Magnolia Oil & Gas (MGY) Update - Jan 15

Magnolia Oil & Gas (MGY) Update - Jan 15

Postby dan_s » Fri Jan 15, 2021 10:39 am

I have updated my forecast/valuation model for MGY and posted it to the EPG website.
MGY is trading for $8.77 at the time of this post.
I am raising my valuation by $2.50 to $11.00 per share. < Based on 2021 realized prices of $52.50/bbl oil, $2.50/mcf ngas, $14.50/bbl of NGLs. Eagle Ford oil sells at a premium to WTI.

RISK >>> NONE OF MGY'S OIL PRODUCTION IS HEDGED. ~50% of their natural gas is hedged thru 8/31/2021 with collars that have $2.31 floors and $3.00 ceilings. So... this stock is for those of you that believe oil prices are going higher.

Magnolia says that their 2021 capital program will be ~60% of 2021 EBITDAX, which based on my forecast model should be approximately $300 million. This compares to my 2021 operating cash flow forecast of $545 million $2.17/share.

They should report an increase in production from Q3 to Q4 of ~9% to ~59,000 Boepd.

The Company has a strong balance sheet and plenty of liquidity. For its size it has a large number of the Wall Street Gang following it. On 12/10/2020 Goldman Sachs rated it a BUY with a $9.50 target. Since oil prices are much higher today, I expect GS to give this one a much higher price target after MGY announces Q4 results and their year-end proven reserve report.
Dan Steffens
Energy Prospectus Group
dan_s
 
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