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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) August 27, 2012
Matador Resources Company
(Exact name of registrant as specified in its charter)
| Texas | 001-35410 | 27-4662601 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 5400 LBJ Freeway, Suite 1500, Dallas, Texas |
75240 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (972) 371-5200
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
Matador Resources Company (the “Company”) expects to make presentations concerning its business to potential investors. The materials to be utilized during the presentations (the “Materials”) are furnished as Exhibit 99.1 hereto and incorporated herein by reference. The Materials include information regarding the quarter ended June 30, 2012.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), unless specifically identified therein as being incorporated therein by reference.
In the Materials, the Company has included as “non-GAAP financial measures,” as defined in Item 10 of Regulation S-K of the Exchange Act, earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, certain other non-cash items and non-cash stock-based compensation expense, including stock option and grant expense and restricted stock and restricted stock units expense, and net gain or loss on asset sales and inventory impairment (“Adjusted EBITDA”). In the Materials, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with generally-accepted accounting principles (“GAAP”) in the United States. In addition, in the Materials the Company has provided the reasons why the Company believes those non-GAAP financial measures provide useful information to the investors.
| Item 7.01 | Regulation FD Disclosure. |
Attached hereto as Exhibit 99.1 are the Materials to be used by the Company in making presentations concerning its business to potential investors.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act and will not be incorporated by reference into any filing under the Securities Act unless specifically identified therein as being incorporated therein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description of Exhibit | |
| 99.1 | Presentation Materials. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MATADOR RESOURCES COMPANY | ||||||||
| Date: August 27, 2012 | By: | /s/ Joseph Wm. Foran |
||||||
| Name: Joseph Wm. Foran | ||||||||
| Title: Chairman, President & CEO | ||||||||
Exhibit Index
| Exhibit |
Description of Exhibit | |
| 99.1 | Presentation Materials. | |
 Investor
Presentation Exhibit 99.1
August 2012 |
 1
Forward-Looking Statements
This presentation and statements made by representatives of Matador Resources Company
(“Matador” or the “Company”) during the course of this presentation include
“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” and similar expressions that are intended to identify
forward-looking statements, although not all forward-looking statements contain such
identifying words. Actual results and future events could differ materially from those anticipated in such statements.
These forward-looking statements involve certain risks and uncertainties and ultimately may not
prove to be accurate, including, but not limited to, the following risks related to our
financial and operational performance: general economic conditions; Matador’s ability to execute
its business plan, including the success of its drilling program; changes in oil, natural gas and
natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; our
ability to replace reserves and efficiently develop our current reserves; our costs of operations,
delays and other difficulties related to producing oil, natural gas and natural gas liquids; our
ability to make acquisitions on economically acceptable terms; availability of sufficient
capital to Matador to execute its business plan, including from our future cash flows, increases in
our borrowing base, joint venture partners and otherwise; weather and environmental conditions; and
other important factors which 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 SEC filings, including the “Risk
Factors” section of Matador’s Annual Report on Form 10-K for the year ended
December 31, 2011. Matador undertakes no obligation and does not intend to update these forward-looking statements
to reflect events or circumstances occurring after the date of this presentation, except as required
by law. You are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this presentation. All forward-looking statements
are qualified in their entirety by this cautionary statement. |
 2
Company Overview
Exchange: Ticker
NYSE: MTDR
Shares Outstanding
55.50 million common shares
Share Price as of August 22, 2012
$10.40/share
Market Capitalization as of August 22, 2012
$577.2 million
2012 Guidance Summary (updated as of August 14, 2012)
2012 Estimated Capital Spending
$313 million
2012 Estimated Total Oil Production
1.2 to 1.4 million barrels
2012 Estimated Exit Rate for Oil Production
5,000 to 5,500 barrels per day
2012 Estimated Total Natural Gas Production
12.5 to 13.5 billion cubic feet
Completed
IPO
of
14,883,334
shares
(12,209,167
primary)
including
overallotment
at
$12.00/share
in
March
2012 |
 Matador Oil Facts: Second Quarter 2012
3
On track to double Adjusted EBITDA
(1)
for the second year in a row
Record quarterly oil production of 285,000 Bbl, a sequential quarterly
increase of 43% from 200,000 Bbl produced in first quarter of 2012
Record six-month oil production of 485,000 Bbl, a year-over-year increase
of almost seven-fold from 70,000 Bbl produced in first half of 2011
Record average daily oil equivalent production of 8,738 BOE per day,
including 3,130 Bbl of oil per day and 33.6 MMcf of natural gas per day
Oil reserves of 6.7 million Bbl at June 30, 2012 up nearly 80% from 3.8
million Bbl at December 31, 2011
Second quarter oil production constitutes 36% of total production volume
and oil revenues constitute 82% of total oil and natural gas revenues
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and
a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see slide 23
Note: Matador is a two-stream reporting company. Its oil production and reserves
volumes do not include Natural Gas Liquids (NGLs) volumes. |
 Founded by Joe Foran in 1983
Foran Oil funded with $270,000 in
contributed capital from 17 friends and
family members
Rolled into Matador Petroleum Corporation
in 1988
Grown primarily through acquire and exploit
strategy
Delivered 21% average annual rate of
return over 15 years
Sold
to
Tom
Brown,
Inc.
