Magnolia Oil & Gas Q3 2026 Earnings Call Transcript

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Provided by Quartr
November 5, 2026

Key Takeaways

  • Positive Sentiment: Magnolia reported third-quarter adjusted net income of $166 million, adjusted EBITDAX of $392 million and adjusted free cash flow of $224 million. Production rose 17% year over year to 117,300 BOE per day, while drilling and completion spending was 38% of adjusted EBITDAX.
  • Positive Sentiment: WildFire integration and synergy capture are progressing ahead of schedule: Magnolia expects to realize at least one-third of more than $100 million in annual run-rate synergies by year-end 2026 and three-quarters by mid-2027. Encouraging early Austin Chalk results also support the company’s view of additional inventory potential.
  • Positive Sentiment: The company returned about $103 million to shareholders in the quarter through dividends and repurchases, and its board expanded the buyback authorization by 15 million shares. Magnolia says it can use the added flexibility to repurchase more shares when opportunities arise.
  • Positive Sentiment: Net debt fell to about $1.9 billion, and Magnolia said it reached its target of less than one times net debt to forecast 2027 EBITDAX more than a year ahead of plan. At current product prices, it expects to repay its $435 million revolver balance in early 2027.
  • Negative Sentiment: Magnolia’s shares have weakened since the acquisition, which the CEO said may partly reflect expected selling by WildFire shareholders after the company issued shares in the transaction. Executives said they cannot predict whether or when that selling will occur.
AI Generated. May Contain Errors.
Earnings Conference Call
Magnolia Oil & Gas Q3 2026
00:00 / 00:00

There are 10 speakers on the call.

Operator

Good morning, everyone, and thank you for participating in Magnolia Oil & Gas Corporation's third quarter 2026 earnings conference call. My name is Chloe, 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.

Speaker 1

Thank you, Chloe, and good morning, everyone. Welcome to Magnolia Oil & Gas's third quarter earnings conference call. Participating on the call today are Chris Stavros, Magnolia's chairman, president, and chief executive officer, and Brian Corales, senior vice president and chief financial officer. As a reminder, today's conference call contains certain projections and other forward-looking statements 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 is available in the company's annual report on Form 10-K filed with the SEC. A full safe harbor can be found on slide two of the conference call slide presentation with the supplemental data on our website.

Speaker 1

You can download Magnolia's third quarter 2026 earnings press release, as well as the conference call slides from the investor section of the company's website at www.magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stavros.

Speaker 2

Thanks, Tom, and good morning, everyone. Thank you all for joining us today for a discussion of our third quarter 2026 financial and operating results and on another very busy day of earnings releases. As you may recall, we provided an update and released preliminary guidance for both the third and fourth quarters in early October, a few weeks after we closed on the acquisition of WildFire. I will briefly cover our third quarter results, which confirm our ability to consistently execute at a high level. I will then highlight a few of the key milestones we have achieved since announcing the WildFire acquisition early last quarter, including some added color around our progress on the integration and synergy capture. Brian will then review our financial results for the third quarter in greater detail and provide some further guidance before we take your questions.

Speaker 2

Beginning on slide three in our quarterly investor presentation, while our third quarter results include only a partial 20-day period of WildFire ownership following the September closing, the benefits of the combined asset base are already clear. Our third quarter adjusted net income was approximately $166 million, or $0.71 per diluted share, with adjusted EBITDAX of $392 million during the period. Adjusted net income, which increased by 114% compared to the year-ago quarter, excludes special items consisting primarily of transaction and integration costs related to the WildFire acquisition and net unrealized losses on derivative contracts. Drilling and completion capital for the third quarter was $147 million and below our earlier guidance, with a reinvestment rate of just 38% of our adjusted EBITDAX.

Speaker 2

Magnolia generated $224 million of adjusted free cash flow in the third quarter, with adjusted operating income or pre-tax margins of 43% and annualized return on capital employed of approximately 20%. Third quarter total company production volumes grew by 17% year-over-year to 117.3 thousand BOE per day and in line with our earlier guidance. Oil production grew by 24% and averaged 49.1 thousand barrels per day. Total Giddings production volumes increased by 23% year-over-year to 97.7 thousand BOE per day, with Giddings oil production climbing 39% to 37.3 thousand barrels per day. Giddings production accounted for approximately 83% of Magnolia's total volumes and will make up a higher proportion of overall company production in the fourth quarter as a result of a full quarter's contribution from WildFire.

