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Magnolia (MGY) Stock Rallies 6.8% Since Q1 Earnings Beat

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Shares of Magnolia Oil & Gas Corporation MGY have gained 6.8% since first-quarter 2021 earnings announcement on May 4. Investors were buoyed by its better-than-expected bottom-line and top-line performances. This uptrend was also driven by an upbeat second-quarter production guidance, which indicates growth from the sequential quarter’s reported figure.

Delving Deeper

Magnolia reported first-quarter 2021 adjusted net income per share of 38 cents, beating the Zacks Consensus Estimate of 28 cents. The bottom line also reversed the year-ago quarter’s loss of 11 cents per share.

This outperformance can be primarily attributed to better-than-anticipated production volumes. Precisely, the South Texas-focused company’s average daily output of 62,262 barrels of oil equivalent (boe) surpassed the Zacks Consensus Estimate of 60,566 boe.

Total revenues came in at $207.66 million, ahead of the Zacks Consensus Estimate of $194 million. Moreover, the top line rose 14.7% from the year-ago level of $181 million.

Production & Prices

Magnolia’s oil and gas production reported a year-over-year decrease of 8.9% to 62,262 boe per day (comprising 70% liquids). Particularly, oil volumes at 28,808 barrels per day were down 22.7% from the level achieved in first-quarter 2020.

The average realized crude oil price during the first quarter was $56.47 per barrel, reflecting a 23.8% rise from the year-ago realization of $45.62. However, the average realized natural gas liquids price was $20.31 per barrel, up 123.4% from the year-ago period while natural gas prices increased 110.6% year over year to $3.39 per thousand cubic feet. Overall, the company fetched $37.06 per boe compared with $29.15 a year ago.

Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise

Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise
Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise

Magnolia Oil & Gas Corp price-consensus-eps-surprise-chart | Magnolia Oil & Gas Corp Quote

Balance Sheet & Capital Expenditure

As of Mar 31, Magnolia had $178.2 million in cash and cash equivalents. The oil explorer’s long-term debt of $391.4 million represented a debt-to-capitalization of 31.7%. In the reported quarter, the company spent around $39 million on its capital program.

Guidance

Magnolia plans to spend a little below $300 million on drilling and completion activities in 2021. The company also projected 6-9% annual production growth this year.

Total output in the second quarter of 2021 is expected to be around 66,000 boe/d, implying a 6% rise from the first-quarter reported level.

Zacks Rank & Key Picks

Magnolia currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are SilverBow Resources Inc. SBOW, Matador Resources Company MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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