DALLAS--(BUSINESS WIRE)--May 3, 2016--
Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”), an
independent energy company engaged in the exploration, development,
production and acquisition of oil and natural gas resources, with an
emphasis on oil and natural gas shale and other unconventional plays and
with a current focus on its Delaware Basin operations in Southeast New
Mexico and West Texas, today reported financial and operating results
for the three months ended March 31, 2016.
This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20160503007041/en/
Sequential and year-over-year quarterly comparisons of selected
financial and operating items are shown in the following table:
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Three Months Ended
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March 31, 2016
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December 31, 2015
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March 31, 2015
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Net Production Volumes:(1)
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Oil (MBbl)(2)
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1,044
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1,062
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1,009
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Natural gas (Bcf)(3)
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6.8
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6.6
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6.6
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Total oil equivalent (MBOE)(4)
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2,170
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2,167
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2,116
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Average Daily Production Volumes:(1)
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Oil (Bbl/d)
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11,473
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11,547
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11,206
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Natural gas (MMcf/d)
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74.2
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72.1
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73.8
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Total oil equivalent (BOE/d)(5)
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23,846
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23,556
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23,513
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Average Sales Prices:
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Oil, with realized derivatives (per Bbl)
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$
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34.12
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$
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57.61
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$
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57.68
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Oil, without realized derivatives (per Bbl)
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$
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28.89
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$
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38.55
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$
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43.37
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Natural gas, with realized derivatives (per Mcf)
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$
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2.27
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$
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3.01
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$
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3.43
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Natural gas, without realized derivatives (per Mcf)
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$
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2.04
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$
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2.30
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$
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2.82
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Revenues (millions):
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Oil and natural gas revenues
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$
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43.9
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$
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56.2
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$
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62.5
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Realized gain on derivatives
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$
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7.1
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$
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24.9
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$
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18.5
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Operating Expenses (per BOE):
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Production taxes and marketing
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$
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3.64
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$
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4.12
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$
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3.33
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Lease operating
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$
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7.14
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$
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7.05
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$
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6.16
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Depletion, depreciation and amortization
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$
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13.33
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$
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16.32
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$
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21.96
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General and administrative(6)
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$
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6.07
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$
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5.34
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$
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6.34
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Total(7)
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$
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30.18
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$
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32.83
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$
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37.79
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Adjusted EBITDA (millions):(8)
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$
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17.2
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$
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48.3
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$
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50.1
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Earnings per share (diluted):
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$
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(1.26
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)
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$
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(2.72
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)
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$
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(0.68
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)
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Adjusted Earnings per share (diluted):(9)
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$
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(0.16
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)
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$
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0.03
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$
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0.01
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(1) Production volumes and proved reserves reported in two streams:
oil and natural gas, including both dry and liquids-rich natural gas.
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(2) One thousand barrels of oil.
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(3) One billion cubic feet of natural gas.
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(4) One thousand barrels of oil equivalent, estimated using a
conversion ratio of one barrel of oil per six thousand cubic feet of
natural gas.
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(5) Barrels of oil equivalent per day, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural
gas.
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(6) Includes approximately $1.03, $1.18 and $1.10 per BOE of
non-cash, stock-based compensation expenses in the first quarter of
2016, the fourth quarter of 2015 and the first quarter of 2015,
respectively, and non-recurring transaction costs of $1.06 per BOE
in the first quarter of 2015.
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(7) Total does not include the impact of full-cost ceiling
impairment charges or immaterial accretion expenses.
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(8) Adjusted EBITDA is a non-GAAP financial measure. For a
definition of Adjusted EBITDA and a reconciliation of Adjusted
EBITDA (non-GAAP) to net income (GAAP) and net cash provided by
operating activities (GAAP), please see “Supplemental Non-GAAP
Financial Measures.”
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(9) Adjusted Earnings per share is a non-GAAP financial measure. For
a definition of Adjusted Earnings per share and a reconciliation of
Adjusted Earnings per share (non-GAAP) to Earnings per share (GAAP),
please see “Supplemental Non-GAAP Financial Measures.”
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A short presentation summarizing the highlights of Matador’s first
quarter 2016 earnings release is also included on the Company’s website
at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab.
Management Comments
Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “The first
quarter of 2016 progressed consistent with the guidance and projections
provided at our Analyst Day presentation on February 3 in Dallas. Our
production was in line with our original forecasts for the quarter,
despite the negative impacts of winter weather shut-ins in the Delaware
Basin in early January and of flooding rains in Northwest Louisiana in
early March, which kept portions of our Haynesville and Cotton Valley
natural gas production in the Elm Grove area shut in for two to three
weeks.
“The highlight of the quarter operationally was the increase in our
proved oil and natural gas reserves, which increased to 90.2 million BOE
at March 31, 2016, an all-time high for Matador, and a year-over-year
increase of 14% from 79.3 million BOE at March 31, 2015, despite the
continued decline in commodity prices over a period of almost two years.
Our proved oil reserves increased to 50.7 million barrels at March 31,
2016, also an all-time high, and a year-over-year increase of 56% from
32.5 million barrels at March 31, 2015. These increases in total proved
reserves—and especially in our proved oil reserves—are primarily
attributable to our ongoing delineation and development drilling and
completion operations in the Delaware Basin.
“We continued to make steady improvements in our drilling and completion
efficiencies and well costs in the Delaware Basin in the first quarter
of 2016, and the Operations Update included with this earnings release
highlights a number of these recent achievements. Our oil production in
the second quarter is expected to increase approximately 10 to 12% as we
bring new production online from several multi-well pads drilled in our
Wolf and Rustler Breaks prospect areas where we completed a number of
wells in late March and into the first part of the second quarter.
Matador’s drilling and completion engineers continue to innovate and use
the latest available technologies to reduce our drilling times and costs
and to achieve better well results from our completion operations. With
the recent completion of several new wells on the Dick Jay and Dorothy
White multi-well pads in our Wolf prospect area, the second quarter is
off to a strong start. At the start of May, our production had increased
from average first quarter production of approximately 23,800 BOE per
day, consisting of 11,500 barrels of oil per day and 74.2 million cubic
feet of natural gas per day, to approximately 27,300 BOE per day,
consisting of about 13,700 barrels of oil per day and 81.7 million cubic
feet of natural gas per day. Matador expects to complete and place on
production 16 new operated wells in our Wolf and Rustler Breaks prospect
areas during the second quarter.
“Financially, our results reflect the low commodity prices experienced
during the first quarter of 2016, which were the lowest in many years
and certainly the lowest in any period since Matador became a public
company. Despite the tough commodity price environment, however, we
continued to keep our balance sheet strong, raising approximately $142
million through the sale of equity during the first quarter, providing
us with ample liquidity to continue our three-rig drilling program and
associated midstream activities in the Delaware Basin. The recent rally
in commodity prices, and particularly in oil prices, has been
encouraging, and both the increase in our production and the rise in
commodity prices should result in a much stronger second quarter. We
anticipate continued production growth and improvement in our operating
results throughout the remainder of 2016.”
First Quarter 2016 Operating and Financial Results
Production and Revenues
Three months ended March 31, 2016 as compared to three months ended
March 31, 2015
Average daily oil equivalent production was up 1% from 23,513 BOE per
day (48% oil by volume) in the first quarter of 2015 to 23,846 BOE per
day (48% oil by volume) during the first quarter of 2016. Total oil
production increased 3% from 1.01 million barrels of oil, or 11,206
barrels of oil per day, during the first quarter of 2015 to 1.04 million
barrels of oil, or 11,473 barrels of oil per day, during the first
quarter of 2016. This increase in oil production was primarily a result
of Matador’s ongoing delineation and development drilling in the
Delaware Basin, which offset declining oil production in the Eagle Ford
shale where the Company has not drilled and completed any new operated
wells since very early in the second quarter of 2015. Matador’s Delaware
Basin oil production almost tripled year-over-year from approximately
222,000 barrels, or 2,467 barrels of oil per day, in the first quarter
of 2015 to approximately 653,000 barrels, or about 7,172 barrels of oil
per day, in the first quarter of 2016.
Total natural gas production was up 2% from 6.6 billion cubic feet of
natural gas, or 73.8 million cubic feet of natural gas per day, during
the first quarter of 2015 to 6.8 billion cubic feet of natural gas, or
74.2 million cubic feet of natural gas per day, during the first quarter
of 2016. This increase in natural gas production was primarily
attributable to increased natural gas production from Matador’s ongoing
delineation and development drilling in the Delaware Basin. Matador’s
Delaware Basin natural gas production increased 2.6-fold from 0.6
billion cubic feet of natural gas, or about 6.5 million cubic feet of
natural gas per day, in the first quarter of 2015 to 1.5 billion cubic
feet of natural gas, or approximately 16.7 million cubic feet of natural
gas per day, in the first quarter of 2016. The Company achieved this
increase despite its natural gas production being impacted negatively by
severe flooding in Northwest Louisiana during the first quarter of 2016,
which resulted in a portion of its Haynesville and Cotton Valley natural
gas production, including both operated and non-operated properties in
the Elm Grove area, being shut-in for two to three weeks. All of this
natural gas production is now back online.
Oil and natural gas revenues decreased 30% from $62.5 million in the
first quarter of 2015 to $43.9 million in the first quarter of 2016. Oil
revenues decreased 31% from $43.7 million in the first quarter of 2015
to $30.2 million in the first quarter of 2016, despite the 3% increase
in oil production from 1.01 million barrels in the first quarter of 2015
to 1.04 million barrels in the first quarter of 2016. This lower oil
revenue was attributable to a sharp decline of 33% in the weighted
average oil price realized by the Company from $43.37 per barrel in the
first quarter of 2015 to $28.89 per barrel realized in the first quarter
of 2016. Natural gas revenues decreased 26% from $18.7 million during
the first quarter of 2015 to $13.8 million during the first quarter of
2016, despite the 2% increase in natural gas production from 6.6 billion
cubic feet in the first quarter of 2015 to 6.8 billion cubic feet in the
first quarter of 2016. This lower natural gas revenue was attributable
to a 28% decrease in the weighted average natural gas price realized
from $2.82 per thousand cubic feet in the first quarter of 2015 to $2.04
per thousand cubic feet in the first quarter of 2016.
