Will Pandemic Blues Weigh On Matador Resources Stock?

The shares of Matador Resources (NYSE: MTDR) have been racing ahead in the past few months assisted by rising benchmark prices and growing domestic demand. The company is engaged in exploration, development, and production of oil and natural gas resources in the United States. Interestingly, the company did not curtail production last year despite a slump in demand and low benchmark prices. Thus, the operating cash flow declined by just 13% last year. While the benchmark prices remain high from inventory draws, Trefis believes that MTDR stock is likely to observe a correction during the latter half of the year as OPEC+ increases supply. We highlight the historical trends in revenues, earnings, and stock prices of MTDR in an interactive dashboard, Buy Or Fear Matador Resources Stock?

Financial performance during the pandemic

Matador Resources’ revenues declined by 4% from $899 million in 2018 to $862 million in 2020 as the pandemic drove down energy demand. While benchmark prices observed a 30% contraction last year, the company did not suspend operations as low production costs assisted positive operating cash. Moreover, the company implemented a prudent capital investment plan leading to just $100 million increase in long-term liabilities. Notably, oil majors including Exxon Mobil, Chevron, BP, and Royal Dutch Shell registered sizable impairment charges due to the pandemic. In 2020, Exxon Mobil and Chevron raised their long-term debt obligations by $20 billion to pay dividends and assist capital expenses.

Industry Outlook

Brent and WTI benchmarks surpassed $70/bbl mark in recent weeks as OPEC+ continued with previously announced production curtailments for July. Crude oil and petroleum product inventories have returned to historical levels in the U.S. and OECD countries. Given the supply restrictions by OPEC, benchmark prices are likely to remain high in the near-term as rising demand puts pressure on reserves. However, the EIA expects benchmark prices to decline by next year as OPEC+ increases production.

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