What changed in this filing

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Item 1. Financial Statements

2023-08-02 compared with 2023-05-04 · 120 added, 73 removed, 361 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

ASSETS (Unaudited) (Audited)

31 unchanged sentences

Class A Common Stock, $ 0.0001 par value, 1,300,000 shares authorized, 214,400 shares issued and 188,066 shares outstanding in 2023 and 213,727 shares issued and 192,043 shares outstanding in 2022

Class B Common Stock, $ 0.0001 par value, 225,000 shares authorized, 21,827 shares issued and outstanding in 2023 and 21,827 shares issued and outstanding in 2022

Class B Common Stock, $ 0.0001 par value, 225,000 shares authorized, 21,827 shares issued and outstanding in 2023 and 2022

Additional paid-in capital 1,731,059 1,719,875

9 unchanged sentences

(In thousands, except per share data)

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Oil revenues $ 223,147 $ 332,791 $ 462,269 $ 595,459

14 unchanged sentences

OTHER INCOME (EXPENSE)

Interest income (expense), net 487 ( 9,357 )

Other income (expense), net ( 1,138 ) 207

Total other expense, net ( 651 ) ( 9,150 )

Interest expense, net ( 1,149 ) ( 7,017 ) ( 662 ) ( 16,374 )

Other income, net 9,259 6,538 8,120 6,744

Total other income (expense), net 8,110 ( 479 ) 7,458 ( 9,630 )

INCOME BEFORE INCOME TAXES 129,443 327,780 255,724 554,500

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Common Stock Additional Paid In Capital Treasury Stock Retained Earnings/ (Accumulated Deficit) Total Stockholders’ Equity Noncontrolling Interest Total

For the Three Months Ended March 31, 2022 Shares Value Shares Value Shares Value

For the Three Months Ended June 30, 2022 Shares Value Shares Value Shares Value

Balance, March 31, 2022 203,762 $ 20 35,594 $ 4 $ 1,649,111 16,218 $ ( 209,418 ) $ ( 542,129 ) $ 897,588 $ 174,780 $ 1,072,368

Stock based compensation expense, net of forfeitures — — — — 2,990 — — — 2,990 527 3,517

Changes in ownership interest adjustment — — — — ( 4,305 ) — — — ( 4,305 ) 4,305 —

Common stock issued related to stock based compensation and other, net 83 — — — ( 159 ) — — — ( 159 ) ( 29 ) ( 188 )

Class A Common Stock repurchases — — — — — 2,065 ( 48,419 ) — ( 48,419 ) — ( 48,419 )

Class B Common Stock purchase and cancellation — — ( 2,000 ) — — — — — — ( 54,020 ) ( 54,020 )

Conversion of Class B Common Stock to Class A Common Stock 4,884 1 ( 4,884 ) ( 1 ) — — — — — — —

Distributions to noncontrolling interest owners — — — — — — — — — ( 4,606 ) ( 4,606 )

Net income — — — — — — — 250,583 250,583 49,322 299,905

Balance, June 30, 2022 208,729 $ 21 28,710 $ 3 $ 1,647,637 18,283 $ ( 257,837 ) $ ( 291,546 ) $ 1,098,278 $ 170,279 $ 1,268,557

For the Three Months Ended June 30, 2023

Balance, March 31, 2023 214,355 $ 21 21,827 $ 2 $ 1,720,487 24,084 $ ( 380,783 ) $ 259,636 $ 1,599,363 $ 167,714 $ 1,767,077

Stock based compensation expense, net of forfeitures — — — — 3,668 — — — 3,668 424 4,092

Changes in ownership interest adjustment — — — — 2,936 — — — 2,936 ( 2,769 ) 167

Common stock issued related to stock based compensation and other, net 45 — — — ( 137 ) — — — ( 137 ) ( 15 ) ( 152 )

Class A Common Stock repurchases — — — — — 2,250 ( 44,821 ) — ( 44,821 ) — ( 44,821 )

Dividends declared ($ 0.115 per share)

— — — — — — — ( 22,117 ) ( 22,117 ) — ( 22,117 )

Distributions to noncontrolling interest owners — — — — — — — — — ( 3,089 ) ( 3,089 )

Adjustment to deferred taxes — — — — 4,543 — — — 4,543 — 4,543

Tax impact of equity transactions — — — — ( 438 ) — — — ( 438 ) — ( 438 )

Net income — — — — — — — 91,492 91,492 13,104 104,596

Balance, June 30, 2023

214,400 $ 21 21,827 $ 2 $ 1,731,059 26,334 $ ( 425,604 ) $ 329,011 $ 1,634,489 $ 175,369 $ 1,809,858

The accompanying notes are an integral part of these consolidated financial statements.

