Breaking Down Magnolia Oil & Gas Corporation (MGY) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and wondering how Magnolia Oil & Gas Corporation is performing? Did you know that in 2024, Magnolia reported a net income attributable to Class A Common Stock of $366.0 million, which translates to $1.94 per diluted share? With the company returning approximately 88% of its free cash flow to shareholders through dividends and share repurchases, and holding $260.0 million in cash at year's end, let's dive into a detailed analysis of Magnolia's financial health and what these figures mean for investors like you.

Magnolia Oil & Gas Corporation (MGY) Revenue Analysis

Understanding where Magnolia Oil & Gas Corporation (MGY) generates its revenue is crucial for investors. Let's delve into the specifics of their revenue streams.

Primary Revenue Sources:

Magnolia Oil & Gas Corporation primarily generates revenue through the sale of:

• Crude Oil
• Natural Gas
• Natural Gas Liquids (NGLs)

These commodities are extracted from their operations in the Eagle Ford Shale and Austin Chalk formations in South Texas.

Year-over-Year Revenue Growth:

Analyzing Magnolia Oil & Gas Corporation's year-over-year revenue growth provides insights into the company's performance and market conditions. According to the 2024 fiscal year data:

In 2024, Magnolia Oil & Gas Corporation reported total revenue of $1.57 billion, a decrease of 12.2% compared to $1.79 billion in 2023. This decline was primarily due to lower realized prices for oil, natural gas, and NGLs.

Contribution of Business Segments:

Magnolia Oil & Gas Corporation operates primarily in one business segment: the exploration, development, and production of oil, natural gas, and NGLs. All of the company's revenue is derived from this segment. For 2024:

• Crude oil sales accounted for approximately 61.4% of total revenues.
• Natural gas sales accounted for approximately 22.6% of total revenues.
• NGL sales accounted for approximately 16.0% of total revenues.

Significant Changes in Revenue Streams:

A notable change in Magnolia Oil & Gas Corporation's revenue streams for 2024 was the decrease in overall revenue due to lower commodity prices. Here's a breakdown:

• The average realized oil price decreased from $78.04 per barrel in 2023 to $72.74 per barrel in 2024.
• Natural gas prices decreased from $3.46 per Mcf in 2023 to $2.04 per Mcf in 2024.
• NGL prices also saw a decrease, from $24.51 per barrel in 2023 to $21.44 per barrel in 2024.

These price declines significantly impacted the company’s revenue despite consistent production levels.

For a deeper dive into the investors of Magnolia Oil & Gas Corporation, check out: Exploring Magnolia Oil & Gas Corporation (MGY) Investor Profile: Who’s Buying and Why?

Magnolia Oil & Gas Corporation (MGY) Profitability Metrics

Analyzing Magnolia Oil & Gas Corporation's profitability involves examining several key metrics that provide insights into the company's financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins, as well as trends in profitability over time and comparisons with industry averages.

Gross Profit: Gross profit is calculated as revenue less the cost of goods sold (COGS). It represents the profit a company makes after deducting the costs associated with producing and selling its products or services. For Magnolia Oil & Gas, monitoring the gross profit margin—gross profit divided by revenue—helps assess how efficiently the company manages its production costs.

Operating Profit: Operating profit, also known as earnings before interest and taxes (EBIT), is calculated by subtracting operating expenses from gross profit. Operating expenses include costs such as salaries, rent, and depreciation. The operating profit margin—operating profit divided by revenue—indicates how well the company controls its operating expenses and generates profit from its core business operations.

Net Profit: Net profit is the profit remaining after deducting all expenses, including interest, taxes, and other non-operating expenses, from revenue. The net profit margin—net profit divided by revenue—is a comprehensive measure of overall profitability. It reflects the percentage of revenue that translates into profit for shareholders after all costs and expenses are considered.

To provide a clearer picture, here's a hypothetical table illustrating these profitability metrics for Magnolia Oil & Gas Corporation:

Trends in Profitability Over Time: Analyzing trends in profitability over several years provides insights into the company's ability to sustain and improve its financial performance. Consistent increases in gross, operating, and net profit margins suggest effective management and operational efficiency. Conversely, declining margins may indicate challenges such as rising costs, increased competition, or inefficient operations.

Comparison of Profitability Ratios with Industry Averages: Comparing Magnolia Oil & Gas's profitability ratios with industry averages helps benchmark its performance against its peers. Higher-than-average margins suggest a competitive advantage, while lower-than-average margins may indicate areas for improvement.

Analysis of Operational Efficiency: Operational efficiency is critical for maintaining and improving profitability. Key aspects to consider include:

• Cost Management: Efficient cost management involves controlling and reducing production and operating costs. This can include negotiating better prices with suppliers, streamlining operations, and implementing cost-saving technologies.
• Gross Margin Trends: Monitoring gross margin trends helps assess the company's ability to maintain pricing power and manage production costs. A rising gross margin indicates improved efficiency, while a declining margin may signal increased competition or rising input costs.

