What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-02 compared with 2023-08-02 · 91 added, 90 removed, 190 unchanged (49% of the section changed)

33 unchanged sentences

The Company’s ongoing plan is to spend within cash flow on drilling and completing wells while maintaining low leverage.

As of June 30, 2023, Magnolia operated two rigs.

Market Conditions Update

1 unchanged sentence

This has resulted in lower revenue and lower operating margins.

As a result, Magnolia took actions to reduce its operating and capital spending to better reflect the current cost and commodity environment for the remainder of the year.

As a result, Magnolia took actions to reduce its operating and capital spending to better reflect the current cost and commodity environment.

The capital spending level is in line with the principles of Magnolia’s business model and is expected to provide the Company more operational and financial flexibility going forward.

Business Overview

As of June 30, 2023, Magnolia’s assets in South Texas included 42,451 gross (22,785 net) acres in the Karnes area, and 645,229 gross (460,182 net) acres in the Giddings area.

As of June 30, 2023, Magnolia held an interest in approximately 2,149 gross (1,383 net) wells, with total production of 81.9 thousand and 80.6 thousand barrels of oil equivalent per day for the three and six months ended June 30, 2023.

Magnolia recognized net income attributable to Class A Common Stock of $91.5 million and $187.8 million, or $0.48 and $0.97 per diluted common share, for the three and six months ended June 30, 2023.

Magnolia recognized net income of $104.6 million and $211.3 million, which includes a noncontrolling interest of $13.1 million and $23.4 million related to the Magnolia LLC Units (and corresponding shares of Class B Common Stock) held by certain affiliates of EnerVest, for the three and six months ended June 30, 2023.

During the six months ended June 30, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $44.5 million.

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.

As of September 30, 2023, Magnolia’s assets in South Texas included 42,451 gross (22,785 net) acres in the Karnes area, and 663,327 gross (475,543 net) acres in the Giddings area.

As of September 30, 2023, Magnolia held an interest in approximately 2,307 gross (1,519 net) wells, with total production of 82.7 thousand and 81.3 thousand barrels of oil equivalent per day for the three and nine months ended September 30, 2023.

Magnolia recognized net income attributable to Class A Common Stock of $102.0 million and $289.9 million, or $0.54 and $1.51 per diluted common share, for the three and nine months ended September 30, 2023.

Magnolia recognized net income of $117.5 million and $328.7 million, which includes a noncontrolling interest of $15.4 million and $38.9 million related to the Magnolia LLC Units (and corresponding shares of Class B Common Stock) held by certain affiliates of EnerVest, for the three and nine months ended September 30, 2023.

During the nine months ended September 30, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $66.3 million.

As of September 30, 2023, the Company’s board of directors had authorized a share repurchase program of up to 40.0 million shares of Class A Common Stock.

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

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.

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

The Company had repurchased 28.3 million shares under the program at a cost of $470.8 million and had 11.7 million shares of Class A Common Stock remaining under its share repurchase authorization as of September 30, 2023.

As of September 30, 2023, Magnolia owned approximately 89.5% of the interest in Magnolia LLC and the noncontrolling interest was approximately 10.5%.

Results of Operations

Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Oil, Natural Gas and NGL Sales Revenues.

3 unchanged sentences

Three Months Ended

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

(In thousands, except per unit data) September 30, 2023 September 30, 2022

Oil (MBbls) 3,024 3,381

15 unchanged sentences

NGLs (per barrel) 20.66 34.66

Oil revenues were 80% and 69% of the Company’s total revenues for the three months ended June 30, 2023 and 2022, respectively.

Oil production was 42% and 45% of total production volume for the three months ended June 30, 2023 and 2022, respectively.

Oil revenues for the three months ended June 30, 2023 were $109.6 million lower than for the three months ended June 30, 2022.

A 35% decrease in average price decreased second quarter 2023 revenues by $115.4 million compared to the same period in the prior year, partially offset by a 3% increase in oil production which increased revenues by $5.8 million.

Natural gas revenues were 7% and 17% of the Company’s total revenues for the three months ended June 30, 2023 and 2022, respectively.

Natural gas production was 31% of total production volume for each of the three months ended June 30, 2023 and 2022.

Natural gas revenues for the three months ended June 30, 2023 were $64.5 million lower than the three months ended June 30, 2022.

