It has been about a month since the last earnings report for Matador Resources (MTDR). Shares have lost about 12.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

Matador Tops on Q4 Earnings

Matador Resources reported fourth-quarter 2022 adjusted earnings of $2.08 per share, beating the Zacks Consensus Estimate of $1.95 per share. The bottom line significantly improved from the year-ago quarter’s earnings of $1.26 per share.

Total quarterly revenues of $707.5 million surpassed the Zacks Consensus Estimate of $651 million. The top line also increased from the year-ago level of $566.4 million.

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

Dividend Hike

Matador’s board of directors announced a quarterly cash dividend of 15 cents per share, indicating a 50% increase from the last paid dividend of 10 cents per share. The dividend is payable on Mar 9, 2023, to shareholders of record as of Feb 27, 2023.

Production

For fourth-quarter 2022, total production volume averaged 10,280 thousand barrels of oil equivalent (MBoe) (comprising 55.8% oil), higher than 8,030 MBoe a year ago.

The average oil production volume was 62,316 barrels per day (Bbls/d), up from 49,756 Bbls/d reported in fourth-quarter 2021. Natural gas production was 296.5 million cubic feet per day (MMcf/d), up from 225.2 MMcf/d a year ago.

Price Realization

The average realized price for oil (excluding realized derivatives) was $83.90 per barrel, which significantly increased from $76.82 in the year-ago quarter. The natural gas price of $5.65 per thousand cubic feet was lower than $7.68 in the prior-year quarter.

Operating Expenses

The company’s plant and other midstream services’ operating expenses increased to $2.85 per Boe from the year-earlier figure of $2.12. Also, lease operating costs increased from $3.34 per Boe in fourth-quarter 2021 to $3.98. Yet, production taxes, transportation and processing costs declined to $6.10 per barrel of oil equivalent (Boe) from $6.48 in the year-ago quarter.

Total operating expenses per Boe were $29.09, higher than the prior-year figure of $26.23.

Balance Sheet

As of Dec 31, 2022, Matador had cash and restricted cash of $547.3 million. Long-term debt was $1,160.2 million. Debt to capitalization was 26%.

Capital Spending

The company spent $188.9 million for the drilling, completing and equipping of wells in the fourth quarter, almost 13% lower than its projection primarily due to the timing of operations.

Outlook

For 2023, Matador increased its oil-equivalent production guidance to 44.35-46.25 million barrels. The metric suggests an improvement from 38.5 million oil-equivalent barrels reported in 2022. The company expects to produce 26.4-27.3 million barrels of oil in 2023.

Matador’s capital spending guidance for drilling, completing and equipping wells is pegged at $1,180-$1,320 million for the year. In midstream, it expects to spend $150-$200 million.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -22.87% due to these changes.

VGM Scores

At this time, Matador has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.

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