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Matador Resources to Fund Delaware Buyout With Stock Offering


Matador Resources Company MTDR expects gross proceeds from the offering of 7,000,000 stocks to be around $229.3 million. The stocks have been priced by the company and the offering will likely conclude on May 17.

Net proceeds from the offering is expected to be utilized by Matador Resources for financing the purchase of Delaware Basin acres and normal corporate activities. The company will likely allocate part of the proceeds for the Basin’s midstream operations. The remaining proceeds, if any, are expected to be used to clear debt under revolving credit facility.

For acquiring acres near the Delaware Basin’s current foothold, Matador Resources spent roughly $30 million since the beginning of 2018. Over the first four months of 2018, the company made acquisitions of net 3,500 mineral acres.

Developments in this front will likely boost Matador Resources’ oil production further. This is highly favorable for the company’s upstream businesses given crude price is in the bullish territory. The West Texas Intermediate crude recently crossed the $70 per barrel psychological mark after President Trump announced that the United States will pull out of the Iran nuclear deal.

Headquartered in Dallas, TX, Matador Resources is primarily an upstream energy player with prime focus on shale and unconventional resources. The stock rallied 42.4% over the past year, outperforming the industry’s 9.5% growth.

The stock currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are BP plc BP, WildHorse Resource Development Corporation WRD and W&T Offshore, Inc. WTI. BP and WildHorse sport a Zacks Rank #1 (Strong Buy), while W&T Offshore carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BP managed to beat the Zacks Consensus Estimate in three of the last four quarters.

WildHorse is expected to see year-over-year earnings growth of 288.4% in 2018.

W&T Offshore will likely witness earnings growth of 7.1% in 2018.

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