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Here's Why Matador (MTDR) is an Attractive Investment Bet
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Matador Resources Company (MTDR - Free Report) is a leading upstream player, having a strong foothold in prolific oil and natural gas shale and other unconventional plays. The company is likely to see earnings growth of 16.7% and 19.1% in 2024 and 2025, respectively.
What’s Favoring the Stock?
The price of West Texas Intermediate crude is trading at more than the $80-per-barrel mark, which is highly favorable for exploration and production activities. Handsome crude price is likely to aid MTDR, carrying a Zacks Rank #2 (Buy), in increasing production volumes.
Recently, the upstream energy major has entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, Matador Resources is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis. Consequently, the company estimates that its production will exceed 180,000 barrels of oil equivalent per day, positioning it for significant growth and enhanced operational scale.
Overall, handsome commodity prices and expectations for higher production will likely aid MTDR’s bottom line.
Risks
However, being an upstream energy player, the company’s overall operations are exposed to extreme volatility in oil and natural gas prices. This is reflected in the company’s beta of 3.29.
Range Resources is among the top 10 producers of natural gas and natural gas liquids in the United States. It is a pure-play Appalachian producer having a bright production outlook. The company has been active in the Marcellus Shale, which is among the largest natural gas fields in the United States, known for its extensive reserves and economic viability for production, and has significant reserves of natural gas within this formation.
Chevron generates most of its earnings from its upstream operations. The integrated energy giant has a strong foothold in the Permian – the most prolific basin in the United States – where a significant portion of the energy major’s acreage has minimum royalty payments. Thus, CVX will generate handsome cashflows through its upstream business, banking on handsome oil prices.
In addition to maintaining disciplined capital spending, Chevron has a strong balance sheet, providing a solid foundation to rely on during unfavorable energy market conditions.
To expand its premier asset portfolio, SM Energy recently agreed to acquire 80% of XCL Resources’ oil and gas assets in the Uinta Basin for $2.04 billion. The value-driven acquisition, likely to close in September this year, will increase its inventory of net locations and boost its oil production. SM Energy is also committed to maintaining its strong balance sheet, which it can rely on during low oil prices.
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Here's Why Matador (MTDR) is an Attractive Investment Bet
Matador Resources Company (MTDR - Free Report) is a leading upstream player, having a strong foothold in prolific oil and natural gas shale and other unconventional plays. The company is likely to see earnings growth of 16.7% and 19.1% in 2024 and 2025, respectively.
What’s Favoring the Stock?
The price of West Texas Intermediate crude is trading at more than the $80-per-barrel mark, which is highly favorable for exploration and production activities. Handsome crude price is likely to aid MTDR, carrying a Zacks Rank #2 (Buy), in increasing production volumes.
Recently, the upstream energy major has entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, Matador Resources is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis. Consequently, the company estimates that its production will exceed 180,000 barrels of oil equivalent per day, positioning it for significant growth and enhanced operational scale.
Overall, handsome commodity prices and expectations for higher production will likely aid MTDR’s bottom line.
Risks
However, being an upstream energy player, the company’s overall operations are exposed to extreme volatility in oil and natural gas prices. This is reflected in the company’s beta of 3.29.
Other Stocks to Consider
Some other top-ranked energy companies are Range Resources Corporation (RRC - Free Report) , Chevron Corporation (CVX - Free Report) and SM Energy Company (SM - Free Report) . While SM Energy sports a Zacks Rank #1 (Strong Buy), RRC and Chevron carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Range Resources is among the top 10 producers of natural gas and natural gas liquids in the United States. It is a pure-play Appalachian producer having a bright production outlook. The company has been active in the Marcellus Shale, which is among the largest natural gas fields in the United States, known for its extensive reserves and economic viability for production, and has significant reserves of natural gas within this formation.
Chevron generates most of its earnings from its upstream operations. The integrated energy giant has a strong foothold in the Permian – the most prolific basin in the United States – where a significant portion of the energy major’s acreage has minimum royalty payments. Thus, CVX will generate handsome cashflows through its upstream business, banking on handsome oil prices.
In addition to maintaining disciplined capital spending, Chevron has a strong balance sheet, providing a solid foundation to rely on during unfavorable energy market conditions.
To expand its premier asset portfolio, SM Energy recently agreed to acquire 80% of XCL Resources’ oil and gas assets in the Uinta Basin for $2.04 billion. The value-driven acquisition, likely to close in September this year, will increase its inventory of net locations and boost its oil production. SM Energy is also committed to maintaining its strong balance sheet, which it can rely on during low oil prices.