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What changed in Magnolia Oil & Gas Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Magnolia Oil & Gas Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+154 added−142 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-15)

Top changes in Magnolia Oil & Gas Corp's 2024 10-K

154 paragraphs added · 142 removed · 114 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+11 added−12 removed189 unchanged
Biggest changeThis may also potentially result in a reduction of available capital funding for potential development projects, impacting the Company’s future financial results. Magnolia’s assets are located in areas that may be prone to severe weather events, due to climate change or otherwise, including hurricanes, winter storms, floods, and major tropical storms.
Biggest changeMagnolia’s assets are located in areas that may be prone to severe weather events, including hurricanes, winter storms, floods, and major tropical storms. These events could adversely affect or delay demand for the Company’s products or cause the Company to incur significant costs in preparing for, or responding to, the effects thereof.
Further, many factors may curtail, delay, or cancel scheduled drilling projects, including: • delays imposed by, or resulting from, permitting activities, compliance with regulatory requirements, including limitations on wastewater disposal, emission of GHGs, and hydraulic fracturing; • pressure or irregularities in geological formations; • sustained periods of low oil and natural gas prices; • shortages of or delays in obtaining equipment and qualified personnel; • access to water for hydraulic fracturing activities and waste disposal or recycling services at a reasonable cost and in accordance with applicable environmental regulations; • equipment failures, accidents, or other unexpected operational events; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity on interconnecting transmission pipelines; • adverse weather conditions; • issues related to compliance with environmental regulations; • environmental or safety hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases, or other pollutants into the surface and subsurface environment; • limited availability of financing on acceptable terms; • title issues; • other market limitations in Magnolia’s industry; • the impact on worldwide economic activity of an epidemic, pandemic, outbreak, or other public health event, such as COVID-19; and • changes in the supply chain of the Company’s vendors that may adversely impact the supply of key components.
Further, many factors may curtail, delay, or cancel scheduled drilling projects, including: • delays imposed by, or resulting from, permitting activities, compliance with regulatory requirements, including limitations on wastewater disposal, emission of GHGs, and hydraulic fracturing; • pressure or irregularities in geological formations; • sustained periods of low oil and natural gas prices; • shortages of or delays in obtaining equipment and qualified personnel; • access to water for hydraulic fracturing activities and waste disposal or recycling services at a reasonable cost and in accordance with applicable environmental regulations; • equipment failures, accidents, or other unexpected operational events; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity on interconnecting transmission pipelines; • adverse weather conditions; • issues related to compliance with environmental regulations; • environmental or safety hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases, or other pollutants into the surface and subsurface environment; • limited availability of financing on acceptable terms; • title issues; • other market limitations in Magnolia’s industry; • the impact on worldwide economic activity of an epidemic, pandemic, outbreak, or other public health event; and • changes in the supply chain of the Company’s vendors that may adversely impact the supply of key components.
To the extent that governmental entities in the United States or other countries implement or impose climate change regulations on the oil and gas industry, it could have a material adverse effect on the Company’s business, including by restricting Magnolia’s ability to execute on its business strategy, requiring additional capital, compliance, operating and maintenance costs, increasing the cost of Magnolia’s products and services, reducing demand for its products and services, reducing its access to financial markets, or creating greater potential for governmental investigations or litigation.
Consequently, to the extent that governmental entities in the United States or other countries implement or impose climate change regulations on the oil and gas industry, it could have a material adverse effect on the Company’s business, including by restricting Magnolia’s ability to execute on its business strategy, requiring additional capital, compliance, operating and maintenance costs, increasing the cost of Magnolia’s products and services, reducing demand for its products and services, reducing its access to financial markets, or creating greater potential for governmental investigations or litigation.
Inflation may adversely affect Magnolia’s business, results of operations, and financial condition. Magnolia is in an industry that has experienced inflationary pressures on operating costs - namely fuel, steel (i.e., wellbore 16 tubulars and facilities manufactured using steel), labor, and drilling and completion services.
Inflation may adversely affect Magnolia’s business, results of operations, and financial condition. Magnolia is in an industry that has experienced inflationary pressures on operating costs - namely fuel, steel (i.e., wellbore tubulars and facilities manufactured using steel), labor, and drilling and completion services.
To the extent Magnolia LLC has available cash, Magnolia intends to cause Magnolia LLC 28 to make (i) generally pro rata distributions to its unitholders, including Magnolia, in an amount at least sufficient to allow Magnolia to pay its taxes and (ii) non-pro rata payments to Magnolia to reimburse it for its corporate and other overhead expenses.
To the extent Magnolia LLC has available cash, Magnolia intends to cause Magnolia LLC to make (i) generally pro rata distributions to its unitholders, including Magnolia, in an amount at least sufficient to allow Magnolia to pay its taxes and (ii) non-pro rata payments to Magnolia to reimburse it for its corporate and other overhead expenses.
Events that could adversely affect Magnolia’s ability to conduct operations or result in substantial loss as a result of claims include injury or loss of life, damage to and destruction of property, natural resources, and equipment, pollution and other environmental damage, regulatory investigations and penalties, and repair and remediation costs.
Events that could adversely affect Magnolia’s ability to conduct operations or result in substantial loss as a result of claims include serious injury or loss of life, damage to and destruction of property, natural resources, and equipment, pollution and other environmental damage, regulatory investigations and penalties, and repair and remediation costs.
Any of these effects could have an adverse effect on the Company’s assets and operations. The Company’s ability to mitigate the physical impacts of adverse weather conditions depends in part upon its emergency preparedness and response along with its business 25 continuity planning.
Any of these effects could have an adverse effect on the Company’s assets and operations. The Company’s ability to mitigate the physical impacts of adverse weather conditions depends in part upon its emergency preparedness and response along with its business continuity planning.
Magnolia’s principal asset is its controlling equity interest in Magnolia LLC, and Magnolia is accordingly dependent upon distributions from Magnolia LLC to pay taxes and cover its corporate and other overhead expenses. Magnolia is a holding company and its principal asset is its controlling equity interest in Magnolia LLC. Magnolia has no independent means of generating revenue.
Magnolia’s principal asset is its controlling equity interest in Magnolia LLC, and Magnolia is accordingly dependent upon distributions from Magnolia LLC to pay taxes and cover its corporate and other overhead expenses. 28 Magnolia is a holding company and its principal asset is its controlling equity interest in Magnolia LLC. Magnolia has no independent means of generating revenue.
The prices Magnolia receives for its production and the levels of Magnolia’s production depend on numerous factors beyond Magnolia’s control, which include, without limitation, the following: • U.S. federal, state, local, and non-U.S. governmental regulation and taxes; • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • the price and quantity of foreign imports of oil, natural gas, and NGLs; • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Africa, South America, and Russia; • actions of OPEC, its members, and other state-controlled oil companies relating to oil price and production controls; • the level of global exploration, development, and production; • the impact on worldwide economic activity of an epidemic, pandemic, outbreak, or other public health event, such as COVID-19; • the level of global inventories; • prevailing prices on local price indexes in the areas in which Magnolia operates; • the proximity, capacity, cost, and availability of gathering, transportation, and processing facilities; • localized and global supply, demand fundamentals, and transportation availability; • the cost of exploring for, developing, producing, and transporting reserves; • weather conditions and natural disasters; • inflation rates; • technological advances affecting energy consumption; • the price and availability of alternative fuels; • expectations about future commodity prices; and • other events that impact global market demand.
The prices Magnolia receives for its production and the levels of Magnolia’s production depend on numerous factors beyond Magnolia’s control, which include, without limitation, the following: • U.S. federal, state, local, and non-U.S. governmental regulation and taxes; • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • the price and quantity of foreign imports of oil, natural gas, and NGLs; • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Africa, South America, and Russia; • actions of OPEC, its members, and other state-controlled oil companies relating to oil price and production controls; • the level of global exploration, development, and production; • the impact on worldwide economic activity of an epidemic, pandemic, outbreak, or other public health event; • the level of global inventories; • prevailing prices on local price indexes in the areas in which Magnolia operates; • the proximity, capacity, cost, and availability of gathering, transportation, and processing facilities; • localized and global supply, demand fundamentals, and transportation availability; • the cost of exploring for, developing, producing, and transporting reserves; • weather conditions and natural disasters; • inflation rates; • technological advances affecting energy consumption; • the price and availability of alternative fuels; • expectations about future commodity prices; and • other events that impact global market demand.
Increasing attention from governmental and regulatory bodies, investors, consumers, industry, and other stakeholders on combating climate change, together with changes in consumer and industrial/commercial behavior, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary climate-related disclosures, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in the enactment of climate change-related regulations, policies and initiatives (at the government, regulator, corporate and/or investor community levels), including alternative energy requirements, new fuel consumption standards, energy conservation and emissions reductions measures and responsible energy development; technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar and hydrogen power, as well as battery technology); increased availability of, and increased demand from consumers and industry for, energy sources other 24 than oil and natural gas (including wind, solar, nuclear, and geothermal sources as well as electric vehicles); and development of, and increased demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies), as well as more efficient products and services.
Increasing attention from governmental and regulatory bodies, investors, consumers, industry, and other stakeholders on combating climate change, together with changes in consumer and industrial/commercial behavior, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary climate-related disclosures, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in the enactment of climate change-related regulations, policies and initiatives (at the government, regulator, corporate and/or investor community levels), including alternative energy requirements, new fuel consumption standards, energy conservation and emissions reductions measures and responsible energy development; technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar, and hydrogen power, as well as battery technology); enhanced disclosure obligations with respect to GHGs; increased availability of, and increased demand 24 from consumers and industry for, energy sources other than oil and natural gas (including wind, solar, nuclear, and geothermal sources, as well as electric vehicles); and development of, and increased demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies), as well as more efficient products and services.
