Magnolia Oil & Gas Corporation Class A

Good morning, everyone, and thank you for participating in the Magnolia Oil and Gas Corporation Second Quarter 2025 earnings conference call. My name is Kim, and I will be your moderator 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, Kim, and good morning, everyone. Welcome to Magnolia Oil and Gas's Second Quarter earnings conference call. Participating on the call today are Chris Stavros, Magnolia's chairman, 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 2 of the conference call slide presentation with the supplemental data on our website. You can download Magnolia's Second Quarter 2025 earnings press release as well as the conference call slides from the investor section of the company's website at .magnolioilgas.com. I will now turn the call over to Mr. Chris Stavros.

Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our Second Quarter 2025 financial and operating results. I plan to highlight our Second Quarter results which define another strong quarter of consistent execution from Magnolia and one that has delivered an even more capital-efficient program than what we outlined earlier this year. In addition to our strong results, Second Quarter results, I'll point out some small bolt-on acquisitions that we completed within the last month and emphasize how this continues to benefit both our operational and financial performance, even through periods of product price volatility. Brian will then review our Second Quarter financial results in greater detail and provide some additional guidance before we take your questions. Turning to slide 3 of the investor presentation, Magnolia delivered strong results across all financial and operational metrics during the Second Quarter. Our total adjusted net income for the quarter was $81 million with adjusted EBITDAX of $222 million. BNC capital was only $95 million during the Second Quarter, providing a reinvestment rate of just 43%, highlighting our asset quality and the efficiency of our capital program. Pre-tax operating margins were 34% in the quarter and our annualized return on capital employed was 18%. Magnolia generated free cash flow of $107 million and we returned 72% or approximately $78 million of that free cash flow to our shareholders through our growing-based dividend and ongoing share repurchase program. The company achieved another record quarterly production rate with total volumes of 98.2 thousand barrels of oil equivalent per day during the quarter, which was above our earlier guidance and the result of continued strong well performance from both earlier wells and some newer completions. This represents -over-year production growth of 9% with total production at Giddings showing growth of 11%. Second quarter total production of 40,000 barrels per day also set a new company record and remained resilient representing 5% -over-year growth. As a result of the continued strong well performance throughout our asset base, we have raised our full year 2025 production growth guidance to approximately 10% from the prior range of 7% to 9% growth. Notably and because of the additional operational flexibility and higher growth afforded to us by the better well performance and capital efficiencies, we are continuing with our plan to defer and preserve several well completions into 2026 and maintaining our estimate of 2025 capital spending in the range of $430 to $470 million. Simply put, our better than expected results seen during the first half of the year allows us to spend less capital in 2025 while generating higher than expected production and advances our goal of being the most efficient operator best in class oil and gas assets and generating high returns on those assets while employing the least amount of capital. Second quarter results are an ideal example of our team's success in executing this strategy and with our recent financial results exhibiting this principle. We were able to use some of the excess cash generated by the business to close on multiple oil and gas property acquisitions from several small private operators during late June and early July totaling about $40 million. These bolt on transactions are shown on slide four added approximately 18,000 net acres and gettings including roughly 500 barrels of oil equivalent per day of production. This acreage is contiguous to our current gettings position and adds new leases, increases our working interest in existing leases while also adding new royalty acreage. These acquisitions further strengthen Magnolia and not simply by adding a small amount of oil and gas production but more importantly by expanding our prospects and extending the durability of our high return business. We have regularly deployed this similar approach in gettings of appraise, acquire, grow and further exploit since the company's inception and leveraging off the significant subsurface knowledge and experience we have gained while operating in the gettings field. Our pursuit of this strategy has allowed us to increase the extent of our development in gettings by an additional 20% to 240,000 net acres which now represents more than 40% of our net acreage position in the area. This increase includes approximately 30,000 net acres from organic appraisal efforts within our existing acreage and roughly 10,000 net acres from the recent bolt on deals. The gettings area has a large amount of oil and gas in place and we will continue to appraise and learn more about this asset over time, feeling confident that our development acreage in the area will continue to grow. Strong wealth productivity, capital efficiencies and high operating margins are all features that are prevalent in our gettings asset area. These high quality attributes along with our continued focus, capital discipline and competitive advantages gained throughout our accumulated knowledge in the field are responsible for much of Magnolia's overall success. A core competency of Magnolia is acquiring bolt on oil and gas properties that have similar attractive operational and financial characteristics to our existing core assets. We will continue to look for additional opportunities over time to expand our presence and footprint within the field. For Magnolia, the crucial aspect around any acquisition is that it continues to provide us with the ability to execute our proven business model while maintaining the same recipe of balance sheet strength, capital discipline, realizing high pre-tax operating margins, generating mid single-digit production growth and returning a significant portion of our free cash flow to our shareholders for ongoing share of purchases and a safe, sustainable and growing based dividend. Magnolia's operations remain consistent and steady and we continue to execute a differentiated focus and investible EMP business model that is enduring. Solid well performance continues to drive our overall production higher while supporting our discipline capital spend that has been well below our self-imposed 55% reinvestment ceiling. Ongoing capital efficiencies has allowed us to generate consistent free cash flow throughout periods of product price volatility. Our top tier assets and focused strategy centered on prudent reinvestment, steady production growth and reliable free cash flow should continue to drive shareholder returns over the long term. I'll now turn the call over to Brian to provide some further details on our second quarter 2025 results and some additional guidance for the third quarter of this year.