Total realized revenues, including realized hedging gains and losses,
but excluding unrealized, non-cash hedging gains and losses, decreased
37% year-over-year from $81.0 million in the first quarter of 2015 to
$51.0 million in the first quarter of 2016. Realized hedging gains,
primarily from oil and natural gas hedges, were $7.1 million in the
first quarter of 2016, as compared to realized hedging gains of $18.5
million in the first quarter of 2015. Including the impacts of realized
hedging gains, Matador realized weighted average oil and natural gas
prices of $34.12 per barrel and $2.27 per thousand cubic feet,
respectively, during the first quarter of 2016, as compared to $57.68
per barrel and $3.43 per thousand cubic feet, respectively, during the
first quarter of 2015.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP financial measure, decreased 66% from $50.1
million during the first quarter of 2015 to $17.2 million in the first
quarter of 2016. This decrease in Adjusted EBITDA was primarily
attributable to the sharp decline in commodity prices during the first
quarter of 2016 (weighted average realized oil and natural gas prices of
$28.89 per barrel and $2.04 per thousand cubic feet, respectively), as
compared to the first quarter of 2015 (weighted average realized oil and
natural gas prices of $43.37 per barrel and $2.82 per thousand cubic
feet, respectively), as discussed in the previous section.
For a definition of Adjusted EBITDA and a reconciliation of Adjusted
EBITDA (non-GAAP) to net income (GAAP) and net cash provided by
operating activities (GAAP), please see “Supplemental Non-GAAP Financial
Measures” below.
Net Income (Loss) and Earnings (Loss) Per Share
For the first quarter of 2016, Matador reported a net loss of
approximately $107.7 million and a loss of $1.26 per diluted common
share on a GAAP basis, as compared to a net loss of approximately $50.2
million and a loss of $0.68 per diluted common share in the first
quarter of 2015.
Matador’s net loss per diluted common share (GAAP basis) for the first
quarter of 2016 was unfavorably impacted by (1) lower realized commodity
prices, (2) a non-cash, unrealized loss on derivatives of $6.8 million
and (3) a non-cash, full-cost ceiling impairment of $80.5 million.
Matador’s net loss per diluted common share for the first quarter of
2016 was favorably impacted and mitigated by (1) a realized gain on
derivatives of $7.1 million and (2) improvements in total operating
expenses year-over-year.
For the first quarter of 2016, Matador reported an adjusted net loss of
approximately $13.9 million and an adjusted loss of $0.16 per diluted
common share, each as adjusted on a non-GAAP basis to exclude a
non-cash, unrealized loss on derivatives of $6.8 million, a non-cash,
full-cost ceiling impairment of $80.5 million and a gain on asset sales
of $1.1 million.
For a reconciliation of adjusted net income (non-GAAP) and adjusted
earnings (loss) per common share (non-GAAP) to net income (loss)(GAAP)
and earnings (loss) per common share (GAAP), please see “Supplemental
Non-GAAP Financial Measures” below.
Operating Expenses
Production Taxes and Marketing
Production taxes and marketing expenses increased 12% on an absolute
basis, and increased 9% on a unit-of-production basis, from $7.0
million, or $3.33 per BOE, for the three months ended March 31, 2015, as
compared to $7.9 million, or $3.64 per BOE, for the three months ended
March 31, 2016. The increase in production taxes and marketing expenses
was primarily attributable to higher natural gas marketing and
processing expenses, offset to some extent by lower production taxes
attributable to the decrease in oil and natural gas revenues between the
respective periods.
Lease Operating Expenses (“LOE”)
Lease operating expenses increased 19% on an absolute basis, and
increased 16% on a unit-of-production basis, from $13.0 million, or
$6.16 per BOE, for the three months ended March 31, 2015, as compared to
$15.5 million, or $7.14 per BOE, for the three months ended March 31,
2016. This increase in unit-of-production lease operating expenses was
attributable to several key factors including (1) weather, (2) increased
field supervisory costs associated with the Company’s expanding
operations in the Delaware Basin, (3) higher-than-anticipated salt water
disposal costs in the Rustler Breaks prospect area early in the first
quarter and (4) unanticipated maintenance and mechanical issues on
several of the Company’s Eagle Ford properties. Matador’s lease
operating expenses were somewhat higher than its target early in the
first quarter of 2016, but had declined to below its first quarter
target of $6.50 per BOE for the month of March 2016, in line with the
Company’s expectations.
Depletion, depreciation and amortization (“DD&A”)
Depletion, depreciation and amortization expenses decreased 38% on an
absolute basis, and decreased 39% on a unit-of-production basis, from
$46.5 million, or $21.96 per BOE, for the three months ended March 31,
2015, as compared to $28.9 million, or $13.33 per BOE, for the three
months ended March 31, 2016. The decrease in DD&A expenses on both an
absolute and unit-of-production basis resulted from the 14% increase in
estimated total proved oil and natural gas reserves from 79.3 million
BOE at March 31, 2015 to 90.2 million BOE at March 31, 2016, as well as
the decrease in unamortized property costs resulting from full-cost
ceiling impairments in 2015. This increase in total proved oil and
natural gas reserves was primarily attributable to Matador’s continued
successful delineation and development of its acreage position in the
Delaware Basin.
Full-cost ceiling impairment
Matador uses the full-cost method of accounting for its investments in
oil and natural gas properties. Due to the sharp decline in commodity
prices since mid-year 2014, the unweighted arithmetic average oil and
natural gas prices that exploration and production companies are
required to use in estimating total proved reserves and present value,
discounted at 10% (“PV-10”) have also declined significantly. At March
31, 2016, these average oil and natural gas prices were $42.77 per
barrel and $2.40 per MMBtu, respectively, as compared to $46.79 per
barrel and $2.59 per MMBtu at December 31, 2015. This decline in the
unweighted arithmetic average commodity prices of approximately $4 per
barrel of oil and $0.19 per MMBtu of natural gas continued to impact the
overall discounted value of the Company’s proved oil and natural gas
reserves. Thus, although Matador’s total proved oil and natural gas
reserves grew by 6% in the first three months of 2016, the PV-10 of its
proved reserves decreased by 7% from $541.6 million at December 31, 2015
to $501.9 million at March 31, 2016. As a result, the Company’s net
capitalized costs exceeded the full-cost ceiling by $80.5 million at
March 31, 2016. These charges are reflected in the Company’s unaudited
condensed consolidated statement of operations for the three months
ended March 31, 2016, which is included herein. Although oil and natural
gas prices have improved in recent weeks, Matador anticipates additional
full-cost ceiling impairments may be dictated in future periods, at
least until the unweighted arithmetic average oil and natural gas prices
used to estimate total proved reserves and PV-10 are no longer
declining. At May 3, 2016, Matador expects a further decline in these
unweighted arithmetic average commodity prices at June 30, 2016, as oil
and natural gas prices in the second quarter of 2015 were higher than
prices observed thus far in the second quarter of 2016.
General and administrative (“G&A”)
General and administrative expenses decreased 2% on an absolute basis,
and decreased 4% on a unit-of-production basis, from $13.4 million, or
$6.34 per BOE, for the three months ended March 31, 2015 to $13.2
million, or $6.07 per BOE, for the three months ended March 31, 2016.
During the first quarter of 2015, the Company incurred one-time
transaction costs of approximately $2.2 million (or $1.06 per BOE) in
connection with the merger of our wholly-owned subsidiary with Harvey E.
Yates Company (the “HEYCO Merger”) in late February 2015. In the first
quarter of 2016, these prior year transaction costs were substantially
offset by increased payroll expenses associated with additional
employees joining Matador between the respective periods, including the
addition of 29 new employees in Roswell, New Mexico as a result of the
HEYCO Merger. General and administrative expenses also included non-cash
stock-based compensation expense of $2.2 million (or $1.03 per BOE), for
the three months ended March 31, 2016, as compared to $2.3 million (or
$1.10 per BOE) for the three months ended March 31, 2015. The decrease
in G&A expenses on a unit-of-production basis was also attributable to
the 2% increase in total oil equivalent production between the
respective periods.
Proved Reserves and PV-10
The following table summarizes Matador’s estimated total proved oil and
natural gas reserves at March 31, 2016, December 31, 2015 and March 31,
2015.
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March 31,
2016
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|
December 31,
2015
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|
March 31,
2015
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|
Estimated proved reserves:(1)(2)
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|
|
|
|
|
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Oil (MBbl)(3)
|
|
|
50,718
|
|
|
|
45,644
|
|
|
32,506
|
|
|
Natural Gas (Bcf)(4)
|
|
|
236.7
|
|
|
|
236.9
|
|
|
280.5
|
|
|
Total (MBOE)(5)
|
|
|
90,168
|
|
|
|
85,127
|
|
|
79,262
|
|
|
Estimated proved developed reserves:
|
|
|
|
|
|
|
|
Oil (MBbl)(3)
|
|
|
16,818
|
|
|
|
17,129
|
|
|
15,889
|
|
|
Natural Gas (Bcf)(4)
|
|
|
96.9
|
|
|
|
101.4
|
|
|
104.7
|
|
|
Total (MBOE)(5)
|
|
|
32,968
|
|
|
|
34,037
|
|
|
33,340
|
|
|
Percent developed
|
|
|
36.6
|
%
|
|
|
40.0
|
%
|
|
42.1
|
%
|
|
Estimated proved undeveloped reserves:
|
|
|
|
|
|
|
|
Oil (MBbl)(3)
|
|
|
33,900
|
|
|
|
28,515
|
|
|
16,617
|
|
|
Natural Gas (Bcf)(4)
|
|
|
139.8
|
|
|
|
135.5
|
|
|
175.8
|
|
|
Total (MBOE)(5)
|
|
|
57,200
|
|
|
|
51,090
|
|
|
45,922
|
|
|
PV-10 (in millions)(6)
|
|
$
|
501.9
|
|
|
$
|
541.6
|
|
|
$
|
1,070.1
|
|
|
Standardized Measure (in millions)
|
|
$
|
495.6
|
|
|
$
|
529.2
|
|
|
$
|
949.2
|
|
|
(1) Numbers in table may not total due to rounding.
