Matador Resources Company

U.S. shale E&P stocks delivered an exceptional second quarter, with the 11 companies tracked beating analysts' consensus revenue estimates by 10.4% as a group. Chord Energy, the largest acreage holder in the Williston Basin, reported revenues of $2.17 billion, up 84% year on year and exceeding expectations by 31.9%, the biggest beat in the group, and its stock has risen 7.9% since reporting to $140.20. HighPeak Energy, operating in the Midland Basin, posted revenues of $272.4 million, up 25.8% year on year and beating estimates by 8.7%, though its stock is down 2.5% to $7.73. Texas Pacific Land, with roughly 868,000 acres in the Permian Basin, reported revenues of $246.1 million, up 31.2% year on year but missing estimates by 1.4%, the weakest performance among peers, and its stock is down 2.4% to $372.77. Matador Resources, focused on the Delaware Basin, saw revenues of $1.19 billion, up 32.5% year on year and beating estimates by 13.7%, with its stock up 18% to $55.50. Diamondback Energy, operating in the Permian Basin, reported revenues of $5.56 billion, up 51.2% year on year and beating estimates by 13.5%, with its stock flat at $199.02. On average, shale E&P stocks have risen 11.1% since the latest earnings results.

Matador Resources outlined its strategy for production growth and free-cash-flow generation at a Chicago conference, projecting approximately $900 million in free cash flow for 2026 while continuing to increase production. The company, primarily a Delaware Basin operator, has expanded its footprint by adding 17,000 net acres through leasing, trades, and acquisitions, including positions that extend laterals and provide exposure to formations such as Woodford and Second Bone Spring Carbonate. Matador has reduced drilling and completion costs per lateral foot by 12% since 2024, and its integrated midstream business, including its 51% stake in San Mateo Midstream, is expected to generate nearly $400 million of EBITDA in 2026. Management is evaluating ways to unlock midstream value, including entity-level debt or a potential IPO. Founder and CEO Joe Foran remains at the helm, and the company has raised its dividend seven times over five years and repurchased about 1.8 million shares since April 2025.

ExxonMobil's Permian Basin operations are driving upstream growth, with second-quarter 2026 production hitting a record of more than 1.8 million oil-equivalent barrels per day. Upstream earnings rose sequentially to $7.93 billion from $5.74 billion, and advantaged volume growth added $1.14 billion year over year, mainly from the Permian and Guyana. Management targets a 9% production CAGR through 2030, aiming for Permian output of about 2.5 MMBoe/d and total upstream production of about 5.5 MMBoe/d by then. Advantaged assets are expected to make up around 65% of upstream production by 2030, supporting a target of more than $15 per barrel in upstream unit earnings. Other Permian producers are also expanding, with Diamondback Energy raising 2026 production guidance to at least 1 MMBoe/d and Matador Resources raising its total production guidance to 218,500-223,500 barrels of oil equivalent per day.

Shares of Matador Resources, Oceaneering, Northern Oil and Gas, and Talos Energy jumped in afternoon trading after Iran ruled out extending a 60-day memorandum of understanding with the United States. The June 17 memorandum was meant to reopen the Strait of Hormuz while the two sides negotiated a nuclear deal within 60 days, CNBC reported. President Trump told Fox News he has no time schedule and is not in a hurry, while a senior Iranian official told Reuters that Tehran would shift from defense to offense if diplomacy fails. Matador Resources rose 3.2%, Oceaneering rose 3.3%, Northern Oil and Gas rose 3.2%, and Talos Energy rose 3.3%. Talos Energy is up 45.9% since the beginning of the year and at $16.41 per share is trading close to its 52-week high of $16.59 from May 2026.

Matador Resources reported near-record adjusted free cash flow of $303 million for the second quarter of 2026 and used $200 million to reduce borrowings associated with its federal lease acquisition. The company expects approximately $900 million in free cash flow for the full year and intends to continue prioritizing debt reduction. Production exceeded guidance, reserves increased 5% to 703 million barrels of oil equivalent, and year-over-year oil production growth outlook was raised to 4% to 7% while planned capital spending was reduced by 1%. Management highlighted that recent acquisitions and federal lease purchases extended inventory life beyond 15 years and could deliver returns above 80%, with development potentially beginning in late 2026 or early 2027.

San Mateo Midstream has completed its $752 million purchase of the operating subsidiaries of Cardinal Midstream Partners. The joint venture, 51% owned by Matador Resources and 49% by Five Point Infrastructure, now has designed natural gas processing capacity exceeding one billion cubic feet per day in the northern Delaware Basin and a pipeline network surpassing 800 miles. The acquired assets include a processing plant complex in Loving County, Texas, with inlet capacity of around 320 million cubic feet per day and roughly 145 miles of gathering pipelines, making San Mateo the largest private natural gas processor in the area. The deal adds nine new customers and is expected to boost third-party volumes and revenues. Funding came from a $650 million term loan, available cash, and partner capital contributions, with Matador using $51 million from San Mateo distributions for its share.