Thanks Chris and good morning everyone. I'll review some items from our second quarter results and refer to the presentation slides found on our website. I'll also provide some additional guidance for the third quarter of 2025 and the remainder of the year before turning it over for questions. Starting on slide six, Magnolia delivered an excellent quarter as we continue to adhere to our differentiated business model. During the second quarter we generated total and adjusted net income of $81 million or $0.42 per diluted share. Our adjusted EBITDAX for the quarter was $223 million with total capital associated with drilling completions and associate facilities of $95 million representing 43% of our adjusted EBITDAX. Second quarter production volumes grew 9% year over year to 98.2 thousand barrels of oil equivalent per day while generating free cash flow of $107 million. Looking at the quarterly cash flow waterfall chart on slide seven, we started the quarter with $248 million of cash. Cash flow from operations before changes in your working capital was $214 million with working capital changes and other small items impacting cash by $16 million. During the quarter we paid dividends of $29 million and allocated $49 million towards share repurchases. We had $16 million of small bolts on acquisitions during the quarter comprised of acreage additions, working interest and royalties. We incurred $100 million on drilling, completions and associated facilities as well as leasehold and ended the quarter with $252 million of cash. Looking at slide eight, this chart illustrates the progress in reducing our total outstanding of our repurchase shares since we began our repurchase program in the second half of 2019. Since that time we have repurchased 77.2 million shares leading to a reduction in weighted average diluted shares outstanding of 25% net of issuances. Magnolia's weighted average diluted share count declined by approximately 2 million shares sequentially averaging 192.1 million shares during the second quarter. We currently have 7.4 million shares remaining under our repurchase authorization which are specifically directed toward repurchasing Class A shares in the open market. Turning to slide nine, our dividend has grown substantially over the past few years including a 15% increase announced earlier this year to 15 cents per share on a quarterly basis. Our next quarterly dividend is payable on September 2nd and provides an annualized dividend payout rate of 60 cents per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by our overall strategy of achieving moderate annual production growth, reducing our outstanding shares and increasing the dividend payout capacity of the company. Magnolia has maintained a strong balance sheet and is a key principle of our business model. Our 400 million senior nodes do not mature until 2032. Including our second quarter ending cash balance of 252 million and our undrawn 450 million revenue per unit cash cost and operating income margins. Our total revenue per BOE declined approximately 13% year over year due to the decline in oil prices and partially offset by an increase in natural gas and NGO prices. Our total adjusted cash operating cost including G&A were down 4% to $10.70 per year. Our operating income margin for the second quarter was $12.07 per BOE or 34% of our total revenue. Turning to guidance, we are reiterating our 2025 drilling completion and facilities capital spending and our overall budget for the second quarter. This includes an estimate of non-operated capital that is about the same as 2024 levels. We are increasing our full year production growth guidance to approximately 10% from a prior range of 7% to 9%. This represents the second quarter in a row of increasing our production guidance for 2025 with a capital budget that is approximately 5% below our initial capital guidance in February. Total production for the third quarter of 2025 was $1.5 million. The third quarter is expected to be approximately 99,000 barrels of oil equivalent a day with third quarter DNC capital expenditures expected to be approximately $115 million. Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston and Magnolia remains completely unhedged for all of its oil and natural gas production. We expect our effective tax rate to be approximately 21% and with the passing of new legislation during the third quarter, we expect minimal cash taxes for the full year 2025 and assuming a similar price environment expect minimal cash taxes in 2026 and should benefit us going forward. The fully diluted share account for the third quarter of 2025 is expected to be approximately 191 million shares which is 4% lower than the third quarter of 2024 levels. We are now ready to take your questions.