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|
|
(2) Production volumes and proved reserves are reported in two
streams: oil and natural gas, including both dry and liquids-rich
natural gas. Our estimated proved reserves, PV-10 and Standardized
Measure were determined using index prices for oil and natural gas,
without giving effect to derivative transactions, and were held
constant throughout the life of the properties. The unweighted
arithmetic averages of the first-day-of-the-month prices for the
period from April 2015 through March 2016 were $42.77 per Bbl for
oil and $2.40 per MMBtu for natural gas, for the period from January
2015 through December 2015 were $46.79 per Bbl for oil and $2.59 per
MMBtu for natural gas and for the period from April 2014 through
March 2015 were $79.21 per Bbl for oil and $3.88 per MMBtu for
natural gas. These prices were adjusted by property for quality,
energy content, regional price differentials, transportation fees,
marketing deductions and other factors affecting the price received
at the wellhead.
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(3) One thousand barrels of oil.
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(4) One billion cubic feet of natural gas.
|
|
|
(5) One thousand barrels of oil equivalent, estimated using a
conversion of one barrel of oil per six thousand cubic feet of
natural gas.
|
|
(6) PV-10 is a non-GAAP financial measure. For a reconciliation of
PV-10 (non-GAAP) to Standardized Measure (GAAP), please see
“Supplemental Non-GAAP Financial Measures” below.
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|
|
Matador’s estimated total proved oil and natural gas reserves were 90.2
million BOE at March 31, 2016, an all-time high, including 50.7 million
barrels of oil and 236.7 billion cubic feet of natural gas, with a
PV-10, a non-GAAP financial measure, of $501.9 million (Standardized
Measure of $495.6 million), an increase of 6% as compared to estimated
total proved oil and natural gas reserves of 85.1 million BOE at
December 31, 2015, including 45.6 million barrels of oil and 236.9
billion cubic feet of natural gas, with a PV-10 of $541.6 million
(Standardized Measure of $529.2 million), and an increase of 14% as
compared to 79.3 million BOE at March 31, 2015, including 32.5 million
barrels of oil and 280.5 billion cubic feet of natural gas, with a PV-10
of $1.07 billion (Standardized Measure of $949.2 million).
Proved oil reserves increased 11% from 45.6 million barrels at
December 31, 2015 to 50.7 million barrels at March 31, 2016, and
increased 56% from 32.5 million barrels at March 31, 2015. At March 31,
2016, approximately 56% of the Company’s total proved reserves were oil
and 44% were natural gas. By comparison, at March 31, 2015,
approximately 41% of the Company’s total proved reserves were oil and
59% were natural gas. Primarily as a result of the continued decline in
commodity prices used to estimate proved reserves at March 31, 2016,
certain of the Company’s proved undeveloped reserves, and in particular
proved undeveloped natural gas reserves in portions of the Haynesville
shale, were reclassified to contingent resources and are no longer
considered proved reserves under applicable Securities and Exchange
Commission (“SEC”) guidelines.
Matador reports its production and estimated proved reserves in two
streams: an oil stream and a natural gas stream, which includes both dry
natural gas and liquids-rich natural gas. Where the Company produces
liquids-rich natural gas, as it does in the Delaware Basin in Southeast
New Mexico and West Texas and the Eagle Ford shale in South Texas, the
economic value of the natural gas liquids associated with the natural
gas is included as an uplift to the estimated natural gas wellhead price
on those properties where the natural gas liquids are extracted and
sold. The reserves estimates in all periods presented were prepared by
the Company’s internal engineering staff and audited by an independent
reservoir engineering firm, Netherland, Sewell & Associates, Inc. These
reserves estimates were prepared in accordance with the SEC’s rules for
oil and natural gas reserves reporting and do not include any unproved
reserves classified as probable or possible that might exist on
Matador’s properties.
As a result of Matador’s drilling, completion and delineation activities
in West Texas and Southeast New Mexico since 2014, the Company’s
Delaware Basin oil and natural gas reserves continue to become a more
significant component of its total oil and natural gas reserves.
Matador’s estimated Delaware Basin proved oil and natural gas reserves
have increased approximately 2.6-fold from 22.9 million BOE at March 31,
2015, or 29% of the Company’s total proved oil and natural gas reserves,
including 15.0 million barrels of oil and 47.6 billion cubic feet of
natural gas, to 59.6 million BOE, or 66% of the Company’s total proved
oil and natural gas reserves, including 37.7 million barrels of oil and
131.6 billion cubic feet of natural gas, at March 31, 2016.
For a reconciliation of PV-10 (non-GAAP) to Standardized Measure
(GAAP), please see “Supplemental Non-GAAP Financial Measures” below.
Operations Update
Delaware Basin - Southeast New Mexico and West Texas
During the first quarter of 2016, Matador operated three drilling rigs
in the Delaware Basin. Early in the first quarter, two of these rigs
were operating in the Wolf prospect area in Loving County, Texas and one
was operating in the Rustler Breaks prospect area in Eddy County, New
Mexico. In late February, one of these rigs was moved to Rustler Breaks,
and since that time and at May 3, 2016, two rigs were operating at
Rustler Breaks and one rig was operating at Wolf. Matador expects to
operate two rigs at Rustler Breaks until the end of the second quarter,
at which time it will move one of these rigs to its Ranger and Arrowhead
prospect areas in Lea and Eddy Counties, New Mexico for the remainder of
2016. These plans are consistent with the 3-rig drilling program
outlined by Matador at its Analyst Day on February 3, 2016 and affirmed
in its February 24, 2016 earnings release and subsequent investor
presentations.
Matador’s first quarter was primarily focused on drilling activities,
particularly with the drilling of several multi-well pads at Wolf and
Rustler Breaks. As a result, the Company placed only three operated
wells on production in the Delaware Basin during the first quarter of
2016, one of which, the Dick Jay 92-TTT-B01 WF #124H (Dick Jay #124H), a
Second Bone Spring completion in the Wolf prospect area, was placed on
production in mid-March and thus did not contribute fully to first
quarter production volumes. As a result, the Company’s oil production
declined 2%, while total oil equivalent production remained flat in the
first quarter of 2016, as compared to the fourth quarter of 2015.
Matador expects a significant increase in its oil, natural gas and total
oil equivalent production in the second quarter of 2016 as more of the
wells drilled in the first quarter, and wells currently being drilled,
are completed and placed on production.
At May 3, 2016, Matador has drilled nine wells in its Wolf prospect area
year-to-date, with seven of those wells now completed and on production
and two more just beginning to flow back and clean up following
stimulation operations. The Company is currently drilling a two-well pad
(both Wolfcamp A-XY wells) on its Barnett lease in the Wolf prospect
area. Matador has drilled six wells in its Rustler Breaks prospect area
year-to-date, with two of those wells having just been completed and
four more awaiting completion. The Company is running two rigs at
Rustler Breaks, both drilling Wolfcamp B wells on the B. Banker and
Guitar leases, respectively. Matador did not complete as many wells in
the first quarter of 2016 as originally planned, while it finalized
negotiations on a new fracturing services pricing agreement for 2016. As
a result, the Company is currently using two fracturing crews in order
to complete its back-log of recently drilled wells and to place these
wells on production as soon as possible. Matador estimates that it will
complete and place on production 16 gross (13.7 net) wells throughout
the second quarter of 2016.
Matador’s Delaware Basin assets continue to be an increasingly important
component of the Company’s portfolio. During the first quarter of 2016,
Matador’s Delaware Basin production averaged approximately 10,000 BOE
per day (consisting of 7,172 Bbl of oil per day and 16.7 million cubic
feet of natural gas per day). Matador’s Delaware Basin production grew
2.8-fold from an average total production of approximately 3,500 BOE per
day in the first quarter of 2015 (consisting of 2,467 Bbl of oil and 6.5
million cubic feet of natural gas per day) and increased 14% from an
average total production of about 8,700 BOE per day in the fourth
quarter of 2015 (consisting of 6,117 Bbl of oil per day and 15.6 million
cubic feet of natural gas per day).
Matador’s midstream operations continue to proceed as planned. As
previously reported, Matador is currently building a cryogenic natural
gas processing plant and the associated natural gas gathering system in
the Rustler Breaks prospect area to support its future development
efforts there. The Rustler Breaks natural gas processing plant is
expected to have an inlet capacity of approximately 60 million cubic
feet of natural gas per day. At May 3, 2016, the construction of the
Rustler Breaks plant is proceeding on time and on budget, and Matador
expects the plant to become operational during the third quarter of 2016.
