Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) today reported financial and operating results for the
fourth quarter and full year 2023. A slide presentation summarizing
the highlights of Matador’s fourth quarter and full year 2023
earnings release and 2024 operating plan is also included on the
Company’s website at www.matadorresources.com on the Events and
Presentations page under the Investor Relations tab.
Management Summary Comments
In summarizing the year, Joseph Wm. Foran, Matador’s Founder,
Chairman and CEO, noted, “Matador achieved another record quarter in the fourth quarter of 2023,
which was another strong finish to yet another record year. Matador not only produced a record
amount of oil and natural gas through strong well performance
during the fourth quarter of 2023 but also steadily decreased costs
during the quarter, resulting in better-than-expected free cash
flow per share. We used this higher free cash flow to repay
borrowings under our credit facility, make profitable investments
in our oil and natural gas properties and our midstream business
and pay a steadily increasing fixed dividend to our
shareholders.
“In 2024, we anticipate that Matador will set further records as
we continue our long tradition of profitable growth at a measured
pace while consistently increasing our reserves and improving our
operational efficiencies in the Delaware Basin (see Slide
A). Matador notably not only significantly exceeded production
expectations during the fourth quarter of 2023 but also anticipates
continued growth and capital efficiency gains throughout 2024.
These efforts are expected to result in organic oil production
gains of 10% year-over-year in the fourth quarter of 2024 when
compared to the oil production reported in the fourth quarter of
this last year (see Slide B and Slide C). This oil
growth and individual well efficiency allows us to continue to
reduce debt and strengthen our balance sheet. In fact, we believe
our large and growing inventory of high-quality acreage in the core
of the Delaware Basin combined with our very capable staff and
board sets us up for years of continued and consistent success,
especially when combined with our profitable midstream business
that provides critical flow assurance for our oil and natural gas
production (see Slide D). In other words, we like our
chances going forward.
2023 Accomplishments
“Matador’s record fourth quarter 2023 average daily production
of 154,300 barrels of oil and natural gas equivalent (‘BOE’) per
day significantly exceeded our expectations of 145,250 BOE per day,
primarily as a result of (i) increased production from wells in
Matador’s Stateline asset area and Rodney Robinson leasehold, (ii)
outperformance of our Margarita wells that were turned to sales in
the third quarter of 2023, (iii) land acquisitions during the
quarter that added approximately 1,000 BOE per day in excess of
Matador’s expectations and (iv) higher-than-expected production
from non-operated assets. In fact, Matador grew its production by
over 50% in 2023 as our average daily production grew from
approximately 100,000 BOE per day in early January 2023 to over
150,000 BOE per day in the fourth quarter of 2023 (see Slide
E).
“In addition to increasing production, we also decreased our
operating costs during the fourth quarter of 2023. For example, our
lease operating expenses decreased 5% to $5.06 per BOE in the
fourth quarter of 2023, as compared to $5.34 per BOE in the third
quarter of 2023 and significantly outperformed our expected fourth
quarter guidance range of $5.40 to $5.80 per BOE (see Slide
F). This decrease was primarily due to increased use of
recycled produced water for completion activities as well as a
range of incremental improvements relating to the wells we acquired
as part of our acquisition of Advance Energy Partners Holdings, LLC
(‘Advance’). These improvements include artificial lift
conversions, consolidation of production facilities and a reduction
in future repairs, field supervision costs and maintenance
costs.
“Our record quarterly production and increased efficiencies
resulted in fourth quarter 2023 net income of $254.5 million as
well as fourth quarter 2023 Adjusted EBITDA of $552.8 million.
During this time, Matador also achieved record total proved oil and
natural gas reserves of 460.1 million BOE at December 31, 2023,
which is an increase of 29% as compared to 356.7 million BOE at
December 31, 2022 despite average oil prices decreasing 17% from
$90.15 in 2022 to $74.70 in 2023 and average natural gas prices
decreasing 58% from $6.36 in 2022 to $2.64 in 2023 (see Slide
G). The Standardized Measure and PV-10 of our total proved oil
and natural gas reserves was $6.1 billion and $7.7 billion,
respectively, using Securities and Exchange Commission (‘SEC’)
pricing of $74.70 for oil and $2.64 for natural gas as of December
31, 2023. Notably, Matador’s natural gas reserves at December 31,
2023 exceeded one trillion cubic feet for the first time.
“The Advance acquisition was important to us but was only one of
approximately 200 acquisitions and trades we completed during 2023.
These transactions and their associated midstream systems were
located throughout Matador’s asset areas and continue to build and
connect Matador’s core Delaware Basin acreage (see Slide H
and Slide I). As a result, Matador now ranks as the number
eight producer by total production in New Mexico according to
Enverus data (see Slide D and Slide I).
“Matador’s midstream businesses also made great strides
throughout 2023. San Mateo Midstream, LLC (‘San Mateo’), our
midstream joint venture, achieved its second-best annual net income
of $131.2 million and record Adjusted EBITDA of $200.2 million
during 2023. These record results include 26% year-over-year growth
in third-party revenue as San Mateo continues to expand its
relationships with existing customers and obtain business from new
third-party customers (see Slide J). In addition to the
success at San Mateo, Pronto Midstream, LLC (‘Pronto’), our
wholly-owned midstream subsidiary, set a single day record of 64
million cubic feet of natural gas processed at its Marlan cryogenic
natural gas processing plant (the ‘Marlan Processing Plant’). This
processing record for the Marlan Processing Plant was achieved in
large part because of Matador’s operated wells in Northern Lea
County, New Mexico, including natural gas from the Margarita wells
that were acquired in the Advance transaction, and repeat business
from third-party customers. In the fourth quarter of 2023, the
Marlan Processing Plant processed approximately 12 million cubic
feet of natural gas per day of Matador’s production from Lea
County, New Mexico, which allowed for the associated oil production
of approximately 9,000 barrels of oil per day.
“We appreciate the planning, teamwork and concerted effort and
communication by and between our various staff members, partners,
consultants, vendors, shareholders and other stakeholders who
helped make 2023 the best year in Matador’s 40-year history. It was
a great leap forward by a hard-working and thoughtful team of
professionals.
2024 Outlook: More of the Same
“While we celebrate our 2023 accomplishments, we remain focused
on continued growth, profitability and increased efficiencies in
2024. Matador anticipates another record year in 2024 with an 18%
increase in our expected total average production of 156,000 BOE
per day in full-year 2024, as compared to total average production
of 131,800 BOE per day in full-year 2023 (see Slide K).
Notably, our oil production is increasing at a faster pace than our
total production as we produce more wells in Northern Lea County in
connection with the 152,000 net acres of our existing leasehold
position and the various other acquisitions we have made in 2023.
In 2024, our oil production is expected to increase 23% to 93,000
barrels of oil per day in full-year 2024, as compared to an average
of 75,500 barrels of oil per day in full-year 2023.
“Matador expects to achieve record production in 2024 despite
the expectation that it will experience temporary midstream
constraints from time to time from third-party midstream providers
primarily in Lea County, New Mexico during the first quarter of
2024. It is difficult to estimate the amount of these temporary
third-party midstream production constraints. During January 2024,
these constraints are estimated to have resulted in approximately
5,500 BOE per day (3,850 barrels of oil per day) of less
production. These third-party midstream constraints have continued
into February and are even expected to continue into March. Our
estimates of our first quarter 2024 production of 145,000 to
146,500 BOE per day take into account the impact of these temporary
third-party midstream constraints.
