Company: MGY
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001698990-25-000021
Chunk: 15

Company: Magnolia Oil & Gas Corp
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 8
Chunk 15
---
 components:Three Months EndedSix Months Ended (In thousands)June 30, 2025June 30, 2024June 30, 2025June 30, 2024Current:Federal$3,854 $9,878 $16,000 $20,858 State272 650 922 1,298 Total current4,126 10,528 16,922 22,156 Deferred:Federal16,139 15,722 27,919 23,946 State673 519 1,234 1,002 Total deferred16,812 16,241 29,153 24,948 Income tax expense$20,938 $26,769 $46,075 $47,104 The Company is subject to U.S. federal income tax and margin tax in the state of Texas. The Company estimates its annual effective tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. The Company’s effective tax rates for the three months ended June 30, 2025 and 2024 were 20.5% and 20.3%, respectively and 19.7% and 18.9% for the six months ended June 30, 2025 and 2024, respectively. The primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest, state taxes, and tax credits.

11

As of June 30, 2025, the Company’s total gross deferred tax assets were $57.1 million. Management assessed whether it is more-likely-than-not that the Company will generate sufficient taxable income to realize its deferred income tax assets, including the investment in partnership and net operating loss carryforwards. In making this determination, the Company considered all available positive and negative evidence and made certain assumptions. The Company considered, among other things, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years. As of June 30, 2025, the Company maintains a valuation allowance of $7.8 million, the majority of which offsets a deferred tax asset associated with a tax capital loss that will expire in 2028, unless offset by future capital gains.

On July 4, 2025, the U.S. enacted legislation referred to as the One Big Beautiful Bill Act (“OBBB”), which contains certain significant