Yahoo Finance Why Is Matador (MTDR) Down 7.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Matador Resources (MTDR). Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Matador due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Matador Q1 Earnings Beat Estimates on Higher Production
Matador reported first-quarter 2023 adjusted earnings of $1.71 per share, which beat the Zacks Consensus Estimate of $1.48. The bottom line also improved from the year-ago quarter’s level of $1.50.
Total quarterly revenues of $788 million beat the Zacks Consensus Estimate of $726 million. The top line also increased from the year-ago quarter’s level of $560 million.
Strong first-quarter results were aided by Matador’s high total production volume, averaging more than 149,700 barrels of oil equivalent per day, along with an increase in the realized price of oil.
Upstream Business in Q1
Since MTDR is engaged in oil and gas exploration and production activities, the fate of its overall business primarily depends on the oil and gas pricing scenario. The majority of Matador’s production comprises oil (57% of total production in the first quarter), making this commodity’s price the prime factor in determining the company’s earnings.
Let’s take a look at Matador’s average sales price of commodities, along with production.
Average Sales Price of Commodities
MTDR reported first-quarter 2024 average sales price for oil (without realized derivatives) at $77.58 per barrel, up from $75.74 in the year-ago period. The commodity price was lower than our projection of $77.99 per barrel. The price of natural gas was recorded at $2.96 per thousand cubic feet (Mcf), which slipped from $3.93 in the year-ago quarter. Our estimate for the same was pinned at $2.83 Mcf.
Increasing Production
Matador reported first-quarter 2023 oil production of 84,777 barrels per day (B/D), up from 58,941 B/D in the prior-year quarter. The figure also beat our estimate of 83,953 B/D. Natural gas production was recorded at 389.9 million cubic feet per day (MMcf/D), up from 286.3 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 373.3 MMcf/D.
The outperformance was driven by increased output from wells in the Stateline asset area. The growth is attributed to the Advance acquisition and increased production from new wells drilled in existing assets and undeveloped acreage. Total oil equivalent production in the first quarter was 149,760 BOE/D, which not only surged from the year-ago quarter’s level of 106,654 BOE/D but also surpassed our projection of 146,168 BOE/D.
Operating Expenses
MTDR’s plant and other midstream services’ operating expenses declined to $2.91 per BOE from the year-earlier level of $3.23. Our estimate for the same was pinned at $3.23.
However, lease operating costs increased from $4.63 per BOE in first-quarter 2023 to $5.60 in the reported quarter. Our projection for the metric was pinned at $5.18 per BOE. Yet, production taxes, transportation and processing costs declined to $5.15 per BOE from $5.78 in the year-ago quarter.
Total operating expense per BOE was $31.42, higher than the prior-year reported figure of $29.14, but below our estimate of $31.69.
Balance Sheet & Capital Spending
As of Mar 31, 2024, Matador had cash and restricted cash of $74.3 million, and a long-term debt of $1,971.6 million. The company spent $236.6 million for the drilling, completion and equipment of wells in the first quarter.
Outlook
For full-year 2024, Matador expects average daily oil equivalent production to be at the high end of 153,000-159,000 BOE/d, indicating approximately 20% year-over-year increase. It also expects full-year lease operating expenses in the range of $5.25-$5.75 per BOE.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Matador has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Matador has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Matador Resources Company (MTDR) : Free Stock Analysis Report