We will now begin the question and answer session. To ask a question you may press star then 1 on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Carlos Escalante with Wolf Research.

Yeah, good morning team. Thank you for taking my question this morning. First of all, I'd like to ask about where you see free cash flow trending. And let me frame the question real quick. So we like to think that the value of an MP is relatively simple. It's free cash flow times duration. And the saves that you've taken this first half of the year by raising production guidance and lowering your capital intensity, you've evidently grown both. So I know it's perhaps too early to talk 2026, but it seems like given recent well performance growth and the low single digits, it's probably inevitable. But so is further capital efficiency improvement. So I wonder if you could frame the 2026 and beyond growth versus capital efficiency conversation for us and specifically in terms of free cash flow optimization. What do you think gives in first and what do you prioritize out of those two items moving forward?

Hi, Carlos. Yeah, it seems reasonable, I guess. I don't know how much I want to get into 2026 just yet. It's a little early, but it's all trending in the right direction. You know, I've said this a number of times on other calls. And so recall, we find ourselves in a position where we're in an older field and getting, you know, it's been operating for decades with an enormous amount of oil and gas in place that had not been developed with modern technology and completion. So when we started out, you know, from the beginning, we viewed it if we were able to crack the code subsurface wise that there was a lot of upside potential in the field. And this is exactly what we've experienced during the last several years. So what you've seen as a result of this are further capital efficiencies creeping into our development program over time. And as I mentioned in my remarks, our more gradual and tactical way of approaching this has been to appraise, acquire, grow, and further exploit. And so as we further expand the gettings footprint, which I'm confident that we will, you know, simply by the nature of moving into newer areas, you should likely pick up further efficiencies. So I do see this over time trending better for us. It's an old field that will just continue to give and give and give and get better. And remember, as I said, I've mentioned this in many prior calls, the goal for us should be the goal, I suppose, for most. The goal for us is to drill the best wells with the least amount of capital as possible in order to generate the highest amount of free cash flow, which I think is where you're getting at, and that's your point. It shouldn't go unnoticed that we began the year by saying that this year, by saying that we would spend about $475 million in capital and see production growth of about 5 to 7 percent. So here we are in late July, and we plan to spend 5 percent less, or about $550 million of capital, and we'll grow our production vines by 10 percent. So hardly anything to complain about as far as I'm concerned, so I hope that gives you a little context.

Yeah, most definitely. Thank you for the incremental call. I guess I'll keep it on the same line of conversation for my follow-up, but perhaps focus more on product mix. So there is clearly a ton of variability across your gettings position, just given how the Austin shock is laid out. And a question that we often get is if your incremental molecule is getting gas here. Now, you turned in line some very good wells that had a lot of liquids, but also a lot of gas earlier this year. So could you possibly perhaps frame what you view your capital allocation within your gettings when you're in, you're out?