(1)
in
June
2003
for
an enterprise value of $388 million in an all-
cash transaction
Foran Oil & Matador Petroleum
4
Matador History
Matador Resources Company
Founded by Joe Foran in 2003
Attracted start-up capital from long-time shareholders;
diverse and unique shareholder group including over
400 friends and neighbors
Proven management, technical team and Board of
Directors
Grown entirely through drill bit, with focus on
unconventional reservoir plays
Chesapeake transaction and strong science and
technical teams enabled the strategic transition to the
Eagle Ford play
IPO in February 2012 (NYSE: MTDR)
Strong year-over-year growth
Daily
oil
production
increased
almost
six-fold
(2)
Proved
oil
reserves
increased
almost
eight-fold
(3)
Adjusted EBITDA
(4)
increased 82%
(2)
Predecessor Entities
Matador Today
(1) Tom Brown purchased by Encana in 2004
(2) Three months ended June 30, 2012 compared to three months ended June 30, 2011 (3) At June 30, 2012 as
compared to at June 30, 2011
(4) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and
a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see slide 23
|
 A Year
of Growth 5
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and
a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see slide 23
AVERAGE DAILY OIL
TOTAL REALIZED
EQUIVALENT PRODUCTION
REVENUES
ADJUSTED EBITDA
(1)
(INCLUDING REALIZED GAIN ON DERIVATIVES)
$8.1
$18.4
$15.2
$23.6
$49.9
$21.3
$27.9
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
$14.2
$29.3
$26.7
$39.3
$74.1
$32.2
$40.8
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
911
1,506
2,285
3,926
7,048
8,023
8,738
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
Year Ended December 31,
Year Ended December 31,
Year Ended December 31, |
 TOTAL OIL
PRODUCTION OIL BY VOLUME
OIL BY REVENUE
12%
12%
9%
7%
22%
74%
82%
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
7%
7%
4%
2%
6%
27%
36%
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
22
37
30
33
154
200
285
2007
2008
2009
2010
2011
2012
1Q
2012
2Q
Transition to Oil
6
Year Ended
December
31,
Year Ended
December
31,
Year Ended
December
31, |
 7
Financial Performance: Proven Management Team
Oil and Natural Gas Revenues
($ in mm)
Total
Realized
Revenues
(2)
($ in mm)
Adjusted
EBITDA
(1)
($ in mm)
Average Daily Production
(BOE/d)
3,729
8,004
8,738
0
2,000
4,000
6,000
8,000
10,000
2Q10
2Q11
2Q12
$7.5
$20.9
$36.1
$0.0
$10.0
$20.0
$30.0
$40.0
2Q10
2Q11
2Q12
$5.2
$15.3
$27.9
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
2Q10
2Q11
2Q12
$9.1
$21.8
$40.8
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
2Q10
2Q11
2Q12
CAGR: 119%
CAGR: 132%
CAGR: 112%
CAGR: 53%
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and
a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see slide 23
(2) Includes realized gain on derivatives
|
 Liquids Focused CapEx in 2012E
Commentary
Oil Production Growth Over Time (Bbl/d)
8
Strong Growth Profile Focused on Liquids
91
422
2,200
3,130
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2010
2011
1Q 2012
2Q 2012
2012 Anticipated Drilling
2012E CapEx
Gross Wells
Net Wells
(in millions)
Total
Total
%
Total
%
South Texas
Eagle Ford
28.0
25.6
86.8%
$257.2
82.2%
Austin Chalk
2.0
2.0
6.8%
$11.3
3.6%
Area Total
30.0
27.6
93.6%
$268.5
85.8%
NW LA / E Texas
