Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) today reported financial and operating results for the
third quarter of 2023. A short slide presentation summarizing the
highlights of Matador’s third 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,
commented, “Matador achieved record
results for the third quarter of 2023 due to the continued
execution and teamwork by Matador’s staff, management team, Board
of Directors, vendors, contractors and partners, among others.
These results reflect our long-term approach to managing Matador’s
business allowing for profitable growth at a measured pace,
maintaining a strong balance sheet and returning value to our
shareholders. We are pleased that this long-term approach is being
increasingly recognized as Matador’s stock has been a top performer
among our peer group over the last five years (see Slide A).
In fact, Matador has significantly outperformed both the price of
oil and the S&P Oil and Gas Exploration & Production Select
Industry Index, or XOP Index, since our initial public offering in
February 2012 and the acquisition of the Boros, Voni and Rodney
Robinson leases from the Bureau of Land Management in 2018 (see
Slide B).
Record Production and Better-Than-Expected
Cost Savings in Third Quarter 2023
“The third quarter of 2023 was the best quarter of total
production in Matador’s history, as we averaged more than 135,000
barrels of oil and natural gas equivalent (‘BOE’) per day. This
record total production for the third
quarter of 2023 was 3% better sequentially than our former total
production record of 130,683 BOE per day in the second quarter of
2023. Notably, we also achieved record
oil production during the third quarter of 2023 of 77,529 barrels
per day, which was 2% better sequentially than our previous oil
production record of 76,345 barrels per day in the second quarter
of 2023. Matador also achieved record
natural gas production during the third quarter of 2023 of 345.4
million cubic feet per day, which was 6% better sequentially than
our prior natural gas production record of 326.0 million cubic feet
per day in the second quarter of 2023. We achieved these record
production results despite the challenges of bringing on the
largest batch of wells in Matador’s history as well as challenges
associated with maintenance, weather and potential midstream
takeaway constraints.
“A portion of the natural gas from Matador’s wells in northern
Lea County, New Mexico is being delivered to and processed by
Pronto Midstream, LLC (“Pronto”), our wholly-owned midstream
subsidiary, at its cryogenic natural gas processing plant named the
‘Marlan Plant’ in honor of our former director and advisor Marlan
Downey. The Marlan Plant provides flow assurance for much of our
acreage in northern Lea County, New Mexico as well as other
producers and midstream companies in the area. Due in part to the
natural gas production from Matador’s wells in northern Lea County,
we are pleased to report that the Marlan Plant is now processing
natural gas volumes up to its designed inlet capacity of 60 million
cubic feet per day.
“In addition to record production during the third quarter, we
also achieved better-than-expected drilling, completing and
equipping (“D/C/E”) capital expenditures and midstream capital
expenditures. Matador’s D/C/E capital expenditures for the third
quarter of 2023 were approximately $4 million lower than expected.
Midstream capital expenditures were approximately $48 million lower
than expected for the third quarter of 2023. We currently expect
full-year 2023 midstream capital expenditures of $135 million to
$165 million as compared to our prior expectation of $150 million
to $200 million. Approximately $10 million of this decrease is due
to cost savings with the remainder due to the timing of our planned
projects.
“Our record production and lower costs led to
better-than-expected Net Cash Provided by Operating Activities of
$461.0 million for the third quarter of 2023 and Adjusted Free Cash
Flow of $144.6 million for the third quarter of 2023. We used a
portion of this free cash flow to continue our long tradition of
paying down debt and various brick-by-brick acquisitions, which
have been instrumental in building our acreage position to over
150,000 net acres in the Delaware Basin (see Slide C). The
Board and I thank and congratulate all the Matador staff that have
worked on these transactions, which continue to provide significant
value to Matador and its shareholders.
Increased Dividend and Continued Debt
Repayment
“Matador was pleased to announce last week that our Board of
Directors increased our fixed quarterly cash dividend from $0.15
per share, or $0.60 per share on an annual basis, to $0.20 per
share, or $0.80 per share on an annual basis (see Slide D).
This is the fourth increase in our fixed dividend since our Board
initiated the dividend in the first quarter of 2021. Our ability to
raise our dividend again evidences our increasing financial and
operational strength.
“Matador was also pleased to announce last week that our bank
group amended our credit agreement to increase the borrowing base
by $250 million to $2.5 billion and increase the elected commitment
by $75 million to $1.325 billion (see Slide E). In
connection with the amendment, we welcomed JPMorgan Chase Bank,
N.A. as the newest member to our bank group. We value our lending
relationships and are grateful for the support of each of our
banks.
