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Why Is Matador (MTDR) Up 3.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 3.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Matador due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Matador Resources reported second-quarter 2020 adjusted loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents. In the year-ago quarter, earnings came in at 30 cents per share.
Revenues of $147.4 million significantly declined from the year-ago level of $241.7 million. Moreover, the metric missed the Zacks Consensus Estimate of $166 million.
The better-than-expected quarterly earnings were supported by higher oil and gas production volumes, as well as decreased operating expenses. This was partially offset by weak oil and natural gas price realizations.
Production Rises
Second-quarter 2020 total production volume averaged 6,670 thousand barrels of oil equivalent (MBOE) (comprising 58.8% oil), higher than 5,577 MBOE a year ago.
The average production volume of oil was 43,074 barrels per day (Bbls/d), up from 36,767 Bbls/d in second-quarter 2019. Natural gas production was 181.4 million cubic feet per day (MMcf/d), up from 147.1 MMcf/d a year ago.
Price Realization Declines
Average realized price for oil (excluding realized derivatives) was $24.03 per barrel, down from $56.51 in the year-ago quarter. Moreover, natural gas price of $1.49 per thousand cubic feet was lower than $1.64 in the prior-year quarter.
San Mateo Operations
The company gathered an average of 195 million cubic feet of natural gas per day in the Wolf and Rustler Breaks asset regions and Greater Stebbins area, indicating a 2% year-over-year rise. It reported adjusted EBITDA of $23.2 million, reflecting a 22% rise from the year-ago period.
Operating Expenses Decline
The company’s production taxes, transportation and processing costs decreased to $2.82 per BOE from $3.86 in the year-ago quarter. Moreover, plant and other midstream services operating expenses fell to $1.47 per BOE from the year-earlier number of $1.51. Also, lease operating costs decreased from $4.72 per BOE in second-quarter 2019 to $3.92. Total operating expenses per BOE were recorded at $24.42, lower than the year-ago level of $28.02.
Balance Sheet
As of Jun 30, 2020, Matador had cash and restricted cash of $43.5 million, down from the first quarter’s $56.8 million. Long-term debt increased from $1,662.3 million in first-quarter 2020 to $1,745.2 million, which included $385 million of borrowings under its credit agreement. The debt to capitalization was 49%.
Capital Spending
For drilling, completing and equipping wells during the second quarter, the company spent $123 million, which is 13% lower than expected. This was supported by improved operational efficiencies, and low drilling and completion costs in the Delaware Basin. Midstream capital spending was $33 million compared with the expectation of $41 million, primarily due to a change in pipeline construction timing.
Guidance
Due to market uncertainty that stemmed from energy demand destruction owing to coronavirus-induced lockdowns, oversupplied market and low commodity prices, the company partially paused activities in the Delaware Basin and Eagle Ford Shale in May and June. However, with improvement in crude prices, the company boosted production and expects 2020 output to be higher than expected.
It boosted its 2020 oil equivalent production guidance to 26.3-27.1 million barrels, indicating an increase from 24.2 million BOE in 2019. Total oil production will likely come in the range of 15.35-15.65 million barrels, indicating an increase from the 2019 level of 14 million barrels. Moreover, the company had around 6.1 million barrels of oil production hedged for the period of July to December. It made additional hedging deals for 2021 oil and gas production in the second quarter.
It reiterated 2020 capital expenditure view for drilling, completing and equipping wells in the range of $440-$500 million, suggesting a significant decline from the 2019 level of $671 million. San Mateo midstream capital expenditure guidance for the year is maintained in the band of $85-$105 million, implying a rise from $77 million in 2019.
Even with low overall capital expenditures, the company expects to increase production while keeping unit costs in check, which will likely enable it to attain free cash flow by 2020-end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 29.05% due to these changes.
VGM Scores
At this time, Matador has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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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Why Is Matador (MTDR) Up 3.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 3.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Matador due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Matador Resources Beats Q2 Earnings Estimates, Boosts Guidance
Matador Resources reported second-quarter 2020 adjusted loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents. In the year-ago quarter, earnings came in at 30 cents per share.
Revenues of $147.4 million significantly declined from the year-ago level of $241.7 million. Moreover, the metric missed the Zacks Consensus Estimate of $166 million.
The better-than-expected quarterly earnings were supported by higher oil and gas production volumes, as well as decreased operating expenses. This was partially offset by weak oil and natural gas price realizations.
Production Rises
Second-quarter 2020 total production volume averaged 6,670 thousand barrels of oil equivalent (MBOE) (comprising 58.8% oil), higher than 5,577 MBOE a year ago.
The average production volume of oil was 43,074 barrels per day (Bbls/d), up from 36,767 Bbls/d in second-quarter 2019. Natural gas production was 181.4 million cubic feet per day (MMcf/d), up from 147.1 MMcf/d a year ago.
Price Realization Declines
Average realized price for oil (excluding realized derivatives) was $24.03 per barrel, down from $56.51 in the year-ago quarter. Moreover, natural gas price of $1.49 per thousand cubic feet was lower than $1.64 in the prior-year quarter.
San Mateo Operations
The company gathered an average of 195 million cubic feet of natural gas per day in the Wolf and Rustler Breaks asset regions and Greater Stebbins area, indicating a 2% year-over-year rise. It reported adjusted EBITDA of $23.2 million, reflecting a 22% rise from the year-ago period.
Operating Expenses Decline
The company’s production taxes, transportation and processing costs decreased to $2.82 per BOE from $3.86 in the year-ago quarter. Moreover, plant and other midstream services operating expenses fell to $1.47 per BOE from the year-earlier number of $1.51. Also, lease operating costs decreased from $4.72 per BOE in second-quarter 2019 to $3.92. Total operating expenses per BOE were recorded at $24.42, lower than the year-ago level of $28.02.
Balance Sheet
As of Jun 30, 2020, Matador had cash and restricted cash of $43.5 million, down from the first quarter’s $56.8 million. Long-term debt increased from $1,662.3 million in first-quarter 2020 to $1,745.2 million, which included $385 million of borrowings under its credit agreement. The debt to capitalization was 49%.
Capital Spending
For drilling, completing and equipping wells during the second quarter, the company spent $123 million, which is 13% lower than expected. This was supported by improved operational efficiencies, and low drilling and completion costs in the Delaware Basin. Midstream capital spending was $33 million compared with the expectation of $41 million, primarily due to a change in pipeline construction timing.
Guidance
Due to market uncertainty that stemmed from energy demand destruction owing to coronavirus-induced lockdowns, oversupplied market and low commodity prices, the company partially paused activities in the Delaware Basin and Eagle Ford Shale in May and June. However, with improvement in crude prices, the company boosted production and expects 2020 output to be higher than expected.
It boosted its 2020 oil equivalent production guidance to 26.3-27.1 million barrels, indicating an increase from 24.2 million BOE in 2019. Total oil production will likely come in the range of 15.35-15.65 million barrels, indicating an increase from the 2019 level of 14 million barrels. Moreover, the company had around 6.1 million barrels of oil production hedged for the period of July to December. It made additional hedging deals for 2021 oil and gas production in the second quarter.
It reiterated 2020 capital expenditure view for drilling, completing and equipping wells in the range of $440-$500 million, suggesting a significant decline from the 2019 level of $671 million. San Mateo midstream capital expenditure guidance for the year is maintained in the band of $85-$105 million, implying a rise from $77 million in 2019.
Even with low overall capital expenditures, the company expects to increase production while keeping unit costs in check, which will likely enable it to attain free cash flow by 2020-end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 29.05% due to these changes.
VGM Scores
At this time, Matador has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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.