In a Feb. 25 research note, Raymond James analyst John Freeman reported that Matador Resources Co. (MTDR:NYSE) ended 2019 with a beat on both volumes and EBITDA in Q4.
Freeman relayed that the Dallas-based company's quarterly volumes exceeded the Street's expectation by 7%, driven by shorter-than-expected shut-in times, improved well performance and accelerated turned in lines (TILs). Whereas the early TILs increased capex, 2% above consensus' forecast, the outperformance in volumes more than made up for it. EBITDA in Q4/19 surpassed the Street's forecast as well, by 12%.
Freeman reviewed expectations for Matador in 2020. The energy company intends to maintain, through the year, the six rigs it has working now in the Delaware Basin. It intends to complete 69 gross, or 58 net, operated wells and participate in a significant number of non-operated wells.
Matador's guidance for 2020 production is 75,500 barrels of oil equivalent per day, higher than that of 2019 and 3% higher than the Street's projection. Exit rate guidance is "massive," 87,000 barrels of oil equivalent per day, 9% above consensus' forecast, the analyst noted. These achievements should more than offset expected capex during the year of $815 million, which is 2% higher than consensus' projection. "The extremely strong Q4/20 run rate (oil volumes up 22% over Q4/19) should set Matador up with strong momentum into 2021," commented Freeman.
As for the spending gap, Freeman indicated that Matador intends to work toward narrowing it by achieving further efficiencies, divesting of additional non-core assets and monetizing mineral interests.
Raymond James has an Outperform rating but no target price on Matador Resources. Its stock is trading at around $9.64 per share.
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Disclosures from Raymond James, Matador Resources Company, February 25, 2020
ANALYST INFORMATION
Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.
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Raymond James & Associates, Inc. makes a market in the shares of Matador Resources Company.
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