What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-10-30 · 72 added, 85 removed, 140 unchanged (53% of the section changed)

20 unchanged sentences

• the availability of goods and services;

• cyber attacks;

• cybersecurity threats, including increased use of artificial intelligence technologies;

• the occurrence of property acquisitions or divestitures;

6 unchanged sentences

The Company’s oil and natural gas properties are located primarily in the Karnes and Giddings areas in South Texas, where the Company primarily targets the Eagle Ford Shale and the Austin Chalk formations.

Magnolia’s objective is to generate stock market value over the long term through steady organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow.

Magnolia’s objective is to generate stock market value over the long term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of free cash flow.

The Company’s allocation of capital prioritizes reinvesting in its business to achieve moderate and predictable annual volume growth balanced with returning capital to its shareholders through dividends and share repurchases.

3 unchanged sentences

Market Conditions Update

Commodity prices experienced significant volatility in recent years, impacted by the Russia-Ukraine war, actions taken by OPEC, and the continued instability and conflict in the Middle East.

In 2024, despite the price volatility, lower well costs combined with improved operating efficiencies allowed for more wells to be drilled, completed, and turned in line helping to support Magnolia’s overall high-margin growth from a disciplined capital program.

In 2025, the macroeconomic and geopolitical outlook remains complex and continues to evolve amid persistent inflationary pressures, high interest rates, and escalating trade tensions, including recently imposed tariffs.

Magnolia will continue to monitor changes in international trade relations and trade policy, including those related to tariffs, which could adversely impact results.

Commodity prices continue to experience volatility driven by geopolitical conflict, evolving global supply-demand dynamics, and macroeconomic uncertainty.

Most notably, the escalation of military conflict involving Iran has materially disrupted global energy markets, including significantly constraining the movement of global crude oil and refined product exports through the Strait of Hormuz.

These developments, together with the ongoing Russia-Ukraine conflict, OPEC and OPEC+ production decisions, and changes in sanctions and trade restrictions affecting major oil-producing countries such as Russia, Iran, and Venezuela, have increased the risk of supply interruptions and contributed to substantial price volatility and uncertainty in global energy markets.

The macroeconomic and geopolitical environment remains uncertain and continues to evolve.

In combination with geopolitical risks — including sanctions regimes, trade restrictions, tariff policies that remain subject to legal, regulatory, and policy uncertainty, and the potential for prolonged or expanded disruptions to global energy supply chains — these conditions continue to increase uncertainty with respect to commodity prices, operating costs, and capital availability.

The Company continues to closely monitor developments in geopolitical conditions, international trade relations, tariff policies, and energy market dynamics, any of which could adversely affect operating results, financial condition, and future cash flows.

Business Overview

As of September 30, 2025, Magnolia’s assets in South Texas included 79,363 gross (55,381 net) acres in the Karnes area, and 752,536 gross (569,217 net) acres in the Giddings area.

As of September 30, 2025, Magnolia held an interest in approximately 2,852 gross (1,934 net) wells, with total production of 100.5 thousand and 98.4 thousand barrels of oil equivalent per day for the three and nine months ended September 30, 2025, respectively.

Magnolia recognized net income attributable to Class A Common Stock of $75.5 million and $256.5 million, or $0.40 and $1.36 per diluted common share, for the three and nine months ended September 30, 2025, respectively.

Magnolia recognized net

income of $78.2 million and $265.9 million, which includes noncontrolling interest of $2.8 million and $9.4 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 nine months ended September 30, 2025, respectively.

During the nine months ended September 30, 2025, the Company declared cash dividends to holders of its Class A Common Stock totaling $85.3 million.

As of September 30, 2025, the Company’s board of directors had authorized a share repurchase program of up to 50.0 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 44.8 million shares under the program at a cost of $859.9 million and had 5.2 million shares of Class A Common Stock remaining under its share repurchase authorization as of September 30, 2025.

As of September 30, 2025, Magnolia owned approximately 97.1% of the interest in Magnolia LLC and the noncontrolling interest was approximately 2.9%.

As of March 31, 2026, Magnolia’s assets in South Texas included 60,187 gross (39,935 net) acres in the Karnes area, and 741,586 gross (561,950 net) acres in the Giddings area.