Matador Resources has agreed to acquire Paloma Permian LLC from EnCap Investments in an all-cash deal valued at approximately $1.27 billion, expanding its footprint in the Delaware Basin. The transaction comes as Matador shares recently pulled back, with a one-day decline of 1.74% and a seven-day drop of 5.56%, though the stock remains up 17.18% year to date and has delivered a five-year total shareholder return of 77.69%. A widely followed narrative pegs Matador's fair value at about $72.61 per share, well above its last close of $50.81, suggesting the stock may be roughly 30% undervalued. That bullish view rests on the company's concentrated Delaware Basin acreage, multi-zone development, and robust drilling inventory, which are expected to drive above-average production growth and durable cash flows. However, risks such as regulatory changes in the basin or sustained lower commodity prices could pressure cash generation and challenge the growth outlook.

Matador Resources stock appears undervalued on earnings, trading at a price-to-earnings ratio of about 13.1 times, below the oil and gas industry average of 14.3 times and the broader peer group average of 23.6 times. Simply Wall St's model suggests a fair P/E of around 21.4 times, indicating the market is pricing in lower expectations than fundamentals may justify. The planned US$1.275 billion Paloma Permian acquisition could support longer-term production and cash flow, though recent revenue weakness and an earnings miss highlight execution risk. The stock screens as cheap in all six of Simply Wall St's valuation tests, reinforcing the view that it trades below what its metrics imply.

Energy Transfer LP has entered into multiple agreements with Matador Resources and a sponsorship deal with the Arizona Ridge Riders. On June 4, Matador Resources announced a new gas supply agreement with Energy Transfer affiliates to improve pricing netbacks and reduce Waha Hub volatility exposure in the second half of 2026, building on an October 2025 transportation deal for 500,000 MMBtu per day on the Hugh Brinson Pipeline. Matador also executed natural gas liquids agreements dedicating Delaware Basin NGLs to Energy Transfer's system. On June 26, the Arizona Ridge Riders announced a multi-year partnership making Energy Transfer the Official Partner and Presenting Sponsor of Ridge Rider Days, including a youth development program and a new Bull Riding Scholarship.

San Mateo Midstream, a majority-owned joint venture of Matador Resources, has agreed to purchase the operating subsidiaries of Cardinal Midstream Partners for $752 million in cash. The acquired assets include a natural gas processing plant in Loving County, Texas, with an inlet capacity of up to 320 million cubic feet per day, along with 145 miles of gathering pipelines in West Texas and southern Eddy County. The deal will expand San Mateo's total processing capacity to more than 1 billion cubic feet per day and its gathering system to over 800 miles, while adding nine new third-party customers. The acquisition is expected to close by July 31, 2026, and be funded through a new term loan of up to $650 million, existing cash, and partner contributions, without materially impacting Matador's cash position. San Mateo expects the Cardinal assets to generate up to $110 million in annual adjusted EBITDA by 2028 when fully utilized.

Matador Resources announced that its San Mateo Midstream joint venture with Five Point Infrastructure has agreed to acquire the operating subsidiaries of Cardinal Midstream Partners, a portfolio company of EnCap Flatrock Midstream, for $752 million in cash. Cardinal's assets include a cryogenic natural gas processing plant complex with a designed inlet capacity of 320 million cubic feet per day and 145 miles of natural gas gathering pipelines in the northern Delaware Basin. The acquisition will increase San Mateo's designed natural gas processing capacity to more than 1 billion cubic feet per day and expand its gathering systems to over 800 miles of pipeline. San Mateo expects the Cardinal assets to be immediately accretive to adjusted EBITDA and cash flows, with adjusted EBITDA projected to reach up to $110 million on an annualized basis by 2028 when the plant complex is fully utilized.

Energy Transfer LP entered into multiple gas supply and natural gas liquid agreements through its affiliates with Matador Resources Company on June 4, 2026. The agreements aim to improve Matador's pricing netbacks and reduce its exposure to volatile Waha Hub pricing in the latter half of 2026, while supplying natural gas to Energy Transfer to meet fuel requirements amid growing power demand from AI data centers and power generation markets. On June 18, 2026, Energy Transfer announced a fully subscribed expansion of its Nederland NGL Export Terminal, adding 240,000 barrels per day of ethane and 55,000 barrels per day of LPG capacity, backed by long-term commitments into the 2040s and including two new ship docks and pipeline expansions, with staged completion expected to begin in 2028. Jim Cramer expressed positive views on Energy Transfer on June 2, 2026, calling it an inexpensive stock with a good dividend.