Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) today reported financial and operating results for the
first quarter of 2023. A short slide presentation summarizing the
highlights of Matador’s first quarter 2023 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.
Management Summary Comments
Joseph Wm. Foran, Matador’s Founder, Chairman and CEO, observed,
“Our results for the first quarter of 2023 were above our
expectations both operationally and financially and constituted a
strong start to the year. We set new operational records in the
first quarter. Then, shortly following the end of the first
quarter, we closed the acquisition of Advance Energy Partners
Holdings, LLC (“Advance”) for approximately $1.6 billion that added
over 100 million barrels of oil and natural gas equivalent reserves
to the 357 million barrels of oil and natural gas equivalent
reserves that we already had. This acquisition sets up another
record year of production in 2023 and an even better 2024. For
additional information regarding our operational and financial
results in the first quarter of 2023 and the closing of the Advance
acquisition, please see the set of seven slides identified as
‘Chairman’s Remarks’ (Slides A through G) on our
website.
Stronger than Expected Results in First
Quarter 2023
“During the first quarter of 2023, Matador achieved
better-than-expected average oil and natural gas equivalent
production of 106,654 BOE per day, which was 6% better than our
previous expectations of approximately 101,000 barrels of oil and
natural gas equivalent (“BOE”) per day. This outperformance was
primarily attributable to (i) better-than-expected production in
our prolific Stateline asset area, (ii) the timing and performance
of pipeline services and connections and (iii) fewer days of
shut-in production than originally anticipated, including on our
Rodney Robinson acreage, as the eight wells drilled on that acreage
were completed faster than expected primarily as a result of our
use of simultaneous fracturing technology.
“In addition to the better-than-expected production during the
first quarter of 2023, we also had lower-than-expected capital
expenditures for both our drilling, completing and equipping costs
and our midstream capital expenditures. These lower capital
expenditures are primarily due to the timing of operations and our
planned midstream projects. Innovation and operating efficiencies,
which include faster drill times, dual-fuel fracturing fleets,
simultaneous and remote fracturing operations and the use of
existing facilities, continue to improve and help to mitigate the
inflationary pressure of service costs. The Company expects to
utilize dual-fuel fracturing equipment for over 95% of wells
completed in 2023 and to increase its use of simultaneous
fracturing operations from 45% in 2022 to over half of our 2023
completions.
The Advance Acquisition
“The closing of the Advance acquisition on April 12, 2023
continues Matador’s long history of profitable growth at a measured
pace. In the Advance acquisition, we acquired approximately 18,500
net acres in the core of the northern Delaware Basin, most of which
is either adjacent to or very close to some of our best acreage.
Together with our other acreage bolt-on acquisitions in 2023, we
are pleased to announce that we now have
150,000 net acres in the Delaware Basin (see Slide
A) with a significant increase in our total proved oil and
natural gas reserves to approximately 465 million BOE (see Slide
B). These reserves are estimated to have a PV-10 (present value
discounted at 10%) value of approximately $12 billion as discussed
below.
“We estimate production from the Advance wells averaged
approximately 25,450 BOE per day during the first quarter of 2023
based upon Advance’s production records, which was better than we
had anticipated. While this increased production was not included
in Matador’s reported production for the first quarter, it was part
of the purchase price adjustment at closing. We are also encouraged
that these existing wells we acquired from Advance are exceeding
our original expectations. We anticipate that production from the
Advance assets will grow in the second half of the year when we
expect to turn to sales 21 wells that are currently being
completed.
“There are many other opportunities that are ahead of us as we
integrate the Advance assets with Matador’s existing assets. These
assets are complementary to our existing acreage and add to our
significant inventory of A+ locations. For example, the Advance
assets provide synergies with our existing Pronto Midstream
(“Pronto”) natural gas gathering and processing system as we plan
to connect them in late 2023 or early 2024 (see Slide C).
This connection should not only provide additional flow assurance
for our wells but also build the value of our existing midstream
business.
Financing Activities
“We funded the Advance acquisition with a combination of cash on
hand, free cash flow and borrowings under our reserves-based
lending credit agreement (the “RBL credit agreement”). The
borrowing base under the RBL credit agreement is $1.25 billion and
does not yet include any reserves for the assets we acquired in the
Advance acquisition. On March 31, 2023, we successfully increased
the elected commitment under the RBL credit agreement from $775
million to $1.25 billion, of which only $625 million is currently
drawn.
“In addition, on April 3, 2023, we launched a private offering
of $400 million of senior unsecured notes due 2028, which was
oversubscribed by $3 billion. As a result of high demand for these
bonds, we increased the size of the offering from $400 million to
$500 million and issued the 6.875% senior unsecured notes at a
price of 98.96% of their face value. The successful execution of
this offering was truly a team effort and very gratifying to us. We
are very appreciative of the support of our banking partners and
the shareholders, bondholders and other friends that placed orders
for these bonds so that we could upsize the offering at a price
that was better than we had originally expected.
