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) April 16, 2015
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Matador Resources Company
(Exact name of registrant as specified in its charter)
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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)
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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:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 | Entry into a Material Definitive Agreement. |
Underwriting Agreement
On April 16, 2015, Matador Resources Company (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with RBC Capital Markets, LLC (the “Underwriter”), providing for the issuance and sale in an underwritten public offering by the Company of 7,000,000 shares of its common stock at $26.96 per share (the “Offering”). The Offering is expected to close on April 21, 2015, subject to the satisfaction of customary closing conditions.
The offer and sale of the shares of common stock were registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a shelf registration statement on Form S-3 (File No. 333-196178) (the “Registration Statement”), which became effective upon filing with the Securities and Exchange Commission on May 22, 2014.
In the Underwriting Agreement, the Company agreed to indemnify the Underwriter against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the Underwriter may be required to make because of any of those liabilities.
The foregoing description is qualified in its entirety by reference to the full text of the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K (this “Current Report”) and incorporated herein by reference.
Item 7.01 | Regulation FD Disclosure. |
The Company expects to make presentations concerning its business to potential investors. The materials to be utilized during the presentations are furnished as Exhibit 99.1 hereto and incorporated herein by reference.
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 Securities Exchange Act of 1934, as amended, 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 8.01 | Other Events. |
On April 16, 2015, the Company issued a press release announcing the pricing of the Offering. A copy of the press release is furnished as Exhibit 99.2 to this Current Report.
In connection with the Offering, the Company is filing the opinion of Baker Botts L.L.P. as part of this Current Report that is to be incorporated by reference into the Registration Statement. The opinion of Baker Botts L.L.P. is filed as Exhibit 5.1 to this Current Report and incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. | Description of Exhibit | ||
1.1 | Underwriting Agreement, dated as of April 16, 2015, by and between the Company and RBC Capital Markets, LLC. | ||
5.1 | Opinion of Baker Botts L.L.P. | ||
23.1 | Consent of Baker Botts L.L.P. (included in Exhibit 5.1). | ||
99.1 | Presentation Materials. | ||
99.2 | Press Release, dated April 16, 2015. | ||
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: April 20, 2015 | By: | /s/ Craig N. Adams | ||||
Name: | Craig N. Adams | |||||
Title: | Executive Vice President | |||||
Exhibit Index
Exhibit No. | Description of Exhibit | ||
1.1 | Underwriting Agreement, dated as of April 16, 2015, by and between the Company and RBC Capital Markets, LLC. | ||
5.1 | Opinion of Baker Botts L.L.P. | ||
23.1 | Consent of Baker Botts L.L.P. (included in Exhibit 5.1). | ||
99.1 | Presentation Materials. | ||
99.2 | Press Release, dated April 16, 2015. | ||
Exhibit 1.1
Execution Version
7,000,000 Shares
Matador Resources Company
Common Stock
($0.01 Par Value)
EQUITY UNDERWRITING AGREEMENT
April 16, 2015
RBC Capital Markets, LLC
Three World Financial Center, 8th Floor
200 Vesey Street
New York, New York 10281-8098
200 Vesey Street
New York, New York 10281-8098
Ladies and Gentlemen:
Matador Resources Company, a Texas corporation (the “Issuer”), proposes to sell to RBC Capital Markets, LLC (the “Underwriter”) an aggregate of 7,000,000 shares (the “Shares”) of the Issuer’s common stock, $0.01 par value (the “Common Stock”).
The Registration Statement (as defined herein) (i) has been prepared by the Issuer in conformity with the requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder; (ii) has been filed with the Commission under the Securities Act; and (iii) became effective under the Securities Act automatically upon filing with the Commission. As used in this Agreement:
(i) “Applicable Time” means 8:45 a.m., New York City time, on April 16, 2015;
(ii) “Base Prospectus” means the base prospectus, dated April 16, 2015, included in the Registration Statement;
(iii) “Disclosure Package” means, as of the Applicable Time, the most recent Preliminary Prospectus, together with (A) the information set forth on Schedule III hereto and (B) each Issuer Free Writing Prospectus identified on Schedule II hereto, other than a road show that is an Issuer Free Writing Prospectus but is not required to be filed under Rule 433 of the Rules and Regulations;
(iv) “Effective Date” means the date and time as of which the Registration Statement, or any post-effective amendment or amendments thereto, became or becomes effective;
(v) “Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) or “issuer free writing prospectus” (as defined in Rule
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433 of the Rules and Regulations) prepared by or on behalf of the Issuer or used or referred to by the Issuer in connection with the offering of the Shares;
(vi) “Preliminary Prospectus” means any preliminary prospectus (including any preliminary prospectus supplement) relating to the offering of the Shares filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations which is filed prior to the filing of the Prospectus, together with the Base Prospectus;
(vii) “Prospectus” means the final prospectus (including any prospectus supplement thereto) relating to the offering of the Shares, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, together with the Base Prospectus;
(viii) “Registration Statement” means the registration statement on Form S-3 (File No. 333-196178), including any Preliminary Prospectus or the Prospectus and all exhibits to such registration statement and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date, shall also mean such registration statement as so amended; and
(ix) “Well-Known Seasoned Issuer” shall mean a well-known seasoned issuer, as defined in Rule 405 of the Rules and Regulations.
Any reference herein to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended, and the Rules and Regulations of the Commission thereunder (collectively, the “Exchange Act”) prior to the Effective Date or the issue date of the Base Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be; and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the Effective Date or the issue date of the Base Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be, deemed to be incorporated therein by reference.
In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:
1.REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer represents and warrants to the Underwriter as follows:
(a) The Issuer meets the requirements for use of Form S-3 under the Securities Act and has filed with the Commission an automatic shelf registration statement, as defined in Rule 405 of the Rules and Regulations. The Registration Statement, which was initially filed with the Commission under the Securities Act on May 22, 2014, including all amendments thereto filed prior to the Applicable Time, became effective upon filing. No stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the knowledge of the Issuer, threatened by the Commission. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing
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Prospectus. Copies of the Registration Statement and each of the amendments thereto have been delivered by the Issuer to you.
(b) The Registration Statement conforms, and any further amendments or supplements to the Registration Statement will conform, in all material respects to the requirements of the Securities Act and the Rules and Regulations. The Prospectus and any Preliminary Prospectus each conforms and, as amended or supplemented, will conform, in all material respects to the requirements of the Securities Act and the Rules and Regulations. As of the Effective Date, the Registration Statement did not, and any further amendments to the Registration Statement, when they become effective, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; as of its date and the date hereof, the Prospectus does not, and as amended or supplemented on the Closing Date, will not, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; the Disclosure Package, as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; each Issuer Free Writing Prospectus listed on Schedule II hereto does not conflict with the information included in the Registration Statement and each such Issuer Free Writing Prospectus listed on Schedule II, as supplemented by and taken together with the Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the representations and warranties set forth in this sentence do not apply to statements or omissions in the Registration Statement, the Prospectus, any Preliminary Prospectus, or any Issuer Free Writing Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Issuer by the Underwriter expressly for use therein, which information is specified in Section 13 below.
(c) (i) At the time of filing the Registration Statement, (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Sections 13 or 15(d) of the Exchange Act or form of prospectus), (iii) at the time the Issuer or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c)) made any offer relating to the Shares in reliance on the exemption in Rule 163, and (iv) at the Applicable Time (with such date being used as the determination date for purposes of this clause (iv)), the Issuer was or is (as the case may be) a “well-known seasoned issuer” as defined in Rule 405. The Issuer agrees to pay the fees required by the Commission relating to the Shares within the time required by Rule 456(b)(1) without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r).
(d) The documents incorporated by reference in the Registration Statement, the Prospectus and the Disclosure Package, at the respective times they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the
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circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Registration Statement, the Prospectus or the Disclosure Package, when such documents are filed with the Commission will conform in all material respects to the requirements of the Exchange Act and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(e) Each of the statements made by the Issuer in the Registration Statement, the Disclosure Package and the Prospectus regarding the Issuer’s expectations, plans and intentions, and any other information that constitutes “forward-looking” information within the meaning of the Securities Act and the Rules and Regulations was made or will be made with a reasonable basis and in good faith. Notwithstanding the foregoing, this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with written information furnished to the Issuer by the Underwriter expressly for use in the Registration Statement, any Preliminary Prospectus or the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by the Issuer, and constitutes a valid, legal, and binding obligation of the Issuer, enforceable in accordance with its terms, except as rights to indemnity and contributions hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally, and subject to general principles of equity. The Issuer has full power and authority to enter into and perform this Agreement.
(g) The Issuer has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Texas with corporate power and authority to own or lease its properties and conduct its business as described in the Prospectus and the Disclosure Package. Each of the subsidiaries of the Issuer as listed in Exhibit A hereto (collectively, the “Subsidiaries”), has been duly organized or formed and is validly existing as a corporation or limited partnership, as applicable, in good standing under the laws of the jurisdiction of its incorporation, organization or formation with corporate or limited partnership power and authority to own or lease its properties and conduct its business as described in the Prospectus and the Disclosure Package. The Subsidiaries are the only subsidiaries, direct or indirect, of the Issuer. The Issuer and each of the Subsidiaries are duly qualified to transact business and are in good standing in all jurisdictions in which the conduct of their business requires such qualification; except where the failure to be so qualified or to be in good standing would not reasonably be expected (i) to have a material adverse effect on the condition (financial or otherwise), properties, assets, operations, earnings, business, or prospects of the Issuer and its Subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business or (ii) to prevent the consummation of the transactions contemplated hereby (clauses (i) and (ii) are referred to hereinafter as a “Material Adverse Effect”).
(h) The information set forth under the caption “Capitalization” in the Prospectus and the Disclosure Package is true and correct (other than for subsequent issuances of capital stock, if any, pursuant to employee benefit plans described in the Disclosure Package and the Prospectus or upon exercise of outstanding options or warrants described in the Disclosure Package and the Prospectus, as the case may be). All of the Shares conform to the description thereof contained in
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the Prospectus and the Disclosure Package. The outstanding shares of Common Stock of the Issuer have been duly authorized and validly issued and are fully paid and non-assessable. The outstanding shares of capital stock or other equity interests of each of the Subsidiaries have been duly authorized and validly issued, are fully paid (to the extent required under the applicable limited partnership agreement of such Subsidiary) and non-assessable (except as such non-assessability may be affected by Sections 3.03, 5.02 and 6.07 of the Texas Revised Limited Partnership Act) and, except as disclosed in the Prospectus and the Disclosure Package, are wholly owned by the Issuer or another Subsidiary free and clear of all liens, pledges, restrictions, encumbrances and equities and claims. The Shares to be issued and sold by the Issuer have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully paid and non-assessable.
(i) The form of certificates for the Shares conforms to the corporate law of the jurisdiction of the Issuer’s incorporation. Immediately after the issuance and sale of the Shares to the Underwriter, no shares of preferred stock of the Issuer shall be issued and outstanding and no holder of any shares of capital stock, securities convertible into or exchangeable or exercisable for capital stock or options, warrants or other rights to purchase capital stock or any other securities of the Issuer shall have any existing or future right to acquire any shares of preferred stock of the Issuer.
(j) No preemptive rights exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock or other securities of the Issuer. Except as disclosed in the Prospectus and the Disclosure Package or otherwise granted pursuant to any employee benefit plans, qualified stock option plans, director compensation arrangements or the employee compensation plans of the Issuer and its Subsidiaries (collectively, the “Issuer Stock Plans”), no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in the Issuer or its Subsidiaries are outstanding. All of the Issuer’s outstanding options, warrants or other rights to purchase or exchange any securities for shares of the Issuer’s capital stock have been duly authorized and validly issued, conform to the descriptions thereof contained in the Prospectus and Disclosure Package and were issued in compliance with federal securities laws and regulations and the terms of any applicable Issuer Stock Plans.
(k) The consolidated financial statements of the Issuer and the Subsidiaries, together with related notes and schedules as incorporated by reference in the Registration Statement, the Prospectus and the Disclosure Package, present fairly in all material respects the financial position and the results of operations and cash flows of the Issuer and the consolidated Subsidiaries, at the indicated dates and for the indicated periods. Such financial statements and related schedules have been prepared in accordance with U.S. generally accepted principles of accounting, consistently applied throughout the periods involved (“GAAP”), except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Registration Statement, the Prospectus and the Disclosure Package presents fairly in all material respects the information shown therein and
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such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Issuer.
(l) The statistical, industry-related and market-related data included in the Registration Statement, the Prospectus and the Disclosure Package are based on or derived from sources that the Issuer reasonably and in good faith believes are reliable and accurate.
(m) Except as disclosed in the Prospectus and Disclosure Package, the Issuer maintains a system of internal accounting controls (“Internal Controls”) sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(n) Since the date of the most recent balance sheet of the Issuer and its consolidated Subsidiaries reviewed or audited by KPMG LLP and reviewed by the audit committee of the board of directors of the Issuer, except as described in the Prospectus and the Disclosure Package, (i) the Issuer has not been advised of (A) any significant deficiencies in the design or operation of Internal Controls that could adversely affect the ability of the Issuer and each of its Subsidiaries to record, process, summarize and report financial data, or any material weaknesses in Internal Controls and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Internal Controls of the Issuer and each of its Subsidiaries, and (ii) since that date, there have been no significant changes in Internal Controls or in other factors that could significantly affect Internal Controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
(o) The Issuer has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act); the Issuer’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Issuer in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Commission, and that all such information is accumulated and communicated to the Issuer’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Issuer required under the Exchange Act with respect to such reports.
(p) Each of (i) Grant Thornton, LLP, which has delivered its opinion with respect to certain of the audited financial statements and schedules incorporated by reference in the Registration Statement and the Prospectus, and (ii) KPMG LLP, which has delivered its opinion with respect to certain of the audited financial statements and schedules of the Issuer incorporated by reference in the Registration Statement and the Prospectus, is an independent registered public accounting firm with respect to the Issuer within the meaning of the Securities Act and the Rules and Regulations and the applicable rules and regulations of the Public Company Accounting Oversight Board.
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(q) Except as set forth in the Registration Statement, the Prospectus and the Disclosure Package, there is no action, suit, claim or proceeding pending or, to the knowledge of the Issuer, threatened against or affecting the Issuer or any of the Subsidiaries, before any court or administrative agency or which has the subject thereof any property owned or leased by the Issuer or any of the Subsidiaries (i) that are required to be described in the Registration Statement, the Prospectus or the Disclosure Package and are not so described or (ii) which, if determined adversely to the Issuer or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect or prevent the consummation of the transactions contemplated hereby.
(r) No labor problem or dispute with the employees of the Issuer or the Subsidiaries exists or, to the Issuer’s knowledge, is threatened or imminent, and the Issuer has no knowledge of any existing or imminent labor disturbance by the employees of any of its or its Subsidiaries’ principal suppliers, contractors, consultants or customers, that would have a Material Adverse Effect.
(s) Each of the Issuer and its Subsidiaries has (i) good and defensible title to all of the oil and gas properties (including oil and gas wells, producing leasehold interests and appurtenant personal property) owned by the Issuer and its Subsidiaries, title investigations having been carried out by the Issuer or its Subsidiaries consistent with the reasonable practice in the oil and gas industry in the areas in which the Issuer and its Subsidiaries operate and (ii) good title to all other real and personal property owned by the Issuer and its Subsidiaries, including but not limited to such other real and personal property reflected in the financial statements or as described in the Prospectus and Disclosure Package, in each case free and clear of all restrictions, mortgages, pledges, security interests, claims, liens, encumbrances, charges and defects except such as (x) are described in the Prospectus and the Disclosure Package, (y) liens and encumbrances under operating agreements, unitization and pooling agreements, production sales contracts, farm-out agreements and other oil and gas exploration participation and production agreements, in each case that secure payment of amounts not yet due and payable for the performance of other unmatured obligations and are of a scope and nature customary in the oil and gas industry or arise in connection with drilling and production operations or (z) such as do not affect the value of the properties of the Issuer and its Subsidiaries, considered as one enterprise, and do not interfere in any respect with the use made and proposed to be made of such properties by the Issuer and its Subsidiaries, considered as one enterprise, with such exceptions as would not reasonably be expected to have a Material Adverse Effect. All of the leases and subleases under which the Issuer or any of its Subsidiaries holds or uses properties described in the Prospectus and the Disclosure Package are in full force and effect, with such exceptions as would not reasonably be expected to have a Material Adverse Effect, and neither the Issuer nor any of its Subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Issuer or its Subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Issuer or any Subsidiary thereof to the continued possession or use of the leased or subleased premises, in each case, with such exceptions as would not reasonably be expected to have a Material Adverse Effect. The working interests in oil, gas and mineral leases or mineral interests which constitute a portion of the real property held by the Issuer reflect in all material respects the right of the Issuer to explore, develop or receive production from such real property, and the care taken by the Issuer and its Subsidiaries with respect to acquiring or otherwise procuring such leases or mineral interests
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was generally consistent with standard industry practices in the areas in which the Issuer and its Subsidiaries operate for acquiring or procuring leases and interests therein to explore, develop or produce for hydrocarbons.
(t) The Issuer and its Subsidiaries have such consents, easements, rights‑of‑way or licenses from any person (“rights‑of‑way”) as are necessary to enable the Issuer and its Subsidiaries to conduct its business in the manner described in the Registration Statement, the Prospectus and the Disclosure Package, subject to such qualifications as may be set forth in the Registration Statement, Prospectus and the Disclosure Package, and except for such rights‑of‑way the lack of which would not have, individually or in the aggregate, a Material Adverse Effect.
(u) The Issuer and the Subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed and have paid all taxes indicated by said returns and all assessments received by them or any of them to the extent that such taxes have become due and payable by them, except (in any case) (i) for such taxes and assessments that are being contested in good faith and for which an adequate reserve for accrual has been established in accordance with GAAP, (ii) for any such taxes or assessments that are currently payable without penalty or interest, (iii) where a failure to do so would not reasonably be expected to have a Material Adverse Effect or (iv) to the extent described in the Disclosure Package or Prospectus. The Issuer has no knowledge of any actual or proposed additional material tax assessments. There are no transfer taxes or other similar fees or charges under U.S. federal law or the laws of any U.S. state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance by the Issuer or sale by the Issuer of the Shares.
(v) Since the respective dates as of which information is given in the Registration Statement, the Prospectus and the Disclosure Package, as it may be amended or supplemented, (i) there has not been any material adverse change or any development involving a prospective change which has had or is reasonably likely to have a Material Adverse Effect, whether or not occurring in the ordinary course of business, and there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Issuer or the Subsidiaries, other than transactions in the ordinary course of business and changes and transactions described in the Prospectus and the Disclosure Package, and (ii) none of the Issuer or any of its Subsidiaries has incurred any liability or obligation (financial or otherwise), direct or contingent, or entered into any transaction (including any off-balance sheet activities or transactions), not in the ordinary course of business, that is material to the Issuer and its Subsidiaries, as a whole, and there has not been any material change in the capital stock or partnership interests, as the case may be, or material increase in the short-term debt or long-term debt (including any off-balance sheet activities or transactions), of any of the Issuer or its Subsidiaries, or any Material Adverse Effect, or any development involving or which may reasonably be expected to result in a Material Adverse Effect, in each case, except as described in the Prospectus and the Disclosure Package. The Issuer and the Subsidiaries have no material liabilities or obligations, or indirect or direct contingent obligations, that are not disclosed in or incorporated by reference in the Issuer’s financial statements in the Registration Statement and the Prospectus.
