Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, Aug. 6, 2026 at 11 a.m. ET

CALL PARTICIPANTS

  • Chairman, President and Chief Executive Officer - Christopher G. Stavros
  • Senior Vice President and Chief Financial Officer - Brian Michael Corales
  • Investor Relations - Tom Fitter

TAKEAWAYS

  • Adjusted Net Income -- $184.3 million, or $0.99 per diluted share, reflecting higher year-over-year oil and natural gas liquid prices.
  • Adjusted EBITDAX -- $370.3 million, supporting a reinvestment rate of 34% for the second quarter.
  • Free Cash Flow -- $234.6 million, more than doubling compared to the prior-year period.
  • Total Production -- 106.1 thousand barrels of oil equivalent per day, growing 8% year over year and exceeding previous management guidance.
  • Oil Production -- 41.9 thousand barrels per day, representing 5% growth versus the previous year.
  • Giddings Field Production -- 85.5 thousand barrels of oil equivalent per day, increasing 10% year over year and accounting for 81% of total company volumes.
  • Giddings Oil Production -- 29 thousand barrels per day, reflecting 7% growth over the same period last year.
  • Karnes Area Production -- 20.6 thousand barrels of oil equivalent per day, remaining relatively flat compared to the previous year.
  • Drilling and Completion Capital -- $125 million, which was the lowest quarterly capital reinvestment rate for the company since 2022.
  • Adjusted Operating Income Margin -- 51%, or $25.15 per barrel of oil equivalent, driven by operational efficiencies.
  • Shareholder Returns -- $80.1 million, returned through $30.8 million in dividends and $49.3 million in share repurchases.
  • Share Repurchases -- 1.7 million shares, bought back at an average price of approximately $29 per share during the quarter.
  • Dividend Increase -- 9%, raising the quarterly payout to $0.18 per share, or an annualized rate of $0.72 per share.
  • Wildfire Energy Acquisition -- $4.06 billion, expected to add 110,000 net acres and approximately 53 thousand barrels of oil equivalent per day of production.
  • Acquisition Funding -- $1.23 billion in net proceeds from a 53.3 million share public equity offering and $500 million from senior notes due 2034.
  • Pro Forma Leverage Target -- less than 1.0 times net debt to EBITDAX, which management expects to achieve by the end of 2027.
  • Cash Operating Costs -- $11.55 per barrel of oil equivalent, including lease operating expenses and general and administrative costs.
  • Full Year Production Guidance -- 6% growth, increased from the previous standalone guidance of 5%.
  • Q3 Production Guidance -- 106 thousand barrels of oil equivalent per day, estimated to be similar to second quarter levels.
  • Q3 Capital Expenditure Guidance -- $115 million, for standalone drilling and completion activities.
  • Oil Price Realization -- $3 per barrel discount, anticipated relative to the Magellan East Houston benchmark for the third quarter.
  • Post-Acquisition Share Count -- 269 million shares, expected on a fully diluted basis after the Wildfire transaction closes.
  • Credit Facility Capacity -- $1.75 million in elected commitments, with a borrowing base increasing to $2 billion upon closing the acquisition.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Stavros stated, "the acquisition adds more leverage than we had carried historically," noting the company will prioritize debt reduction following the close of the $4.06 billion Wildfire Energy transaction.

SUMMARY

Management focused on the company's second quarter operational records and the strategic integration of the pending Wildfire Energy acquisition. The company reported record total production and oil volumes, driven primarily by outperformance in the Giddings Field. Following the acquisition announcement, the company completed significant capital market transactions to secure funding, maintaining a balanced mix of debt and equity. Management emphasized that the business model remains focused on high pretax margins and significant free cash flow generation, with a renewed priority on rapid deleveraging post-acquisition to return to a conservative financial profile. The company intends to resume its share repurchase program immediately following the earnings report, targeting at least 1% of outstanding shares per quarter.

