\nMatador Resources Company (NYSE: MTDR) (\u201cMatador\u201d) today announced the successful closing of its previously announced agreement whereby Matador contributed Pronto Midstream, LLC (\u201cPronto\u201d), Matador\u2019s wholly-owned midstream subsidiary, to San Mateo Midstream, LLC, Matador\u2019s 51%-owned midstream joint venture (\u201cSan Mateo\u201d), for a total implied pre-closing valuation of Pronto of approximately $600 million. Upon completion of the transaction, San Mateo has a total estimated asset value of more than $1.5 billion net to Matador.1<\/sup> Please see Matador\u2019s December 5, 2024, press release for additional details on the transaction.<\/p>\n
\nJoseph Wm. Foran, Matador\u2019s Founder, Chairman and CEO, commented, \u201cWe are excited to have successfully closed the combination of San Mateo and Pronto. This transaction is expected to have substantial benefits for Matador and its shareholders, including:<\/p>\n
- \n
- \nStrengthening Matador\u2019s balance sheet with the receipt of approximately $220 million in upfront cash plus up to $75 million in performance incentive payments;<\/p>\n<\/li>\n
- \nIncreasing flow assurance;<\/p>\n<\/li>\n
- \nProviding a long-term sour gas solution in northern Lea County, New Mexico;<\/p>\n<\/li>\n
- \nExpediting the expanded Marlan Processing Plant approaching its designed capacity of 260 million cubic feet as early as 2026;<\/p>\n<\/li>\n
- \nGiving San Mateo additional scale and growth opportunities; and<\/p>\n<\/li>\n
- \nSimplifying Matador\u2019s midstream business by combining San Mateo and Pronto.<\/p>\n<\/li>\n<\/ul>\n
\n\u201cFirst, we are pleased to have Five Point participating in this growth opportunity. The transaction increases the ability for San Mateo, to which Five Point is already a 49% partner, to provide flow assurance to Matador and San Mateo\u2019s third-party customers. Notably, after the upcoming Marlan Processing Plant expansion, San Mateo is expected to be one of the leading natural gas processors in New Mexico with over 700 million cubic feet of designed inlet natural gas processing capacity. The expansion of the Marlan Processing Plant remains on time and on budget and is expected to come online in the first half of 2025.<\/p>\n
\n\u201cSecond, the transaction provides Matador, San Mateo and their customers with a long-term sour gas solution in northern Lea County, New Mexico. At the same time, we are looking forward to working more closely with Northwind Midstream Partners LLC (\u201cNorthwind\u201d), an affiliate of Five Point, through agreements with San Mateo. As a part of the transaction, Northwind has agreed to treat sour gas delivered by San Mateo and re-deliver treated gas back to San Mateo for processing. This sour gas solution is expected to allow Matador to continue with its development plans in the Advance acreage it acquired in 2023 as well as on other acreage Matador and its third-party customers have acquired in northern Lea County, New Mexico.<\/p>\n
\n\u201cThird, the transaction should expedite the time for San Mateo to reach designed capacity at the Marlan Processing Plant. As part of the transaction, Northwind has agreed to deliver treated sour gas and sweet gas from Northwind\u2019s third-party customers to San Mateo for processing. We expect that these additional volumes, as well as other third-party opportunities, will help the expanded Marlan Processing Plant approach its designed capacity as early as 2026.<\/p>\n
\n\u201cFourth, the transaction strengthens Matador\u2019s balance sheet. As part of the transaction, Matador received an up-front cash payment of approximately $220 million. We are using this amount to repay outstanding borrowings under our revolving credit facility. We expect our leverage ratio (net debt divided by adjusted earnings before interest expense, income taxes, depletion, depreciation, amortization and other items, or \u201cAdjusted EBITDA\u201d) to be approximately 1.1 times at December 31, 2024 with plans to continue reducing our leverage in 2025. In addition, over the next five years, Matador expects to receive up to $75 million in performance incentive payments from Five Point as we execute our drilling and operational plans in northern Lea County, New Mexico.<\/p>\n
\n\u201cFifth, San Mateo improves its scale and growth opportunities, which will also allow San Mateo to continue to explore potential strategic transactions going forward. The midstream team is focused on enhancing our midstream assets to continue to provide best-in-class service to Matador, Northwind and San Mateo\u2019s other third-party customers. San Mateo\u2019s ability to offer midstream services across all three production streams\u2014crude oil, natural gas and water\u2014makes it one of the few full-service midstream companies in the northern Delaware Basin.<\/p>\n
\n\u201cMatador wishes to thank Five Point for their professionalism throughout this process and for successfully closing the transaction on time. Five Point\u2019s friendship, expertise and investment as a partner in San Mateo over the last seven years has helped build additional shareholder value and confidence in San Mateo\u2019s system and facilities while growing Matador\u2019s midstream business.\u201d<\/p>\n