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(w) Neither the Issuer nor any of the Subsidiaries is (i) in violation of its Certificate of Formation or other formation document (“Charter”) or Bylaws, limited partnership agreement or similar organizational documents, (ii) in violation of or default (or with the giving of notice or lapse of time or both, will be in default) under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound or (iii) in violation of any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Issuer or such Subsidiary or any of its properties, as applicable, except, with respect to clauses (i) through (iii), for such violations or defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under (1) the Charter or Bylaws, of the Issuer, (2) any contract, indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer or any of the Subsidiaries is a party, or (3) any order, rule or regulation applicable to the Issuer or any of the Subsidiaries of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction over the Issuer or any of the Subsidiaries or any of their respective properties, except, with respect to clauses (2) and (3), where such conflicts, breaches or defaults would not result in a Material Adverse Effect.
(x) No permit, consent, approval, authorization, order, registration, filing or qualification (“Consents”) of or with any court or governmental agency or body having jurisdiction over the Issuer or any of the Subsidiaries or any of their respective properties or assets is required in connection with the offering, issuance or sale by the Issuer of the Shares or the execution, delivery and performance of this Agreement by the Issuer, except (i) such Consents as may be required under the Securities Act of 1933, as amended, the Exchange Act and state securities or “Blue Sky” laws of any jurisdiction, (ii) such Consents as have been obtained or will be obtained prior to the Closing Date, (iii) such Consents that, if not obtained, could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or materially impair the ability of the Issuer to consummate the transactions contemplated by this Agreement, and (iv) such Consents as are disclosed in the Disclosure Package and the Prospectus.
(y) The Issuer and each of the Subsidiaries has all licenses, certifications, permits, franchises, approvals, clearances and other regulatory authorizations (“Permits”) from governmental authorities as are necessary to conduct its businesses as currently conducted and to own, lease and operate its properties in the manner described in the Prospectus and the Disclosure Package except as would not reasonably be expected to have a Material Adverse Effect. There is no claim, proceeding or controversy, pending or, to the knowledge of the Issuer or any of the Subsidiaries, threatened, involving the status of or sanctions under any of the Permits and no event has occurred that might allow for the revocation, termination, modification or other impairment of the rights of the Issuer or any of the Subsidiaries under such Permit, except, for such claims, proceedings, controversies or events as would not, individually or in the aggregate, have a Material Adverse Effect.
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(z) To the Issuer’s knowledge, there are no affiliations or associations between any member of Financial Industry Regulatory Authority (“FINRA”) and any of the Issuer’s officers, directors or 5% or greater security holders, except as set forth in the Registration Statement, the Prospectus and Disclosure Package. Except as disclosed in the Prospectus and the Disclosure Package, the Issuer (i) does not have any material lending or other relationship with the Underwriter or any bank or lending entity that is, to the Issuer’s knowledge, an affiliate of the Underwriter, and (ii) does not intend to use any of the proceeds from the sale of the Shares hereunder to repay any outstanding debt owed to any affiliate of the Underwriter.
(aa) The Issuer has not taken, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares. The Issuer acknowledges that the Underwriter may engage in passive market making transactions in the Shares on the New York Stock Exchange in accordance with Regulation M under the Exchange Act.
(bb) Neither the Issuer nor any of the Subsidiaries is, and after giving effect to the offering and the sale of the Shares and the application of the proceeds thereof as described in the Prospectus and the Disclosure Package will be, an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “1940 Act”).
(cc) The Issuer and each of the Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is commercially reasonable for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar industries. All policies of insurance insuring the Issuer or any Subsidiary or any of their respective businesses, assets, employees, officers and directors are in full force and effect, and the Issuer and the Subsidiaries are in compliance with the terms of such policies in all material respects. There are no claims by the Issuer or any Subsidiary under any such policy or instrument as to which an insurance company is denying liability or defending under a reservation of rights clause. The Issuer has no reason to believe that it or any Subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not have a Material Adverse Effect.
(dd) The Issuer is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Issuer would have any liability; the Issuer has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “pension plan” for which the Issuer would have any liability that is intended to be qualified under Section 401
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(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
(ee) Other than as contemplated by this Agreement or as disclosed in the Prospectus and the Disclosure Package, neither the Issuer nor any Subsidiary has incurred any liability for any finder’s or broker’s fee, or agent’s commission, in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(ff) Other than the Subsidiaries or as otherwise disclosed in the Prospectus and the Disclosure Package, the Issuer does not own, directly or indirectly, any shares of capital stock and does not have any other equity or ownership or proprietary interest in any corporation, partnership, association, trust, limited liability company, joint venture or other entity.
(gg) Neither the Issuer nor any Subsidiary is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous chemicals, toxic substances or radioactive and biological materials or relating to the protection or restoration of the environment or human exposure to hazardous chemicals, toxic substances or radioactive and biological materials (collectively, “Environmental Laws”), except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither the Issuer nor the Subsidiaries own or operate any real property contaminated with any substance that requires remedial action to be taken under any Environmental Laws, is liable for remedial action at any site where materials regulated under Environmental Laws were disposed by the Issuer or any Subsidiary, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim in each case would individually or in the aggregate have a Material Adverse Effect; and the Issuer is not aware of any pending investigation which might lead to such a claim. There are no costs or liabilities arising under any Environmental Laws with respect to the operations or properties of the Issuer and its Subsidiaries (including, without limitation, any capital or operating expenditures required for clean-up or closure of properties, compliance with Environmental Laws, any permit, license or approval or any related legal constraints on operating activities, and any potential liabilities of third parties assumed under contract by the Issuer or its Subsidiaries) that would, individually or in the aggregate, have a Material Adverse Effect.
(hh) In the ordinary course of its business, the Issuer conducts a periodic review of the effect of applicable Environmental Laws on the business, operations and properties of the Issuer and its Subsidiaries, in the course of which it identifies and evaluates material associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean‑up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review and the amount of its established reserves and except as disclosed in the Prospectus or the Disclosure Package, the Issuer has reasonably concluded that such identified associated costs and liabilities would not, individually or in the aggregate, have a Material Adverse Effect.
(ii) Neither the Issuer nor any Subsidiary, nor, to the knowledge of the Issuer, any director, officer, agent, employee or other person associated with or acting on behalf of the
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Issuer or any Subsidiary: (i) has made any payments or inducements, directly or indirectly, to any federal or local official or candidate for, any federal or state office in the United States or foreign offices in connection with any opportunity, contract, permit, certificate, consent, order, approval, waiver or other authorization relating to the business of the Issuer or any Subsidiary, except for such payments or inducements as were lawful under applicable laws, rules and regulations: (ii) has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (iii) has made any direct or indirect unlawful payment to any government official or employee from corporate funds; (iv) has violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (v) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment in connection with the business of the Issuer or any Subsidiary.
(jj) The Issuer and each of the Subsidiaries owns, licenses, or otherwise has rights in all United States and foreign patents, trademarks, service marks, tradenames, copyrights, trade secrets and other proprietary rights necessary for the conduct of its respective business as currently carried on and as proposed to be carried on as described in the Prospectus and the Disclosure Package (collectively and together with any applications or registrations for the foregoing, the “Intellectual Property”), except where the failure to so own or possess would not, individually or in the aggregate, have a Material Adverse Effect, and neither the Issuer nor any of its Subsidiaries has received any notice of infringement of or conflict with any asserted rights of others with respect to any of the foregoing which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.
(kk) At the Effective Date, the Issuer was, and on the Closing Date will be, in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder and the rules of the New York Stock Exchange that are then in effect and with which the Issuer is required to comply.
(ll) No relationship, direct or indirect, exists between or among the Issuer or its Subsidiaries, on the one hand, and the directors, officers, shareholders, customers or suppliers of the Issuer or its Subsidiaries, on the other hand, that is required to be described in the Registration Statement, the Prospectus or the Disclosure Package and is not so described. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Issuer to or for the benefit of any of the officers or directors of the Issuer or any of their respective family members, except as disclosed in the Prospectus and the Disclosure Package.
(mm) On or prior to the Closing Date, the Shares will have been duly approved for listing on the New York Stock Exchange.
(nn) The Issuer has not distributed any offering material in connection with the offering and sale of the Shares other than a Preliminary Prospectus, the Prospectus, or any Issuer Free Writing Prospectus reviewed and consented to by the Underwriter.
(oo) At the respective times that the Registration Statement or any amendment to the Registration Statement were filed and at the date of this Agreement, the Issuer was not and is
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not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 of the Rules and Regulations.
(pp) The operations of the Issuer and its Subsidiaries are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Issuer and its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Issuer or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Issuer, threatened.
(qq) None of the Issuer nor any of its Subsidiaries (collectively, the “Entity”), nor any director or officer of the Entity nor, to the Entity’s knowledge, any employee agent, affiliate or representative of the Entity, is an individual or entity (“Person”) that is, or is owned or controlled by, a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor (ii) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria). The Entity represents and covenants that it will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (A) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or (B) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise). The Entity represents and covenants that it has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
(rr) As of the date hereof, (i) all royalties, rentals, deposits and other amounts owed under the oil and gas leases constituting the oil and gas properties of the Issuer and its Subsidiaries have been properly and timely paid, other than amounts held in suspense accounts pending routine payments or related to disputes about the proper identification of royalty owners and except where the failure to timely pay such amounts could not, individually or in the aggregate, have a Material Adverse Effect on the Issuer or any of its Subsidiaries; (ii) no material amount of proceeds from the sale or production attributable to the oil and gas properties of the Issuer and its Subsidiaries are currently being held in suspense by any purchaser thereof, except where such amounts due could not, individually or in the aggregate, have a Material Adverse Effect on the Issuer or any of the Subsidiaries, and (iii) there are no claims under take or pay contracts pursuant to which natural gas purchasers have any make up rights affecting the interests of the Issuer or its
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Subsidiaries in their oil and gas properties, except where such claims could not, individually or in the aggregate, have a Material Adverse Effect on the Issuer or any of its Subsidiaries.
(ss) The oil and natural gas reserve estimates contained in the Registration Statement and included in the Prospectus have been prepared by employees of the Issuer or its Subsidiaries and have been audited by an independent reserve engineer, in accordance with Commission guidelines applied on a consistent basis throughout the periods involved, and the Issuer and the Subsidiaries have no reason to believe that such estimates do not fairly reflect the oil and natural gas reserves of the Issuer and the Subsidiaries as of the dates indicated. The information underlying the estimates of the Issuer’s reserves that was supplied to Netherland, Sewell & Associates, Inc. (the “Reserve Engineer”), for the purposes of auditing the reserve reports and estimates of the proved reserves of the Issuer disclosed in the Registration Statement, the Prospectus and the Disclosure Package, including production and costs of operation, was true and correct in all material respects on the dates such estimates were made, and such information was supplied and was prepared in accordance with customary industry practices. Other than normal production of the reserves, the impact of the changes in prices and costs, and fluctuations in demand for oil and natural gas and except as disclosed in the Registration Statement, the Prospectus and the Disclosure Package, the Issuer has no knowledge of any facts or circumstances that would in the aggregate result in a material adverse change in the aggregate net proved reserves, or the aggregate present value or the standardized measure of the future net cash flows therefrom, as described in the Registration Statement, the Prospectus and the Disclosure Package and as reflected in the reports the Reserve Engineer prepared with regard to the proved reserves that the Issuer owns. The estimates of such proved reserves and standardized measure as described in the Registration Statement, the Prospectus and the Disclosure Package and reflected in the reports referenced therein have been prepared in a manner that complies, in all material respects, with the applicable requirements of the Rules and Regulations with respect to such estimates.
(tt) The Reserve Engineer is an independent petroleum engineer with respect to the Issuer and its Subsidiaries.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Issuer agrees to sell to the Underwriter and the Underwriter agrees to purchase from the Issuer the Shares at a price of $26.96 per share.
(b) Payment for the Shares to be sold hereunder is to be made in federal (same day) funds to an account designated by the Issuer for the Shares to be sold by it against delivery therefor to the Underwriter. Such payment and delivery are to be made through the facilities of the Depository Trust Company, New York, NY (“DTC”) at 9:00 a.m., New York time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as you and the Issuer shall agree upon (such time and date being herein referred to as the “Closing Date”). As used herein, “business day” means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed.
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3. OFFERING BY THE UNDERWRITER.
It is understood that the Underwriter is to make a public offering of the Shares as soon as the Underwriter deems it advisable to do so. The Shares are to be offered to the public upon the terms and conditions set forth in the Prospectus.
4. COVENANTS.
(a) The Issuer covenants and agrees with the Underwriter that it will (i) prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the Underwriter containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430B of the Rules and Regulations, (ii) not file any amendment to the Registration Statement or supplement to the Prospectus, any Preliminary Prospectus or any Issuer Free Writing Prospectus of which the Underwriter shall not previously have been advised and furnished with a copy or to which the Underwriter shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations and (iii) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Issuer with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Shares by the Underwriter.
(b) The Issuer, without the prior consent of the Underwriter, will not distribute any prospectus or other offering material (including, without limitation, any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus and content on the Issuer’s website that may be deemed to be a prospectus or other offering material) in connection with the offering and sale of the Shares, other than the materials referred to in Section 1(a). The Underwriter represents and agrees that it has not made and, without the prior consent of the Issuer, it will not make, any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus. Any such Issuer Free Writing Prospectus the use of which has been consented to by the Issuer and the Underwriter is listed on Schedule II hereto. The Issuer has complied and will comply with the requirements of Rule 433 of the Rules and Regulations applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending. The Issuer agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, any Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Issuer will give prompt notice thereof to the Underwriter and, if requested by the Underwriter, will prepare and furnish without charge to the Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission.
(c) The Issuer will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Issuer.
(d) After the date of this Agreement, the Issuer shall promptly advise the Underwriter in writing (i) of the receipt of any comments of, or requests for additional or
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supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Preliminary Prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order or notice preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. The Issuer shall use its commercially reasonable efforts to prevent the issuance of any such stop order or notice of prevention or suspension of such use. If the Commission shall enter any such stop order or issue any such notice at any time, the Issuer will use its commercially reasonable efforts to obtain the lifting or reversal of such order or notice at the earliest possible moment. Additionally, the Issuer agrees that it shall comply with the provisions of Rules 424(b) and 430B, as applicable, of the Rules and Regulations, including with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Issuer under such Rule 424(b) of the Rules and Regulations were received in a timely manner by the Commission.
(e) The Issuer will cooperate with the Underwriter in endeavoring to qualify the Shares for sale under or obtain exemptions from the application of the securities laws of such jurisdictions as the Underwriter may reasonably have designated in writing and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose; provided, that the Issuer shall not be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not otherwise be required to so qualify, (ii) file a general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would not otherwise be subject. The Issuer will, from time to time, prepare and file such statements, reports, and other documents, as are or may be required to continue such qualifications in effect for so long a period as the Underwriter may reasonably request for distribution of the Shares. The Issuer will advise the Underwriter promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Issuer shall use its commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.
(f) The Issuer will deliver to, or upon the order of, the Underwriter, from time to time, as many copies of any Preliminary Prospectus as the Underwriter may reasonably request. The Issuer will deliver to, or upon the order of, the Underwriter during the period when delivery of a Prospectus is required under the Securities Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Underwriter may reasonably request. The Issuer will deliver to the Underwriter at or before the Closing Date, upon request, conformed copies of the Registration Statement and all amendments thereto (including all exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein or otherwise deemed to be a part thereof).
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(g) The Issuer will comply with the Securities Act and the Rules and Regulations, and the Exchange Act, and the rules and regulations of the Commission thereunder and the rules and regulations of the New York Stock Exchange, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If, during the period in which a prospectus is required by law to be delivered by the Underwriter or a dealer, any event or development shall occur or condition exist as a result of which the Prospectus or the Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading, or if it shall be necessary to amend or supplement the Prospectus or the Disclosure Package, in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading, or if in the opinion of the Underwriter it is otherwise necessary to amend or supplement the Registration Statement, the Prospectus or the Disclosure Package, or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or Exchange Act or with a request from the Commission, in order to comply with law, including in connection with the delivery of the Prospectus, the Issuer agrees to (i) notify the Underwriter of any such event, development or condition and (ii) promptly prepare (subject to Section 4(a) hereof), file with the Commission (and use its commercially reasonable efforts to have any amendment to the Registration Statement to be declared effective) and furnish at its own expense to the Underwriter and to any dealers identified by the Underwriter, amendments or supplements to the Registration Statement, the Prospectus or the Disclosure Package necessary in order to make the statements in the Prospectus or the Disclosure Package as so amended or supplemented, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading or so that the Registration Statement, the Prospectus or the Disclosure Package, as amended or supplemented, will comply with law.
(h) The Issuer will make generally available to its security holders, as soon as it is practicable to do so, an earning statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the Effective Date, which earning statement shall satisfy the requirements of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and will advise you in writing when such statement has been so made available.
(i) The Issuer covenants and agrees that it will not, without the prior written consent of the Underwriter (which consent may be withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), grant any option, right or warrant to purchase, pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a‑1(h) under the Exchange Act, lend or otherwise dispose of any shares of Common Stock, options, rights or warrants to acquire shares of Common Stock, or securities exchangeable or exercisable for or convertible into shares of Common Stock, including, without limitation, entering into any swap or other arrangement that transfers, in whole or in part, the economic consequences of the ownership of Common Stock, or announce the offering of, or file any registration statement under the Securities Act in respect of any shares of Common Stock, options or warrants to acquire Common Stock or securities exchangeable or exercisable for or convertible into Common Stock, or publicly announce an intention to do any of the foregoing,
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for a period commencing on the date hereof and continuing through the close of trading on the date 60 days after the date of the final prospectus relating to the offering (the “Restricted Period”), other than: (i) the Shares to be sold hereunder; (ii) grants of options or other purchase rights or shares of Common Stock pursuant to the Issuer Stock Plans; provided, that such securities will not vest or become exercisable, as applicable (other than grants of shares of Common Stock to special board advisors pursuant to Issuer Stock Plans), during the Restricted Period without the Underwriter’s prior written consent; (iii) issuances of shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock pursuant to the exercise of warrants, options or other convertible or exchangeable securities, including shares of convertible preferred stock, in each case, which are outstanding on the date hereof; or (iv) any registration statement on Form S‑8 or any similar or successor form relating to an offering of securities solely to the Issuer’s or its Subsidiaries’ employees.
(j) The Issuer will use its commercially reasonable efforts to list, subject to notice of issuance, the Shares, and cause the shares to be admitted and authorized for trading, on the New York Stock Exchange.
(k) The Issuer has caused each of the persons listed on Schedule II hereto, to furnish to the Underwriter, on or prior to the date of this Agreement, a letter or letters, substantially in the form of Exhibit C hereto, pursuant to which each such person shall agree not to offer, sell, sell short or otherwise dispose of any shares of Common Stock of the Issuer or other capital stock of the Issuer, or any other securities convertible, exchangeable or exercisable for Common Stock or derivative of Common Stock owned by such person or request the registration for the offer or sale of any of the foregoing (or as to which such person has the right to direct the disposition of) for a period of 60 days after the date of this Agreement, directly or indirectly, except with the prior written consent of the Underwriter (“Lock-up Agreements”).
(l) The Issuer shall apply the net proceeds of its sale of the Shares as described under the heading “Use of Proceeds” in the Prospectus and the Disclosure Package.
(m) The Issuer shall not invest, or otherwise use the proceeds received by it from the sale of the Shares in such a manner as would require the Issuer or any of its Subsidiaries to, and will take such steps as necessary to ensure that neither the Issuer nor any of its Subsidiaries is required to, register as an investment company under the 1940 Act.
(n) The Issuer will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Issuer, a registrar for the Common Stock.
(o) The Issuer will use its commercially reasonable efforts to do or perform all things required to be done or performed by it prior to the Closing Date to satisfy all conditions precedent to the delivery of the Shares pursuant to this Agreement.
5. COSTS AND EXPENSES.
The Issuer will pay all costs, expenses and fees incident to the performance of the obligations of the Issuer under this Agreement, including, without limiting the generality of the foregoing, the
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following: accounting fees of the Issuer; the fees and disbursements of counsel for the Issuer; the cost of printing and delivering to, or as requested by, the Underwriter copies of the Registration Statement, any Preliminary Prospectus, the Disclosure Package, any Issuer Free Writing Prospectus, the Prospectus, the Underwriter’s Selling Memorandum and the Underwriter’s Invitation Letter, if any, the Listing Application, the Blue Sky Survey and any supplements or amendments thereto; the preparation, printing and distribution of one or more versions of the Preliminary Prospectus and the Prospectus for distribution in Canada, including the form of the Canadian “wrapper” (including reasonable related fees and expenses of Canadian counsel to the Underwriter); the filing fees of the Commission; the filing fees incident to securing any required review by FINRA of the terms of the sale of the Shares (in an amount not to exceed $10,000); the listing fee of the New York Stock Exchange; the investor presentations on any “road show” undertaken in connection with the marketing of the Shares, including, without limitation, expenses associated with any electronic road show, travel and lodging expenses of the representatives and officers of the Issuer; provided, however, that the Underwriter will pay for 50% of the cost of any aircraft chartered in connection with the road show; and the expenses, including the fees and disbursements of counsel for the Underwriter, incurred in connection with the qualification of the Shares under State securities or Blue Sky laws; provided, that except as provided in this Section 5, the Underwriter shall pay all of its own costs and expenses, including the fees of its counsel, transfer taxes on any resale of the Shares by the Underwriter, any advertising expenses connected with any offers it may make and the transportation and other expenses incurred by the Underwriter on its own behalf in connection with presentations to prospective purchasers of the Shares. Any transfer taxes imposed on the sale of the Shares to the Underwriter by the Issuer pursuant to this Agreement (but not, for the avoidance of doubt, any such taxes imposed on resale of any Shares by the Underwriter) will be paid by the Issuer.
If this Agreement shall not be consummated because the conditions in Section 6 or 7 hereof are not satisfied, or because this Agreement is terminated by the Underwriter pursuant to Section 11(a)(i), (vi) or (vii) hereof, then the Issuer shall reimburse the Underwriter for reasonable out‑of‑pocket expenses, including all fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing its obligations hereunder; but the Issuer shall not in any event be liable to the Underwriter for damages on account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITER.
The obligations of the Underwriter to purchase the Shares on the Closing Date are subject to the accuracy, as of the Closing Date, of the representations and warranties of the Issuer contained herein, and to the performance by the Issuer of its covenants and obligations hereunder and to the following additional conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with Section 4(a) hereof, and any and all filings required by Rule 424 and Rule 430B of the Rules and Regulations shall have been made, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed
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to the Underwriter and complied with to its reasonable satisfaction. All material required to be filed by the Issuer pursuant to Rule 433(d) of the Rules and Regulations shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433 of the Rules and Regulations. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Issuer, shall be contemplated by the Commission; no stop order suspending or preventing the use of any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or, to the knowledge of the Issuer, shall be contemplated by the Commission; all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction; and no injunction, restraining order, or order of any nature by a federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Underwriter shall have received on the Closing Date an opinion of Baker Botts L.L.P., counsel for the Issuer, dated the Closing Date and addressed to the Underwriter in the form attached as Exhibit B hereto.
(c) The Underwriter shall have received from Latham & Watkins LLP, counsel for the Underwriter, an opinion dated the Closing Date, in the form satisfactory to the Underwriter, and such counsel shall have received such papers and information as they reasonably request to enable them to pass upon such matters.
(d) You shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to you, of each of KPMG LLP and Grant Thornton, LLP confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published Rules and Regulations thereunder and stating that, in their opinion, the financial statements and schedules examined by them and included in the Registration Statement, as applicable, comply in form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations; and containing such other statements and information as is ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain accounting information contained in the Registration Statement, the Prospectus and the Disclosure Package.
(e) The Underwriter shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriter, from the Reserve Engineer, containing statements and information ordinarily included in reserve engineers’ “comfort letters” to underwriters with respect to the reserve reports and related information contained in the Registration Statement, the Prospectus and the Disclosure Package.
(f) The Underwriter shall have received on the Closing Date a certificate or certificates of the Issuer’s Chief Executive Officer and Chief Financial Officer to the effect that, as of the Closing Date, each of them severally represents as follows:
20
(i) The Registration Statement became effective under the Securities Act automatically upon filing with the Commission and no stop order suspending the effectiveness of the Registrations Statement has been issued, and no proceedings for such purpose have been instituted or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Issuer contained in Section 1 hereof are true and correct as of the Closing Date;
(iii) The Issuer has complied with all of the covenants and agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date;
(iv) They have carefully examined the Registration Statement and the Prospectus and, in their opinion, as of the effective date of the Registration Statement, the statements contained in the Registration Statement were true and correct, and such Registration Statement and Prospectus did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, and since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in the Disclosure Package, (1) there has not been any material adverse change or any development involving a prospective change, which has had or is reasonably likely to have a Material Adverse Effect, whether or not arising in the ordinary course of business; (2) neither the Issuer nor any of its Subsidiaries shall have sustained any material loss or interference with its business from fire, explosion, flood, or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Disclosure Package; and (3) there shall not have been any change in the capital stock (other than issuances of capital stock in the ordinary course of business pursuant to the Issuer Stock Plans) or increase in long-term debt of the Issuer or any of the Subsidiaries.
(g) The Issuer shall have furnished to the Underwriter such further certificates and documents confirming the representations and warranties, covenants and conditions contained herein and related matters as the Underwriter may reasonably have requested.
(h) The Shares to be issued and sold by the Issuer pursuant to this Agreement shall have been listed, admitted to trading and approved for designation upon notice of issuance on the New York Stock Exchange and satisfactory evidence thereof shall have been provided to the Underwriter.
(i) The Lock-up Agreements shall have been delivered to the Underwriter and shall be in full force and effect.
21
The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects reasonably satisfactory to the Underwriter and to Latham & Watkins LLP, counsel for the Underwriter.
If any of the conditions hereinabove provided for in this Section 6 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriter hereunder may be terminated by the Underwriter.
In such event, the Issuer and the Underwriter shall not be under any obligation to each other (except to the extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE ISSUER.
The obligations of the Issuer to sell and deliver the portion of the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that, at the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Issuer agrees:
(i) to indemnify and hold harmless the Underwriter and its directors, officers, partners, members, employees, agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the successors and assigns of each of the foregoing (each an “Indemnified Party”), against any losses, claims, expenses, damages or liabilities to which such Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (x) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Preliminary Prospectus, the Disclosure Package, the Prospectus or any amendment or supplement thereto, or in any Issuer Free Writing Prospectus not included in the Disclosure Package, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations or any “road show” (as defined in Rule 433 of the Rules and Regulations) not constituting an Issuer Free Writing Prospectus, or (y) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that the Issuer will not be liable to the Underwriter and its directors, officers, partners, members, employees, agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the successors and assigns of each of the foregoing, in any such case to the extent that any such loss, claim, expense, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement made in, or omission or alleged omission from any of such documents or any road show in reliance upon and in conformity with written information furnished to the Issuer by the Underwriter specifically for use therein, which information is specified in Section 13 below;
22
(ii) to reimburse each Indemnified Party upon demand for any and all legal or other out‑of‑pocket expenses reasonably incurred by such Indemnified Party in connection with investigating, settling, compromising, paying or defending any such loss, claim, expense, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering of the Shares under Section 8(a)(i) above, whether or not such Indemnified Party is a party to any action or proceeding. In the event that it is finally judicially determined that the Underwriter is not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriter will promptly return all sums that had been advanced pursuant hereto; and
(iii) the indemnification agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Issuer may otherwise have.
(b) The Underwriter agrees:
(i) to indemnify and hold harmless the Issuer, each of its directors, each of its officers who have signed the Registration Statement and each person, if any, who controls the Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Underwriter Indemnified Party”), against any losses, claims, expenses, damages or liabilities to which such Underwriter Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (x) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Preliminary Prospectus, the Disclosure Package, the Prospectus or any amendment or supplement thereto, or in any Issuer Free Writing Prospectus not included in the Disclosure Package or (y) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that the Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in such documents in reliance upon and in conformity with written information furnished to the Issuer by the Underwriter specifically for use therein, which information is specified in Section 13 below;
(ii) to reimburse each Underwriter Indemnified Party upon demand for any and all legal or other out‑of‑pocket expenses reasonably incurred by such Underwriter Indemnified Party in connection with investigating, settling, compromising, paying or defending any such loss, claim, expense, damage or liability, action or proceeding under Section 8(b)(i) above, whether or not such Underwriter Indemnified Party is a party to any action or proceeding. In the event that it is finally judicially determined that the Underwriter Indemnified Party was not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriter Indemnified Party will promptly return all sums that had been advanced pursuant hereto; and
(iii) the indemnification agreement set forth in this Section 8(b) shall be in addition to any liabilities that the Underwriter may otherwise have
(c) In case any proceeding (including any governmental investigation), action or suit shall be instituted involving any person in respect of which indemnity may be sought pursuant
23
to this Section 8, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing. No indemnification provided for in Section 8(a) or (b) shall be available to any party who shall fail to give notice as provided in this Subsection if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a) or (b). In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to special local counsel) for all such indemnified parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding and does not include a statement attributing fault or liability to any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), (b) or (c) above in respect of any losses, claims, expenses, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, expenses, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Issuer on the one hand and the Underwriter on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted
24
by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuer on the one hand and the Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, expenses, damages or liabilities, (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Issuer on the one hand and the Underwriter on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuer (as set forth in the first paragraph of the cover page of the Prospectus) bear to the total underwriting discounts and commissions received by the Underwriter. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer on the one hand or the Underwriter on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Issuer and the Underwriter agree that it would not be just and equitable if contributions pursuant to this Subsection were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Subsection. The amount paid or payable by an indemnified party as a result of the losses, claims, expenses, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Subsection shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Subsection, (i) the Underwriter shall not be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by the Underwriter and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
(e) Any losses, claims, expenses, damages or liabilities for which an indemnified party is entitled to indemnification or contribution under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, expenses, damages or liabilities are incurred. The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Issuer set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the Underwriter or any person controlling the Underwriter, the Issuer, its directors or officers or any persons controlling the Issuer, (ii) acceptance of any Shares and payment therefor hereunder, and (iii) any termination of this Agreement. A successor to the Underwriter, or to the Issuer, its directors or officers, or any person controlling the Issuer, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8.
9. [RESERVED.]
10. NOTICES.
25
All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered, or faxed (and promptly confirmed in writing via mail or delivery) as follows:
if to the Underwriter, to: | RBC Capital Markets, LLC Three World Financial Center, 8th Floor 200 Vesey Street New York, New York 10281-8098 Attention: Rick Brice Managing Director Fax: (713) 403-5626 |
with a copy to (which shall not constitute notice):
Latham & Watkins LLP
811 Main St., Suite 3700
Houston, Texas 77002
Attention: Sean T. Wheeler
Fax: (713) 546‑5401
811 Main St., Suite 3700
Houston, Texas 77002
Attention: Sean T. Wheeler
Fax: (713) 546‑5401
if to the Issuer to: | Matador Resources Company One Lincoln Centre 5400 LBJ Freeway, Suite 1500 Dallas, Texas 75240 Attention: Joseph Wm. Foran , Chief Executive Officer Fax: (972) 371‑5201 |
with a copy to (which shall not constitute notice):
Baker Botts L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Douglass M. Rayburn
Fax: (214) 661-4634
2001 Ross Avenue
Dallas, Texas 75201
Attention: Douglass M. Rayburn
Fax: (214) 661-4634
11. TERMINATION. This Agreement may be terminated:
(a) by you at any time prior to the Closing Date if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change or any development involving a prospective change, which in the absolute discretion of the Underwriter, has had, or is reasonably likely to have, a Material Adverse Effect, (ii) any outbreak, attack, or escalation of hostilities or declaration of war, national emergency, act of terrorism or other national or international calamity or crisis or change in economic, financial or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States or Canada would, in the absolute discretion of the Underwriter make it impracticable or inadvisable to market the
26
Shares or to enforce contracts for the sale of the Shares, (iii) suspension of trading in securities generally on the New York Stock Exchange or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on such Exchange, (iv) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects or may materially and adversely affect the business or operations of the Issuer, (v) declaration of a banking moratorium by United States or New York State authorities, (vi) any downgrading, or placement on any watch list for possible downgrading, in the rating of the Issuer’s debt securities by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Exchange Act), (vii) the suspension of trading of the Issuer’s Common Stock by the New York Stock Exchange, the Commission, or any other governmental authority, or (viii) the taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 7 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the Issuer and the Underwriter and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. No purchaser of any of the Shares from the Underwriter shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITER.
The Issuer and the Underwriter acknowledge and agree that the only information furnished or to be furnished by the Underwriter to the Issuer for inclusion in any Preliminary Prospectus, Prospectus, Issuer Free Writing Prospectus or the Registration Statement consists of (a) the statement regarding delivery of shares by the Underwriter set forth on the cover page of, and (b) the fourth, fourteenth and fifteenth paragraphs under the caption “Underwriting (CONFLICTS OF INTEREST)” in the Prospectus.
14. RESEARCH INDEPENDENCE.
In addition, the Issuer acknowledges that the Underwriter’s research analysts and research department is required to be independent from its investment banking division and is subject to certain regulations and internal policies, and that the Underwriter’s research analysts may hold and make statements or investment recommendations and/or publish research reports with respect to the Issuer and/or the offering that differ from the views of its investment bankers. The Issuer hereby waives and releases, to the fullest extent permitted by law, any claims that the Issuer may have against the Underwriter with respect to any conflict of interest that may arise from the fact that the views expressed by its independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Issuer by the Underwriter’s investment banking division. The Issuer acknowledges that the Underwriter is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect
27
transactions for its own account or the account of its customers and hold long or short position in debt or equity securities of the companies which may be the subject to the transactions contemplated by this Agreement.
15. NO FIDUCIARY DUTY.
Notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Underwriter, the Issuer acknowledges and agrees that:
(a) nothing herein shall create a fiduciary or agency relationship between the Issuer and the Underwriter;
(b) the Underwriter is not acting as an advisor, expert or otherwise, to the Issuer in connection with this offering, sale of the Shares or any other services the Underwriter may be deemed to be providing hereunder, including, without limitation, with respect to the public offering price of the Shares;
(c) the relationship between the Issuer and the Underwriter is entirely and solely commercial, based on arms-length negotiations;
(d) any duties and obligations that the Underwriter may have to the Issuer shall be limited to those duties and obligations specifically stated herein; and
(e) notwithstanding anything in this Underwriting Agreement to the contrary, the Issuer acknowledges that the Underwriter may have financial interests in the success of the offering that are not limited to the difference between the price to the public and the purchase price paid to the Issuer by the Underwriter for the shares and the Underwriter has no obligation to disclose, or account to the Issuer for, any of such additional financial interests.
The Issuer hereby waives and releases, to the fullest extent permitted by law, any claims that the Issuer may have against the Underwriter with respect to any breach or alleged breach of fiduciary duty.
16. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of the Underwriter or controlling person thereof, or by or on behalf of the Issuer or its directors or officers and (c) delivery of and payment for the Shares under this Agreement.
For purposes of this Agreement, “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.
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In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107‑56 (signed into law October 26, 2001)), the Underwriter is required to obtain, verify and record information that identifies its clients, including the Issuer, which information may include the name and address of its clients, as well as other information that will allow the Underwriter to properly identify its clients.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
THE ISSUER AND THE UNDERWRITER EACH WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY WITH RESPECT TO ANY MATTER WHATSOEVER RELATING TO OR ARISING OUT OF THE TERMS OF THIS AGREEMENT AND THE OFFERING CONTEMPLATED HEREBY.
This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
This Agreement may only be amended or modified in writing, signed by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.
[remainder of page intentionally blank]
29
If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Issuer and the Underwriter in accordance with its terms.
Very truly yours,
MATADOR RESOURCES COMPANY
By: | /s/ David E. Lancaster David E. Lancaster Executive Vice President, Chief Operating Officer and Chief Financial Officer |
[Signature Page to Underwriting Agreement]
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
and accepted as of the date first above written.
RBC CAPITAL MARKETS, LLC
By: /s/ Peter Chapman
Name: Peter Chapman
Title: Managing Director
Name: Peter Chapman
Title: Managing Director
[Signature Page to Underwriting Agreement]
SCHEDULE I
LIST OF PERSONS SUBJECT TO LOCK-UP
Joseph Wm. Foran
Reynald A. Baribault
David M. Laney
Gregory E. Mitchell
Steven W. Ohnimus
Michael C. Ryan
Carlos M. Sepulveda, Jr.
Margaret B. Shannon
Matthew V. Hairford
David E. Lancaster
Bradley M. Robinson
Craig N. Adams
Ryan C. London
Sandra K. Fendley
Van H. Singleton, II
Reynald A. Baribault
David M. Laney
Gregory E. Mitchell
Steven W. Ohnimus
Michael C. Ryan
Carlos M. Sepulveda, Jr.
Margaret B. Shannon
Matthew V. Hairford
David E. Lancaster
Bradley M. Robinson
Craig N. Adams
Ryan C. London
Sandra K. Fendley
Van H. Singleton, II
S‑1
SCHEDULE II
Schedule of Issuer Free Writing Prospectuses included in the Disclosure Package:
None.
S‑2
SCHEDULE III
Information Included in the Disclosure Package
1. Public Offering Price: Variable price offering
2. Number of Shares offered: 7,000,000
S‑3
EXHIBIT A
LIST OF SUBSIDIARIES
• | Delaware Water Management Company, LLC |
• | DLK Black River Midstream, LLC |
• | DLK Wolf Midstream, LLC |
• | Longwood Gathering and Disposal Systems GP, Inc. |
• | Longwood Gathering and Disposal Systems, LP |
• | Longwood Midstream South Texas, LLC |
• | Longwood Midstream Southeast, LLC |
• | Longwood Midstream Delaware, LLC |
• | Matador Production Company |
• | MRC Delaware Resources, LLC |
• | MRC Energy Company |
• | MRC Energy Southeast Company, LLC |
• | MRC Energy South Texas Company, LLC |
• | MRC Permian Company |
• | MRC Rockies Company |
• | Southeast Water Management Company, LLC |
• | Fulcrum Delaware Water Resources, LLC |
A‑1
EXHIBIT B
FORM OF LEGAL OPINION OF BAKER BOTTS L.L.P.
Based upon the foregoing and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:
1. The Company is validly existing and in good standing under the laws of the State of Texas, and each of the Subsidiaries is validly existing and in good standing under the laws of the State of Texas.