You know, it's interesting, we get the question too, and I understand maybe a little bit of maybe the confusion, but at the end of the day, broadly gettings, whether it's a little areas that are a little bit maybe oilier, or certainly areas that are gassy, which I think is what you're getting at, the gassier wells and gettings do come with a lot of liquids and quite a bit of oil, more often than not. And so to say that we're focusing on one particular area in gettings, I mean, this is gettings the way we see it broadly, and our goal is to sort of drill good wells, and maybe this is an odd way of putting it, but sort of do a tour around gettings, and we'll rotate around the field. And again, part of this is to learn more about it, because we're at the relatively early stages of it, but we'll move around. And typically, on a broad basis, the well performance is quite strong, the well returns are very, very strong. So we don't, there's pockets of a little differentiation, but at the end of the day, broadly, we're seeing very good returns from most of the wells that we bring online.

Fair enough. Thank you, Chris, and congratulations on the solid border again.

Thanks.

Our next question comes from Peyton Dorn with UBS.

Hey, thanks, guys. This is Peyton from UBS. Quick question on Brian's side. I think I might have missed it in the prepared remarks, but you mentioned, I think it was minimal cash taxes as a result of the new budget bill. So just if you mind clarifying that, and then any impact on taxes or forecasts for 26 and beyond that you should be thinking about. Thanks.

Yeah, the taxes for this year, minimal, or maybe I would say negligible for 25. For 26, as Brian said in his remarks, probably not all that different at current product prices. So if that gives you, I mean, I think the range that we had given prior to the bill was 6, 7, 8, 9 percent in that vicinity. This is quite different than that. Quite a bit lower. Negligible.

Yeah, certainly. Good to see extra free cash flow too. And I guess just otherwise on the operating cost side, it was a nice trend down for the LOE. I know you attributed some of that to a lower work over, but just curious if there's any more juice to squeeze there or any other outlook on potential for declining costs on the operating side in the back half of the year. Thank you.

Sure. You know, we definitely benefited from what I would call a lighter quarter of work over activity and maybe some lower surface facility expenses during the period. But having said that, we did, you know, if you recall, we embarked on an effort to address field level operating costs more than a year ago. And we definitely experienced some broad improvements throughout our field operations. And there are a lot of smaller items that begin to add up. I think we have and will continue to see some of those improvements trickle into our field operating expenses. You know, a couple of items I've mentioned that are either helping or will help, utilization of chemicals, water hauling. And so, you know, while lower work overs did pull things down quite a bit in the second quarter, yeah, we're seeing some broad improvements. But having said that, I think we'll normalize more towards, you know, 5, 525 per BOE in that sort of frame. And we'll see where that goes. But that's still about 5% of where we were last, 5% lower than where we were last year. And I hope to do better through the remainder of the year.

All right, great. Thanks for getting me on.

Sure. Our next question comes from Zach Parham with JPMorgan.

Hey, thanks for taking my questions. I first just wanted to ask on oil production and the trajectory from here. You all hit 40,000 barrels a day in two Q, which you'd previously stated was kind of the goal for four Q this year. Do you expect continued growth in oil production in the second half of the year and as we go into 2026?

Yeah, I think as I look at the program, how it play out from here on in for the year, you know, I think

similar

to slightly higher than what we saw in the second quarter. And I would tell you probably, and that would include the small amount of production volumes that we grabbed from those, those bolt on acquisitions, the little bit of volumes. So as I said, you know, maybe 99,000 a day, you know, for the third quarter. And oil should sort of follow the same general trajectory on a percentage basis. So I think you'll get a little bit of bump in both total volumes and oil for the rest of the year.

And then as you go into 2026, would you expect to grow oil at a similar rate as total or should that grow a little bit slower?

