Magnolia Oil & Gas (MGY) Update - March 16

[dan_s]

I have updated my forecast/valuation model for MGY and I am raising my valuation by $3 to $30.50 per share.

NONE of MGY's production is hedged. The Company's production mix is approximately 45% crude oil, 31% natural gas and 24% NGLs.

Actual realized commodity prices in Q4 2021 were $76.16/bbl of oil, $5.07/mcf of ngas and $35.41/bbl of NGLs.

My 2022 forecast assumes MGY's realized prices will average $97/bbl of oil, $3.75/mcf of ngas and $32/bbl of NGLs. If so, the Company should $1.1 to $1.2 billion of operating cash flow this year, $5.19/share. 6X operating CFPS is a reasonable price target.

MGY's D&C capital expenditure budget is $350 million, so lots of free cash flow to fund dividend increases and stock buybacks.

On March 14 Wells Fargo increased MGY's price target to $29.00.

MGY was trading at $21.47 at the time of this post.