“The support of our banks was critical in connection with our
Advance acquisition as we borrowed $700 million under Matador’s
credit agreement. Since then, we have repaid $200 million of these
borrowings leaving only $500 million outstanding under Matador’s
credit agreement today. As of September 30, 2023, our leverage
ratio was just under 1.0x. We expect our leverage ratio to remain
1.0x or less for the remainder of 2023 and anticipate being able to
fully repay the borrowings under Matador’s credit agreement in 2024
at current commodity prices.
Horseshoe Well Update
“In October 2023, Matador turned to sales its first two
‘horseshoe’ wells in our Wolf asset area in Loving County, Texas
(see Slide F). We are pleased to announce that these two
horseshoe wells have 24-hour initial production test results of
2,477 BOE per day (51% oil) and 2,166 BOE per day (53% oil),
respectively, and have high initial flowing casing pressures
between 3,650 and 4,100 pounds per square inch. We are encouraged
by the early initial production from the horseshoe wells, which is
comparable to or better than traditional two-mile lateral wells
drilled in the Wolf asset area. We estimate that we achieved
approximately $10 million in cost savings by drilling two horseshoe
two-mile lateral wells as compared to four one-mile lateral wells
in this section.
Looking Forward to the Remainder of 2023
and Into 2024
“Matador expects to finish the year strong with continued
production increases, cost efficiencies and debt repayment. We
anticipate achieving the mid-to-high end of our full-year 2023
guidance range for total oil and natural gas equivalent production,
oil production and natural gas production. We also expect lower
capital expenditures for full-year 2023, primarily due to lower
midstream capital expenditures of $25 million.
“For the fourth quarter of 2023, we now expect to produce an
average of approximately 145,000 BOE per day, which is a 2%
increase from our previous expectation of 143,000 BOE per day (see
Slide G). In addition, we anticipate our oil production to
average 86,750 barrels of oil per day at the midpoint of our
guidance during the fourth quarter, which is a 1% increase from our
previous expectation of 86,000 barrels of oil per day. In addition
to the increased production during the fourth quarter of 2023, we
also anticipate having 47 net wells in some stage of drilling or
completion on December 31, 2023.
“We are currently operating seven drilling rigs and anticipate
adding an eighth drilling rig in the first quarter of 2024. This
additional drilling rig is expected to be a ‘super-spec’ drilling
rig similar to our other seven drilling rigs. We are pleased with
our extensive well inventory and continued capital and operating
efficiencies that allow us to add this drilling rig. Special thanks
go to our vendors and operational teams for helping achieve these
efficiencies.
“Matador also continues to make progress with its midstream
assets to increase the ‘flow assurance’ essential for its growing
production volumes and third-party relationships in the Delaware
Basin. We expect to connect Pronto’s natural gas system with the
natural gas system owned by San Mateo Midstream, LLC (“San Mateo”),
our midstream joint venture, in the first quarter of 2024. We also
expect to connect Pronto’s natural gas system to our Advance
acreage in the first quarter of 2024, which will allow us to
directly deliver natural gas volumes from the Advance acreage to
the Marlan Plant. In addition to these connections, we continue to
move forward with our plans to expand our processing capacity by
adding an additional cryogenic natural gas processing plant with a
designed inlet capacity of 200 million cubic feet of natural gas
per day and are evaluating whether to include a partner in building
the processing plant. Matador has a history of successfully
building midstream assets. We formed San Mateo in 2017 and have
grown our midstream assets since then, both at San Mateo and
Pronto, to include approximately 525 miles of oil, natural gas and
water pipelines, 520 million cubic feet per day of designed natural
gas processing capacity and over 475,000 barrels per day of
designed water disposal capacity (see Slide H).
“Thanks again for your interest and support and thanks to the
Board, the staff and our stakeholders for their extra efforts and
teamwork to keep Matador growing.”
Third Quarter 2023 Matador Operational and Financial
Highlights (for comparisons to last year, please see the
remainder of this press release)
- Average production of 135,096 BOE per day (77,529 barrels of
oil per day)
- Net cash provided by operating activities of $461.0
million
- Adjusted Free Cash Flow of $144.6 million
- Net income of $263.7 million, or $2.20 per diluted common
share
- Adjusted net income of $223.4 million, or adjusted earnings of
$1.86 per diluted common share
- Adjusted EBITDA of $508.3 million
- San Mateo net income of $29.9 million
- San Mateo Adjusted EBITDA of $47.1 million
- D/C/E capital expenditures of $296.0 million
- Midstream capital expenditures of $41.7 million
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
and adjusted free cash flow and reconciliations of such non-GAAP
financial metrics to their comparable GAAP metrics, please see
“Supplemental Non-GAAP Financial Measures” below.
