Intrinsic value of Matador Resources - MTDR

Previous Close

$23.83

  Intrinsic Value

$2.49

stock screener

  Rating & Target

str. sell

-90%

Previous close

$23.83

 
Intrinsic value

$2.49

 
Up/down potential

-90%

 
Rating

str. sell

We calculate the intrinsic value of MTDR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  871
  1,345
  2,012
  2,919
  4,119
  5,663
  7,601
  9,980
  12,842
  16,221
  20,143
  24,627
  29,683
  35,317
  41,527
  48,306
  55,644
  63,530
  71,951
  80,895
  90,349
  100,303
  110,751
  121,687
  133,110
  145,022
  157,426
  170,332
  183,752
  197,700
Variable operating expenses, $m
  1,453
  2,246
  3,358
  4,873
  6,875
  9,451
  12,686
  16,657
  21,434
  27,073
  33,618
  41,102
  49,542
  58,945
  69,308
  80,622
  92,870
  106,032
  120,087
  135,013
  150,792
  167,406
  184,844
  203,096
  222,161
  242,041
  262,744
  284,285
  306,682
  329,961
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,453
  2,246
  3,358
  4,873
  6,875
  9,451
  12,686
  16,657
  21,434
  27,073
  33,618
  41,102
  49,542
  58,945
  69,308
  80,622
  92,870
  106,032
  120,087
  135,013
  150,792
  167,406
  184,844
  203,096
  222,161
  242,041
  262,744
  284,285
  306,682
  329,961
Operating income, $m
  -583
  -900
  -1,346
  -1,953
  -2,756
  -3,788
  -5,085
  -6,677
  -8,592
  -10,852
  -13,476
  -16,475
  -19,858
  -23,627
  -27,781
  -32,317
  -37,226
  -42,502
  -48,135
  -54,119
  -60,443
  -67,103
  -74,093
  -81,409
  -89,051
  -97,020
  -105,318
  -113,952
  -122,930
  -132,261
EBITDA, $m
  -297
  -459
  -687
  -996
  -1,406
  -1,933
  -2,594
  -3,407
  -4,383
  -5,537
  -6,875
  -8,406
  -10,132
  -12,055
  -14,174
  -16,488
  -18,993
  -21,685
  -24,559
  -27,611
  -30,838
  -34,236
  -37,802
  -41,535
  -45,434
  -49,500
  -53,734
  -58,139
  -62,719
  -67,480
Interest expense (income), $m
  27
  34
  69
  119
  189
  284
  410
  573
  777
  1,028
  1,329
  1,684
  2,097
  2,569
  3,102
  3,695
  4,348
  5,062
  5,834
  6,665
  7,551
  8,492
  9,488
  10,536
  11,635
  12,787
  13,989
  15,243
  16,549
  17,907
  19,320
Earnings before tax, $m
  -617
  -969
  -1,465
  -2,142
  -3,040
  -4,199
  -5,658
  -7,454
  -9,619
  -12,181
  -15,160
  -18,572
  -22,427
  -26,729
  -31,476
  -36,665
  -42,288
  -48,336
  -54,800
  -61,670
  -68,936
  -76,591
  -84,628
  -93,044
  -101,837
  -111,009
  -120,561
  -130,501
  -140,837
  -151,581
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -617
  -969
  -1,465
  -2,142
  -3,040
  -4,199
  -5,658
  -7,454
  -9,619
  -12,181
  -15,160
  -18,572
  -22,427
  -26,729
  -31,476
  -36,665
  -42,288
  -48,336
  -54,800
  -61,670
  -68,936
  -76,591
  -84,628
  -93,044
  -101,837
  -111,009
  -120,561
  -130,501
  -140,837
  -151,581

