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Independant energy producer and shale exploration company Matador Resources reported fourth quarter earnings after the close Tuesday. $MTDR reiterated its drilling spend cutbacks and divesting non core assets. The companies main focus is the efficiency of the Wolfcamp and Bone Spring plays in the Delaware Basin. 



Matador Natural gas Processing

Matador Natural Gas Processing Plant 

Matador Resources Co NYSE: MTDR Reported Earnings After Close Tuesday

$0.28 EPS and $ billion forecast in revenue 

Earnings

Matador Resources Co. (MTDR) on Tuesday reported fourth-quarter profit with adjusted net income (a non-GAAP financial measure) of $43.0 million, or $0.37 per diluted common share, a sequential decrease of $12.7 million from $55.7 million in the third quarter of 2018, and a year-over-year increase of 58% from $27.2 million in the fourth quarter of 2017. Analysts had expected earnings per share of 28 cents down from 63 cents last quarter. Fourth quarter 2018 net income (GAAP basis) was $136.7 million, or $1.17 per diluted common share, a sequential increase of $118.9 million from $17.8 million in the third quarter of 2018, and a year-over-year increase of 257% from $38.3 million in the fourth quarter of 2017.

Fourth quarter 2018 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) were $143.2 million, a sequential decrease of $12.2 million from $155.4 million in the third quarter of 2018, and a year-over-year increase of 32% from $108.6 million in the fourth quarter of 2017. 

Matador Resources Co NYSE: MTDR

Market Reaction > After hours $17.90 −0.010 (0.056%)

Fourth Quarter Highlights

  • Average daily oil equivalent production increased 2% sequentially to a record quarterly high for the Company of 55,500 barrels of oil equivalent (“BOE”) per day (60% oil) as compared to the third quarter of 2018.
  • Average daily oil production increased 4% sequentially to 33,500 barrels per day and average daily natural gas production decreased 1% sequentially to 132.3 million cubic feet per day, each as compared to the third quarter of 2018.
  • Delaware Basin average daily oil equivalent production increased 3% sequentially to a record quarterly high for the Company of 49,300 BOE per day (64% oil) as compared to the third quarter of 2018.
  • Delaware Basin average daily oil production increased 5% sequentially to 31,300 barrels per day and Delaware Basin average daily natural gas production was essentially flat sequentially at 107.9 million cubic feet per day, each as compared to the third quarter of 2018.

Outlook

As a result of the sharp decline in oil prices during the fourth quarter of 2018 and the changing financial circumstances in the industry, Matador started taking various steps to mitigate its anticipated 2019 cash flow outspend.

First, we announced in late January 2019 plans to reduce our operated drilling program by releasing the drilling rig we had been operating in South Texas since early October 2018. We have since completed our South Texas drilling operations for now, and this rig was released in early February. As further noted in our January press release, in 2019, we plan to focus on executing the highest rate of return opportunities across our Delaware Basin properties and midstream operations, while continuing to be mindful of our balance sheet as we have always done.

Second, Matador is continuing to narrow its spending gap by converting certain non-cash assets to cash and by divesting of portions of its non-core assets, particularly in South Texas and in the Haynesville shale. Thus far, this effort is expected to result in approximately $50 to $55 million in cash to Matador’s balance sheet from a number of transactions closed or under contract to close in the very near future, not including the $50 million capital carry we expect Five Point to provide as part of the San Mateo expansion.

Third, we will also consider monetizing other assets, such as certain royalty, mineral and non-core midstream interests, as value-creating opportunities arise. 

Matador Resources Q3 Earnings Recap

$0.63 Beat $0.43 EPS and $1.98 billion Beat $1.91 billion forecast in revenue 

Earnings

Matador Resources Co. (MTDR) on Wednesday reported third-quarter profit of $17.8 million. On a per-share basis, a profit of 15 cents. Earnings, adjusted for non-recurring costs, were 48 cents per share beating expectations of 37 cents per share. Revenue was $207.2 million which  forecasts of $208.2 million. 

Matador Resources Co NYSE: MTDR

Market Reaction > After hours $28.88 ▲ 0.035 (0.12%)

Highlights

  • Daily oil and total production were record numbers in Q3 2018 and up more than expected from Q2 2018
  • Oil production of ~32,300 Bbl per day, up 9% from ~29,700 Bbl per day in Q2 2018 – Record Quarter! 
  • Natural gas production of ~133.8 MMcf per day, down 4%, as expected, from ~139.2 MMcf per day in Q2 2018 , but up 21% year-over-year from ~110.5 million cubic feet per day in Q3 2017
  • Oil equivalent production of ~54,600 BOE per day (59% oil), up 3% from ~52,900 BOE per day (56% oil) in Q2 2018 – Record Quarter! 
  • Delaware Basin total oil equivalent production of ~47,800 BOE per day (63% oil) in Q3 2018, up 3% from ~46,500 BOE per day (59% oil) in Q2 2018 
  • Adjusted EBITDA(1)(3) of $155.4 million – Record Quarter! 
  • San Mateo has entered into contracts to provide firm gathering and processing for over 200 MMcf/d, or over 80% of the designed inlet capacity of 260 MMcf/d at the Black River Processing Plant
  • San Mateo completed its fourth and fifth commercial salt water disposal wells in the Rustler Breaks asset area in Eddy County, New Mexico 
  • Continued to strategically add to and enhance Delaware Basin acreage position. Acquired ~8,400 gross/net acres in the September 2018 BLM lease sale for $387 million, including some of the most prospective acreage in the Delaware Basin 
  • Including the BLM lease sale, YTD through October 31, 2018, Matador had acquired approximately 27,200 net leasehold and mineral acres. Delaware Basin acreage position now includes ~222,200 gross (~131,200 net) leasehold and mineral acres at an all-in cost of ~$11,000 per acre, excluding small amounts of production acquired. 
  • Continued solid execution in the Delaware Basin  Notable wells highlighted in Earnings Release: Strong #214H, Leslie #214H and Irvin Wall #131H in Antelope Ridge, Clare Glassell #204H in Wolf, David Edelstein #203H and Brantley #205H in Rustler Breaks  Enhanced already strong financial and liquidity positions via senior notes offerings and increase in borrowing base 

Outlook

  • Revised 2018 production and Adjusted EBITDA guidance estimates upward on October 31, 2018 
  • Plan to run six rigs in the Delaware Basin and one rig in South Texas for the remainder of 2018 
  • Three rigs in Rustler Breaks, one rig in Antelope Ridge, one rig in Wolf/Jackson Trust and one rig in Ranger/Arrowhead/Twin Lakes
  • Updated drilling, completing and equipping (“D/C/E”) capital expenditures on October 1, 2018 by $25 million to $30 million, or 4%, to reflect the addition of a seventh rig being deployed in South Texas to drill up to 10 wells, primarily in the Eagle Ford shale 
  • therwise, no further adjustments were made to estimated D/C/E or midstream capital expenditures for the remainder of 2018 
  • Will pursue strategic acreage and mineral acquisitions, primarily in the Delaware Basin, as opportunities arise

 

Matador Drilling

About Matador Resources

Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas.

Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations, primarily through its midstream joint venture, San Mateo, in support of its exploration, development and production operations and provides natural gas processing, oil transportation services, natural gas, oil and salt water gathering services and salt water disposal services to third parties.

Sources: Matador Earnings

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