Magnolia Oil & Gas Corporation Class A

Good morning, everyone, and thank you for participating in Magnolia Oil and Gas Corporation's first quarter 2025 earnings conference call. My name is Megan. I will be your operator for today's call. At this time, all participants will be placed in a listen-only mode as our call is being recorded. I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question and answer session.

Thank you, Megan, and good morning, everyone. Welcome to Magnolia Oil and Gas's first quarter earnings conference call. Participating on the call today are Chris Stavros, Magnolia's president and chief executive officer, and Brian Corrales, senior vice president and chief financial officer. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ is available in the company's annual report on Form 10-K filed with the SEC. A full safe harbor can be found on slide two of the conference call slide presentation with supplemental data on our website. You can download Magnolia's first quarter 2025 earnings press release, as well as the conference call slides from the investor section of the company's website at www.magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stoppers.

Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2025 financial and operating results. I plan to speak to our first quarter results, which puts Magnolia on a very solid foundation to start the year and in a strong position with extensive flexibility to maneuver through the current product price volatility and macroeconomic uncertainty. I will briefly discuss how our asset quality, notably in Giddings, continues to drive our operational execution and providing us with further confidence in our plan for this year. I'll conclude by giving a brief update of Magnolia's 2025 capital and operating plan, where we now expect to see higher production growth with lower capital spending, resulting in a more capital-efficient program and in accordance with our business model discipline. Brian will then review our first quarter financial results in greater detail and provide some additional guidance before we take your questions. Focusing on slide three of the investor presentation, Magnolia delivered strong operational and financial results during this year's first quarter. We achieved a record quarterly production rate of 96.5 thousand barrels of oil equivalent per day during the quarter, which was well ahead of our earlier guidance. We made a tactical decision to bring a couple of multi-well pads online in the first quarter that are in a gassier portion of Giddings and to take advantage of higher natural gas prices historically seen during the winter months. The wells not only exceeded our performance expectations, but are also exhibiting a shallower decline profile. The outperformance from these wells helped drive the first quarter year-over-year total production growth to 14%, in addition to oil production growth of 4%. Total production at Giddings grew by 25% compared to the prior year quarter, with Giddings oil volumes growing by 17%. Our first quarter financial results were also strong, with total adjusted net income index of $248 million, both up 9% compared to the year-ago period. Operating income margins were 39% in the quarter and our annualized return on capital employed was 23%. Our DNC capital spending was $130 million with a reinvestment rate of 53% during the first quarter. The first quarter rate of capital outlays is expected to be the highest quarterly spending rate for the year. Magnolia generated free cash flow of $111 million and we returned 74% of the free cash or approximately $82 million to our shareholders through our growing base dividend and ongoing share repurchase program. Much of the outperformance seen from the wells I mentioned earlier originated from a newer area of Giddings, which we had previously appraised, ultimately leading to the acquisition of additional acreage and the completion of our first multi-well pads late last year and into early 2025. In addition to the strong performance and lower than expected declines, these wells also generate strong financial returns with quick payback periods. Other areas within Giddings also saw strong oil production performance with meaningful associated gas volumes. The outperformance we experienced this past quarter in Giddings is not a new phenomenon for us. Rather, we have more commonly and consistently seen the results in Giddings positively deployed more modern completions design and technology to this older vintage field. Our subsurface team has done an outstanding job of advancing our knowledge of the Austin Chalk Reservoir. Our drilling completion crews continue to execute on time and below budget, and our production group ensures that the wells are producing in the most efficient manner. significant free cash flow. As a result of the stronger-than-expected wealth performance, and which has continued into the second quarter, we are increasing our full-year 2025 production growth guidance range to 7 to 9 percent from a range of 5 to 7 percent previously. At the same time, we are lowering the range for our 2025 capital spending to $430 to $470 million dollars. original spending plan. Capital discipline continues to be one of the core principles of Magnolia's business model. Within the backdrop of current macroeconomic uncertainty and weaker product prices, we see no reason to be overly heroic in terms of pursuing and generating even higher production growth to our original capital spending and activity levels. The higher growth rate and improved operational flexibility that we now expect to achieve in 2025 is primarily a function of the outperformance of the wells and The reduction to our capital and activity plan will lead to deferring the completion of several wells into next year. To summarize, at current product prices, we now expect to see somewhat higher production in 2025 compared to our previous forecast and with less capital spending, while maintaining a high level of flexibility within our activity program for the remainder of the year. Magnolia's operations remain consistent and steady, and we continue Our objective, as always, is to be the most efficient operator of best-in-class oil and gas assets, generating the highest returns on those assets while employing the least amount of capital for drilling and completing wells. As we noted earlier this year, our teams took proactive measures during the last couple of years to reduce both our field-level operating costs as well as working with our key oil field service providers and material vendors to lower our overall well costs. These early efforts taken during a period of higher product prices has reduced our overall cost structure, placing us in a continued strong position should product prices continue to weaken. Our low level of debt business model oriented toward capital discipline and our high quality assets are valuable characteristics, particularly during periods of greater uncertainty, and allow Magnolia to operate from a position of strength and manage Despite the lower product commodity price environment, we will continue to limit our reinvestment rate to 55% of our gross cash flow, or EBITDAX, allowing for a significant return of free cash to shareholders through our base dividend and ongoing share purchases. Any additional free cash accrues to the balance sheet, allowing us to consistently strong execution supports the competitive advantage we have in South Texas, Eagleford, and Austin Chalk, and we will continue to focus our attention and capital in these areas to further generate and compound value for our shareholders. I'll now turn the call over to Brian to provide some further details on our first quarter 2025 results and additional guidance for the second quarter.