Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) announced today the successful acquisition of 8,400
gross (8,400 net) acres for approximately $387 million, or a
weighted average cost of approximately $46,000 per net acre, in Lea
and Eddy Counties, New Mexico in the Bureau of Land Management
(“BLM”) New Mexico Oil and Gas Lease Sale on September 5 and 6,
2018. Two maps highlighting the acquired acreage are included on
the Company’s website at www.matadorresources.com on the Presentations
& Webcasts page under the Investors tab.
Joseph Wm. Foran, Matador’s Chairman and CEO, commented,
“Matador is very excited by these purchases. Over the past several
years, Matador has followed a strategy of primarily building its
Delaware Basin land position on a ‘brick by brick’ basis, but we
have always believed it is also important to capture unique
value-creating opportunities on a select basis, like the recent BLM
lease sale, which was the largest BLM New Mexico Oil and Gas Lease
Sale in the last 10 years. Each tract we acquired was evaluated
based on rock quality, the number of potential commercial zones,
potential additional reserves bookings, the added value from the
lower 1/8th royalty interest, available midstream opportunities and
the tract’s strategic fit within our existing portfolio of
properties. As a result, while some of the acreage values were
higher than Matador and others have paid in the past, we were able
to acquire each tract for less than our full valuation. We will, of
course, continue our ‘brick by brick’ strategy, which has worked
well for us—and is continuing to work well for us—but we will also
strive to be prepared in the future for special opportunities such
as this one.”
Other important considerations made by Matador’s Board of
Directors and staff in valuing this newly acquired acreage included
the following:
- Matador estimates these properties
should immediately add an incremental 16.3 million barrels of oil
equivalent (“BOE”), or 10%, in proved undeveloped reserves (“PUDs”)
with a PV-10 (a non-GAAP financial measure) of approximately $135
million to its total proved reserves base. This amount equates to a
weighted average value of approximately $16,000 per net acre
acquired. The total estimated value of these PUDs is additive to
Matador’s previously reported proved oil and natural gas reserves
of 170.2 million BOE at June 30, 2018, consisting of 95.4 million
barrels of oil and 448.2 billion cubic feet of natural gas with a
PV-10 (a non-GAAP financial measure) of $1.8 billion.
- The acquired leases are federal leases
and provide an 87.5% net revenue interest (“NRI”) as compared to
approximately 75% NRI on most fee leases today. As a result,
Matador will retain an additional 17% of the net production from
each well drilled and completed on these properties, which should
significantly improve the economics of wells drilled on this
acreage. Matador believes this increased NRI substantially enhances
the value of the acquired properties, especially given the
Company’s expectation of multiple zones of development, including
as many as seven to nine potentially productive zones in certain
tracts.
- The large majority of the acquired
acreage is believed to be conducive to drilling longer laterals of
up to two miles or more, utilizing central facilities and
multi-well pad development, which should reduce well costs and
further improve well returns and economics. The positive effects of
this acquisition on Matador’s production and on potential
additional midstream opportunities should begin to be realized in
late 2019, 2020 and beyond as Matador expects to initiate
production from these properties with higher NRIs and lower costs
per lateral foot.
The acquired acreage blends well with Matador’s existing
properties, expanding and bolting on acreage in the Antelope Ridge
asset area in Lea County, New Mexico and establishing a foothold
for the Company in the prolific Stateline area in Eddy County, New
Mexico, while maintaining Matador’s weighted average all-in
Delaware Basin acreage cost at approximately $11,000 per net acre.
The maps provided illustrate the location of the properties
acquired in the BLM lease sale (in blue) along with Matador’s
existing Delaware Basin acreage position (in red).
The acquired acreage includes approximately 2,800 gross/net
acres in the Stateline area, 4,800 gross/net acres in the Antelope
Ridge asset area, 400 gross/net acres in the Arrowhead asset area
and 400 gross/net acres in the Twin Lakes asset area, bringing
Matador’s total leasehold and mineral position in the Delaware
Basin to approximately 217,400 gross (123,800 net) acres (pro forma
at August 1, 2018). Although all of the acquired acreage is
undeveloped, most of the acreage is prospective for multiple
geologic targets in areas where operators have already achieved
strong well results as outlined on the maps provided. Matador
expects to finance these acreage acquisitions using cash on hand
and borrowings under its revolving credit facility, which had no
borrowings outstanding at September 12, 2018, but additional
options include, among others, the divestiture of portions or all
of its non-Delaware Basin assets.
Mr. Foran further commented, “We have waited and managed our
balance sheet carefully over time for this special opportunity. As
a result, our financial position and liquidity remain strong, with
a pro forma Net Debt to Adjusted EBITDA (trailing twelve months)
ratio of 1.9x. The specific location of these select assets, the
multi-pay potential in several prolific zones, the cost savings
associated with developing these new assets via longer laterals on
multi-well pads with centralized facilities and the favorable net
revenue interest along with other favorable federal lease terms
were key features that attracted Matador to this unique opportunity
and should significantly enhance our already strong Delaware Basin
leasehold and mineral portfolio. Additionally, we see further
opportunities for Matador to unlock additional value across this
quality acreage position, including midstream opportunities and the
ability to add to our growing minerals and leasehold positions. The
‘read-through’ of this sale to the value of our total leasehold and
mineral positions is very encouraging and we are very excited by
the additional opportunities this newly-acquired acreage
provides.”
Additional inquiries regarding the acquisition of these
properties may be directed to Mac Schmitz, Capital Markets
Coordinator, using the contact information provided below. Matador
expects to provide additional information regarding the acquisition
of these properties, as well as other acreage acquisitions closed
during the third quarter of 2018, during its third quarter 2018
earnings conference call scheduled for November 1, 2018.
About Matador Resources Company
Matador is an independent energy company engaged in the
exploration, development, production and acquisition of oil and
natural gas resources in the United States, with an emphasis on oil
and natural gas shale and other unconventional plays. Its current
operations are focused primarily on the oil and liquids-rich
portion of the Wolfcamp and Bone Spring plays in the Delaware Basin
in Southeast New Mexico and West Texas. Matador also operates in
the Eagle Ford shale play in South Texas and the Haynesville shale
and Cotton Valley plays in Northwest Louisiana and East Texas.
Additionally, Matador conducts midstream operations, primarily
through its midstream joint venture, San Mateo, in support of its
exploration, development and production operations and provides
natural gas processing, oil transportation services, natural gas,
oil and salt water gathering services and salt water disposal
services to third parties.
For more information, visit Matador Resources Company at
www.matadorresources.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. “Forward-looking statements” are statements related to
future, not past, events. Forward-looking statements are based on
current expectations and include any statement that does not
directly relate to a current or historical fact. In this context,
forward-looking statements often address expected future business
and financial performance, and often contain words such as “could,”
“believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,”
“may,” “should,” “continue,” “plan,” “predict,” “potential,”
“project,” “hypothetical,” “forecasted” and similar expressions
that are intended to identify forward-looking statements, although
not all forward-looking statements contain such identifying words.
Such forward-looking statements include, but are not limited to,
statements about guidance, projected or forecasted financial and
operating results, results in certain basins, objectives, project
timing, expectations and intentions and other statements that are
not historical facts. Actual results and future events could differ
materially from those anticipated in such statements, and such
forward-looking statements may not prove to be accurate. These
forward-looking statements involve certain risks and uncertainties,
including, but not limited to, the following risks related to
financial and operational performance: general economic conditions;
the Company’s ability to execute its business plan, including
whether its drilling program is successful; changes in oil, natural
gas and natural gas liquids prices and the demand for oil, natural
gas and natural gas liquids; its ability to replace reserves and
efficiently develop current reserves; costs of operations; delays
and other difficulties related to producing oil, natural gas and
natural gas liquids; delays and other difficulties related to
regulatory and governmental approvals and restrictions; its ability
to make acquisitions on economically acceptable terms; its ability
to integrate acquisitions; availability of sufficient capital to
execute its business plan, including from future cash flows,
increases in its borrowing base and otherwise; weather and
environmental conditions; the operating results of the Company’s
midstream joint venture’s expansion of the Black River cryogenic
processing plant; the timing and operating results of the buildout
by the Company’s midstream joint venture of oil, natural gas and
water gathering and transportation systems and the drilling of any
additional salt water disposal wells; and other important factors
which could cause actual results to differ materially from those
anticipated or implied in the forward-looking statements. For
further discussions of risks and uncertainties, you should refer to
Matador’s filings with the Securities and Exchange Commission
(“SEC”), including the “Risk Factors” section of Matador’s most
recent Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q. Matador undertakes no obligation to update
these forward-looking statements to reflect events or circumstances
occurring after the date of this press release, except as required
by law, including the securities laws of the United States and the
rules and regulations of the SEC. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary
statement.
Supplemental Non-GAAP Financial Measures
PV-10
PV-10 is a non-GAAP financial measure and generally differs from
Standardized Measure, the most directly comparable GAAP financial
measure, because it does not include the effects of income taxes on
future net revenues. PV-10 is not an estimate of the fair market
value of the Company’s properties. Matador and others in the
industry use PV-10 as a measure to compare the relative size and
value of proved reserves held by companies and of the potential
return on investment related to the companies’ properties without
regard to the specific tax characteristics of such entities. PV-10
may be reconciled to the Standardized Measure of discounted future
net cash flows at such dates by adding the discounted future income
taxes associated with such reserves to the Standardized
Measure.
(in millions)
At June 30, 2018
Standardized Measure $ 1,613.3
Discounted future income taxes 152.6 PV-10 $ 1,765.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180912006021/en/
Matador Resources CompanyMac Schmitz, 972-371-5225Capital
Markets Coordinatorinvestors@matadorresources.com
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