[ad_1]
Magnolia Oil & Gas Corporation reported a net income of $117.5 million for the third quarter, a decrease of 59 percent compared to a net income of $287.0 million in the same period in 2022.
The company’s adjusted EBITDAX, or earnings before interest, depreciation, amortization, and exploration, was $239.0 million for the third quarter, with total drilling and completions capital at $104.3 million, or approximately 44 percent of adjusted EBITDAX. Magnolia said in an earnings release that it continues to realize the benefit of lower capital-related costs for oil field services and materials due to successful initiatives earlier this year.
Houston-based Magnolia posted earnings of $0.54 per share, slightly beating the Zacks Consensus Estimate of $0.53 per share.
Operating income as a percentage of revenue improved to 47 percent during the quarter, Magnolia highlighted, compared to 43 percent in the previous quarter, which it attributed to higher product price realizations and lower field operating costs.
The company’s total company production volumes for the quarter averaged 82,700 barrels of oil equivalent per day (boepd), representing one percent sequential growth and ahead of its guidance, which it attributed to better well performance from the Giddings asset. Production from its Giddings and Other segment increased by 28 percent year over year to 61,200 boepd with oil production growing 3,800 barrels per day, or 23 percent, over the same period.
“Magnolia continues to execute on its business model as evidenced by our third quarter financial and operating results”, Magnolia President and CEO Chris Stavros said. “Production trended above our expectations due to strong well performance in Giddings. Our operating results are further supported by realizing ongoing efficiencies in the field. We set a record during the quarter with completed feet per day, and we are currently seeing the results of our cost-reduction efforts. These accomplishments position Magnolia to deliver organic production growth of 8 percent in 2023 with capital outlays that are 15 percent lower than our original plan and 7 percent below our 2022 spending levels”.
In September, Magnolia entered into a definitive agreement to acquire certain oil- and gas-producing properties, including leasehold and mineral interests in Giddings, Texas, for $300 million from an undisclosed seller.
Commenting on the acquisition, Stavros said, “During the third quarter, we utilized some of the excess cash generated by the business announcing an accretive bolt-on acquisition in our Giddings area. This acquisition improves our overall business by adding high-margin, oil-weighted production, while also enhancing the depth of our development locations in both the Eagle Ford and Austin Chalk formations. The transaction, which is expected to close during the fourth quarter, will bring our total Giddings acreage position to more than half a million net acres with a current development area of more than 150,000 net acres. We plan to fold this into our existing Giddings asset and include it as part of our 2024 development plan”.
“This is an example of our strategy to pursue small bolt-on assets, adding to our high-quality bench, and leveraging the significant knowledge we have gained through operating in the Giddings field to enhance our per share metrics and improve the overall business”, Stavros added.
Speaking about the company’s current and future strategy, Stavros said, “Magnolia’s high-quality assets and ongoing strategy which includes disciplined capital spending, generating moderate annual production growth, high pre-tax margins, and steady, consistent free cash flow, continue to drive the value of the business. We believe this framework is optimal in maximizing shareholder value over the long term and through an uncertain product price environment. Our focus remains on taking actions to improve the overall business, sustain our high returns, and increase our dividend per share payout capacity, allowing for annual dividend growth of at least 10 percent”.
“As we look towards 2024, our core principles and strategy remain largely unchanged”, Stavros continued. “We remain well-positioned with a strong balance sheet, a significantly improved cost structure, and a larger footprint in the Giddings field allowing for efficient development which should continue to drive our high-return production growth. Assuming current product prices, we expect to spend less than half of our EBITDAX for drilling and completing wells which should deliver high single-digit year-over-year production growth”.
To contact the author, email rocky.teodoro@rigzone.com
[ad_2]
Source link