Matador Resources Company (NYSE: MTDR) (“Matador” or the
“Company”) today reported financial and operating results for the
second quarter of 2023. A short slide presentation summarizing the
highlights of Matador’s second 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, “Thank you for your support during this year’s annual
meeting and throughout our history. We enjoyed seeing many of you
shareholders and other friends at our annual shareholder meeting in
June where we celebrated the 40-year anniversary of Matador and its
predecessors (see Slide A). Your Board, management and staff
are all dedicated to Matador’s progress and continuing to provide
value for our stakeholders. Along those lines, we are pleased to
announce results for another quarter where we have met or exceeded
earnings guidance – our 36th quarter in a row, which makes nine
years straight that we have achieved this accomplishment (see
Slide B). We also reduced our bank debt as we increased
production.
“Notably, we had record production
during the second quarter largely due to the success of our 2022
and 2023 drilling program and the successful integration of Advance
Energy Partners Holdings, LLC (“Advance”), which we acquired in
April 2023. The Advance assets continue to perform better than we
had expected, which has allowed us to increase our production
guidance for 2023 and sets us up for an even better 2024. For
additional information regarding our operational and financial
results in the second quarter of 2023 and adjustments to our 2023
guidance, please see the set of seven slides identified as
‘Chairman’s Remarks’ (Slides A through G) on our
website.
Stronger than Expected Results in Second
Quarter 2023
“Our results for the second quarter of 2023 were above our
expectations both operationally and financially. The second quarter
of 2023 was the best production quarter in Matador’s history as we
averaged more than 130,000 barrels of oil and natural gas
equivalent (“BOE”) production per day. This record production was 3% better than our previous
expectation of approximately 126,500 BOE per day and 23% better
than our first quarter 2023 production of 106,654 BOE per day (see
Slide C). The outperformance was primarily attributable to
better-than-expected production from the Advance assets,
higher-than-expected natural gas production from non-operated
assets in the Haynesville shale in Louisiana and outperformance of
our Rodney Robinson leasehold wells in Lea County, New Mexico,
including the eight new Rodney Robinson wells turned to sales in
the first quarter of 2023.
“In addition to the better-than-expected production during the
second quarter of 2023, we also had lower-than-expected drilling,
completing and equipping (“D/C/E”) capital expenditures of
approximately $310 million, which was 14% better than our previous
budgeted expectation of $358 million. In addition, our midstream
capital expenditures were approximately $12 million, which was 71%
better than our prior budgeted expectation of $41 million. These
lower capital expenditures are primarily due to capital and
operational efficiency savings that we were able to implement with
regard to the Advance assets and our legacy operations and the
timing of our planned projects near the end of the second quarter
and into the third quarter of 2023 for both our exploration and
production and our midstream businesses. These efficiency savings
allowed us to reduce our bank debt by $140 million since closing
the Advance acquisition and lower our leverage ratio to 1.0x as of
June 30, 2023 (see Slide D).
“Meanwhile, we remain on track to produce over 140,000 BOE per
day during the fourth quarter of 2023, which would result in 40%
production growth during 2023 (see Slide C).
Successful Integration of the Advance
Acquisition
“We closed on the Advance acquisition in April 2023 and
immediately began implementing cost savings strategies in both our
drilling and completion operations in addition to optimizing
day-to-day operations leading to anticipated reductions in lease
operating expenses. At the closing of the Advance acquisition, we
took over completion operations on 21 wells that are expected to be
turned to sales in the second half of 2023 as well as drilling
operations on 21 wells that are expected to be turned to sales in
the first half of 2024. The oversight of Matador’s MAXCOM
Operations Center and other drilling efficiencies on the wells
being drilled helped to improve well performance and at the same
time helped to reduce key service costs by more than 10%. We also
began using dual-fuel and simultaneous fracturing operations on the
remaining drilled but uncompleted (DUC) wells, saving between
$250,000 and $350,000 per well. To further increase production from
the Advance assets, our operations team has successfully performed
workovers on several of the acquired wells. We anticipate further
cost savings associated with facility consolidation that we expect
to complete in the third quarter of 2023. The integration of
Advance also increased our total proved oil and natural gas
reserves to 455 million BOE as of June 30, 2023, which is another
all-time high for Matador (see
Slide E).
Midstream Expansion
“Another key targeted goal for us in 2023 is to take steps to
increase the ‘flow assurance’ of our natural gas production in the
Delaware Basin. Our Pronto midstream natural gas gathering and
processing system that we acquired a year ago provides this kind of
strategic value to Matador. The Pronto system, with its cryogenic
natural gas processing plant that has a designed inlet capacity of
60 million cubic feet of natural gas per day, assures additional
flow capacity for our Advance acreage as well as our other acreage
in northern Lea County, New Mexico (see Slide F). Pronto’s
natural gas gathering and processing system has already
successfully been connected to more than 15 of Matador’s wells in
northern Lea County, and we expect to connect the Advance assets to
Pronto’s system late this year or early next year. In addition,
because of our expectations regarding the development of the
Advance acreage and our other acreage in northern Lea County as
well as third-party natural gas gathering and processing
opportunities in the area, we plan to further 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. We are currently evaluating whether to include
a partner in building the processing plant. We look forward to the
continued expansion of our midstream business on a selective basis
to ensure flow assurance for our production and take advantage of
third-party opportunities as such opportunities may arise.
