Magnolia Q3 Production Rises 17% as WildFire Deal Expands Giddings

Magnolia Oil & Gas Corp. (NYSE: MGY) reported sharply higher third-quarter 2026 production and adjusted earnings after closing its acquisition of WildFire Energy, while outlining plans to reduce acquisition-related debt and capture more than $100 million in annual run-rate synergies by the end of 2027.

Total production increased 17% year over year to 117.3 thousand barrels of oil equivalent per day, while oil output rose 24% to 49.1 thousand barrels per day. The Giddings area led the gains, with total production up 23% and oil production up 39%. The WildFire transaction added approximately 53 thousand barrels of oil equivalent per day of production, about 70% of it oil, and expanded Magnolia’s Giddings position to more than 1.25 million net acres.

Third-quarter revenue rose 58% to $514 million. Adjusted EBITDAX increased 79% to $392 million, and adjusted net income more than doubled to $166 million from $77.8 million a year earlier. GAAP net income was $80.5 million, compared with $78.2 million in the prior-year period, as transaction and integration costs and an unrealized derivatives loss affected reported results.

Adjusted free cash flow increased 67% to $224 million. Drilling and completion capital spending was $147 million, equivalent to 38% of adjusted EBITDAX, compared with 54% a year earlier. Magnolia reported an adjusted operating income margin of 43%, up from 31%, after excluding transaction and integration costs. Its adjusted cash operating margin was 61%, compared with 68% in the third quarter of 2025.

WildFire integration and balance sheet priorities

Magnolia said integration of the WildFire assets and operations was proceeding as planned. The company expects to realize at least one-third of the acquisition’s estimated annual run-rate synergies by the end of 2026 and more than three-quarters by mid-2027. The projected savings exceed $100 million annually by year-end 2027, including $60 million from drilling, completion and facilities, $20 million from field operations and $20 million from corporate general and administrative expenses.

The company ended September with $1.94 billion of principal debt, $17 million of cash and net debt of approximately $1.92 billion. Net debt was 1.2 times annualized third-quarter adjusted EBITDAX. Magnolia also said net debt was below 1.0 times estimated 2027 EBITDA at current strip prices, reaching that level more than a year ahead of its original plan. Liquidity totaled $1.33 billion, and the company has no debt maturities before 2029.

Magnolia’s capital-allocation framework calls for reducing leverage to no more than 0.5 times net debt to EBITDA and limiting drilling and completion spending to 55% or less of adjusted EBITDAX. The company also plans to maintain a growing dividend and repurchase at least 1% of outstanding shares per quarter.

During the third quarter, Magnolia returned about $103 million to shareholders through $60 million of share repurchases and $43 million of dividends. It increased its repurchase authorization by 15 million shares, leaving 22.6 million shares available at September 30, equivalent to about 8.5% of outstanding shares. The quarterly dividend has been increased by a cumulative 20% to $0.18 per share from $0.15 during 2026.

Magnolia also sold non-core assets for total consideration of $47.5 million and received 616 net acres in Gonzales County, increasing its working interest in a contiguous undeveloped block acquired earlier in the year.

Fourth-quarter and 2027 outlook

For the fourth quarter, Magnolia expects production of 159 thousand to 161 thousand barrels of oil equivalent per day, with oil representing 49% to 50% of the total. Drilling and completion capital spending is projected at approximately $235 million, while the fully diluted share count is expected to be about 266 million.

The 2027 operating plan calls for approximately four drilling rigs and two completion crews. Management expects that activity to support organic growth of 4% to 5% in both total production and oil output. Full-year drilling and completion capital spending is projected at $900 million to $950 million, with 88% to 90% directed to Giddings and 10% to 12% allocated to Karnes.

To protect debt reduction and operating plans from near-term commodity volatility, Magnolia added oil hedges using costless collars and said more than half of its oil production is hedged through the second quarter of 2027. The positions retain some exposure to higher oil prices while establishing price floors.

The outlook remains subject to the successful integration of WildFire and realization of the anticipated synergies. Magnolia also identified oil, natural gas and natural gas liquids prices, supply and demand conditions, regulatory and policy changes, geopolitical developments, cybersecurity threats, inflation and other economic or competitive factors as material uncertainties.