Haynesville
25.0
1.5
5.1%
$13.5
4.3%
Cotton Valley
-
-
-
-
-
Area Total
25.0
1.5
5.1%
$13.5
4.3%
SW WY, NE UT, SE ID
1.0
0.4
1.3%
$2.5
0.8%
Other
-
-
-
$28.5
9.1%
Total
56.0
29.5
100.0%
$313.0
100.0%
Q2 2012 oil production
approximately 285,000 barrels
Six-month oil production of
485,000 Bbl up almost
seven-fold year-over-year at
June 30, 2012
Approximately 88% of 2012E
capital budget focused on
Eagle Ford (84%) and
Austin Chalk (4%)
All 2012 Eagle Ford and
Austin Chalk drilling locations
targeting oil and liquids
Oil production expected to
increase 8x to 9x in 2012 |
 2012E Capex
% Eagle Ford
48.7
46.9
45.6
45.3
37.5
33.1
25.4
23.5
22.2
20.0
13.9
9.8
9.5
6.3
3.9
SFY
SM
MTDR
NFX
FST
GDP
ROSE
PVA
CRZO
CHK
MHR
PXD
APA
PXP
APC
84%
48%
34%
N/A
N/A
N/A
78%
92%
N/A
N/A
62%
25%
73%
85%
5.2%
Leverage to Eagle Ford (Net Eagle Ford Acres / EV)
(Net Acres / $mm)
9
Leading Eagle Ford Exposure
Matador offers significant leverage
and focus to the Eagle Ford
Approximately 90% of Eagle Ford
acreage is in the prospective oil
and liquids window
All 2012E Eagle Ford drilling
focused in the prospective oil and
liquids window
84% of 2012 estimated CapEx
allocated to Eagle Ford
One rig running in the eastern and
one in the western portions of the
Eagle Ford play
Eagle Ford acreage well-
positioned throughout the play
(1)
Note: Reflects companies with greater than 50 Bcfe of proved reserves. Data sourced from public
filings; stock price data as of August 22, 2012 close
(1) Per operational guidance
|
 10
San Antonio
Uvalde
Medina
Zavala
Frio
Dimmit
La Salle
Webb
Bexar
Atascosa
McMullen
Live Oak
Bee
Goliad
Dewitt
Gonzales
Wilson
COMBO LIQUIDS /
GAS FAIRWAY
DRY GAS FAIRWAY
OIL FAIRWAY
Eagle Ford and Austin Chalk Properties
GLASSCOCK (WINN) RANCH
8,891 gross / 8,891 net acres
EAGLE FORD WEST
14,242 gross / 11,380 net acres
EAGLE FORD EAST
7,567 gross / 6,170 net acres
EOG OPERATED, MTDR WI ~21%
18,998 gross / 3,709 net acres
Note: All acreage at June 30, 2012
EAGLE FORD ACREAGE TOTALS
49,698 gross / 30,150 net acres
Matador Resources Acreage
Karnes
Glasscock
Ranch
Shelton
Newman
ZLS
Martin Ranch
Northcut
Affleck
Troutt
Sutton
MRC/EOG
Pawelek
Danysh
Sickenius
Lyssy
Repka
RCT Wilson
Love
Cowey
Keseling
Finney
Lewton
Hennig
Nickel
Ranch |
 Highlights
11
Eagle Ford Properties are in Good Neighborhoods
MTDR acreage in counties
with robust transaction
activity
–
“good
neighborhoods”
Transaction values ranging
from $10,000 to $30,000 per
acre
Our Eagle Ford position has
grown to over 30,000 net
acres
Acreage in both the eastern
and western areas of the play
Approximately 90% of
acreage in prospective
oil and liquids windows
Acreage offers potential for
Austin Chalk, Buda, Pearsall
and other formations
Note: All Matador acreage at June 30, 2012 and all other acreage based on
public information Good reputation with land and mineral owners
More than 80% of Eagle Ford acreage HBP or not burdened with lease expirations
before 2013 Frio
Medina
Bexar
Guadalupe
Gonzales
Atascosa
Bee
Goliad
Live Oak
McMullen
La Salle
Zavala
Dimmit
Karnes
Wilson
Matador
Anadarko
EOG
Chesapeake
El Paso
Carrizo
Shell
Petrohawk/BHP
SM Energy
Pioneer
Marathon
Dewitt
OIL FAIRWAY
COMBO LIQUIDS /
GAS FAIRWAY
DRY GAS
FAIRWAY
TALISMAN-STATOIL / SM ENERGY
June 2011
+$14,000 / acre
