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Magnolia Oil & Gas (MGY)
NYSE:MGY
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Magnolia Oil & Gas
(NYSE:MGY)
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Rating:75Outperform
Price Target:
$30.00
▲(5.08% Upside)
Action:ReiteratedDate:02/09/26
MGY’s score is driven primarily by solid profitability/cash generation and improved leverage, alongside constructive price trend signals. The main offsets are weakening recent revenue/FCF momentum and elevated technical momentum readings, while valuation and a shareholder-return-focused 2026 outlook provide moderate support.
Positive Factors
Margin Profile
Sustained TTM gross (~49%) and net (~26%) margins reflect durable operating economics in Magnolia's core Eagle Ford/Austin Chalk assets. Strong margins support long‑term cash generation, enable maintenance capex and shareholder returns, and provide a buffer versus cyclical commodity swings.
Improved Balance Sheet / Leverage
Material reduction in leverage to ~0.21 signals a stronger capital structure and lower financial risk. Improved balance sheet flexibility supports sustained dividends, opportunistic buybacks or M&A, and provides resilience to commodity-price shocks over the medium term.
Free Cash Flow and Capital Returns
Robust FCF generation and a history of returning ~75% of FCF to shareholders (dividends and buybacks) demonstrate disciplined capital allocation. Reliable FCF enables sustainable shareholder returns while funding maintenance capex and selective growth without materially increasing leverage.
Negative Factors
Weakening Revenue / FCF Momentum
Sharp TTM revenue decline and recent negative free cash flow growth reduce the margin of safety for returns and reinvestment. If lingering, this trend pressures cash conversion, limits discretionary capital, and raises execution risk for sustaining dividends and buybacks over coming quarters.
Unhedged Commodity Exposure
A policy of being fully unhedged increases sensitivity to oil and gas price swings, meaning sustained lower realizations can quickly erode operating cash flow. This heightens volatility in funding for capex, returns, and debt service, complicating medium‑term planning and reserve economics.
Moderating Growth & Capex Uncertainty
A deliberate, flat capex plan and modest ~5% growth guidance imply limited organic upside in the near term. The wide capex range and competitive M&A market constrain transformative growth options, making sustained reserve and production expansion dependent on higher spend or expensive acquisitions.
Magnolia Oil & Gas (MGY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.32B
Dividend Yield2.74%
Average Volume (3M)3.18M
Price to Earnings (P/E)16.1
Beta (1Y)0.79
Revenue Growth0.68%
EPS Growth-11.13%
CountryUS
Employees252
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.37
Shares Outstanding180,882,430
10 Day Avg. Volume2,851,241
30 Day Avg. Volume3,183,995
Financial Highlights & Ratios
PEG Ratio-1.28
Price to Book (P/B)2.09
Price to Sales (P/S)3.10
P/FCF Ratio9.93
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue4.02
Enterprise Value/Gross Profit8.49
Enterprise Value/Ebitda6.00
Forecast
1Y Price Target
$28.46Price Target Upside-0.32% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)1.63
Revenue Forecast (FY)$1.30B
Magnolia Oil & Gas Business Overview & Revenue Model
Company DescriptionMagnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States. Its properties are located primarily in Karnes County and the Giddings Field in South Texas principally comprising the Eagle Ford Shale and the Austin Chalk formation. As of December 31, 2021, the company's assets consisted of a total leasehold position of 4,71,263 net acres, including 23,785 net acres in Karnes and 4,47,478 net acres in the Giddings area, as well as holds 1,292 net wells with a total production capacity of 66.0 thousand barrels of oil equivalent per day. The company was incorporated in 2017 and is headquartered in Houston, Texas.
How the Company Makes MoneyMagnolia Oil & Gas generates revenue primarily through the sale of crude oil, natural gas, and natural gas liquids produced from its wells. The company operates on a revenue model that includes direct sales to refineries, utility companies, and other end-users in the energy market. Key revenue streams consist of production revenues from its operated and non-operated assets, as well as revenues from hedging activities aimed at managing price volatility in the commodities market. Magnolia also benefits from partnerships and joint ventures that allow for shared resources and reduced operational costs, enhancing its profitability. Factors such as market prices for oil and gas, production levels, and operational efficiency play significant roles in the company's earnings performance.
