Matador Resources (MTDR) Valuation Update - April 24
Posted: Thu Apr 24, 2025 1:26 pm
I spent two hours this morning going through Matador's Q1 results and presentation slides. I don't see anything that justifies MTDR trading at less than 2.5 X operating cash flow per share.
> Matador is an Aggressive Growth company, that now generates a lot of free cash flow.
> YOY production growth of 22.4% in 2022, 24.9% in 2023, 29.6% in 2024 and based on their updated guidance 18.3% in 2025.
> 2025 growth is being funded entirely by operating cash flow AND they should have close to $900 million of free cash flow to fund stock buybacks, more dividends and debt reduction.
> The strong balance sheet has Matador positioned to make accretive bolt-on acquisitions that should be coming available in the Delaware Basin.
> TipRanks consensus price target today is $68.73
> PV10 Net Asset Value of just the proven reserves is ~$37/share and they have some valuable midstream assets and extremely valuable undeveloped leasehold in the Permian Basin.
MTDR is trading today at around $41/share. My current valuation is $84/share, which is just 4.25 X annualized operating cash flow.
Just a thought based on my M&A work at Hess: The merger of MTDR and PR would create a POWERHOUSE upstream company in the Delaware Basin.
My updated forecast/valuation model will be posted to the EPG website this afternoon.
> Matador is an Aggressive Growth company, that now generates a lot of free cash flow.
> YOY production growth of 22.4% in 2022, 24.9% in 2023, 29.6% in 2024 and based on their updated guidance 18.3% in 2025.
> 2025 growth is being funded entirely by operating cash flow AND they should have close to $900 million of free cash flow to fund stock buybacks, more dividends and debt reduction.
> The strong balance sheet has Matador positioned to make accretive bolt-on acquisitions that should be coming available in the Delaware Basin.
> TipRanks consensus price target today is $68.73
> PV10 Net Asset Value of just the proven reserves is ~$37/share and they have some valuable midstream assets and extremely valuable undeveloped leasehold in the Permian Basin.
MTDR is trading today at around $41/share. My current valuation is $84/share, which is just 4.25 X annualized operating cash flow.
Just a thought based on my M&A work at Hess: The merger of MTDR and PR would create a POWERHOUSE upstream company in the Delaware Basin.
My updated forecast/valuation model will be posted to the EPG website this afternoon.