Investors will soon have another exploration and production company to choose from when deciding where to invest in the energy sector, as Matador Resources (Nasdaq:MTDR) has recently filed for an initial public offering.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Matador Resources
Matador Resources has approximately 210,000 net acres under lease, and reported average daily production of 49.1 million cubic feet of natural gas equivalents as of May 2011. The company estimates that it has 154.8 Bcfe of proved reserves at the end of the first quarter of 2011.

Matador Resources is active mostly in East Texas and Northern Louisiana, where the company is developing both the Haynesville Shale and Cotton Valley formations. The company is also ramping up the development of the Eagle Ford Shale in South Texas.

Matador Resources also has prospective oil and gas acreage in Utah, Wyoming, Utah and the Permian Basin and hopes to find new sources of oil and gas here.

Haynesville Shale
Matador Resources has 15,000 net acres prospective for the Haynesville Shale and estimates that 90% of its acreage is held by production. This means that Matador Resources is not under any short-term pressure to drill. The company also has exposure to the Cotton Valley, Travis Peak and Bossier Shale plays on its leasehold. The majority of the company's production and proved reserves are from the Haynesville Shale.

Eagle Ford Shale
Matador Resources has 29,000 net acres spread across several counties in South Texas that is prospective for the Eagle Ford Shale. The company estimates that 85% of its leasehold is in the oil and liquids part of the play and 80% is either held by production or leased through 2013. Some of the acreage also has exposure to other plays including the Austin Chalk and Buda Lime formations.

Meade Peak Shale
Matador Resources is also evaluating the Meade Peak natural gas shale on its acreage in Wyoming. The company started drilling a well in February 2011 and plans to finish up in September 2011 once environmental restrictions are lifted.

The Meade Peak formation has been the source rock for many of the conventional oil and gas reservoirs in the area and Matador Resources is attempting to see if oil and gas can be produced from the formation itself.

Matador Resources has approximately 136,000 net acres under lease here and is partnering with a private oil and gas company to explore and develop this formation.

One interesting item regarding the Meade Peak Shale is that an affiliate of Alliance Bernstein Holding L.P. (NYSE:AB) is paying for the cost of the first well, and after an examination of data from this well, has the option of buying up to a 50% interest in all the leases in the prospect.

Capital Expenditures
Matador Resources plans to increase its capital budget in 2012 to explore and develop its oil and gas properties. The company plans to spend $231 million in 2012, up from $149 million in 2011. The majority of this capital will be spent in the Eagle Ford Shale area.

Partners
Matador Resources has acted as the operator on 49% of its wells and has also partnered with some of the largest and most experienced operators in the business, including EOG Resources (NYSE:EOG), Royal Dutch Shell (NYSE:RDS) and Chesapeake Energy (NYSE:CHK).

The Bottom Line
The market loves the energy sector and has an almost insatiable demand for investment opportunities in this area. This provides easy access to the capital markets for a number of fast-growing private operators. (For additional reading, take a look at What Determines Oil Prices?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
  2. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  3. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  4. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  5. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  6. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  7. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  8. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  9. Investing

    Don't Freak Out Over Black Swans; Be Prepared

    Could 2016 be a big year for black swans? Who knows? Here's what black swans are, how they can devastate the unprepared, and how the prepared can emerge unscathed.
  10. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
RELATED FAQS
  1. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  2. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  3. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  4. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  5. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  6. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center