we can answer it I'm not I'm not going to I'm not going to tell you you know what.

Speaker Change: Competitive reasons exactly where this is where we're just not going to disclose that but.

Speaker Change: Fortunately for you I'm not going to tell you exactly for.

Speaker Change: What I will say is that.

Speaker Change: Competitive reasons exactly where this is where we're just not going to disclose that but.

Yeah.

Speaker Change: This is a this is a new area as we talked about it is in what I would call now our development area.

Thanks, Carlos for the questions.

Speaker Change: What I will say is that.

So.

The.

Speaker Change: This is a this is a new area as we talked about.

To answer some some of the questions I sort of have to assume that your.

Speaker Change: <unk>.

Speaker Change: It is in what I would call now our development area.

Speaker Change: Part of it may have been already sort of noted in our you know a couple of hundred thousand acres of development area and part of it is not.

Youre guessing on it in terms of the area is correct and based on your the characteristics that you mentioned.

Speaker Change: <unk>.

Speaker Change: Part of it may have been already sort of noted in our.

Brian Corales: Part of it may have been already sort of noted in our, you know, 200,000 acres of development area and part of it is not. You know, if you wanted to count acres, I suppose you could say that there's more development acres to be added. Not just by the way, not just from this area, but probably from other areas as well, because the 200,000 acre number is fairly static.

You would not be correct Sir.

Speaker Change: A couple of hundred thousand acres of development area and part of it is not.

Speaker Change: So you know if you wanted to count acres I suppose you could say that there's more development acres could be added and not just by the way not just from this area, but probably from other areas as well because the 200000 acre number is is fairly stale.

So I'll answer it the way we can answer it.

Speaker Change: So you know if you wanted to count acres I suppose you could say that theres more development acres to be added.

I'm not going to not going to tell you. Unfortunately for you I'm not going to tell you exactly for.

Speaker Change: And not just by the way not just from this area, but probably from other areas as well because the 200000 acre number is is fairly stale.

Competitive reasons exactly where this is where we're just not going to disclose that but.

Speaker Change:

What I will say is that.

Speaker Change: In terms of you know what the wells did.

This is a this is a new area as we talked about.

Speaker Change:

Speaker Change: In terms of you know what the wells did.

And and how they looked.

It is in what I would call now our development area.

Chris Stavros: In terms of, you know, what the wells did, and how they looked, you know, they've been producing for a bit of time. You know, as I said, you know, we have a meaningful amount of measurement period, if you will, where I could tell you we directed some of this activity because it was, in our view, a gassier area, and we wanted to take advantage of that. Fortunately, our gas realizations were double what they were a year ago. That worked out just fine. Importantly, and I think maybe critically, the financial returns and payback periods on these wells were very strong because the average well probably produced maybe 500 barrels a day of oil in addition to the gas. That's worked out that much better.

Speaker Change: You know they've been producing for a bit of time, you know as I said.

Speaker Change: And and how they looked.

<unk>.

Part of it may have been already sorted noted in our.

Speaker Change: We have a meaningful amount of measurement period, if you will.

Speaker Change: You know they've been producing for a bit of time.

A couple of hundred thousand acres of development area and part of it is not.

Speaker Change: Third we have a meaningful amount of measurement period, if you will.

Speaker Change: What I can tell you we directed some of this activity because it was and our view of gas here area and we wanted to take advantage of that.

Speaker Change: What I can tell you we directed some of this activity because it was and argue gasior area and we wanted to take advantage of that and Fortunately our gas realizations were double what they were a year ago. So that worked out just fine.

So if you wanted to count acres I suppose you could say that there is more development acres can be added.

Speaker Change: Fortunately our gas realizations were double what they were a year ago. So that worked out just fine.

And not just by the way not just from this area, but probably from other areas as well because the.

Speaker Change: But importantly, and I think maybe critically.

200000 acre number is fairly stale.

Speaker Change: E.

Speaker Change: Financial returns and payback periods on these wells are very strong.

Speaker Change: But importantly, and I think maybe critically.

In terms of you know.

Speaker Change: E.

Speaker Change: Financial returns and payback periods on these wells are very strong.

Speaker Change: Because the average well probably produced.

What the wells did.

Speaker Change: Maybe 500 barrels a day of oil.

And how they looked.

Speaker Change: Because the average well probably produced.

Speaker Change: In addition of the gas.

They've been producing for a bit of time as I said, we have a meaningful amount of measurement period, if you will.

Speaker Change: Maybe 500 barrels a day of oil.

Speaker Change: And so.

Speaker Change: That that's worked out that much better.

Speaker Change: In addition of the gas.

Speaker Change:

Speaker Change: And so.

Speaker Change: And you know call. These wells roughly in this area that I'm speaking to that we called out roughly in terms of the outperformance about 1000 wells.

Speaker Change: That that's worked out that much better.

What I can tell you we directed some of this activity because it was in our view a gasior area and we wanted to take advantage of that.

Speaker Change:

Speaker Change: And you know call. These wells roughly in this area that I'm speaking to that we called out roughly in terms of the outperformance above a 1000 wells.

Chris Stavros: You know, call these wells roughly in this area that I'm speaking to, that we called out roughly in terms of the outperformance, about a dozen wells. I wouldn't tell you that, you know, characteristically there's some things on the subsurface level that are different from other areas of Giddings, but that's not a new statement that I would make. I mean, Giddings is not necessarily homogenous. There are different areas of Giddings throughout the field. This particular area has its own characteristics, and I'm not gonna get into too much of it, but nevertheless, the performance was very good, both oil and gas, beyond our expectations. I mentioned the shallower rates of decline.

Speaker Change: I wouldn't tell you that.

And Fortunately our gas realizations were double what they were a year ago. So that worked out just fine.

Speaker Change: Characteristically theres some things on the sub surface level that are different from from other areas of of kings, but that's not that's.

Speaker Change: I wouldn't tell you that.

But importantly, and I think maybe critically.

Speaker Change: Characteristically theres some things on the subsurface level that are different from from other areas of killings, but that's not that's.

Financial returns and payback periods on these wells are very strong.

Speaker Change: That's not a new statement that I would make I mean giddings is not necessarily homogenous there are different areas of giddings throughout the field. This particular area has its own characteristics and I'm not going to get into too much of it but nevertheless, the performance was very good both oil and gas beyond our.

Speaker Change: That's not a new statement that I would make I mean giddings is not necessarily homogenous there are different areas of giddings throughout the field. This particular area has its own characteristics I'm not going to get into too much of it but nevertheless, the performance was very good both oil and gas beyond our.

Because the average well probably produced.

Maybe 500 barrels a day of oil.

In addition of the gas.

And so that.

That's worked out that much better.

Speaker Change: Patients I mentioned, the the shallower weight rip rates of decline.

And <unk>.

All of these wells roughly in this area that I'm speaking to that we called out roughly in terms of the outperformance about 1000 wells.

Speaker Change: Patients I mentioned, the the shallower wage rates of decline.

Speaker Change: And you know frankly.

Speaker Change: Just based on I mentioned that the returns a little bit, but but youre looking at F&D costs for these wells that are in the high single digits.

I wouldn't tell you that.

Speaker Change: And you know frankly.

Chris Stavros: You know, frankly, I mentioned the returns a little bit, but you're looking at F&D costs for these wells that are in the high single digits on a per barrel basis. That's sort of what I would say. I mean, I think we're being conservative to some extent in terms of how we've evaluated this position. You know, we'll know more as we see more well results. It's a new area, but there are other new areas for us in Giddings too. I mean, there's commonly new areas that we'll be able to speak to with more time. You know, we'll study this a little further in order to get a better understanding of what happened or what might have surprised us.

Speaker Change: Just based on I mentioned that the returns a little bit, but what youre looking at F&D costs for these wells that are in the high single digits.

Characteristically theres some things on the subsurface level that are different from from other areas of giddings, but that's not.

Speaker Change: On a per barrel basis.

Speaker Change: So that's sort of what I would what I would say I mean I.

That's not a new statement that I would make I mean giddings is not necessarily homogenous there are different areas of giddings trap field. This particular area has its own characteristics and I'm not going to get into too much of it but nevertheless, the performance was very good both oil and gas beyond our XP.

Speaker Change: On a per barrel basis.

Speaker Change: I think we're being conservative to some extent in terms of how we've evaluated this position and you know we'll know more as we see more well results but.

Speaker Change: So that's sort of what I would what I would say I mean I.

Speaker Change: I think we're being conservative to some extent in terms of how we've evaluated this position and you know.

Speaker Change: Yeah, it's a new area, but there are other new areas for us in Giddings too I mean, there there's common commonly new areas that we'll be able to speak to with more time.

Speaker Change: We'll know more as we see more well results but.

Speaker Change: Yeah, it's a new area, but there are other new areas for us in Giddings too I mean, there there's common commonly new areas that we'll be able to speak to one more time.

Vacations I mentioned, the the shallower wage rates of decline.

Speaker Change: So you know will study this a little further in order to get a better understanding of what happened or what might have surprised us.

And you know frankly.

Speaker Change: So well studied this a little further in order to get a better understanding of what happened or what might have surprised us.

Just based on I mentioned that the returns a little bit but you are looking at F&D cost for these wells that are.

Speaker Change: But I think you know, we're obviously very encouraged very enthusiastic about what's what's happened just in terms of the results and.

In the high single digits.

Speaker Change: But I think you know.

