Matador Resources Company MTDR is a leading upstream player, having a strong foothold in prolific oil and natural gas shale, and other unconventional plays.
The company has witnessed upward earnings estimate revisions for 2023 and 2024 over the past 30 days.
What’s Favoring the Stock?
The West Texas Intermediate crude, currently trading at more than $73 per barrel, presents a highly advantageous scenario for exploration and production activities. The substantial crude price is expected to support Matador, which sports a Zacks Rank #1 (Strong Buy), in boosting its production volumes.
The third quarter of 2023 marked the highest total production quarter in Matador’s history, with an average exceeding 135,000 barrels of oil and natural gas equivalent per day. The company anticipates concluding the year on a robust note, driven by sustained production growth, operational cost efficiencies and progress in debt repayment.
Matador’s exceptional performance resulted in net cash from operating activities of $461 million surpassing expectations, with an adjusted free cash flow of $144.6 million for the third quarter of 2023. The company allocated a portion of this free cash flow to maintain its longstanding practice of debt reduction and strategic acquisitions. These acquisitions have played a crucial role in expanding Matador's acreage position to more than 150,000 net acres in the Delaware Basin.
The company expects a total oil production of 26.8-27.5 million barrels for 2023, indicating a year-over-year rise of 24%. Matador anticipates this year’s production to be within the mid to high end of the specified range.
On a positive note, the company intends to bring a net total of 100 wells to sales this year, encompassing both operated and non-operated wells. Its primary objectives revolve around debt reduction, generating free cash flows and preserving or augmenting dividends.
Matador has raised its fixed quarterly cash dividend by 33% to 20 cents per share (80 cents per share annually). This marks the fourth increment in the company’s fixed dividend since its introduction in the first quarter of 2021. The decision to once again increase the dividend underscores Matador's growing financial and operational strength.
Other Stocks to Consider
Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy Oil Corporation MUR possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies and independent E&P group.
The company’s board of directors approved a 10% increase in the quarterly dividend rate beginning in the first quarter of 2023, taking the total annualized figure to $1.10 per share. MUR's current dividend yield is 2.57%, better than the Zacks S&P 500 composite's average of 1.7%.
Suncor Energy, Inc. SU is Canada’s premier integrated energy company. Suncor boasts an impressive supply-chain network, owning significant oil sands and conventional production platforms.
Suncor's robust liquidity position will allow it to sustain its dividend, even if oil prices stay lower for longer. The company recently hiked its dividend by 5% to 54.5 Canadian cents per share (over the prior quarter) and increased the buyback authorization to roughly 10% of its public float.
Liberty Energy LBRT offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America. The company has a strong position in the oilfield service space.
Liberty’s board of directors announced a cash dividend of seven cents per common share, payable Dec 20, 2023, to stockholders of record as of Dec 6, 2023. This dividend reflects a 40% rise from the previous quarter’s level. As part of its shareholder return policy, LBRT repurchased shares worth $29 million at an average price of $16.38 per share.
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