“Notably, Matador’s midstream systems (San Mateo and Pronto)
have operated without any material downtime and have not
contributed to these constrained volumes, which is evidence of the
importance of operating our own midstream assets. The completion of
the natural gas pipeline connections between Pronto and San Mateo
and between Pronto and our Advance acreage as well as certain other
firm service gas gathering and processing agreements are expected
to resolve these temporary midstream constraints by the end of the
first quarter of 2024. As a result, we expect our second quarter
2024 production to increase back above our fourth quarter 2023
production of 154,300 BOE per day and then to continue to grow
above that amount throughout the rest of the year.
2024 Operations Outlook and Innovations
“As we announced in October 2023, we added an eighth drilling
rig in late January 2024. Matador anticipates drilling, completing
and equipping (‘D/C/E’) capital expenditures of $1.20 billion
during 2024, which is similar to our D/C/E capital expenditures of
$1.16 billion in 2023. We expect similar D/C/E capital expenditures
in 2024 as compared to 2023 because of increased efficiencies and
lower working interests in the wells we turn to sales in 2024 as
compared to 2023. After the success and continued outperformance of
the 21 Margarita wells that we acquired in the Advance transaction,
we are excited to turn to sales the additional 21 ‘DUC’ wells that
we acquired in the Advance transaction on our Dagger Lake South
lease. We expect to turn these wells to sales during the second
quarter of 2024. The Dagger Lake South wells have lateral lengths
of 1.5 miles as compared to the 2.25-mile lateral lengths of the
Margarita wells. Similar to the Margarita wells, we expect the
Dagger Lake South wells to have an oil to natural gas ratio of over
80%.
“Notably, Matador expects to achieve record production during
2024 while also decreasing costs. We anticipate 6% lower drilling
and completion costs for operated wells turned to sales in 2024 of
$995 to $1,025 per completed lateral foot, as compared to $1,075
per completed lateral foot in 2023. After successfully implementing
‘Simul-Frac’ operations in 2021, we are currently testing our first
‘Trimul-Frac’ operation, which will allow us to complete three
wells simultaneously in a six well batch. Matador estimates that
‘Simul-Frac’ and ‘Trimul-Frac’ operations save approximately
$250,000 and $350,000, respectively, per well as compared to
traditional zipper fracturing operations. Total savings from these
operations exceed $35 million since 2021 (see Slide L).
“Matador also remains encouraged by the positive test of cost
and production efficiency of its first two ‘U-Turn’ wells in
Matador’s Wolf asset area in Loving County, Texas. We achieved
approximately $10 million in cost savings by drilling two ‘U-Turn’
two-mile lateral wells as compared to four one-mile lateral wells
in this section. Production testing indicates all perforated depths
are contributing to production and cumulative results are
consistent with traditional straight two-mile lateral wells.
Following this encouraging test, we are exploring the possibility
of drilling up to 20 additional ‘U-Turn’ wells during 2024 and
2025. We are excited about the prospects of implementing the
‘U-Turn’ design throughout our acreage footprint (see Slide
M).
“The opportunities to expand our midstream footprint in the
Delaware Basin to support Matador’s operations and provide services
to third-party customers look favorable due in large part to the
trust, relationships and repeat business of third-party friends and
customers (see Slide N). The natural gas pipelines
connecting Pronto’s system to both the San Mateo system and the
acreage acquired in the Advance transaction remain on track to be
completed by the end of the first quarter of 2024.
“Matador continues to move forward with the 200 million cubic
feet per day expansion of the Marlan Processing Plant, which is
expected to be completed in the first half of 2025. We plan to fund
100% of this expansion with our cash flows and availability under
our credit facility, although we continue to evaluate potential
partners in Pronto that would share in these capital expenditures
and strategic opportunities. Matador generally expects its
midstream projects to have a rate of return of 20% or more with a
payback period of less than five years, but most importantly such
midstream projects provide added flow assurance for Matador and its
third-party customers in the Delaware Basin.
Today, San Mateo and Pronto have over 540 miles of oil, natural
gas and water pipelines, 520 million cubic feet per day of designed
natural gas processing capacity and 17 saltwater disposal wells
with approximately 510,000 barrels per day of designed produced
water disposal capacity.
Expression of Thanks and Appreciation
“Many thanks are due to our Board, management, office and field
staffs, friends and shareholders who have worked together to
establish Matador as one of the top ten oil and natural gas
producers in New Mexico. We are particularly appreciative of the
staff work, bank support and disciplined approach of our Board and
Executive Team that has allowed us to continue to expand our
exploration and production programs under challenging conditions as
well as to expand our strategic opportunities to include an
increasingly important midstream system. We believe this support
has enabled us to outperform the price of oil, the S&P Oil and
Gas Exploration & Production Select Industry Index, or XOP
Index, the Russell 2000 Index and the S&P 500 Index since our
initial public offering in February 2012 (see Slide O). We
are excited about the opportunities ahead for Matador and thank you
for your continued support and friendship.”
Highlights
Fourth Quarter 2023 Operational and Financial
Highlights
(for comparisons to prior year, please see the remainder of
this press release)
- Record quarterly average production of 154,300 BOE per day
(88,700 barrels of oil per day)
- Net cash provided by operating activities of $618.3
million
- Adjusted free cash flow of $180.5 million
- Net income of $254.5 million, or $2.12 per diluted common
share
- Adjusted net income of $238.4 million, or $1.99 per diluted
common share
- Adjusted EBITDA of $552.8 million
- San Mateo net income of $43.7 million
- San Mateo Adjusted EBITDA of $61.6 million
Full Year 2023 Operational and Financial Highlights
(for comparisons to prior year, please see the remainder of
this press release)
- Record annual average production of 131,800 BOE per day (75,500
barrels of oil per day)
- Net cash provided by operating activities of $1.87 billion
- Adjusted free cash flow of $460.0 million
- Net income of $846.1 million, or $7.05 per diluted common
share
- Adjusted net income of $811.7 million, or $6.77 per diluted
common share
- Adjusted EBITDA of $1.85 billion
- San Mateo net income of $131.2 million
- San Mateo Adjusted EBITDA of $200.2 million
2024 Guidance Highlights
- Oil production guidance of 91,000 to 95,000 barrels per
day
- Natural gas production guidance of 370.0 to 386.0 million cubic
feet per day
- Total production guidance of 153,000 to 159,000 BOE per
day
- Drilling, completing and equipping capital expenditures of
$1.10 to 1.30 billion
- Midstream capital expenditures of $200 to 250 million
Note: All references to Matador’s net income, adjusted net
income, 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, adjusted net income, 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, adjusted earnings per diluted common share,
Adjusted EBITDA, adjusted free cash flow and PV-10 and
reconciliations of such non-GAAP financial metrics to their
comparable GAAP metrics, please see “Supplemental Non-GAAP
Financial Measures” below.
Operational and Financial Update
Record Fourth Quarter 2023 Oil, Natural Gas and Total Oil
Equivalent Production
Matador’s average daily oil and natural gas production was
154,261 BOE per day in the fourth quarter of 2023, which was the
highest in Matador’s history. The production in the fourth quarter
of 2023 was a 14% sequential increase from 135,096 BOE in the third
quarter of 2023 and a 38% year-over-year increase from 111,735 BOE
per day in the fourth quarter of 2022. Matador’s average production
of 154,261 BOE per day in the fourth quarter of 2023 was a 6%
increase as compared to the midpoint of Matador’s expected
production guidance of 145,250 BOE per day for the fourth quarter
of 2023. The primary drivers behind this outperformance were (i)
increased production from wells in Matador’s Stateline asset area
and Rodney Robinson leasehold, (ii) outperformance of Matador’s
Margarita wells that were turned to sales in the third quarter of
2023, (iii) land acquisitions during the quarter that added
approximately 1,000 BOE per day in excess of Matador’s expectations
and (iv) higher-than-expected production from non-operated
assets.