“Following the bond offering, we had over $600 million in
liquidity, which provides additional flexibility and optionality as
we continue with our previously announced plans for 2023. We intend
to use our free cash flow for the remainder of the year primarily
to repay debt under our RBL credit agreement, continue measured
growth through the drillbit and pay our fixed dividend while
continuing to opportunistically pursue strategic bolt-on
acquisitions and midstream opportunities that may arise.
Importantly, the Advance acquisition should not significantly
impact Matador’s leverage profile, as we expect to maintain a pro
forma leverage ratio below 1.0x throughout 2023 at current
commodity prices. In fact, we were able to repay more borrowings
than we anticipated this month under the RBL credit agreement
following the Advance acquisition, and assuming current commodity
prices, we anticipate being able to fully repay the borrowings
under the RBL credit agreement in the second half of 2024 (see
Slide D).
Looking Ahead
“In addition to acquiring Advance, our operations team has
remained busy finding new and innovative ways to reduce costs and
increase production from our existing acreage. We are currently
testing our first batch of ‘horseshoe’ wells in our Wolf asset area
in West Texas, which will allow the Company to drill two-mile
lateral wells in one-mile land-locked sections (see Slide
E). By drilling two-mile long ‘U’ shaped laterals, we should
increase our inventory of two-mile locations across Matador’s
Delaware Basin assets and continue expanding capital efficiencies
by accessing longer laterals in sections previously limited to
one-mile wells. We estimate approximately $10 million in cost
savings will be realized by drilling two ‘U’ shaped two-mile wells
as compared to four one-mile lateral wells in this section. We are
excited about this test and look forward to discussing the results
of the horseshoe wells later in the year.
“Due to the strong start in the first quarter of 2023, the
Advance acquisition and our other operations, we expect full year
2023 total oil equivalent production to be near the high end of the
previously announced guidance range of 44.35 million BOE to 46.25
million BOE. In addition, we expect to achieve approximately 40%
growth in year-over-year oil production in the fourth quarter of
2023 (see Slide F).
“As many of you may recall, the Matador organization first began
in 1983 with $270,000 in contributed capital from 17 friends and
family members and has grown to a company with an enterprise value
of approximately $8 billion since then (see Slide G). We are
grateful for the many individuals that have been critical to
building Matador and the friendships we have made together. Our
success is the result of the efforts and support of many dedicated
board members, staff members, shareholders, bondholders and other
friends. Notably, many of Matador’s original shareholders or their
families remain shareholders today. Thank you to each of you who
has supported Matador as we have grown from a company of a few
hundred thousand dollars in initial capital in 1983 to a top 10 oil
and natural gas producer in the state of New Mexico today. We are
more excited than ever about the future of Matador and look forward
to continuing to build Matador together into a bigger, better
company.”
First Quarter 2023 Matador Operational and Financial
Highlights
- Average production of 106,654 BOE per day (58,941 barrels of
oil per day)
- Net cash provided by operating activities of $339.5
million
- Adjusted Free Cash Flow of $57.2 million
- Net income of $163.1 million, or $1.36 per diluted common
share
- Adjusted net income of $180.0 million, or adjusted earnings of
$1.50 per diluted common share
- Adjusted EBITDA of $365.2 million
- San Mateo net income of $32.2 million
- San Mateo Adjusted EBITDA of $48.7 million
- Drilling, completion and equipping capital expenditures of
$294.8 million
- Midstream capital expenditures of $8.7 million
Advance Acquisition Highlights
- Closed on April 12, 2023 for an initial cash purchase price of
$1.6 billion, subject to post-closing adjustments
- Approximately 18,500 net acres (99% held by production) in the
core of the northern Delaware Basin, most of which is strategically
located in Matador’s Ranger asset area in Lea County, New Mexico
near Matador’s existing properties
- 406 gross (203 net) horizontal locations identified for future
drilling, including prospective targets throughout the Wolfcamp,
Bone Spring and Avalon formations
- Completing 21 gross (20 net) wells that are expected to be
turned to sales in the second half of 2023
- Drilling 21 gross (19 net) wells that are expected to be turned
to sales in early 2024
- PV-10 of the proved oil and natural gas reserves at December
31, 2022 of approximately $2.86 billion using the same unweighted
arithmetic average first-day-of-the-month prices for the previous
12-month period that was used to value the Company’s reserves at
December 31, 2022, which were $90.15 per barrel of oil and $6.36
per MMBtu of natural gas
Note: The Standardized Measure and
PV-10 of the Company’s reserves as of December 31, 2022 were $6.98
billion and $9.13 billion, respectively. The PV-10 of the Advance
reserves was estimated to be $2.86 billion as of December 31, 2022
using the same unweighted arithmetic average first-day-of-the-month
prices for the previous 12-month period being used to value the
Company’s reserves at December 31, 2022, which are $90.15 per
barrel of oil and $6.36 per MMBtu of natural gas. PV-10 is a
non-GAAP financial measure, which differs from the GAAP financial
measure of “Standardized Measure” because PV-10 does not include
the effects of income taxes on future income. The income taxes
related to the Advance assets as of December 31, 2022 were unknown
because the tax basis in such properties as of December 31, 2022 is
not known and is subject to many variables. As such, the Company
has not provided the Standardized Measure of the Advance assets or
a reconciliation of PV-10 to Standardized Measure with respect to
the Advance assets.