2. The Company has the requisite corporate power and authority (i) to execute and deliver the Underwriting Agreement and to perform its obligations thereunder and (ii) to own, lease and operate its properties and to conduct its business as described in the Disclosure Package and the Prospectus, in each case in all material respects.
3. The Underwriting Agreement has been duly authorized, executed and delivered by the Company.
4. The Shares to be issued and sold by the Company pursuant to the Underwriting Agreement on the date hereof have been duly authorized, and when delivered to and paid for by the Underwriters in accordance with the terms of the Underwriting Agreement, will be validly issued, fully paid and non-assessable.
5. The Registration Statement became effective under the Securities Act and the Rules and Regulations automatically upon filing with the Commission on May 22, 2014. Any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b). To our knowledge, no stop order suspending the effectiveness of a Registration Statement or any part thereof has been issued or threatened under the Securities Act or the Rules and Regulations.
6. The issuance of the Shares is not subject to any preemptive rights under the Certificate of Formation or Bylaws of the Company.
7. The statements under the caption “Description of Capital Stock” in the Disclosure Package and Prospectus, insofar they purport to constitute a summary of the terms of the Common Stock, are accurate in all material respects.
8. The statements under the caption “Material United States Federal Income and Estate Tax Considerations for Non‑U.S. Holders” in the Disclosure Package and Prospectus, insofar as they purport to constitute a summary of matters of United States federal tax law and regulations, is accurate in all material respects, subject to the limitations, qualifications and assumptions set forth therein.
9. None of the offering, issuance and sale by the Company of the Shares, the execution, delivery and performance of the Underwriting Agreement by the Company, or the consummation of the transactions contemplated by the Underwriting Agreement (i) constitutes or
B‑1
will constitute a violation of the provisions of the Certificate of Formation or Bylaws of the Company, (ii) constitutes or will constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default) under any agreement filed or incorporated by reference as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10-K”) or any of the Company’s Current Reports on Form 8-K filed with the Commission after December 31, 2014 (collectively, the “Material Agreements”), or (iii) results in a violation by the Company of any law, statute, rule or regulation of the United States of America or the State of Texas applicable to the Company (other than securities laws or anti-fraud laws), which breaches, violations or defaults, in the case of clauses (ii) or (iii), would, individually or in the aggregate, have a Material Adverse Effect.
10. No filing, consent, approval, authorization, order, registration or qualification under the federal laws of the United States of America or the laws of the State of Texas is required for the execution, delivery and performance by the Company of the Underwriting Agreement or for the offering, issuance, sale or delivery of the Shares by the Company pursuant to the Underwriting Agreement, except for (i) such consents, approvals, authorizations, orders and registrations or qualifications as may be required by FINRA or under applicable state securities laws or blue sky laws in connection with the purchase and distribution of the Shares by the Underwriters and (ii) any consent, approval, authorization, order, registration or qualification or other action that is or has been obtained or made prior to the Closing Date.
11. The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Registration Statement, the Disclosure Package, and the Prospectus, will not be, or be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
B‑2
FORM OF NEGATIVE ASSURANCE OF BAKER BOTTS L.L.P.
We have reviewed the Registration Statement, the Disclosure Package and the Prospectus and have participated in conferences with officers and other representatives of the Company, with representatives of the Company’s independent registered public accounting firm and independent petroleum engineer, and with your representatives and your counsel, at which the contents of the Registration Statement, the Disclosure Package, the Prospectus and related matters were discussed. The purpose of our professional engagement was not to establish or confirm factual matters set forth in the Registration Statement, the Disclosure Package or the Prospectus, and we have not undertaken to verify independently any of the factual matters in such documents. Moreover, many of the determinations required to be made in the preparation of the Registration Statement, the Disclosure Package and the Prospectus involve matters of a non-legal nature. Accordingly, we are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained or included in the Registration Statement, the Disclosure Package and the Prospectus (except to the extent stated in paragraphs 7 and 8 above). Subject to the foregoing and on the basis of the information we gained in the course of performing the services referred to above, we advise you that:
(a) the Registration Statement, as of the latest Effective Time, the Preliminary Prospectus, as of the Applicable Time, the Prospectus, as of its date and the date hereof, appear on their face to be appropriately responsive in all material respects to the requirements of the Securities Act and the Rules and Regulations;
(b) the documents incorporated by reference in the Disclosure Package and the Prospectus, when they were filed with the Commission, appear on their face to be appropriately responsive in all material respects to the requirements of the Exchange Act and the Rules and Regulations; and
(c) nothing came to our attention that caused us to believe that:
(1) the Registration Statement, as of the latest Effective Time, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading,
(2) the Disclosure Package, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or
(3) the Prospectus, as of its date or as of the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
it being understood that in each case we have not been asked to, and do not, express any belief with respect to (i) the financial statements and schedules or other financial or accounting information contained or included or incorporated by reference therein or omitted therefrom, (ii) the summary reserve report of the independent petroleum engineer and reserve information
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contained or included or incorporated by reference therein or omitted therefrom, or (iii) representations and warranties and other statements of fact contained in the exhibits to the Registration Statement or to documents incorporated by reference therein.
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EXHIBIT C
FORM OF LOCK-UP AGREEMENT
April 16, 2015
RBC Capital Markets, LLC
Three World Financial Center, 8th Floor
200 Vesey Street
New York, New York 10281-8098
Three World Financial Center, 8th Floor
200 Vesey Street
New York, New York 10281-8098
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed Underwriting Agreement (the “Underwriting Agreement”), among Matador Resources Company (the “Issuer”) and you (the “Underwriter”), relating to an underwritten public offering of the Issuer’s common stock, $0.01 par value (the “Common Stock”).
In order to induce you to enter into the Underwriting Agreement, the undersigned will not, without the prior written consent of the Underwriter, offer, sell, contract to sell or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any affiliate of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned), directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Securities and Exchange Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any Common Stock of the Issuer or any securities convertible into, or exercisable or exchangeable for such Common Stock (collectively, “Securities”), or publicly announce an intention to effect any such transaction, for a period of 60 days after the date of the Underwriting Agreement.
Notwithstanding the foregoing, the undersigned shall be permitted to (i) transfer Securities as a bona fide gift, (ii) transfer Securities to family members or a trust established for the benefit of family members, (iii) transfer Securities to entities where the undersigned is the sole beneficial owner of all Securities held by such entities, (iv) receive Securities upon the exercise of an option or warrant or in connection with the vesting of restricted stock or restricted stock units, and any Securities issued upon any such exercise or vesting shall be subject to the restrictions contained in this agreement, (v) transfer Securities to the Company in a transaction exempt from Section 16(b) of the Exchange Act solely in connection with the payment of taxes due in connection with any exercise or vesting of Securities; provided, however, that in any such case described in clauses (i) through (v) it shall be a pre-condition to such transfer that the transferee or donee executes and delivers to the Underwriter a lock-up agreement in form and substance satisfactory to the
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Underwriter and (vi) transfer Securities pursuant to the terms of any pledge or collateral agreement existing on the date hereof.
If for any reason the Underwriting Agreement shall be terminated prior to the Closing Date (as defined in the Underwriting Agreement), the agreement set forth above shall likewise be terminated.
Yours very truly,
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Exhibit 5.1
[BAKER BOTTS L.L.P. LETTERHEAD]
April 20, 2015
Matador Resources Company
5400 LBJ Freeway, Suite 1500
Dallas, Texas 75240
Ladies and Gentlemen:
We have acted as counsel to Matador Resources Company, a Texas corporation (the “Company”), in connection with the proposed issuance and sale in an underwritten public offering (the “Offering”) of an aggregate of 7,000,000 shares (the “Shares”) of its common stock, par value $.01 per share, pursuant to that certain Equity Underwriting Agreement dated April 16, 2015 (the “Underwriting Agreement”) by and between the Company and RBC Capital Markets, LLC.
We refer to the registration statement on Form S-3 (Registration Statement No. 333-196178) with respect to the Shares being sold by the Company in the Offering (the “Registration Statement”), which Registration Statement became effective upon filing by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) on May 22, 2014. The final prospectus supplement dated April 16, 2015 (the “Prospectus Supplement”), which together with the accompanying prospectus dated May 22, 2014 filed with the Registration Statement, has been filed pursuant to Rule 424(b) promulgated under the Securities Act.
As the basis for the opinion hereinafter expressed, we examined the Amended and Restated Certificate of Formation of the Company, dated as of February 3, 2012, as amended to date, the Amended and Restated Bylaws of the Company, effective as of February 7, 2012, as amended to date, the Underwriting Agreement, the Texas Business Organizations Code, corporate records and documents related to the Company, certificates of the Company and public officials, and other instruments and documents as we deemed necessary or advisable for the purposes of this opinion. In making our examination, we have assumed that all signatures on documents examined by us are genuine, that all documents submitted to us as originals are authentic and that all documents submitted to us as certified or photostatic copies conform with the original copies of such documents.
Based on the foregoing and on such legal considerations as we deem relevant, we are of the opinion that the Shares, when issued and delivered in the Offering on behalf of the Company against payment therefor as described in the Underwriting Agreement, will be duly authorized, validly issued, fully paid and non-assessable.
This opinion is limited in all respects to the federal laws of the United States of America and the laws of the state of Texas, each as in effect on the date hereof.
At your request, this opinion is being furnished to you for filing as an exhibit to the Company’s Current Report on Form 8-K filed on the date hereof. We hereby consent to the statements with respect to us under the heading “Legal Matters” in the Prospectus Supplement
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and to the filing of this opinion as an exhibit to the Company’s Current Report on Form 8-K filed on the date hereof. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission issued thereunder.
Very truly yours,
/s/ Baker Botts L.L.P.
DMR/MPB/JBP/CHJ
April 2015 Investor Presentation NYSE: MTDR Exhibit 99.1
2 Disclosure Statements Safe Harbor Statement – 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, 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, the following risks related to Matador’s financial and operational performance: general economic conditions; Matador’s ability to execute its business plan, including whether Matador’s 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; Matador’s ability to replace reserves and efficiently develop its current reserves; Matador’s costs of operations, delays and other difficulties related to producing oil, natural gas and natural gas liquids; Matador’s ability to integrate the assets, employees and operations of Harvey E. Yates Company following its merger with one of Matador’s wholly-owned subsidiaries on February 27, 2015; Matador’s ability to make other acquisitions on economically acceptable terms; availability of sufficient capital to execute Matador’s business plan, including from its future cash flows, increases in Matador’s borrowing base 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 most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. 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, 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 presentation. All forward-looking statements are qualified in their entirety by this cautionary statement. Cautionary Note – The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. Potential resources are not proved, probable or possible reserves. The SEC’s guidelines prohibit Matador from including such information in filings with the SEC. Definitions – Proved oil and natural gas reserves are the estimated quantities of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Matador’s production and proved reserves are reported in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Where Matador produces liquids-rich natural gas, the economic value of the natural gas liquids associated with the natural gas is included in the estimated wellhead natural gas price on those properties where the natural gas liquids are extracted and sold. Estimated ultimate recovery (EUR) is a measure that by its nature is more speculative than estimates of proved reserves prepared in accordance with SEC definitions and guidelines and is accordingly less certain.
Company Summary
2012, 2013 and 2014 capital spending focused primarily on developing Eagle Ford and transitioning to oil February 2012 IPO at $12.00; net cash proceeds of ~$136 million May 2014 Follow-on Offering at $25.00; net cash proceeds of ~$181 million September 2013 Follow-on Offering at $15.25; net cash proceeds of ~$142 million 2012 2014 Matador has grown almost entirely through the drill bit, with a focus on unconventional reservoir plays Assembling Permian acreage position; begin delineation drilling program Founded by Joe Foran in 1983 – most participants are still shareholders today Foran Oil funded with $270,000 in contributed capital from 17 friends and family members; evolved into Matador Petroleum Corporation Sold Matador Petroleum Corporation 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 Timeline Predecessor Entities (1) Tom Brown acquired by Encana in 2004. Matador Today 2003 2008 2003 Founded by Joe Foran with $6 million, a proven management and technical team and board of directors 2008 Sold Haynesville rights in ~9,000 net acres to CHK for ~$180 million; retained 25% participation interest, carried working interest and overriding royalty interest 2010-2011 Redeployed capital into the Eagle Ford early in the play, acquiring over 30,000 net acres for ~$100 million 2012, 2013 and 2014 capital spending focused primarily on developing Eagle Ford and transitioning to oil February 2012 IPO at $12.00; net cash proceeds of ~$136 million May 2014 Follow-on Offering at $25.00; net cash proceeds of ~$181 million September 2013 Follow-on Offering at $15.25; net cash proceeds of ~$142 million 2010 2012 2014 Matador has grown almost entirely through the drill bit, with focus on unconventional reservoir plays, initially in Cotton Valley and Haynesville Assembling Permian acreage position; begin delineation drilling program 2015 February 2015 HEYCO Combination 2015 February 2015 HEYCO Combination 2013 April 2015 Inaugural High-Yield Offering of $400 million; Follow-on Offering at $26.96; net cash proceeds of ~$188 million 2003 2008 2009 2010 2011 2012 2003 Founded by Joe Foran with $6 million, a proven management and technical team and board of directors 2008 Sold Haynesville rights in ~9,000 net acres to CHK for ~$180 million; retained 25% participation interest, carried working interest and overriding royalty interest 2010-2011 Redeployed capital into the Eagle Ford early in the play, acquiring over 30,000 net acres for ~$100 million Pre – IPO Post – IPO
5 Company Overview 2014 Actual 2015 Guidance(3) % Change Capital Spending $610 million $350 million - 43% Total Oil Production 3.3 million Bbl 4.0 to 4.2 million Bbl + 23% Total Natural Gas Production 15.3 Bcf 24.0 to 26.0 Bcf + 63% Oil and Natural Gas Revenues $367.7 million $270 to $290 million(4) - 24% Adjusted EBITDA(5) $262.9 million $200 to $220 million(4) - 20% Exchange: Ticker NYSE: MTDR Shares Outstanding(1) 85.2 million common shares Share Price(2) $27.24/share Market Capitalization(1)(2) $2.3 billion (1) Shares outstanding as reported in the Form 10-K for the year ended December 31, 2014 filed on March 2, 2015 plus 1.5 million common shares converted from 150,000 shares of Series A Preferred Stock in April 2015 and 7.0 million common shares issued in April 2015 equity offering. (2) As of April 16, 2015. (3) As reaffirmed on April 6, 2015; does not include capital expenditures associated with the HEYCO transaction. (4) Estimated 2015 oil and natural gas revenues and Adjusted EBITDA based on production guidance range as reaffirmed on April 6, 2015. Estimated average realized prices for oil and natural gas used in these estimates were $50.00/Bbl (WTI oil price of $55.00/Bbl less $5.00/Bbl differentials and transportation costs) and $3.00/Mcf (NYMEX Henry Hub natural gas price assuming regional differentials and uplifts from natural gas processing roughly offset), respectively, for the period January through December 2015. (5) 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 Appendix.