Magnolia Oil & Gas Corporation

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)

Common Stock Class B

Common Stock Additional Paid In Capital Treasury Stock Retained Earnings/ (Accumulated Deficit) Total Stockholders’ Equity Noncontrolling Interest Total

For the Six Months Ended June 30, 2022 Shares Value Shares Value Shares Value

Balance, December 31, 2021 193,437 $ 19 49,293 $ 5 $ 1,689,500 14,168 $ ( 164,599 ) $ ( 708,168 ) $ 816,757 $ 228,492 $ 1,045,249

9 unchanged sentences

Net income — — — — — — — 416,622 416,622 91,903 508,525

Balance, March 31, 2022 203,762 $ 20 35,594 $ 4 $ 1,649,111 16,218 $ ( 209,418 ) $ ( 542,129 ) $ 897,588 $ 174,780 $ 1,072,368

For the Three Months Ended March 31, 2023

Balance, June 30, 2022 208,729 $ 21 28,710 $ 3 $ 1,647,637 18,283 $ ( 257,837 ) $ ( 291,546 ) $ 1,098,278 $ 170,279 $ 1,268,557

For the Six Months Ended June 30, 2023

Balance, December 31, 2022 213,727 $ 21 21,827 $ 2 $ 1,719,875 21,684 $ ( 329,512 ) $ 185,669 $ 1,576,055 $ 164,136 $ 1,740,191

9 unchanged sentences

Net income — — — — — — — 187,826 187,826 23,446 211,272

Balance, March 31, 2023

Balance, June 30, 2023

214,400 $ 21 21,827 $ 2 $ 1,731,059 26,334 $ ( 425,604 ) $ 329,011 $ 1,634,489 $ 175,369 $ 1,809,858

3 unchanged sentences

( In thousands)

Three Months Ended

March 31, 2023 March 31, 2022

Six Months Ended

June 30, 2023 June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

Amortization of deferred financing costs 2,100 3,779

(Gain) on sale of assets ( 3,946 ) —

Deferred income tax expense 36,264 —

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Summary of Significant Accounting Policies

As of March 31, 2023, the Company’s significant accounting policies are consistent with those discussed in Note 1—Organization and Summary of Significant Accounting Policies of its consolidated financial statements contained in the Company’s 2022 Form 10-K.

As of June 30, 2023, the Company’s significant accounting policies are consistent with those discussed in Note 1—Organization and Summary of Significant Accounting Policies of its consolidated financial statements contained in the Company’s 2022 Form 10-K.

Revenue Recognition

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The Company’s receivables consist mainly of trade receivables from commodity sales and joint interest billings due from owners on properties the Company operates.

Receivables from contracts with customers totaled $ 123.2 million as of March 31, 2023 and $ 138.6 million as of December 31, 2022.

Receivables from contracts with customers totaled $ 96.4 million as of June 30, 2023 and $ 138.6 million as of December 31, 2022.

For further detail regarding the Company’s revenue recognition policies, please refer to Note 1—Organization and Summary of Significant Accounting Policies of the consolidated financial statements contained in the Company’s 2022 Form 10-K.

During the three months ended December 31, 2022, the Company completed various leasehold, mineral rights, and property acquisitions of certain oil and natural gas assets, which had downward purchase price adjustments during the three months ended March 31, 2023.

The transactions were accounted for as asset acquisitions.