Wolf/Loving Prospect Area - Loving County, Texas
At May 3, 2016, Matador is operating one drilling rig in its Wolf
prospect area and expects to run at least one rig in this area
throughout 2016. From January 1 through late February 2016, Matador
operated two drilling rigs in the Wolf prospect area. One of these rigs
drilled a four-well pad in “batch” mode (the Dick Jay pad), testing the
Wolfcamp A-XY (two horizontals, one in the A-X and one in the A-Y), the
Wolfcamp A-Lower and the Second Bone Spring. As noted above, the Dick
Jay #124H well, the Second Bone Spring test, was completed and placed on
production during March 2016. The remaining three wells, the Dick Jay
92-TTT-B01 WF #203H (Dick Jay #203H), the Wolfcamp A-Y test, the Dick
Jay 92-TTT-B01 WF #204H (Dick Jay #204H), the Wolfcamp A-X test, and the
Dick Jay 92-TTT-B01 WF #212H (Dick Jay #212H), the Wolfcamp A-Lower
test, were completed and placed on production during April 2016. The
second rig drilled a three-well pad in “batch” mode (the Dorothy White
pad), with each well testing the Wolfcamp A-XY (three horizontals). The
Dorothy White 82-TTT-B33 WF #202H and #204H wells (Dorothy White #202H
and #204H) were Wolfcamp A-X tests and the Dorothy White 82-TTT-B33 WF
#208H (Dorothy White #208H) was a Wolfcamp A-Y test. Each of these three
wells was completed and placed on production in mid-to-late April. At
May 3, 2016, Matador has drilled, completed and just initiated flowback
after stimulation from two additional Dorothy White wells in the Wolf
prospect, one Wolfcamp A-X and one Second Bone Spring test, and is
currently batch drilling two new wells on its Barnett lease.
Matador continues to make progress in reducing drilling times and well
costs for both Wolfcamp and Bone Spring horizontal wells in the Wolf
prospect area. In the Wolfcamp, the Company’s most recently drilled
well, the Dorothy White 82-TTT-B33 WF #203H, was drilled from spud to
total depth of 15,550 feet in 17.3 days, as compared to average drilling
times of 43 days in 2014 for similar depths. In the Second Bone Spring,
the Dick Jay #124H was Matador’s fastest Second Bone Spring well drilled
to date in this area at approximately 12.6 days from spud to total depth
of 14,883 feet. In addition, the Company’s drilling engineers were able
to eliminate a second intermediate casing string typically used when
drilling the Second Bone Spring in this area. Not only did eliminating
this casing string save approximately $650,000 in well costs, but it
also provides for larger casing to be set through the lateral, thereby
reducing hydraulic horsepower costs during fracturing operations and
enhancing the number of artificial lift options available to the Company
in the future. Furthermore, by drilling multiple wells in “batch” mode,
Matador is able to reduce well costs even further. As an example, the
Company estimates that it saved up to $400,000 in drilling costs per
well, or a total of approximately $1.6 million, by drilling the four
Dick Jay wells in “batch” mode on a single pad. Completion costs have
also continued to improve significantly as a result of the Company’s
efficiencies, technology and reduced service costs.
Matador has been very pleased by the initial performance from all four
wells drilled and completed on the Dick Jay pad, which had an aggregate
24-hour initial potential of approximately 4,700 BOE per day, including
2,855 Bbl of oil per day and 11.1 million cubic feet of natural gas per
day. Matador has a working interest of approximately 79% in each of
these wells. The 24-hour initial potential test results from each well
are summarized in the table below.
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24-Hour Initial Potential Test Results
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Oil
|
|
|
|
Gas
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|
|
BOE
|
|
|
|
% Oil
|
|
|
|
FCP(1)
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Choke
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|
Well
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Interval
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(Bbl/d)
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|
(MMcf/d)
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(BOE/d)
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(psi)
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(inch.)
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Dick Jay #124H
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Second Bone Spring
|
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733
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|
|
|
2.2
|
|
|
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1,093
|
|
|
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67%
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|
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|
1,410
|
|
|
|
36/64"
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|
Dick Jay #203H
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Wolfcamp A-Y
|
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|
|
677
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|
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|
2.2
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|
|
|
1,050
|
|
|
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64%
|
|
|
|
3,000
|
|
|
|
28/64"
|
|
Dick Jay #204H
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Wolfcamp A-X
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|
906
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|
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3.9
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|
|
|
1,553
|
|
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58%
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|
2,950
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30/64"
|
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Dick Jay #212H
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Wolfcamp A-Lower
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539
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2.8
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|
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1,009
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53%
|
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2,475
|
|
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30/64"
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Total
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2,855
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11.1
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4,705
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61%
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|
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|
|
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|
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(1) Flowing casing pressure.
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The Dick Jay #124H, the Second Bone Spring test, flowed approximately
1,100 BOE per day (67% oil), which exceeded the Company’s expectations
and is a significant improvement over Matador’s first Second Bone Spring
test in this area. Matador pumped a larger fracture treatment on the
Dick Jay #124H well, using 40 barrels per foot of fracturing fluid and
2,000 pounds of 20/40 sand per foot of lateral compared to its previous
Second Bone Spring completion in the Wolf prospect area, which used only
20 barrels per foot of fracturing fluid and about 1,300 pounds of 30/50
sand per foot of lateral. Matador also ran flow-through plugs with
dissolvable balls for the first time on this well; these dissolvable
balls performed very well, eliminating the need for the plugs to be
drilled out following completion, thus saving another $40,000 in well
costs. Total costs for this well were approximately $4.4 million, some
of which was attributable to extended flowback equipment used to test
the Second Bone Spring completion while the deeper Wolfcamp laterals
were being completed. In the near future, Matador estimates that it
should be able drill, complete and equip Second Bone Spring wells in
this area for under $4 million. Given the success of the Dick Jay #124H
well, Matador is considering scheduling changes to allow for additional
Second Bone Spring tests on its Wolf acreage during 2016.
The Dick Jay #203H (Wolfcamp A-Y) and the Dick Jay #204H (Wolfcamp A-X)
wells are also excellent wells, with the Dick Jay #204H well having the
second highest 24-hour initial potential flow rate recorded to date for
any well drilled on Matador’s Wolf prospect. Both wells were completed
using 40 barrels of fracturing fluid and just over 2,000 pounds of 30/50
sand per foot of lateral. In each of these wells, Matador revised the
fracturing fluid chemistry by testing a new surfactant on the Dick Jay
#203H and increasing surfactant concentration on the Dick Jay #204H.
This revised fluid design assisted in clean up of the fracturing fluid,
but it is still too early in the life of these wells to draw any
conclusions as to the effectiveness of the surfactants on longer-term
well performance.
The Dick Jay #212H marked Matador’s second test of the lower Wolfcamp A
(Wolfcamp A-Lower), the more organically rich interval of the Wolfcamp,
about 350 feet below the X and Y targets in the upper Wolfcamp. The
initial performance of this well is also an improvement over the initial
Wolfcamp A-Lower test, with higher total production, including higher
oil and significantly better natural gas flow rates, and higher flowing
pressures. Matador experimented with a hybrid slickwater/linear gel
design on this well in an attempt to reduce fracture height growth and
to focus more of the fracture treatment within the target formation.
This well was stimulated with almost 50 barrels of fracturing fluid and
about 2,200 pounds of 40/70 sand per foot of lateral. Early results
suggest an improvement in overall well productivity in the Wolfcamp
A-Lower as a result. In fact, the Dick Jay #212H well has continued to
clean up and improve since its earlier 24-hour initial potential test as
shown above, and at May 2, 2016, the well was producing 1,326 BOE per
day (54% oil), consisting of 713 barrels of oil per day and 3.7 million
cubic feet of natural gas per day.
Matador has also observed very strong initial performance from the
three-well pad recently drilled and completed on the Dorothy White
lease. These wells had an aggregate 24-hour initial potential of 4,327
BOE per day, including 2,940 Bbl of oil per day and 8.3 million cubic
feet of natural gas per day. Matador has an average working interest of
approximately 85% in these wells. The 24-hour initial potential test of
the Dorothy White #204H well of 1,671 BOE per day is the highest initial
potential flow rate recorded to date for any well drilled in the Wolf
prospect area. The 24-hour initial potential test results from each well
are summarized in the table below.
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|
|
|
|
|
|
|
|
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|
|
24-Hour Initial Potential Test Results
|
|
|
|
|
|
|
|
|
|
Oil
|
|
|
|
Gas
|
|
|
|
BOE
|
|
|
|
% Oil
|
|
|
|
FCP(1)
|
|
|
|
Choke
|
|
Well
|
|
|
|
Interval
|
|
|
|
(Bbl/d)
|
|
|
|
(MMcf/d)
|
|
|
|
(BOE/d)
|
|
|
|
|
|
|
|
(psi)
|
|
|
|
(inch.)
|
|
Dorothy White #202H
|
|
|
|
Wolfcamp A-X
|
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|
|
924
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|
|
3.0
|
|
|
|
1,416
|
|
|
|
65%
|
|
|
|
2,600
|
|
|
|
32/64"
|
|
Dorothy White #204H
|
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|
|
Wolfcamp A-X
|
|
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1,165
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|
|
|
3.0
|
|
|
|
1,671
|
|
|
|
70%
|
|
|
|
2,800
|
|
|
|
32/64"
|
|
Dorothy White #208H
|
|
|
|
Wolfcamp A-Y
|
|
851
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|
|
|
2.3
|
|
|
|
1,240
|
|
|
|
69%
|
|
|
|
2,400
|
|
|
|
32/64"
|
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|
|
|
|
|
|
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Total
|
|
2,940
|
|
|
|
8.3
|
|
|
|
4,327
|
|
|
|
68%
|
|
|
|
|
|
|
|
|
|
(1) Flowing casing pressure.
|
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|
Each of the three wells on the Dorothy White pad was stimulated with 40
barrels of fracturing fluid and 2,000 to 3,000 pounds of 30/50 sand per
foot of lateral. A diverting agent was pumped during each stage of the
fracture treatment on each well, and as a result, more perforation
clusters were used in each stage, resulting in longer stages. This, in
turn, resulted in fewer fracture stages being pumped on each well; these
wells were completed with 12 to 15 fracture stages, as opposed to 19
stages on each of the Wolfcamp A-XY wells completed on the Dick Jay pad.
