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MR

Matador Resources Co (MTDR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record production at 201,116 BOE/d and adjusted EBITDA of $640.9M; total revenues were $970.4M with diluted EPS of $1.71 and adjusted EPS of $1.83 .
  • The quarter modestly exceeded company guidance: total BOE/d was +2% vs midpoint, natural gas +5%, while oil was slightly below guidance (<1% below) as third-party midstream constraints in Lea County curtailed ~3,000 BOE/d but were largely resolved by 2/18/2025 .
  • 2025 guidance targets 202,000–208,000 BOE/d, 120,000–124,000 bbl/d oil, and 492–504 MMcf/d gas; San Mateo midstream EBITDA guided to $285M, up 13% YoY; quarterly dividend raised 25% to $0.3125 (annual $1.25) .
  • Management emphasized year-over-year growth, integration synergies from Ameredev (Opex lowered by ~$2M/month; >$150M expected D&C synergies over five years), and operational innovations (U-Turn wells, simul/trimul-frac) supporting lower per-foot costs into 2025 .
  • Near-term catalysts: dividend hike and explicit 2025 production range, resolution of midstream constraints, and Q2’25 startup of the Marlan Plant expansion (additional 200 MMcf/d) .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly production: 201,116 BOE/d (118,440 bbl/d oil; 496.1 MMcf/d gas) with adjusted EBITDA $640.9M and adjusted free cash flow $415.5M .
  • Guidance beat: total BOE/d +2% vs guidance midpoint and natural gas +5%, driven by stronger Rustler Breaks/Ranger well performance and higher non-operated volumes; Ameredev contributed 23,200 BOE/d, above initial expectations .
  • Strategic dividend increase to $0.3125/quarter and management confidence: “raising the dividend—and senior management buying the stock… 30 ‘buys’ since 2021 and no ‘sells’” .

What Went Wrong

  • Oil volumes were slightly below guidance (<1% below), in part due to third-party midstream constraints (~3,000 BOE/d curtailed) in Antelope Ridge; constraints largely resolved by 2/18/25 .
  • G&A rose 22% sequentially to $2.22/BOE due to cash-settled stock awards remeasured as share price increased 14% QoQ (from $49.42 to $56.26) .
  • Q4 D/C/E capex ($325.5M) and midstream capex ($65.2M) were higher than expected, reflecting facility upgrades on Ameredev and accelerated Marlan expansion spend; Q1’25 D/C/E expected to rise to $340–$400M .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenues ($USD Millions)$836.1 $899.8 $970.4
Diluted EPS ($)$2.12 $1.99 $1.71
Adjusted EPS ($)$1.99 $1.89 $1.83
Adjusted EBITDA ($USD Millions)$552.8 $574.5 $640.9
Average Oil (bbl/d)88,663 100,315 118,440
Average Gas (MMcf/d)393.6 427.0 496.1
Total BOE/d154,261 171,480 201,116
Realized Oil Price ($/bbl)$79.00 $75.67 $70.66
Realized Gas Price ($/Mcf)$3.01 $1.83 $2.72

Revenue Breakdown

Component ($USD Thousands)Q4 2023Q3 2024Q4 2024
Oil & Natural Gas Revenues$753,246 $770,155 $893,860
Third-Party Midstream Revenues$35,636 $38,316 $37,703
Sales of Purchased Natural Gas$43,388 $51,666 $46,720
Realized Gain (Loss) on Derivatives$(3,121) $4,528 $4,151
Unrealized (Loss) Gain on Derivatives$6,983 $35,118 $(12,065)
Total Revenues$836,132 $899,783 $970,369

Operating Costs per BOE

Cost ($/BOE)Q4 2023Q3 2024Q4 2024
Prod. Taxes, Transportation, Processing$5.31 $4.61 $4.70
Lease Operating (LOE)$5.06 $5.50 $5.37
Plant & Other Midstream Operating$2.56 $2.77 $2.75
DD&A$15.51 $15.39 $15.85
G&A$2.08 $1.82 $2.22
Total (excl. purchased gas)$30.52 $30.09 $30.89

Midstream Throughput (San Mateo, 100%)

ThroughputQ4 2023Q3 2024Q4 2024
Gas Gathering (MMcf/d)416 431 454
Gas Processing (MMcf/d)413 460 434
Oil Gathering (bbl/d)50,900 52,300 63,000
Produced Water Handling (bbl/d)442,000 513,200 470,100

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Production (BOE/d)FY 2025“Expect >200,000 BOE/d” 202,000–208,000 BOE/d Refined to explicit range
Oil Production (bbl/d)FY 2025Not provided120,000–124,000 bbl/d New
Natural Gas (MMcf/d)FY 2025Not provided492–504 MMcf/d New
D/C/E Capex ($)FY 2025Not provided$1.28–$1.47B New
Midstream Capex ($)FY 2025Not provided$120–$180M New (lower vs 2024 actual $238.7M )
San Mateo Adj. EBITDA ($)FY 2025Not provided$285M New (+13% vs $253.2M 2024 )
Dividend per Quarter ($)Q1 2025 payout$0.25 (prior policy) $0.3125 declared, payable 3/14/25 (record 2/28/25) Raised 25%
Q1 Production (BOE/d)Q1 2025ENot provided195,000–197,000 BOE/d New
Cash Taxes (%)FY 2025Not provided~5–10% of pre-tax book net income Higher vs 2024 ~2% actual

