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Magnolia (MGY) Q2 Earnings Rise Y/Y, Revenues Lag Estimates
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Magnolia Oil & Gas Corporation (MGY - Free Report) reported second-quarter 2024 net profit of 51 cents per share, reflecting an increase from the prior-year quarter's 48 cents. The outperformance can be attributed to a healthy increase in production volumes and higher oil prices year over year.
The oil and gas exploration and production company’s total revenues came in at $336.7 million, which missed the Zacks Consensus Estimate of $341 million. It was due to lower-than-expected revenues from natural gas. Moreover, the metric totaled $18.6 million, which missed the consensus mark of $24.3 million. However, the top line increased 4.4% from $280.3 million recorded in the year-ago period.
In the quarter under review, the company recorded $269.4 million in net cash from operating activities and achieved a free cash flow of $96.7 million. Magnolia’s operating income was 40% of revenues.
On Jul 29, South Texas-focused Magnolia declared a cash dividend of 13 cents per share of Class A common stock and a cash distribution of 13 cents per share of Class B unit, payable on Sep 3, to its shareholders of record as of Aug 9.
Magnolia repurchased 4 million shares of its common stock (Classes A and B) for $102.7 million in the quarter under review. The company has a remaining $5.9 million share repurchase authorization allocated for open market purchases.
MYG distributed approximately $130 million to its shareholders in the second quarter through a combination of dividend payments and share repurchases. As of quarter-end, the company maintained a robust cash position of $275.7 million and had an undrawn revolving credit facility of $450 million.
Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise
The average daily total output of 90,207 barrels of oil equivalent per day (boe/d) increased from the year-ago quarter’s figure of 81,881 boe/d. Additionally, the figure surpassed our estimate of 89,000 boe/d. Oil and gas production increased 10% year over year. Oil volumes totaled 37,943 barrels per day (bpd), up 11.4% from the year-ago quarter’s level. The figure exceeded our estimate of 37,200 bpd. Natural gas volumes reached 164,641 thousand cubic feet per day (Mcf/d), up 8.7% from the second quarter of 2023.The figure also exceeded our expectations of 162,800 Mcf/d.
The average realized crude oil price was $79.74 per barrel, indicating a 10.8% increase from the year-ago period’s level of $71.98. The average realized natural gas liquids price was $18.96 per barrel, implying a 7.3% increase from the year-ago period’s figure. However, natural gas prices decreased 17.9% year over year to $1.24 per thousand cubic feet. MGY recorded an average sales price per boe of $41.02 compared with $37.62 a year ago.
Balance Sheet & Capital Expenditure
As of Jun 30, Magnolia had cash and cash equivalents of $275.7 million and long-term debt of $394.1 million. The total debt-to-total capital was 17%.
The company spent $123.4 million on its capital program in the reported quarter. Operating expenses increased to $202.4 million from $159 million in the year-ago period.
Guidance
Magnolia plans to maintain its current operating tempo of two drilling rigs and one completion crew throughout 2024. Despite consistent activity levels compared to last year, significant cost reductions and operational enhancements will allow us to drill, complete and bring online more wells. This will drive substantial high-margin growth.
MGY's primary focus for 2024 is developing multi-well pads in the Giddings area. The company plans to execute a smaller-scale development program in the Karnes area and conduct appraisal well activities across its asset base. In Giddings, Magnolia anticipates drilling multi-well pads with lateral lengths averaging 8,500 feet, an increase from last year.
The company expects full-year 2024 capital spending and production to increase. Drilling and completion (D&C) capital is projected to range from $450 to $480 million. This investment is anticipated to drive high single-digit growth in total production compared to 2023, with oil production pacing similarly.
Third-quarter D&C capital expenditures are estimated at $120 million and total production for the quarter is expected to reach 91 thousand barrels of oil equivalent per day. Magnolia's operational expertise is being leveraged to enhance field performance and efficiency on recently acquired assets. This is expected to maintain low unit operating costs throughout the second half of 2024. Building on its strong track record in the Giddings area, the company expects that cost optimization initiatives will boost margins and free cash flow on these assets.
Oil price differentials are projected to be $3 per barrel below the Magellan East Houston benchmark. Magnolia maintains a fully unhedged position for its oil and natural gas production. The fully diluted share count for the third quarter of 2024 is anticipated to be 199 million, representing a roughly 5% decrease compared to the same period in 2023.
While it's early in the earnings season, there have been a few key energy releases thus far. Let’s glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT’s bottom line underperformed the year-ago quarter’s reported figure of 87 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company’s shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.
Houston, TX-based Halliburton Company (HAL - Free Report) , an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.
As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.
As of Jun 30, 2024, Kinder Morgan reported $98 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For the full year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.