In addition, certain change of control events may have the effect of accelerating any payments due under Magnolia’s RBL Facility, and could, in certain defined circumstances, require Magnolia to make an offer to repurchase its outstanding notes and/or result in the acceleration of payments required by the indenture governing its outstanding notes, which could be substantial and accordingly serve as a disincentive to a potential acquirer of the Company.
In addition, certain change of control events may have the effect of accelerating any payments due under Magnolia’s RBL Facility, and could, in certain defined circumstances, require Magnolia to make an offer to repurchase its outstanding notes and/or result in the acceleration of payments required by the Indenture governing the 2032 Senior Notes, which could be substantial and accordingly serve as a disincentive to a potential acquirer of the Company.
In addition, the final rule establishes “Emissions Guidelines,” creating a Subpart OOOOc that requires states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by the EPA. The final rule also creates a new third-party monitoring program to flag large emissions events, referred to as “super emitters”.
The final rule establishes “Emissions Guidelines,” creating a Subpart OOOOc that requires states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by the EPA. The final rule also creates a new third-party monitoring program to flag large emissions events, referred to as “super emitters”.
The RBL Facility also limits Magnolia Operating’s ability to draw additional amounts under the RBL Facility if Magnolia Operating has a consolidated cash balance in excess of $45.0 million. Magnolia’s debt agreements may restrict the payment of dividends and distributions by certain of its subsidiaries to it, which could affect its access to cash.
The RBL Facility also limits Magnolia Operating’s ability to draw additional amounts under the RBL Facility if Magnolia Operating has a consolidated cash balance in excess of $70.0 million. Magnolia’s debt agreements may restrict the payment of dividends and distributions by certain of its subsidiaries to it, which could affect its access to cash.
If there are widespread public health crises, epidemics and outbreaks of infectious diseases such as COVID-19 across the United States and other locations across the world and related responsive measures are imposed, and if such events reduce demand for oil and natural gas, available storage and transportation capacity for the Company’s production may be limited or unavailable in the future.
If there are widespread public health crises, epidemics, and outbreaks of infectious diseases across the United States and other locations across the world and related responsive measures are imposed, and if such events reduce demand for oil and natural gas, available storage and transportation capacity for the Company’s production may be limited or unavailable in the future.
Magnolia’s business could be adversely affected by security threats, including cyber security threats, and related disruptions. Magnolia relies heavily on its information systems, and the availability and integrity of these systems is essential to conducting Magnolia’s business and operations.
Magnolia’s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions. Magnolia relies heavily on its information systems, and the availability and integrity of these systems is essential to conducting Magnolia’s business and operations.
Cyber security risks, including phishing-attacks, unauthorized access, malicious software, data exfiltration, data privacy breaches by employees or others with authorized access, ransomware, and other cyber security issues could compromise computer and telecommunications systems and result in disruptions to the Company’s business operations or the access, disclosure, or loss of Company data and proprietary information.
Cybersecurity risks, including phishing-attacks, unauthorized access, malicious software, data exfiltration, data privacy breaches by employees or others with authorized access, ransomware, and other cybersecurity issues could compromise computer and telecommunications systems and result in disruptions to the Company’s business operations or the access, disclosure, or loss of Company data and proprietary information.
Magnolia normally sells its production to a relatively small number of customers, as is customary in the oil and natural gas business. In 2023, there were three purchasers who accounted for an aggregate 61% of the total revenue attributable to Magnolia’s assets. The loss of any significant purchaser could adversely affect Magnolia’s revenues in the short-term.
Magnolia normally sells its production to a relatively small number of customers, as is customary in the oil and natural gas business. In 2024, there were three purchasers who accounted for an aggregate 67% of the total revenue attributable to Magnolia’s assets. The loss of any significant purchaser could adversely affect Magnolia’s revenues in the short-term.
To the extent the frequency of extreme weather events increases, due to climate change or otherwise, this could impact operations in various ways, including damage to or disruption of operations at the Company’s facilities, increased insurance premiums or increases to the cost of providing service, reduced availability of electrical power, road accessibility, and transportation facilities, as well as impacts on personnel, supply chain, distribution chain or customers.
To the extent the frequency of extreme weather events may increase, this could impact operations in various ways, including damage to or disruption of operations at the Company’s facilities, increased insurance premiums or increases to the cost of providing service, reduced availability of electrical power, road accessibility, and transportation facilities, as well as impacts on personnel, supply chain, distribution chain or customers.
The RBL Facility limits the amounts Magnolia can borrow up to a borrowing base amount, which the lenders determine, in good faith, in accordance with their respective usual and customary oil and natural gas lending criteria, based upon the loan value of 27 the proved oil and natural gas reserves located within the geographic boundaries of the United States included in the most recent reserve report provided to the lenders.
The RBL Facility limits the amounts Magnolia can borrow up to the lesser of the aggregate elected commitment amount and the borrowing base amount, which, in the case of the latter, the lenders determine, in good faith, in accordance with their respective 27 usual and customary oil and natural gas lending criteria, based upon the loan value of the proved oil and natural gas reserves located within the geographic boundaries of the United States included in the most recent reserve report provided to the lenders.
Additionally, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022. Among other things, the Inflation Reduction Act includes a methane emissions reduction program that amends the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems.
Additionally, in August 2022, the Inflation Reduction Act of 2022 was signed into law. Among other things, the Inflation Reduction Act amends the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems.
As of December 31, 2023, the Company had $450.0 million of borrowing base capacity and no borrowings. The RBL Facility requires periodic borrowing base redeterminations based on reserve reports.
As of December 31, 2024, the Company had a borrowing base amount of $800.0 million, a borrowing capacity amount of $450.0 million, and no borrowings. The RBL Facility requires periodic borrowing base redeterminations based on reserve reports.
According to the Bureau of Labor Statistics, inflation rose to a peak of 9.1% in June 2022, and has since decreased to 3.4% as of December 2023.
According to the Bureau of Labor Statistics, inflation rose to a peak of 9.1% in June 2022, and has since decreased to 2.9% as of December 2024.
As of December 31, 2023, the Company had $450.0 million of borrowing base capacity and no borrowings during the year or outstanding at the end of the period, and therefore there were no restrictions under the RBL Facility on the ability of Magnolia LLC and its subsidiaries to transfer funds to Magnolia.
As of December 31, 2024, the Company had no borrowings during the year or outstanding at the end of the period related to the RBL Facility, and therefore there were no restrictions under the RBL Facility on the ability of Magnolia LLC and its subsidiaries to transfer funds to Magnolia.
As of December 31, 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 and $450.0 million of borrowing capacity of the RBL Facility.
As of December 31, 2024, 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.
Therefore, proved undeveloped reserves may not be ultimately developed or produced. As of December 31, 2023, Magnolia’s assets contained 34.6 MMboe of proved undeveloped reserves consisting of 11.0 MMBbls of oil, 73.4 Bcf of natural gas, and 11.3 MMBbls of NGLs. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than anticipated.
Therefore, proved undeveloped reserves may not be ultimately developed or produced. As of December 31, 2024, Magnolia’s assets contained 42.4 MMboe of proved undeveloped reserves consisting of 14.2 MMBbls of oil, 78.4 Bcf of natural gas, and 15.1 MMBbls of NGLs. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than anticipated.
This program requires the EPA to impose a “waste emissions charge” on certain oil and gas sources that are already required to report emissions under EPA’s Greenhouse Gas Reporting Program. To implement the program, the Inflation Reduction Act required revisions to GHG reporting regulations for petroleum and natural gas systems (Subpart W) by 2024.
This program requires the EPA to impose a “Waste Emissions Charge” on certain oil and gas sources that are already required to report emissions under EPA’s Greenhouse Gas Reporting Program. To implement the program, in May 2024, the EPA finalized revisions to the Greenhouse Gas Reporting Program for the oil and natural gas sector.
In the absence of sufficient cash flows and capital resources, Magnolia could face substantial liquidity problems and might be required to dispose of material assets or operations to meet debt service and other obligations. The RBL Facility and the indenture governing the 2026 Senior Notes limit Magnolia’s ability to dispose of assets and use the proceeds from such dispositions.
In the absence of sufficient cash flows and capital resources, Magnolia could face substantial liquidity problems and might be required to dispose of material assets or operations to meet debt service and other obligations.
Although for many years, inflation in the United States had been relatively low, there was a significant increase in inflation beginning in the second half of 2021, which has continued into 2023, due to a substantial increase in money supply, a stimulative fiscal policy, a significant rebound in consumer demand as COVID-19 restrictions were relaxed, the Russia-Ukraine war and worldwide supply chain disruptions resulting from the economic contraction caused by COVID-19 and lockdowns followed by a rapid recovery.
Although for many years, inflation in the 16 United States had been relatively low, there was a significant increase in inflation beginning in the second half of 2021, which has continued into 2024, due to a substantial increase in money supply, a stimulative fiscal policy, the Russia-Ukraine war, and worldwide supply chain disruptions.
Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs, additional operating restrictions or delays in the completion of oil and natural gas wells, and adversely affect Magnolia’s production.
See “Magnolia’s producing properties are predominantly located in South Texas, making Magnolia vulnerable to risks associated with operating in a limited geographic area.” Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs, additional operating restrictions or delays in the completion of oil and natural gas wells, and adversely affect Magnolia’s production.
The final rule gives states, along with federal tribes that wish to regulate existing sources, two years to develop and submit their plans for reducing methane emissions from existing sources. The final emissions guidelines under Subpart OOOOc provide three years from the plan submission deadline for existing sources to comply.