Full-Year 2023 Guidance Update
Effective October 24, 2023, Matador anticipates achieving the
mid-to-high end of its full-year 2023 guidance range for total oil
and natural gas equivalent production, oil production and natural
gas production. Matador also expects lower capital expenditures for
full-year 2023, primarily due to lower midstream capital
expenditures of $25 million.
Operational and Financial Update
Third Quarter 2023 Oil, Natural Gas and Total Oil Equivalent
Production Above Expectations
Matador’s average daily oil and natural gas production was
135,096 BOE per day in the third quarter of 2023, which was a 3%
sequential increase from 130,683 BOE in the second quarter of 2023
and a 28% year-over-year increase from 105,214 BOE per day in the
third quarter of 2022. Matador’s production for the third quarter
of 2023 of 135,096 BOE per day exceeded its announced expectations
for the quarter of a range from 129,500 to 131,500 BOE per day, as
summarized in the table below. The primary drivers behind this
outperformance were (i) better-than-expected production from our
wells in Lea County, New Mexico, (ii) higher-than-expected
production from non-operated assets, (iii) fewer shut-in wells than
Matador had anticipated and (iv) certain land transactions that
were expected to close in the fourth quarter of 2023 but instead
closed in the third quarter of 2023. In addition, the force majeure
event experienced by a third-party midstream provider during the
third quarter has been resolved.
Production
Q3 2023 Average Daily Volume
Q3 2023
Guidance
Range (1)
Difference (2)
Sequential (3)
YoY (4)
Total, BOE per day
135,096
129,500 to 131,500
+4% Better than Guidance
+3%
+28%
Oil, Bbl per day
77,529
75,500 to 76,500
+2% Better than Guidance
+2%
+29%
Natural Gas, MMcf per day
345.4
324.0 to 330.0
+6% Better than Guidance
+6%
+28%
(1) Production range previously projected,
as provided on July 25, 2023.
(2) As compared to midpoint of guidance
provided on July 25, 2023.
(3) Represents sequential percentage
change from the second quarter of 2023.
(4) Represents year-over-year percentage
change from the third quarter of 2022.
Third Quarter 2023 Realized Commodity Prices
The following table summarizes Matador’s realized commodity
prices during the third quarter of 2023, as compared to the second
quarter of 2023 and the third quarter of 2022.
Sequential (Q3 2023 vs. Q2
2023)
YoY (Q3 2023 vs. Q3 2022)
Realized Commodity Prices
Q3 2023
Q2 2023
Sequential Change(1)
Q3 2023
Q3 2022
YoY Change(2)
Oil Prices, per Bbl
$82.49
$73.46
Up 12%
$82.49
$94.36
Down 13%
Natural Gas Prices, per Mcf
$3.56
$2.61
Up 36%
$3.56
$9.22
Down 61%
(1) Third quarter 2023 as compared to
second quarter 2023.
(2) Third quarter 2023 as compared to
third quarter 2022.
Third Quarter 2023 Wells Turned to Sales
During the third quarter of 2023, Matador turned to sales 29
gross (26.1 net) operated horizontal wells with an average
completed lateral length of approximately 10,700 feet. The table
below provides a summary of Matador’s operated and non-operated
activity in the third quarter of 2023. Matador had one additional
net non-operated well turned to sales in the third quarter of 2023
than what it previously planned.
Third 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 Q3
2023
Antelope Ridge
—
—
6
0.0
6
0.0
1-3BS-Carb, 1-WC A, 4-WC B
Arrowhead
—
—
14
1.3
14
1.3
7-2BS, 3-3BS, 4-WC A
Ranger
21
20.4
2
0.1
23
20.5
3-2BS-Carb, 8-2BS, 6-3BS-Carb,
3-3BS, 3-WC A
Rustler Breaks
8
5.7
2
0.2
10
5.9
3-1BS, 1-2BS, 4-WC A, 2-WC B
Stateline
—
—
—
—
—
—
No wells turned to sales in Q3
2023
Wolf/Jackson Trust
—
—
11
0.2
11
0.2
1- 3BS-Carb, 3-3BS, 6-WC A,
1-WC B
Delaware Basin
29
26.1
35
1.8
64
27.9
South Texas
—
—
—
—
—
—
No wells turned to sales in Q3
2023
Haynesville Shale
—
—
1
0.0
1
0.0
1-HV
Total
29
26.1
36
1.8
65
27.9
Note: WC = Wolfcamp; BS = Bone Spring; HV
= Haynesville; For example, 1-3BS-Carb indicates one Third Bone
Spring Carbonate completion and 1-WC A indicates one Wolfcamp A
completion. Any “0.0” values in the table above suggest a net
working interest of less than 5%, which does not round to 0.1.
