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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________ 
FORM 10-Q
 _________________________________________________________  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission File Number 001-35410
 _________________________________________________________  
Matador Resources Company
(Exact name of registrant as specified in its charter)
  _________________________________________________________ 
Texas27-4662601
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
5400 LBJ Freeway, Suite 1500
Dallas, Texas
75240
(Address of principal executive offices)(Zip Code)
(972) 371-5200
(Registrant’s telephone number, including area code)
 _________________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareMTDRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
As of April 26, 2022, there were 118,125,452 shares of the registrant’s common stock, par value $0.01 per share, outstanding.


Table of Contents
MATADOR RESOURCES COMPANY
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
 Page


Table of Contents
Part I — FINANCIAL INFORMATION
Item 1. Financial Statements — Unaudited
Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
(In thousands, except par value and share data)
March 31,
2022
December 31,
2021
ASSETS
Current assets
Cash$63,001 $48,135 
Restricted cash57,156 38,785 
Accounts receivable
Oil and natural gas revenues269,499 164,242 
Joint interest billings79,056 48,366 
Other19,089 28,808 
Derivative instruments190 1,971 
Lease and well equipment inventory12,456 12,188 
Prepaid expenses and other current assets35,816 28,810 
Total current assets536,263 371,305 
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated6,208,109 6,007,325 
Unproved and unevaluated979,391 964,714 
Midstream properties919,948 900,979 
Other property and equipment30,502 30,123 
Less accumulated depletion, depreciation and amortization(4,142,309)(4,046,456)
Net property and equipment3,995,641 3,856,685 
Other assets
Other long-term assets 35,424 34,163 
Total assets$4,567,328 $4,262,153 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$33,973 $26,256 
Accrued liabilities221,840 253,283 
Royalties payable102,669 94,359 
Amounts due to affiliates20,497 27,324 
Derivative instruments90,097 16,849 
Advances from joint interest owners16,743 18,074 
Income taxes payable15,409  
Other current liabilities36,706 28,692 
Total current liabilities537,934 464,837 
Long-term liabilities
Borrowings under Credit Agreement50,000 100,000 
Borrowings under San Mateo Credit Facility405,000 385,000 
Senior unsecured notes payable1,042,975 1,042,580 
Asset retirement obligations41,265 41,689 
Deferred income taxes135,835 77,938 
Other long-term liabilities16,855 22,721 
Total long-term liabilities1,691,930 1,669,928 
Commitments and contingencies (Note 9)
Shareholders’ equity
Common stock - $0.01 par value, 160,000,000 shares authorized; 118,090,652 and 117,861,923 shares issued; and 118,066,432 and 117,850,233 shares outstanding, respectively
1,181 1,179 
Additional paid-in capital2,087,788 2,077,592 
Retained earnings (accumulated deficit)29,940 (171,318)
Treasury stock, at cost, 24,220 and 11,945 shares, respectively
(309)(243)
Total Matador Resources Company shareholders’ equity2,118,600 1,907,210 
Non-controlling interest in subsidiaries218,864 220,178 
Total shareholders’ equity2,337,464 2,127,388 
Total liabilities and shareholders’ equity$4,567,328 $4,262,153 




