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Matador (MTDR) Signs Agreement to Acquire New Mexico Assets

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·3 min read
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Matador Resources Company MTDR signed an agreement with Summit Midstream Partners LP to acquire the latter’s Lane Gathering and Processing (G&P) system in Eddy and Lea counties for $75 million.

The Lane G&P system involves 45 miles of low- and high-pressure gathering pipeline in Eddy and Lea counties in the northern Delaware Basin. The system also involves three compressor stations and a cryogenic gas processing facility, with the capacity to process 60 million cubic feet per day.

Matador will also assume the takeaway capacity on the Double E Pipeline associated with the Lane G&P System. Double E Pipeline is a FERC-regulated natural gas pipeline operated by Summit Midstream.

The acquisition is a further development of Matador’s strategy to manage its midstream operations and use midstream resources to enhance operations. To achieve this, the company expects to expand the Lane G&P system to support its environmental aspects, safety, exploration and production work in northern Eddy and Lea counties.

Matador is a major acreage holder, owning 125,000 net acres in Eddy and Lea counties in southeastern New Mexico. The takeover of additional take-or-pay firm capacity further improves Matador’s commercial relationship with Double E.

The divestment provides Summit Midstream with the added financial flexibility to seek scale-building opportunities for Double E and its key assets in growth basins. The transaction, subject to customary closing conditions, is expected to complete in the second quarter of 2022.

Price Performance

Shares of Matador have outperformed the industry in the past six months. The stock has surged 78.3% compared with the industry’s 68.7% growth.

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Zacks Rank & Other Stocks to Consider

Matador currently flaunts a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector might look at the following companies that also sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Valero Energy Corporation VLO is the largest independent refiner and marketer of petroleum products in the United States. VLO’s Gulf Coast contributed approximately 60.5% to total throughput volume in the first quarter of 2022.

Valero currently holds a Zacks Style Score of A for Growth and Momentum. Through the March-end quarter, Valero returned $545 million to stockholders as dividend payments.

EQT Corporation EQT is primarily an explorer and producer of natural gas. In 2021, the company produced 1,857,817 million cubic feet equivalent of natural gas.

Almost 65% of EQT’s production in 2022 is hedged, thereby securing the best risk-adjusted upside in natural gas. EQT has lower exposure to debt capital than composite stocks belonging to the industry. Hence, the company can rely on its strong balance sheet to sail through the volatility in commodity prices.

Suncor Energy SU is Canada’s premier integrated energy company. In the first quarter, the company distributed C$601 billion in dividends and paid out C$827 million in share repurchases.

In good news for investors, Suncor declared a quarterly dividend of 47 Canadian cents per share, up 11.9% from the prior dividend of 42 Canadian cents. The dividend is payable on Jun 24 to shareholders of record on Jun 3. Suncor also expanded its repurchase program to 10% of shares outstanding (from 7% before).

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Valero Energy Corporation (VLO) : Free Stock Analysis Report
EQT Corporation (EQT) : Free Stock Analysis Report
Suncor Energy Inc. (SU) : Free Stock Analysis Report
Matador Resources Company (MTDR) : Free Stock Analysis Report
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