Matador Resources Company (MTDR) is a prominent upstream player with a strong presence in prolific oil and natural gas shale and other unconventional plays. The company is poised for earnings growth of 16.5% in 2024 and 18.6% in 2025, driven by several favorable factors.
Oil & Gas Data Download
Matador Resources Wells Drilled in 2024
Factors Favoring Matador Resources
- High Crude Prices: The price of West Texas Intermediate crude has reached $80 per barrel, which is favorable for exploration and production activities. This price level supports MTDR in increasing production volumes, thereby boosting its earnings potential.
- Strategic Expansion: Matador recently entered into a $1.91 billion agreement to expand its presence in the Delaware Basin. This deal, expected to close in the late third quarter of 2024, will increase Matador’s holdings to over 190,000 net acres in the Delaware Basin. Consequently, the company’s production is projected to exceed 180,000 barrels of oil equivalent per day, enhancing its operational scale and growth prospects.
- Zacks Rank #1 (Strong Buy): MTDR holds a top Zacks Rank, indicating strong buy recommendations based on favorable earnings estimate revisions and other factors.
Risks
- Commodity Price Volatility: As an upstream energy player, Matador’s operations are highly sensitive to fluctuations in oil and natural gas prices. The company’s beta of 3.30 reflects this volatility, posing a significant risk to its financial performance.
Conclusion
Matador Resources is well-positioned for growth, supported by high crude prices and strategic expansions. However, investors should be aware of the inherent risks due to commodity price volatility.