Magnolia Oil & Gas Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call emphasized consistently strong operational execution, significant free cash flow generation, disciplined capital allocation, cost reductions, reserve adds at low F&D costs, and robust shareholder returns (dividend increase and buybacks). Headwinds include lower commodity realizations (oil down >15% y/y), short-term weather impacts, continued commodity price volatility due to an unhedged position, and a competitive M&A market for large PDP-heavy assets. Management reiterated a conservative, capital-efficient plan for 2026 with moderate (~5%) production growth, flat-to-similar capex, and emphasis on returning excess cash to shareholders.Q4-2025 Updates
Positive Updates
Strong Production Growth and Q4 Record
Full-year 2025 production grew 11% to ~99,800 BOE/day; oil production grew 4% and averaged nearly 40,000 Bbl/day. Fourth quarter 2025 set a company record at ~103,800 BOE/day (reported as nearly 104,000 BOE/day) and 40,700 Bbl/day, a sequential increase of ~3%.
Robust Free Cash Flow and Capital Returns
Generated more than $425 million of free cash flow in 2025 and returned ~75% of that free cash flow to shareholders via dividends and share repurchases. Repurchased ~8.9 million shares during 2025, reducing diluted shares roughly 4–4.5%.
Solid Earnings and Cash Flow Metrics
Fourth quarter adjusted net income of ~$71 million ($0.38/diluted share) and adjusted EBITDAX of $216 million. Full-year adjusted EBITDAX was $906 million.
High Operating Margins Despite Lower Prices
Pretax operating margins averaged ~33% for 2025 even though oil price realizations declined by more than 15% year-over-year. Q4 operating income margin was $9.85/BOE, ~30% of total revenue.
Lower Unit Costs and Improved Field Efficiency
Field-level cash operating expenses declined 7% to $5.12/BOE in 2025. Total adjusted cash operating costs including G&A were $10.64/BOE in Q4. Average drilled feet per day increased ~8% and completed feet per day improved ~6% year-over-year.
Low-Cost Reserve Additions
Year-end proved developed reserves were 167 million BOE. Excluding acquisitions and price-related revisions, the company added ~50 million BOE of proved developed reserves in 2025 with organic proved developed F&D cost of $9.25/BOE (3-year average $9.85/BOE).
Strong Returns on Capital and Balance Sheet Strength
2025 ROCE of 18% (5-year average ROCE ~34%, >3x WACC). Ended 2025 with $267 million of cash and undrawn $450 million revolver for total liquidity of ~ $717 million; $400 million senior notes mature in 2032.
Disciplined Capital Plan and 2026 Guidance
2026 D&C and facility capital guidance of $440–480 million (midpoint similar to 2025) with expected full-year production growth of ~5%. Q1 2026 D&C capex expected ~ $125 million (the highest quarterly rate) and Q1 production guidance ~102,000 BOE/day (includes ~1,500 BOE/day weather impact).
Shareholder Returns — Dividend and Buyback Program
Board approved 10% dividend increase to $0.165 per quarter ($0.66 annualized) — the fifth consecutive annual increase — and expanded buyback authorization by 10 million shares (12.9 million shares remaining under current authorization).
Negative Updates
Decline in Commodity Realizations and Revenue/BOE
Oil price realizations decreased by more than 15% year-over-year and total revenue per BOE declined ~13% quarter-over-quarter, which reduced margins sequentially despite operational improvements.
Exposure to Commodity Price Volatility (Unhedged Position)
Magnolia remains completely unhedged for all oil and gas production, increasing sensitivity to commodity price swings; management framed this as strategic but it heightens short-term cash flow volatility risk.
Weather-Related Production and Cost Impacts
Winter weather in January reduced Q1 2026 production by approximately 1,500 BOE/day and may cause some near-term LOE creep due to repair and maintenance, as well as seasonal first-quarter cost effects.
CapEx Guidance Uncertainty and Wide Range
2026 drilling and completion guidance range ($440–480M) is relatively wide and subject to service cost movements and product price volatility; CFO noted midpoint or lower is likely but uncertainty remains.