  • CEO Stavros characterized the Karnes area assets as a "cash cow" that provides "ballast and stability for the overall organization" while generating significant free cash flow.
  • Regarding the upside in the Giddings Field acreage, Stavros noted that the technical team will "feel like kids in a candy store" exploring multiple benches including the Austin Chalk, Eagle Ford, and Woodbine.
  • The company acquired a sand mine as part of the Wildfire transaction, which Stavros stated would provide "several million dollars of the synergies and cost saving benefits" for future completion designs.
  • Management plans to transition the Wildfire assets to an even mix of Eagle Ford and Austin Chalk development, representing an activity increase for the Austin Chalk portion relative to previous operators.
  • CFO Corales noted that the company ended the quarter with $295.9 million in cash and expects minimal cash taxes for the 2026 fiscal year with an effective tax rate of approximately 21%.
  • Management indicated that small bolt-on acquisitions of working interests and royalties will continue to be evaluated within the existing pro forma footprint using excess free cash flow.

INDUSTRY GLOSSARY

  • Adjusted EBITDAX: Earnings before interest, taxes, depreciation, amortization, and exploration expenses, used to evaluate core operational performance in the oil and gas industry.
  • Austin Chalk: A geological formation in the Gulf Coast region that is a primary target for the company's horizontal drilling and hydraulic fracturing operations.
  • BOE (Barrel of Oil Equivalent): A unit of energy that equates various energy sources, such as natural gas and natural gas liquids, to the energy content of one barrel of crude oil.
  • D&C (Drilling and Completion): The process of drilling a wellbore and preparing it for production, including the casing and hydraulic fracturing stages.
  • Eagle Ford Shale: A major sedimentary rock formation in South Texas known for producing significant amounts of oil and natural gas.
  • Free Cash Flow (FCF): A measure of financial performance calculated as operating cash flow minus capital expenditures, representing the cash available for distribution to shareholders or debt repayment.
  • Giddings Field: A large oil and gas field in East Texas where Magnolia focuses its redevelopment efforts using modern horizontal drilling techniques.
  • NGLs (Natural Gas Liquids): Hydrocarbons such as ethane, propane, and butane that are separated from natural gas and sold as distinct products.
  • Realization: The actual price received for oil or gas production relative to a standard market benchmark, often expressed as a percentage or a dollar discount.
  • Reinvestment Rate: The percentage of operating cash flow or EBITDAX that a company spends on capital expenditures to maintain or grow production.

Full Conference Call Transcript

Operator: Good morning, everyone, and thank you for participating in Magnolia Oil and Gas Corporation's Second Quarter 26 Earnings Conference Call. My name is Megan, and I will be your moderator for today's call. At this time, all participants will be placed in a listen-only mode as our call is being recorded. I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question-and-answer session.

Tom Fitter: Thank you, Megan, and good morning, everyone. Welcome to Magnolia Oil and Gas' second quarter earnings conference call. Participating on the call today are Christopher G. Stavros, Magnolia's Chairman, President and Chief Executive Officer and Brian Michael Corales, Senior Vice President and Chief Financial Officer. As a reminder, today's conference call contains certain projections and other forward-looking statements, which are within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ available in the company's annual report on Form 10-Ks filed with the SEC.

A full Safe Harbor can be found on Slide 2 of the conference call slide presentation with the supplemental data on our website. You can download Magnolia's second quarter 26 earnings press release as well as the conference call slides from the Investors section of the company's website, www.magnoliaoilgas.com. I will now turn the call over to Mr. Christopher G. Stavros.

Christopher G. Stavros: Tom, and good morning, everyone. Thank you all for joining us today for a discussion of our second quarter 26 financial and operating results. I know that today is a very busy day of earnings. I will briefly cover our second quarter results which continue to validate the consistent high quality nature of our Giddings asset and provide strong overall financial results, returns, together with our current rate business. I will then highlight a few items related to the financing underlying our recent agreement to acquire Wildfire Energy. Brian will then review our financial results for the second quarter in greater detail and provide some additional guidance before we take your questions.

