Magnolia Oil & Gas: A Strong Buy on Robust Production and Financial Health

Analyst Gabriele Sorbara from Siebert Williams Shank & Co maintained a Buy rating on Magnolia Oil & Gas (MGY – Research Report) and increased the price target to $35.00 from $26.00.

Gabriele Sorbara’s rating is based on a combination of positive factors surrounding Magnolia Oil & Gas. The acquisition that Magnolia Oil & Gas recently completed has significantly bolstered their daily production by approximately 1.0 million barrels of oil equivalent per day, with oil making up 35% of this figure. This development is particularly impactful as it contributes to a sustainable free cash flow generation, positioning the company to yield capital returns that are above the industry average.
Additionally, Sorbara is optimistic about Magnolia Oil & Gas’s financial health, noting that its underleveraged balance sheet coupled with a robust liquidity position offers the company strategic flexibility. This could enable further enhancement of its capital returns or the pursuit of additional accretive acquisitions. The company’s guidance for capital expenditures and anticipated high single-digit oil production growth align with these positive attributes, reinforcing the rationale behind the Buy rating.

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Magnolia Oil & Gas (MGY) Company Description:

Magnolia Oil & Gas Corp. is engaged in oil and gas exploration and production business. It operates assets located in the Eagle Ford Shale and Austin Chalk formations in South Texas. The company was founded on July 31, 2018 and is headquartered in Houston, TX.