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
First Quarter 2023 Oil, Natural Gas and Total Oil Equivalent
Production Above Expectations
Matador’s average daily oil and natural gas production increased
14% year-over-year from 93,969 BOE per day in the first quarter of
2022 to 106,654 BOE per day in the first quarter of 2023. Matador’s
production for the first quarter of 2023 of 106,654 BOE per day
exceeded the Company’s expectations for the quarter of a range from
100,500 to 101,500 BOE per day, as summarized in the table below.
The primary drivers behind this outperformance were (i)
better-than-expected production from the Company’s Stateline asset
area, (ii) the timing and performance of pipeline services and
connections and (iii) fewer days of shut-in production than
originally anticipated for Matador’s and other offset operators’
activity in the Antelope Ridge asset area. In particular, the
Rodney Robinson properties in western Antelope Ridge had less
production shut in than anticipated, as the eight wells drilled on
that acreage were completed faster than expected as a result of
Remote Simul-Frac operations. In addition, Matador turned to sales
seven gross (3.1 net) more operated horizontal wells during the
first quarter than the Company’s original estimates and experienced
better-than-expected production from non-operated properties.
Production
Q1 2023 Average Daily Volume
Q1 2023
Guidance
Range(1)
Difference(2)
YoY (3)
Total, BOE per day
106,654
100,500 to 101,500
+6% Better than Guidance
+14%
Oil, Bbl per day
58,941
55,000 to 56,000
+6% Better than Guidance
+10%
Natural Gas, MMcf per day
286.3
270.7 to 274.7
+5% Better than Guidance
+18%
(1)
Production change previously projected, as
provided February 21, 2023.
(2)
As compared to midpoint of guidance
provided on February 21, 2023.
(3)
Represents year-over-year percentage
change from the first quarter of 2022.
First Quarter 2023 Wells Turned to Sales
During the first quarter of 2023, Matador turned to sales 24
gross (18.0 net) operated horizontal wells with an average
completed lateral length of approximately 9,800 feet. The Company
was able to turn to sales seven gross (3.1 net) more operated
horizontal wells in the first quarter of 2023 than anticipated,
primarily due to operating, capital and midstream efficiencies. The
table below provides a summary of our operated and non-operated
activity in the first quarter of 2023.
First 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)
8
7.7
—
—
8
7.7
4-2BS, 2-3BS Carb, 2-WC B
Antelope Ridge
4
3.1
1
0.0
5
3.1
1-1BS, 2-2BS, 2-3BS
Arrowhead
—
—
11
0.2
11
0.2
3-2BS, 2-WC A, 6-Yeso
Ranger
3
1.3
7
0.3
10
1.6
6-2BS, 3-3BS, 1-WC A
Rustler Breaks
9
5.9
11
0.5
20
6.4
3-1BS, 9-2BS, 4-WC A, 4-WC B
Stateline
—
—
—
—
—
—
No wells turned to sales in Q1
2023
Wolf/Jackson Trust
—
—
—
—
—
—
No wells turned to sales in Q1
2023
Delaware Basin
24
18.0
30
1.0
54
19.0
South Texas
—
—
—
—
—
—
No wells turned to sales in Q1
2023
Haynesville Shale
—
—
16
0.1
16
0.1
16-HSVL
Total
24
18.0
46
1.1
70
19.1
Note: WC = Wolfcamp; BS = Bone Spring; 3BS
Carb = Third Bone Spring Carbonate; Yeso = Yeso; HSVL =
Haynesville. For example, 4-2BS indicates four Second Bone Spring
completions and 2-WC B indicates two Wolfcamp B completions. Any
“0.0” values in the table above suggest a net working interest of
less than 5%, which does not round to 0.1.
First Quarter 2023 Realized Commodity Prices
The following table summarizes Matador’s realized commodity
prices during the first quarter of 2023, as compared to the fourth
quarter of 2022 and the first quarter of 2022.
Sequential (Q1 2023 vs. Q4
2022)
YoY (Q1 2023 vs. Q1 2022)
Realized Commodity Prices
Q1 2023
Q4 2022
Sequential Change(1)
Q1 2023
Q1 2022
YoY Change(2)
Oil Prices, per Bbl
$75.74
$83.90
Down 10%
$75.74
$95.45
Down 21%
Natural Gas Prices, per Mcf
$3.93
$5.65
Down 30%
$3.93
$7.63
Down 48%
First Quarter 2023 Operating Expenses
Matador plans to continue to focus on cost control in the areas
of lease operating expenses, general and administrative expenses
and plant and other midstream services operating expenses. The
Company has already implemented measures to reduce costs and
increase operating efficiencies in these areas. Matador believes
these efforts are beginning to show improvements in these
areas.