On a per barrel basis.

Chris Stavros: I think, you know, we're obviously very encouraged, very enthusiastic about what's happened just in terms of the results. As I was driving home last night, I thought to myself, "Wow, would I rather have had this circumstance of outperformance where we could lean on it a little bit in driving the better production growth expectations for the year with less capital? Would I have rather had these circumstances at $80 oil, or would I have rather had these circumstances at sub-$60 oil?" As you can imagine, I'll take it as it is, because in this environment, this is working out just fine for us. Hopefully that gives you a little color.

Speaker Change: We're obviously very encouraged very enthusiastic about what's what's happened just in terms of the results and.

Speaker Change: As far as what's driving home last night I thought to myself why would I rather have had this circumstance of out performance, where we could.

So that's sort of what I would what I would say I mean.

I think we're being conservative to some extent in terms of how we've evaluated this position and you know we'll know more as we see more well results but.

Speaker Change: As far as what's driving home last night I thought to myself why would I rather have had this circumstance of outperformance where we could.

Speaker Change: Lean on it little bit Ah and driving the better production growth expectations for the year with less capital would I rather have these circumstances at $80 oil or would I rather have these circumstances at sub $60 oil and as you can imagine.

Speaker Change: Lean on a little bit and driving the better production growth expectations for the year with less capital would I rather have these circumstances at $80 oil or would have rather had these circumstances at sub $60 oil and as you can imagine I'll take it as it is because of this.

Yeah, it's a new area, but there are other new areas for us in Giddings too I mean, there there's common commonly new areas that we'll be able to speak to with more time.

So study.

Speaker Change: I'll take it as it is because in this environment.

Study this a little further in order to get a better understanding of what happened or what might have surprised us.

This is working out just fine for us.

Speaker Change: So hopefully that gives you a little color.

Speaker Change: Environment. This is working out just fine for us.

But I think you know.

Speaker Change: Oh no.

Speaker Change: What most definitely unfortunately, I can't say I didn't expect that answer.

We're obviously very encouraged very enthusiastic about what's what's happened just in terms of the results and.

So hopefully that gives you a little color.

Speaker Change: No.

Speaker Change: The my next question My follow up is is precisely about what did you just touched on in a way and is trying to understand what your underlying sustaining capital will look like.

Speaker Change: It's definitely Oh.

As a as what's driving home last night I thought to myself why would I rather have had this circumstance of out performance, where we could.

Carlos Escalante: Yeah. No, most definitely. Unfortunately, I can't say I didn't expect that answer. My next question, my follow-up is precisely about what you just touched on, in a way, and it's trying to understand what your underlying sustaining capital will look like. Said another way, should we expect the underlying sustaining capital to go down commensurably with your updated 2025 go-forward drilling guidance?

Speaker Change: Fortunately I can say I didn't expect that answer.

Speaker Change: The my next question My follow up is is precisely about what you just touched on in a way and it's trying to understand what your underlying sustaining capital will look like.

Lean on it little bit Ah and driving the better production growth expectations for the year with less capital would I rather have these circumstances at $80 oil or would I rather have these circumstances at sub $60 oil and as you can imagine.

Speaker Change: Said another way.

Speaker Change: Should we expect.

Speaker Change: The the underlying sustaining capital to go down can measurably with your updated 2025 go forward drilling guidance.

Speaker Change: Said another way.

Speaker Change: Should we expect.

Speaker Change: The the underlying sustaining capital to go down can measurably with your updated 2025 go forward drilling guidance.

I'll take it as it is because in this environment.

Speaker Change: Well, there's a there's a number of factors that would play into that first and foremost what we sat around.

Is this working out just fine for us.

Speaker Change: Well, there's a there's a number of factors that would play into that first and foremost what we sat around.

So hopefully that gives you a little color.

Chris Stavros: Well, there's a number of factors that would play into that. You know, first and foremost, what we said around our ability because of the strong production, and we don't have to be overly heroic on the volume growth this year. We're gonna defer a handful of completions, call it roughly half a dozen completions, into next year. That will provide us with more in the way of flexibility, if you will, not just this year, but also into next year. The cadence of capital just got sort of stretched out or pushed out to some extent. I think this year's efficiencies on the capital side also bleeds into benefiting next year's efficiencies too.

Speaker Change: Our ability to because of the strong production and we don't have to be overly heroic on the on the volume growth. This year. So we're going to defer a handful of completions call. It roughly half a dozen completions into next year.

Most definitely.

Unfortunately, I can't say I didn't expect that answer [laughter]. The my next question. My follow up is is precisely about what did you just touched on in a way and is trying to understand.

Our ability to because of the strong production and we don't have to be an overlay of ROIC on the on the volume growth. This year. So we're going to defer a handful of completions call. It roughly half a dozen completions into next year.

What your underlying sustaining capital will look like said another way.

Speaker Change: So that will provide us with more in the way of flexibility if you will.

Should we expect.

Speaker Change: So that will provide us with more in the way of flexibility if you will.

Speaker Change: Not just this year, but also into next year, so the cadence of capital.

The the underlying sustaining capital to go down can measurably with your updated 2025 go forward drilling guidance.

Speaker Change: Not just this year, but also into next year, so the cadence of capital.

Speaker Change: Just got sort of stretched out or pushed out to some extent Si I think this year's efficiencies on the capital side also bleeds into <unk>.

Well Theres a theres a number of factors that would play into that first and foremost what we sat around.

Speaker Change: Benefiting next year's efficiencies too.

Speaker Change: And <unk> in addition to that you know.

Speaker Change: Benefiting next year's efficiencies too.

Our ability to because of the strong production and we don't have to be overly heroic on the on the volume growth. This year. So we're going to defer a handful of completions call. It roughly half a dozen completions into next year.

Speaker Change: Talking to what we're seeing a little bit on on the O F S cost side.

Speaker Change: And.

Speaker Change: In addition to that.

Chris Stavros: In addition to that, you know, talking to you know what we're seeing a little bit on the OFS cost side, I can't really tell you that in this environment there's any notable upside pressure on pricing on oil field service side. Things, if anything, could start to fall off a little bit, you know, later into this year. The capital doesn't feel to me as if it's moving meaningfully higher from the new range that you know we've talked about, the updated range, the $430 to 470 pace.

Speaker Change: Talking to what we're seeing a little bit on on the cost side.

Speaker Change: I can't really tell you that in this environment, there's any notable upside pressure on.

Speaker Change: Pricing on the oilfield service side, so things if anything.

So that will provide us with more in the way of flexibility if you will.

Speaker Change: Pricing on oilfield service side so.

Speaker Change: Could start to fall off a little bit.

Not just this year, but also into next year and so that the cadence of capital.

Speaker Change: You know things if anything.

Speaker Change: Later and connect into this year so.

Speaker Change: Could start to fall off a little bit.

The capital doesn't feel to me, it's if it's moving meaningfully higher from the new range that.

Just got sort of stretched out or pushed out to some extent Si I think this year's efficiencies on the capital side also bleeds into benefiting.

Speaker Change: In a later and connect into this year. So I think the capital doesn't feel to me, it's if it's moving meaningfully higher.

Speaker Change: We've talked about the updated range is the fourth or 30 to 40 70 pace.

Benefiting next year's efficiencies too.

Speaker Change: From the new range that.

Speaker Change: We've talked about the updated ranges for 330 to $4 70 pace.

And.

Chris Shoppers: Thank you Chris.

In addition to that.

Speaker Change: Thanks.

Talking to what we're seeing a little bit on on the RFS cost side.

Speaker Change: Our next question comes from Zach par him with J P. Morgan. Please go ahead.

Speaker Change: Thank you Chris.

Speaker Change: Thanks.

Carlos Escalante: Thank you, Chris.

Can't really tell you that in this environment, there's any notable upside pressure on it.

Speaker Change: Our next question comes from Zach par him with J P. Morgan. Please go ahead.

Chris Stavros: Thanks.

Hey, Thanks for taking my question.

Operator: Our next question comes from Zach Parham with J.P. Morgan. Please go ahead.

Speaker Change: Did you ask about capital allocation and how you think about that between mcgaffey or oily or areas of the play.

Pricing on the oilfield service side, so things if anything.

Speaker Change: Hey, Thanks for taking my question.

Speaker Change: Did you ask about capital allocation and how you think about that between mcgaffey or an oily or areas of the play.

Zach Parham: Hey, thanks for taking my question. Wanted to ask about capital allocation and how you think about that between the gassier and oilier areas of the play. You know, in the current macro environment, could you potentially, you know, decide to hold oil volumes flat or even potentially let them fall and focus on gassier areas of the play? Just trying to think about how you manage that decision here.

Speaker Change: The current macro environment could could you potentially decide to hold oil volumes flat or even potentially let the bowl and focus on the death of your areas of the play just trying to think about how you manage that decision here.

Good start to fall off a little bit.

You know later and connect into this year so.

Speaker Change: The current macro environment could could you potentially decide to hold oil volumes flat or even potentially let the bowl and focus on daffy or areas of the play just trying to think about how you manage that decision here.

I think the capital doesn't feel to me, it's if it's moving meaningfully higher from the new range that.

Speaker Change: Yeah. Thanks.

We've talked about the updated range in the fourth or fifth 30 to $4 70 pace.

Speaker Change: We find ourselves frankly, given the.

Speaker Change: Yeah.

Speaker Change: Yes. Thanks.

