Outlook raised
https://www.matadorresources.com/news-releases/news-release-details/matador-resources-company-reports-record-second-quarter-2024
Matador earnings out
Re: Matador earnings out
I am in Boston.
Matador is a "Great American Success Story". Q2 production beat my forecast.
I do expect all of the Sweet 16 to report solid Q2 results and most of them should beat my forecasts.
Matador is a "Great American Success Story". Q2 production beat my forecast.
I do expect all of the Sweet 16 to report solid Q2 results and most of them should beat my forecasts.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
Petroleum economist
- Posts: 125
- Joined: Wed Aug 23, 2023 7:01 am
- Location: The Netherlands
Re: Matador earnings out
Matador Q2 results were as per expectation, with some small plusses and minuses.
Production
• Q2 production (160.3 K BoE/d) exceeded the outlook (156.5-158 K BoE/d).
• Exceeding the outlook was not surprising, as Matador is always conservative in their outlooks. Actuals exceeded outlook by a considerable margin (3-5 K BoE/d) in ever quarter in 2023 and 2024.
• Matador Q3 outlook (163-165 K BoE/d) again looks conservative. I expect Q3 to be 166.5 K BoE/d.
• Also 2024 outlook (15.5-163.5 K BoE/d) looks conservative, especially as Meredev will add 25-26 K BoE/d in Q4. I expect a 2024 production of 167.1 K BoE/d.
• With Meredev included, production in 2025 can rise to 191 K BoE/d, thereafter increasing with 1-3% per year.
Balance sheet
• Solvency (=equity/balance total) improved from 56.4% to a good 57.0%.
• With the upcoming Meredev acquisition, solvency will drop to a mediocre 46.6%
• Long term debt (borrowings + unsecured notes) of $ 1,981 M in Q2 remained flat versus $ 1,972 M in Q1.
• Debt/EBITDA in 2023 will be a high 1.5, but can reduce to an acceptable 1.1 in late 2025
• The balance sheet will limit shareholder returns in 2024 and 2025.
Profitability
• Overall costs were as per expectation. Lease, operating, depreciation and overheads were slightly lower than expected. Transportation and interest slightly higher.
• With WTI in H2 at $ 80-85/bbl, my 2024 net profit estimate (excluding non-cash hedging) increases $ 1,006-1,077 M.
• My eps increased by $ 0.05 to $ 8.14-8.70 (PE=7.0-7.5).
• In 2025 the eps can increase to $ 10.50-11.25 (PE 5.4-6.1) with mild increases in the years thereafter.
Shareholder returns
• Matador pays a quarterly dividend of $ 0.20 or $ 0.80/year.
• In view of the balance sheet, it is unlikely that the dividend will be modified in 2024.
• Matador has no share buybacks planned for 2024.
• 2024 yield thus should be 1.8%
• In H2 2025 Matador may start increasing the dividends.
• Shareholder yield after 2025 can go up 6.5-7.5%.
Conclusions
Matador Q2 results were as per expectation. Profitability is good and the PE is moderate and will improve in 2025 and beyond. Due to the Meredev acquisition, shareholder returns are limited. Matador should be a solid investment.
Production
• Q2 production (160.3 K BoE/d) exceeded the outlook (156.5-158 K BoE/d).
• Exceeding the outlook was not surprising, as Matador is always conservative in their outlooks. Actuals exceeded outlook by a considerable margin (3-5 K BoE/d) in ever quarter in 2023 and 2024.
• Matador Q3 outlook (163-165 K BoE/d) again looks conservative. I expect Q3 to be 166.5 K BoE/d.
• Also 2024 outlook (15.5-163.5 K BoE/d) looks conservative, especially as Meredev will add 25-26 K BoE/d in Q4. I expect a 2024 production of 167.1 K BoE/d.
• With Meredev included, production in 2025 can rise to 191 K BoE/d, thereafter increasing with 1-3% per year.
Balance sheet
• Solvency (=equity/balance total) improved from 56.4% to a good 57.0%.
• With the upcoming Meredev acquisition, solvency will drop to a mediocre 46.6%
• Long term debt (borrowings + unsecured notes) of $ 1,981 M in Q2 remained flat versus $ 1,972 M in Q1.
• Debt/EBITDA in 2023 will be a high 1.5, but can reduce to an acceptable 1.1 in late 2025
• The balance sheet will limit shareholder returns in 2024 and 2025.
Profitability
• Overall costs were as per expectation. Lease, operating, depreciation and overheads were slightly lower than expected. Transportation and interest slightly higher.
