Matador Divests South Texas Assets, Strengthens Balance Sheet

Matador Resources Company MTDR announced that it divested its remaining acreage in the Eagle Ford Basin in South Texas. The company has also discussed the possibility of implementing a stock repurchase program this year over and above its fixed quarterly dividend of 31.25 cents per share.

Sale of Remaining Eagle Ford Acreage

The company announced the sale of its remaining acreage and producing assets in the La Salle, Karnes, and Atascosa Counties in South Texas. These assets were highly productive and a key part of MTDR’s production asset base. The company executed the sale of these properties through several transactions made over the prior two quarters. The proceeds from the sales totaled over $30 million.

Through this divestment, Matador exited the Eagle Ford Basin, where it had started developing its acreage position initially. The company stated that while moving forward, it will focus on developing its acreage position in the northern Delaware Basin, also recognized as the most prolific oil and gas basin in the country. MTDR owns 200,000 acres in the northern Delaware Basin.

Matador Delivers $180M Debt Reduction

Matador used the proceeds from the sale and a portion of its internal cash flows to pay off part of its borrowings under its credit facility. Notably, in the first quarter of 2025, it repaid $180 million and currently has $405 million of debt outstanding under its credit facility. The company has further highlighted that at the end of the first quarter, it had a robust financial position with approximately $1.8 billion in liquidity. Further, in order to strengthen its balance sheet, MTDR is pursuing a strategy that involves hedge protection and divestment of non-core assets.

MTDR’s Historical Success in Volatile Market Conditions

The company is optimistic about its drilling plans and inventory for 2025. Recently, due to tariffs, Matador expects steel prices to rise, which may also impact the prices of other goods like casing, valves and surface equipment. To combat the situation, it has implemented precautionary measures and has already purchased the inventory needed for its drilling program in 2025. The company, however, does not anticipate the recent tariffs to materially affect its well costs until the second half of the year.

Historically, in highly volatile and tumultuous times, the independent exploration and production firm and its predecessor firms have made notable acquisitions and explored extremely profitable prospects that have been beneficial for it in the long run. Furthermore, during challenging times, the company has recruited important individuals who have contributed to MTDR’s long-term success.

MTDR has also announced that since its stock price has been on the decline, its board of directors may implement a stock repurchase program on top of its current quarterly dividend payment, as mentioned before. The share repurchase program, if announced, shall remain within the means of the company at current commodity prices.

MTDR’s Zacks Rank & Key Picks

Matador Resources, an independent oil and gas company based in the United States, currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Nine Energy Service NINE and Kinder Morgan, Inc. KMI. Archrock currently sports a Zacks Rank #1 (Strong Buy), and Nine Energy Service and Kinder Morgan carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, the company is expected to witness sustained demand for its services.

Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position the company for growth in the long run.

Kinder Morgan is a leading North American midstream player with a stable and resilient business model, largely driven by take-or-pay contracts, which ensure consistent earnings and facilitate reliable capital returns to its shareholders.

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