Magnolia Oil & Gas Reports Mixed Q3 Results with Revenue Growth, Decreased Profitability

Magnolia Oil & Gas Corporation reported its financial results for the third quarter and nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period. Total revenues for the three months reached $333.1 million, an increase from $315.7 million in the same period of 2023. For the nine months, revenues rose to $989.3 million from $904.4 million year-over-year. Oil revenues specifically increased to $265.7 million for the third quarter, up from $243.6 million, while for the nine months, oil revenues were $800.2 million compared to $705.9 million in 2023.

Despite the revenue growth, net income for the third quarter decreased to $105.9 million from $117.5 million in the prior year, with net income attributable to Class A common stock falling to $99.8 million from $102.0 million. For the nine-month period, net income was $308.6 million, down from $328.7 million in 2023. The decline in profitability was attributed to increased operating expenses, which rose to $204.1 million for the third quarter from $167.5 million, and totaled $601.4 million for the nine months, compared to $508.0 million in the previous year.

The company’s cash and cash equivalents decreased to $276.1 million as of September 30, 2024, down from $401.1 million at the end of 2023. Total current assets also fell to $415.2 million from $591.3 million. However, oil and natural gas properties increased significantly to $4.3 billion from $3.7 billion, reflecting ongoing investments in acquisitions. Notably, Magnolia completed several acquisitions, including properties in the Giddings area for $125.0 million in April 2024 and $264.1 million in November 2023.

Magnolia's capital allocation strategy continues to focus on reinvestment for growth while returning capital to shareholders through dividends and share repurchases. The board authorized a share repurchase program of up to 40 million shares of Class A common stock, with 36.1 million shares repurchased at a cost of $652.0 million as of September 30, 2024.

The company also reported a federal current income tax provision of $(910,000) for the third quarter, a significant decrease from $18.2 million in 2023, while total deferred income tax increased to $27.0 million from $11.9 million. Magnolia remains compliant with all covenants under its revolving credit facility and has no outstanding borrowings under it as of the reporting date.

Overall, Magnolia Oil & Gas Corporation's performance reflects a strategic focus on growth through acquisitions and operational efficiency, despite challenges in profitability and cash reserves.