The accompanying notes are an integral part of these financial statements.
3

Table of Contents

Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
(In thousands, except per share data)
 Three Months Ended
March 31,
 20222021
Revenues
Oil and natural gas revenues$626,515 $316,233 
Third-party midstream services revenues17,306 15,438 
Sales of purchased natural gas19,339 4,510 
Realized loss on derivatives(22,439)(25,913)
Unrealized loss on derivatives(75,029)(43,423)
Total revenues565,692 266,845 
Expenses
Production taxes, transportation and processing59,819 34,174 
Lease operating33,955 25,939 
Plant and other midstream services operating19,461 13,663 
Purchased natural gas17,021 2,855 
Depletion, depreciation and amortization95,853 74,863 
Accretion of asset retirement obligations543 500 
General and administrative29,733 22,188 
Total expenses256,385 174,182 
Operating income309,307 92,663 
Other income (expense)
Net loss on asset sales and impairment(198) 
Interest expense(16,252)(19,650)
Other expense(144)(675)
Total other expense(16,594)(20,325)
Income before income taxes292,713 72,338 
Income tax provision
Current15,409  
Deferred53,119 2,840 
Total income tax provision68,528 2,840 
Net income224,185 69,498 
Net income attributable to non-controlling interest in subsidiaries(17,061)(8,853)
Net income attributable to Matador Resources Company shareholders$207,124 $60,645 
Earnings per common share
Basic$1.76 $0.52 
Diluted$1.73 $0.51 
Weighted average common shares outstanding
Basic117,951 116,807 
Diluted119,814 118,669 
The accompanying notes are an integral part of these financial statements.
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED
(In thousands)
For the Three Months Ended March 31, 2022
Total shareholders’ equity attributable to Matador Resources Company
Non-controlling interest in subsidiariesTotal shareholders’ equity
 Common StockAdditional
paid-in capital
Retained earnings (accumulated deficit)Treasury Stock
 SharesAmountSharesAmount
Balance at January 1, 2022117,862 $1,179 $2,077,592 $(171,318)12 $(243)$1,907,210 $220,178 $2,127,388 
Dividends declared ($0.05 per share)
— — — (5,866)— — (5,866)— (5,866)
Issuance of common stock pursuant to employee stock compensation plan205 2 (11,536)— — — (11,534)— (11,534)
Stock-based compensation expense related to equity-based awards including amounts capitalized— — 4,344 — — — 4,344 — 4,344 
Stock options exercised, net of options forfeited in net share settlements24 — (585)— — — (585)— (585)
Restricted stock forfeited— — — — 12 (66)(66)— (66)
Contribution related to formation of San Mateo, net of tax of $4.8 million (see Note 6)
— — 17,973 — — — 17,973 — 17,973 
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries— — — — — — — (18,375)(18,375)
Current period net income— — — 207,124 — — 207,124 17,061 224,185 
Balance at March 31, 2022118,091 $1,181 $2,087,788 $29,940 24 $(309)$2,118,600 $218,864 $2,337,464 


















The accompanying notes are an integral part of these financial statements.
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED
(In thousands)
For the Three Months Ended March 31, 2021
Total shareholders’ equity attributable to Matador Resources Company
Non-controlling interest in subsidiariesTotal shareholders’ equity
 Common StockAdditional
paid-in capital
Accumulated deficitTreasury Stock
 SharesAmountSharesAmount
Balance at January 1, 2021116,847 $1,169 $2,027,069 $(741,705)2 $(3)$1,286,530 $226,495 $1,513,025 
Dividends declared ($0.025 per share)
— — — (2,913)— — (2,913)— (2,913)
Issuance of common stock pursuant to employee stock compensation plan3 — — — — — — —  
Issuance of common stock pursuant to directors’ and advisors’
compensation plan
9 — — — — — — —  
Stock-based compensation expense related to equity-based awards including amounts capitalized— — 1,477 — — — 1,477 — 1,477 
Stock options exercised, net of options forfeited in net share settlements13 — — — — — — —  
Restricted stock forfeited— — (219)— 90 (1,501)(1,720)— (1,720)
Contribution related to formation of San Mateo (see Note 6)— — 15,376 — — — 15,376 — 15,376 
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries— — — — — — — (14,210)(14,210)
Current period net income— — — 60,645 — — 60,645 8,853 69,498 
Balance at March 31, 2021116,872 $1,169 $2,043,703 $(683,973)92 $(1,504)$1,359,395 $221,138 $1,580,533 




The accompanying notes are an integral part of these financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(In thousands)
 Three Months Ended
March 31,
 20222021
Operating activities
Net income$224,185 $69,498 
Adjustments to reconcile net income to net cash provided by operating activities
Unrealized loss on derivatives75,029 43,423 
Depletion, depreciation and amortization95,853 74,863 
Accretion of asset retirement obligations543 500 
Stock-based compensation expense3,014 855 
Deferred income tax provision53,119 2,840 
Amortization of debt issuance cost943 724 
Net loss on asset sales and impairment198  
Changes in operating assets and liabilities
Accounts receivable(125,345)(39,680)
Lease and well equipment inventory(78)112 
Prepaid expenses and other current assets(7,796)(802)
Other long-term assets97 19 
Accounts payable, accrued liabilities and other current liabilities(5,668)8,560 
Royalties payable8,311 5,741 
Advances from joint interest owners(1,331)2,809 
Income taxes payable15,409  
Other long-term liabilities(7,529)(67)
Net cash provided by operating activities328,954 169,395 
Investing activities
Drilling, completion and equipping capital expenditures(207,829)(85,986)
Acquisition of oil and natural gas properties(43,761)(6,676)
Midstream capital expenditures(11,992)(16,380)
Expenditures for other property and equipment(225)(133)
Proceeds from sale of assets11,911 280 
Net cash used in investing activities(251,896)(108,895)
Financing activities
Repayments of borrowings under Credit Agreement(210,000)(100,000)
Borrowings under Credit Agreement160,000  
Repayments of borrowings under San Mateo Credit Facility(30,000)(11,000)
Borrowings under San Mateo Credit Facility50,000 11,000 
Dividends paid(5,866)(2,913)
Contributions related to formation of San Mateo22,750 15,376 
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries(18,375)(14,210)
Taxes paid related to net share settlement of stock-based compensation(12,184)(1,721)
Other(146)(158)
Net cash used in financing activities(43,821)(103,626)
Increase (decrease) in cash and restricted cash33,237 (43,126)
Cash and restricted cash at beginning of period86,920 91,383 
Cash and restricted cash at end of period$120,157 $48,257 
Supplemental disclosures of cash flow information (Note 10)

