The Company’s board of directors adopted the Plan, effective as of July 17, 2018. A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of June 30, 2025. The Company grants stock based compensation awards in the form of RSUs, PRSUs, and PSUs to eligible employees and directors to enhance the Company’s ability to attract, retain, and motivate persons who make important contributions to the Company by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock. The Company’s awards provide for accelerated vesting upon retirement under specific conditions.

Stock based compensation expense is recognized net of forfeitures within “General and administrative expenses” and “Lease operating expenses” on the consolidated statements of operations and was $7.3 million and $4.8 million for the three months ended June 30, 2025 and 2024, respectively, and $13.9 million and $9.5 million for the six months ended June 30, 2025 and 2024, respectively. The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense. The total income tax benefit recognized for stock that vested during the six months ended June 30, 2025 and 2024 was $3.6 million and $5.5 million, respectively.

On February 12, 2025, certain PSUs were modified to be 50% settled in cash. In accordance with ASC 718, the Company reclassified 50% of the impacted PSUs from equity-classified awards to liability-classified awards, resulting in a reclassification of $2.0 million from equity to liability. The modification resulted in additional compensation expense of $0.4 million recognized within “General and administrative expenses” on the consolidated statements of operations. The modification affected three grantees.


	Restricted Stock Units			Performance Restricted Stock Units			Performance Stock Units
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Unvested at December 31, 2024	1,408,980	$	21.44	245,527	$	19.25	528,281	$	22.45
Granted	785,920	22.82		—	—		179,802	19.87
Modified	—	—		—	—		(193,871)	22.36
Vested (1)	(537,625)	21.66		(240,731)	19.19		—	—
Forfeited	(37,048)	22.56		(131)	19.16		—	—
Unvested at June 30, 2025	1,620,227	$	22.01	4,665	$	22.34	514,212	$	21.58

The Company grants service-based RSU awards to employees, which generally vest and settle ratably over a three-year or four-year service period, and to non-employee directors, which vest in full after one year. Non-employee directors may elect to defer the RSU settlement date. RSUs represent the right to receive shares of Class A Common Stock at the end of the vesting period equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award. Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. The aggregate fair value of RSUs that vested during the six months ended June 30, 2025 and 2024 were $11.9 million and $11.1 million, respectively. Unrecognized compensation expense related to unvested RSUs as of June 30, 2025 was $27.9 million, which the Company expects to recognize over a weighted average period of 1.9 years.

The Company previously granted PRSUs to certain employees. Each PRSU represents the contingent right to receive one share of Class A Common Stock once the PRSU is both vested and earned. PRSUs generally vest and settle either ratably over a three-year service period or at the end of a three-year service period, in each case, subject to the recipient’s continued employment or service through each applicable vesting date. Each PRSU is earned based on whether Magnolia’s stock price achieves a target average stock price for any 20 consecutive trading days during the five-year performance period (“Performance Condition”). If PRSUs are not earned by the end of the five-year performance period, the PRSUs will be forfeited and no shares of Class A Common Stock will be issued, even if the vesting conditions have been met. Compensation expense for the PRSU awards is based upon grant date fair market value of the award, calculated using a Monte Carlo simulation, and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards, as applicable. The aggregate fair value of PRSUs that vested during the six months ended June 30, 2025 and 2024 were $5.4 million and $15.0 million, respectively. Unrecognized compensation expense related to unvested PRSUs as of June 30, 2025 was $0.1 million, which the Company expects to recognize over a weighted average period of 0.8 years.

The Company grants equity-classified PSUs to certain employees. Each equity-classified PSU, to the extent earned, represents the contingent right to receive one share of Class A Common Stock and the awardee may earn between zero and 150% of the target number of the equity-classified PSUs granted based on the total shareholder return (“TSR”) of the Class A Common Stock relative to the TSR achieved by a specific industry peer group over a three-year performance period. In addition to the TSR conditions, vesting of the equity-classified PSUs is subject to the awardee’s continued employment through the date of settlement of the equity-classified PSUs (unless an employee elects to retire under certain qualifying conditions), which will occur within 60 days following the end of the performance period. No equity-classified PSUs vested during the six months ended June 30, 2025. The aggregate fair value of equity-classified PSUs that vested during the six months ended June 30, 2024 was $0.1 million. Unrecognized compensation expense related to unvested equity-classified PSUs as of June 30, 2025 was $5.4 million, which the Company expects to recognize over a weighted average period of 1.7 years.

The Company grants liability-classified PSUs to certain employees. Each liability-classified PSU, to the extent earned, represents the contingent right to receive cash in lieu of each share of Class A Common Stock and the awardee may earn between zero and 150% of the target number of liability-classified PSUs granted based on the TSR of the Class A Common Stock relative to the TSR achieved by a specific industry peer group over a three-year performance period. In addition to the TSR conditions, vesting of the liability-classified PSUs is subject to the awardee’s continued employment through the date of settlement of the liability-classified PSUs (unless an employee elects to retire under certain qualifying conditions), which will occur within 60 days following the end of the performance period. No liability-classified PSUs vested during the six months ended June 30, 2025 and 2024. Unrecognized compensation expense related to unvested liability-classified PSUs as of June 30, 2025 was $5.7 million, which the Company expects to recognize over a weighted average period of 1.4 years.