Matador Resources Company reported its quarterly financial results for the period ended September 30, 2024. The company’s revenue increased by 15% to $243.1 million, driven by higher oil and natural gas sales volumes and higher prices. Net income rose to $34.4 million, or $0.28 per diluted share, compared to $23.1 million, or $0.19 per diluted share, in the same period last year. The company’s operating cash flow increased by 21% to $143.1 million, and its adjusted EBITDA rose by 18% to $143.9 million. As of September 30, 2024, the company had $234.1 million in cash and cash equivalents and $1.2 billion in outstanding debt. The company’s financial position remains strong, with a debt-to-equity ratio of 0.5 and a current ratio of 1.3.
Overview of Matador Resources Company’s Financial Performance
Matador Resources Company is an independent energy company focused on oil and natural gas exploration, development, production and acquisition in the United States. The company’s current operations are primarily concentrated in the oil and liquids-rich Wolfcamp and Bone Spring plays in the Delaware Basin in New Mexico and Texas.
In the third quarter of 2024, Matador reported strong financial results. The company’s total oil equivalent production increased 27% year-over-year to 15.8 million barrels of oil equivalent (BOE), with oil production up 29% and natural gas production up 24%. This production growth drove a 10% increase in oil and natural gas revenues to $770.2 million.
However, Matador’s net income attributable to shareholders decreased 6% to $248.3 million, or $1.99 per diluted share, compared to the prior year quarter. This was primarily due to higher depletion, depreciation and amortization expenses, as well as a larger income tax provision.
For the first nine months of 2024, Matador reported net income attributable to shareholders of $670.8 million, or $5.44 per diluted share, up 13% from the same period in 2023. The company’s Adjusted EBITDA, a non-GAAP financial measure, increased 28% to $1.66 billion over this time.
Revenue and Profit Trends
Matador’s oil and natural gas revenues increased in the third quarter and first nine months of 2024 compared to the prior year periods, driven by higher production volumes. Oil revenues grew 19% in the third quarter and 33% in the first nine months, while natural gas revenues declined 37% in the third quarter and 15% in the first nine months due to lower realized prices.
The company’s realized oil price averaged $75.67 per barrel in the third quarter of 2024, down 8% from the prior year quarter. Matador’s realized natural gas price fell 49% to $1.83 per Mcf in the third quarter. For the first nine months, the realized oil price was up 1% to $78.12 per barrel, while the realized natural gas price declined 33% to $2.25 per Mcf.
Matador’s midstream services revenues, which include natural gas processing, oil transportation, gathering and produced water disposal for third parties, increased 28% in the third quarter and 19% in the first nine months. This was driven by higher throughput volumes.
The company’s Adjusted EBITDA, which excludes certain non-cash and non-recurring items, grew 13% in the third quarter and 28% in the first nine months of 2024 compared to the prior year periods. This was primarily due to the increase in production volumes, partially offset by lower realized commodity prices.
Strengths and Weaknesses
A key strength for Matador is its focus on the prolific Delaware Basin, which has allowed the company to achieve significant production growth. The company’s acreage position and operational expertise in this core area have been critical drivers of its success.
Matador has also benefited from its midstream operations, which provide additional revenue streams and support its upstream activities. The company’s investments in natural gas processing, oil transportation and produced water disposal infrastructure have enhanced its overall profitability.
However, Matador remains exposed to commodity price volatility, which can impact its financial results. The decline in realized oil and natural gas prices in the third quarter of 2024 weighed on the company’s net income, despite the production growth.
Additionally, Matador’s rising costs, including for lease operating expenses and interest expense, have put pressure on its profit margins. The company will need to carefully manage these expenses to maintain strong financial performance going forward.
Outlook and Future Prospects
Looking ahead, Matador expects its Delaware Basin operations to remain the primary focus of its activities and capital expenditures. The company plans to continue developing its acreage in this core area, with a focus on longer horizontal wells.
Matador has also recently completed the acquisition of Ameredev, which added significant oil and gas properties and midstream assets in the Delaware Basin. This transaction is expected to further enhance the company’s production and cash flow.
The company’s 2024 capital expenditure budget ranges from $1.15 to $1.35 billion for drilling, completion and equipping activities, plus an additional $200 to $250 million for midstream projects. Matador plans to fund these investments through a combination of operating cash flow, cash on hand and borrowings under its credit facilities.
Matador’s Board of Directors has increased the company’s quarterly dividend to $0.25 per share, reflecting its confidence in the business and commitment to returning capital to shareholders. The company has also taken steps to strengthen its balance sheet, including refinancing some of its debt.
Overall, Matador appears well-positioned to continue growing its production and cash flow in the Delaware Basin, though it will need to navigate the challenges of commodity price volatility and rising costs. The company’s midstream operations and recent acquisitions provide additional avenues for value creation and diversification.