The accompanying notes are an integral part of these financial statements.
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Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
NOTE 1 — NATURE OF OPERATIONS
Matador Resources Company, a Texas corporation (“Matador” and, collectively with its subsidiaries, the “Company”), 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. The Company’s 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. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, the Company conducts midstream operations, primarily through its midstream joint venture, San Mateo Midstream, LLC (collectively with its subsidiaries, “San Mateo”), in support of the Company’s exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates
The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) but do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 (the “Annual Report”). The Company consolidates certain subsidiaries and joint ventures that are less than wholly-owned and are not involved in oil and natural gas exploration, including San Mateo, and the net income and equity attributable to the non-controlling interest in these subsidiaries have been reported separately as required by Accounting Standards Codification, Consolidation (Topic 810). The Company proportionately consolidates certain joint ventures that are less than wholly-owned and are involved in oil and natural gas exploration. All intercompany accounts and transactions have been eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all normal, recurring adjustments that are necessary for a fair presentation of the Company’s interim unaudited condensed consolidated financial statements as of March 31, 2022. Amounts as of December 31, 2021 are derived from the Company’s audited consolidated financial statements included in the Annual Report.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s interim unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and natural gas revenues, accrued assets and liabilities, stock-based compensation, valuation of derivative instruments, deferred tax assets and liabilities and oil and natural gas reserves. The estimates of oil and natural gas reserves quantities and future net cash flows are the basis for the calculations of depletion and impairment of oil and natural gas properties, as well as estimates of asset retirement obligations and certain tax accruals. While the Company believes its estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued
Revenues
The following table summarizes the Company’s total revenues and revenues from contracts with customers on a disaggregated basis for the three months ended March 31, 2022 and 2021 (in thousands).
Three Months Ended
March 31,
20222021
Revenues from contracts with customers$663,160 $336,181 
Realized loss on derivatives(22,439)(25,913)
Unrealized loss on derivatives(75,029)(43,423)
Total revenues$565,692 $266,845 
Three Months Ended
March 31,
20222021
Oil revenues$460,122 $213,279 
Natural gas revenues166,393 102,954 
Third-party midstream services revenues17,306 15,438 
Sales of purchased natural gas19,339 4,510 
Total revenues from contracts with customers$663,160 $336,181 

