Matador Resources (NYSE: MTDR) reported Q3 EPS of $0.32, $0.08 better than the analyst estimate of $0.24. Revenue for the quarter came in at $279.4 million versus the consensus estimate of $232.33 million.

Increased Net Income, Earnings Per Share and Adjusted EBITDA

• Third quarter 2019 net income (GAAP basis) was $44.0 million, or $0.38 per diluted common share, a 20% sequential increase from net income of $36.8 million in the second quarter of 2019, and a 2.5-fold year-over-year increase from net income of $17.8 million in the third quarter of 2018.
• Third quarter 2019 adjusted net income (a non-GAAP financial measure) was $37.9 million, or $0.32 per diluted common share, a 10% sequential increase from $34.6 million in the second quarter of 2019, and a year-over-year decrease from $55.7 million in the third quarter of 2018.
• Third quarter 2019 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) was $160.8 million, a 12% sequential increase from $144.1 million in the second quarter of 2019, and a 3% year-over-year increase from $155.4 million in the third quarter of 2018.

Management Comments

Third Quarter Highlights

Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “As highlighted throughout this earnings release, the third quarter of 2019 was simply the best quarter in our Company’s history. During the third quarter, we significantly exceeded our estimates for both oil and natural gas production as a result of continued improvements in operating efficiency and better-than-expected well results from a number of wells across our various asset areas. We have continued to maintain our commitment to capital discipline throughout the third quarter and realized an additional aggregate savings of approximately $5 million on those wells completed and turned to sales during the third quarter. In addition, we continued to see our unit operating costs improve, as both our lease operating and general and administrative expenses declined during the third quarter. San Mateo delivered record results in the third quarter as well, highlighted by all-time highs for third-party revenues, natural gas gathering and processing volumes, water gathering and disposal volumes and Adjusted EBITDA. The Board and I congratulate the staff for its continued consistent and professional execution across all departments throughout the organization.

Longer Laterals Leading to Improved Capital Efficiency

“As we enter the fourth quarter of 2019, our transition to longer laterals across our various asset areas in the Delaware Basin is well underway, and we anticipate that just over half of the wells we complete and turn to sales during the remainder of 2019 will be laterals longer than one mile, with about 30% of the total being two-mile laterals. As examples, we recently completed and turned to sales our first two-mile laterals in the Antelope Ridge asset area and are very pleased with the early performance from both wells. One of these wells, the Jeff Hart State Com #134H well, a Third Bone Spring completion, has produced approximately 70,000 barrels of oil in just its first 30 days of production, marking the highest 30-day oil production from any well in Matador’s history, including our prolific Mallon wells in the Ranger asset area, also Third Bone Spring completions. Equally important, drilling and completion costs on the Jeff Hart State Com #134H well were just under $1,000 per lateral foot, about 20 to 25% below the drilling and completion costs per lateral foot associated with one-mile laterals recently drilled in the Antelope Ridge asset area. As we look forward to 2020, this transition to longer laterals and the improved capital efficiency associated with these wells should continue.

Asset Sales

“Our efforts to convert certain non-core assets to cash, and in particular, the divestment of portions of our non-core assets, have progressed well during the first nine months of 2019. We continue to receive interest in our various properties in South Texas and are actively working to complete one or more of these opportunities before the end of the year. We remain confident that our deliberate approach to divesting of our non-core assets should result in increased value being obtained for these properties for Matador and its shareholders.

Assets Behind Each Share of Matador Stock

“In these times of volatile market conditions, the Board and I take comfort in the outstanding performance of our staff, in the steadily improving fundamentals of our businesses and in the hard assets that stand behind each share of Matador stock. For example, each Matador share represents more than one barrel of oil and approximately five thousand cubic feet of natural gas reserves. Further, Matador owns a 51% interest in a significant, rapidly growing, and we believe, underappreciated group of oil, natural gas and water midstream assets in the Delaware Basin. In addition, we have accumulated approximately 183,000 net acres of leasehold in three of the best oil and natural gas plays in the country, including 132,700 net acres in the prolific Delaware Basin. We have also acquired approximately 11,200 net royalty acres of strategically located mineral interests. Finally, of course, each Matador share is also backed by approximately 300 talented technical, land and financial professionals, who are, we contend, among Matador’s most valuable assets.

“In summary, we are very pleased with the excellent operating and financial performance that both our exploration and production and midstream businesses have delivered through the first three quarters of 2019. We expect to finish 2019 on a strong note and look forward to 2020, as we fully transition to drilling and completing longer laterals, continue to improve the capital efficiency of our exploration and production operations and complete the ongoing expansion of San Mateo. We are very excited about the opportunities that lie ahead, and we like our chances as we continue to grow and build the value of both of our highly complementary exploration and production and midstream businesses.”

Full Year 2019 Updated Guidance

As a result of the Company’s production and financial performance exceeding its expectations for the first three quarters of 2019, effective October 29, 2019, Matador increased its full year 2019 guidance estimates as provided in the table presented above in the highlights section of this earnings release.

For earnings history and earnings-related data on Matador Resources (MTDR) click here.