Speaker Change: The broader balance of opportunity set within getting to almost do whatever we'd prefer to do to some extent.

Speaker Change: I mean, we find ourselves frankly, given the.

Chris Stavros: Yeah. Thanks, Zach. I mean, we find ourselves, you know, frankly, given the broader balance of opportunity set within Giddings to almost do whatever we prefer to do to some extent, where, you know, the wells that we typically are drilling have, you know, a large amount of gas, but also come with a good amount of oil as just evidenced by some of these more recent wells that we talked about in Q1. You know, oil is sorta gonna grow at, you know, lower single digits this year, which is sort of what I think is beat the Street expectations, you know, 2, 3, 4% in that range. I don't see any problem even in this environment with our capability to do that into next year.

Thank you Chris.

Thanks.

Speaker Change: The broader balance of opportunity set within getting to almost do whatever we'd prefer to two to some extent.

Our next question comes from Zach par him with J P. Morgan. Please go ahead.

Where you know the wells that we typically are drilling have you know a large amount of gas, but also come.

Hey, Thanks for taking my question I wanted to ask about capital allocation and how you think about that between mcgaffey or oily or areas of the play.

Speaker Change: Where you know the wells that we typically are drilling have you know a large amount of gas, but also come.

Speaker Change: With a good amount of oil as just evidenced by some of these more recent wells that we talked about it in the first quarter.

The current macro environment could could you potentially decide to hold oil volumes flat or even potentially let the bowl and focus on death of your areas of the play just trying to think about how you manage that decision here.

Speaker Change: With a good amount of oil as just evidenced by some of these more recent wells that we talked about it in the first quarter.

Speaker Change: You know oil is sort of going to grow with lower single digits. This year, which is sort of what I think is is.

Speaker Change: Well, it's sort of going to grow with lower single digits. This year, which is sort of what I think is is.

Speaker Change: Make to street expectations to three 4% in that range.

Speaker Change: I don't see any problem and even in this environment with our capability to do that into next year.

Yeah. Thanks, Zach I I mean, we find ourselves frankly, given the.

Speaker Change: Baked to street expectations to three 4% in that range.

Speaker Change: I don't see any problem and even in this environment with our capability to do that into next year.

The broader balance of opportunity set within getting to almost do whatever we preferred to to some extent.

Speaker Change: But what I find interesting around your question is that.

Speaker Change: It almost feels like if oil prices were higher we'd be talking about just leaning into oil if gas prices were higher we'd be talking about leaning into gas.

Speaker Change: But what I find interesting around your question is that.

Where you know the wells that we typically are drilling have you know a large amount of gas, but also come.

Chris Stavros: What I find interesting around your question is that it almost feels like if oil prices were higher, we'd be talking about just leaning into oil. If gas prices were higher, we'd be talking about leaning into gas. You know, the beauty of Giddings is that, you know, the returns on the wells, oil, gas, and a mix thereof are very good. It provides us with an outcome that, you know, is fairly balanced over time. I don't necessarily have to find ourselves strategically leaning into one particular mix of production or stream. We come and go, and we sort of move around the field. Some of it is experimenting or appraising, and some of it is obviously, most of it is development.

Speaker Change: It almost feels like if oil prices were higher we'd be talking about just leaning into oil or gas prices were higher we'd be talking about leaning into gas.

Speaker Change: You know.

With a good amount of oil as just evidenced by some of these more recent wells that we talked about it in the first quarter.

Speaker Change: The beauty of of Giddings is that you know the the returns on the wells oil gas and a mix thereof.

Speaker Change: You know the beauty of of Giddings is that you know the returns on the wells oil gas and a mix thereof.

Well, it's sort of going to grow with lower single digits. This year, which is sort of what I think is is.

Speaker Change: Is are very good and so it provides us with an outcome that you know, it's it's fairly balanced over time, so I don't necessarily have to find ourselves strategically leaning into one particular.

Bank to street expectations to three 4% in that range.

Speaker Change: <unk> are very good and so it provides us with an outcome that you know it's fairly balanced over time, so I don't necessarily have to find ourselves strategically leaning into one particular.

I don't see any problem and even in this environment with our capability to do that into next year.

Speaker Change: Mix of our production stream.

Speaker Change: We we come and go and we sort of.

What I find interesting around your question is that it almost feels like if oil prices were higher we'd be talking about just leaning into oil or gas prices were higher we'd be talking about leaning into gas.

Speaker Change:

Speaker Change: Mix of our production stream.

Speaker Change: I'll move around the field and some of it is experimenting or appraising and and some of it is obviously most of it is development, but we found it find ourselves coming and going into different areas of the field because it's quite large the footprint is quite large.

Speaker Change: We we come and go and we sort of move.

Speaker Change: Move around the field.

Speaker Change: Some of it is experimenting or appraising and and some of it's obviously most of it is development, but we found it find ourselves coming and going into different areas.

You know the beauty of Giddings is that you know.

Chris Stavros: We find ourselves coming and going into different areas of the field because it's quite large. The footprint is quite large. Strategically, if you will, rather than tactically, strategically, I don't see necessarily shifting in this sort of pricing environment to one versus the other. You'd have to see something far more dramatic, separation between the two, the streams for us to think about doing that right now, and that's not here.

Turns on the wells oil gas and a mix thereof.

Speaker Change: But strategically if you will rather than tactically strategically I don't see necessarily shifting in this sort of crop pricing environment to one versus the other you'd have to see something far more dramatic.

Speaker Change: The field because it's quite large footprint is quite large.

<unk> are very good and so it provides us with an outcome that you know it's fairly balanced over time, so I don't necessarily have to find ourselves strategically leaning into one particular.

Speaker Change: But strategically if you will rather than tactically strategically I don't see necessarily shifting in this sort of.

Speaker Change: Reising environment to one versus the other you'd have to see something far more dramatic.

Speaker Change: Separation between the two streams for us to think about doing that right now and that's not that's not here.

Mix of our production stream.

Speaker Change: Jack I I'd also add just like our return of capital to shareholders is very balanced and so we have a very balanced program.

We we come and go and we sort of move.

Move around the field.

Speaker Change: Jack I I'd also add just like our return of capital to shareholders is very balanced and so we have a very balanced program throughout the 200000 acres.

Some of it is experimenting or appraising and and some of it is obviously most of it is in development, but we found it find ourselves coming and going into different areas of the field because it's quite large the footprint is quite large.

Brian Corales: Zach, I'd also add, just like our return of capital to shareholders is very balanced, and so we have a very balanced program throughout the 200,000 acres in Giddings.

Speaker Change: The 200000 acres.

Speaker Change: Kidding.

Speaker Change: Thanks, guys.

But follow up.

Speaker Change: <unk>.

Speaker Change: Wanted to ask on the acquisition outlook you highlighted some oh, my gosh, let's say, but they didnt come with any production this quarter, but you know what are you seeing as far as M&A.

Speaker Change: Thanks, guys.

But strategically if you will rather than tactically strategically I don't see necessarily shifting in this sort of.

Speaker Change: But follow up.

Zach Parham: Thanks, guys. A follow-up. Just wanted to ask on the acquisition outlook. You highlighted some on the cash flow statement that didn't come with any production this quarter, but you know, what are you seeing as far as M&A out there in the current market?

Speaker Change: Just wanted to ask on the acquisition outlook.

Speaker Change: It's all of them.

<unk> environment to one versus the other you'd have to see something far more dramatic.

Speaker Change: When the cash flow statement.

Speaker Change: It didn't come with any production this quarter, but you know what are you seeing as far as M&A.

Speaker Change: Out there in the current market.

Speaker Change: Generally smaller Zack I mean, the where we're evaluating some some smaller bolt on opportunities you know again generally that are in our backyard again, focusing on the chalk in Eagle Ford, where we I can think we have a competitive advantage.

Separation between the two streams for us to think about doing that right now and that's not that's not here.

Speaker Change: Out there in the current market.

Speaker Change: Generally smaller Zack I mean the.

Chris Stavros: Generally smaller, Zach. I mean, we're evaluating some smaller bolt-on opportunities, you know, again, generally that are in our backyard, you know, again, focusing on the Chalk and Eagle Ford, where we again think we have a competitive advantage through our subsurface knowledge and experience. You know, it's really in these areas where we think the development teams can create better value for the shareholder and for Magnolia over time and improve the opportunity set. But I would tell you right now, given this heightened level of uncertainty, things have generally slowed down a bit. Maybe said differently, the bid ask between buyers and sellers has probably widened. I think it's people have fallen back to a little bit more of a neutral position. The clearing price may work for one, but not necessarily the other.

Jack I I'd also add just like our return of capital to shareholders is very balanced and so we have a very balanced program throughout the 200000 acres.

Speaker Change: <unk> some some smaller bolt on opportunities you know again generally that are in our backyard again, focusing on the chalk in Eagle Ford, where we I can think we have a competitive advantage through our subsurface knowledge and experience.

Speaker Change: Page through our subsurface knowledge and experience.

Kidding.

Speaker Change: You know its really in these areas, where we think the development teams can create better value for.

Thanks, guys.

But follow up.

Speaker Change:

To ask on the acquisition outlook you highlighted some when the cash flow statement that didnt come with any production this quarter, but you know what are you seeing as far as M&A.

Speaker Change: The shareholder and for Magnolia overtime, and improve the opportunity set but I would tell you right now given this heightened level of uncertainty things have generally slowed down a bit maybe said differently. The bid ask between buyers and sellers has probably widened so I think it's it people.