During the first quarter of 2023, Matador’s total lease
operating expenses were $4.63 per BOE, which was a 16% sequential
increase from $3.98 per BOE in the fourth quarter of 2022 and a 15%
year-over-year increase from $4.01 per BOE in the first quarter of
2022, primarily due to the number of wells, chemical costs, weather
and ad valorem costs. Matador expects the Advance acquisition will
increase lease operating expenses during the remainder of 2023,
although we anticipate mitigating this increase by targeting
improvements in workover, supervision and repair and maintenance
costs.
Matador’s general and administrative expenses decreased 30%
sequentially from $3.36 per BOE in the fourth quarter of 2022 to
$2.34 per BOE in the first quarter of 2023. General and
administrative expenses in the fourth quarter reflected year-end
bonus payments made to Matador’s employees related to record 2022
performance. In addition, the value of employee stock awards that
are settled in cash, which are remeasured at each quarterly
reporting period, decreased between the periods due to the fact
that Matador’s share price decreased 17% from $57.24 at December
31, 2022 to $47.65 at March 31, 2023. The Company expects general
and administrative expenses for full year 2023 will range between
$2.50 to $3.50 per BOE.
During the first quarter of 2023, Matador’s plant and other
midstream services operating expenses, which includes the costs to
operate San Mateo and Pronto, were $3.23 per BOE, a 13% increase
from $2.85 per BOE in the fourth quarter of 2022. The first quarter
of 2023 included non-recurring, one-time repair and maintenance
costs for Pronto’s Marlan cryogenic natural gas processing plant
and gathering system. Plant and other midstream services operating
expenses increased 40% from $2.30 per BOE in the first quarter of
2022 because Matador purchased Pronto on June 30, 2022. The Company
expects plant and other midstream services operating expenses per
BOE will decrease in the second quarter and throughout the
remainder of 2023. Matador expects full year 2023 plant and other
midstream services operating expenses will range between $2.50 to
$3.00 per BOE.
First Quarter 2023 Capital Expenditures
Matador’s drilling, completing and equipping (“D/C/E”) and
midstream capital expenditures were better than expected for the
first quarter of 2023 as set forth in the table below. Matador
achieved approximately $8 million of cost savings on its D/C/E
capital expenditures in the first quarter, primarily as a result of
improvements in completion capital efficiencies with dual-fuel
pressure pumping and Simul-Frac completions. Matador’s midstream
capital expenditures were $8.7 million in the first quarter of
2023, 81% below the Company’s estimate of $45 million for the
quarter mostly due to the timing of projects underway during the
quarter with most of these costs currently expected to be incurred
in the second quarter of 2023.
Q1 2023 Capital Expenditures
($ millions)
Actual
Guidance(1)
Difference vs. Guidance(2)
D/C/E
$294.8
$315.0
6% less than estimated
Midstream
$8.7
$45.0
81% less than estimated
(1)
Midpoint of guidance as provided on
February 21, 2023.
(2)
As compared to the midpoint of guidance
provided on February 21, 2023.
Midstream Update
San Mateo’s operations in the first quarter of 2023 were
highlighted by better-than-expected operating and financial
results. These strong results reflect not only better-than-expected
volumes delivered by Matador during the first quarter of 2023, but
also increased and stronger-than-expected volumes delivered by
other San Mateo customers as a result of several new business
opportunities recently awarded to San Mateo.
Operationally, natural gas gathering and processing volumes
achieved in the first quarter of 2023 were all-time quarterly highs
for San Mateo and are shown in the table below, along with other
San Mateo throughput volumes, as compared to the fourth quarter of
2022 and the first 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 in each period),
but for which San Mateo recognized revenues during each period.
Sequential (Q1 2023 vs. Q4
2022)
YoY (Q1 2023 vs. Q1 2022)
San Mateo Throughput Volumes
Q1 2023
Q4 2022
Change(1)
Q1 2023
Q1 2022
Change(2)
Natural gas gathering, MMcf per day
333
305
+10%
333
267
+25%
Natural gas processing, MMcf per day
352
328
+7%
352
253
+39%
Oil gathering and transportation, Bbl per
day
41,900
46,000
-9%
41,900
47,800
-12%
Produced water handling, Bbl per day
373,000
386,000
-4%
373,000
344,000
+8%
(1)
First quarter 2023 as compared to fourth
quarter 2022.
(2)
First quarter 2023 as compared to first
quarter 2022.
Second Quarter 2023 Estimates
Second Quarter 2023 Estimated Oil, Natural Gas and Total Oil
Equivalent Production Growth
As noted in the table below, Matador anticipates its average
daily oil equivalent production should increase 19% from 106,654
BOE per day in the first quarter of 2023 to approximately 126,500
BOE per day in the second quarter of 2023. This significant
sequential increase is primarily attributable to the closing of the
Advance acquisition in April 2023. The Company’s estimated
production of approximately 126,500 BOE per day in the second
quarter is 8,500 BOE per day more than Matador’s original
expectations provided on February 21, 2023. This increase in
expected second quarter production is primarily attributable to (i)
additional production from the Advance properties, which production
exceeded our expectations, (ii) accelerated production driven by
operating and capital efficiencies turning wells to sales ahead of
schedule and (iii) Pronto’s first direct connection to Matador in
the Ranger asset area, which was completed in April 2023 and
provides additional flow assurance and confidence that Matador can
increase its production forecasts on these better-than-expected
wells.
