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Matador Boosts Production Guidance, Expects Lower 2019 Capex

Zacks Equity Research

Matador Resources Company MTDR recently increased its 2019 production guidance in a new investor presentation. The company also updated its capital investment plan for the year, which reflects efficiency gains. It further boosted its 2019 adjusted EBITDA guidance to $540-$560 million from prior estimation of $520-$550 million. The upper limit of this guided range is higher than the 2018 level of $553 million.

Matador increased its oil production guidance to 13.3-13.45 million barrels from 12.9-13.3 million barrels. This indicates a 20% jump from 2018 levels of 11.14 million barrels. The company anticipates full-year natural gas production in the range of 56-58 billion cubic feet (Bcf), higher than the prior projected band of 55-57 Bcf. This also suggests a 20% year-over-year increase. Total oil equivalent production is now estimated within 22.6-23.1 million barrels of oil equivalent (BOE), higher than the previous estimation of 22-22.8 million BOE. This also implies a jump from the 2018 level of 19.03 million BOE.

Capital expenditure associated with drilling, completing, and equipping wells is expected to amount to $640-$680 million in 2019, pointing to a decline from the year-ago reported figure of $686 million. Notably, its completion cost per feet averaged $650 so far this year, 22% lower than 2018’s $830. Moreover, Matador’s capital expenditure for midstream operations is expected in the range of $70-$90 million, whose mid-point is below the 2018 level of $85 million.

The company’s plan of boosting year-over-year production despite lower capital spending through 2019 reflects improving operational and capital efficiency. This can help it improve the cash flow situation, as its free cash flows have been negative over the past few years.

Price Performance

Dallas, TX-based Matador has lost 0.5% year to date compared with 20% decline of its industry.

 

 

Zacks Rank and Stocks to Consider

Currently, Matador carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are National Oilwell Varco, Inc. NOV, Dril-Quip, Inc. DRQ and NuStar Energy L.P. NS, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Oilwell’s 2019 earnings per share are expected to rise 75% year over year.

Dril-Quip’s 2019 earnings per share are expected to rise 131.8% year over year.

NuStar Energy’s third-quarter 2019 earnings per share are expected to gain more than 107% year over year.

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