As of March 31, 2026, Magnolia held an interest in approximately 2,890 gross (1,960 net) wells, with total production of 102.6 thousand barrels of oil equivalent per day for the three months ended March 31, 2026.

Magnolia recognized net income attributable to Class A Common Stock of $99.8 million, or $0.54 per diluted common share, for the three months ended March 31, 2026.

Magnolia recognized net income of $100.8 million, which includes noncontrolling interest of $1.0 million related to the Magnolia LLC Units (and corresponding shares of Class B Common Stock) held by certain affiliates of EnerVest, for the three months ended March 31, 2026.

During the three months ended March 31, 2026, the Company declared and paid cash dividends and distributions totaling $31.4 million.

As of March 31, 2026, the Company’s board of directors had authorized a share repurchase program of up to 60.0 million shares of Class A Common Stock.

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

The Company had repurchased 48.4 million shares under the program at a cost of $945.4 million and had 11.6 million shares of Class A Common Stock remaining under its share repurchase authorization as of March 31, 2026.

As of March 31, 2026, Magnolia owned 100.0% of the interest in Magnolia LLC.

Results of Operations

Factors Affecting the Comparability of the Historical Financial Results

Magnolia’s historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, as a result of the Company’s redemption of its 2026 Senior Notes that bore interest at 6.0% per annum and its issuance of the 2032 Senior Notes that bear interest at 6.875% per annum, both of which occurred in November 2024.

Three and Nine Months Ended September 30, 2025 Compared to the Three and Nine Months Ended September 30, 2024

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

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.

Three Months Ended Nine Months Ended

(In thousands, except per unit data) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Three Months Ended

(In thousands, except per unit data) March 31, 2026 March 31, 2025

Oil (MBbls) 3,661 3,517

23 unchanged sentences

NGLs (per barrel) 18.48 22.03

Oil revenues for the three months ended September 30, 2025 were $35.2 million lower than the three months ended September 30, 2024.

A 14% decrease in average prices decreased third quarter 2025 revenues by $38.3 million compared to the same period in the prior year, partially offset by a 1% increase in oil production that increased revenues by $3.1 million.

Oil revenues for the nine months ended September 30, 2025 were $97.8 million lower than for the nine months ended September 30, 2024.

A 15% decrease in average prices decreased revenues for the nine months ended September 30, 2025 by $119.7 million compared to the same period in the prior year, partially offset by a 3% increase in oil production that increased revenues by $21.9 million.

Natural gas revenues for the three months ended September 30, 2025 were $21.0 million higher than the three months ended September 30, 2024.

A 63% increase in average prices increased third quarter 2025 revenues by $13.9 million compared to the same period in the prior year, and a 20% increase in natural gas production increased revenues by $7.1 million.

Natural gas revenues for the nine months ended September 30, 2025 were $75.5 million higher than the nine months ended September 30, 2024.

An 89% increase in average prices increased revenues for the nine months ended September 30, 2025 by $55.4 million compared to the same period in the prior year, and a 17% increase in natural gas production increased revenues by $20.1 million.

NGL revenues for the three months ended September 30, 2025 were $6.0 million higher than the three months ended September 30, 2024.

A 16% increase in NGL production increased third quarter 2025 revenues by $7.1 million compared to the same period in the prior year, partially offset by a 2% decrease in average prices that decreased revenues by $1.1 million.

NGL revenues for the nine months ended September 30, 2025 were $27.2 million higher than the nine months ended September 30, 2024.

A 16% increase in NGL production increased revenues for the nine months ended September 30, 2025 by $20.8 million compared to the same period in the prior year, and a 5% increase in average prices increased revenues by $6.4 million.

Oil revenues for the three months ended March 31, 2026 were $11.8 million higher than the three months ended March 31, 2025.

A 4% increase in oil production increased first quarter 2026 revenues by $10.1 million compared to the same period in the prior year, and a 1% increase in average prices increased revenues by $1.7 million.

Natural gas revenues for the three months ended March 31, 2026 were $0.4 million higher than the three months ended March 31, 2025.