Third Quarter 2023 Operating Expenses
Matador expected an increase to its lease operating expenses in
the third quarter of 2023 as a result of the closing of the Advance
acquisition in April. Matador was able to offset certain
anticipated expense increases by targeting improvements in
workover, supervision and repair and maintenance costs resulting in
total lease operating expenses of $5.34 per BOE for the third
quarter of 2023, which is a 4% sequential increase from $5.13 per
BOE in the second quarter of 2023 and a 22% year-over-year increase
from $4.38 per BOE in the third quarter of 2022. The third quarter
2023 lease operating expenses were consistent with Matador’s
expected full-year 2023 lease operating expenses range of $5.00 to
$5.50 per BOE.
Matador’s general and administrative (“G&A”) expenses
increased 13% sequentially from $2.25 per BOE in the second quarter
of 2023 to $2.55 per BOE in the third quarter of 2023. This
increase is due in part to the value of employee stock awards that
are settled in cash, which are remeasured at each quarterly
reporting period. These cash-settled stock award amounts increased
due to the fact that Matador’s share price increased 14% from
$52.32 at the end of the second quarter of 2023 to $59.48 at end of
the third quarter of 2023. Matador’s third quarter 2023 G&A
expenses were better than expected. As a result, Matador is
reducing its expected full-year 2023 G&A expenses by 9% from a
range of $2.25 to $3.25 per BOE to a range of $2.25 to $2.75 per
BOE.
During the third quarter of 2023, Matador’s plant and other
midstream operating expenses, which include the costs to operate
San Mateo’s and Pronto’s assets, were $2.48 per BOE, a 4% decrease
from $2.58 per BOE in the second quarter of 2023. Matador continues
to expect its midstream businesses to experience full-year 2023
plant and other midstream operating expenses to range from $2.50 to
$3.00 per BOE.
Third Quarter 2023 Capital Expenditures
Matador’s D/C/E capital expenditures were approximately $4
million lower than expected. Matador’s cost savings were partially
offset by additional non-operated activity, which resulted in one
additional net well turned to sales, as noted above. Midstream
capital expenditures were significantly lower than expected for the
third quarter of 2023 due primarily to cost savings and the timing
of planned projects.
Q3 2023 Capital Expenditures
($ millions)
Actual
Guidance(1)
Difference vs. Guidance(2)
D/C/E
$296.0
$300.0
1% less than estimated
Midstream
$41.7
$90.0
54% less than estimated
(1) Midpoint of guidance as provided on
July 25, 2023.
(2) As compared to the midpoint of
guidance provided on July 25, 2023.
Midstream Update
San Mateo’s operations in the third quarter of 2023 were
highlighted by better-than-expected operating and financial
results. These strong results primarily reflect
better-than-expected volumes delivered by third party customers
into the San Mateo system. San Mateo’s net income of $29.9 million
and Adjusted EBITDA of $47.1 million were each better than
expected.
Operationally, San Mateo’s natural gas gathering and processing
volumes in the third quarter of 2023 were all-time quarterly highs.
The table below sets forth San Mateo’s throughput volumes, as
compared to the second quarter of 2023 and the third 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 (Q3 2023 vs. Q2
2023)
YoY (Q3 2023 vs. Q3 2022)
San Mateo Throughput Volumes
Q3 2023
Q2 2023
Change(1)
Q3 2023
Q3 2022
Change(2)
Natural gas gathering, MMcf per day
350
331
+6%
350
285
+23%
Natural gas processing, MMcf per day
385
373
+3%
385
280
+38%
Oil gathering and transportation, Bbl per
day
40,200
41,400
-3%
40,200
44,800
-10%
Produced water handling, Bbl per day
354,000
335,000
+6%
354,000
358,000
-1%
(1) Third quarter 2023 as compared to
second quarter 2023.
(2) Third quarter 2023 as compared to
third quarter 2022.
Fourth Quarter 2023 Estimates
Fourth 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 of 135,096 BOE per day in the third
quarter of 2023 to increase to a midpoint of approximately 145,000
BOE per day in the fourth quarter of 2023.
Q3 and Q4 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
Q3 2023
135,096
77,529
345.4
57%
Q4 2023E
144,000 to 146,500
86,000 to 87,500
348.0 to 354.0
60%
Fourth Quarter 2023 Estimated Wells Turned to Sales
At October 24, 2023, Matador expects to turn to sales 38 gross
(28.2 net) operated horizontal wells in the Delaware Basin during
the fourth quarter of 2023, consisting of four gross (4.0 net)
wells in the Ranger asset area, four gross (2.6 net) wells in the
Antelope Ridge asset area, 17 gross (10.4 net) wells in the
Arrowhead asset area and 13 gross (11.2 net) wells in the Wolf
asset area.