Updating 2023 Guidance — Production Up and
Costs Down
“Due to the better-than-expected well performance across both
Matador’s legacy assets and the recently-acquired Advance assets,
we are increasing our 2023 production guidance. We are increasing
the midpoint of our 2023 total oil production guidance from 26.85
million barrels of oil to 27.15 million barrels of oil and
increasing the midpoint of our 2023 total natural gas production
guidance from 110.7 billion cubic feet of natural gas to 117.0
billion cubic feet of natural gas. As a result, we are increasing
the midpoint of our 2023 total oil and natural gas equivalent
production guidance from 45.30 million BOE to 46.65 million
BOE.
“We also anticipate decreased D/C/E costs for the remainder of
2023 and into 2024. Our long-term relationships with our vendors
have been beneficial as we have begun to see service costs peaking
across the board. Combining these overall peaking service costs
with our capital and operational efficiencies, which include faster
drilling and completion times, dual-fuel fracturing fleets,
simultaneous and remote fracturing operations and the use of
existing facilities, should position us well to increase production
while still reducing costs. We expect that these capital and
operational efficiencies and service cost decreases will result in
well cost savings of $25.0 to $30.0 million for the remainder of
2023 as compared to our prior expectations. As a result, we
currently expect our drilling and completion costs for full-year
2023 to average $1,100 per completed lateral foot, which is a
decrease from our prior expectation of $1,125 per completed lateral
foot. We expect to continue to realize additional benefits from our
capital and operational efficiencies and decreased service costs in
2024 and beyond.
“As a result of increased capital and operational efficiencies,
the peaking service cost environment and adjustments to our
operating plan for the remainder of 2023, we are decreasing the
midpoint of our D/C/E capital expenditure guidance from $1.25
billion to $1.16 billion and decreasing the midpoint of our total
capital expenditure guidance from $1.425 billion to $1.335
billion.
“Following the closing of the Advance acquisition, we continued
operating the one drilling rig Advance had been operating. We
subsequently released this drilling rig in anticipation of picking
up a new “super-spec” drilling rig that would be better suited to
Matador’s planned drilling operations. We currently plan to operate
just seven drilling rigs for the remainder of 2023. Due to the
various work by our drilling and completions teams to increase our
capital and operational efficiencies, we expect to turn to sales
the same number of operated wells in 2023 as we had previously
planned and continue to expect to produce 143,000 BOE per day at
the midpoint of our guidance for the fourth quarter of 2023 despite
dropping the eighth drilling rig. We will continue to evaluate when
to add back an eighth drilling rig depending on our realization of
decreased service costs, capital and operational efficiencies, the
prices of oil and natural gas and our various drilling and
acquisition opportunities.
“In addition to capital expenditure savings, we anticipate lower
per unit lease operating expenses during the remainder of 2023. As
expected, the lease operating expenses for the Advance assets as
well as our other Lea County assets have been higher than our
historical lease operating expenses. We have mitigated this
increase, however, by targeting improvements in workover,
supervision and repair and maintenance costs. As a result, we are
decreasing the midpoint of our expected 2023 lease operating
expenses from $5.50 per BOE to $5.25 per BOE. The Board and I
congratulate our office and field production staff for their good
work that has allowed us to reduce our expected lease operating
expenses for 2023, another targeted goal of Matador bearing fruit,
so to speak.
Looking Ahead — Debt Reduction
“We are pleased to increase our production guidance while also
decreasing our expected costs for the year and reducing our bank
debt. In fact, we have repaid $140 million of borrowings under our
reserves-based lending credit agreement (the “RBL credit
agreement”) since we closed on the Advance acquisition in April. As
a result, we have $560 million in borrowings under the RBL credit
agreement as of July 25, 2023. Our leverage ratio was 1.0x as of
June 30, 2023, and we expect our leverage ratio to remain 1.0x or
less for the remainder of 2023. We plan to prioritize repaying the
borrowings under our RBL credit agreement during 2023 and into 2024
while also paying dividends to our shareholders and continuing to
evaluate potential bolt-on acquisitions (see Slide G).
“As we celebrate Matador’s 40-year history during 2023, we
remain committed to continuing to create value for Matador and its
stakeholders for many years to come. The Board, management team and
I would like to thank our staff, shareholders, bondholders and
others, including our long-time vendors, that have helped us
integrate the Advance acquisition and achieve these strong results.
With these relationships, we anticipate a strong finish to 2023 and
are looking forward to the opportunities in front of us in
2024.”
