Does Matador Resources (MTDR) Increasing Its Borrowing Base Clarify Its Long-Term Capital Allocation Priorities?

• Earlier this month, Matador Resources Company reported that its nineteen commercial lenders unanimously reaffirmed a US$3.25 billion borrowing base under its reserves-based loan credit facility, while commitments under its midstream joint venture San Mateo’s revolving credit facility were increased to US$1.10 billion from US$850 million.
• This broad lender support not only trims Matador’s borrowing costs but also reinforces the scale and importance of its Delaware Basin midstream network.
• We’ll now examine how this expanded borrowing capacity and lower funding costs may influence Matador’s investment narrative and future flexibility.

We've found 13 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Matador Resources Investment Narrative Recap

To own Matador Resources, you need to believe in the long term value of its Delaware Basin drilling and its growing midstream platform. The reaffirmed US$3.25 billion borrowing base and higher San Mateo credit line support near term growth capacity, but do not fundamentally change the key short term catalyst of midstream throughput expansion or the central risk of capital intensity in a weaker commodity price backdrop.

The most relevant recent announcement here is the 29% increase in San Mateo’s revolving credit facility to US$1.10 billion. That extra liquidity can help fund additional gathering and processing buildout, supporting the catalyst of higher fee based midstream volumes, while also amplifying Matador’s exposure to its already concentrated Delaware Basin footprint.

Yet behind the stronger credit lines, investors should be aware of how Matador’s high capital needs could collide with a prolonged period of...

Read the full narrative on Matador Resources (it's free!)

Matador Resources' narrative projects $4.3 billion revenue and $840.5 million earnings by 2028. This requires 7.2% yearly revenue growth and an $12.6 million earnings decrease from $853.1 million today.

Uncover how Matador Resources' forecasts yield a $58.16 fair value, a 42% upside to its current price.

Exploring Other Perspectives

Five Simply Wall St Community fair value views span roughly US$30 to US$139 per share, showing how far apart individual expectations can sit. Set against this, Matador’s heavy Delaware Basin concentration and ongoing capital demands may shape how each of those investors thinks about the company’s resilience and long run earnings power.

Explore 5 other fair value estimates on Matador Resources - why the stock might be worth 27% less than the current price!

Build Your Own Matador Resources Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Matador Resources research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Matador Resources research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Matador Resources' overall financial health at a glance.

Want Some Alternatives?

Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay:

• Trump has pledged to "unleash" American oil and gas and these 22 US stocks have developments that are poised to benefit.
• Rare earth metals are the new gold rush. Find out which 35 stocks are leading the charge.
• Find companies with promising cash flow potential yet trading below their fair value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com