{"id":751089,"date":"2023-04-25T17:23:36","date_gmt":"2023-04-25T21:23:36","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/matador-resources-company-reports-first-quarter-2023-financial-results-and-provides-operational-update\/"},"modified":"2023-04-25T17:23:36","modified_gmt":"2023-04-25T21:23:36","slug":"matador-resources-company-reports-first-quarter-2023-financial-results-and-provides-operational-update","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/matador-resources-company-reports-first-quarter-2023-financial-results-and-provides-operational-update\/","title":{"rendered":"Matador Resources Company Reports First Quarter 2023 Financial Results and Provides Operational Update"},"content":{"rendered":"

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Matador Resources Company Reports First Quarter 2023 <\/b>Financial Results and Provides Operational Update<\/b><\/p>\n

DALLAS–(BUSINESS WIRE<\/a>)–
\nMatador Resources Company (NYSE: MTDR) (\u201cMatador\u201d or the \u201cCompany\u201d) today reported financial and operating results for the first quarter of 2023. A short slide presentation summarizing the highlights of Matador\u2019s first quarter 2023 earnings release is also included on the Company\u2019s website at www.matadorresources.com<\/a> on the Events and Presentations page under the Investor Relations tab.<\/p>\n

Management Summary Comments<\/b><\/p>\n

\nJoseph Wm. Foran, Matador\u2019s Founder, Chairman and CEO, observed, \u201cOur results for the first quarter of 2023 were above our expectations both operationally and financially and constituted a strong start to the year. We set new operational records in the first quarter. Then, shortly following the end of the first quarter, we closed the acquisition of Advance Energy Partners Holdings, LLC (\u201cAdvance\u201d) for approximately $1.6 billion that added over 100 million barrels of oil and natural gas equivalent reserves to the 357 million barrels of oil and natural gas equivalent reserves that we already had. This acquisition sets up another record year of production in 2023 and an even better 2024. For additional information regarding our operational and financial results in the first quarter of 2023 and the closing of the Advance acquisition, please see the set of seven slides identified as \u2018Chairman\u2019s Remarks\u2019 (Slides A through G<\/b>) on our website.<\/p>\n

Stronger than Expected Results in First Quarter 2023<\/span><\/p>\n

\n\u201cDuring the first quarter of 2023, Matador achieved better-than-expected average oil and natural gas equivalent production of 106,654 BOE per day, which was 6% better than our previous expectations of approximately 101,000 barrels of oil and natural gas equivalent (\u201cBOE\u201d) per day. This outperformance was primarily attributable to (i) better-than-expected production in our prolific Stateline asset area, (ii) the timing and performance of pipeline services and connections and (iii) fewer days of shut-in production than originally anticipated, including on our Rodney Robinson acreage, as the eight wells drilled on that acreage were completed faster than expected primarily as a result of our use of simultaneous fracturing technology.<\/p>\n

\n\u201cIn addition to the better-than-expected production during the first quarter of 2023, we also had lower-than-expected capital expenditures for both our drilling, completing and equipping costs and our midstream capital expenditures. These lower capital expenditures are primarily due to the timing of operations and our planned midstream projects. Innovation and operating efficiencies, which include faster drill times, dual-fuel fracturing fleets, simultaneous and remote fracturing operations and the use of existing facilities, continue to improve and help to mitigate the inflationary pressure of service costs. The Company expects to utilize dual-fuel fracturing equipment for over 95% of wells completed in 2023 and to increase its use of simultaneous fracturing operations from 45% in 2022 to over half of our 2023 completions.<\/p>\n

The Advance Acquisition<\/span><\/p>\n

\n\u201cThe closing of the Advance acquisition on April 12, 2023 continues Matador\u2019s long history of profitable growth at a measured pace. In the Advance acquisition, we acquired approximately 18,500 net acres in the core of the northern Delaware Basin, most of which is either adjacent to or very close to some of our best acreage. Together with our other acreage bolt-on acquisitions in 2023, we are pleased to announce that we now have 150,000 net acres in the Delaware Basin<\/span><\/b> (see Slide A<\/b>) with a significant increase in our total proved oil and natural gas reserves to approximately 465 million BOE (see Slide B<\/b>). These reserves are estimated to have a PV-10 (present value discounted at 10%) value of approximately $12 billion as discussed below.<\/p>\n

\n\u201cWe estimate production from the Advance wells averaged approximately 25,450 BOE per day during the first quarter of 2023 based upon Advance\u2019s production records, which was better than we had anticipated. While this increased production was not included in Matador\u2019s reported production for the first quarter, it was part of the purchase price adjustment at closing. We are also encouraged that these existing wells we acquired from Advance are exceeding our original expectations. We anticipate that production from the Advance assets will grow in the second half of the year when we expect to turn to sales 21 wells that are currently being completed.<\/p>\n