SHELL / HARRISON RANCH
March 2010
~$10,000 / acre
TALISMAN-STATOIL / ENDURING
October 2010
+$13,000 / acre
CNOOC / CHESAPEAKE
October 2010
+$11,000 / acre
HUNT / MARUBENI
January 2012
+$20,000 / acre
MARATHON / HILCORP
June 2011
+$24,000 / acre
KKR / HILCORP
June 2010
~$10,000 / acre
MARATHON / PALOMA
May 2012
+$30,000 / acre |
 12
San Antonio
Multi-Pay Fairway
with Eagle Ford, Pearsall, Austin Chalk and Buda potential
Emerging Multi-Pay Area in Eagle Ford Oil Fairway and MTDR Acreage
OIL FAIRWAY
OIL FAIRWAY
DRY GAS FAIRWAY
DRY GAS FAIRWAY
Note: All acreage at June 30, 2012
Matador Resources Acreage |
 13
South Texas Multi-Pay Petroleum Systems:
Petroleum Charge focus towards Glasscock Ranch
Note: Information for Pearsall Oil Field sourced from public information
Redhawk
Area
Note: All acreage at June 30, 2012
Olmos/Navarro
Austin Chalk
Oil and Gas Fields:
Buda
Wilcox
Matador Resources Acreage
Edwards |
 14
Multi-Pay Fairway: Productive and Prospective Pay Zones
Historic Conventional Zones
Olmos-Navarro
–
Gas and oil fields in shallow section
Austin
–
Upper Austin horizontal drilling
–
Fractured reservoir
Buda
–
Primarily productive on structure
–
Fractured reservoir
Edwards
–
Productive on structure
“New”
Unconventional Zones
“Chalkleford”
(Eagle Ford / Austin Chalk transition zone)
–
Recent results in Pearsall Field from other operators are positive
Eagle Ford
–
Lower costs combined with better completion techniques have improved initial
results in northern oil window
Horizontal Buda Drilling
–
Exploratory play developing to exploit fracturing within the Buda both on and
off structure
Pearsall Shale
–
Exploratory play, initial test wells now being drilled
Austin Chalk
Eagle Ford
Buda
Georgetown
Del Rio
Edwards
Glen Rose
Rodessa
Pearsall
Sligo
Olmos
Navarro
ANCC |
 15
Wolfbone Play in the Delaware Basin (West Texas)
Chesapeake Operated
IP’s: 260 –
750 Bbl/d
600 –
3,300 Mcf/d
Anadarko Operated
IP’s: 162 –
931 Bbl/d
466 –
2,400 Mcf/d
Energen Operated
IP’s: 117 –
902 Bbl/d
500 –
1,500 Mcf/d
Devon Operated
IP’s: 121 –725 Bbl/d
1,100 –
1,300 Mcf/d
Cimarex Operated
IP’s: 240 –608 Bbl/d
255 –
2,000 Mcf/d
Major Operator Index
Matador Resources
Anadarko Petroleum Corp.
Chesapeake Operating
Cimarex Energy
Clayton Williams Energy
Devon Energy Production
Energen Resources Corp.
Oxy USA Inc.
Matador Resources
~4,900 gross / ~2,900 net acres
Note: As of August 23, 2012 and only wells with total depths greater than 7,000’
posted. Third-party information from public sources. |
 16
Wolfbone Play in the Delaware Basin (West Texas) Stratigraphic Column
Avalon
Shale
Depth: 7,900’
–
8,300’
(Oil Window)
Density Porosity: 12-14%
Thickness: 300-500 ft.
Normal Pressure (0.45 psi/ft.)
Total Organic Carbon (TOC) 5-8%
XRD: 15-20% clay and 40-60% silica
IP: 100-270 Bbl/d 200-1,200 Mcf/d
Middle
Wolfcamp
Depth: 11,500’
–
12,000’
Thickness: 200-300 ft.
Total Organic Carbon (TOC) 2-4%
Density Porosity: 12-15%
Geopressure (0.7psi/ft.)
Upper
Wolfcamp
Depth: 10,500’
–
10,600’
(Oil Window)
Density Porosity: >10%
Gross Thickness: 280-350 ft.
IP: 121-900 Bbl/d 250-3,300 Mcf/d
Geopressure (0.7psi/ft.)
Horizontal Targets
1
st
2
nd
3
rd
Bone
Spring
Depth: 8,500’
–
10,600’
(Oil Window)
Density Porosity: >10%
Thickness: 10-100 ft.
Normal Pressure (0.45 psi/ft.)
