Matador Resources: Now That’s One Way to Derail a Stock

Now that’s one way to kill a stock’s upward progress.

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Heading into today, Matador Resources (MTDR) had gained 40% so far this year, as the competitor to Anadarko Petroleum (APC) and EOG Resources (EOG) has boosted oil & gas revenue and oil production. Make that 32% after Matador Resources announced a secondary offering.

Wunderlich’s Irene Haas doesn’t understand what the big deal is:

Matador Resources Company announced on May 22, 2014 after the market close that it has commenced an underwritten public offering of 7.5 million of its common stock. This will enable Matador to keep a second rig in the Permian Basin for the rest of 2014, while keeping a 2-rig program in the Eagle Ford shale play. Part of the proceeds will be used for acreage acquisition and participation in non-operated wells in the Haynesville trend. In the interim, Matador intends to repay outstanding borrowings under its revolving credit facility. While the deal is slightly dilutive to NAV, earnings and cash flow, it enables the company to operate for the rest of 2014 without having to raise additional money while keeping the balance sheet clean. We reiterate our Buy rating on Matador.

Shares of Matador have dropped 5.9% to $24.62 at 2:08 p.m., while Anadarko Petroleum has dipped 0.2% to $101.36 and EOG Resources has gained 0.8% to $104.50.