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Operational efficiency: simul/trimul-frac; U-Turn wells; per-foot costsQ2: Revise D&C costs down to $960/ft; U-Turn wells and first trimul-frac . Q3: 90 wells via simul/trimul; costs $925–$935/ft; $135M savings since 2022 .2024 achieved $910/ft; 2025 guided $865–$895/ft; Trimul-frac to ~35% of completions .Improving efficiencies and lower costs
Midstream flow assurance; Pronto→San MateoQ2: Connector enabled Dagger Lake wells; midstream supports flow assurance . Q3: 99% uptime; higher volumes; Marlan expansion on track H1’25 .Third-party constraints curtailed volumes; San Mateo/Pronto uptime 99%; Pronto combination closed; Marlan expansion online Q2’25 .Strengthening scale; constraints resolved
Ameredev integrationQ2: Pending Ameredev; 25.5k BOE/d expected . Q3: Closed; 31.5k BOE/d initial; synergies forecast .23.2k BOE/d contribution; Opex down ~$2M/month; >$150M D&C synergies over 5 years; $4M already realized .Progressing, delivering synergies
Capital cadenceQ2: D/C/E below expectations . Q3: Continued capital savings .Q4 D/C/E higher; Q1’25 D/C/E up on completions and non-operated activity .Front-loaded near term
Cotton Valley gas optionalityNot emphasizedHighlighted “gas bank” (37 net locations; 200–300 Bcf potential) with existing infrastructure .New optional lever
Cash taxesQ3: lowered 2024 cash tax expectation (benefit) .2025 cash taxes ~5–10% vs 2024 ~2% .Rising in 2025

Management Commentary

  • “We put an emphasis on year-to-year growth… the most important is year-over-year growth… we expect to have growth approximately 30% for the first quarter of this year compared to the first quarter of last year.” — Joseph Wm. Foran .
  • “Raising the dividend—and senior management buying the stock… 30 ‘buys’ since 2021 and no ‘sells’—is the sincerest way we know to express our confidence.” .
  • “The Ameredev properties were special… good rock… batch drilling saved an estimated $30–$50 million… timing affects sequential growth.” — Foran .
  • “San Mateo… first year of operations, we had EBITDA of $30 million. This year, we have $300 million.” — Foran, midstream scale .
  • “We estimate 2025 drilling and completion costs per completed lateral foot to average between $865 to $895… Trimul-Frac alone ~35% of completions.” .

Q&A Highlights

  • Midstream strategy and monetization: Management sees continued expansion for flow assurance, evaluates partners/strategic options; 180 miles of pipeline acquired with Ameredev (not part of San Mateo) adds optionality .
  • D&C cost trajectory: Leading-edge D&C costs guided below 2024 levels driven by simul/trimul-frac, reduced days on well, vendor partnerships; trimul-frac ramps in 2025 .
  • Capital cadence & Ameredev upgrades: Front-loaded facility upgrades and accelerated completions reduced Opex (~$2M/month), recycled ~1.2M bbls of water for fracs on 11 Ameredev wells .
  • Cotton Valley optionality: Management highlighted substantial EUR potential (long laterals, higher intensity completions) and existing infrastructure; not marketing for sale, a “card to play” dependent on gas macro .
  • Uses of cash: With ~$1B free cash flow expected in 2025, priority is “profitable growth at a measured pace” across upstream, midstream, and optionality (Louisiana gas), with steady dividend increases; buybacks not favored .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable at the time of query due to provider limits. As a proxy, the company outperformed its own Q4 guidance on total BOE/d (+2%) and gas (+5%) while oil modestly under-ran guidance (<1%). S&P Global consensus figures could not be retrieved at this time; please note unavailability .

Key Takeaways for Investors

  • Operational execution remains a differentiator: record volumes, cost per foot down, and continued efficiency gains should support margins despite lower realized oil prices QoQ .
  • Integration is adding tangible value: Ameredev synergies (Opex down ~$2M/month; >$150M D&C synergies expected) and production contribution support 2025 growth trajectory .
  • Midstream provides flow assurance and earnings stability: San Mateo EBITDA guided +13% YoY; Marlan expansion in Q2’25 is a near-term volume/capacity catalyst .
  • Capital cadence is front-loaded: expect elevated D/C/E in Q1’25 ahead of volume ramps; investors should anticipate “lumpy” quarterly production with sequential dips in Q1 and Q3 .
  • Return of capital momentum: 25% dividend increase, ongoing insider purchases, and low leverage (~1.05x at YE 2024) indicate confidence in sustainable free cash flow .
  • Watch gas optionality: Cotton Valley inventory offers upside if gas prices strengthen, with existing Gulf Coast LNG-linked infrastructure .
  • Near-term trading lens: focus on Q2’25 production ramp, Marlan expansion start-up, and the resolution of third-party midstream constraints; dividend increase provides support on pullbacks .