Property and Equipment
The Company uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method, the Company is required to perform a ceiling test each quarter that determines a limit, or ceiling, on the capitalized costs of oil and natural gas properties based primarily on the after-tax estimated future net cash flows from oil and natural gas properties using a 10% discount rate and the arithmetic average of first-day-of-the-month oil and natural gas prices for the prior 12-month period. For both the three months ended March 31, 2022 and 2021, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary.
The Company capitalized approximately $13.2 million and $9.5 million of its general and administrative costs and approximately $3.5 million and $0.6 million of its interest expense for the three months ended March 31, 2022 and 2021, respectively.
Earnings Per Common Share
The Company reports basic earnings attributable to Matador shareholders per common share, which excludes the effect of potentially dilutive securities, and diluted earnings attributable to Matador shareholders per common share, which includes the effect of all potentially dilutive securities unless their impact is anti-dilutive.
The following table sets forth the computation of diluted weighted average common shares outstanding for the three months ended March 31, 2022 and 2021 (in thousands).
 Three Months Ended
March 31,
20222021
Weighted average common shares outstanding
Basic117,951 116,807 
Dilutive effect of options and restricted stock units1,863 1,862 
Diluted weighted average common shares outstanding 119,814 118,669 
A total of 1.5 million options to purchase shares of Matador’s common stock were excluded from the diluted weighted average common shares outstanding for the three months ended March 31, 2021, because their effects were anti-dilutive.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 3 — ASSET RETIREMENT OBLIGATIONS
The following table summarizes the changes in the Company’s asset retirement obligations for the three months ended March 31, 2022 (in thousands).
Beginning asset retirement obligations$41,959 
Liabilities incurred during period817 
Liabilities settled during period(323)
Divestitures during period(1,449)
Accretion expense543 
Ending asset retirement obligations41,547 
Less: current asset retirement obligations(1)
(282)
Long-term asset retirement obligations$41,265 
 _______________
(1)Included in accrued liabilities in the Company’s interim unaudited condensed consolidated balance sheet at March 31, 2022.
NOTE 4 — DEBT
At March 31, 2022, the Company had (i) $1.05 billion of outstanding senior notes due 2026 (the “Notes”), (ii) $50.0 million in borrowings outstanding under its reserves-based revolving credit facility (the “Credit Agreement”) and (iii) approximately $45.8 million in outstanding letters of credit issued pursuant to the Credit Agreement. Between March 31, 2022 and April 26, 2022, the Company repaid the remaining $50.0 million of borrowings under the Credit Agreement. During the first quarter of 2022, the $7.5 million unsecured U.S. Small Business Administration loan was forgiven under the terms of the loan agreement and recorded as a gain on the extinguishment of debt within “Other expense” on the unaudited condensed consolidated statement of operations.
At March 31, 2022, San Mateo had $405.0 million in borrowings outstanding under its revolving credit facility (the “San Mateo Credit Facility”) and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between March 31, 2022 and April 26, 2022, San Mateo repaid $30.0 million of borrowings under the San Mateo Credit Facility.
Credit Agreements
MRC Energy Company
The borrowing base under the Credit Agreement is determined semi-annually as of May 1 and November 1 by the lenders based primarily on the estimated value of the Company’s proved oil and natural gas reserves at December 31 and June 30 of each year, respectively. The Company and the lenders may each request an unscheduled redetermination of the borrowing base once between scheduled redetermination dates. In April 2022, the lenders completed their review of the Company’s proved oil and natural gas reserves, and, as a result, the borrowing base was increased to $2.0 billion, the borrowing commitment was increased to $775.0 million and the maximum facility amount remained $1.5 billion. In addition, the terms of the Credit Agreement were amended to increase the sublimit for issuances of letters of credit under the Credit Agreement from $50 million to $100 million and replace the London Interbank Offered Rate (“LIBOR”) interest rate benchmark with an Adjusted Term SOFR (as defined in the Credit Agreement) interest rate benchmark. After giving effect to the amendment to the Credit Agreement, the applicable interest rate margin for borrowings under the Credit Agreement ranges from 1.75% to 2.75% per annum for borrowings bearing interest with reference to the Adjusted Term SOFR and from 0.75% to 1.75% per annum for borrowings bearing interest with reference to the Alternate Base Rate (as defined in the Credit Agreement), in each case depending on the level of borrowings under the Credit Agreement. In addition, the Adjusted Term SOFR includes a credit spread adjustment of 0.10% per annum for all interest periods. This April 2022 redetermination constituted the regularly scheduled May 1 redetermination. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected commitment (subject to compliance with the covenant noted below). The Credit Agreement matures October 31, 2026.
The Credit Agreement requires the Company to maintain (i) a current ratio, which is defined as (x) total consolidated current assets plus the unused availability under the Credit Agreement divided by (y) total consolidated current liabilities less current maturities under the Credit Agreement, of not less than 1.0 to 1.0 at the end of each fiscal quarter and (ii) a debt to
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 4 — DEBT — Continued
EBITDA ratio, which is defined as debt outstanding (net of up to $75.0 million of cash or cash equivalents), divided by a rolling four quarter EBITDA calculation, of 3.5 to 1.0 or less. The Company believes that it was in compliance with the terms of the Credit Agreement at March 31, 2022.
San Mateo Midstream, LLC