Production
Q4 2023 Average Daily Volume
Q4 2023
Guidance
Range (1)
Difference (2)
Sequential (3)
YoY (4)
Total, BOE per day
154,261
144,000 to 146,500
+6% Better than Guidance
+14%
+38%
Oil, Bbl per day
88,663
86,000 to 87,500
+2% Better than Guidance
+14%
+42%
Natural Gas, MMcf per day
393.6
348.0 to 354.0
+12% Better than Guidance
+14%
+33%
(1) Production range previously projected,
as provided on October 24, 2023.
(2) As compared to midpoint of guidance
provided on October 24, 2023.
(3) Represents sequential percentage
change from the third quarter of 2023.
(4) Represents year-over-year percentage
change from the fourth quarter of 2022.
Fourth Quarter 2023 Realized Commodity Prices
The following table summarizes Matador’s realized commodity
prices during the fourth quarter of 2023, as compared to the third
quarter of 2023 and the fourth quarter of 2022.
Sequential (Q4 2023 vs. Q3
2023)
YoY (Q4 2023 vs. Q4 2022)
Realized Commodity Prices
Q4 2023
Q3 2023
Sequential Change(1)
Q4 2023
Q4 2022
YoY Change(2)
Oil Prices, per Bbl
$79.00
$82.49
Down 4%
$79.00
$83.90
Down 6%
Natural Gas Prices, per Mcf
$3.01
$3.56
Down 15%
$3.01
$5.65
Down 47%
(1) Fourth quarter 2023 as compared to
third quarter 2023.
(2) Fourth quarter 2023 as compared to
fourth quarter 2022.
During the fourth quarter of 2023, Matador turned to sales a
record 39 gross (29.5 net) operated horizontal wells with an
average completed lateral length of 9,300 feet. The table below
provides a summary of our operated and non-operated activity in the
fourth quarter of 2023. Matador had 1.3 net additional operated
wells turned to sales in the fourth quarter of 2023 than it had
previously planned.
Fourth Quarter 2023 Quarterly
Well Count
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)
—
—
—
—
—
—
No wells turned to sales in Q4
2023
Antelope Ridge
4
2.7
1
0.0
5
2.7
3-2BS, 1-1BS, 1-AV
Arrowhead
17
10.6
—
—
17
10.6
8-WC A, 7-2BS, 2-1BS
Ranger
5
5.0
—
—
5
5.0
3-3BS, 1-3BS Carb, 1-WC A
Rustler Breaks
—
—
6
0.5
6
0.5
6-WC A
Stateline
—
—
—
—
—
—
No wells turned to sales in Q4
2023
Wolf/Jackson Trust
13
11.2
3
0.1
16
11.3
10-WC B, 5-WC A, 1-3BS Carb
Delaware Basin
39
29.5
10
0.6
49
30.1
South Texas
—
—
1
0.4
1
0.4
1-EF
Haynesville Shale
—
—
5
0.3
5
0.3
5-HV
Total
39
29.5
16
1.3
55
30.8
Note: AV = Avalon; BS = Bone Spring; HV =
Haynesville; EF = Eagle Ford; WC = Wolfcamp; BS Carb = Bone Spring
Carbonate. For example, 3-2BS indicates three Second Bone Spring
completions, and 8-WC A indicates eight Wolfcamp A completions. Any
“0.0” values in the table suggest a net working interest of less
than 5%, which does not round to 0.1.
Fourth Quarter 2023 Operating Expenses
Matador expected increased lease operating expenses in the
fourth quarter of 2023 as a result of closing the Advance
acquisition in April 2023 and continued integration of the acquired
assets. Fortunately, Matador was able to offset certain anticipated
expense increases through savings from the greater use of recycled
produced water for completion activities as well as a range of
improvements relating to the wells acquired in the Advance
transaction. These improvements include artificial lift
conversions, consolidation of production facilities and a reduction
in future repairs, field supervision costs and maintenance costs.
These actions to offset the expected increase in lease operating
expenses resulted in total lease operating expenses of $5.06 per
BOE for the fourth quarter of 2023, which is a 5% sequential
decrease from $5.34 per BOE in the third quarter of 2023, and a 10%
decrease from the midpoint of Matador’s expected fourth quarter
2023 guidance range of $5.40 to $5.80 per BOE.
Matador’s general and administrative (“G&A”) expenses
decreased 18% sequentially from $2.55 per BOE in the third quarter
of 2023 to $2.08 per BOE in the fourth quarter of 2023. This
decrease is due in part to the value of employee stock awards that
are settled in cash, which are remeasured at each quarterly
reporting period according to accounting rules. These cash-settled
stock award amounts decreased due to the fact that Matador’s share
price decreased 4% from $59.48 at the end of the third quarter of
2023 to $56.86 at end of the fourth quarter of 2023. Matador’s
fourth quarter 2023 G&A expenses were at the low end of
Matador’s expected fourth quarter 2023 range of $2.00 to $3.00 per
BOE.
During the fourth quarter of 2023, Matador’s plant and other
midstream services operating expenses, which include the costs to
operate San Mateo’s and Pronto’s assets, were $2.56 per BOE, a 3%
sequential increase from $2.48 per BOE in the third quarter of
2023. The fourth quarter 2023 plant and other midstream services
operating expenses were consistent with Matador’s expected fourth
quarter 2023 range of $2.25 to $2.75 per BOE.
Fourth Quarter 2023 Capital Expenditures
For the fourth quarter of 2023, Matador’s D/C/E capital
expenditures of $261.4 million and midstream capital expenditures
of $86.2 million were consistent with expectations and guidance.
The midstream capital expenditures during the fourth quarter
included the first payments related to the expansion of Pronto’s
Marlan Processing Plant.
Midstream Update
San Mateo’s operations in the fourth quarter of 2023 were
highlighted by record operating and financial results. These strong
results primarily reflect better-than-expected volumes delivered by
Matador and third-party customers into the San Mateo system. San
Mateo’s net income of $43.7 million and Adjusted EBITDA of $61.6
million were each records for San Mateo and better than
expected.
Operationally, San Mateo’s natural gas gathering and processing
volumes and produced water handling volumes in the fourth quarter
of 2023 were all-time quarterly highs. The table below sets forth
San Mateo’s throughput volumes, as compared to the third quarter of
2023 and the fourth quarter of 2022. The volumes in the table do
not include the full quantity of volumes that would have otherwise
been delivered by certain San Mateo customers subject to minimum
volume commitments (although partial deliveries were made), but for
which San Mateo recognized revenues.
Sequential (Q4 2023 vs. Q3
2023)
YoY (Q4 2023 vs. Q4 2022)
San Mateo Throughput Volumes
Q4 2023
Q3 2023
Change(1)
Q4 2023
Q4 2022
Change(2)
Natural gas gathering, MMcf per day
416
350
+19%
416
305
+36%
Natural gas processing, MMcf per day
413
385
+7%
413
328
+26%
Oil gathering and transportation, Bbl per
day
50,900
40,200
+27%
50,900
46,000
+11%
Produced water handling, Bbl per day
442,000
354,000
+25%
442,000
386,000
+15%
(1) Fourth quarter 2023 as compared to
third quarter 2023.
(2) Fourth quarter 2023 as compared to
fourth quarter 2022.
Pronto achieved record quarterly average throughput at the
Marlan Processing Plant of 54.4 million cubic feet of natural gas
per day. Pronto is moving forward with the expansion of the Marlan
Processing Plant as well as its other projects to connect to
Matador operated wells and other wells operated by third-party
customers. Matador does not expect significant net income or
Adjusted EBITDA from Pronto’s operations until the second half of
2025 when such expansion and construction operations are expected
to be fully complete and operational.
Proved Reserves, Standardized Measure and PV-10
The following table summarizes Matador’s estimated total proved
oil and natural gas reserves at December 31, 2023 and 2022.