About Matador Resources Company<\/b><\/p>\n
\nMatador 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.<\/p>\n
\nFor more information, visit Matador Resources Company at www.matadorresources.com<\/a>.<\/p>\n
Forward-Looking Statements<\/b><\/p>\n
\nThis press release includes \u201cforward-looking statements\u201d 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. \u201cForward-looking statements\u201d 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 \u201ccould,\u201d \u201cbelieve,\u201d \u201cwould,\u201d \u201canticipate,\u201d \u201cintend,\u201d \u201cestimate,\u201d \u201cexpect,\u201d \u201cmay,\u201d \u201cshould,\u201d \u201ccontinue,\u201d \u201cplan,\u201d \u201cpredict,\u201d \u201cpotential,\u201d \u201cproject,\u201d \u201chypothetical,\u201d \u201cforecasted\u201d 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 contribution of Pronto to San Mateo, guidance, projected or forecasted financial and operating results, future liquidity, the payment of dividends, results in certain basins, objectives, project timing, expectations and intentions, regulatory and governmental actions and other statements that are not historical facts. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, disruption from Matador\u2019s acquisitions or dispositions, including the Pronto contribution, making it more difficult to maintain business and operational relationships; significant transaction costs associated with Matador\u2019s acquisitions or dispositions, including the Pronto contribution; the risk of litigation and\/or regulatory actions related to Matador\u2019s acquisitions or dispositions, including the Pronto contribution, as well as the following risks related to financial and operational performance: general economic conditions; Matador\u2019s 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 Matador\u2019s 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 Matador\u2019s 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; 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\u2019s filings with the Securities and Exchange Commission (\u201cSEC\u201d), including the \u201cRisk Factors\u201d section of Matador\u2019s 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.<\/p>\n
Supplemental Non-GAAP Financial Measures<\/b><\/p>\n
Adjusted EBITDA<\/span><\/p>\n
\nThis 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 Matador\u2019s consolidated financial statements, such as securities analysts, investors, lenders and rating agencies. \u201cGAAP\u201d means Generally Accepted Accounting Principles in the United States of America. Matador 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. Matador defines, on a consolidated basis and for San Mateo, Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, non-recurring transaction costs for certain acquisitions, certain other non-cash items and non-cash stock-based compensation expense and net gain or loss on asset sales and impairment. Adjusted EBITDA is not a measure of net income or net cash provided by operating activities as determined by GAAP.<\/p>\n
\nAdjusted 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 Matador\u2019s or San Mateo\u2019s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components of understanding and assessing a company\u2019s financial performance, such as a company\u2019s 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. This press release does not provide a reconciliation with respect to forward-looking Adjusted EBITDA, which is not based on historical fact. Matador could not provide such reconciliation without undue hardship because such Adjusted EBITDA amount is an estimation. In addition, it would be difficult for Matador to present a detailed reconciliation on account of many unknown variables for Adjusted EBITDA, including future income taxes, future interest expense and gains or losses on asset sales and impairment. For the same reasons, Matador is unable to address the probable significance of the unavailable information, which could be material to future results.<\/p>\n
1<\/sup> The $600 million implied valuation is represented by Matador\u2019s receipt of an up-front cash payment of approximately $220 million plus up to $75 million in performance incentive payments in exchange for 49% of Pronto. San Mateo\u2019s total estimated asset value net to Matador is calculated using Matador\u2019s 51% interest in San Mateo multiplied by (i) a 10x multiple applied to San Mateo\u2019s 2024 estimated Adjusted EBITDA of $240 to $260 million plus (ii) the $600 million implied valuation for Pronto.<\/p>\n
<\/p>\n
View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20241219080202\/en\/<\/a><\/span><\/p>\n
\nMac Schmitz
\n
Senior Vice President – Investor Relations
\n
(972) 371-5225
\n
investors@matadorresources.com<\/a><\/p>\nKEYWORDS:<\/b> Louisiana New Mexico Texas United States North America<\/p>\n
INDUSTRY KEYWORDS:<\/b> Energy Other Energy Oil\/Gas<\/p>\n
![\"Logo\"](\"https:\/\/mms.businesswire.com\/media\/20241219080202\/en\/319150\/3\/Matador_Logo.jpg\"){kind=logo}
<\/td>\n<\/tr>\n