Beginning on Slide 3 in our quarterly investor presentation, Magnolia marked its 8 year anniversary by delivering another quarter of strong and consistent execution as seen through our financial and operating metrics which continue to underscore the strength of our differentiated business model and the quality of our asset base. Strong second quarter financial metrics were supported by both solid production growth and higher year over year oil and NGL prices. Our second quarter adjusted net income was approximately $184 million or $0.99 per diluted share with adjusted EBITDAX of $370 million during the period.

Drilling and completion capital for the second quarter was $125 million a reinvestment rate of just 34% of our adjusted EBITDAX and our lowest quarterly rate of capital reinvestment since 2022. Our pretax adjusted operating income margins averaged a very robust 51% for the quarter. Magnolia generated $235 million of free cash flow in the second quarter and returned $80 million of this free cash to our shareholders through a combination of our base dividend and our share repurchase program where we bought back just over 1.7 million shares during the quarter.

Our ongoing discipline around capital allocation, strong operational performance and continued focus on our financial returns allowed us to generate meaningful free cash flow and to continue to execute on our proven business model. The second quarter of 26, total company production volumes grew by 8% year over year to 106 thousand barrels of oil equivalent per day above our expectations in earlier guidance with oil production growing by 5% and averaging 41.9 thousand barrels per day. Our total production and oil production volumes established new quarterly records for the company Based on the strong second quarter production we are raising Magnolia standalone full year 2026 production growth guidance to 6% from 5%.

Production at Giddings continued to be the primary growth driver for Magnolia and setting a new quarterly record with total Giddings production increasing 10% year over year to 85.5 thousand barrels of oil equivalent per day and oil production of 29 thousand barrels per day with growth of 7% over the same period. Giddings production accounts for approximately 81% of Magnolia's total company volumes. Production in our Karnes area was relatively flat year over year at just over 20 thousand barrels of oil equivalent per day during the second quarter, which we expect to sustain for many years. The Karnes area assets continue to generate a significant amount of free cash flow Magnolia. Turning to Slide 4.

As we announced last month, we entered into a definitive agreement to acquire Wildfire Energy for a total consideration of approximately $4.06 billion The acquisition will add approximately 110 thousand net acres to Magnolia's Giddings area position and total oil and gas production of roughly 53 thousand barrels of oil equivalent per day including 37 thousand barrels per day of oil. The acquisition of the Wildfire oil and gas properties and acreage is a natural and strategic fit for Magnolia and greatly improves our business by extending our runway of advantaged profitability and the durability of our significant free cash flow generation.

The fit should be clear given the sizable overlap and with roughly 70% of Magnolia's existing acreage benefiting from the transaction with significantly more acreage benefiting from adjacency. Our combined position in the Giddings field will amount to more than 1.25 million net acres with upside development opportunities across multiple benches, including the Austin Chalk, Eagle Ford and Woodbine. The acquisition is a culmination of our extensive subsurface understanding, experience and the demonstration of our proven resource capture in the Giddings field. This creates a premier upstream operation in South Texas by combining 2 high quality and complementary assets near Gulf Coast markets, which offer premium pricing for our products.

We expect the transaction to be immediately and highly accretive to our key per share financial metrics, including cash flow, free cash flow and earnings in addition to enhancing our D&C capital reinvestment rate. Wildfire is not only a strong fit for Magnolia offering unique benefits, but it also provides several important characteristics we look for, namely focused, high quality assets with concentrated scale, a low capital reinvestment rate, the ability to provide moderate production growth with high operating margins and steady free cash flow allowing for consistent and significant shareholder returns. Following the wildfire announcement, Magnolia executed multiple capital markets transactions to partially fund the acquisition.