Fair Value Measurements

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Recurring Fair Value Measurements

The carrying value and fair value of the financial instrument that is not carried at fair value in the Company’s consolidated balance sheets at March 31, 2023 and December 31, 2022 are as follows:

March 31, 2023 December 31, 2022

The carrying value and fair value of the financial instrument that is not carried at fair value in the Company’s consolidated balance sheets at June 30, 2023 and December 31, 2022 are as follows:

June 30, 2023 December 31, 2022

(In thousands) Carrying Value Fair Value Carrying Value Fair Value

Long-term debt $ 391,590 $ 388,800 $ 390,383 $ 382,704

The fair value of the 2026 Senior Notes at March 31, 2023 and December 31, 2022 is based on unadjusted quoted prices in an active market, which is considered a Level 1 input in the fair value hierarchy.

The fair value of the 2026 Senior Notes at June 30, 2023 and December 31, 2022 is based on unadjusted quoted prices in an active market, which is considered a Level 1 input in the fair value hierarchy.

The Company has other financial instruments consisting primarily of receivables, payables, and other current assets and liabilities that approximate fair value due to the nature of the instruments and their relatively short maturities.

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For further detail, see Note 10—Stock Based Compensation in the Notes to the consolidated financial statements.

There were no other material nonrecurring fair value measurements as of March 31, 2023 or December 31, 2022.

There were no other material nonrecurring fair value measurements as of June 30, 2023 or December 31, 2022.

Other Current Liabilities

The following table provides detail of the Company’s other current liabilities for the periods presented:

(In thousands) March 31, 2023 December 31, 2022

(In thousands) June 30, 2023 December 31, 2022

Accrued capital expenditures $ 28,500 $ 67,923

3 unchanged sentences

The Company’s long-term debt is comprised of the following:

(In thousands) March 31, 2023 December 31, 2022

(In thousands) June 30, 2023 December 31, 2022

Revolving credit facility $ — $ —

12 unchanged sentences

The RBL Facility contains certain affirmative and negative covenants customary for financings of this type, including compliance with a leverage ratio of less than 3.50 to 1.00 and a current ratio of greater than 1.00 to 1.00.

As of March 31, 2023, the Company was in compliance with all covenants under the RBL Facility.

The Company incurred approximately $ 5.5 million of lender and transaction fees related to the modification of which $ 5.1 million were recorded as deferred financing costs and will be amortized prospectively over the remaining term of the RBL Facility and $ 0.4 million of which were expensed and are reflected in “Interest expense, net” on the Company’s consolidated statements of operations for the three months ended March 31, 2022.

As of June 30, 2023, the Company was in compliance with all covenants under the RBL Facility.

Deferred financing costs in connection with the RBL Facility are amortized on a straight-line basis over a period of four years from February 2022 to February 2026 and included in “Interest expense, net” in the Company’s consolidated statements of operations.

The Company recognized interest expense related to the RBL Facility of $ 1.0 million and $ 2.8 million for the three months ended March 31, 2023 and 2022, respectively.

The unamortized portion of the deferred financing costs is included in “Deferred financing costs, net” on the Company’s consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The Company did no t have any outstanding borrowings under the RBL Facility as of March 31, 2023.

The Company recognized interest expense related to the RBL Facility of $ 1.0 million for each of the three months ended June 30, 2023 and 2022, and $ 2.1 million and $ 3.7 million for the six months ended June 30, 2023 and 2022, respectively.

The unamortized portion of the deferred financing costs is included in “Deferred financing costs, net” on the Company’s consolidated balance sheets as of June 30, 2023 and December 31, 2022.

The Company did no t have any outstanding borrowings under the RBL Facility as of June 30, 2023.

2026 Senior Notes

5 unchanged sentences

Deferred financing costs related to the issuance of, and the amendment to the Indenture governing, the 2026 Senior Notes are amortized using the effective interest method over the term of the 2026 Senior Notes and are included in “Interest expense, net” in the Company’s consolidated statements of operations.

The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the 2026 Senior Notes, which has been recorded as “Long-term debt, net” on the Company’s consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The Company recognized interest expense related to the 2026 Senior Notes of $ 6.6 million for each of the three months ended March 31, 2023 and 2022.

