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Magnolia Oil & Gas Corp (MGY) Up 19.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Magnolia Oil & Gas Corp (MGY). Shares have added about 19.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Magnolia Oil & Gas Corp due for a pullback? 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 catalysts.

Magnolia Q1 Earnings and Revenues Top Estimates

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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.35% due to these changes.

VGM Scores

Currently, Magnolia Oil & Gas Corp has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Magnolia Oil & Gas Corp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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