What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-08 · 130 added, 82 removed, 369 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

ASSETS (Unaudited) (Audited)

30 unchanged sentences

Class A Common Stock, $ 0.0001 par value, 1,300,000 shares authorized, 223,167 shares issued and 188,484 shares outstanding in 2024 and 214,497 shares issued and 183,164 shares outstanding in 2023

Class B Common Stock, $ 0.0001 par value, 225,000 shares authorized, 21,827 shares issued and outstanding in 2024 and 2023

Class B Common Stock, $ 0.0001 par value, 225,000 shares authorized, 10,958 shares issued and outstanding in 2024 and 21,827 issued and outstanding in 2023

Additional paid-in capital 1,815,798 1,743,930

9 unchanged sentences

(In thousands, except per share data)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Oil revenues $ 275,331 $ 223,147 $ 534,514 $ 462,269

14 unchanged sentences

OTHER INCOME (EXPENSE)

Interest income (expense), net ( 2,312 ) 487

Other expense, net ( 4,313 ) ( 1,138 )

Total other expense, net ( 6,625 ) ( 651 )

Interest expense, net ( 3,516 ) ( 1,149 ) ( 5,828 ) ( 662 )

Other income (expense), net 1,047 9,259 ( 3,267 ) 8,120

Total other income (expense), net ( 2,469 ) 8,110 ( 9,095 ) 7,458

INCOME BEFORE INCOME TAXES 131,882 129,443 249,814 255,724

15 unchanged sentences

Common Stock Additional Paid In Capital Treasury Stock Retained Earnings Total Stockholders’ Equity Noncontrolling Interest Total

For the Three Months Ended March 31, 2023

For the Three Months Ended June 30, 2023

Shares Value Shares Value Shares Value

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

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, net 45 — — — ( 137 ) — — — ( 137 ) ( 15 ) ( 152 )

Class A Common Stock repurchase — — — — — 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

For the Three Months Ended June 30, 2024

Balance, March 31, 2024 215,177 $ 22 21,827 $ 2 $ 1,745,157 33,683 $ ( 591,175 ) $ 547,261 $ 1,701,267 $ 196,517 $ 1,897,784

Stock based compensation expense, net of forfeitures — — — — 4,449 — — — 4,449 347 4,796

Changes in ownership interest adjustment — — — — 25,573 — — — 25,573 ( 25,573 ) —

Common stock issued related to stock based compensation and other, net 121 — — — ( 135 ) — — — ( 135 ) ( 13 ) ( 148 )

Class A Common Stock repurchases — — — — — 1,000 ( 25,939 ) — ( 25,939 ) — ( 25,939 )

Class B Common Stock purchase and cancellation — — ( 3,000 ) — — — — — — ( 76,740 ) ( 76,740 )

Conversion of Class B Common Stock to Class A Common Stock 7,869 1 ( 7,869 ) ( 1 ) — — — — — — —

Dividends declared ($ 0.13 per share)

4 unchanged sentences

Net income — — — — — — — 95,559 95,559 9,554 105,113

Balance, March 31, 2023

Balance, June 30, 2024

223,167 $ 23 10,958 $ 1 $ 1,815,798 34,683 $ ( 616,747 ) $ 619,000 $ 1,818,075 $ 100,281 $ 1,918,356

For the Three Months Ended March 31, 2024

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

Magnolia Oil & Gas Corporation

Consolidated Statements of Changes in Equity (Unaudited)

(In thousands)

Common Stock Class B

Common Stock Additional Paid In Capital Treasury Stock Retained Earnings Total Stockholders’ Equity Noncontrolling Interest Total

For the Six Months Ended June 30, 2023

Shares Value Shares Value Shares Value

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

1 unchanged sentence

Changes in ownership interest adjustment — — — — 6,875 — — — 6,875 ( 6,708 ) 167

Common stock issued related to stock based compensation, net 673 — — — ( 6,262 ) — — — ( 6,262 ) ( 716 ) ( 6,978 )