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,429
  5,297
  7,922
  11,494
  16,216
  22,294
  29,925
  39,293
  50,561
  63,862
  79,303
  96,955
  116,864
  139,045
  163,492
  190,180
  219,072
  250,119
  283,273
  318,483
  355,703
  394,895
  436,028
  479,084
  524,057
  570,952
  619,788
  670,600
  723,433
  778,345
Adjusted assets (=assets-cash), $m
  3,429
  5,297
  7,922
  11,494
  16,216
  22,294
  29,925
  39,293
  50,561
  63,862
  79,303
  96,955
  116,864
  139,045
  163,492
  190,180
  219,072
  250,119
  283,273
  318,483
  355,703
  394,895
  436,028
  479,084
  524,057
  570,952
  619,788
  670,600
  723,433
  778,345
Revenue / Adjusted assets
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
Average production assets, $m
  2,454
  3,791
  5,670
  8,227
  11,607
  15,957
  21,419
  28,125
  36,190
  45,711
  56,763
  69,398
  83,648
  99,524
  117,023
  136,126
  156,805
  179,028
  202,759
  227,961
  254,603
  282,655
  312,097
  342,915
  375,105
  408,671
  443,627
  479,997
  517,813
  557,118
Working capital, $m
  -180
  -279
  -417
  -604
  -853
  -1,172
  -1,573
  -2,066
  -2,658
  -3,358
  -4,170
  -5,098
  -6,144
  -7,311
  -8,596
  -9,999
  -11,518
  -13,151
  -14,894
  -16,745
  -18,702
  -20,763
  -22,925
  -25,189
  -27,554
  -30,019
  -32,587
  -35,259
  -38,037
  -40,924
Total debt, $m
  1,182
  2,043
  3,253
  4,900
  7,077
  9,879
  13,397
  17,716
  22,910
  29,042
  36,160
  44,298
  53,475
  63,701
  74,971
  87,274
  100,593
  114,906
  130,190
  146,422
  163,581
  181,648
  200,610
  220,459
  241,191
  262,810
  285,324
  308,748
  333,104
  358,419
Total liabilities, $m
  1,581
  2,442
  3,652
  5,299
  7,476
  10,277
  13,795
  18,114
  23,309
  29,441
  36,559
  44,696
  53,874
  64,100
  75,370
  87,673
  100,992
  115,305
  130,589
  146,821
  163,979
  182,047
  201,009
  220,858
  241,590
  263,209
  285,722
  309,147
  333,502
  358,817
Total equity, $m
  1,848
  2,855
  4,270
  6,195
  8,741
  12,016
  16,130
  21,179
  27,252
  34,422
  42,744
  52,259
  62,989
  74,945
  88,122
  102,507
  118,080
  134,814
  152,684
  171,662
  191,724
  212,848
  235,019
  258,226
  282,467
  307,743
  334,066
  361,453
  389,930
  419,528
Total liabilities and equity, $m
  3,429
  5,297
  7,922
  11,494
  16,217
  22,293
  29,925
  39,293
  50,561
  63,863
  79,303
  96,955
  116,863
  139,045
  163,492
  190,180
  219,072
  250,119
  283,273
  318,483
  355,703
  394,895
  436,028
  479,084
  524,057
  570,952
  619,788
  670,600
  723,432
  778,345
Debt-to-equity ratio
  0.640
  0.720
  0.760
  0.790
  0.810
  0.820
  0.830
  0.840
  0.840
  0.840
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
Adjusted equity ratio
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539
  0.539