Second Quarter 2023 Matador Operational and Financial
Highlights (for comparisons to last year, please see the
remainder of this press release)
- Average production of 130,683 BOE per day (76,345 barrels of
oil per day)
- Net cash provided by operating activities of $449.0
million
- Adjusted Free Cash Flow of $77.7 million
- Net income of $164.7 million, or $1.37 per diluted common
share
- Adjusted net income of $170.1 million, or adjusted earnings of
$1.42 per diluted common share
- Adjusted EBITDA of $423.3 million
- San Mateo net income of $25.4 million
- San Mateo Adjusted EBITDA of $42.7 million
- D/C/E capital expenditures of $309.6 million
- Midstream capital expenditures of $11.7 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 and Year-Over-Year
Comparisons
As shown in the table below, effective July 25, 2023, Matador
raised the midpoint of its full-year 2023 guidance estimates for
oil, natural gas and total oil equivalent production and lowered
its estimates for full-year 2023 D/C/E capital expenditures, which
were originally provided on February 21, 2023. In addition, Matador
affirmed its estimates for midstream capital expenditures.
2023 Guidance Ranges
Guidance Metric
Actual 2022 Results
February 21, 2023(1)
% YoY Change(2)
July 25, 2023
% YoY Change(2)
Total Oil Production, million Bbl(3)
21.9
26.4 to 27.3
+22%
26.8 to 27.5
+24%
Total Natural Gas Production, Bcf(4)
99.3
107.7 to 113.7
+11%
114.0 to 120.0
+18%
Total Oil Equivalent Production, million
BOE(5)
38.5
44.35 to 46.25
+18%
45.8 to 47.5
+21%
D/C/E CapEx(6), millions
$773
$1,180 to $1,320
+62%
$1,100 to $1,220
+50%
Midstream CapEx(7), millions
$44
$150 to $200
+298%
$150 to $200
+298%
Total D/C/E and Midstream CapEx,
millions
$817
$1,330 to $1,520
+74%
$1,250 to $1,420
+64%
(1) As provided on February 21, 2023. The
Company pointed to the high end of total oil equivalent production
guidance on April 25, 2023.
(2) Represents percentage change from 2022
actual results to the midpoint of the updated 2023 guidance
range.
(3) One barrel of oil.
(4) One billion cubic feet of natural
gas.
(5) One barrel of oil equivalent,
estimated using a conversion factor of one barrel of oil per six
thousand standard cubic feet of natural gas.
(6) Capital expenditures associated with
drilling, completing and equipping wells.
(7) Includes Matador’s share of estimated
capital expenditures for San Mateo and other wholly-owned midstream
projects, including projects completed by Pronto. Excludes the
acquisition cost of Pronto in 2022 and Advance’s midstream assets
in 2023.
Operational and Financial Update
Second Quarter 2023 Oil, Natural Gas and Total Oil Equivalent
Production Above Expectations
Matador’s average daily oil and natural gas production was
130,683 BOE per day in the second quarter of 2023, which was a 23%
sequential increase from 106,654 BOE in the first quarter of 2023
and an 18% year-over-year increase from 110,750 BOE per day in the
second quarter of 2022. Matador’s production for the second quarter
of 2023 of 130,683 BOE per day exceeded its expectations for the
quarter of a range from 125,500 to 127,500 BOE per day, as
summarized in the table below. The primary drivers behind this
outperformance were better-than-expected production from the
Advance assets following the acquisition of Advance in April,
higher-than-expected natural gas production from non-operated
assets in the Haynesville shale in Louisiana and outperformance of
Matador’s Rodney Robinson leasehold, including the eight wells
turned to sales in the first quarter of 2023.
Production
Q2 2023 Average Daily Volume
Q2 2023 Guidance Range(1)
Difference (2)
Sequential (3)
YoY (4)
Total, BOE per day
130,683
125,500 to 127,500
+3% Better than Guidance
+23%
+18%
Oil, Bbl per day
76,345
75,000 to 76,000
+1% Better than Guidance
+30%
+19%
Natural Gas, MMcf per day
326.0
304.0 to 308.0
+7% Better than Guidance
+14%
+17%
(1) Production range previously projected,
as provided April 25, 2023.
(2) As compared to midpoint of guidance
provided on April 25, 2023.
(3) Represents sequential percentage
change from the first quarter of 2023.
(4) Represents year-over-year percentage
change from the second quarter of 2022.
Second Quarter 2023 Wells Turned to Sales
During the second quarter of 2023, Matador turned to sales 27
gross (20.6 net) operated horizontal wells with an average
completed lateral length of approximately 9,600 feet. The table
below provides a summary of Matador’s operated and non-operated
activity in the second quarter of 2023.
Second 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 Q2
2023
Antelope Ridge
4
3.4
10
0.8
14
4.2
4-1BS, 5-2BS, 1-3BS, 3-WC A, 1-WC
B
Arrowhead
—
—
5
0.3
5
0.3
3-2BS, 2-3BS
Ranger
11
6.5
2
0.2
13
6.7
3-1BS, 8-2BS, 2-3BS
Rustler Breaks
4
2.7
4
0.6
8
3.3
3-2BS, 3-WC A, 2-WC B
Stateline
8
8.0
4
0.2
12
8.2
4-AVLN, 4-WC A, 4-WC B
Wolf/Jackson Trust
—
—
3
0.1
3
0.1
3-WC A
Delaware Basin
27
20.6
28
2.2
55
22.8
South Texas
—
—
—
—
—
—
No wells turned to sales in Q2
2023
Haynesville Shale
—
—
—
—
—
—
Royalty interests in five
non-operated wells in Q2 2023
Total
27
20.6
28
2.2
55
22.8
Note: WC = Wolfcamp; BS = Bone Spring;
AVLN = Avalon; For example, 4-1BS indicates four First Bone Spring
completions and 3-WC A indicates four Wolfcamp A 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.
