Matador Resources (MTDR) Update - July 31
Posted: Fri Jul 31, 2020 6:44 pm
I have subscribed to Keith Kohl's newsletter for over a decade. He is a smart guy and has picked a lot of winners. In his Top Ten picks are MTDR, FANG and PAA. Below is a note that he sent me this afternoon. I have increased my valuation of MTDR to $13.50/share. - Dan
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Earnings are Officially Underway as Matador Posts a Surprise Beat
The next few weeks are going to be quite busy for us, with more than a dozen of our positions release their second quarter results.
I know what you’re thinking. The second quarter was an historically poor quarter for practically everyone, and the fact that oil prices plummeted into negative territory meant it was going to be a horror show for investors.
Well, you’re not wrong.
However, it turns out that Matador Resources was able to weather the storm far better than other drillers.
The company posted a net loss of $0.03 per share on Wednesday.
This was particularly significant for us considering I can’t recall the last time the company wasn’t profitable during a quarter.
Even when crude prices declined precipitously between 2014 and 2016, Matador was still posting profits every quarter. Leading up to this report, the company had managed to exceed analyst expectations 12 of the previous 13 quarters!
Why wouldn’t we expect them to do it again?
Naturally, Matador outperformed Wall Street’s expectations. Analysts were expecting to see a loss of $0.16 per share.
The results were better-than-expected due to Matador’s production volumes. During the quarter, the company’s total oil output averaged 43,074 barrels per day — a 17% year-over-year increase.
It wasn’t a surprise to see revenues take a hard hit. Matador generated $147.4 million during the quarter, compared to the $241.7 million the company took in during the second quarter of 2019. But it's important to keep in mind that Matador’s average realized price for oil during the quarter was approximately $24.03 per barrel, compared to the $56.51 it was receiving per barrel during the same period in 2019.
The good news is that shares of Matador have rebounded 506% since bottoming in March!
I told you at the beginning of these lockdowns that things were going to get worse before they got better.
Matador still has a ways to climb before reaching its pre-Covid price levels, but I remain optimistic as we hopefully start to put the pieces of our economy back together.
Matador is a buy for us at current prices.
Good investing,
Keith Kohl
Energy Investor
------------------------------------------------
Earnings are Officially Underway as Matador Posts a Surprise Beat
The next few weeks are going to be quite busy for us, with more than a dozen of our positions release their second quarter results.
I know what you’re thinking. The second quarter was an historically poor quarter for practically everyone, and the fact that oil prices plummeted into negative territory meant it was going to be a horror show for investors.
Well, you’re not wrong.
However, it turns out that Matador Resources was able to weather the storm far better than other drillers.
The company posted a net loss of $0.03 per share on Wednesday.
This was particularly significant for us considering I can’t recall the last time the company wasn’t profitable during a quarter.
Even when crude prices declined precipitously between 2014 and 2016, Matador was still posting profits every quarter. Leading up to this report, the company had managed to exceed analyst expectations 12 of the previous 13 quarters!
Why wouldn’t we expect them to do it again?
Naturally, Matador outperformed Wall Street’s expectations. Analysts were expecting to see a loss of $0.16 per share.
The results were better-than-expected due to Matador’s production volumes. During the quarter, the company’s total oil output averaged 43,074 barrels per day — a 17% year-over-year increase.
It wasn’t a surprise to see revenues take a hard hit. Matador generated $147.4 million during the quarter, compared to the $241.7 million the company took in during the second quarter of 2019. But it's important to keep in mind that Matador’s average realized price for oil during the quarter was approximately $24.03 per barrel, compared to the $56.51 it was receiving per barrel during the same period in 2019.
The good news is that shares of Matador have rebounded 506% since bottoming in March!
I told you at the beginning of these lockdowns that things were going to get worse before they got better.
Matador still has a ways to climb before reaching its pre-Covid price levels, but I remain optimistic as we hopefully start to put the pieces of our economy back together.
Matador is a buy for us at current prices.
Good investing,
Keith Kohl
Energy Investor