At December 31,
% YoY Change
2023
2022
Estimated proved reserves:(1)(2)
Oil (MBbl)(3)
272,277
196,289
+39%
Natural Gas (Bcf)(4)
1,126.8
962.6
+17%
Total (MBOE)(5)
460,070
356,722
+29%
Estimated proved developed reserves:
Oil (MBbl)(3)
161,642
116,030
+39%
Natural Gas (Bcf)(4)
782.7
632.9
+24%
Total (MBOE)(5)
292,097
221,507
+32%
Percent developed
63.5
%
62.1
%
Estimated proved undeveloped reserves:
Oil (MBbl)(3)
110,635
80,259
+38%
Natural Gas (Bcf)(4)
344.0
329.7
+4%
Total (MBOE)(5)
167,973
135,215
+24%
Standardized Measure (in millions)(6)
$
6,113.5
$
6,983.2
(12)%
PV-10 (in millions)(7)
$
7,704.1
$
9,132.2
(16)%
Commodity prices:(2)
Oil (per Bbl)
$
74.70
$
90.15
(17)%
Natural Gas (per MMBtu)
$
2.64
$
6.36
(58)%
(1) Numbers in table may not total due to
rounding.
(2) Matador’s estimated proved reserves,
Standardized Measure and PV-10 were determined using index prices
for oil and natural gas, without giving effect to derivative
transactions, and were held constant throughout the life of the
properties. The unweighted arithmetic averages of
first-day-of-the-month prices for the period from January through
December 2023 were $74.70 per Bbl for oil and $2.64 per MMBtu for
natural gas and for the period from January through December 2022
were $90.15 per Bbl for oil and $6.36 per MMBtu for natural gas.
These prices were adjusted by property for quality, energy content,
regional price differentials, transportation fees, marketing
deductions and other factors affecting the price received at the
wellhead. Matador reports its proved reserves in two streams, oil
and natural gas, and the economic value of the natural gas liquids
(“NGL”) associated with the natural gas is included in the
estimated wellhead price on those properties where NGLs are
extracted and sold.
(3) One thousand barrels of oil.
(4) One billion cubic feet of natural
gas.
(5) One thousand barrels of oil
equivalent, estimated using a conversion factor of one barrel of
oil per six thousand standard cubic feet of natural gas.
(6) Standardized Measure represents the
present value of estimated future net cash flows from proved
reserves, less estimated future development, production, plugging
and abandonment and income tax expenses, discounted at 10% per
annum to reflect the timing of future cash flows. Standardized
Measure is not an estimate of the fair market value of Matador’s
properties.
(7) PV-10 is a non-GAAP financial measure.
For a reconciliation of PV-10 (non-GAAP) to Standardized Measure
(GAAP), please see “Supplemental Non-GAAP Financial Measures.”
PV-10 is not an estimate of the fair market value of our
properties.
The proved reserves estimates presented for each period in the
table above were prepared by the Company’s internal engineering
staff and audited by an independent reservoir engineering firm,
Netherland, Sewell & Associates, Inc. These proved reserves
estimates were prepared in accordance with the SEC’s rules for oil
and natural gas reserves reporting and do not include any unproved
reserves classified as probable or possible that might exist on
Matador’s properties. Notably, the commodity prices used in these
estimates decreased significantly in 2023 as compared to 2022 with
average oil prices decreasing 17% from $90.15 in 2022 to $74.70 in
2023 and average natural gas prices decreasing 58% from $6.36 in
2022 to $2.64 in 2023.
Matador’s total proved oil and natural gas reserves increased
29% year-over-year from 356.7 million BOE (55% oil, 62% proved
developed, 98% Delaware Basin), consisting of 196.3 million barrels
of oil and 962.6 billion cubic feet of natural gas, at December 31,
2022 to 460.1 million BOE (59% oil, 64% proved developed, 97%
Delaware Basin), consisting of 272.3 million barrels of oil and
1.13 trillion cubic feet of natural gas, at December 31, 2023.
Matador’s oil, natural gas and total proved reserves at December
31, 2023 were each at an all-time high.
The Standardized Measure of Matador’s total proved oil and
natural gas reserves decreased 12% from $6.98 billion at December
31, 2022 to $6.11 billion at December 31, 2023. The PV-10 (a
non-GAAP financial measure) of Matador’s total proved oil and
natural gas reserves decreased 16% from $9.13 billion at December
31, 2022 to $7.70 billion at December 31, 2023. The decrease in
both Standardized Measure and PV-10 of Matador’s proved oil and
natural gas reserves at December 31, 2023 resulted primarily from
the decrease in both oil and natural gas prices used to estimate
proved reserves at December 31, 2023, as compared to December 31,
2022. At December 31, 2023, the oil and natural gas prices used to
estimate total proved reserves were $74.70 per barrel (a 17%
decrease) and $2.64 per MMBtu (a 58% decrease), respectively, as
compared to $90.15 per barrel and $6.36 per MMBtu, respectively, at
December 31, 2022.
Matador’s proved developed oil and natural gas reserves
increased 32% year-over-year from 221.5 million BOE (52% oil),
consisting of 116.0 million barrels of oil and 632.9 billion cubic
feet of natural gas, at December 31, 2022 to 292.1 million BOE (55%
oil), consisting of 161.6 million barrels of oil and 782.7 billion
cubic feet of natural gas, at December 31, 2023.
Matador’s proved undeveloped reserves at December 31, 2023
increased 24% year-over-year from 135.2 million BOE (59% oil),
consisting of 80.3 million barrels of oil and 329.7 billion cubic
feet of natural gas, at December 31, 2022 to 168.0 million BOE (66%
oil), consisting of 110.6 million barrels of oil and 344.0 billion
cubic feet of natural gas, at December 31, 2023.
Full Year 2024 Guidance Summary
Matador’s full year 2024 guidance estimates are summarized in
the table below, as compared to the actual results for 2023.
Guidance Metric
Actual
2023 Results
2024 Guidance Range
% YoY
Change(1)
Oil Production
75,457 Bbl/d(2)
91,000 to 95,000 Bbl/d
+23%
Natural Gas Production
338.1 MMcf/d(3)
370.0 to 386.0 MMcf/d
+12%
Oil Equivalent Production
131,813 BOE/d(4)
153,000 to 159,000 BOE/d
+18%
D/C/E CapEx(5)
$1.16 billion
$1.10 to $1.30 billion
+3%
Midstream CapEx(6)
$148.3 million
$200 to $250 million
+52%
Total D/C/E and Midstream CapEx
$1.31 billion
$1.30 to $1.55 billion
+9%
(1) Represents percentage change from 2023
actual results to the midpoint of 2024 guidance range.
(2) One barrel of oil per day.
(3) One billion cubic feet of natural gas
per day.
(4) One barrel of oil equivalent per day,
estimated using a conversion factor of one barrel of oil per six
thousand standard cubic feet of natural gas.
(5) Capital expenditures associated with
drilling, completing and equipping wells.
(6) Includes Matador’s share of estimated
capital expenditures for San Mateo and other wholly-owned midstream
projects, including projects completed by Pronto. Excludes the
acquisition cost of Advance’s midstream assets in 2023. Assumes
that Matador incurs all of Pronto’s 2024 capital expenditures and
does not add a partner in Pronto.
The full year 2024 guidance estimates presented in the table
above are based upon the following key assumptions for 2024
drilling and completions activity and capital expenditures.
- Matador began 2024 operating seven drilling rigs in the
Delaware Basin and added an eighth operated drilling rig in late
January. The full-year 2024 guidance estimates presented above
assume that Matador will continue to operate eight drilling rigs in
the Delaware Basin throughout the remainder of 2024.