Matador Resources Company – Operations Overview Market Capitalization(1) $2.3 billion Avg. Daily Production – Q4 2014(2) 20,807 BOE/d Oil (% total) 11,062 Bbl/d (53%) Natural Gas (% total) 58.5 MMcf/d (47%) Proved Reserves @ 12/31/2014 68.7 million BOE % Proved Developed 45% % Oil 35% 2015E CapEx(3) $350 million % Permian ~70% % Oil and Liquids ~96% Gross Acreage(4) 219,492 acres Net Acreage(4) 139,502 acres Engineered Drilling Locations(5) 2,265 gross / 1,362 net Eagle Ford 278 gross / 240 net Permian 1,445 gross / 960 net Haynesville/Cotton Valley 542 gross / 162 net *Note: Represents increase as compared to each respective figure at or for the three months ended December 31, 2013. (1) Market capitalization based on closing share price as of April 16, 2015 and shares outstanding as reported in the Form 10-K for the year ended December 31, 2014 filed on March 2, 2015 plus 1.5 million common shares converted from 150,000 shares of Series A Preferred Stock in April 2015 and 7.0 million common shares issued in April 2015 equity offering. (2) Average daily production for the three months ended December 31, 2014. (3) 2015 estimated capital expenditures for operations only; does not include capital expenditures associated with the HEYCO transaction. (4) Presented as of February 27, 2015. Excludes 75,674 gross (35,732 net) acres still under lease in Wyoming, Utah and Idaho. (5) Identified and engineered locations for potential future drilling, including specified production units and estimated lateral lengths, costs and well spacing using objective criteria for designation. Locations identified as of December 31, 2014, but including no locations at Twin Lakes and no locations associated with the HEYCO transaction. 6 +440%* +139%* +43%* +33%* +74%* 30% of total production Almost no oil 65% of total natural gas 57% of total production 83% of total oil 28% of total natural gas 13% of total production 17% of total oil 7% of total natural gas
Matador’s Execution History – “Doing What We Say” Oil Production 414 Bbl/d of oil 6% oil 4,916 Bbl/d of oil 46% oil 11,062 Bbl/d of oil 53% oil Proved Reserves 27 MMBOE 1.1 MMBbl of oil 4% oil 39 MMBOE 12.1 MMBbl of oil 31% oil 69 MMBOE 24.2 MMBbl of oil 35% oil PV-10(2) and Asset Coverage $155.2 million 24% of PV-10 in Eagle Ford PV-10 / debt of 2.0x $522.3 million 90% of PV-10 in Eagle Ford PV-10 / debt of 2.1x $1.04 billion 58% of PV-10 in Eagle Ford PV-10 / debt of 3.1x LTM Adjusted EBITDA(3) $50 million(4) $148 million $263 million Leverage(5) 1.7x 1.7x 1.3x Acreage ~7,500 net Permian acres ~32,900 net Permian acres ~85,400 net Permian acres(11) Enterprise Value (“EV”)(6) $0.65 billion(7) $1.2 billion(9) $2.7 billion(12) 12x growth in oil production 11x growth in oil reserves ~200% growth Doubled EV Over 4x growth in Permian acres At IPO(1) September 2013 Follow-On(8) Over 3x growth in PV-10 (1) Unless otherwise noted, at or for the nine months ended September 30, 2011. (2) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), see Appendix. (3) 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 Appendix. (4) For the twelve months ended December 31, 2011. (5) Calculated as debt divided by LTM Adjusted EBITDA. (6) Enterprise value equals market capitalization plus borrowings under our revolving credit agreement. (7) As of February 7, 2012 at time of IPO. (8) Unless otherwise noted, at or for the three months ended June 30, 2013. (9) As of September 1, 2013. (10) Unless otherwise noted, at or for the year ended December 31, 2014. (11) As of February 27, 2015. (12) As of April 16, 2015. Pro forma for April 2015 equity offering. Market capitalization based on closing share price as of April 16, 2015 and shares outstanding as reported in the Form 10-K for the year ended December 31, 2014 filed on March 2, 2015 plus 1.5 million common shares converted from 150,000 shares of Series A Preferred Stock in April 2015 and 7.0 million common shares issued in April 2015 equity offering. 125% growth in oil production Doubled oil reserves 78% growth 125% EV growth 2.6x growth in Permian acres Doubled PV-10 December 31, 2014(10) Matador continues to execute on its core strategy of acquiring great assets, developing a highly professional, committed workforce, maintaining a strong balance sheet and generating significant shareholder returns 7 Remained conservative Improved
8 Oil and Natural Gas Proved Reserves and PV-10(1) Growth By Area YE 2013 Total proved reserves = 68.7 million BOE PV-10(1): $1,043.4 million $91.48 oil / $4.35 natural gas (1) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), see Appendix. YE 2012 Total proved reserves = 23.8 million BOE PV-10(1): $423.2 million $91.21 oil / $2.76 natural gas Total proved reserves = 51.7 million BOE PV-10(1): $655.2 million $93.42 oil / $3.67 natural gas YE 2014 Eagle Ford $393.6 million, 93% Permian $2.0 million, 1% Haynesville/CV $27.6 million, 6% Eagle Ford $540.4 million, 82% Haynesville/CV $82.9 million, 13% Permian $31.9 million, 5% Eagle Ford $603.8 million, 58% Haynesville/CV $193.4 million, 18% Permian $246.2 million, 24%
Be prudent with our investors’ capital Reduced drilling program from 5 rigs at YE2014 to 2 rigs currently due to lower commodity prices, with primary focus on Permian (Delaware) Basin 2015E CapEx highest in Q1 2015 but falls quickly thereafter – second half of 2015 close to cash flow at $55 per Bbl oil price Proven and experienced management team and Board of Directors have demonstrated ability to manage through industry cycles Committed to maintaining strong, conservative balance sheet Strong, conservative financial position with Net Debt/LTM Adjusted EBITDA(1)(2) of 1.1x Preserve and enhance liquidity through April 2015 equity and Senior Notes offerings – substantial liquidity to execute planned drilling program Target leverage at less than 2.0x Adjusted EBITDA(1), though profile typically more conservative Hedging program designed to protect cash flows and provide stability to drilling program Flexibility to manage liquidity and maintain conservative balance sheet Most drilling is operated; low level of non-operated drilling obligations; few long-term drilling rig or service contract commitments Expectations of increased cash flow and borrowing base increases as proved reserves are added Financial Strategy 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 Appendix. (2) LTM Adjusted EBITDA at December 31, 2014 and Net Debt pro forma at April 16, 2015 after giving effect to April 2015 equity of fering. 0.0x 0.0x 0.1x 1.5x 0.2x 0.7x 1.1x 1.3x 1.5x 1.6x 0.8x 1.0x 1.2x 0.6x 1.0x 1.3x 1.1x 2008 2009 2010 2011 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 PF Net Debt / LTM EBITDA(1) (2) In it ia l P u b lic O ff e ri n g E q u it y Ra is e E q u it y Ra is e B o n d O ff e ri n g + E q u it y Ra is e
23.0 39.8 34.1 35.4 41.9 80.0 2010 2011 2012 2013 2014 Current 91 422 3,317 5,843 9,095 14,000 2010 2011 2012 2013 2014 Current 2% 6% 37% 50% 57% 51% 2010 2011 2012 2013 2014 Current 3.9 7.0 9.0 11.7 16.1 27.0 2010 2011 2012 2013 2014 Current Matador’s Continued Production Growth Average Daily Oil Production (Bbl/d) Average Daily Natural Gas Production (MMcf/d) Average Daily Total Production (MBOE/d) Oil Production Mix (% of Average Daily Production) 10 Growth since IPO Growth since IPO Growth since IPO Growth since IPO (1) Average daily production for the last two weeks of March 2015. (1) (1) (1) (1)
1.1x 1.2x 1.3x 1.5x 1.8x 1.9x 2.0x 2.0x 2.0x 2.7x 3.3x 3.5x 3.9x 4.3x 4.3x Peer B Peer A Peer C Peer D Peer J Peer I Peer G Peer H Peer E Peer F Peer L Peer N 0 Peer M Peer K $0.38 $0.58 $1.17 $2.15 $3.26 $3.74 2009 2010 2011 2012 2013 2014 $1.75 $2.92 $5.82 $7.84 $11.15 $14.86 2009 2010 2011 2012 2013 2014 (in thousands) Shares(3) PV-10(2) Adj. EBITDA(1) 2009 40,123 $70,359 $15,184 2010 41,037 $119,869 $23,635 2011 42,718 $248,700 $49,911 2012 53,957 $423,200 $115,923 2013 58,777 $655,200 $191,771 2014 70,229 $1,043,400 $262,943 Note: “Proved PV-10/YE 2014 Net Debt” analysis prepared by RBC Capital Markets. Average does not include Matador. Matador figures are pro forma at December 31, 2014 after giving effect to the recent HEYCO Merger, the April 2015 offering of $400 million of Senior Notes and the April 2015 equity offering. Peer group chosen by RBC includes SFY, CRK, ROSE, SN, PVA, AREX, GDP, CWEI, JONE, BCEI, CRZO, PE, RSPP, FANG. Average does not include Matador. Source: Company filings, metrics pro forma for announced acquisitions. Market data as of April 2, 2015. (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 Appendix. (2) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), see Appendix. (3) Weighted Average Basic Shares Outstanding. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 2010 2011 2012 2013 20142014 (1)2010 (1) 201 (1) 2012 (1) PV -1 0, mil lio ns $75.96 oil $4.38 gas $92.71 oil $4.12 gas $91.21 oil $2.76 gas SEC Pricing Oil, $/Bbl Gas, $/MMBtu 2013 (1) $93.42 oil $3.67 gas $91.48 oil $4.35 gas Matador Has Experienced Strong Reserves and Adjusted EBITDA(1) Growth in Recent Years 11 Growth in PV-10(2) Over Last 5 Years Proved PV-10(2) / YE 2014 Net Debt PV-10(2) per Share ($ per share) Adjusted EBITDA(1) per Share ($ per share) Average: 2.4x Four times coverage
12 Previous Oil Price Declines Have Created Opportunities for Matador(1) Comparison of Major Oil Corrections and Major Matador Turning Points Since 1980 Date Event % Change in Oil Price Length of Oil Price Decline (in trading days) % Increase in Oil Price – 1-Year Post-Low 1986 Saudi Market Share War -67.2% 82 79.0% A number of Mesa’s top technical staff join Matador I 1988 Oil Glut -43.7% 295 58.4% Matador I buys key waterflood properties and New Mexico natural gas acreage 1991 Global Recession / End of Gulf War -57.2% 90 5.4% First interests in Amaker-Tippett acquired; becomes Matador I’s largest field 1998 Asian Crisis -59.6% 484 134.5% Unocal exchanges NM properties for Matador I’s stock 2001 Global Recession -53.1% 290 46.2% Matador I shifts to unconventionals (Marlan Downey joins Board) 2008 Great Recession -78.4% 119 134.8% Matador II builds Eagle Ford position and drills first Haynesville wells Average -59.9% 227 76.4% 2014-2015 Current Dip -57.2% ~230(2) ? MTDR and HEYCO join forces (1) Includes Matador Resources Company, Foran Oil and Matador Petroleum Corporation and other predecessor entities. (2) As of April 6, 2015.
Keys to Matador’s Success Over Last 35 Years(1) 13 People We have a strong, committed technical and financial team in place, and we continue to make additions and improvements to our staff, our capabilities and our processes Board and Special Advisor additions have strengthened Board skills and stewardship Properties Matador’s acreage positions and multi-year drilling inventory are significant and located in three of the industry’s best plays – Permian, Eagle Ford and Haynesville Our property mix provides us with a balanced opportunity set for both oil and natural gas Process Continuous improvement in all aspects of our business leading to more efficient operations, improved financial results and increased shareholder value Gaining momentum as a successful publicly-held company Execution Increase total production by ~40%, with oil production expected to increase to ~4.1 million barrels and natural gas production expected to increase to ~25 Bcf in 2015 Maintain quality acreage positions in the Permian, Eagle Ford and Haynesville – successfully integrate HEYCO acreage in Permian Reduce drilling and completion times and costs – improve operational efficiencies Maintain strong financial position and technical and administrative teams (1) Includes Matador Resources Company and its predecessor entities.
Productive Use of Technology Drives Operational Efficiencies 14 Matador Resources Investment Highlights Attractive Growth Company with Oil / Liquids Focus Strong Financial Position with Low Debt and Substantial Liquidity Proven Management and Technical Team and Active Board of Directors High Quality Asset Base in Attractive Areas with Multi-year Drilling Inventory
Permian Basin Southeast New Mexico and West Texas
16 Delaware Basin – A “World Class” Hydrocarbon System DELAWARE BASIN CENTRAL BASIN PLATFORM MIDLAND BASIN Wolfcamp Simpson ~23,000’ Sediment Fill East West Source “Kitchens” Now Unconventional Resource Plays 70,000 square mile area Up to 25,000 feet of multiple, stacked, petroleum systems Extensive drilling, coring and geological studies since 1920s >1,500 conventional reservoirs with cumulative production >1.0 million Bbl each Cumulative production from 1,500 conventional reservoirs, as of year 2000 (pre- horizontal drilling) >30.0 billion Bbl(1) (1) Dutton et al, AAPG 2005
Oil Eq. Oil Natural Gas % Pf (3) Choke Well Date (BOE/d) (Bbl/d) (Mcf/d) Oil (psi) (inches) Arno #1H (Wolfcamp "X") Mid-Sept 2014 1,110 300 4,900 27% 4,100 26/64th Norton Schaub 84-TTT-B33 WF #2010H (Wolfcamp "A") Late Dec 2014 875 608 1,600 69% 2,600 28/64th Barnett 90-TTT-B01-WF #201H (Wolfcamp "X") Early Mar 2015 1,268 720 3,300 57% 3,225 26/64th Barnett 90-TTT-B01-WF #205H (Wolfcamp "Y") Mid-Feb 2015 1,377 738 3,800 54% 3,475 26/64th Guitar 10-24S-28E RB #202H (Wolfcamp "X") Early Apr 2015 1,273 1,008 1,600 79% 2,190 26/64th Tiger 14-24S-28E RB #224H (Wolfcamp "B") Early Apr 2015 1,525 650 5,300 43% 3,900 26/64th Cumulative Production Current Production Oil Eq. % Oil Natural Gas EUR(2) Well Months (BOE) Oil (Bbl/d) (Mcf/d) (MBOE) Ranger 33 State Com #1H (2nd Bone Spring) 15 184,000 91% 190 130 600 Dorothy White #1H (Wolfcamp "X") 12.5 310,000 66% 450 1,700 1,000 Rustler Breaks 12-24-27 #1H (Wolfcamp "B") 9 134,000 43% 140 1,250 600 Norton Schaub #1H (Wolfcamp "X") 6 122,000 69% 500 1,600 700 Pickard State 20-18-34 #1H (2nd Bone Spring) 6 71,000 92% 330 180 400 Johnson 44-02S-B53 #204H (Wolfcamp "X") 4 117,000 65% 530 1,800 800 Pickard State 20-18-34 #2H (Wolfcamp "D") 7 35,000 86% 125 200 200 Jim Rolfe 22-18-34 RN State #131Y 3rd Bone Spring) 3 8,000 95% 44 10 70 Successful performance of initial horizontal wells(1) Recent activity and 24-hour initial potential tests E D D Y L E A LOVING WARD TWIN LAKES 42,538 gross / 29,073 net acres RUSTLER BREAKS 64,513 gross / 27,775 net acres RANGER 28,994 gross / 16,307 net acres WOLF / LOVING AREA 11,274 gross / 7,877 net acres 2 4 1 3 9 6 5 10 8 Permian Basin Total Gross Acres 152,370 acres Net Acres 85,375 acres Permian Basin Acreage Position and Recent Test Results Note: All acreage at February 27, 2015. Some tracts not shown on map. (1) As of January 31, 2015. (2) Estimated ultimate recovery, thousands of barrels of oil equivalent. (3) Flowing surface pressure. 17 7 1 2 3 4 5 6 7 8 9 10 # Matador Resources Acreage HEYCO Acreage Location of Matador Well 11 11 12 13 14 13 14 IP = 1,273 BOE/d Wolfcamp “X” (“A”) IP = 1,525 BOE/d Wolfcamp “B” IP = 1,268 BOE/d Wolfcamp “X” (“A”) IP = 1,377 BOE/d Wolfcamp “Y” (“A”) 12
18 Delaware Basin Combination Attributes Matador added approximately 58,600 gross (18,200 net) acres located in the northern Delaware Basin in Lea and Eddy Counties, New Mexico from privately-held Harvey E. Yates Company (“HEYCO”) Strategically links Matador’s existing Ranger and Rustler Breaks prospect areas Over 95% of added acreage consists of state and federal leases and essentially all acreage is held by production from existing wells and production units − Favorable net revenue interests, most above 80% to as high as 87.5%, enhance returns − Held-by-production status allows for flexible development Matador holds largest Delaware Basin acreage position among small and mid-cap publicly traded energy companies(1) Matador became the second largest operator in terms of the ratio of Delaware Basin acreage to enterprise value or market capitalization among all publicly traded energy companies(1) Average net daily production of approximately 530 BOE per day (approximately 70% oil) in Q4 2014 Average net daily production includes contributions from the CTA State Com #3H and #4H Net PDP reserves of 1.3 million BOE at September 1, 2014 (approximately 60% oil)(2) Excludes reserves contributions from the CTA State Com #3H and #4H No proved developed non-producing (“PDNP”) or proved undeveloped (“PUD”) reserves have been assigned to these properties (1) Based on an independent market analysis prepared by BMO Capital Markets in January 2015. Small and mid-cap publicly traded energy companies defined as those companies with an enterprise value between $500 million and $3.5 billion. Companies below $100 million in market capitalization were excluded in determining the ratio of Delaware Basin acreage to market capitalization. (2) PDP reserves at September 1, 2014 based on an independent reserves analysis prepared by Netherland, Sewell & Associates, Inc. Note: All acreage at February 27, 2015. Some tracts not shown on map. E d d y L e a L o v in g W ink le r Ward Texas New Mexico Chaves Delaware Basin Non-op wells in progress or pending Matador Acreage HEYCO Acreage Potash Mine WOLF / LOVING AREA RANGER RUSTLER BREAKS TWIN LAKES Concho CTA State Com #4H: 1,063 BOE per day – 830 Bbl oil + 1.4 MMcf natural gas per day (first 30 days) Concho CTA State Com #3H: 992 BOE per day – 830 Bbl oil + 1.0 MMcf natural gas per day (first 30 days)
Combination Acreage a Strategic Fit 19 HEYCO combination facilitates horizontal development and upsized fracture treatments in a proven area Contiguous acreage provides opportunity for long laterals Many acreage blocks compete favorably with Matador inventory Matador will pursue operations wherever possible Extensive workover program has commenced 2nd Bone Spring Landing Zone CTA State Com 3H - IP(30): 992 BOE/d (84% Oil) - 37.6 MBO Cum to date (46 days) CTA State Com 1 Type Log 40 api 10 ohm 8% CTA State Com 4H - IP(30): 1,063 BOE/d (78% Oil) - 26.3 MBO Cum to date (33 days) Key Horizontal Wells Cum Oil > 150 MBO or EUR > 250 MBO Potash Mine HEYCO Acreage Matador Acreage Coupled Reservoir
20 Matador is a Significant Delaware Basin Player MTDR MTDR MTDR MTDR Matador’s 85,400 net acres place it among the largest operators in the Delaware Basin − Matador holds largest Delaware Basin acreage position among small and mid-cap publicly traded energy companies(1) − Matador is the second largest operator in terms of the ratio of Delaware Basin acreage to enterprise value or market capitalization among all public traded energy companies Key Operators in the Delaware Basin(2): − Oxy 1,500,000 net acres − Chevron 1,000,000 net acres − Shell 618,000 net acres − Cimarex 400,000 net acres − EOG 307,000 net acres − Anadarko 255,000 net acres − Apache 230,000 net acres − Conoco 150,000 net acres − Energen 113,000 net acres − Matador 152,000 gross / 85,400 net acres (1) Based on an independent market analysis prepared by BMO Capital Markets in January 2015. Small and mid-cap publicly traded energy companies defined as those companies with an enterprise value between $500 million and $3.5 billion. Companies below $100 million in market capitalization were excluded in determining the ratio of Delaware Basin acreage to market capitalization. (2) Goldman Sachs Equity Research report dated April 1, 2015 (Singer)
21 Matador’s Acreage Among Other Significant Delaware Basin Activity Matador Acreage Note: Horizontal wells shown based upon publicly available data as of March 31, 2015. Other Operators Wolf Prospect Area – Loving County, TX L o v in g W in k le r Ward Cimarex Energen Rustler Breaks Prospect Area – Eddy County, NM Eddy Potash Area Cimarex Concho & Mewbourne Oxy BOPCO Chevron EOG Devon Northern Delaware (HEYCO and Ranger Prospect Areas) – Lea/Eddy Counties, NM Potash Area E d d y L e a Central Basin Platform NW Shelf Cimarex Concho Mewbourne EOG Chevron Devon Devon Concho
Determining “Good, Better, Best” important as potential exceeds inter-formational stacked pay 2015 program will expand on intra-formational stacked pay tests performed in each asset area 4,000 feet of Hydrocarbon Column Creates Opportunity Wolf Area Type Log – Wolfcamp X/Y X Test Y Test 80 acre 100’ Rustler Breaks Type Log Wolfcamp B 350’ X Test Y Test 160 acre Ranger Type Log 2nd Bone Spring DPHI > 8% LLD > 10 ohm INTRA-Formational Stacked Pays Decoupled – Coupled – Micro-coupled Bone Spring Lime Upper Avalon Shale Lower Avalon Shale First Bone Spring Sand Second Bone Spring Carbonate Third Bone Spring Carbonate Wolfcamp / Pennsylvanian Strawn Wolfcamp “C” Third Bone Spring Sand GR RES INTER-Formational Stacked Pay Second Bone Spring Sand Wolfcamp “A” Wolfcamp “B” 100’ Wolfcamp “X/Y” 22
E D D Y L E A LOVING WARD TWIN LAKES 42,538 gross / 29,073 net acres RUSTLER BREAKS 64,513 gross / 27,775 net acres RANGER 28,994 gross / 16,307 net acres WOLF / LOVING AREA 11,274 gross / 7,877 net acres 23 Estimated capital expenditures of ~$245 million, including ~$32 million for land/seismic and facilities and ~$38 million for midstream initiatives at Wolf 36 gross (23.7 net) wells planned for 2015, with 33 gross (21.0 net) wells turned to sales Wolf/NE Loving Area − 11 gross (9.4 net) wells testing primarily Wolfcamp “X/Y”, including initial test of NE Loving acreage in Wolfcamp “A” Rustler Breaks Area − 13 gross (8.9 net) wells testing 2nd Bone Spring, Wolfcamp “X/Y” and Wolfcamp “B” targets Ranger Area − 2 gross (2.0 net) wells testing 2nd and 3rd Bone Spring HEYCO Acreage − 7 gross (0.7 net) non-operated wells testing 2nd and 3rd Bone Spring; also includes ~$5 million for workovers − Will likely drill wells on HEYCO acreage in lieu of certain wells planned in Rustler Breaks area in latter half of 2015 Twin Lakes Area − No tests at Twin Lakes area planned for 2015 − Longer-term acreage; seeking JV partner 2015 Permian Basin Program 2015 Permian Basin Drilling Plan 36 gross (23.7 net) wells planned in 2015 - 33 gross (21.0 net) wells turned to sales # Matador Resources Acreage HEYCO Acreage Gross wells turned to sales in 2015 1 2 10 7 13 Note: All acreage at February 27, 2015. Some tracts not shown on map.
