Matador Resources (MTDR) Valuation Update - Oct 18
Posted: Tue Oct 18, 2022 11:04 am
At the time of this post MTDR was trading at $61.86.
TipRanks: "In the last 3 months, 9 ranked analysts set 12-month price targets for MTDR. The average price target among the analysts is $75.67. The 9 price targets range from $60 to $95."
My valuation increases by $1 to $82.00. My valuation is just 5X annualized operating cash flow for MTDR.
I can justify a higher valuation multiple because Matador is one of the most aggressive growth companies in the Sweet 16 with double digit production growth locked in that is being totally funded by operating cash flow (13.6% YOY in 2020, 14.6% YOY in 2021 and on pace for 20% YOY in 2022). I expect the PV10 Net Asset Value of just their proved reserves (P1) to be over $80/share as of 12/31/2022.
Operating Cash Flow Growth is "Stunning":
> 2020A: $500.6 million ($4.28/share)
> 2021A: $1,054.3 million ($8.95/share)
> 2022E: $2,143.3 million ($18.20/share)
> 2023E: $2,391.1 million ($20.26/share)
Even if I lower the oil and gas price assumptions for 2023 to $80/bbl and $5/mcf, Matador should still generate close to $2 Billion of operating cash flow next year, more than enough to fund an aggressive drilling program.
TipRanks: "In the last 3 months, 9 ranked analysts set 12-month price targets for MTDR. The average price target among the analysts is $75.67. The 9 price targets range from $60 to $95."
My valuation increases by $1 to $82.00. My valuation is just 5X annualized operating cash flow for MTDR.
I can justify a higher valuation multiple because Matador is one of the most aggressive growth companies in the Sweet 16 with double digit production growth locked in that is being totally funded by operating cash flow (13.6% YOY in 2020, 14.6% YOY in 2021 and on pace for 20% YOY in 2022). I expect the PV10 Net Asset Value of just their proved reserves (P1) to be over $80/share as of 12/31/2022.
Operating Cash Flow Growth is "Stunning":
> 2020A: $500.6 million ($4.28/share)
> 2021A: $1,054.3 million ($8.95/share)
> 2022E: $2,143.3 million ($18.20/share)
> 2023E: $2,391.1 million ($20.26/share)
Even if I lower the oil and gas price assumptions for 2023 to $80/bbl and $5/mcf, Matador should still generate close to $2 Billion of operating cash flow next year, more than enough to fund an aggressive drilling program.