Magnolia Oil & Gas Corp (MGY) Up 3.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Magnolia Oil & Gas Corp (MGY). Shares have added about 3.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Magnolia Q2 Earnings Fall on Lower Prices
Magnolia Oil & Gas 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.
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%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Magnolia Oil & Gas Corp has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 has been net zero. 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.
Performance of an Industry Player
Magnolia Oil & Gas Corp belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Viper Energy Partners (VNOM), has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Viper Energy reported revenues of $160.79 million in the last reported quarter, representing a year-over-year change of -32.8%. EPS of $0.47 for the same period compares with $0.43 a year ago.
For the current quarter, Viper Energy is expected to post earnings of $0.33 per share, indicating a change of -66.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +38.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Viper Energy. Also, the stock has a VGM Score of B.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Magnolia Oil & Gas Corp (MGY) : Free Stock Analysis Report
Viper Energy Partners LP (VNOM) : Free Stock Analysis Report