The Company recognized interest expense related to the 2026 Senior

Notes of $ 6.6 million for each of the three months ended June 30, 2023 and 2022, and $ 13.2 million and $ 13.1 million for the six months ended June 30, 2023 and 2022, respectively.

At any time, the Issuers may redeem all or a part of the 2026 Senior Notes based on principal plus a set premium, as set forth in the Indenture, including any accrued and unpaid interest.

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After the Commission affirmed the granting of the permit, and after judicial review of the Commission’s order by the 53rd Judicial District Court Travis County, Texas (the “District Court”), the District Court reversed and remanded the Commission’s order.

The Commission and Magnolia have appealed the District Court’s judgment to the Third Court of Appeals in Austin, Texas.

At March 31, 2023, the Company does not believe the outcome of any such disputes or legal actions will have a material effect on its consolidated statements of operations, balance sheet, or cash flows.

No amounts were accrued with respect to outstanding litigation at March 31, 2023 or March 31, 2022.

Upon appeal to the Third Court of Appeals in Austin, Texas (the“Court of Appeals”), the Court of Appeals reversed in part and affirmed in part the District Court’s ruling and remanded the matter to the Commission.

The plaintiffs have filed a motion for rehearing with the Court of Appeals, and the parties are waiting for the Court’s decision.

At June 30, 2023, the Company does not believe the outcome of any such disputes or legal actions will have a material effect on its consolidated statements of operations, balance sheet, or cash flows.

No amounts were accrued with respect to outstanding litigation at June 30, 2023 or June 30, 2022.

Environmental Matters

11 unchanged sentences

The Company’s income tax provision consists of the following components:

Three Months Ended

(In thousands) March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

(In thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Federal $ 3,405 $ 25,902 $ 7,055 $ 42,687

2 unchanged sentences

Federal 20,025 — 34,845 —

State 836 — 1,419 —

Total deferred 20,861 — 36,264 —

1 unchanged sentence

The Company is subject to U.S.

federal income tax, margin tax in the state of Texas, and Louisiana corporate income tax.

federal income tax and margin tax in the state of Texas.

The Company estimates its annual effective tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates.

The Company’s effective tax rate for the three months ended March 31, 2023 and 2022 was 15.5 % and 8.0 %, respectively.

As a result of impairments in the first quarter of 2020, the Company established full valuation allowances on the federal and state deferred tax assets, which resulted in additional differences between the effective tax rate and the statutory rate as of March 31, 2022.

During the year ended December 31, 2022, the Company released the valuation allowance against net deferred tax assets.

For the three months ended March 31, 2023, the primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest and state taxes.

For the three months ended March 31, 2022, the difference between the effective tax rate and the statutory rate was also driven by valuation allowances.

As of March 31, 2023, the Company does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months.

For the three months ended March 31, 2023, no significant amounts were incurred for interest and penalties.

The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 was 19.2 % and 8.5 %, respectively, and 17.4 % and 8.3 % for the six months ended June 30, 2023 and 2022, respectively.

As of December 31, 2022, the Company released the valuation allowance against net deferred tax assets.

The primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest, state taxes, and valuation allowances.

As of June 30, 2023, the Company does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months.

For the six months ended June 30, 2023, no significant amounts were incurred for interest and penalties.

Currently, the Company is not aware of any issues under review that could result in significant payments, accruals, or a material deviation from its position.

The Company’s tax years since its formation remain subject to possible income tax examinations by its major taxing authorities.

As of March 31, 2023, the Company’s total deferred tax assets were $ 147.7 million.

As of June 30, 2023, the Company’s total deferred tax assets were $ 134.5 million.

Management assessed whether it is more-likely-than-not that it will generate sufficient taxable income to realize its deferred income tax assets, including the investment in partnership and net operating loss carryforwards.

1 unchanged sentence

The Company considered, among other things, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years.

As of March 31, 2023, Magnolia has no valuation allowance as the Company concluded that it is more likely than not that it will be able to realize all of its deferred tax assets.

As of June 30, 2023, the Company recorded a valuation allowance of $ 3.1 million to offset the deferred tax asset created by the capital loss attributable to the Highlander sale.

On August 16, 2022, the U.S.