Competitive and Pricier M&A Market for Large PDP Assets
Management noted rising competition and elevated pricing for large PDP-heavy packages (e.g., Delaware/Permian), limiting attractively priced transformative M&A opportunities and making bolt-ons more tactical and local.
Oil Realization Headwind from Differentials
Management expects oil differentials of roughly $3/bbl discount to Magellan East Houston in 2026, which modestly pressures realizations vs. benchmark prices.
Moderation of Growth Rate
Guidance targets moderate growth (~5% production growth in 2026) with capital spending roughly flat year-over-year, implying slower growth compared with prior higher-growth years and deliberate low reinvestment strategy.
Company Guidance
Management guided 2026 drilling, completions and facilities capital of $440–$480 million (midpoint roughly flat to 2025, including similar non‑operated capital), with Q1 D&C spending ~ $125 million (the year’s highest quarter). They forecast total 2026 production growth of ~5% (Q1 production ~102,000 BOE/d, which includes ~1,500 BOE/d of winter weather impact) and expect oil volumes to grow roughly 2–3% (oil mix around the high‑30s to ~40% range); oil differentials are assumed at about a $3/bo discount to Magellan East Houston and the company remains fully unhedged. Financial and share metrics for Q1 include a fully diluted share count ~187 million (≈4% lower YoY) and an effective tax rate of ~21% (deferred); liquidity at year‑end was ~$267 million cash plus a $450 million undrawn revolver (~$717 million total). Management reiterated a disciplined plan (no additional rig planned) and noted maintenance‑type spend expectations in the roughly $400 million range while retaining flexibility to deploy excess cash to dividends, buybacks, or opportunistic M&A.Magnolia Oil & Gas Financial Statement Overview
Summary
Profitability and cash generation are solid (TTM gross margin ~49%, net margin ~26%, and strong operating cash flow), and leverage has improved materially (debt-to-equity down to ~0.21 in 2024). Offsets include sharp TTM revenue and free-cash-flow weakening versus prior periods and some TTM balance-sheet data inconsistency that reduces confidence in point-in-time figures.Income Statement
MGY’s profitability profile is strong in recent periods, with TTM (Trailing-Twelve-Months) gross margin around 49% and net margin around 26%, indicating healthy operating economics. However, growth has turned negative, with TTM (Trailing-Twelve-Months) revenue down ~68% versus the prior period, and margins have compressed versus the 2021–2022 peak levels. Results also show commodity-cycle sensitivity (e.g., large losses in 2020 followed by outsized profitability in 2021–2022), which increases earnings volatility risk.72
Positive
Balance Sheet
Leverage appears conservative overall: debt-to-equity has improved materially from ~0.71 (2020) to ~0.21 (2024), signaling a stronger capital structure and lower balance-sheet risk. Total assets have also grown steadily over time. That said, TTM (Trailing-Twelve-Months) balance-sheet fields show $0 for total debt and equity while still reporting a debt-to-equity ratio, which suggests data inconsistency in the latest snapshot and limits confidence in point-in-time TTM (Trailing-Twelve-Months) balance-sheet detail.78
Positive
Cash Flow
Cash generation is solid: TTM (Trailing-Twelve-Months) operating cash flow of ~$879M is strong and exceeds accounting earnings (operating cash flow to net income ~2.8x), supporting earnings quality. Free cash flow remains positive at ~$393M, but free cash flow conversion is moderate (free cash flow to net income ~0.46) and recent free cash flow growth is sharply negative in TTM (Trailing-Twelve-Months), pointing to increased reinvestment, working-capital swings, or softer cash realization versus prior years.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.31B | 1.32B | 1.23B | 1.69B | 1.08B |