Matador also continues to be pleased with the early performance of the
Billy Burt 90-TTT-B33 WF #201H well (Billy Burt #201H) where it used a
diverting agent as part of the fracture stimulation treatment for the
first time in late October 2015. After approximately six months of
production, the Billy Burt #201H well had produced about 157,000 BOE, or
about 38% more oil and natural gas than the immediate 80-acre offsetting
well having a similar lateral length, but where no diverting agent was
used.
Matador continues to test a variety of treatment modifications and
treatment additives and new technologies in an effort to improve and
optimize well performance from its Delaware Basin wells. In addition,
Matador also continues to use recycled produced water in the stimulation
of its newly drilled wells in the Wolf prospect area. Recycled produced
water made up between 70% and 100% of the total water volumes used in
the recent fracture treatments conducted on each of the nine wells
drilled and completed on the recent Dick Jay and Dorothy White pads.
Using recycled water saves the Company on costs to source fresh water,
as well as the disposal costs associated with produced water, in
addition to conserving fresh water for other uses in the Wolf area.
Rustler Breaks Prospect Area - Eddy County, New
Mexico
At May 3, 2016, Matador is operating two drilling rigs in its Rustler
Breaks prospect area in Eddy County, New Mexico and expects to run at
least one rig in this area throughout 2016. The Company began its 2016
drilling campaign at Rustler Breaks in mid-February and has drilled six
gross (5.3 net) wells in this area so far this year. None of these wells
were completed and placed on production during the first quarter of
2016. The first two of these wells, a two-well batch on the Jimmy Kone
pad testing the Wolfcamp A-XY and Wolfcamp B intervals, have now been
completed and are just starting to flow back following stimulation. Four
wells are waiting on completion, including three Wolfcamp A-XY tests and
one Wolfcamp B test, all located in the southeast portion of the Rustler
Breaks prospect area. These wells should be completed and placed on
production during May. One of these wells, the Paul 25-24S-28E #221H, is
now Matador’s fastest-drilled Wolfcamp well, being drilled in just 13.8
days from spud to total depth of 14,468 feet. Matador is currently
drilling a Wolfcamp B test on its B. Banker lease south of the Dr. K
24-23S-27E RB #203H well (Dr. K # 203H) and a Wolfcamp B test on its
Guitar lease, offsetting its Guitar 10-24S-28E RB #202H well (Guitar
#202H) that was drilled and placed on production just over one year ago.
Matador expects to continue to operate two rigs at Rustler Breaks
throughout the second quarter. At the end of the second quarter, one of
these rigs is expected to move to the Ranger and Arrowhead prospect
areas for the balance of 2016.
Matador continues to be very pleased with the results of recent wells
drilled in the Rustler Breaks prospect area. During the first quarter of
2016, the Janie Conner 13-24S-28E RB #224H well (Janie Conner #224H), a
Wolfcamp B completion during the fourth quarter of 2015, continued to
outpace the early performance of the Tiger 14-24S-28E RB #224H well
(Tiger #224H), which was also drilled and completed in the Wolfcamp B
formation in April 2015. As of late April 2016, the Janie Conner #224H
well had produced approximately 157,000 BOE (56% oil) in almost 5.5
months of production. The Tiger #224H well had produced approximately
278,000 BOE (42% oil) in just over 13 months of production. Both wells
continue to track above Matador’s one million BOE type curve for the
Rustler Breaks area.
The Dr. K #203H well, a Wolfcamp A-XY completion late in the fourth
quarter of 2015, also continued to perform well in early 2016. As of
late April 2016, this well had produced approximately 86,000 BOE (71%
oil) in about four months of production. The Dr. K #203H has exhibited
comparable early performance with Matador’s initial Wolfcamp A-XY
completion at Rustler Breaks, the Guitar #202H. The Guitar #202H well
was placed on production in mid-March 2015 and has produced
approximately 201,000 BOE (76% oil) in just over 13 months of
production. Both are excellent wells and continue to track at or above
Matador’s 800,000 BOE Wolfcamp A-XY type curve for the Rustler Breaks
area. Matador’s best Wolfcamp A-XY completion at Rustler Breaks,
however, the Tiger 14-24S-28E #204H well (Tiger #204H), continues to
outperform both of these wells. As of late April 2016, the Tiger #204H
well had produced approximately 214,000 BOE (78% oil) in its first 10
months of production and is tracking well above Matador’s 800,000 BOE
Wolfcamp A-XY type curve for this area.
Ranger Prospect Area - Lea County, New Mexico and
Arrowhead Prospect Area - Eddy County, New Mexico
Matador is not currently drilling in either its Ranger or Arrowhead
prospect areas, but expects to return to drilling in these areas during
the second half of 2016. The Company anticipates completing and placing
on production five gross (3.9 net) wells in this area in the latter half
of 2016, including two Second Bone Spring and three Third Bone Spring
wells. The Third Bone Spring wells are scheduled to be drilled beginning
in July 2016 and will be approximately 7,500-foot laterals.
Matador participated in one new, non-operated well on its Arrowhead
acreage during the first quarter of 2016. This well, the Yates Petroleum
Corporation Baroque “BTQ” Federal Com #1H well, tested at rates
averaging approximately 1,300 BOE per day (including approximately 1,100
barrels of oil per day and 1.2 million cubic feet of natural gas per
day) beginning in late March 2016. This well is located in the eastern
portion of Matador’s Arrowhead prospect area in Eddy County, New Mexico.
Matador owns a 9.5% working interest in this well, which provides yet
another indication of the prospectivity of Matador’s northern Delaware
Basin acreage.
Twin Lakes Prospect Area - Lea County, New Mexico
As discussed in its Analyst Day presentation on February 3, 2016,
Matador drilled an initial data collection well, the Olivine State
5-16S-37E TL #1 (Olivine State #1), in its Twin Lakes prospect area
during the fourth quarter of 2015. This was a vertical pilot hole
drilled for the purpose of collecting whole core and a detailed suite of
geophysical logs to assist Matador in determining the landing target for
its initial horizontal test of the Wolfcamp D interval at Twin Lakes.
The Company collected about 400 feet of whole core throughout much of
the Wolfcamp D interval, and the core data and well logs are undergoing
detailed description and analysis by both Matador’s geoscience staff and
third-party vendors. Matador currently plans to drill its Wolfcamp D
horizontal test in the fourth quarter of 2016.
The Olivine State #1 vertical pilot hole was drilled through the
Wolfcamp D and into and through the Strawn formation below. The Strawn
interval at about 11,500 feet is a complex carbonate formation that has
previously produced significant quantities of oil and natural gas in the
Twin Lakes area. Upon drilling through the Strawn interval, Matador’s
geoscience staff analyzed the well logs taken across the interval and
determined that there was the potential for a Strawn test in the Olivine
State #1. As a result, the Olivine State #1 was perforated and completed
in the Strawn interval with a small acid treatment during the first
quarter of 2016.
Matador is pleased to announce that this vertical Strawn completion in
the Olivine State #1 well referenced above flowed 691 BOE per day (84%
oil) during a 24-hour initial potential test, consisting of 579 barrels
of oil per day and 0.7 million cubic feet of natural gas per day, at a
flowing surface pressure of 350 psi on a 32/64 inch choke. Given the
positive results from this Strawn test, Matador now plans to produce the
Olivine State #1 vertical well, rather than plug back, kick off and
drill a horizontal Wolfcamp D test from this vertical wellbore as
originally anticipated. Matador expects to drill a new horizontal well
on the same pad to test the Wolfcamp D interval later this year. The
Company also notes that there appear to be additional bypassed Strawn
locations on its acreage in this area that may be targets for future
Strawn vertical or horizontal tests.
Delaware Basin Acreage Update
At December 31, 2015, Matador held 157,100 gross (88,800 net) acres in
the Permian Basin, primarily in Lea and Eddy Counties, New Mexico and
Loving County, Texas. Between January 1 and May 3, 2016, the Company
added approximately 2,500 gross (2,100 net) acres in Southeast New
Mexico and West Texas, bringing Matador’s total Permian Basin acreage
position to 158,000 gross (90,200 net) acres, almost all of which is
located in the Delaware Basin. At May 3, 2016, these acreage totals
included approximately 31,500 gross (19,100 net) acres in Matador’s
Ranger prospect area in Lea County, 47,400 gross (16,900 net) acres in
its Arrowhead prospect area in Eddy County, 21,700 gross (14,600 net)
acres in its Rustler Breaks prospect area in Eddy County, 12,400 gross
(7,700 net) acres in its Wolf and Jackson Trust prospect areas in Loving
County and 42,700 gross (30,300 net) acres in its Twin Lakes prospect
area in Lea County. Matador plans to continue its leasing and
acquisition efforts in the Delaware Basin during 2016, and may also
consider acquiring additional acreage in the Eagle Ford shale and
Haynesville shale as strategic opportunities are identified.
Liquidity, Capital Spending and Credit Update
On March 11, 2016, Matador completed a public offering of 7.5 million
shares of its common stock, receiving net proceeds of approximately
$141.5 million, which are being used for general corporate purposes,
including to fund a portion of the Company’s current and future capital
expenditures.
On February 26, 2016, Standard & Poor’s Ratings Services (“S&P”) raised
its issue-level rating on Matador’s senior unsecured debt to “B” (the
same level as Matador’s corporate credit rating) from B-. S&P’s
corporate rating on Matador remained “B” with a stable outlook. On March
24, 2016, Moody’s Investors Service (“Moody’s”) confirmed Matador’s B2
Corporate Family Rating with a stable outlook. At the same time, Moody’s
confirmed Matador’s Senior Unsecured Regular Bond/Debenture Rating at B3
and affirmed its Speculative Grade Liquidity Rating at SGL-3.