A 5% increase in natural gas production increased first quarter 2026 revenues by $2.7 million compared to the same period in the prior year, partially offset by a 4% decrease in average prices that decreased revenues by $2.3 million.

NGL revenues for the three months ended March 31, 2026 were $4.0 million lower than the three months ended March 31, 2025.

A 16% decrease in average prices decreased first quarter 2026 revenues by $8.6 million compared to the same period in the prior year, partially offset by a 10% increase in NGL production that increased revenues by $4.6 million.

Operating Expenses and Other Expense

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

Three Months Ended Nine Months Ended

(In thousands, except per unit data) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Three Months Ended

(In thousands, except per unit data) March 31, 2026 March 31, 2025

Operating Expenses:

10 unchanged sentences

Other income (expense), net (36) 1,215

Total other income (expense), net $ (6,023) $ 3,430 $ (15,909) $ (5,665)

Total other expense, net $ (6,040) $ (4,037)

Average Operating Costs per boe:

7 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 September 30, 2025 were $4.1 million higher, and $0.08 per boe lower, than the three months ended September 30, 2024.

Lease operating expenses for the nine months ended September 30, 2025 were $4.3 million higher, and $0.38 per boe lower, than the nine months ended September 30, 2024.

The increases in both periods were due to higher workover activity and an increase in surface repair and maintenance, contract labor, and equipment rentals associated with higher well count, offset by broad cost reduction initiatives.

Lease operating expenses for the three months ended March 31, 2026 were $0.7 million higher, and $0.25 per boe lower, than the three months ended March 31, 2025.

The increase was due to an increase in surface repair and maintenance and compression associated with higher well count.

The decrease in lease operating expenses per boe was due to higher production.

1 unchanged sentence

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

The GTP costs for the three months ended September 30, 2025 were $7.1 million, or $0.64 per boe, higher, than the three months ended September 30, 2024.

The GTP costs for the nine months ended September 30, 2025 were $21.5 million, or $0.69 per boe, higher, than the nine months ended September 30, 2024.

The increase in GTP costs in both periods was driven by changes to certain gathering and processing contracts, which resulted in a higher portion of Magnolia’s GTP costs to be recognized as expense versus a reduction to Magnolia’s natural gas revenues, as well as higher production and natural gas prices.

The GTP costs for the three months ended March 31, 2026 were $3.3 million, or $0.25 per boe, higher, than the three months ended March 31, 2025 driven by higher production and changes to certain gathering and processing contracts, which resulted in a higher portion of Magnolia’s GTP costs being recognized as expense versus a reduction to Magnolia’s natural gas revenues.

Taxes other than income include 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 September 30, 2025 were $2.1 million higher than the three months ended September 30, 2024.

Taxes other than income for the nine months ended September 30, 2025 were $3.3 million higher than the nine months ended September 30, 2024.

The increase in taxes other than income in both periods was primarily due to an increase in ad valorem taxes as a result of higher market value of new wells brought online.

Depreciation, depletion and amortization (“DD&A”) during the three months ended September 30, 2025 was $3.3 million higher, and $0.90 per boe lower, than the three months ended September 30, 2024.

DD&A for the nine months ended September 30, 2025 was $14.4 million higher, and $0.70 per boe lower, than the nine months ended September 30, 2024.

In both periods, higher production increased overall DD&A, and an increase in oil and natural gas reserves decreased DD&A per boe.

General and administrative expenses (“G&A”) during the three months ended September 30, 2025 were $3.0 million, and $0.08 per boe, higher, than the three months ended September 30, 2024.

G&A expenses during the nine months ended September 30, 2025 were $4.5 million higher, and $0.10 per boe lower, than the nine months ended September 30, 2024.

G&A increased in both periods due to an increase in overall labor costs, including changes from the modification of stock based compensation awards in 2025 and higher subscription and license fees, partially offset by certain one-time costs incurred in 2024.

Interest expense, net, during the three months ended September 30, 2025 was $1.5 million higher than the three months ended September 30, 2024.

Interest expense, net, during the nine months ended September 30, 2025 was $6.5 million higher than the nine months ended September 30, 2024.

The increase in both periods was primarily driven by lower interest income realized during 2025 as a result of lower interest rates and cash balances.