Magnolia issued 53.3 million new shares in a public equity offering for net proceeds of $1.23 billion in addition to $500 million of senior notes at a 6 5/8% coupon due in 2034. These 2 transactions closed on July 22 and August 5, respectively. In total, the Wildfire acquisition will be funded with a balanced mix of approximately half equity and half debt with the acquisition on track and expected to close late in the third quarter. Turning to Slide 5, 1 of the most important elements of the Wildfire acquisition is that Magnolia's differentiated, proven, and highly investable business model remains unchanged. While the acquisition adds more leverage than we had carried historically, we believe this is very manageable.

Given the significant increase in our free cash flow generation, we have a clear line of sight towards the reduction of debt, which we expect to be less than 1x our net debt to EBITDA by year-end 2027, if not sooner, and returning us to our traditionally more conservative leverage profile. As part of our disciplined capital plan, we will continue to limit our D&C spending to 55% of adjusted EBITDAX, which provides consistent free cash flow through the cycle while delivering both moderate annual total production growth and oil growth.

With our combined oil production mix of approximately 50%, we expect to generate high pretax operating margins and in keeping with our business model, continue to return a significant portion of our free cash flow to our shareholders. This includes a safe, sustainable and growing dividend, which is expected to compound at a rate of about 10% over the long term in addition to our ongoing share repurchases of at least 1% of the outstanding shares per quarter.

I often mention that 1 of Magnolia's primary goals is to be the most efficient operator of our best in class oil and gas assets to generate the highest returns on those assets while spending the least amount of capital on drilling and completing wells. The combination of Magnolia and Wildfire creates a larger and stronger enterprise with a concentrated acreage position that offers moderate growth, best in class financial returns while generating significant free cash flow. Magnolia will continue to look and behave like it has historically, with an emphasis on managing both operational and financial risk and using the same differentiated and proven business model to continuously compound value for our shareholders.

As we were briefly restricted from share repurchases while working on the Wildfire acquisition, we expect to resume our share repurchases after today's quarterly results. I will now turn the call over to Brian for further details on the quarter. For some additional guidance.

Brian Michael Corales: Thanks, Christopher, and good morning, everyone. I will review some items from our second quarter results and refer to the presentation slides found on our website. I will also provide some additional guidance for the third quarter of 2026 before turning it over for questions. Beginning on Slide 6, Magnolia delivered a strong quarter generating adjusted net income of $184 million or $0.99 per diluted share. Adjusted EBITDAX for the quarter was $370 million with total capital associated with drilling completions and associated facilities of $125 million representing just 34% of adjusted EBITDAX. Second quarter production volumes grew 8% year over year to 106 thousand barrels of oil equivalent per day, while generating free cash flow of $235 million.

Our second quarter annualized return on capital employed was 39%, as a result of higher prices and increased production. Looking at the quarterly cash flow waterfall chart on Slide 7, We started the quarter with $124 million of cash flow from operations before changes in working capital was $362 million with working capital changes and other small items impacting cash by $15 million During the quarter, we paid dividends of $31 million and allocated $49 million towards share repurchases.

We incurred $125 million in drilling completions and associated facilities and leasehold, and we ended the quarter with $296 million of cash, an increase of $172 million Looking at Slide 8, this chart illustrates the significant amount of share repurchases we have done beginning the program in the second half of 39. Since that time, we have repurchased 85.5 million shares We repurchased just over 1.7 million shares during the quarter prior to being restricted due to the transaction, leading to the diluted weighted average shares outstanding of 184.6 million shares during the second quarter. We currently have 9.9 million shares remaining under our repurchase authorization. Turning to Slide 9.

Our dividend growth has grown substantially over the past few years, including a 10% increase announced early 2026, an additional 9% increase announced a couple of weeks ago in conjunction with our definitive agreement to acquire Wildfire. to $0.18 per share on a quarterly basis. Our next quarterly dividend is payable on September 1, and provides an annualized dividend payout rate of $0.72 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by our overall strategy of achieving moderate annual production growth reducing our outstanding shares and increasing the dividend payout capacity of the company.