• With WTI in H2 at $ 80-85/bbl, my 2024 net profit estimate (excluding non-cash hedging) increases $ 1,006-1,077 M.
• My eps increased by $ 0.05 to $ 8.14-8.70 (PE=7.0-7.5).
• In 2025 the eps can increase to $ 10.50-11.25 (PE 5.4-6.1) with mild increases in the years thereafter.
Shareholder returns
• Matador pays a quarterly dividend of $ 0.20 or $ 0.80/year.
• In view of the balance sheet, it is unlikely that the dividend will be modified in 2024.
• Matador has no share buybacks planned for 2024.
• 2024 yield thus should be 1.8%
• In H2 2025 Matador may start increasing the dividends.
• Shareholder yield after 2025 can go up 6.5-7.5%.
Conclusions
Matador Q2 results were as per expectation. Profitability is good and the PE is moderate and will improve in 2025 and beyond. Due to the Meredev acquisition, shareholder returns are limited. Matador should be a solid investment.
Keith Kohl's Update on Matador Resources - July 31
Keith Kohl's take on MTDR. Keith is the editor of The Energy Investor.
Matador Resources is an independent energy company that explores, acquires, develops, and produces crude oil and natural gas resources in both the Delaware Basin in southeast New Mexico (part of the greater Permian Basin) and the Eagle Ford shale in Texas. The company holds approximately 460.1 million barrels of oil equivalent of proved reserves as of December 31, 2023. < My guess is that Matador's proved reserves will be over 600,000 BOE at December 31, 2024/
Recent News
Last week, Matador released its Q2 results.
Once again, the company showed us why we’re invested in its future. As you know, Matador is one of our pure-play Permian operators that is still flying under investors’ radar.
The company controls approximately 191,900 net acres in the Delaware Basin, with more than 5,000 gross drilling locations on the books (1,998 net), which is one reason why Matador has been successfully growing output each year for the past 12 years!
22.4% YOY production growth in 2022, 24.9% YOY in 2023 and on pace for over 24% YOY production growth in 2024.
2024 Exit rate should be ~185,000 Boepd.
If you recall from our last issue, Matador announced that it had entered into a definitive agreement to acquire a subsidiary of Ameredev II Parent, LLC. The $1.9 billion deal would add significant value to our Matador position.
Here are just some of what Ameredev brings to the table:
1. Matador will add approximately 33,500 net acres to its asset base.
2. Ameredev adds roughly 25,500 barrels of oil equivalent to Matador’s daily production, 60% of which is weighted toward crude oil.
3. Matador’s proved reserve base will increase by 118 million boe.
4. The deal will provide Matador with an additional 125 miles of pipeline in the midstream sector.
For us, it’s a win-win situation.
In fact, once the deal is completed, Matador will become the 7th largest producer in New Mexico.
For the record, New Mexico is the second-largest oil producing state in the U.S., with companies extracting roughly 2 million barrels per day — more than North Dakota, Alaska, and California combined!
During the second quarter of 2024, Matador hit a new production record, pumping out an average of 160,305 boepd. We’re seeing record oil and natural gas production out of this Permian star. I’ll also note that production during the quarter exceeded guidance.
In total, Matador completed and turned to sales a total of 102 gross (41.1 net) horizontal wells from its acreage.
From a financial standpoint, Matador generated approximately $776.3 million in oil and gas revenues during the quarter, and posted a net income of 228.8 million, or $1.83 per share.
As you probably guessed, this performance easily beat analyst expectations — Matador has had a nice habit of doing that for the past year.
It was a strong quarter, and I believe things are starting to heat up for Matador.
Remember, one biggest attraction for us with Matador is the development of its U-Turn wells. Last year, we saw the company drill its first two U-Turn wells, which led to savings of around $10 million.
At the time, it was a gamble… a fresh drilling technology to help boost efficiency and output. This year, Matador is expected to turn five U-Turn wells to sale, with an estimated savings of $15 million!
These U-Turn wells mean that Matador is spending less time drilling, and is one of the key factors for lowering costs. And the company is getting better with each new well drilled, too. The third U-Turn well was drilled in half the time that it took to drill the other two.
Looking forward, I’m not expecting things to slow down. Current 2024 production guidance projects that the company’s oil production will average between 93,500 and 96,500 barrels per day — a 26% year-over-year increase. But again, that’s assuming we don’t see another upward revision to those numbers. < My forecast is that Matador's 2024 exit rate for oil production will be over 112,000 BOPD.