Other income (expense), net, during the three months ended September 30, 2025 was $(0.7) million compared to $7.3 million during the three months ended September 30, 2024.

The decrease in other income (expense) for the three months ended September 30, 2025 as compared to the same period in the prior year was primarily due to the revaluation of the contingent consideration and loss on asset retirement obligation settlements.

Other income (expense), net, during the nine months ended September 30, 2025 was $0.3 million compared to $4.0 million during the nine months ended September 30, 2024.

The decrease in other income (expense) for the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily comprised of the loss on sale of other assets in 2025 and loss on asset retirement obligation settlements, partially offset by the revaluation of the contingent consideration.

Taxes other than income for the three months ended March 31, 2026 were $3.7 million, or $0.53 per boe, lower than the three months ended March 31, 2025.

The decrease in taxes other than income was primarily due to a decrease in ad valorem taxes as a result of lower market valuations and a decrease in production taxes as a result of severance tax refunds.

Depreciation, depletion and amortization (“DD&A”) during the three months ended March 31, 2026 was $7.5 million, or $0.10 per boe, higher than the three months ended March 31, 2025.

The increase in DD&A was primarily due to higher production.

The slight increase in the DD&A rate period over period was primarily due to acquisitions made during 2026.

General and administrative expenses (“G&A”) consists primarily of salaries and related benefits, stock based compensation, office rent, legal and consulting fees, system costs and other administrative costs incurred.

The table below reflects the Company’s G&A for the periods indicated:

Three Months Ended

(In thousands) March 31, 2026 March 31, 2025

General and administrative expenses $ 20,160 $ 18,696

Stock based compensation 11,284 5,892

Total general and administrative expenses $ 31,444 $ 24,588

G&A during the three months ended March 31, 2026 were $6.9 million, or $0.58 per boe, higher, than the three months ended March 31, 2025.

The increase in G&A was primarily due to increased stock based compensation expense as a result of higher grant date fair values, accelerated vesting of certain awards, and changes in expected payouts for the Company’s performance share unit awards.

Income Tax Expense

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

Three Months Ended Nine Months Ended

(In thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Current income tax expense (benefit) $ (32,288) $ (480) $ (15,367) $ 21,676

Three Months Ended

(In thousands) March 31, 2026 March 31, 2025

Current income tax expense $ 3,998 $ 12,795

Deferred income tax expense 16,890 12,342

Income tax expense $ 20,888 $ 25,137

For the three months ended September 30, 2025, income tax expense was $9.3 million lower than the three months ended September 30, 2024 driven by a $31.8 million decrease in current income tax expense and offset by a $22.5 million increase in deferred income tax expense.

Income tax expense during the nine months ended September 30, 2025 was $10.4 million lower compared to the nine months ended September 30, 2024, driven by a $37.0 million decrease in current income tax expense and offset by a $26.7 million increase in deferred income tax expense.

The decrease in tax expense was primarily due to a decrease in income before income taxes and additional tax credits, partially offset by an increased controlling interest.

The decrease in current tax expense and increase in deferred tax expense were primarily due to the acceleration of tax deductions from the passage of the One Big Beautiful Bill Act.

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.

For the three months ended March 31, 2026, income tax expense was $4.2 million lower than the three months ended March 31, 2025 driven by an $8.8 million decrease in current income tax expense and offset by a $4.6 million increase in deferred income tax expense.

The decrease in total tax expense was primarily due to a decrease in income before income taxes and an increase in the discrete impact from stock based compensation that vested during the three months ended March 31, 2026 compared to March 31, 2025.

Accelerated deductions as a result of the passage of the One Big Beautiful Bill Act resulted in lower current tax expense and higher deferred tax expense.

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

Liquidity and Capital Resources

4 unchanged sentences

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 September 30, 2025, the Company had $400.0 million of principal debt related to the 2032 Senior Notes outstanding and no outstanding borrowings related to the RBL Facility.

As of September 30, 2025, the Company had $730.5 million of liquidity comprised of the $450.0 million of borrowing capacity under the RBL Facility, and $280.5 million of cash and cash equivalents.