Speaker 2

Production in our Karnes area was roughly 20,000 BOE per day during the third quarter, a level which we expect to sustain for an extended period while generating a significant amount of free cash flow. As I've often said, Magnolia's goals and objectives are to be the most efficient operator of our best-in-class oil and gas assets, to generate the highest returns on those assets while employing the least amount of capital for drilling and completing our wells. Overall, our strong momentum has carried into the fourth quarter, the first period with a full contribution of the WildFire assets. Supported by these strong operational and financial results, Magnolia returned approximately $103 million of its free cash flow to shareholders during the quarter through a combination of our base dividend and ongoing share repurchase program, where we bought back 2.3 million shares.

Speaker 2

We also reduced our net debt by $100 million to approximately $1.9 billion from the time we closed the WildFire acquisition to the end of the third quarter. Finally, Magnolia's board has increased our share repurchase authorization by an incremental 15 million shares, bringing the remaining authorization to 22.6 million shares, or nearly 8.5% of current shares outstanding. This is indicative of the confidence in Magnolia's value proposition and gives us the flexibility to lean into share repurchases above the 1% per quarter level, either opportunistically or when warranted. Turning to slide four, we highlight some key milestones achieved since we announced the WildFire acquisition.

Speaker 2

First, we divested some non-core assets in the Western Eagle Ford during the third quarter for a sales price of $47.5 million, while also receiving consideration of 616 net acres in our contiguous block of acreage, primarily in Gonzales County and in our Karnes area. This divestiture not only improves the focus of our portfolio, it also increases our working interest in our operated tracts in this acreage block to approximately 98%, with an average NRI of 80%. Second, we have already made strong progress on reducing debt, ending the third quarter with approximately $1.9 billion of net debt and achieving our goal of less than one times net debt to forecasted EBITDAX by the end of 2027, more than a year sooner than originally planned when announcing the WildFire acquisition.

Speaker 2

At current product prices, we expect to fully repay the outstanding debt on a revolving credit facility into early 2027. Next, we proactively and opportunistically added some oil hedges using costless collars with floor prices between $70 and $75 to provide greater assurance around our ability to reduce debt should oil prices experience a sharp decline while maintaining exposure to the current higher prices. Finally, we continue to make good progress in capturing synergies from the acquisition, which are proceeding a bit faster than we anticipated, and expect to realize at least one-third of the more than $100 million of estimated annual run rate synergies by year-end 2026. Looking at slide five, the integration of WildFire continues to progress very smoothly, and we're meeting all our planned milestones.

Speaker 2

As I mentioned, synergy capture is moving ahead of schedule, and we now expect to realize at least three-quarters of the projected annual run rate synergies by mid-2027. Part of the speed of the integration and synergy capture can be ascribed to the significant overlap of the WildFire acreage to our existing Giddings position, in addition to our strong existing knowledge of field operations and the subsurface. Nearly all the D&C and subsurface efforts have now been transitioned, with the full operations team expected to be in place next month. We are currently running four rigs and two completion crews, and have recently substituted some equipment to capture further operation and capital efficiencies, and are in the early stages of implementing Magnolia's playbook of operating practices and procedures.

Speaker 2

D&C synergies that have been identified amount to at least $1 million per well and include procurement benefits, faster drilling times, transitioning to multi-well pads, lower cost of sand resulting from our ownership of the sand mine, which cuts our sand cost by roughly a third, and completions optimization, to name a few. These are incorporated in our current estimated 2027 capital budget of $900 million-$950 million. Over time, we anticipate additional synergies through completion design improvements and the drilling of longer laterals. Recent Austin Chalk well results on WildFire's operated acreage are encouraging and are supportive of our geologic model that led to Magnolia's strong Austin Chalk development plan over the last several years. These results have increased our confidence in the acreage and suggest greater inventory potential than our earlier baseline acquisition analysis.

