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Matador (MTDR) Down 2.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Matador Resources (MTDR). Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Matador due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Matador Beats Q3 Earnings & Revenue Estimates

Matador reported adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate of $2.47 per share. The bottom line significantly improved from the year-ago quarter’s earnings of $1.25 per share.

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Total quarterly revenues of $841 million surpassed the Zacks Consensus Estimate of $735 million. The top line also increased from the year-ago level of $472 million.

Strong quarterly earnings were driven by higher oil-equivalent production volumes and commodity price realizations.

Production

For third-quarter 2022, total production volume averaged 9,680 thousand barrels of oil equivalent (MBoe) (comprising 57.2% oil), higher than 8,283 MBoe a year ago.

The average oil production volume was 60,163 barrels per day (Bbls/d), up from 50,747 Bbls/d reported in third-quarter 2021. Natural gas production was 270.3 million cubic feet per day (MMcf/d), up from 235.7 MMcf/d a year ago.

Price Realization

The average realized price for oil (excluding realized derivatives) was $94.36 per barrel, which significantly increased from $69.73 in the year-ago quarter. Also, the natural gas price of $9.22 per thousand cubic feet was higher than $6.27 in the prior-year quarter.

Operating Expenses

The company’s production taxes, transportation and processing costs increased to $7.64 per barrel of oil equivalent (Boe) from $5.90 in the year-ago quarter. Plant and other midstream services’ operating expenses increased to $2.56 per Boe from the year-earlier figure of $2.06. Also, lease operating costs increased from $3.31 per Boe in third-quarter 2021 to $4.38.

Total operating expenses per Boe were $29.71, higher than the prior-year figure of $24.99.

Balance Sheet

As of Sept 30, 2022, Matador had cash and restricted cash of $441.7 million. Long-term debt was $1,192.9 million. Debt to capitalization was 28%.

Capital Spending

The company spent $241.8 million for the drilling, completing and equipping of wells in the third quarter, almost 7% lower than its projection. Enhanced operational efficiencies in the Delaware Basin primarily aided its performance.

Outlook

For 2022, Matador increased its oil-equivalent production guidance to 37.7-38.3 million barrels from the prior stated 36.9-38.3 million barrels. The metric suggests an improvement from 31.5 million oil-equivalent barrels reported last year. In the fourth quarter, the company expects to produce 105,500-107,500 oil-equivalent barrels per day.

Matador’s capital spending guidance for drilling, completing and equipping wells is pegged at $765-$835 million for the year. In midstream, it expects to spend $50-$60 million for the year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -5.77% due to these changes.

VGM Scores

Currently, Matador has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Matador has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Matador is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Range Resources (RRC), a stock from the same industry, has gained 6.3%. The company reported its results for the quarter ended September 2022 more than a month ago.

Range Resources reported revenues of $1.1 billion in the last reported quarter, representing a year-over-year change of +264.7%. EPS of $1.37 for the same period compares with $0.52 a year ago.

Range Resources is expected to post earnings of $1.21 per share for the current quarter, representing a year-over-year change of +26%. Over the last 30 days, the Zacks Consensus Estimate has changed -14.6%.

Range Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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