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    MGY
    Earnings call· Jun 2026(Q2 FY26)

    Magnolia Oil & Gas Q2 FY26 earnings call MGY

    Aug 6, 2026 Source

    Executive summary

    Magnolia Oil & Gas Q2 FY26 — Record Production and Strategic WildFire Acquisition

    Magnolia Oil & Gas delivered record production and strong financial results in Q2 FY26, driven by its Giddings asset. The company announced the strategic acquisition of WildFire Energy, significantly expanding its Giddings footprint and enhancing future free cash flow generation, while maintaining its disciplined capital allocation and shareholder return model.

    Highlights

    5

    • Adjusted net income of $184 million or $0.99 per diluted share.

    • Total company production volumes grew 8% year-over-year to a record 106,100 barrels of oil equivalent per day.

    • Generated $235 million of free cash flow in the quarter.

    • Pretax adjusted operating income margins averaged a robust 51%.

    • Full-year 2026 production growth guidance raised to 6% from 5%.

    Concerns

    1

    • WildFire acquisition adds more leverage than historically carried, though expected to be manageable with net debt to EBITDA below 1x by year-end 2027.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 total production growth
    6%
    high materiality
    High
    Q3 2026 D&C capital expenditures
    $115 million
    medium materiality
    High
    Q3 2026 total production
    approximately 106,000 barrels of oil equivalent a day
    medium materiality
    High
    Q3 2026 oil realizations
    $3 per barrel discount
    medium materiality
    High
    Net debt to EBITDA
    less than 1x
    high materiality
    High
    D&C spending limit
    55% of adjusted EBITDAX
    high materiality
    High
    Annualized dividend growth
    about 10%
    high materiality
    High
    Share repurchases
    at least 1% of the outstanding shares per quarter
    high materiality
    High
    Fully diluted share count (post-WildFire)
    approximately 269 million shares
    medium materiality
    High
    Effective tax rate
    approximately 21%
    low materiality
    High
    Cash taxes for 2026
    minimal
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Giddings
    Primary growth driver for Magnolia, setting a new quarterly record for total production.
    Total production: 85,500 boe/dOil production: 29,000 bbl/dOil production growth: 7% YoYAccounts for 81% of total company volumes
    		—10%——
    Karnes
    Expected to sustain production for many years, generating a significant amount of free cash flow and providing ballast and stability for the overall organization.
    Total production: just over 20,000 boe/d
    		—relatively flat——

    Operational metrics

    27
    Adjusted net income
    $184 million
    Q2 FY26

    Reported for the second quarter.

    Adjusted EBITDAX
    $370 million
    Q2 FY26

    Reported for the second quarter.

    Drilling and completion capital
    $125 million
    Q2 FY26

    Includes associated facilities.

    Pretax adjusted operating income margins
    51%
    Q2 FY26

    Averaged for the quarter.

    Shareholder returns
    $80 million
    Q2 FY26

    Returned from free cash flow.

    Share repurchases
    1.7 million shares
    Q2 FY26

    Bought back during the quarter prior to restrictions.

    Diluted weighted average shares outstanding
    184.6 million shares
    Q2 FY26

    During the second quarter.

    Total company production volumes
    106,1008% year-over-year
    Q2 FY26

    Above expectations and earlier guidance.

    Oil production volumes
    41,9005% year-over-year
    Q2 FY26

    Company-wide oil production.

    Annualized return on capital employed
    39%
    Q2 FY26

    As a result of higher prices and increased production.

    Cash balance
    $296 millionincrease of $172 million
    end of Q2 FY26

    Ending cash balance.

    Dividends paid
    $31 million
    Q2 FY26

    Paid during the quarter.

    Share repurchases (cash)
    $49 million
    Q2 FY26

    Allocated towards share repurchases during the quarter.

    Total shares repurchased
    85.5 million shares
    since H2 2019

    Cumulative repurchases since the program began.

    Quarterly dividend
    $0.189% increase
    quarterly

    Payable on September 1.

    Annualized dividend payout rate
    $0.72
    annualized

    Based on the new quarterly dividend.

    Total adjusted cash operating costs
    $11.55
    Q2 FY26

    Per unit cash costs.

    Adjusted operating income margin
    $25.15
    Q2 FY26

    Per unit operating income margin.

    WildFire production contribution
    53,000
    pro forma

    Production added by the WildFire acquisition.

    WildFire acreage contribution
    810,000
    pro forma

    Acreage added to Magnolia's Giddings position.

    Combined Giddings net acres
    more than 1.25 million
    pro forma

    Total combined position after WildFire acquisition.

    WildFire acquisition equity funding
    $1.23 billion
    July 22, 2026

    Net proceeds from new share issuance.

