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Matador (MTDR) Beats on Q2 Earnings, Ups '24 Output Guidance

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Matador Resources Company (MTDR - Free Report) reported second-quarter 2024 adjusted earnings of $2.05 per share, which beat the Zacks Consensus Estimate of $1.75. The bottom line also improved from the year-ago quarter’s $1.42.

Total quarterly revenues of $847.1 million beat the Zacks Consensus Estimate of $817 million. The top line also increased from the year-ago quarter’s $638.1 million.

Strong second-quarter results were aided by Matador’s high total production volume, 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 Q2

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 (60% of total production in the second quarter), making this commodity’s price the prime factor in determining the company’s earnings.

Matador achieved a record average oil production per day in the second quarter of 2024, surpassing its anticipated average by 3%.

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

Average Sales Price of Commodities

MTDR reported second-quarter 2024 average sales price for oil (without realized derivatives) at $81.20 per barrel, up from $73.46 in the year-ago period. The commodity price was also higher than our projection of $80.68 per barrel. The price of natural gas was $2 per thousand cubic feet (Mcf), which slipped from $2.61 in the year-ago quarter and was also below our estimate of $2.64 Mcf.

Increasing Production

Matador reported second-quarter 2024 oil production of 95,488 barrels per day (B/D), up from 76,345 B/D in the prior-year quarter. The figure also beat our estimate of 93,179.4 B/D. Natural gas production was recorded at 388.9 million cubic feet per day (MMcf/D), up from 326 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 386.3 MMcf/D.

The outperformance was largely due to the unprecedented 47 gross (38.6 net) operated horizontal wells turned to sales during this period, marking the highest number in the company's history. The company consistently delivered robust well results across its asset areas in the northern Delaware Basin. This includes the 21 gross (19 net) Dagger Lake South wells in the Antelope Ridge asset area, which were acquired through last year's Advance acquisition.

Total oil equivalent production in the second quarter was 160,305 BOE/D, which surged from the year-ago quarter’s 130,683 BOE/D and surpassed our projection of 157,558 BOE/D.

Operating Expenses

MTDR’s plant and other midstream services’ operating expenses declined to $2.55 per BOE from the year-earlier level of $2.58. Our estimate for the same was pinned at $3.23.

However, lease operating costs increased from $5.13 per BOE in second-quarter 2023 to $5.42 in the reported quarter. Our projection for the metric was pinned at $5.18 per BOE. Production taxes, transportation and processing costs increased to $5.27 per BOE from $5.21 in the year-ago quarter.

Total operating expenses per BOE were $30.64, higher than the prior-year figure of $30.10 but below our estimate of $31.69.

Balance Sheet & Capital Spending

As of Jun 30, 2024, Matador had cash and restricted cash of $63.9 million, and a long-term debt of $1,981.6 million. The company spent $375 million for the drilling, completion and equipment of wells in the second quarter.

Outlook

For 2024, Matador revised its average daily oil equivalent production upward to 158,500-163,500 BOE/d, a 3.2% increase from the previous guidance. It also expects full-year lease operating expenses 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 mentioned below. These three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy Company (SM - Free Report) is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term shareholder value.

The Zacks Consensus Estimate for SM’s 2024 and 2025 earnings per unit is pegged at $7.30 and $8.89, respectively. The company has a Zacks Style Score of A for Value, and B for Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Sunoco LP (SUN - Free Report) is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes more than 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value and Growth Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.26, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.

GeoPark Ltd. (GPRK - Free Report) , based in Hamilton, Bermuda, is an explorer, operator and consolidator in the oil and gas sector. The company primarily operates in Chile, Colombia, Brazil and Argentina. It has a Zacks Style Score of A for Value and Growth.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $3.23 and $3.98, respectively. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.


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