\n\u201cThere are many other opportunities that are ahead of us as we integrate the Advance assets with Matador\u2019s existing assets. These assets are complementary to our existing acreage and add to our significant inventory of A+ locations. For example, the Advance assets provide synergies with our existing Pronto Midstream (\u201cPronto\u201d) natural gas gathering and processing system as we plan to connect them in late 2023 or early 2024 (see Slide C<\/b>). This connection should not only provide additional flow assurance for our wells but also build the value of our existing midstream business.<\/p>\n

Financing Activities<\/span><\/p>\n

\n\u201cWe funded the Advance acquisition with a combination of cash on hand, free cash flow and borrowings under our reserves-based lending credit agreement (the \u201cRBL credit agreement\u201d). The borrowing base under the RBL credit agreement is $1.25 billion and does not yet include any reserves for the assets we acquired in the Advance acquisition. On March 31, 2023, we successfully increased the elected commitment under the RBL credit agreement from $775 million to $1.25 billion, of which only $625 million is currently drawn.<\/p>\n

\n\u201cIn addition, on April 3, 2023, we launched a private offering of $400 million of senior unsecured notes due 2028, which was oversubscribed by $3 billion. As a result of high demand for these bonds, we increased the size of the offering from $400 million to $500 million and issued the 6.875% senior unsecured notes at a price of 98.96% of their face value. The successful execution of this offering was truly a team effort and very gratifying to us. We are very appreciative of the support of our banking partners and the shareholders, bondholders and other friends that placed orders for these bonds so that we could upsize the offering at a price that was better than we had originally expected.<\/p>\n

\n\u201cFollowing the bond offering, we had over $600 million in liquidity, which provides additional flexibility and optionality as we continue with our previously announced plans for 2023. We intend to use our free cash flow for the remainder of the year primarily to repay debt under our RBL credit agreement, continue measured growth through the drillbit and pay our fixed dividend while continuing to opportunistically pursue strategic bolt-on acquisitions and midstream opportunities that may arise. Importantly, the Advance acquisition should not significantly impact Matador\u2019s leverage profile, as we expect to maintain a pro forma leverage ratio below 1.0x throughout 2023 at current commodity prices. In fact, we were able to repay more borrowings than we anticipated this month under the RBL credit agreement following the Advance acquisition, and assuming current commodity prices, we anticipate being able to fully repay the borrowings under the RBL credit agreement in the second half of 2024 (see Slide D<\/b>).<\/p>\n

Looking Ahead<\/span><\/p>\n

\n\u201cIn addition to acquiring Advance, our operations team has remained busy finding new and innovative ways to reduce costs and increase production from our existing acreage. We are currently testing our first batch of \u2018horseshoe\u2019 wells in our Wolf asset area in West Texas, which will allow the Company to drill two-mile lateral wells in one-mile land-locked sections (see Slide E<\/b>). By drilling two-mile long \u2018U\u2019 shaped laterals, we should increase our inventory of two-mile locations across Matador\u2019s Delaware Basin assets and continue expanding capital efficiencies by accessing longer laterals in sections previously limited to one-mile wells. We estimate approximately $10 million in cost savings will be realized by drilling two \u2018U\u2019 shaped two-mile wells as compared to four one-mile lateral wells in this section. We are excited about this test and look forward to discussing the results of the horseshoe wells later in the year.<\/p>\n

\n\u201cDue to the strong start in the first quarter of 2023, the Advance acquisition and our other operations, we expect full year 2023 total oil equivalent production to be near the high end of the previously announced guidance range of 44.35 million BOE to 46.25 million BOE. In addition, we expect to achieve approximately 40% growth in year-over-year oil production in the fourth quarter of 2023 (see Slide F<\/b>).<\/p>\n

\n\u201cAs many of you may recall, the Matador organization first began in 1983 with $270,000 in contributed capital from 17 friends and family members and has grown to a company with an enterprise value of approximately $8 billion since then (see Slide G<\/b>). We are grateful for the many individuals that have been critical to building Matador and the friendships we have made together. Our success is the result of the efforts and support of many dedicated board members, staff members, shareholders, bondholders and other friends. Notably, many of Matador\u2019s original shareholders or their families remain shareholders today. Thank you to each of you who has supported Matador as we have grown from a company of a few hundred thousand dollars in initial capital in 1983 to a top 10 oil and natural gas producer in the state of New Mexico today. We are more excited than ever about the future of Matador and look forward to continuing to build Matador together into a bigger, better company.\u201d<\/p>\n

First Quarter 2023 Matador Operational and Financial Highlights<\/b><\/p>\n