Matador Resources (MTDR)

[dan_s]

I have updated my forecast model for Matador and it will be available on the website tomorrow.

First quarter results were solid. Their production topped my forecast and I believe the company's production guidance for this year is conservative. Keep in mind that their guidance does not include the impact of adding a 3rd rig to drill in the Permian Basin this summer. Recent well results in the Permian are VERY ENCOURAGING.

Matador's recent acquisitions + their equity & debt offerings significantly improves their liquidity and their low risk drilling inventory. It probably deserves an even higher multiple than what I am using to arrive at my valuation. YOY production growth is on-track to be ~48%.

I have increased my Fair Value Estimate by $2.50/share to $30.00/share. First Call's Price target is now $30.69 and my guess is that it will be raised over the next couple of weeks.

One thing I love about Matador is that they put out very good quarterly reports with all the details I need to update my forecast. I have been following Matador for over a year and I now have a very high level of confidence in my forecast model.

NOTE: On a boe basis, about half of Matador's production in natural gas and NGLs. If you read the newsletter, you know there is significant upside potential for the price of these commodities heading into 2016, beyond what I am using in my forecast models.