Magnolia (MGY) Q2 Earnings Fall Y/Y, Revenues Miss Estimates
Magnolia Oil & Gas Corp MGY reported second-quarter 2023 net profit of 48 cents per share, indicating a significant decrease from the prior-year quarter's level of $1.32 due to a decline in commodity prices.
Total revenues came in at $280.3 million, which missed the Zacks Consensus Estimate of $292 million. The top line declined 42.2% from $484.6 million recorded in the year-ago period.
South Texas-focused Magnolia declared a cash dividend of 11.5 cents per share of Class A common stock and a cash distribution of 11.5 cents per Class B unit, payable on Sep 1, 2023, to shareholders of record as of Aug 10, 2023. The company repurchased 2.3 million of its Class A common shares for $44.8 million in the reported quarter.
Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise
Magnolia Oil & Gas Corp price-consensus-eps-surprise-chart | Magnolia Oil & Gas Corp Quote
Production & Prices
The average daily total output of 81,881 barrels of oil equivalent per day (boe/d) was up from the year-ago quarter’s figure of 74,200 boe/d. The figure also beat our estimate of 79,988 boe/d. Oil and gas production increased a little more than 10.4% year over year. Oil volumes totaled 34,065 barrels per day (bpd), up 2.7% from that reported in the second quarter of 2022. The same missed our estimate of 36,100 bpd.
The average realized crude oil price was $71.9 per barrel, indicating a 34.7% decline from the year-ago period’s level of $110.2. The average realized natural gas liquids price was $17.6 per barrel, implying a 56% deterioration from the year-ago period’s figure. Natural gas price decreased 78% year over year to $1.5 per thousand cubic feet. MGY recorded $37.6 per boe compared with $71.8 a year ago.
Balance Sheet & Capital Expenditure
As of Jun 30, Magnolia had cash and cash equivalents of $676.6 million and long-term debt of $391.6 million. The total debt-to-total capital was 13.2%.
The company spent $86.1 million on its capital program in the reported quarter. Operating expenses increased to $181.4 million from $142 million in the year-ago period.
Guidance
The company projects the diluted share count for the third quarter to be approximately 210 million.
MGY plans to offer a discount of $3.00 per barrel to Magellan East Houston, leaving it unhedged for all oil and natural gas production.
MGY expects total D&C capital for 2023 to be in the range of $425-$440 million. It also anticipates D&C capital expenditures to average $100 million per quarter in the second half of 2023, with variability due to activity timing.
MGY expects 2023 capital spending to be lower than the previous year’s level.
The company plans to increase its guidance for full-year production growth to 7-8%.
Zacks Rank and Key Picks
Currently, MGYcarries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks for investors interested in the energy sector are Murphy USA MUSA, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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