The San Mateo Credit Facility is non-recourse with respect to Matador and its wholly-owned subsidiaries but is guaranteed by San Mateo’s subsidiaries and secured by substantially all of San Mateo’s assets, including real property. The San Mateo Credit Facility matures December 19, 2023 and lender commitments under the revolving credit facility were $450.0 million at March 31, 2022 (subject to San Mateo’s compliance with the covenants noted below). The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in lender commitments to up to $700.0 million.
The San Mateo Credit Facility requires San Mateo to maintain a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.0 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo’s consolidated interest expense, of 2.5 or more. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo’s liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility. The Company believes that San Mateo was in compliance with the terms of the San Mateo Credit Facility at March 31, 2022.
Senior Unsecured Notes
At March 31, 2022, the Company had $1.05 billion of outstanding Notes, which have a 5.875% coupon rate. The Notes mature September 15, 2026, and interest is payable on the Notes semi-annually in arrears on each March 15 and September 15. The Notes are guaranteed on a senior unsecured basis by certain subsidiaries of the Company.
NOTE 5 — INCOME TAXES
The Company recorded a current income tax provision of $15.4 million and a deferred income tax provision of $53.1 million for the three months ended March 31, 2022. The Company’s effective income tax rate of 25% for the three months ended March 31, 2022 differed from the U.S. federal statutory rate due primarily to permanent differences between book and tax income and state taxes, primarily in New Mexico.
The Company recorded an income tax provision of $2.8 million for the three months ended March 31, 2021, which resulted in an effective tax rate of 4%. The effective tax rate differed from amounts computed by applying the U.S. federal statutory rate to the pre-tax income due primarily to recording a net deferred tax liability for state taxes, primarily in New Mexico, and continuing to recognize a valuation allowance against our U.S. federal net deferred tax assets. As a result of the full-cost ceiling impairments recorded in 2020, the Company recognized a valuation allowance against its net deferred tax assets for the year ended December 31, 2020. Due to a variety of factors, including the Company’s significant net income during 2021, the Company’s federal valuation allowance was reversed as of September 30, 2021 as the deferred tax assets were determined to be more likely than not to be utilized.
NOTE 6 — EQUITY
Stock-based Compensation
During the three months ended March 31, 2022, the Company granted awards to certain of its employees of 222,938 service-based restricted stock units to be settled in cash, which are liability instruments, and 230,251 performance-based stock units and 205,156 service-based shares of restricted stock, which are equity instruments. The performance-based stock units vest in an amount between zero and 200% of the target units granted based on the Company’s relative total shareholder return over the three-year period ending December 31, 2024, as compared to a designated peer group. The service-based restricted stock and restricted stock units vest over a three-year period. The fair value of these awards was approximately $31.4 million on the grant date.
Common Stock Dividend
During the three months ended March 31, 2022, the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.05 per share of common stock. The dividend, which totaled $5.9 million, was paid on March 14, 2022. In April 2022, the Board declared a quarterly cash dividend of $0.05 per share of common stock payable on June 3, 2022 to shareholders of record as of May 18, 2022.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 6 — EQUITY — Continued
San Mateo Distributions and Contributions
During the three months ended March 31, 2022 and 2021, San Mateo distributed $19.1 million and $14.8 million, respectively, to the Company and $18.4 million and $14.2 million, respectively, to a subsidiary of Five Point Energy LLC (“Five Point”), the Company’s joint venture partner in San Mateo. During the three months ended March 31, 2022 and 2021, there were no contributions to San Mateo by either the Company or Five Point.
Performance Incentives
Five Point paid to the Company $22.8 million and $15.4 million in performance incentives during the three months ended March 31, 2022 and 2021, respectively. These performance incentives are recorded when received, net of the $4.8 million deferred tax impact to Matador for the three months ended March 31, 2022, in “Additional paid-in capital” in the Company’s interim unaudited condensed consolidated balance sheets. These performance incentives for the three months ended March 31, 2022 and 2021 are also denoted as “Contributions related to formation of San Mateo” under “Financing activities” in the Company’s interim unaudited condensed consolidated statements of cash flows and changes in shareholders’ equity.
NOTE 7 — DERIVATIVE FINANCIAL INSTRUMENTS
At March 31, 2022, the Company had various costless collar and swap contracts open and in place to mitigate its exposure to oil and natural gas price volatility, each with a specific term (calculation period), notional quantity (volume hedged) and price floor and ceiling for the collars and fixed price for the swaps. At March 31, 2022, each contract was set to expire at varying times during 2022. The Company had no open contracts associated with natural gas liquids (“NGL”) prices at March 31, 2022.
The following is a summary of the Company’s open costless collar contracts for oil and natural gas at March 31, 2022.
CommodityCalculation PeriodNotional Quantity (Bbl or MMBtu)Weighted Average Price Floor ($/Bbl or $/MMBtu)Weighted Average Price Ceiling ($/Bbl or $/MMBtu)Fair Value of
Asset
(Liability)
(thousands)
Oil04/01/2022 - 12/31/20228,100,000 $65.22 $110.49 $(59,752)
Natural Gas04/01/2022 - 12/31/202242,000,000 $3.13 $5.73 (30,181)
Total open costless collar contracts$(89,933)
The following is a summary of the Company’s open basis swap contracts for oil at March 31, 2022.
CommodityCalculation PeriodNotional Quantity (Bbl)Fixed Price
($/Bbl)
Fair Value of
Asset
(Liability)
(thousands)
Oil Basis04/01/2022 - 12/31/20224,140,000 $0.95 $26 
Total open basis swap contracts$26 