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Class A Common Stock

At March 31, 2023, there were 214.4 million shares of Class A Common Stock issued and 190.3 million shares of Class A Common Stock outstanding.

At June 30, 2023, there were 214.4 million shares of Class A Common Stock issued and 188.1 million shares of Class A Common Stock outstanding.

The holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters and are entitled one vote for each share held.

3 unchanged sentences

Class B Common Stock

At March 31, 2023, there were 21.8 million shares of Class B Common Stock issued and outstanding.

At June 30, 2023, there were 21.8 million shares of Class B Common Stock issued and outstanding.

Holders of Class B Common Stock vote together as a single class with holders of Class A Common Stock on all matters properly submitted to a vote of the stockholders.

4 unchanged sentences

Share Repurchases

The Company’s board of directors has authorized a share repurchase program of up to 30.0 million shares of Class A Common Stock.

As of June 30, 2023, the Company’s board of directors had authorized a share repurchase program of up to 30.0 million shares of Class A Common Stock.

The program does not require purchases to be made within a particular time frame.

As of March 31, 2023, the Company had repurchased 23.5 million shares under the program at a cost of $ 369.2 million and had 6.5 million shares of Class A Common Stock remaining under its current repurchase authorization .

During the three months ended March 31, 2022, the Company repurchased 0.6 million shares of Class A Common Stock for $ 11.6 million from EnerVest Energy Institutional Fund XIV-C, L.P.

The Company had repurchased 25.8 million shares under the program at a cost of $ 414.0 million and had 4.2 million shares of Class A Common Stock remaining under its share repurchase authorization as of June 30, 2023.

On July 31, 2023, the Company’s board of directors increased the share repurchase authorization by an additional 10.0 million shares of Class A Common Stock, which increases total share repurchase authorization to 40.0 million shares.

During the six months ended June 30, 2022, the Company repurchased 0.6 million shares of Class A Common Stock for $ 11.6 million from EnerVest Energy Institutional Fund XIV-C, L.P.

outside of the share repurchase program.

During the three months ended March 31, 2022 Magnolia LLC repurchased and subsequently canceled 3.9 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for $ 84.7 million of cash consideration (the “Class B Common Stock Repurchases”).

During the six months ended June 30, 2022 Magnolia LLC repurchased and subsequently canceled 5.9 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for $ 138.8 million of cash consideration (the “Class B Common Stock Repurchases”).

During the same period, the Magnolia LLC Unit Holders redeemed 14.6 million Magnolia LLC Units (and a corresponding number of shares of Class B Common Stock) for an equivalent number of shares of Class A Common Stock and subsequently sold these shares to the public.

3 unchanged sentences

The Company’s board of directors periodically declares dividends payable on issued and outstanding shares of Class A Common Stock, and a corresponding distribution from Magnolia LLC to Magnolia LLC Unit Holders.

Dividends in excess of retained earnings are recorded as a reduction of additional paid-in capital.

The distributions to the Magnolia LLC Unit Holders were recorded as a reduction of noncontrolling interest on the Company’s consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The following table sets forth information with respect to cash dividends and distributions declared by the Company’s board of directors during the three months ended March 31, 2023 and the year ended December 31, 2022, on its own behalf and in its capacity as the managing member of Magnolia LLC, on issued and outstanding shares of Class A Common Stock and Magnolia LLC Units:

Dividends in excess of retained earnings are recorded as a reduction of additional paid-in capital and distributions to the Magnolia LLC Unit Holders are recorded as a reduction of noncontrolling interest.

The following table sets forth information with respect to cash dividends and distributions declared by the Company’s board of directors during the six months ended June 30, 2023 and the year ended December 31, 2022, on its own behalf and in its capacity as the managing member of Magnolia LLC, on issued and outstanding shares of Class A Common Stock and Magnolia LLC Units:

Distribution Amount per share (1)

4 unchanged sentences

(In thousands, except per share amounts)

May 11, 2023 June 1, 2023 $ 0.115 $ 24,627 $ 22,117 $ 2,510

February 10, 2023 March 1, 2023 $ 0.115 $ 24,878 $ 22,368 $ 2,510

7 unchanged sentences

The noncontrolling interest percentage is affected by various equity transactions such as issuances and repurchases of Class A Common Stock, the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) for Class A Common Stock, or the cancellation of Class B Common Stock (and corresponding Magnolia LLC Units).