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -617
  -969
  -1,465
  -2,142
  -3,040
  -4,199
  -5,658
  -7,454
  -9,619
  -12,181
  -15,160
  -18,572
  -22,427
  -26,729
  -31,476
  -36,665
  -42,288
  -48,336
  -54,800
  -61,670
  -68,936
  -76,591
  -84,628
  -93,044
  -101,837
  -111,009
  -120,561
  -130,501
  -140,837
  -151,581
Depreciation, amort., depletion, $m
  285
  441
  659
  957
  1,350
  1,856
  2,491
  3,270
  4,208
  5,315
  6,600
  8,070
  9,726
  11,573
  13,607
  15,829
  18,233
  20,817
  23,577
  26,507
  29,605
  32,867
  36,290
  39,874
  43,617
  47,520
  51,585
  55,814
  60,211
  64,781
Funds from operations, $m
  -331
  -528
  -805
  -1,185
  -1,690
  -2,343
  -3,167
  -4,184
  -5,411
  -6,865
  -8,560
  -10,503
  -12,701
  -15,156
  -17,869
  -20,836
  -24,055
  -27,519
  -31,223
  -35,162
  -39,331
  -43,724
  -48,338
  -53,170
  -58,221
  -63,489
  -68,977
  -74,688
  -80,627
  -86,800
Change in working capital, $m
  -68
  -98
  -138
  -188
  -248
  -320
  -401
  -493
  -592
  -699
  -812
  -928
  -1,047
  -1,166
  -1,285
  -1,403
  -1,519
  -1,632
  -1,743
  -1,851
  -1,957
  -2,061
  -2,163
  -2,264
  -2,365
  -2,466
  -2,568
  -2,672
  -2,778
  -2,887
Cash from operations, $m
  -264
  -430
  -667
  -997
  -1,442
  -2,024
  -2,766
  -3,691
  -4,819
  -6,166
  -7,748
  -9,575
  -11,654
  -13,990
  -16,583
  -19,433
  -22,536
  -25,887
  -29,480
  -33,311
  -37,374
  -41,663
  -46,175
  -50,907
  -55,856
  -61,023
  -66,409
  -72,016
  -77,849
  -83,913
Maintenance CAPEX, $m
  -178
  -285
  -441
  -659
  -957
  -1,350
  -1,856
  -2,491
  -3,270
  -4,208
  -5,315
  -6,600
  -8,070
  -9,726
  -11,573
  -13,607
  -15,829
  -18,233
  -20,817
  -23,577
  -26,507
  -29,605
  -32,867
  -36,290
  -39,874
  -43,617
  -47,520
  -51,585
  -55,814
  -60,211
New CAPEX, $m
  -921
  -1,337
  -1,879
  -2,557
  -3,380
  -4,350
  -5,462
  -6,706
  -8,065
  -9,521
  -11,052
  -12,635
  -14,250
  -15,877
  -17,499
  -19,103
  -20,680
  -22,223
  -23,731
  -25,202
  -26,641
  -28,052
  -29,442
  -30,818
  -32,190
  -33,566
  -34,956
  -36,370
  -37,816
  -39,305
Cash from investing activities, $m
  -1,099
  -1,622
  -2,320
  -3,216
  -4,337
  -5,700
  -7,318
  -9,197
  -11,335
  -13,729
  -16,367
  -19,235
  -22,320
  -25,603
  -29,072
  -32,710
  -36,509
  -40,456
  -44,548
  -48,779
  -53,148
  -57,657
  -62,309
  -67,108
  -72,064
  -77,183
  -82,476
  -87,955
  -93,630
  -99,516
Free cash flow, $m
  -1,363
  -2,052
  -2,987
  -4,214
  -5,779
  -7,723
  -10,084
  -12,887
  -16,154
  -19,895
  -24,115
  -28,810
  -33,974
  -39,593
  -45,655
  -52,143
  -59,044
  -66,343
  -74,028
  -82,090
  -90,522
  -99,320
  -108,484
  -118,015
  -127,920
  -138,206
  -148,885
  -159,970
  -171,478
  -183,429
Issuance/(repayment) of debt, $m
  591
  861
  1,210
  1,647
  2,177
  2,802
  3,518
  4,319
  5,194
  6,132
  7,118
  8,138
  9,178
  10,225
  11,270
  12,303
  13,319
  14,313
  15,284
  16,232
  17,159
  18,067
  18,962
  19,849
  20,732
  21,619
  22,514
  23,424
  24,356
  25,315
Issuance/(repurchase) of shares, $m
  1,308
  1,976
  2,879
  4,067
  5,585
  7,475
  9,771
  12,504
  15,692
  19,350
  23,482
  28,087
  33,158
  38,684
  44,653
  51,050
  57,860
  65,071
  72,670
  80,648
  88,997
  97,715
  106,799
  116,252
  126,078
  136,285
  146,884
  157,889
  169,314
  181,179
Cash from financing (excl. dividends), $m  
  1,899
  2,837
  4,089
  5,714
  7,762
  10,277
  13,289
  16,823
  20,886
  25,482
  30,600
  36,225
  42,336
  48,909
  55,923
  63,353
  71,179
  79,384
  87,954
  96,880
  106,156
  115,782
  125,761
  136,101
  146,810
  157,904
  169,398
  181,313
  193,670
  206,494
Total cash flow (excl. dividends), $m
  536
  785
  1,102
  1,500
  1,984
  2,553
  3,205
  3,935
  4,733
  5,587
  6,485
  7,415
  8,362
  9,317
  10,269
  11,210
  12,135
  13,041
  13,926
  14,789
  15,634
  16,462
  17,277
  18,085
  18,890
  19,698
  20,513
  21,343
  22,192
  23,065
Retained Cash Flow (-), $m
  -1,308
  -1,976
  -2,879
  -4,067
  -5,585
  -7,475
  -9,771
  -12,504
  -15,692
  -19,350
  -23,482
  -28,087
  -33,158
  -38,684
  -44,653
  -51,050
  -57,860
  -65,071
  -72,670
  -80,648
  -88,997
  -97,715
  -106,799
  -116,252
  -126,078
  -136,285
  -146,884
  -157,889
  -169,314
  -181,179
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -772
  -1,191
  -1,777
  -2,567
  -3,602
  -4,922
  -6,566
  -8,568
  -10,960
  -13,763
  -16,997
  -20,672
  -24,796
  -29,368
  -34,384
  -39,840
  -45,725
  -52,030
  -58,744
  -65,858
  -73,364
  -81,253
  -89,521
  -98,166
  -107,188
  -116,587
  -126,371
  -136,546
  -147,123
  -158,114
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -740
  -1,090
  -1,546
  -2,114
  -2,792
  -3,572
  -4,436
  -5,355
  -6,296
  -7,215
  -8,072
  -8,822
  -9,428
  -9,859
  -10,095
  -10,124
  -9,949
  -9,582
  -9,045
  -8,369
  -7,588
  -6,742
  -5,867
  -5,000
  -4,170
  -3,401
  -2,712
  -2,113
  -1,606
  -1,191
Current shareholders' claim on cash, %
  67.9
  47.0
  33.1
  23.7
  17.2
  12.7
  9.5
  7.2
  5.5
  4.2
  3.3
  2.6
  2.0
  1.6
  1.3
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1