A 78% decrease in average price decreased second quarter 2023 revenues by $66.5 million compared to the same period in the prior year, partially offset by an 11% increase in natural gas production which increased revenues by $2.0 million.

NGL revenues were 13% and 14% of the Company’s total revenues for the three months ended June 30, 2023 and 2022, respectively.

NGL production was 27% and 24% of total production volume for the three months ended June 30, 2023 and 2022, respectively.

NGL revenues for the three months ended June 30, 2023 were $30.2 million lower than the three months ended June 30, 2022.

A 56% decrease in average price decreased second quarter 2023 revenues by $37.2 million compared to the same period in the prior year, partially offset by a 24% increase in NGL production which increased revenues by $7.0 million.

Oil revenues were 77% and 66% of the Company’s total revenues for the three months ended September 30, 2023 and 2022, respectively.

Oil production was 40% and 45% of total production volume for the three months ended September 30, 2023 and 2022, respectively.

Oil revenues for the three months ended September 30, 2023 were $73.7 million lower than for the three months ended September 30, 2022.

A 14% decrease in average price decreased third quarter 2023 revenues by $44.9 million compared to the same period in the prior year while an 11% decrease in oil production decreased revenues by $28.8 million.

Natural gas revenues were 9% and 20% of the Company’s total revenues for the three months ended September 30, 2023 and 2022, respectively.

Natural gas production was 31% and 30% of total production volume for the three months ended September 30, 2023 and 2022, respectively.

Natural gas revenues for the three months ended September 30, 2023 were $73.1 million lower than the three months ended September 30, 2022.

A 75% decrease in average price decreased third quarter 2023 revenues by $75.0 million compared to the same period in the prior year, partially offset by an 8% increase in natural gas production which increased revenues by $1.9 million.

NGL revenues were 14% of the Company’s total revenues for each of the three months ended September 30, 2023 and 2022.

NGL production was 29% and 25% of total production volume for the three months ended September 30, 2023 and 2022, respectively.

NGL revenues for the three months ended September 30, 2023 were $20.6 million lower than the three months ended September 30, 2022.

A 40% decrease in average price decreased third quarter 2023 revenues by $26.5 million compared to the same period in the prior year, partially offset by a 15% increase in NGL production which increased revenues by $5.9 million.

Operating Expenses and Other Income (Expense) .

1 unchanged sentence

Three Months Ended

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

(In thousands, except per unit data) September 30, 2023 September 30, 2022

Operating Expenses:

8 unchanged sentences

Other Income (Expense):

Interest expense, net $ (1,149) $ (7,017)

Other income, net 9,259 6,538

Interest income (expense), net $ 1,034 $ (5,263)

Other expense, net (479) (166)

Total other income (expense), net $ 555 $ (5,429)

8 unchanged sentences

Lease operating expenses are costs incurred in the operation of producing properties, including expenses for utilities, direct labor, water disposal, workover rigs, workover expenses, materials, and supplies.

Lease operating expenses for the three months ended June 30, 2023 were $4.2 million, or $0.11 per boe, higher compared to the corresponding 2022 period, due to increased activity and an increase in costs, including chemicals, compression, and operating and maintenance costs.

Lease operating expenses for the three months ended September 30, 2023 were $1.2 million, or $0.09 per boe, higher compared to the corresponding 2022 period, due to an increase in costs, including chemicals, compression, and operating and maintenance costs.

Gathering, transportation and processing costs are costs incurred to deliver oil, natural gas, and NGLs to the market.

These expenses can vary based on the volume of oil, natural gas, and NGLs produced as well as the cost of commodity processing.

The gathering, transportation and processing costs for the three months ended June 30, 2023 were $6.0 million, or $1.04 per boe, lower than the three months ended June 30, 2022, primarily due to lower natural gas and NGL prices which resulted in lower processing costs.

The gathering, transportation and processing costs for the three months ended September 30, 2023 were $9.0 million, or $1.22 per boe, lower than the three months ended September 30, 2022, primarily due to lower natural gas and NGL prices which resulted in lower processing costs.

Taxes other than income is comprised of production, ad valorem, and franchise taxes.

2 unchanged sentences

Ad valorem taxes are based on the fair market value of the mineral interests or business assets.

