Q4 2025 Magnolia Oil & Gas Corp Earnings Call

February 6, 2026

Speaker #1: Good morning, everyone, and thank you for participating in Magnolia Oil & Gas Corp Q4 2025 earnings conference call. My name is Chloe, and I will be your moderator for today's call.

Operator: Good morning, everyone, and thank you for participating in Magnolia Oil & Gas Corp Q4 2025 Earnings Conference Call. My name is Chloe, and I will be your moderator 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.

Speaker #1: 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.

Speaker #1: Session. Thank you, Chloe, and good morning,

Tom Fitter: Thank you, Chloe, and good morning, everyone. Welcome to Magnolia Oil & Gas' Q4 earnings conference call. Participating on the call today are Chris Stavros, Magnolia's Chairman, 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. A full safe harbor can be found on Slide 2 of the conference call slide presentation with the supplemental data on our website.

Q4 2025 Magnolia Oil & Gas Corp Earnings Call

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Magnolia Oil & Gas

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Q4 2025 Magnolia Oil & Gas Corp Earnings Call

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Friday, February 6th, 2026 at 4:00 PM

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Speaker #2: Everyone, welcome to Magnolia Oil & Gas's Q4 earnings conference call. Participating on the call today are Chris Stavros, Magnolia's Chairman, President, and Chief Executive Officer, and Brian Corales, Senior Vice President and Chief Financial Officer.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: A full safe harbor can be found on slide 2 of the conference call slide presentation with the supplemental data on our website. You can download Magnolia's Q4 2025 earnings press release, as well as the conference call slides, from the investor section of the company's website at www.magnoliaoilgas.com.

Tom Fitter: You can download Magnolia's Q4 2025 earnings press release as well as the conference call slides from the investor section of the company's website at www.magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stavros.

Speaker #2: I will now turn the call over to Mr. Chris.

Speaker #2: Stavros: Thank you, Tom, and good

Chris Stavros: Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our Q4 and full year 2025 financial and operating results. I plan to briefly speak to last year's results, which closed out another year of strong, consistent performance and execution, showing the beneficial characteristics and merits of our differentiated business model, and during a year of elevated product price volatility. Our model has allowed us to deliver strong Free Cash Flow and cash returns to our shareholders, resulting from superior asset performance and our continued focus on capital discipline, cost containment, and visible efficiency improvements. I'll conclude by providing an outlook of Magnolia's 2026 capital and operating plan, which is expected to deliver moderate growth with a similar level of capital spending that provides us with further opportunities to capture low-cost resource across our acreage position.

Speaker #3: Good morning, everyone. We appreciate you joining us today for a discussion of our Q4 and full year 2025 financial and operating results. I plan to briefly speak to last year's results, which closed out another year of strong, consistent performance and execution, showing the beneficial characteristics and merits of our differentiated business model during a year of elevated product-price volatility.

Speaker #3: Our model has allowed us to deliver strong free cash flow and cash returns to our shareholders, resulting from superior asset performance and our continued focus on capital discipline, cost containment, and visible efficiency improvements.

Speaker #3: I'll conclude by providing an outlook of Magnolia's 2026 capital and operating plan, which is expected to deliver moderate growth with a similar level of capital spending. This approach provides us with further opportunities to capture low-cost resource across our acreage position.

Speaker #3: Brian will then review our financial results in greater detail and provide some additional guidance before we take your questions. Beginning on slide 3 of our quarterly investor presentation and looking at the highlights, Magnolia delivered another solid quarter and year of performance marked by steady execution of our capital-efficient business model and our high-quality assets.

Chris Stavros: Ryan will then review our financial results in greater detail and provide some additional guidance before we take your questions. Beginning on Slide 3 of our quarterly investor presentation and looking at the highlights, Magnolia delivered another solid quarter and year of performance marked by steady execution of our capital-efficient business model and our high-quality assets. I'm particularly proud of our ongoing dedication and focus shown by both our operating teams in the field and our Houston staff. Their continued hard work and diligence is a significant factor behind Magnolia's success. Our business performed exceptionally well throughout the year, driven by stronger-than-expected well results, improved efficiencies, lower unit costs, and our commitment to capital discipline, as I mentioned.

Speaker #3: I'm particularly proud of our ongoing dedication and focus shown by both our operating teams in the field and our Houston staff. Their continued hard work and diligence is a significant factor behind Magnolia's success.

Speaker #3: Our business performed exceptionally well throughout the year, driven by stronger-than-expected well results, improved efficiencies, lower unit costs, and our commitment to capital discipline, as I mentioned.

Speaker #3: For the full year 2025, total company production grew by 11% to approximately 100,000 barrels of oil equivalent per day, with oil production growing by 4% and averaging nearly 40,000 barrels per day.

Chris Stavros: For the full year 2025, total company production grew by 11% to approximately 100,000 barrels of oil equivalent per day, with oil production growing by 4% and averaging nearly 40,000 barrels per day. Operationally, we continued to make strides in reducing our field-level cash operating expenses, which declined by 7% to $5.12 per BOE during 2025. The better-than-expected well productivity we experienced during the first half of last year not only provided us with higher production growth in 2025 but also allowed us to save capital by deferring some well completions into this year. Our teams were also able to drive a more efficient drilling and completions program last year in Giddings, with our average drilled feet per day increasing by 8% and with completed feet per day improving by 6%.

Speaker #3: Operationally, we continue to make strides in reducing our field-level cash operating expenses, which declined by 7% to $5.12 per BOE during 2025. The better-than-expected well productivity we experienced during the first half of last year not only provided us with higher production growth in 2025, but also allowed us to save capital by deferring some well completions into this year.

Speaker #3: Our teams were also able to drive a more efficient drilling and completions program last year in Giddings, with our average drilled feet per day increasing by 8%, and with completed feet per day improving by 6%.

Speaker #3: Turning specifically to the fourth quarter, we achieved a new company record for our production, averaging nearly 104,000 barrels of oil equivalent per day and 40,700 barrels of oil per day.

Chris Stavros: Turning specifically to the Q4, we achieved a new company record for our production, averaging nearly 104,000 barrels of oil equivalent per day and 40,700 barrels of oil per day. These both marked a sequential increase of 3% and reflected the continued strong performance from our wells. Financially, the quarter and year were equally strong and aligned with our goal of generating consistent and sustainable free cash flow through disciplined capital allocation. Our Q4 adjusted net income was approximately $71 million or $0.38 per diluted share, with Adjusted EBITDA coming in at $216 million. Our drilling and completion capital for the period was roughly $117 million, representing 54% of our Adjusted EBITDA. Pre-tax operating margins averaged 33% for the year despite a more than 15% annual decline in our oil price realizations.

Speaker #3: These both marked a sequential increase of 3% and reflected the continued strong performance from our wells. Financially, the quarter and year were equally strong and aligned with our goal of generating consistent and sustainable free cash flow through disciplined capital allocation.

Speaker #3: Our Q4 adjusted net income was approximately $71 million, or $0.38 per diluted share, with adjusted EBITDA coming in at $216 million. Our drilling and completion capital for the period was roughly $117 million, representing 54% of our adjusted EBITDAX.

Speaker #3: Pre-tax operating margins averaged 33% for the year, despite a more than 15% annual decline in our oil price realizations. Our low reinvestment rate enabled us to generate free cash flow of more than $425 million for the full year.

Chris Stavros: Our low reinvestment rate enabled us to generate free cash flow of more than $425 million for the full year. We stood by our commitment to return a significant portion of that free cash flow to our shareholders, distributing approximately 75% through a combination of our base dividend and share repurchases. In total, we repurchased approximately 8.9 million shares throughout the course of 2025, reducing our diluted share count by roughly 4.5%. This not only accretes value on a per-share basis but also reinforces our business model that leads to a serial compounding of value. Our balance sheet ended the year in a position of strength, allowing us to navigate product price uncertainty, yet provides us with ample liquidity and a cash balance, giving us flexibility to selectively pursue opportunistic bolt-on additions to our portfolio.

Speaker #3: We stood by our commitment to return a significant portion of that free cash flow to our shareholders, distributing approximately via dividend and share repurchases. In total, we repurchased approximately 8.9 million shares in 2025, reducing our diluted share count by roughly 4.5% throughout the course of the year.

Speaker #3: This not only accretes value on a per-share basis, but also reinforces our business model that leads to a serial compounding of value. Our balance sheet ended the year in a position of strength, allowing us to navigate product price uncertainty, yet provides us with ample liquidity and a cash balance, giving us flexibility to selectively pursue opportunistic bolt-on additions to our portfolio.

Speaker #3: As shown on slide 4, our strategy is designed to produce steady mid-single-digit total production growth, high pre-tax margins, reliable free cash, and a strong balance sheet.

Chris Stavros: As shown on Slide 4, our strategy is designed to produce steady mid-single-digit total production growth, high pre-tax margins, and reliable free cash flow while maintaining a low reinvestment rate and a strong balance sheet. The strength of this model and the strategy is clear when looking at Magnolia's longer-term performance across these key financial metrics. Looking at Slide 5, Magnolia has maintained one of the lowest capital reinvestment rates among the US oil and gas producers over the past five years while delivering one of the highest rates of production growth per share. As shown on Slide 6, Magnolia continues to achieve strong pre-tax operating margins driven primarily by our low-cost, high-quality asset base, which is also in close proximity to large consuming markets on the US Gulf Coast. Slide 7 highlights the continued strength of our balance sheet, which remains best-in-class in the industry.

Speaker #3: The strength of this model and the strategy is clear when looking at Magnolia's longer-term performance across these key financial metrics. Looking at the lowest capital reinvestment rates among the slide 5, Magnolia has maintained one of the lowest in US oil and gas producers over the past five years, while delivering one of the highest rates of production growth per share.

Speaker #3: As shown on slide 6, Magnolia continues to achieve strong pre-tax operating margins, driven primarily by our low-cost, high-quality asset base, which is also in close proximity to large consuming markets on the US Gulf Coast.

Speaker #3: Slide 7 highlights the continued strength of our balance sheet, which is industry leading. Maintaining low leverage is a critical part of our strategy, as it reduces financial risk while preserving substantial flexibility and strategic optionality.

Chris Stavros: Maintaining low leverage is a critical part of our strategy as it reduces financial risk while preserving substantial flexibility and strategic optionality. While many oil and gas operators often excel in one or two of these areas, we believe that a combination of our low capital reinvestment rate, above-average per-share growth, high operating margins, and minimal debt is unique, especially for a small to midsize operator. This powerful recipe allows us to generate high corporate returns, maximize our free cash flow generation, and sustain our strong and consistent capital return program for shareholders. Slide 8 illustrates our corporate-level returns, showing 2025 as another strong year with return on capital employed, ROCE, of 18% and well above our cost of capital despite year-over-year lower oil prices. Over the last five years, Magnolia has generated an average ROCE of 34% and more than three times our weighted average cost of capital.

Speaker #3: While many oil and gas operators often excel in one or two of these areas, we believe that our combination of a low capital reinvestment rate, above-average per-share growth, high operating margins, and minimal debt is unique, especially for a small- to mid-size operator.

Speaker #3: This powerful recipe returns, maximizing our free cash flow generation and sustain, allows us to generate high corporate, our strong and consistent capital return program for shareholders.

Speaker #3: Slide 8 illustrates our corporate-level returns, showing 2025 is another strong year with return on capital employed, or ROC, of 18% and well above our cost of capital despite year-over-year lower oil prices.

Speaker #3: Over the last five years, Magnolia has generated an average ROC of 34% and more than three times our weighted average cost of capital. These exceptional returns stem from our prudent low debt levels, ongoing share capital allocation, consistent repurchase program, and, perhaps most importantly, our low-cost, high-quality assets.

Chris Stavros: These exceptional returns stem from our prudent capital allocation, consistent low debt levels, ongoing share repurchase program, and perhaps most importantly, our low-cost, high-quality assets. Case in point, Magnolia added approximately 50 million BOE proved developed reserves during the year. When accounting for all expenditures to add these reserves, this resulted in organic proved developed finding and development costs, or F&D, of $9.25 per BOE. During the three-year period from 2023 to 2025, Magnolia's organic proved developed F&D costs averaged $9.85 per BOE. This demonstrates our high-quality and low-cost of supply asset base. Looking ahead into 2026, we're committed to the principles that have guided us from the start and have proven to be successful thus far. We plan to remain fiscally prudent and disciplined with our capital spending expected to be approximately flat year-over-year while delivering total production growth of approximately 5%.

Speaker #3: Case in point, Magnolia added approximately $50 million BOE of proved developed reserves during the year. When accounting for all expenditures to add these reserves, this resulted in organic proved developed finding and development costs, or F&D, of $9.25 per BOE.

Speaker #3: Period from 2023 to 2025, Magnolia's organic proved during the three-year developed F&D costs averaged $9.85 per BOE. This demonstrates our high-quality and low-cost-of-supply asset. Ahead into 2026, we're base.

Speaker #3: Looking committed to the principles that have guided us from the start and have proven to be successful thus far, we plan to remain fiscally prudent and disciplined, with our capital spending expected to be approximately flat year-over-year while delivering total production growth of approximately 5%.

Speaker #3: As I've often said, Magnolia's primary goals and objectives are to be the most prudent and efficient, to be the most efficient operator of our best-in-class oil and gas assets, to generate the highest return on those assets while spending the least amount of capital on drilling and completing wells no matter what the product price.

Chris Stavros: As I've often said, Magnolia's primary goals and objectives are to be the most prudent and efficient to be the most efficient and our best-in-class oil and gas assets to generate the highest return on those assets while spending the least amount of capital on drilling and completing wells, no matter what the product price. Last year was another example of our successful delivery on these goals. We achieved double-digit production growth with less capital than originally planned, repurchased more than 4% of our outstanding shares, recently announced a 10% increase in our dividend, our fifth consecutive annual increase, and completed approximately $67 million of bolt-on acquisitions, furthering our resource opportunity set. To summarize, Magnolia is well positioned and consistently guided by the principles of our business model.

Speaker #3: Last year was another of these goals. We achieved double-digit production growth with less capital than originally planned, repurchased more than 4% of our outstanding shares, recently announced a 10% increase in our dividend—our fifth consecutive annual increase—and completed approximately $67 million of bolt-on acquisitions, furthering our resource opportunity set.

Speaker #3: To summarize, Magnolia is well-positioned and consistently guided by the principles of our business model. Our high-quality assets and strategy, continued capital spending discipline, proactive cost management, and pursuit of further operational efficiencies should serve us well during periods of product-price volatility.

Chris Stavros: Our high-quality assets and strategy of continued capital spending discipline, proactive cost management, and pursuit of further operational efficiencies should serve us well during periods of product price volatility. Our consistent policy of low leverage and the lack of commodity hedges is central to our strategy, providing us with downside protection while also allowing for upside to product prices and the ability to generate value through commodity cycles. I'll now turn the call over to Brian for a review of our financials and provide some additional guidance.

Speaker #3: Our consistent policy of low leverage and lack of commodity hedges is essential to our strategy, providing us with downside protection while also allowing for upside to product prices and the ability to generate value through commodity cycles.

Speaker #3: I'll now turn the call over to Brian for review of guidance.

Speaker #3: our financials, and to provide some additional

Speaker #2: Thanks, Chris, and good morning, everyone. Our

Brian Corales: Thanks, Chris, and good morning, everyone. I will review some items from our Q4 full year results and refer to the presentation slides found on our website. I'll also provide some additional guidance for the first quarter of 2026 and the remainder of the year before turning it over for questions. Magnolia ended 2025 with a strong performance across our operations. Starting on Slide 10, during the Q4, we generated total adjusted net income of $71 million or $0.38 per diluted share. Our Adjusted EBITDA for the quarter was $216 million, with total capital associated with drilling, completions, and associated facilities of $117 million, representing 54% of our Adjusted EBITDA. For the full year, Adjusted EBITDA was $906 million, with D&C capital representing 51% of EBITDA. Q4 production volumes grew 11% year-over-year to 103,800 barrels of oil equivalent per day.

Speaker #2: Full-year results and refer to the presentation slides found on our website. I'll review some items from our fourth quarter and also provide some additional guidance for 2026 and the remainder of the quarter for the first quarter of the year, before turning it over for questions.

Speaker #2: Magnolia ended operations. Starting on slide 10, during the fourth quarter, we generated total adjusted net income of $71 million, or $0.38 per diluted share.

Speaker #2: Our adjusted EBITDA for the quarter was $216 million, with total capital associated with drilling, completions, and associated facilities of $117 million, representing 54% of our adjusted EBITDA.

Speaker #2: For the full year, adjusted EBITDA was $906 million, with D&C capital representing 51% of EBITDA. Fourth quarter production volumes grew 11% year-over-year to 103.8 thousand barrels of oil equivalent per day.

Speaker #2: For the full year, production volumes grew 11% to 99.8 thousand barrels of oil equivalent per day, with oil growth of 4%. During the year, we repurchased a total of 8.9 million shares, and our diluted share count fell by 4% year-over-year.

Brian Corales: For the full year, production volumes grew 11% to 99.8 thousand barrels of oil equivalent per day, with oil growth of 4%. During the year, we repurchased a total of 8.9 million shares, and our diluted share count fell by 4% year-over-year. Looking at the quarterly cash flow waterfall chart on Slide 11, we started the year with $260 million of cash. Cash flow from operations before changes in working capital was $906 million, with working capital changes and other small items impacting cash by $41 million. Throughout the year, we added $67 million of bolt-on acquisitions. We paid dividends of $117 million and allocated $205 million towards share repurchases. We incurred $469 million on drilling completions, and associated facilities, and leasehold and ended the year with $267 million of cash.

Speaker #2: Looking at the quarterly cash flow waterfall chart on slide 11, we started the year with flow from operations before changes in working capital of $906 million, with working capital changes and other small items impacting cash by $41 million.

Speaker #2: Throughout the year, we added $67 million of bolt-on acquisitions. We paid dividends of $117 million towards share repurchases. We incurred $469 million on drilling, completions, and associated cash.

Speaker #2: Looking at slide 12, this chart illustrates the progress in reducing our total outstanding shares. Since we began our facilities and leasehold and ended the year with the repurchase program in the second half of 2019, since that time, we have repurchased 81.8 million shares, leading to a change in weighted average diluted shares outstanding of approximately 27% net of issuances.

Brian Corales: Looking at Slide 12, 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 81.8 million shares, leading to a change in weighted average diluted shares outstanding of approximately 27% net of issuances. Magnolia's weighted average diluted share count declined by more than 2 million shares sequentially, averaging 188 million shares during the Q4. As Chris discussed, the board recently approved a 10 million share increase to our share repurchase authorization, leaving 12.9 million shares remaining under our current repurchase authorization, which are specifically directed towards repurchasing Class A shares in the open market. Turning to Slide 13, our dividend has grown substantially over the past few years, including a 10% increase we recently announced to $0.16 per share on a quarterly basis.

Speaker #2: Magnolia's weighted average diluted share count declined by more than 2 million shares sequentially, averaging 188 million shares during the fourth quarter. As Chris discussed, the board recently approved a 10 million share increase to our share repurchase authorization, leaving 12.9 million shares remaining under our current repurchase authorization, which are specifically directed towards repurchasing Class A shares in the open market.

Speaker #2: Turning to slide 13, our dividend has grown substantially over the past few years, including a 10% increase we recently announced to $16.50 per share on a quarterly basis.

Speaker #2: Our next quarterly dividend is payable on March 2 and provides an annualized dividend payout rate of $0.66 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and is supported by our overall strategy of achieving moderate annual production growth.

Brian Corales: Our next quarterly dividend is payable on 2 March and provides an annualized dividend payout rate of $0.66 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by our 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 $267 million of cash. Our $400 million of senior note does not mature until 2032. Including our Q4 ending cash balance of $267 million and our undrawn $450 million revolving credit facility, our total liquidity is approximately $717 million. Our cadence balance sheet as of 31 December is shown on Slide 14. Turn to Slide 15, looking at our per-unit cash cost and operating income margins.

Speaker #2: 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 $267 million of cash.

Speaker #2: Our $400 million of senior notes do not mature until 2032. Including our fourth quarter ending cash balance of $267 million and our undrawn $450 million revolving credit facility, our total liquidity is approximately $717 million.

Speaker #2: Our condensed balance sheet as of December 31st is shown on slide 14. Turn to slide 15 and look at our per unit cash cost and operating income margins.

Speaker #2: Total revenue per BOE declined 13% quarter over quarter due to the decline in oil prices. Our total adjusted cash operating cost, including G&A, was $10.64 per BOE in the fourth quarter of 2025.

Brian Corales: Total revenue per BOE declined 13% quarter over quarter due to the decline in oil prices. Our total adjusted cash operating costs, including G&A, were $10.64 per BOE in the Q4 of 2025. Our operating income margin for the Q4 was $9.85 per BOE, or 30% of our total revenue. The decrease in our quarter over quarter pre-tax operating margin was entirely driven by the decrease in commodity prices and were further benefited from lower D&A expense. On Slide 16, Magnolia continues to have a very successful organic drilling program. The total proved developed reserves at year-end 2025 were 167 million barrels of oil equivalent. Excluding acquisitions and price-related revisions, the company added 50 million barrels of oil equivalent of proved developed reserves during the year.

Speaker #2: Our operating income margin for the fourth quarter was $9.85 per BOE, or 30% of our decrease in our quarter-over-quarter total revenue. The pre-tax operating margin was entirely driven by the decrease in commodity from lower D&A expense.

Speaker #2: On slide 16, Magnolia continues to have a very successful organic drilling program. The total proved developed reserves at year-end 2025 were 167 million barrels of oil equivalent.

Speaker #2: Excluding acquisitions and price-related revisions, the company added 50 million barrels of oil equivalent of proved developed reserves during the year. Total drilling and completions capital was $461 million in 2025, resulting in an organic proved developed F&D cost of $9.25 per BOE and reflective of our current drilling program.

Brian Corales: Total drilling and completions capital was $461 million in 2025, resulting in organic proved developed F&D costs of $9.25 per BOE and reflective of our current drilling program. The three-year average organic proved developed F&D cost was $9.85 per BOE. Turning to guidance, we expect our 2026 drilling completions and facility capital to be in the range of $440 to $480 million, which includes an estimate of non-operated capital that is similar to that of 2025. At the midpoint, this is similar to prior years' capital cost despite planning more wells in 2026. We expect Q1 D&C capital expenditures to be approximately $125 million and anticipate this to be the highest quarterly rate of spending for the year.

Speaker #2: The three-year average organic proved developed per BOE. Turning to guidance, we expect our 2026 drilling F&D cost was $9.85. Completions and facility capital to be in the range of $440 to $480 million, which includes an estimate of non-operated capital that is similar to that of 2025.

Speaker #2: At the midpoint, this is similar to prior years' capital cost despite planning more wells in 2026. We expect first-quarter D&C capital expenditures to be approximately $125 million and anticipate this to be the highest quarterly rate of spending for the year.

Speaker #2: Total production for the first quarter is estimated to be approximately 102,000 barrels of oil equivalent per day, which includes approximately 1,500 barrels of oil equivalent per day of winter weather impacts experienced in January.

Brian Corales: Total production for the first quarter is estimated to be approximately 102,000 barrels of oil equivalent per day, which includes approximately 1,500 barrels of oil equivalent per day of winter weather impacts experienced in January. Total full year 2026 production growth is expected to be approximately 5%. Oil price differentials are anticipated to be approximately $3 per barrel discount to Magellan East Houston, and Magnolia remains completely unhedged for all of its oil and natural gas production. The fully diluted share count for the first quarter of 2026 is expected to be approximately 187 million shares, which is 4% lower than first-quarter 2025 levels. We expect our effective tax rate to be approximately 21%, with all of this being deferred. We are now ready to take your questions.

Speaker #2: Total full-year 2026 production growth is expected to be approximately 5%. Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, and Magnolia remains completely unhedged for all of its oil and natural gas production.

Speaker #2: For the first quarter of 2026, the fully diluted share count is expected to be approximately 187 million shares, which is 4% lower than first quarter 2025 levels.

Speaker #2: We expect our effective tax rate to be approximately 21%, with all of this being deferred. We are now ready to take your

Speaker #2: questions. We will now

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're 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. The first question comes from Neal Dingmann with William Blair. Please go ahead.

Speaker #1: We will begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Speaker #1: 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.

Speaker #1: The first question comes from Neal Dingmann with William Blair. Please go ahead.

Neal Dingmann: Morning, guys. Nice to see another strong quarter, Chris and team. Chris, my first question is to jump right to the Giddings play. Specifically, looking at our well data, it suggests that a number of your recent wells not only continue to outperform the type curves, but they certainly appear to be some of the best drilled to date. I'm just wondering, with that said, has there been notable operational changes? Is it more because you're in pure development for a lot of that now? What do you attribute most of this continued upside to?

Speaker #3: Another strong quarter, Chris and team. Morning, guys. Nice to see you, Chris. My first question is to jump right to the getting play. Specifically, looking at our well data suggests that a number of your recent wells not only continue to outperform the type curves, but they certainly appear to be some of the best drilled to date.

Speaker #3: I'm just wondering, with that said, has there been notable operational changes? Is it a lot of that now? What do you attribute most of this continued upside to?

Speaker #4: Morning, Neal. Thanks for the question, and also for pointing it out. We did notice it as well. They're producing—the wells are very strong.

Chris Stavros: Good morning, Neal. Thanks for the question and also for pointing it out. We did notice it as well. The wells are very strong. They're producing a lot of everything. I'm not sure exactly which specific wells that you're referring to, but many of them have performed very well. I can't point to anything specific or very different in terms of the completion design, if that's a little bit of what you're asking. I think what you're seeing is simply the outcome of drilling into some very good rock. I think when we take a lot of and make a lot of effort in terms of locating the wells and placing the wells, there's a better than decent chance that you'll see more of this. So there's nothing specific that I can say that we've changed. We've just gotten better at it with time.

Speaker #4: They're producing a lot of everything, and I'm not sure exactly which specific wells that you're referring to, but many of them have performed very well.

Speaker #4: I can't point to anything very different, in terms of anything specific or of the completion design, if that's a little bit of what you're asking. I think what you're seeing is simply the outcome of drilling into some very good rock.

Speaker #4: And I think when we take a lot of—and make a lot of effort in terms of locating the wells and placing the wells—I think there's a better than decent chance that you'll see more of this.

Speaker #4: So there's nothing specific that I can say that we've changed. We've just gotten better at it with time.

Neal Dingmann: No, that's obvious to see. And then second question, moving over to M&A. Specifically, could you discuss? I know you'll look at sort of all the above, I think, as any operator would. But what we've noticed out there, I mean, we've seen record prices paid for Delaware. We've seen big prices paid for PDP-heavy things. I guess sort of twofold here. Are you looking sort of at all the above? And when it comes to the goings-on around your area particularly, are we seeing prices increase there like we've seen in a lot of these other areas?

Speaker #3: Then, second question, moving—no, that's obvious to see. And over to M&A, physically, can you discuss—you'll look at sort of all of the above, I think, as any of Stuart would—but what we've noticed out there, I mean, we've seen record prices paid for Delaware.

Speaker #3: We've seen big prices paid for PDP-heavy things. I guess it's sort of twofold here. What are you looking at, sort of, at all of the above, and when it comes to the gettings around your area in particular, are we seeing prices increase there like we've seen in a lot of areas?

Speaker #3: We've seen big prices paid for PDP-heavy things. I guess sort of twofold here. What are you looking at, sort of at all of the above, and when it comes to the gettings around your area in particular, are we seeing prices increase there like we've seen in a lot of these other...

Chris Stavros: Yeah. Brian put some numbers around the bolt-on transactions, acquisitions, some of the ground game that has led to some of the bolt-ons that we've done over the last couple of years. And what I'd say is that it's not predictable. But we've done a good job, I think, with that ground game in gettings, Western Eagle Ford, Karnes area. I really do expect it to continue. Like I said, it's just tough to predict in terms of the timing. The competition, I would tell you, has risen over the last year. The larger the opportunity or maybe deal size or item that you might be looking for, the tougher it is and maybe the more expensive it is. But we've done a good job of better understanding the things that we're looking for in terms of the subsurface and in and around where we currently operate.

Speaker #4: Put some numbers around the bolt-on transactions, acquisitions, and some of the ground game that has led to some of the bolt-ons that we've done over the last couple of years.

Speaker #4: And what I'd say is that it's not predictable. But we've done a good job, I think, with that ground game in getting Western Eagle expected to for Carnes area.

Speaker #4: Continue. Like I said, it's just tough to predict in terms of the timing. The competition, I would tell you, really has risen over the last year—the larger the opportunity, or maybe deal size or item that you might be looking for.

Speaker #4: The tougher it is, and maybe the more expensive it is, but we've done a good job of better understanding the things that we're looking for in terms of the subsurface and in and around where we currently operate.

Speaker #4: I'm not, and never really have been, a big proponent of very large PDP-heavy deals, as you're more likely to pay full value for these—or even higher.

