Matador Resources (MTDR) Q4 Results - Feb 24

[dan_s]

Matador is FINALLY committed to remain FCF positive!

Stifel
Matador Resources Company (MTDR, $21.39, Buy; Target $26.00)
4Q FCF Beat, Accelerating Federal Development - Michael S. Scialla
We view the release as slightly positive. The positives include: i) 4Q FCF topped consensus by 56% as CF was 6% above and capex was 20% below; ii) 4Q20 well costs declined 21% from 3Q20 iii) 2021 production guidance was 6% above consensus. The negatives include: i) 2021 capex guidance was 27% above consensus as the company plans to add a 4th rig focused on its federal acreage; ii) 1Q21 production guidance was 9% below consensus due to weather; iii) 4Q20 unit cash costs were 8% above our forecast. In summary, MTDR delivered another solid beat and was confident enough in its long term plan to initiate a dividend. In addition, the accelerated pace of development causes us to raise our NAV estimate and target price.

MY TAKE: Matador was added to the Sweet 16 on 1-1-2018 because it is a "Aggressive Growth" company with a ton of running room in the Permian Basin. They increased production by 27% YOY in 2019 and by another 13.6% YOY in 2020. Their 2021 guidance is for production growth of 10% to 12%. I expect their production to be down slightly in Q1 because of the weather last week in West Texas. I am updating my forecast/valuation model this evening and it will be posted to the EPG website on Thursday morning.