Class A Common Stock repurchase — — — — — 4,650 ( 96,092 ) — ( 96,092 ) — ( 96,092 )

Dividends declared ($ 0.23 per share)

— — — — — — ( 44,484 ) ( 44,484 ) — ( 44,484 )

Distributions to noncontrolling interest owners — — — — — — — — — ( 5,599 ) ( 5,599 )

Adjustment to deferred taxes — — — — 4,327 — — — 4,327 — 4,327

Tax impact of equity transactions — — — — ( 809 ) — — — ( 809 ) — ( 809 )

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

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

For the Six Months Ended June 30, 2024

Balance, December 31, 2023 214,497 $ 21 21,827 $ 2 $ 1,743,930 31,333 $ ( 538,445 ) $ 486,162 $ 1,691,670 $ 190,998 $ 1,882,668

Stock based compensation expense, net of forfeitures — — — — 8,607 — — — 8,607 847 9,454

Changes in ownership interest adjustment — — — — 29,434 — — — 29,434 ( 29,434 ) —

Common stock issued related to stock based compensation and other, net 801 1 — — ( 6,721 ) — — — ( 6,720 ) ( 807 ) ( 7,527 )

Class A Common Stock repurchases — — — — — 3,350 ( 78,302 ) — ( 78,302 ) — ( 78,302 )

Class B Common Stock purchase and cancellation — — ( 3,000 ) — — — — — — ( 76,740 ) ( 76,740 )

Conversion of Class B Common Stock to Class A Common Stock 7,869 1 ( 7,869 ) ( 1 ) — — — — — — —

Dividends declared ($ 0.26 per share)

4 unchanged sentences

Net income — — — — — — — 180,645 180,645 22,065 202,710

Balance, March 31, 2024

Balance, June 30, 2024

223,167 $ 23 10,958 $ 1 $ 1,815,798 34,683 $ ( 616,747 ) $ 619,000 $ 1,818,075 $ 100,281 $ 1,918,356

3 unchanged sentences

( In thousands)

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

Amortization of deferred financing costs 2,189 2,100

(Gain) on sale of assets — ( 3,946 )

Deferred income tax expense 24,948 36,264

11 unchanged sentences

Acquisitions ( 150,172 ) ( 3,357 )

Deposits for acquisitions of oil and natural gas properties ( 13,150 ) —

Additions to oil and natural gas properties ( 247,063 ) ( 225,388 )

4 unchanged sentences

Class A Common Stock repurchases ( 80,018 ) ( 94,942 )

Class B Common Stock purchases and cancellations ( 76,740 ) —

Dividends paid ( 47,830 ) ( 44,684 )

22 unchanged sentences

The Company’s interests in oil and natural gas exploration and production ventures and partnerships are proportionately consolidated.

The Company reflects a noncontrolling interest representing primarily the interest owned by the Magnolia LLC Unit Holders through their ownership of Magnolia LLC Units in the consolidated financial statements.

The Company reflects a noncontrolling interest representing the interest owned by the Magnolia LLC Unit Holders through their ownership of Magnolia LLC Units in the consolidated financial statements.

The noncontrolling interest is presented as a component of equity.

1 unchanged sentence

Summary of Significant Accounting Policies

As of March 31, 2024, 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 2023 Form 10-K.

As of June 30, 2024, 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 2023 Form 10-K.

Recent Accounting Pronouncements

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ASU 2023-09 is effective for annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

The Company is currently evaluating the potential effect that ASU 2023-09 will have on its financial statement disclosures.

Revenue Recognition

2 unchanged sentences

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 $ 125.3 million as of March 31, 2024 and $ 124.4 million as of December 31, 2023.

Receivables from contracts with customers totaled $ 130.0 million as of June 30, 2024 and $ 124.4 million as of December 31, 2023.

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 2023 Form 10-K.

