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Magnolia Oil & Gas (MGY)
:MGY
US Market

Magnolia Oil & Gas (MGY) AI Stock Analysis

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Magnolia Oil & Gas

(NYSE:MGY)

Rating:74Outperform
Price Target:
$25.00
▲(11.51%Upside)
Magnolia Oil & Gas scores well due to its strong financial health and attractive valuation. The earnings call further bolstered confidence with record production and increased guidance. Technical analysis is neutral, neither strongly supporting nor detracting from the overall positive outlook.
Positive Factors
Capital Returns
MGY consistently executes on the capital returns front with $81.2 million returned to shareholders, aligning with estimates.
Dividend Increase
The company announced a 15% increase to its quarterly base dividend, exceeding expectations and its long-term target for annual dividend growth.
Production Guidance
MGY set its total production guidance above estimates while achieving this with lower capex.
Negative Factors
Oil Market Conditions
Limited upside due to a weak oil macro keeps the rating at Neutral.
Production Challenges
The first quarter of 2025 volume guidance is slightly below some expectations, signaling potential challenges in meeting higher forecasts.
Stock Performance
Magnolia Oil & Gas shares meaningfully outperformed SMID E&P peers in 2024, although they have lagged year-to-date.

Magnolia Oil & Gas (MGY) vs. SPDR S&P 500 ETF (SPY)

Magnolia Oil & Gas Business Overview & Revenue Model

Company DescriptionMagnolia Oil & Gas Corporation (MGY) is an independent oil and natural gas exploration and production company focused on the acquisition, development, and production of oil and gas properties. The company primarily operates in the core areas of South Texas, specifically the Eagle Ford Shale and Austin Chalk formations. Magnolia Oil & Gas is headquartered in Houston, Texas, and its operations are centered around maximizing value through efficient production and a disciplined capital allocation strategy.
How the Company Makes MoneyMagnolia Oil & Gas generates revenue primarily through the sale of crude oil, natural gas, and natural gas liquids (NGLs) extracted from its developed properties in South Texas. The company makes money by exploring for and producing hydrocarbons, which are then sold to refineries, processing plants, and other customers in the energy market. Key revenue streams include the sale of produced oil, gas, and NGLs, with pricing largely influenced by market conditions and commodity prices. Magnolia funds its operations through cash flows generated from sales and aims to maintain a strong balance sheet by controlling costs and optimizing production efficiencies. Additionally, the company may engage in strategic partnerships and joint ventures to enhance its exploration and production capabilities and expand its asset base.

Magnolia Oil & Gas Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 9.96%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
Magnolia Oil & Gas Corporation demonstrated strong operational and financial performance with record production levels and increased shareholder returns. Despite challenges posed by product price volatility and increased GP&T costs, the company managed to enhance capital efficiency and increase production guidance.
Q1-2025 Updates
Positive Updates
Record Quarterly Production
Achieved a record quarterly production rate of 96,500 barrels of oil equivalent per day, exceeding earlier guidance.
Strong Financial Performance
Total adjusted net income for the quarter of $106 million and adjusted EBITDAX of $248 million, both up 9% compared to the year-ago period.
Increased Production Guidance
Increased full-year 2025 production growth guidance range to 7% to 9% from a previous range of 5% to 7%.
Capital Efficiency
Lowered the range for 2025 capital spending by approximately $25 million or more than 5% from the midpoint of the original spending plan.
Increased Returns to Shareholders
Returned 74% of free cash flow to shareholders through dividends and share repurchases, with a 15% increase in quarterly dividend.
Negative Updates
Product Price Volatility
Managed through current product price volatility and macroeconomic uncertainty, highlighting potential risks in the market.
Increased GP&T Costs
Higher GP&T costs due to increased natural gas prices, affecting overall cost structure.
Company Guidance
In the first quarter of 2025, Magnolia Oil & Gas Corporation reported robust production and financial metrics, exceeding earlier guidance with a record output of 96,500 barrels of oil equivalent per day. This performance drove a 14% year-over-year increase in total production, including a 4% rise in oil production. The Giddings asset notably contributed with a 25% increase in total production and a 17% growth in oil volumes compared to the previous year. Financially, Magnolia recorded an adjusted net income of $106 million and an adjusted EBITDAX of $248 million, both up by 9% from the year-ago period, alongside a 39% operating income margin. The company generated $111 million in free cash flow, returning 74% ($82 million) to shareholders via dividends and share repurchases. Magnolia also revised its 2025 production growth guidance to 7%-9% from 5%-7%, while reducing its capital spending estimate to $430-$470 million, reflecting a disciplined approach amidst macroeconomic uncertainties. The firm maintains a reinvestment rate capped at 55% of gross cash flow, emphasizing capital efficiency and shareholder returns.