Right now, Matador has 9 rigs running in the Delaware Basin, and will spend up to $1.3 billion this year drilling and completing approximately 275 gross (107.5 net) horizontal wells.
Along with this good news, the company also announced that its latest cash dividend of $0.20 per share will be paid out on September 5, 2024, to all shareholders on record as of August 15, 2024.
After the most recent sell-off, shares are once again back within our buy range, and I see this as a potential buying opportunity.
Keith Kohl: Matador Resources (NYSE: MTDR) is rated a “Buy” under $65. < My current valuation is $90/share based on just 5X annualized operating cash flow machine.
Matador Resources is an independent energy company that explores, acquires, develops, and produces crude oil and natural gas resources in both the Delaware Basin in southeast New Mexico (part of the greater Permian Basin) and the Eagle Ford shale in Texas. The company holds approximately 460.1 million barrels of oil equivalent of proved reserves as of December 31, 2023. < My guess is that Matador's proved reserves will be over 600,000 BOE at December 31, 2024/
Recent News
Last week, Matador released its Q2 results.
Once again, the company showed us why we’re invested in its future. As you know, Matador is one of our pure-play Permian operators that is still flying under investors’ radar.
The company controls approximately 191,900 net acres in the Delaware Basin, with more than 5,000 gross drilling locations on the books (1,998 net), which is one reason why Matador has been successfully growing output each year for the past 12 years!
22.4% YOY production growth in 2022, 24.9% YOY in 2023 and on pace for over 24% YOY production growth in 2024.
2024 Exit rate should be ~185,000 Boepd.
If you recall from our last issue, Matador announced that it had entered into a definitive agreement to acquire a subsidiary of Ameredev II Parent, LLC. The $1.9 billion deal would add significant value to our Matador position.
Here are just some of what Ameredev brings to the table:
1. Matador will add approximately 33,500 net acres to its asset base.
2. Ameredev adds roughly 25,500 barrels of oil equivalent to Matador’s daily production, 60% of which is weighted toward crude oil.
3. Matador’s proved reserve base will increase by 118 million boe.
4. The deal will provide Matador with an additional 125 miles of pipeline in the midstream sector.
For us, it’s a win-win situation.
In fact, once the deal is completed, Matador will become the 7th largest producer in New Mexico.
For the record, New Mexico is the second-largest oil producing state in the U.S., with companies extracting roughly 2 million barrels per day — more than North Dakota, Alaska, and California combined!
During the second quarter of 2024, Matador hit a new production record, pumping out an average of 160,305 boepd. We’re seeing record oil and natural gas production out of this Permian star. I’ll also note that production during the quarter exceeded guidance.
In total, Matador completed and turned to sales a total of 102 gross (41.1 net) horizontal wells from its acreage.
From a financial standpoint, Matador generated approximately $776.3 million in oil and gas revenues during the quarter, and posted a net income of 228.8 million, or $1.83 per share.
As you probably guessed, this performance easily beat analyst expectations — Matador has had a nice habit of doing that for the past year.
It was a strong quarter, and I believe things are starting to heat up for Matador.
Remember, one biggest attraction for us with Matador is the development of its U-Turn wells. Last year, we saw the company drill its first two U-Turn wells, which led to savings of around $10 million.
At the time, it was a gamble… a fresh drilling technology to help boost efficiency and output. This year, Matador is expected to turn five U-Turn wells to sale, with an estimated savings of $15 million!
These U-Turn wells mean that Matador is spending less time drilling, and is one of the key factors for lowering costs. And the company is getting better with each new well drilled, too. The third U-Turn well was drilled in half the time that it took to drill the other two.
Looking forward, I’m not expecting things to slow down. Current 2024 production guidance projects that the company’s oil production will average between 93,500 and 96,500 barrels per day — a 26% year-over-year increase. But again, that’s assuming we don’t see another upward revision to those numbers. < My forecast is that Matador's 2024 exit rate for oil production will be over 112,000 BOPD.
Right now, Matador has 9 rigs running in the Delaware Basin, and will spend up to $1.3 billion this year drilling and completing approximately 275 gross (107.5 net) horizontal wells.
Along with this good news, the company also announced that its latest cash dividend of $0.20 per share will be paid out on September 5, 2024, to all shareholders on record as of August 15, 2024.
After the most recent sell-off, shares are once again back within our buy range, and I see this as a potential buying opportunity.
Keith Kohl: Matador Resources (NYSE: MTDR) is rated a “Buy” under $65. < My current valuation is $90/share based on just 5X annualized operating cash flow machine.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group