2024 Acquisitions

On April 30, 2024, the Company acquired certain oil and gas producing properties including leasehold and mineral interests in the Giddings area for approximately $ 125.0 million, subject to customary purchase price adjustments.

During the three months ended March 31, 2024, the Company paid a $ 12.5 million deposit related to this acquisition.

The remaining consideration was funded at closing with cash on hand.

In April 2024, the Company acquired certain oil and gas producing properties, including leasehold and mineral interests, in the Giddings area for approximately $ 125.0 million, subject to customary purchase price adjustments.

The acquisition was accounted for as an asset acquisition and was funded with cash on hand.

2023 Acquisitions

14 unchanged sentences

Fair Value of Financial Instruments

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, 2024 and December 31, 2023 are as follows:

March 31, 2024 December 31, 2023

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, 2024 and December 31, 2023 are as follows:

June 30, 2024 December 31, 2023

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

Long-term debt $ 394,131 $ 395,672 $ 392,839 $ 394,356

The fair value of the 2026 Senior Notes at March 31, 2024 and December 31, 2023 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, 2024 and December 31, 2023 is based on unadjusted quoted prices in an active market, which is considered a Level 1 input in the fair value hierarchy.

Recurring Fair Value Measurements

3 unchanged sentences

The fair value of the contingent consideration is estimated using observable market data (NYMEX WTI forward price curve) and Monte Carlo simulation models, which are considered Level 2 inputs in the fair value hierarchy.

The fair value of the contingent consideration carried at fair value within the Company’s consolidated balance sheets at March 31, 2024 and December 31, 2023 are as follows:

(In thousands) March 31, 2024 December 31, 2023

Included within other current liabilities $ 6,678 $ 6,700

Included within other long-term liabilities 9,108 7,631

Total fair value $ 15,786 $ 14,331

The fair value of the contingent consideration was $ 14.8 million and $ 14.3 million as of June 30, 2024 and December 31, 2023, respectively.

The current portion of the liability included in “Other current liabilities” on the Company’s consolidated balance sheet as of June 30, 2024 and December 31, 2023 was $ 6.0 million and $ 6.7 million, respectively.

The long-term portion of the liability included in “Other long-term liabilities” on the Company’s consolidated balance sheet as of June 30, 2024 and December 31, 2023 was $ 8.8 million and $ 7.6 million, respectively.

The first tranche was settled for $ 2.7 million in January 2024.

A loss on revaluation of the remaining tranches of $ 4.2 million is included in “Other income, net” on the Company’s consolidated statements of operations for the three months ended March 31, 2024.

The Company recognized a gain of $ 1.0 million on the revaluation of the remaining tranches for the three months ended June 30, 2024, and a loss of $ 3.2 million for the six months ended June 30, 2024.

Gains and losses on revaluation are included in “Other income, net” on the Company’s consolidated statements of operations.

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.

4 unchanged sentences

For further detail, see Note 11—Stock Based Compensation in the notes to the consolidated financial statements.

There were no other material nonrecurring fair value measurements as of March 31, 2024 or December 31, 2023.

There were no other material nonrecurring fair value measurements as of June 30, 2024 or December 31, 2023.

Other Current Liabilities

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

(In thousands) March 31, 2024 December 31, 2023

(In thousands) June 30, 2024 December 31, 2023

Accrued capital expenditures $ 44,417 $ 34,131

3 unchanged sentences

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

(In thousands) March 31, 2024 December 31, 2023

(In thousands) June 30, 2024 December 31, 2023

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, 2024, 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 income (expense), net” in the Company’s consolidated statements of operations.

The Company recognized interest expense related to the RBL Facility of $ 1.0 million for each of the three months ended March 31, 2024 and 2023.

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, 2024 and December 31, 2023.

The Company did no t have any outstanding borrowings under the RBL Facility as of March 31, 2024.

As of June 30, 2024, 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 for each of the three months ended June 30, 2024 and 2023, and $ 2.1 million for each of the six months ended June 30, 2024 and 2023.

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, 2024 and December 31, 2023.