Magnolia continues to have a strong balance sheet we ended the quarter with $296 million of cash. Our $400 million senior notes did not mature until 2032, and our recently closed offering of $500 million senior notes associated with the financing, of the wildfire transaction matures in 2034. Upon closing, late in the third quarter, we will also assume Wildfire $600 million senior notes due in 2029. Also upon closing, our credit facility will increase to a $2 billion borrowing base with elected commitments of $1.75 billion providing plenty of available liquidity.

We thoughtfully we thoughtfully financed the transaction with half equity and half debt positioning Magnolia to have a very manageable debt load at the close of the transaction allowing us to maintain our business model and our consistent return of capital program. With a significant increase to pro forma cash flows, our plan is to immediately begin to reduce our debt post closing of the transaction. Our condensed balance sheet as of June 30 is shown on Slide 10. Turning to Slide 11 and looking at our per unit cash cost and operating income margins. Total revenue per BOE increased approximately 39% year over year due to the strength in oil prices.

Our total adjusted cash operating costs including G&A were $11.55 per BOE in the second quarter of 26, And our adjusted operating income margin for the second quarter was $25.15 per BOE or 51% of our total revenue. Turning to guidance. Third quarter D&C capital expenditures for Magnolia standalone is expected to be approximately $115 million In addition, total production for the third quarter is estimated to be similar to second quarter levels or approximately 106 thousand barrels of oil equivalent a day. Our full year 2026 outlook for total production growth has increased to approximately 6% from our prior guidance of 5%.

Oil realizations have trended back to our historical differentials and we are anticipating prices for the third quarter to be at a $3 per barrel discount to Magellan East Houston benchmark pricing. The fully diluted share count after closing the wildfire transaction is expected to be approximately 269 million shares. We expect our effective tax rate to be approximately 21% and cash taxes for 2026 to be minimal. We are now ready to take your questions.

Operator: We will now begin the question-and-answer session. The first question comes from Neal Dingmann with William Blair. Please go ahead.

Neil Dingmann: Hey, morning team. This is Bert filling in. I know Wildfire has not closed yet, but maybe you could give early thoughts on maybe what a blended D&C plan might look like. Last call, I think you mentioned you are picking up the rig and crew, 2 rigs and a crew. That might imply 50, but we have kind of looked at the data in Giddings. On Enveris and that seems pretty strong. So it would be impressive for the new assets to kind of get equal screen time. Just any thoughts on how you would prioritize the 2 assets?

Christopher G. Stavros: Yes. Thanks. Good morning. So if you just simplistically took what we have, what we have been doing, and what they have been doing and combine it that is not a bad starting point. So there are 2 rigs for each of us and 1 completion crew for each of us. it is still very early. We have not closed. We will have more information for you probably later, you know, at the at the back part of this year and after we close on the combined business on our activity, I do believe that we can do better on a combined basis We are obviously going through it.

You know, as I have always said, our emphasis is to do this as efficiently as possible. And I think we will be able to do that. We know the field very well. We know the subsurface very well. We have got some very good vendors to work with and good crews, and we will be evaluating theirs And collectively, I do believe that on a combined basis, we will be able to do better. That makes perfect sense. And then on the capital allocation of your free cash flow, you kind of laid out the 5 pillars. We assume most of it will go towards debt.

But is there a large opportunity to add working interest or, I think, you called it small bolt ons I just imagine there would be some white space, but also that wildfire probably out there, you know, buying up everything they could. So I know if there was anything left in the area, or was that implying out outside the kind of pro forma footprint? No, I would not tell you it is much outside the pro forma footprint.

