Matador Resources Co.
) has commenced an underwritten public offering of 7,500,000 common
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, to pay for
targeted acquisitions, as well as for corporate purposes. Any
leftover amount will be targeted towards repaying the debts under
the company's revolving credit facility.
Matador Resources, which recently reported upbeat first quarter
results on strong production, 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
With a multi-year drilling inventory located in some of the
industry's best plays, balanced oil/gas portfolio and accretive
acquisitions, Matador Resources' asset portfolio is primed for high
production growth and peer-leading returns.
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. Realized prices could differ significantly
from our estimates, thereby affecting the partnership's revenues,
earnings and cash flow.
Moreover, having already climbed some 40% year-to-date, any further
upside for Matador shares looks unlikely.
As a result, Matador currently retains a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next one to three months.
However, some better-ranked domestic upstream energy stocks include
Ultra Petroleum Corp.
Clayton Williams Energy Inc.
). All the firms hold a Zacks Rank #1 (Strong Buy).
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