Q1 and Q2 2023 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
Q1 2023
106,654
58,941
286.3
55%
Q2 2023E(1)
125,500 to 127,500
75,000 to 76,000
304.0 to 308.0
60%
(1)
Includes anticipated volumes from the
Advance acquisition after closing on April 12, 2023.
Second Quarter 2023 Estimated Wells Turned to Sales
At April 25, 2023, Matador expects to turn to sales 27 gross
(20.8 net) operated horizontal wells in the Delaware Basin during
the second quarter of 2023, consisting of 11 gross (7.3 net) wells
in the Ranger asset area, four gross (2.2 net) wells in the Rustler
Breaks asset area, four gross (3.3 net) wells in the Antelope Ridge
asset area and eight gross (8.0 net) wells in the Stateline asset
area. The Company expects the average completed lateral length of
these wells to be approximately 9,500 feet.
Second Quarter 2023 Commodity Price Differentials
The following table summarizes Matador’s expectations for
commodity price differentials for the second quarter of 2023, as
compared to the first quarter of 2023.
Q1 2023
Q2 2023E
Realized Commodity Prices
Benchmark(1)
Actual Realized Price
Actual Differential
Differential Guidance(2)
Oil Prices, per Bbl
$75.99
$75.74
-$0.25
-$1.50 to -$0.50 (Below
Benchmark)
Natural Gas Prices, per Mcf
$2.74
$3.93
+$1.19
+$0.25 to +$1.25 (Above
Benchmark)
(1)
Oil benchmark is WTI and natural gas
benchmark is the Henry Hub daily average.
(2)
As provided on April 25, 2023.
- The change in the realized oil price differential from -$0.25
per barrel (below the benchmark) in the first quarter to
approximately -$1.00 per barrel (below the benchmark) in the second
quarter of 2023 is primarily to attributable to the negative
differential between WTI-Midland and the WTI-Cushing benchmark,
which is expected to widen in the second quarter of 2023, and the
realized oil price differential for Matador’s non-operated
properties, which had much stronger realized oil prices than
expected in the first quarter of 2023.
- The change in the realized natural gas price differential from
+$1.19 per thousand cubic feet (above the benchmark) in the first
quarter to approximately +$0.75 per thousand cubic feet (above the
benchmark) in the second quarter of 2023 is primarily attributable
to an expected narrowing of the difference between fixed month or
“bid week” residue natural gas prices as compared to average daily
natural gas prices in the second quarter of 2023, as compared to
the first quarter of 2023. Matador is a
two-stream reporter, and the revenues associated with its NGL
production are included in the weighted average realized natural
gas price. NGL prices do not contribute to or affect Matador’s
realized gain or loss on natural gas derivatives.
Second Quarter 2023 Estimated Capital Expenditures
Matador began 2023 operating seven drilling rigs in the Delaware
Basin. Following closing of the Advance acquisition on April 12,
2023, Matador continued operating the one drilling rig that Advance
had been operating. As a result, at April 25, 2023, Matador was
operating eight drilling rigs in the Delaware Basin. At April 25,
2023, the Company expects D/C/E capital expenditures for the second
quarter of 2023 will be approximately $358 million and midstream
capital expenditures to be approximately $41 million.
Conference Call Information
The Company will host a live conference call on Wednesday, April
26, 2023, at 10:00 a.m. Central Time to review its first quarter
2023 operational and financial results. To access the live
conference call by phone, you can use the following link
https://register.vevent.com/register/BI9c40d9305d414fa0bbf5f0eefcb13b39
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, 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 the anticipated benefits, opportunities and
results with respect to the Advance acquisition, including any
expected value creation, reserves additions, midstream
opportunities and other anticipated impacts from the Advance
acquisition, as well as other aspects of the transaction, guidance,
projected or forecasted financial and operating results, future
liquidity, leverage, 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, disruption from the Advance
acquisition making it more difficult to maintain business and
operational relationships; significant transaction costs associated
with the Advance acquisition; the risk of litigation and/or
regulatory actions related to the Advance acquisition, as well as
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; 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; the ongoing impact
of the novel coronavirus, or COVID-19, or variants thereof, on oil
and natural gas demand, oil and natural gas prices and its
business; 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
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.