The final rule gives states, along with federal tribes that wish to regulate existing sources, until March 2026 to develop and submit their plans for reducing methane emissions from existing sources. The final emissions guidelines under Subpart OOOOc provide until 2029 for existing sources to comply. The final rule is subject to ongoing litigation but remains in effect.
At the 27th conference of parties in November 2022, President Biden announced the EPA’s supplemental proposed rule to reduce methane emissions from existing oil and gas sources (discussed above), and agreed, in conjunction with the European Union and a number of other partner countries, to develop standards for monitoring and reporting methane emissions to help create a market for low methane-intensity natural gas, and at the 28th conference of parties in December 2023, the Biden administration announced the final methane rule (discussed above).
At the 27th conference of parties in November 2022, the United States agreed, in conjunction with the European Union and a number of other partner countries, to develop standards for monitoring and reporting methane emissions to help create a market for low methane-intensity natural gas.
Negative public perception regarding the Company and/or its industry resulting from, among other things, concerns raised by advocacy groups about climate change, emissions, hydraulic fracturing, seismicity, or oil spills may lead to increased litigation risk and regulatory, legislative and judicial scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.
Negative public perception regarding the Company and/or its industry resulting from, among other things, concerns raised by advocacy groups about climate change, emissions, hydraulic fracturing, seismicity, or oil spills may lead to increased litigation risk and regulatory, legislative, and judicial scrutiny. These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens and increased risk of litigation.
These events could adversely affect or delay demand for the Company’s products or cause the Company to incur significant costs in preparing for, or responding to, the effects thereof. Energy needs could increase or decrease as a result of weather conditions, depending on the duration and magnitude of any such weather events, and adversely impact Magnolia’s operating costs or revenues.
Energy needs could increase or decrease as a result of weather conditions, depending on the duration and magnitude of any such weather events, and adversely impact Magnolia’s operating costs or revenues.
These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens and increased risk of litigation. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts.
Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts.
However, President Biden has highlighted addressing climate change as a priority of his administration, and federal regulators, state and local governments, and private parties have taken (or announced that they plan to take) actions that have or may have a significant influence on the Company’s operations.
In the United States, no comprehensive climate change legislation regulating the emission of GHGs or directly imposing a price on carbon has been implemented at the federal level. However, federal regulators, state and local governments, and private parties have taken (or announced that they plan to take) actions that have or may have a significant influence on the Company’s operations.
Restrictions in Magnolia’s existing and future debt agreements could limit Magnolia’s growth and ability to engage in certain activities.
These alternative measures may not be successful and may not permit Magnolia to meet scheduled debt service obligations. Restrictions in Magnolia’s existing and future debt agreements could limit Magnolia’s growth and ability to engage in certain activities.
The methane emissions charge imposed under the Methane Emissions and Waste Reduction Incentive Program for 2024 would be $900 per ton emitted over annual methane emissions thresholds, and would increase to $1,200 in 2025, and $1,500 in 2026.
The Waste Emissions Charge for 2024 is $900 per ton emitted over annual methane emissions thresholds, and increases to $1,200 in 2025, and $1,500 in 2026. In January 2025, industry associations challenged the Waste Emissions Charge rule in the D.C. Circuit.
As a result of these regulatory changes, the scope of any final methane regulations or the costs for complying with federal methane regulations are uncertain. Separately, a number of states have developed programs that are aimed at reducing GHG emissions by means of cap and trade programs, carbon taxes, or encouraging the use of renewable energy or alternative low-carbon fuels.
Separately, a number of states have developed programs that are aimed at reducing GHG emissions by means of cap and trade programs, carbon taxes, or encouraging the use of renewable energy or alternative low-carbon fuels. Cap and trade programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.
Magnolia may not be able to consummate those dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit Magnolia to meet scheduled debt service obligations.
The RBL Facility and the Indenture (as defined below) governing the 2032 Senior Notes limit Magnolia’s ability to dispose of assets and use the proceeds from such dispositions. Magnolia may not be able to consummate those dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due.
For example, pursuant to the terms of the Paris Agreement, the United States has committed to reducing its GHG emissions by at least 50% below 2005 levels by 2030.
In addition, efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues. For example, pursuant to the terms of the Paris Agreement, the United States previously committed to reducing its GHG emissions by at least 50% below 2005 levels by 2030.
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In the United States, no comprehensive climate change legislation regulating the emission of GHGs or directly imposing a price on carbon has been implemented at the federal level.
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The emissions reported under the Greenhouse Gas Reporting Program will be the basis for any payments under the Methane Emissions Reduction Program. However, petitions for reconsideration to the EPA are 23 pending and litigation in the D.C. Circuit challenging the revisions have commenced. In November 2024, the EPA finalized a regulation to implement the Inflation Reduction Act’s Waste Emissions Charge.
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In July 2023, the EPA proposed to expand the scope of the 23 Greenhouse Gas Reporting Program for petroleum and natural gas facilities, as required by the Inflation Reduction Act.
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The emissions fee and funding provisions of the Inflation Reduction Act and related legislation could increase operating costs within the oil and gas industry and accelerate the transition away from fossil fuels, which could in turn adversely affect Magnolia’s business and results of operations.
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Among other things, the proposed rule expands the emissions events that are subject to reporting requirements to include “other large release events” and applies reporting requirements to certain new sources and sectors.
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However, in January 2025, President Trump issued an executive order directing the heads of all federal agencies to identify and begin the processes to suspend, revise, or rescind all agency actions that are unduly burdensome on the identification, development, or use of domestic energy resources. Consequently, future implementation and enforcement of these final rules remains uncertain at this time.
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The rule is currently scheduled to be finalized in the spring of 2024 and is expected to take effect on January 1, 2025, in advance of the deadline for GHG reporting for 2024 (March 2025). In January 2024, the EPA proposed a rule implementing the Inflation Reduction Act’s methane emissions charge.
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At the 28th conference of parties in December 2023, member countries entered into an agreement that calls for actions toward achieving, at a global scale, a tripling of renewable energy capacity and doubling energy efficiency improvements by 2030.
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The proposed rule includes potential methodologies for calculating the amount by which a facility’s reported methane emissions are below or exceed the waste emissions thresholds and contemplates approaches for implementing certain exemptions created by the Inflation Reduction Act.
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However, in January 2025, President Trump issued an executive order directing the notice to the United Nations of the United States’ immediate withdrawal from the Paris Agreement and all other agreements made under the United Nations Framework Convention on Climate Change. As a result, the full impact of these actions remains unclear at this time.
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Cap and trade programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs. In addition, efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues.
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In addition, the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo to end the concept of general deference to regulatory agency interpretations of laws introduces new complexity for federal agencies and administration of climate change policy and regulatory programs.
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In addition, nearly 200 countries, including the United States, agreed to transition away from fossil fuels while accelerating action in this decade to achieve net zero GHG emissions by 2050.
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This may also potentially result in a reduction of available capital funding for potential development projects, impacting the Company’s future financial results. In addition, in recent years, companies across all industries are facing increasing scrutiny from certain investors, employees, customers, lenders and other stakeholders related to their sustainability practices, particularly with respect to climate change.
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See “Magnolia’s producing properties are predominantly located in South Texas, making Magnolia vulnerable to risks associated with operating in a limited geographic area.” New climate disclosure rules proposed by the SEC may increase Magnolia’s costs of compliance and adversely impact its business. In March 2022, the U.S.
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If Magnolia does not adapt to or comply with investor or other stakeholder expectations and standards on sustainability matters as they continue to evolve, or if the Company is perceived to have not responded appropriately or quickly enough to growing concern for climate change issues, regardless of whether there is a regulatory or legal requirement to do so, the Company may suffer from reputational damage and its business, financial condition, and results of operations could be materially and adversely affected.
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Securities and Exchange Commission proposed new rules relating to the disclosure of a range of climate-related risks.
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Further, the Company’s continuing efforts to research, establish, accomplish, and accurately report on the implementation of its sustainability strategy may also create additional operational risks and expenses and expose the Company to reputational, legal and other risks.
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To the extent this rule is finalized as proposed, Magnolia could incur increased costs relating to the assessment and disclosure of climate-related risks, including increased legal, accounting and financial compliance costs, as well as making some activities more difficult, time-consuming and costly, and placing strain on Magnolia’s personnel, systems and resources.
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While Magnolia creates and publishes voluntary disclosures regarding sustainability matters from time to time, some of the statements in those voluntary disclosures may be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Removed
Magnolia may also face increased litigation risks related to disclosures made pursuant to the rule if finalized as proposed. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon-intensive sectors.
Added
Such expectations 25 and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many sustainability matters.
Removed
The SEC proposes certain phase-in compliance dates for disclosures under the proposed rules, including for GHG emissions metrics.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company utilizes security vulnerability scanning software and 24/7 monitoring to detect and prevent significant cybersecurity threats. Magnolia uses a leading email and spam filtering solution and requires mandatory security awareness training for all employees, which is reinforced through periodic simulated phishing tests.
Biggest changeThe Company utilizes security vulnerability scanning software and 24/7 monitoring in an effort to detect and prevent significant cybersecurity threats.
In the event of a cybersecurity incident, the IRP would be initiated to inform management, the Audit Committee, and the board of directors. The Company also has contracted retainers with third party vendors in the event they are required to assist during a major cybersecurity incident. Cybersecurity risks are an important subset of Magnolia’s overall risk management process.
