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Why Is Matador (MTDR) Up 4.5% 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 4.5% 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 its most recent earnings report in order to get a better handle on the important drivers.

Matador Resources’ Q3 Earnings & Sales Beat Estimates

Matador Resources Company reported third-quarter 2019 adjusted earnings of 32 cents per share, beating the Zacks Consensus Estimate of 23 cents. However, the bottom line declined from the year-ago figure of 48 cents.

Meanwhile, revenues of $279.4 million improved from the year-ago level of $207.2 million and beat the Zacks Consensus Estimate of $231 million.

The better-than-expected results were supported by higher oil equivalent production volumes, partially offset by weak average commodity price realizations.

Production Picture

In third-quarter 2019, total production volume averaged 6,407 thousand barrels of oil equivalent (MBOE) (comprising almost 57.1% oil), higher than 5,025 MBOE a year ago.

The average production volume of oil was 39,776 barrels per day (Bbls/d), up from 32,317 Bbls/d in third-quarter 2018. Natural gas production was at 179.2 million cubic feet per day (MMcf/d), up from 133.8 MMcf/d a year ago.

Price Realization

Average realized price for oil (excluding realized derivatives) was $54.19 per barrel, down from $57.15 in the year-ago quarter. Also, natural gas price of $1.88 per thousand cubic feet was lower than $3.77 in the prior-year quarter.

Operating Expenses

The company’s production taxes, transportation and processing costs declined to $3.86 per BOE from $4.02 in the year-ago quarter. Moreover, plant and other midstream services operating expenses fell to $1.38 per BOE in the quarter from the year-earlier number of $1.45. However, lease operating costs increased from $4.48 per BOE in third-quarter 2018 to $4.64.

Balance Sheet

As of Sep 30, 2019, Matador had cash and restricted cash of $40.8 million. Long-term debt totaled $1,514 million, which included $215 million of borrowings under its credit agreement. Its debt-to-capitalization ratio was 44.2%.

Capital Spending

The company spent $213 million during the third quarter of 2019. Matador allocated $193 million of the total amount to drill, equip and complete wells and $20 million toward midstream operations.

Guidance

The company has updated its 2019 guidance and expects oil production of 13.625-13.675 million barrels compared with 13.3-13.45 million barrels guided earlier. Notably, it reaffirms the 2019 capital expenditure guidance for drilling, completing and equipping wells at $640-$680 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted -15.13% due to these changes.

VGM Scores

At this time, Matador has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Outlook

Estimates have been broadly trending upward 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.


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