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Magnolia Oil & Gas Corp (MGY) Down 8.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Magnolia Oil & Gas Corp (MGY - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Magnolia Oil & Gas Corp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Magnolia Q3 Earnings and Revenues Top Estimates

Magnolia reported third-quarter adjusted net income per share of 67 cents, beating the Zacks Consensus Estimate of 60 cents and the year-ago quarter’s bottom line of 6 cents.

This outperformance can be primarily attributed to better-than-anticipated production volumes. South Texas-focused MGY’s average daily total output of 67,385 barrels of oil equivalent per day (boe/d) surpassed the Zacks Consensus Estimate of 66,418boe/d.

Total revenues came in at $283.58 million, ahead of the Zacks Consensus Estimate of $277 million. Moreover, the top line rose 134.2% from the year-ago level of $121.07 million.

Production & Prices

Magnolia’s oil and gas production reported a year-over-year increase of 24.1% to 67,385boe/d (comprising 69.3% liquids). Oil volumes at 30,989 barrels per day were up14.7% from the level achieved in third-quarter 2020. However, the same missed the Zacks Consensus Estimate of 31,678 barrels per day.

The average realized crude oil price during the third quarter was $68.44 per barrel, reflecting a 77.8% rise from the year-ago period’s realization of $38.5. The average realized natural gas liquids price was $31.6 per barrel, up 182.1% from the year-ago period’s tally while natural gas prices increased 137.3% year over year to $3.75 per thousand cubic feet. Overall, MGY fetched $45.74 per boe compared with $24.23 a year ago.

Balance Sheet & Capital Expenditure

As of Sep 30, Magnolia had $245.02 million of cash and cash equivalents. The oil explorer’s long-term debt of $387.5 million represented a debt-to-capitalization of 30%. In the reported quarter, MGY spent $67.2 million on its capital program.

Guidance

Magnolia plans to spend around $80 million on drilling and completion activities in the fourth quarter of this year.

Total output in the fourth quarter of 2021 is expected in the 68,000-70,000 boe/d range.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 6.44% due to these changes.

VGM Scores

At this time, Magnolia Oil & Gas Corp has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Magnolia Oil & Gas Corp has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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