IP: 10-600 Bbl/d 500-2,500 Mcf/d
Note: Information from public sources |
 17
Hedging Profile
Oil Hedges (Costless Collars)
2H 2012
FY 2013
Total Volume Hedged by Ceiling (Bbl)
720,000
1,260,000
Weighted Average Price ($ / Bbl)
$110.31
$110.26
Total Volume Hedged by Floor (Bbl)
720,000
1,260,000
Weighted Average Price ($ / Bbl)
$90.83
$87.14
Natural Gas Hedges (Costless Collars)
2H 2012
FY 2013
Total Volume Hedged by Ceiling (Bcf)
4.62
2.25
Weighted Average Price ($ / MMBtu)
$5.30
$4.73
Total Volume Hedged by Floor (Bcf)
4.62
2.25
Weighted Average Price ($ / MMBtu)
$4.07
$3.73
Natural Gas Liquids (NGLs) Hedges (Swaps)
2H 2012
FY 2013
Total Volume Hedged (gal)
400,800
2,360,400
Weighted Average Price ($ / gal)
$0.74
$0.73 |
 Net NGL production of 163 Bbl/d and 476 Bbl/d for the first quarter and second
quarter of 2012 respectively. Matador is negotiating a natural gas gathering,
transportation and processing agreement, including firm transportation and
processing, for most of its operated natural gas production in South Texas. Matador expects
to complete this agreement during the third quarter of 2012.
163
476
0
100
200
300
400
500
1Q 2012
2Q 2012
18
Natural Gas Liquids (NGLs)
Net NGL Production
(Bbl/d) |
 19
Financial Flexibility
Plan to fund 2012 capital budget with a portion of IPO net proceeds, anticipated
cash flows from operations and available borrowings under credit
facility Currently
negotiating
an
amended
and
restated
credit
facility
to
increase
the
Company’s
borrowing
capacity to up to $200 million primarily as a result of increased oil reserves at
June 30, 2012 Expanding bank group
Expected to close during third quarter 2012
Borrowing base of $125 million, based on February 2012 redetermination
22%
of
current
market
capitalization
$90 million in debt outstanding as of August 22, 2012
(1) As of August 22, 2012 close
(1) |
 Liquids Focused CapEx in 2012E
Commentary
Oil Production Growth Over Time (Bbl/d)
20
Q2 2012 oil production
approximately 285,000 barrels
Six-month oil production of
485,000 Bbl up almost
seven-fold year-over-year at
June 30, 2012
Approximately 88% of 2012E
capital budget focused on
Eagle Ford (84%) and
Austin Chalk (4%)
All 2012 Eagle Ford and
Austin Chalk drilling locations
targeting oil and liquids
Oil production expected to
increase 8x to 9x in 2012
Strong Growth Profile Focused on Liquids
91
422
2,200
3,130
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2010
2011
1Q 2012
2Q 2012
2012 Anticipated Drilling
2012E CapEx
Gross Wells
Net Wells
(in millions)
Total
Total
%
Total
%
South Texas
Eagle Ford
28.0
25.6
86.8%
$257.2
82.2%
Austin Chalk
2.0
2.0
6.8%
$11.3
3.6%
Area Total
30.0
27.6
93.6%
$268.5
85.8%
NW LA / E Texas
Haynesville
25.0
1.5
5.1%
$13.5
4.3%
Cotton Valley
-
-
-
-
-
Area Total
25.0
1.5
5.1%
$13.5
4.3%
SW WY, NE UT, SE ID
1.0
0.4
1.3%
$2.5
0.8%
Other
-
-
-
$28.5
9.1%
Total
56.0
29.5
100.0%
$313.0
100.0% |
 21
Investment Highlights
Strong Growth Profile with Increasing Focus on Oil / Liquids
High Quality Asset Base in Attractive Areas
Significant Multi-year Drilling Inventory
Strong Financial Position and Long-Term Institutional, Industry and Individual
Shareholders
Proven Management and Technical Team and Active Board of Directors
Active Exploration Effort Using Science and Technology
|
 Appendix |
 23
Adjusted EBITDA Reconciliation
The following table presents our calculation of Adjusted EBITDA and reconciliation
of Adjusted EBITDA to the GAAP financial measures of net income (loss) and
net cash provided by operating activities, respectively. Year Ended December
31, (In thousands)
2008
2009
2010
2011
2010
2011
2012
Unaudited Adjusted EBITDA reconciliation to Net Income (Loss):
Net income (loss)
$103,878
($14,425)
$6,377
($10,309)
$4,692
($20,443)
($2,875)
Interest expense
-
-
3
683
-
290
309
Total income tax provision (benefit)
20,023
(9,925)
3,521
(5,521)
2,459
(6,952)
(649)
Depletion, depreciation and amortization
12,127
10,743
15,596
31,754
7,064
15,291