Second Quarter 2023 Realized Commodity Prices
The following table summarizes Matador’s realized commodity
prices during the second quarter of 2023, as compared to the first
quarter of 2023 and the second quarter of 2022. Despite the drop in
commodity prices and the higher lease operating expenses, Matador
still earned a profit for the second quarter of 2023 of $164.7
million in net income, or $1.37 per diluted common share, and
Adjusted EBITDA for the second quarter of 2023 of $423.3 million,
both as a result of higher-than-expected production and
lower-than-expected general and administrative expenses and plant
and other midstream services operating expenses.
Sequential (Q2 2023 vs. Q1
2023)
YoY (Q2 2023 vs. Q2 2022)
Realized Commodity Prices
Q2 2023
Q1 2023
Sequential Change(1)
Q2 2023
Q2 2022
YoY Change(2)
Oil Prices, per Bbl
$73.46
$75.74
Down 3%
$73.46
$111.06
Down 34%
Natural Gas Prices, per Mcf
$2.61
$3.93
Down 34%
$2.61
$9.57
Down 73%
(1) Second quarter 2023 as compared to
first quarter 2023.
(2) Second quarter 2023 as compared to
second quarter 2022.
Second Quarter 2023 Operating Expenses
During the second quarter of 2023, Matador expected an increase
to its lease operating expenses as a result of the closing of the
Advance acquisition in April as well as increases in vendor and
lease operator expenses. Accordingly, Matador’s total lease
operating expenses were $5.13 per BOE during the second quarter,
which was an 11% sequential increase from $4.63 per BOE in the
first quarter of 2023 and a 30% year-over-year increase from $3.95
per BOE in the second quarter of 2022. The second quarter 2023
lease operating expenses were better than expected as Matador was
able to mitigate certain of the increases in expenses incurred by
targeting improvements in workover, supervision and repair and
maintenance costs. As a result of these cost savings, Matador is
decreasing its expected full-year 2023 lease operating expenses
from $5.25 to $5.75 per BOE to $5.00 to $5.50 per BOE.
Matador’s general and administrative expenses decreased 4%
sequentially from $2.34 per BOE in the first quarter of 2023 to
$2.25 per BOE in the second quarter of 2023. This is also better
than Matador expected as general and administrative expenses for
full-year 2023 were expected to range from $2.50 to $3.50 per BOE.
Matador now expects lower full-year 2023 general and administrative
expenses to range from $2.25 to $3.25 per BOE.
During the second quarter of 2023, Matador’s plant and other
midstream services operating expenses, which include the costs to
operate San Mateo’s and Pronto’s midstream assets, were $2.58 per
BOE, a 20% decrease from $3.23 per BOE in the first quarter of
2023. 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. Matador continues to
expect full year 2023 plant and other midstream services operating
expenses to range from $2.50 to $3.00 per BOE. Matador continues to
make efforts to reduce all of these types of operating
expenses.
Second Quarter 2023 Capital Expenditures
Matador’s D/C/E and midstream capital expenditures were
significantly lower than expected for the second quarter of 2023 as
set forth in the table below. These lower capital expenditures are
primarily due to capital and operational efficiency savings that
the Company was able to implement with regard to the Advance assets
and its legacy operations and the timing of its planned projects
near the end of the second quarter and into the third quarter for
both Matador’s exploration and production and its midstream
businesses.
Q2 2023 Capital Expenditures ($
millions)
Actual
Guidance(1)
Difference vs. Guidance(2)
D/C/E
$309.6
$358.0
14% less than estimated
Midstream
$11.7
$41.0
71% less than estimated
(1) Midpoint of guidance as provided on
April 25, 2023.
(2) As compared to the midpoint of
guidance provided on April 25, 2023.
Midstream Update
San Mateo’s operations in the second quarter of 2023 were
highlighted by better-than-expected operating and financial
results. These strong results reflect better-than-expected volumes
delivered by third party customers into the San Mateo system. San
Mateo’s net income of $25.4 million and Adjusted EBITDA of $42.7
million were better than expected, although both results were less
than the first quarter 2023 results primarily due to Matador’s
increased focus on Lea County, New Mexico during 2023 and expected
shut-ins at Matador’s Stateline asset area due to completing the
eight new Stateline wells during the second quarter of 2023.
