On May 23, Dallas, TX-based
Matador Resources Co.
) announced the pricing of its 7.5 million share offering. The
company expects to garner about $182 million from the offering,
before taking into consideration the related expenses
The oil and natural gas explorer plans to use the net proceeds from
this offering to partially fund its 2014 capital budget for
operating an additional rig in the Permian Basin, pay for targeted
acquisitions and for corporate purposes. Any leftover amount will
be targeted toward repaying the debts under the company's revolving
Post this announcement, shares of the company fell 5.8% to close at
While the proceeds from the offering would help Matador Resources
sail though its 2014 capital plans, it would also result in share
dilution, which would ultimately reflect on its earnings report
card. Investors seemed to be aware and concerned about this fact as
reflected in the fall in share price.
Matador Resources, which recently reported upbeat first-quarter
results on the back of strong production growth, is an independent
exploration and production company engaged in the acquisition,
finding and development of unconventional onshore oil and gas
properties. The company's operations are concentrated primarily in
the Eagle Ford in South Texas and Permian Basin in Southeast New
Mexico and West Texas.
However, as is the case with other independent exploration and
production firms, Matador Resources' results are directly exposed
to oil and gas prices, which are inherently volatile and subject to
complex market forces.
Shares of Matador Resources have gained over 32% year-to-date.
However, any further uptrend seems unlikely as reflected by its
Zacks Rank #4 (Sell).
Meanwhile, some better-ranked domestic upstream energy stocks
Athlon Energy Inc.
RSP Permian, Inc.
). All the firms sport a Zacks Rank #1 (Strong Buy).
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ATHLON ENERGY (ATHL): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
MATADOR RESOURC (MTDR): Free Stock Analysis
RSP PERMIAN INC (RSPP): Free Stock Analysis
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