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Matador Resources Company Reports Record Second Quarter 2021 Operating and Financial Results and Announces an Additional $100 Million in Borrowings Repaid

Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today reported financial and operating results for the second quarter of 2021. A short slide presentation summarizing the highlights of Matador’s second quarter 2021 earnings release is also included on the Company’s website at www.matadorresources.com on the Events and Presentations page under the Investor Relations tab.

Second Quarter 2021 Management Summary Comments

Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “On both our website and the webcast planned for tomorrow’s earnings conference call is a set of six slides identified as ‘Chairman’s Remarks’ (Slides A through F) to add color and detail to my remarks. We invite you to review these slides in conjunction with my comments below, which are intended to provide context for the second quarter of 2021 compared to Matador’s goals for the year.

Record Results in Second Quarter 2021

“The second quarter of 2021 was an outstanding quarter for Matador highlighted by record operational and financial achievements (see Slide A), including a significant increase in net income and all-time quarterly highs for oil and natural gas production, oil and natural gas revenues, Adjusted EBITDA and adjusted free cash flow. San Mateo also delivered record results in the second quarter highlighted by all-time quarterly highs for third-party midstream revenues, net income, Adjusted EBITDA and adjusted free cash flow (see Slide B). The Board and I would like to acknowledge and express our sincere appreciation to both the Matador and San Mateo teams for their strong execution once again in the second quarter.

“Net cash provided by operating activities in the second quarter was $258.2 million, a 52% sequential increase, leading to second quarter 2021 adjusted free cash flow of $156.3 million, a sequential increase of 145% and an all-time quarterly high. This adjusted free cash flow included $16.3 million in performance incentives received by Matador from our midstream joint venture partner Five Point associated with turning the first 13 Voni wells to sales in the Stateline asset area in the second quarter. Given this strong free cash flow, Matador repaid $100 million in borrowings outstanding in the second quarter of 2021. Matador has now reduced the borrowings outstanding under its reserves-based revolving credit facility by $235 million, or essentially half of the prior borrowings outstanding, during the past three quarters. As a result, Matador’s leverage ratio under the reserves-based credit facility has now declined to 1.8x (see Slide C), which marks the lowest leverage ratio in two years, dating back to the second quarter of 2019. Matador expects to use a significant portion of its free cash flow in future periods to continue reducing the borrowings outstanding under its reserves-based credit facility and paying quarterly dividends to shareholders.

Operations Tracking Key 2021 Milestones, Including Strong Well Results and Improved Capital Efficiency

“Matador’s 2021 priorities and milestones are shown in Slide D, and we continue to be on schedule, or even slightly ahead, of this operating and capital efficiency plan for 2021. During the second quarter of 2021, we achieved our second key operational milestone when we turned to sales in April the first 13 Voni wells in the Stateline asset area. Just recently, we achieved our third key operational milestone when we turned to sales four wells, all two-mile, Second Bone Spring completions, in the Greater Stebbins Area. We remain very pleased with the continued better-than-expected well performance being achieved all across our acreage position in the Delaware Basin, but we are particularly excited by the better-than-expected well performance we continue to achieve in the Stateline asset area and in the Rodney Robinson wells in the western portion of the Antelope Ridge asset area. In fact, the first six Rodney Robinson wells turned to sales in late March 2020, in aggregate, achieved payout in approximately one year, and the first 13 Boros wells turned to sales in September 2020, in aggregate, achieved payout in approximately nine months, all despite being turned to sales in 2020 during periods of significantly lower oil and natural gas prices than we enjoy today. Further, we currently expect the initial 13 Voni wells, in aggregate, to achieve payout even quicker than the first 13 Boros wells.

“Matador’s drilling and completion costs and operating efficiencies continue to improve. Drilling and completion costs averaged $615 per completed lateral foot in the second quarter of 2021, an all-time quarterly low, and $655 per completed lateral foot in the first six months of 2021, approximately 4% below expectations (see Slide E). This improvement in capital efficiency through our transition to drilling and completing longer laterals has been and continues to be a high priority for Matador. Matador expects that 98% of the wells it turns to sales this year should have completed lateral lengths of two miles or longer.

Looking Ahead

“We are today announcing two important modifications to our anticipated operated and non-operated activities for the second half of 2021. First, as the operations team continues to reduce drilling times for wells in the Stateline asset area, we are now expecting to advance completion operations for the next 11 Voni wells currently being drilled entirely into the fourth quarter of 2021, as opposed to completing most of those wells in the first quarter of 2022. Accelerating these completions should allow us to make more capital-efficient use of two stimulation crews during the fall of 2021 and into early 2022, which should enable us to turn this next group of Voni wells to sales two to three months earlier in 2022 than previously anticipated, but will defer some of our expected fourth quarter 2021 production until after the first of next year. Second, we now expect to participate in approximately 2.3 net fewer non-operated well opportunities during 2021 as a result of certain of Matador’s operating partners deferring activity from 2021 into 2022. Given the cost savings in operated D/C/E capital expenditures Matador has achieved thus far in 2021, the capital efficiency this change provides us and the anticipated savings from fewer non-operated well opportunities during the remainder of 2021, we believe we can accelerate completion operations on the 11 new Voni wells in the fourth quarter of 2021 without increasing our total estimated D/C/E capital expenditures for full year 2021. Further, given our strong start during the first two quarters of 2021, we also expect to achieve our full year 2021 production guidance despite the loss of production resulting from fewer non-operated wells being turned to sales in the second half of 2021 and the deferral of production in the Stateline asset area from the fourth quarter into the first quarter of 2022 as currently producing wells are expected to be shut in during completion operations on the next 11 Voni wells. Additional details on these modifications to our operating plan and updates to our third and fourth quarter production estimates are provided in more detail later in this earnings release (see Slide F).

“We are also pleased to announce that San Mateo has recently secured several new midstream opportunities with new and existing customers in Eddy County, New Mexico. We salute the San Mateo team for their successful business development efforts and look forward to these new natural gas, oil and water volumes being connected to San Mateo’s system. As a result, we have increased our anticipated full year 2021 midstream capital expenditures by approximately $15 million to connect these new midstream volumes and to be ready for first production from Matador’s next 11 Voni wells in early 2022. We expect San Mateo to continue to generate free cash flow in the second half of 2021 and have increased our estimates for San Mateo’s Adjusted EBITDA by approximately $10 million for full year 2021.

“We believe the second half of 2021 will continue to be exciting for Matador and its stakeholders as we work to generate additional free cash flow, lower costs, reduce debt, pay dividends to our shareholders and grow the value of our oil and natural gas and midstream assets. We look forward to finishing 2021 in a capital efficient manner to set up even stronger value creation for Matador stakeholders in 2022 and beyond.”

Second Quarter 2021 Financial and Operational Highlights

Net Cash Provided by Operating Activities and Adjusted Free Cash Flow

  • Second quarter 2021 net cash provided by operating activities was $258.2 million (GAAP basis), leading to second quarter 2021 adjusted free cash flow (a non-GAAP financial measure) of $156.3 million, a 2.5-fold increase from adjusted free cash flow of $63.9 million in the first quarter of 2021.

