Matador Resources Company (MTDR, $30.48, Buy; Target $42.00) - (https://stifel2.bluematrix.com/sellside ... ource=mail)
Accelerated Deleveraging Opens Door for Dividend Increase - Michael S. Scialla - We view the release as positive. The positives include: i) 2Q21 FCF exceeded consensus by 73% as CFPS and capex beat by 20% and 19%; ii) MTDR lowered 2021 D&C cost guidance 5% to $695/ft as 1H21 costs were 4% below expectations; iii) $100MM of debt was repaid in 2Q while debt/ebitda declined to 1.8x at mid-year vs our prior estimate of 1.9x. The negatives include: i) the 2021 budget increased 3%; ii) 3Q21 production guidance was 3% below consensus. In summary, MTDR continued to delever more quickly than anticipated as FCF exceeded Street expectations by a wide margin. While some investors may balk at incremental 4Q21 completions, our projected YE21 debt/EBITDA estimate of 1.5x (vs 1.6x previously) raises the possibility of a 2H21 or 1H22 dividend increase.