In the event of a cybersecurity incident, the IRP would be initiated to inform management, the Audit Committee, and the board of directors, as necessary. The Company also has contracted retainers with third party vendors in the event they are required to assist during a major cybersecurity incident. Cybersecurity risks are an important subset of Magnolia’s overall risk management process.
The Company uses a sophisticated backup and recovery methodology that supports the replication of data across multiple secure data centers with the intent to prevent local and cloud backup data from accidental destruction and unavailability in the event of 29 data loss or a major cyber event.
Magnolia uses email and spam filtering and requires mandatory security awareness training for all employees, which is reinforced through periodic simulated phishing tests. 29 The Company uses a backup and recovery methodology that supports the replication of data across multiple secure data centers with the intent to prevent local and cloud backup data from accidental destruction and unavailability in the event of data loss or a major cyber event.
The Company is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. Please see “Risk Factors” in Item 1A in this Annual Report on Form 10-K for further discussion regarding the Company’s cybersecurity risks.
The Company is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.
Added
Please see Item 1A—Risk Factors—Magnolia’s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions in this Annual Report on Form 10-K for further discussion regarding the Company’s cybersecurity risks.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of these events cannot be predicted with certainty, management does not currently expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.
Biggest changeItem 3. Legal Proceedings From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not currently expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.
Removed
Item 3. Legal Proceedings See Part II, Item 8, Note 10—Commitments and Contingencies to the consolidated financial statements, which is incorporated herein by reference. From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeLarson has served as an independent director of CSI Compressco GP LLC and its predecessor CSI Compressco GP Inc., general partner of CSI Compressco L.P., a provider of compression services and equipment for oil and natural gas production, gathering, transportation, processing, and storage, and as Chairman of its Audit Committee since July 2011, and served as a member of its Conflicts Committee from April 2012 until January 2021 and as Chairman of its Conflicts Committee since August 2021.
Biggest changeLarson served as an independent director of CSI Compressco GP LLC and its predecessor CSI Compressco GP Inc., general partner of CSI Compressco L.P., a provider of compression services and equipment for oil and natural gas production, gathering, transportation, processing, and storage (“CSI Compressco”), from July 2011 until April 2024, when CSI Compressco was acquired by Kodiak Gas Services, Inc.
Corales serves as Magnolia’s Senior Vice President and Chief Financial Officer. Prior to this appointment, Mr. Corales served as the Company’s Vice President, Investor Relations since November 2018. Prior to joining the Company in November 2018, Mr.
Corales serves as Magnolia’s Senior Vice President and Chief Financial Officer. Prior to this appointment in November 2022, Mr. Corales served as the Company’s Vice President, Investor Relations since November 2018. Prior to joining the Company in November 2018, Mr.
Yang served as General Counsel and Corporate Secretary of Newfield Exploration Company, an independent exploration and production company, from July 2015 through September 2018, and as General Counsel, Chief Compliance Officer, and Secretary of Sabine Oil & Gas Corporation from February 2013 to July 2015. Steve F.
Yang served as General Counsel and Corporate Secretary of Newfield Exploration Company, an independent exploration and production company, from July 2015 through September 2018, and as General Counsel, Chief Compliance Officer, and Secretary of Sabine Oil & Gas Corporation from February 2013 to July 2015. Dan F.
Prior to joining the Company, Mr. Stavros was the Chief Financial Officer of Occidental Petroleum Corporation (“Occidental”), whose principal businesses consist of oil and gas, chemical and midstream, and marketing segments. Mr. Stavros served in this position from 2014 to 2017, having previously served in various investor relations and treasury roles at Occidental since 2005. Brian M.
Stavros was the Chief Financial Officer of Occidental Petroleum Corporation (“Occidental”), whose principal businesses consist of oil and gas, chemical and midstream, and marketing segments. Mr. Stavros served in this position from 2014 to 2017, having previously served in various investor relations and treasury roles at Occidental since 2005. Brian M.
Item 4. Mine Safety Disclosures Not applicable. 30 Information About Magnolia’s Executive Officers and Directors The following table sets forth, as of February 15, 2024, the names, ages, and positions held by Magnolia’s executive officers and directors: Name Age Position Christopher G. Stavros 60 President, Chief Executive Officer and Director Brian M.
Item 4. Mine Safety Disclosures Not applicable. 30 Information About Magnolia’s Executive Officers and Directors The following table sets forth, as of February 19, 2025, the names, ages, and positions held by Magnolia’s executive officers and directors: Name Age Position Christopher G. Stavros 61 President, Chief Executive Officer and Director Brian M.
Foreign Service for eight presidents, from John F. Kennedy in 1962 to William J. Clinton in 1994. After his retirement from government service in 1994, he became the founding director of Rice University’s Baker Institute for Public Policy, a premier nonpartisan public policy think tank, which he led for 28 years until June 2022. David M.
After his retirement from government service in 1994, he became the founding director of Rice University’s Baker Institute for Public Policy, a premier nonpartisan public policy think tank, which he led for 28 years until June 2022. David M.
Khani served as the Executive Vice President and Chief Financial Officer of CONSOL Energy (“CONSOL”), an energy company whose businesses during his tenure included natural gas, exploration and production, and coal mining. During his time at CONSOL, Mr.
Khani served as the Executive Vice President and Chief Financial Officer of CONSOL Energy (“CONSOL”), an energy company whose businesses during his tenure included natural gas, exploration and production, and coal mining from March 2013 to December 2019, and as Vice President, Finance at CONSOL from September 2011 to March 2013. Mr.
Mr. Larson retired in January 2006 from his position as senior vice president of Anadarko Petroleum Corporation (“Anadarko”), an independent exploration and production company, and he held various tax and financial positions within Anadarko since joining the company in 1981. John B. Walker is Executive Chairman of EnerVest, Ltd., a position he has held since December 2020.
Larson retired in January 2006 from his position as senior vice president of Anadarko Petroleum Corporation (“Anadarko”), an independent exploration and production company, and he held various tax and financial positions within Anadarko since joining the company in 1981. R.
Larson 74 Director John B. Walker 78 Director Christopher G. Stavros is Magnolia’s President and Chief Executive Officer and serves as a member of the Company’s board of directors. Before his appointment to this position in September 2022, he served as Magnolia’s Executive Vice President and Chief Financial Officer since the closing of the Business Combination.
Stavros is Magnolia’s President and Chief Executive Officer and serves as a member of the Company’s board of directors. Before his appointment to this position in September 2022, he served as Magnolia’s Executive Vice President and Chief Financial Officer since the Company’s inception. Prior to joining the Company, Mr.
Khani also held chief financial officer and board member roles at CONSOL affiliates, including at CNX Midstream Partners LLC (formerly, CONE Midstream LLC), a joint venture with Noble Energy. Mr. Khani spent the first 18 years of his career at various investment banking and capital market firms, including FBR & Co., Prudential Financial, Inc., and Lehman Brothers, Inc. James R.
Khani spent the first 18 years of his career at various investment banking and capital market firms, including FBR & Co., Prudential Financial, Inc., and Lehman Brothers, Inc. 31 James R.
Corales 44 Senior Vice President and Chief Financial Officer Timothy D. Yang 52 Executive Vice President, General Counsel, Corporate Secretary and Land Steve F. Millican 48 Senior Vice President, Operations Dan F. Smith 77 Chairman Arcilia C. Acosta 58 Director Angela M. Busch 57 Director Edward P. Djerejian 84 Director David M. Khani 60 Director James R.
Corales 46 Senior Vice President and Chief Financial Officer Timothy D. Yang 53 Executive Vice President, General Counsel, Corporate Secretary and Land Dan F. Smith 78 Chairman Arcilia C. Acosta 59 Director Edward P. Djerejian 85 Director David M. Khani 61 Director James R. Larson 75 Director R. Lewis Ropp 65 Director Shandell M. Szabo 50 Director Christopher G.
Acosta is currently a member of the board of directors of Vistra Corporation and Veritex Holdings, Inc. Angela M.
Acosta is currently a member of the board of directors of Vistra Corporation and Veritex Holdings, Inc. Edward P. Djerejian served in the U.S. Foreign Service for eight presidents, from John F. Kennedy in 1962 to William J. Clinton in 1994.
Removed
Millican serves as Senior Vice President, Operations for Magnolia, a position he has held since November 2018. Prior to joining the Company, Mr. Millican was Senior Vice President and General Manager of the South Texas Region for EnerVest Operating Company since July 2016, and he held various reservoir engineering positions at EnerVest from 2008 to 2016. Dan F.
Added
During his tenure on the CSI Compressco board, Mr. Larson also served as Chairman of its Audit Committee since July 2011, and served as a member of its Conflicts Committee from April 2012 until January 2021 and as Chairman of its Conflicts Committee since August 2021. Mr.
Removed
Busch currently serves as the Executive Vice President of Corporate and Business Development for Ecolab Inc., a global leader in water, hygiene, and energy technologies and services, where she is responsible for acquisitions, divestitures, and alliances in support of Ecolab’s strategic objectives related to its global portfolio of businesses and activities. 31 Edward P. Djerejian served in the U.S.
Added
Lewis Ropp was a Senior Managing Director and Senior Equity Partner of Barrow Hanley Global Investors, a diversified investment management firm (“Barrow Hanley”), from October 2001 until June 2024, at which time he retired. From 2017 until 2020, Mr.
Removed
He previously served as EnerVest’s Chief Executive Officer since its formation in 1992. Mr. Walker served as Chairman of the Independent Petroleum Association of America from 2003 to 2005 and served on the board of Petrologistics LP from 2012 until 2014. Mr. Walker served on the Board of Regents of the Texas Tech University System from 2012 until 2023. Mr.