At March 31, 2022, the aggregate liability value for the Company’s open derivative financial instruments was $89.9 million.
The Company’s derivative financial instruments are subject to master netting arrangements, and the Company’s counterparties allow for cross-commodity master netting provided the settlement dates for the commodities are the same. The Company does not present different types of commodities with the same counterparty on a net basis in its interim unaudited condensed consolidated balance sheets.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 7 — DERIVATIVE FINANCIAL INSTRUMENTS — Continued
The following table presents the gross asset and liability fair values of the Company’s commodity price derivative financial instruments and the location of these balances in the interim unaudited condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 (in thousands).
Derivative InstrumentsGross
amounts
recognized
Gross amounts
netted in the condensed
consolidated
balance sheets
Net amounts presented in the condensed
consolidated
balance sheets
March 31, 2022
Current assets$245,400 $(245,210)$190 
Current liabilities(335,307)245,210 (90,097)
Total$(89,907)$ $(89,907)
December 31, 2021
Current assets$215,145 $(213,174)$1,971 
Current liabilities(230,023)213,174 (16,849)
Total$(14,878)$ $(14,878)
The following table summarizes the location and aggregate gain (loss) of all derivative financial instruments recorded in the interim unaudited condensed consolidated statements of operations for the periods presented (in thousands).
 Three Months Ended
March 31,
Type of InstrumentLocation in Condensed Consolidated 
Statement of Operations
20222021
Derivative Instrument
OilRevenues: Realized loss on derivatives$(18,166)$(26,075)
Natural GasRevenues: Realized (loss) gain on derivatives(4,273)162 
Realized loss on derivatives(22,439)(25,913)
OilRevenues: Unrealized loss on derivatives(44,999)(39,269)
Natural GasRevenues: Unrealized loss on derivatives(30,030)(4,154)
Unrealized loss on derivatives(75,029)(43,423)
Total$(97,468)$(69,336)
NOTE 8 — FAIR VALUE MEASUREMENTS
The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements are classified and disclosed in one of the following categories.
Level 1    Unadjusted quoted prices for identical, unrestricted assets or liabilities in active markets.
Level 2    Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that are valued with industry standard models that consider various inputs, including: (i) quoted forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument and can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace.
Level 3    Unobservable inputs that are not corroborated by market data that reflect a company’s own market assumptions.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 8 — FAIR VALUE MEASUREMENTS — Continued
Financial and non-financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.
The following tables summarize the valuation of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis in accordance with the classifications provided above as of March 31, 2022 and December 31, 2021 (in thousands).
 
Fair Value Measurements at
 March 31, 2022 using
DescriptionLevel 1Level 2Level 3Total
Assets (Liabilities)
Oil derivatives and basis swaps$ $(59,726)$ $(59,726)
Natural gas derivatives (30,181) (30,181)
Contingent consideration related to business combination  (16,029)(16,029)
Total$ $(89,907)$(16,029)$(105,936)
 
Fair Value Measurements at
December 31, 2021 using
DescriptionLevel 1Level 2Level 3Total
Assets (Liabilities)
Oil derivatives and basis swaps$ $(14,727)$ $(14,727)
Natural gas derivatives (151) (151)
Contingent consideration related to business combination  (8,203)(8,203)
Total$ $(14,878)$(8,203)$(23,081)

Additional disclosures related to derivative financial instruments are provided in Note 7.
Other Fair Value Measurements
At March 31, 2022 and December 31, 2021, the carrying values reported on the interim unaudited condensed consolidated balance sheets for accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, royalties payable, amounts due to affiliates, advances from joint interest owners, income taxes payable and other current liabilities approximated their fair values due to their short-term maturities.
At March 31, 2022 and December 31, 2021, the carrying value of borrowings under the Credit Agreement and the San Mateo Credit Facility approximated their fair value as both are subject to short-term floating interest rates that reflect market rates available to the Company at the time and are classified at Level 2 in the fair value hierarchy.
At March 31, 2022 and December 31, 2021, the fair value of the Notes was $1.07 billion and $1.08 billion, respectively, based on quoted market prices, which represent Level 1 inputs in the fair value hierarchy.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED


NOTE 9 — COMMITMENTS AND CONTINGENCIES
Processing, Transportation and Produced Water Disposal Commitments
Firm Commitments
From time to time, the Company enters into agreements with third parties whereby the Company commits to deliver anticipated natural gas and oil production and produced water from certain portions of its acreage for transportation, gathering, processing, fractionation, sales and disposal. The Company paid approximately $11.0 million and $12.6 million for deliveries under these agreements during the three months ended March 31, 2022 and 2021, respectively. Certain of these agreements contain minimum volume commitments. If the Company does not meet the minimum volume commitments under these agreements, it will be required to pay certain deficiency fees. If the Company ceased operations in the areas subject to these agreements at March 31, 2022, the total deficiencies required to be paid by the Company under these agreements would be approximately $552.1 million.
San Mateo Commitments
The Company dedicated to San Mateo its current and certain future leasehold interests in the Rustler Breaks and Wolf asset areas and acreage in the southern portion of the Arrowhead asset area (the “Greater Stebbins Area”) and the Stateline asset area pursuant to 15-year, fixed-fee oil transportation, oil, natural gas and produced water gathering and produced water disposal agreements. In addition, the Company dedicated to San Mateo its current and certain future leasehold interests in the Rustler Breaks asset area and acreage in the Greater Stebbins Area and Stateline asset area pursuant to 15-year, fixed-fee natural gas processing agreements (collectively with the transportation, gathering and produced water disposal agreements, the “Operational Agreements”). San Mateo provides the Company with firm service under each of the Operational Agreements in exchange for certain minimum volume commitments. The remaining minimum contractual obligation under the Operational Agreements at March 31, 2022 was approximately $351.7 million.
Legal Proceedings
The Company is a party to several legal proceedings encountered in the ordinary course of its business. While the ultimate outcome and impact on the Company cannot be predicted with certainty, in the opinion of management, it is remote that these legal proceedings will have a material adverse impact on the Company’s financial condition, results of operations or cash flows.
NOTE 10 — SUPPLEMENTAL DISCLOSURES
Accrued Liabilities
The following table summarizes the Company’s current accrued liabilities at March 31, 2022 and December 31, 2021 (in thousands).
March 31,
2022
December 31,
2021
Accrued evaluated and unproved and unevaluated property costs$114,931 $128,598 
Accrued midstream properties costs14,897 7,799 
Accrued lease operating expenses34,681 32,182 
Accrued interest on debt2,764 18,232 
Accrued asset retirement obligations282 270 
Accrued partners’ share of joint interest charges28,810 17,460 
Accrued payable related to purchased natural gas6,473 11,284 
Other19,002 37,458 
Total accrued liabilities$221,840 $253,283 


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Table of Contents
Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 10 — SUPPLEMENTAL DISCLOSURES — Continued
Supplemental Cash Flow Information
The following table provides supplemental disclosures of cash flow information for the three months ended March 31, 2022 and 2021 (in thousands).
 Three Months Ended
March 31,
 20222021
Cash paid for interest expense, net of amounts capitalized$31,650 $35,085 
(Decrease) increase in asset retirement obligations related to mineral properties$(955)$105 
(Decrease) increase in liabilities for drilling, completion and equipping capital expenditures$(10,969)$40,067 
(Decrease) increase in liabilities for acquisition of oil and natural gas properties$(2,689)$2,031 
Increase (decrease) in liabilities for midstream properties capital expenditures$7,098 $(6,691)
Stock-based compensation expense recognized as a liability$13,612 $7,249 
Transfer of inventory to oil and natural gas properties$(190)$(574)