As of March 31, 2023, Magnolia owned approximately 89.7 % of the interest in Magnolia LLC and the noncontrolling interest was approximately 10.3 %.

Highlander Oil & Gas Holdings LLC (“Highlander”) is a joint venture whereby MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, holds approximately 84.7 % of the units of Highlander, with the remaining 15.3 % attributable to noncontrolling interest.

As of June 30, 2023, Magnolia owned approximately 89.6 % of the interest in Magnolia LLC and the noncontrolling interest was approximately 10.4 %.

Highlander was a joint venture whereby MGY Louisiana LLC, a wholly owned subsidiary of Magnolia Operating, held approximately 84.7 % of the units of Highlander, with the remaining 15.3 % attributable to noncontrolling interest.

On May 30, 2023, the Company sold its interest in Highlander and recognized a gain on sale of $ 3.9 million included within “Other income, net” on the Company’s consolidated statements of operations.

Stock Based Compensation

On October 8, 2018, the Company’s board of directors adopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (as amended, the “Plan”), effective as of July 17, 2018.

A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of March 31, 2023.

A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of June 30, 2023.

The Company grants stock based compensation awards in the form of restricted stock units (“RSU”), performance restricted stock units (“PRSU”), and performance stock units (“PSU”) to eligible employees and directors to enhance the Company and its affiliates’ ability to attract, retain, and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities.

Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” and “Lease operating expenses” on the consolidated statements of operations and was $ 3.8 million and $ 2.9 million for the three months ended March 31, 2023 and 2022, respectively.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” and “Lease operating expenses” on the consolidated statements of operations and was $ 4.1 million and $ 3.5 million for the three months ended June 30, 2023 and 2022, and $ 7.9 million and $ 6.4 million for the six months ended June 30, 2023 and 2022, respectively.

The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense.

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the three months ended March 31, 2023.

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the three months ended June 30, 2023.

Stock Units Performance Restricted

1 unchanged sentence

Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value

Unvested at March 31, 2023 1,186,712 $ 18.79 946,229 $ 13.65 232,700 $ 24.69

Granted 63,728 20.31 9,772 21.88 — —

Vested ( 52,409 ) 19.13 — — — —

Forfeited ( 24,624 ) 17.47 ( 5,146 ) 14.14 — —

Unvested at June 30, 2023

1,173,407 $ 18.89 950,855 $ 13.73 232,700 $ 24.69

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the six months ended June 30, 2023.

Stock Units Performance Restricted

Stock Units Performance

Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value

Unvested at December 31, 2022 911,286 $ 12.89 1,257,583 $ 13.36 278,486 $ 6.14

4 unchanged sentences

Forfeited ( 40,659 ) 17.22 ( 7,289 ) 15.16 — —

Unvested at March 31, 2023

Unvested at June 30, 2023

1,173,407 $ 18.89 950,855 $ 13.73 232,700 $ 24.69

6 unchanged sentences

Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards.

The aggregate fair value of RSUs that vested during the three months ended March 31, 2023 and 2022 were $ 7.2 million and $ 7.9 million, respectively.

Unrecognized compensation expense related to unvested RSUs as of March 31, 2023 was $ 19.4 million, which the Company expects to recognize over a weighted average period of 2.8 years.

The aggregate fair value of RSUs that vested during the six months ended June 30, 2023 and 2022 were $ 8.3 million and $ 10.2 million, respectively.

Unrecognized compensation expense related to unvested RSUs as of June 30, 2023 was $ 18.1 million, which the Company expects to recognize over a weighted average period of 2.6 years.

Performance Restricted Stock Units and Performance Stock Units

5 unchanged sentences

Compensation expense for the PRSU awards is based upon grant date fair market value of the award, calculated using a Monte Carlo simulation, as presented below, and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards, as applicable.

The aggregate fair value of PRSU awards that vested during the three months ended March 31, 2023 and 2022 were $ 7.0 million and $ 4.8 million.