Sequential and year-over-year quarterly comparisons of selected
financial and operating items are shown in the following table:
Three Months Ended
March 31, 2023
December 31, 2022
March 31, 2022
Net Production Volumes:(1)
Oil (MBbl)(2)
5,305
5,733
4,820
Natural gas (Bcf)(3)
25.8
27.3
21.8
Total oil equivalent (MBOE)(4)
9,599
10,280
8,457
Average Daily Production Volumes:(1)
Oil (Bbl/d)(5)
58,941
62,316
53,561
Natural gas (MMcf/d)(6)
286.3
296.5
242.4
Total oil equivalent (BOE/d)(7)
106,654
111,735
93,969
Average Sales Prices:
Oil, without realized derivatives (per
Bbl)
$
75.74
$
83.90
$
95.45
Oil, with realized derivatives (per
Bbl)
$
75.74
$
82.39
$
91.68
Natural gas, without realized derivatives
(per Mcf)(8)
$
3.93
$
5.65
$
7.63
Natural gas, with realized derivatives
(per Mcf)
$
4.07
$
5.32
$
7.43
Revenues (millions):
Oil and natural gas revenues
$
502.9
$
635.0
$
626.5
Third-party midstream services
revenues
$
26.5
$
26.7
$
17.3
Realized gain (loss) on derivatives
$
3.7
$
(17.6
)
$
(22.4
)
Operating Expenses (per BOE):
Production taxes, transportation and
processing
$
5.78
$
6.10
$
7.07
Lease operating
$
4.63
$
3.98
$
4.01
Plant and other midstream services
operating
$
3.23
$
2.85
$
2.30
Depletion, depreciation and
amortization
$
13.16
$
12.80
$
11.33
General and administrative(9)
$
2.34
$
3.36
$
3.52
Total(10)
$
29.14
$
29.09
$
28.23
Other (millions):
Net sales of purchased natural gas(11)
$
5.8
$
7.0
$
2.3
Net income (millions)(12)
$
163.1
$
253.8
$
207.1
Earnings per common share
(diluted)(12)
$
1.36
$
2.11
$
1.73
Adjusted net income (millions)(12)(13)
$
180.0
$
249.9
$
277.5
Adjusted earnings per common share
(diluted)(12)(14)
$
1.50
$
2.08
$
2.32
Adjusted EBITDA (millions)(12)(15)
$
365.2
$
461.8
$
461.8
Net cash provided by operating activities
(millions)(16)
$
339.5
$
446.5
$
329.0
Adjusted free cash flow
(millions)(12)(17)
$
57.2
$
249.3
$
245.7
San Mateo net income (millions)(18)
$
32.2
$
37.0
$
34.8
San Mateo Adjusted EBITDA
(millions)(15)(18)
$
48.7
$
52.3
$
45.1
San Mateo net cash provided by operating
activities (millions)(18)
$
53.6
$
44.8
$
45.5
San Mateo adjusted free cash flow
(millions)(16)(17)(18)
$
31.7
$
27.7
$
23.8
D/C/E capital expenditures (millions)
$
294.8
$
188.9
$
198.8
Midstream capital expenditures
(millions)(19)
$
8.7
$
10.6
$
9.7
(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 $0.24, $0.41 and
$0.36 per BOE of non-cash, stock-based compensation expense in the
first quarter of 2023, the fourth quarter of 2022 and the first
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 natural gas liquids
(“NGL”) to other purchasers. Such amounts reflect revenues from
sales of purchased natural gas of $34.3 million, $43.1 million and
$19.3 million less expenses of $28.4 million, $36.0 million and
$17.0 million in the first quarter of 2023, the fourth quarter of
2022 and the first 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.
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(In thousands, except par value and share
data)
March 31, 2023
December 31,
2022
ASSETS
Current assets
Cash
$
448,723
$
505,179
Restricted cash
54,705
42,151
Accounts receivable
Oil and natural gas revenues
178,846
224,860
Joint interest billings
188,498
180,947
Other
45,568
48,011
Derivative instruments
—
3,930
Lease and well equipment inventory
20,039
15,184
Prepaid expenses and other current
assets
70,115
51,570
Total current assets
1,006,494
1,071,832
Property and equipment, at cost
Oil and natural gas properties, full-cost
method
Evaluated
7,168,997
6,862,455
Unproved and unevaluated
1,069,330
977,502
Midstream properties
1,071,181
1,057,668
Other property and equipment
35,248
32,847
Less accumulated depletion, depreciation
and amortization
(4,638,600
)
(4,512,275
)
Net property and equipment
4,706,156
4,418,197
Other assets
Other long-term assets
69,455
64,476
Total assets
$
5,782,105
$
5,554,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
45,284
$
58,848
Accrued liabilities
328,909
261,310
Royalties payable
118,074
117,698
Amounts due to affiliates
12,215
32,803
Derivative instruments
3,136
—
Advances from joint interest owners
42,552
52,357
Other current liabilities
51,202
52,857
Total current liabilities
601,372
575,873
Long-term liabilities
Borrowings under Credit Agreement
—
—
Borrowings under San Mateo Credit
Facility
475,000
465,000
Senior unsecured notes payable
695,515
695,245
Asset retirement obligations
54,240
52,985
Deferred income taxes
483,180
428,351
Other long-term liabilities
16,968
19,960
Total long-term liabilities
1,724,903
1,661,541
Shareholders’ equity
Common stock - $0.01 par value,
160,000,000 shares authorized; 119,232,002 and 118,953,381 shares
issued; and 119,205,783 and 118,948,624 shares outstanding,
respectively
1,192
1,190
Additional paid-in capital
2,099,926
2,101,999
Retained earnings
1,153,004
1,007,642
Treasury stock, at cost, 26,219 and 4,757
shares, respectively
(1,270
)
(34
)
Total Matador Resources Company
shareholders’ equity
3,252,852
3,110,797