Wolf Inventory – Multi-Pay Development Potential ~660’ Brushy Canyon Avalon 1st Bone Spring 2nd Bone Spring 3rd Bone Spring Wolfcamp X/Y Wolfcamp A 4 66 Eval. Ongoing 34 66 66 66 302 Full Development Location Gross Wells Development Well D&C(1) CapEx EUR(2) (MBOE) Bone Spring $7 – $8 million 450 – 600 Wolfcamp $9 – $10 million 650 – 1,100 Matador Acreage 1 mile MRC Spacing Test Completed Full Development Spacing Pattern (Cross-Section View) 24 Matador Well Location (1) Drilling and completion. (2) Estimated ultimate recovery, thousands of barrels of oil equivalent. Wolfcamp X/Y Wolfcamp A
10 100 1000 10000 0 50 100 150 200 250 300 350 400 Da ily P roduction Rat e, BO E/d ay Time, Days Dorothy White #1H Norton Schaub #1H Johnson 44-02S-B53 #204H 500 MBOE Type Curve 700 MBOE Type Curve 1,000 MBOE Type Curve Dorothy White #1H has produced ~310,000 BOE (66% oil) in 12.5 months Norton Schaub #1H has produced ~122,000 BOE (69% oil) in 6 months Johnson 44-02S-B53 #204H has produced ~117,000 BOE (65% oil) in 4 months Wolfcamp "X-Y" horizontal wells in Wolf Area - Loving County, Texas 25 Wolf Area Wolfcamp “X/Y” Wells Performing Above Expectations Original projection Current type curves Production increase following offset frac Note: Production as of February 1, 2015. Dorothy White #1H has produced ~310,000 BOE (66% oil) in 12.5 months – “X” Norton Schaub #1H has produced ~122,000 BOE (69% oil) in 6 months – “X” Johnson 44-02S-B53 #204H has produced ~117,000 (65% oil) in 4 months – “X” Wolfcamp “X”/”Y” horizontal wells in Wolf Area – Loving County, Texas
Rustler Breaks Inventory – Multi-Pay Development Inventory Brushy Canyon Avalon 1st Bone Spring 2nd Bone Spring 3rd Bone Spring X/Y Wolfcamp B ~8 0 0 ’ 65 73 73 77 69 77 65 499 Full Development Location Gross Wells Development Well D&C(1) CapEx EUR(2) (MBOE) Bone Spring $6 – $7 million 350 – 650 Wolfcamp $7 – $8 million 500 – 900 HEYCO Acreage Matador Acreage For clarity only 160 ac. well slots shown 1 mile MRC Horizontal Drilled Full Development Spacing Pattern (Cross-Section View) ~1,320’ 26 (1) Drilling and completion. (2) Estimated ultimate recovery, thousands of barrels of oil equivalent. Matador Well Location Wolfcamp X/Y Wolfcamp B
10 100 1000 10000 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 Da ily P roduction Rat e, BO E/d ay Time, Days 500 MBOE Type Curve 600 MBOE Type Curve Rustler Breaks 12-24-27 #1H has produced ~134,000 BOE (43% oil) in 9 months Wolfcamp "B" horizontal well in Rustler Breaks Area - Eddy County, NM 27 Rustler Breaks Area Wolfcamp “B” Well Performing Above Expectations Original projection Current type curve Note: Production as of February 1, 2015.
Ranger Inventory – Multi-Well Development Potential ~1,320’ 1st Bone Spring 2nd Bone Spring 3rd Bone Spring X/Y Wolfcamp A-D ~7 5 0 ’ 43 55 30 70 6 204 1 mile MRC Horizontal Drilled Full Development Location Full Development Spacing Pattern (Cross-Section View) Gross Wells Development Well D&C(1) CapEx EUR(2) (MBOE) Bone Spring $7 – $8 million 400 – 600 Wolfcamp $8 – $9 million 200 – 800* * Based on Volumetrics and 4-8% Recovery Factor 28 (1) Drilling and completion. (2) Estimated ultimate recovery, thousands of barrels of oil equivalent. HEYCO Acreage Matador Acreage For clarity only 160 ac. well slots shown Matador Well Location 2nd Bone Spring 3rd Bone Spring Wolfcamp D
29 Ranger Area Second Bone Spring Wells Performing Above Expectations 10 100 1000 10000 0 50 100 150 200 250 300 350 400 450 Da ily P roduction Rat e, BO E/d ay Time, Days Ranger 33 State Com #1H Pickard State 20-18-34 #1H 400 MBOE Type Curve 600 MBOE Type Curve Ranger 33 State Com #1H has produced ~184,000 BOE (91% oil) in 15 months Pickard State 20-18-34 #1H has produced ~71,000 BOE (92% oil) in 6 months 2nd Bone Spring horizontal wells in Ranger Area - Lea County, NM Original projection Current type curve Note: Production as of February 1, 2015.
Significant Delaware Basin Inventory Matador has identified 1,445 gross (960 net) locations(1) This inventory does not yet include the HEYCO properties or Twin Lakes locations Delaware Basin E d d y L e a Lo v in g W in k le r Ward Texas New Mexico Chaves Potash Mine HEYCO Acreage Matador Acreage Formation Gross Locations Net Locations Delaware Group 109 67 Avalon 160 112 1st Bone Spring 146 96 2nd Bone Spring 210 141 3rd Bone Spring 224 148 Wolfcamp X/Y 152 104 Wolfcamp A 207 134 Wolfcamp B 92 62 Wolfcamp D 145 96 TOTAL 1,445 960 30 WOLF / LOVING AREA RANGER RUSTLER BREAKS TWIN LAKES (1) Identified and engineered locations for potential future drilling, including specified production units and estimated lateral lengths, costs and well spacing using objective criteria for designation. Locations identified as of December 31, 2014, but including no locations at Twin Lakes and no locations associated with the HEYCO transaction. Note: Inventory only includes wells with >30% working interest. Note: All acreage at February 27, 2015. Some tracts not shown on map.
31 Permian Basin Economics – Oil Price Sensitivities 0 50 100 150 200 250 40 45 50 55 60 65 70 ROR , % Oil Price, $ Ranger 33 400-700 MBOE ROR vs Oil Price 700 MBOE, $7.5 MM D&C 700 MBOE, $6 MM D&C 400 MBOE, $7.5 MM D&C 400 MBOE, $6 MM D&C uses $4 flat Gas price 0 10 20 30 40 50 60 70 80 90 100 40 45 50 55 60 65 70 ROR , % Oil Price, $ Dorothy White 700-1000 MBOE ROR vs Oil Price 1000 MBOE, $9.6 MM D&C 1000 MBOE, $8 MM D&C 700 MBOE, $9.6 MM D&C 700 MBOE, $8 MM D&C uses $4 flat Gas price 0 50 100 150 200 250 40 45 50 55 60 65 70 ROR , % Oil Price, $ Rustler Breaks 2nd Bone Spring 400-700 MBOE ROR vs Oil Price 700 MBOE, $7 MM D&C 700 MBOE, $6 MM D&C 400 MBOE, $7 MM D&C 400 MBOE, $6 MM D&C uses $4 flat Gas price 0 10 20 30 40 50 60 70 40 45 0 55 60 65 70 ROR , % Oil Price, $ Rustler Breaks Wolfcamp 600-800 MBOE ROR vs Oil Price 800 MBOE, $7.5 MM D&C 800 MBOE, $6.5 MM D&C 600 MBOE, $7.5 MM D&C 600 MBOE, $6.5 MM D&C uses $4 flat Gas price /Bbl /Bbl /Bbl /Bbl
Latest Technology: Simultaneous Operations (Sim-Ops) Capable Rigs 32 Conventional Drilling Configuration Sim-Ops Capable with V-door turned 90° Space available for frac operations while simultaneously drilling on the same pad Drilling rig must leave location prior to frac operations
New Rig Improvements 7,500 psi Pressure Rating Estimated reduction in drilling time of 15 to 20% in the lateral on Wolfcamp wells Telescoping Flex-joint Estimated reduction in drilling time of 12 to 18 hours per well Integrated Mud-Gas Separator Estimated savings of 50% compared to rental separator BOP Test Stump Estimated reduction in drilling time of 12 hours per well Walking System & V-door turned 90° Allows for batch-setting and simultaneous operations 33 Efficiency gains save approximately $540,000 per well ...equivalent to a $3.00/Bbl uplift in oil prices
34 Flowing Rod Pumping Gas Lifting 300 Bbl/d 100 Bbl/d Accelerated Production Benefits of Gas Lift • Accelerates production • Reduces LOE • Lower maintenance • Helps wells recover faster from offset fracs Artificial Lift Reducing Natural Production Declines Time Note: Graph and data is for illustrative purposes only and not meant to reflect historical or forecasted data from actual well.
$50.00 $7.50 $5.10 $4.50 $3.00 $3.00 $0.90 $74.00 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Total Prospective Equivalent Oil Price Uplifts 35 $50.00 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Current Oil Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50.00 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Current Oil Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50. 0 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.00 $80.00 Current Oil Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50.00 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 0.0 $1 . 20.0 $3 . 40.0 $5 . 60.0 $7 . 80.00 Current il Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50.00 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 $0.0 $1 . 20.0 $3 . 40.0 $5 . 60.0 $7 . 80.00 Current Oil Price Frac S vings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50.00 $7.50 $6.00 $4.50 $3.00 $3.00 $74.00 $ . 0 $1 . 0 $2 . 0 $3 . 0 $4 .00 $5 .00 $6 .00 $70.00 $80.00 Current Oil Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Equivalent Realization $50.00 $7.50 $6.00 $4.50 $3.00 $3.0 $74.00 $ . 1 . 2 . 3 . 4 . 5 . $6 . $70.00 $80.00 Cur ent Oil P ic Frac S vings Midstream SWD Drilling Spread Rate Rig Improvements H2O ecycle Equivalent Realization $50.00 $7.50 $5.10 $4.50 $3.00 $3.00 $0.90 $74.00 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Current Oil Price Frac Savings Midstream SWD Drilling Spread Rate Rig Improvements H2O Recycle Oil Price Realized W T I Oil Pri c e, $/ B b l
36 7,500 Bbl 9,000 Bbl 8,400 Bbl 600 Mlbs 420 Mlbs 500 Mlbs Evolution of Permian Basin Frac Design – Reservoir Specific 375 ft. 300 ft. 50 ft. 75 ft. 210 ft. 35 ft. Gen 1 Gen 2 2,000 lbs/ft 1,333 lbs/ft 40 Bbl/ft 20 Bbl/ft 50’ cluster spacing 75’ cluster spacing Gen 1 Gen 2 2,000 lbs/ft 2,000 lbs/ft 40 Bbl/ft 30 Bbl/ft 35’ cluster spacing 50’ cluster spacing Gen 1 2,000 lbs/ft 40 Bbl/ft 35’ cluster spacing Bone Spring Upper Wolfcamp Lower Wolfcamp C o u p le d M ic ro -C o u p le d S o u rc e R o c k
Microseismic in Wolf Prospect Fractures generate sonic events as they propagate through the rock Microseismic uses downhole geophones installed in offset horizontals to measure these sonic events Half-length is a measure of the fracture propagation away from the wellbore In this example, only a portion of the yellow stage propagated a fracture system beyond the optimal half-length 37 80-acre spacing appears optimal for Wolfcamp X/Y development Frac Stage #3 Frac Stage #7 Frac Stage #10 Note: Only three frac stages shown for clarity.
Midstream
39 Longwood Gathering and Disposal Systems(1) in Delaware Basin Loving County, Texas Natural gas gathering and compression Water gathering Salt water disposal Oil gathering Cryogenic natural gas processing plant Eddy County, New Mexico Natural gas gathering and compression Water gathering Salt water disposal (under evaluation) (1) Longwood Gathering and Disposal Systems, LP is an indirect wholly owned subsidiary of Matador Resources Company. SWD = Salt Water Disposal Longwood Gathering and Disposal Systems Activities
Midstream Initiatives Growing into Respectable Stand-Alone Business 40 Expect to spend ~$38 million on midstream initiatives in the Permian Basin in 2015 Matador expects Longwood to be able to support its own sources of financing Additional third-party volumes and a contemplated natural gas processing facility in Rustler Breaks provide upside to these forecasts (1) Estimated cash flow figures exclude allocations for general and administrative and certain other expenses. Cash flow presented is not necessarily incremental to Matador’s other businesses. (2) 2014 cash flow is an estimate as the Company has not historically viewed its midstream operations as a separate business as such operations have been immaterial. (3) Base Case assumes no third-party natural gas processing or salt water disposal volumes for the Loving County natural gas process ing facility and salt water disposal facility. Matador, as the “anchor tenant”, would provide all of the estimated volumes in the Base Case scenario. (4) Full Capacity Case assumes the Loving County natural gas processing facility and salt water disposal facility operate at capacity once each facility is operational through a combination of estimated volumes provided by Matador as the “anchor tenant” and by other third-party producers. (2) Matador Processing Volumes Only Third-Party and Matador Natural Gas Fills Facility from Outset Matador Salt Water Disposal Volumes Only (3) (4) (3) (4) Third-Party and Matador Water Fills Facility from Outset Matador Processing Volumes Only Third-Party and Matador Natural Gas Fills Facility from Outset Matador Salt Water Disposal Volumes Only Third-Party and Matador Water Fills Facility from Outset
41 Loving County, Texas – Biggest Midstream Project to Date Natural gas gathering and compression Cryogenic natural gas processing plant Water gathering Salt water disposal Oil gathering SWD = Salt Water Disposal
Eagle Ford “Oil Bank”
43 Eagle Ford Overview Note: All acreage at February 27, 2015. Some tracts not shown on map. Karnes Uvalde Medina Zavala Frio Dimmit La Salle Webb Atascosa McMullen Live Oak Bee Goliad Dewitt Gonzales Wilson San Antonio Glasscock Ranch Martin Ranch Northcut Affleck Troutt Sutton Love Cowey Lewton Hennig Nickel Ranch COMBO LIQUIDS / GAS FAIRWAY DRY GAS FAIRWAY OIL FAIRWAY EAGLE FORD ACREAGE TOTALS 39,871 gross / 29,731 net acres Harris Newman Pena ZLS Carroll Lloyd Hurt Sojourner Sickenius Lyssy Repka Falls City Pawelek Danysh Bishop-Brogan Campbellton-Haverlah 8 5 2 2 Matador Resources Acreage Gross wells turned to sales in 2015 2015 CapEx ~$90 million Rigs released February 2015 17 gross (17.0 net) operated wells turned to sales “Oil Bank” for future development # EAGLE FORD “EAST” ~3,700 gross / ~2,900 net acres Measured Depth: 17,000’ – 18,000’ Well Costs: $8-10 million 80-acre spacing EAGLE FORD “CENTRAL” ~3,900 gross / ~3,900 net acres Measured Depth: 15,500’ – 16,500’ Well Costs: $6-8 million 40-50 acre spacing EAGLE FORD “WEST” ~14,800 gross / ~12,100 net acres Measured Depth: 12,500’ – 14,500’ Well Costs: $5.5-6.5 million 40-50 acre spacing
Eagle Ford – 2014 Accomplishments 44 Increased net oil production rate by 44% from ~6,400 Bbl/d in Q4 2013 to ~9,100 Bbl/d in Q4 2014 Added 2,900 net acres, more than replacing 2014 Eagle Ford drilled inventory of ~36 net wells (See chart to the right) Evolved from Generation 5 to 7 frac designed for closer well spacing 26% more proppant Tighter perforation cluster spacing More consistent proppant distribution Improved efficiencies Completed 187,123 lateral feet within 15’ target window Drilled 90% of operated wells in batch mode on 40 to 50 acre spacing Reduced well costs by ~15% from $6.5 to $5.5 million per well in the western portion of our acreage Reserves growth(1) Increased proved reserves by approximately 10% from 20.2 to 22.3 million BOE Increased proved developed reserves by approximately 44% from 11.1 to 16.0 million BOE Note: Batch drilling is the process by which multiple horizontal wells are drilled from a single pad. In batch drilling, the surface holes for each well are drilled first and then the production holes, including the horizontal laterals for each well, are drilled. Pad drilling is the process by which multiple horizontal wells are drilled from a single pad. In pad drilling, each well on the pad is drilled to total depth before the next well is initiated. (1) From December 31, 2013 to December 31, 2014. 229 240 Eagle Ford Net Well Location Inventory 12/31/2013 12/31/2014
45 Batch mode cut costs by ~10% vs pad drilling ~21% vs single well drilling Shaved 2.5 days per well Modern rigs Latest technology & equipment Improved drilling techniques Expecting ~28% pricing reduction in 2015 Eagle Ford Drilling – Cost Reductions $219/ft $194/ft $173/ft $ /f t
Gen 2 Gen 3 Gen 4 Gen 5 5,770 Bbl 7,825 Bbl 9,550 Bbl 11,750 Bbl 375 Mlbs 500 Mlbs 405 Mlbs 515 Mlbs 11,750 Bbl 650 Mlbs Gen 6 46 Note: Figure depicts proppant and fluid volume pumped per 300 ft. of horizontal wellbore. (1) Mlbs = thousands of pounds of proppant pumped. Fluid Volume Pumped Proppant Pumped(1) Gen 7 650 Mlbs 11,750 Bbl 3 0 0 f t. Evolution of Matador Eagle Ford Frac Design
5,380 5,040 6,430 6,970 5,450 5,500 5,690 4,910 7,360 4,830 6,360 5,110 5,510 4,590 5,220 4,890 5,230 5,650 4,960 0 500 1,000 1,500 2,000 2,500 3,000 3,500 P ro p p ant Co n ce n tr atio n ( #/ft of perf’d la ter al) 2012 2013 2014 Eagle Ford Completions – Industry Comparison Matador designs some of the biggest fracs in the Eagle Ford 47 Source: ITG Investment Research. EOG MTDR COG CRZO MUR SM CHK COP XCO ECA CRK SN PXD DVN EPE BHP ROSE MRO APC Average 2014 Lateral Length (ft) Average Proppant Conc. Matador Gen 7
Eagle Ford Completions – Cost Reductions (1) Normalized to 5,000 foot lateral. (2) Per completed lateral foot. 48 Compl e ti o n s Co s t $ /f t( 2 ) Toe Prep Drill Out Frac Auxiliary $238 $318 $164 Non-frac completion costs cut by: ~50% since Q1 2012 (savings of over $750,000 per well(1)) Cut toe-prep costs by ~70% Cut drill out costs by ~47% Cut other costs by ~40% 31% since Q4 2013
Haynesville Shale “Gas Bank”
Haynesville – Chesapeake Elm Grove Operations 50 Estimated capital expenditures of ~$15 million for non-operated well participation interests ˗ Represents only ~4% of 2015 estimated capital expenditures 38 gross (3.0 net) wells throughout Tier 1 Haynesville; 33 gross (2.3 net) wells turned to sales Includes 10 gross (1.8 net) wells turned to sales on Elm Grove properties operated by Chesapeake in 2015 (shown on map at left) Chesapeake placed seven additional wells on production in Q1 2015 ˗ Initial rates of ~12-15 MMcf/d of natural gas at flowing tubing pressures of 6,000 to 8,000 psi 2015 Haynesville Non-Op Drilling Program Successful 2014 non-op drilling program, primarily by Chesapeake at Elm Grove ˗ 17 gross (3.8 net) wells with estimated recoveries of 8 to 12 Bcf and well costs of $7 to $8 million (below Chesapeake’s original AFEs and Matador’s expectations) Haynesville average daily natural gas production up over 3-fold to 35.0 MMcf/d in Q4 2014 from 11.1 MMcf/d in Q4 2013 – currently over 55 MMcf/d
Economics of Tier 1 Wells (10 Bcf) Haynesville at Elm Grove 51 Note: Individual well economics only. Excludes costs prior to drilling (i.e. acquisition or acreage costs). Economics use a NRI / WI of 85% but actual interests vary. Natural gas price differential = ($0.55)/Mcf. D&C cost = drilling and completion cost. 0 50 100 150 200 250 300 350 400 450 500 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 R a te o f R e turn , % Natural Gas Price, $/Mcf $7.0MM D&C Cost $8.0MM D&C Cost $9.0MM D&C Cost Matador’s Advantaged Economics NRI’s of 85% to 90% on many properties due to ORRI’s Improved pricing/differentials of ~$0.70/MMBtu due to taking gas in kind Longer laterals and better completion techniques
2015 Capital Investment Plan
53 2015 Capital Investment Plan – Reduced Drilling Program in 2015 Reduced drilling program from 5 rigs to 2 rigs due to lower commodity prices, with primary focus on Permian (Delaware) Basin Currently operating 2 rigs – both in the Delaware Basin Possible addition of a third drilling rig in the Permian in the next six to nine months(1) New-build rigs, latest technology and designed for simultaneous operations (Sim-Ops) # o f RIg s 5 4 3 2 2 2 2 2 2 3 N u m b e r o f O p e ra te d Ri g s 2 2 2 (1) As announced April 15, 2015 in conjunction with our April 2015 equity offering. Eagle Ford Rig Permian Rig