Taxes other than income for the three months ended June 30, 2023 were $12.2 million, or $2.02 per boe, lower compared to the three months ended June 30, 2022, primarily due to a decrease in production taxes as a result of the decrease in oil, natural gas, and NGL revenues.

Taxes other than income for the three months ended September 30, 2023 were $11.8 million, or $1.60 per boe, lower compared to the three months ended September 30, 2022, primarily due to a decrease in production taxes as a result of the decrease in oil, natural gas, and NGL revenues.

Exploration expenses are geological and geophysical costs that include seismic surveying costs, costs of expired or abandoned leases, and delay rentals.

The exploration expenses for the three months ended June 30, 2023 were $3.4 million, or $0.50 per boe, lower than the three months ended June 30, 2022, due to decreased spending on seismic surveying.

Depreciation, depletion and amortization (“DD&A”) during the three months ended June 30, 2023 was $19.8 million, or $1.86 per boe, higher than the three months ended June 30, 2022 due to increased production and a higher depreciable cost basis.

Interest expense, net, during the three months ended June 30, 2023 was $5.9 million lower than the three months ended June 30, 2022, driven by higher interest income realized during 2023 as a result of higher interest rates.

Other income, net, during the three months ended June 30, 2023 was $2.7 million higher than the three months ended June 30, 2022, primarily driven by the gain on sale of the Company’s 84.7% interest in Highlander.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

The exploration expenses for the three months ended September 30, 2023 were $4.0 million, or $0.51 per boe, higher than the three months ended September 30, 2022, due to increased spending on seismic licenses.

Depreciation, depletion and amortization (“DD&A”) during the three months ended September 30, 2023 was $12.2 million, or $1.47 per boe, higher than the three months ended September 30, 2022, due to increased production and a higher depreciable cost basis.

The Company recognized interest income, net, during the three months ended September 30, 2023 as compared to interest expense, net during the three months ended September 30, 2022.

This $6.3 million change was driven by higher interest income realized during 2023 as a result of higher interest rates.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Oil, Natural Gas and NGL Sales Revenues.

2 unchanged sentences

This ratio may not be reflective of the current price ratio between the two products.

Six Months Ended

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

Nine Months Ended

(In thousands, except per unit data) September 30, 2023 September 30, 2022

Oil (MBbls) 9,345 9,216

15 unchanged sentences

NGLs (per barrel) 20.32 37.14

Oil revenues were 79% and 69% of the Company’s total revenues for the six months ended June 30, 2023 and 2022, respectively.

Oil production was 43% and 44% of total production volume for the six months ended June 30, 2023 and 2022, respectively.

Oil revenues for the six months ended June 30, 2023 were $133.2 million lower than for the six months ended June 30, 2022.

A 28% decrease in average price decreased revenues by $168.7 million during the six months ended June 30, 2023 compared to the same period in the prior year, partially offset by an 8% increase in oil production which increased revenues by $35.5 million.

Natural gas revenues were 8% and 16% of the Company’s total revenues for the six months ended June 30, 2023 and 2022, respectively.

Natural gas production was 30% and 31% of total production volume for the six months ended June 30, 2023 and 2022, respectively.

Natural gas revenues for the six months ended June 30, 2023 were $93.3 million lower than the six months ended June 30, 2022.

A 68% decrease in average price decreased revenues by $96.2 million during the six months ended June 30, 2023 compared to the same period in the prior year, partially offset by a 6% increase in natural gas production which increased revenues by $2.9 million.

NGL revenues were 13% and 15% of the Company’s total revenues for the six months ended June 30, 2023 and 2022, respectively.

NGL production was 27% and 25% of total production volume for the six months ended June 30, 2023 and 2022, respectively.

NGL revenues for the six months ended June 30, 2023 were $47.3 million lower than the six months ended June 30, 2022.

A 48% decrease in average price decreased revenues by $59.9 million during the six months ended June 30, 2023 compared to the same period in the prior year, partially offset by a 19% increase in NGL production which increased revenues by $12.6 million.

Oil revenues were 78% and 68% of the Company’s total revenues for the nine months ended September 30, 2023 and 2022, respectively.

Oil production was 42% and 44% of total production volume for the nine months ended September 30, 2023 and 2022, respectively.

