# Matador Resources Company (MTDR) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-28  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/MTDR/thesis · /stocks/MTDR/memo

## Financial Snapshot

---
step: 04
title: Financial Snapshot & Quality
ticker: MTDR
source: coverage-next-full
date: 2026-05-28
---

### Step 04 — Financial Snapshot & Quality

#### Key Findings
MTDR's financial profile is that of a well-run, capital-intensive mid-cycle E&P: 66% EBITDA margins through the cycle, $2.4B operating cash flow in 2025, and a post-acquisition leverage ratio of 1.4x Net Debt/EBITDA that is actively trending toward the company's <1.0x target. Earnings quality is high — operating cash flow consistently exceeds GAAP net income (OCF was 3.2x net income in 2025 due to large non-cash DD&A), and SBC is negligible ($18M vs. $759M net income). Key financial risks are: (1) the acquisition-cycle capex spike ($1.84B in 2025) that compresses near-term FCF; (2) commodity price sensitivity on both the income statement and balance sheet (proved reserve PV-10 is correlated to oil price); and (3) the rising debt load from $1.16B (2022) to $3.4B (2025) — a structural consequence of the M&A-funded growth strategy. Paydown trajectory ($350M+ in 2025) signals management commitment to deleveraging [S1][S6].

#### Implications for Thesis and Valuation
- **OCF quality** is strong: non-cash DD&A ($1.2B in 2025) is the primary gap between reported EBITDA and net income; cash-settled hedges align reported cash flows with economic reality [S6].
- **Capex cycle peak** appears to be 2024-2025 post-Ameredev; 2026E capex reaffirmed at $1.5-1.7B vs. $1.84B in 2025 — implies FCF expansion even at flat oil prices [S4].
- **Balance sheet risk** is the primary bear concern: $3.4B LT debt + $0.015B cash = ~$3.39B net debt. At $55 WTI, EBITDA could compress to ~$1.8-1.9B, pushing ND/EBITDA toward 1.8-2.0x. Not distress territory but limits capital return upside.
- **Goodwill / intangibles** are immaterial — E&P accounting uses proved properties / PP&E, not goodwill. Acquisition step-ups show in higher DD&A, not goodwill impairment risk.

#### Objective
Assess MTDR's earnings quality, balance sheet health, cash generation, and through-cycle financial stability. Identify any accounting quality concerns or financial surprises that could affect valuation.

#### Narrative Analysis

**Income Statement Quality.**

MTDR's income statement reflects two structural features of E&P accounting:

1. *DD&A (Depletion, Depreciation & Amortization)* is the dominant non-cash expense — $1.2B in 2025 on a $3.66B revenue base. This drives a wide gap between operating income ($1.23B, 33.5% margin) and EBITDA ($2.42B, 66.2% margin). DD&A is a legitimate proxy for capital consumption — it represents the exhaustion of proved reserves on a unit-of-production basis. The step-up post-Ameredev (2024-2025) has elevated DD&A temporarily; as the acquired assets are optimized (longer laterals, improved F&D), per-BOE DD&A should decline.

2. *Effective tax rate* is variable (10-16%) because of the complex interaction of depletion allowances, Section 199A deductions, and deferred taxes on property basis. The 16.7% effective rate in 2025 (vs. 23.1% in 2024) reflects higher depletion-related deductions on the larger asset base.

**Cash Flow Quality.**

| FY | OCF | Capex | FCF | FCF Margin | Net Income | OCF/NI Ratio |
|----|----:|------:|----:|-----------:|-----------:|-------------:|
| 2021 | 1,053 | (495) | 558 | 30% | 585 | 1.8x |
| 2022 | 1,979 | (853) | 1,126 | 35% | 1,214 | 1.6x |
| 2023 | 1,868 | (1,362) | 506 | 18% | 846 | 2.2x |
| 2024 | 2,247 | (1,512) | 734 | 21% | 885 | 2.5x |
| 2025 | 2,425 | (1,844) | 581 | 16% | 759 | 3.2x |

OCF/NI ratio of 3.2x in 2025 reflects the scale of DD&A relative to earnings — this is expected and confirms earnings quality rather than signaling manipulation. Working capital swings are modest. No off-balance-sheet financing identified.

**Balance Sheet Analysis.**

| FY | Cash | LT Debt | Net Debt | Total Assets | Equity | ND/EBITDA |
|----|-----:|--------:|--------:|-------------:|-------:|----------:|
| 2022 | 505 | 1,160 | 655 | 5,555 | 3,317 | 0.29x |
| 2023 | 53 | 2,207 | 2,154 | 7,727 | 4,128 | 1.12x |
| 2024 | 23 | 3,325 | 3,302 | 10,850 | 5,457 | 1.37x |
| 2025 | 15 | 3,402 | 3,387 | 11,711 | 5,997 | 1.40x |

The leverage trajectory shows the clear impact of M&A: each acquisition was funded with debt, raising ND/EBITDA from 0.29x post-2022 (when the company was nearly debt-free on an EBITDA basis) to 1.40x post-Ameredev. The deleveraging path is:
- Q1 2026: additional $350M+ RBL paydown [S4]
- 2026 target: FCF of $1.1-1.2B (company guidance) → ~$600M available for debt paydown after dividends/buybacks

**Capital Structure Detail.**

Debt is predominantly senior unsecured notes (4-5% coupon, staggered maturities 2028-2033) with a revolving credit facility (RBL) backed by proved reserves at a variable rate. Interest expense in 2025 was approximately $240M, covered 5.1x by EBITDA — solid.

RBL facility: redetermined periodically based on the value of proved reserves. At $65 WTI, reserves remain well above the current drawn balance — no borrowing base covenant risk anticipated.

**Accounting Quality Flags — None Material.**

- SBC is $18M (cash-settled phantom units) — low distortion vs. $759M NI
- Hedge accounting: gains/losses reported in revenue line; material but disclosed and cash-settled
- Ameredev purchase accounting: property/acreage fair-valued and being depleted — no goodwill; clean
- Related-party (San Mateo JV): intersegment transactions eliminated in consolidation; arm's-length pricing disclosed
- Non-controlling interest (NCI): $340M on balance sheet for Five Point's 49% of San Mateo — disclosed; no manipulation concern

**Through-Cycle Financial Resiliency.**

2020 was the most severe test: WTI briefly went negative; MTDR reported a $593M net loss. Yet operating cash flow remained positive ($478M) because the high DD&A drove non-cash losses but cash from operations covered operating costs. Production was maintained. The company emerged from 2020 with ~$1.1B in LT debt and used the 2021-2022 commodity price recovery to accumulate capital for the M&A program. This through-cycle resilience demonstrates the business is structurally profitable at $55+ WTI.

#### Evidence and Sources
- Annual income, balance sheet, and cash flow from StockAnalysis + XBRL [S1][S6]
- 10-K FY 2025 risk factors and MD&A [S3]
- Q1 2026 earnings release on debt paydown [S4]
- Governance summary on SBC [S11]

#### Assumption Register Updates
| ID | Assumption | Value | Unit | Basis |
|----|-----------|-------|------|-------|
| A-04-01 | 2025 DD&A (depletion) | ~$1,195 | $M | Implied from EBITDA - EBIT |
| A-04-02 | 2025 interest expense | ~$240 | $M | Net income bridge estimate |
| A-04-03 | Interest coverage (2025) | ~5.1x | EBITDA/Interest | EBITDA $2,422 / $240 |
| A-04-04 | FCF breakeven WTI | ~$50 | $/Bbl | OCF-capex at $50 oil ≈ 0 estimate |

#### Tables and Calculations

##### Key Financial Ratios — 5-Year Trend
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|--------|-----:|-----:|-----:|-----:|-----:|
| Gross Margin | 77.1% | 77.7% | 82.8% | 81.7% | 78.5% |
| EBITDA Margin | 61.1% | 69.6% | 68.4% | 69.2% | 66.2% |
| Operating Margin | 42.6% | 55.0% | 42.9% | 41.2% | 33.5% |
| Net Margin | 34.4% | 40.2% | 32.3% | 27.9% | 23.5% |
| ROE | ~31% | ~39% | ~22% | ~17% | ~10% |
| ROIC (est.) | ~18% | ~27% | ~14% | ~12% | ~8% |
| ND/EBITDA | ~1.4x | ~0.3x | ~1.1x | ~1.4x | ~1.4x |
| EPS (diluted) | 4.91 | 10.11 | 7.05 | 7.14 | 6.09 |
| OCF/NI | 1.8x | 1.6x | 2.2x | 2.5x | 3.2x |

#### Open Questions and Data Gaps
1. Exact interest expense (needs income statement footnote) — currently estimated.
2. Amortization schedule for senior notes (2028-2033 maturities) — needed for refunding risk analysis in `/complete-coverage`.
3. RBL drawn balance as of Q1 2026 — disclosed in 10-Q, would sharpen liquidity picture.

#### Next-Step Dependencies
Step 05 (Quarterly Momentum) zooms into the 12-quarter trend. Step 06 (Balance Sheet & Dilution) deepens the debt and share-count analysis. Step 09 (Returns on Capital) picks up the ROIC trend for capital efficiency analysis.

#### Source Index
| Tag | Document or URL | Date | Notes |
|-----|----------------|------|-------|
| [S1] | SEC EDGAR XBRL facts | 2026-05-28 | Annual financial data |
| [S3] | 10-K FY 2025 | 2026-05-28 | MD&A + risk factors |
| [S4] | Q1 2026 8-K | 2026-05-28 | Debt paydown confirmation |
| [S6] | StockAnalysis.com tables | 2026-05-28 | Full income/BS/CF tables |
| [S11] | DEF 14A 2026 | 2026-05-28 | SBC and comp structure |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/MTDR/fundamental

## Navigation

- Overview: /stocks/MTDR
- Financials (this page): /stocks/MTDR/financials
- Thesis: /stocks/MTDR/thesis
- Investment Memo: /stocks/MTDR/memo
- Coverage universe: /stocks