Matador Resources beat earnings estimates and increased its full-year guidance late Tuesday, as shares have been hitting new highs above a buy point. The oil producer's quarterly report comes just days after the Biden administration announced an additional 15 million barrels from the U.S. Strategic Petroleum Reserve are for sale, in a bid to keep energy prices low. Matador Resources stock angled up after the market closed Tuesday.
The earnings report from the Dallas-based explorer and producer of oil comes ahead of energy giants Exxon Mobil and Chevron, both of which announce earnings Friday.
Matador Resources Stock: Earnings
Estimates: Wall Street forecast earnings per share surging 100% to $2.51. Analysts predicted sales growing 56% to $736 million.
Results: EPS ballooned 115% to $2.68 per share in the third quarter. Revenue also shot up 78% to $841 million.
The company reported that it achieved better-than-expected average oil and natural gas equivalent production, with more than 105,000 barrels of oil and natural gas equivalent (BOE) per day. That was 4% better than Matador Resources' estimates of around 101,000 BOE per day.
Outlook: Matador Resources increased its full-year oil and natural gas production guidance. MTDR expects oil production of between 21.7 million barrels to 21.85 million barrels in 2022, up from the earlier 21.7 million barrels. The company is also now projecting 95.5 billion cubic feet to 97 billion cubic feet of natural gas, increased from the prior 95.5 billion.
MTDR also reaffirmed its capital expenditure guidance of $800 million, citing operational efficiencies as reason it has mitigated inflationary pressures.
While oil and gas companies have seen profits boom in 2022, businesses have also been hit with oilfield supply issues and inflation. This has led many to increase capital expenditures to cover increased costs.
In Q2, Matador Resources reported that its full-year outlook included $30 million of its $125 million expected capex increase for service cost inflation.
Matador Resources stock edged up 0.3% in after hours trading Tuesday. The stock had advanced 1.3% to 67.55 Tuesday during market trading. Shares angled down 0.90% to around 66.71 Monday. The stock broke out above a 64.41 buy point on Oct. 19. It is in a buy range that extends to 67.63.
MTDR shares previously formed a late-stage cup-with-handle pattern with an official 58.68 buy point, according to MarketSmith. Since Oct. 6, the stock has been outperforming the S&P 500 as it has gained around 13% in the last two weeks.
Dallas-based Matador Resources is an explorer and producer of oil and some natural gas. The company's current operations are concentrated in the Delaware Basin portion of the Permian Basin along the Texas-New Mexico border. Matador Resources also conducts a small midstream operations business, with natural gas processing operations and oil transportation services.
Matador Resources is coming off record profits and revenue in the second quarter, when many oil producers saw sales and earnings balloon on strong demand with high natural gas and oil prices. MTDR revenue grew 164% to $943 million in the second quarter, while earnings surged 240% to $3.47 per share.
On Monday, the company announced a quarterly cash dividend of 10 cents per share to be paid on Dec. 1. MTDR has a dividend yield of 0.6%.
Matador Resources stock has a perfect Composite Rating of 99. It has a stellar 97 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 99.
The Oil Market
U.S. crude futures jumped 0.5% to around $85 a barrel Tuesday. Meanwhile, U.S. natural gas prices advanced 8.4% $5.64 per million British thermal units. Last week, futures dropped below $5 per million British thermal units to the lowest prices in seven months.
Oil Companies Prioritize Buybacks Over Production Gains
In early October, the Organization of the Petroleum Exporting Countries and its key allies including Russia, known as OPEC+, decided to cut their oil production by 2 million barrels per day in November. The group had been warning of a possible production cut, due to forecasts calling for economic slowing and a decrease in energy demand.
Meanwhile, President Joe Biden has been releasing millions of barrels of oil from the U.S. Strategic Petroleum Reserve, attempting to hold down U.S. oil and fuel costs ahead of the looking midterms elections. Last week, the president confirmed plans to sell the last 15 million of 180 million barrels he had authorized for sale back in March.
On Tuesday, the average price of gasoline at the pump was $3.77, according to AAA — around 12% above year-ago levels.
After increasing in late September, gasoline prices have dropped, with costs falling daily since Oct. 11, primarily due to lower oil prices and fewer drivers than usual fueling up, according to AAA analysis.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
