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Is Matador Ready for a Bull Run?

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Judging by midstream data, East Daley Analytics expects Matador Resources (MTDR) to report robust gas production growth Q-o-Q in its upcoming 4Q23 earnings release. Volumes have surged and nearly filled capacity on the producer’s G&P assets in the Delaware Basin, according to plant data in Energy Data Studio.

Matador is an independent producer moonlighting as a midstream operator. The company is a joint-venture partner in San Mateo Midstream and in 2022 acquired the Lane G&P system (renamed Pronto Midstream) from Summit Midstream (SMLP).

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Understanding the midstream infrastructure can provide unique insight into upstream assets. In the case of Matadaor, its G&P systems saw volumes increase 7.3% from 3Q23 to 4Q23, plant inlet data in EDA’s Energy Data Studio show. The systems in West Texas and New Mexico have a combined processing capacity of 520 MMcf/d and ran close to full utilization in 4Q23 (see figure).

Matador isn’t the only producer behind the G&P assets, with Occidental Petroleum (OXY), ExxonMobil (XOM) and Permian Resources (PR) also feeding raw gas through MTDR’s plants. But MTDR accounts for more than half of all volumes processed by its own plants. Volumes and producers backing San Mateo Midstream are shown from the “G&P System Analysis” dashboard in Energy Data Studio.

MTDR will report 4Q23 earnings Tuesday (February 20). With its G&P systems nearing 100% utilization, the producer could even provide specifics on potential midstream expansions. Our data suggests MTDR must either offload some volumes to third parties or plan to expand its systems, especially if the producer wants to maintain the pace of growth. MTDR is currently running 5 rigs on its G&P assets and shows no sign of slowing down. – Rob Wilson, CFA and Maria Paz Urdaneta Tickers: MTDR, OXY, SMLP, XOM.




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