Net Income, Earnings Per Share and Adjusted EBITDA

  • Second quarter 2021 net income (GAAP basis) was $105.9 million, or $0.89 per diluted common share, a significant improvement from net income of $60.6 million in the first quarter of 2021, and a year-over-year increase from a net loss of $353.4 million in the second quarter of 2020. The change in net income between the year-over-year periods was significantly impacted by a non-cash full cost ceiling impairment of $324.0 million recorded in the second quarter of 2020.
  • Second quarter 2021 adjusted net income (a non-GAAP financial measure) was $121.7 million, or $1.02 per diluted common share, a 44% sequential increase from adjusted net income of $84.5 million in the first quarter of 2021, and a significant year-over-year increase from an adjusted net loss of $3.1 million in the second quarter of 2020.
  • Second quarter 2021 adjusted earnings before interest expense, income taxes, depletion, depreciation and amortization and certain other items (“Adjusted EBITDA,” a non-GAAP financial measure) were $261.0 million, a 32% sequential increase from $198.1 million in the first quarter of 2021, and a 143% year-over-year increase from $107.6 million in the second quarter of 2020.

Record Oil, Natural Gas and Oil Equivalent Production

  • As summarized in the table below, Matador’s second quarter 2021 average daily oil, natural gas and total oil equivalent production all exceeded the Company’s expectations and were all-time quarterly highs. The majority of the production outperformance resulted from the better-than-expected performance of the 13 Voni wells in the Stateline asset area, which were turned to sales in April 2021, as well as by continued strong performance from the four most recent Rodney Robinson wells turned to sales in mid-March 2021. The 13 new Voni wells are anticipated to have typical estimated ultimate recoveries (“EURs”) between 1.75 and 2.5 million barrels of oil equivalent (“BOE”), while the ten Rodney Robinson wells turned to sales thus far are currently anticipated to have typical EURs between 1.5 and 2.0 million BOE.

 

 

 

Production Change (%)

Production

Q2 Average Daily Volume

 

Sequential(1)

 

Guidance(2)

 

Difference(3)

 

YoY(4)

Total, BOE per day

93,200

 

+26%

 

+19% to +22%

 

+5%

 

+27%

Oil, Bbl per day

53,400

 

+28%

 

+21% to +24%

 

+5%

 

+24%

Natural Gas, MMcf per day

239.1

 

+23%

 

+16% to +19%

 

+5%

 

+32%

(1)

As compared to the first quarter of 2021.

(2)

Production change previously projected, as provided on April 28, 2021.

(3)

As compared to midpoint of guidance provided on April 28, 2021.

(4)

Represents year-over-year percentage change from the second quarter of 2020.

Drilling and Completion Costs Continue at Record Lows

  • Drilling and completion costs for the 15 operated horizontal wells turned to sales in the second quarter of 2021 averaged $615 per completed lateral foot, a decrease of 28% from average drilling and completion costs of $850 per completed lateral foot achieved in full year 2020. Drilling and completion costs associated with the 21 operated horizontal wells turned to sales in the first half of 2021 averaged $655 per completed lateral foot, approximately 4% below the Company’s expectations.
  • Matador incurred capital expenditures for drilling, completing and equipping wells (“D/C/E capital expenditures”) of approximately $101 million in the second quarter of 2021, or 20% below the Company’s estimate of $125 million for D/C/E capital expenditures during the quarter. Matador estimates that approximately $10 million of these savings were directly attributable to improved operational efficiencies and lower-than-expected drilling and completion costs in the Delaware Basin. The remainder of these cost savings resulted primarily from the timing of both operated and non-operated drilling and completion activities, and most of these costs are currently expected to be incurred in the second half of 2021. Through the first six months of 2021, Matador estimates that it achieved cost savings of approximately $16 million attributable to improved operational efficiencies and lower-than-expected drilling and completion costs in the Delaware Basin.

Credit Rating and Senior Unsecured Notes Upgraded by S&P Global Ratings

  • On June 28, 2021, S&P Global Ratings raised Matador’s issuer credit rating from “B-” to “B” and raised the issue-level rating on Matador’s senior unsecured notes from “B” to “B+”.

Lender Commitments Increased Under San Mateo’s Revolving Credit Facility

  • On June 29, 2021, Matador announced a $75 million increase in lender commitments to the credit facility of its midstream affiliate, San Mateo Midstream, LLC (“San Mateo”), from $375 million to $450 million. In addition, the lenders agreed to refresh and increase the accordion feature under the credit facility to $250 million, which could further expand lender commitments to up to $700 million. The $75 million increase in lender commitments to the credit facility should provide San Mateo with greater operating and financial flexibility.

Quarterly Cash Dividend Declared

  • On July 26, 2021, Matador announced that its Board of Directors declared a quarterly cash dividend of $0.025 per share of common stock payable on September 3, 2021 to shareholders of record as of August 12, 2021.

Environmental, Social and Governance (ESG) Metrics Updated

  • Coincident with this earnings release on July 27, 2021, Matador published an update to its sustainability metrics aligned with standards developed by the Sustainability Accounting Standards Board (“SASB”), reflecting Matador’s continued efforts to highlight its commitment to ESG excellence. These updated metrics provide supplemental information to the Company’s inaugural report on SASB-aligned ESG metrics as published on May 17, 2021 and are available on the Company’s website at www.matadorresources.com/sustainability.

Note: All references to Matador’s net income (loss), adjusted net income (loss), Adjusted EBITDA and adjusted free cash flow reported throughout this earnings release are those values attributable to Matador Resources Company shareholders after giving effect to any net income (loss), Adjusted EBITDA or adjusted free cash flow, respectively, attributable to third-party non-controlling interests, including in San Mateo. Matador owns 51% of San Mateo. For a definition of adjusted net income (loss), adjusted earnings (loss) per diluted common share, Adjusted EBITDA and adjusted free cash flow and reconciliations of such non-GAAP financial metrics to their comparable GAAP metrics, please see “Supplemental Non-GAAP Financial Measures” below.

Sequential and year-over-year quarterly comparisons of selected financial and operating items are shown in the following table:

 

Three Months Ended

 

June 30,

2021

 

March 31,

2021

 

June 30,

2020

 

Net Production Volumes:(1)

 

 

 

 

 

 

Oil (MBbl)(2)

 

4,855

 

 

 

3,738

 

 

 

3,920

 

 

Natural gas (Bcf)(3)

 

21.8

 

 

 

17.5

 

 

 

16.5

 

 

Total oil equivalent (MBOE)(4)

 

8,482

 

 

 

6,658

 

 

 

6,670

 

 

Average Daily Production Volumes:(1)

 

 

 

 

 

 

Oil (Bbl/d)(5)

 

53,354

 

 

 

41,537

 

 

 

43,074

 

 

Natural gas (MMcf/d)(6)

 

239.1

 

 

 

194.7

 

 

 

181.4

 

 

Total oil equivalent (BOE/d)(7)

 

93,210

 

 

 

73,983

 

 

 

73,302

 

 

Average Sales Prices:

 

 

 

 

 

 

Oil, without realized derivatives (per Bbl)

$

64.90

 

 

$

57.05

 

 

$

24.03

 

 

Oil, with realized derivatives (per Bbl)

$

56.13

 

 

$

50.08

 

 

$

35.28

 

 

Natural gas, without realized derivatives (per Mcf)(8)

$

4.46

 

 

$

5.88

 

 

$

1.49

 

 

Natural gas, with realized derivatives (per Mcf)

$

4.46

 

 

$

5.89

 

 

$

1.49

 

 

Revenues (millions):

 

 

 

 

 

 

Oil and natural gas revenues

$

412.1

 

 

$

316.2

 

 

$

118.8

 

 

Third-party midstream services revenues

$

19.9

 

 

$

15.4

 

 

$

14.7

 

 

Realized (loss) gain on derivatives

$

(42.6

)

 

$

(25.9

)

 

$

44.1

 

 

Operating Expenses (per BOE):

 

 

 

 

 

 

Production taxes, transportation and processing

$

5.17

 

 

$

5.13

 

 

$

2.82

 

 

Lease operating

$

3.39

 

 

$

3.90

 

 

$

3.92

 

 

Plant and other midstream services operating

$

1.62

 

 

$

2.05

 

 

$

1.47

 

 

Depletion, depreciation and amortization

$

10.78

 

 

$

11.24

 

 

$

14.00

 

 

General and administrative(9)

$

2.88

 

 

$

3.33

 

 

$

2.21

 

 

Total(10)

$

23.84

 

 

$

25.65

 

 

$

24.42

 

 

Other (millions):

 

 

 

 

 

 

Net sales of purchased natural gas(11)

$

1.3

 

 

$

1.7

 

 

$

3.1

 

 

Lease bonus - mineral acreage

$

 

 

$

 

 

$

4.1

 

 

 

 

 

 

 

 

 

Net income (loss) (millions)(12)

$

105.9

 

 

$

60.6

 

 

$

(353.4

)

 

Earnings (loss) per common share (diluted)(12)

$

0.89

 

 

$

0.51

 

 

$

(3.04

)

 

Adjusted net income (loss) (millions)(12)(13)

$

121.7

 

 

$

84.5

 

 

$

(3.1

)

 

Adjusted earnings (loss) per common share (diluted)(12)(14)

$

1.02

 

 

$

0.71

 

 

$

(0.03

)

 

Adjusted EBITDA (millions)(12)(15)

$

261.0

 

 

$

198.1

 

 

$

107.6

 

 

Net cash provided by operating activities (millions)(16)

$

258.2

 

 

$

169.4

 

 

$

101.0

 

 

Adjusted free cash flow (millions)(12)(17)

$

156.3

 

 

$

63.9

 

 

$

(63.8

)

 

San Mateo net income (millions)(18)

$

32.6

 

 

$

18.1

 

 

$

15.3

 

 

San Mateo Adjusted EBITDA (millions)(15)(18)

$

42.3

 

 

$

27.6

 

 

$

23.2

 

 

San Mateo net cash provided by operating activities (millions)(18)

$

25.3

 

 

$

41.2

 

 

$

20.2

 

 

San Mateo adjusted free cash flow (millions)(16)(17)(18)

$

32.7

 

 

$

17.0

 

 

$

(43.6

)

 

D/C/E capital expenditures (millions)

$

100.6

 

 

$

126.0

 

 

$

123.2

 

 

Midstream capital expenditures (millions)(19)

$

4.1

 

 

$

5.4

 

 

$

33.2

 

 

(1)

Production volumes reported in two streams: oil and natural gas, including both dry and liquids-rich natural gas.

(2)

One thousand barrels of oil.

(3)

One billion cubic feet of natural gas.

(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.

(5)

Barrels of oil per day.

(6)

Millions of cubic feet of natural gas per day.

(7)

Barrels of oil equivalent per day, estimated using a conversion ratio of one barrel of oil per six thousand cubic feet of natural gas.

(8)

Per thousand cubic feet of natural gas.

(9)

Includes approximately $0.21, $0.13 and $0.49 per BOE of non-cash, stock-based compensation expense in the second quarter of 2021, the first quarter of 2021 and the second quarter of 2020, respectively.

(10)

Total does not include the impact of full-cost ceiling impairment charges, purchased natural gas or immaterial accretion expenses.

(11)

Net sales of purchased natural gas reflect those natural gas purchase transactions that the Company periodically enters into with third parties whereby the Company purchases natural gas and (i) subsequently sells the natural gas to other purchasers or (ii) processes the natural gas at San Mateo’s cryogenic natural gas processing plant in Eddy County, New Mexico (the “Black River Processing Plant”) and subsequently sells the residue natural gas and natural gas liquids (“NGL”) to other purchasers. Such amounts reflect revenues from sales of purchased natural gas of $10.9 million, $4.5 million and $14.0 million less expenses of $9.6 million, $2.9 million and $10.9 million in the second quarter of 2021, the first quarter of 2021 and the second quarter of 2020, respectively.

(12)

Attributable to Matador Resources Company shareholders.

(13)

Adjusted net income (loss) is a non-GAAP financial measure. For a definition of adjusted net income (loss) and a reconciliation of adjusted net income (loss) (non-GAAP) to net income (loss) (GAAP), please see “Supplemental Non-GAAP Financial Measures.”

(14)

Adjusted earnings per diluted common share is a non-GAAP financial measure. For a definition of adjusted earnings per diluted common share and a reconciliation of adjusted earnings per diluted common share (non-GAAP) to earnings (loss) per diluted common share (GAAP), please see “Supplemental Non-GAAP Financial Measures.”

(15)

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 (loss) (GAAP) and net cash provided by operating activities (GAAP), please see “Supplemental Non-GAAP Financial Measures.”

(16)

As reported for each period on a consolidated basis, including 100% of San Mateo’s net cash provided by operating activities.

(17)

Adjusted free cash flow is a non-GAAP financial measure. For a definition of adjusted free cash flow and a reconciliation of adjusted free cash flow (non-GAAP) to net cash provided by operating activities (GAAP), please see “Supplemental Non-GAAP Financial Measures.”

(18)

Represents 100% of San Mateo’s net income, net cash provided by operating activities or adjusted free cash flow for each period reported.

(19)

Includes Matador’s 51% share of San Mateo’s capital expenditures plus 100% of other immaterial midstream capital expenditures not associated with San Mateo.

Full Year 2021 Guidance – Production and D/C/E Capital Expenditures Guidance Affirmed, Midstream Capital Expenditures Guidance Increased $15 Million for New Opportunities

As shown in the table below, effective July 27, 2021, Matador affirmed its full year 2021 guidance estimates for oil, natural gas and total oil equivalent production and D/C/E capital expenditures, which were originally provided on February 23, 2021. As explained further below, Matador has increased its full year 2021 estimates for midstream capital expenditures by $15 million at the midpoint of guidance, primarily to accommodate several new midstream opportunities in the second half of 2021.

 

2021 Guidance Estimates

Guidance Metric

Actual 2020 Results

February 23, 2021(1)

% YoY Change(2)

July 27, 2021(3)

% YoY Change(4)

Total Oil Production, million Bbl

15.9

 

17.2 to 17.8

 

+10%

 

17.2 to 17.8

 

+10%

Total Natural Gas Production, Bcf

69.5

 

76.0 to 79.0

 

+12%

 

76.0 to 79.0

 

+12%

Total Oil Equivalent Production, million BOE

27.5

 

29.9 to 31.0

 

+11%

 

29.9 to 31.0

 

+11%

D/C/E CapEx(5), millions

$450

 

$525 to $575

 

+22%

 

$525 to $575

 

+22%

Midstream CapEx(6), millions

$89

 

$20 to $30

 

-72%

 

$35 to $45

 

-55%

Total D/C/E and Midstream CapEx, millions

$539

 

$545 to $605

 

+7%

 

$560 to $620

 

+9%

(1)

As of and as provided on February 23, 2021.

(2)

Represents percentage change from 2020 actual results to the midpoint of previous 2021 guidance, as provided on February 23, 2021.

(3)

As of and as affirmed or updated on July 27, 2021.

(4)

Represents percentage change from 2020 actual results to the midpoint of updated 2021 guidance, as affirmed or updated on July 27, 2021.

(5)

Capital expenditures associated with drilling, completing and equipping wells.

(6)

Primarily reflects Matador’s share estimated capital expenditures for San Mateo.

The guidance estimates presented in the table above are based upon the following key assumptions and modifications for anticipated drilling and completions and midstream activity and capital expenditures for full year 2021 as provided on July 27, 2021. Consistent with its February 23, 2021 guidance estimates, Matador still expects 49 gross (45.6 net) operated horizontal wells, with an average completed lateral length of 10,400 feet, to be turned to sales during full year 2021.

  • Matador now expects to participate in 65 gross (4.7 net) non-operated horizontal well opportunities during 2021, a decrease of 11 gross (2.3 net) wells from the Company’s prior expectations, primarily as a result of certain of its operating partners deferring drilling and completions activity from 2021 into 2022. As a result, Matador now expects its Delaware Basin non-operated oil and natural gas production in the second half of 2021 to be approximately 225,000 BOE below its prior estimates, including a decrease of approximately 175,000 barrels of oil and 0.3 Bcf of natural gas. Further, Matador now estimates D/C/E capital expenditures attributable to non-operated wells for full year 2021 to be approximately $21 million less than its original estimates as provided on February 23, 2021. Matador’s non-operated oil and natural gas production in the first half of 2021 was in-line with the Company’s expectations.
  • As a result of savings of approximately $16 million on operated D/C/E capital expenditures, a faster drilling and completions pace and the anticipated decrease in its non-operated D/C/E capital expenditures in the second half of 2021, Matador now intends to advance the next 11 Voni well completions forward into the fourth quarter of 2021 and expects to be able to do so without increasing its estimates for D/C/E capital expenditures for full year 2021. By doing so, Matador should also be able to fully utilize the same two completions crews throughout the fall of 2021 and into early 2022, which the Company believes will result in more capital efficient completion operations.
  • Matador estimates that advancing the next 11 Voni completions into the fourth quarter of 2021 should result in a reduction in estimated fourth quarter production of approximately 475,000 BOE, including a decrease of 275,000 barrels of oil and 1.2 Bcf of natural gas, as compared to prior estimates. This deferred production results from the need to shut in certain Voni and Boros wells in the Stateline asset area during the fourth quarter while completion operations are ongoing on these 11 new Voni wells. These shut-ins were originally expected to occur in the first quarter of 2022. Accelerating these 11 Voni completions into the fourth quarter of 2021, however, should enable these new wells to be turned to sales in February 2022, two to three months earlier than previously anticipated. This acceleration should allow Matador to achieve not only improved capital and operational efficiencies, but also to realize essentially a full year of production from these 11 Voni wells in 2022.
  • Matador has today affirmed its full year 2021 production guidance, notwithstanding the anticipated aggregate production decrease of approximately 700,000 BOE in the second half of 2021, including a decrease of approximately 450,000 barrels of oil and 1.5 Bcf of natural gas, as noted above. Significantly, Matador believes it should still achieve its full year 2021 production guidance, primarily as a result of the outperformance associated with the Voni and Rodney Robinson wells turned to sales earlier in 2021, as well as the continued outperformance of the original Boros and Rodney Robinson wells turned to sales during 2020.
  • In recent months, San Mateo has secured several new midstream opportunities with producers in Eddy County, New Mexico. San Mateo is very pleased to have these new midstream opportunities, but such opportunities require San Mateo to increase its estimated capital expenditures for full year 2021 in order to build the necessary pipeline connections to secure these additional volumes. In addition, Matador’s decision to accelerate the next 11 Voni completions into the fourth quarter of 2021 requires San Mateo to accelerate the installation of compression facilities and other infrastructure prior to the end of 2021 in order to be prepared for these additional Stateline volumes in early 2022. Previously, these Voni-related capital expenditures were scheduled for early 2022.
  • As a result, effective July 27, 2021, Matador increased its full year 2021 estimates for midstream capital expenditures from $20 to $30 million to $35 to $45 million, or an increase of approximately $15 million at the midpoint of guidance. These midstream capital expenditures primarily reflect Matador’s 51% share of San Mateo’s estimated capital expenditures for full year 2021. Notwithstanding this increase in full year 2021 capital expenditures, San Mateo still expects to generate adjusted free cash flow during 2021. Further, the Company now estimates that San Mateo’s full year Adjusted EBITDA should be between $130 and $150 million, as compared to its original estimate of $125 to $135 million, as provided on February 23, 2021.

Third and Fourth Quarter 2021 Completions and Production Cadence Update

Third and Fourth Quarter 2021 Estimated Wells Turned to Sales

Matador expects to focus on its completion operations in the Stateline asset area and in the southern portion of the Arrowhead asset area in Eddy County, New Mexico (the “Greater Stebbins Area”) in the Delaware Basin during the third and fourth quarters of 2021. Early in the third quarter of 2021, as anticipated, Matador turned to sales four gross (3.5 net) operated wells in the Greater Stebbins Area, all of which are two-mile, Second Bone Spring completions. Matador expects to turn to sales 24 gross (22.3 net) operated wells in the fourth quarter of 2021, all of which are two-mile laterals. These estimates reflect no change to the Company’s estimates for operated wells expected to be turned to sales in the second half of 2021 from those originally provided on February 23, 2021.

Third and Fourth Quarter 2021 Estimated Oil, Natural Gas and Oil Equivalent Production

The table below provides Matador’s estimates for anticipated quarterly sequential changes in the Company’s average daily total oil equivalent, oil and natural gas production for the third and fourth quarters of 2021 as of July 27, 2021. These production estimates reflect the anticipated modifications to Matador’s operated and non-operated drilling and completions plans as described above.

 

Estimated Sequential Change in Q3 and Q4 2021

Period

Average Daily Total

Production

Average Daily Oil

Production

Average Daily Natural

Gas Production

Q3 2021

-10% to -12%

-9% to -10%

-13% to -14%

Q4 2021

0% to +1%

0% to +1%

0% to +1%

Operations Update

Drilling and Completion Activity

Matador operated four drilling rigs in the Delaware Basin during the second quarter of 2021. Two of these rigs are currently drilling in the Stateline asset area in Eddy County, New Mexico. These two rigs recently completed drilling 13 additional Boros wells in the eastern portion of the Stateline asset area and are now drilling 11 new Voni wells in the western portion of that asset area. The other two rigs have been drilling 13 wells in the Greater Stebbins Area, nine of which are still in progress. Four of these wells, all Second Bone Spring completions, were recently turned to sales and are currently cleaning up after completion operations while Matador prepares to install electric submersible pumps (ESPs) in each well. When Matador completes drilling the nine wells currently in progress in the Greater Stebbins Area, the Company plans to use these two rigs to drill two additional Uncle Ches wells in the Ranger asset area in Lea County, New Mexico and several additional Rodney Robinson wells in the western portion of the Antelope Ridge asset area in Lea County. The next 13 Boros wells, the nine remaining Greater Stebbins Area wells and the two Uncle Ches wells, a total of 24 wells, are all expected to be turned to sales prior to the end of 2021, as previously reported.

Wells Completed and Turned to Sales

During the second quarter of 2021, Matador completed and turned to sales a total of 24 gross (15.6 net) wells in its various Delaware Basin operating areas. This total was comprised of 15 gross (14.6 net) operated wells and nine gross (1.0 net) non-operated wells. The 15 operated wells included the first 13 Voni wells in the western portion of the Stateline asset area, all of which had completed lateral lengths of approximately 12,000 feet, or about 2.3 miles, making them the longest horizontal laterals that Matador has completed to date in the Delaware Basin.

 

Operated

 

 

 

Non-Operated

 

 

 

Total

 

Gross Operated and Non-Operated

Asset/Operating Area

Gross

 

Net

 

 

 

Gross

 

Net

 

 

 

Gross

 

Net

 

Well Completion Intervals

Western Antelope Ridge (Rodney Robinson)

 

 

 

 

 

 

 

 

 

 

No wells turned to sales in Q2 2021

Antelope Ridge

 

 

 

 

5

 

0.3

 

 

 

5

 

0.3

 

5-WC A

Arrowhead

 

 

 

 

2

 

0.7

 

 

 

2

 

0.7

 

2-3BS

Ranger

 

 

 

 

 

 

 

 

 

 

No wells turned to sales in Q2 2021

Rustler Breaks

 

 

 

 

2

 

0.0

 

 

 

2

 

0.0

 

2-WC A

Stateline

13

 

12.7

 

 

 

 

 

 

 

13

 

12.7

 

8-WC A; 4-2BS; 1-1BS

Twin Lakes

 

 

 

 

 

 

 

 

 

 

No wells turned to sales in Q2 2021

Wolf/Jackson Trust

2

 

1.9

 

 

 

 

 

 

 

2

 

1.9

 

2-2BS

Delaware Basin

15

 

14.6

 

 

 

9

 

1.0

 

 

 

24

 

15.6

 

 

South Texas

 

 

 

 

 

 

 

 

 

 

No wells turned to sales in Q2 2021

Haynesville Shale

 

 

 

 

4

 

0.0

 

 

 

4

 

0.0

 

 

Total

15

 

14.6

 

 

 

13

 

1.0

 

 

 

28

 

15.6

 

 

Note: WC = Wolfcamp; BS = Bone Spring. For example, 5-WC A indicates five Wolfcamp A completions and 2-3BS indicates two Third Bone Spring completions. Any “0.0” values in the table above suggest a net working interest of less than 5%, which does not round to 0.1.

Recent Wells Continuing to Outperform Expectations

Stateline Asset Area, Eddy County, New Mexico

Matador turned to sales the initial 13 Voni wells in the western portion of the Stateline asset area on a staggered basis during April 2021, and these wells continue to outperform the Company’s expectations. In aggregate, these 13 Voni wells have produced approximately 2.3 million BOE in just over three months of production. These wells have been produced on restricted chokes throughout their early producing lives and still exhibit high flowing surface pressures and shallow production declines.

Matador turned to sales the initial 13 Boros wells in the eastern portion of the Stateline asset area in September 2020. In aggregate, these 13 Boros wells have produced approximately 5.2 million BOE in just over 10 months of production. Most of these wells also continue to produce at high flowing surface pressures with shallow production declines. Of particular interest, in aggregate, these first 13 Boros wells achieved payout in May 2021, or after approximately nine months of production, where payout is defined as net oil and natural gas revenues received less D/C/E capital expenditures plus all associated operating expenses incurred since the wells were turned to sales in September 2020.

All oil, natural gas and water production from these Boros and Voni wells is being gathered via pipeline by San Mateo.

Rodney Robinson Wells, Western Antelope Ridge Asset Area, Lea County, New Mexico

Matador turned to sales four additional Rodney Robinson wells in late March 2021. In aggregate, these four wells have produced 850,000 BOE in approximately four months of production, and these wells continue to outperform the Company’s expectations. These wells have been produced on restricted chokes throughout their early producing lives and still exhibit high flowing surface pressures and shallow production declines.

Matador turned to sales the initial six Rodney Robinson wells in the western portion of the Antelope Ridge asset area in late March 2020. In aggregate, these six wells have produced just over 3.5 million BOE in approximately 16 months of production, and Matador continues to be very pleased with the performance of these wells. These first six Rodney Robinson wells, in aggregate, achieved payout (as described above) in April 2021, or after approximately one year of production. Matador considers this to be particularly significant given that these six wells experienced their first full quarter of production in the second quarter of 2020, when Matador’s realized oil and natural gas prices were $24.03 per barrel and $1.49 per thousand cubic feet, respectively.

Uncle Ches Wells, Ranger Asset Area, Lea County, New Mexico

Matador turned to sales two Uncle Ches wells in the Ranger asset area in March 2021. As noted in the Company’s first quarter earnings release on April 28, 2021, 24-hour initial potential (“IP”) tests were expected to be conducted after these wells were equipped with ESPs. This is Matador’s customary practice for many wells completed and turned to sales in the Ranger and Arrowhead asset areas, particularly in the Bone Spring formations. The following table highlights the 24-hour IP test results from these two Uncle Ches wells, both two-mile, Second Bone Spring completions. Matador is very pleased by the 24-hour IP test results and the 90% oil cuts exhibited by both Uncle Ches wells, as well as by the early performance of both wells. These wells also exhibit very low water cuts, producing less than one barrel of water per barrel of oil produced, which should further enhance the economic returns from these wells.

 

Completion

24-hr IP

BOE/d /

Oil

 

Asset Area/Well Name

Interval

(BOE/d)

1,000 ft.(1)

(%)

Comments

Ranger, Lea County, NM

Uncle Ches #127H

Second Bone Spring

1,988

198

90%

Tested 1,795 Bbl of oil per day and 1.2 MMcf of natural gas per day on ESP.

Uncle Ches #128H

Second Bone Spring

2,065

208

90%

Tested 1,854 Bbl of oil per day and 1.3 MMcf of natural gas per day on ESP.

(1)

24-hour IP per 1,000 feet of completed lateral length.

Realized Commodity Prices

Oil Prices

Matador’s weighted average realized oil price, excluding derivatives, was $64.90 per barrel in the second quarter of 2021, a 14% sequential increase from $57.05 per barrel in the first quarter of 2021, and a 170% year-over-year increase from $24.03 per barrel in the second quarter of 2020. Matador’s weighted average oil price differential relative to the West Texas Intermediate (“WTI”) benchmark, inclusive of the monthly roll and transportation costs, was ($1.27) per barrel in the second quarter of 2021, as compared to ($1.09) per barrel in the first quarter of 2021 and ($3.97) in the second quarter of 2020.