Operationally, San Mateo’s natural gas processing volumes in the
second quarter of 2023 were an all-time quarterly high. The table
below sets forth San Mateo’s throughput volumes, as compared to the
first quarter of 2023 and the second 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 (Q2 2023 vs. Q1
2023)
YoY (Q2 2023 vs. Q2 2022)
San Mateo Throughput Volumes
Q2 2023
Q1 2023
Change(1)
Q2 2023
Q2 2022
Change(2)
Natural gas gathering, MMcf per day
331
333
-1%
331
293
+13%
Natural gas processing, MMcf per day
373
352
+6%
373
292
+28%
Oil gathering and transportation, Bbl per
day
41,400
41,900
-1%
41,400
51,200
-19%
Produced water handling, Bbl per day
335,000
373,000
-10%
335,000
348,000
-4%
(1) Second quarter 2023 as compared to
first quarter 2023.
(2) Second quarter 2023 as compared to
second quarter 2022.
Third and Fourth Quarter 2023 Estimates
Third and 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 130,683 BOE per day in the
second quarter of 2023 to remain flat with a midpoint of
approximately 130,500 BOE per day in the third quarter of 2023 and
increase to a midpoint of approximately 143,000 BOE per day in the
fourth quarter of 2023.
Q2, 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
Q2 2023(1)
130,683
76,345
326.0
58%
Q3 2023E
129,500 to 131,500
75,500 to 76,500
324.0 to 330.0
58%
Q4 2023E
142,000 to 144,000
85,500 to 86,500
339.0 to 345.0
60%
(1) Includes volumes from the Advance
acquisition after closing on April 12, 2023.
Second Half 2023 Estimated Wells Turned to Sales
At July 25, 2023, Matador expects to turn to sales 67 gross
(53.0 net) operated horizontal wells in the Delaware Basin during
the second half of 2023, consisting of 25 gross (24.4 net) wells in
the Ranger asset area, four gross (2.6 net) wells in the Antelope
Ridge asset area, 17 gross (9.6 net) wells in the Arrowhead asset
area, eight gross (5.2 net) wells in the Rustler Breaks asset area
and 13 gross (11.2 net) wells in the Wolf asset area. The Company
expects the average completed lateral length of these wells to be
approximately 9,900 feet.
Third 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. Near the end of June 2023, Matador released
this eighth operated drilling rig and continued operating seven
drilling rigs in the Delaware Basin. Matador currently plans to
operate seven drilling rigs for the remainder of 2023. Not only is
the release of the eighth drilling rig expected to save capital
expenditures, but also Matador still expects to achieve its goals
for oil and natural gas production and its goals for number of
wells drilled and turned to sales in 2023. At July 25, 2023, the
Company expects D/C/E capital expenditures for the third quarter of
2023 will be approximately $300 million and midstream capital
expenditures to be approximately $90 million.
Conference Call Information
The Company will host a live conference call on Wednesday, July
26, 2023, at 10:00 a.m. Central Time to review its second 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/BIb6191e11f59a4d72868b56486df15362
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
June 30, 2023
March 31, 2023
June 30, 2022
Net Production Volumes:(1)
Oil (MBbl)(2)
6,947
5,305
5,855
Natural gas (Bcf)(3)
29.7
25.8
25.3
Total oil equivalent (MBOE)(4)
11,892
9,599
10,078
Average Daily Production Volumes:(1)
Oil (Bbl/d)(5)
76,345
58,941
64,339
Natural gas (MMcf/d)(6)
326.0
286.3
278.5
Total oil equivalent (BOE/d)(7)
130,683
106,654
110,750
Average Sales Prices:
Oil, without realized derivatives (per
Bbl)
$
73.46
$
75.74
$
111.06
Oil, with realized derivatives (per
Bbl)
$
73.46
$
75.74
$
105.21
Natural gas, without realized derivatives
(per Mcf)(8)
$
2.61
$
3.93
$
9.57
Natural gas, with realized derivatives
(per Mcf)
$
2.51
$
4.07
$
8.51
Revenues (millions):
Oil and natural gas revenues
$
587.9
$
502.9
$
892.8
Third-party midstream services
revenues
$
30.1
$
26.5
$
21.9
Realized (loss) gain on derivatives
$
(3.1
)
$
3.7
$
(61.2
)
Operating Expenses (per BOE):
Production taxes, transportation and
processing
$
5.21
$
5.78
$
8.50
Lease operating
$
5.13
$
4.63
$
3.95
Plant and other midstream services
operating
$
2.58
$
3.23
$
2.18
Depletion, depreciation and
amortization
$
14.93
$
13.16
$
11.91
General and administrative(9)
$
2.25
$
2.34
$
2.42
Total(10)
$
30.10
$
29.14
$
28.96
Other (millions):
Net sales of purchased natural gas(11)
$
4.8
$
5.8
$
3.6
Net income (millions)(12)
$
164.7
$
163.1
$
415.7
Earnings per common share
(diluted)(12)
$
1.37
$
1.36
$
3.47
Adjusted net income (millions)(12)(13)
$
170.1
$
180.0
$
415.6
Adjusted earnings per common share
(diluted)(12)(14)
$
1.42
$
1.50
$
3.47
Adjusted EBITDA (millions)(12)(15)