Oil revenues for the nine months ended September 30, 2023 were $206.8 million lower than for the nine months ended September 30, 2022.

A 24% decrease in average price decreased revenues by $216.5 million during the nine months ended September 30, 2023 compared to the same period in the prior year, partially offset by a 1% increase in oil production which increased revenues by $9.7 million.

Natural gas revenues were 8% and 18% of the Company’s total revenues for the nine months ended September 30, 2023 and 2022, respectively.

Natural gas production was 31% of total production volume for each of the nine months ended September 30, 2023 and 2022.

Natural gas revenues for the nine months ended September 30, 2023 were $166.4 million lower than the nine months ended September 30, 2022.

A 71% decrease in average price decreased revenues by $171.3 million during the nine months ended September 30, 2023 compared to the same period in the prior year, partially offset by a 7% increase in natural gas production which increased revenues by $4.9 million.

NGL revenues were 14% of the Company’s total revenues for each of the nine months ended September 30, 2023 and 2022.

NGL production was 27% and 25% of total production volume for the nine months ended September 30, 2023 and 2022, respectively.

NGL revenues for the nine months ended September 30, 2023 were $67.9 million lower than the nine months ended September 30, 2022.

A 45% decrease in average price decreased revenues by $86.4 million during the nine months ended September 30, 2023

compared to the same period in the prior year, partially offset by an 18% increase in NGL production which increased revenues by $18.5 million.

Operating Expenses and Other Income (Expense) .

The following table summarizes the Company’s operating expenses and other income (expense) for the periods indicated.

Six Months Ended

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

Nine Months Ended

(In thousands, except per unit data) September 30, 2023 September 30, 2022

Operating Expenses:

9 unchanged sentences

Other Income (Expense):

Interest expense, net $ (662) $ (16,374)

Interest income (expense), net $ 372 $ (21,637)

Other income, net 7,643 6,579

9 unchanged sentences

General and administrative expenses 2.61 2.67

Lease operating expenses for the six months ended June 30, 2023 were $17.8 million, or $0.79 per boe, higher compared to the corresponding 2022 period, due to increased activity, including workover activity, and an increase in costs, including chemicals, compression, and operating and maintenance costs.

Gathering, transportation and processing costs for the six months ended June 30, 2023 were $9.1 million, or $0.86 per boe, lower than the six months ended June 30, 2022, primarily due to lower natural gas and NGL prices which resulted in lower processing costs.

Taxes other than income for the six months ended June 30, 2023 were $13.8 million, or $1.29 per boe, lower compared to the six months ended June 30, 2022, primarily due to a decrease in production taxes as a result of the decrease in oil, natural gas, and NGL revenues.

Exploration expenses for the six months ended June 30, 2023 were $8.9 million, or $0.68 per boe, lower than the six months ended June 30, 2022, due to decreased spending on seismic surveying.

DD&A during the six months ended June 30, 2023 was $37.4 million, or $1.77 per boe, higher than the six months ended June 30, 2022 due to increased production and a higher depreciable cost basis.

During the six months ended June 30, 2023, the Company recognized a $15.7 million proved property impairment related to the Highlander property.

General and administrative expenses during the six months ended June 30, 2023 were $2.9 million higher, but $0.05 per boe lower, than the six months ended June 30, 2022.

Lease operating expenses for the nine months ended September 30, 2023 were $19.0 million, or $0.54 per boe, higher compared to the corresponding 2022 period, due to increased activity, including workover activity, and an increase in costs, including chemicals, compression, and operating and maintenance costs.

Gathering, transportation and processing costs for the nine months ended September 30, 2023 were $18.1 million, or $0.98 per boe, lower than the nine months ended September 30, 2022, primarily due to lower natural gas and NGL prices which resulted in lower processing costs.

Taxes other than income for the nine months ended September 30, 2023 were $25.6 million, or $1.40 per boe, lower compared to the nine months ended September 30, 2022, primarily due to a decrease in production taxes as a result of the decrease in oil, natural gas, and NGL revenues.

Exploration expenses for the nine months ended September 30, 2023 were $5.0 million, or $0.26 per boe, lower than the nine months ended September 30, 2022, due to decreased spending on seismic licenses.