Matador incurred total capital spending of about $87.1 million in the
first quarter of 2016, approximately 15% less than the $103.0 million
anticipated. Capital expenditures for drilling and completion operations
and associated infrastructure was about $52.5 million, with expenditures
for midstream and land at $21.1 million and $12.2 million, respectively,
and other property and equipment expenditures of $1.3 million. Capital
expenditures for drilling and completion operations and associated
infrastructure were about $22.5 million less than anticipated. This
reflects, in part, cost savings on wells drilled in the first quarter
relative to Matador’s initial estimates, but also reflects fewer wells
being completed in the first quarter than originally planned; Matador
has incurred these completion costs early in the second quarter of 2016.
Midstream capital expenditures were consistent with estimates, as the
construction of the cryogenic natural gas processing plant and natural
gas gathering system at Rustler Breaks continues to proceed on schedule
and on budget. Land expenditures were higher than anticipated in the
first quarter of 2016, but reflect the addition of approximately 2,100
additional net acres in the Delaware Basin, additional working interests
in the Company’s properties acquired from non-operating participants and
lease extension costs. At May 3, 2016, Matador reaffirms its 2016
capital spending guidance of $325.0 million.
On May 3, 2016, the borrowing base under Matador’s revolving credit
facility was reduced from $375 million to $300 million, based on its
lenders’ review of the current valuation of Matador’s proved oil and
natural gas reserves at December 31, 2015 using commodity price
estimates prescribed by its bank group. Notably, the borrowing base
reduction was primarily attributable to the significant declines in oil
and natural gas prices since July 2014. In fact, this adjustment is the
first and only reduction in Matador’s conforming borrowing base that the
Company has received during this almost two-year period of declining
commodity prices. All other provisions of Matador’s revolving credit
facility remain unchanged, including the costs to borrow funds, as well
as Matador’s single financial covenant under its credit facility that
requires the Company to keep its ratio of total debt to Adjusted EBITDA
at or below 4.25. The Company’s bank group did not impose further
restrictions on Matador’s ability to access the borrowings available
under the facility. Given the continued growth in its reserves base,
Matador anticipates that the borrowing base under its credit facility
will increase in future periods, particularly if oil and natural gas
prices continue to improve.
At May 3, 2016, the Company had no outstanding borrowings and
approximately $0.6 million in outstanding letters of credit under its
revolving credit facility.
Hedging Positions
From time to time, Matador uses derivative financial instruments to
mitigate its exposure to commodity price risk associated with oil,
natural gas and natural gas liquids prices and to protect its cash flows
and borrowing capacity.
At May 3, 2016, Matador had the following hedges in place, in the form
of costless collars, for the remainder of 2016.
-
Approximately 1.8 million barrels of oil at a weighted average floor
price of $42 per barrel and a weighted average ceiling price of $61
per barrel.
-
Approximately 8.0 billion cubic feet of natural gas at a weighted
average floor price of $2.60 per MMBtu and a weighted average ceiling
price of $3.53 per MMBtu.
Matador estimates that it now has just over 50% of its anticipated oil
production and approximately 44% of its anticipated natural gas
production hedged for the remainder of 2016 based on the midpoint of its
production guidance.
At May 3, 2016, Matador had the following hedges in place, in the form
of costless collars, for 2017.
-
Approximately 1.6 million barrels of oil at a weighted average floor
price of $39 per barrel and a weighted average ceiling price of $48
per barrel.
-
Approximately 13.2 billion cubic feet of natural gas at a weighted
average floor price of $2.34 per MMBtu and a weighted average ceiling
price of $3.42 per MMBtu.
2016 Guidance Affirmation
At May 3, 2016, Matador affirms its 2016 guidance as initially provided
at its Analyst Day on February 3, 2016 and affirmed on February 24,
2016. This guidance is based on Matador running three operated drilling
rigs in the Delaware Basin throughout 2016.
As noted earlier in this release, Matador did not complete a number of
new wells drilled in its Wolf and Rustler Breaks prospect areas until
late in the first quarter or into the second quarter as it finalized
negotiations on a new stimulation services pricing agreement with its
vendor. The Company is currently using two fracturing crews to complete
its back-log of recently drilled wells and to place these wells on
production as soon as possible. As a result, Matador currently
anticipates a more steady production growth profile throughout 2016, as
opposed to the more uneven or “lumpy” production growth projected during
its Analyst Day presentation on February 3. At May 3, 2016, Matador
estimates that its oil production should increase by about 10 to 12% in
the second quarter, while still achieving fourth quarter 2016 oil
production approximately 34% higher than the fourth quarter of 2015.
Natural gas production is currently expected to increase by about 5 to
7% in the second quarter, but may decline slightly in the latter half of
2016, as increasing natural gas production in the Delaware Basin largely
offsets the anticipated declines in natural gas production resulting
from essentially no drilling activity in the Eagle Ford and Haynesville
shales plays during 2016.
Key elements of the Company’s 2016 guidance, based on a three-rig
drilling program, are as follows.
-
2016 capital expenditures of $325 million, including $260 million for
drilling, completions, facilities and infrastructure costs, $40
million for midstream activities in the Delaware Basin and $25 million
for discretionary land and seismic data;
-
2016 oil production guidance of 4.9 to 5.1 million barrels, an
increase of approximately 11% from 2015 actual oil production of 4.5
million barrels to the midpoint of 2016 production guidance;
-
2016 natural gas production guidance of 26.0 to 28.0 billion cubic
feet, a decrease of approximately 3% from 2015 actual natural gas
production of 27.7 billion cubic feet to the midpoint of 2016
production guidance;
-
2016 total oil equivalent production guidance of 9.2 to 9.8 million
BOE, an increase of approximately 4% from 2015 actual oil equivalent
production of 9.1 million BOE at the midpoint of 2016 production
guidance; and
-
2016 Adjusted EBITDA guidance of $120 to $130 million, a decrease of
approximately 44% from 2015 Adjusted EBITDA of $223.2 million based on
actual results for the first quarter of 2016 and estimated average
prices for the remainder of 2016 of $39.75 per barrel for oil (West
Texas Intermediate average oil price of $43.75 per barrel, less $4.00
per barrel of estimated price differentials, using the forward strip
for oil prices in late April 2016) and $2.37 per thousand cubic feet
for natural gas (NYMEX Henry Hub average natural gas price using the
forward strip for natural gas prices in late April 2016 and assuming
regional price differentials and uplifts from natural gas processing
roughly offset).
Conference Call Information
The Company will host a live conference call on Wednesday, May 4, 2016,
at 9:00 a.m. Central Time to review first quarter 2016 financial results
and operational highlights. To access the conference call, domestic
participants should dial (855) 875-8781 and international participants
should dial (720) 634-2925. The participant passcode is 97677813. The
conference call will also be available through the Company’s website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab. The replay
for the event will be available on the Company’s website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab through May
31, 2016.
About Matador Resources Company
Matador is an independent energy company engaged in the exploration,
development, production and acquisition of oil and natural gas resources
in the United States, with an emphasis on oil and natural gas shale and
other unconventional plays. Its current operations are focused primarily
on the oil and liquids-rich portion of the Wolfcamp and Bone Spring
plays in the Delaware Basin in Southeast New Mexico and West Texas.
Matador also operates in the Eagle Ford shale play in South Texas and
the Haynesville shale and Cotton Valley plays in Northwest Louisiana and
East Texas.
