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Why Is Magnolia Oil & Gas Corp (MGY) Up 33.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Magnolia Oil & Gas Corp (MGY - Free Report) . Shares have added about 33.5% 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 drivers.

Magnolia Q1 Earnings Meet Estimate

Magnolia reported first-quarter adjusted net income of 90 cents per share, meeting the Zacks Consensus Estimate but improving from the year-ago quarter’s bottom line of 37 cents.

This year-over-year improvement in the top line can be primarily attributed to a surge in commodity prices and a healthy increase in year-over-year production volumes by about 15%. South Texas-focused Magnolia’s average daily total output of 71,835 barrels of oil equivalent per day (boe/d) was up from the year-ago quarter’s figure of 62,262 boe/d. Moreover, it narrowly beat the Zacks Consensus Estimate of 70,785 boe/d.

Total revenues came in at $377.84 million, ahead of the Zacks Consensus Estimate of $362 million. Moreover, the top line rose 80.7% from the year-ago level of $209.1 million.

Production & Prices

As mentioned earlier, Magnolia’s oil and gas production reported a year-over-year increase of a little more than 15% to 71,835 boe/d (comprising 68% of liquids). Oil volumes at 31,289 barrels per day (bpd) were up 8.6% from the level achieved in the first quarter of 2021. However, the same missed the Zacks Consensus Estimate of 31,816 bpd.

The average realized crude oil price in the first quarter was $93.28 per barrel, reflecting a 64.6% rise from the year-ago period’s realization of $56.68. The average realized natural gas liquids price was $36.94 per barrel, up 81.9% from the year-ago period’s tally, while natural gas prices increased 31.3% year over year to $4.57 per thousand cubic feet. Overall, MGY fetched $58.44 per barrel of oil equivalent (boe) compared with $37.32 a year ago.

Balance Sheet & Capital Expenditure

As of Mar 31, Magnolia had $346.4 million of cash and cash equivalents. The oil explorer has long-term debt of $388.65 million. In the reported quarter, Magnolia spent $83.4 million on its capital program.

The company had property, plant, and equipment worth $1.25 billion on its books.

Guidance

Magnolia plans to spend somewhere around $100 to $110 million on drilling and completion activities in the second quarter of 2022 and approximately $400 million for the full year.

The total output in the second quarter of 2022 is expected in the 72,000-74,000 boe/d range.

Based on the continued strong well performance, faster drilling times and other operational efficiencies seen at Giddings, MGY anticipates the total production growth to surpass 10% for the full year of 2022 compared with the earlier guidance of high single-digit growth.



 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Magnolia Oil & Gas Corp has a great 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 downward for the stock, and the magnitude of these revisions looks promising. Notably, 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.

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, Continental Resources (CLR - Free Report) , has gained 29.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Continental Resources reported revenues of $1.82 billion in the last reported quarter, representing a year-over-year change of +49.4%. EPS of $2.65 for the same period compares with $0.77 a year ago.

Continental Resources is expected to post earnings of $2.92 per share for the current quarter, representing a year-over-year change of +220.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.

Continental Resources has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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