2015E CapEx of ~$350 million − Decrease of ~43% from 2014 CapEx of ~ $610 million − Estimated service cost reductions of 15 to 20% as observed through January 2015, but further cost reductions expected (up to 50% on some services) − Does not include any CapEx associated with HEYCO combination (cash and assumed debt of $36.6 million) 2015E CapEx highest in Q1 2015 – falls quickly thereafter − Q1 at $163 million (47%); Q2 at $71 million (20%); Q3 and Q4 at $58 million each (remaining 33%) – close to cash flow at $55 per Bbl oil Permian Basin drilling program will focus on Wolf development, further delineation of Ranger and Rustler Breaks areas and integration of HEYCO acreage − Represents ~70% of 2015E CapEx − Includes ~$38 million for midstream initiatives Eagle Ford development will be temporarily suspended – over 95% of acreage held by production or not subject to near-term expirations − Represents ~26% of 2015E CapEx Haynesville development includes continued selective participation in non-operated wells, primarily CHK drilling at Elm Grove; Haynesville acreage ~100% held by production − Represents only ~4% of 2015E CapEx 2015 Capital Investment Plan Summary 54 Land, Seismic, Etc. (Discretionary) $20 million 5.7% Facilities, Infrastructure, Etc. $25 million 7.1% Drilling and Completions $267 million 76.3% Permian Midstream Activities (Longwood) $38 million 10.9% 2015E CapEx by Expense Type Permian $230 million 65.7% Eagle Ford $85 million 24.3% 2015E CapEx by Region Haynesville Non-Op $15 million 4.3% Permian $245 million 70.0% Eagle Ford $90 million 25.7%
$350 $333 $315 $298 $280 $263 $245 $0 $50 $100 $150 $200 $250 $300 $350 $400 0% 5% 10% 15% 20% 25% 30% 20 15 E Ca pE x ($ m ill io ns ) Percentage Reduction in 2015E Service Costs Relatively small improvements in oil price and cost reductions can significantly improve financial forecasts and reduce estimated CapEx $10/Bbl increase in oil price improves Adjusted EBITDA(1) by ~$25 million 10 to 15% in additional cost reductions reduce CapEx by $35 to $50 million $10/Bbl increase in oil price and additional 15% in CapEx reductions reduce operating cash outspend by ~$75 million – about half of current estimates Matador technical teams focused on reducing both operating costs and capital expenditures in 2015 and continuing to improve well performance Commodity Price and CapEx Estimates Significantly Impact Forecasts (1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net (loss) income and net cash provided by operating activities, see Appendix. (2) Estimated 2015 Adjusted EBITDA based upon production guidance range for 2015 as reaffirmed on April 6, 2015. Estimated average realized prices for oil and natural gas used in these estimates were $50.00/Bbl (WTI oil price of $55.00/Bbl less $5.00/Bbl differentials and transportation costs) and $3.00/Mcf (NYMEX Henry Hub natural gas price assuming regional differentials and uplifts from natural gas processing roughly offset), respectively, for the period January through December 2015. 55 2015E Guidance Range(2) Sensitivity of 2015E CapEx to Cost Reductions Sensitivity of 2015E Adjusted EBITDA(1) to Oil Price
2015E Oil Production Estimated oil production of 4.0 to 4.2 million barrels − 23% increase from 2014 despite decreased drilling Average daily oil production of 11,200 Bbl/d, up from 9,100 Bbl/d in 2014 − Eagle Ford ~7,000 Bbl/d (63%) − Permian ~4,200 Bbl/d (37%) Quarterly production peaks in Q2; Q4 2015 oil production relatively flat to Q4 2014 − Q1 down ~12% sequentially due to Eagle Ford shut-ins − Permian production increases three-fold in 2015; Eagle Ford production declines by 10% 2015E Natural Gas Production Estimated natural gas production of 24 to 26 Bcf − 63% increase from 2014 despite decreased drilling; significant Haynesville impact − Quarterly production peaks in Q2; Q4 2015 natural gas production up ~12% over Q4 2014 Average daily natural gas production of 68.5 MMcf/d, up from 41.9 MMcf/d in 2014 − Haynesville ~40.9 MMcf/d (60%) − Eagle Ford ~14.4 MMcf/d (21%) − Permian ~13.2 MMcf/d (19%) 2015 Production Estimates – Oil Equivalent Growth of ~41% (1) Estimated daily average oil and natural gas production at midpoint of 2015 guidance range. 56 Oil Production Growth (Bbl/d) Natural Gas Production Growth (MMcf/d) 0 10 20 30 40 50 60 70 80 2011 2012 2013 2014 2015E Haynesville/CV Eagle Ford Permian 39.8 34.1 35.4 41.9 68.5 (1) 0 2,00 4,000 6,000 8,000 10,000 12,000 2011 2012 2013 2014 2015E Eagle Ford Permian 422 3,318 5,843 9,095 11,223 (1)
2015E Revenues and Adjusted EBITDA(1)(2) Revenues and Adjusted EBITDA(1)(2) growth significantly impacted by lower estimated 2015 realized oil and natural gas prices − 2015E realized oil price of $50/Bbl vs ~$87/Bbl realized in 2014 − 2015E realized natural gas price of $3.00/Mcf vs ~5.00/Mcf in 2014 Estimated oil and natural gas revenues of $270 to $290 million − Decrease of ~24% from estimated $367.7 million in 2014 − Oil and natural gas hedges estimated to contribute $55 million in additional revenues in 2015, as compared to $5 million in 2014 Estimated Adjusted EBITDA(1)(2) of $200 to $220 million − Decrease of ~20% from estimated $262.9 million in 2014 ~50% oil by volume, ~73% oil by revenue in 2015(2); compared to ~57% oil by volume, ~79% oil by revenue in 2014 2015E Operating Cost Estimates (Unit Costs per BOE) Production taxes/marketing = $4.00; $5.65 in 2014 (reduced revenues) Lease operating = $7.25; $8.75 in 2014 (gas volumes, operating efficiencies, service costs) G&A = $5.25; $5.48 in 2014 (additional staff) Operating cash costs, excluding interest = $16.50; ~$20.00 in 2014 DD&A = $22.75; $22.95 in 2014 2015 Financial Estimates (1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net (loss) income and net cash provided by operating activities, see Appendix. (2) Estimated 2015 oil and natural gas revenues and Adjusted EBITDA based upon the midpoint of 2015 production guidance range as reaffirmed on April 6, 2015. Estimated average realized prices for oil and natural gas used in these estimates were $50.00/Bbl (WTI oil price of $55.00/Bbl less $5.00/Bbl differentials and transportation costs) and $3.00/Mcf (NYMEX Henry Hub natural gas price assuming regional differentials and uplifts from natural gas processing roughly offset), respectively, for the period January through December 2015. 57 Oil and Natural Gas Revenues(2) (millions) Adjusted EBITDA(1)(2) (millions) $76.39 $93.80 $101.86 $99.79 $87.37 $50.00 $3.75 $3.62 $2.59 $4.35 $5.08 $3.00 Realized Oil and Natural Gas Prices, $/Bbl and $/Mcf $34.0 $67.0 $156.0 $269.0 $367.7 $280.0 $0.0 $100.0 $200.0 $300.0 $400.0 2010 011 2012 2013 2014 2015E $23.6 $49.9 $115.9 $191.8 $262.9 $210.0 $0.0 $100.0 $200.0 3 . 2010 2011 2012 2013 2014 2015E
58 Summary and 2015 Guidance (1) As announced April 15, 2015 in conjunction with our April 2015 equity offering. (2) As reaffirmed on April 6, 2015; does not include capital expenditures associated with the HEYCO transaction. (3) Estimated 2015 oil and natural gas revenues and Adjusted EBITDA at midpoint of 2015 production guidance range as reaffirmed on April 6, 2015. Estimated average realized prices for oil and natural gas used in these estimates were $50.00/Bbl (WTI oil price of $55.00/Bbl less $5.00/Bbl differentials and transportation costs) and $3.00/Mcf (NYMEX Henry Hub natural gas price assuming regional differentials and uplifts from natural gas processing roughly offset), respectively, for the period January through December 2015. (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 Appendix. Moving from 5 rigs to 2 rigs in 2015; currently operating 2 rigs in Delaware Basin − Possible addition of a third drilling rig in the Permian Basin in the next six to nine months(1) Permian drilling focused on Wolf development and further delineation of Ranger and Rustler Breaks prospect areas, plus integration of HEYCO acreage Eagle Ford drilling temporarily suspended as over 95% of acreage held-by-production or not subject to near-term expiration 2014 Actual 2015 Guidance(2) % Change Capital Spending $610 million $350 million - 43% Total Oil Production 3.3 million Bbl 4.0 to 4.2 million Bbl + 23% Total Natural Gas Production 15.3 Bcf 24.0 to 26.0 Bcf + 63% Oil and Natural Gas Revenues $367.7 million $270 to $290 million(3) - 24% Adjusted EBITDA(4) $262.9 million $200 to $220 million(3) - 20%
59 Matador Resources Investment Highlights High Quality Asset Base in Attractive Areas with Multi- year Drilling Inventory(1)(2) 85,400 net acres and 960 net engineered drilling locations in the Permian Basin prospective for the liquids-rich Wolfcamp, Bone Spring and other targets; Matador holds largest Delaware Basin acreage position among small and mid-cap publicly traded energy companies(3) 29,700 net acres and 240 net engineered locations in the Eagle Ford with 96% HBP or not burdened by lease expirations before 2016; demonstrated ability to replenish drilling inventory with 3,000 net acres (63 net locations) acquired in 2014 Long-term option on natural gas with 162 net engineered locations in Haynesville, Cotton Valley and Bossier; almost all HBP Attractive, Low Risk Growth Company with Oil / Liquids Focus YE2011 to 2014 oil production CAGR of 178% with expected year-over-year growth of 23%(4) in 2015 Total production expected to grow 41%(4) year-over-year in 2015 despite 43% reduction in CapEx to $350 million(5) 96% of 2015E CapEx program focused on oil / liquids exploration and development(5) Strong Financial Profile with Low Debt and Substantial Liquidity Low leverage of 1.1x(6) allows for operational flexibility Following April 2015 equity offering, substantial liquidity available, including undrawn revolving credit facility, substantial cash on our balance sheet and future cash flows available to execute planned drilling program Productive Use of Technology Drives Operational Efficiencies Substantially reduced Eagle Ford drilling days and well costs since IPO and currently targeting Permian drilling costs Effectively using gas lift technology in the Eagle Ford and the Permian to keep oil wells “flowing” longer at higher rates State-of-the-art, new-build rigs, batch drilling programs, midstream and infrastructure initiatives and other improvements have potential to further reduce well costs and improve spud to sales times Proven Management and Technical Team and Active Board of Directors Management and senior technical team average over 25 years of industry experience combined with emerging group of young technical leaders and landmen Board with extensive industry knowledge, business experience and company ownership for past 30 years Strong record of stewardship and accomplishment, including demonstrated ability to manage through industry cycles (1) Acreage presented as of February 27, 2015. Net engineered locations presented as of December 31, 2014. (2) Identified and engineered locations for potential future drilling, including specified production units and estimated lateral lengths, costs and well spacing using objective criteria for designation. Locations identified as of December 31, 2014, but including no locations at Twin Lakes and no locations associated with the HEYCO transaction in the Permian Basin. (3) Based on an independent market analysis prepared by BMO Capital Markets in January 2015. Small and mid-cap publicly traded energy companies defined as those companies with an enterprise value between $500 million and $3.5 billion. Companies below $100 million in market capitalization were excluded in determining the ratio of Delaware Basin acreage to market capitalization. (4) Represents growth to the midpoint of 2015 guidance range of 4.0 to 4.2 million barrels of oil. (5) Does not include capital expenditures associated with the HEYCO transaction. (6) LTM Adjusted EBITDA at December 31, 2014 and Net Debt pro forma at April 16, 2015 after giving effect to April 2015 equity offering.
Appendix
4.65 4.35 4.35 4.05 $4.65 $3.94 $3.94 $3.99 $3.73 $3.26 $3.26 $3.30 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 3.70 3.80 3.90 4.00 4.10 4.20 4.30 4.40 4.50 4.60 4.70 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Na tu ra l G as Vol umes He dg ed (B cf) 420,000 600,000 690,000 690,000 $99.75 $90.30 $87.42 $87.42 $83.00 $72.43 $69.22 $69.22 $0 $50 $100 $150 $200 $250 $300 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Oil Vol ume He dg ed (B bl) Hedging Profile 2015 Hedges(1) Oil Hedges: 2.4 million barrels of oil hedged for 2015 at weighted average floor and ceiling prices of $72/Bbl and $90/Bbl, respectively – Approximately 59% of oil hedged for 2015(2) Natural Gas Hedges: 17.4 Bcf of natural gas hedged for 2015 at weighted average floor and ceiling of $3.40/MMBtu and $4.14/MMBtu, respectively – Approximately 70% of natural gas hedged for 2015(2) Natural Gas Liquids: 3.8 million gallons of natural gas liquids hedged for 2015 at weighted average price of $1.02/gal Oil and natural gas hedges estimated to add $60 million to projected oil and natural gas revenues in 2015 2016 Hedges 1.1 million Bbl of oil ($44/Bbl floor and $77/Bbl ceiling) and 2.4 Bcf of natural gas ($2.75/MMBtu floor and $3.50/MMBtu ceiling) 61 2015 Oil Hedges (Costless Collars) 2015 Natural Gas Hedges (Costless Collars) (1) Figures are for the twelve months ended December 31, 2015, including contracts for 2015 which have already been realized. (2) Based upon the midpoint of 2015 guidance range of 4.0 to 4.2 million barrels for oil and 24.0 to 26.0 Bcf for natural gas as reaffirmed on April 6, 2015. Ceiling Ceiling Floor Floor Ceiling Floor Ceiling Floor
Board of Directors and Special Advisors – Expertise and Stewardship Board Members Professional Experience Business Expertise David M. Laney Lead Director - Past Chairman, Amtrak Board of Directors - Former Partner, Jackson Walker LLP Law and Investments Reynald A. Baribault Director - Vice President / Engineering and Co-founder, North Plains Energy, LLC - President and CEO, IPR Energy Partners, LLC - Former Vice President, Netherland, Sewell & Associates, Inc. Oil and Gas Exploration Gregory E. Mitchell Director - President and CEO, Toot’n Totum Food Stores Petroleum Retailing Dr. Steven W. Ohnimus Director - Retired Vice President and General Manager, Unocal Indonesia Oil and Gas Operations Michael C. Ryan Director - Partner, Berens Capital Management International Business and Finance Carlos M. Sepulveda, Jr. Director - Executive Chairman of the Board, Triumph Bancorp, Inc. - Retired President and CEO, Interstate Battery System International, Inc. - Director and Audit Chair, Cinemark Holdings, Inc. Business and Finance Margaret B. Shannon Director - Retired Vice President and General Counsel, BJ Services Co. - Former Partner, Andrews Kurth LLP Law and Corporate Governance Special Board Advisors Professional Experience Business Expertise Marlan W. Downey Special Board Advisor - Retired President, ARCO International - Former President, Shell Pecten International - Past President of American Association of Petroleum Geologists Oil and Gas Exploration John R. Gass Special Board Advisor - VP, Eastern Hemisphere Operations, Nabors Drilling International Limited based in Dubai, UAE - Previously spent 28 years with Parker Drilling Company in various management roles Oil and Gas Drilling Wade I. Massad Special Board Advisor - Managing Member, Cleveland Capital Management, LLC - Formerly with KeyBanc Capital Markets and RBC Capital Markets Capital Markets Greg L. McMichael Special Board Advisor - Retired Vice President and Group Leader – Energy Research of A.G. Edwards Capital Markets Dr. James D. Robertson Special Board Advisor - Retired VP Exploration, Chief Geophysicist, ARCO International Oil and Gas Company Oil and Gas Exploration 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 and Gas Executive Management 62
Proven Management Team – Experienced Leadership Management Team Background and Prior Affiliations Industry Experience Matador Experience Joseph Wm. Foran Founder, Chairman and CEO - Matador Petroleum Corporation, Foran Oil Company and James Cleo Thompson Jr. 34 years Since Inception Matthew V. Hairford President - Samson, Sonat, Conoco 30 years Since 2004 David E. Lancaster EVP, COO and CFO - Schlumberger, S.A. Holditch & Associates, Inc., Diamond Shamrock 35 years Since 2003 Craig N. Adams EVP – Land & Legal (General Counsel) - Baker Botts L.L.P., Thompson & Knight LLP 21 years Since 2012 Ryan C. London EVP and General Manager - Matador Resources Company (Began as intern) 10 years Since 2004 Van H. Singleton, II EVP – Land - Southern Escrow & Title, VanBrannon & Associates 18 years Since 2007 Bradley M. Robinson VP and CTO - Schlumberger, S.A. Holditch & Associates, Inc., Marathon 37 years Since Inception Billy E. Goodwin VP – Drilling - Samson, Conoco 30 years Since 2010 G. Gregg Krug VP – Marketing - Williams Companies, Samson, Unit Corporation 31 years Since 2005 Trent W. Green VP – Production - HEYCO, Bass Enterprises, Schlumberger, S.A. Holditch & Associates, Inc., Amerada Hess 26 years Since 2015 Jennifer S. Queen VP – Human Resources & Administration - Baker Botts L.L.P., McKenna Long & Aldridge LLP 22 years Since 2015 Sandra K. Fendley VP and CAO - J-W Midstream, Crosstex Energy 23 years Since 2013 Kathryn L. Wayne Controller and Treasurer - Matador Petroleum Corporation, Mobil 30 years Since Inception 63
64 “Wolf-Bone” Geological Setting, Predicting Where the Better Rocks Are 265 mya End of Bone Springs – Warmer! Delaware Basin San Andres Yeso Abo Delaware Mountain Group 1st, 2nd, 3rd Bone Spring Sands Sands confined to channels and distributary systems 1st, 2nd, 3rd Bone Spring Carbonates Wolfcamp “A” Carbonates Wolfcamp “D” Carbonates More limited in areal extent Wolfcamp “A”, “B”, “D” = Oil & Gas Source Rocks and Resource Reservoir Rocks Extensively distributed basin-wide
Understanding the Petroleum Systems for Maximum Oil Recovery Note: Diagram Modified from Bishop (2014). Eagle Ford & Haynesville Wolfcamp Bone Spring Conventional Unconventional Shelf Organic-Rich Basin Decoupled Coupled Micro-Coupled In-Situ Bone Spring Source Rock and Reservoir ReservoirRock Source Rock MIXED SOURCE ROCK AND RESERVOIRS CHARGED WITH OIL AND GAS BUOYANCY DRIVES OIL AND GAS INTO POROSITY AND PERMEABILITY Rock Mechanics and Completion Strategy Varies Rock Depositional System Petroleum System 65
North Ranger-Twin Lakes Area Pennsylvanian/Wolfcamp “D” Production Distribution 66 A A’ MATADOR RESOURCES COMPANY PICKARD STATE 20-18-34 #2H Vacuum Field Townsend Field 166 wells 25 million Bbl, 49 Bcf Sanmal & Leamex Fields Corbin Field Kemnitz Field 94 wells 19 million Bbl, 78 Bcf Sanmal and Leamex Fields 39 wells 3.3 million Bbl, 5.5 Bcf Vacuum Field 137 wells 17 million Bbl, 39 Bcf Airstrip Field Corbin Field 77 wells 7.6 million Bbl, 18 Bcf Airstrip Field 14 wells 0.26 million Bbl, 0.17 Bcf Wolfcamp/ Upper Pennsylvanian Production ~72 million Bbl, 190 Bcf ~527 vertical wells ~137,000 Bbl per vertical well Matador Resources Acreage Note: Information from public sources available as of November 2014. Vacuum N and NW Fields Kemnitz & Lea Fields Bcf = billions of cubic feet of natural gas.
