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Why Is Matador (MTDR) Up 3.3% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Matador Resources (MTDR). Shares have added about 3.3% 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 catalysts.

Matador Resources Q4 Earnings Beat, Reserves Grow

Matador Resourcesrecently reported fourth-quarter 2018 adjusted earnings of 37 cents per share, beating the Zacks Consensus Estimate of 27 cents and also improving from the year-ago profit of 25 cents.

Revenues of $289.9 million rose from the year-ago quarter’s $153.6 million and beat the Zacks Consensus Estimate of $200.5 million.

Record production at the Delaware Basin backed the strong fourth-quarter results.

Production & Price Realization

During fourth-quarter 2018, total production volumes averaged 5,109 thousand barrels of oil equivalent (MBOE) (comprising 60.3% oil), higher than 4,022 MBOE recorded a year ago.

The average production volumes of oil were recorded at 33,479 barrels per day (Bbls/d), up from 24,665 Bbls/d in fourth-quarter 2017. Natural gas production was recorded at 132.3 million cubic feet per day (MMcf/d), up from 114.3 MMcf/d a year ago.

Record oil-equivalent production in the Delaware Basin aided the quarterly volumes.

Realized price for oil (including derivatives) was recorded at $50.75 per barrel, down from $52.30 in the year-ago quarter. Also, natural gas price of $3.35 per thousand cubic feet (Mcf) was lower than $4.12 in the prior-year quarter.     

Balance Sheet

As of Dec 31, 2018, the company reported cash and restricted cash of $64.6 million. Long-term debt totaled $1,297.8 million, which includes $40 million of borrowing under credit agreement. Its debt-to-capitalization ratio stands at 42.2%. 

Capital Spending

The company spent $209.7 million through the fourth quarter of 2018. Matador Resources allocated $187.8 million of the total amount to drill, equip and complete wells while $21.9 million was expended for midstream operations.

Proved Reserves Grow

As of Dec 31, 2018, the company reported total estimated proved reserves of 215.3 million barrels of oil equivalent (MMBoE), up almost 41% year over year.  

Guidance

Matador Resources expects oil production through 2019 in the band of 12.9 to 13.3 million Bbl, reflecting an increase of 18% year over year from the midpoint of this year’s projected range. Total oil equivalent production for 2019 is projected in the range of 22 to 22.8 million BOE, up 18% year over year.    

The company guided capital spending for drilling, completing and equipping wells through 2019 to be $640 to $680 million, lower by 4% year over year from the midpoint of this year’s projected range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -23.72% due to these changes.

VGM Scores

Currently, Matador has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

Estimates have been broadly trending downward 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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