Matador Resources Company (MTDR) Earnings & Analysis

Latest quarter

Matador reported second-quarter revenue of $1.2 billion, above the consensus estimate of $942.7 million. Adjusted earnings per share were $2.61, compared with the consensus estimate of $2.05.

Revenue rose from $895.3 million a year earlier, while diluted earnings per share increased to $3.15 from $1.21. In its filing, Matador attributed higher oil revenue to higher realized oil prices and increased production. Average daily oil production rose to 126,106 Bbl per day from 122,875 Bbl per day, while average daily natural gas production rose to 537.1 MMcf per day from 516.8 MMcf per day.

The filing said third-party midstream revenue benefited from higher natural gas gathering and processing revenue, partly offset by lower water disposal revenue. Matador’s operating margin increased to 48.7% from 32.2%, and free cash flow rose to $548.1 million from $46.2 million. On the call, CEO Joe Foran cited $303 million in adjusted free cash flow, a separate measure, and said $200 million was used to repay federal-lease acquisition debt.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Joe Foran told the earnings call that Matador had exceeded the high end of its production guidance and used $200 million of cash flow to reduce borrowings associated with the May federal lease sale. He said debt reduction remained a priority and that the company would adjust repayments to monthly cash flow.

In response to a question about growth and debt, Foran described Matador’s policy as “profitable growth at a measured pace.” He said the company would adjust its drilling program to commodity prices and targeted repayments of approximately $100 million a month at present prices. He also said the company remained interested in acquisition opportunities.

Foran said Matador had closed the Cardinal acquisition and was integrating the business. All 26 Cardinal field employees who received offers accepted them, he said. He added that Matador used midstream funds for the purchase, consistent with its policy of funding midstream assets separately from exploration and production properties.

Discussing gas transportation, Foran said Cardinal’s pipeline system connected with Matador’s existing network and could help provide routes to market across the basin. He said the company was seeking additional customers near its pipelines, while also using the system to move its own gas. In the question-and-answer session, he pointed to concerns about flow assurance as a reason for the investment.

Treasurer Michael Frenzel said the marketing team had worked to mitigate weakness in Waha pricing. He did not expect the gain under discussion to recur necessarily, but said Matador expected improved natural gas realizations from the Hugh Brinson Pipeline and other arrangements with Energy Transfer. Executive Vice President Andrew Parker said the Rae’s Creek well reflected work by the geoscience, land and operations teams.

Guidance

Foran said Matador raised its 2026 year-over-year oil production growth outlook from 4% to 7%. The company said it expects organic oil production growth of 6% year over year, compared with its original expectation of 3%.

In its filing, Matador said it raised its 2026 drilling, completing and equipping capital expenditure estimate to $1.48 to $1.56 billion from $1.35 to $1.44 billion, including spending on acquired and expected acquisition acreage. It also raised its midstream capital expenditure estimate to $145.0 to $165.0 million from $100.0 to $110.0 million.