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1. Company Snapshot

1.a. Company Description

Magnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States.Its properties are located primarily in Karnes County and the Giddings Field in South Texas principally comprising the Eagle Ford Shale and the Austin Chalk formation.As of December 31, 2021, the company's assets consisted of a total leasehold position of 4,71,263 net acres, including 23,785 net acres in Karnes and 4,47,478 net acres in the Giddings area, as well as holds 1,292 net wells with a total production capacity of 66.0 thousand barrels of oil equivalent per day.


The company was incorporated in 2017 and is headquartered in Houston, Texas.

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1.b. Last Insights on MGY

The recent 3-month performance of Magnolia Oil & Gas Corporation was negatively impacted by a lack of significant catalysts, despite a Q4 earnings beat and revenue growth. The absence of a substantial increase in production and a relatively stable capex budget may have contributed to the muted performance. Additionally, the company's Q1 2025 earnings expectations, while still positive, may not be enough to drive significant stock movement. The recent upgrade to a Zacks Rank #2 (Buy) and the upcoming conference call for Q1 2025 results may provide some near-term support, but the overall market sentiment remains cautious.

1.c. Company Highlights

2. Magnolia Oil & Gas: Strong Q3 Earnings with Record Production

Magnolia Oil & Gas Corporation reported a robust third-quarter 2025 earnings, with adjusted EBITDAX reaching $219 million, reflecting an operating income margin of 31%. The company's earnings per share (EPS) came in at $0.41, in line with analyst estimates. Revenue growth was driven by a record quarterly production rate of 100,500 barrels of oil equivalent per day, representing an 11% year-over-year increase. The company's disciplined approach to capital spending resulted in a 54% reinvestment rate of adjusted EBITDAX, generating $134 million in free cash flow, with approximately 60% of this amount returned to shareholders through share repurchases and dividend payments.

Publication Date: Nov -03

📋 Highlights
  • Record Production Growth: Achieved 100,500 BOE/day, 11% YoY increase, driven by Giddings well outperformance.
  • Strong Financial Metrics: Adjusted EBITDAX of $219M, 31% margin, and 17% annualized ROCE, with $134M in free cash flow.
  • Capital Efficiency: 5% reduction in 2025 capex, 54% of EBITDAX reinvested, and $80M returned to shareholders.
  • High Liquidity: $280M in cash and $730M total liquidity, supporting $0.15/share quarterly dividend (15% increase).
  • 2026 Guidance: Mid-single-digit production growth, $520/BOE LOE reduction, and capex aligned with 2025 levels.

Operational Highlights

The Giddings well results outperformed expectations, exceeding levels of the previous couple of years despite a similar drilling and activity program, leading to a reduction in capital spending with a roughly 5% savings in spending during 2025. As Chris Stavros noted, "we are still seeing the benefits of our appraisal program at Karnes, and we believe there may be more to be had there." The company's production is expected to grow at a mid-single-digit rate in 2026, with capital spending similar to 2025 levels.

Financial Flexibility and Shareholder Returns

Magnolia ended the quarter with $280 million in cash, the highest level of the year, and a total liquidity of approximately $730 million. The company's dividend has grown substantially over the past few years, with a 15% increase announced earlier this year to $0.15 per share on a quarterly basis. With a free cash flow yield of 10.0%, the company is well-positioned to continue returning value to shareholders.

Valuation and Growth Prospects

With a P/E Ratio of 12.13 and an EV/EBITDA of 4.36, Magnolia's valuation appears reasonable, considering its strong operational performance and growth prospects. Analysts estimate next year's revenue growth at 3.1%, and with a ROIC of 15.91%, the company is expected to continue generating strong returns on invested capital. The company's net debt to EBITDA ratio is -0.32, indicating a healthy balance sheet.

Outlook and Conclusion

Magnolia's guidance for 2026 suggests a continued focus on maximizing free cash flow and returning it to shareholders, rather than accelerating production or cutting capital expenditures. As the company navigates the complexities of the energy market, its disciplined approach to capital spending and commitment to shareholder returns are likely to drive long-term value creation.

