Matador Resource (MTDR) Q4 Results - Feb 27

[dan_s]

Production was slightly above my forecast for Q4 and Adjusted Earnings were slightly lower. My valuation of MTDR is $30/share. - Dan

DALLAS--(BUSINESS WIRE)--Feb. 26, 2019-- Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today reported financial and operating results for the fourth quarter and full year 2018. A short slide presentation summarizing the highlights of Matador’s fourth quarter and full year 2018 earnings release is also included on the Company’s website at www.matadorresources.com on the Events and Presentations page under the Investor Relations tab. In a separate, simultaneous press release issued today, Matador also provided its 2019 operating plan and 2019 market guidance.

Fourth quarter 2018 highlights and financial results are summarized below, followed immediately thereafter by a summary of full year 2018 highlights and financial results.

Fourth Quarter 2018 Highlights

Fourth quarter 2018 average daily oil equivalent production increased 2% sequentially to a record quarterly high for the Company of 55,500 barrels of oil equivalent (“BOE”) per day (60% oil) as compared to the third quarter of 2018. Average daily oil production increased 4% sequentially to 33,500 barrels per day and average daily natural gas production decreased 1% sequentially to 132.3 million cubic feet per day, each as compared to the third quarter of 2018. < My forecast was 54,800 Boepd (32,800 BOPD).

Fourth quarter 2018 Delaware Basin average daily oil equivalent production increased 3% sequentially to a record quarterly high for the Company of 49,300 BOE per day (64% oil) as compared to the third quarter of 2018. Delaware Basin average daily oil production increased 5% sequentially to 31,300 barrels per day and Delaware Basin average daily natural gas production was essentially flat sequentially at 107.9 million cubic feet per day, each as compared to the third quarter of 2018.

Fourth quarter 2018 net income (GAAP basis) was $136.7 million, or $1.17 per diluted common share, a sequential increase of $118.9 million from $17.8 million in the third quarter of 2018, and a year-over-year increase of 257% from $38.3 million in the fourth quarter of 2017.

Fourth quarter 2018 adjusted net income (a non-GAAP financial measure) was $43.0 million, or $0.37 per diluted common share, a sequential decrease of $12.7 million from $55.7 million in the third quarter of 2018, and a year-over-year increase of 58% from $27.2 million in the fourth quarter of 2017. < My forecast was $48.4 million net income, or $0.41 per share.

Fourth quarter 2018 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) were $143.2 million, a sequential decrease of $12.2 million from $155.4 million in the third quarter of 2018, and a year-over-year increase of 32% from $108.6 million in the fourth quarter of 2017. < Very close to my forecast.

[dan_s]

Matador gives extremely detailed guidance and they have a habit of "under-promising and over-delivering" on their guidance.

I have updated my forecast/valuation model for MTDR and it will be posted to the EPG website shortly.

This morning Stifel, Oppenheimer and Northland Securities all updated their forecasts for MTDR. They all rate it a BUY with a $32/share valuation.

My valuation is $31.00/share only because they are still outspending their cash flow from operations. Production increased ~34% YOY in 2018 and it should increase another 18% to 20% in 2019 and in 2020. If oil moves firmly over $60/bbl, the valuation will go over $35/share.
> They have used collars to hedge their oil, so if oil prices go up they will get a lot of the upside.
> Matador has some extremely valuable midstream assets that can be monetized if they need more cash.
> Their balance sheet is in very good shape.