stockrowWhat it does
Magnolia Oil & Gas is an independent oil and natural gas company. It acquires, explores, develops and produces oil, natural gas and natural gas liquids, or NGLs. NGLs are liquids extracted from natural gas during processing. Magnolia sells its production to third-party buyers, including oil purchasers and natural gas processors.
Its properties are primarily in the Giddings and Karnes areas of South Texas. The company targets underground rock formations called the Eagle Ford Shale and the Austin Chalk, drilling wells to bring hydrocarbons to the surface. In 2026, Magnolia closed its acquisition of Wildfire, adding to its Giddings position. The company is continuing to assess the Austin Chalk across that acreage and develop wells in both the Austin Chalk and Eagle Ford.
Magnolia operates through Magnolia LLC, in which it owned a 97.0% interest as of December 31, 2025. The corporation is the LLC’s managing member and controls its business and affairs. Magnolia’s headquarters are in Houston, Texas, and Christopher G. Stavros is chairman, president and chief executive officer.
The company’s plan is to use cash generated by its business to drill and complete wells, while also returning capital to shareholders through dividends and share repurchases.
How it makes money
Magnolia has one reportable segment: acquiring, developing, exploring and producing oil and natural gas properties in the United States. It earns revenue by selling oil, natural gas and NGLs produced from its wells. Production is gathered, transported or processed before it reaches purchasers; natural gas processing also separates out NGLs for sale.
Revenue depends on both the volumes sold and the prices received. Oil generated $918.0 million in FY2025, representing 70.0% of revenue. Although the company also sells gas and NGLs, oil therefore accounted for the larger share of its revenue that year. Magnolia sells oil to third-party purchasers at market prices, while natural gas and NGL sales are governed by processing and purchase arrangements.
In 2025, lower oil prices reduced oil revenue even though oil production increased. Natural gas revenue rose as both prices and production increased. Magnolia’s producing wells generate ongoing sales, but the company also drills and completes new wells to develop reserves and support production. Its plan is to spend within cash flow on those activities.
Operating cash flow was $878.6 million for the year ended December 31, 2025. Magnolia uses cash for property development, acquisitions, working capital and shareholder returns. For the third quarter of 2026, it reported adjusted EBITDAX of $392 million; the acquired Wildfire assets contributed for only part of that quarter. Adjusted EBITDAX is not the same measure as revenue or operating cash flow.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Oil revenues | $918.0 million | 70.0% | −12.3% |
| Natural gas liquids revenues | $203.6 million | 15.5% | 13.8% |
| Natural gas revenues | $190.3 million | 14.5% | 110.7% |
Customers and how it sells
Magnolia’s operations are concentrated in South Texas, primarily in the Giddings and Karnes areas. Its Giddings assets span several counties, while its Karnes properties include acreage in the Eagle Ford Shale and the overlying Austin Chalk. Following the Wildfire acquisition, Magnolia described its Giddings position as 1.25 million net acres.
The company sells to oil purchasers, gas processors and other third parties rather than directly to households. In Giddings, natural gas is gathered and processed under acreage dedications with third-party midstream companies. Residue gas and extracted NGLs are sold to gathering and processing counterparties. Most Giddings oil is sold to third parties and transported from leases by truck under shorter-term contracts.
In Karnes, a gathering agreement provides a pipeline outlet for much of Magnolia’s oil, while gas is sold under processing and purchase contracts. Two customers, including their subsidiaries, accounted for 41.0% and 20.0% of combined oil, natural gas and NGL revenue in FY2025. Their identities are not disclosed in the available information.
Suppliers and costs
Magnolia relies on rigs, completion crews, equipment, sand, water, transportation and processing services to develop wells and move production to market. Its lease operating expenses include utilities, direct labor, water disposal, workover rigs, materials and supplies. Gathering, transportation and processing costs vary with production volumes and commodity-processing costs. Production and property taxes are additional operating costs.
The company had no long-term service obligations in its capital program as of the end of 2025. Its Karnes crude oil gathering agreement with Plains Eagle Ford Energy, LLC expires on June 30, 2027. Magnolia also uses third-party midstream companies to gather and process Giddings gas.