31,119
Accretion of asset retirement obligations
92
137
155
209
68
96
111
Full-cost ceiling impairment
22,195
25,244
-
35,673
-
35,673
33,205
Unrealized (gain) loss on derivatives
(3,592)
2,375
(3,139)
(5,138)
(3,272)
1,336
(11,844)
Stock option and grant expense
605
622
824
2,362
334
159
(333)
Restricted stock grants
60
34
74
44
13
22
161
Net (gain) loss on asset sales and inventory impairment
(136,977)
379
224
154
-
-
60
Adjusted EBITDA
$18,411
$15,184
$23,635
$49,911
$11,358
$25,472
$49,264
Year Ended December 31,
(In thousands)
2008
2009
2010
2011
2010
2011
2012
Unaudited Adjusted EBITDA reconciliation to Net Cash Provided
by Operating Activities:
Net cash provided by operating activities
$25,851
$1,791
$27,273
$61,868
$33,725
$19,531
$51,526
Net change in operating assets and liabilities
(17,888)
15,717
(2,230)
(12,594)
(22,367)
5,697
(2,571)
Interest expense
-
-
3
683
-
290
309
Current income tax provision (benefit)
10,448
(2,324)
(1,411)
(46)
-
(46)
-
Adjusted EBITDA
$18,411
$15,184
$23,635
$49,911
$11,358
$25,472
$49,264
Six Months Ended June 30,
Six Months Ended June 30,
We believe Adjusted EBITDA helps us evaluate our operating performance and compare our results of
operation from period to period without regard to our financing methods or capital structure.
We define Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset
retirement obligations, property impairments, unrealized derivative gains and losses, certain other
non-cash items and non-cash stock-based compensation expense, including stock
option and grant expense and restricted stock and restricted stock units expense, and net gain or loss on asset sales and inventory impairment. Adjusted
EBITDA is not a measure of net income (loss) or cash flows as determined by GAAP. Adjusted EBITDA
should not be considered an alternative to, or more meaningful than, net income or cash flows
from operating activities as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. |
 Board
of
Directors
and
Special
Board
Advisors
–
Expertise
and
Stewardship
24
Board Members
and Advisors
Professional Experience
Business Expertise
Dr. Stephen A. Holditch
Director
-
Professor and Former Head of the Department of Petroleum
Engineering, Texas A&M University
-
Founder / President S.A. Holditch & Associates
-
Past President of Society of Petroleum Engineers
Oil & Gas Operations
David M. Laney
Director
-
Past Chairman, Amtrak Board of Directors
-
Former Partner, Jackson Walker LLP
Law
Gregory E. Mitchell
Director
-
President / CEO, Toot’n Totum Food Stores
Petroleum Retailing
Dr. Steven W. Ohnimus
Director
-
Retired VP and General Manager, Unocal Indonesia
Oil & Gas Operations
Michael C. Ryan
Director
-
Partner, Berens Capital Management
International Business and
Finance
Margaret B. Shannon
Director
-
Retired VP and General Counsel, BJ Services Co.
-
Former Partner, Andrews Kurth LLP
Law and
Corporate Governance
Marlan W. Downey
Special Board Advisor
-
Retired President, ARCO International
-
Former President, Shell Pecten International
-
Past President of American Association of Petroleum Geologists
Oil & Gas Exploration
Wade I. Massad
Special Board Advisor
-
Managing Member, Cleveland Capital Management, LLC
-
Former EVP Capital Markets, Matador Resources Company
-
Formerly with KeyBanc Capital Markets and RBC Capital Markets
Capital Markets
Edward R. Scott, Jr.
Special Board Advisor
-
Former Chairman, Amarillo Economic Development Corporation
-
Law Firm of Gibson, Ochsner & Adkins
Law, Accounting and Real
Estate Development
W.J. “Jack”
Sleeper, Jr.
Special Board Advisor
-
Retired President, DeGolyer and MacNaughton (Worldwide
Petroleum Consultants)
Oil & Gas Executive
Management |
 Proven Management Team –
Experienced Leadership
25
Management Team
Background and Prior Affiliations
Industry
Experience
Matador
Experience
Joseph Wm. Foran
Founder, Chairman and CEO
-
Matador Petroleum Corporation, Foran Oil Company,
J Cleo Thompson Jr. and Thompson Petroleum Corp.
