Magnolia Oil & Gas (MGY) Q1 FY26 earnings call: guidance and Q&A

How much acreage was added in Karnes, and will this change upcoming activity plans?

The Karnes acquisition created a 10,000-acre contiguous block, largely undeveloped with high working interest, providing multiple years of drilling. It will be integrated into the drilling program but won't change overall activity or capital allocation.

“It's sort of a blank canvas, the way I would describe it and allows us to optimally develop the asset.”

asked by Neal Dingmann · answered by Christopher Stavros

What is the average pad size and well cost in Giddings, and how do current economics compare to a few years ago?

Average pad size is 3-4 wells, which is optimal. Economics are better now due to increased capital efficiency, faster drilling, and quicker completions.

“As far as the economics, they're better than they were earlier because we've gotten more capitally efficient. And we know the play better.”

asked by Neal Dingmann · answered by Christopher Stavros

How does Magnolia envision the development scheme for the new 10,000-acre contiguous block in Karnes, regarding lateral lengths and zones?

Laterals will approach or exceed 10,000 feet in some cases, which is substantially more than typical for the Karnes area.

“But I mean, the laterals will be sort of approaching 10,000 feet in some cases and beyond. So that's substantially more than what we've typically been able to do in the cards area generally.”

asked by Phillip Jungwirth · answered by Christopher Stavros

Is there an upper limit on transaction size for acquisitions, and what are the balance sheet parameters for larger deals?

The company looks at everything but aims not to 'shock' shareholders with out-of-basin deals. Acquisitions must support the business model and improve it. Transaction size depends on availability and fit, with current pricing potentially increasing opportunities.

“I mean the objective of any acquisition is to make it better, not worse.”

asked by Phillip Jungwirth · answered by Christopher Stavros

Is there an opportunity to accelerate workovers or other activities to take advantage of higher oil prices?

While possible to consider more appraisal or exploration, the company views development as a 'marathon, not a sprint.' Accelerating production means faster replacement. They expect to grow 5% this year and might surprise higher. No dramatic shift in plans due to price, but non-op activity might increase.

“I view this more as a marathon, not a sprint. So you never know what's right around the bend.”

asked by Peyton Dorne · answered by Christopher Stavros

Can the company quantify total royalty acreage and if royalty acquisitions will become a larger part of the strategy?

Acquiring royalties enhances economics and margins, not primarily for monetization. They have '50-plus thousand a day' in production from royalties, especially in Giddings. The goal is to control more and have higher margins.

“It's definitely, we'll call it, 50-plus thousand a day in terms of production that's straight from royalties, but that really enhances our margin.”

asked by Peyton Dorne · answered by Brian Corales

How did the recent deal clear at current prices, and what does this say about the broader M&A market in their operating areas?

The deal was in discussions for a while, not necessarily clearing at 'peak' prices. There are many opportunities available for sellers. Magnolia's focus is on deals that support its business model and improve it, regardless of market conditions.

“I never said that it cleared at current prices. So we were in conversations around this for a period of time and sometimes better to be fortunate than good.”

asked by Carlos Escalante · answered by Christopher Stavros

What is the perspective on natural gas realizations given new Permian pipelines coming to market and potential impact on their selling points?

Past experience (e.g., Matterhorn pipeline) suggests infrastructure additions don't always impact realizations as feared. They sell products at market on the water, close to where they are sold, with attractive pricing and lower tolling fees.

“my experience suggests that it may not be all that different than what occurred a year ago, irrespective of what's happening right now.”

asked by Carlos Escalante · answered by Christopher Stavros

Perspective on the buyback program and its role in creating shareholder value.

Buybacks are a consistent part of their model, providing compounding benefits for dividend growth and per-share metrics. It's an appropriate size and helps create shareholder value over time.

“It's always been part of the model as far -- frankly, its compounding effects are enormously beneficial in terms of helping us with the dividend growth and growth per share in the dividend, if you will, by sort of reducing the actual cash outlays while you grow the dividend on a higher per share rate.”

asked by Neil Mehta · answered by Christopher Stavros

How does the company feel about the 10% long-term dividend growth rate, and is there potential for upside in a 'higher for longer' environment?

The 10% dividend growth is an outcome of the business's capabilities, specifically mid-single-digit volume growth (4-6%) and 1% share buybacks per quarter. It's built into the investment proposition.

“The dividend growth is an outcome of what I just said around the volume growth and the share repurchases. So it sort of just falls out of the model.”

asked by Neil Mehta · answered by Christopher Stavros