For the third quarter of 2021, Matador’s weighted average oil price differential relative to the WTI benchmark price, inclusive of the monthly roll and transportation costs, is anticipated to be in the range of ($1.00) to ($2.00) per barrel.

Matador’s realized loss on derivatives of approximately $42.6 million in the second quarter of 2021 was primarily attributable to the significant increase in WTI oil prices during the first and second quarters of 2021, resulting in WTI oil prices that were above the strike prices for most of the Company’s oil swaps and costless collars. Please see the accompanying slide presentation for a more complete summary of Matador’s current hedging positions.

Natural Gas Prices

Matador’s weighted average realized natural gas price, excluding derivatives, was $4.46 per thousand cubic feet in the second quarter of 2021, a 24% sequential decrease from $5.88 per thousand cubic feet in the first quarter of 2021, but a three-fold increase from $1.49 per thousand cubic feet in the second quarter of 2020. NGL prices, and especially propane prices, continued to be strong in the second quarter, which contributed to the Company’s weighted average natural gas price being well above the Company’s expectations in the second quarter of 2021. Matador is a two-stream reporter, and the revenues associated with its NGL production are included in the weighted average realized natural gas price.

For the third quarter of 2021, Matador’s weighted average natural gas price differential relative to the Henry Hub benchmark price is anticipated to be in the range of +$1.00 to +$1.50 per thousand cubic feet, assuming NGL prices continue to remain strong throughout the third quarter.

Operating Expenses

On a unit of production basis:

  • Production taxes, transportation and processing expenses increased 1% sequentially from $5.13 per BOE in the first quarter of 2021 to $5.17 per BOE in the second quarter of 2021. This increase was primarily attributable to increased production taxes associated with oil and natural gas revenues of $412.1 million, an all-time quarterly high, reported by Matador in the second quarter.
  • Lease operating expenses decreased 13% sequentially from $3.90 per BOE in the first quarter of 2021 to $3.39 per BOE in the second quarter of 2021. Lease operating expenses in the second quarter reflected a modest increase in costs associated with workovers, chemicals and other typical expenses associated with servicing an increased number of wells over time, but on a unit-of-production basis, these costs were offset by the 26% sequential increase in total oil and natural gas production achieved in the second quarter, resulting primarily from new wells recently turned to sales.
  • General and administrative expenses per BOE decreased 14% sequentially from $3.33 per BOE in the first quarter of 2021 to $2.88 per BOE in the second quarter of 2021. General and administrative expenses in the second quarter reflected the reinstatement of employee compensation beginning in March 2021, which had been previously reduced beginning in March 2020 in response to the significantly lower oil and natural gas price environment at that time. In addition, no bonuses were awarded to Matador management and staff in 2020. General and administrative expenses also reflected an increase in stock-based compensation expense associated with the Company’s cash-settled stock awards, the values of which are remeasured at each reporting period. Matador’s share price increased 54% from $23.45 at March 31, 2021 to $36.01 at June 30, 2021. On a unit-of-production basis, however, general and administrative expenses were positively impacted by the large sequential production increase in the second quarter.

San Mateo Highlights and Update

Operating Highlights and Financial Results

San Mateo’s operations in the second quarter of 2021 were highlighted by sequentially higher volumes and better-than-expected financial results. Natural gas gathering and processing, water handling and oil gathering and transportation volumes all increased sequentially in the second quarter of 2021, primarily as a result of the first 13 Voni wells being turned to sales in the Stateline asset area, along with two new wells in the Wolf asset area. Second quarter 2021 volumes do not include the full quantity of volumes that would have otherwise been delivered by certain San Mateo customers subject to minimum volume commitments (although partial deliveries were made in the second quarter), but for which San Mateo recognized revenues during the second quarter of 2021. San Mateo anticipates natural gas gathering and processing, water handling and oil gathering and transportation volumes should decrease sequentially in the third quarter of 2021, consistent with the anticipated sequential decrease in Matador’s production volumes. These volumes are now expected to increase slightly in the fourth quarter of 2021 and then significantly in the first quarter of 2022.

Operating Highlights

During the second quarter of 2021, San Mateo:

  • Handled an average of 281,000 barrels of produced water per day, a 21% sequential increase, as compared to 233,000 barrels per day in the first quarter of 2021, and a 30% year-over-year increase, as compared to 217,000 barrels per day in the second quarter of 2020.
  • Gathered or transported an average of 43,900 barrels of oil per day, a 25% sequential increase, as compared to 35,000 barrels of oil per day in the first quarter of 2021, and a 61% year-over-year increase, as compared to 27,300 barrels per day in the second quarter of 2020.
  • Gathered an average of 252 million cubic feet of natural gas per day, a 32% sequential increase, as compared to 191 million cubic feet per day in the first quarter of 2021, and a 29% year-over-year increase, as compared to 195 million cubic feet per day in the second quarter of 2020.
  • Processed an average of 223 million cubic feet of natural gas per day at its Black River Processing Plant, a 41% sequential increase, as compared to 158 million cubic feet per day in the first quarter of 2021, and a 38% year-over-year increase, as compared to 162 million cubic feet per day in the second quarter of 2020.

Financial Results

During the second quarter of 2021, San Mateo achieved better-than-anticipated financial results as described below. Net income, Adjusted EBITDA and adjusted free cash flow were each at all-time highs for San Mateo.

  • Net income (GAAP basis) of $32.6 million, an 80% sequential increase from $18.1 million in the first quarter of 2021, and a 2.1-fold year-over-year increase from $15.3 million in the second quarter of 2020. This quarterly result was above the Company’s expectations for the second quarter, primarily resulting from better-than-expected volumes delivered by Matador and other San Mateo customers.
  • Adjusted EBITDA (a non-GAAP financial measure) of $42.3 million, a 53% sequential increase from $27.6 million in the first quarter of 2021, and an 82% year-over-year increase from $23.2 million in the second quarter of 2020.
  • Net cash provided by San Mateo operating activities (GAAP basis) of $25.3 million, leading to San Mateo adjusted free cash flow (a non-GAAP financial measure) of $32.7 million.

Capital Expenditures

Matador’s portion of San Mateo’s capital expenditures was approximately $4.1 million in the second quarter of 2021, about $2 million less than the Company’s estimate of $6.0 million for the quarter, primarily attributable to both cost savings on completed projects and the timing of various operations. As noted earlier in this release, effective July 27, 2021, Matador increased its guidance for full year 2021 midstream capital expenditures from $20 to $30 million to $35 to $45 million to account for additional capital expenditures associated with new midstream opportunities, as well as to plan for additional infrastructure needed to handle increased volumes associated with the acceleration of production from Matador’s next 11 Voni wells in the Stateline asset area into the first quarter of 2022, which was earlier than prior expectations. These midstream capital expenditures primarily reflect Matador’s 51% share of San Mateo’s estimated capital expenditures for full year 2021.