- Matador estimates its 2024 D/C/E capital expenditures will be
$1.10 to $1.30 billion, as further detailed in the table
below.
D/C/E CapEx(1) Components
Actual
2023 Results
2024 CapEx Estimates
% YoY
Change(2)
Operated(3)
$1.05 billion
$0.99 to $1.17 billion
+3%
Non-Operated
$68 million
$70 to $80 million
+10%
Capitalized G&A and Interest
$41 million
$40 to $50 million
+10%
Total D/C/E CapEx
$1.16 billion
$1.10 to $1.30 billion
+3%
(1) Capital expenditures associated with
drilling, completing and equipping wells.
(2) Represents percentage change from 2023
actual results to the midpoint of 2024 guidance range.
(3) Includes $85 to $95 million of
artificial lift and other production-related capital
expenditures.
- Matador anticipates full-year 2024 drilling and completion
costs per completed lateral foot to average approximately $1,010
per completed lateral foot, or a 6% decrease as compared to $1,075
in 2023. As it has done in the past, Matador expects to continue to
seek to maximize and increase its capital efficiencies across all
operations. Matador anticipates “Simul-Frac”, “Remote Simul-Frac”
and “Trimul-Frac” operations to account for over 60% of completions
in 2024. In addition, Matador expects that dual-fuel optimization
on all well completions, improved water and sand logistics, casing
design optimization, using existing infrastructure and increased
operating efficiency should reduce drilling and completion days on
wells.
- Matador estimates 2024 midstream capital expenditures of $200
to $250 million. This estimate includes (i) $30 to $40 million for
Matador’s 51% share of San Mateo’s 2024 estimated capital
expenditures of approximately $59 to $78 million and (ii) $170 to
$210 million for other wholly-owned midstream projects, including
projects expected to be completed by Pronto. Pronto’s 2024 capital
expenditures include the 200 million cubic feet per day expansion
of the Marlan Processing Plant and the pipelines to connect
Pronto’s natural gas system to both San Mateo’s natural gas system
and to the acreage Matador acquired in the Advance transaction.
Estimates of San Mateo’s and Pronto’s capital expenditures include
such other projects needed to provide service for newly drilled
wells operated by Matador and other customers, as such
opportunities may arise.
2024 Operating Plan
The table below provides Matador’s expectations for operated and
non-operated horizontal wells to be turned to sales during 2024.
Additional details regarding Matador’s drilling and completions
program for 2024 are provided in the slide presentation
accompanying this press release.
Avg. Operated
Operated
Non-Operated
Total
Gross Operated
Asset/Operating Area
Lateral Length(1) (feet)
Gross
Net
Gross
Net
Gross
Net
Well Completion Intervals
Western Antelope Ridge
(Rodney Robinson)
-
-
-
-
-
-
-
No operated completions in
2024
Antelope Ridge
(Advance Properties)
7,400
21
18.8
-
-
21
18.8
3-WC A, 6-3BS, 3-3BS Carb, 6-2BS,
3-1BS
Antelope Ridge
(All Other)
9,700
31
20.0
9
0.8
40
20.8
4-WC B, 6-WC A 7-3BS, 7-2BS,
7-1BS
Arrowhead
9,100
20
14.2
27
1.6
47
15.8
12-2BS, 8-WC A
Ranger
10,000
10
8.0
28
3.3
38
11.3
1-3BS, 4-2BS, 4-1BS, 1-AV
Rustler Breaks
9,000
40
27.0
44
3.2
84
30.2
4-WC B, 12-3BS, 10-2BS,
14-1BS
Stateline
12,000
6
6.0
18
0.4
24
6.4
6-AV
Wolf
-
-
-
9
0.2
9
0.2
No operated completions in
2024
Delaware Basin
9,100
128
94.0
135
9.5
263
103.5
Eagle Ford Shale
-
-
-
-
-
-
-
No operated completions in
2024
Haynesville Shale
-
-
-
8
0.1
8
0.1
No operated completions in
2024
Total
9,100
128
94.0
143
9.6
271
103.6
Note: WC = Wolfcamp; BS = Bone Spring; BS
Carb = Bone Spring Carbonate; AV = Avalon. For example, 3-WC B
indicates three Wolfcamp A completions and 6-3BS indicates six
Third Bone Spring completions. (1) Average completed lateral length
for all Matador-operated horizontal wells expected to be turned to
sales in 2024.
2024 Production Estimates and Cadence
Oil, Natural Gas and Oil Equivalent
Production Growth and Anticipated Cadence
Matador expects full-year 2024 production of 91,000 to 95,000
barrels of oil per day and 370 to 386 million cubic feet of natural
gas per day, resulting in 153,000 to 159,000 BOE per day, which
would be an increase of 18% as compared to our record 2023
production of 131,800 BOE per day (75,500 barrels of oil per
day).
First Quarter 2024 Estimated Oil, Natural Gas and Total Oil
Equivalent Production
As noted in the table below, Matador anticipates its average
daily oil equivalent production of 154,261 BOE per day in the
fourth quarter of 2023 to decrease to a midpoint of approximately
145,750 BOE per day in the first quarter of 2024 and then to
increase again quarter by quarter to an exit rate of a range of
160,000 BOE per day to 162,000 BOE per day in the fourth quarter of
2024.
Q4 2023 and Q1 2024 Production
Comparison
Period
Average Daily
Total Production,
BOE per day
Average Daily
Oil Production,
Bbl per day
Average Daily
Natural Gas Production,
MMcf per day
% Oil
Q4 2023
154,261
88,663
393.6
57%
Q1 2024E
145,000 to 146,500
83,000 to 84,000
372.0 to 375.0
57%
Matador expects to achieve record production in 2024 despite the
expectation that it will experience temporary midstream constraints
from time to time from third-party midstream providers primarily
occurring in Lea County, New Mexico during the first quarter of
2024. It is difficult to estimate the amount of these temporary
third-party midstream production constraints. During January 2024,
these constraints are estimated to have resulted in approximately
5,500 BOE per day (3,850 barrels of oil per day) less production.
These third-party midstream constraints have continued into
February and are even expected to continue into March. Matador’s
estimates of its first quarter 2024 production of 145,000 to
146,500 BOE per day take into account the impact of these temporary
third-party midstream constraints.
Notably, Matador’s midstream systems (San Mateo and Pronto) have
operated without any material downtime and have not contributed to
these constrained volumes, which is evidence of the importance of
Matador operating its own midstream assets. The completion of the
natural gas pipeline connections between Pronto and San Mateo and
between Pronto and Matador’s Advance acreage as well as certain
other firm service gas gathering and processing agreements are
expected to resolve these temporary midstream constraints by the
end of the first quarter of 2024. As a result, Matador expects its
second quarter 2024 production to increase back above its fourth
quarter 2023 production of 154,300 BOE per day and then to continue
to grow above that amount throughout the rest of the year.
Delaware Basin Production
Growth
Matador estimates total oil equivalent production of 55.7
million BOE (61% oil) from the Delaware Basin, or 152,200 BOE per
day, at the midpoint of 2024 guidance, a year-over-year increase of
20% from 2023. The Company anticipates its total oil and natural
gas production from the Delaware Basin should increase 24% and 15%,
respectively, year-over-year, at the midpoint of 2024 production
guidance.
First Quarter 2024 Estimated Capital Expenditures
Matador began 2024 operating seven drilling rigs in the Delaware
Basin and added an eighth drilling rig in late January 2024. At
February 20, 2024, Matador expects D/C/E capital expenditures for
the first quarter of 2024 will be approximately $350 to $420
million, which is a 48% increase as compared to $261 million for
the fourth quarter of 2023, primarily due to completion costs
associated with the 21 Dagger Lake South wells expected to be
turned to sales in the second quarter of 2024 and expected higher
non-operated well capital expenditures relative to the remainder of
the year. Matador expects its proportionate share of midstream
capital expenditures to be approximately $70 to $90 million in the
first quarter of 2024, as compared to $86 million in the fourth
quarter of 2023.
