A month has gone by since the last earnings report for Matador Resources (MTDR - Free Report) . Shares have added about 2.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Second-Quarter 2018 Results
Matador Resources reported second-quarter 2018 adjusted earnings of 41 cents per share, beating the Zacks Consensus Estimate of 33 cents and improving from the year-ago profit of 11 cents.
Revenues of $211.4 million steered past the Zacks Consensus Estimate of $184 million and rose from the year-ago quarter’s $129.6 million.
Delaware Basin production and increased realized crude price backed the strong second-quarter results. Importantly, management pointed that the April-to-June quarter has been the best since the inception of the company.
Production & Price Realization
During second-quarter 2018, total production volumes averaged 4,817 thousand barrels of oil equivalent (MBOE) (56.2% oil), higher than 3,360 MBOE a year ago. The net production volumes of oil were recorded at 2,706 thousand barrels (MBbl), up from 1,767 MBbl in second-quarter 2017. Record oil-equivalent production in the Delaware Basin aided the quarterly volumes.
Realized price for oil (including derivatives) was recorded at $60.52 per barrel, up from $46.34 in the year-ago quarter. However, natural gas price of $3.38 per thousand cubic feet (Mcf) was marginally lower than $3.39 in the prior-year quarter.
Financials & Capital Spending
As of Jun 30, 2018, the company reported cash and restricted cash of $143.5 million and debt of $574.2 million, with a debt-to-capitalization ratio of 25.5%.
The company spent $182.8 million through the second quarter of 2018. To drill, equip and complete wells, Matador allocated $166.1 million of the total amount. While the remaining $16.7 million was expended for midstream operations.
As of Jun 30, 2018, Matador estimated proved reserves of 170,155 MBOE, up from 152,771 MBOE as of Dec 31, 2017.
Matador raised its 2018 production guidance to 18.3-18.7 million barrels of oil equivalent (BOE) from the prior 16.5-17.3 million BOE.
Through 2018, the company has maintained capital spending for midstream activities at $70 to $90 million. However, for drilling, completing and equipping wells, Matador is planning to spend $620 to $650 million, higher than its prior guidance of $530 to $570 million.
Through 2018, the company expects to complete and bring 151 gross wells online, higher than its original projection of 128 wells.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Matador has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Matador has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.