Shares for independent oil and gas producer Matador Resources (MTDR) took off in early Tuesday action after the company’s stock was upgraded to “outperform” by Zacks Equity Research.
The 5 percent gain, though impressive, has become something of a regularity for the shale-boomer, whose shares have advanced some 170 percent over the past 12 months, due mostly to the impressive results it has yielded from its operations in the oil-rich Permian Basin.
The Shale Boom
The technological advances that have unlocked the vast reserves within shale formations across have led to an astronomical increase in domestic energy production over the last decade, sending the US well on its way to being self-sufficient in terms of its oil and gas needs. But the overwhelming majority of these plays are yielding natural gas, which sells on the market at an enormous discount to crude oil despite relatively high costs of production.
The producers who have benefitted the most from shale are the ones that are, generally speaking, the ones who are bringing substantial amounts of oil to the surface, and Matador has, by all appearances, turned out to be a perfect example of such a company. Indeed, the upgrade from Zacks was the result of an impressive production report that was perhaps somewhat overlooked as it was released on Valentine’s day.
A Crude Operator
The company revealed that it had begun production from its first well in Loving County, TX, initial testing of which brought up 903 barrels of oil per day, along with another 2.7 million cubic feet of natural gas. Another well in Lea County, NM, was shown to be handily surpassing expectations, and the company is working on more drilling in the area, as well as having finished drilling its first horizontal in Eddy County, TX. In 2014, the company has at least 9 new wells planned in the Permian alone.
But it’s not just the wells, or the performance of the company’s stock that has investors and analysts excited about Matador, as the report from Friday, Feb 14 also indicated a huge increase in the reserves the company is sitting on. Proven oil reserves are up over 50 percent since 2013 to 16 billion barrels, and natural gas reserves nearly tripled to 212 billion cubic feet.
Shares for Matador hit $22.70 heading towards the closing bell, cooling off slightly from the day’s high of $23.25.