In short: Named by KeyBanc's Tim Rezvan among producers with high exposure to oil prices that "could see more gains"; he is increasingly bullish on oil into next year as China ramps imports and the Saudi pipeline attack "raises the ceiling on 'worst case' outlooks." Analyst call relayed by Barron's, no valuation given.
Matador drills for oil and gas in the U.S. (mainly the Permian Basin of Texas and New Mexico). Because it sells mostly oil, its profits rise quickly when oil prices rise — that is what "high exposure to oil prices" means.
A KeyBanc analyst, quoted by Barron's, thinks oil can keep climbing into next year: the emergency U.S. reserve is nearly drained, a Saudi pipeline was attacked, and China looks to be buying again after living off its stockpiles. If he is right, producers like Matador should keep gaining. This is an analyst's call relayed by the article, not Barron's own pick, and it reverses if the Iran war ends or the pipeline is fixed sooner than expected.
In short: Still the midsize rung of the producer ladder — "we also own a midsize company. Matador is a company we own."
Matador is a mid-sized US shale producer, mostly in the Permian Basin. On Oakley's ladder it is the "midsize" rung — bigger and better-capitalised than a small driller, more responsive to the oil price than a supermajor.
Consistent with his earlier appearance, he doesn't own it as a leveraged bet on crude. He owns it because he believes he can forecast its earnings for the next six to eight quarters, and that visible stream of profits is priced at single-digit multiples while the broad market trades near 25 times.
42:34you said, but we also own a midsize company. Matador is a company we own. A company called Northern Oil and Gas. Great company. We bought, oh, seven or eight weeks ago at around 18 bucks. It's a 10% yield. Even now, it's a 7 and a half% yield at this level. We own natural gas.
In short: The mid-cap producer he owns alongside Chevron — "we own Matador on the midsize." Held for the earnings look over the next six-to-eight quarters, not as a high-beta bet on the oil price.
Matador is a mid-sized US shale producer, mostly in the Permian Basin of West Texas and New Mexico. It's the "midsize" rung on Oakley's energy ladder, sitting between the supermajors and the small drillers.
Importantly, he doesn't own it as a leveraged bet on the oil price. Asked directly whether resource stocks are just high-beta ways to be long oil, he said no: "we like them because of the earnings look" — he believes he can see this company's profits clearly for the next six to eight quarters, and at eight or nine times earnings that visibility is being given away.
5:54— Would you be particularly favorable to the refiners or the producers or the explorers right now? Which segment within the oil and gas space do you think is the is most positioned to gain from this current situation? — That's a good question, David. I think you have to own the whole spectrum. — Mhm. — Like for us on the producing side, we own big producers like Chevron and we own Matador on the midsize, but then we own the pipelines, on the midstream.
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