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DALLAS - Matador Resources Company (NYSE:MTDR), an independent energy company engaged in the exploration, development, and production of oil and natural gas resources, has reported a profitable first quarter for 2025 and revealed plans for a $400 million share repurchase program. The announcement comes alongside adjustments to the company’s drilling activity for the year. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong profitability metrics including an EBITDA of $2.4 billion for the last twelve months.
The Dallas-based firm, which holds approximately 200,000 net acres in the Delaware Basin, has seen production reach all-time highs, with record oil and natural gas reserves. The company’s financial strength and strategic midstream business were cited as key factors in the decision to initiate the repurchase of its common stock. With a market capitalization of $5.1 billion and a P/E ratio of 5.7, InvestingPro analysis suggests the stock is currently undervalued compared to its Fair Value.
Matador’s board and management have shown confidence in the company’s asset base and net asset value, leading to the implementation of share repurchases as a means to deliver value to shareholders. The repurchases are set to be incremental to the company’s current quarterly fixed dividend of $0.3125 per share, which has been raised six times over the past four years. InvestingPro data shows impressive dividend growth of 56.25% over the last twelve months, with the current dividend yield at 3.05%. For deeper insights into Matador’s dividend sustainability and growth potential, access the comprehensive Pro Research Report available on InvestingPro.
The repurchase program will be opportunistic, with the timing and number of shares to be purchased dependent on several factors, including stock price, market conditions, and other uses of free cash flow. Notably, Matador’s directors and executive officers purchased 31,100 shares of Matador stock for $1.6 million during the first quarter of 2025.
In response to commodity price volatility, Matador has adjusted its drilling and completion activity for 2025, planning to operate eight drilling rigs by mid-year, down from nine at the beginning of the year. This adjustment is expected to reduce the company’s drilling, completing, and equipping capital expenditures by $100 million for the year, from an original expectation of $1.375 billion to $1.275 billion.
Despite market challenges, Matador’s total oil and natural gas production increased 33% year-over-year in the first quarter of 2025, surpassing the company’s expected range. The firm turned to sales 40 gross (33.5 net) operated wells during the quarter, earning drilling incentives totaling $6.4 million.
Looking ahead, Matador anticipates continued production growth in the second quarter of 2025 and remains focused on operational efficiencies and cost reduction. The company’s midstream joint venture, San Mateo, is also expected to contribute to balancing the impact of commodity price fluctuations on Matador’s free cash flow. With revenue growth of 23.61% in the last twelve months and an impressive gross profit margin of 80.5%, the company demonstrates strong operational execution despite market challenges. Discover more exclusive financial metrics and analysis with InvestingPro, including 8 additional ProTips and comprehensive valuation models.
Investors and interested parties are invited to join Matador’s first-ever ’Town Hall’ Conference Call on April 28, 2025, to discuss first-quarter results and the company’s plans for the remainder of the year. This information is based on a press release statement.
In other recent news, Matador Resources Company has made significant financial strides by selling its Eagle Ford shale assets in South Texas, generating over $30 million in proceeds. This sale has allowed the company to reduce its debt significantly, paying down $180 million of its credit facility and enhancing its liquidity to approximately $1.8 billion. Additionally, Matador has fortified its balance sheet with new oil hedges for 2025, aiming to provide price stability amid market volatility.
Meanwhile, UBS has initiated coverage on Matador Resources with a Neutral rating and a price target of $47, noting the company’s growth strategy and increased dividends but raising concerns about its balance sheet leverage. Stephens has adjusted its price target to $86, maintaining an Overweight rating while highlighting potential strategic shifts in response to global oil market challenges. Mizuho has also revised its price target to $74, retaining an Outperform rating and indicating Matador’s readiness to explore mergers and acquisitions.
JPMorgan has lowered its price target to $61, still recommending an Overweight rating, and pointed out Matador’s progress on the Marlan processing plant and plans for a stock buyback program. The company is considering initiating a share repurchase program and has seen significant insider share purchases, reflecting confidence in its future prospects.
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