MTDR – No Traded CDS, Base Case iCDS 168bps, Negative Case iCDS 305bps, 2026 5.875% Bond YTW of 6.134%, iYTW of 4.584%, B1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need
- Credit markets are materially overstating MTDR’s credit risk with a YTW of 6.134% relative to an Intrinsic YTW of 4.584% and an Intrinsic CDS of 168bps. Similarly, Moody’s is materially overstating the firm’s fundamental credit risk, with its B1 credit rating six notches lower than Valens’ IG4+ (Baa1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly favorable signals for credit holders. Management’s compensation framework should drive them to focus on all three value drivers: asset efficiency, margin expansion, and revenue growth, which should lead to Uniform ROA improvement and higher cash flows available for servicing obligations. Additionally, most management members are material owners of MTDR’s equity relative to their annual compensation, indicating they are well-aligned with the long-term interests of their shareholders.
- Earnings Call Forensics™ of the firm’s Q1 2022 (4/27) earnings call highlights that management is confident getting their liquids on pipe will help flow assurance.