They did a very good job with line of sight and looking sort of over the hill, if you will, on needing to, sort of you know, pick up additional working interest as they were going ahead, permitting wells and moving forward with drilling. So they did a little of that. Certainly. I do think that there are and will be opportunities for us to pick up additional working interests and royalties on a, you know, concentrated basis, if you will, here and there within the existing footprint of combined magnolia wildfire. So I do not think we will be moving you know, vastly out of that footprint. I think there is still plenty to work on.

These will be sort of the typical usual blocking and tackling smaller bolt ons that we have done that will amount to smallish amounts of, money outflow, if you will. I would not tell you that there is anything very, very large by any means. So, you know, the money, the free cash flow in excess of our return of capital plan will go to the debt, first and foremost. And then, you know, there is a little left over. We will certainly be open to picking off some working interest and royalties to make us better. And improve our capability. That sounds like the right thing to do. Thanks, guys. Thanks.

Operator: The next question comes from Phillip Jungwirth with BMO. Please go ahead.

Phillip Jungwirth: I wanted to come back to the Austin Chalk potential discussion for wildfire. Obviously, they mostly targeted the Lower Eagle Ford, but they do have some strong chalk wells across the Robertson, Burleson area offsetting you in Washington and also Eastern Brazos County. But just wondering which of these areas do you think are more interesting and could the Chalk potential also just be more widespread across the footprint just the areas that they have tested?

Christopher G. Stavros: You could be right. We will certainly give it our best shot and try to figure that out. This is an enormous footprint, 1.25 million net acres. So it is going to take us some time to work through. I think the areas that you identified are correct, in addition to areas in Burleson. So, no, there is a tremendous amount of potential upside.

There has been, up to now, vis a vis wildfire sort of limited testing drilling So I think there is a lot of low hanging fruit, if you will, that will be you know, accumulated under Magnolia's experience and expertise and just technical knowledge, and we will get at it, over time into next year and beyond. And continue adding to it. So, there is lots going to be lots to work on. To some extent, you know, our folks are going to feel like kids in a candy store. So there will be lots to work on. Sounds good. And then, could you talk about the acquired sand mine and the benefits here?

Just are you able to quantify well cost savings from the vertical integration and any optionality it provides you on completion design for both wildfire and legacy Magnolia? Yeah. And we did not actually quantify it or break out the specific savings for the sand mine. But I would tell you, in aggregate, it is several million dollars of the synergies and, cost saving benefits that will get captured in the process. So, that is something different for us. Owning a sand mine. But you know, clearly, we were we were sourcing and our sourcing most of the large majority of our sand requirements and demand from that mine.

So it is important to us and they have they have done a good job running it. So it will it will be meaningful in the outcome in terms of what we are able to do going forward. Thank you. Thanks.

Operator: The next question comes from Carlos Escalante with Wolfe. Please go ahead.

Carlos Escalante: Hey, Christopher and Brian. Thank you for taking my question today. My question is around how should we think about the trajectory of what you develop the next 12 months Said more explicitly, knowing that wildfire was more of an Eagle Ford developer and you are more of an Austin Chalk developer, What do you think is a good placeholder for us modeling the company to have for the next 12 months? Is it a transition from Eagle Ford at first onto Austin Chalk, or should we expect a more equivalent development in between both?

Christopher G. Stavros: I think no. I know the plan will be roughly a decent even roughly even mix of Eagle Ford and Chalk. And that is that is not to say that, you know, there is anything any issue 1 way or the other. it is just sort of that is we will probably initially have that balanced plan And, actually, that is, an uplift if you want to think about where they will be coming from on their Austin Chalk activity where we are going to take it. Because we think there is a lot more to capture there.

And given our expertise and experience, obviously, The benefit of the Eagle Ford for us and the transition is the fact that it is generally been done for many years there, but not just by wildfire, but by previous operators. And so there is a lot of consistent operational, experience and expertise, if you want to say that. And so we will be looking at ways they have done things and to see if we can employ our model on top of that to see if there is any improvements. I think frankly, I think there will be. Just in terms of how we drill and complete. Maybe even more so maybe drill.