Added
Ropp served on the United Nations Principles for Responsible Investment (UNPRI) Oil & Gas Advisory Committee, leading the engagement conversation with industry CEOs on transition risks for oil and gas companies to a low-carbon environment. Mr.
Removed
Walker is a member of the National Petroleum Council, where he currently serves as Chairman of the Nominating Committee. 32 PART II
Added
Ropp began his career in 1981 in the oil and gas industry, and was a process team leader at Shell Oil Company from 1990 to 1997. Shandell M.
Added
Szabo has served as an independent director of Talos Energy, Inc., an energy company focused on offshore oil and gas exploration and production (“Talos”), since February 2023, where she serves on the Compensation and Safety, Sustainability and Corporate Responsibility Committees and co-chairs the Technical Committee. Beginning in February 2020, Ms.
Added
Szabo served on the board of directors of EnVen Energy Corporation, which was a private operator of deepwater platforms in the Gulf of Mexico that was acquired by Talos in February 2023, and she served as Chair of the Risk Committee and a member of the Governance Committee until the acquisition. Prior to that, Ms.
Added
Szabo served nearly 20 years with Anadarko in various roles of steadily increasing responsibility throughout Anadarko’s U.S. onshore portfolio and deepwater Gulf of Mexico, until its acquisition by Occidental in August 2019. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table sets forth the Company’s share repurchase activities for the year ended December 31, 2023: Period Number of Shares of Class A Common Stock Purchased Average Price Paid per Share Total Number of Shares of Class A Common Stock Purchased as Part of Publicly Announced Program Maximum Number of Shares of Class A Common Stock that May Yet be Purchased Under the Program (1) January 1, 2023 - September 30, 2023 7,149,000 $ 21.38 7,149,000 11,718,105 October 1, 2023 - October 31, 2023 520,216 22.40 520,216 11,197,889 November 1, 2023 - November 30, 2023 1,050,000 21.63 1,050,000 10,147,889 December 1, 2023 - December 31, 2023 929,784 21.30 929,784 9,218,105 Total 9,649,000 $ 21.46 9,649,000 9,218,105 (1) As of December 31, 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.
Biggest changeIssuer Purchases of Equity Securities The following table sets forth the Company’s share repurchase activities for the year ended December 31, 2024: Period Number of Shares of Class A Common Stock Purchased Average Price Paid per Share Total Number of Shares of Class A Common Stock Purchased as Part of Publicly Announced Program Maximum Number of Shares of Class A Common Stock that May Yet be Purchased Under the Program (1) January 1, 2024 - September 30, 2024 5,300,000 $ 23.97 5,300,000 3,918,105 October 1, 2024 - October 31, 2024 575,000 26.04 575,000 3,343,105 November 1, 2024 - November 30, 2024 420,000 27.35 420,000 2,923,105 December 1, 2024 - December 31, 2024 1,180,000 24.87 1,180,000 1,743,105 Total 7,475,000 $ 24.46 7,475,000 1,743,105 (1) As of December 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.
The graph assumes an 33 investment of $100 was made in the Company’s Class A Common Stock and in each of the S&P 500 Index and the S&P 500 Oil & Gas Exploration and Production Index on December 31, 2018. Note: The stock price performance of Magnolia’s Class A Common Stock is not necessarily indicative of future performance .
The graph assumes an 33 investment of $100 was made in the Company’s Class A Common Stock and in each of the S&P 500 Index and the SPDR S&P 500 Oil & Gas Exploration and Production ETF on December 31, 2019. Note: The stock price performance of Magnolia’s Class A Common Stock is not necessarily indicative of future performance .
Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Magnolia’s Class A Common Stock are currently traded on the NYSE under the ticker symbol “MGY.” As of February 12, 2024, there were 11 holders of record of Magnolia’s Class A Common Stock, and 5 holders of record of the Company’s Class B Common Stock, par value $0.0001 per share.
Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Magnolia’s Class A Common Stock are currently traded on the NYSE under the ticker symbol “MGY.” As of February 14, 2025, there were 10 holders of record of Magnolia’s Class A Common Stock, and 5 holders of record of the Company’s Class B Common Stock, par value $0.0001 per share.
The program does not require purchases to be made within a particular time frame. Comparative Stock Performance The performance graph below compares the cumulative total stockholder return (including the reinvestment of dividends) for the Company’s Class A Common Stock to that of the Standard and Poor’s (“S&P”), 500 Index and the S&P 500 Oil & Gas Exploration and Production Index.
Comparative Stock Performance The performance graph below compares the cumulative total stockholder return (including the reinvestment of dividends) for the Company’s Class A Common Stock to that of the Standard and Poor’s (“S&P”) 500 Index and the SPDR S&P 500 Oil & Gas Exploration and Production ETF.
Added
The program does not require purchases to be made within a particular time frame. On February 12, 2025, the Company’s board of directors increased the share repurchase authorization by an additional 10.0 million shares of Class A Common Stock, which increased the total share repurchase authorization to 50.0 million shares.
Added
During the twelve months ended December 31, 2024, outside of the share repurchase program, Magnolia LLC repurchased and subsequently canceled a total of 3.5 million Magnolia LLC Units with an equal number of shares of corresponding Class B Common Stock for cash consideration of $89.7 million at an average price of $25.62 per share.
Added
There is no public market for the Class B Common Stock. For further detail, see Note 11—Stockholders’ Equity in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended (In thousands, except per unit data) December 31, 2023 December 31, 2022 Production: Oil (MBbls) 12,608 12,189 Natural gas (MMcf) 55,085 50,660 NGLs (MBbls) 8,266 6,874 Total (Mboe) 30,054 27,506 Average daily production: Oil (Bbls/d) 34,541 33,394 Natural gas (Mcf/d) 150,918 138,796 NGLs (Bbls/d) 22,645 18,833 Total (boe/d) 82,340 75,360 Revenues: Oil revenues $ 958,388 $ 1,158,006 Natural gas revenues 102,054 301,494 Natural gas liquids revenues 166,537 234,993 Total revenues $ 1,226,979 $ 1,694,493 Average Price: Oil (per barrel) $ 76.02 $ 95.01 Natural gas (per Mcf) 1.85 5.95 NGLs (per barrel) 20.15 34.18 Oil revenues were 78% and 68% of the Company’s total revenues for the years ended December 31, 2023 and 2022, respectively.
Biggest changeYears Ended (In thousands, except per unit data) December 31, 2024 December 31, 2023 Production: Oil (MBbls) 14,019 12,608 Natural gas (MMcf) 58,746 55,085 NGLs (MBbls) 9,024 8,266 Total (Mboe) 32,834 30,054 Average daily production: Oil (Bbls/d) 38,302 34,541 Natural gas (Mcf/d) 160,508 150,918 NGLs (Bbls/d) 24,655 22,645 Total (boe/d) 89,709 82,340 Production (% of total): Oil 43 % 42 % Natural gas 30 % 31 % NGLs 27 % 27 % Revenues: Oil revenues $ 1,046,675 $ 958,388 Natural gas revenues 90,277 102,054 Natural gas liquids revenues 178,934 166,537 Total revenues $ 1,315,886 $ 1,226,979 Revenue (% of total): Oil 80 % 78 % Natural gas 7 % 8 % NGLs 13 % 14 % Average Price: Oil (per barrel) $ 74.66 $ 76.02 Natural gas (per Mcf) 1.54 1.85 NGLs (per barrel) 19.83 20.15 Oil revenues for the year ended December 31, 2024 were $88.3 million higher than the year ended December 31, 2023.
Key assumptions used in developing a discounted cash flow model described above include estimated quantities of crude oil and natural gas reserves; estimates of market prices considering forward commodity price curves as of the measurement date; and estimates of operating, administrative, and capital costs adjusted for inflation.
Key assumptions used in developing a discounted cash flow model described above include estimated quantities of crude oil and natural gas reserves; estimates of market prices considering forward commodity price curves as of the measurement date; and estimates of 42 operating, administrative, and capital costs adjusted for inflation.
The Company may also utilize borrowings under other various financing sources available to Magnolia, including its RBL Facility and the issuance of equity or debt securities through public offerings or private placements, to fund Magnolia’s acquisitions and long-term liquidity needs.
The Company may also utilize borrowings under other various financing sources available to Magnolia, including the RBL Facility and the issuance of equity or debt securities through public offerings or private placements, to fund Magnolia’s acquisitions and long-term liquidity needs.
Undrilled locations can be classified as undeveloped reserves only if a plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. All of Magnolia’s proved undeveloped reserves as of December 31, 2023, that are included in this Annual Report, are planned to be developed within one year.
Undrilled locations can be classified as undeveloped reserves only if a plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. All of Magnolia’s proved undeveloped reserves as of December 31, 2024, that are included in this Annual Report, are planned to be developed within one year.
The Company’s ongoing plan is to continue to spend within cash flow on drilling and completing wells while maintaining low financial leverage. Capital Requirements As of December 31, 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 Company’s ongoing plan is to continue to spend within cash flow on drilling and completing wells while maintaining low financial leverage. Capital Requirements As of December 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.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The activity during the year ended December 31, 2023 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.
The activity during the year ended December 31, 2024 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.
The factors that determine operating cash flows are largely the same as those that affect net earnings or net losses, with the exception of certain non-cash expenses such as DD&A, stock based compensation, amortization of deferred financing costs, gain on revaluation of contingent consideration, the non-cash portion of exploration expenses, impairment of oil and natural gas properties, asset retirement obligations accretion, and deferred taxes.
The factors that determine operating cash flows are largely the same as those that affect net earnings or net losses, 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.
