• Year-over-Year Production Growth: Increased from 4.6 million BOEs to over 6 billion BOEs from Q4 2023 to Q4 2024.
• Expected Quarterly Growth: Approximately 30% growth expected for Q1 2025 compared to Q1 2024; similar growth anticipated for Q2 and Q3 2025.
• Cost Savings: Estimated savings of $30 million to $50 million through batch drilling.
• Dividend Increase: Confidence in raising the dividend due to asset growth.
• Insider Transactions: Over 30 insider transactions by senior management.
• Employee Stock Purchase Plan Participation: Over 95% of staff participating.

• Warning! GuruFocus has detected 3 Warning Sign with MTDR.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Matador Resources Co (NYSE:MTDR) reported significant year-over-year growth, with production increasing from $4.6 million BOEs to over $6 billion BOEs.
• The company successfully integrated the Ameredev properties, which are noted for their high-quality rock, and expects a 20% to 30% growth rate in 2025.
• Matador Resources Co achieved substantial cost savings through batch drilling, estimated at $30 million to $50 million.
• The company has a strong financial position with a $3 billion line of credit and plans to maintain a measured growth pace.
• Matador Resources Co increased its dividend, reflecting confidence in its financial health and future growth prospects.

Negative Points

• The integration of Ameredev properties led to a timing issue affecting sequential growth, which some analysts viewed as a concern.
• Capital expenditures were higher in the fourth quarter and are expected to remain elevated in the first quarter of 2025.
• There is uncertainty regarding the future monetization of the midstream infrastructure, despite its significant development.
• The company faces challenges in managing the volatility of commodity prices, which impacts its financial planning.
• Matador Resources Co has not committed to stock buybacks, which may not align with the preferences of some short-term investors.

Q & A Highlights

Q: Can you provide insights into the development and potential monetization of your midstream infrastructure? A: Joseph Foran, CEO, explained that as long as Matador is active in the basin, they will continue to expand their midstream infrastructure to ensure flow assurance. Greg Krug has led this effort, growing EBITA from $30 million to $300 million. The company is exploring opportunities to enhance flow assurance for both Matador and third-party customers, including the integration of 180 miles of pipeline from the Ameredev acquisition.

Q: Could you elaborate on the reduction in DNC costs and future expectations? A: Christopher Calvert, Co-COO, noted that the DNC cost per foot is down 3% year-over-year, attributed to operational efficiencies like Simul frac and Trimul frac. The company plans to increase Trimul frac usage from 16 to 40 wells, contributing to lower costs and maintaining their position as a leading-edge innovator in operational efficiencies.

Q: How do you view capital expenditure fluctuations and their impact on operations? A: Joseph Foran, CEO, emphasized that initial capital expenditures are aimed at improving long-term operating expenses. Glenn Stetson, EVP of Production, added that facility upgrades and accelerated completions on Ameredev properties have reduced operating expenses by $2 million per month, showcasing the strategic use of capital to enhance efficiency.

Q: What is the strategic importance of the Cotton Valley assets? A: Joseph Foran, CEO, stated that the Cotton Valley assets are a valuable part of Matador's portfolio, with potential for horizontal drilling yielding significant gas production. The assets are not currently for sale but represent a strategic option for future development, especially as gas prices stabilize.

Q: What are the plans for utilizing the projected $1 billion free cash flow in 2025? A: Joseph Foran, CEO, highlighted the company's focus on measured growth, with opportunities in New Mexico and midstream expansion. The company maintains a strong balance sheet and is committed to increasing dividends steadily over time, while avoiding stock buybacks to favor long-term shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.