Keeley Small Cap Fund on Magnolia Oil & Gas Corp.
Thesis
Magnolia is a conservatively financed producer that has historically balanced growth spending with shareholder returns. The shares were pressured by lower oil prices because the company is unhedged. The WildFire Energy acquisition is expected to increase production by 50% and generate more than $100 million of annual synergies.
“Magnolia is a well-operated, conservatively financed company that has historically balanced growth capital spending with returns to shareholders.”
Key risks
- Unhedged oil-price exposure