I don't know for 2026 in terms of total volumes. I would tell you right now the plan would be, you know, to really mid single digit growth. But in terms of the split, you know, typically with, as we've seen with gettings with more and more of the focus and capital and the business generally growing more so there than the rest of it, you're going to see that be a little bit lower on oil. So I would imagine that mid single digit growth on the total company basis would be a little bit lower on oil.

Thanks. And then my follow-up is just on the M&A outlook. You'll bid the $40 million in acquisitions this quarter. Some of that really, you know, right on top of some of your core acreage there. Can you just talk about what you're seeing in the market going forward from an M&A perspective, from a bolt-on perspective? Do you see the ability to continue to kind of add acreage in these core areas going forward?

I think we can. There's some, you know, ongoing smaller opportunities and these tend to be oftentimes individuals, people, families, or that nature and that's not very different than what we experienced here with what we've just done. When you look at larger things, those can tend to have other complications or complexities be managed by more like asset managers or financial managers that may take a different view and just by the nature of its size, it's just generally more complex. And with the fall away or fall off of product prices, that is another dynamic. So, you know, that's generally not there as much in some of the smaller opportunities. So I think there's still things to be had, but on a smaller level.

Thanks, Chris.

Our next question comes from Oliver Hang from Tudor, Pickering, and Holt.

Good morning, Chris and Brian, and thanks for taking the questions. Hi, Oliver. Maybe first off, hey, Chris, maybe first off, just good to see success in the appraisal program driving the confidence to increase your house views on core gettings development acreage. Just trying to think through relative economics of the incremental 40,000 net acres being folded into the program. So hoping that you all could maybe talk a bit more on the criteria or any return thresholds you all typically look at when such a decision is made to shift acreage into that bucket.

Well, I think if you back out any value for the production that we received, the remainder of that, which is really the point, was a very reasonable amount to pay for the entry point or tuck in, if you will, of the additional acreage that is in our core area. For the most part, and is adjacent to where we are and could offer opportunities for lengthening laterals or clearly brand new wells and whatnot. So it's more about the upside potential and the entry point, the cost of the entry point, which I would view as very low in terms of picking up the acreage. So that's how I look at it.

Okay, makes sense. And maybe just on service costs as we kind of think about trends there, the front end of the oil curve is certainly held in stronger than expected and does seem like there's potential for service companies softening their stance a bit here. But just kind of wondering how initial discussions have been and sort of expectations as we enter our V season.

Yeah, I don't want to speak for the service guys very, very specifically, but I will tell you it's obviously harder for them right now. I don't want to say that you're down to the bone, but there's certainly seeing bone as opposed to any fatter skin left on the bone. So it's harder for them. But things have come off and you've seen some ongoing deflation as activity has rolled over a bit. And certainly in the second quarter, product prices certainly for liquids, for oil rolled over. And I think that that certainly spooked some operators where they've reduced activity or just laid off rigs, et cetera. So as you continue to see that, which you very well may well see into towards the end of the year, if you sort of sit around these prices, you do have a little bit of ability to nudge or push on it somewhat, but not a whole lot. I think what you're seeing is some improved benefits on OFS to Q3 and then you get into Q4 where there's more in the way of steel inflation and OCTG items as a result of tariffs. So that may start to rub against it, if you will, and flatten it out. But I would tell you what we've seen is probably several percent into Q3, a little bit more than what we saw in the first half of the year. And maybe all in, I would tell you, from the exit of 24, 6, 7 percent, something like that, but then it sort of flattens out. And may, in fact, depending on what happens with activity, you might see a little bit of a soup bowl or the bottom of the soup bowl, and then you start to perhaps trickle higher with activity ramping as operators typically do into the beginning of next year. But we'll see. It's a hard one to call based on product prices and exact activity for operators right now.

Okay, that's helpful, Coller. Thanks for the time.

Our next question comes from Charles Mead with Johnson Rice.

Good morning, Chris, Brian, and Tom.

Morning.

Chris, I have to say you're cutting down to the bone. That was quite a vivid metaphor that you offered for us. I really just have one question, Chris. You mentioned in your prepare remarks that some of your recent completions have been, I guess, stronger than you guys had expected or modeled. Can you talk about where those are? And what I'm really curious about is are some of those recent completions on this 30,000 acres that you recently added to your development area?

