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Matador (MTDR) Stock Slips 7.1% Despite Q3 Earnings Beat

Matador Resources Company’s MTDR shares declined 7.1% despite reporting strong third-quarter 2021 earnings on Oct 26. Despite some recovery, investors remain cautious about the uncertainty in the oil and gas business as the pandemic is still affecting upstream operations.

The company reported adjusted earnings of $1.25 per share, beating the Zacks Consensus Estimate of $1.02 per share. The bottom line significantly improved from the year-ago quarter’s earnings of 10 cents.

Total quarterly revenues of $472 million surpassed the Zacks Consensus Estimate of $393 million. The top line increased from the year-ago level of $203 million.

The strong quarterly results can be attributed to increased production volumes and higher commodity price realizations.

Matador Resources Company Price, Consensus and EPS Surprise

 

Dividend Hike

Matador announced a quarterly cash dividend of 5 cents per share, an increase from the previous dividend of 2.5 cents initiated earlier this year.  The dividend will be paid out on Dec 1, 2021, to shareholders of record as of Nov 10, 2021.

Production

For third-quarter 2021, total production volume averaged 8,283 thousand barrels of oil equivalent (MBoe) (comprising 56.4% oil), higher than 6,715 MBoe a year ago.

The average oil production volume was 50,747 barrels per day (Bbls/d), up from 42,340 Bbls/d reported in third-quarter 2020. Natural gas production was 235.7 million cubic feet per day (MMcf/d), up from 183.9 MMcf/d a year ago.

Price Realization

The average realized price for oil (excluding realized derivatives) was $69.73 per barrel, which significantly increased from $38.67 in the year-ago quarter. Moreover, the natural gas price of $6.27 per thousand cubic feet was higher than $2.27 in the prior-year quarter.

Operating Expenses

The company’s production taxes, transportation and processing costs increased to $5.90 per barrel of oil equivalent (Boe) from $3.85 in the year-ago quarter. Plant and other midstream services’ operating expenses increased to $2.06 per Boe from the year-earlier figure of $1.40. However, lease operating costs fell from $3.48 per Boe in third-quarter 2020 to $3.31.

Total operating expenses per Boe were recorded at $24.99, higher than the prior-year figure of $24.09.

Balance Sheet

As of Sep 30, 2021, Matador had cash and restricted cash of $107.8 million. Long-term debt was recorded at $1,520 million, including $120 million of borrowings under its credit agreement. Debt to capitalization was 44.3%.

Capital Spending

For the drilling, completing and equipping of wells in the third quarter, the company spent $121 million, 14% lower than its projection. Enhanced operational efficiencies, and lower drilling and completion costs in the Delaware Basin primarily aided its performance.

Outlook

For 2021, Matador expects oil-equivalent production of 30.7-31.2 million barrels, which increased from its previously mentioned 29.9-31 million barrels. It expects total oil production of 17.4-17.6 million barrels.

The company’s 2021 capital spending guidance for drilling, completing and equipping wells is pegged at $535-$565 million. In midstream, Matador expects to spend $35-$45 million, which has been unchanged.

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked players in the energy space are Cheniere Energy, Inc. LNGAPA Corporation APA and Chevron Corporation CVX, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cheniere’s earnings for 2021 are expected to surge 158% year over year.

APA’s earnings for 2021 are expected to rise 15% year over year.

Chevron’s bottom line for 2021 is expected to increase 19.6% year over year.


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Matador Resources Company (MTDR): Free Stock Analysis Report
 
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