Magnolia Oil & Gas (NYSE:MGY) and Sky Quarry (NASDAQ:SKYQ) Critical Review

Sky Quarry (NASDAQ:SKYQ) and Magnolia Oil & Gas (NYSE:MGY) are both energy companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Sky Quarry and Magnolia Oil & Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sky Quarry	-97.65%	-232.60%	-59.42%
Magnolia Oil & Gas	28.77%	21.04%	14.46%

Insider and Institutional Ownership

94.7% of Magnolia Oil & Gas shares are owned by institutional investors. 5.1% of Sky Quarry shares are owned by insiders. Comparatively, 0.9% of Magnolia Oil & Gas shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Sky Quarry has a beta of 2.16, meaning that its stock price is 116% more volatile than the S&P 500. Comparatively, Magnolia Oil & Gas has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Sky Quarry and Magnolia Oil & Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sky Quarry	1	0	0	0	1.00
Magnolia Oil & Gas	0	5	11	2	2.83

Magnolia Oil & Gas has a consensus target price of $31.81, indicating a potential upside of 31.96%. Given Magnolia Oil & Gas’ stronger consensus rating and higher probable upside, analysts plainly believe Magnolia Oil & Gas is more favorable than Sky Quarry.

Earnings & Valuation

This table compares Sky Quarry and Magnolia Oil & Gas”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sky Quarry	$1.62 million	14.58	-$12.20 million	($2.73)	-0.98
Magnolia Oil & Gas	$1.48 billion	3.86	$325.25 million	$2.28	10.57

Magnolia Oil & Gas has higher revenue and earnings than Sky Quarry. Sky Quarry is trading at a lower price-to-earnings ratio than Magnolia Oil & Gas, indicating that it is currently the more affordable of the two stocks.

Summary

Magnolia Oil & Gas beats Sky Quarry on 12 of the 15 factors compared between the two stocks.

About Sky Quarry

We are an oil production, refining, and a development-stage environmental remediation company formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils. The recycling of asphalt shingles is expected to reduce the dependence on landfills for the removal of waste and to also reduce dependence on foreign and domestic virgin crude oil extraction for industrial uses. We have developed a process for separating oil from oily sands and other oil-bearing solids utilizing a proprietary solvent which we refer to as our ECOSolv technology or the ECOSolv process. The solvent is used in a closed-loop distillation and evaporation circuit which results in over 99% of the solvent being recoverable for continuous reuse and requires no water. The solvent has demonstrated oil separation rates of over 95% in bench testing using samples of both mined crushed ore and ground asphalt shingles. We intend to retrofit our PR Spring oil sands remediation facility, located in southeast Utah, to recycle waste asphalt shingles using our ECOSolv technology, and to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit. We also plan to develop a modular asphalt shingle recycling facility (“ASR Facility”), which can be deployed in cities with high concentrations of waste asphalt shingles and near asphalt shingle manufacturing centers. We were incorporated in Delaware on June 4, 2019 as “Recoteq, Inc.” On April 22, 2020, we changed our name to “Sky Quarry Inc.”. Sky Quarry is a holding company and has no operations. The purpose of the holding company is to maintain ownership over our subsidiaries, create management efficiencies and establish an organizational structure to facilitate the potential acquisition of other businesses within or complementary to our industry. On September 16, 2020, we acquired 2020 Resources LLC. The assets of 2020 Resources include an oil sands remediation facility (the “PR Spring facility”) and a 100% interest in asphalt bitumen leases covering approximately 5,930 acres in the PR Spring region in Utah. On September 16, 2020, we also acquired 2020 Resources (Canada) Ltd, an entity which is currently inactive. On September 30, 2022, we acquired Foreland Refining Corporation, which is engaged in the refining of heavy crude oil into diesel and other petroleum products (naphtha, vacuum gas oil, and paving asphalt liquids) at its Eagle Springs Refinery located near Ely, Nevada. The acquisition of Foreland was immediately accretive to our revenues and cash flow and provides a strong base for growth. We believe the acquisition is a strategic fit and will form an important role in the future enabling us to vertically integrate the production and refining of oil from waste materials to energy in a sustainable and efficient manner. Sky Quarry Inc. 707 W. 700 S. Suite 101 Woods Cross, UT.

About Magnolia Oil & Gas

Magnolia Oil & Gas Corp. engages in the acquisition, development, exploration, and production of oil and natural gas properties. It operates assets located in the Eagle Ford Shale and Austin Chalk formations in South Texas. The company was founded on February 14, 2017 and is headquartered in Houston, TX.