Conference Call Information

The Company will host a live conference call on Wednesday, July 28, 2021, at 9:00 a.m. Central Time to review its second quarter 2021 operational and financial results. To access the live conference call, domestic participants should dial (855) 875-8781 and international participants should dial (720) 634-2925. The conference ID and passcode is 9189353. The conference call will also be available through the Company’s website at www.matadorresources.com on the Events and Presentations page under the Investor Relations tab. The replay of the event will be available on the Company’s website at www.matadorresources.com on the Events and Presentations page under the Investor Relations tab through August 31, 2021.

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. Additionally, Matador conducts midstream operations, primarily through its midstream joint venture, San Mateo, in support of its exploration, development and production operations and provides natural gas processing, oil transportation services, natural gas, oil and produced water gathering services and produced water disposal services to third parties.

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. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, future liquidity, the payment of dividends, results in certain basins, objectives, project timing, expectations and intentions, regulatory and governmental actions and other statements that are not historical facts. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, 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; delays and other difficulties related to regulatory and governmental approvals and restrictions; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; the impact of the worldwide spread of the novel coronavirus, or COVID-19, on oil and natural gas demand, oil and natural gas prices and its business; the operating results of the Company’s midstream joint venture’s Black River cryogenic natural gas processing plant; the timing and operating results of the buildout by the Company’s midstream joint venture of oil, natural gas and water gathering and transportation systems and the drilling of any additional produced water disposal wells; and other important factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), 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 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)

June 30,

2021

 

December 31,

2020

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash

$

44,632

 

 

$

57,916

 

 

Restricted cash

 

34,576

 

 

 

33,467

 

 

Accounts receivable

 

 

 

 

Oil and natural gas revenues

 

154,077

 

 

 

85,098

 

 

Joint interest billings

 

42,130

 

 

 

34,823

 

 

Other

 

19,826

 

 

 

17,212

 

 

Derivative instruments

 

6,171

 

 

 

6,727

 

 

Lease and well equipment inventory

 

11,657

 

 

 

10,584

 

 

Prepaid expenses and other current assets

 

20,559

 

 

 

15,802

 

 

Total current assets

 

333,628

 

 

 

261,629

 

 

Property and equipment, at cost

 

 

 

 

Oil and natural gas properties, full-cost method

 

 

 

 

Evaluated

 

5,514,224

 

 

 

5,295,931

 

 

Unproved and unevaluated

 

926,492

 

 

 

902,133

 

 

Midstream properties

 

859,189

 

 

 

841,695

 

 

Other property and equipment

 

29,983

 

 

 

29,561

 

 

Less accumulated depletion, depreciation and amortization

 

(3,867,858

)

 

 

(3,701,551

)

 

Net property and equipment

 

3,462,030

 

 

 

3,367,769

 

 

Other assets

 

 

 

 

Derivative instruments

 

2,424

 

 

 

2,570

 

 

Other long-term assets

 

36,467

 

 

 

55,312

 

 

Total assets

$

3,834,549

 

 

$

3,687,280

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

13,573

 

 

$

13,982

 

 

Accrued liabilities

 

151,051

 

 

 

119,158

 

 

Royalties payable

 

82,256

 

 

 

66,049

 

 

Amounts due to affiliates

 

15,823

 

 

 

4,934

 

 

Derivative instruments

 

127,687

 

 

 

45,186

 

 

Advances from joint interest owners

 

6,208

 

 

 

4,191

 

 

Other current liabilities

 

25,982

 

 

 

37,436

 

 

Total current liabilities

 

422,580

 

 

 

290,936

 

 

Long-term liabilities

 

 

 

 

Borrowings under Credit Agreement

 

240,000

 

 

 

440,000

 

 

Borrowings under San Mateo Credit Facility

 

352,500

 

 

 

334,000

 

 

Senior unsecured notes payable

 

1,041,789

 

 

 

1,040,998

 

 

Asset retirement obligations

 

39,737

 

 

 

37,919

 

 

Derivative instruments

 

3,024

 

 

 

 

 

Deferred income taxes

 

7,847

 

 

 

 

 

Other long-term liabilities

 

24,946

 

 

 

30,402

 

 

Total long-term liabilities

 

1,709,843

 

 

 

1,883,319

 

 

Shareholders’ equity

 

 

 

 

Common stock - $0.01 par value, 160,000,000 shares authorized; 117,123,379 and 116,847,003 shares issued; and 116,992,831 and 116,844,768 shares outstanding, respectively

 

1,171

 

 

 

1,169

 

 

Additional paid-in capital

 

2,061,815

 

 

 

2,027,069

 

 

Accumulated deficit

 

(580,981

)

 

 

(741,705

)

 

Treasury stock, at cost, 130,548 and 2,235 shares, respectively

 

(2,243

)

 

 

(3

)

 

Total Matador Resources Company shareholders’ equity

 

1,479,762

 

 

 

1,286,530

 

 

Non-controlling interest in subsidiaries

 

222,364

 

 

 

226,495

 

 

Total shareholders’ equity

 

1,702,126

 

 

 

1,513,025

 

 

Total liabilities and shareholders’ equity

$

3,834,549

 

 

$

3,687,280

 

 

 

 

 

 

 

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

 

(In thousands, except per share data)

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Revenues

 

 

 

 

 

 

 

 

Oil and natural gas revenues

$

412,074

 

 

$

118,767

 

 

$

728,307

 

 

$

316,681

 

 

Third-party midstream services revenues

 

19,850

 

 

 

14,668

 

 

 

35,288

 

 

 

30,498

 

 

Sales of purchased natural gas

 

10,918

 

 

 

13,981

 

 

 

15,428

 

 

 

24,525

 

 

Lease bonus - mineral acreage

 

 

 

 

4,062

 

 

 

 

 

 

4,062

 

 

Realized (loss) gain on derivatives

 

(42,611

)

 

 

44,110

 

 

 

(68,524

)

 

 

54,977

 

 

Unrealized (loss) gain on derivatives

 

(42,804

)

 

 

(132,668

)

 

 

(86,227

)

 

 

3,762

 

 

Total revenues

 

357,427

 

 

 

62,920

 

 

 

624,272

 

 

 

434,505

 

 

Expenses

 

 

 

 

 

 

 

 

Production taxes, transportation and processing

 

43,843

 

 

 

18,797

 

 

 

78,017

 

 

 

40,513

 

 

Lease operating

 

28,752

 

 

 

26,162

 

 

 

54,691

 

 

 

57,072

 

 

Plant and other midstream services operating

 

13,746

 

 

 

9,780

 

 

 

27,409

 

 

 

19,744

 

 

Purchased natural gas

 

9,628

 

 

 

10,922

 

 

 

12,483

 

 

 

18,980

 

 

Depletion, depreciation and amortization

 

91,444

 

 

 

93,350

 

 

 

166,307

 

 

 

184,057

 

 

Accretion of asset retirement obligations

 

511

 

 

 

495

 

 

 

1,011

 

 

 

971

 

 

Full-cost ceiling impairment

 

 

 

 

324,001

 

 

 

 

 

 

324,001

 

 

General and administrative

 

24,397

 

 

 

14,723

 

 

 

46,585

 

 

 

30,945

 

 

Total expenses

 

212,321

 

 

 

498,230

 

 

 

386,503

 

 

 

676,283

 

 

Operating income (loss)

 

145,106

 

 

 

(435,310

)

 

 

237,769

 

 

 

(241,778

)

 

Other income (expense)

 