$
423.3
$
365.2
$
663.8
Net cash provided by operating activities
(millions)(16)
$
449.0
$
339.5
$
646.3
Adjusted free cash flow
(millions)(12)(17)
$
77.7
$
57.2
$
453.8
San Mateo net income (millions)(18)
$
25.4
$
32.2
$
41.8
San Mateo Adjusted EBITDA
(millions)(15)(18)
$
42.7
$
48.7
$
52.9
San Mateo net cash provided by operating
activities (millions)(18)
$
17.3
$
53.6
$
49.9
San Mateo adjusted free cash flow
(millions)(16)(17)(18)
$
20.6
$
31.7
$
33.4
D/C/E capital expenditures (millions)
$
309.6
$
294.8
$
143.0
Midstream capital expenditures
(millions)(19)
$
11.7
$
8.7
$
8.9
(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 $0.33, $0.24 and
$0.40 per BOE of non-cash, stock-based compensation expense in the
second quarter of 2023, the first quarter of 2023 and the second
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 $31.9 million, $34.3 million and
$60.0 million less expenses of $27.1 million, $28.4 million and
$56.4 million in the second quarter of 2023, the first quarter of
2023 and the second 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)
June 30, 2023
December 31,
2022
ASSETS
Current assets
Cash
$
22,303
$
505,179
Restricted cash
43,535
42,151
Accounts receivable
Oil and natural gas revenues
201,612
224,860
Joint interest billings
220,126
180,947
Other
39,013
48,011
Derivative instruments
—
3,930
Lease and well equipment inventory
30,848
15,184
Prepaid expenses and other current
assets
76,966
51,570
Total current assets
634,403
1,071,832
Property and equipment, at cost
Oil and natural gas properties, full-cost
method
Evaluated
8,857,450
6,862,455
Unproved and unevaluated
1,207,186
977,502
Midstream properties
1,153,915
1,057,668
Other property and equipment
36,810
32,847
Less accumulated depletion, depreciation
and amortization
(4,816,115
)
(4,512,275
)
Net property and equipment
6,439,246
4,418,197
Other assets
Other long-term assets
58,689
64,476
Total assets
$
7,132,338
$
5,554,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
75,275
$
58,848
Accrued liabilities
350,343
261,310
Royalties payable
137,795
117,698
Amounts due to affiliates
17,163
32,803
Derivative instruments
11,796
—
Advances from joint interest owners
47,378
52,357
Other current liabilities
47,222
52,857
Total current liabilities
686,972
575,873
Long-term liabilities
Borrowings under Credit Agreement
560,000
—
Borrowings under San Mateo Credit
Facility
460,000
465,000
Senior unsecured notes payable
1,182,718
695,245
Asset retirement obligations
63,246
52,985
Deferred income taxes
545,415
428,351
Other long-term liabilities
16,557
19,960
Total long-term liabilities
2,827,936
1,661,541
Shareholders’ equity
Common stock - $0.01 par value,
160,000,000 shares authorized; 119,272,719 and 118,953,381 shares
issued; and 119,147,205 and 118,948,624 shares outstanding,
respectively
1,192
1,190
Additional paid-in capital
2,106,987
2,101,999
Retained earnings
1,299,753
1,007,642
Treasury stock, at cost, 125,514 and 4,757
shares, respectively
(5,076
)
(34
)
Total Matador Resources Company
shareholders’ equity
3,402,856
3,110,797
Non-controlling interest in
subsidiaries
214,574
206,294
Total shareholders’ equity
3,617,430
3,317,091
Total liabilities and shareholders’
equity
$
7,132,338
$
5,554,505
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
Oil and natural gas revenues
$
587,917
$
892,769
$
1,090,826
$
1,519,284
Third-party midstream services
revenues
30,075
21,886
56,586
39,192
Sales of purchased natural gas
31,898
60,008
66,152
79,347
Realized (loss) gain on derivatives
(3,148
)
(61,163
)
521
(83,602
)
Unrealized (loss) gain on derivatives
(8,659
)
30,430
(15,726
)
(44,599
)
Total revenues
638,083
943,930
1,198,359
1,509,622
Expenses
Production taxes, transportation and
processing
61,991
85,658
117,477
145,477
Lease operating
61,043
39,857
105,450
73,812
Plant and other midstream services
operating
30,657
22,014
61,702
41,475
Purchased natural gas
27,103
56,440
55,551
73,461
Depletion, depreciation and
amortization
177,514
120,024
303,839
215,877
Accretion of asset retirement
obligations
792
517
1,491
1,060
General and administrative
26,715
24,431
49,148
54,164
Total expenses
385,815
348,941
694,658
605,326
Operating income
252,268
594,989
503,701
904,296
Other income (expense)
Net loss on impairment
(202
)
—
(202
)
(198
)
Interest expense
(34,229
)
(18,492
)
(50,405
)
(34,744
)
Other income (expense)
16,564
(4,342
)
16,903
(4,486
)
Total other expense
(17,867
)
(22,834
)
(33,704
)
(39,428
)
Income before income taxes
234,401
572,155
469,997
864,868
Income tax provision (benefit)
Current
(4,929
)
36,261
—
51,670
Deferred
62,235
99,699
113,978
152,818
Total income tax provision
57,306