Yeah, probably. You know, that's what I said in my remarks. You know, tactically, as you look at how you exploit gettings, it's moving around the field, appraise, acquire, and that's sort of the indication of the way we've done it. And so the real ideal or perfect example was in an area where we were drilling late last year into early this year where the wells outperformed. That was the exact way it panned out, where we had appraised an area and then liked what we had seen and then had an opportunity to acquire much more of it, which led to having a bigger development, swath of development area. And so, you know, I imagine that this is what this will lead to as well over time. Same sort of concept, giving you precision as far as GPS location where it is. I'm not going to do that, but anyway.

Got it. That's it for me. Thanks. Okay, thanks.

Our next question comes from Tim Moore with Clear Street.

Thanks, and nice consistent execution along with the drilling runway still strong, followed by your production growth guidance. Most of my questions were already answered, but I said two remaining ones. You mentioned the uptake percentage and the getting acreage added since the original acquisition. And as you explore and kind of exploit those acres, I am curious, are you finding better whole areas clustered for more output yield and better pressures? And have you done any type of enhancement to maybe the drilling efficiencies and completions? Are you going to like four to five well pads more there the last few months? Just a little bit more color in gettings is going so well.

Yeah, no, we've done that throughout the, you know, the development period time period of gettings. We've, you know, as we've looked at things like, you know, downspacing, we've looked at things like adding more wells per pad to optimize a development area once we know more about it. We've done that in some, you know, parts of that core development area that's now that 240,000 acres. So over time, yeah, we will continue to further optimize as we get to it because we haven't gotten to it, obviously, all yet. But as we get to it, there'll be more, not just more efficiencies, but, you know, different ways to maximize and optimize the capital as we spend and further develop as we learn. So, yeah, there will be more improvements with the development.

That's very helpful and it's a really good catalyst. Just one quick follow-up on, you know, the efficiency in LOE per BOE was very impressive in the quarter. You know, I think you'd already given commentary a while ago that, you know, gathering transport and processing expense per BOE would go up this year. But do you envision, you know, the transport, you know, gathering processing side to maybe go down a little bit next year? Or do you think the run right now is really the level for next year?

It's going to be somewhat dependent on, you know, gas prices for the most part, but probably fairly similar, I would say.

Okay. Thanks a lot, Chris. And that's it for my questions.

Okay. Thanks, Sam. Our next question comes from Fu Sam with Roth Capital.

Hey, good morning, Sam. Thanks for asking my questions. So I just have a question about the giving expansion. So we know that 70% of the expansion comes from the appraisal well. So, I'll say, can you be more specific about like the number of appraisal wells you drilled and how does that compare to the past two quarters?

Yeah, on an ongoing basis, I would tell you, you know, the appraisal program

typically

is maybe 10% of what we do on an overall basis, plus or minus. So we always try to fold in some things that we'll look at on a different type of from a different angle, test some new concepts. So we're always looking to pull in some opportunities to, you know, to examine the area for other types of opportunities in a different way to do things where potentially more things will get folded into the de-risk area of the acreage. So, or improve our results over time. It may lead to other bolt-ons with that. So I would tell you plus or minus sort of 10%.

All right, thank you.

Our next question comes from Noah Hewness with Bank of America.

Morning. Just one for me. I guess I was wondering, how many completions are being deferred at the 26th if that number has changed from what you guys had talked about last quarter? And then how are you thinking about tilling that spare capacity? And would you consider maybe pulling some of that activity forward? And if so, what would you need to see to feel comfortable doing that?

I guess the last portion of the question I'll take first, no. I don't right now as I see it, I mean, we're sort of, if we pulled any of it forward, we'd grow at a faster clip. And the need to do that right now, I just don't see it. Things are performing better than what we had anticipated expected. So I don't see that right now. 10% of growth is just fine. The completions that were deferring, that number didn't change. There's about a half a dozen that will be deferred into next year.