Non-controlling interest in
subsidiaries
202,978
206,294
Total shareholders’ equity
3,455,830
3,317,091
Total liabilities and shareholders’
equity
$
5,782,105
$
5,554,505
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended
March 31,
2023
2022
Revenues
Oil and natural gas revenues
$
502,909
$
626,515
Third-party midstream services
revenues
26,511
17,306
Sales of purchased natural gas
34,254
19,339
Realized gain (loss) on derivatives
3,669
(22,439
)
Unrealized loss on derivatives
(7,067
)
(75,029
)
Total revenues
560,276
565,692
Expenses
Production taxes, transportation and
processing
55,486
59,819
Lease operating
44,407
33,955
Plant and other midstream services
operating
31,045
19,461
Purchased natural gas
28,448
17,021
Depletion, depreciation and
amortization
126,325
95,853
Accretion of asset retirement
obligations
699
543
General and administrative
22,433
29,733
Total expenses
308,843
256,385
Operating income
251,433
309,307
Other income (expense)
Net loss on impairment
—
(198
)
Interest expense
(16,176
)
(16,252
)
Other income (expense)
339
(144
)
Total other expense
(15,837
)
(16,594
)
Income before income taxes
235,596
292,713
Income tax provision (benefit)
Current
4,929
15,409
Deferred
51,743
53,119
Total income tax provision
56,672
68,528
Net income
178,924
224,185
Net income attributable to non-controlling
interest in subsidiaries
(15,794
)
(17,061
)
Net income attributable to Matador
Resources Company shareholders
$
163,130
$
207,124
Earnings per common share
Basic
$
1.37
$
1.76
Diluted
$
1.36
$
1.73
Weighted average common shares
outstanding
Basic
119,034
117,951
Diluted
119,702
119,814
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS - UNAUDITED
(In thousands)
Three Months Ended
March 31,
2023
2022
Operating activities
Net income
$
178,924
$
224,185
Adjustments to reconcile net income to net
cash provided by operating activities
Unrealized loss on derivatives
7,067
75,029
Depletion, depreciation and
amortization
126,325
95,853
Accretion of asset retirement
obligations
699
543
Stock-based compensation expense
2,290
3,014
Deferred income tax provision
51,743
53,119
Amortization of debt issuance cost and
other debt-related costs
838
943
Net loss on impairment
—
198
Changes in operating assets and
liabilities
Accounts receivable
40,906
(125,345
)
Lease and well equipment inventory
(4,423
)
(78
)
Prepaid expenses and other current
assets
(16,517
)
(7,796
)
Other long-term assets
35
97
Accounts payable, accrued liabilities and
other current liabilities
(39,871
)
(5,668
)
Royalties payable
376
8,311
Advances from joint interest owners
(9,805
)
(1,331
)
Income taxes payable
723
15,409
Other long-term liabilities
190
(7,529
)
Net cash provided by operating
activities
339,500
328,954
Investing activities
Drilling, completion and equipping capital
expenditures
(224,144
)
(207,829
)
Acquisition of oil and natural gas
properties
(103,863
)
(43,761
)
Midstream capital expenditures
(14,141
)
(11,992
)
Expenditures for other property and
equipment
(1,769
)
(225
)
Proceeds from sale of assets
451
11,911
Net cash used in investing activities
(343,466
)
(251,896
)
Financing activities
Repayments of borrowings under Credit
Agreement
—
(210,000
)
Borrowings under Credit Agreement
—
160,000
Repayments of borrowings under San Mateo
Credit Facility
(55,000
)
(30,000
)
Borrowings under San Mateo Credit
Facility
65,000
50,000
Cost to amend credit facilities
(8,645
)
—
Dividends paid
(17,768
)
(5,866
)
Contributions related to formation of San
Mateo
14,700
22,750
Distributions to non-controlling interest
owners of less-than-wholly-owned subsidiaries
(19,110
)
(18,375
)
Taxes paid related to net share settlement
of stock-based compensation
(18,909
)
(12,184
)
Other
(204
)
(146
)
Net cash used in financing activities
(39,936
)
(43,821
)
Change in cash and restricted cash
(43,902
)
33,237
Cash and restricted cash at beginning of
period
547,330
86,920
Cash and restricted cash at end of
period
$
503,428
$
120,157
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, certain other non-cash items and non-cash
stock-based compensation expense and net gain or loss on
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
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income attributable to Matador
Resources Company shareholders
$
163,130
$
253,792
$
207,124
Net income attributable to non-controlling
interest in subsidiaries
15,794
18,117
17,061
Net income
178,924
271,909
224,185
Interest expense
16,176
16,424
16,252
Total income tax provision
56,672
80,928
68,528
Depletion, depreciation and
amortization
126,325
131,601
95,853
Accretion of asset retirement
obligations
699
682
543
Unrealized loss (gain) on derivatives
7,067
(20,311
)
75,029
Non-cash stock-based compensation
expense
2,290
4,236
3,014
Net loss on impairment
—
—
198
Expense related to contingent
consideration and other
942
1,969
356
Consolidated Adjusted EBITDA
389,095
487,438
483,958
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(23,871
)
(25,650
)
(22,115