    WildFire acquisition debt funding (new notes)
    $500 million
    August 5, 2026

    Issued to partially fund the acquisition.

    WildFire acquisition debt funding (assumed notes)
    $600 million
    upon closing

    WildFire's senior notes to be assumed upon closing.

    Credit facility borrowing base
    $2 billion
    upon closing

    Will increase upon closing of the WildFire acquisition.

    Credit facility elected commitments
    $1.75 billion
    upon closing

    Providing plenty of available liquidity.

    Combined oil production mix
    approximately 50%
    pro forma

    Expected post-WildFire acquisition.

    Industry KPIs

    3
    MetricValueDetails
    Realized price differential$3 per barrel discountUSD
    Basin level production volume85,500boe/d
    FCF shareholder distributions$235 millionUSD

    Orderbook & backlog

    1
    Remaining share repurchase authorization9.9 million sharesQ2 FY26

    Deals & partnerships

    1
    WildFire EnergyAcquisition of oil and gas properties and acreage, primarily in the Giddings area, significantly expanding Magnolia's footprint.$4.06 billion

    Funded with a balanced mix of approximately half equity ($1.23 billion from public equity offering) and half debt ($500 million senior notes due 2034, assumption of WildFire's $600 million senior notes due 2029).

    Risks & headwinds

    1
    Increased leverage post-WildFire acquisitionpost-acquisition close (expected late Q3)

    more leverage than we have carried historically

    Mitigation: Clear line of sight towards debt reduction, expected to be less than 1x net debt to EBITDA by year-end 2027, if not sooner.

    What to watch in Q3 FY26

    4

    WildFire acquisition closing

    Q3 FY26
    Currenton track, expected late Q3
    Targetclosed

    Why it matters

    Completion of this strategic acquisition is foundational to the company's expanded Giddings footprint and future financial performance.

    the acquisition on track and expected to close late in the third quarter.

    Q&A highlights

    6

    How will Magnolia prioritize development between legacy assets and WildFire assets, given WildFire's two rigs and one completion crew?

    Chris Stavros stated that a combined approach, starting with the existing rig and completion crew count for both entities, is a reasonable initial thought. He believes they can achieve better efficiency on a combined basis by leveraging their subsurface knowledge and vendor relationships.

    “If you just simplistically took what we have, what we've been doing and what they've been doing and combine it, that's not a bad starting point.”

    asked by Bertrand Donnes · answered by Christopher Stavros

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Highlights

    Magnolia achieved strong financial and operational results in Q2 FY26, marking its 8-year anniversary. The company reported adjusted net income of $184 million ($0.99/diluted share) and adjusted EBITDAX of $370 million. Production volumes reached a new quarterly record of 106,100 boe/d, an 8% year-over-year increase, with oil production growing 5% to 41,900 bbl/d.

    02

    WildFire Energy Acquisition Rationale

    The acquisition of WildFire Energy for approximately $4.06 billion is a strategic fit, adding 810,000 net acres to Magnolia's Giddings position and 53,000 boe/d of production (37,000 bbl/d oil). This transaction is expected to extend Magnolia's advantaged profitability, enhance free cash flow generation, and be immediately accretive to key per-share financial metrics.

    03

    Funding and Financial Impact of WildFire

    The acquisition is funded with a balanced mix of approximately half equity and half debt, including a $1.23 billion public equity offering and $500 million in senior notes, plus the assumption of WildFire's $600 million senior notes. Post-closing, Magnolia's credit facility will increase to a $2 billion borrowing base, and the company aims to reduce net debt to less than 1x EBITDA by year-end 2027.

    04

    Capital Allocation Strategy

    Magnolia maintains its disciplined capital allocation, limiting D&C spending to 55% of adjusted EBITDAX. The company generated $235 million in free cash flow in Q2 and returned $80 million to shareholders through dividends and share repurchases. The annualized dividend payout rate is $0.72 per share, with an expected long-term growth rate of about 10%.

    05

    Giddings and Karnes Asset Performance

    Giddings continues to be the primary growth driver, with production increasing 10% year-over-year to 85,500 boe/d and oil production up 7% to 29,000 bbl/d, accounting for 81% of total volumes. The Karnes area maintained relatively flat production at over 20,000 boe/d, serving as a significant free cash flow generator and providing stability.

    06

    Austin Chalk Potential and Sand Mine

    The WildFire acquisition significantly expands Magnolia's Austin Chalk potential, particularly in areas like Burleson, Robertson, Milam, Washington, and Eastern Brazos County. The acquired sand mine is expected to contribute several million dollars in cost savings and synergies, supporting both WildFire and legacy Magnolia operations.

    AI-generated summary of the company’s earnings call. Not investment advice.