Speaker 2

We plan to continue to delineate the Austin Chalk across our now 1.25 million net acre position in Giddings, and our 2027 company-wide drilling program is expected to allocate approximately 65% of targeted activity to the Austin Chalk and 35% to the Eagle Ford. Developed wells on the legacy WildFire acreage are expected to be split about evenly between the Austin Chalk and Eagle Ford. Finishing up my discussion with slide six, perhaps most importantly, Magnolia's differentiated proven business model remains unchanged, but with improved durability. We will continue to limit our D&C spending to 55% of adjusted EBITDAX, supporting annual moderate production growth and consistent free cash flow through the cycle.

Speaker 2

With approximately 50% oil production, we expect to generate strong operating margins and significant free cash flow, allowing us to return meaningful capital to shareholders through a growing dividend and ongoing share repurchases of at least 1% per quarter. Magnolia will continue to operate a focused business with the same discipline around allocating capital, controlling our costs, and managing risk that has historically defined our strategy. The significant free cash flow generation should allow us to continue reducing our leverage with a goal of getting our metric of net debt to EBITDA below half a turn. Now turn the call over to Brian for further details on the quarter and for some additional guidance.

Speaker 3

Thanks, Chris, and good morning, everyone. Third quarter was very busy, which included some one-time items associated with the WildFire transaction that closed September 10th. I'll review some items from our third quarter results and refer to the presentation slides found on our website. I'll also provide some additional guidance for the fourth quarter of 2026, which is unchanged from our press release last month, before turning it over for questions. Beginning on slide seven, Magnolia delivered an excellent quarter, generating adjusted net income of $166 million, or $0.71 per diluted share. Our adjusted EBITDAX for the quarter was $392 million, with total capital associated with drilling, completions, and associated facilities of $147 million, representing just 38% of our adjusted EBITDAX. Third quarter production volumes grew 17% year-over-year to 117,000 BOE per day, while generating adjusted free cash flow of $224 million.

Speaker 3

Our third quarter annualized return on capital employed was 20%. Looking at the quarterly cash flow waterfall chart on slide eight, we started the quarter with $296 million of cash. We issued $1.2 billion of new equity and approximately $900 million of both term debt and borrowings under the credit facility to pay for the $2.6 billion cash portion of the WildFire transaction. Cash flow from operations before changes in working capital was $323 million, with working capital changes and other small items benefiting cash by $33 million. During the quarter, we paid dividends of $43 million and allocated $60 million towards share repurchases. We incurred $151 million on drilling completions and associated facilities and leaseholds, and ended the quarter with $17 million of cash.

Speaker 3

Looking at slide nine, this chart illustrates the significant amount of share repurchases we have made since beginning the program in the second half of 2019. Since that time, we have repurchased 87.8 million shares. Despite being restricted for a portion of the third quarter, we repurchased 2.3 million shares, leading to diluted weighted average shares outstanding of 230.6 million shares during the third quarter. As Chris mentioned, our board increased our share repurchase authorization by 15 million shares and have 22.6 million shares remaining under our repurchase authorization. Slide 10 shows substantial dividend growth in recent years, including increases of 10% in early 2026 and 9% in July alongside our WildFire announcement, bringing the quarterly dividend to $0.18 per share, a cumulative 20% increase in 2026. Our next quarterly dividend is payable on December 1st and provides an annualized dividend payout rate of $0.72 per share.

Speaker 3

Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supportive of our strategy of achieving moderate annual production growth, reducing our outstanding shares, and increasing the dividend payout capacity of the company. Magnolia ended the quarter with $1.9 billion of net debt and below one times net debt to 2027 forecasted EBITDA, a year faster than originally planned. We expect to repay our $435 million revolver balance quickly using the business's substantial free cash flow. We now have three notes outstanding shown in the table at the bottom of the slide, with the earliest being due in 2029 that we acquired from WildFire. Our outstanding debt and liquidity as of September 30th is shown on slide 11. To ensure quick reduction of debt, we have hedges covering a decreasing portion of our expected oil production over the next year.