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
365,224
$
461,788
$
461,843
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
339,500
$
446,523
$
328,954
Net change in operating assets and
liabilities
28,386
19,750
123,930
Interest expense, net of non-cash
portion
15,338
15,219
15,309
Current income tax provision
4,929
2,937
15,409
Expense related to contingent
consideration and other
942
3,009
356
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(23,871
)
(25,650
)
(22,115
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
365,224
$
461,788
$
461,843
Adjusted EBITDA – San Mateo (100%)
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income
$
32,232
$
36,971
$
34,819
Depletion, depreciation and
amortization
8,457
8,301
7,778
Interest expense
7,948
7,000
2,269
Accretion of asset retirement
obligations
80
75
68
Net loss on impairment
—
—
198
Adjusted EBITDA
$
48,717
$
52,347
$
45,132
Three Months Ended
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
53,635
$
44,803
$
45,511
Net change in operating assets and
liabilities
(12,617
)
1,029
(2,393
)
Interest expense, net of non-cash
portion
7,699
6,515
2,014
Adjusted EBITDA
$
48,717
$
52,347
$
45,132
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 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 securities 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
March 31,
December
31,
March 31,
2023
2022
2022
(In thousands, except per share data)
Unaudited Adjusted Net Income and
Adjusted Earnings Per Share Reconciliation to
Net Income:
Net income attributable to Matador
Resources Company shareholders
$
163,130
$
253,792
$
207,124
Total income tax provision
56,672
80,928
68,528
Income attributable to Matador Resources
Company shareholders before taxes
219,802
334,720
275,652
Less non-recurring and unrealized charges
to income before taxes:
Unrealized loss (gain) on derivatives
7,067
(20,311
)
75,029
Net loss on impairment
—
—
198
Expense related to contingent
consideration and other
942
1,969
356
Adjusted income attributable to Matador
Resources Company shareholders before taxes
227,811
316,378
351,235
Income tax expense(1)
47,840
66,439
73,759
Adjusted net income attributable to
Matador Resources Company shareholders (non-GAAP)
$
179,971
$
249,939
$
277,476
Weighted average shares outstanding -
basic
119,034
118,298
117,951
Dilutive effect of options and restricted
stock units
668
1,776
1,863
Weighted average common shares outstanding
- diluted
119,702
120,074
119,814
Adjusted earnings per share attributable
to Matador Resources Company
shareholders (non-GAAP)
Basic
$
1.51
$
2.11
$
2.35
Diluted
$
1.50
$
2.08
$
2.32
(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
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Net cash provided by operating
activities
$
339,500
$
446,523
$
328,954
Net change in operating assets and
liabilities
28,386
19,750
123,930
San Mateo discretionary cash flow
attributable to non-controlling interest in subsidiaries(1)
(20,099
)
(22,458
)
(21,128
)
Performance incentives received from Five
Point
14,700
5,500
22,750
Total discretionary cash flow
362,487
449,315
454,506
Drilling, completion and equipping capital
expenditures
224,144
226,377
207,829
Midstream capital expenditures
14,141
28,638
11,992
Expenditures for other property and
equipment
1,769
523
225
Net change in capital accruals
69,758
(46,621
)
(1,768
)
San Mateo accrual-based capital
expenditures related to non-controlling interest in
subsidiaries(2)
(4,567
)
(8,883
)
(9,446
)
Total accrual-based capital
expenditures(3)
305,245
200,034
208,832
Adjusted free cash flow
$
57,242
$
249,281
$
245,674
(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
March 31,
December 31,
March 31,
(In thousands)
2023
2022
2022
Net cash provided by San Mateo operating
activities
$
53,635
$
44,803
$
45,511
Net change in San Mateo operating assets
and liabilities
(12,617
)
1,029
(2,393
)
Total San Mateo discretionary cash
flow
41,018
45,832
43,118
San Mateo capital expenditures
12,376
27,181
12,170
Net change in San Mateo capital
accruals
(3,056
)
(9,052
)
7,107
San Mateo accrual-based capital
expenditures
9,320
18,129
19,277
San Mateo adjusted free cash flow
$
31,698
$
27,703
$
23,841
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.
Income taxes related to the Advance assets as of December 31, 2022
were unknown because the tax basis in such properties as of
December 31, 2022 is not known and is subject to many variables. As
such, the Company has not provided the Standardized Measure of the
Advance assets or a reconciliation of PV-10 to Standardized Measure
with respect to the Advance assets.
Standardized Measure to PV-10 Reconciliation - Matador
(in millions)
At December 31,
2022
Standardized Measure
$
6,983.2
Discounted future income taxes
2,149.0
PV-10
$
9,132.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425005962/en/
Mac Schmitz Vice President - Investor Relations (972) 371-5225
investors@matadorresources.com
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