Unrecognized compensation expense related to unvested PRSUs as of March 31, 2023 was $ 7.4 million, which the Company expects to recognize over a weighted average period of 1.7 years.

The aggregate fair value of PRSU awards that vested during the six months ended June 30, 2023 and 2022 were $ 7.0 million and $ 4.8 million.

Unrecognized compensation expense related to unvested PRSUs as of June 30, 2023 was $ 6.1 million, which the Company expects to recognize over a weighted average period of 1.5 years.

The Company grants PSUs to certain employees.

1 unchanged sentence

In addition to the TSR conditions, vesting of the PSUs is subject to the awardee’s continued employment through the date of settlement of the PSUs, which will occur within 60 days following the end of the performance period.

The aggregate fair value of PSU awards that vested during the three months ended March 31, 2023 and 2022 were $ 6.7 million and $ 5.5 million, respectively.

Unrecognized compensation expense related to unvested PSUs as of March 31, 2023 was $ 5.5 million, which the Company expects to recognize over a weighted average period of 2.8 years.

The aggregate fair value of PSU awards that vested during the six months ended June 30, 2023 and 2022 were $ 6.7 million and $ 5.5 million, respectively.

Unrecognized compensation expense related to unvested PSUs as of June 30, 2023 was $ 5.0 million, which the Company expects to recognize over a weighted average period of 2.6 years.

The Performance Condition for the PRSUs granted in 2022 were met on March 28, 2022, therefore the fair value of the PRSUs granted after the Performance Condition were met were based upon the grant date market value of the award.

1 unchanged sentence

The following table summarizes the Monte Carlo simulation assumptions used to calculate the grant date fair value of the PSUs in 2023 and PRSUs in 2022.

Three Months Ended

PSU and PRSU Grant Date Fair Value Assumptions March 31, 2023 March 31, 2022

Six Months Ended

PSU and PRSU Grant Date Fair Value Assumptions June 30, 2023 June 30, 2022

Expected term (in years)

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The components of basic and diluted net income per share attributable to Class A Common Stock are as follows:

Three Months Ended

(In thousands, except per share data) March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

(In thousands, except per share data) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Net income attributable to Class A Common Stock $ 91,492 $ 250,583 $ 187,826 $ 416,622

12 unchanged sentences

$ 0.48 $ 1.32 $ 0.97 $ 2.22

For the three months ended March 31, 2023 and 2022, the Company excluded 21.8 million and 44.3 million, respectively, of weighted average shares of Class A Common Stock issuable upon the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) as the effect was anti-dilutive.

For the three months ended June 30, 2023 and 2022, the Company excluded 21.8 million and 33.8 million, respectively, of weighted average shares of Class A Common Stock issuable upon the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) as the effect was anti-dilutive.

For the six months ended June 30, 2023 and 2022, the Company excluded 21.8 million and 39.0 million, respectively, of weighted average shares of Class A Common Stock issuable upon the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) as the effect was anti-dilutive.

Related Party Transactions

As of March 31, 2023, no entity held more than 10% of the Company’s common stock or qualified as a principal owner of the Company, as defined in ASC 850, “Related Party Disclosures.”

As of June 30, 2023, no entity held more than 10% of the Company’s common stock or qualified as a principal owner of the Company, as defined in ASC 850, “Related Party Disclosures.”

Subsequent Events

On May 1, 2023, the Company’s board of directors declared a quarterly cash dividend of $ 0.115 per share of Class A Common Stock, and a cash distribution of $ 0.115 per Magnolia LLC Unit, payable on June 1, 2023 to shareholders or members of record, as applicable, as of May 11, 2023.

On July 31, 2023, the Company’s board of directors declared a quarterly cash dividend of $ 0.115 per share of Class A Common Stock, and a cash distribution of $ 0.115 per Magnolia LLC Unit, payable on September 1, 2023 to shareholders or members of record, as applicable, as of August 10, 2023.

On July 31, 2023, Magnolia closed an acquisition in the Giddings area, outside of the Company’s core development area, for a total cash consideration of approximately $ 40.0 million, subject to customary closing adjustments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements