• Quarterly Production Volume: 93,100 barrels of oil equivalent per day in Q4 2024.
• Full Year Production Volume: 89,700 barrels of oil equivalent per day for 2024.
• Annual Production Growth: 9% total company production growth; 11% oil production growth.
• Adjusted Net Income: $401 million for the full year 2024.
• Adjusted EBITDAX: $953 million for the full year 2024.
• Free Cash Flow: $430 million generated in 2024.
• Shareholder Returns: $378 million returned through dividends and share repurchases.
• Lease Operating Costs Reduction: 10% per BOE reduction in 2024.
• Return on Capital Employed (ROCE): 22% for 2024.
• Quarterly Dividend Increase: 15% increase to $0.15 per share.
• Share Repurchase Program: Authorization increased by 10 million shares.
• Net Income for Q4: $89 million.
• Adjusted Net Income for Q4: $95 million or $0.49 per diluted share.
• Adjusted EBITDAX for Q4: $236 million.
• Cash Balance at Year-End: $260 million.
• Capital Expenditures for D&C: $132 million in Q4 2024.
• Full Year D&C Capital Spending: $477 million.
• Cash Operating Costs: $10.62 per BOE in Q4 2024.
• Operating Income Margin: $14.48 per barrel or 38% of total revenue in Q4 2024.
• Proved Developed Reserves: 149 million BOEs at year-end 2024.
• Guidance for 2025 Production Growth: 5% to 7% total annual production growth.
• 2025 Capital Spending Guidance: $460 million to $490 million for D&C.
• First Quarter 2025 Production Estimate: Approximately 94 MBoe per day.

• Warning! GuruFocus has detected 9 Warning Signs with HR.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Magnolia Oil & Gas Corp (NYSE:MGY) achieved record quarterly production volume in Q4 2024, reaching 93,100 barrels of oil equivalent per day.
• The company reported a 9% annual total production growth for the second consecutive year, with oil production growth exceeding expectations at 11%.
• Magnolia generated $430 million in free cash flow in 2024, returning 88% of it to shareholders through dividends and share repurchases.
• The company successfully reduced lease operating costs by 10% per BOE, enhancing its cost structure and positioning it strongly for 2025.
• Magnolia's Board approved a 15% increase in the quarterly dividend, reflecting confidence in the company's financial outlook.

Negative Points

• Despite strong performance, Magnolia's total revenue per BOE declined year-over-year due to lower oil prices.
• The company remains unhedged for its oil and natural gas production, which could expose it to market volatility.
• Magnolia's cash balance decreased from $401 million to $260 million by the end of 2024, partly due to acquisitions and capital expenditures.
• The company's capital spending for 2025 is expected to be similar to 2024, which may limit flexibility in responding to market changes.
• Magnolia's production growth guidance for 2025 is moderate, with total annual production growth expected to be 5% to 7%.

Q & A Highlights

Q: Are you still conducting significant scientific tests on wells in Giddings, or is it now primarily a development program? A: Christopher Stavros, President, CEO: We are primarily focused on development in Giddings now, with limited scientific testing mainly in newer areas. The focus is on pure development.

Q: With a growing cash position, are you comfortable keeping large amounts on the balance sheet, or are there strategic plans for it? A: Christopher Stavros, President, CEO: We are comfortable holding cash temporarily, as we have done before, and will deploy it when attractive opportunities arise. We don't plan to hold it for an extended period.

Q: What would it take to lean into your gas inventory more, given the current gas price trajectory? A: Christopher Stavros, President, CEO: Our improved cost structure has enhanced well economics, making previously marginal areas more viable. We continuously review these areas and expect more of our extensive Giddings acreage to become productive over time.

Q: Are there any immediate levers to further reduce well costs, such as longer laterals? A: Christopher Stavros, President, CEO: We are exploring different parts of the field and testing new concepts. Our actions have already added significant lateral feet to our inventory, and we expect this to continue.

Q: How does your 2025 capital program align with your long-term sustaining capital needs? A: Christopher Stavros, President, CEO: Our capital spending range of $460 million to $490 million is sufficient for our planned growth. We have flexibility and optionality in our program and are well-positioned to achieve our goals without needing to reduce activity.

Q: Can you provide more color on the appraisal work in Karnes? A: Christopher Stavros, President, CEO: We are appraising an oily area acquired about a year ago. Recent wells have performed well, but further study is needed before moving forward. We are encouraged by the results so far.

Q: What are the key focus areas in Giddings for the year ahead? A: Christopher Stavros, President, CEO: We aim to expand and delineate the field further, leveraging our strong cost position to explore new areas. We hope to provide more data and results in the second half of the year.

Q: How do you balance dividend growth with share buybacks? A: Christopher Stavros, President, CEO: The dividend is a promise to shareholders, and we stress test it at lower prices. Share repurchases complement dividend growth by reducing share count, enhancing per-share metrics, and supporting our overall return program.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.