DD&A during the nine months ended September 30, 2023 was $49.5 million, or $1.65 per boe, higher than the nine months ended September 30, 2022 due to increased production and a higher depreciable cost basis.

During the nine months ended September 30, 2023, the Company recognized a $15.7 million proved property impairment related to the Highlander property.

General and administrative expenses during the nine months ended September 30, 2023 were $2.6 million higher, but $0.06 per boe lower, than the nine months ended September 30, 2022.

General and administrative expenses were higher year over year primarily due to higher corporate payroll expenses, but lower on a per boe basis because of increased production.

Interest expense, net, during the six months ended June 30, 2023 was $15.7 million lower than the six months ended June 30, 2022, driven by higher interest income realized during 2023 as a result of higher interest rates.

The Company recognized interest income, net, during the nine months ended September 30, 2023 as compared to interest expense, net during the nine months ended September 30, 2022.

This $22.0 million change was driven by higher interest income realized during 2023 as a result of a higher average cash balance and higher interest rates.

Income tax expense.

The following table summarizes the Company’s income tax expense for the periods indicated.

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

Current income tax expense $ 19,262 $ 19,358 $ 27,450 $ 65,333

1 unchanged sentence

Income tax expense $ 31,211 $ 19,358 $ 75,663 $ 65,333

For the three months ended June 30, 2023, income tax expense was $3.0 million lower than the three months ended June 30, 2022, comprised of movements in both current and deferred income taxes.

This was primarily driven by a $23.9 million decrease in current income tax expense due to lower taxable income primarily as a result of the decline in commodity prices.

This was partially offset by $20.9 million of deferred income tax expense recognized in 2023 which was not recognized in 2022 due to the existence of a full valuation allowance against net deferred tax assets.

For the six months ended June 30, 2023, income tax expense was $1.5 million lower than the six months ended June 30, 2022, comprised of movements in both current and deferred income taxes.

This was primarily driven by a $37.8 million decrease in current income tax expense due to lower taxable income primarily as a result of the decline in commodity prices.

This was partially offset by $36.3 million of deferred income tax expense recognized in 2023 which was not recognized in 2022 due to the existence of a full valuation allowance against net deferred tax assets.

For the three months ended September 30, 2023, income tax expense was $11.9 million higher than the three months ended September 30, 2022, comprised of movements in both current and deferred income taxes.

This was primarily driven by $11.9 million of deferred income tax expense recognized in 2023 which was not recognized in 2022 due to the existence of a full valuation allowance against net deferred tax assets.

For the nine months ended September 30, 2023, income tax expense was $10.3 million higher than the nine months ended September 30, 2022, comprised of movements in both current and deferred income taxes.

This was primarily driven by $48.2 million of deferred income tax expense recognized in 2023 which was not recognized in 2022 due to the existence of a full valuation allowance against net deferred tax assets.

This was partially offset by a $37.9 million decrease in current income tax expense due to lower taxable income primarily as a result of the decline in commodity prices.

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

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

As of September 30, 2023, the Company’s total deferred tax assets were $122.5 million.

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

As of September 30, 2023, the Company assessed the realizability of the deferred tax assets and recorded a valuation allowance of $3.8 million to offset the deferred tax asset created by the capital loss attributable to the sale of the Company’s interest in Highlander.

See Note 9— Income Taxes in the Notes to the Company’s consolidated financial statements included in this Quarterly Report on Form 10-Q for further detail.

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The Company anticipates its current cash balance, cash flows from operations, and its available sources of liquidity to be sufficient to meet the Company’s cash requirements.

As of June 30, 2023, the Company had $400.0 million of principal debt related to the 2026 Senior Notes outstanding and no outstanding borrowings related to the RBL Facility.

As of June 30, 2023, the Company had $1.1 billion of liquidity comprised of the $450.0 million of borrowing base capacity of the RBL Facility, and $676.6 million of cash and cash equivalents.

As of September 30, 2023, the Company had $400.0 million of principal debt related to the 2026 Senior Notes outstanding and no outstanding borrowings related to the RBL Facility.

As of September 30, 2023, the Company had $1.1 billion of liquidity comprised of the $450.0 million of borrowing base capacity of the RBL Facility, and $618.5 million of cash and cash equivalents.