The Company did no t have any outstanding borrowings under the RBL Facility as of June 30, 2024.

2026 Senior Notes

4 unchanged sentences

The 2026 Senior Notes will mature on August 1, 2026 and bear interest at the rate of 6.0 % per annum.

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 income (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, 2024 and December 31, 2023.

The Company recognized interest expense related to the 2026 Senior Notes of $ 6.6 million for each of the three months ended March 31, 2024 and 2023.

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 Company recognized interest expense related to the 2026 Senior Notes of $ 6.7 million and $ 6.6 million for the three months ended June 30, 2024 and 2023, respectively, and $ 13.3 million and $ 13.2 million for the six months ended June 30, 2024 and 2023, 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.

21 unchanged sentences

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

Three Months Ended

(In thousands) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

(In thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Federal $ 9,878 $ 3,405 $ 20,858 $ 7,055

8 unchanged sentences

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, 2024 and 2023 was 17.2 % and 15.5 %, respectively.

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 changes in valuation allowances.

As of March 31, 2024, 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, 2024, no significant amounts were incurred for interest and penalties.

The Company’s effective tax rate for the three months ended June 30, 2024 and 2023 was 20.3 % and 19.2 %, respectively, and 18.9 % and 17.4 % for the six months ended June 30, 2024 and 2023, respectively.

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

As of June 30, 2024, 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, 2024, 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.

As of March 31, 2024, the Company’s total deferred tax assets were $ 87.2 million.

During the six months ended June 30, 2024, the Magnolia LLC Unit Holders redeemed 7.9 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.

Magnolia did not receive any proceeds from the sale of shares of Class A Common Stock by the Magnolia LLC Unit Holders.

The redemption and exchange of these Magnolia LLC Units increased Magnolia’s tax basis in Magnolia LLC.

The Company recorded a deferred tax asset of $ 43.5 million related to this additional tax basis in Magnolia LLC Units with a corresponding increase to additional paid-in capital on the Company’s consolidated balance sheet.

As of June 30, 2024, the Company’s total deferred tax assets were $ 111.9 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, 2024, the Company recorded a valuation allowance of $ 5.6 million to offset the deferred tax asset created by the capital loss attributable to the sale of the Company’s interest in Highlander.

As of June 30, 2024, the Company recorded a valuation allowance of $ 5.6 million to offset the deferred tax asset created by the tax capital loss attributable to the sale of the Company’s interest in Highlander.

On August 16, 2022, the U.S.

2 unchanged sentences

These changes include, among others, a new 15% corporate alternative minimum tax on adjusted financial statement income of corporations with profits over $1 billion, a 1% excise tax on stock buybacks, and various tax incentives for energy and climate initiatives.

As of March 31, 2024, the Company is in compliance with all applicable provisions of the IRA, including the excise tax on stock buybacks.

The Company is not subject to the corporate alternative minimum tax.

As of June 30, 2024, the Company is in compliance with all applicable provisions of the IRA, including the excise tax on stock buybacks.

The Company is currently not subject to the corporate alternative minimum tax.

The stock buyback excise tax did not have a material impact on the Company’s consolidated financial statements.

2 unchanged sentences

Class A Common Stock

At March 31, 2024, there were 215.2 million shares of Class A Common Stock issued and 181.5 million shares of Class A Common Stock outstanding.

At June 30, 2024, there were 223.2 million shares of Class A Common Stock issued and 188.5 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, 2024, there were 21.8 million shares of Class B Common Stock issued and outstanding.

At June 30, 2024, there were 11.0 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

As of March 31, 2024, the Company’s board of directors had authorized a share repurchase program of up to 40.0 million shares of Class A Common Stock.

As of June 30, 2024, the Company’s board of directors had authorized a share repurchase program of up to 40.0 million shares of Class A Common Stock.

In addition, the Company may repurchase shares pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit the Company to repurchase shares at times that may otherwise be prohibited under the Company’s insider trading policy.

