Matador Resources (MTDR) Q1 Results - May 1

[dan_s]

DALLAS--(BUSINESS WIRE)--May 1, 2019-- Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today reported financial and operating results for the first quarter of 2019. A short slide presentation summarizing the highlights of Matador’s first quarter 2019 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.

First Quarter 2019 Financial and Operational Highlights

First quarter 2019 average daily oil equivalent production increased 8% sequentially to a record quarterly high for the Company of 59,900 barrels of oil equivalent (“BOE”) per day (58% oil) as compared to the fourth quarter of 2018. Average daily oil production increased 3% sequentially to 34,500 barrels per day, and average daily natural gas production increased 15% sequentially to 152.5 million cubic feet per day, each as compared to the fourth quarter of 2018. < Compares to my production forecast of 56,250 Boepd and 33,750 BOPD.

First quarter 2019 Delaware Basin average daily oil equivalent production increased 7% sequentially to a record quarterly high for the Company of 52,600 BOE per day (61% oil) as compared to the fourth quarter of 2018. Delaware Basin average daily oil production increased 2% sequentially to 32,000 barrels per day, and Delaware Basin average daily natural gas production increased 15% sequentially to 123.9 million cubic feet per day, each as compared to the fourth quarter of 2018.

First quarter 2019 net loss (GAAP basis) was $16.9 million, or a loss of $0.15 per diluted common share, a sequential decrease from net income of $136.7 million in the fourth quarter of 2018, and a year-over-year decrease from net income of $59.9 million in the first quarter of 2018. On a GAAP basis, first quarter 2019 net income was negatively impacted by a non-cash unrealized loss on derivatives of $45.7 million, as oil prices rose throughout much of the first quarter. By comparison, the fourth quarter of 2018 and the first quarter of 2018 were positively impacted by non-cash unrealized gains on derivatives of $74.6 million and $10.4 million, respectively.

First quarter 2019 adjusted net income (a non-GAAP financial measure) was $21.9 million, or $0.19 per diluted common share, a sequential decrease from $43.0 million in the fourth quarter of 2018, and a year-over-year decrease from $39.1 million in the first quarter of 2018. < Compares to my Net Income forecast of $27.5 million, $0.23 EPS.

First quarter 2019 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) was $124.8 million, a sequential decrease from $143.2 million in the fourth quarter of 2018, and a year-over-year increase from $117.3 million in the first quarter of 2018.

In February 2019, Matador announced a second strategic midstream transaction with a subsidiary of Five Point Energy LLC (“Five Point”) to expand San Mateo’s (as defined below) natural gas gathering and processing, salt water gathering and disposal and oil gathering operations in the Delaware Basin (please see Matador’s February 25, 2019 press release for additional information). As part of this transaction, Five Point has committed to carry Matador for $125 million of the first $150 million in capital expenditures (i.e., Matador will pay $25 million and Five Point will pay $125 million). In addition, Five Point has also provided Matador the opportunity to earn deferred performance incentives of up to $150 million over the next five years (over and above those performance incentives associated with the 2017 formation of the San Mateo joint venture), plus additional performance incentives to bring in third-party customers.

Matador incurred capital expenditures, excluding land and mineral acquisitions, of approximately $193 million, including $177 million for drilling, completing and equipping wells (“D/C/E”) and $16 million for midstream investments in the first quarter of 2019, which primarily represented Matador’s proportionate share of San Mateo’s first quarter capital expenditures. Matador’s D/C/E and midstream capital expenditures were below its estimates of $190 million and $22 million, respectively, for the first quarter of 2019. Matador estimates that approximately $10 million of the difference in D/C/E capital expenditures resulted from lower-than-expected well costs on certain wells in both the Delaware Basin and South Texas, primarily attributable to lower-than-expected completion costs, including from the use of increased quantities of regional sand in the Delaware Basin.

I will update my forecast/valuation model on Thursday.