The following is a discussion of Magnolia’s most critical accounting policies and estimates. 40 Reserves Estimates Proved oil and natural gas reserves are those quantities of oil, natural gas, and NGLs which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
Reserves Estimates Proved oil and natural gas reserves are those quantities of oil, natural gas, and NGLs which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
The Company’s ongoing plan is to spend within cash flow on drilling and completing wells while maintaining low financial leverage. As of December 31, 2023, Magnolia operated two rigs. The Company’s gradual and measured approach toward the development of the Giddings area has created operating efficiencies leading to higher production in 2023.
The Company’s ongoing plan is to spend within cash flow on drilling and completing wells while maintaining low financial leverage. During 2024, Magnolia operated two rigs. The Company’s gradual and measured approach toward the development of the Giddings area has created operating efficiencies leading to higher production in 2024.
As of December 31, 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 December 31, 2024, 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.
These taxes are based on rates primarily established by state and local taxing authorities. Production taxes are based on the market value of production. Ad valorem taxes are based on the fair market value of the mineral interests or business assets.
Taxes other than income include production, ad valorem, and franchise taxes. These taxes are based on rates primarily established by state and local taxing authorities. Production taxes are based on the market value of production. Ad valorem taxes are based on the fair market value of the mineral interests or business assets.
A 41% decrease in average prices decreased revenues for the year ended December 31, 2023 by $96.5 million compared to the same period in the prior year, partially offset by a 20% increase in NGL production which increased revenues by $28.0 million. Operating Expenses and Other Income (Expense) .
A 9% increase in NGL production increased revenues for the year ended December 31, 2024 by $15.0 million compared to the same period in the prior year, partially offset by a 2% decrease in average prices which decreased revenues by $2.6 million. Operating Expenses and Other Income (Expense) .
Liquidity and Capital Resources Magnolia’s primary source of liquidity and capital has been its cash flows from operations. The Company’s primary uses of cash have been for development of the Company’s oil and natural gas properties, returning capital to shareholders, bolt-on acquisitions of oil and natural gas properties, and general working capital needs.
The Company’s primary uses of cash have been for development of the Company’s oil and natural gas properties, returning capital to shareholders, bolt-on acquisitions of oil and natural gas properties, and general working capital needs.
Net cash provided by operating activities totaled $855.8 million and $1.3 billion for the years ended December 31, 2023 and 2022, respectively.
Net cash provided by operating activities totaled $920.9 million and $855.8 million for the years ended December 31, 2024 and 2023, respectively.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto included in this Form 10-K.
As of December 31, 2023, Magnolia owned approximately 89.4% of the interest in Magnolia LLC and the noncontrolling interest was 10.6%. 35 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 following factors: • In November 2023, the Company acquired certain oil and gas producing properties including leasehold and mineral interests in the Giddings area for approximately $264.1 million, subject to customary purchase price adjustments, and an additional contingent cash consideration of up to $40.0 million through January 2026 based on future commodity prices.
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 following factors: • In November 2024, the Company amended and restated the RBL Facility, redeemed all of the 2026 Senior Notes that bore interest at 6.0% per annum, and issued the 2032 Senior Notes that bear interest at 6.875% per annum. • In November 2023, the Company acquired certain oil and gas producing properties including leasehold and mineral interests in the Giddings area for approximately $264.1 million, subject to customary purchase price adjustments, and an additional contingent cash consideration of up to $40.0 million through January 2026 based on future commodity prices.
These expenses can vary based on the volume of oil, natural gas, and NGLs produced as well as the cost of commodity processing.
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.
During the year ended December 31, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $87.8 million. During the same time period, cash paid for dividends was $88.1 million, inclusive of dividends on vested non-participating securities. Additionally, $10.0 million was distributed to the Magnolia LLC Unit Holders.
During the same time period, cash paid for dividends was $88.1 million, inclusive of dividends on vested non-participating securities. Additionally, $10.0 million was distributed to the Magnolia LLC Unit Holders.
Depreciation, depletion and amortization (“DD&A”) during the year ended December 31, 2023 was $81.6 million, or $1.97 per boe, higher than the year ended December 31, 2022 due to increased production and a higher depreciable cost basis. During the year ended December 31, 2023, the Company recognized a $15.7 million proved property impairment related to the Highlander property.
Depreciation, depletion and amortization (“DD&A”) during the year ended December 31, 2024 was $89.7 million, or $1.81 per boe, higher than the year ended December 31, 2023 due to increased production and a higher depreciable cost basis. During the year ended December 31, 2024, the Company did not recognize any impairments.
As of December 31, 2023, Magnolia held an interest in approximately 2,483 gross (1,680 net) wells, with total production of 82.3 thousand barrels of oil equivalent per day (“Mboe/d”) for the year ended December 31, 2023. As of December 31, 2023, Magnolia was running a two-rig program.
As of December 31, 2024, Magnolia held an interest in approximately 2,674 gross (1,818 net) wells, with total production of 89.7 thousand barrels of oil equivalent per day (“Mboe/d”) for the year ended December 31, 2024.
Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies.
Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of Magnolia’s most critical accounting policies and estimates.
Critical Accounting Policies and Estimates Magnolia prepares its financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes.
The amount and frequency of future dividends is subject to the discretion of the Company’s board of directors and primarily depends on earnings, capital expenditures, debt covenants, and various other factors. 41 Critical Accounting Policies and Estimates Magnolia prepares its financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes.
During the year ended December 31, 2022, the Company declared cash dividends to holders of its Class A Common Stock totaling $75.4 million, of which $75.2 million was paid as of December 31, 2022. Additionally, $14.3 million was distributed to the Magnolia LLC Unit Holders.
During the year ended December 31, 2024, the Company declared and paid cash dividends to holders of its Class A Common Stock totaling $97.6 million. Additionally, $7.8 million was distributed to the Magnolia LLC Unit Holders. During the year ended December 31, 2023, the Company declared cash dividends to holders of its Class A Common Stock totaling $87.8 million.
Years Ended (In thousands, except per unit data) December 31, 2023 December 31, 2022 Operating Expenses: Lease operating expenses $ 155,491 $ 131,513 Gathering, transportation, and processing 44,327 64,754 Taxes other than income 65,565 94,031 Exploration expenses 5,445 11,586 Asset retirement obligations accretion 4,039 3,245 Depreciation, depletion and amortization 324,790 243,152 Impairment of oil and natural gas properties 15,735 — General and administrative expenses 77,102 72,426 Total operating costs and expenses $ 692,494 $ 620,707 Other Income (Expense): Interest expense, net $ (33) $ (23,442) Other income, net 15,360 6,543 Total other income (expense), net $ 15,327 $ (16,899) Average Operating Costs per boe: Lease operating expenses $ 5.17 $ 4.78 Gathering, transportation, and processing 1.47 2.35 Taxes other than income 2.18 3.42 Exploration expenses 0.18 0.42 Asset retirement obligations accretion 0.13 0.12 Depreciation, depletion and amortization 10.81 8.84 Impairment of oil and natural gas properties 0.52 — General and administrative expenses 2.57 2.63 Lease operating expenses are the costs incurred in the operation of producing properties, including expenses for utilities, direct labor, water disposal, workover rigs, workover expenses, materials, and supplies.
Years Ended (In thousands, except per unit data) December 31, 2024 December 31, 2023 Operating Expenses: Lease operating expenses $ 180,881 $ 155,491 Gathering, transportation, and processing 39,832 44,327 Taxes other than income 71,862 65,565 Exploration expenses 1,374 5,445 Asset retirement obligations accretion 6,729 4,039 Depreciation, depletion and amortization 414,487 324,790 Impairment of oil and natural gas properties — 15,735 General and administrative expenses 88,733 77,102 Total operating costs and expenses $ 803,898 $ 692,494 Other Income (Expense): Interest expense, net $ (14,371) $ (33) Loss on extinguishment of debt (8,796) — Other income, net 4,322 15,360 Total other income (expense), net $ (18,845) $ 15,327 Average Operating Costs per boe: Lease operating expenses $ 5.51 $ 5.17 Gathering, transportation, and processing 1.21 1.47 Taxes other than income 2.19 2.18 Exploration expenses 0.04 0.18 Asset retirement obligations accretion 0.20 0.13 Depreciation, depletion and amortization 12.62 10.81 Impairment of oil and natural gas properties — 0.52 General and administrative expenses 2.70 2.57 Lease operating expenses are the costs incurred in the operation of producing properties, including expenses for utilities, direct labor, water disposal, workover rigs, workover expenses, materials, and supplies.
Sources and Uses of Cash and Cash Equivalents The following table presents the sources and uses of the Company’s cash and cash equivalents for the periods presented: Years Ended (In thousands) December 31, 2023 December 31, 2022 SOURCES OF CASH AND CASH EQUIVALENTS Net cash provided by operating activities $ 855,789 $ 1,296,687 USES OF CASH AND CASH EQUIVALENTS Acquisitions $ (355,499) $ (90,126) Additions to oil and natural gas properties (424,890) (465,139) Changes in working capital associated with additions to oil and natural gas properties (33,793) 37,987 Class A Common Stock repurchases (205,320) (164,913) Class B Common Stock purchases and cancellations — (187,273) Dividends paid (88,077) (75,198) Distributions to noncontrolling interest owners (14,065) (29,362) Other (8,465) (14,204) Net uses of cash and cash equivalents (1,130,109) (988,228) NET CHANGE IN CASH AND CASH EQUIVALENTS $ (274,320) $ 308,459 Sources of Cash and Cash Equivalents Net Cash Provided by Operating Activities 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.
