Matador Resources (MTDR) Update - Oct 10

[dan_s]

In the last 3 months, 6 ranked analysts set 12-month price targets for MTDR. The average price target among the analysts is $39.83. The six reports have valuations ranging from $34 to $45.
The most recent analyst's report submitted to Reuters is from Tim Rezvan at Oppenheimer that is dated 10-2-2018. Tim rates it a BUY with a $43.00 valuation.

MTDR is currently trading for $32.80.

I have made a few minor changes to my forecast/valuation model, but my valuation remains $42.00/share.

Matador does have some exposure to the Permian Basin pipeline capacity issues, but they should not have any trouble getting their production to market. The discount to WTI in the Permian Basin will be partially offset by premiums to WTI in the Eagle Ford.
Their actual realized prices in Q2, which includes differential and cash settlements on hedges were $3.38/mcf for natural gas (includes NGLs) and $60.52/bbl for crude oil.

Matador's production mix is approximately 58% crude oil and 42% natural gas & NGLs. The report gas and NGLs on a combined basis.

Matador's production s/b up 30% to 32% YOY in 2018 and I am assuming 27% to 28% YOY growth in 2019.

Matador is outspending cash flow from operations this year, but not by much. They have more than enough liquidity to cover the difference. If WTI oil stays over $65/bbl in 2019, they should have enough cash flow to fund a six rig continuous drilling program.

Matador has some extremely valuable midstream assets.