| Gross Profit | 612.67M | 680.69M | 702.37M | 1.26B | 742.76M |
| EBITDA | 883.59M | 922.00M | 874.63M | 1.32B | 796.60M |
| Net Income | 325.25M | 366.03M | 388.30M | 893.84M | 417.28M |
Balance Sheet | |||||
| Total Assets | 2.90B | 2.82B | 2.76B | 2.57B | 1.75B |
| Cash, Cash Equivalents and Short-Term Investments | 266.79M | 260.05M | 401.12M | 675.44M | 366.98M |
| Total Debt | 393.25M | 410.31M | 392.84M | 390.38M | 388.09M |
| Total Liabilities | 903.92M | 853.51M | 873.55M | 832.39M | 701.49M |
| Stockholders Equity | 1.94B | 1.91B | 1.69B | 1.58B | 816.76M |
Cash Flow | |||||
| Free Cash Flow | 409.16M | 431.74M | 430.90M | 831.55M | 552.05M |
| Operating Cash Flow | 878.64M | 920.85M | 855.79M | 1.30B | 788.48M |
| Investing Cash Flow | -540.75M | -655.12M | -814.90M | -518.89M | -243.44M |
| Financing Cash Flow | -331.16M | -406.80M | -315.21M | -469.34M | -370.61M |
Magnolia Oil & Gas Technical Analysis
Positive
28.55
Price Trends
24.25
Positive
23.44
Positive
23.28
Positive
Market Momentum
0.97
Negative
71.78
Negative
88.72
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGY, the sentiment is Positive. The current price of 28.55 is above the 20-day moving average (MA) of 26.73, above the 50-day MA of 24.25, and above the 200-day MA of 23.28, indicating a bullish trend. The MACD of 0.97 indicates Negative momentum. The RSI at 71.78 is Negative, neither overbought nor oversold. The STOCH value of 88.72 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGY.
Magnolia Oil & Gas Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $5.60B | 8.27 | 37.11% | ― | 50.79% | 32.97% | |
75 Outperform | $5.32B | 16.09 | 16.65% | 2.74% | 0.68% | -11.13% | |
74 Outperform | $5.49B | 13.68 | 11.06% | 3.56% | 33.85% | -34.08% | |
72 Outperform | $5.77B | 4.10 | 14.33% | 4.38% | 34.93% | -11.85% | |
66 Neutral | $5.96B | 11.41 | 15.01% | ― | 43.30% | -43.07% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
62 Neutral | $4.97B | 45.81 | 2.01% | 4.15% | -13.92% | -68.34% |
* Energy Sector Average
MGY
Magnolia Oil & Gas
28.42
6.39
29.03%
CNX
CNX Resources
41.91
11.98
40.03%
MUR
Murphy Oil
34.87
11.63
50.05%
SM
SM Energy
24.09
-3.73
-13.40%
VIST
Vista Energy SAB de CV
59.57
13.44
29.14%
CRC
California Resources Corp
60.47
22.64
59.86%
Magnolia Oil & Gas Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Magnolia Oil & Gas Posts 2025 Results, Boosts Shareholder Returns
Positive
Feb 5, 2026
On February 5, 2026, Magnolia Oil & Gas reported its fourth-quarter and full-year 2025 results, showing lower net income and adjusted EBITDAX versus 2024 despite strong production growth and disciplined capital spending. Net income fell 20% in the fourth quarter and 15% for the full year to $71.4 million and $337.3 million, respectively, while average daily production rose 11% for both the quarter and the year, reaching a record 103.8 Mboe/d in Q4 and 99.8 Mboe/d for 2025, driven largely by 16% growth at the Giddings area and record oil output. The company generated $878.6 million in operating cash flow and $426.6 million in free cash flow in 2025, reinvesting about half of adjusted EBITDAX into drilling and completions while adding 49.8 MMboe of organic proved developed reserves, achieving a 137% reserve replacement ratio at low finding and development costs. Magnolia intensified its shareholder return strategy by repurchasing 8.9 million Class A shares in 2025, cutting diluted share count by 4.4%, securing board approval for an expanded buyback authorization, and lifting its quarterly dividend by 10% for the fifth consecutive year, while finishing 2025 with slightly higher cash on hand and an undrawn credit facility, underscoring a commitment to capital discipline and sustained cash returns even amid softer earnings.
The most recent analyst rating on (MGY) stock is a Buy with a $27.00 price target. To see the full list of analyst forecasts on Magnolia Oil & Gas stock, see the MGY Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.