Matador Resources (MTDR) Q3 Results - Oct 27

[dan_s]

Matador announce Q3 2020 financial results after the market closed on Tuesday, October 27

Management Highlights:

“The third quarter of 2020 was another positive quarter for Matador, highlighted by the completion of three more significant and long-anticipated operational milestones.
> First, Matador completed and turned to sales the first 13 Boros wells in our Stateline asset area in southeastern Eddy County, New Mexico with better-than-anticipated results and lower-than-estimated capital expenditures.
> Second, San Mateo, our midstream affiliate, completed and placed in service an expansion of the Black River Processing Plant and approximately 43 miles of large-diameter natural gas and oil pipelines in Eddy County, both on time and on budget. The successful completion of these two significant projects reflects the vision, execution and determination of the Matador and San Mateo teams to achieve the goals Matador set as part of the Bureau of Land Management lease acquisition two years ago in terms of improved capital efficiency, production and reserves growth and midstream expansion (see Slide A).
> Third, over the summer, Matador also successfully completed the fifth and the final of its operational milestones when we turned to sales the five Leatherneck wells in the Greater Stebbins Area. Today, the oil, natural gas and water production from both the Stateline asset area and the Greater Stebbins Area, as well as the Wolf and Rustler Breaks asset areas, is being gathered by San Mateo via its 335 miles of midstream pipeline infrastructure. As a result of these accomplishments, we expect Matador’s oil, natural gas and total production and San Mateo’s revenues to reach record levels during the fourth quarter of 2020.

Q3 production exceeded my forecast of 69,000 BOE per day by 4,000 Boepd. Oil production exceeded my forecast of 40,500 BOPD by 1,800 BOPD.

Third quarter 2020 adjusted net income (a non-GAAP financial measure) was $11.6 million, or adjusted net income of $0.10 per diluted common share, a sequential increase from an adjusted net loss of $3.1 million in the second quarter of 2020, and a year-over-year decrease from adjusted net income of $37.9 million in the third quarter of 2019. < Compares to my forecast of $4.9 million net income, $0.04 per share.

Third quarter 2020 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) were $121.0 million. < Compares to my forecast of $120.8 million EBITDA.

MOST IMPORTANT: Matador''s Adjusted Cash Flow From Operations of $117.2 million ($1.00/share) compares to First Call's operating CFPS forecast of $0.76.

Matador has outspent operating cash flow thru the first 3 quarters, but they promise to be free cash flow positive in Q4 and 2021 based on current strip prices. If management can deliver on that promise this stock has a lot of upside because their production should surge into year-end. From the press release: "At October 27, 2020, Matador expects its fourth quarter 2020 average daily oil equivalent production, oil production and natural gas production to increase 8 to 10% sequentially."