New York Stock Exchange (NYSE) · Energy
Magnolia Oil & Gas Corporation MGY
SpeculativeScore band: 40–50
The thesis, in one sentence
After closing an acquisition, this oil producer trades at a multiple and free-cash-flow yield that already match what the forward curve and its own price collar imply, leaving little valuation disagreement, with synergies not due until well after close.
Written for this site in plain English, without figures. The arithmetic is in the full report.
Key risks
- The deal is neutral to cash flow per share until synergies arrive
- Promised synergies are not due for a long stretch after closing
- The valuation leans on a forward oil-price curve holding
What would change the verdict
- Debt relative to equity rises into significantly more levered territory
- Free cash flow yield falls to a level that erodes the case
- Share count rises materially beyond current levels
- Return on equity falls below a level that still looks attractive
Read it yourself
Step five of the method is the reader's: open the latest annual or quarterly report and read it before acting on anything here. A score is a summary, and a summary is not understanding.
Next report expected 2026-11-04. The deep report was written against the filings available on 2026-09-18; anything published since is not in it.
Price, one year
DCF valuation range
range of the DCF modelsbase casetoday's price
Valuation range, shape only. Figures in the full version.
Monte Carlo outcome shape
scenarios below today's pricescenarios above today's pricetoday's price
Distribution of simulated outcomes around today's price. Bar heights only; the scale and the percentiles are in the full version.
Where the money goes
Last four reported quarters, 2025-09 → 2026-06, in USD. Filings data as gathered on 2026-09-18. Figures rounded to three significant digits.
Chapter one: Executive summary (1 page: thesis, estimated value, verdict)
Deep-value analysis — Magnolia Oil & Gas Corporation (NYSE: MGY)
September 18, 2026 · reference price … (2026-09-18, indicatori tracker) · sector Energy / Oil & Gas E&P
Trigger: deep_delta.py = FULL on 8-K item 2.01 — completion of the WildFire Energy acquisition, filed 2026-09-14 (accession 0001104659-26-107498), event from 2026-09-10.
Executive summary (1 page: thesis, estimated value, verdict)
On September 10, 2026, Magnolia stopped being the company someone bought in 2024. It closed the WildFire Energy acquisition — …lion cash (out of … contracted, before final adjustments), 32,203,000 Class A shares, and the assumption of …lion of 7.50% senior notes due 2029. The accounting consideration recognized is …lion (cash plus …lion in stock, valued at the 2026-08-31 price of …); total transaction value, including assumed debt, is ~… billion (8-K 2026-09-14, Note 2 of Exhibit 99.4). For a company that was worth ~… billion in enterprise value before the announcement, this isn't an acquisition — it's a merger disguised as one.
Share count rises from 183.703 million (2026-06-30) to 269.166 million: 53,263,158 issued publicly at … on 2026-07-22 (…lion net) plus 32.203 million to the seller. Dilution of 46.5%; pre-July shareholders now own 68.2% of the company. Gross debt rises from … to …lion (400 at 6.875% due 2032, 600 at 7.50% due 2029 assumed, 500 at 6.625% due 2034 issued 2026-08-05, 674.2 drawn on the revolver). Pro forma cash at 2026-06-30 is …lion, versus 295.9. The fortress balance sheet management touted in its March 2026 shareholder letter ("just …lion of long term debt," "best-in-class in the industry") vanished in eight weeks.
The thesis. MGY trades at a normalized FCFE yield of ~11% and 5.0× normalized EBITDA, at a moment when the spot price of oil (…/bbl on 2026-09-18) is ~45% above what the forward curve assumes for the second half of 2027. The market isn't paying for the spot price — the stock is at … below the March 2026 high (…) and below EMA50 and EMA200, with RSI14 at 42. That's, essentially, correct: at a normalized oil price of …/bbl, the combined company produces ~…lion of FCFE per year, and the stock is close to fair value, not cheap. The apparent discount comes from the spot price, not the asset.
The estimated value. Triangulation across five models gives a range from … (DCF bear, …/bbl) to … (DCF bull, …/bbl), with a median at … (EPV Greenwald). The Monte Carlo simulation over 20,000 scenarios, with the same central assumptions, gives a median intrinsic value of … (MOS …), P10 at … and P90 at …, with an undervaluation probability of …% — but only …% probability of finding a margin of safety above 30%. The range is wide because the entire thesis is a function of a single input nobody controls: the price of oil.
Verdict: MONITOR (the weighted GBL grid gives …%, i.e. the mechanical "SPECULATIVE" threshold, down from 49.2% — the whole difference comes from the dilution penalty; I discuss the divergence in the last chapter). It isn't a buy today, but nor is it a company to drop from the universe. Three reasons I'm not buying: (1) the transaction is, at normalized prices and before synergies, neutral on FCF per share — … combined versus … standalone, i.e. the difference is at the third decimal; all the added value depends on the …lion of promised synergies, only "run-rate by end of 2027"; (2) it was financed by issuing shares at … three weeks after the company was buying back its own shares at … in June — a sign reversal no textbook Outsider would sign off on; (3) the purchased reserves had negative revisions of 16.5 MMboe in 2025 (… of the opening base), and the company itself announces that WildFire's PUDs will be reduced when they move onto MGY's one-year development plan. One reason I'm not rejecting it: the purchased asset is, per unit, better than what MGY already had — … cash margin per boe versus … and it takes the reserve life from 5.8 years to 8.9 years, which was MGY's structural problem.
The entry point that would change the verdict: below ~… (MOS above … in the simulation) or confirmation of at least 60 of the 100 million of synergies in the 2026-11-04 report and the year-end one.
Figures were removed from this excerpt. The full report opens free for five tickers a week — see what's open now.
Full report contents
- Executive summary (1 page: thesis, estimated value, verdict)
- 🔒 The business and the moat (how it makes money, competitive advantage, durability) (Available in the full report)
- 🔒 Management and capital allocation (track record, buybacks/dividends/acquisitions, skin in the game) (Available in the full report)
- 🔒 What has changed in the last 4 quarters (line-by-line balance sheet from the data pack, margins, cash conversion — explains EVERY large swing) (Available in the full report)
- 🔒 Balance-sheet analysis — Quality of Earnings (Thornton O'Glove method) (Available in the full report)
- 🔒 CEO profile — Outsider traits (William Thorndike method) (Available in the full report)
- 🔒 Accounting red flags (accruals, dilution, one-offs, accounting-policy changes) (Available in the full report)
- 🔒 Triangulated valuation (conservative DCF with explicit assumptions + earnings power value + 5-year historical multiples + Monte Carlo from step 5; a range, not a point) (Available in the full report)
- 🔒 Pre-mortem (why the thesis could be wrong — 3 concrete scenarios) (Available in the full report)
- 🔒 Verdict compared to the tracker's GBL score (convergence/divergence and why) (Available in the full report)
- 🔒 Markers (Available in the full report)
- 🔒 Sources (Available in the full report)
Evaluation history
| Date | Verdict |
|---|---|
| 2026-08-16 | Monitor |
| 2026-08-18 | Monitor |
| 2026-09-06 | Monitor |
| 2026-09-18 | Speculative |
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