But I would tell you that the cadence will be fairly even, but that would represent an uplift on the chalk. D&C and activity relative to what they have been doing. Got it. Fair enough. And then the deal carries a significant amount of oil leverage on their assets. Relative to where Magnolia is stood at a corporate level. So I wonder because Karnes has usually been a source of that exposure to oil, If you can frame today's current strategic fit to you in light of that? Yeah. Sure. I mean, it, you know, as I mentioned in my remarks, the Karnes asset we are very confident that we can hold that flat.

For many years, and given some recent acquisitions, that we have done to sort of bolster the available upside of development there. So we like the asset. It generates an enormous amount of free cash flow. So it really is sort of a cash cow, if you will. Way I would characterize it is it does provide ballast and stability for the overall organization. So it is a very important element of what we are and for the business model going forward. So, you know, we like Karnes. it is a good asset. it is very high quality rock.

And there is probably more things down the road that, you know, there, given the quality of subsurface that we have not yet gotten to and will over time. Got it. Thank you, Christopher. Thanks.

Operator: The next question comes from Peyton Dorne with UBS. Please go ahead.

Peyton Doorn: Hi, good morning Christopher and team. Thanks for having me on. I wondered if you could walk through the mechanics of the buyback a bit here for 3Q. Christopher, it sounds like first from your comments that the restrictions are now over. So you will be back in the market. Are there any restrictions on the repurchases as we get closer to the deal close? Any other nuances that we should be thinking about this quarter on the buyback?

Christopher G. Stavros: Noah, we have pretty much at this point, we are moving to close We have pretty much disclosed everything that we, need to and are required to disclose. So we are not in any we do not have any, material nonpublic information. So we are open to repurchase We are going to get at that ASAP. And, know, to the extent that the stock does not perform the way we believe it should or reflects the benefits of the transaction. We will choose to be, you know, potentially more aggressive than not. So you should think that we will we will be involved as soon as we can. Great. that is helpful detail.

If we could just go back to the capital allocation side. Just curious, when you think about the expected larger scale post wildfire, If there is like a minimum type cash balance that you would like to keep on hand on a go forward basis, I guess what I am really trying to get to is how actively or aggressively you will be kind of repaying that revolver once the deal closes. Thank you. Yeah. I mean, that will really be a priority for us getting that leverage and debt balance down quickly and fairly ratably.

At current commodity prices, product prices, that will move ahead at a at a decent clip, and you will see it, you know, we will mark time there. Giving, obviously, the financials every quarter, and you will sort of see it, see the debt come down every period. And if we can find some extra money to put to it, we may do that. So it will be coming down at a good pace. You know, I do not want to give too much in the way of specifics, but that will be a big focus. And I feel very confident that, you know, the 1 times are less, like I said, in my remarks.

Certainly by the end of next year. But, frankly, probably sooner than that. Okay. Very helpful. Thanks for having me on. Okay. Thanks.

Operator: Our next question comes from Charles Meade with Johnson Rice. Please go ahead.

John Davenport: Hey, good morning guys and thanks for taking my question. I wanted to go focus on the production guidance increase from 5% to 6% year-over-year. I know much of that increase is from the Giddings acreage, actually all of it is. Curious if it is simply just well outperformance of expectations so far, if you have made any changes on the D&C front that might be contributing to that?

Christopher G. Stavros: No. there is nothing, very meaningful in this particular period or in the last, you know, 3 to 6 months that I would tell you has been needle moving on the DNC front in terms of the well performance. it is really just good operational outcome from the wells that we brought online in Giddings that you mentioned. So, that is exactly what I would point to. And importantly, this is all, you know, stand alone Magnolia. So we have done better than, we anticipated, and that program is sort of continuing that way. So it is it is very specifically the well performance. Okay. Perfect. Yeah. that is thanks for the color. that is all I have today. Okay.

Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.