Cash and Cash Equivalents

At June 30, 2023, Magnolia had $676.6 million of cash and cash equivalents.

At September 30, 2023, Magnolia had $618.5 million of cash and cash equivalents.

The Company’s cash and cash equivalents are maintained with various financial institutions in the United States.

3 unchanged sentences

The following table presents the sources and uses of the Company’s cash and cash equivalents for the periods presented:

Six Months Ended

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

Nine Months Ended

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

SOURCES OF CASH AND CASH EQUIVALENTS

2 unchanged sentences

Acquisitions $ (53,812) $ (11,749)

Deposits for acquisitions of oil and natural gas properties (22,503) —

Additions to oil and natural gas properties (332,055) (323,510)

11 unchanged sentences

The factors that determine operating cash flows are largely the same as those that affect net earnings, with the exception of certain non-cash expenses such as DD&A, stock based compensation, amortization of deferred financing costs, gain on sale of assets, impairment of oil and natural gas properties, non-cash exploration expenses, asset retirement obligations accretion, and deferred income tax expense.

Net cash provided by operating activities totaled $421.6 million and $618.0 million for the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, cash provided by operating activities was negatively impacted by a decrease in realized oil and natural gas prices and the timing of payments, partially offset by the timing of collections.

Net cash provided by operating activities totaled $608.9 million and $1.0 billion for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, cash provided by operating activities was negatively impacted by a decrease in realized oil and natural gas prices and net changes in operating assets and liabilities.

Uses of Cash and Cash Equivalents

The Company made individually insignificant bolt-on acquisitions and purchase price adjustments during each of the six months ended June 30, 2023 and 2022.

During the nine months ended September 30, 2023, the Company paid $53.8 million for acquisitions, primarily comprised of a $40.0 million acquisition in the Giddings area.

In addition, Magnolia paid a $22.5 million deposit for an acquisition in the Giddings area expected to close in the fourth quarter of 2023.

The remaining consideration for this acquisition will be funded with cash on hand.

Additions to Oil and Natural Gas Properties

The following table sets forth the Company’s capital expenditures for the periods presented:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

Drilling and completion $ 104,310 $ 114,468 $ 330,147 $ 319,843

1 unchanged sentence

Total capital expenditures $ 106,668 $ 116,050 $ 332,055 $ 323,510

During the second quarter of 2023, Magnolia was running a two-rig program.

During the third quarter of 2023, Magnolia was running a two-rig program.

The number of operated drilling rigs is largely dependent on commodity prices and the Company’s strategy of maintaining spending to accommodate the Company’s business model.

Capital Requirements

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.

As of September 30, 2023 the Company’s board of directors had authorized a share repurchase program of up to 40.0 million shares of Class A Common Stock.

The program does not require purchases to be made within a particular time frame and whether the Company undertakes these additional repurchases is ultimately subject to numerous considerations, market conditions, and other factors.

During the six months ended June 30, 2023 and 2022, the Company repurchased 4.7 million and 3.6 million shares for a total cost of approximately $96.1 million and $81.7 million, respectively.

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

During the nine months ended September 30, 2023 and 2022, the Company repurchased 7.1 million and 6.6 million shares for a total cost of approximately $152.9 million and $144.0 million, respectively.

During the nine months ended September 30, 2022, the Company also 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 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, respectively.

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

During the six months ended June 30, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $44.5 million.

During the nine months ended September 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, respectively.

As of September 30, 2023, Magnolia owned approximately 89.5% of the interest in Magnolia LLC and the noncontrolling interest was approximately 10.5%.

During the nine months ended September 30, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $66.3 million.

During the same time period, cash paid for dividends was $66.5 million, inclusive of dividends on vested non-participating securities.

Additionally, $7.5 million was distributed to the Magnolia LLC Unit Holders.

During the six months ended June 30, 2022, the Company declared cash dividends to holders of its Class A Common Stock totaling $37.3 million, of which $37.2 million was paid as of June 30, 2022.

During the nine months ended September 30, 2022, the Company declared cash dividends to holders of its Class A Common Stock totaling $56.4 million, of which $56.2 million was paid as of September 30, 2022.

Additionally, $11.4 million was distributed to the Magnolia LLC Unit Holders.

1 unchanged sentence

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 2. Management’s Discussion and Analysis