Matador (MTDR) Q1 Earnings Beat Estimates on Production Volume

Matador Resources Company MTDR reported first-quarter 2023 adjusted earnings of $1.71 per share, which beat the Zacks Consensus Estimate of $1.48. The bottom line also improved from the year-ago quarter’s level of $1.50.

Total quarterly revenues of $788 million beat the Zacks Consensus Estimate of $726 million. The top line also increased from the year-ago quarter’s level of $560 million.

Strong first-quarter results were aided by Matador’s high total production volume, averaging more than 149,700 barrels of oil equivalent per day, along with an increase in the realized price of oil.

Matador Resources Company Price, Consensus and EPS Surprise

Matador Resources Company Price, Consensus and EPS Surprise

Matador Resources Company price-consensus-eps-surprise-chart | Matador Resources Company Quote

Upstream Business in Q1

Since MTDR is engaged in oil and gas exploration and production activities, the fate of its overall business primarily depends on the oil and gas pricing scenario. The majority of Matador’s production comprises oil (57% of total production in the first quarter), making this commodity’s price the prime factor in determining the company’s earnings.

Let’s take a look at Matador’s average sales price of commodities, along with production.

Average Sales Price of Commodities

MTDR reported first-quarter 2024 average sales price for oil (without realized derivatives) at $77.58 per barrel, up from $75.74 in the year-ago period. The commodity price was lower than our projection of $77.99 per barrel. The price of natural gas was recorded at $2.96 per thousand cubic feet (Mcf), which slipped from $3.93 in the year-ago quarter. Our estimate for the same was pinned at $2.83 Mcf.

Increasing Production

Matador reported first-quarter 2023 oil production of 84,777 barrels per day (B/D), up from 58,941 B/D in the prior-year quarter. The figure also beat our estimate of 83,953 B/D. Natural gas production was recorded at 389.9 million cubic feet per day (MMcf/D), up from 286.3 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 373.3 MMcf/D.

The outperformance was driven by increased output from wells in the Stateline asset area. The growth is attributed to the Advance acquisition and increased production from new wells drilled in existing assets and undeveloped acreage. Total oil equivalent production in the first quarter was 149,760 BOE/D, which not only surged from the year-ago quarter’s level of 106,654 BOE/D but also surpassed our projection of 146,168 BOE/D.

Operating Expenses

MTDR’s plant and other midstream services’ operating expenses declined to $2.91 per BOE from the year-earlier level of $3.23. Our estimate for the same was pinned at $3.23.

However, lease operating costs increased from $4.63 per BOE in first-quarter 2023 to $5.60 in the reported quarter. Our projection for the metric was pinned at $5.18 per BOE. Yet, production taxes, transportation and processing costs declined to $5.15 per BOE from $5.78 in the year-ago quarter.

Total operating expense per BOE was $31.42, higher than the prior-year reported figure of $29.14, but below our estimate of $31.69.

Balance Sheet & Capital Spending

As of Mar 31, 2024, Matador had cash and restricted cash of $74.3 million, and a long-term debt of $1,971.6 million. The company spent $236.6 million for the drilling, completion and equipment of wells in the first quarter.

Outlook

For full-year 2024, Matador expects average daily oil equivalent production to be at the high end of 153,000-159,000 BOE/d, indicating approximately 20% year-over-year increase. It also expects full-year lease operating expenses in the range of $5.25-$5.75 per BOE.

Zacks Rank & Stocks to Consider

Matador currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies like Murphy USA Inc. MUSA, SM Energy Company SM and Global Partners GLP, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States.

The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $26.40. The company has a Zacks Style Score of B for Growth and B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

SM Energy Company is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of oil and gas in North America. SM currently has a Value Score of B.

The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.15 and $6.73, respectively. The stock has witnessed upward earnings estimate revisions for 2025 in the past seven days.

Global Partners is a leading operator of gasoline stations and convenience stores. Over the past 60 days, GLP has witnessed upward earnings estimate revisions for 2024 and 2025.

The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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