DALLAS - Matador Resources Company (NYSE: NYSE:MTDR), an independent energy firm, has announced the acquisition of oil and natural gas properties from a subsidiary of Ameredev II Parent, LLC, including a 19% interest in Piñon Midstream, LLC. The deal, valued at $1.905 billion, is set to enhance Matador’s presence in the Delaware Basin, with the transaction expected to close by the end of the third quarter of 2024.
The assets, situated in Lea County, New Mexico, and Loving and Winkler Counties, Texas, are anticipated to produce between 25,000 and 26,000 barrels of oil equivalent (BOE) per day in the third quarter of 2024. This acquisition will expand Matador’s net acreage in the region to over 190,000 and add 431 gross operated locations to its portfolio.
Matador’s CEO, Joseph Wm. Foran, expressed confidence in the strategic value of the acquisition, citing the quality of the assets, existing production, and the potential for significant reserve additions. The company’s recent financial maneuvers, including securities offerings and a credit facility amendment, have positioned it to pursue this opportunity without compromising its balance sheet.
The transaction is expected to be accretive to key financial metrics, with a forward one-year Adjusted EBITDA projection of $425 to $475 million based on May 2024 strip prices. Additionally, the company anticipates maintaining a strong leverage profile, with pro forma leverage expected to be around 1.3x at closing and projected to drop below 1.0x by mid-2025.
Matador estimates the total proved oil and natural gas reserves of the Ameredev properties to be 118 million BOE as of May 31, 2024, with a PV-10 valuation of approximately $1.66 billion. The company is also planning to continue operating nine drilling rigs across the combined acreage post-acquisition.
To finance the all-cash transaction, Matador has secured commitments for increased credit facilities from PNC Bank. The company will host a live conference call today to discuss the details of the acquisition.
The information provided in this article is based on a press release statement.
In other recent news, Matador Resources Company has made significant strides with a robust first quarter in 2024 and a positive outlook for the future.
BMO (TSX:BMO) Capital Markets has maintained its Outperform rating for the company, citing its consistent execution of profitable growth strategies and robust financial standing as key factors. This rating follows a recent meeting with Matador Resources' management, which expressed confidence in the availability of future opportunities to expand its core acreage position.
Matador Resources reported a strong Q1 with an increase in flow assurance and a strengthened balance sheet, thanks to recent transactions. The company highlighted a record number of wells to be activated this quarter and raised its full-year guidance to the higher end. The company's financial strength was emphasized, with $1.5 billion available for acquisitions and a diverse market portfolio to counteract weak gas pricing.
These recent developments indicate a favorable outlook for Matador Resources. BMO Capital's reaffirmation of a $79.00 price target reflects ongoing confidence in the company's capabilities and prospects.
Matador Resources continues to demonstrate a positive start to 2024 with increased production guidance, a record number of wells to be activated, and a strategic balance between organic growth and acquisitions.
InvestingPro Insights
Matador Resources Company (NYSE: MTDR) has made a significant stride in consolidating its position in the Delaware Basin with its latest acquisition. As investors consider the implications of this move, here are some key metrics and InvestingPro Tips that shed light on the company's current financial health and market performance.
InvestingPro Data reveals a robust financial landscape for Matador Resources, as evidenced by a market capitalization of $7.44 billion and an attractive P/E ratio of 8.14, which slightly adjusts to 8.53 when looking at the last twelve months as of Q1 2024. The company's revenue for the same period stands at $2.825 billion, with a notable quarterly revenue growth of 39.68% in Q1 2024—a testament to the company's strength in generating income.
An InvestingPro Tip highlights the company's commitment to shareholder returns, with Matador having raised its dividend for three consecutive years. This demonstrates the company's confidence in its financial stability and its dedication to returning value to its investors. Additionally, analysts have taken a positive stance on the company's prospects, with six analysts revising their earnings upwards for the upcoming period, signaling potential growth ahead.
Investors looking to delve deeper into Matador Resources' financials and market predictions can find additional insights and tips on InvestingPro. With a total of 7 additional InvestingPro Tips available, users can gain a comprehensive understanding of the company's trajectory. To access these valuable insights, consider subscribing to InvestingPro using the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
As Matador Resources navigates the integration of its newly acquired assets, these financial metrics and expert analyses will be crucial for investors monitoring the company's progress and assessing its long-term potential in the energy sector.
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