Speaker Change: It's really in these areas, where we think the development teams can create better value for the.

Out there in the current market.

Generally smaller Zack I mean.

Speaker Change: If it's fallen back to a little bit more of a neutral position.

We're evaluating some some smaller bolt on opportunities you know again generally that are in our backyard again, focusing on the chalk in Eagle Ford, where we I can think we have a competitive advantage through our subsurface knowledge and experience.

Speaker Change: So I think it's if people have fallen back to a little bit more of a neutral position.

Speaker Change: Clearing price May may work for one but not necessarily the other.

Speaker Change: The clearing price may may work for one but not necessarily the other.

Brent: Thanks, Chris Thanks, Brent.

Speaker Change: Thanks.

Speaker Change: Our next question comes from Oliver Huang with T. P. H. Please go ahead.

Speaker Change: Thanks, Chris Thanks, Brian.

Speaker Change: Thanks.

You know its really in these areas, where we think the development teams can create better value for the.

Zach Parham: Thanks, Chris. Thanks, Brian.

Speaker Change: Our next question comes from Oliver Huang with T. P. H. Please go ahead.

Chris Stavros: Thanks.

Oliver Huang: Good morning, Chris and Brian and thanks for taking the questions.

Operator: Our next question comes from Oliver Huang with TPH&Co. Please go ahead.

A shareholder in <unk> over time and improve the opportunity set but I would tell you right now given this heightened level of uncertainty things have generally slowed down a bit maybe said differently. The bid ask between buyers and sellers has probably widened.

<unk> just had one from my end on capital allocation I know I mean, just really hoping you all might be able to elaborate on the internal thought process a bit more just given how dynamic the commodity price environment is today I know, there's the less than 55% of EBITDAX, which acts.

Oliver Huang: Good morning, Chris and Brian and thanks for taking the questions.

Oliver Huang: Good morning, Chris and Brian, and thanks for taking the questions. Just had one from my end on capital allocation. I know, I mean, just really hoping you all might be able to elaborate on the internal thought process a bit more, just given how dynamic the commodity price environment is today. I know there's less than 55% of EBITDAX, which acts as a governor on reinvestment rate for you all, and you've highlighted flexibility in your opening remarks. Just what might we need to see to occur to take a closer look at the program in the case commodity risk to the downside does play out? And would this come in the form of incremental completion deferrals, or would we get to the point of maybe a rig dropping off?

Oliver Huang: Just had one from my end on capital allocation I know I mean, just really hoping you all might be able to elaborate on the internal thought process a bit more just given how dynamic the commodity price environment is today I know, there's the less than 55% of EBITDAX, which access.

So I think it's it people.

People have fallen back to a little bit more of a neutral position.

Oliver Huang: As a governor on reimbursement rate for you all and you've highlighted flexibility in your opening remarks, but just what might we need to seed.

The clearing price may may work for one but not necessarily the other.

Oliver Huang: As a governor on reimbursement rate for you all and you've highlighted flexibility in your opening remarks, but just what might we need the seed.

Oliver Huang: Her to take a closer look at the program and the case commodity risk to the downside does play out and would this come in the form of incremental completion deferrals or would we get to the point of maybe a rig dropping off.

Thanks, Chris Thanks, Brent.

Thanks.

Oliver Huang: <unk> to take a closer look at the program and the case commodity risk to the downside does play out and what does come in the form of incremental completion deferrals or would we get to the point of maybe a rate dropping off.

Our next question comes from Oliver Huang with T. P. H. Please go ahead.

Good morning, Chris and Brian and thanks for taking the questions.

Oliver Huang: Yeah, right now I mean, not that I won't tell you that.

Just had one from my end on capital allocation I know I mean, just really hoping you all might be able to elaborate on the internal thought process a bit more just given how dynamic the commodity price environment is today I know, there's the less than 55% of EBITDAX, which access.

Yeah, right now I mean, not that I won't tell you that.

Oliver Huang: That thought hasn't peers, my brain or anybody around here as far as you know curtailing activity, but.

Chris Stavros: Yeah. Right now, I mean, not that I won't tell you that thought hasn't pierced my brain, or anybody around here as far as, you know, curtailing activity. Considering that we're in a good position in terms of, you know, the production outperformance, and our flexibility around rig operators, I mean, we just don't find ourselves in a position to need to do that right now. We have a lot of flexibility. You know, our plan is maybe to be more pointed. Our plan is not to drop a rig here. We just don't have any reason to do that. We'll continue to monitor the product price environment, you know, around supply-demand conditions, and we'll sort of see how things go.

Oliver Huang: That thought hasn't peers, my brain or anybody around here as far as <unk>.

Oliver Huang: Considering that we're in a good position in terms of you know the production outperformance.

Our tailing activity, but considering that we're in a good position in terms of the production outperformance.

Oliver Huang: And our flexibility around rig operators and and our Frac crew.

The governor on reinvestment rate for you all and you've highlighted flexibility in your opening remarks, but just what might we need to seed occur to take a closer look at the program and the case commodity risk to the downside does play out and what has come in the form of incremental completion deferrals or would we get to the point of maybe a rig.

Oliver Huang: And our flexibility around rig operators and and our Frac crew I.

Oliver Huang: We just don't find ourselves in a position to need to do that right now we have a lot of flexibility.

Oliver Huang: I mean, we just don't find ourselves in a position to meet.

Oliver Huang: So our plan is maybe it would be more pointed our plan is not to drop a rig here. We just don't have any reason to do that Oh, we'll continue to monitor the product price environment, you know round supply demand conditions, and we'll sort of see how things go and as you pointed out we have the the governor of the <unk>.

To do that right now we have a lot of flexibility.

Dropping off.

Oliver Huang: So our plan is maybe it would be more pointed our plan is not to drop a rig here. We just don't have any.

Yeah, right now I mean, not that I won't tell you that.

Oliver Huang: The reason to do that or continue to monitor the product price environment.

That thought hasn't pierced my brain or anybody around here as far as you know.

Oliver Huang: <unk> supply demand conditions.

Oliver Huang: Going on.

Curtailing activity, but considering that we're in a good position in terms of you know the production outperformance.

Oliver Huang: Capital, 75% of gross cash flows so.

Oliver Huang: See how things go and as you pointed out we have had the governor of the ceiling on it.

Chris Stavros: As you pointed out, we have the governor of the ceiling on our capital, 55% of gross cash flow. You know, I'm not overly concerned about it right now. Could it get worse? Sure. Could it get better? Sure. We'll just have to monitor it. But we have a lot of flexibility that, you know, if we needed to, we could defer some things further into next year. Again, as I said, it's about 1,000 wells, roughly. You know, but it's all within the outlook that we generally provided you on the production. So I don't feel necessarily overly pressured at this point in time. But we'll just have to wait and see how things pan out as we move through the year.

Oliver Huang: Now.

Oliver Huang: Our capital 75% of our gross cash flow so.

Oliver Huang: I'm not overly concerned about it right now could it get worse sure could it get better sure. We'll just have to monitor it.

And our flexibility around rig operators and and our Frac crew.

Oliver Huang: Hum.

Oliver Huang: Overly concerned about it right now could it get worse sharpening better sure, we'll just have to monitor it.

Oliver Huang: But we have a lot of flexibility and said you know if we needed to we could defer some things further into next year.

We just don't find ourselves in a position to need to do that right now we have a lot of flexibility.

Oliver Huang:

Oliver Huang: But we have a lot of flexibility.

Oliver Huang: Yeah.

Oliver Huang: Again as I said, it's about a half dozen wells roughly you know, but it's it's all within the outlook that we generally provided you on the production.

Oliver Huang: We needed two weeks.

So our plan is maybe it would be more pointed our plan is not to drop a rig here. We just don't have any reason to do that a whole continue to monitor the product price environment, you know around supply demand conditions, and we'll sort of see how things go and as you pointed out we have the governor of the <unk>.

Oliver Huang: Some things further into next year.

Oliver Huang: Again as I said, it's about <unk>.

Oliver Huang: Yes, roughly you know.

Oliver Huang: So I don't feel a necessarily overly pressured at this point in time.

Oliver Huang: But it's all within the outlook that we generally provided you on the production.

Oliver Huang: So I don't feel necessarily overly pressured at this point in time.

Oliver Huang: Well, we'll just have to wait and see how things pan out as we move through the year.

Selling on.

Our capital 75% of.

Oliver Huang: We'll just have to wait and see how things pan out as we move through the year.

Speaker Change: Perfect that makes sense and maybe just a quick follow up on service costs I understand negotiations are likely ongoing but just anything that you're seeing on either the drilling or frac pricing side of things commensurate to any sort of softness we're seeing on the product side.

Gross cash flow so you know.

Not overly concerned about it right now could it get worse sure could it get better sure. We'll just have to monitor it.

Speaker Change: Perfect that makes sense and maybe just a quick follow up on service costs I understand negotiations are likely ongoing but just anything that youre seeing on either the drilling or frac pricing side of things commensurate to any sort of softness we're seeing on the product side.

Oliver Huang: Perfect. That makes sense. Maybe just a quick follow-up on service costs. I understand negotiations are likely ongoing, but just anything that you're seeing on either the drilling or frac pricing side of things commensurate to any sort of softness we're seeing on the product side?

But we have a lot of flexibility and said you know if we needed to we could defer some things further into next year.

