Magnolia Oil & Gas (MGY) Q4 2023 earnings summary

Executive summary

• FY 2023 production averaged 82.3 Mboe/d, up 9% YoY; free cash flow was $412.9 MM, with 74% returned to shareholders.

• Q4 production rose 16% YoY to 85.4 Mboe/d; disciplined capital spending and lower well costs supported cash generation and high-single-digit 2024 production growth guidance.

Financial highlights

• Q4 revenue was $322.6 MM versus $349.0 MM YoY; FY revenue was $1,227 MM versus $1,694 MM.

• Adjusted EBITDAX was $240.0 MM in Q4 and $899.2 MM for FY 2023; D&C capital was $91.5 MM and $421.6 MM, respectively.

• Q4 net income was $113.9 MM, or $0.53 diluted EPS, versus $254.8 MM, or $1.20; FY net income was $442.6 MM and diluted EPS was $2.04.

• Net cash from operations was $246.9 MM in Q4 and $855.8 MM for FY; free cash flow was $131.3 MM and $412.9 MM, respectively.

Outlook and guidance

• FY 2024 production and oil growth targeted at high-single digits, with oil volumes expected to remain fairly steady through the year.

• FY D&C capital budget is $450–$480 MM; Q1 D&C spending is expected near $130 MM, the highest quarterly spend rate of 2024.

• Q1 production guidance is 84–85 Mboe/d, including mid-January weather downtime; production had fully recovered.

• Reinvestment expected below 55% of adjusted EBITDAX at current product prices; oil differential forecast at a $3/bbl discount to MEH, with production unhedged.

• Two rigs and one completion crew planned throughout 2024; Giddings well costs fell more than 20% YoY, with ~8,500-foot laterals planned.