Speaker 3

The hedges consist of some inherited oil swaps from WildFire, and we have opportunistically added some oil collars that ensures the ability to pay off our revolver in the early part of 2027. We do not expect to add any additional hedges. Turning to slide 12 and looking at our per-unit cash costs and operating income margins. Total revenue per BOE increased approximately 36% year-over-year, primarily due to the strength in oil prices and also a slightly oilier barrel. Our total adjusted cash operating costs, excluding transaction integration costs related to WildFire, were $12.40 per BOE in the third quarter of 2026. The adjusted operating income margin for the third quarter is $20.70 per BOE, or 43% of our total revenue. Turning to guidance, fourth quarter D&C capital expenditures for Magnolia is expected to be approximately $235 million.

Speaker 3

In addition, total production for the fourth quarter is estimated to be 159,000-161,000 BOE a day, with 49%-50% oil cut. We disclosed detailed operating expense guidance in the quarter release, which was unchanged from our prior guidance. For the fourth quarter, we expect oil realizations at a $2 discount to Magellan East Houston benchmark pricing and a fully diluted share count of approximately 266 million shares. We anticipate an effective tax rate of approximately 21%, with minimal cash taxes for the fourth quarter and for 2027. Our full year 2027 guidance released in early October remains unchanged. We expect organic growth of 4%-5% in both total production and oil production. Our 2027 capital budget is $900 million-$950 million, representing less than 55% of our adjusted EBITDAX, with four drilling rigs and two completion crews. We are now ready to take your questions.

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Neal Dingmann with William Blair. Please go ahead.

Speaker 4

Morning, guys. Thanks for the time. Chris, my first question is on the, really just, I guess I would call it on the pro forma company. Well, obviously, to me, the acquisition certainly added notable scale. What do you believe the market is missing with this combination? Because, I mean, look, to me, it just seems illogical that your stock price would be lower today than prior to the deal, given everything that it brings.

Speaker 2

Yeah. Morning, Neal. Thanks. Look, yeah, the stock has been weak. We have done something that is obviously relatively large to what we were. I think it was an enormously opportunistic and attractive opportunity for us in terms of larger scale M&A, which personally I am not a huge fan of. But if you are going to do it, to do it with something that is in your backyard where you have already operated substantial part of what it was and have a great understanding of what it is going to be going forward, I think that is sort of the way to do it. Clearly, we had to issue some shares to do it, both in the market and to the seller. So there is some seller friction on maybe some anticipated selling that they could do. My job, our job is not to necessarily predict if and when that will happen.

Speaker 2

It is to really accommodate it the best way we can, and we will do that. I can assure you that. We have done that historically, and we have a playbook with a lot of experience around that. What it also reminds everyone is that we have no full filed financial statements of what the combined organization looks like. So we put out a press release with financial statements with a 20-day stub period of WildFire and Magnolia together. And so you see a better reflection of that into the fourth quarter and obviously into next year going forward. So I think evidence of that will show what the combined company is truly capable of delivering in terms of operating margins, oil cut, as we bought into oil, and just the continued consistent, predictable, reliable sort of execution that I think we are known for. So, I understand it is illogical.

Speaker 2

I can't predict these things. I can only try to do the best we can do to manage around it, and we will. I think the shares are an opportunity, and we look for opportunities too. I'll just leave it at that.

Speaker 4

Agree. Look forward to the upside. My second question, just really on the development plan specifically, you all mentioned that 65% targeted the Chalk, and I think the remainder in the Eagle Ford. How much will quite a bit of that be co-developed, and remind me just, are there big cost differences between the two?

Speaker 2

We'll do some co-development into 2027 and probably later as we get deeper into the year and further beyond that, certainly. The mix between you have to remember that WildFire was not really drilling any Chalk wells, and so all of the Chalk activity that we're going to be executing on is incremental. That's why we're introducing this new mix, if you will, on Chalk versus Eagle Ford. That's what you're seeing. You have to keep in mind that all the WildFire wells are about 25%-30% more shallow than what we had been drilling, so the well costs are lower than what Magnolia had been doing standalone.

Speaker 4

Very good. Thanks, Chris.

Operator

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

Speaker 5

Hey, good morning, guys, and thank you for having me on. With the increase in the repurchase authorization, I wondered if we should see this as maybe Magnolia's willingness to participate in an offering if any of those shares issued for WildFire do come to market. Then on a broader sense, if you just touch on your view of the lockup for these shares recently expiring. Thank you.

