Magnolia Oil & Gas started as Buy at BofA on capital discipline, cash return priority

Magnolia Oil & Fuel (NYSE:MGY) +0.7% in Tuesday’s buying and selling as Financial institution of America initiates protection with a Purchase ranking and $25 worth goal, citing probably the most capital environment friendly enterprise fashions within the business that caps spending at 55% of estimated EBITDA.

“Amidst a sector consolidation pattern that we consider is pushed by stock accumulation, Magnolia’s outlook relies on useful resource delineation that may greater than double the ten years we consider is an inexpensive base case,” BofA’s Noah Hungness writes.

The analyst sees aggressive upside vs. small-to-midcap friends for Magnolia (MGY), “with continuation of the profitable useful resource evaluation that comes with continued D&C operational execution we see each quarter the catalyst we consider can help share outperformance.”

Magnolia’s (MGY) acreage place that spans 498K acres has simply 150K allotted to an outlined improvement plan, however “with present completion designs vs. legacy Eagle Ford improvement, administration’s definition of Giddings as a re-emerging space that may in the end ship 1,000 drilling areas or a ~20-year backlog is an upside case that could be a free possibility at present,” in response to Hungness.