For more information, visit Matador Resources Company at www.matadorresources.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
“Forward-looking statements” are statements related to future, not past,
events. Forward-looking statements are based on current expectations and
include any statement that does not directly relate to a current or
historical fact. In this context, forward-looking statements often
address expected future business and financial performance, and often
contain words such as “could,” “believe,” “would,” “anticipate,”
“intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,”
“predict,” “potential,” “project,” “hypothetical,” “forecasted” and
similar expressions that are intended to identify forward-looking
statements, although not all forward-looking statements contain such
identifying words. 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
integrate acquisitions, including the merger with Harvey E. Yates
Company; its ability to make other acquisitions on economically
acceptable terms; 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 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 press release, except as required by law, including the
securities laws of the United States and the rules and regulations of
the SEC. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in their
entirety by this cautionary statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matador Resources Company and Subsidiaries
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
|
|
|
|
|
|
|
|
|
|
(In thousands, except par value and share data)
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
118,329
|
|
|
|
$
|
16,732
|
|
|
Restricted cash
|
|
|
|
510
|
|
|
|
|
44,357
|
|
|
Accounts receivable
|
|
|
|
|
|
|
|
Oil and natural gas revenues
|
|
|
|
14,748
|
|
|
|
|
16,616
|
|
|
Joint interest billings
|
|
|
|
16,807
|
|
|
|
|
16,999
|
|
|
Other
|
|
|
|
5,548
|
|
|
|
|
10,794
|
|
|
Derivative instruments
|
|
|
|
11,966
|
|
|
|
|
16,284
|
|
|
Lease and well equipment inventory
|
|
|
|
1,928
|
|
|
|
|
2,022
|
|
|
Prepaid expenses
|
|
|
|
3,250
|
|
|
|
|
3,203
|
|
|
Total current assets
|
|
|
|
173,086
|
|
|
|
|
127,007
|
|
|
Property and equipment, at cost
|
|
|
|
|
|
|
|
Oil and natural gas properties, full-cost method
|
|
|
|
|
|
|
|
Evaluated
|
|
|
|
2,192,053
|
|
|
|
|
2,122,174
|
|
|
Unproved and unevaluated
|
|
|
|
381,915
|
|
|
|
|
387,504
|
|
|
Other property and equipment
|
|
|
|
108,731
|
|
|
|
|
86,387
|
|
|
Less accumulated depletion, depreciation and amortization
|
|
|
|
(1,693,044
|
)
|
|
|
|
(1,583,659
|
)
|
|
Net property and equipment
|
|
|
|
989,655
|
|
|
|
|
1,012,406
|
|
|
Other assets
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
|
60
|
|
|
|
|
—
|
|
|
Other assets
|
|
|
|
1,351
|
|
|
|
|
1,448
|
|
|
Total other assets
|
|
|
|
1,411
|
|
|
|
|
1,448
|
|
|
Total assets
|
|
|
$
|
1,164,152
|
|
|
|
$
|
1,140,861
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
5,930
|
|
|
|
$
|
10,966
|
|
|
Accrued liabilities
|
|
|
|
84,495
|
|
|
|
|
92,369
|
|
|
Royalties payable
|
|
|
|
12,518
|
|
|
|
|
16,493
|
|
|
Amounts due to affiliates
|
|
|
|
3,898
|
|
|
|
|
5,670
|
|
|
Derivative instruments
|
|
|
|
299
|
|
|
|
|
—
|
|
|
Advances from joint interest owners
|
|
|
|
3,225
|
|
|
|
|
700
|
|
|
Deferred gain on plant sale
|
|
|
|
5,367
|
|
|
|
|
4,830
|
|
|
Amounts due to joint ventures
|
|
|
|
3,115
|
|
|
|
|
2,793
|
|
|
Income taxes payable
|
|
|
|
385
|
|
|
|
|
2,848
|
|
|
Other current liabilities
|
|
|
|
161
|
|
|
|
|
161
|
|
|
Total current liabilities
|
|
|
|
119,393
|
|
|
|
|
136,830
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
Senior unsecured notes payable
|
|
|
|
391,553
|
|
|
|
|
391,254
|
|
|
Asset retirement obligations
|
|
|
|
17,177
|
|
|
|
|
15,166
|
|
|
Amounts due to joint ventures
|
|
|
|
3,634
|
|
|
|
|
3,956
|
|
|
Derivative instruments
|
|
|
|
2,282
|
|
|
|
|
—
|
|
|
Deferred gain on plant sale
|
|
|
|
100,896
|
|
|
|
|
102,506
|
|
|
Other long-term liabilities
|
|
|
|
4,065
|
|
|
|
|
2,190
|
|
|
Total long-term liabilities
|
|
|
|
519,607
|
|
|
|
|
515,072
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
Common stock - $0.01 par value, 120,000,000 shares authorized;
93,327,432 and 85,567,021 shares issued; and 93,271,423 and
85,564,435 shares outstanding, respectively
|
|
|
|
933
|
|
|
|
|
856
|
|
|
Additional paid-in capital
|
|
|
|
1,169,860
|
|
|
|
|
1,026,077
|
|
|
Retained deficit
|
|
|
|
(646,584
|
)
|
|
|
|
(538,930
|
)
|
|
Total Matador Resources Company shareholders’ equity
|
|
|
|
524,209
|
|
|
|
|
488,003
|
|
|
Non-controlling interest in subsidiaries
|
|
|
|
943
|
|
|
|
|
956
|
|
|
Total shareholders’ equity
|
|
|
|
525,152
|
|
|
|
|
488,959
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
1,164,152
|
|
|
|
$
|
1,140,861
|
|
|
|
|
|
|
|
|
|
|
|
|
Matador Resources Company and Subsidiaries
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
|
|
|
|
|
|
|
(In thousands, except per share data)
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
Revenues
|
|
|
|
|
|
|
|
Oil and natural gas revenues
|
|
|
$
|
43,926
|
|
|
|
$
|
62,465
|
|
|
Realized gain on derivatives
|
|
|
|
7,063
|
|
|
|
|
18,504
|
|
|
Unrealized loss on derivatives
|
|
|
|
(6,839
|
)
|
|
|
|
(8,557
|
)
|
|
Total revenues
|
|
|
|
44,150
|
|
|
|
|
72,412
|
|
|
Expenses
|
|
|
|
|
|
|
|
Production taxes and marketing
|
|
|
|
7,902
|
|
|
|
|
7,049
|
|
|
Lease operating
|
|
|
|
15,489
|
|
|
|
|
13,046
|
|
|
Depletion, depreciation and amortization
|
|
|
|
28,923
|
|
|
|
|
46,470
|
|
|
Accretion of asset retirement obligations
|
|
|
|
264
|
|
|
|
|
112
|
|
|
Full-cost ceiling impairment
|
|
|
|
80,462
|
|
|
|
|
67,127
|
|
|
General and administrative
|
|
|
|
13,163
|
|
|
|
|
13,413
|
|
|
Total expenses
|
|
|
|
146,203
|
|
|
|
|
147,217
|
|
|
Operating loss
|
|
|
|
(102,053
|
)
|
|
|
|
(74,805
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
Net gain (loss) on asset sales and inventory impairment
|
|
|
|
1,065
|
|
|
|
|
(97
|
)
|
|
Interest expense
|
|
|
|
(7,197
|
)
|
|
|
|
(2,070
|
)
|
|
Interest and other income
|
|
|
|
518
|
|
|
|
|
384
|
|
|
Total other expense
|
|
|
|
(5,614
|
)
|
|
|
|
(1,783
|
)
|
|
Loss before income taxes
|
|
|
|
(107,667
|
)
|
|
|
|
(76,588
|
)
|
|
Income tax (benefit) provision
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
—
|
|
|
|
|
(26,390
|
)
|
|
Total income tax (benefit) provision
|
|
|
|
—
|
|
|
|
|
(26,390
|
)
|
|
Net loss
|
|
|
|
(107,667
|
)
|
|
|
|
(50,198
|
)
|
|
Net loss (income) attributable to non-controlling interest in
subsidiaries
|
|
|
|
13
|
|
|
|
|
(36
|
)
|
|
Net loss attributable to Matador Resources Company shareholders
|
|
|
$
|
(107,654
|
)
|
|
|
$
|
(50,234
|
)
|
|
Earnings (loss) per common share
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(1.26
|
)
|
|
|
$
|
(0.68
|
)
|
|
Diluted
|
|
|
$
|
(1.26
|
)
|
|
|
$
|
(0.68
|
)
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
|
85,305
|
|
|
|
|
73,819
|
|
|
Diluted
|
|
|
|
85,305
|
|
|
|
|
73,819
|
|
|
|
|
|
|
|
|
|
|
|
|
Matador Resources Company and Subsidiaries
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
|
|
|
|
|
|
|
(In thousands)
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(107,667
|
)
|
|
|
$
|
(50,198
|
)
|
|
Adjustments to reconcile net loss to net cash provided by operating
activities
|
|
|
|
|
|
|
|
Unrealized loss on derivatives
|
|
|
|
6,839
|
|
|
|
|
8,557
|
|
|
Depletion, depreciation and amortization
|
|
|
|
28,923
|
|
|
|
|
46,470
|
|
|
Accretion of asset retirement obligations
|
|
|
|
264
|
|
|
|
|
112
|
|
|
Full-cost ceiling impairment
|
|
|
|
80,462
|
|
|
|
|
67,127
|
|
|
Stock-based compensation expense
|
|
|
|
2,243
|
|
|
|
|
2,337
|
|
|
Deferred income tax (benefit) provision
|
|
|
|
—
|
|
|
|
|
(26,390
|
)
|
|
Amortization of debt issuance cost
|
|
|
|
300
|
|
|
|
|
—
|
|
|
Net (gain) loss on asset sales and inventory impairment
|
|
|
|
(1,065
|
)
|
|
|
|
97
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
7,307
|
|
|
|
|
2,140
|
|
|
Lease and well equipment inventory
|
|
|
|
150
|
|
|
|
|
(112
|
)
|
|
Prepaid expenses
|
|
|
|
(47
|
)
|
|
|
|
(364
|
)
|
|
Other assets
|
|
|
|
97
|
|
|
|
|
193
|
|
|
Accounts payable, accrued liabilities and other current liabilities
|
|
|
|
2,591
|
|
|
|
|
45,703
|
|
|
Royalties payable
|
|
|
|
(3,975
|
)
|
|
|
|
(2,907
|
)
|
|
Advances from joint interest owners
|
|
|
|
2,524
|
|
|
|
|
1,378
|
|
|
Income taxes payable
|
|
|
|
(2,463
|
)
|
|
|
|
(444
|
)
|
|
Other long-term liabilities
|
|
|
|
1,875
|
|
|
|
|
(353
|
)
|
|
Net cash provided by operating activities
|
|
|
|
18,358
|
|
|
|
|
93,346
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Oil and natural gas properties capital expenditures
|
|
|
|
(74,370
|
)
|
|
|
|
(127,440
|
)
|
|
Expenditures for other property and equipment
|
|
|
|
(27,409
|
)
|
|
|
|
(14,241
|
)
|
|
Business combination, net of cash acquired
|
|
|
|
—
|
|
|
|
|
(24,028
|
)
|
|
Restricted cash
|
|
|
|
43,337
|
|
|
|
|
—
|
|
|
Restricted cash in less-than-wholly-owned subsidiaries