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

The Company had repurchased 33.1 million shares under the program at a cost of $ 577.3 million and had 6.9 million shares of Class A Common Stock remaining under its share repurchase authorization as of March 31, 2024.

The Company had repurchased 34.1 million shares under the program at a cost of $ 603.3 million and had 5.9 million shares of Class A Common Stock remaining under its share repurchase authorization as of June 30, 2024.

During the six months ended June 30, 2024, Magnolia LLC repurchased and subsequently canceled 3.0 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for $ 76.7 million of cash consideration (the “Class B Common Stock Repurchase”).

Magnolia funded the Class B Common Stock Repurchase with cash on hand.

During the same period, the Magnolia LLC Unit Holders redeemed 7.9 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.

Magnolia did not receive any proceeds from the sale of shares of Class A Common Stock by the Magnolia LLC Unit Holders.

Dividends and Distributions

1 unchanged sentence

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 three months ended March 31, 2024 and the year ended December 31, 2023, 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:

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, 2024 and the year ended December 31, 2023, 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 13, 2024 June 3, 2024 $ 0.130 $ 26,657 $ 23,820 $ 2,837

February 16, 2024 March 1, 2024 $ 0.130 $ 26,824 $ 23,987 $ 2,837

8 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, 2024, Magnolia owned approximately 89.3 % of the interest in Magnolia LLC and the noncontrolling interest was approximately 10.7 %.

As of June 30, 2024, Magnolia owned approximately 94.5 % of the interest in Magnolia LLC and the noncontrolling interest was approximately 5.5 %.

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.

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

Stock Based Compensation

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, 2024.

A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of June 30, 2024.

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 $ 4.7 million and $ 3.8 million for the three months ended March 31, 2024 and 2023, 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 $ 4.8 million and $ 4.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 9.5 million and $ 7.9 million for the six months ended June 30, 2024 and 2023, respectively.

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

The total income tax benefit recognized for stock that vested during the three months ended March 31, 2024 and 2023 was $ 4.8 million and $ 4.4 million, respectively.

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the three months ended March 31, 2024.

The total income tax benefit recognized for stock that vested during the six months ended June 30, 2024 and 2023 was $ 5.5 million and $ 4.6 million, respectively.

The following table presents a summary of Magnolia’s unvested RSU, PRSU, and PSU activity for the six months ended June 30, 2024.

Stock Units Performance Restricted

5 unchanged sentences

Forfeited ( 31,903 ) 21.64 ( 9,510 ) 19.01 ( 19,677 ) 22.41

Unvested at March 31, 2024

Unvested at June 30, 2024

1,488,500 $ 21.29 282,260 $ 19.31 579,961 $ 22.48

The weighted average grant date fair values of the RSUs, PRSUs, and PSUs granted during the three months ended March 31, 2023 were $ 23.06 , $ 22.96 , and $ 24.69 per share, respectively.

The weighted average grant date fair values of the RSUs, PRSUs, and PSUs granted during the six months ended June 30, 2023 were $ 22.81 , $ 22.28 , and $ 24.69 per share, respectively.

Restricted Stock Units

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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, 2024 and 2023 were $ 7.9 million and $ 7.2 million, respectively.

Unrecognized compensation expense related to unvested RSUs as of March 31, 2024 was $ 28.8 million, which the Company expects to recognize over a weighted average period of 2.6 years.

The aggregate fair value of RSUs that vested during the six months ended June 30, 2024 and 2023 were $ 11.1 million and $ 8.3 million, respectively.

Unrecognized compensation expense related to unvested RSUs as of June 30, 2024 was $ 26.7 million, which the Company expects to recognize over a weighted average period of 2.3 years.

Performance Restricted Stock Units and Performance Stock Units

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Each PRSU represents the contingent right to receive one share of Class A Common Stock once the PRSU is both vested and earned.

PRSUs generally vest either ratably over a three-year service period or at the end of a three-year service period, in each case, subject to the recipient’s continued employment or service through each applicable vesting date.