Fourth Quarter 2023 Estimated Capital Expenditures
Matador began 2023 operating seven drilling rigs in the Delaware
Basin. Following the closing of the Advance acquisition on April
12, 2023, Matador continued operating the drilling rig that Advance
had been operating. In June 2023, Matador released this eighth
operated drilling rig and continued operating seven drilling rigs
in the Delaware Basin. Matador plans to operate seven drilling rigs
for the remainder of 2023 and add back an eighth drilling rig in
the first quarter of 2024. At October 24, 2023, Matador expects
D/C/E capital expenditures for the fourth quarter of 2023 will be
approximately $259 million, which is a 13% decrease as compared to
$296 million for the third quarter of 2023 due to the mix of wells
drilled and completed during the fourth quarter as compared to the
third quarter. Matador expects its proportionate share of midstream
capital expenditures to be approximately $87 million in the fourth
quarter of 2023, as compared to $41.7 million in the third quarter
of 2023 due to the timing of projects.
Fourth Quarter 2023 Estimated Cash Taxes
Matador expects to make cash tax payments in an amount of
approximately 1% of pre-tax book net income for the year ended
December 31, 2023, as compared to cash taxes of approximately 3% of
pre-tax book net income for the year ended December 31, 2022. This
year-over-year decrease is due to lower oil and natural gas prices
in 2023 as compared to 2022 as well as higher acquisition and
capital expenditures incurred in 2023 as compared to 2022. Matador
had previously anticipated that it would not pay any cash taxes for
2023 but has since revised its estimates based upon higher
estimated 2023 production and realized oil and gas prices and lower
estimated capital expenditures. The 2023 cash tax payments
primarily relate to New Mexico state income taxes.
Conference Call Information
The Company will host a live conference call on Wednesday,
October 25, 2023, at 10:00 a.m. Central Time to review its third
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/BIec0f864806654c48b2686f74a95969b3
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
September 30, 2023
June 30, 2023
September 30, 2022
Net Production Volumes:(1)
Oil (MBbl)(2)
7,133
6,947
5,535
Natural gas (Bcf)(3)
31.8
29.7
24.9
Total oil equivalent
(MBOE)(4)
12,429
11,892
9,680
Average Daily Production
Volumes:(1)
Oil (Bbl/d)(5)
77,529
76,345
60,163
Natural gas (MMcf/d)(6)
345.4
326.0
270.3
Total oil equivalent
(BOE/d)(7)
135,096
130,683
105,214
Average Sales Prices:
Oil, without realized derivatives
(per Bbl)
$
82.49
$
73.46
$
94.36
Oil, with realized derivatives
(per Bbl)
$
82.49
$
73.46
$
91.69
Natural gas, without realized
derivatives (per Mcf)(8)
$
3.56
$
2.61
$
9.22
Natural gas, with realized
derivatives (per Mcf)
$
3.34
$
2.51
$
7.55
Revenues (millions):
Oil and natural gas revenues
$
701.5
$
587.9
$
751.4
Third-party midstream services
revenues
$
29.9
$
30.1
$
24.7
Realized loss on derivatives
$
(7.0
)
$
(3.1
)
$
(56.3
)
Operating Expenses (per BOE):
Production taxes, transportation
and processing
$
5.77
$
5.21
$
7.64
Lease operating
$
5.34
$
5.13
$
4.38
Plant and other midstream
services operating
$
2.48
$
2.58
$
2.56
Depletion, depreciation and
amortization
$
15.51
$
14.93
$
12.28
General and administrative(9)
$
2.55
$
2.25
$
2.85
Total(10)
$
31.65
$
30.10
$
29.71
Other (millions):
Net sales of purchased natural
gas(11)
$
2.7
$
4.8
$
8.5
Net income (millions)(12)
$
263.7
$
164.7
$
337.6
Earnings per common share
(diluted)(12)
$
2.20
$
1.37
$
2.82
Adjusted net income
(millions)(12)(13)
$
223.4
$
170.1
$
321.7
Adjusted earnings per common
share (diluted)(12)(14)
$
1.86
$
1.42
$
2.68
Adjusted EBITDA
(millions)(12)(15)
$
508.3
$
423.3
$
539.7
Net cash provided by operating
activities (millions)(16)
$
461.0
$
449.0
$
557.0
Adjusted free cash flow
(millions)(12)(17)
$
144.6
$
77.7
$
269.1
San Mateo net income
(millions)(18)
$
29.9
$
25.4
$
33.6
San Mateo Adjusted EBITDA
(millions)(15)(18)
$
47.1
$
42.7
$
47.6
San Mateo net cash provided by
operating activities (millions)(18)
$
36.5
$
17.3
$
38.3
San Mateo adjusted free cash flow
(millions)(16)(17)(18)
$
10.7
$
20.6
$
16.4
D/C/E capital expenditures
(millions)
$
296.0
$
309.6
$
241.8
Midstream capital expenditures
(millions)(19)
$
41.7
$
11.7
$
14.7
(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 $0.37,
$0.33 and $0.39 per BOE of non-cash, stock-based compensation
expense in the third quarter of 2023, the second quarter of 2023
and the third 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 $40.3 million,
$31.9 million and $77.9 million less expenses of $37.6 million,
$27.1 million and $69.4 million in the third quarter of 2023, the
second quarter of 2023 and the third 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)
September 30,
2023
December 31,
2022
ASSETS
Current assets
Cash
$
25,935
$
505,179
Restricted cash
36,239
42,151
Accounts receivable
Oil and natural gas revenues
289,308
224,860
Joint interest billings
188,261
180,947
Other
49,345
48,011
Derivative instruments
—
3,930
Lease and well equipment inventory
35,468
15,184
Prepaid expenses and other current
assets
86,819
51,570
Total current assets
711,375
1,071,832
Property and equipment, at cost
Oil and natural gas properties, full-cost
method
Evaluated
9,291,696
6,862,455
Unproved and unevaluated
1,143,769
977,502
Midstream properties
1,209,756
1,057,668
Other property and equipment
39,626
32,847
Less accumulated depletion, depreciation
and amortization
(5,008,909
)
(4,512,275
)
Net property and equipment
6,675,938
4,418,197
Other assets
Other long-term assets
51,850
64,476
Total assets
$
7,439,163
$
5,554,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
81,439
$
58,848
Accrued liabilities
367,200
261,310
Royalties payable
150,365
117,698
Amounts due to affiliates
28,850
32,803
Derivative instruments
4,314
—
Advances from joint interest owners
21,416
52,357
Other current liabilities
68,743
52,857
Total current liabilities
722,327
575,873
Long-term liabilities
Borrowings under Credit Agreement
530,000
—
Borrowings under San Mateo Credit
Facility
475,000
465,000
Senior unsecured notes payable
1,183,673
695,245
Asset retirement obligations
87,216
52,985
Deferred income taxes
552,937
428,351
Other long-term liabilities
12,712
19,960
Total long-term liabilities
2,841,538
1,661,541
Shareholders’ equity
Common stock - $0.01 par value,
160,000,000 shares authorized; 119,277,669 and 118,953,381 shares
issued; and 119,145,818 and 118,948,624 shares outstanding,
respectively
1,192
1,190
Additional paid-in capital
2,120,896
2,101,999
Retained earnings
1,545,712
1,007,642
Treasury stock, at cost, 131,851 and 4,757
shares, respectively
(5,076
)
(34
)
Total Matador Resources Company
shareholders’ equity
3,662,724
3,110,797
Non-controlling interest in
subsidiaries
212,574
206,294
Total shareholders’ equity
3,875,298
3,317,091
Total liabilities and shareholders’
equity
$
7,439,163
$
5,554,505
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
Oil and natural gas revenues
$
701,527
$
751,444
$
1,792,353
$
2,270,728
Third-party midstream services
revenues
29,931
24,707
86,517
63,899
Sales of purchased natural gas
40,329
77,943
106,481
157,290
Realized loss on derivatives
(6,975
)
(56,263
)
(6,454
)
(139,865
)
Unrealized gain (loss) on derivatives
7,482
43,097
(8,244
)
(1,502
)
Total revenues
772,294
840,928
1,970,653
2,350,550
Expenses
Production taxes, transportation and
processing
71,697
73,964
189,174
219,441
Lease operating
66,395
42,360
171,845
116,172
Plant and other midstream services
operating
30,808
24,790
92,510
66,265
Purchased natural gas
37,641
69,442
93,192
142,903
Depletion, depreciation and
amortization
192,794
118,870
496,633
334,747
Accretion of asset retirement
obligations
1,218
679
2,709
1,739
General and administrative
31,731
27,549
80,879
81,713
Total expenses
432,284
357,654
1,126,942
962,980
Operating income
340,010
483,274
843,711
1,387,570
Other income (expense)
Net loss on impairment
—
(1,113
)
(202
)
(1,311
)
Interest expense
(35,408
)
(15,996
)
(85,813
)
(50,740
)
Other (expense) income
(11,614
)
1,804
5,289
(2,682
)
Total other expense
(47,022
)
(15,305
)
(80,726
)
(54,733
)
Income before income taxes
292,988
467,969
762,985
1,332,837
Income tax provision (benefit)
Current
8,958
270
8,958
51,940
Deferred
5,631
113,671
119,609
266,489
Total income tax provision
14,589
113,941
128,567
318,429
Net income
278,399
354,028
634,418
1,014,408
Net income attributable to non-controlling
interest in subsidiaries
(14,660
)
(16,456
)
(42,883
)
(53,994
)
Net income attributable to Matador
Resources Company shareholders
$
263,739
$
337,572
$
591,535
$
960,414
