Magnolia Oil & Gas (MGY) Update - April 19

[dan_s]

None of MGY's production is hedged. It has a clean balance sheet and it generates a lot of FCF.

I have updated my forecast for higher natural gas prices and I have also increased the NGL prices used in my forecast.

My valuation of MGY increases by $1.50 to $32.00 per share. At the time of this post, it was trading at $26.30. Since April 1 three analysts have updated their price targets to $28, $30 and $31.

If MGY'a Q1 results and updated guidance confirm my forecast model assumption, an increase in the valuation multiple should be justified.

2022 operating cash flow s/b close to $1.25 Billion. MGY likes to keep their capex spending under 60% of EBITDAX, so with more cash flow they might be adding another drilling rig this summer.