135,960
113,978
204,488
Net income
177,095
436,195
356,019
660,380
Net income attributable to non-controlling
interest in subsidiaries
(12,429
)
(20,477
)
(28,223
)
(37,538
)
Net income attributable to Matador
Resources Company shareholders
$
164,666
$
415,718
$
327,796
$
622,842
Earnings per common share
Basic
$
1.38
$
3.52
$
2.75
$
5.28
Diluted
$
1.37
$
3.47
$
2.73
$
5.20
Weighted average common shares
outstanding
Basic
119,183
118,103
119,109
118,027
Diluted
119,842
119,903
119,856
119,857
Matador Resources Company and
Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS - UNAUDITED
(In thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating activities
Net income
$
177,095
$
436,195
$
356,019
$
660,380
Adjustments to reconcile net income to net
cash provided by operating activities
Unrealized loss (gain) on derivatives
8,659
(30,430
)
15,726
44,599
Depletion, depreciation and
amortization
177,514
120,024
303,839
215,877
Accretion of asset retirement
obligations
792
517
1,491
1,060
Stock-based compensation expense
3,931
4,063
6,221
7,077
Deferred income tax provision
62,235
99,699
113,978
152,818
Amortization of debt issuance cost and
other debt-related costs
2,057
263
2,895
1,206
Other non-cash changes
(15,682
)
—
(15,682
)
198
Changes in operating assets and
liabilities
Accounts receivable
15,501
(85,678
)
56,407
(211,023
)
Lease and well equipment inventory
(2,814
)
(751
)
(7,237
)
(829
)
Prepaid expenses and other current
assets
(7,607
)
(6,921
)
(24,124
)
(14,717
)
Other long-term assets
2,037
130
2,072
227
Accounts payable, accrued liabilities and
other current liabilities
11,639
36,160
(28,232
)
30,492
Royalties payable
9,709
48,228
10,085
56,539
Advances from joint interest owners
4,826
2,188
(4,979
)
857
Income taxes payable
(2,400
)
22,761
(1,677
)
38,170
Other long-term liabilities
1,519
(146
)
1,709
(7,675
)
Net cash provided by operating
activities
449,011
646,302
788,511
975,256
Investing activities
Drilling, completion and equipping capital
expenditures
(315,367
)
(182,064
)
(539,511
)
(389,893
)
Acquisition of Advance
(1,528,427
)
—
(1,608,427
)
—
Acquisition of oil and natural gas
properties
(32,034
)
(29,353
)
(55,897
)
(73,114
)
Midstream capital expenditures
(18,730
)
(16,318
)
(32,871
)
(28,310
)
Acquisition of midstream assets
—
(75,816
)
—
(75,816
)
Expenditures for other property and
equipment
(709
)
(58
)
(2,478
)
(283
)
Proceeds from sale of assets
—
34,501
451
46,412
Net cash used in investing activities
(1,895,267
)
(269,108
)
(2,238,733
)
(521,004
)
Financing activities
Purchase of senior unsecured notes
—
(142,404
)
—
(142,404
)
Repayments of borrowings under Credit
Agreement
(2,190,000
)
(90,000
)
(2,190,000
)
(300,000
)
Borrowings under Credit Agreement
2,750,000
40,000
2,750,000
200,000
Repayments of borrowings under San Mateo
Credit Facility
(53,000
)
(40,000
)
(108,000
)
(70,000
)
Borrowings under San Mateo Credit
Facility
38,000
55,000
103,000
105,000
Cost to amend credit facilities
—
(506
)
(8,645
)
(506
)
Proceeds from issuance of senior unsecured
notes
494,800
—
494,800
—
Cost to issue senior unsecured notes
(8,255
)
—
(8,255
)
—
Dividends paid
(17,917
)
(5,878
)
(35,685
)
(11,744
)
Contributions related to formation of San
Mateo
—
—
14,700
22,750
Contributions from non-controlling
interest owners of less-than-wholly-owned subsidiaries
24,500
—
24,500
—
Distributions to non-controlling interest
owners of less-than-wholly-owned subsidiaries
(25,333
)
(26,460
)
(44,443
)
(44,835
)
Taxes paid related to net share settlement
of stock-based compensation
(3,881
)
(4,668
)
(22,790
)
(16,852
)
Other
(248
)
(152
)
(452
)
(298
)
Net cash provided by (used in) financing
activities
1,008,666
(215,068
)
968,730
(258,889
)
Change in cash and restricted cash
(437,590
)
162,126
(481,492
)
195,363
Cash and restricted cash at beginning of
period
503,428
120,157
547,330
86,920
Cash and restricted cash at end of
period
$
65,838
$
282,283
$
65,838
$
282,283
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
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income attributable to Matador
Resources Company shareholders
$
164,666
$
163,130
$
415,718
Net income attributable to non-controlling
interest in subsidiaries
12,429
15,794
20,477
Net income
177,095
178,924
436,195
Interest expense
34,229
16,176
18,492
Total income tax provision
57,306
56,672
135,960
Depletion, depreciation and
amortization
177,514
126,325
120,024
Accretion of asset retirement
obligations
792
699
517
Unrealized loss (gain) on derivatives
8,659
7,067
(30,430
)
Non-cash stock-based compensation
expense
3,931
2,290
4,063
Net loss on impairment
202
—
—
(Income) expense related to contingent