Earnings per common share
Basic
$
2.21
$
2.86
$
4.97
$
8.13
Diluted
$
2.20
$
2.82
$
4.93
$
8.01
Weighted average common shares
outstanding
Basic
119,147
118,136
119,121
118,063
Diluted
120,081
119,850
120,045
119,867
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS - UNAUDITED
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Operating activities
Net income
$
278,399
$
354,028
$
634,418
$
1,014,408
Adjustments to reconcile net income to net
cash provided by operating activities
Unrealized (gain) loss on derivatives
(7,482
)
(43,097
)
8,244
1,502
Depletion, depreciation and
amortization
192,794
118,870
496,633
334,747
Accretion of asset retirement
obligations
1,218
679
2,709
1,739
Stock-based compensation expense
4,556
3,810
10,777
10,887
Deferred income tax provision
5,631
113,671
119,609
266,489
Amortization of debt issuance cost and
other debt-related costs
2,101
(1,888
)
4,996
(682
)
Other non-cash changes
15,696
1,113
14
1,311
Changes in operating assets and
liabilities
Accounts receivable
(52,983
)
40,922
3,424
(170,101
)
Lease and well equipment inventory
(2,986
)
(903
)
(10,223
)
(1,732
)
Prepaid expenses and other current
assets
(17,693
)
(7,169
)
(41,817
)
(21,886
)
Other long-term assets
(803
)
30
1,269
257
Accounts payable, accrued liabilities and
other current liabilities
46,923
20,586
18,691
51,078
Royalties payable
12,570
(16,525
)
22,655
40,014
Advances from joint interest owners
(25,962
)
8,062
(30,941
)
8,919
Income taxes payable
10,550
(34,731
)
8,873
3,439
Other long-term liabilities
(1,559
)
(498
)
150
(8,173
)
Net cash provided by operating
activities
460,970
556,960
1,249,481
1,532,216
Investing activities
Drilling, completion and equipping capital
expenditures
(315,957
)
(155,560
)
(855,468
)
(545,453
)
Acquisition of Advance
—
—
(1,608,427
)
—
Acquisition of oil and natural gas
properties
(64,689
)
(61,141
)
(120,586
)
(134,255
)
Midstream capital expenditures
(42,738
)
(23,103
)
(75,609
)
(51,413
)
Acquisition of midstream assets
—
—
—
(75,816
)
Expenditures for other property and
equipment
(486
)
(407
)
(2,964
)
(690
)
Proceeds from sale of assets
279
95
730
46,507
Net cash used in investing activities
(423,591
)
(240,116
)
(2,662,324
)
(761,120
)
Financing activities
Purchase of senior unsecured notes
—
(141,556
)
—
(283,960
)
Repayments of borrowings under Credit
Agreement
(432,000
)
—
(2,622,000
)
(300,000
)
Borrowings under Credit Agreement
402,000
—
3,152,000
200,000
Repayments of borrowings under San Mateo
Credit Facility
(32,000
)
(50,000
)
(140,000
)
(120,000
)
Borrowings under San Mateo Credit
Facility
47,000
70,000
150,000
175,000
Cost to amend credit facilities
—
—
(8,645
)
(506
)
Proceeds from issuance of senior unsecured
notes
—
—
494,800
—
Cost to issue senior unsecured notes
(248
)
—
(8,503
)
—
Dividends paid
(17,780
)
(11,750
)
(53,465
)
(23,494
)
Contributions related to formation of San
Mateo
9,000
—
23,700
22,750
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
(16,660
)
(22,540
)
(61,103
)
(67,375
)
Taxes paid related to net share settlement
of stock-based compensation
(43
)
(1,412
)
(22,833
)
(18,264
)
Other
(312
)
(149
)
(764
)
(447
)
Net cash provided by (used in) financing
activities
(41,043
)
(157,407
)
927,687
(416,296
)
Change in cash and restricted cash
(3,664
)
159,437
(485,156
)
354,800
Cash and restricted cash at beginning of
period
65,838
282,283
547,330
86,920
Cash and restricted cash at end of
period
$
62,174
$
441,720
$
62,174
$
441,720
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 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
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income attributable to Matador
Resources Company shareholders
$
263,739
$
164,666
$
337,572
Net income attributable to non-controlling
interest in subsidiaries
14,660
12,429
16,456
Net income
278,399
177,095
354,028
Interest expense
35,408
34,229
15,996
Total income tax provision
14,589
57,306
113,941
Depletion, depreciation and
amortization
192,794
177,514
118,870
Accretion of asset retirement
obligations
1,218
792
679
Unrealized (gain) loss on derivatives
(7,482
)
8,659
(43,097
)
Non-cash stock-based compensation
expense
4,556
3,931
3,810
Net loss on impairment
—
202
1,113
Expense (income) related to contingent
consideration and other
11,895
(15,577
)
(2,288
)
Consolidated Adjusted EBITDA
531,377
444,151
563,052
