Matador Resources Company MTDR recently announced that the company expects a $44.1 million realized net gain on derivatives for second-quarter 2020. Following the news, the stock jumped 6.5%.
The total realized gain will include $41.9 million from several West Texas Intermediate hedges and around $2.2 million from the upstream energy company’s Midland-Cushing oil basis swaps. Moreover, it is expected to incur $132.7 million non-cash, unrealized net loss on derivatives in the June quarter.
The oil price crash in the second quarter affected the bottom line of several exploration and production companies. As such, firms with strong oil hedge positions have averted the major blow of low oil prices. Notably, Matador has not only restructured the existing hedging positions but also added new hedges since Apr 1. The company’s move to protect cash flows and balance sheet was perfectly timed. Importantly, its oil production for the rest of this year is around 90% hedged at a weighted average price floor of $38 per barrel. The company intends to further strengthen oil and gas hedging positions for the next year and thereafter.
During June-end, Matador decreased the Delaware Basin-operated drilling program to three rigs, in line with the plan announced in March. The upstream energy firm will be operating only three rigs through the second half of 2020 at the site.
The Zacks Consensus Estimate for Matador’s second-quarter earnings has narrowed from a loss of 16 cents per share to a loss of 13 cents in the past 60 days. The company has witnessed three upward revisions and no downward movement during this time period.
Its shares have gained 145.8% in the past three months compared with 17.9% rise of the industry it belongs to.
Zacks Rank & Other Stocks to Consider
The company currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include ConocoPhillips COP, Antero Resources Corporation AR and Centennial Resource Development, Inc. CDEV, each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ConocoPhillips’ second-quarter earnings estimates have improved over the past 60 days, with four upward estimate revisions and one downward movement.
Antero Resources’ bottom line for second-quarter 2020 is expected to rise 33.3% year over year.
Centennial Resource’s second-quarter earnings estimates have improved over the past 30 days, with three upward estimate revisions and no downward movement.
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ConocoPhillips (COP) : Free Stock Analysis Report
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