2024 Estimated Cash Taxes
Matador expects to make cash tax payments of approximately 5 to
10% of pre-tax book net income for the year ended December 31, 2024
at current commodity prices, as compared to cash tax payments of
approximately 1% of pre-tax book net income for the year ended
December 31, 2023. The Company’s cash tax payments will be
dependent upon a variety of factors that will impact taxable
income, including oil and natural gas prices, allowable deductions
and any legislative changes thereon, and any tax credits generated
that would offset tax liabilities in 2024.
Environmental, Social and Governance (“ESG”) Update
Matador is committed to creating long-term value for its
stakeholders in a responsible manner by pursuing sound growth and
earnings objectives and exercising prudence in the use of its
assets and resources. In October 2023, Matador was pleased to issue
its annual Sustainability Report on Matador’s ongoing ESG-related
initiatives. This report highlights Matador’s continued progress
and improvements in its operating practices, including quantitative
sustainability metrics aligned with standards developed by the
Sustainability Accounting Standards Board (“SASB”), and should
provide Matador’s stakeholders and interested parties with a
standardized platform for evaluating the Company’s recent
performance and future progress. Matador’s Sustainability Report,
including the SASB-aligned sustainability metrics, is available on
the Company’s website at
www.matadorresources.com/sustainability.
Conference Call Information
The Company will host a live conference call on Wednesday,
February 21, 2024, at 10:00 a.m. Central Time to discuss its fourth
quarter and full year 2023 financial and operational results, as
well as its 2024 operating plan and market guidance. To access the
live conference call by phone, you can use the following link
https://register.vevent.com/register/BI059f2e31c0f6471991e0ec996c4a1065
and you will be provided with dial in details. To avoid delays, it
is recommended that participants dial into the conference call 15
minutes ahead of the scheduled start time.
The live 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 for
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 for one year.
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 in support of its
exploration, development and production operations and provides
natural gas processing, oil transportation services, oil, natural
gas 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; the
operating results of the Company’s midstream oil, natural gas and
water gathering and transportation systems, pipelines and
facilities, the acquiring of third-party business and the drilling
of any additional salt water disposal wells; 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; impact on
the Company’s operations due to seismic events; its ability to make
acquisitions on economically acceptable terms; its ability to
integrate acquisitions; disruption from the Company’s acquisitions
making it more difficult to maintain business and operational
relationships; significant transaction costs associated with the
Company’s acquisitions; the risk of litigation and/or regulatory
actions related to the Company’s acquisitions; availability of
sufficient capital to execute its business plan, including from
future cash flows, available borrowing capacity under its revolving
credit facilities and otherwise; the operating results of and the
availability of any potential distributions from our joint
ventures; weather and environmental conditions; and the other
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 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.
Sequential and year-over-year quarterly comparisons of selected
financial and operating items are shown in the following table:
Three Months Ended
December 31,
September 30,
December 31,
2023
2023
2022
Net Production Volumes:(1)
Oil (MBbl)(2)
8,157
7,133
5,733
Natural gas (Bcf)(3)
36.2
31.8
27.3
Total oil equivalent (MBOE)(4)
14,192
12,429
10,280
Average Daily Production Volumes:(1)
Oil (Bbl/d)(5)
88,663
77,529
62,316
Natural gas (MMcf/d)(6)
393.6
345.4
296.5
Total oil equivalent (BOE/d)(7)
154,261
135,096
111,735
Average Sales Prices:
Oil, without realized derivatives (per
Bbl)
$
79.00
$
82.49
$
83.90
Oil, with realized derivatives (per
Bbl)
$
79.00
$
82.49
$
82.39
Natural gas, without realized derivatives
(per Mcf)(8)
$
3.01
$
3.56
$
5.65
Natural gas, with realized derivatives
(per Mcf)
$
2.92
$
3.34
$
5.32
Revenues (millions):
Oil and natural gas revenues
$
753.2
$
701.5
$
635.0
Third-party midstream services
revenues
$
35.6
$
29.9
$
26.7
Realized loss on derivatives
$
(3.1
)
$
(7.0
)
$
(17.6
)
Operating Expenses (per BOE):
Production taxes, transportation and
processing
$
5.31
$
5.77
$
6.10
Lease operating
$
5.06
$
5.34
$
3.98
Plant and other midstream services
operating
$
2.56
$
2.48
$
2.85
Depletion, depreciation and
amortization
$
15.51
$
15.51
$
12.80
General and administrative(9)
$
2.08
$
2.55
$
3.36
Total(10)
$
30.52
$
31.65
$
29.09
Other (millions):
Net sales of purchased natural gas(11)
$
7.2
$
2.7
$
7.0
Net income (millions)(12)
$
254.5
$
263.7
$
253.8
Earnings per common share
(diluted)(12)
$
2.12
$
2.20
$
2.11
Adjusted net income (millions)(12)(13)
$
238.4
$
223.4
$
249.9
Adjusted earnings per common share
(diluted)(12)(14)
$
1.99
$
1.86
$
2.08
Adjusted EBITDA (millions)(12)(15)
$
552.8
$
508.3
$
461.8
Net cash provided by operating activities
(millions)(16)
$
618.3
$
461.0
$
446.5
Adjusted free cash flow
(millions)(12)(17)
$
180.5
$
144.6
$
249.3
San Mateo net income (millions)(18)
$
43.7
$
29.9
$
37.0
San Mateo Adjusted EBITDA
(millions)(15)(18)
$
61.6
$
47.1
$
52.3
San Mateo net cash provided by operating
activities (millions)(18)
$
45.5
$
36.5
$
44.8
San Mateo adjusted free cash flow
(millions)(17)(18)
$
18.8
$
10.7
$
27.7
D/C/E capital expenditures (millions)
$
261.4
$
296.0
$
188.9
Midstream capital expenditures
(millions)(19)
$
86.2
$
41.7
$
10.6
(1) Production volumes and proved reserves
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 $0.20, $0.37
and $0.41 per BOE of non-cash, stock-based compensation expense in
the fourth quarter of 2023, the third quarter of 2023 and the
fourth quarter of 2022, respectively.
(10) Total does not include the impact of
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 either the
San Mateo or Pronto cryogenic natural gas processing plants and
subsequently sells the residue natural gas and NGLs to other
purchasers. Such amounts reflect revenues from sales of purchased
natural gas of $43.4 million, $40.3 million and $43.1 million less
expenses of $36.2 million, $37.6 million and $36.0 million in the
fourth quarter of 2023, the third quarter of 2023 and the fourth
quarter of 2022, 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
(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 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 (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, Adjusted EBITDA, net cash provided by operating activities
or adjusted free cash flow for each period reported.
(19) Includes Matador’s share of estimated
capital expenditures for San Mateo and other wholly-owned midstream
projects, including projects completed by Pronto. Excludes the
acquisition cost of Pronto in 2022 and Advance’s midstream assets
in 2023.
Matador Resources Company and
Subsidiaries
CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(In thousands, except par value and share
data)
December 31,
2023
2022
ASSETS
Current assets
Cash
$
52,662
$
505,179
Restricted cash
53,636
42,151
Accounts receivable
Oil and natural gas revenues
274,192
224,860
Joint interest billings
163,660
180,947
Other
35,102
48,011
Derivative instruments
2,112
3,930
Lease and well equipment inventory
41,808
15,184
Prepaid expenses and other current
assets
92,700
51,570
Total current assets
715,872
1,071,832
Property and equipment, at cost
Oil and natural gas properties, full-cost
method
Evaluated
9,633,757
6,862,455
Unproved and unevaluated
1,193,257
977,502
Midstream properties
1,318,015
1,057,668
Other property and equipment
40,375
32,847
Less accumulated depletion, depreciation
and amortization
(5,228,963
)
(4,512,275
)
Net property and equipment
6,956,441
4,418,197
Other assets
Derivative instruments
558
—
Other long-term assets
54,125
64,476
Total other assets
54,683
64,476
Total assets
$
7,726,996
$
5,554,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
68,185
$
58,848
Accrued liabilities
365,848
261,310
Royalties payable
161,983
117,698
Amounts due to affiliates
28,688
32,803
Advances from joint interest owners
19,954
52,357
Other current liabilities
40,617
52,857
Total current liabilities
685,275
575,873
Long-term liabilities
Borrowings under Credit Agreement
500,000
—
Borrowings under San Mateo Credit
Facility
522,000
465,000
Senior unsecured notes payable
1,184,627
695,245
Asset retirement obligations
87,485
52,985
Deferred income taxes
581,439
428,351
Other long-term liabilities
38,482
19,960
Total long-term liabilities
2,914,033
1,661,541
Shareholders’ equity
Common stock — $0.01 par value,
160,000,000 shares authorized; 119,478,282 and 118,953,381 shares
issued; and 119,458,674 and 118,948,624 shares outstanding,
respectively
1,194
1,190
Additional paid-in capital
2,133,172
2,101,999
Retained earnings
1,776,541
1,007,642
Treasury stock, at cost, 19,608 and 4,757
shares, respectively
(45
)
(34
)
Total Matador Resources Company
shareholders’ equity
3,910,862
3,110,797
Non-controlling interest in
subsidiaries
216,826
206,294
Total shareholders’ equity
4,127,688
3,317,091
Total liabilities and shareholders’
equity
$
7,726,996
$
5,554,505
Matador Resources Company and
Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME -
UNAUDITED
(In thousands, except per share data)
Three Months Ended December
31,
Year Ended
December 31,
2023
2022
2023
2022
Revenues
Oil and natural gas revenues
$
753,246
$
635,010
$
2,545,599
$
2,905,738
Third-party midstream services
revenues
35,636
26,707
122,153
90,606
Sales of purchased natural gas
43,388
43,065
149,869
200,355
Realized loss on derivatives
(3,121
)
(17,618
)
(9,575
)
(157,483
)
Unrealized gain (loss) on derivatives
6,983
20,311
(1,261
)
18,809
Total revenues
836,132
707,475
2,806,785
3,058,025
Expenses
Production taxes, transportation and
processing
75,319
62,752
264,493
282,193
Lease operating
71,810
40,933
243,655
157,105
Plant and other midstream services
operating
36,400
29,257
128,910
95,522
Purchased natural gas
36,209
36,034
129,401
178,937
Depletion, depreciation and
amortization
220,055
131,601
716,688
466,348
Accretion of asset retirement
obligations
1,234
682
3,943
2,421
General and administrative
29,494
34,516
110,373
116,229
Total expenses
470,521
335,775
1,597,463
1,298,755
Operating income
365,611
371,700
1,209,322
1,759,270
Other income (expense)
Net loss on asset sales and impairment
—
—
(202
)
(1,311
)
Interest expense
(35,707
)
(16,424
)
(121,520
)
(67,164
)
Other income (expense)
3,496
(2,439
)
8,785
(5,121
)
Total other expense
(32,211
)
(18,863
)
(112,937
)
(73,596
)
Income before income taxes
333,400
352,837
1,096,385
1,685,674
Income tax provision (benefit)
Current
4,964
2,937
13,922
54,877
Deferred
52,495
77,991
172,104
344,480
Total income tax provision
57,459
80,928
186,026
399,357
Net income
275,941
271,909
910,359
1,286,317
Net income attributable to non-controlling
interest in subsidiaries
(21,402
)
(18,117
)
(64,285
)
(72,111
)
Net income attributable to Matador
Resources Company shareholders
$
254,539
$
253,792
$
846,074
$
1,214,206
Earnings per common share
Basic
$
2.14
$
2.15
$
7.10
$
10.28
Diluted
$
2.12
$
2.11
$
7.05
$
10.11
Weighted average common shares
outstanding
Basic
119,192
118,298
119,139
118,122
Diluted
119,971
120,074
119,980
120,131
Matador Resources Company and
Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS -
UNAUDITED
(In thousands)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Operating activities
Net income
$
275,941
$
271,909
$
910,359
$
1,286,317
Adjustments to reconcile net income to net
cash provided by operating activities
Unrealized (gain) loss on derivatives
(6,983
)
(20,311
)
1,261
(18,809
)
Depletion, depreciation and
amortization
220,055
131,601
716,688
466,348
Accretion of asset retirement
obligations
1,234
682
3,943
2,421
Stock-based compensation expense
2,884
4,236
13,661
15,123
Deferred income tax provision
52,495
77,991
172,104
344,480
Amortization of debt issuance cost and
other debt related costs
2,051
165
7,047
(517
)
Other non-cash changes
(7,276
)
—
(7,262
)
1,311
Changes in operating assets and
liabilities
Accounts receivable
56,469
(35,325
)
59,893
(205,426
)
Lease and well equipment inventory
7,189
(1,115
)
(3,034
)
(2,847
)
Prepaid expenses and other current
assets
30,060
(1,066
)
(11,757
)
(22,952
)
Other long-term assets
(623
)
(82
)
646
175
Accounts payable, accrued liabilities and
other current liabilities
(24,754
)
8,938
2,810
63,455
Royalties payable
11,618
(16,675
)
34,273
23,339
Advances from joint interest owners
(1,461
)
25,364
(32,402
)
34,283
Other long-term liabilities
(552
)
211
(402
)
(7,962
)
Net cash provided by operating
activities
618,347
446,523
1,867,828
1,978,739
Investing activities
Drilling, completion and equipping capital
expenditures
(337,332
)
(226,377
)
(1,192,800
)
(771,830
)
Acquisition of Advance
(67,705
)
—
(1,676,132
)
—
Acquisition of oil and natural gas
properties
(67,069
)
(20,819
)
(187,655
)
(155,074
)
Midstream capital expenditures
(90,110
)
(28,638
)
(165,719
)
(80,051
)
Acquisition of midstream assets
—
—
—
(75,816
)
Expenditures for other property and
equipment
(672
)
(523
)
(3,636
)
(1,213
)
Proceeds from sale of assets and other
14,020
—
14,750
46,507
Net cash used in investing activities
(548,868
)
(276,357
)
(3,211,192
)
(1,037,477
)
Financing activities
Repayments of borrowings under Credit
Agreement
(410,000
)
—
(3,032,000
)
(300,000
)
Borrowings under Credit Agreement
380,000
—
3,532,000
200,000
Repayments of borrowings under San Mateo
Credit Facility
(31,000
)
(30,000
)
(171,000
)
(150,000
)
Borrowings under San Mateo Credit
Facility
78,000
55,000
228,000
230,000
Cost to enter into or amend credit
facilities
(651
)
(3,219
)
(9,296
)
(3,725
)
Proceeds from issuance of senior unsecured
notes
—
—
494,800
—
Issuance costs of senior unsecured
notes
—
—
(8,503
)
—
Purchase of senior unsecured notes
—
(60,342
)
—
(344,302
)
Dividends paid
(23,710
)
(11,752
)
(77,175
)
(35,246
)
Contributions related to formation of San
Mateo
14,500
5,500
38,200
28,250
Contributions from non-controlling
interest owners of less-than-wholly-owned subsidiaries
—
—
24,500
—
Distributions to non-controlling interest
owners of less-than-wholly-owned subsidiaries
(17,150
)
(18,620
)
(78,253
)
(85,995
)
Taxes paid related to net share settlement
of stock-based compensation
(77
)
(978
)
(22,910
)
(19,242
)
Other
(15,267
)
(145
)
(16,031
)
(592
)
Net cash (used in) provided by financing
activities
(25,355
)
(64,556
)
902,332
(480,852
)
Increase (decrease) in cash and restricted
cash
44,124
105,610
(441,032
)
460,410
Cash and restricted cash at beginning of
period
62,174
441,720
547,330
86,920
Cash and restricted cash at end of
period
$
106,298
$
547,330
$
106,298
$
547,330
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 securities
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, non-recurring transaction costs for certain
acquisitions, certain other non-cash items and non-cash stock-based
compensation expense and net gain or loss on asset sales and
impairment. Adjusted EBITDA is not a measure of net income or net
cash provided by operating activities as determined by GAAP. All
references to Matador’s Adjusted EBITDA are those values
attributable to Matador Resources Company shareholders after giving
effect to Adjusted EBITDA attributable to third-party
non-controlling interests, including in San Mateo.
Adjusted EBITDA should not be considered an alternative to, or
more meaningful than, net income 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 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
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income attributable to Matador
Resources Company shareholders
$
254,539
$
263,739
$
253,792
$
846,074
Net income attributable to non-controlling
interest in subsidiaries
21,402
14,660
18,117
64,285
Net income
275,941
278,399
271,909
910,359
Interest expense
35,707
35,408
16,424
121,520
Total income tax provision
57,459
14,589
80,928
186,026
Depletion, depreciation and
amortization
220,055
192,794
131,601
716,688
Accretion of asset retirement
obligations
1,234
1,218
682
3,943
Unrealized (gain) loss on derivatives
(6,983
)
(7,482
)
(20,311
)
1,261
Non-cash stock-based compensation
expense
2,884
4,556
4,236
13,661
Net loss on impairment
—
—
—
202
(Income) expense related to contingent
consideration and other
(3,298
)
11,895
1,969
(6,038
)
Consolidated Adjusted EBITDA
582,999
531,377
487,438
1,947,622
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(30,202
)
(23,102
)
(25,650
)
(98,075
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
552,797
$
508,275
$
461,788
$
1,849,547
Three Months Ended
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
618,347
$
460,970
$
446,523
$
1,867,828
Net change in operating assets and
liabilities
(77,946
)
31,943
19,750
(50,027
)
Interest expense, net of non-cash
portion
33,656
33,307
15,219
114,473
Current income tax provision
4,964
8,958
2,937
13,922
Other non-cash and non-recurring expense
(income)
3,978
(3,801
)
3,009
1,426
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(30,202
)
(23,102
)
(25,650
)
(98,075
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
552,797
$
508,275
$
461,788
$
1,849,547
Adjusted EBITDA – San Mateo (100%)
Three Months Ended
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income
$
43,682
$
29,917
$
36,971
$
131,196
Depletion, depreciation and
amortization
9,179
8,821
8,301
35,132
Interest expense
8,683
8,325
7,000
33,489
Accretion of asset retirement
obligations
92
84
75
336
Adjusted EBITDA
$
61,636
$
47,147
$
52,347
$
200,153
Three Months Ended
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
45,463
$
36,483
$
44,803
$
152,907
Net change in operating assets and
liabilities
7,757
2,588
1,029
14,771
Interest expense, net of non-cash
portion
8,416
8,076
6,515
32,475
Adjusted EBITDA
$
61,636
$
47,147
$
52,347
$
200,153
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 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 income or 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 attributable to
Matador Resources Company shareholders.
Three Months Ended
Year Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
(In thousands, except per share data)
Unaudited Adjusted Net Income and
Adjusted Earnings Per Common Share Reconciliation to Net
Income:
Net income attributable to Matador
Resources Company shareholders
$
254,539
$
263,739
$
253,792
$
846,074
Total income tax provision
57,459
14,589
80,928
186,026
Income attributable to Matador Resources
shareholders before taxes
311,998
278,328
334,720
1,032,100
Less non-recurring and unrealized charges
to income before taxes:
Unrealized (gain) loss on derivatives
(6,983
)
(7,482
)
(20,311
)
1,261
Net loss on impairment
—
—
—
202
(Income) expense related to contingent
consideration and other
(3,298
)
11,895
1,969
(6,038
)
Adjusted income attributable to Matador
Resources Company shareholders before taxes
301,717
282,741
316,378
1,027,525
Income tax expense(1)
63,361
59,376
66,439
215,780
Adjusted net income attributable to
Matador Resources Company shareholders (non-GAAP)
$
238,356
$
223,365
$
249,939
$
811,745
Weighted average shares outstanding -
basic
119,192
119,147
118,298
119,139
Dilutive effect of options and restricted
stock units
779
934
1,776
841
Weighted average common shares outstanding
- diluted
119,971
120,081
120,074
119,980
Adjusted earnings per share attributable
to Matador Resources Company shareholders (non-GAAP)
Basic
$
2.00
$
1.87
$
2.11
$
6.81
Diluted
$
1.99
$
1.86
$
2.08
$
6.77
(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 – Matador
Resources Company
Three Months Ended
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Net cash provided by operating
activities
$
618,347
$
460,970
$
446,523
$
1,867,828
Net change in operating assets and
liabilities
(77,946
)
31,943
19,750
(50,027
)
San Mateo discretionary cash flow
attributable to non-controlling interest in subsidiaries(1)
(26,078
)
(19,145
)
(22,458
)
(82,163
)
Performance incentives received from Five
Point
14,500
9,000
5,500
38,200
Total discretionary cash flow
528,823
482,768
449,315
1,773,838
Drilling, completion and equipping capital
expenditures
337,332
315,957
226,377
1,192,800
Midstream capital expenditures
90,110
42,738
28,638
165,719
Expenditures for other property and
equipment
672
486
523
3,636
Net change in capital accruals
(62,957
)
(7,104
)
(46,621
)
(6,288
)
San Mateo accrual-based capital
expenditures related to non-controlling interest in
subsidiaries(2)
(16,846
)
(13,908
)
(8,883
)
(42,073
)
Total accrual-based capital
expenditures(3)
348,311
338,169
200,034
1,313,794
Adjusted free cash flow
$
180,512
$
144,599
$
249,281
$
460,044
(1)
Represents Five Point Energy LLC’s (“Five
Point”) 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.
(3)
Represents drilling, completion and
equipping costs, Matador’s share of San Mateo capital expenditures
plus 100% of other midstream capital expenditures not associated
with San Mateo.
Adjusted Free Cash Flow - San Mateo (100%)
Three Months Ended
Year Ended
(In thousands)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
Net cash provided by San Mateo operating
activities
$
45,463
$
36,483
$
44,803
$
152,907
Net change in San Mateo operating assets
and liabilities
7,757
2,588
1,029
14,771
Total San Mateo discretionary cash
flow
53,220
39,071
45,832
167,678
San Mateo capital expenditures
39,633
22,812
27,181
86,827
Net change in San Mateo capital
accruals
(5,253
)
5,571
(9,052
)
(964
)
San Mateo accrual-based capital
expenditures
34,380
28,383
18,129
85,863
San Mateo adjusted free cash flow
$
18,840
$
10,688
$
27,703
$
81,815
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 income. 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 December 31,
2023
At December 31,
2022
Standardized Measure
$
6,113.5
$
6,983.2
Discounted future income taxes
1,590.6
2,149.0
PV-10
$
7,704.1
$
9,132.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220326054/en/
Mac Schmitz Vice President - Investor Relations (972) 371-5225
investors@matadorresources.com
Matador Resources (NYSE:MTDR)
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