Chris Stavros: I'm not and never really have been a big proponent of very large PDP-heavy deals, as you're more likely to pay full value for these or even higher. I think part of that is within your question in terms of what you might be seeing in the Permian in the Delaware. I really much prefer to focus on opportunities where we have more undeveloped upside. But you're generally right. The prices for acreage have climbed. I mean, we're not out there looking to build a data center anytime soon in terms of what you're seeing for what's happening in real estate or land prices. But for all I know, we could be competing with some of those who are looking to build a data center. I just don't know. But it's certainly reflected in some of the elevated levels of pricing.

Speaker #4: Within your question, in terms of what you might—I think part of that is being seen in the Permian and the Delaware. I really much prefer to focus on opportunities where we have more, generally. Right.

Speaker #4: Undeveloped upside. But your acreage has climbed. I mean, we're not out there looking to build soon. In terms of what a data center—anytime, you're seeing what's happening in real estate or land prices. But for all I know, we could be competing with the prices for those—some of those who are looking to build a data center.

Speaker #4: Know. But it's certainly reflected in—I just don't—some of the elevated levels of

Speaker #4: pricing. Well, thanks,

Neal Dingmann: Well said. Thanks, Chris.

Speaker #3: Chris, the next question comes from Neal Dingmann.

Operator: The next question comes from Philip Jungworth with BMO. Please go ahead.

Speaker #1: Philip Jungworth with BMO. Please go ahead.

Speaker #5: Yeah, thanks. Good

Philip Jungworth: Yeah. Thanks. Good morning.

Phillip Jungwirth: Yeah. Thanks. Good morning.

Speaker #4: Good

Speaker #4: morning.

Neal Dingmann: Good morning.

Chris Stavros: Good morning.

Speaker #5: You called out the faster cycle times last year and the morning release. Was also hoping you could talk to well cost reductions and how those might have contributed to the better capital efficiency and lower F&D.

Philip Jungworth: You called out the faster cycle times last year in the release. Was also hoping you could talk to well cost reductions and how those might have contributed to the better capital efficiency and lower F&D. Any expectations here as we go into 2026 or what you're seeing on the service cost front?

Phillip Jungwirth: You called out the faster cycle times last year in the release. Was also hoping you could talk to well cost reductions and how those might have contributed to the better capital efficiency and lower F&D. Any expectations here as we go into 2026 or what you're seeing on the service cost front?

Speaker #5: And any expectations here as we go into 2026, or what you're seeing on the service cost front?

Speaker #4: Yeah, sure. We had been, if I go back a year, at a standard cost plus we were looking—or a cost of a standard getting—as well as sort of maybe $1,100 a foot.

Chris Stavros: Yeah. Sure. We had been, if I go back a year plus, we were looking at a standard cost of a standard Giddings well as sort of maybe $1,100/ft. And it was trending through that period up to now, maybe down towards $1,000/ft. So I think that's sort of what we're looking at right now for a standard Giddings well, which is between 8,000ft and 8,500ft. So something between that probably gives you a reasonable estimate and maybe closer to $1,000/ft, if that helps you. On the service costs, things are flat to slightly down into this year. But we'll see where this goes as far as commodity prices. We have regular conversations with our service partners, and we want to keep them working because they've been good partners.

Speaker #4: And it was trending through that period up to now, maybe down towards $1,000 a foot. So I think that's sort of what we're looking at right now for a standard Gettings well, which is between 8,000 to 8,500 feet.

Speaker #4: So something between that probably gives you a reasonable estimate, and maybe closer to $1,000 a foot, if that helps you. On the service, things are flat to slightly down in costs into this year, but we'll see where this goes.

Speaker #4: As far as commodity prices, we have regular conversations with our service partners, and we want to keep them working because they've been good partners.

Speaker #4: Most recently, this has been a tough way to make a living. I think the OFS market can continue to experience some pricing pressure going through this year, and certainly at prices for oil at $60 or below.

Chris Stavros: Most recently, this has been a tough way to make a living. I think the OFS market can continue to experience some pricing pressure going through this year, and certainly if prices for oil are $60 or below. We've locked in some of our service costs with our key providers through most of the first half of this year. And we'll be going back probably later in the spring to start looking at negotiating for things in the back half of the year and sort of close it out. But I feel as if we're in a good position, and we're not looking to take advantage. But like I said, it's tough. And I get it. But we're also in the business to make a margin as well. So things are favorable for us, less favorable for the OFS guys.

Speaker #4: We've locked with our key providers in some of our service costs through most of the first half of this year, and we'll be going back probably later in the spring to start looking at negotiating for things in the back half of the year and sort of close it out.

Speaker #4: But I feel as if we're in a good position, and we're not looking to take advantage, but it's—like I said—it's tough. And I get it.

Speaker #4: But we're also in the business to make a margin as well. So things are favorable for us, less favorable for the OFS guys.

Philip Jungworth: Right. It makes sense. And then we've seen really strong equity performance year-to-date for the sector and Magnolia, I mean, helped by geopolitical risk. So how tactical do you plan to be on the buyback? Do you view this as more programmatic as far as deploying it or maintaining dry powder to take advantage of any pullback, given that we're likely to continue to see volatility?