Matador Resources Company is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company's segments include exploration and production, and midstream. The Company's operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, the Company conducts midstream operations primarily, as of February 17, 2017, through its midstream joint venture, San Mateo Midstream, LLC (San Mateo or the Joint Venture).

FINANCIAL RATIOS  of  Matador Resources (MTDR)

Valuation Ratios
P/E Ratio -24.4
Price to Sales 9.3
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 17.7
Price to Free Cash Flow -7.4
Growth Rates
Sales Growth Rate 5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 83.2%
Total Debt to Equity 83.2%
Interest Coverage -3
Management Effectiveness
Return On Assets -5.4%
Ret/ On Assets - 3 Yr. Avg. -15.8%
Return On Total Capital -9.1%
Ret/ On T. Cap. - 3 Yr. Avg. -21%
Return On Equity -16.5%
Return On Equity - 3 Yr. Avg. -33.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 59.2%
Gross Margin - 3 Yr. Avg. 66.8%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. -56.1%
Operating Margin -69.4%
Oper. Margin - 3 Yr. Avg. -120.7%
Pre-Tax Margin -38.4%
Pre-Tax Margin - 3 Yr. Avg. -113.5%
Net Profit Margin -38%
Net Profit Margin - 3 Yr. Avg. -98%
Effective Tax Rate 1%
Eff/ Tax Rate - 3 Yr. Avg. 18.5%
Payout Ratio 0%

MTDR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTDR stock intrinsic value calculation we used $544.276 million for the last fiscal year's total revenue generated by Matador Resources. The default revenue input number comes from 0001 income statement of Matador Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MTDR stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MTDR is calculated based on our internal credit rating of Matador Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Matador Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MTDR stock the variable cost ratio is equal to 166.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MTDR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Matador Resources.

Corporate tax rate of 27% is the nominal tax rate for Matador Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MTDR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MTDR are equal to 281.8%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Matador Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MTDR is equal to -20.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1156.556 million for Matador Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 116.365 million for Matador Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Matador Resources at the current share price and the inputted number of shares is $2.8 billion.

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COMPANY NEWS

▶ Matador: 3Q Earnings Snapshot   [04:58PM  Associated Press]
▶ EOG Resources Beats Earnings, Revenue Views; Dividend Hiked 19%   [Aug-02-18 04:30PM  Investor's Business Daily]
▶ Matador: 2Q Earnings Snapshot   [06:45PM  Associated Press]
▶ Crude Moves Past its Headwinds   [Jun-27-18 12:54PM  InvestorPlace]
▶ 6 Lagging Oil Stocks Ready to Rebound   [Jun-25-18 06:00AM  Investopedia]
▶ Closing Bell Ringer: May 25, 2018   [May-25-18 04:00PM  CNBC Videos]
▶ Matador: 1Q Earnings Snapshot   [May-02-18 05:51PM  Associated Press]
▶ Earnings Watch: Call Options Could Make Sense For FireEye, BP, Marathon Oil   [Apr-30-18 05:55PM  Investor's Business Daily]
▶ Stock Chart: Is This Oil & Gas Stock Ready For A Run-Up?   [Apr-25-18 01:07PM  Investor's Business Daily]
▶ Bank Stocks Break Out On 3% Benchmark Yield; Oil Stocks Also At New Highs   [Apr-24-18 01:04PM  Investor's Business Daily]
▶ Matador Resources Company to Host Earnings Call   [Feb-22-18 08:10AM  ACCESSWIRE]
▶ Matador tops Street 4Q forecasts   [Feb-21-18 05:09PM  Associated Press]
▶ Matador Resources Company Announces Upcoming Company Events   [Feb-14-18 06:30AM  Business Wire]
▶ How Our Top 5 Upstream Stocks Performed in 2017   [Jan-10-18 11:10AM  Market Realist]

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