Matador Energy Surpasses Oil Production Expectations in Q1 2024

Matador Resources Co., an independent oil and gas company based in Dallas, surpassed its oil production expectations in the first quarter of 2024, pumping more oil than expected at a time when most US producers have pledged flat to moderate output growth this year. Matador's 2% production over-performance was achieved while spending less money on drilling than projected, and the company now expects to reach the high end of its full-year output guidance of 91,000 to 95,000 barrels of oil per day.

Matador reported first-quarter profit of $193.7 million, or $1.61 per share. The company's earnings, adjusted for non-recurring costs, came to $1.71 per share, topping Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.48 per share. Matador Resources also posted revenue of $787.7 million in the period, beating Street forecasts.

Matador's success is attributed to better-than-expected well performance in the Permian Basin in New Mexico. The company achieved this feat while spending $35 million less on drilling than initially budgeted, underscoring its ability to optimize operations and maximize output without proportional increases in expenditure. Matador's midstream assets, including San Mateo Midstream and Pronto Midstream, played a critical role in ensuring consistent production.

Why this matters: Matador's strong performance comes as US shale producers have surprised to the upside with their output in 2023, helping to keep oil prices in check amid supply cuts from OPEC+. The unexpected increase in output from US producers, including Matador, has positioned the United States as the world's leading oil producer, contributing to a more balanced global oil supply and potentially moderating price volatility.

Looking ahead, Matador remains optimistic about its operational capabilities and financial strategy, aiming to maintain a leverage ratio of 1.0x or less for the remainder of 2024. The company has taken steps to strengthen its balance sheet, including amending its credit facility and completing equity and senior notes offerings. "Matador has outperformed the S&P 500 by 13.8% so far in 2024," according to Zacks Investment Research. Matador's future earnings expectations and stock performance will depend on management's commentary on the earnings call.

Key Takeaways

• Matador Resources exceeded Q1 2024 oil production targets, spending less on drilling.
• Matador reported Q1 2024 profit of $193.7M, or $1.71 per share, beating analyst estimates.
• Matador's success attributed to better-than-expected well performance in the Permian Basin.
• Matador's midstream assets played a critical role in ensuring consistent production.
• Matador aims to maintain a leverage ratio of 1.0x or less for the remainder of 2024.