Oliver Huang: Okay.

Oliver Huang: Yeah, I mean for the second quarter I would tell you probably overall pricing is roughly flat with the first quarter.

Oliver Huang: Okay.

Again as I said, it's about a half dozen wells roughly you know.

Chris Stavros: Yeah. I mean, for Q2, I would tell you probably overall pricing is roughly flat with Q1. I mean, drilling efficiency gains are offsetting some of the small increases on OCTG pricing. Those are, you know, OCTG steel related, really very small in the scheme of our overall well costs really as a result of the steel tariffs. We do have a lot of flexibility with it within both our rigs and frac service providers. I'm not gonna go into the specific terms. On other materials and items, we're probably seeing some relief, for sure, as you can imagine, on things like diesel pricing.

Oliver Huang: Yeah, I mean for the second quarter.

Oliver Huang: Would tell you probably overall pricing is roughly flat with the first quarter.

Oliver Huang: I mean drilling efficiency gains or are offsetting some of the.

But it's all within the outlook that we generally provided you on the production.

Oliver Huang: Small increases on Oce T G pricing.

Oliver Huang: I mean drilling efficiency gains are offsetting some of the.

So I don't feel a necessarily overly pressured at this point in time.

Oliver Huang: And those are.

Oliver Huang: Oh CTG steel related really very small in the scheme of our overall well cost really as a result of the.

Oliver Huang: Small increases on <unk> pricing.

We'll just have to wait and see how things pan out as we move through the year.

Oliver Huang: And those are.

Oliver Huang: CTG steel related really very small in the scheme of our overall well cost really as a result of the.

Oliver Huang: The steel tariffs well, we do have a lot of flexibility with it within both of our rigs and Frac service providers not going to go into specific terms on other materials items.

Perfect that makes sense and maybe just a quick follow up on service costs I understand negotiations are likely ongoing but just anything that you're seeing on either the drilling or frac pricing side of things commensurate to any sort of softness we're seeing on the product side.

Oliver Huang: The steel tariffs.

Oliver Huang: Well, we do have a lot of flexibility with it within both our rigs and Frac service providers I'm not going to go into the specific terms on other materials items.

Oliver Huang: We're probably seeing some relief for sure as you can imagine on things like diesel pricing, a we use a lot of diesel.

Okay.

Oliver Huang: We're probably seeing some relief for sure as you can imagine on things like diesel pricing, we use a lot of diesel.

Yeah, I mean for the second quarter I would tell you probably overall pricing is roughly flat with the first quarter.

Oliver Huang: Which has offset some of the small price increases might be rather relatively fluid and things like chemicals.

Chris Stavros: We use a lot of diesel, which has offset some of the small price increases that might be relatively fluid in things like chemicals, valves, and other type services. If this is sort of the picture in terms of what you're seeing on the screen for commodity prices, as we move through the year, you know, back half of the year, you know, the 5 handle on oil and, you know, 3.50-ish on gas, I wouldn't imagine that there's gonna be a ton of upside pressure on pricing. In fact, I would take the other side of it. There'd probably be some softness as you go through the back half of the year.

Oliver Huang: Which has offset some of the small price increases.

I mean drilling efficiency gains are offsetting some of the <unk>.

Oliver Huang: Valves and other type services, but I <unk>.

Oliver Huang: B rather relatively fluid.

Oliver Huang: Chemicals.

This is sort of the picture in terms of what you're seeing on the screen for commodity prices.

Small increases on <unk> pricing.

Oliver Huang: Valves and other type services, but I <unk>.

And those are.

Oh CTG steel related really very small in the scheme of our overall well cost really as a result of the steel tariffs what.

Oliver Huang: This is sort of the picture in terms of what you're seeing on the screen for commodity prices.

Oliver Huang: As we move through the year, you know back half of the year with a five handle on oil.

Oliver Huang: You know $3 50, a shot gas.

Oliver Huang: As we move through the year back half of the year and on a five handle on oil.

But we do have a lot of flexibility with it within both of our rigs and Frac service providers I'm not going to go into the specific terms on other materials items.

Oliver Huang: I wouldn't imagine that's just going to be a ton of upside pressure on pricing in fact, I went I would take the the other side of it there probably would be some softness as you as you go through in the back half of the here.

Oliver Huang: You know 350 is shot gas I wouldn't imagine that there's going to be a ton of upside pressure on pricing in fact, I won't I'll take the other.

We're probably seeing some relief for sure as you can imagine on things like diesel pricing, we use a lot of diesel.

Oliver Huang: Other side of it there probably would be some softness as you as you go through in the back half of the year.

Speaker Change: Awesome, Thanks for the time Chris.

Oliver Huang: Thanks.

Which has offset some of the small price increases.

Oliver Huang: Our next question comes from Tim Moore.

Chris: Awesome, Thanks for the time Chris.

Oliver Huang: Awesome. Thanks for the time, Chris.

B, rather relatively fluid and things like chemicals.

Chris Stavros: Thanks.

Oliver Huang: Thanks.

Please go ahead.

Oliver Huang: Yeah.

Tim Moore: Our next question comes from Tim Moore with clear Street. Please go ahead.

Operator: Our next question comes from Tim Moore with Clear Street. Please go ahead.

Tim Moore: Thanks, and great execution in the quarter in the guidance raise.

<unk> and other type services, but I. If this is sort of the picture in terms of what you're seeing on the screen for commodity prices.

Speaker Change: So prefer just forgetting.

Tim Moore: Thanks, and great execution in the quarter and the guidance raise.

Tim Moore: Thanks. Great execution on the quarter and the guidance raise. For just Giddings, you know, I get asked a lot about this 'cause you have so much untapped potential there and, you know, you're probably planning to do some more peripheral land frame study work. You know, as Chris has mentioned in the past, you know, those acreage lines aren't smooth, they're not homogeneous, they're more staggered, odd shapes. You know, it's probably harder to apply a logical approach for appraisal drilling. I'm just wondering, you know, I know Chris started talking about this in his first question response today.

Speaker Change: How about this because you have so much untapped potential there.

Speaker Change: So prefer just forgetting.

Speaker Change: You know, you're probably planning to do some more peripheral influenced study work.

As we move through the year, you know back half of the year with a five handle on oil.

Speaker Change: How about this because you have so much untapped potential there.

Speaker Change: Yeah as Chris has mentioned in the past you know those acres lines aren't Smith are not homogenous and they're more staggered odd shapes and its probably harder to play a logical approach for appraisal drilling.

Speaker Change: You're probably planning to do some more peripheral land claim study work.

You know 350 is shot gas I wouldn't imagine that just going to be a ton of upside pressure on pricing in fact, I went I would take the other.

Speaker Change: As Chris has mentioned in the past you know those acres lines aren't Smith are not homogenous and they're more staggered odd shapes and its probably harder to play a logical approach for appraisal drilling.

Speaker Change: Just wondering you know I know Christopher talking about this in his first question response today.

The other side of it there probably would be some softness as you as you go through in the back half of the year.

Speaker Change: Can you elaborate more color maybe on.

Speaker Change: I'm just wondering you know I know Chris started talking about this in his first question response today.

Awesome, Thanks for the time Chris.

Speaker Change: How you landed on that acreage just maybe with an example.

Thanks.

Yeah.

Tim Moore: If you can, you know, elaborate more color maybe on, you know, how you landed on that acreage, just, you know, maybe with an example, you know, pinpointing where it is and really how you're maybe trying to hop around, if you're gonna be hopping around more this year than maybe you would expect a couple of years down the road just because, you know, you've only been working on it for a little bit over a year.

Speaker Change: Can you elaborate more color maybe on.

Our next question comes from Tim Moore with clear Street. Please go ahead.

Speaker Change: When and where it is and really how you're maybe trying to hop around.

Speaker Change: How you landed on that acreage just maybe with an example.

Thanks, and great execution in the quarter and the guidance raise.

Speaker Change: If you're gonna be hopping around more this year than maybe you would expect.

Speaker Change: Pointing where it is and really how you are maybe trying to hop around.

Speaker Change: Years down the road just because.

So for for just forgetting.

Speaker Change: If you're gonna be hopping around more this year than maybe you would expect.

Speaker Change: Who are they working on it's a little bit over a year.

How about this because you have so much untapped potential there.

Speaker Change: Couple of years down the road just because.

Speaker Change: Well the particular acreage that we highlighted within you know where the wells have performed.

You know, you're probably planning to do some more peripheral influence study work.

Speaker Change: How are they working on like a little bit over a year.

Yeah as Chris has mentioned in the past you know those acres lines aren't Smith are not homogenous and they're more staggered odd shapes and its probably harder to play a logical approach for appraisal drilling.

Speaker Change: Well, the particular acreage pad that we highlighted within you know where the wells have performed.

Chris Stavros: Well, the particular acreage that we highlighted within, you know, where the wells outperformed, I mean, some of this was part of our original area within Giddings, going back from the beginning. Part of it was, as we appraised some of the area. Part of it was also acquired after that, as part of a package, you know, a couple of years ago, at least, I think two plus years ago. We continue to scout around for opportunities to fill in holes within our acreage where we think, you know, conditions are ripe for further, you know, development area that looks like the same thing we've been seeing in and around Giddings. It's a little bit of the extension of the boundaries.

Speaker Change: Some of this was part of our original area, where they are getting.

Speaker Change: Going back from the beginning.