In summary, a comprehensive analysis of Magnolia Oil & Gas Corporation's profitability involves examining gross profit, operating profit, and net profit margins, tracking trends over time, comparing ratios with industry averages, and assessing operational efficiency. These insights are crucial for investors seeking to understand the company's financial health and potential for future growth.

See also Mission Statement, Vision, & Core Values of Magnolia Oil & Gas Corporation (MGY).

Magnolia Oil & Gas Corporation (MGY) Debt vs. Equity Structure

Understanding how Magnolia Oil & Gas Corporation (MGY) manages its debt and equity is crucial for investors. This involves looking at the company's debt levels, its debt-to-equity ratio, and how it strategically uses debt and equity to fund its operations and growth. Examining these elements provides a clearer picture of the company's financial risk and stability. For further insights, you might find this resource helpful: Breaking Down Magnolia Oil & Gas Corporation (MGY) Financial Health: Key Insights for Investors.

As of the fiscal year 2024, Magnolia Oil & Gas Corporation's debt profile includes both short-term and long-term obligations. While specific figures fluctuate, understanding the composition of this debt is essential for assessing the company's immediate and future financial obligations.

• Overview of Debt Levels: Magnolia Oil & Gas Corporation strategically manages its debt, balancing short-term needs with long-term financial health.
• Short-Term Debt: This includes obligations due within a year, such as accounts payable and short-term loans, impacting immediate liquidity.
• Long-Term Debt: Consisting of bonds and long-term loans, this debt supports long-term investments and operational expansions.

The debt-to-equity ratio is a key metric for evaluating Magnolia Oil & Gas Corporation's financial leverage. It indicates the proportion of debt the company uses to finance its assets relative to the value of shareholders' equity. A high ratio suggests a greater reliance on debt, which can amplify both profits and losses, while a lower ratio indicates a more conservative approach.

• Debt-to-Equity Ratio: Comparing Magnolia Oil & Gas Corporation's ratio to industry averages provides insights into its financial risk relative to its peers.
• Industry Standards: Analyzing where Magnolia Oil & Gas Corporation's debt-to-equity ratio stands against industry benchmarks helps determine if the company is over-leveraged or conservatively financed.

Recent activities, such as debt issuances, credit ratings, or refinancing, can significantly impact Magnolia Oil & Gas Corporation's financial structure. These actions can lower interest rates, extend debt maturities, or provide additional capital for investments.

• Debt Issuances: New bond offerings or loans can provide capital for growth but increase debt levels.
• Credit Ratings: Ratings from agencies like Moody's and S&P reflect the company's creditworthiness and influence borrowing costs.
• Refinancing: Replacing existing debt with new debt at more favorable terms can improve cash flow and reduce interest expenses.

Magnolia Oil & Gas Corporation strategically balances debt and equity to optimize its capital structure. Debt financing can provide tax advantages and maintain ownership control, while equity funding can reduce financial risk and improve the company's balance sheet.

• Strategic Balance: The company aims to strike a balance that supports growth while maintaining financial stability.
• Debt Financing: Utilizing debt can lower the cost of capital due to the tax deductibility of interest payments.
• Equity Funding: Issuing new shares can strengthen the balance sheet and fund projects without increasing leverage.

Understanding these elements of Magnolia Oil & Gas Corporation's debt and equity structure is essential for making informed investment decisions. Monitoring these factors over time provides valuable insights into the company's financial strategy and risk profile.

Magnolia Oil & Gas Corporation (MGY) Liquidity and Solvency

Assessing Magnolia Oil & Gas Corporation's (MGY) financial health requires a close look at its liquidity and solvency positions. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations.

Here's an overview of MGY's liquidity, incorporating data from the 2024 fiscal year:

• Current Ratio: The current ratio, a key metric for assessing liquidity, was reported at 1.41 as of December 31, 2024. This indicates that MGY has $1.41 of current assets for every $1 of current liabilities.
• Quick Ratio: The quick ratio, which excludes inventories from current assets, stood at 0.95 in the fourth quarter of 2024. This suggests a slightly more conservative view of liquidity, as it focuses on the most liquid assets.

A current ratio above 1 generally indicates good liquidity, while a quick ratio close to 1 suggests the company can comfortably meet its short-term obligations with its most liquid assets.

Analysis of Working Capital Trends:

Working capital, the difference between a company's current assets and current liabilities, provides insights into operational efficiency and short-term financial health. While specific working capital figures vary, it's essential to monitor the trend to identify potential issues. For example, the change in working capital was reported at -$22.928 million for a period in 2024. Declining working capital could indicate challenges in managing current assets and liabilities effectively.

Cash Flow Statements Overview:

An examination of cash flow statements reveals the trends in operating, investing, and financing activities, offering a comprehensive view of how Magnolia Oil & Gas generates and uses cash.

• Operating Activities: In 2024, net cash provided by operating activities was $920.9 million.
• Investing Activities: Capital expenditures on drilling, completions, and associated facilities totaled $477.0 million for the full year 2024.
• Financing Activities: Magnolia returned 88% of its free cash flow, or nearly $380 million to shareholders during 2024 through dividends and share repurchases.

Potential Liquidity Concerns or Strengths:

• Strengths:
• Magnolia Oil & Gas ended 2024 with $260.0 million in cash and an undrawn $450 million revolving credit facility.
• Consistent free cash flow generation, with $430.2 million generated in 2024.
• Concerns:
• Magnolia's liquidity is lower than the industry average.

Solvency:

Regarding solvency, Magnolia Oil & Gas appears to be in a strong position. The company maintained its long-term debt at $400 million related to the 2026 Senior Notes, with no outstanding borrowings under its RBL Facility. Key solvency ratios as of the most recent quarter include:

• Total Debt / Equity: 20.86%
• Total Debt / Capital: 17.26%
• LT Debt / Equity: 20.24%
• LT Debt / Total Capital: 16.74%

These ratios indicate a conservative capital structure with a manageable level of debt relative to equity and capital.

Additionally, Magnolia's financial statements and related footnotes are available in its Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 19, 2025.

See more about Magnolia Oil & Gas Corporation (MGY) Mission Statement, Vision, & Core Values of Magnolia Oil & Gas Corporation (MGY).

Magnolia Oil & Gas Corporation (MGY) Valuation Analysis

Determining whether Magnolia Oil & Gas Corporation (MGY) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment.

Key valuation ratios provide a snapshot of how the market prices MGY relative to its earnings, book value, and cash flow:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of MGY's earnings. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers or MGY's historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares MGY's market capitalization to its book value of equity. It can help investors assess whether the stock price is justified by the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares MGY's enterprise value (market cap plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a more comprehensive valuation measure than P/E, especially for companies with significant debt.

Analyzing MGY's stock price trends over the past year (or longer) provides context on market sentiment and investor confidence. Significant price appreciation could suggest overvaluation, while a declining price might indicate undervaluation or reflect concerns about the company's prospects.

For insights into Magnolia Oil & Gas Corporation's strategic direction, explore Mission Statement, Vision, & Core Values of Magnolia Oil & Gas Corporation (MGY).

If applicable, dividend yield and payout ratios offer additional insights into valuation. A higher dividend yield can make a stock more attractive to income-seeking investors, potentially supporting its valuation. The payout ratio indicates the proportion of earnings distributed as dividends, which can affect the company's ability to reinvest in growth.

Analyst consensus on MGY's stock valuation—whether it's rated as a buy, hold, or sell—reflects the collective opinion of financial analysts who cover the company. These ratings are typically based on in-depth research and financial modeling, providing valuable perspectives on MGY's potential upside or downside.

Magnolia Oil & Gas Corporation (MGY) Risk Factors

Magnolia Oil & Gas Corporation (MGY) faces a variety of risks that could impact its financial health. These risks span internal operational challenges, external market pressures, and strategic considerations. Understanding these potential pitfalls is crucial for investors.

Here are some key risks that Magnolia Oil & Gas Corporation faces:

• Industry Competition: The oil and gas industry is intensely competitive. Magnolia competes with numerous other companies, including major integrated oil companies, national oil companies, and independent producers. Increased competition could lead to lower prices and reduced profitability.
• Regulatory Changes: Changes in environmental regulations, both at the state and federal levels, can significantly impact Magnolia's operations. Stricter regulations could increase operating costs and limit drilling opportunities.
• Market Conditions: Oil and gas prices are subject to significant volatility due to global economic conditions, geopolitical events, and supply and demand imbalances. A sustained decline in prices could reduce Magnolia’s revenues and cash flow.
• Operational Risks: Exploration and production activities are inherently risky, with potential for accidents, equipment failures, and environmental damage. These events could lead to significant financial losses and liabilities.
• Financial Risks: Magnolia's financial performance is closely tied to its ability to manage debt and capital expenditures effectively. High debt levels and poor investment decisions could strain the company’s financial resources.
• Strategic Risks: The success of Magnolia's growth strategy depends on its ability to acquire and develop new reserves. Failure to execute its strategic plans effectively could limit its long-term growth potential.

Magnolia Oil & Gas Corporation's most recent 10-K filing highlights several key risk factors that could affect its business, financial condition, and results of operations. These risks include:

Price Volatility:

Magnolia's revenues, operating results, and cash flows are heavily dependent on the prices of oil, natural gas, and natural gas liquids (NGLs). These prices are subject to volatile fluctuations due to factors such as:

• Global and regional supply and demand
• Economic conditions
• Geopolitical events
• Weather patterns
• Technological advancements
• Government regulations

For instance, the 2024 average West Texas Intermediate (WTI) crude oil price was approximately $77 per barrel, while natural gas prices at the Henry Hub averaged around $2.70 per million British thermal units (MMBtu). Significant price declines could materially and adversely affect Magnolia’s financial performance.

Operational Risks:

Magnolia's operations are subject to inherent risks, including:

• Drilling and completion risks
• Production risks
• Environmental risks
• Geological risks

These risks can result in:

• Well blowouts
• Fires
• Spills
• Equipment failures
• Other accidents

Such incidents can cause substantial financial losses, environmental damage, and regulatory penalties. For example, in 2024, Magnolia reported approximately $5 million in expenses related to environmental remediation and safety enhancements.

Financial Risks:

Magnolia's financial risks include:

• Liquidity risk
• Credit risk
• Interest rate risk

The company’s ability to fund its capital expenditures, acquisitions, and debt service obligations depends on its access to capital markets and its operating cash flows. As of December 31, 2024, Magnolia had approximately $400 million in outstanding debt. Fluctuations in interest rates and credit market conditions could increase borrowing costs and reduce financial flexibility.

Regulatory and Environmental Risks:

Magnolia operates in a heavily regulated industry, and changes in laws and regulations can significantly impact its operations. Key regulatory areas include:

• Environmental regulations
• Drilling permits
• Transportation regulations

Stricter environmental standards, such as those related to greenhouse gas emissions and water usage, could increase compliance costs and limit Magnolia’s ability to develop new reserves. In 2024, Magnolia spent approximately $15 million on environmental compliance activities.

Mitigation Strategies:

Magnolia employs several strategies to mitigate these risks:

• Hedging: Using financial instruments to manage price volatility.
• Insurance: Maintaining insurance coverage to protect against operational risks.
• Compliance Programs: Implementing robust compliance programs to adhere to regulatory requirements.
• Diversification: Diversifying its asset base to reduce reliance on any single area or resource.

For example, Magnolia’s hedging program aims to protect a portion of its future production from price declines. In 2024, the company hedged approximately 50% of its oil and gas production.

Below is a summary table of key financial figures for Magnolia Oil & Gas Corporation (MGY) based on the latest available data from 2024:

Understanding these risks and mitigation strategies is essential for investors to assess the potential impact on Magnolia's financial performance and make informed investment decisions. To gain a deeper understanding of the company's values and strategic direction, consider exploring: Mission Statement, Vision, & Core Values of Magnolia Oil & Gas Corporation (MGY).

Magnolia Oil & Gas Corporation (MGY) Growth Opportunities

Magnolia Oil & Gas Corporation's future growth prospects hinge on several key factors, including strategic acquisitions, efficient operations, and a focus on shareholder returns. The company's approach to capital allocation and its operational efficiencies are crucial in assessing its potential for future expansion and profitability.

Key growth drivers for Magnolia Oil & Gas Corporation include:

• Operational Efficiencies: Magnolia focuses on lowering costs and improving well productivity.
• Strategic Acquisitions: The company has a track record of making strategic acquisitions to expand its asset base.
• Shareholder Returns: A commitment to returning capital to shareholders through dividends and share repurchases.

Magnolia Oil & Gas Corporation emphasizes disciplined capital spending, which is evident in their financial strategy. For example, the company's capital expenditures have been carefully managed to maximize returns while maintaining a strong balance sheet. In 2024, Magnolia demonstrated its ability to generate substantial free cash flow, which supports both reinvestment in the business and returning capital to shareholders.

Future revenue growth projections and earnings estimates for Magnolia Oil & Gas Corporation are influenced by oil and gas prices, production levels, and the company's ability to execute its operational plans. Analysts' estimates can vary, but they generally consider factors such as commodity price forecasts, production growth rates, and cost management efforts.

Strategic initiatives and partnerships that may drive future growth include:

• Technology Adoption: Embracing new technologies to enhance drilling and production efficiencies.
• Infrastructure Development: Investing in infrastructure to support increased production and reduce transportation costs.
• Market Expansion: Exploring opportunities to expand its footprint in core operating areas.

Magnolia Oil & Gas Corporation's competitive advantages that position the company for growth include:

• Low-Cost Operations: Magnolia's focus on cost control enhances its profitability even in lower commodity price environments.
• Strong Balance Sheet: A healthy financial position provides flexibility to pursue acquisitions and other growth opportunities.
• Experienced Management Team: A seasoned leadership team with a proven track record in the oil and gas industry.

Here’s a look at some key operational and financial data points for Magnolia Oil & Gas Corporation:

For more insight into the company's values and long-term goals, review Mission Statement, Vision, & Core Values of Magnolia Oil & Gas Corporation (MGY).