And how would you consider using that spare capacity, I guess, then, in 26? Is that something that you think you would for sure use as part of your program? Or is that something that you think that maybe you would want to maybe save, depending on the environment that you're seeing?

Well, it's going to depend. But I mean, if you're sitting here in the environment that we're in, since it's been drilled, it'll be part of the program for next year, with all likelihood. If this is sort of the commodity environment that we're in, it'll get completed.

Gotcha. Very helpful stuff, guys. Thank you.

Okay, thanks.

Again, if you have a question, please press star, then one. Our next question comes from Tim Resvan with KeyBank Capital Markets.

Thanks for taking my questions, folks. I wanted to ask about the really strong well results we saw, you all turned to sales, in the fourth quarter of 2024. Very sort of differentiated production profile. Mid-30s oil cut, but they were so strong that the total oil was really comparable to other vintages. So I was just curious, did you all sort of expect that production profile? Was that a tactical decision into winter with gas rallying? And just trying to think about how you can be nimble with your drilling, especially as we look at the natural gas strip in Contango in 2026. I know that's a few questions in one, but just curious, any insight on what you did there? Thank you.

No, good question. And we, I mean, we did say this at the time back in the May call. It was a tactical decision to pivot a little bit more to what we believe to be a gaseer area to try to capture some of what we thought would be some better pricing for gas. And it did work out just fine in that sense. What we didn't anticipate was the prolific nature of the wells, strength of the wells, both on the gas and the oil side. So the wells were very high pressure, very good returns. And even what we've seen since then in terms of the cadence of the productivity has been, continues to be good. And so it's been rather durable up to now. So it's worked out very well. I would tell you that we'll plan, we haven't done it much since then in that area, but we'll go back to it next year and revisit it. So if that, if anyone cares, we'll do that. We'll plan to do that.

Okay, that's helpful. I appreciate the insight there. And then as my follow up, looking at where commodity prices are shaking out, you seem to be somewhere around 48% investment rate as a percentage of catbacks this year. With the under-leveraged balance sheet and sort of this larger sandbox of de-risked inventory, and you have seven years of experience now in gettings, why not grow a little more? And where I'm going with that is like, and then relate a question, this sort of high single digit production growth, CAGR you've had, can you continue to do that the next couple of years with two rigs? Or is kind of an increase of activity inevitable to sustain that? Thanks.

So the model has us looking to grow mid-single digits as I define it, four, five, six percent. As you know, if you were to stretch and try to reach beyond that, and the more you sort of reach for growth, it only, usually anyway, enhances your rate of decline. It makes it more difficult thereafter and as you get larger. So you're pretty spot on on the 48%. So there's obvious uncertainties around product price environment. You know, there's not a lot of folks optimistic out there on oil, but you know, current prices seem just okay to me. I don't see needing to reach beyond what the field and gettings has provided. Gettings is clearly the growth part of the business, the growthier asset, while the Carnes area has been more the free cash flow generative piece of the business. Gettings has far exceeded our expectations as far as what it's been able to generate in terms of growth. So almost every year, year in, year out, we've been, we've overshot what we've anticipated or expected going into it in terms of our development plan. So the outcome of the growth has been really more better than expected. It wasn't the modeled plan. So we got more

out

of the wells pound for pound on a capital dollar than what we had anticipated broadly. And so I just continue to look for that sort of benefit. I'm not, I'm not claiming that that's going to be the go forward case, but we'll continue to sort of do the best we can. And that's the plan. We'll try to squeeze as much as we can out of the field. And, you know, some of these newer areas we're optimistic about and the plan is still mid single digit. If we exceed that, great with the same amount of capital.

Okay. I appreciate the insight. Thanks.

Okay. Thanks, Tim.

This concludes our question and answer session and concludes the Magnolia Oil and Gas Corporation Conference Call. Thank you for attending. You may now disconnect.