consideration and other
(15,577
)
942
4,889
Consolidated Adjusted EBITDA
444,151
389,095
689,710
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(20,900
)
(23,871
)
(25,916
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
423,251
$
365,224
$
663,794
Three Months Ended
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
449,011
$
339,500
$
646,302
Net change in operating assets and
liabilities
(32,410
)
28,386
(15,971
)
Interest expense, net of non-cash
portion
32,172
15,338
18,229
Current income tax (benefit) provision
(4,929
)
4,929
36,261
Other non-recurring expense
307
942
4,889
Adjusted EBITDA attributable to
non-controlling interest in subsidiaries
(20,900
)
(23,871
)
(25,916
)
Adjusted EBITDA attributable to Matador
Resources Company shareholders
$
423,251
$
365,224
$
663,794
Adjusted EBITDA – San Mateo (100%)
Three Months Ended
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Income:
Net income
$
25,365
$
32,232
$
41,789
Depletion, depreciation and
amortization
8,675
8,457
8,041
Interest expense
8,533
7,948
2,990
Accretion of asset retirement
obligations
80
80
69
Adjusted EBITDA
$
42,653
$
48,717
$
52,889
Three Months Ended
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Unaudited Adjusted EBITDA
Reconciliation to Net Cash Provided by Operating
Activities:
Net cash provided by operating
activities
$
17,326
$
53,635
$
49,902
Net change in operating assets and
liabilities
17,043
(12,617
)
250
Interest expense, net of non-cash
portion
8,284
7,699
2,737
Adjusted EBITDA
$
42,653
$
48,717
$
52,889
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
June 30,
March 31,
June 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
$
164,666
$
163,130
$
415,718
Total income tax provision
57,306
56,672
135,960
Income attributable to Matador Resources
Company shareholders before taxes
221,972
219,802
551,678
Less non-recurring and unrealized charges
to income before taxes:
Unrealized loss (gain) on derivatives
8,659
7,067
(30,430
)
Net loss on impairment
202
—
—
(Income) expense related to contingent
consideration and other
(15,577
)
942
4,889
Adjusted income attributable to Matador
Resources Company shareholders before taxes
215,256
227,811
526,137
Income tax expense(1)
45,204
47,840
110,489
Adjusted net income attributable to
Matador Resources Company shareholders (non-GAAP)
$
170,052
$
179,971
$
415,648
Weighted average shares outstanding -
basic
119,183
119,034
118,103
Dilutive effect of options and restricted
stock units
659
668
1,800
Weighted average common shares outstanding
- diluted
119,842
119,702
119,903
Adjusted earnings per share attributable
to Matador Resources Company
shareholders (non-GAAP)
Basic
$
1.43
$
1.51
$
3.52
Diluted
$
1.42
$
1.50
$
3.47
(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
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Net cash provided by operating
activities
$
449,011
$
339,500
$
646,302
Net change in operating assets and
liabilities
(32,410
)
28,386
(15,971
)
San Mateo discretionary cash flow
attributable to non-controlling interest in subsidiaries(1)
(16,841
)
(20,099
)
(24,574
)
Performance incentives received from Five
Point
—
14,700
—
Total discretionary cash flow
399,760
362,487
605,757
Drilling, completion and equipping capital
expenditures
315,367
224,144
182,064
Midstream capital expenditures
18,730
14,141
16,318
Expenditures for other property and
equipment
709
1,769
58
Net change in capital accruals
(5,985
)
69,758
(38,250
)
San Mateo accrual-based capital
expenditures related to non-controlling interest in
subsidiaries(2)
(6,752
)
(4,567
)
(8,200
)
Total accrual-based capital
expenditures(3)
322,069
305,245
151,990
Adjusted free cash flow
$
77,691
$
57,242
$
453,767
(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
June 30,
March 31,
June 30,
(In thousands)
2023
2023
2022
Net cash provided by San Mateo operating
activities
$
17,326
$
53,635
$
49,902
Net change in San Mateo operating assets
and liabilities
17,043
(12,617
)
250
Total San Mateo discretionary cash
flow
34,369
41,018
50,152
San Mateo capital expenditures
12,006
12,376
16,616
Net change in San Mateo capital
accruals
1,774
(3,056
)
119
San Mateo accrual-based capital
expenditures
13,780
9,320
16,735
San Mateo adjusted free cash flow
$
20,589
$
31,698
$
33,417
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725407970/en/
Mac Schmitz Vice President - Investor Relations (972) 371-5225
investors@matadorresources.com
Grafico Azioni Matador Resources (NYSE:MTDR)
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Da Ago 2024 a Set 2024
Grafico Azioni Matador Resources (NYSE:MTDR)
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