Magnolia Oil & Gas Financial Statement Overview

Summary
Magnolia Oil & Gas exhibits strong financial health with zero debt and robust cash flow generation. The income statement shows stable revenue growth, although net income growth remains a challenge. The balance sheet reflects a strong equity position, and cash flow indicates solid operational performance despite a decline in free cash flow due to higher capital expenditure.
Income Statement
68
Positive
The income statement shows a mixed trend for Magnolia Oil & Gas. The company experienced a moderate increase in revenue to $1.32 billion in TTM (Trailing-Twelve-Months) compared to $1.23 billion in the previous year, indicating a revenue growth rate of approximately 7.24%. The gross profit margin improved to 63.87% in TTM, reflecting efficient cost management. However, net profit margin decreased slightly to 27.81% in TTM from 31.66% last year, primarily due to reduced net income. EBITDA margin remained strong at 68.35% in TTM, showcasing robust operational performance. The company needs to focus on maintaining its net income to improve profitability.
Balance Sheet
75
Positive
Magnolia Oil & Gas exhibits a strong balance sheet with zero debt in TTM, indicating financial prudence and a significant reduction from $409.55 million in the previous year. The company has a high equity ratio of 26.75% in TTM, reflecting a solid equity position. Return on equity (ROE) stands at 48.50%, demonstrating effective utilization of shareholder funds. The company's strong cash position and equity base provide a stable financial foundation, though the company should aim to improve its asset base to enhance long-term growth.
Cash Flow
72
Positive
The company's cash flow performance is steady with operating cash flow increasing to $920.85 million in TTM from $855.79 million last year. Free cash flow decreased to $291.40 million in TTM from $430.90 million, mainly due to higher capital expenditure. The operating cash flow to net income ratio is robust at 2.52, indicating strong cash generation ability relative to net income. Despite the decline in free cash flow, the company maintains a healthy cash flow position with adequate liquidity to fund operations and investments.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.35B1.32B1.23B1.69B1.08B534.51M
Gross Profit
693.30M680.69M692.89M1.26B742.76M128.81M
EBIT
523.25M511.99M534.49M1.07B602.59M-544.41M
EBITDA
951.64M922.00M878.67M1.33B801.53M-1.62B
Net Income Common Stockholders
383.87M366.03M388.30M893.84M559.72M-1.87B
Balance SheetCash, Cash Equivalents and Short-Term Investments
247.56M260.05M401.12M675.44M366.98M192.56M
Total Assets
2.87B2.82B2.76B2.57B1.75B1.45B
Total Debt
0.00392.51M409.55M390.38M388.09M391.12M
Net Debt
163.90M132.46M8.43M-285.06M21.11M198.55M
Total Liabilities
879.29M853.51M873.55M832.39M701.49M614.00M
Stockholders Equity
1.99B1.97B1.69B1.58B816.76M548.16M
Cash FlowFree Cash Flow
290.73M431.74M430.90M831.55M552.05M87.91M
Operating Cash Flow
934.41M920.85M855.79M1.30B788.48M310.12M
Investing Cash Flow
-673.89M-655.12M-814.90M-518.89M-243.44M-269.99M
Financing Cash Flow
-412.28M-406.80M-315.21M-469.34M-370.61M-30.20M

Magnolia Oil & Gas Technical Analysis

Technical Analysis Sentiment
Positive
Last Price22.42
Price Trends
50DMA
21.94
Positive
100DMA
22.93
Negative
200DMA
24.01
Negative
Market Momentum
MACD
0.09
Negative
RSI
53.68
Neutral
STOCH
71.44
Neutral
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 22.42 is above the 20-day moving average (MA) of 22.15, above the 50-day MA of 21.94, and below the 200-day MA of 24.01, indicating a neutral trend. The MACD of 0.09 indicates Negative momentum. The RSI at 53.68 is Neutral, neither overbought nor oversold. The STOCH value of 71.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGY.

Magnolia Oil & Gas Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
NONOG
76
Outperform
$2.78B4.3329.41%5.99%24.27%5.01%
MUMUR
75
Outperform
$3.14B8.457.54%5.77%-14.90%-27.53%
75
Outperform
$4.90B9.5532.69%54.19%37.69%
MGMGY
74
Outperform
$4.32B11.1220.85%2.51%8.78%0.56%
CNCNX
64
Neutral
$4.52B9.01-7.30%22.23%-130.65%
63
Neutral
$3.50B16.69-16.01%10.44%-139.05%
57
Neutral
$7.16B3.10-4.49%5.66%0.82%-49.15%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MGY
Magnolia Oil & Gas
22.12
-1.57
-6.63%
CNX
CNX Resources
31.16
5.78
22.77%
MUR
Murphy Oil
21.54
-16.44
-43.29%
NOG
Northern Oil And Gas
27.80
-7.95
-22.24%
VIST
Vista Oil & Gas SAB de CV
48.60
5.77
13.47%
GPOR
Gulfport Energy
188.55
29.66
18.67%

Magnolia Oil & Gas Corporate Events

Executive/Board ChangesShareholder Meetings
Magnolia Oil & Gas Holds Annual Stockholders Meeting
Neutral
May 9, 2025

On May 7, 2025, Magnolia Oil & Gas Corporation conducted its Annual Meeting of Stockholders where several key decisions were made. All eight nominees for the board of directors were elected for a one-year term, and the stockholders approved an advisory resolution on executive compensation for 2024. Additionally, it was decided that future say-on-pay votes will be held annually, and KPMG LLP was ratified as the independent registered public accounting firm for the 2025 fiscal year.

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Magnolia Oil & Gas Reports Strong Q1 2025 Results
Positive
Apr 30, 2025

On April 30, 2025, Magnolia Oil & Gas Corporation announced its financial and operational results for the first quarter of 2025, highlighting a 14% increase in production volumes compared to the previous year. The company reported a net income of $106.6 million and adjusted EBITDAX of $248.4 million, with a notable 25% production growth in the Giddings area. Due to stronger than expected well performance, Magnolia raised its full-year production growth guidance and reduced its capital spending program. The company also returned $81.7 million to shareholders through share repurchases and dividends, maintaining a strong cash position and operational flexibility.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.