Matador Resources Company MTDR reported third-quarter 2024 adjusted earnings of $1.89 per share, which beat the Zacks Consensus Estimate of $1.73. The bottom line also improved from the year-ago quarter’s $1.86.
Total revenues of $899.8 million beat the Zacks Consensus Estimate of $839 million. The top line also increased from the year-ago quarter’s $772.3 million.
The strong third-quarter results were driven by Matador’s high total production volume and a decrease in the total operating expenses per barrel of oil equivalent (BOE).
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 Q3
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. Most of Matador’s production comprises oil (58.5% of total production in the third quarter), making this commodity’s price the prime factor in determining the company’s earnings.
Matador achieved a record average daily oil production in the third 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 average sales price for oil (without realized derivatives) at $75.67 per barrel, down from $82.49 a year ago. The commodity price was also lower than our projection of $78.96 per barrel. The price of natural gas was $1.83 per thousand cubic feet (Mcf), down from $3.56 in the year-ago quarter. It was also below our estimate of $2.17 Mcf.
Increasing Production
Matador reported oil production of 100,315 barrels per day (B/D), up from 77,529 B/D in the prior-year quarter. The figure also beat our estimate of 97,345 B/D. Natural gas production was recorded at 427 million cubic feet per day (MMcf/D), up from 345.4 MMcf/D recorded a year ago. The reported figure also outpaced our estimate of 400.5 MMcf/D.
The rise in total average production can be attributed to stronger-than-expected initial output from new wells drilled by Matador in the third quarter, along with the consistent strong performance of existing wells. This includes the 21 gross (19 net) Dagger Lake South wells, acquired through the Advance acquisition in 2023, brought online in the second quarter of 2024.
Total oil equivalent production in the third quarter was 171,480 BOE/D, which surged from the year-ago quarter’s level of 135,096 BOE/D. The figure was also above our projection of 164,094.7 BOE/D.
Operating Expenses
MTDR’s plant and other midstream services’ operating expenses increased to $2.77 per BOE from the year-earlier level of $2.48. Our estimate for the same was pinned at $2.48.
Lease operating costs increased to $5.50 per BOE from $5.34 a year ago . Our projection for the metric was pinned at $5.44 per BOE. However, production taxes, transportation and processing costs decreased to $4.61 per BOE from $5.77 in the year-ago quarter.
Total operating expenses per BOE were $30.09, lower than the prior-year figure of $31.65 and below our estimate of $31.95.
Balance Sheet & Capital Spending
As of Sept. 30, 2024, Matador had cash and restricted cash of $77.02 million, and a long-term debt of $3,596.2 million. The company spent $293.7 million for the drilling, completion and equipment of wells in the third quarter.
Outlook
For 2024, Matador raised its guidance for average daily oil equivalent production to 167,500-172,500 BOE/d. This implies a 6% increase from the previous projection. The company has narrowed its full-year 2024 lease operating expenses guidance to $5.55-$5.75 per BOE from the previously anticipated range of $5.25-$5.75.
Zacks Rank & Stocks to Consider
Matador currently carries a Zacks Rank #4 (Sell).
Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, PEDEVCO Corp. PED and Cheniere Energy LNG, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
The Zacks Consensus Estimate for AROC’s 2024 EPS is pegged at $1.10. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations.
The Zacks Consensus Estimate for PED’s 2024 EPS is pegged at $0.08. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days.
Cheniere is one of the largest exporters of liquefied natural gas in the United States. The company stands to benefit from increased demand for U.S. natural gas, both domestically and globally, as it continues to expand its LNG production capacity. The ongoing surge in natural gas demand could boost Cheniere’s export volumes, supporting its revenue growth.
The Zacks Consensus Estimate for LNG’s 2024 EPS is pegged at $9.86. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
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