Speaker 2

Yeah, as I said earlier, Peyton, I can't predict what they're going to do, when they're going to do it. All I'd say is that the increased authorization really accommodates the larger amount of shares outstanding and providing us with, as I said in my remarks, providing us with some optionality and flexibility to sort of lean in, should we find an opportunity to do so, where we could do something that's a little bit blockier or chunkier if it comes up. So, happy to do it. We're well-equipped to do it, well-prepared, and we'll look for those opportunities as they come.

Speaker 5

Okay, great. We'll stay tuned. I guess second question is, you mentioned the synergies accruing a bit faster than expected. I wonder if you could just provide a bit more detail here. Is there one area where you're seeing this kind of faster synergy capture? Is it really from switching out the equipment? Kind of where are you seeing that kind of faster savings?

Speaker 2

Yeah, certainly some of it has been that. On the swapping out of both rigs and frac, the rigs provide us with greater flexibility and speed in terms of drilling. Frac is improving quite a bit too. The rigs are more capable. But again, it's implementing our playbook to some extent. Yeah, it's across the board in terms of what I've seen happen. We've already onboarded quite a bit of staff, quite a bit of folks. We're making a lot of headway, obviously, in terms of not just G&A, but field operations, and more so into next year, certainly, Q1, Q2, you'll start to really see it in the, or we will certainly start to see it in the well costs and our D&C program.

Speaker 5

Okay, great. Helpful detail. Thanks for having me on.

Speaker 2

Thanks.

Operator

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

Speaker 6

Hey, good morning, Chris and Brian. Thank you as always for having me on today. Wanted to ask you, now that you've had presumably some incremental insight into drilling and actually completing some of the Austin Chalk acreage locations on the WildFire asset, when you think about the lower confidence upside in the resource, today, do you think that's mainly bounded by geography, meaning perhaps less delineated edges of the 1 million acre footprint, or is the real risk or is the real bound uphole or downhole, meaning perhaps Eagle Ford and Woodbine under the Chalk? Trying to really understand, now that you've seen wells under your own operations, where do you see the lower risk to an upside scenario on the inventory side?

Speaker 2

Well, we know that the Woodbine, as you mentioned, and other zones exist. We have not experienced that as Magnolia yet. They have. That is, I think, on the come. Certainly, there is going to be a lot of additional appraisal opportunities over the vast amount of acreage. To answer your question, I think our confidence has grown around the simple fact that we have done a lot of successful drilling in the south, in the southern portion of Giddings, and in parts of the northern part of Giddings. In between, WildFire had what they had, yet had not really drilled much of it, and now we are starting to see that, and now we own all of that in between. That is really what has factored into some of the confidence that we have, more so than the multi-zones that you are sort of referring to right now.

Speaker 2

But we will get to that down the road.

Speaker 6

Sure. That is actually a good segue to my follow-up question. Presumably, again, out of the locations that you intend to target on their side of, I guess your side now, but WildFire side of the acreage, that you would be working towards delineation of new inventory as you are highlighting. But at the same time, I wonder where the idea of drilling for best returns fits within that context and framework. Then obviously leading into 2027, how much of that preliminary budget is dedicated to strictly appraisal activity on that side of the fence?

Speaker 2

Yeah, I would call it more delineation as opposed to appraisal. I mean, we are going to be delineating quite a lot of the WildFire acreage as part of the program, not all that different than what I conveyed. Just as I said, the Eagle Ford portion of the WildFire acreage is very well delineated. I think there are some things that we can do on the optimization side over time that will improve our results and well performance. But more so on the delineation, that is really in the Chalk area where we, as I said, WildFire drilled very few wells. We are just getting at it. We have drilled a handful of wells. That will accelerate as we exit the year and into 2027. The appraisal will be sort of a later stage activity for us, frankly.

Speaker 6

Fair enough. Thanks, Chris.

Operator

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

Speaker 7

Yeah, thanks. Good morning. You're one of the few E&Ps that has a preliminary budget for next year at $900 million-$950 million. Was just hoping you could talk about underlying inflation assumptions, and also just what are some of the ways that you might be looking to mitigate diesel pressures, and is there much real benefit at this point to using more dual-fuel or e-fleets given prices have already run, or are providers kind of trying to price out that fuel arbitrage?

