matador news- selling stock

[Fraser921]

https://www.matadorresources.com/news-releases/news-release-details/matador-resources-company-announces-commencement-public-6

they just got their bank line expanded from 2 b to 3.5 b, maybe as a condition of that, the bank told the to raise 325 m

https://www.matadorresources.com/news-releases/news-release-details/matador-resources-company-announces-amendment-its-credit

why pay a dividend then raise cash?

[dan_s]

Rapidly growing companies do raise equity from time to time. This is less than 4.4% increase in the outstanding shares.

Matador is an "Aggressive Growth" company with a lot of high-quality Running Room.

[allen46]

Their stock is right at an all time high so i guess they figure its a good time.

[dan_s]

I remember when being able to raise equity in the public market was a good thing.

[allen46]

Dan, I agree with you. Their timing for the secondary is good them and I may add more on the pull back.

[Fraser921]

I disagree with both of you, fwiw.

Let's sum up what happened here

- Issue 5,250 m shares of new stock for $347.3
- market impact due to issuance -2.90 on on 119.5 m = -346.6

= Result; more shares outstanding with the equity raised offsetting equity loss due to issuance.

The market has spoken.

And why can't anyone answer this question;

Why pay a dividend, then sell stock to cover it? Just don't pay the dividend, it's not real.

And this is a statement by the company on what they think their stock is worth.

NG revenue has cratered in Q1. Anyone with ng content is hurting.

[marc.wolin@yahoo.com]

MTD Selling Stock

Raising equity, increasing bank line etc gives them more cash to maneuver in the field of play. My question is what are they planning to use the cash for? Is it just general room to maneuver for additional good opportunities? What are they looking at? A call to Fraser’s friend might be helpful. They don’t appear to make bad decisions.

Marc Wolin

[allen46]

So according to Fraser a company a should never issue new stock if they pay a dividend. As my grandfather would say Horse feathers!

And it is always the case that when stock is issued, the stock price goes down somewhat but often recovers after the selling is over so the small drop in MTDR share price is perfectly normal.

[Ray_M]

I actually tried to update the most recent MTDR model to see what the impact was but agree that we don't have enough information (yet) on what the cash will be used for.

In the model itself, I update the share counts for 2024 and 2025 (cells M46:P46 and S46) to 125,000 (I'm assuming all shares will be issued this week).

The challenge I had is where to update the model for the initial proceeds. I settled on cell M32 (Asset sales), but I'm definitely not an accountant, so this is probably incorrect.

I also used a value of $66.00/share, which was based on the current impact due to the news --- but I know the actual value cannot be known until reported (example, was a sale price already negotiated with the underwriter?).

With these updates I came up with a value of $80.47 vs the original $83.00 --- with a major caveat: we don't know what the ultimate purpose is for the sale, and I probably have omitted some key updates to the model based on what we know today.

For example, if MTDR is looking to buy new assets (or company), it seems to make sense to sell shares today while the share price is higher and then announce the deal rather than announce the deal first then sell the shares after they've already dropped due to the announcement.

--- bottom line, this is where I look for Dan's experience to help understand the impact

[dan_s]

All Matador is doing is restructuring the balance sheet a bit. Doing it with a combination of debt and equity is a GOOD THING.

This Company's management team has done a great job building this company into a market-cap of more than $7.8 billion.

They've reported fantastic well results, beating my forecast year after year.

At the time of this post MTDR was trading at $65.66. < 416% higher than were it opened on 1-2-2021.