Sources and Uses of Cash and Cash Equivalents The following table presents the sources and uses of the Company’s cash and cash equivalents for the periods presented: Years Ended (In thousands) December 31, 2024 December 31, 2023 SOURCES OF CASH AND CASH EQUIVALENTS Net cash provided by operating activities $ 920,850 $ 855,789 Proceeds from issuance of long-term debt 400,000 — Net sources of cash and cash equivalents 1,320,850 855,789 USES OF CASH AND CASH EQUIVALENTS Redemption of long-term debt $ (404,000) $ — Acquisitions (165,424) (355,499) Additions to oil and natural gas properties (486,729) (424,890) Changes in working capital associated with additions to oil and natural gas properties (2,385) (33,793) Class A Common Stock repurchases (183,375) (205,320) Class B Common Stock purchases and cancellations (89,670) — Dividends paid (97,620) (88,077) Distributions to noncontrolling interest owners (9,133) (14,065) Cash paid for debt issuance costs (12,713) — Other (10,873) (8,465) Net uses of cash and cash equivalents (1,461,922) (1,130,109) NET CHANGE IN CASH AND CASH EQUIVALENTS $ (141,072) $ (274,320) Sources of Cash and Cash Equivalents Net Cash Provided by Operating Activities 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.
Negative revisions of estimated reserves quantities, increases in future cost estimates, or sustained decreases in oil or natural gas prices could lead to a reduction in expected future cash flows and possibly an impairment of long-lived assets in future periods. 41 Income Taxes The Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of Magnolia LLC.
Negative revisions of estimated reserves quantities, increases in future cost estimates, or sustained decreases in oil or natural gas prices could lead to a reduction in expected future cash flows and possibly an impairment of long-lived assets in future periods.
During the years ended December 31, 2023 and 2022, the Company repurchased 9.6 million and 7.0 million shares under this authorization, for a total cost of approximately $207.0 million and $153.3 million, respectively. As of December 31, 2023, Magnolia owned approximately 89.4% of the interest in Magnolia LLC and the noncontrolling interest was 10.6%.
During the years ended December 31, 2024 and 2023, the Company repurchased 7.5 million and 9.6 million shares under this authorization, for a total cost of approximately $182.8 million and $207.0 million, respectively.
Please refer to Note 1—Organization and Summary of Significant Accounting Policies and Note 11—Income Taxes in Part II, Item 8 of this report for additional discussion.
Please refer to Part II, Item 8, Note 2—Summary of Significant Accounting Policies and Note 10—Income Taxes in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for additional discussion.
As of December 31, 2023, the Company has $851.1 million of liquidity comprised of the $450.0 million of borrowing base capacity of the RBL Facility, and $401.1 million of cash and cash equivalents.
As of December 31, 2024, the Company has $710.0 million of liquidity comprised of the $450.0 million of borrowing capacity under the RBL Facility, and $260.0 million of cash and cash equivalents. 39 Cash and Cash Equivalents At December 31, 2024, Magnolia had $260.0 million of cash and cash equivalents.
The amount of income taxes recorded by the Company requires interpretations of complex rules related to the Company’s partnership structure and regulations of various tax jurisdictions throughout the United States.
Income Taxes The Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of Magnolia LLC. The amount of income taxes recorded by the Company requires interpretations of complex rules related to the Company’s partnership structure and regulations of various tax jurisdictions throughout the United States.
Interest expense, net, during the year ended December 31, 2023 was $23.4 million lower than the year ended December 31, 2022, driven by higher interest income realized during 2023 as a result of a higher interest rates. Other income, net, during the year ended December 31, 2023 was $8.8 million higher than the year ended December 31, 2022.
Interest expense, net, during the year ended December 31, 2024 was $14.3 million higher than the year ended December 31, 2023, driven by lower interest income realized during 2024 as a result of lower cash balances. During the year ended December 31, 2024, the Company recognized a loss of $8.8 million on the extinguishment of the 2026 Senior Notes.
The gathering, transportation, and processing costs for the year ended December 31, 2023 were $20.4 million, or $0.88 per boe, lower than the year ended December 31, 2022, primarily due to lower natural gas and NGL prices which resulted in lower processing costs, partially offset by higher volumes.
The gathering, transportation, and processing costs for the year ended December 31, 2024 were $4.5 million, or $0.26 per boe, lower than the year ended December 31, 2023, primarily due to contractual changes and lower natural gas and NGL pricing while the change per boe was due to the increase in natural gas and NGL production.
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 year ended December 31, 2023 were $6.1 million, or $0.24 per boe, lower than the year ended December 31, 2022, due to decreased spending on seismic licenses.
The exploration expenses for the year ended December 31, 2024 were $4.1 million, or $0.14 per boe, lower than the year ended December 31, 2023, due to decreased spending on seismic licenses.
A 20% decrease in average prices decreased revenues for the year ended December 31, 2023 by $231.5 million compared to the same period in the prior year, partially offset by a 3% increase in oil production which increased revenues by $31.9 million. 36 Natural gas revenues were 8% and 18% of the Company’s total revenues for the years ended December 31, 2023 and 2022, respectively.
A 17% decrease in average prices decreased revenues for the year ended December 31, 2024 by $17.4 million compared to the same period in the prior year, partially offset by a 7% increase in natural gas production which increased revenues by $5.6 million. 37 NGL revenues for the year ended December 31, 2024 were $12.4 million higher than the year ended December 31, 2023.
The transaction was accounted for as an asset acquisition. As a result of the factors listed above, the historical results of operations and period-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results.
As a result of the factors listed above, the historical results of operations and period-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results. 36 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Oil, Natural Gas and NGL Sales Revenues.
Magnolia recognized net income attributable to Class A Common Stock of $388.3 million, or $2.04 per diluted common share, for the year ended December 31, 2023. Magnolia also recognized net income of $442.6 million, which includes noncontrolling interest of $54.3 million for the year ended December 31, 2023.
Magnolia recognized net income attributable to Class A Common Stock of $366.0 million, or $1.94 per diluted common share, for the year ended December 31, 2024.
Magnolia’s ability to complete future offerings of equity and debt securities and the timing of these offerings will depend upon various factors, including prevailing market conditions and the Company’s financial condition. 38 Material cash commitments include $24.0 million in interest payments paid each year through 2026, along with contractual obligations discussed in Note 10—Commitments and Contingencies in the Notes to the Company’s consolidated financial statements included in this Annual Report on Form 10-K.
Material cash commitments include $27.5 million in interest payments paid each year through 2032, along with contractual obligations discussed in Note 9—Commitments and Contingencies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
Business Overview As of December 31, 2023, Magnolia’s assets in South Texas included 72,503 gross (50,681 net) acres in the Karnes area and 717,216 gross (525,823 net) acres in the Giddings area.
Business Overview As of December 31, 2024, Magnolia’s assets in South Texas included 79,067 gross (54,936 net) acres in the Karnes area and 738,840 gross (549,121 net) acres in the Giddings area.
As of December 31, 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 timeframe.
The program does not require purchases to be made within a particular timeframe. The Company had repurchased 38.3 million shares under the program at a cost of $707.8 million and had 1.7 million shares of Class A Common Stock remaining under its share repurchase authorization as of December 31, 2024.
This table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a ratio of six Mcf to one barrel. This ratio may not be reflective of the current price ratio between the two products.
The following table provides the components of Magnolia’s revenues for the periods indicated, as well as each period’s respective average prices and production volumes. This table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a ratio of six Mcf to one barrel.
Natural gas production was 31% of total production volume for each of the years ended December 31, 2023 and 2022. Natural gas revenues for the year ended December 31, 2023 were $199.4 million lower than the year ended December 31, 2022.
Natural gas revenues for the year ended December 31, 2024 were $11.8 million lower than the year ended December 31, 2023.
Lease operating expenses for the year ended December 31, 2023 were $24.0 million, or $0.39 per boe, higher than the year ended December 31, 2022, due to increased activity, acquisitions, and an increase in costs including chemicals, compression and maintenance costs. Gathering, transportation, and processing costs are costs incurred to deliver oil, natural gas, and NGLs to the market.
Lease operating expenses for the year ended December 31, 2024 were $25.4 million, or $0.34 per boe, higher than the year ended December 31, 2023, due to an increase in chemicals, compression, operating and maintenance costs and payroll expense associated with a higher well count in addition to higher workover activity.
A 69% decrease in average prices decreased revenues for the year ended December 31, 2023 by $207.6 million compared to the same period in the prior year, partially offset by a 9% increase in natural gas production which increased revenues by $8.2 million. The realized revenue pricing included the impact of gas plant processing fees that were netted from revenue.
An 11% increase in oil production increased revenues for the year ended December 31, 2024 by $105.4 million compared to the same period in the prior year, partially offset by a 2% decrease in average prices which decreased revenues by $17.1 million.
Taxes other than income for the year ended December 31, 2023 were $28.5 million, or $1.24 per boe, lower than the year ended December 31, 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 year ended December 31, 2024 were $6.3 million, or $0.01 per boe, higher than the year ended December 31, 2023, primarily due to an increase in production taxes as a result of the increase in oil and NGL revenues, which was partially offset by the decrease in natural gas revenues. 38 Exploration expenses are geological and geophysical costs that include seismic surveying costs, costs of expired or abandoned leases, and delay rentals.
During the year ended December 31, 2023, cash provided by operating activities was negatively impacted by lower realized oil, natural gas, and NGL prices. 39 Uses of Cash and Cash Equivalents Acquisitions During the year ended December 31, 2023, the Company completed various leasehold, mineral rights, and property acquisitions totaling $355.5 million, primarily comprised of two acquisitions of certain oil and gas producing properties located in the Giddings area for $264.1 million and $41.8 million.