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(23,102
)
(20,900
)
(23,322
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
508,275
$
423,251
$
539,730
Three Months Ended
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
460,970
$
449,011
$
556,960
Net change in operating assets and
liabilities
31,943
(32,410
)
(9,774
)
Interest expense, net of non-cash
portion
33,307
32,172
15,013
Current income tax provision (benefit)
8,958
(4,929
)
270
Other non-recurring (income) expense
(3,801
)
307
583
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(23,102
)
(20,900
)
(23,322
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
508,275
$
423,251
$
539,730
Adjusted EBITDA – San Mateo (100%)
Three Months Ended
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income
$
29,917
$
25,365
$
33,584
Depletion, depreciation and
amortization
8,821
8,675
8,258
Interest expense
8,325
8,533
4,570
Accretion of asset retirement
obligations
84
80
70
Net loss on impairment
—
—
1,113
Adjusted EBITDA
$
47,147
$
42,653
$
47,595
Three Months Ended
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
36,483
$
17,326
$
38,333
Net change in operating assets and
liabilities
2,588
17,043
4,948
Interest expense, net of non-cash
portion
8,076
8,284
4,314
Adjusted EBITDA
$
47,147
$
42,653
$
47,595
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 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
September 30,
June 30,
September 30,
2023
2023
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
$
263,739
$
164,666
$
337,572
Total income tax provision
14,589
57,306
113,941
Income attributable to Matador Resources
Company shareholders before taxes
278,328
221,972
451,513
Less non-recurring and unrealized charges
to income before taxes:
Unrealized (gain) loss on derivatives
(7,482
)
8,659
(43,097
)
Net loss on impairment
—
202
1,113
Expense (income) related to contingent
consideration and other
11,895
(15,577
)
(2,288
)
Adjusted income attributable to Matador
Resources Company shareholders before taxes
282,741
215,256
407,241
Income tax expense(1)
59,376
45,204
85,521
Adjusted net income attributable to
Matador Resources Company shareholders (non-GAAP)
$
223,365
$
170,052
$
321,720
Weighted average shares outstanding -
basic
119,147
119,183
118,136
Dilutive effect of options and restricted
stock units
934
659
1,714
Weighted average common shares outstanding
- diluted
120,081
119,842
119,850
Adjusted earnings per share attributable
to Matador Resources Company
shareholders (non-GAAP)
Basic
$
1.87
$
1.43
$
2.72
Diluted
$
1.86
$
1.42
$
2.68
(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
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Net cash provided by operating
activities
$
460,970
$
449,011
$
556,960
Net change in operating assets and
liabilities
31,943
(32,410
)
(9,774
)
San Mateo discretionary cash flow
attributable to non-controlling interest in subsidiaries(1)
(19,145
)
(16,841
)
(21,208
)
Performance incentives received from Five
Point
9,000
—
—
Total discretionary cash flow
482,768
399,760
525,978
Drilling, completion and equipping capital
expenditures
315,957
315,367
155,560
Midstream capital expenditures
42,738
18,730
23,103
Expenditures for other property and
equipment
486
709
407
Net change in capital accruals
(7,104
)
(5,985
)
90,994
San Mateo accrual-based capital
expenditures related to non-controlling interest in
subsidiaries(2)
(13,908
)
(6,752
)
(13,188
)
Total accrual-based capital
expenditures(3)
338,169
322,069
256,876
Adjusted free cash flow
$
144,599
$
77,691
$
269,102
(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
September 30,
June 30,
September 30,
(In thousands)
2023
2023
2022
Net cash provided by San Mateo operating
activities
$
36,483
$
17,326
$
38,333
Net change in San Mateo operating assets
and liabilities
2,588
17,043
4,948
Total San Mateo discretionary cash
flow
39,071
34,369
43,281
San Mateo capital expenditures
22,812
12,006
23,059
Net change in San Mateo capital
accruals
5,571
1,774
3,855
San Mateo accrual-based capital
expenditures
28,383
13,780
26,914
San Mateo adjusted free cash flow
$
10,688
$
20,589
$
16,367
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024125186/en/
Mac Schmitz Vice President - Investor Relations (972) 371-5225
investors@matadorresources.com
Matador Resources (NYSE:MTDR)
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