Company: MGY
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0001698990-25-000030
Chunk: 14

Company: Magnolia Oil & Gas Corp
Filing Date: 2025-10-30
Form: 10-Q
Item: Item 8
Chunk 14
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 statements of operations, balance sheet, or cash flows after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.Environmental MattersThe Company, as an owner or lessee and operator of oil and natural gas properties, is subject to various federal, state, and local laws and regulations, and in certain cases permits, relating to discharge of materials into, and the protection of, the environment. These laws, regulations, and permits may, among other things, impose liability on a lessee under an oil and natural gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in an affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks.ContingenciesIn November 2023, the Company completed the acquisition of certain oil and natural gas producing properties and mineral interests located in the Giddings area. The seller may receive up to a maximum of $40.0 million in additional contingent cash consideration based on future commodity prices. The contingent consideration is payable in three tranches based on average NYMEX WTI prices for (i) the period beginning July 1, 2023 through December 31, 2023, (ii) the year ending December 31, 2024, and (iii) the year ending December 31, 2025. The first tranche was settled for $2.7 million in January 2024 and the second tranche was settled for $2.8 million in January 2025. As of September 30, 2025, the remaining tranche is not expected to result in a payment.The Company recognized a gain of $0.5 million and $7.0 million on the revaluation of the remaining tranches for the three months ended September 30, 2025 and 2024, respectively. The Company recognized a gain of $4.5 million and $3.8 million on the revaluation of the remaining tranches for the nine months ended September 30, 2025 and 2024, respectively. Gains and losses on revaluation are included in “Other income (expense), net” on the Company’s consolidated statements of operations. Refer to Note 5—Fair Value Measurements for additional information.

9. Income Taxes

The Company’s income tax provision consists of the following components: