Breaking Down Matador Resources Company (MTDR) Financial Health: Key Insights for Investors

You're looking at Matador Resources Company (MTDR) right now and asking if the operational momentum is truly translating into shareholder value, and honestly, the third-quarter numbers for 2025 give us a clear answer: yes, but with a capital expenditure caveat you need to factor in immediately. The company is firing on all cylinders in the Delaware Basin, hitting a record 209,184 barrels of oil equivalent (BOE) per day in Q3, which is a massive signal of execution efficiency.

Still, you need to watch the capital deployment closely. While Matador delivered a net income of $176 million and $93 million in adjusted free cash flow for the quarter, they also raised their full-year 2025 capital expenditure (CapEx) guidance to a range of $1.47 to $1.55 billion to accelerate drilling-that's a significant forward investment. Plus, they're committed to returning capital, with the annual dividend now at $1.50 per share, which is a nice 20% bump. We need to break down how this accelerated spending, coupled with a realized Q3 oil price of $64.91 per barrel, maps to your near-term investment decision, so let's dive into the details.

Revenue Analysis

You need to know where the money is coming from to truly assess Matador Resources Company (MTDR), and the picture is clear: it's an integrated energy play, but the upstream business is the massive engine. For the trailing twelve months (TTM) ending September 30, 2025, Matador Resources Company generated approximately $3.82 billion in total revenue. That's a solid number, reflecting a year-over-year growth rate of about 13.29%. That kind of double-digit growth tells us the company is defintely executing on its production strategy.

The company's revenue streams break down into two key segments: the core Exploration and Production (E&P), which we call Upstream, and the infrastructure business, the Midstream segment, run through its subsidiary, San Mateo Midstream. The Upstream segment, selling oil and natural gas, is the dominant driver. In the third quarter of 2025 alone, oil and natural gas revenues were $810.2 million, showing a 5.2% increase from the same period last year. The Midstream segment is smaller but critical for operational efficiency.

Here's the quick math on the segment contribution for Q3 2025, which gives you the most current view of the business mix:

• Upstream Revenue (Oil & Natural Gas Sales): $810.2 million
• Total Revenue: $939.0 million
• Implied Midstream/Other Revenue: $128.8 million (13.7% of total revenue)

While the Upstream segment is the main cash generator, the Midstream business provides a crucial stability layer. Matador Resources Company owns 51% of San Mateo Midstream, and that asset is growing. For instance, San Mateo Midstream's Adjusted EBITDA is anticipated to be between $285 million to $295 million for the full year 2025. That's a significant, predictable cash flow stream that helps buffer the volatility of pure commodity prices.

A major change in the revenue structure came from strategic moves like the Ameredev acquisition in late 2024, which bolstered their production base. Also, the expansion of the Marlan Plant for San Mateo Midstream in Q2 2025 increased natural gas processing capacity by 38%, up to 720 million cubic feet of natural gas per day (MMcf/d). This expansion is a direct investment into the midstream segment, ensuring future production can be processed and sold efficiently, which directly supports the Upstream revenue growth. You can see how this all ties into the company's long-term strategy in their Mission Statement, Vision, & Core Values of Matador Resources Company (MTDR).

What this estimate hides is the commodity price risk. The revenue growth is impressive, but if oil and gas prices drop, even record production (like the 209,184 barrels of oil equivalent per day achieved in Q3 2025) won't translate to the same top-line figure. Still, the growth in the midstream segment provides a valuable hedge against that E&P volatility.

Profitability Metrics

You need to know if Matador Resources Company (MTDR) is making money efficiently, and the quick answer is yes, but the trend is a headwind. The company's profitability margins are substantially higher than the industry average, which is a clear sign of superior operational execution, but they are contracting from recent highs.

Looking at the trailing twelve months (TTM) through November 2025, Matador's margins show a strong core business. The TTM Operating Margin is a solid 32.94%, which is the true measure of core business efficiency, showing how much profit is generated before accounting for interest and taxes. This performance is notably strong against peers like EOG Resources, which has an Operating Margin around 35.15%, and Chesapeake Energy at approximately 40.09% in the highly competitive Oil & Gas Exploration and Production (E&P) sector. Matador's integrated midstream business, San Mateo, helps here, providing flow assurance and cost control that most pure-play E&P companies lack.

The Gross Profit Margin (GPM) is the first line of defense, showing revenue minus the direct costs of production. While the exact 2025 fiscal year GPM is not yet finalized, the company's historical performance suggests an exceptional figure, with a 2024 calculated GPM near 82.3%. This is far above the Oil & Gas E&P industry average GPM of 61.3% as of November 2025. Honestly, that spread tells you Matador has a cost-of-production advantage, defintely in the Delaware Basin.

The Net Profit Margin, which is the final takeaway, confirms the trend. Matador's TTM Net Profit Margin as of October 2025 was approximately 22%. That is more than double the industry average Net Profit Margin of just 9.5%, illustrating a powerful competitive edge. But, this margin has compressed from 29.9% a year ago, reflecting softer commodity realizations and higher capital spending, a near-term risk you must track.

Here's a quick snapshot of the key profitability ratios, mapping Matador's current TTM performance against the sector average:

Operational efficiency is the engine driving this outperformance. In the first quarter of 2025, drilling and completion costs decreased to $880 per completed lateral foot, a 3% drop from the prior year. Plus, management successfully achieved capital expenditure savings of between $50 million and $60 million, primarily by optimizing drilling programs. This is how you sustain high margins even as market prices fluctuate. The Q3 2025 results showed net income of $176 million on revenue of $915.12 million, resulting in a quarterly Net Margin of 20.46%, confirming the margin compression is a current reality, not just a historical note. You can dive deeper into the full financial health analysis by reading the full post: Breaking Down Matador Resources Company (MTDR) Financial Health: Key Insights for Investors.

• Monitor the Net Profit Margin trend; its decline is a flag.
• The high Operating Margin validates the business model's efficiency.
• Operational cost savings are actively mitigating margin pressure.

Debt vs. Equity Structure

You're looking at Matador Resources Company (MTDR) and wondering how they pay for their aggressive growth in the Delaware Basin. The direct takeaway is that Matador is managing its debt load very conservatively, moving capital away from debt reduction and toward shareholders. Their balance sheet is strong, with a low debt-to-equity ratio that gives them significant financial flexibility.

As of the third quarter of 2025, Matador Resources Company reports total debt of approximately $3.22 Billion, with long-term debt making up the vast majority of this figure at $3.220 Billion. This debt is primarily composed of their senior unsecured notes and their Reserves-Based Loan (RBL) facility. Against this, the company's total equity (Equity Capital and Reserves) stands at a robust $5.51 Billion. That's a solid foundation.

Here's the quick math: Matador's debt-to-equity (D/E) ratio is currently around 0.55 to 0.57. This is a defintely healthy figure for an exploration and production (E&P) company, especially one focused on development. It means for every dollar of shareholder equity, the company uses only about 55 to 57 cents of debt. This low leverage is a key differentiator in the energy sector, where the D/E ratio can often climb well over 1.0x, indicating a much higher reliance on borrowing.

The company's focus on deleveraging has been clear throughout 2025. They've successfully paid down $311 million in borrowings under their RBL during the first nine months of the year, reducing the RBL balance to just $285 million by September 30, 2025. This proactive debt reduction, which has lowered gross debt by over $700 million since the Ameredev acquisition in late 2024, is what the rating agencies love.

This debt management success led to a major positive signal from the credit markets in May 2025, when Fitch Ratings upgraded Matador's Long-Term Issuer Default Ratings (IDRs) from 'BB-' to 'BB', maintaining a Stable Outlook. Fitch specifically noted the company's successful debt reduction and anticipated positive Free Cash Flow (FCF) generation. This upgrade is a direct result of their conservative financial policy, which keeps their debt-to-EBITDA leverage ratio under a comfortable 1.0x.

Matador's financing strategy is clearly shifting from a debt-heavy growth phase to a capital-return phase. With low leverage and approximately $2 billion in available liquidity under their RBL as of Q3 2025, they have ample room to maneuver. Instead of prioritizing debt financing, they are now focused on equity funding's opposite: returning capital to shareholders.

• Announced a $400 million share repurchase program in Q1 2025.
• Repurchased 1.3 million shares for about $55 million by October 2025.
• Increased the quarterly dividend to $0.375 per share, an annualized yield of about 3.6%.

This balancing act-maintaining a low debt profile while increasing shareholder payouts-shows a mature, cash-generative business model. If you want to dig deeper into who is buying the stock, check out Exploring Matador Resources Company (MTDR) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Matador Resources Company (MTDR) has the cash to cover its near-term obligations, and the quick answer is yes, despite a technical working capital deficit. The company's liquidity is robust, driven by exceptional operating cash flow and a large, untapped credit facility, which is a common structure for high-growth exploration and production (E&P) companies.

As of September 30, 2025, Matador Resources Company's current ratio (Current Assets divided by Current Liabilities) stands at approximately 0.73 ($916.8 million / $1.257 billion). A ratio below 1.0 is technically a liquidity concern, meaning current liabilities exceed current assets. However, for a major E&P player, this is often a structural reality, not a crisis, because they manage their day-to-day liquidity via cash flow and credit lines, not a large cash hoard.

The quick ratio (or acid-test ratio), which excludes inventory, is also likely below 1.0, but the company's true, immediate liquidity picture is much stronger. They have nearly $2 billion in available liquidity under their revolving credit facility (RBL) as of Q3 2025. This massive liquidity cushion means they can defintely cover any short-term funding gaps.

Working Capital and Cash Flow Trends

The working capital position-Current Assets minus Current Liabilities-is a deficit of about $340.35 million as of Q3 2025. However, the trend in working capital changes is positive, contributing $123 million to their cash flow in the third quarter alone, which helped fund debt paydown.

The cash flow statement is where Matador Resources Company truly shines, showing their ability to generate internal capital. This is the engine that makes their balance sheet structure work:

• Operating Cash Flow (OCF): Net cash from operations surged to $722 million in Q3 2025, a 44% jump from the prior quarter. This is a huge number that covers their capital needs.
• Investing Cash Flow: This is a major outflow, as expected for a growth-focused E&P company. Drilling, completion, and equipping (D/C/E) capital expenditures (CAPEX) were $430 million in Q3 2025, and the full-year 2025 guidance is a hefty $1.47 billion to $1.55 billion. This high investment is for future production.
• Financing Cash Flow: The company is actively deleveraging and rewarding shareholders. They paid down $105 million of their RBL in Q3 2025, reducing the balance to $285 million. Plus, they increased the annual dividend to $1.50 per share.

Here's the quick math on their Q3 2025 capital allocation:

Liquidity Strengths and Risks

The company's liquidity strength is not in its cash-on-hand, but in its ability to generate cash and its access to capital. The debt-to-EBITDA leverage ratio is well under 1.0x-some reports cite it as low as 0.4-which is excellent for a capital-intensive business. They paid down $311 million in RBL debt in the first nine months of 2025, demonstrating financial discipline.

The primary liquidity risk for Matador Resources Company is commodity price volatility. While their operational efficiency is high, a sharp, sustained drop in oil and natural gas prices-like the negative Waha gas pricing that forced some production curtailments-could quickly reduce that strong operating cash flow. For more on the strategic direction that supports this financial model, you should review the Mission Statement, Vision, & Core Values of Matador Resources Company (MTDR).

Valuation Analysis

Matador Resources Company (MTDR) currently appears to be an attractively valued stock, leaning toward the undervalued side based on traditional metrics, especially when you look at its low Enterprise Value-to-EBITDA (EV/EBITDA) and Price-to-Book (P/B) ratios as of late 2025.

You're seeing an energy stock that has pulled back significantly in the last year, but its underlying earnings and cash flow multiples suggest the market is defintely not giving it full credit for its operational strength. This disconnect between price and fundamentals is where a real opportunity lies, but you must understand the near-term price risk first.

Is Matador Resources Company (MTDR) Overvalued or Undervalued?

To gauge the valuation, we look at three core multiples. The Price-to-Earnings (P/E) ratio, which compares the stock price to its earnings per share, is estimated at a low 6.81 for the 2025 fiscal year. This is cheap compared to the broader market, which often trades in the high teens or twenties.

More compellingly, the Price-to-Book (P/B) ratio sits at just 0.90. A P/B below 1.0 means the stock is trading for less than the value of its net assets (equity), which is a classic indicator of undervaluation. Also, the Enterprise Value-to-EBITDA (EV/EBITDA), which is a better metric for capital-intensive energy companies because it accounts for debt, is a low 3.29 as of November 2025. Here's the quick math on why that's a strong signal:

Stock Performance and Analyst Consensus

The stock price trend over the last 12 months tells a story of market skepticism, or perhaps just a sector rotation. Matador Resources Company's stock price has decreased 28.03% over the last year, with a 52-week range between a low of $35.19 and a high of $64.05. This decline is what has pushed the valuation multiples so low.

But the analysts who cover the stock see a clear path back up. The consensus rating from analysts is a strong Buy. The average price target is around $62.79, which implies a significant upside from the current price in the low $40s. That's a massive potential return if the company can execute on its production guidance, which they've been good at. You can dig deeper into the institutional interest by Exploring Matador Resources Company (MTDR) Investor Profile: Who's Buying and Why?

Dividend Health and Payout

The dividend profile for Matador Resources Company is another positive sign of financial health. The company pays an annual dividend of approximately $1.50 per share, which translates to a current dividend yield of about 3.62%.

The key here is the dividend payout ratio, which is a very sustainable 21.02%. This low figure means the company is paying out only a small fraction of its earnings as dividends, retaining the vast majority of cash flow for reinvestment in its Permian Basin assets or for debt reduction. It's a sign of a well-managed balance between returning capital to shareholders and funding future growth. A low payout ratio means the dividend is safe.

Next Step: Model a sensitivity analysis on Matador Resources Company's discounted cash flow (DCF) valuation using an oil price range of $70-$90 per barrel to quantify the upside potential to the analyst consensus target.

Risk Factors

You're looking at Matador Resources Company (MTDR) and seeing record production, but the market's reaction-like the stock dropping 8.77% after the Q3 2025 revenue miss-tells you the external risks are still the dominant driver. The core challenge for Matador, despite its operational excellence, remains the brutal volatility of commodity prices and the concentrated nature of its operations. It's a classic energy sector trade-off: high-quality assets, but an unpredictable pricing environment.

External Risks: The Commodity Price Headwind

The biggest threat is always the price of oil and natural gas. In the third quarter of 2025, Matador's oil and natural gas revenues climbed to $810.2 million, but this still missed analyst forecasts by a significant margin, showing how much pricing power has softened. We saw this risk play out concretely in October 2025 when Waha natural gas prices turned negative, forcing the company to voluntarily curtail approximately 0.9 billion cubic feet of natural gas and 45,000 barrels of oil production to avoid a loss. That's a direct hit to cash flow, even if it's a smart operational move. Plus, there's the looming concern of oil oversupply in 2026, which could keep prices suppressed.

The competition in the Permian Basin, specifically the Delaware Basin where Matador has over 200,000 net acres, is fierce. Matador has to continuously innovate just to hold its ground against larger players. The regulatory environment, while stable for now, is an ever-present risk; any new federal or state-level rule on flaring or methane emissions could necessitate a sudden, costly capital adjustment. You can't control the price, so you have to control the cost.

Internal and Operational Pressures

The Q3 2025 financials show the impact of these external forces on the bottom line. Net income attributable to shareholders dropped to $176.4 million in Q3 2025 from $248.3 million in the prior-year quarter, a clear sign of margin compression despite record production of 209,184 BOE per day. Another operational risk is the slight decrease in well productivity on a per lateral foot basis compared to last year, which bears defintely watching, even if it's in line with historical averages. Here's the quick math on their financial flexibility:

What this estimate hides is the strategic risk of increased capital expenditure (capex). Matador accelerated its development activity, resulting in a roughly $250 million increase in its 2025 capex budget at the midpoint. This spending is a bet on 2026 production, and while it shows confidence, it slightly increases near-term balance sheet risk, as one analyst noted. It's a calculated risk, but a risk nonetheless.

Mitigation Strategies and Clear Actions

Matador's management is not passive; their strategy is built around mitigating these very risks. The most critical mitigation is their integrated midstream segment, San Mateo Midstream, which is largely fee-based revenue, making it a natural hedge against commodity price swings. This segment is expected to generate $30 million to $40 million in EBITDA in 2025. They also actively use financial hedging, specifically having hedged their 2026 gas production to protect against a repeat of that negative Waha pricing event.

Operationally, they've demonstrated flexibility by reducing their drilling rig count from nine to eight earlier in 2025, and they are driving down drilling and completion (D&C) costs per completed lateral foot, revising the full-year 2025 guidance down to a range of $835 to $855. Finally, the long-term solution for the Permian gas takeaway issue-the new long-haul pipeline capacity-is expected to come online in 2026, which should alleviate the Waha pricing pressure. This is a crucial external fix. If you want to dive deeper into the full financial picture, check out the main post: Breaking Down Matador Resources Company (MTDR) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path to growth in the energy sector, and with Matador Resources Company (MTDR), it boils down to two things: smart acquisitions and relentless capital efficiency. The company's strategic moves in the Delaware Basin are translating directly into strong 2025 financial projections, which is exactly what you want to see. Honestly, they've done a great job integrating their recent purchases.

The biggest driver for 2025 is the full-year impact of the Ameredev II acquisition, which closed in late 2024. This deal expanded Matador Resources Company's core acreage in the Delaware Basin to over 190,000 net acres, giving them approximately 2,000 net locations for future drilling, which provides a 10-to-15-year inventory. This immediately boosted production and is the foundation for their projected revenue growth, which is expected to be around $3.957 billion for the full 2025 fiscal year, assuming a WTI oil price of $71 to $72 per barrel.

Here's the quick math on their operational ramp-up:

• Oil Production: Expected to average 122,000 barrels of oil per day (Bbl/d) for full-year 2025, a 22% year-over-year increase.
• Total Production: Full-year guidance was recently raised to a range of 205,500 to 206,500 BOE per day.
• Capital Expenditure: Drilling, Completing, and Equipping (D/C/E) capital expenditures are projected in the $1.47 to $1.55 billion range for 2025.

Matador Resources Company's competitive advantage is its vertical integration-owning both the upstream drilling and the midstream processing assets through its 51% stake in San Mateo Midstream. This helps control costs and ensures product gets to market. Plus, the midstream business is growing, with the Marlan Plant expansion completed in the second quarter of 2025, increasing natural gas processing capacity by 38% to 720 million cubic feet of natural gas per day (MMcf/d).

The company is also laser-focused on efficiency, which is a defintely necessary trend in the energy space. They anticipate a roughly 3% decrease in drilling and completion (D&C) costs per completed lateral foot in 2025 compared to 2024. This is achieved through product innovations like the expanded use of 'Trimul-Frac' operations, which are expected to account for approximately 35% of 2025 completions, up from just 15% in 2024.

This operational discipline is translating into significant cash generation. For the 2025 fiscal year, Matador Resources Company is projected to generate roughly $1.1 billion in free cash flow (FCF), which is over $8.50 per share. This strong FCF is what allows them to comfortably increase their base dividend, which was raised to an annualized rate of $1.50 per share as of October 2025.

For a deeper dive into the valuation and risks, you should check out the full post at Breaking Down Matador Resources Company (MTDR) Financial Health: Key Insights for Investors. For now, here is a quick summary of the key financial projections for 2025:

Next Step: Evaluate the sustainability of their capital efficiency gains against potential commodity price volatility.