Matador Resources (MTDR) Valuation Update - Feb 22

[dan_s]

MTDR closed at $53.11 on Friday. First Call's price target is $77.29

I have updated my forecast/valuation model for Matador for the strong Q4 results and their 2025 guidance, which as usual looks very conservative. During Q4 2024 Matador's production was 201,116 Boepd (118,440 bpd of oil). YOY the Company's production increased by 29.6% in 2024, building on an increase of 24.9% YOY in 2023. The midpoint of their 2025 production guidance is another year of 20+% growth this year.

Matador's realized natural gas price increased from $1.94/mcf in Q3 to $2.81/mcf in Q4. Matador reports dry gas and NGLs on a combined basis, so my guess is that about half of the increase is due to higher NGL prices. Regardless, it gives me more confidence that they will get net gas prices inline with my forecast model assumptions.

None of Matador's natural gas or NGLs are hedged. In 1H 2025 they have ~40% of their oil hedged with collars that have ceiling of $86 and floors of $60, so they should have no impact on my forecast. Differentials have declined in West Texas (a good thing).

My current valuation stays at $94/share, based on 4.25 X annualized operating cash flow. < In my opinion, this is a conservative valuation multiple for a company of this size and quality.

TipRanks: Since Matador released Q4 results on February 18th, six analysts have submitted updated price targets to TipRanks that range from $73 to $90 and average $78.83.