PRSUs generally vest and settle either ratably over a three-year service period or at the end of a three-year service period, in each case, subject to the recipient’s continued employment or service through each applicable vesting date.

Each PRSU is earned based on whether Magnolia’s stock price achieves a target average stock price for any 20 consecutive trading days during the five-year performance period (“Performance Condition”).

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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 PRSUs that vested during the three months ended March 31, 2024 and 2023 were $ 14.9 million and $ 7.0 million, respectively.

Unrecognized compensation expense related to unvested PRSUs as of March 31, 2024 was $ 1.8 million, which the Company expects to recognize over a weighted average period of 1.1 years.

The aggregate fair value of PRSUs that vested during the six months ended June 30, 2024 and 2023 were $ 15.0 million and $ 7.0 million, respectively.

Unrecognized compensation expense related to unvested PRSUs as of June 30, 2024 was $ 1.4 million, which the Company expects to recognize over a weighted average period of 0.9 years.

The Company grants PSUs to certain employees.

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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 PSUs that vested during the three months ended March 31, 2024 and 2023 were $ 0.1 million and $ 6.7 million, respectively.

Unrecognized compensation expense related to unvested PSUs as of March 31, 2024 was $ 10.6 million, which the Company expects to recognize over a weighted average period of 2.5 years.

The aggregate fair value of PSUs that vested during the six months ended June 30, 2024 and 2023 were $ 0.1 million and $ 6.7 million, respectively.

Unrecognized compensation expense related to unvested PSUs as of June 30, 2024 was $ 9.4 million, which the Company expects to recognize over a weighted average period of 2.3 years.

The following table summarizes the Monte Carlo simulation assumptions used to calculate the grant date fair value of the PSUs in 2024 and 2023.

Three Months Ended

PSU Grant Date Fair Value Assumptions March 31, 2024 March 31, 2023

Six Months Ended

PSU Grant Date Fair Value Assumptions June 30, 2024 June 30, 2023

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, 2024 March 31, 2023

Three Months Ended Six Months Ended

(In thousands, except per share data) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income attributable to Class A Common Stock $ 95,559 $ 91,492 $ 180,645 $ 187,826

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$ 0.51 $ 0.48 $ 0.97 $ 0.97

For each of the three months ended March 31, 2024 and 2023, the Company excluded 21.8 million 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, 2024 and 2023, the Company excluded 16.2 million and 21.8 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, 2024 and 2023, the Company excluded 19.0 million and 21.8 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.

Related Party Transactions

For the three months ended March 31, 2024 and 2023, there were no related party transactions with an entity that 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.”

For the six months ended June 30, 2024 and 2023, there were no material related party transactions with an entity that 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.”

Supplemental Cash Flow

Supplemental cash flow disclosures are presented below:

Three Months Ended

(In thousands) March 31, 2024 March 31, 2023

Six Months Ended

(In thousands) June 30, 2024 June 30, 2023

Supplemental cash items:

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Accrued capital expenditures 44,417 28,500

Liabilities assumed in connection with acquisitions 6,968 —

Net liabilities assumed in connection with acquisitions 6,990 —

Supplemental non-cash lease operating activity:

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Subsequent Events

On May 2, 2024, the Company’s board of directors declared a quarterly cash dividend of $ 0.13 per share of Class A Common Stock, and Magnolia LLC declared a cash distribution of $ 0.13 per Magnolia LLC Unit to each holder of Magnolia LLC Units, each payable on June 3, 2024 to shareholders or members of record, as applicable, as of May 13, 2024.

On July 29, 2024, the Company’s board of directors declared a quarterly cash dividend of $ 0.13 per share of Class A Common Stock, and Magnolia LLC declared a cash distribution of $ 0.13 per Magnolia LLC Unit to each holder of Magnolia LLC Units, each payable on September 3, 2024 to shareholders or members of record, as applicable, as of August 9, 2024.

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