|
|
|
|
510
|
|
|
|
|
(383
|
)
|
|
Net cash used in investing activities
|
|
|
|
(57,932
|
)
|
|
|
|
(166,092
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
Borrowings under Credit Agreement
|
|
|
|
—
|
|
|
|
|
70,000
|
|
|
Proceeds from issuance of common stock
|
|
|
|
142,350
|
|
|
|
|
—
|
|
|
Cost to issue equity
|
|
|
|
(614
|
)
|
|
|
|
—
|
|
|
Capital contribution from non-controlling interest owners in
less-than-wholly-owned subsidiaries
|
|
|
|
—
|
|
|
|
|
450
|
|
|
Taxes paid related to net share settlement of stock-based
compensation
|
|
|
|
(565
|
)
|
|
|
|
(50
|
)
|
|
Net cash provided by financing activities
|
|
|
|
141,171
|
|
|
|
|
70,400
|
|
|
Increase (decrease) in cash
|
|
|
|
101,597
|
|
|
|
|
(2,346
|
)
|
|
Cash at beginning of period
|
|
|
|
16,732
|
|
|
|
|
8,407
|
|
|
Cash at end of period
|
|
|
$
|
118,329
|
|
|
|
$
|
6,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-GAAP Financial Measures
Adjusted EBITDA
This press release includes the non-GAAP financial measure of Adjusted
EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of the Company’s
consolidated financial statements, such as 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,
preliminary or prospective in nature, and not based on historical fact,
the table does not provide a reconciliation. The Company could not
provide such reconciliation without undue hardship because the
forward-looking Adjusted EBITDA numbers included in this press release
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
(In thousands)
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
March 31, 2015
|
|
|
|
December 31, 2015
|
|
Unaudited Adjusted EBITDA Reconciliation to Net Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Matador Resources Company shareholders
|
|
|
$
|
(107,654
|
)
|
|
|
$
|
(230,401
|
)
|
|
|
$
|
(50,234
|
)
|
|
|
|
$
|
(679,785
|
)
|
|
Interest expense
|
|
|
|
7,197
|
|
|
|
|
6,586
|
|
|
|
|
2,070
|
|
|
|
|
|
21,754
|
|
|
Total income tax (benefit) provision
|
|
|
|
—
|
|
|
|
|
1,677
|
|
|
|
|
(26,390
|
)
|
|
|
|
|
(147,368
|
)
|
|
Depletion, depreciation and amortization
|
|
|
|
28,923
|
|
|
|
|
35,370
|
|
|
|
|
46,470
|
|
|
|
|
|
178,847
|
|
|
Accretion of asset retirement obligations
|
|
|
|
264
|
|
|
|
|
307
|
|
|
|
|
112
|
|
|
|
|
|
734
|
|
|
Full-cost ceiling impairment
|
|
|
|
80,462
|
|
|
|
|
219,292
|
|
|
|
|
67,127
|
|
|
|
|
|
801,166
|
|
|
Unrealized loss on derivatives
|
|
|
|
6,839
|
|
|
|
|
13,909
|
|
|
|
|
8,557
|
|
|
|
|
|
39,265
|
|
|
Stock-based compensation expense
|
|
|
|
2,243
|
|
|
|
|
2,564
|
|
|
|
|
2,337
|
|
|
|
|
|
9,450
|
|
|
Net (gain) loss on asset sales and inventory impairment
|
|
|
|
(1,065
|
)
|
|
|
|
(1,005
|
)
|
|
|
|
97
|
|
|
|
|
|
(908
|
)
|
|
Adjusted EBITDA
|
|
|
$
|
17,209
|
|
|
|
$
|
48,299
|
|
|
|
$
|
50,146
|
|
|
|
|
$
|
223,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
(In thousands)
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
March 31, 2015
|
|
|
|
December 31, 2015
|
|
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
$
|
18,358
|
|
|
|
$
|
22,611
|
|
|
|
$
|
93,346
|
|
|
|
|
$
|
208,535
|
|
|
Net change in operating assets and liabilities
|
|
|
|
(8,059
|
)
|
|
|
|
16,254
|
|
|
|
|
(45,234
|
)
|
|
|
|
|
(8,980
|
)
|
|
Interest expense, net of non-cash portion
|
|
|
|
6,897
|
|
|
|
|
6,285
|
|
|
|
|
2,070
|
|
|
|
|
|
20,902
|
|
|
Current income tax (benefit) provision
|
|
|
|
—
|
|
|
|
|
3,254
|
|
|
|
|
—
|
|
|
|
|
|
2,959
|
|
|
Net loss (income) attributable to non-controlling interest in
subsidiary
|
|
|
|
13
|
|
|
|
|
(105
|
)
|
|
|
|
(36
|
)
|
|
|
|
|
(261
|
)
|
|
Adjusted EBITDA
|
|
|
$
|
17,209
|
|
|
|
$
|
48,299
|
|
|
|
$
|
50,146
|
|
|
|
|
$
|
223,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income and Adjusted Earnings Per Share
This press release includes the non-GAAP financial measures of adjusted
net income and adjusted earnings per diluted common share. These
non-GAAP items are measured as net income (loss) attributable to Matador
Resources Company shareholders, adjusted for dollar and per share impact
of certain items, including unrealized gains or losses on derivatives,
the impact of full cost-ceiling impairment charges, if any, and
nonrecurring transaction costs for certain acquisitions along with the
related tax effect for all periods. This non-GAAP financial information
is provided as additional information for investors and is not in
accordance with, or an alternative to, GAAP financial measures.
Additionally, these non-GAAP financial measures may be different than
similar measures used by other companies. The Company believes the
presentation of adjusted net income and adjusted earnings per diluted
common share provides useful information to investors, as it provides
them an additional relevant comparison of the Company’s performance
across periods and to the performance of the Company’s peers. In
addition, these non-GAAP financial measures reflect adjustments for
items of income and expense that are often excluded by securities
analysts and other users of the Company’s financial statements in
evaluating the Company’s performance. The table below reconciles
adjusted net income and adjusted earnings per diluted common share to
their most directly comparable GAAP measure of net income (loss)
attributable to Matador Resources Company shareholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
|
|
Three Months Ended
December 31, 2015
|
|
|
Three Months Ended
March 31, 2015
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Unaudited Adjusted Net Income and Adjusted Earnings Per Share
Reconciliation to Net Loss:
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Matador Resources Company shareholders
|
|
|
$
|
(107,654
|
)
|
|
|
$
|
(230,401
|
)
|
|
|
$
|
(50,234
|
)
|
|
Total income tax (benefit) provision
|
|
|
|
—
|
|
|
|
|
1,677
|
|
|
|
|
(26,390
|
)
|
|
Loss attributable to Matador Resources Company shareholders before
taxes
|
|
|
|
(107,654
|
)
|
|
|
|
(228,724
|
)
|
|
|
|
(76,624
|
)
|
|
Less non-recurring and unrealized charges to net income before taxes:
|
|
|
|
|
|
|
|
|
|
|
Full-cost ceiling impairment
|
|
|
|
80,462
|
|
|
|
|
219,292
|
|
|
|
|
67,127
|
|
|
Unrealized loss on derivatives
|
|
|
|
6,839
|
|
|
|
|
13,909
|
|
|
|
|
8,557
|
|
|
Net (gain) loss on asset sales and inventory impairment
|
|
|
|
(1,065
|
)
|
|
|
|
(1,005
|
)
|
|
|
|
97
|
|
|
Non-recurring transaction costs associated with the HEYCO merger
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,235
|
|
|
Adjusted income (loss) attributable to Matador Resources Company
shareholders before taxes
|
|
|
|
(21,418
|
)
|
|
|
|
3,472
|
|
|
|
|
1,392
|
|
|
Income tax (benefit) provision
|
|
|
|
(7,496
|
)
|
(1)
|
|
|
1,111
|
|
|
|
|
475
|
|
|
Adjusted net income (loss) attributable to Matador Resources Company
shareholders (non-GAAP)
|
|
|
$
|
(13,922
|
)
|
|
|
$
|
2,361
|
|
|
|
$
|
917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding, without participating
securities
|
|
|
|
85,305
|
|
|
|
|
84,705
|
|
|
|
|
73,819
|
|
|
Dilutive effect of participating securities
|
|
|
|
—
|
|
|
|
|
849
|
|
|
|
|
767
|
|
|
Weighted average shares outstanding, including participating
securities - basic
|
|
|
|
85,305
|
|
|
|
|
85,554
|
|
|
|
|
74,586
|
|
|
Dilutive effect of options, restricted stock units and preferred
shares
|
|
|
|
—
|
|
|
|
|
461
|
|
|
|
|
919
|
|
|
Weighted average common shares outstanding - diluted
|
|
|
|
85,305
|
|
|
|
|
86,015
|
|
|
|
|
75,505
|
|
|
Adjusted earnings (loss) per share attributable to Matador Resources
Company shareholders (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.16
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
0.01
|
|
|
Diluted
|
|
|
$
|
(0.16
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
0.01
|
|
|
(1) Estimated using federal statutory tax rate of 35%, which differs
from the actual effective tax rate due to a full valuation allowance
recognized against the deferred tax benefit.
|
|
|
|
|
PV-10
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. Where references are hypothetical in nature, and not
based on historical fact, the table does not provide a reconciliation.
The Company could not provide such reconciliation without undue hardship
because such amounts are estimations and/or approximations. In addition,
it would be difficult for the Company to present a detailed
reconciliation on account of many unknown variables for the reconciling
items.
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
At March 31,
2016
|
|
|
At December 31,
2015
|
|
|
At March 31,
2015
|
|
PV-10
|
|
|
$
|
501.9
|
|
|
|
$
|
541.6
|
|
|
|
$
|
1,070.1
|
|
|
Discounted future income taxes
|
|
|
|
(6.3
|
)
|
|
|
|
(12.4
|
)
|
|
|
|
(120.9
|
)
|
|
Standardized Measure
|
|
|
$
|
495.6
|
|
|
|
$
|
529.2
|
|
|
|
$
|
949.2
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160503007041/en/
Source: Matador Resources Company
Matador Resources Company
Mac Schmitz, 972-371-5225
Capital
Markets Coordinator
mschmitz@matadorresources.com