Speaker 2

Yeah, I mean, we did about the best we could do at this stage in terms of incorporating probably mid-single-digit inflation expectations coming out of this year and into 2027 broadly for oil field service costs. So that's what I sort of, I'm guessing right now, and that's at current oil and gas prices. It includes rigs, frac, OCTG, obviously partly resulting from import pricing pressures due to the tariffs on steel, et cetera. But we're well prepared, I would say, to tackle some of these challenges. Our supply chain team's done a terrific job of getting ahead of it and taken steps to mitigate some of the impact of the inflation that we're seeing. Some of that, as I mentioned, is related to substituting some of the WildFire equipment that I mentioned, the rigs and frac. Certainly, the sand costs, as I said, will help.

Speaker 2

We do have a dual-fuel frac that is helping us on some diesel substitution quite a bit. We've done some things on a field gas trial, which could lead to further savings in fuel on the frac. There's other things that we're doing here and there as well, and will help us with time. So, just in dealing with the bigger equipment in terms of performance expectations and pricing over time.

Speaker 7

Okay, great. Just coming back to the increased optimism around the Chalk on WildFire's acreage, just wondering, does this have anything to do with any wells recently drilled and completed? Because I know they had targeted the Chalk across some of their position. Anything to note on the 3D seismic survey that you purchased? As you do progress a more active Chalk position across WildFire, are you looking to do anything differently on just how wells are drilled, designed, and completed versus what they had done in the past?

Speaker 2

Yeah. The seismic, we just purchased the seismic, so we've got to input and download the data and really analyze the data. So that's really later into 2027. But I fully anticipate that that could alleviate some potential operational issues on the drilling side, for sure, over time. That was always helpful just in terms of previous seismic that we had acquired and had over our experiences through Giddings. So I know the seismic will be useful to us. But I really do believe that operationally, as we've inserted our playbook and on our operating procedures, that things will have a better outcome around optimization efforts, both in the Chalk and the Eagle Ford over time. Again, they really didn't do much on the Chalk.

Speaker 2

Back to your initial part of your question, I mean, we've drilled a handful of wells, and we've seen some early good performance out of those wells, which is, as we said in the press release and our comments, just very encouraging and really gives us a nice little runway, early good start to the program heading into next year.

Speaker 7

Great. Thank you.

Operator

Again, if you have a question, please press star then one. The next question comes from Jerry Speicher with Goldman Sachs. Please go ahead.

Speaker 8

Morning, and thank you for taking my question. Thinking about the recent asset sale of the non-core assets, is there any color on that sale? Is there any additional assets you expect within the combined portfolio that could be exchanged or sold off?

Speaker 2

That was really just a pivot away from something that we were some acreage that we were experimenting on, frankly, and it was a bit of a stranded opportunity to the extent that we would have had to pursue additional leasing to make it bigger. Having just gone through a sizable acquisition, just felt that we should refocus our efforts on something more core in Giddings, and that's what we did. That's about all I'll say. It was a relatively small sale for us, and it minimizes our distraction going forward and refocuses our efforts on Giddings and the acquisition that we just did with WildFire.

Speaker 8

Great. Then on the $900 million-$950 million of D&C capital to deliver 4%-5% production growth in 2027, how much of that represents maintenance capital versus incremental growth capital? Thank you.

Speaker 3

Maintenance capital is probably plus or minus $800 million or so.

Speaker 8

Great. Thank you.

Operator

The next question comes from Noah Hungness with Wells Fargo. Please go ahead.

Speaker 9

Morning. Just one question for me is on the Eagle Ford split that you guys gave, the 35%. Could you maybe just talk about how those wells are split across the Karnes area, the legacy Magnolia position, and the WildFire position?

Speaker 2

Yes. I mean, it makes up a combination of the old WildFire Eagle Ford position and what we had been doing. If you wanted to think about the four rigs, I would probably tell you it would be a fraction of one rig in the Karnes area, and then call it a half to two-thirds of a full rig in the Eagle Ford area and in the Giddings field, and then two-plus rigs really throughout in Giddings on the chalk. So call it roughly 15% in the Eagle Ford and in the Karnes area.

Operator

session and the conference. Thank you for attending today's presentation. You may now disconnect.

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