Following the Wildfire acquisition, Magnolia owns a sand mine. The company says the mine reduces its sand costs by roughly 1-third and has identified drilling and completion synergies that include procurement, faster drilling, multi-well pads and completion changes. Magnolia expects oilfield service cost inflation, partly from steel tariffs, and has incorporated those expectations into its planning.
- Revenue$1.3B
- Cost of revenue−$67.1M
- Research and development−$962.0K
- Selling, general and administrative−$97.0M
- Other operating costs−$707.6M
- Operating income$439.2M
Competitive position
Magnolia competes with major integrated and other independent oil and gas companies in exploring, developing and operating properties, acquiring prospects and marketing production. It also faces indirect competition from alternative energy sources, including wind, solar and electric power. No competing company is named in the available company information.
Competition for properties affects the company’s ability to acquire prospects and develop reserves. Competitors may have advantages in responding to changes in prices, political conditions, weather and the availability of pipelines and other transportation facilities. Magnolia’s access to gathering systems and its ability to sell production to third parties are part of how it reaches markets.
Our reading: Magnolia’s concentrated acreage and knowledge of Giddings provide a moderate operating advantage: they support development across an established position, but do not remove competition for properties or exposure to market prices. Our reading: ownership of the sand mine may provide a cost advantage in well completions, although the company must still manage other service and equipment costs. Our reading: the reported overlap between Wildfire and Magnolia acreage supports potential efficiencies, but the expected acquisition synergies remain dependent on execution.
Growth opportunities
Magnolia’s long-term strategy centers on moderate annual organic production growth, an efficient drilling program and reinvestment of free cash flow. It plans to develop its existing properties while maintaining spending within cash flow. In 2025, its Giddings development contributed to higher production, and the company completed property acquisitions primarily in that area.
The Wildfire acquisition expanded Magnolia’s Giddings position in 2026. Magnolia plans to continue assessing the Austin Chalk across that acreage and expects its development program to target both the Austin Chalk and Eagle Ford. It also expects opportunities over time from longer lateral wells and changes to completion designs.
For 2027, Magnolia expects organic growth of 4% to 5% in both total production and oil production. Its estimated 2027 capital budget is $900 million to $950 million, with 4 drilling rigs and 2 completion crews. The company expects to realize at least 3-fourths of projected annual run-rate acquisition synergies by mid-27.
Magnolia also sold noncore Western Eagle Ford assets in the third quarter of 2026 for $47.5 million and received acreage primarily in its Karnes area. It says the transaction increased its working interest in an operated acreage block there.
- $1.1BFY2021
- $1.7BFY2022
- $1.2BFY2023
- $1.3BFY2024
- $1.3BFY2025
Structural risks
- Commodity prices: Oil, natural gas and NGL prices are volatile. Magnolia’s operating cash flow is affected by the prices it receives, and sustained low prices can delay or curtail drilling projects.
- Concentration: Operations are primarily in South Texas, where severe weather, including hurricanes, winter storms and floods, can disrupt activity or increase costs. Two customers accounted for 41.0% and 20.0% of combined product revenue in FY2025.
- Drilling and reserves: Horizontal drilling can encounter geological and equipment difficulties. Reserve estimates depend on engineering and geological interpretations and can differ from quantities ultimately recovered; adverse revisions can affect depreciation or lead to impairments.
- Debt and integration: Magnolia ended the third quarter of 2026 with approximately $1.9 billion of net debt after the Wildfire acquisition. It expects cash generation to support debt reduction, but cash flow depends in part on commodity prices.
- Regulation and services: Environmental and safety rules can impose compliance and remediation costs. Restrictions on hydraulic fracturing could add costs or delay development, while equipment shortages, water access or vendor supply-chain changes can also delay projects.
Bottom line
Our reading
Our reading: Magnolia is a South Texas producer whose cash generation depends on commodity prices and continued well development, with oil accounting for most of its 2025 revenue (item1, item7). Our reading: Wildfire expands its Giddings position and potential operating efficiencies, but also leaves the company managing integration and substantially more debt than at the end of 2025 (call_qa, item7).