Acquisitions During the year ended December 31, 2024, the Company completed various leasehold, mineral rights, and property acquisitions totaling $165.4 million primarily in the Giddings area. During the year ended December 31, 2023, the Company completed various leasehold, mineral rights, and property acquisitions totaling $355.5 million primarily in the Giddings area.
General and administrative expenses during the year ended December 31, 2023 were $4.7 million higher, but $0.06 per boe lower, than the year ended December 31, 2022. General and administrative expenses were higher year over year primarily due to higher corporate payroll expenses as a result of higher headcount, but lower on a per boe basis because of increased production.
For the year ended December 31, 2023, the Company recognized a $15.7 million proved property impairment related to the Highlander property. General and administrative expenses during the year ended December 31, 2024 were $11.6 million, or $0.13 per boe, higher than the year ended December 31, 2023 primarily driven by increased corporate payroll expenses and other non-recurring costs.
For the Years Ended (In thousands) December 31, 2023 December 31, 2022 Current income tax expense $ 31,852 $ 72,358 Deferred income tax expense (benefit) 75,356 (65,720) Income tax expense $ 107,208 $ 6,638 For the year ended December 31, 2023, income tax expense was $100.6 million higher than the year ended December 31, 2022, comprised of movements in both current and deferred income taxes.
For the Years Ended (In thousands) December 31, 2024 December 31, 2023 Current income tax expense $ 25,541 $ 31,852 Deferred income tax expense 70,272 75,356 Income tax expense $ 95,813 $ 107,208 For the year ended December 31, 2024, income tax expense was $11.4 million lower than the year ended December 31, 2023, primarily a result of additional tax credits and a decrease in income before income taxes, partially offset by an increase in controlling interest.
Years Ended (In thousands) December 31, 2023 December 31, 2022 Drilling and completion $ 421,623 $ 459,837 Leasehold acquisition costs 3,267 5,302 Total capital expenditures $ 424,890 $ 465,139 As of December 31, 2023, Magnolia was running a two-rig program.
Additions to Oil and Natural Gas Properties The following table sets forth the Company’s capital expenditures for the years ended December 31, 2024 and 2023. Years Ended (In thousands) December 31, 2024 December 31, 2023 Drilling and completion $ 477,000 $ 421,623 Leasehold acquisition costs 9,729 3,267 Total capital expenditures $ 486,729 $ 424,890 During 2024, Magnolia operated two rigs.
During the year ended December 31, 2023, the Company repurchased 9.6 million shares of Class A Common Stock under the program at a weighted average price of $21.46, for a total cost of approximately $207.0 million. As of December 31, 2023, 9.2 million shares of Class A Common Stock remained under the share repurchase program.
During the year ended December 31, 2024, the Company declared cash dividends to holders of its Class A Common Stock totaling $97.6 million. As of December 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.
The increase in deferred income tax expense was partially offset by the $40.5 million decrease in current income tax expense due to lower taxable income, primarily as a result of the decline in commodity prices. See Note 11—Income taxes in the Notes to the Company’s consolidated financial statements included in this Annual Report on Form 10-K for further detail.
See Note 10—Income Taxes in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for further detail. Liquidity and Capital Resources Magnolia’s primary source of liquidity and capital has been its cash flows from operations.
Removed
Market Conditions Update After Magnolia experienced record operating margins during 2022, natural gas and NGL prices have significantly declined and oil prices have weakened, while material and labor costs remained elevated. This has resulted in lower revenue and lower operating margins.
Added
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Removed
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.
Added
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. Global conflict and supply chain disruptions drove high oil and natural gas prices in 2022.
Removed
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Oil, Natural Gas and NGL Sales Revenues. The following table provides the components of Magnolia’s revenues for the periods indicated, as well as each period’s respective average prices and production volumes.
Added
Beginning in 2023, due to the easing of global geopolitically driven supply fears along with record high U.S. production, natural gas and NGL prices significantly declined and oil prices weakened.
Removed
Oil production was 42% and 44% of total production volume for the years ended December 31, 2023 and 2022, respectively. Oil revenues for the year ended December 31, 2023 were $199.6 million lower than the year ended December 31, 2022.
Added
In 2024, despite continued commodity 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.
Removed
NGL revenues were 14% of the Company’s total revenues for each of the years ended December 31, 2023 and 2022. NGL production was 27% and 25% of total production volume for the years ended December 31, 2023 and 2022, respectively. NGL revenues for the year ended December 31, 2023 were $68.5 million lower than the year ended December 31, 2022.
Added
Magnolia also recognized net income of $397.3 million, which includes noncontrolling interest of $31.3 million related to the Magnolia LLC Units (and corresponding shares of Class B Common Stock) held by certain affiliates of EnerVest for the year ended December 31, 2024.
Removed
The Company is party to a number of contracts that are recorded gross within natural gas and NGL 37 revenues, which track with natural gas and NGL pricing, and thereby have contributed to a decrease in gathering, transportation, and processing expense. Taxes other than income include production, ad valorem, and franchise taxes.
Added
On February 12, 2025, the Company’s board of directors increased the share repurchase authorization by an additional 10.0 million shares of Class A Common Stock, which increased the total share repurchase authorization to 50.0 million shares. 35 As of December 31, 2024, Magnolia owned approximately 97.2% of the interest in Magnolia LLC and the noncontrolling interest was 2.8%.
Removed
This is primarily comprised of the gain on revaluation of the contingent consideration liability associated with the acquisition of certain oil and gas producing properties in the Giddings area in the fourth quarter of 2023. Income tax expense. The following table summarizes the Company’s income tax expense for the periods indicated.
Added
The transaction was accounted for as an asset acquisition.
Removed
For the year ended December 31, 2023, the Company recognized $75.4 million of deferred income tax expense, while the Company recognized $65.7 million of deferred income tax benefit in the prior year due to the release of the valuation allowance against the Company’s deferred tax assets.
Added
This ratio may not be reflective of the current price ratio between the two products.
Removed
As of December 31, 2023, the Company’s Adjusted Consolidated Net Tangible Asset, as calculated in accordance with the Company’s Indenture relating to its 2026 Senior Notes, was approximately $3.8 billion. Cash and Cash Equivalents At December 31, 2023, Magnolia had $401.1 million of cash and cash equivalents.
Added
The Company is also party to a number of percent-of-proceeds arrangements that track closely to natural gas and NGL pricing and affect the cost of commodity processing.
Removed
During the year ended December 31, 2022, the Company completed various leasehold, mineral rights, and property acquisitions of certain oil and natural gas assets totaling $90.1 million, subject to customary closing adjustments. Additions to Oil and Natural Gas Properties The following table sets forth the Company’s capital expenditures for the years ended December 31, 2023 and 2022.
Added
Other income, net, during the year ended December 31, 2024 was $11.0 million lower than the year ended December 31, 2023.
Removed
The amount and frequency of future dividends is subject to the discretion of the Company’s board of directors and primarily depends on earnings, capital expenditures, debt covenants, and various other factors.
Added
In 2023, the Company recognized a gain on earnout payment associated with the sale of the Company’s 35% membership interest in Ironwood Eagle Ford Midstream LLC and a gain on sale of the Company’s 84.7% interest in Highlander, with no such gains in 2024. In addition, the decrease is impacted by the change in revaluation of the contingent consideration.
Added
Income tax expense. The following table summarizes the Company’s income tax expense for the periods indicated.
Added
Magnolia’s ability to complete future offerings of equity and debt securities and the timing of these offerings will depend upon various factors, including prevailing market conditions and the Company’s financial condition.
Added
During the year ended December 31, 2024, cash provided by operating activities was positively impacted by the timing of collections and the increase in oil, natural gas, and NGL production, partially offset by lower realized oil, natural gas, and NGL prices.
Added
Proceeds from issuance of long-term debt During the year ended December 31, 2024, the Company received $400.0 million from the issuance of the 2032 Senior Notes.
Added
For more detail, refer to Note 7—Long-term Debt. 40 Uses of Cash and Cash Equivalents Redemption of Long-term debt During the year ended December 31, 2024, the Company paid $404.0 million to redeem the 2026 Senior Notes. For more detail, refer to Note 7—Long-term Debt.
Added
On February 12, 2025, the Company’s board of directors increased the share repurchase authorization by an additional 10.0 million shares of Class A Common Stock, which increased total share repurchase authorization to 50.0 million.
Added
During the year ended December 31, 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 December 31, 2024, Magnolia owned approximately 97.2% of the interest in Magnolia LLC and the noncontrolling interest was 2.8%.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
Biggest changeA $1.00 per barrel increase (decrease) in the weighted average oil price for the year ended December 31, 2023 would have increased (decreased) the Company’s revenues by approximately $12.6 million and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2023 would have increased (decreased) Magnolia’s revenues by approximately $5.5 million. 42
Biggest changeA $1.00 per barrel increase (decrease) in the weighted average oil price for the year ended December 31, 2024 would have increased (decreased) the Company’s revenues by approximately $14.0 million and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2024 would have increased (decreased) Magnolia’s revenues by approximately $5.9 million. 43
The Company is subject to market risk exposure related to changes in interest rates on borrowings under the RBL Facility. Interest on borrowings under the RBL Facility is based on the SOFR rate or alternative base rate plus an applicable margin. At December 31, 2023, the Company had no borrowings outstanding under the RBL Facility.
The Company is subject to market risk exposure related to changes in interest rates on borrowings under the RBL Facility. Interest on borrowings under the RBL Facility is based on the SOFR rate or alternative base rate plus an applicable margin. At December 31, 2024, the Company had no borrowings outstanding under the RBL Facility.

Other MGY 10-K year-over-year comparisons