As of March 31, 2026, the Company had $400.0 million of principal debt related to the Senior Notes outstanding and no outstanding borrowings related to the RBL Facility.

As of March 31, 2026, the Company had $574.4 million of liquidity comprised of the $450.0 million of borrowing capacity under the RBL Facility, and $124.4 million of cash and cash equivalents.

Cash and Cash Equivalents

At September 30, 2025, Magnolia had $280.5 million of cash and cash equivalents.

At March 31, 2026, Magnolia had $124.4 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:

Nine Months Ended

(In thousands) September 30, 2025 September 30, 2024

Three Months Ended

(In thousands) March 31, 2026 March 31, 2025

SOURCES OF CASH AND CASH EQUIVALENTS

14 unchanged sentences

Operating cash flows are the Company’s primary source of liquidity and are impacted, in the short-term and long-term, by oil and natural gas prices.

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, revaluation of contingent consideration, impairment of oil and natural gas properties, asset retirement obligations accretion, and deferred taxes.

Net cash provided by operating activities totaled $670.2 million and $698.2 million for the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, cash provided by operating activities was negatively impacted by the timing of receipts and a decrease in realized oil prices, partially offset by the timing of payments, increased production, and an increase in realized natural gas prices.

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, asset retirement obligations accretion, and deferred taxes.

Net cash provided by operating activities totaled $197.6 million and $224.5 million for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, cash provided by operating activities decreased due to lower realized NGL prices and the timing of receipts and payments, partially offset by increased production and the receipt of tax refunds.

Uses of Cash and Cash Equivalents

The Company made individually insignificant bolt-on acquisitions during each of the nine months ended September 30, 2025 and 2024.

The Company made individually insignificant bolt-on acquisitions totaling $155.0 million and $24.1 million during the three months ended March 31, 2026 and 2025, respectively.

Additions to Oil and Natural Gas Properties

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

Three Months Ended Nine Months Ended

(In thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Three Months Ended

(In thousands) March 31, 2026 March 31, 2025

Drilling and completion $ 128,687 $ 130,439

1 unchanged sentence

Total capital expenditures $ 128,427 $ 131,168

During the third quarter of 2025, Magnolia operated two rigs.

The activity during the third quarter of 2025 was largely driven by the number of operated and non-operated drilling rigs.

During the first quarter of 2026, Magnolia operated two rigs.

The activity during the first quarter of 2026 was largely driven by the number of operated and non-operated drilling rigs.

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.

1 unchanged sentence

Capital Requirements

As of September 30, 2025, the Company’s board of directors had authorized a share repurchase program of up to 50.0 million shares of Class A Common Stock.

As of March 31, 2026, the Company’s board of directors had authorized a share repurchase program of up to 60.0 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 each of the nine months ended September 30, 2025 and 2024, the Company repurchased 6.5 million and 5.3 million shares for a total cost of approximately $152.1 million and $127.0 million, respectively.

During the nine months ended September 30, 2024, Magnolia LLC repurchased and subsequently canceled 3.5 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for $89.7 million of cash consideration.

As of September 30, 2025, Magnolia owned approximately 97.1% of the interest in Magnolia LLC and the noncontrolling interest was approximately 2.9%.

During the nine months ended September 30, 2025, the Company declared and paid cash dividends to holders of its Class A Common Stock totaling $85.3 million.

During each of the three months ended March 31, 2026 and 2025, the Company repurchased 1.2 million and 2.2 million shares for a total cost of approximately $32.1 million and $52.0 million, respectively.

During the three months ended March 31, 2025, Magnolia LLC repurchased and subsequently canceled 0.7 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for $19.8 million of cash consideration.

As of March 31, 2026, Magnolia owned 100.0% of the interest in Magnolia LLC.

During the three months ended March 31, 2026, the Company declared and paid cash dividends to holders of its Class A Common Stock totaling $30.5 million.

Additionally, $0.9 million was distributed to the Magnolia LLC Unit Holders.

During the nine months ended September 30, 2024, the Company declared and paid cash dividends to holders of its Class A Common Stock totaling $72.5 million.

During the three months ended March 31, 2025, the Company declared and paid cash dividends to holders of its Class A Common Stock totaling $28.9 million.

Additionally, $0.8 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