Magnolia Oil & Gas CorpMGY
Magnolia Oil & Gas Corp Fair Value Disclosure
Fair Value Measurements
Certain of the Company’s assets and liabilities are carried at fair value and measured either on a recurring or nonrecurring basis. The Company’s fair value measurements are based either on actual market data or assumptions that other market participants would use in pricing an asset or liability in an orderly transaction, using the valuation hierarchy prescribed by GAAP under ASC 820.
The three levels of the fair value hierarchy under ASC 820 are as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.
Level 2 - Pricing inputs are other than quoted prices included within Level 1 that are observable for the investment, either directly or indirectly. Level 2 pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.
The Company has other financial instruments consisting primarily of receivables, payables, and other current assets and liabilities that approximate fair value due to the nature of the instruments and their relatively short maturities. Non-financial assets and liabilities initially measured at fair value include assets acquired and liabilities assumed in business combinations and asset retirement obligations.
Recurring Fair Value Measurements
The below financial instruments, with the exception of long-term debt, are carried at fair value in the Company’s consolidated balance sheets as of December 31, 2025 and 2024 as discussed further below:
Fair value at December 31, 2025 | ||||||||||||||||||||||||||
| (In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Long-term debt (see Note 7) | $ | 412,443 | $ | — | $ | — | $ | 412,443 | ||||||||||||||||||
Contingent Consideration (see Note 9) | — | — | — | — | ||||||||||||||||||||||
Liability-classified stock based compensation (see Note 12) | — | 5,610 | — | 5,610 | ||||||||||||||||||||||
Fair value at December 31, 2024 | ||||||||||||||||||||||||||
| (In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Long-term debt (see Note 7) | $ | 396,808 | $ | — | $ | — | $ | 396,808 | ||||||||||||||||||
Contingent Consideration (see Note 9) | — | 7,269 | — | 7,269 | ||||||||||||||||||||||
Liability-classified stock based compensation (see Note 12) | — | — | — | — | ||||||||||||||||||||||
Long-Term Debt
The fair value of the 2032 Senior Notes as of December 31, 2025 is based on unadjusted quoted prices in an active market. The carrying value of the 2032 Senior Notes, net of unamortized deferred financing costs, was $393.3 million and $392.5 million as of December 31, 2025 and December 31, 2024, respectively, and is included in “Long-term debt, net” on the Company’s consolidated balance sheets.
Contingent Consideration
The fair value of the contingent consideration is estimated using observable market data (NYMEX WTI forward price curve) and Monte Carlo simulation models. The fair value of the contingent consideration is included in “Other current liabilities” on the Company’s consolidated balance sheets.
Liability-Classified Stock Based Compensation
The fair value of the liability for future cash-settled stock based compensation is estimated using observable market data (the total shareholder return (“TSR”) of the Class A Common Stock relative to the TSR achieved by a specific industry peer group) and Monte Carlo simulation models. The fair value of the liability for future cash-settled stock based compensation is included in “Other current liabilities” and “Other long-term liabilities” on the Company’s consolidated balance sheets.
Nonrecurring Fair Value Measurements
Certain of the Company’s assets and liabilities are measured at fair value on a nonrecurring basis. Specifically, stock based compensation is not measured at fair value on an ongoing basis but is subject to fair value calculations in certain circumstances. For further detail, see Note 12—Stock Based Compensation. There were no other material nonrecurring fair value measurements for the years ended December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.