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Magnolia (MGY) Q2 Earnings Rise Y/Y, Revenues Lag Estimates
Magnolia Oil & Gas Corporation (MGY - Free Report) reported second-quarter 2024 net profit of 51 cents per share, reflecting an increase from the prior-year quarter's 48 cents. The outperformance can be attributed to a healthy increase in production volumes and higher oil prices year over year.
The oil and gas exploration and production company’s total revenues came in at $336.7 million, which missed the Zacks Consensus Estimate of $341 million. It was due to lower-than-expected revenues from natural gas. Moreover, the metric totaled $18.6 million, which missed the consensus mark of $24.3 million. However, the top line increased 4.4% from $280.3 million recorded in the year-ago period.
In the quarter under review, the company recorded $269.4 million in net cash from operating activities and achieved a free cash flow of $96.7 million. Magnolia’s operating income was 40% of revenues.
On Jul 29, South Texas-focused Magnolia declared a cash dividend of 13 cents per share of Class A common stock and a cash distribution of 13 cents per share of Class B unit, payable on Sep 3, to its shareholders of record as of Aug 9.
Magnolia repurchased 4 million shares of its common stock (Classes A and B) for $102.7 million in the quarter under review. The company has a remaining $5.9 million share repurchase authorization allocated for open market purchases.
MYG distributed approximately $130 million to its shareholders in the second quarter through a combination of dividend payments and share repurchases. As of quarter-end, the company maintained a robust cash position of $275.7 million and had an undrawn revolving credit facility of $450 million.
Magnolia Oil & Gas Corp Price, Consensus and EPS Surprise
Magnolia Oil & Gas Corp price-consensus-eps-surprise-chart | Magnolia Oil & Gas Corp Quote
Production & Prices
The average daily total output of 90,207 barrels of oil equivalent per day (boe/d) increased from the year-ago quarter’s figure of 81,881 boe/d. Additionally, the figure surpassed our estimate of 89,000 boe/d. Oil and gas production increased 10% year over year. Oil volumes totaled 37,943 barrels per day (bpd), up 11.4% from the year-ago quarter’s level. The figure exceeded our estimate of 37,200 bpd. Natural gas volumes reached 164,641 thousand cubic feet per day (Mcf/d), up 8.7% from the second quarter of 2023.The figure also exceeded our expectations of 162,800 Mcf/d.
The average realized crude oil price was $79.74 per barrel, indicating a 10.8% increase from the year-ago period’s level of $71.98. The average realized natural gas liquids price was $18.96 per barrel, implying a 7.3% increase from the year-ago period’s figure. However, natural gas prices decreased 17.9% year over year to $1.24 per thousand cubic feet. MGY recorded an average sales price per boe of $41.02 compared with $37.62 a year ago.
Balance Sheet & Capital Expenditure
As of Jun 30, Magnolia had cash and cash equivalents of $275.7 million and long-term debt of $394.1 million. The total debt-to-total capital was 17%.
The company spent $123.4 million on its capital program in the reported quarter. Operating expenses increased to $202.4 million from $159 million in the year-ago period.
Guidance
Magnolia plans to maintain its current operating tempo of two drilling rigs and one completion crew throughout 2024. Despite consistent activity levels compared to last year, significant cost reductions and operational enhancements will allow us to drill, complete and bring online more wells. This will drive substantial high-margin growth.
MGY's primary focus for 2024 is developing multi-well pads in the Giddings area. The company plans to execute a smaller-scale development program in the Karnes area and conduct appraisal well activities across its asset base. In Giddings, Magnolia anticipates drilling multi-well pads with lateral lengths averaging 8,500 feet, an increase from last year.
The company expects full-year 2024 capital spending and production to increase. Drilling and completion (D&C) capital is projected to range from $450 to $480 million. This investment is anticipated to drive high single-digit growth in total production compared to 2023, with oil production pacing similarly.
Third-quarter D&C capital expenditures are estimated at $120 million and total production for the quarter is expected to reach 91 thousand barrels of oil equivalent per day. Magnolia's operational expertise is being leveraged to enhance field performance and efficiency on recently acquired assets. This is expected to maintain low unit operating costs throughout the second half of 2024. Building on its strong track record in the Giddings area, the company expects that cost optimization initiatives will boost margins and free cash flow on these assets.
Oil price differentials are projected to be $3 per barrel below the Magellan East Houston benchmark. Magnolia maintains a fully unhedged position for its oil and natural gas production. The fully diluted share count for the third quarter of 2024 is anticipated to be 199 million, representing a roughly 5% decrease compared to the same period in 2023.
MGY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Energy Earnings So Far
While it's early in the earnings season, there have been a few key energy releases thus far. Let’s glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT’s bottom line underperformed the year-ago quarter’s reported figure of 87 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company’s shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.
Houston, TX-based Halliburton Company (HAL - Free Report) , an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.
As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.
As of Jun 30, 2024, Kinder Morgan reported $98 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at the quarter-end. For the full year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.