32 years
Since Inception
David E. Lancaster
EVP, COO and CFO
-
Schlumberger, S.A. Holditch & Associates, Inc., Diamond
Shamrock
33 years
Since 2003
Matthew V. Hairford
EVP, Operations
-
Samson, Sonat, Conoco
28 years
Since 2004
David F. Nicklin
Executive Director, Exploration
-
ARCO, Senior Geological Assignments in UK, Angola,
Norway and the Middle East
41 years
Since 2007
Scott E. King
Co-Founder, VP, Geophysics
and New Ventures
-
Matador Petroleum Corporation, Enserch, BP, Sohio
29 years
Since Inception
Bradley M. Robinson
VP, Reservoir Engineering
-
Schlumberger, S.A. Holditch & Associates, Inc.,
Marathon
35 years
Since Inception
Kathryn L. Wayne
Controller and Treasurer
-
Matador Petroleum Corporation, Mobil
28 years
Since Inception |
 26
Daily Production
(1)
8,738 BOE/d
Oil Production (% total)
3,130 Bbl/d (36%)
Proved Reserves @ 6/30/12
19.1 Million BOE
% Proved Developed
64%
% Oil
35% (and growing)
2012E CapEx
$313 million
% Eagle Ford
84%
% Oil and Liquids
94%
2012E Anticipated Drilling
29.5 net wells
Eagle Ford / Austin Chalk
27.6 net wells
Haynesville
1.5 net wells
Gross Acreage
(2)
195,838 acres
Net Acreage
(2)
160,516 acres
(1)
Average daily production for the three months ended June 30, 2012
(2)
At June 30, 2012
Matador Resources Snapshot
Note: Loving County acreage added August 10, 2012 and is not reflected in acreage
totals at June 30, 2012 (see slide 15) |
 27
Eagle Ford and Austin Chalk Overview
Acreage positioned in some of the
most active counties for Eagle Ford
and Austin Chalk (including
“Chalkleford”)
Two rigs running, primarily focused on
oil and liquids
2012E capital expenditure program
focused on oil and liquids exploration
and development
Anticipate oil production to constitute
approx. 35-40% of total production
volume and oil revenues to constitute
approx. 75-80% of total oil and natural
gas revenues in 2012
Drilling locations are based on 120
acre spacing
Currently testing 80-acre spacing on
one Eagle Ford property and plan
additional tests on other properties
before end of 2012
Proved Reserves @ 6/30/12
8.8 Million BOE
% Proved Developed
47%
% Oil / Liquids
75%
Daily Oil Production
(1)
3,178 Bbl/d
Gross Acres
(2)
49,698 acres
Net Acres
(2)
30,150 acres
Eagle Ford
(2),(3)
30,150 acres
Austin Chalk
(2),(3)
17,343 acres
2012E Anticipated Drilling
27.6 net wells
2012E CapEx Budget
$268.5 million
% HBP or no short term expirations
(4)
~80%
(1)
Average daily oil production for the six months ended June 30, 2012
(2)
At June 30, 2012
(3)
Some of the same leases cover the net acres shown for Eagle Ford and Austin Chalk. Therefore, the sum
for both formations is not equal to the total net acreage
(4)
80% of Eagle Ford acreage HBP or not burdened with lease expirations before 2013
|
 Highlights
28
Haynesville Positioning
Approximately 12,500 gross
and 5,800 net acres in
Haynesville Tier 1 core area
Almost all prospective
Haynesville acreage is HBP –
provides “natural gas bank”
for future development
MTDR active as both operator
and non-operator in
Haynesville play
Approximately 1,700 net
acres with Bossier potential
Haynesville acreage also
prospective for shallower
targets
–
Cotton
Valley,
Hosston
–
in
many
areas
Approximately 10,000 net
HBP acres prospective for
Cotton Valley Horizontal play
at Elm Grove / Caspiana
Note: Matador operates two sections, including the LA Wildlife and the BLM
sections, in Tier 1; all other acreage in Tier 1 is non-operated.
