Magnolia Oil & Gas (MGY) is expected to report a "positive" Q2 update as production rebounds from weather-related disruptions in Q1 with higher oil prices and "unhedged" production driving record revenue and the highest free cash flow since mid-2022, UBS Securities said in a report emailed Friday.

UBS forecasts cash flow per share of $1.82, above the Wall Street estimate of $1.68, on "total production" of 105,000 barrels of oil equivalent per day. It also expects about $210 million in "pre-dividend" free cash flow, supporting roughly $65 million in "stock buybacks" and boosting the company's cash balance following Q1 acquisitions, according to the report.

Magnolia's recent Karnes acquisition should improve drilling economics by enabling "longer laterals," though the firm does not expect a "significant" increase in production and anticipates output will remain roughly flat at about 20,000 barrels of oil equivalent per day, the report said.

UBS reiterated their buy rating on Magnolia Oil & Gas but lowered its price target to $34 from $38.

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