On February 18, 2025, Magnolia Oil & Gas Corp (MGY, Financial) released its 8-K filing detailing the financial and operational results for the fourth quarter and full year 2024. The company, an independent oil and natural gas entity, focuses on the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (NGL) reserves, primarily in South Texas.
Quarterly and Annual Financial Performance
For the fourth quarter of 2024, Magnolia Oil & Gas Corp reported a net income of $88.7 million, a 22% decrease from the $113.9 million reported in the same quarter of 2023. The diluted earnings per share (EPS) for the quarter was $0.44, falling short of the analyst estimate of $0.48. The company's revenue for the quarter was $326.61 million, slightly surpassing the estimated $325.22 million.
Annually, the company reported a net income of $397.3 million, a 10% decline from the previous year's $442.6 million. The diluted EPS for the year was $1.94, below the estimated $2.00. Total revenue for 2024 was $1,315.89 million, exceeding the estimated $1,314.77 million.
Operational Highlights and Challenges
Magnolia Oil & Gas Corp achieved a 9% increase in average daily production, reaching 93.1 thousand barrels of oil equivalent per day (Mboe/d) in Q4 2024. The Giddings area production grew by 14%, with oil production increasing by 17% compared to the previous year. Despite these operational successes, the company faced challenges with a 35% reduction in cash balance, ending the year with $260 million compared to $401.1 million in 2023.
Financial Achievements and Industry Context
The company generated an adjusted EBITDAX of $235.8 million for Q4 2024, with a full-year figure of $953.3 million, marking a 6% increase from 2023. Capital expenditures for drilling and completions (D&C) rose by 44% in Q4 to $131.6 million, reflecting the company's investment in expanding its production capabilities. Magnolia's ability to maintain a low reinvestment rate of 50% of adjusted EBITDAX is significant in the oil and gas industry, as it indicates efficient capital management and potential for sustained growth.
Income Statement and Cash Flow Insights
Magnolia reported total revenues of $326.61 million for Q4 2024, with oil revenues contributing $246.48 million. Operating expenses totaled $202.54 million, leading to an operating income of $124.07 million. The company generated $222.63 million in net cash from operating activities during the quarter, contributing to a full-year total of $920.85 million.
Shareholder Returns and Strategic Initiatives
In 2024, Magnolia returned 88% of its free cash flow to shareholders through dividends and share repurchases. The company repurchased 11 million shares, reducing its diluted weighted average share count by 5%. The Board of Directors increased the quarterly dividend by 15%, resulting in an annualized rate of $0.60 per share.
Steady, reliable, and consistent, are some of the words used to describe what was an exceptional period for Magnolia’s operational and financial execution in 2024," said President and CEO Chris Stavros.
Conclusion and Outlook
Magnolia Oil & Gas Corp's performance in 2024 highlights its operational strengths and strategic focus on shareholder returns. However, the decline in net income and EPS compared to estimates indicates challenges that the company must address. As Magnolia enters 2025, its commitment to disciplined capital spending and efficient operations positions it well for continued growth and value creation for shareholders.
Explore the complete 8-K earnings release (here) from Magnolia Oil & Gas Corp for further details.