Pennsylvanian/Wolfcamp “D” “Hybrid” Production Target Interval 30025300490000 AVRA OIL COMPANY 30025257790000 ELK OIL COMPANY 30025019240000 UNION OIL 30025397370000 CML EXPLORATION 30025414070000 CML EXPLORATION 30025416140000 MATADOR PRODUCTION A B E N A KI 1 0 S T A T E # 1 S T A T E ` 7 ` # 1 NOR T H E A S T K E M NI T Z # 3 S T A T E -L E A E # 1 B E A M S 1 5 S T A T E # 3 P ICK A R D S T A T E # 2 H P IL O T TOP OF WOLFCAMP LWTS GR Res. Dens. Neut. 10 MBbl 48 MMcf 197 MBbl 356 MMcf 140 MBbl 296 MMcf 90 MBbl 410 MMcf 11 MBbl 60 MMcf First Horizontal Landing Zone in source rock play: overpressured 0.7 psi/ft Produced 35,000 BOE – 7 mo. IP (24 hr.) from source rock: • 232 Bbl/d, 225 Mcf/d (86% oil) • 1,150 psi surface pressure • 18/64th inch choke A North A’ South Pickard #2H Future horizontal landing zones (oil on pits while drilling) in “hybrid” reservoirs: porous, sandstone/limestone and source rock. ~6 0 0 ’ – 8 0 0 ’ Th ic k Cumulative volumes produced from older vertical wells 172 MBbl 536 MMcf Flowed oil on test Re g io n a ll y pro d u c ti v e “ Hy brid ” Ta rge t In te rv a l 67 MMBbl = millions of barrels of oil. Bcf = billions of cubic feet of natural gas. MMcf = millions of cubic feet of natural gas.
$60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 7/5/2014 8/24/2014 10/13/2014 12/2/2014 1/21/2015 $0 $20 $40 $60 $80 $100 $120 $140 Fr ac In de x Pric e & Drilli ng Sp rea d Ra te W TI Oi l Pri ce WTI Oil Price Frac Index Price Drilling Spread Rate WTI Oil Price and Service Prices 68 Frac Index Price reductions of 31% ...equivalent to a $7.50/Bbl uplift in oil prices Drilling Spread Rate reductions of 18% ...equivalent to a $4.50/Bbl uplift in oil prices Note: Frac Index Price represents average stage cost on a 22 stage well completion with 25# cross-linked gel, 400,000 lb. 30/50 white sand per stage, 65 barrels per minute average treating rate, 8,500 psi average treating pressure, 4,000 gallons of acid per stage, and 7,000 Bbl clean fluid per stage. This does not represent the current Matador design in any area and/or the current stage cost. $ /B b l
Saltwater disposal savings $1.30/Bbl of produced water Infrastructure Development ...equivalent to a $5.10/Bbl uplift in oil prices Oil pipeline fee reduction ...an uplift of $0.90/Bbl in oil prices 69
Potential Water Recycling Savings for Loving County Saltwater Disposal Produced Water Purchase Frac Water Frac Additives Fracturing Well (~200,000 Bbl) Recycling Potential savings of up to $600,000 per well ...equivalent to a $3.00/Bbl uplift in oil prices 70
91.3% 85.8% 57.3% 56.6% 54.0% 53.7% 53.0% 47.9% 37.9% 34.6% 31.3% 13.2% 12.2% 12.2% 10.0% Peer J Peer B Peer N Peer I Peer D Peer C Peer E Peer A Peer H Peer G Peer F Peer L 0 Peer M Peer K 4.3x 4.3x 3.9x 3.5x 3.3x 2.7x 2.0x 2.0x 2.0x 1.9x 1.8x 1.5x 1.3x 1.2x 1.1x Peer K Peer M 0 Peer N Peer L Peer F Peer E Peer H Peer G Peer I Peer J Peer D Peer C Peer A Peer B 4.0x 3.0x 3.0x 2.5x 2.4x 2.4x 2.3x 2.1x 2.1x 2.0x 2.0x 1.7x 1.3x 1.3x 1.0x Peer A Peer C Peer J Peer I Peer H Peer B Peer E Peer N Peer F Peer D Peer L Peer G Peer M Peer K 0 $11.4 4 $10.33 $9.62 $9.44 $8.97 $7.92 $7.3 9 $6.40 $6.26 $5.54 $4.78 $4.43 $3.91 $2.90 $2.73 Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Peer K Peer L 0 Peer M Peer N Strong Balance Sheet Metrics Relative to Peers(1) – Compares Well to Permian Peers 71 FY 2014 Net Debt / Proved Reserves ($ / BOE) FY 2014 Net Debt / LTM Adjusted EBITDA (2) FY 2014 Proved PV-10 (3) / Net Debt FY 2014 Net Debt / Enterprise Value Average – $7.01 Average – 2.3x Average – 2.4x Average – 45.6% (1) Market analysis prepared by RBC Capital Markets. Average does not include Matador. Matador figures are pro forma at December 31, 2014 after giving effect to the recent HEYCO Merger, the April 2015 offering of $400 million of Senior Notes and the April 2015 equity offering. Peer group chosen by RBC includes SFY, CRK, ROSE, SN, PVA, AREX, GDP, CWEI, JONE, BCEI, CRZO, PE, RSPP, FANG. Average does not include Matador. Source: Company filings, metrics pro forma for announced acquisitions. Market data as of April 2, 2015. (2) 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 Appendix. (3) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), see Appendix.
Strong, supportive bank group led by Royal Bank of Canada Borrowing base at $375 million based on December 31, 2014 reserves Bank group affirmed $375 million conforming borrowing base in April 2015 Retained full $375 million conforming borrowing base upon closing of Senior Notes offering Borrowings outstanding of $340 million at December 31, 2014 and $30 million on April 14, 2015; repaid $380 million following closing of Senior Notes Offering on April 14, 2015 No borrowings outstanding pro forma for April 2015 equity offering(1) Net Debt/Adjusted EBITDA(1)(2) of 1.1x Financial covenants Maximum Total Debt to Adjusted EBITDA(2) Ratio of not more than 4.25:1.00 Under this covenant, Total Debt could be ~$1.1 billion based on LTM Adjusted EBITDA(1) 72 Credit Agreement Status (1) LTM Adjusted EBITDA at December 31, 2014 and Net Debt pro forma at April 16, 2015 after giving effect to April 2015 equity offering. (2) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA an a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see Appendix. TIER Conforming Borrowing Base Utilization LIBOR Margin BASE Margin Commitment Fee Tier One x < 25% 150 bps 50 bps 37.5 bps Tier Two 25% < or = x < 50% 175 bps 75 bps 37.5 bps Tier Three 50% < or = x < 75% 200 bps 100 bps 50 bps Tier Four 75% < or = x < 90% 225 bps 125 bps 50 bps Tier Five 90% < or = x < 100% 250 bps 150 bps 50 bps
73 PV-10 Reconciliation PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. PV-10 is not an estimate of the fair market value of the Company's properties. Matador and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies and of the potential return on investment related to the companies' properties without regard to the specific tax characteristics of such entities. PV-10 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by reducing PV-10 by the discounted future income taxes associated with such reserves. At December 31, 2009 At December 31, 2010 At September 30, 2011 At December 31, 2011 At December, 2012 At June 30, 2012 At September 30, 2012 At December 31, 2012 PV-10 (in millions) $70.4 $119.9 $155.2 $248.7 $329.6 $303.4 $363.6 $423.2 Discounted Future Income Taxes (in millions) $(5.3) $(8.8) $(11.8) $(33.2) $(42.2) $(21.9) $(29.7) $(28.6) Standardized Measure (in millions) $65.1 $111.1 $143.4 $215.5 $287.4 $281.5 $333.9 $394.6 At March 31, 2013 At June 30, 2013 At September 30, 2013 At December 31, 2013 At March 31, 2014 At June 30, 2014 At September 30, 2014 At December 31, 2014 PV-10 (in millions) $438.1 $522.3 $538.6 $655.2 $739.8 $826.0 $952.0 $1,043.4 Discounted Future Income Taxes (in millions) $(31.1) $(44.7) $(52.5) $(76.5) $(86.2) $(103.0) $(116.9) $(130.1) Standardized Measure (in millions) $407.0 $477.6 $486.1 $578.7 $653.6 $723.0 $835.1 $913.3
74 Adjusted EBITDA Reconciliation This investor presentation 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 consolidated financial statements, such as industry 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 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, and net gain or loss on asset sales and inventory impairment. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) 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 (loss) and net cash provided by operating activities, respectively, that are of a historical nature. Where references are pro forma, forward-looking or prospective in nature, and not based on historical fact, the table does not provide a reconciliation. The Company could not provide such reconciliations 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.
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. 75 (In thousands) 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 Unaudited Adjusted EBITDA reconciliation to Net (loss) Income: Net (loss) income $ (27,596) $ 7,153 $ 6,194 $ 3,941 $ 3,801 $ (6,676) $ (9,197) $ (21,188) $ (15,505) $ 25,119 $ 20,105 $ 15,374 $ 16,363 $ 18,226 $ 29,619 $ 46,563 Interest expense 106 184 171 222 308 1 144 549 1,271 1,609 2,038 768 1,396 1,616 673 1,649 Total income tax provision (benefit) (6,906) (46) - 1,430 3,064 (3,713) (593) (188) 46 32 2,563 7,056 9,536 10,634 16,504 27,701 Depletion, depreciation and amortization 7,111 8,180 7,287 9,176 11,205 19,914 21,680 27,655 28,232 20,234 26,127 23,802 24,030 31,797 35,143 43,767 Accretion of asset retirement obligations 39 57 62 51 53 58 59 86 81 80 86 100 117 123 130 134 Full-cost ceiling impairment 35,673 - - - - 33,205 3,596 26,674 21,230 - - - - - - - Unrealized (gain) loss on derivatives 1,668 (332) (2,870) (3,604) 3,270 (15,114) 12,993 3,653 4,825 (7,526) 9,327 606 3,108 5,234 (16,293) (50,351) Stock-based compensation expense 53 128 1,234 991 (363) 191 (51) 363 492 1,032 1,239 1,134 1,795 1,834 1,038 857 Net loss on asset sales and inventory impairment - - - 154 - 60 - 425 - 192 - - - - - - Adjusted EBITDA $ 10,148 $ 15,324 $ 12,078 $ 12,361 $ 21,338 $ 27,926 $ 28,631 $ 38,029 $ 40,672 $ 40,772 $ 61,485 $ 48,840 $ 56,345 $ 69,464 $ 66,814 $ 70,320 (In thousands) 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 Unaudited Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities: Net cash provided by operating activities $ 12,732 $ 6,799 $ 14,912 $ 27,425 $ 5,110 $ 46,416 $ 28,799 $ 43,903 $ 32,229 $ 51,684 $ 43,280 $ 52,278 $ 31,945 $ 81,530 $ 66,883 $ 71,123 Net change in operating assets and liabilities (2,690) 8,386 (3,004) (15,286) 15,920 (18,491) (500) (6,235) 7,126 (12,553) 15,265 (3,630) 21,729 (15,221) (586) 56 Interest expense 106 184 171 222 308 1 144 549 1,271 1,609 2,038 768 1,396 1,616 673 1,649 Current income tax (benefit) provision - (45) (1) - - - 188 (188) 46 32 902 (576) 1,275 1,539 (156) (2,525) Net loss attributable to non-controlling interest in subsidiary - - - - - - - - - - - - - - - 17 Adjusted EBITDA $ 10,148 $ 15,324 $ 12,078 $ 12,361 $ 21,338 $ 27,926 $ 28,631 $ 38,029 $ 40,672 $ 40,772 $ 61,485 $ 48,840 $ 56,345 $ 69,464 $ 66,814 $ 70,320
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. 76 LTM at LTM at (In thousands) 2008 2009 2010 2011 2012 2013 2014 6/30/2013 9/30/2014 Unaudited Adjusted EBITDA reconciliation to Net Income (Loss): Net income (loss) $103,878 ($14,425) $6,377 ($10,309) ($33,261) $45,094 $110,771 ($20,771) $79,582 Interest expense - - 3 683 1,002 5,687 5,334 3,574 4,453 Total income tax (benefit) provision 20,023 (9,925) 3,521 (5,521) (1,430) 9,697 64,375 (703) 43,730 Depletion, depreciation and amortization 12,127 10,743 15,596 31,754 80,454 98,395 134,737 97,801 114,772 Accretion of asset retirement obligations 92 137 155 209 256 348 504 307 470 Full-cost ceiling impairment 22,195 25,244 - 35,673 63,475 21,229 0 51,499 - Unrealized loss (gain) on derivatives (3,592) 2,375 (3,139) (5,138) 4,802 7,232 (58,302) 13,945 (7,345) Stock-based compensation expense 665 656 898 2,406 140 3,897 5,524 1,836 5,801 Net (gain) loss on asset sales and inventory impairment (136,977) 379 224 154 485 192 0 617 - Adjusted EBITDA $18,411 $15,184 $23,635 $49,911 $115,923 $191,771 $262,943 $148,105 $241,463 LTM at LTM at (In thousands) 2008 2009 2010 2011 2012 2013 2014 6/30/2013 9/30/2014 Un udited djusted EBITDA reconciliation to Net Cash Provided by Operating Activities: Net cash provided by operating activities $25,851 $1,791 $27,273 $61,868 $124,228 $179,470 $251,481 $156,614 $232,636 Net change in operating assets and liabilities (17,888) 15,717 (2,230) (12,594) (9,307) 6,210 5,978 (12,161) 2,292 Interest expense - - 3 683 1,002 5,687 5,334 3,574 4,453 Current income tax (benefit) provision $10,448 ($2,324) (1,411) (46) 0 404 133 78 2,082 Net loss attributable to non-controlling interest in subsidiary 0 0 0 0 - 0 17 0 0 Adjusted EBITDA $18,411 $15,184 $23,635 $49,911 $115,923 $191,771 $262,943 $148,105 $241,463 Year Ended December 31, Year Ended December 31, Note: LTM is last 12 months.
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively. 77 (In thousands) 12/31/2011 6/30/2012 12/31/2012 6/30/2013 12/31/2013 6/30/2014 Unaudited Adjusted EBITDA reconciliation to Net (Loss) Income: Net (loss) income 10,135$ (2,875)$ (30,385)$ 9,615$ 35,479$ 34,589$ Interest expense 393 309 693 2,881 2,806 3,012 Total income tax (benefit) provision 1,430 (649) (781) 78 9,619 20,170 Depletion, depreciation and amortization 16,463 31,119 49,335 48,466 49,929 55,827 Accretion of asset retirement obligations 113 111 145 162 186 241 Full-cost ceiling impairment 0 33,205 30,270 21,229 - - Unrealized loss (gain) on derivatives (6,474) (11,844) 16,646 (2,701) 9,933 8,342 Stock-based compensation expense 2,225 (172) 312 1,524 2,373 3,629 Net loss on asset sales and inventory impairment 154 60 425 192 - - Adjusted EBITDA 24,439$ 49,264$ 66,660$ 81,446$ 110,325$ 125,810$ (In thousands) 12/31/2011 6/30/2012 12/31/2012 6/30/2013 12/31/2013 6/30/2014 Unaudited Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities: Net cash provided by operating activities 42,337$ 51,526$ 72,702$ 83,912$ 95,558$ 113,475$ Net change in operating assets and liabilities (18,290) (2,571) (6,735) (5,425) 11,635 6,509 Interest expense 393 309 693 2,881 2,806 3,012 Current income tax provision (benefit) (1) - - 78 326 2,814 Adjusted EBITDA 24,439$ 49,264$ 66,660$ 81,446$ 110,325$ 125,810$ Six Months Ended Six Months Ended
Exhibit 99.2
MATADOR RESOURCES COMPANY ANNOUNCES
PRICING OF PUBLIC OFFERING OF COMMON STOCK
DALLAS, April 16, 2015 - Matador Resources Company (NYSE: MTDR) (“Matador”) announced today that it has priced an underwritten public offering of 7,000,000 shares of its common stock. Total estimated proceeds of the offering to Matador, before estimated offering expenses, are approximately $189 million. The offering is expected to close on April 21, 2015, subject to customary closing conditions.
Matador intends to use the net proceeds from this offering to repay outstanding borrowings under its revolving credit facility, to fund a portion of its future capital expenditures, including the possible addition of a third drilling rig in the Permian Basin in the next six to nine months and targeted acquisitions of additional acreage in the Permian Basin, as well as in the Eagle Ford shale and the Haynesville shale, and for other general working capital needs. Pending such uses, Matador intends to invest the funds in short-term marketable securities or apply them to the reduction of other short-term indebtedness.
RBC Capital Markets is acting as the sole underwriter of the offering. The underwriter may offer the shares of Matador’s common stock from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.
When available, copies of the preliminary prospectus supplement, prospectus supplement and accompanying base prospectus relating to the offering may be obtained free of charge on the Securities and Exchange Commission’s website at www.sec.gov or from the underwriter of the offering by sending a request to: RBC Capital Markets, Attn: Equity Syndicate, Three World Financial Center, 200 Vesey Street, 8th Floor, New York, New York 10281. By telephone (877) 822-4089.
The shares of common stock will be offered and sold pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering is being made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”).
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 Eagle Ford shale play in South Texas and the Wolfcamp and Bone Spring plays in the Permian Basin in Southeast New Mexico and West Texas. Matador also operates in the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act 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, 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, 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; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions, including the HEYCO merger; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base 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 filings with the Securities and Exchange Commission, 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 and does not intend 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 Securities and Exchange Commission. 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.
Contact Information
Mac Schmitz
Investor Relations
(972) 371-5225
mschmitz@matadorresources.com