Speaker Change: Some of this was part of our original area, where they are getting going back from the beginning.

Speaker Change: And part of it was as we appraise some of it some of the area part of it was also acquired after that.

I'm just wondering you know I know Chris started talking about this in his first question response today.

Speaker Change: And part of it was as we appraise some of it some of the area part of it was also acquired after that.

Can you elaborate more color maybe on.

Speaker Change: As part of a package.

How you landed on that acreage just maybe with an example.

Speaker Change: You know couple of years ago at least I think two two plus years ago. So we continue to scour around for opportunities to fill in.

Speaker Change: As part of a package.

Pointing where it is and really how you are maybe trying to hop around.

Speaker Change: You know couple of years ago at least I think two two plus years ago. So we continue to scour around for opportunities to fill in.

If you're going to be hopping around more this year than maybe you would expect.

Speaker Change: Holes within our acreage where we think.

Couple of years down the road just because.

Speaker Change: Conditions are ripe for further.

You have been working on for a little bit over a year.

Speaker Change: Holds within our acreage where we think.

Speaker Change: Uh huh.

Well the particular acreage that we highlighted within you know where the wells have performed.

Speaker Change: You know conditions are ripe for further.

Speaker Change: Development area that it looks like the same thing we've been seeing in and around Giddings. So it's a little bit of the extension of the boundaries I can't I can't do much about lease lines. It is what it is but nevertheless.

Speaker Change: Uh huh.

Speaker Change: You know development area that it looks like the same thing we've been seeing in and around Giddings. So it's a little bit of the extension the boundaries I can't I can't do much about lease lines. It is what it is nevertheless.

Some of this was part of our original area within Giddings I'm going back from the beginning.

And part of it was as we appraise some of it some of the area part of it was also acquired after that.

Chris Stavros: I can't do much about, you know, lease lines. It is what it is. Nevertheless, you know, we continue to look for opportunities to acquire or even potentially lease more or whatever to pursue, you know, further opportunities set over time.

Speaker Change: We continue to look for opportunities to acquire or even potentially at least more or whatever.

As part of a package.

Speaker Change: Pursue you know.

You know couple of years ago at least I think two two plus years ago. So we continue to scour around for opportunities to fill in.

Speaker Change: Further opportunity set over time.

Speaker Change: That's great. Thanks for that color and that was it for my questions.

Speaker Change: Pursue.

Speaker Change: Further opportunity set over time.

Yeah.

Speaker Change: That's great. Thanks for that color and that was it for my questions.

Tim Moore: No, that's great. Thanks for that color, and that was it for my question.

Noah Hong: Our next question comes from Noah Hong Miss with Bank of America. Please go ahead.

Holes within our acreage where we think.

Speaker Change: Yeah.

Conditions are ripe for further.

Speaker Change: Our next question comes from Noah Hong Miss with Bank of America. Please go ahead.

Speaker Change: We're gonna Crystal Brian I'm for my first question here. It was how can we think about like the oil cut through the remainder of 'twenty five I mean with the increased production growth guidance is it also fair to assume that we'll have some oil growth along with that some additional oil growth.

Operator: Our next question comes from Noah Hungness with Bank of America. Please go ahead.

Uh huh.

You know development area that it looks like the same thing we've been seeing in and around Giddings. So it's a little bit of the extension the boundaries I can't I can't do much about lease lines. It is what it is nevertheless.

Speaker Change: Good morning, Chris and Brian I'm for my first question here. It was a how can we think about like the oil cut through the remainder of 'twenty five I mean with the increased production growth guidance is it also fair to assume that we'll have some oil growth along with some additional oil growth.

Noah Hungness: Morning, Chris and Brian. For my first question here, it was, how can we think about, like, the oil cut through the remainder of 2025? I mean, with the increased production growth guidance, is it also fair to assume that we'll have some oil growth along with that, some additional oil growth?

Noah Hong: Yeah.

Noah Hong: I think we'll have and based on what we're looking at I think we'll have a little bit of.

We continue to look for opportunities to acquire or even potentially at least more or whatever.

Speaker Change: Yeah.

Speaker Change: I think we will have and based on what we're looking at I think we will have a little bit of.

Chris Stavros: I think we'll have a little bit of slight oil growth, oil volumes a little bit, you know, through the year. On a percentage basis, I think it'll remain relatively stable, and quite similar to what we've seen. It might bounce around, but within call it roughly 1% or so. We were sort of 40%, so maybe 40, 41% in that vicinity. Based on what we're seeing right now in terms of the planning for the wells for the year, it looks like, you know, maybe we'll see a little bit of additional oil in coming quarters, but, you know, fairly stable.

Noah Hong: Absolute oil growth oil volumes a little bit.

Pursue.

Further opportunity set over time.

Noah Hong: You know through the year.

Speaker Change: Absolute oil growth oil volumes a little bit.

Noah Hong: On and on a percentage basis, I think it'll it'll remain relatively stable and quite similar to what we've seen it might bounce around but within call it roughly a percent or so.

That's great. Thanks for that color and that was it for my questions.

Speaker Change: Through the year.

Yeah.

Speaker Change: On a percentage basis, I think it'll it'll remain relatively stable.

Our next question comes from Noah Hong Miss with Bank of America. Please go ahead.

Speaker Change: And quite similar to what we've seen it bounce around but within call it roughly a percent or so.

Good morning, Crystal Brian I'm for my first question here. It was how can we think about like the oil cut through the remainder of 'twenty five I mean with the increased production growth guidance is it also fair to assume that we'll have some oil growth along with that some additional little growth.

Noah Hong: But we were sort of 40%, so maybe 40 or 41% in that vicinity, but based on what we're seeing right now in terms of.

Speaker Change: But we were sort of 40%, so maybe 40 or 41% in that vicinity, but based on what we're seeing right now in terms of.

Noah Hong: The planning for the wells for the year. It looks like you know, maybe we'll see a little bit.

Speaker Change: But our planning for the wells for the year. It looks like maybe you will see a little bit.

Noah Hong: Of additional oil in coming quarters, but fairly stable.

Yeah.

I think we will have and based on what we're looking at I think we'll have a little bit of.

Speaker Change: Of additional oil in coming quarters, but fairly stable.

Noah Hong: Okay and then on my for my next question is on G. P. M. T costs I think it was a little higher than what we were expecting as we kind of see natural gas still in a contango.

Absolute oil growth oil volumes a little bit.

Speaker Change: Okay and then on my for my next question is on the G. P. M. T costs I think it was a little higher than what we were expecting as we kind of see natural gas still in a contango.

Noah Hungness: Great. My next question is on GP&T costs. I think it was a little higher than what we were expecting. As we kinda see natural gas still in a contango for the forward curve, how can we think about GP&T costs trending through the rest of 2025 and also into 2026, if you could?

You know through the year.

On and on a percentage basis, I think it'll it'll remain relatively stable.

Noah Hong: Forward curve, how can we think about G. P. M T cost trending through the rest of 25 and also into 'twenty six if you could.

And quite similar to what we've seen it might bounce around but within call it roughly a percent or so.

Speaker Change: Forward curve, how can we think about the P&C cost trending through the rest of 25 and also into 'twenty six if you could.

Noah Hong: I mean, most of the increase that you see I mean, these things U P. T tends to move in tandem with gas prices. So generally.

But we were sort of 40%, so maybe 40 or 41% in that vicinity, but based on what we're seeing right now in terms of.

Speaker Change: I mean, most of the increase that you see I mean, these things you P&C tends to move in tandem with gas prices. So generally.

Chris Stavros: I mean, most of the increase that you see, I mean, these things, GP&T tends to move in tandem with gas prices. Generally, you know, the move is in about the same direction. Not necessarily linearly, but there's other variables as well, but that might impact GP&T, but generally in a similar broad direction. If gas prices should spike or rise further into summer or you know, as you get more into winter, I would imagine, you know, GP&T would move generally in the same direction. Alternatively, the opposite would be the case.

The planning for the wells for the year. It looks like you know maybe it will see a little bit.

Noah Hong: The move is it about the same direction not not necessarily linearly but.

Of additional oil in coming quarters, but fairly stable.

Speaker Change: The move is it about the same direction not necessarily linearly but.

Noah Hong: Theres other variables as well, but I think that might impact Chi PNT, but.

Noah Hong: Generally in a in a similar.

Speaker Change: Theres other variables as well, but that might impact G. P N T.

Great and then on my for My next question was on G. P. N T costs I think it was a little higher than what we were expecting as we kind of see natural gas still in a contango for the forward curve. How can we think about Gee P&C cost trending through the rest.

Noah Hong: <unk> broad direction, so if gas prices should.

Speaker Change: Generally in a similar.

Spike or rise further into into summer or you know as you get more into winter I would imagine.

Broad direction, so if gas prices should.

Operator: meaningfully higher from the new range that, you know, we've talked about the updated range, the 430 to 470 pace.

Speaker Change: Spike.

Speaker Change: Or or rise further into into summer or you know as you get more into winter I would imagine.

Noah Hong: G. P N T would move generally in the same direction and alternatively, the opposite would be the case.

Of 25 and also into 'twenty six if you could.

Speaker Change: P&G would move generally in the same direction and alternatively, the opposite would be the case.

Noah Hong: Great. Thanks for the color.

Speaker Change: I mean, most of the increase that you see I mean, these things you P&C tends to move in tandem with gas prices. So generally you know that.

