Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) today reported financial and operating results for the
first quarter of 2021. A short slide presentation summarizing the
highlights of Matador’s first quarter 2021 earnings release is also
included on the Company’s website at www.matadorresources.com on the Events and
Presentations page under the Investor Relations tab.
First Quarter 2021 Management Summary Comments
Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “On
both our website and the webcast planned for tomorrow’s earnings
conference call is a set of six slides identified as ‘Chairman’s
Remarks’ (Slides A through F) to add color and detail to my
remarks. We invite you to review these slides in conjunction with
my comments below, which are intended to provide context for the
first quarter of 2021 compared to Matador’s goals for the year.
First Quarter 2021 Highlights and
Significant Achievements
“The first quarter of 2021 was an outstanding quarter for
Matador highlighted by a number of significant achievements (see
Slide A). The Board and I would like to acknowledge the various
efforts of the Matador team to deliver these excellent results
despite the challenges we faced in the first quarter due to the
pandemic and historically prolonged cold weather conditions
experienced in New Mexico and Texas during Winter Storm Uri. In
particular, we salute the efforts of the production and marketing
teams and our entire field staff for keeping a significant portion
of Matador’s oil and natural gas production online and for finding
available markets for our products during this unprecedented winter
storm. We also express our appreciation to San Mateo, our midstream
affiliate, for keeping its gathering, processing and disposal
systems operational throughout the winter storm. Notably, we
believe San Mateo’s Black River natural gas cryogenic processing
plant (the “Black River Processing Plant”) was one of only about 5%
of plants in the Delaware Basin to remain operational for the
duration of the storm.
“Matador is also pleased to report positive free cash flow once
again in the first quarter of 2021. Net cash provided by operating
activities in the first quarter was $169.4 million, a 7% sequential
increase, leading to first quarter 2021 adjusted free cash flow of
$63.9 million, about 5% higher than we achieved in the fourth
quarter of 2020 and significantly better than our initial
expectations. Given this strong free cash flow, Matador repaid $100
million in borrowings outstanding in the first quarter of 2021,
which was in addition to the $35 million repaid during the fourth
quarter of 2020. As a result, Matador’s leverage ratio under the
reserves-based credit facility has now declined to 2.5x (see
Slide B). Matador expects to continue to generate adjusted free
cash flow in aggregate for full year 2021 and plans to use a
significant portion of this discretionary cash flow primarily to
continue reducing the borrowings outstanding under its
reserves-based credit facility and then to pay a quarterly dividend
to shareholders.
Operations Tracking Key 2021 Milestones,
Including Strong Rodney Robinson and Voni Well Results
“Matador’s 2021 priorities and milestones are shown on Slide
C. During the first quarter of 2021, we achieved our first
significant operational milestone for 2021 when we turned to sales
four new Rodney Robinson wells in mid-March. Matador is very
pleased with the strong 24-hour initial potential (“IP”) test
results from these most recent Rodney Robinson wells, including
excellent results from our first two tests of the Third Bone Spring
formation on this leasehold (see Slide D). In April 2021,
Matador achieved its second key operational milestone for 2021 when
we began turning to sales the first 13 Voni wells in the Stateline
asset area. The 13 Voni wells all have completed lateral lengths of
approximately 12,000 feet, or about 2.3 miles, making them the
longest horizontal laterals that Matador has completed to date in
the Delaware Basin. Matador has now turned to sales all 13 Voni
wells, slightly ahead of schedule, and today we have reported
24-hour IP test results from the first six of these wells (see
Slide D). Matador is very excited by the strong 24-hour IP test
results from these six wells, especially the Voni Federal #216H
well, a Wolfcamp A-Lower completion, which set a new Matador record
for best overall 24-hour IP test result to date in any formation in
the Delaware Basin at 5,073 barrels of oil equivalent per day!
Drilling and Completion Costs Continue to
Move Lower
“Matador’s operations and asset teams continue to achieve new
milestones in their efforts to improve our capital efficiency.
Drilling and completion costs per completed lateral foot for the 13
Voni wells turned to sales in April 2021 averaged $610 per
completed lateral foot, an all-time low for Matador (see Slide
E). This improvement in capital efficiency through our
transition to drilling and completing longer laterals has been and
continues to be a high priority for Matador.
Looking Ahead
“Matador is already off to a great start in 2021, and we believe
the year will continue to be exciting for Matador and its
stakeholders as we work to generate free cash flow, pay down debt,
pay dividends to our shareholders and grow the value of our
midstream assets and our oil and natural gas reserves. As a result,
we anticipate our total oil equivalent production should increase
by about 20% sequentially in the second quarter while our leverage
ratio should continue to shrink. As the asset teams continue
generating plenty of new opportunities and San Mateo continues to
build revenue and value for Matador and its joint venture partner
Five Point (see Slide F), it makes one think, ‘what a
difference a year makes.’”
First Quarter 2021 Financial and Operational
Highlights
Realized Oil and Natural Gas
Prices
- First quarter 2021 weighted average realized oil and natural
gas prices, excluding hedging impacts, were $57.05 per barrel and
$5.88 per thousand cubic feet, sequential increases of 39% and 98%,
respectively, from $40.99 per barrel and $2.97 per thousand cubic
feet in the fourth quarter of 2020. Weighted average realized oil
and natural gas prices, excluding hedging impacts, also increased
year-over-year 24% and 3.5-fold, respectively, from $45.87 per
barrel and $1.70 per thousand cubic feet in the first quarter of
2020 to $57.05 per barrel and $5.88 per thousand cubic feet in the
first quarter of 2021. These stronger-than-anticipated realized
commodity prices, and particularly, the realized natural gas price,
resulted in better-than-expected net income, Adjusted EBITDA and
adjusted free cash flow during the first quarter of 2021.
Achieved Better-Than-Expected Adjusted
Free Cash Flow and Repaid $100 Million in First Quarter
2021
- First quarter 2021 net cash provided by operating activities
was $169.4 million (GAAP basis), leading to first quarter 2021
adjusted free cash flow (a non-GAAP financial measure) of $63.9
million, which includes $15.4 million in performance incentives
received from a subsidiary of Five Point Energy LLC (“Five Point”),
Matador’s joint venture partner in San Mateo (as defined below).
These cash flow measures were above Matador’s expectations for the
first quarter and allowed the Company to repay $100 million in
borrowings outstanding under its reserves-based revolving credit
facility in the first quarter and to pay its first quarterly cash
dividend of $0.025 per share of common stock.
Net Income, Earnings Per Share and
Adjusted EBITDA
- First quarter 2021 net income (GAAP basis) was $60.6 million,
or $0.51 per diluted common share, a significant improvement from a
net loss of $89.5 million in the fourth quarter of 2020, but a 52%
year-over-year decrease from net income of $125.7 million in the
first quarter of 2020. The changes in net income (loss) between
periods were significantly impacted by a non-cash, unrealized loss
on derivatives of $43.4 million in the first quarter of 2021, as
compared to a non-cash, unrealized loss on derivatives of $22.7
million in the fourth quarter of 2020, and a non-cash, unrealized
gain on derivatives of $136.4 million in the first quarter of
2020.
- First quarter 2021 adjusted net income (a non-GAAP financial
measure) was $84.5 million, or $0.71 per diluted common share, a
162% sequential increase from adjusted net income of $32.3 million
in the fourth quarter of 2020, and a 265% year-over-year increase
from adjusted net income of $23.1 million in the first quarter of
2020.
- First quarter 2021 adjusted earnings before interest expense,
income taxes, depletion, depreciation and amortization and certain
other items (“Adjusted EBITDA,” a non-GAAP financial measure) were
$198.1 million, a 32% sequential increase from $150.1 million in
the fourth quarter of 2020, and a 41% year-over-year increase from
$140.6 million in the first quarter of 2020.
Oil, Natural Gas and Oil Equivalent
Production
- As summarized in the table below, Matador’s first quarter 2021
average daily oil, natural gas and total oil equivalent production
all exceeded the Company’s expectations. The majority of the
production outperformance resulted from a prompt return to full
production by late February following the partial production
shut-ins necessitated by the historically prolonged cold weather
conditions experienced in New Mexico and Texas in mid- to late
February due to Winter Storm Uri. First quarter 2021 production was
also impacted positively by the continued better-than-expected
performance from the 13 Boros wells in the Stateline asset area,
which were turned to sales in September 2020, as well as by strong
initial well performance from four new Rodney Robinson wells turned
to sales in mid-March. Natural gas production was also positively
impacted by continued strong production from the two significant
non-operated Haynesville shale wells turned to sales in the third
quarter of 2019 that continue to outperform expectations.
Production Change (%)
Production
Q1 Average Daily Volume
Sequential(1)
Guidance(2)
Difference(3)
YoY(4)
Total, BOE per day
74,000
-11%
-13% to -15%
+3%
+4%
Oil, Bbl per day
41,500
-14%
-15% to -17%
+2%
+2%
Natural Gas, MMcf per day
194.7
-8%
-10% to -12%
+3%
+6%
(1) As compared to the fourth quarter of
2020.
(2) Production change previously
projected, as provided on February 23, 2021.
(3) As compared to midpoint of guidance
provided on February 23, 2021.
(4) Represents year-over-year percentage
change from the first quarter of 2020.
Drilling and Completion Costs Continue at
Record Lows
- Drilling and completion costs for the six operated horizontal
wells turned to sales in the first quarter of 2021 averaged
$785 per completed lateral foot, a
decrease of 8% from average drilling and completion costs of $850
per completed lateral foot achieved in full year 2020. Including
the record-low drilling and completion costs associated with the 13
Voni wells noted below, drilling and completion costs associated
with these 19 operated horizontal wells turned to sales in 2021
averaged $657 per completed lateral
foot.
- Drilling and completion costs for the 13 Voni wells turned to
sales in April 2021 averaged $610 per
completed lateral foot, a decrease of 28% from average
drilling and completion costs of $850 per completed lateral foot in
full year 2020 and below the $625 per completed lateral foot
realized for all operated horizontal wells turned to sales in the
fourth quarter of 2020. Drilling and completion costs of $610 per
completed lateral foot for these 13 Voni wells marked a new record
low for Matador.
- Matador incurred capital expenditures for drilling, completing
and equipping wells (“D/C/E capital expenditures”) of approximately
$126 million in the first quarter of 2021, or 11% below the
Company’s estimate of $142 million for D/C/E capital expenditures
during the quarter. Matador estimates that approximately $6 million
of these savings were directly attributable to improved operational
efficiencies and lower-than-expected drilling and completion costs
in the Delaware Basin. The remainder of these cost savings
primarily resulted from the timing of both operated and
non-operated drilling and completion activities, and most of these
costs are currently expected to be incurred in the second quarter
of 2021.
Borrowing Base Reaffirmed and Total Borrowings Better Than
Expectations
- As noted above, Matador repaid $100 million in borrowings
outstanding under its reserves-based revolving credit facility in
the first quarter of 2021. At March 31, 2021, total borrowings
outstanding under Matador’s reserves-based credit facility were
$340 million, $50 million less than the Company’s expectations for
the end of the first quarter. These higher-than-anticipated
repayments of borrowings were primarily attributable to Matador’s
continued capital and operating cost efficiencies and higher than
expected revenues, particularly for natural gas, during the first
quarter. Matador plans to use the majority of its anticipated free
cash flow in future periods to reduce borrowings and pay quarterly
dividends.
- In April 2021, as part of the spring 2021 redetermination
process, Matador’s 11 different commercial lenders unanimously
reaffirmed the Company’s borrowing base under its reserves-based
credit facility at $900 million. Matador’s elected commitment also
remained constant at $700 million, and no material changes were
made to the terms of the Company’s reserves-based credit
facility.
Quarterly Cash Dividend Declared
- On April 26, 2021, Matador announced that its Board of
Directors declared a quarterly cash dividend of $0.025 per share of
common stock payable on June 3, 2021 to shareholders of record as
of May 13, 2021.
Note: All references to Matador’s
net income (loss), adjusted net income (loss), Adjusted EBITDA and
adjusted free cash flow reported throughout this earnings release
are those values attributable to Matador Resources Company
shareholders after giving effect to any net income (loss), Adjusted
EBITDA or adjusted free cash flow, respectively, attributable to
third-party non-controlling interests, including in San Mateo
Midstream, LLC (“San Mateo”). Matador owns 51% of San Mateo. For a
definition of adjusted net income (loss), adjusted earnings (loss)
per diluted common share, Adjusted EBITDA and adjusted free cash
flow and reconciliations of such non-GAAP financial metrics to
their comparable GAAP metrics, please see “Supplemental Non-GAAP
Financial Measures” below.
Sequential and year-over-year quarterly comparisons of selected
financial and operating items are shown in the following table:
Three Months Ended
March 31, 2021
December 31, 2020
March 31, 2020
Net Production Volumes:(1)
Oil (MBbl)(2)
3,738
4,419
3,697
Natural gas (Bcf)(3)
17.5
19.4
16.7
Total oil equivalent (MBOE)(4)
6,658
7,653
6,476
Average Daily Production Volumes:(1)
Oil (Bbl/d)(5)
41,537
48,028
40,626
Natural gas (MMcf/d)(6)
194.7
210.9
183.2
Total oil equivalent (BOE/d)(7)
73,983
83,183
71,161
Average Sales Prices:
Oil, without realized derivatives (per
Bbl)
$
57.05
$
40.99
$
45.87
Oil, with realized derivatives (per
Bbl)
$
50.08
$
38.59
$
48.81
Natural gas, without realized derivatives
(per Mcf)(8)
$
5.88
$
2.97
$
1.70
Natural gas, with realized derivatives
(per Mcf)
$
5.89
$
2.97
$
1.70
Revenues (millions):
Oil and natural gas revenues
$
316.2
$
238.7
$
197.9
Third-party midstream services
revenues
$
15.4
$
15.1
$
15.8
Realized (loss) gain on derivatives
$
(25.9)
$
(10.6)
$
10.9
Operating Expenses (per BOE):
Production taxes, transportation and
processing
$
5.13
$
3.53
$
3.35
Lease operating
$
3.90
$
3.20
$
4.77
Plant and other midstream services
operating
$
2.05
$
1.62
$
1.54
Depletion, depreciation and
amortization
$
11.24
$
11.73
$
14.01
General and administrative(9)
$
3.33
$
2.16
$
2.51
Total(10)
$
25.65
$
22.24
$
26.18
Other (millions):
Net sales of purchased natural gas(11)
$
1.7
$
1.2
$
2.5
Net income (loss) (millions)(12)
$
60.6
$
(89.5)
$
125.7
Earnings (loss) per common share
(diluted)(12)
$
0.51
$
(0.77)
$
1.08
Adjusted net income (millions)(12)(13)
$
84.5
$
32.3
$
23.1
Adjusted earnings per common share
(diluted)(12)(14)
$
0.71
$
0.27
$
0.20
Adjusted EBITDA (millions)(12)(15)
$
198.1
$
150.1
$
140.6
Net cash provided by operating activities
(millions)(16)
$
169.4
$
157.6
$
109.4
Adjusted free cash flow
(millions)(12)(17)
$
63.9
$
60.7
$
(52.8)
San Mateo net income (millions)(18)
$
18.1
$
26.2
$
19.1
San Mateo Adjusted EBITDA
(millions)(15)(18)
$
27.6
$
35.4
$
26.2
San Mateo net cash provided by operating
activities (millions)(18)
$
41.2
$
26.1
$
25.2
San Mateo adjusted free cash flow
(millions)(16)(17)(18)
$
17.0
$
21.4
$
(44.9)
D/C/E capital expenditures (millions)
$
126.0
$
63.4
$
169.3
Midstream capital expenditures
(millions)(19)
$
5.4
$
7.4
$
20.3
(1) Production volumes reported in two
streams: oil and natural gas, including both dry and liquids-rich
natural gas.
(2) One thousand barrels of oil.
(3) One billion cubic feet of natural
gas.
(4) One thousand barrels of oil
equivalent, estimated using a conversion ratio of one barrel of oil
per six thousand cubic feet of natural gas.
(5) Barrels of oil per day.
(6) Millions of cubic feet of natural gas
per day.
(7) Barrels of oil equivalent per day,
estimated using a conversion ratio of one barrel of oil per six
thousand cubic feet of natural gas.
(8) Per thousand cubic feet of natural
gas.
(9) Includes approximately $0.13, $0.42
and $0.59 per BOE of non-cash, stock-based compensation expense in
the first quarter of 2021, the fourth quarter of 2020 and the first
quarter of 2020, respectively.
(10) Total does not include the impact of
full-cost ceiling impairment charges, purchased natural gas or
immaterial accretion expenses.
(11) Net sales of purchased natural gas
reflect those natural gas purchase transactions that the Company
periodically enters into with third parties whereby the Company
purchases natural gas and (i) subsequently sells the natural gas to
other purchasers or (ii) processes the natural gas at San Mateo’s
Black River Processing Plant and subsequently sells the residue
natural gas and natural gas liquids (“NGL”) to other purchasers.
Such amounts reflect revenues from sales of purchased natural gas
of $4.5 million, $3.9 million and $10.5 million less expenses of
$2.9 million, $2.6 million and $8.1 million in the first quarter of
2021, the fourth quarter of 2020 and the first quarter of 2020,
respectively.
(12) Attributable to Matador Resources
Company shareholders.
(13) Adjusted net income is a non-GAAP
financial measure. For a definition of adjusted net income and a
reconciliation of adjusted net income (non-GAAP) to net income
(loss) (GAAP), please see “Supplemental Non-GAAP Financial
Measures.”
(14) Adjusted earnings per diluted common
share is a non-GAAP financial measure. For a definition of adjusted
earnings per diluted common share and a reconciliation of adjusted
earnings per diluted common share (non-GAAP) to earnings (loss) per
diluted common share (GAAP), please see “Supplemental Non-GAAP
Financial Measures.”
(15) Adjusted EBITDA is a non-GAAP
financial measure. For a definition of Adjusted EBITDA and a
reconciliation of Adjusted EBITDA (non-GAAP) to net income (loss)
(GAAP) and net cash provided by operating activities (GAAP), please
see “Supplemental Non-GAAP Financial Measures.”
(16) As reported for each period on a
consolidated basis, including 100% of San Mateo’s net cash provided
by operating activities.
(17) Adjusted free cash flow is a non-GAAP
financial measure. For a definition of adjusted free cash flow and
a reconciliation of adjusted free cash flow (non-GAAP) to net cash
provided by operating activities (GAAP), please see “Supplemental
Non-GAAP Financial Measures.”
(18) Represents 100% of San Mateo’s net
income, net cash provided by operating activities or adjusted free
cash flow for each period reported.
(19) Includes Matador’s 51% share of San
Mateo’s capital expenditures, net of the applicable portions of the
$50 million capital carry of Matador’s proportionate interest in
San Mateo provided by Five Point, plus 100% of other immaterial
midstream capital expenditures not associated with San Mateo.
Federal Permits Update
Matador is pleased to report that it has received nine new
federal drilling permits since the Company’s last update on
February 23, 2021. Eight of these new permits are in the Antelope
Ridge asset area and one is in the Ranger asset area. Matador has
also received several sundries, or amendments, to existing permits
over the last two months, which have been beneficial to ongoing
drilling operations on its federal leasehold. The Company also
continues to submit new applications for permits to drill on its
federal leasehold on an ongoing basis.
At April 28, 2021, Matador had secured 174 approved and
undrilled federal drilling permits and had 106 additional permits
under review by the Bureau of Land Management for future drilling
on federal lands across its various asset areas in the Delaware
Basin. In the period between February 23 and April 28, 2021,
Matador received the nine new permits noted above and used 12
permits in its ongoing drilling operations.
Operations Update
Drilling and Completion
Activity
Matador operated three drilling rigs in the Delaware Basin
during most of the first quarter of 2021. In late March, the
Company added a fourth rig, and Matador expects to operate these
four drilling rigs in the Delaware Basin throughout the remainder
of 2021 but has the flexibility to reduce the number of rigs based
upon market conditions or other factors. Two of these rigs are
currently drilling in the Stateline asset area in Eddy County, New
Mexico and are expected to operate in the Stateline asset area for
the remainder of 2021. The other two rigs are currently drilling in
the southern portion of the Arrowhead asset area in Eddy County
(the “Greater Stebbins Area”) and are expected to operate primarily
in the Greater Stebbins Area and the Rodney Robinson leasehold in
the western portion of the Antelope Ridge asset area in Lea County,
New Mexico for the remainder of 2021.
Wells Completed and Turned to
Sales
During the first quarter of 2021, Matador completed and turned
to sales a total of 16 gross (6.0 net) wells in its various
Delaware Basin operating areas. This total was comprised of six
gross (5.1 net) operated wells and 10 gross (0.9 net) non-operated
wells. All six operated wells were two-mile laterals, including
four gross (3.8 net) wells on the Rodney Robinson leasehold and two
gross (1.3 net) Uncle Ches wells in the Ranger asset area. These
six operated wells were turned to sales in mid-March 2021. As a
result, these wells did not contribute significantly to Matador’s
first quarter production but are expected to be important
contributors to Matador’s production in the second quarter of 2021.
Matador expects all of the operated wells it turns to sales in 2021
will have lateral lengths greater than one mile, and almost all
(98%) of these wells are expected to have lateral lengths of two
miles or greater.
Operated
Non-Operated
Total
Gross Operated and
Non-Operated
Asset/Operating Area
Gross
Net
Gross
Net
Gross
Net
Well Completion Intervals
Western Antelope Ridge (Rodney
Robinson)
4
3.8
-
-
4
3.8
2-WC A, 2-3BS
Antelope Ridge
-
-
4
0.2
4
0.2
4-WC A
Arrowhead
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Ranger
2
1.3
-
-
2
1.3
2-2BS
Rustler Breaks
-
-
6
0.7
6
0.7
6-WC A
Stateline
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Twin Lakes
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Wolf/Jackson Trust
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Delaware Basin
6
5.1
10
0.9
16
6.0
South Texas
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Haynesville Shale
-
-
-
-
-
-
No wells turned to sales in Q1
2021
Total
6
5.1
10
0.9
16
6.0
Note: WC = Wolfcamp; BS = Bone Spring. For
example, 2-WC A indicates two Wolfcamp A completions and 2-3BS
indicates two Third Bone Spring completions.
Significant Well Results
Rodney Robinson and Uncle Ches
Wells
The following table highlights the 24-hour IP test results from
the four new Rodney Robinson wells completed and turned to sales in
the first quarter of 2021, which continue to show the excellent
reservoir quality in multiple formations associated with this
leasehold. IP tests for the two Uncle Ches wells are expected to be
conducted after these wells are equipped with electrical
submersible pumps (ESPs), which is customary for many wells
completed and turned to sales in the Ranger and Arrowhead asset
areas. Initial flowback results from the Uncle Ches wells, both
Second Bone Spring completions, exceeded Matador’s expectations for
flow rates and flowing casing pressures, and both wells exhibited
initial oil cuts above 90%.
Completion
24-hr IP
BOE/d /
Oil
Asset Area/Well Name
Interval
(BOE/d)
1,000 ft.(1)
(%)
Comments
Antelope Ridge, Lea County, NM
Rodney Robinson Federal #133H
Third Bone Spring
2,999
303
78%
Tested 2,354 Bbl of oil per day and 3.9
MMcf of natural gas per day. One of the first two tests of Third
Bone Spring on this property.
Rodney Robinson Federal #134H
Third Bone Spring
4,768
491
78%
Tested 3,720 Bbl of oil per day and 6.3
MMcf of natural gas per day. One of the first two tests of Third
Bone Spring on this property.
Rodney Robinson Federal #203H
Wolfcamp A-XY
4,414
459
77%
Tested 3,383 Bbl of oil per day and 6.2
MMcf of natural gas per day.
Rodney Robinson Federal #204H
Wolfcamp A-XY
4,859
488
77%
Tested 3,754 Bbl of oil per day and 6.6
MMcf of natural gas per day. Best IP test result for any of
Matador’s Wolfcamp A-XY completions in the Delaware Basin.
(1) 24-hour IP per 1,000 feet of completed
lateral length.
Voni Wells
In April 2021, as anticipated, Matador began turning to sales
the 13 Voni wells in the western portion of the Company’s Stateline
asset area. As a result, Matador has now held by production all
4,000 net acres of its federal acreage in the Stateline and Rodney
Robinson leaseholds. In addition, Matador estimates that
approximately 75% of its federal leasehold in the Delaware Basin is
held by production and that almost all of the Company’s remaining
federal leasehold in the Delaware Basin is not subject to
expiration before 2028. All 13 Voni wells have completed lateral
lengths of approximately 12,000 feet, or about 2.3 miles, making
them the longest horizontal laterals that Matador has completed to
date in the Delaware Basin. The 13 Voni wells include one First
Bone Spring completion, four Second Bone Spring completions, four
Wolfcamp A-XY completions and four Wolfcamp A-Lower completions.
These 13 wells were all drilled and completed without any material
deviations from the Company’s initial drilling plans.
The table below highlights the 24-hour IP test results from the
first six Voni wells, which reflect the excellent reservoir quality
in multiple formations associated with the Stateline asset area.
These six Voni wells are currently producing at restricted flow
rates through the Company’s production facilities in the Stateline
asset area while the additional seven wells are cleaning up, but
24-hour IP tests have not yet been conducted on the additional
wells. All oil, natural gas and water from these wells are being
gathered via pipeline by San Mateo.
Completion
24-hr IP
BOE/d /
Oil
Asset Area/Well Name
Interval
(BOE/d)
1,000 ft.(1)
(%)
Comments
Stateline, Eddy County, NM
Voni Federal #123H
Second Bone Spring
3,177
259
68%
Tested 2,158 Bbl of oil per day and 6.1
MMcf of natural gas per day.
Voni Federal #124H
Second Bone Spring
3,084
252
70%
Tested 2,156 Bbl of oil per day and 5.6
MMcf of natural gas per day.
Voni Federal #204H
Wolfcamp A-XY
2,835
235
59%
Tested 1,675 Bbl of oil per day and 7.0
MMcf of natural gas per day.
Voni Federal #216H
Wolfcamp A-Lower
5,073
423
60%
Tested 3,031 Bbl of oil per day and 12.2
MMcf of natural gas per day. Set a Matador record for the best
overall IP test result to date in any formation in the Delaware
Basin.
Voni Federal #217H
Wolfcamp A-Lower
4,619
384
59%
Tested 2,735 Bbl of oil per day and 11.3
MMcf of natural gas per day. Among the best overall IP test results
for Matador in the Delaware Basin.
Voni Federal #218H
Wolfcamp A-Lower
3,587
297
59%
Tested 2,122 Bbl of oil per day and 8.8
MMcf of natural gas per day.
(1) 24-hour IP per 1,000 feet of completed
lateral length.
Realized Commodity Prices
Oil Prices
Matador’s weighted average realized oil price, excluding
derivatives, increased 39% sequentially from $40.99 per barrel in
the fourth quarter of 2020 to $57.05 per barrel in the first
quarter of 2021. Matador’s weighted average oil price differential
relative to the West Texas Intermediate (“WTI”) benchmark,
inclusive of the monthly roll and transportation costs, improved
from ($1.71) per barrel in the fourth quarter of 2020 to ($1.09)
per barrel in the first quarter of 2021.
For the second quarter of 2021, Matador’s weighted average oil
price differential relative to the WTI benchmark price, inclusive
of the monthly roll and transportation costs, is anticipated to be
in the range of ($1.00) to ($2.00) per barrel.
Matador’s realized loss on derivatives of approximately $25.9
million in the first quarter of 2021 was primarily attributable to
the significant increase in WTI oil prices during the first quarter
of 2021, resulting in WTI oil prices that were above the strike
prices for most of the Company’s oil swaps and costless collars.
Please see the accompanying slide presentation for a more complete
summary of Matador’s current hedging positions.
Natural Gas Prices
Matador’s weighted average realized natural gas price, excluding
derivatives, increased 98% sequentially from $2.97 per thousand
cubic feet in the fourth quarter of 2020 to $5.88 per thousand
cubic feet in the first quarter of 2021, well above the Company’s
expectations for the first quarter. While most of Matador’s natural
gas production is typically sold at prices established at the
beginning of each month by the various markets where the Company
sells its natural gas production, certain volumes of its natural
gas production are sold at daily market prices. During the first
quarter of 2021, and particularly during the period associated with
Winter Storm Uri, these daily market prices for natural gas were
often well above the monthly market prices, resulting in an
associated increase in the Company’s weighted average realized
natural gas price for the first quarter of 2021. NGL prices were
also strong in the first quarter of 2021, which further contributed
to Matador’s first quarter weighted average realized natural gas
price. Matador is a two-stream reporter, and
the revenues associated with its NGL production are included in the
weighted average realized natural gas price.
For the second quarter of 2021, Matador’s weighted average
natural gas price differential relative to the Henry Hub benchmark
price is anticipated to be in the range of +$0.50 to +$1.00 per
thousand cubic feet.
Operating Expenses
On a unit of production basis:
- Production taxes, transportation and processing expenses
increased 45% sequentially from $3.53 per BOE in the fourth quarter
of 2020 to $5.13 per BOE in the first quarter of 2021. This
increase was primarily attributable to increased production taxes
associated with record oil and natural gas revenues of $316.2
million reported by Matador in the first quarter.
- Lease operating expenses increased 22% sequentially from an
all-time low of $3.20 per BOE in the fourth quarter of 2020 to
$3.90 per BOE in the first quarter of 2021. This increase was
primarily attributable to additional operating expenses associated
with Winter Storm Uri. In any given year, lease operating expenses
historically tend to be higher during the first quarter due to
additional costs associated with preparing for and handling winter
weather. Although higher than the prior quarter, lease operating
expenses of $3.90 per BOE in the first quarter of 2021 still marked
a record low for lease operating expenses per BOE reported by
Matador during the first quarter of any year since Matador became a
public company in February 2012.
- General and administrative expenses per BOE increased 54%
sequentially from an all-time low of $2.16 per BOE in the fourth
quarter of 2020 to $3.33 per BOE in the first quarter of 2021. This
increase was primarily attributable to an increase in stock-based
compensation expense recorded during the first quarter associated
with cash-settled stock awards, the values of which are remeasured
for each reporting period based upon changes in the Company’s share
price during the period. Matador’s share price increased by 94%
from $12.06 at December 31, 2020 to $23.45 at March 31, 2021. In
March 2021, Matador also restored the COVID-related Company-wide
compensation reductions implemented beginning in the first quarter
of 2020.
In addition to the specific reasons noted above, Matador’s
operating expenses on a unit-of-production basis were also impacted
during the first quarter of 2021 by the 11% sequential decline in
total oil equivalent production (which was better than anticipated)
in the first quarter. Matador anticipates that each of these
operating expenses on a unit-of-production basis will improve in
the second quarter of 2021 as the Company’s total oil equivalent
production is expected to increase by 19 to 22% sequentially as
noted in the following section.
Full-Year and Second Quarter 2021 Guidance Estimates
Full-Year 2021 Guidance
Estimates
At April 28, 2021, Matador made no changes to its full-year 2021
guidance estimates for oil, natural gas or total oil equivalent
production or capital expenditures from those originally provided
on February 23, 2021.
Second Quarter 2021 Completions and
Production Cadence Update
Second Quarter 2021 Estimated Drilling and Completion
Activity
As noted above, Matador expects to operate four drilling rigs in
the Delaware Basin during the second quarter of 2021, with two of
these rigs operating in the Stateline asset area and the other two
rigs operating primarily in the Greater Stebbins Area. Matador
expects to complete and turn to sales 15 gross (14.7 net) operated
wells in the second quarter of 2021, including the first 13 Voni
wells in the Stateline asset area and two wells, both Second Bone
Spring completions, in the Wolf asset area.
Second Quarter 2021 Estimated Oil, Natural Gas and Oil
Equivalent Production
The table below provides Matador’s estimates for anticipated
quarterly sequential changes in the Company’s average daily total
oil equivalent, oil and natural gas production for the second
quarter of 2021 as of April 28, 2021.
Estimated Sequential Change from
Q1 2021
Period
Average Daily Total
Production
Average Daily Oil Production
Average Daily Natural Gas
Production
Q2 2021
+19% to +22%
+21% to +24%
+16% to +19%
San Mateo Highlights and Update
Operating Highlights and Financial
Results
San Mateo’s operations in the first quarter of 2021 were
highlighted by sequentially lower but better-than-expected volumes
and financial results. As anticipated, sequential natural gas
gathering and processing, water handling and oil gathering and
transportation volumes all declined in the first quarter of 2021,
primarily as a result of the sequential declines noted above in
Matador’s oil, natural gas and water production, but also due to
production impacts suffered by San Mateo’s other customers
resulting from Winter Storm Uri. In addition, first quarter 2021
volumes do not include the full quantity of volumes that would have
otherwise been delivered by San Mateo customers subject to minimum
volume commitments, but for which San Mateo recognized revenues
during the first quarter of 2021. San Mateo anticipates that
natural gas gathering and processing, water handling and oil
gathering and transportation volumes should all increase
significantly in the second quarter of 2021 as the first 13 Voni
wells are turned to sales in the Stateline asset area, along with
two new wells in the Wolf asset area.
Operating Highlights
During the first quarter of 2021, San Mateo:
- Handled an average of 233,000 barrels of produced water per
day, an 11% sequential decrease, as compared to 260,000 barrels per
day in the fourth quarter of 2020, but an 8% year-over-year
increase, as compared to 216,000 barrels per day in the first
quarter of 2020.
- Gathered or transported an average of 35,000 barrels of oil per
day, an 18% sequential decrease, as compared to 42,500 barrels of
oil per day in the fourth quarter of 2020, but a 31% year-over-year
increase, as compared to 26,800 barrels per day in the first
quarter of 2020.
- Gathered an average of 191 million cubic feet of natural gas
per day, a 12% sequential decrease, as compared to 216 million
cubic feet per day in the fourth quarter of 2020, and a 5%
year-over-year decrease, as compared to 201 million cubic feet per
day in the first quarter of 2020.
- Processed an average of 158 million cubic feet of natural gas
per day at its Black River Processing Plant, a 10% sequential
decrease, as compared to 175 million cubic feet per day in the
fourth quarter of 2020, and an 11% year-over-year decrease, as
compared to 177 million cubic feet per day in the first quarter of
2020.
Financial Results
During the first quarter of 2021, San Mateo achieved
better-than-anticipated financial results as described below,
including:
- Net income (GAAP basis) of $18.1 million, a 31% sequential
decrease from $26.2 million in the fourth quarter of 2020, and a 5%
year-over-year decrease from $19.1 million in the first quarter of
2020. This quarterly result was above the Company’s expectations
for the first quarter, primarily resulting from
better-than-expected volumes from Matador and other customers
attributable to San Mateo maintaining operations during Winter
Storm Uri and lower-than-projected operating costs.
- Adjusted EBITDA (a non-GAAP financial measure) of $27.6
million, a 22% sequential decrease from $35.4 million in the fourth
quarter of 2020, but a 5% year-over-year increase from $26.2
million in the first quarter of 2020. This quarterly result was
above the Company’s expectations for the first quarter by about $6
million for the reasons noted above. San Mateo’s net income and
Adjusted EBITDA are both expected to increase sequentially in the
second quarter of 2021.
- Net cash provided by San Mateo operating activities (GAAP
basis) of $41.2 million, leading to San Mateo adjusted free cash
flow (a non-GAAP financial measure) of $17.0 million. San Mateo
expects to continue generating adjusted free cash flow, assuming a
maintenance level of capital expenditures in future periods.
- In April 2021, San Mateo repaid $19 million in total borrowings
under its credit facility. Total borrowings outstanding under the
San Mateo credit facility at April 28, 2021 were $315 million. The
San Mateo credit facility is non-recourse with respect to
Matador.
Capital Expenditures
Matador’s portion of San Mateo’s capital expenditures was
approximately $5 million in the first quarter of 2021, about $2
million less than the Company’s estimate of $7 million for the
quarter, primarily attributable to both cost savings on completed
projects and the timing of various operations.
Conference Call Information
The Company will host a live conference call on Thursday, April
29, 2021, at 9:00 a.m. Central Time to review its first quarter
2021 operational and financial results. To access the live
conference call, domestic participants should dial (855) 875-8781
and international participants should dial (720) 634-2925. The
conference ID and passcode is 3738118. The conference call will
also be available through the Company’s website at www.matadorresources.com on the Events and
Presentations page under the Investor Relations tab. The replay of
the event will be available on the Company’s website at
www.matadorresources.com on the Events
and Presentations page under the Investor Relations tab through May
31, 2021.
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. 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
produced water gathering services and produced 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, future liquidity, the payment of dividends,
results in certain basins, objectives, project timing, expectations
and intentions, regulatory and governmental actions 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 impact of the worldwide spread of the
novel coronavirus, or COVID-19, on oil and natural gas demand, oil
and natural gas prices and our business; the operating results of
the Company’s midstream joint venture’s Black River cryogenic
natural gas 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 produced water disposal wells; and other
important factors that 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.
Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(In thousands, except par value and share
data)
March 31, 2021
December 31,
2020
ASSETS
Current assets
Cash
$
17,924
$
57,916
Restricted cash
30,333
33,467
Accounts receivable
Oil and natural gas revenues
121,825
85,098
Joint interest billings
43,331
34,823
Other
11,658
17,212
Derivative instruments
4,071
6,727
Lease and well equipment inventory
11,045
10,584
Prepaid expenses and other current
assets
16,677
15,802
Total current assets
256,864
261,629
Property and equipment, at cost
Oil and natural gas properties, full-cost
method
Evaluated
5,407,305
5,295,931
Unproved and unevaluated
925,259
902,133
Midstream properties
851,412
841,695
Other property and equipment
29,802
29,561
Less accumulated depletion, depreciation
and amortization
(3,776,414
)
(3,701,551
)
Net property and equipment
3,437,364
3,367,769
Other assets
Derivative instruments
422
2,570
Other long-term assets
44,231
55,312
Total assets
$
3,738,881
$
3,687,280
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
30,198
$
13,982
Accrued liabilities
143,074
119,158
Royalties payable
71,790
66,049
Amounts due to affiliates
8,533
4,934
Derivative instruments
83,805
45,186
Advances from joint interest owners
7,000
4,191
Other current liabilities
32,012
37,436
Total current liabilities
376,412
290,936
Long-term liabilities
Borrowings under Credit Agreement
340,000
440,000
Borrowings under San Mateo Credit
Facility
334,000
334,000
Senior unsecured notes payable
1,041,393
1,040,998
Asset retirement obligations
38,720
37,919
Deferred income taxes
2,499
—
Other long-term liabilities
25,324
30,402
Total long-term liabilities
1,781,936
1,883,319
Shareholders' equity
Common stock - $0.01 par value,
160,000,000 shares authorized; 116,871,689 and 116,847,003 shares
issued; and 116,779,751 and 116,844,768 shares outstanding,
respectively
1,169
1,169
Additional paid-in capital
2,043,703
2,027,069
Accumulated deficit
(683,973
)
(741,705
)
Treasury stock, at cost, 91,938 and 2,235
shares, respectively
(1,504
)
(3
)
Total Matador Resources Company
shareholders' equity
1,359,395
1,286,530
Non-controlling interest in
subsidiaries
221,138
226,495
Total shareholders' equity
1,580,533
1,513,025
Total liabilities and shareholders'
equity
$
3,738,881
$
3,687,280
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended
March 31,
2021
2020
Revenues
Oil and natural gas revenues
$
316,233
$
197,914
Third-party midstream services
revenues
15,438
15,830
Sales of purchased natural gas
4,510
10,544
Realized (loss) gain on derivatives
(25,913
)
10,867
Unrealized (loss) gain on derivatives
(43,423
)
136,430
Total revenues
266,845
371,585
Expenses
Production taxes, transportation and
processing
34,174
21,716
Lease operating
25,939
30,910
Plant and other midstream services
operating
13,663
9,964
Purchased natural gas
2,855
8,058
Depletion, depreciation and
amortization
74,863
90,707
Accretion of asset retirement
obligations
500
476
General and administrative
22,188
16,222
Total expenses
174,182
178,053
Operating income
92,663
193,532
Other income (expense)
Interest expense
(19,650
)
(19,812
)
Other (expense) income
(675
)
1,320
Total other expense
(20,325
)
(18,492
)
Income before income taxes
72,338
175,040
Income tax provision (benefit)
Deferred
2,840
39,957
Income tax provision
2,840
39,957
Net income
69,498
135,083
Net income attributable to non-controlling
interest in subsidiaries
(8,853
)
(9,354
)
Net income attributable to Matador
Resources Company shareholders
$
60,645
$
125,729
Earnings per common share
Basic
$
0.52
$
1.08
Diluted
$
0.51
$
1.08
Weighted average common shares
outstanding
Basic
116,807
116,607
Diluted
118,669
116,684
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS - UNAUDITED
(In thousands)
Three Months Ended
March 31,
2021
2020
Operating activities
Net income
$
69,498
$
135,083
Adjustments to reconcile net income to net
cash provided by operating activities
Unrealized loss (gain) on derivatives
43,423
(136,430
)
Depletion, depreciation and
amortization
74,863
90,707
Accretion of asset retirement
obligations
500
476
Stock-based compensation expense
855
3,794
Deferred income tax provision
2,840
39,957
Amortization of debt issuance cost
724
684
Changes in operating assets and
liabilities
Accounts receivable
(39,680
)
36,342
Lease and well equipment inventory
112
(1,296
)
Prepaid expenses and other current
assets
(802
)
174
Other long-term assets
19
1,749
Accounts payable, accrued liabilities and
other current liabilities
8,560
(58,562
)
Royalties payable
5,741
384
Advances from joint interest owners
2,809
(3,598
)
Other long-term liabilities
(67
)
(92
)
Net cash provided by operating
activities
169,395
109,372
Investing activities
Drilling, completion and equipping capital
expenditures
(85,986
)
(133,170
)
Acquisition of oil and natural gas
properties
(6,676
)
(40,824
)
Midstream capital expenditures
(16,380
)
(73,439
)
Expenditures for other property and
equipment
(133
)
(787
)
Proceeds from sale of assets
280
—
Net cash used in investing activities
(108,895
)
(248,220
)
Financing activities
Repayments of borrowings under Credit
Agreement
(100,000
)
—
Borrowings under Credit Agreement
—
60,000
Repayments of borrowings under San Mateo
Credit Facility
(11,000
)
—
Borrowings under San Mateo Credit
Facility
11,000
19,500
Cost to amend credit facilities
—
(660
)
Dividends paid
(2,913
)
—
Contributions related to formation of San
Mateo
15,376
14,700
Contributions from non-controlling
interest owners of less-than-wholly-owned subsidiaries
—
50,000
Distributions to non-controlling interest
owners of less-than-wholly-owned subsidiaries
(14,210
)
(11,515
)
Taxes paid related to net share settlement
of stock-based compensation
(1,721
)
(1,336
)
Other
(158
)
(174
)
Net cash (used in) provided by financing
activities
(103,626
)
130,515
Decrease in cash and restricted cash
(43,126
)
(8,333
)
Cash and restricted cash at beginning of
period
91,383
65,128
Cash and restricted cash at end of
period
$
48,257
$
56,795
Supplemental Non-GAAP Financial Measures
Adjusted EBITDA
This press release includes the non-GAAP financial measure of
Adjusted EBITDA. Adjusted EBITDA is a supplemental non-GAAP
financial measure that is used by management and external users of
the Company's consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies. "GAAP" means
Generally Accepted Accounting Principles in the United States of
America. The Company believes Adjusted EBITDA helps it evaluate its
operating performance and compare its results of operations from
period to period without regard to its financing methods or capital
structure. The Company defines, on a consolidated basis and for San
Mateo, Adjusted EBITDA as earnings before interest expense, income
taxes, depletion, depreciation and amortization, accretion of asset
retirement obligations, property impairments, unrealized derivative
gains and losses, certain other non-cash items and non-cash
stock-based compensation expense and net gain or loss on asset
sales and impairment. Adjusted EBITDA for San Mateo includes the
combined financial results of San Mateo Midstream, LLC and San
Mateo Midstream II, LLC prior to their October 2020 merger.
Adjusted EBITDA is not a measure of net income (loss) or net cash
provided by operating activities as determined by GAAP. All
reference to Matador's Adjusted EBITDA are those values
attributable to Matador Resources Company shareholders after giving
effect to Adjusted EBITDA attributable to non-controlling
interests, including in San Mateo.
Adjusted EBITDA should not be considered an alternative to, or
more meaningful than, net income (loss) or net cash provided by
operating activities as determined in accordance with GAAP or as an
indicator of the Company's operating performance or liquidity.
Certain items excluded from Adjusted EBITDA are significant
components of understanding and assessing a company's financial
performance, such as a company's cost of capital and tax structure.
Adjusted EBITDA may not be comparable to similarly titled measures
of another company because all companies may not calculate Adjusted
EBITDA in the same manner. The following table presents the
calculation of Adjusted EBITDA and the reconciliation of Adjusted
EBITDA to the GAAP financial measures of net income (loss) and net
cash provided by operating activities, respectively, that are of a
historical nature. Where references are pro forma, forward-looking,
preliminary or prospective in nature, and not based on historical
fact, the table does not provide a reconciliation. The Company
could not provide such reconciliation without undue hardship
because such Adjusted EBITDA numbers are estimations,
approximations and/or ranges. In addition, it would be difficult
for the Company to present a detailed reconciliation on account of
many unknown variables for the reconciling items, including future
income taxes, full-cost ceiling impairments, unrealized gains or
losses on derivatives and gains or losses on asset sales and
impairment. For the same reasons, the Company is unable to address
the probable significance of the unavailable information, which
could be material to future results.
Adjusted EBITDA – Matador Resources
Company
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Unaudited Adjusted EBITDA
Reconciliation to Net Income (Loss):
Net income (loss) attributable to Matador
Resources Company shareholders
$
60,645
$
(89,454
)
$
125,729
Net income attributable to non-controlling
interest in subsidiaries
8,853
12,861
9,354
Net income (loss)
69,498
(76,593
)
135,083
Interest expense
19,650
20,352
19,812
Total income tax provision (benefit)
2,840
(2,230
)
39,957
Depletion, depreciation and
amortization
74,863
89,749
90,707
Accretion of asset retirement
obligations
500
499
476
Full-cost ceiling impairment
—
109,579
—
Unrealized loss (gain) on derivatives
43,423
22,737
(136,430
)
Non-cash stock-based compensation
expense
855
3,176
3,794
Net loss on asset sales and impairment
—
200
—
Consolidated Adjusted EBITDA
211,629
167,469
153,399
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(13,514
)
(17,350
)
(12,823
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
198,115
$
150,119
$
140,576
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
169,395
$
157,623
$
109,372
Net change in operating assets and
liabilities
23,308
(9,788
)
24,899
Interest expense, net of non-cash
portion
18,926
19,634
19,128
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(13,514
)
(17,350
)
(12,823
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
198,115
$
150,119
$
140,576
Adjusted EBITDA – San Mateo (100%)
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income
$
18,068
$
26,247
$
19,088
Depletion, depreciation and
amortization
7,523
7,277
4,600
Interest expense
1,928
1,827
2,437
Accretion of asset retirement
obligations
60
56
45
Adjusted EBITDA
$
27,579
$
35,407
$
26,170
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
41,198
$
26,131
$
25,244
Net change in operating assets and
liabilities
(15,308
)
7,716
(1,341
)
Interest expense, net of non-cash
portion
1,689
1,560
2,267
Adjusted EBITDA
$
27,579
$
35,407
$
26,170
Adjusted Net Income and Adjusted Earnings
Per Diluted Common Share
This press release includes the non-GAAP financial measures of
adjusted net income and adjusted earnings per diluted common share.
These non-GAAP items are measured as net income (loss) attributable
to Matador Resources Company shareholders, adjusted for dollar and
per share impact of certain items, including unrealized gains or
losses on derivatives, the impact of full cost-ceiling impairment
charges, if any, and non-recurring transaction costs for certain
acquisitions or other non-recurring expense items, along with the
related tax effect for all periods. This non-GAAP financial
information is provided as additional information for investors and
is not in accordance with, or an alternative to, GAAP financial
measures. Additionally, these non-GAAP financial measures may be
different than similar measures used by other companies. The
Company believes the presentation of adjusted net income and
adjusted earnings per diluted common share provides useful
information to investors, as it provides them an additional
relevant comparison of the Company's performance across periods and
to the performance of the Company's peers. In addition, these
non-GAAP financial measures reflect adjustments for items of income
and expense that are often excluded by industry analysts and other
users of the Company's financial statements in evaluating the
Company's performance. The table below reconciles adjusted net
income and adjusted earnings per diluted common share to their most
directly comparable GAAP measure of net income (loss) attributable
to Matador Resources Company shareholders.
Three Months Ended
March 31,
December 31,
March 31,
2021
2020
2020
(In thousands, except per share data)
Unaudited Adjusted Net Income and
Adjusted Earnings Per Share Reconciliation to
Net Income (Loss):
Net income (loss) attributable to Matador
Resources Company shareholders
$
60,645
$
(89,454
)
$
125,729
Total income tax provision (benefit)
2,840
(2,230
)
39,957
Income (loss) attributable to Matador
Resources Company shareholders before taxes
63,485
(91,684
)
165,686
Less non-recurring and unrealized charges
to income (loss) before taxes:
Full-cost ceiling impairment
—
109,579
—
Unrealized loss (gain) on derivatives
43,423
22,737
(136,430
)
Net loss on asset sales and impairment
—
200
—
Adjusted income attributable to Matador
Resources Company shareholders before taxes
106,908
40,832
29,256
Income tax expense(1)
22,451
8,575
6,144
Adjusted net income attributable to
Matador Resources Company shareholders (non-GAAP)
$
84,457
$
32,257
$
23,112
Weighted average shares outstanding,
including participating securities - basic
116,807
116,840
116,607
Dilutive effect of options and restricted
stock units
1,862
704
77
Weighted average common shares outstanding
- diluted
118,669
117,544
116,684
Adjusted earnings per share attributable
to Matador Resources Company
shareholders (non-GAAP)
Basic
$
0.72
$
0.28
$
0.20
Diluted
$
0.71
$
0.27
$
0.20
(1) Estimated using federal statutory tax
rate in effect for the period.
Adjusted Free Cash Flow
This press release includes the non-GAAP financial measure of
adjusted free cash flow. This non-GAAP item is measured, on a
consolidated basis for the Company and for San Mateo, as net cash
provided by operating activities, adjusted for changes in working
capital and cash performance incentives that are not included as
operating cash flows, less cash flows used for capital
expenditures, adjusted for changes in capital accruals. On a
consolidated basis, these numbers are also adjusted for the cash
flows related to non-controlling interest in subsidiaries that
represent cash flows not attributable to Matador shareholders.
Adjusted free cash flow should not be considered an alternative to,
or more meaningful than, net cash provided by operating activities
as determined in accordance with GAAP or an indicator of the
Company's liquidity. Adjusted free cash flow is used by the
Company, securities analysts and investors as an indicator of the
Company's ability to manage its operating cash flow, internally
fund its D/C/E capital expenditures, pay dividends and service or
incur additional debt, without regard to the timing of settlement
of either operating assets and liabilities or accounts payable
related to capital expenditures. Additionally, this non-GAAP
financial measure may be different than similar measures used by
other companies. The Company believes the presentation of adjusted
free cash flow provides useful information to investors, as it
provides them an additional relevant comparison of the Company’s
performance, sources and uses of capital associated with its
operations across periods and to the performance of the Company's
peers. In addition, this non-GAAP financial measure reflects
adjustments for items of cash flows that are often excluded by
securities analysts and other users of the Company's financial
statements in evaluating the Company's cash spend.
The table below reconciles adjusted free cash flow to its most
directly comparable GAAP measure of net cash provided by operating
activities. All references to Matador's adjusted free cash flow are
those values attributable to Matador shareholders after giving
effect to adjusted free cash flow attributable to third-party
non-controlling interests, including in San Mateo. Adjusted free
cash flow for San Mateo includes the combined financial results of
San Mateo Midstream, LLC and San Mateo Midstream II, LLC prior to
their October 2020 merger.
Adjusted Free Cash Flow - Matador
Resources Company
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Net cash provided by operating
activities
$
169,395
$
157,623
$
109,372
Net change in operating assets and
liabilities
23,308
(9,788
)
24,899
San Mateo discretionary cash flow
attributable to non-controlling interest in subsidiaries(1)
(12,686
)
(16,585
)
(11,712
)
Performance incentives received from Five
Point
15,376
—
14,700
Total discretionary cash flow
195,393
131,250
137,259
Drilling, completion and equipping capital
expenditures
85,986
70,531
133,170
Midstream capital expenditures
16,380
36,417
73,439
Expenditures for other property and
equipment
133
404
787
Net change in capital accruals
33,376
(30,753
)
30,135
San Mateo accrual-based capital
expenditures related to non-controlling interest in
subsidiaries(2)
(4,356
)
(6,083
)
(47,485
)
Total accrual-based capital
expenditures(3)
131,519
70,516
190,046
Adjusted free cash flow
$
63,874
$
60,734
$
(52,787
)
(1)
Represents Five Point's 49% interest in
San Mateo discretionary cash flow, as computed below.
(2)
Represents Five Point's 49% interest in
accrual-based San Mateo capital expenditures, as computed below,
and for the three months ended March 31, 2020, amounts related to
Five Point's $50 million carry of Matador's proportionate interest
in San Mateo.
(3)
Represents drilling, completion and
equipping costs, Matador's share of San Mateo capital expenditures
plus 100% of other immaterial midstream capital expenditures not
associated with San Mateo.
Adjusted Free Cash Flow - San Mateo (100%)
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2021
2020
2020
Net cash provided by San Mateo operating
activities
$
41,198
$
26,131
$
25,244
Net change in San Mateo operating assets
and liabilities
(15,308
)
7,716
(1,341
)
Total San Mateo discretionary cash
flow
25,890
33,847
23,903
San Mateo capital expenditures
15,332
36,333
73,670
Net change in San Mateo capital
accruals
(6,442
)
(23,919
)
(4,819
)
San Mateo accrual-based capital
expenditures
8,890
12,414
68,851
San Mateo adjusted free cash flow
$
17,000
$
21,433
$
(44,948
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006061/en/
Mac Schmitz Capital Markets Coordinator (972) 371-5225
investors@matadorresources.com
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