Magnolia Oil & Gas Corp (MGY)

Business overview

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Management discussion and analysis

— Management’s Discussion and Analysis of Financial Condition and Results of Operation s of this Annual Report on Form 10-K. Segment Information and Geographic Area The Company operates in one reportable segment engaged in the acquisition, development, exploration, and production of oil and natural gas properties located in the United States. Magnolia’s operations are conducted predominantly in one geographic area of the United States. Magnolia’s oil and natural gas properties are located primarily in the Karnes and Giddings areas in South Texas where the Company targets the Eagle Ford Shale and the Austin Chalk formations. For additional segment information please see Part 5 II, Item 8, Note 1 —Organization and Basis of Presentation in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.

Properties As of December 31, 2025, Magnolia’s assets consisted of a total leasehold position of 818,230 gross (613,360 net) acres, including 79,350 gross (55,370 net) acres in the Karnes area and 738,880 gross (557,990 net) acres in the Giddings area. As of December 31, 2025, Magnolia had 2,867 gross (1,948 net) wells with total production of 99. 8 Mboe/d for the year ended December 31, 2025. During 2025, Magnolia operated two rigs. Approximately 40%, 32%, and 28% of production from Magnolia’s assets was attributable to oil, natural gas, and NGLs, respectively, for the year ended December 31, 2025. The Giddings area is comprised of oil and natural gas assets primarily located in Brazos, Burleson, Fayette, Grimes, Lee, Milam, Robertson, and Washington Counties, Texas.

The Austin Chalk formation produces along a northeast-to-southwest trend that is approximately parallel to the Texas Gulf Coast. There are several notable producing areas along the Austin Chalk trend, the largest of which is the Giddings area. The Giddings area has seen two major drilling cycles. The first cycle began in the late 1970s and into the early 1980s and consisted primarily of vertical well drilling. The second cycle ran through much of the 1990s and involved primarily horizontal well drilling. Recent improvements in drilling and completion technologies have unlocked new development opportunities in the Giddings area.

Wells drilled across the Giddings area have demonstrated strong economic viability. Future development results may allow for further expansion of existing location inventory throughout the leasehold. The Karnes area is comprised of oil and natural gas assets primarily located in Dewitt, Dimmit, Gonzales, Karnes, and Zavala Counties, Texas, in the core of the Eagle Ford Shale. The acreage comprising the Karnes area also includes the Austin Chalk formation overlying the Eagle Ford Shale. The Austin Chalk formation has shown itself to be an independent reservoir from the Eagle Ford Shale and represents a very attractive development target. The Karnes area includes a well-known, low-risk acreage position that has been developed with a focus on maximizing returns and improving operational efficiencies.

Reserve Data Estimated Proved Reserves The estimates of Magnolia’s proved oil and natural gas reserves included in this Annual Report on Form 10-K are as of December 31, 2025. The Company’s proved reserves volumes are based on evaluations prepared by the independent petroleum engineering firm of Miller and Lents, in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers and definitions and guidelines established by the SEC. Miller and Lents was selected for its historical experience and expertise in evaluating hydrocarbon resources.

Proved oil and natural gas reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Oil and natural gas prices applied in estimating proved reserves are determined using an unweighted arithmetic average of the first-day-of-the-month price for each of the 12 months within the reporting period. Proved reserves are sub-divided into two categories, proved developed and proved undeveloped. […]

Key risk disclosures

Risk Factors The nature of Magnolia’s business activities subjects the Company to certain hazards and risks. The following risks and uncertainties, together with other information set forth in this Annual Report on Form 10-K, should be carefully considered by current and future investors in the Company’s securities. These risks and uncertainties are not the only ones Magnolia faces. Additional risks and uncertainties presently unknown to Magnolia, or currently deemed immaterial, also may impair the Company’s business operations. The occurrence of one or more of these risks or uncertainties could materially and adversely affect the Company’s business, its financial condition, and the results of Magnolia’s operations, which in turn could negatively impact the value of the Company’s securities.

Risks Related to Magnolia’s Overall Business Operations Oil, natural gas, and NGL prices are volatile. A sustained period of low oil, natural gas, and NGL prices could adversely affect Magnolia’s business, financial condition, results of operations, and ability to meet its expenditure obligations and financial commitments. The prices Magnolia receives for its oil, natural gas, and NGL production will heavily influence its revenue, profitability, access to capital, future rate of growth, and the carrying value of its properties. Oil, natural gas, and NGLs are commodities, and their prices may fluctuate widely in response to market uncertainty and to relatively minor changes in the supply of and demand for oil, natural gas, and NGLs.

Historically, oil, natural gas, and NGL prices have been volatile. The prices Magnolia receives for its production and the levels of Magnolia’s production depend on numerous factors beyond Magnolia’s control, which include, without limitation, the following: • U. S. federal, state, local, and non-U. S.

governmental regulation and taxes; • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • the price and quantity of foreign imports of oil, natural gas, and NGLs; • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Africa, South America, and Russia; • actions of OPEC, its members, and other state-controlled oil companies relating to oil price and production controls; • the level of global exploration, development, and production; • the impact on worldwide economic activity of an epidemic, pandemic, outbreak, or other public health event; • the level of global inventories; • prevailing prices on local price indexes in the areas in which Magnolia operates; • the proximity, capacity, cost, and availability of gathering, transportation, and processing facilities; • localized and global supply, demand fundamentals, and transportation availability; • the cost of exploring for, developing, producing, and transporting reserves; • weather conditions and natural disasters; • inflation rates; • technological advances affecting energy consumption; • the price and availability of alternative fuels; • expectations about future commodity prices; and • other events that impact global market demand.

Lower commodity prices may reduce Magnolia’s cash flow and borrowing ability and cause the Company to shut in wells or curtail production. If Magnolia is unable to obtain needed capital or financing on satisfactory terms, its ability to acquire and develop future reserves could be adversely affected. Also, using lower prices in estimating proved reserves may result in a reduction in proved reserves volumes due to economic limits. In addition, sustained periods with lower oil and natural gas prices may adversely affect drilling economics and Magnolia’s ability to raise capital, which may require it to re-evaluate and postpone or eliminate its development program, and result in the reduction of some proved undeveloped reserves and related standardized measure.

If Magnolia is required to curtail its drilling program, Magnolia may be unable to hold leases that are scheduled to expire, which may further reduce reserves. As a result, a substantial or extended decline in commodity prices may materially and adversely affect Magnolia’s future business, financial condition, results of operations, liquidity, and ability to finance planned capital expenditures. Part of Magnolia’s business strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application. Magnolia’s operations involve utilizing some of the latest drilling and completion (“D&C”) techniques. The difficulties 16 Magnolia faces drilling horizontal wells include landing its wellbore in the desired drilling zone, staying in the desired drilling zone while drilling horizontally through the formation, running its casing the entire length of the wellbore, and being able to run tools and other equipment consistently through the horizontal wellbore. […]

Source and methodology

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