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Why Is Matador (MTDR) Up 11.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 11.8% 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 drivers.
Matador Q4 Earnings Beat Estimates on Higher Production
Matador Resources reported fourth-quarter 2023 adjusted earnings of $1.99 per share, which beat the Zacks Consensus Estimate of $1.75. However, the bottom line declined from the year-ago quarter’s level of $2.08.
Total quarterly revenues of $836 million beat the Zacks Consensus Estimate of $770 million. The top line increased from the year-ago quarter’s level of $707 million.
Better-than-expected fourth-quarter earnings were aided by Matador’s high total production volume, averaging more than 154,200 barrels of oil and natural gas equivalent per day. However, declining realized commodity prices offset the positive.
Upstream Business in Q4
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 fourth 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.
Declining Average Sales Price of Commodities
MTDR reported fourth-quarter 2023 average sales price for oil (without realized derivatives) at $79.00 per barrel, down from $83.90 in the year-ago period. The commodity price was also lower than our projection of $79.36 per barrel. The price of natural gas was recorded at $3.01 per thousand cubic feet (Mcf), which slipped from $5.65 in the year-ago quarter. The figure also missed our estimate of $3.33 Mcf.
Notably, our estimates and the reported figures for oil and gas prices were significantly lower year over year in the fourth quarter. This was possibly due to concerns over a looming recession and an economic slowdown.
Increasing Production
Matador reported fourth-quarter 2023 oil production of 88,663 barrels per day (B/D), up from 62,316 B/D in the prior-year quarter. The figure also beat our estimate of 86,750 B/D. Natural gas production was recorded at 393.6 million cubic feet per day (MMcf/D), up from 296.5 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 351 MMcf/D.
The higher production was driven by increased output from wells in the Stateline asset area and Rodney Robinson leasehold, the exceptional performance of Margarita wells, land acquisitions contributing approximately 1,000 BOE per day more than expected, and higher-than-anticipated production from non-operated assets. Total oil equivalent production in the fourth quarter was 154,261 BOE/D, which not only surged from the year-ago quarter’s level of 111,735 BOE/D but also surpassed our projection of 145,249 BOE/D.
Operating Expenses
MTDR’s plant and other midstream services’ operating expenses declined to $2.56 per BOE from the year-earlier level of $2.85. Our estimate for the same was pinned at $2.53. However, lease operating costs increased from $3.98 per BOE in fourth-quarter 2022 to $5.06. Our projection for the metric was pinned at $5.44 per BOE. Yet, production taxes, transportation and processing costs declined to $5.31 per BOE from $6.10 in the year-ago quarter.
Total operating expense per BOE was $30.52, higher than the prior-year reported figure of $29.09, yet well below our estimate of $32.53.
Balance Sheet & Capital Spending
As of Dec 31, 2023, Matador had cash and restricted cash of $106.3 million, and a long-term debt of $2,206.6 million. The company spent $337.3 million for the drilling, completion and equipment of wells in the fourth quarter.
Outlook
For full-year 2024, Matador expects its average daily oil equivalent production to be in the range of 153,000-159,000 BOE/d, indicating an 18% year-over-year increase. It also expects total capital expenditures for the full year between $1.30 billion and $1.55 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -19.25% due to these changes.
VGM Scores
At this time, Matador has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Matador has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Matador is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Magnolia Oil & Gas Corp (MGY - Free Report) , a stock from the same industry, has gained 13.1%. The company reported its results for the quarter ended December 2023 more than a month ago.
Magnolia Oil & Gas Corp reported revenues of $322.63 million in the last reported quarter, representing a year-over-year change of -7.6%. EPS of $0.50 for the same period compares with $0.86 a year ago.
For the current quarter, Magnolia Oil & Gas Corp is expected to post earnings of $0.43 per share, indicating a change of -23.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.6% over the last 30 days.
Magnolia Oil & Gas Corp has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Matador (MTDR) Up 11.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 11.8% 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 drivers.
Matador Q4 Earnings Beat Estimates on Higher Production
Matador Resources reported fourth-quarter 2023 adjusted earnings of $1.99 per share, which beat the Zacks Consensus Estimate of $1.75. However, the bottom line declined from the year-ago quarter’s level of $2.08.
Total quarterly revenues of $836 million beat the Zacks Consensus Estimate of $770 million. The top line increased from the year-ago quarter’s level of $707 million.
Better-than-expected fourth-quarter earnings were aided by Matador’s high total production volume, averaging more than 154,200 barrels of oil and natural gas equivalent per day. However, declining realized commodity prices offset the positive.
Upstream Business in Q4
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 fourth 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.
Declining Average Sales Price of Commodities
MTDR reported fourth-quarter 2023 average sales price for oil (without realized derivatives) at $79.00 per barrel, down from $83.90 in the year-ago period. The commodity price was also lower than our projection of $79.36 per barrel. The price of natural gas was recorded at $3.01 per thousand cubic feet (Mcf), which slipped from $5.65 in the year-ago quarter. The figure also missed our estimate of $3.33 Mcf.
Notably, our estimates and the reported figures for oil and gas prices were significantly lower year over year in the fourth quarter. This was possibly due to concerns over a looming recession and an economic slowdown.
Increasing Production
Matador reported fourth-quarter 2023 oil production of 88,663 barrels per day (B/D), up from 62,316 B/D in the prior-year quarter. The figure also beat our estimate of 86,750 B/D. Natural gas production was recorded at 393.6 million cubic feet per day (MMcf/D), up from 296.5 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 351 MMcf/D.
The higher production was driven by increased output from wells in the Stateline asset area and Rodney Robinson leasehold, the exceptional performance of Margarita wells, land acquisitions contributing approximately 1,000 BOE per day more than expected, and higher-than-anticipated production from non-operated assets. Total oil equivalent production in the fourth quarter was 154,261 BOE/D, which not only surged from the year-ago quarter’s level of 111,735 BOE/D but also surpassed our projection of 145,249 BOE/D.
Operating Expenses
MTDR’s plant and other midstream services’ operating expenses declined to $2.56 per BOE from the year-earlier level of $2.85. Our estimate for the same was pinned at $2.53. However, lease operating costs increased from $3.98 per BOE in fourth-quarter 2022 to $5.06. Our projection for the metric was pinned at $5.44 per BOE. Yet, production taxes, transportation and processing costs declined to $5.31 per BOE from $6.10 in the year-ago quarter.
Total operating expense per BOE was $30.52, higher than the prior-year reported figure of $29.09, yet well below our estimate of $32.53.
Balance Sheet & Capital Spending
As of Dec 31, 2023, Matador had cash and restricted cash of $106.3 million, and a long-term debt of $2,206.6 million. The company spent $337.3 million for the drilling, completion and equipment of wells in the fourth quarter.
Outlook
For full-year 2024, Matador expects its average daily oil equivalent production to be in the range of 153,000-159,000 BOE/d, indicating an 18% year-over-year increase. It also expects total capital expenditures for the full year between $1.30 billion and $1.55 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -19.25% due to these changes.
VGM Scores
At this time, Matador has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Matador has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Matador is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Magnolia Oil & Gas Corp (MGY - Free Report) , a stock from the same industry, has gained 13.1%. The company reported its results for the quarter ended December 2023 more than a month ago.
Magnolia Oil & Gas Corp reported revenues of $322.63 million in the last reported quarter, representing a year-over-year change of -7.6%. EPS of $0.50 for the same period compares with $0.86 a year ago.
For the current quarter, Magnolia Oil & Gas Corp is expected to post earnings of $0.43 per share, indicating a change of -23.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.6% over the last 30 days.
Magnolia Oil & Gas Corp has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.