Noah Hong: This is the end of the question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Zach Parham: Our next question... Zach Parham Please go ahead. Hey, thanks for taking my question. I wanted to ask about capital allocation and how you think about that between the gassier and oilier areas of the play. In the current macro environment, could you potentially decide to hold oil volumes flat or even potentially let them fall and focus on gassier areas of the play?

Speaker Change: Great. Thanks for the color.

Noah Hungness: Great. Thanks for the color.

Speaker Change: The move is in about the same direction not not necessarily linearly but.

Speaker Change: This is the end of the question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: This is the end of the question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Our next question comes from Zach Parham with J.P. Morgan, please go ahead. Hey, thanks for taking my question.

Speaker Change: Theres other variables as well, but that might impact G. P N T.

Zach Parham: I wanted to ask about capital allocation and how you think about that between the gassier and oilier areas of the play. You know, in the current macro environment, could you potentially, you know, decide to hold oil volumes flat or even potentially let them fall and focus on gassier areas of the play? Just trying to think about how you manage that decision here?

Speaker Change: Generally in a similar.

<unk> broad direction, so if gas prices should.

Speaker Change: Spike or rise further into into summer or you know as you get more into winter I would imagine.

Unnamed Speaker: Just trying to think about how you manage that in Yeah, thanks, Zach. I mean, we find ourselves, you know, frankly, given the The broader balance of opportunity set within Giddings to almost do whatever we prefer to do to some extent, where, you know, the wells that we typically are drilling have, you know, a large amount of gas, but also come With a good amount of oil, as just evidenced by some of these more recent wells that we talked about in the first quarter, oil is sort of going to grow at lower single digits this year, which is sort of what I think is baked to Shreed Expectations, 2%, 3%, 4% in that range.

Speaker Change: G. P N T would move generally in the same direction and alternatively, the opposite would be the case.

Christopher Stavros: Yeah, thanks, Zach. I mean, we find ourselves, you know, frankly, given the The broader balance of opportunity set within Giddings to almost do whatever we prefer to do to some extent, where, you know, the wells that we typically are drilling have, you know, a large amount of gas, but also come With a good amount of oil, as just evidenced by some of these more recent wells that we talked about in the first quarter, you know, oil is sort of going to grow at, you know, lower single digits this year, which is sort of what I think is baked to Shreed expectations, you know, two, three, four percent in that range.

Speaker Change: Great. Thanks for the color.

Speaker Change: This is the end of the question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Unnamed Speaker: I don't see any problem, even in this environment, with our capability to do that into next year.

Christopher Stavros: I don't see any problem, and even in this environment, with our capability to do that into next year.

Unnamed Speaker: What I find interesting around your question is that it almost feels like if oil prices were higher, we'd be talking about just leaning into oil. If gas prices were higher, we'd be talking about leaning into gas. You know, the beauty of Giddings is that, you know, the returns on the wells, oil, gas, and a mix thereof, is, are very good. And so it provides us with an outcome that, you know, is fairly balanced over time. So I don't necessarily have to find ourselves strategically leaning into one particular mix of production or stream. We come and go, and we sort of move around the field.

Christopher Stavros: What I find interesting around your question is that it almost feels like if oil prices were higher, we'd be talking about just leaning into oil. If gas prices were higher, we'd be talking about leaning into gas. You know, the beauty of Giddings is that, you know, the returns on the wells, oil, gas, and a mix thereof. is are very good. And so it provides us with an outcome that, you know, it's fairly balanced over time. So I don't necessarily have to find ourselves strategically leaning into one particular mix of production or stream. We come and go and we sort of move around the field.

Unnamed Speaker: Some of it is experimenting or appraising, and some of it is obviously, most of it is development. But we find ourselves coming and going into different areas of the field because it's quite large, the footprint is quite large. But strategically, if you will, rather than tactically, strategically, I don't see necessarily shifting in this sort of pricing environment to one versus the other. You'd have to see something far more dramatic separation between the two, the streams for us to think about doing that right now. And that's not, that's not here.

Christopher Stavros: Some of it is experimenting or appraising, and some of it is obviously most of it is development. But we find ourselves coming and going into different areas of the field because it's quite large. The footprint is quite large. But strategically, if you will, rather than tactically, strategically, I don't see necessarily shifting in this sort of pricing environment to one versus the other. You'd have to see something far more dramatic separation between the streams for us to think about doing that right now. And that's not that's not here.

Unnamed Speaker: Jack, I'd also add just like our return of capital to shareholders is very balanced. And so we have a very balanced program throughout the 200,000 acres in Kitty.

Christopher Stavros: Jack, I'd also add just like our return of capital to shareholders is very balanced. And so we have a very balanced program throughout the 200,000 acres in Kitty.

Operator: Thank you, guys.

Unnamed Speaker: And then a follow-up. I just wanted to ask on the acquisition outlook, you highlighted some on the cash flow statement that didn't come with any production this quarter, but what are you seeing as far as M&A? out there in the current market.

Zach Parham: Thank you guys. I didn't follow up.

Zach Parham: I just wanted to ask on the acquisition outlook, you highlighted some on the cash flow statement that didn't come with any production this quarter, but what are you seeing as far as M&A? out there in the current market.

Unnamed Speaker: Generally smaller, Zach. I mean, we're evaluating some smaller bolt-on opportunities, you know, again, generally that are in our backyard, you know, again, focusing on the Chalk and Eagleford, where we, again, think we have a competitive advantage through our subsurface knowledge and experience. It's really in these areas where we think the development teams can create better value for the shareholder and for Magnolia over time and improve the opportunity set.

Christopher Stavros: Generally smaller, Zach. I mean, we're evaluating some smaller bolt-on opportunities, you know, again, generally that are in our backyard, you know, again, focusing on the Chalk and Eagleford where we, again, think we have a competitive advantage through our subsurface knowledge and experience.

Christopher Stavros: um you know it's really in these areas where we think the development teams can create better value for the shareholder and for Magnolia over time and improve the opportunity set but I would tell you right now given this heightened level of uncertainty things have generally slowed down a bit um maybe said differently the bid-ask between buyers and sellers has probably widened so I think it's if people have fallen back to a little bit more of a neutral position um the clearing price may may work for one but not necessarily the other Thanks, Chris.

Unnamed Speaker: But I would tell you, right now, given this heightened level of uncertainty, things have generally slowed down a bit, maybe said differently, the bid-ask between buyers and sellers has probably widened. So I think people have fallen back to a little bit more of a neutral position. The clearing price may work for one, but not necessarily the other.

Oliver Huang: Oliver, Wong, Lip, TPH. Please go ahead. Good morning, Chris and Brian, and thanks for taking the question. I just had one from my end on capital allocation. I know – I mean just really hoping you all might be able to elaborate on the internal thought process a bit more just given how dynamic the commodity price environment is today. I know there's the less than 55% of EBITDAX, which acts as a governor on reinvestment rate for you all. And you've highlighted flexibility in your opening remarks, but just what might we need to – occur to take a closer look at the program in the case commodity risk to the downside does play out, and would this come in the form of incremental completion deferrals?

Brian Corales: Thanks, Brian. Thanks.

Oliver Huang: Oliver, Wong with TPH. Please go. Good morning, Chris and Brian, and thanks for taking the question.

Oliver Huang: I just had one from my end on capital allocation.

Oliver Huang: I'm just really hoping you all might be able to elaborate on the internal thought process a bit more, just given how dynamic the commodity price environment is today. I know there's the less than 55% of EBITDAX, which acts as a governor on reinvestment rate for you all, and you've highlighted flexibility in your opening remarks. But just what might we need to see occur to take a closer look at the program in the case commodity risk to the downside does play out? And would this come in the form of incremental completion deferrals, or would we get to the point of maybe a rate dropping off?

Unnamed Speaker: We get to the point of.

Unnamed Speaker: rig drop. Yeah, right now, I mean, not that I won't tell you that. That thought hasn't pierced my brain or anybody around here as far as, you know, curtailing activity, but considering that that we're in a good position in terms of, you know, the production outperformance and our flexibility around rig operators and our frack crew. I mean, we just don't find ourselves in a position to need to do that right now.

Christopher Stavros: Yeah, right now, I mean, not that I won't tell you that That thought hasn't pierced my brain, or anybody around here as far as, you know, curtailing activity, but considering that we're in a good position in terms of, you know, the production outperformance and our flexibility around rig operators and our frack crew. I mean, we just don't find ourselves in a position to need to do that right now. We have a lot of flexibility. You know, so our plan is, maybe to be more pointed, our plan is not to drop a rig here. We just don't have any reason to do that.

Unnamed Speaker: We have a lot of flexibility, you know, so our plan is maybe to be more pointed, our plan is not to drop a rig here. We just don't have any reason to do that, but we'll continue to monitor the product price environment, you know, around supply-demand conditions, and we'll sort of see how things go. And as you pointed out, we have the governor at the ceiling on capital, 55% of gross cash flow. So, you know, I'm not overly concerned about it right now. Could it get worse? Could it get better? Sure. We'll just have to monitor it.

Christopher Stavros: But we'll continue to monitor the product price environment, you know, around supply-demand conditions. And as you pointed out, we have the governor at the ceiling on capital, 55% of gross cash flow. So I'm not overly concerned about it right now. Could it get worse? Sure. Could it get better? Sure. We'll just have to monitor it. But we have a lot of flexibility that if we needed to, we could defer some things further into next year. Again, I said it's about a thousand wells, roughly, you know, but it's all within the outlook that we generally provided you on the production.

