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Matador (MTDR) Up 9.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 9.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Matador Beats Q4 Earnings on Higher Oil & Gas Output
Matador Resources Company reported fourth-quarter 2020 adjusted earnings of 27 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line, however, declined from the year-ago earnings of 39 cents per share.
Revenues of $224.2 million declined from the year-ago level of $288.7 million. Moreover, the metric missed the Zacks Consensus Estimate of $233 million.
The better-than-expected quarterly earnings were supported by higher oil and gas production volumes, as well as decreased lease operating costs. This was partially offset by weak oil price realizations.
Production
Fourth-quarter 2020 total production volume averaged 7,653 thousand barrels of oil equivalent (MBoe) (comprising 57.7% oil), higher than 6,785 MBoe a year ago.
The average production volume of oil was 48,028 barrels per day (Bbls/d), up from 42,087 Bbls/d in fourth-quarter 2019. Natural gas production was 210.9 million cubic feet per day (MMcf/d), up from 190 MMcf/d a year ago.
Price Realization
Average realized price for oil (excluding realized derivatives) was $40.99 per barrel, down from $56.36 in the year-ago quarter. However, natural gas price of $2.97 per thousand cubic feet was higher than $2.31 in the prior-year quarter.
Operating Expenses
The company’s production taxes, transportation and processing costs decreased to $3.53 per Boe from $3.88 in the year-ago quarter. Also, lease operating costs fell from $4.43 per Boe in fourth-quarter 2019 to $3.20. However, plant and other midstream services’ operating expenses increased to $1.62 per Boe from the year-earlier figure of $1.51.
Total operating expenses per Boe were recorded at $22.24, lower than the year-ago level of $27.88.
Balance Sheet
As of Dec 31, 2020, Matador had cash and restricted cash of $91.4 million. Long-term debt was recorded at $1,815 million, which included $440 million of borrowings under its credit agreement. The debt to capitalization was 54.5%.
Capital Spending
For drilling, completing and equipping wells during the fourth quarter, the company spent $63 million, which is 21% lower than what it had projected. Enhanced operational efficiencies, along with reduction in drilling and completion costs in the Delaware Basin primarily aided its performance.
Guidance
It expects 2021 oil equivalent production in the range of 29.9-31 million barrels, indicating an increase from 27.5 million Boe in 2020. Total oil production guidance is expected in the range of 17.2-17.8 million barrels, indicating an increase from the 2020 level of 15.9 million barrels.
The company’s 2021 capital spending guidance for drilling, completing and equipping wells is projected in the range of $525-$575 million, suggesting a jump of 22% from $450 million a year ago. In midstream, it expects to spend $20-$30 million, signaling a plunge from $89 million in 2020.
Importantly, production taxes, transportation and processing costs for 2021 are expected in the range of $4.25-$4.75 per Boe, indicating a rise from the 2020 level of $3.39. Lease operating expenses are expected in the range of $3.50-$4 per Boe. The metric was $3.81 in 2020. Total operating expenses for 2021 are estimated within $23.50-$27 per Boe. The same in the prior year was $24.13.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted 33.09% due to these changes.
VGM Scores
At this time, Matador has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Matador has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Matador (MTDR) Up 9.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 9.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Matador Beats Q4 Earnings on Higher Oil & Gas Output
Matador Resources Company reported fourth-quarter 2020 adjusted earnings of 27 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line, however, declined from the year-ago earnings of 39 cents per share.
Revenues of $224.2 million declined from the year-ago level of $288.7 million. Moreover, the metric missed the Zacks Consensus Estimate of $233 million.
The better-than-expected quarterly earnings were supported by higher oil and gas production volumes, as well as decreased lease operating costs. This was partially offset by weak oil price realizations.
Production
Fourth-quarter 2020 total production volume averaged 7,653 thousand barrels of oil equivalent (MBoe) (comprising 57.7% oil), higher than 6,785 MBoe a year ago.
The average production volume of oil was 48,028 barrels per day (Bbls/d), up from 42,087 Bbls/d in fourth-quarter 2019. Natural gas production was 210.9 million cubic feet per day (MMcf/d), up from 190 MMcf/d a year ago.
Price Realization
Average realized price for oil (excluding realized derivatives) was $40.99 per barrel, down from $56.36 in the year-ago quarter. However, natural gas price of $2.97 per thousand cubic feet was higher than $2.31 in the prior-year quarter.
Operating Expenses
The company’s production taxes, transportation and processing costs decreased to $3.53 per Boe from $3.88 in the year-ago quarter. Also, lease operating costs fell from $4.43 per Boe in fourth-quarter 2019 to $3.20. However, plant and other midstream services’ operating expenses increased to $1.62 per Boe from the year-earlier figure of $1.51.
Total operating expenses per Boe were recorded at $22.24, lower than the year-ago level of $27.88.
Balance Sheet
As of Dec 31, 2020, Matador had cash and restricted cash of $91.4 million. Long-term debt was recorded at $1,815 million, which included $440 million of borrowings under its credit agreement. The debt to capitalization was 54.5%.
Capital Spending
For drilling, completing and equipping wells during the fourth quarter, the company spent $63 million, which is 21% lower than what it had projected. Enhanced operational efficiencies, along with reduction in drilling and completion costs in the Delaware Basin primarily aided its performance.
Guidance
It expects 2021 oil equivalent production in the range of 29.9-31 million barrels, indicating an increase from 27.5 million Boe in 2020. Total oil production guidance is expected in the range of 17.2-17.8 million barrels, indicating an increase from the 2020 level of 15.9 million barrels.
The company’s 2021 capital spending guidance for drilling, completing and equipping wells is projected in the range of $525-$575 million, suggesting a jump of 22% from $450 million a year ago. In midstream, it expects to spend $20-$30 million, signaling a plunge from $89 million in 2020.
Importantly, production taxes, transportation and processing costs for 2021 are expected in the range of $4.25-$4.75 per Boe, indicating a rise from the 2020 level of $3.39. Lease operating expenses are expected in the range of $3.50-$4 per Boe. The metric was $3.81 in 2020. Total operating expenses for 2021 are estimated within $23.50-$27 per Boe. The same in the prior year was $24.13.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted 33.09% due to these changes.
VGM Scores
At this time, Matador has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Matador has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.