Magnolia Oil & Gas Corporation

Magnolia Oil & Gas Corporation produces oil, natural gas and natural gas liquids in South Texas, primarily in the Eagle Ford and Austin Chalk formations. It earns revenue from selling that production, so prices, output and the cost of developing wells shape its cash generation. Its Class A shares trade on the New York Stock Exchange as MGY.

Financial record through the WildFire acquisition

Higher oil prices and acquired production both contributed to Q3 revenue growth. The acquisition was included for only part of September. Prior consolidated net income includes $2.8 million attributable to noncontrolling interests; Class A shareholders' portion was $75.5 million.

Adjusted EBITDAX excludes interest, income taxes, depreciation, depletion, amortization, exploration, asset-retirement accretion, noncash stock compensation, transaction and integration costs, and unrealized derivative effects. Adjusted net income was $166.3 million, or $0.71 per diluted share, compared with GAAP net income of $80.5 million. The main adjustments were acquisition expense and unrealized derivative losses, with tax effects.

What closed, and how it was financed

Magnolia completed the WildFire acquisition on September 10, 2026. The seller received $2.57 billion of cash and 32.2 million new Magnolia shares, valued at $892.0 million at closing. Magnolia also assumed $600 million of WildFire notes due in 2029. The acquired acreage expands Magnolia's development opportunities around its existing Giddings position.

Financing included 53.3 million new shares sold publicly in July, $500 million of new notes issued in August and borrowing under the revolving credit facility. The public stock offering generated approximately $1.2 billion net. The issuance of shares helps explain why total reported profit rose in Q3 while earnings per share fell.

Management targets more than $100 million of annual run-rate savings from the combination. It expects to reach at least one-third by the end of 2026 and more than three-quarters by mid-2027. Those milestones concern the annual rate of savings achieved, rather than cash already collected during 2026.

Earlier expectations and the combined plan

The original August outlook put standalone 2026 drilling and completion spending at $440 million to $480 million, with roughly $115 million in Q3. Those figures excluded WildFire. Actual Q3 spending of $147.4 million includes part of the acquired operation, so it is a different comparison.

The 2027 growth target uses an adjusted pro forma Q2 2026 base of about 158,000 oil-equivalent barrels a day. It includes WildFire and removes production from noncore assets sold during Q3. It therefore measures growth beyond that combined asset base.

Cash definitions and shareholder returns

Q3 operating cash flow of $369.0 million less cash property investment of $162.3 million leaves $206.7 million. Magnolia's own free cash flow removes a $46.3 million operating working-capital inflow as well, producing $160.4 million. Adjusted free cash flow adds back $63.3 million of cash transaction and integration costs to reach $223.7 million.

The company returned $103.3 million through $60.2 million of share repurchases and $43.1 million of dividends. Those payments were about 46% of adjusted free cash flow, 64% of unadjusted issuer free cash flow and 50% of operating cash flow after cash property investment.

Repurchase authority remaining at September 30 was 7.6 million shares. The board added 15 million shares on November 2, bringing reported remaining authority to 22.6 million. Magnolia intends to repurchase at least 1% of outstanding shares each quarter. Its latest $0.18 quarterly dividend is payable December 1 to holders of record November 10.

Debt, liquidity and commodity exposure

At September 30, cash was $17.5 million, down from $295.9 million in June following the acquisition and financing. Principal debt was $1.935 billion, compared with $400 million at the preceding year-end. The balance-sheet carrying value was $1.938 billion after premiums and financing costs.

Debt consists of $435 million drawn on the credit facility, $600 million of assumed 7.5% notes due in 2029, $400 million of 6.875% notes due in 2032 and $500 million of 6.625% notes due in 2034. The facility has $1.75 billion of elected commitments and $1.315 billion of undrawn borrowing capacity. Its September 2031 maturity can move earlier if the 2029 notes remain outstanding above the specified threshold.

Net debt, calculated using principal less cash, was $1.918 billion. Management's below-one-times leverage statement uses forecast 2027 adjusted EBITDAX and current futures prices. The original acquisition target used July 15 prices and a year-end 2027 deadline. The presentation separately reports 1.2 times net debt to annualized Q3 adjusted EBITDAX.

Acquired and new oil hedges also affect cash timing. Q3 cash derivative settlements were $20.4 million, including $19.0 million settling liabilities acquired with WildFire. Based on September 30 forward prices, Magnolia expects approximately $170.8 million of settlement payments over the following year, partly offset by higher prices received for its oil.