Unnamed Speaker: But we have a lot of flexibility. I said, you know, if we needed to, we could defer some things further into next year. Again, as I said, it's about a half a dozen wells, roughly, but it's all within the outlook that we generally provided you on the production, so I don't feel necessarily overly pressured at this point in time. We'll just have to wait and see how things pan out as we move through the year.

Christopher Stavros: So I don't feel necessarily overly pressured at this point in time.

Christopher Stavros: We'll just have to wait and see how things pan out as we move through the year.

Unnamed Speaker: And maybe just a quick follow up on service costs. I understand negotiations are likely ongoing, but just anything that you're seeing on either the drilling or frack pricing side of things commensurate to any sort of softness we're seeing on the product side. Yeah, I mean, for the second quarter, I would tell you probably overall pricing is roughly flat with the first quarter. I mean, drilling efficiency gains are offsetting some of the... small increases on OCTG pricing, and those are, you know, the OCTG steel-related, really very small in the scheme of our overall well cost, really, as a result.

Oliver Huang: Perfect. That makes sense.

Christopher Stavros: And maybe just a quick follow up on service costs. I understand negotiations are likely ongoing, but just anything that you're seeing on either the drilling or frag pricing side of things, commensurate to any sort of softness we're seeing on the product side. Yeah, I mean, for the second quarter, I would tell you probably overall pricing is roughly flat with the first quarter. Um, I mean, drilling efficiency gains are offsetting some of the small increases on OCTG pricing, and those are OCTG steel-related, really very small in the scheme of our overall well cost, really, as a result .

Unnamed Speaker: steel tariffs, but we do have a lot of flexibility with it within both our rigs and FRAC service providers.

Christopher Stavros: Steel Tariffs, but we do have a lot of flexibility within both our rigs and track service providers.

Unnamed Speaker: I'm not going to go into the specific terms. On other materials and items, We're probably seeing some relief, for sure, as you can imagine on things like diesel pricing. We use a lot of diesel. which has offset some of the small price increases that might be relatively fluid in things like chemicals. Valves and other type services. But I if this is sort of the picture in terms of what you're seeing on on the screen for commodity price as we move through the year, you know, back half of the year, you know, with a five handle on oil.

Christopher Stavros: I'm not going to go into the specific terms. On other materials and items, We're probably seeing some relief, for sure, as you can imagine on things like diesel price. I'll be using a lot of these. which has offset some of the small price increases that might be relatively fluid in things like chemicals. valves and other type services. But I, if this is sort of the picture, in terms of what you're seeing on on the screen for commodity price As we move through the year, you know, back half of the year, you know, with a five-handle on oil.

Unnamed Speaker: you know, 350-ish on gas. I wouldn't imagine that there's going to be a ton of upside pressure on pricing. In fact, I would take the other side of it. There'd probably be some softness as you go through the back half of the year.

Christopher Stavros: you know, 350-ish on gas. I wouldn't imagine that there's going to be a ton of upside pressure on pricing. In fact, I would take the other side of it. There'd probably be some softness as you go through the back half.

Operator: Thanks for the time, Chris.

Noah Hungness: Awesome. Thanks for the time, Chris.

Tim Moore: Your next question comes from Tim Moore with Clear Street. Please go ahead. Thanks, and great execution on the quarter and the guidance raised.

Operator: Our next question comes from Tim Moore with Clear Street. Please go ahead. Thanks, and great execution on the quarter and the guidance raised.

Unnamed Speaker: So, for just forgetting, you know, I get asked a lot about this because you have so much untapped potential there and, you know, you're probably planning to do some more peripheral land fringe study work. You know, as Chris has mentioned in the past, you know, those acres lines aren't smooth, they're not homogenous, and they're more staggered, odd shapes. You know, it's probably harder to apply a logical approach for appraisal drilling.

Tim Moore: So for just forgetting, you know, I get asked a lot about this because you have so much untapped potential there. And, you know, you're probably planning to do some more peripheral land fringe study work. You know, as Chris has mentioned in the past, you know, those acres lines aren't smooth. They're not homogenous and they're more staggered odd shapes. You know, it's probably harder to apply a logical approach for appraisal drilling.

Unnamed Speaker: But, you know, I'm just wondering, you know, I know Chris started talking about this in his first question response today, if you can, you know, elaborate more color maybe on, you know, how you landed on that acreage, just, you know, maybe with an example, you know, pinpointing where it is and really how you're maybe trying to hop around. If you're going to be hopping around more this year, then maybe you would expect a couple of years down the road, just because, you know, you've only been working a little bit over a year. Well, the particular acreage that we highlighted within, you know, where the wells outperformed, I mean, some of this was part of our original area within Giddings, going back from the beginning.

Christopher Stavros: But, you know, I'm just wondering, you know, I know Chris started talking about this in his first question response today. If you can, you know, elaborate more color, maybe on, you know, how you landed on that acreage, just, you know, maybe with an example, you know, pinpointing where it is and really how you're maybe trying to hop around. If you're going to be hopping around more this year than maybe you would expect a couple of years down the road, just because, you know, you've only been working on it for a little bit over a year.

Christopher Stavros: Well, the particular acreage that we highlighted within, you know, where the wells outperformed, I mean, some of this was part of our original area within Giddings, going back from the beginning. And part of it was, as we appraised some of it, some of the area, part of it was also acquired after that as part of a package, you know, a couple of years ago, at least, I think two, two plus years ago. So we continue to scowl around for opportunities to fill in. uh holes within our acreage where we think um you know, conditions are ripe for further You know, develop an area that looks That's great.

Unnamed Speaker: And part of it was, as we appraised some of it, some of the area, part of it was also acquired after that as part of a package, you know, a couple of years ago, at least, I think two, two plus years ago. So we continue to scour around for opportunities to fill in. holes within our acreage where we think you know, conditions are ripe for further like the same thing we've been seeing in and around Ginnings, so it's a little bit of the extension of the boundaries. I can't do much about, you know, lease lines.

Unnamed Speaker: It is what it is, but nevertheless, you know, we continue to look for opportunities to acquire or even potentially lease more or whatever to pursue, you know, further opportunity set over time.

Unnamed Speaker: Thanks for that color, and that was it for my questions.

Tim Moore: Thanks for that color.

Tim Moore: And that was it for my questions.

Noah Hungness: Noah Hungness with Bank of America. Please go ahead.

Operator: Morning, Chris and Brian.

Unnamed Speaker: For my first question here, it was, how can you think about the oil cut through the remainder of 2025? I mean, with the increased production growth guidance, is it also fair to assume that we'll have some oil growth along with that, some additional oil growth? I think we'll have, based on what we're looking at, I think we'll have a little bit of absolute oil growth, oil volumes, a little bit. you know, through the year. on a percentage basis, I think it'll remain relatively stable and quite similar to what we've seen. It might bounce around, but within, call it roughly a percent or so.

Noah Hungness: Morning, Chris and Brian.

Noah Hungness: Um, for my first question here, it was, how can you think about like the oil cut through the remainder of 25? I mean, with the increased production growth guidance, is it also fair to assume that we'll have some oil growth along with that some additional oil growth? I think we'll have, based on what we're looking at, I think we'll have a little bit of absolute oil growth, oil volumes, a little bit. you know, through the year. On a percentage basis, I think it'll remain relatively stable and quite similar to what we've seen. It might bounce around, but within, call it roughly a percent or so, but we were sort of 40%, so maybe 40, 41% in that vicinity.

Unnamed Speaker: But we were sort of 40%, so maybe 40, 41% in that vicinity. But based on what we're seeing right now, in terms of the planning for the wells through the year, it looks like maybe we'll see a little bit... of additional oil in coming quarters, but fairly stable.

Christopher Stavros: But based on what we're seeing right now in terms of the planning for the wells through the year, it looks like, you know, maybe we'll see a little of additional oil. Incoming Quarters, but you know, fairly stable.

Unnamed Speaker: Great.

Unnamed Speaker: And then on my next question, it's on G, P and T costs. I think it was a little higher than what we were expecting. As we kind of see natural gas still in a contango for the forward curve, how can we think about G, P and T costs trending through the rest of 2025? I mean, most of the increase that you see, I mean, these things, GP&T tends to move in tandem with gas prices. So generally, you know, the move is in about the same direction, not necessarily linearly, but there's other variables as well that might impact GP&T, but generally in a similar broad direction.

Noah Hungness: And then on my next question, it's on GP&T costs. I think it was a little higher than what we were expecting.

Christopher Stavros: As we kind of see natural gas still in a contango for the forward curve, how can we think about GP&T costs trending through the rest of 2025 and also into 2021? I mean, most of the increase that you see, I mean, these things, GP&T tends to move in tandem with gas prices. So generally, you know, the move is in about the same direction, not necessarily linearly, but there's other variables as well, but that might impact GP&T, but generally in a similar broad direction. So if gas prices should G.P. and T. would move generally in the same direction, and alternatively the opposite would That's the end of the question and answer session.

Unnamed Speaker: So if gas prices should spike or rise further into summer or, you know, as you get more into winter, I would imagine. Class B Class C would move generally in the same direction and alternatively the opposite would be the case.

Operator: This is the end of the question and answer session.

Operator: Thank you for attending today's presentation.

Operator: Your conference is now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.

Q1 2025 Magnolia Oil & Gas Corp Earnings Call

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