Matador Resources (MTDR): An updated Net Income & Cash Flow Forecast model has been posted under the Watch List Tab.
I adjusted 2014 to agree with company guidance issued today. I also took down the forecast oil price a couple dollars since LLS now trading closer to WTI.
My Fair Value Estimate is $26.15/share.
MTDR
Re: MTDR
From Zacks Equity Research Team: "Independent energy company, Matador Resources Company (MTDR) recently announced bullish numbers under its 2014 capital budget and operating plan."
"During the year, the company expects oil production in the range of 2.8–3.1 million barrels, up about 44% year over year. Similarly, natural gas production is expected in the range of 13.5–15.0 Bcf, up about 14% from 2013. As a result, the company expects its full-year 2014 revenue within $325 million to $355 million, up about 31% from 2013. Similarly, 2014 adjusted EBITDA guidance is expected in the $235–$265 million bracket, up about 35% from 2013."
Zacks rates MTDR a #1 pick (Strong Buy) and so do I. It is a strong candidate for our Sweet 16 on January 1.
"During the year, the company expects oil production in the range of 2.8–3.1 million barrels, up about 44% year over year. Similarly, natural gas production is expected in the range of 13.5–15.0 Bcf, up about 14% from 2013. As a result, the company expects its full-year 2014 revenue within $325 million to $355 million, up about 31% from 2013. Similarly, 2014 adjusted EBITDA guidance is expected in the $235–$265 million bracket, up about 35% from 2013."
Zacks rates MTDR a #1 pick (Strong Buy) and so do I. It is a strong candidate for our Sweet 16 on January 1.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: MTDR
Matador has a new presentation on their website. After reading the transcript of their Analyst Day, held last week, I have adjusted my forecast model and re-posted it under the Watch List Tab. I extended the forecast through 2015.
My Fair Value Estimate is $26.80.
This one is a strong candidate for the Sweet 16.
My Fair Value Estimate is $26.80.
This one is a strong candidate for the Sweet 16.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: MTDR
12/16/2013: Matador TP raised from $20 to $22 by Stifel --
Raising NAV Estimate and Target Price
We are raising our NAV estimate and target price to $22/share from $20 based on
lower well costs and tighter spacing assumptions in the Eagle Ford, partially offset
by a slight reduction to our Permian Basin value.
Lowering Well Cost Assumptions
While well cost guidance for MTDR’s Eagle Ford areas remains unchanged,
projected 2014 well expenditures of $300mn imply an average well cost of only
$6.5mn. This is near the midpoint of the lowest cost area even though 19 of next
year’s 49 gross wells are planned in higher cost portions of the play.
The company recently completed some western Eagle Ford wells for less than
$6mn and expects a 60%+ efficiency improvement between 2012 and 2014.
Accordingly, we are lowering our western and central Eagle Ford cost assumptions
from the high end of guidance to the midpoint, which could be conservative.
Increasing Drilling Density Assumptions
Matador plans to develop its western and central Eagle Ford properties on 40-acre
spacing based on encouraging pilot tests. New data show some 40-acre wells are
producing at lower rates than their 80-acre counterparts, although management is
convinced that 40-acre density improves the play’s economics. In addition, new
completion methods are typically outperforming older wells by a wide margin.
We are increasing our well density assumptions to 60 acres from 80 acres for the
western Eagle Ford and to 60 acres from 100 acres for the central acreage. We
are maintaining our 100 acre spacing assumption for the eastern acreage.
Permian Basin: Well Results Limited, Acreage Better Defined
Data from MTDR’s first two Permian Basin horizontal wells is encouraging, albeit
inconclusive. The Ranger 33 State Com #1 in Lea County, New Mexico, had a
peak 24-hour IP of 641 Boe/d (90% oil) while the Dorothy White #1, located in
Loving County, Texas, exhibited strong pressure and flowed while drilling in the
Wolcamp A target zone. The well is expected to be completed by YE13.
MTDR revealed the location split on its Permian leasehold. Of the company’s 40.8k
net acres in the basin, only 3.3k are located at the Wolf prospect, which causes us
to reduce our value for the area to $1/share from $3/share.
Strong Balance Sheet Supports Outspend
We forecast 2014 expenditures will exceed cash flow by approximately $220mn.
Despite the anticipated outspend, we project debt/EBITDA, which was only 0.8x at
3Q13, to increase to a comfortable 1.8x level at YE14.
Raising NAV Estimate and Target Price
We are raising our NAV estimate and target price to $22/share from $20 based on
lower well costs and tighter spacing assumptions in the Eagle Ford, partially offset
by a slight reduction to our Permian Basin value.
Lowering Well Cost Assumptions
While well cost guidance for MTDR’s Eagle Ford areas remains unchanged,
projected 2014 well expenditures of $300mn imply an average well cost of only
$6.5mn. This is near the midpoint of the lowest cost area even though 19 of next
year’s 49 gross wells are planned in higher cost portions of the play.
The company recently completed some western Eagle Ford wells for less than
$6mn and expects a 60%+ efficiency improvement between 2012 and 2014.
Accordingly, we are lowering our western and central Eagle Ford cost assumptions
from the high end of guidance to the midpoint, which could be conservative.
Increasing Drilling Density Assumptions
Matador plans to develop its western and central Eagle Ford properties on 40-acre
spacing based on encouraging pilot tests. New data show some 40-acre wells are
producing at lower rates than their 80-acre counterparts, although management is
convinced that 40-acre density improves the play’s economics. In addition, new
completion methods are typically outperforming older wells by a wide margin.
We are increasing our well density assumptions to 60 acres from 80 acres for the
western Eagle Ford and to 60 acres from 100 acres for the central acreage. We
are maintaining our 100 acre spacing assumption for the eastern acreage.
Permian Basin: Well Results Limited, Acreage Better Defined
Data from MTDR’s first two Permian Basin horizontal wells is encouraging, albeit
inconclusive. The Ranger 33 State Com #1 in Lea County, New Mexico, had a
peak 24-hour IP of 641 Boe/d (90% oil) while the Dorothy White #1, located in
Loving County, Texas, exhibited strong pressure and flowed while drilling in the
Wolcamp A target zone. The well is expected to be completed by YE13.
MTDR revealed the location split on its Permian leasehold. Of the company’s 40.8k
net acres in the basin, only 3.3k are located at the Wolf prospect, which causes us
to reduce our value for the area to $1/share from $3/share.
Strong Balance Sheet Supports Outspend
We forecast 2014 expenditures will exceed cash flow by approximately $220mn.
Despite the anticipated outspend, we project debt/EBITDA, which was only 0.8x at
3Q13, to increase to a comfortable 1.8x level at YE14.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group