Phillip Jungwirth: Right. It makes sense. And then we've seen really strong equity performance year-to-date for the sector and Magnolia, I mean, helped by geopolitical risk. So how tactical do you plan to be on the buyback? Do you view this as more programmatic as far as deploying it or maintaining dry powder to take advantage of any pullback, given that we're likely to continue to see volatility?

Speaker #5: We've seen really strong equity performance year-to-date for the sector and Magnolia. I mean, right, makes sense. And then, do you plan to be on the buyback?

Speaker #5: Do you view this as more about maintaining dry powder to take advantage of any pullback, given that we're likely to continue to see programmatic—as far as deploying it—volatility?

Speaker #4: Yeah, the programmatic portion of it is the sort of 1% that we're minimally committed to, as far as the way I think about it.

Chris Stavros: Yeah. The programmatic portion of it is the sort of 1% that we're minimally committed to as far as the way I think about it. I mean, and it really does have teeth as it starts to chew into the shares outstanding and works with that sort of serial compounding that I mentioned. Some of the tactical portion of it is what you saw, probably for us in Q4, where we underperformed, whether that was mean reversion or whatever. Nothing really changed in the business. But we have the opportunity to sort of, since we don't provide broker discretion, we sort of run it ourselves. We have the opportunity to sort of lean in or not as things move along on the stock. It's going to be volatile.

Speaker #4: I mean, and teeth as it starts to chew into the shares outstanding and works with that sort of serial compounding that I mentioned. Some of the tactical portion of it is what you saw probably for us in the fourth quarter, where we underperformed—whether that was mean reversion or whatever. Nothing really changed in the business, but we have the opportunity to sort of, since we don't provide broker discretion, we sort of run it ourselves.

Speaker #4: We have the opportunity to sort of lean in, or not, as things move along on the stock. It's going to be volatile, and if we see pockets of disconnect or I can't necessarily determine why that's occurring, we can lean in or not.

Chris Stavros: If we see pockets of disconnect where I can't necessarily determine why that's occurring, we can lean in or not. So should that occur again, we will.

Speaker #4: So should that occur, and again, we

Speaker #4: will. Right.

Philip Jungworth: Great. Thanks, guys. Great results.

Phillip Jungwirth: Great. Thanks, guys. Great results.

Speaker #5: Thanks, guys. Great results.

Speaker #4: Thanks.

Chris Stavros: Thanks.

Speaker #1: The next question comes from Payton Dorn with UBS. Please go ahead.

Operator: The next question comes from Peyton Dorn with UBS. Please go ahead.

Speaker #1: ahead. Hey, Chris and team.

Peyton Dorn: Hey, Chris and team. Thanks a lot for getting me on. Understanding the weather impacts for Q1, I wondered if you could just touch on your expectations for the shape of the 2026 production outlook. Is it fair to think that beyond the step back here in Q1, that we should kind of see maybe a steady growth rate through the year? Or is there any other factors that we should keep in mind kind of as we go through 2026?

Speaker #6: Thanks a lot for getting me on. Understanding the weather impacts for the first quarter, I wondered if you could just touch on your expectations for the shape of the 2026 production outlook.

Speaker #6: Is it fair to think that beyond the step back here in long Q, that we should kind of see maybe a steady growth rate through the year, or is there any other factors that we — through 2026?

Speaker #4: Yeah, more or less. I mean, you can do—

Chris Stavros: Yeah, more or less. I mean, you can do the arithmetic. I mean, I think we provide investors with enough information with the winter storm impact in the quarter and sort of adding it back, what it might have looked like, perhaps, without the occurrence of the event. So 2026 is off to a good start, and I sort of see things gradually progressing through the year. But it's a little bit heavier capital outlay in the first half of the year, certainly in the first quarter. So typically, that's sort of the way the curve works for us just in terms of timing of the spend. Q4, Q1 is a little heavier, and then it sort of tapers off in the mid-part of the year and then again rises on the capital as we end it out or finish out the full year.

Speaker #4: The arithmetic—I mean, I think we provide a ship with enough information where you should keep in mind, kind of as we go, with the winter storm sort of adding it back, what impact it might have in the quarter and what it looked like, perhaps, without the occurrence of the event.

Speaker #4: So, '26 is off to a good start, and I sort of see things gradually progressing through the year, but it's a little bit heavier capital outlay in the first half of the year—certainly in the first quarter.

Speaker #4: So typically, that’s sort of the way the curve works for us, just in terms of timing of the spend for Q1—Q1 is a little heavier.

Speaker #4: And then it sort of tapers off in the mid part of the year, and then again rises on the capital as we end it out or finish out the full year.

Speaker #4: But the goal would be to spend as little as possible and generate better results on growth if we can. And I'm optimistic around the outcome of the wells.

Chris Stavros: But the goal would be to spend as little as possible and generate better results on growth if we can. And I'm optimistic around the outcome of the wells. But generally, I think you'll see a gradual, steady progress through the year on the volumes.

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Q4 2025 Magnolia Oil & Gas Corp Earnings Call

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