Note: All acreage at June 30, 2012 |
 Business Strategy to Deliver Growth and Value
29
Exploration and Development
2012E CapEx program focused on oil and liquids opportunities
Balanced Portfolio
Growing Eagle Ford and Delaware Basin contributes to a diversified portfolio mix
between oil and natural gas
Active,
ongoing
exploration
effort
continues
to
identify
new
oil
prospects
and
opportunities
Pursue Opportunistic Acquisitions
Ability to identify high return, operated opportunities at attractive prices
History of significant acquisitions and joint ventures
Maintain Financial Discipline
Keep balance sheet strong and control expenses
Work with industry participants to control costs for non-operated
properties Leverage Industry Relationships
Leverage expertise of our industry partners, exchange data and information and
build upon existing relationships
Continue active participation in industry consortia and professional
societies Build Upon Director and Management Team Experience and Success in
Unconventional Plays |
 30
Matador Today
Gross Acres
(1),(2)
107,122 acres
Net Acres
(1),(2)
100,670 acres
2012E CapEx Budget
$2.5 million
Matador Today
Gross Acres
(1),(3)
10,714 acres
Net Acres
(1),(3)
4,717 acres
Wyoming, Utah and Idaho (Meade Peak Shale)
Option Value in Large Unevaluated Acreage Positions
Initial test well drilled and cored through the Meade Peak
shale
Detailed petrophysical and rock property testing concluded
Carried participation interest provided by industry partner
Foothold of existing production and reserves
On August 10, 2012, acquired approx. 4,900 gross and
2,900 net acres prospective for the Wolfbone play in the
Delaware Basin in Loving County, Texas.
Southeast New Mexico / West Texas
(1)
At June 30, 2012
(2)
While we and our partners continue to evaluate the results from the initial test
well and plan for its completion and further testing, we expect a portion of our acreage will be allowed to expire during 2012
(3)
We believe approximately 8,000 gross and 2,000 net acres are no longer prospective,
and we plan to let them expire without drilling during 2012 |
 31
Selected Historical Financials
(Revenues and Adjusted EBITDA in millions)
Year Ended December 31,
Three Months Ended June 30,
2009
2010
2011
2011
2012
Production Summary
Oil Production (MBbl)
30
33
154
51
285
Gas Production (Bcf)
4.8
8.4
14.5
4.1
3.1
Total Production (MBOE)
830
1,433
2,571
728
795
Realized Prices (Including hedges)
Oil ($/ Bbl)
$57.72
$76.39
$93.80
$99.72
$105.82
Natural Gas ($/ Mcf)
$5.17
$4.38
$4.11
$4.11
$3.48
Revenues
Oil and Natural Gas Revenues
$19.0
$34.0
$67.0
$20.9
$36.1
Realized Gain on Derivatives
7.6
5.3
7.1
1.0
4.7
Unrealized Gain (Loss) on Derivatives
(2.4)
3.1
5.1
0.3
15.1
Total Revenues
$24.3
$42.5
$79.2
$22.1
$55.9
Operating Expenses ($/ BOE)
Production Taxes and Marketing
$1.30
$1.38
$2.44
$2.27
$3.29
Lease Operating
5.69
3.69
2.82
2.70
8.02
Depletion, Depreciation and Amortization
12.94
10.89
12.35
11.23
25.04
General and Administrative
8.57
6.77
5.21
4.25
5.15
Total Expenses
$28.50
$22.73
$22.82
$20.45
$41.50
Adjusted EBITDA
(1)
$15.2
$23.6
$49.9
$15.3
$27.9
(1) Adjusted EBITDA is a non-GAAP financial measure. For a
definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see slide 23 |
 32
Investment Highlights
Strong Growth Profile with Increasing Focus on Oil / Liquids
Oil production up almost five-fold in 2011 and projected to increase 8x to 9x
in 2012 2012E capital expenditure program focused on oil and liquids
exploration and development High Quality Asset Base in Attractive Areas
Eagle Ford provides immediate oil-weighted value and upside
Expanding acreage position in Delaware Basin in West Texas
Other key assets provide long-term option value on natural gas, with
Haynesville, Bossier and Cotton Valley assets all essentially HBP
Significant Multi-year Drilling Inventory
Strong Financial Position and Long-Term Institutional, Industry and Individual
Shareholders Proven Management, Technical Team and Active Board of
Directors Management averaging over 25 years of industry experience
Board with extensive industry experience and expertise as well as significant
company ownership Strong record of stewardship for over 28 years
Active Exploration Effort Using Science and Technology
Ongoing pipeline of new oil and natural gas opportunities, with strong emphasis on
science and technology to create value |
 Diversified Investor Composition Before July 31, 2012 Lock-up Expiration
33
Given management’s significant equity position, interests are well aligned
with public shareholders Unique and diverse investor base includes
institutional and industry shareholders with significant experience
investing in the oil and gas sector Most initial capital was provided by
investor base of predecessor company, Matador Petroleum Corporation
Investor composition prior to July 31, 2012 lock-up expiration:
Management
13%
of shares
(1)
(1) Approximate ownership at the time of the IPO (2) Public
Float percentage also includes shares purchased by Management and Legacy Shareholders on or after the IPO
Legacy Shareholders
60%
of shares
(1)
Public
Float
27%
of
shares
(2) |
 Matador Resources Company (“MTDR”)
34 |