It has been about a month since the last earnings report for Matador Resources (MTDR Quick QuoteMTDR - Free Report) . Shares have added about 15.1% 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 Q1 Earnings on Strong Production Volumes

Matador Resources reported first-quarter 2020 adjusted earnings of 20 cents per share, beating the Zacks Consensus Estimate of 6 cents. Also, the bottom line rose from the year-ago figure of 19 cents per share.

Revenues of $371.6 million significantly rose from the year-ago level of $173.9 million. Moreover, the metric beat the Zacks Consensus Estimate of $236 million.

The strong quarterly results 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

In first-quarter 2020, total production volume averaged 6,476 thousand barrels of oil equivalent (MBOE) (comprising 57.1% oil), higher than 5,395 MBOE a year ago.

The average production volume of oil was 40,626 barrels per day (Bbls/d), up from 34,517 Bbls/d in first-quarter 2019. Natural gas production was 183.2 million cubic feet per day (MMcf/d), up from 152.5 MMcf/d a year ago.

Price Realization Declines

Average realized price for oil (excluding realized derivatives) was $45.87 per barrel, down from $49.64 in the year-ago quarter. Moreover, natural gas price of $1.70 per thousand cubic feet was lower than $2.85 in the prior-year quarter.

San Mateo Operations

In the first quarter, the company gathered an average of 201 million cubic feet of natural gas per day in the Wolf and Rustler Breaks asset regions, indicating a 12% year-over-year rise. It reported adjusted EBITDA of $26.2 million, reflecting a 26% rise from the year-ago period.

Operating Expenses Decline

The company’s production taxes, transportation and processing costs decreased to $3.35 per BOE from $3.65 in the year-ago quarter. Moreover, plant and other midstream services operating expenses fell to $1.54 per BOE in the quarter from the year-earlier number of $1.73. Also, lease operating costs decreased from $5.78 per BOE in first-quarter 2019 to $4.77. Total operating expenses per BOE in the quarter were recorded at $26.18, lower than the year-ago level of $28.80.

Balance Sheet

As of Mar 31, 2020, Matador had cash and restricted cash of $56.8 million. Long-term debt increased from $1,582.4 million in fourth-quarter 2019 to $1,662.3 million, which included $315 million of borrowings under its credit agreement. The debt to capitalization was 43.6%.

Capital Spending

For drilling, completing and equipping wells during the first quarter, the company spent $169 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 $20 million in the quarter compared with the estimate of $41 million, primarily due to change in pipeline construction timing.

Guidance

Due to the current market uncertainty stemming from energy demand destruction owing to coronavirus-induced lockdowns, oversupplied market and low commodity prices, the company intends to partially pause activities in the Delaware Basin and Eagle Ford Shale in May and June. Therefore, the company’s second-quarter overall production is expected to decline 4-6% sequentially. While crude oil production will likely remain flat with the first-quarter figure, natural gas output is expected to decrease 10-12% sequentially in the second quarter.

The company expects 2020 oil equivalent production within 25.4-26.5 million barrels, indicating an increase from 24.2 million BOE in 2019. Total oil production will likely come in the range of 15.1-15.5 million barrels, higher than the 2019 level of 14 million barrels.

It expects 2020 capital expenditure 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 for the year is expected in the band of $85-$105 million, implying a rise from $77 million in 2019. Moreover, the company now expects to turn to sales 96 gross wells this year compared with the previous guidance of 150 wells.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates revision. The consensus estimate has shifted 19.85% due to these changes.

VGM Scores

Currently, Matador has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Matador has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.