3. NewsRoom

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Magnolia Oil & Gas Corp $MGY Shares Sold by Creative Planning

Nov -27

Source: defenseworld.net

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Rep. Lisa C. McClain Sells Magnolia Oil & Gas Corp (NYSE:MGY) Shares

Nov -27

Source: defenseworld.net

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Magnolia Oil & Gas Corporation (MGY) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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Magnolia Oil & Gas Q3 Earnings Match Estimates, Revenues Beat

Oct -30

Source: zacks.com

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Magnolia Oil & Gas Corp (MGY) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Oct -29

Source: zacks.com

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Magnolia Oil & Gas Corp (MGY) Q3 Earnings Match Estimates

Oct -29

Source: zacks.com

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Magnolia Oil & Gas Corporation Announces Third Quarter 2025 Results

Oct -29

Source: businesswire.com

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Magnolia Oil & Gas to Post Q3 Earnings: What's in Store for the Stock?

Oct -23

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.60%)

6. Segments

Oil

Expected Growth: 3.5%

Magnolia Oil & Gas Corporation's 3.5% growth in oil production is driven by increased drilling activities in the Eagle Ford shale, improved operational efficiencies, and strategic acquisitions. Additionally, rising global demand and favorable crude oil prices contribute to the growth. The company's focus on cost reduction and capital discipline also supports its ability to maintain a strong growth trajectory.

Natural Gas Liquids

Expected Growth: 3.8%

Magnolia Oil & Gas Corporation's 3.8% growth in Natural Gas Liquids is driven by increasing demand from petrochemicals and refining industries, coupled with strategic acquisitions and efficient operations. Additionally, favorable market conditions, including rising prices and growing production volumes, contribute to the company's growth momentum.

Natural Gas

Expected Growth: 4.2%

Magnolia Oil & Gas Corporation's 4.2% growth in Natural Gas is driven by increasing demand from power generation and industrial sectors, coupled with strategic acquisitions and efficient operations. Additionally, favorable weather conditions and rising LNG exports contribute to the growth. The company's focus on cost reduction and capital discipline also supports its growth momentum.

7. Detailed Products

Crude Oil

Magnolia Oil & Gas Corporation extracts and refines crude oil from its oil fields, providing a vital energy source for various industries.

Natural Gas

The company explores, produces, and transports natural gas, a clean-burning fuel used for power generation, heating, and cooking.

Natural Gas Liquids (NGLs)

Magnolia Oil & Gas Corporation extracts and processes NGLs, a group of hydrocarbons used in various industrial and commercial applications.

Refined Petroleum Products

The company refines crude oil into various petroleum products, including gasoline, diesel, jet fuel, and lubricants.

Oilfield Services

Magnolia Oil & Gas Corporation provides a range of oilfield services, including drilling, completion, and production optimization.

8. Magnolia Oil & Gas Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Magnolia Oil & Gas Corporation is moderate due to the availability of alternative energy sources such as solar and wind power.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of negotiating power of individual consumers in the oil and gas industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers is high due to the concentration of suppliers in the oil and gas industry, giving them significant negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the oil and gas industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the oil and gas industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 19.22%
Debt Cost 3.95%
Equity Weight 80.78%
Equity Cost 14.09%
WACC 12.14%
Leverage 23.79%

11. Quality Control: Magnolia Oil & Gas Corporation passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Matador Resources

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Value: 8.4

Growth: 8.8

Quality: 7.4

Yield: 4.0

Momentum: 3.0

Volatility: 4.7

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Permian Resources

A-Score: 6.0/10

Value: 6.6

Growth: 7.8

Quality: 6.6

Yield: 6.0

Momentum: 3.5

Volatility: 5.3

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Northern Oil and Gas

A-Score: 5.8/10

Value: 8.7

Growth: 5.4

Quality: 6.4

Yield: 9.0

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Volatility: 4.0

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Magnolia Oil & Gas

A-Score: 5.8/10

Value: 6.0

Growth: 6.6

Quality: 7.1

Yield: 5.0

Momentum: 3.5

Volatility: 6.7

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Murphy Oil

A-Score: 5.4/10

Value: 7.7

Growth: 4.6

Quality: 6.0

Yield: 7.0

Momentum: 3.0

Volatility: 4.3

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Chesapeake Energy

A-Score: 4.9/10

Value: 5.1

Growth: 1.6

Quality: 6.1

Yield: 8.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.59$

Current Price

23.59$

Potential

-0.00%

Expected Cash-Flows