 

 

 

 

 

 

 

Net loss on asset sales and impairment

 

 

 

 

(2,632

)

 

 

 

 

 

(2,632

)

 

Interest expense

 

(17,940

)

 

 

(18,297

)

 

 

(37,590

)

 

 

(38,109

)

 

Other income (expense)

 

14

 

 

 

473

 

 

 

(661

)

 

 

1,793

 

 

Total other expense

 

(17,926

)

 

 

(20,456

)

 

 

(38,251

)

 

 

(38,948

)

 

Income (loss) before income taxes

 

127,180

 

 

 

(455,766

)

 

 

199,518

 

 

 

(280,726

)

 

Income tax provision (benefit)

 

 

 

 

 

 

 

 

Deferred

 

5,349

 

 

 

(109,823

)

 

 

8,189

 

 

 

(69,866

)

 

Income tax provision (benefit)

 

5,349

 

 

 

(109,823

)

 

 

8,189

 

 

 

(69,866

)

 

Net income (loss)

 

121,831

 

 

 

(345,943

)

 

 

191,329

 

 

 

(210,860

)

 

Net income attributable to non-controlling interest in subsidiaries

 

(15,926

)

 

 

(7,473

)

 

 

(24,779

)

 

 

(16,827

)

 

Net income (loss) attributable to Matador Resources Company shareholders

$

105,905

 

 

$

(353,416

)

 

$

166,550

 

 

$

(227,687

)

 

Earnings (loss) per common share

 

 

 

 

 

 

 

 

Basic

$

0.91

 

 

$

(3.04

)

 

$

1.43

 

 

$

(1.96

)

 

Diluted

$

0.89

 

 

$

(3.04

)

 

$

1.40

 

 

$

(1.96

)

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

116,801

 

 

 

116,071

 

 

 

116,804

 

 

 

115,977

 

 

Diluted

 

118,993

 

 

 

116,071

 

 

 

118,617

 

 

 

115,977

 

 

 

 

 

 

 

 

 

 

 

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

 

(In thousands)

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

$

121,831

 

 

$

(345,943

)

 

$

191,329

 

 

$

(210,860

)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities

 

 

 

 

 

 

 

 

Unrealized loss (gain) on derivatives

 

42,804

 

 

 

132,668

 

 

 

86,227

 

 

 

(3,762

)

 

Depletion, depreciation and amortization

 

91,444

 

 

 

93,350

 

 

 

166,307

 

 

 

184,057

 

 

Accretion of asset retirement obligations

 

511

 

 

 

495

 

 

 

1,011

 

 

 

971

 

 

Full-cost ceiling impairment

 

 

 

 

324,001

 

 

 

 

 

 

324,001

 

 

Stock-based compensation expense

 

1,795

 

 

 

3,286

 

 

 

2,650

 

 

 

7,080

 

 

Deferred income tax provision (benefit)

 

5,349

 

 

 

(109,823

)

 

 

8,189

 

 

 

(69,866

)

 

Amortization of debt issuance cost

 

931

 

 

 

715

 

 

 

1,655

 

 

 

1,399

 

 

Net loss on asset sales and impairment

 

 

 

 

2,632

 

 

 

 

 

 

2,632

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

(39,220

)

 

 

10,286

 

 

 

(78,900

)

 

 

46,628

 

 

Lease and well equipment inventory

 

(549

)

 

 

428

 

 

 

(437

)

 

 

(868

)

 

Prepaid expenses and other current assets

 

(3,681

)

 

 

(1,784

)

 

 

(4,483

)

 

 

(1,610

)

 

Other long-term assets

 

72

 

 

 

57

 

 

 

91

 

 

 

1,806

 

 

Accounts payable, accrued liabilities and other current liabilities

 

25,785

 

 

 

6,211

 

 

 

34,345

 

 

 

(52,351

)

 

Royalties payable

 

10,466

 

 

 

(24,582

)

 

 

16,207

 

 

 

(24,198

)

 

Advances from joint interest owners

 

(792

)

 

 

8,692

 

 

 

2,017

 

 

 

5,094

 

 

Other long-term liabilities

 

1,454

 

 

 

324

 

 

 

1,387

 

 

 

232

 

 

Net cash provided by operating activities

 

258,200

 

 

 

101,013

 

 

 

427,595

 

 

 

210,385

 

 

Investing activities

 

 

 

 

 

 

 

 

Drilling, completion and equipping capital expenditures

 

(124,739

)

 

 

(150,192

)

 

 

(210,725

)

 

 

(283,362

)

 

Acquisition of oil and natural gas properties

 

(8,680

)

 

 

(10,912

)

 

 

(15,356

)

 

 

(51,736

)

 

Midstream capital expenditures

 

(8,712

)

 

 

(49,899

)

 

 

(25,092

)

 

 

(123,338

)

 

Expenditures for other property and equipment

 

(112

)

 

 

(594

)

 

 

(245

)

 

 

(1,381

)

 

Proceeds from sale of assets

 

16

 

 

 

1,056

 

 

 

296

 

 

 

1,056

 

 

Net cash used in investing activities

 

(142,227

)

 

 

(210,541

)

 

 

(251,122

)

 

 

(458,761

)

 

Financing activities

 

 

 

 

 

 

 

 

Repayments of borrowings under Credit Agreement

 

(140,000

)

 

 

 

 

 

(240,000

)

 

 

 

 

Borrowings under Credit Agreement

 

40,000

 

 

 

70,000

 

 

 

40,000

 

 

 

130,000

 

 

Repayments of borrowings under San Mateo Credit Facility

 

(23,000

)

 

 

 

 

 

(34,000

)

 

 

 

 

Borrowings under San Mateo Credit Facility

 

41,500

 

 

 

12,500

 

 

 

52,500

 

 

 

32,000

 

 

Cost to amend credit facilities

 

(830

)

 

 

 

 

 

(830

)

 

 

(660

)

 

Dividends paid

 

(2,913

)

 

 

 

 

 

(5,826

)

 

 

 

 

Contributions related to formation of San Mateo

 

16,250

 

 

 

 

 

 

31,626

 

 

 

14,700

 

 

Contributions from non-controlling interest owners of less-than-wholly-owned subsidiaries

 

 

 

 

17,172

 

 

 

 

 

 

67,172

 

 

Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries

 

(14,700

)

 

 

(10,535

)

 

 

(28,910

)

 

 

(22,050

)

 

Taxes paid related to net share settlement of stock-based compensation

 

(1,163

)

 

 

(157

)

 

 

(2,884

)

 

 

(1,493

)

 

Other

 

(166

)

 

 

7,261

 

 

 

(324

)

 

 

7,087

 

 

Net cash (used in) provided by financing activities

 

(85,022

)

 

 

96,241

 

 

 

(188,648

)

 

 

226,756

 

 

Increase (decrease) in cash and restricted cash

 

30,951

 

 

 

(13,287

)

 

 

(12,175

)

 

 

(21,620

)

 

Cash and restricted cash at beginning of period

 

48,257

 

 

 

56,795

 

 

 

91,383

 

 

 

65,128

 

 

Cash and restricted cash at end of period

$

79,208

 

 

$

43,508

 

 

$

79,208

 

 

$

43,508

 

 

 

 

 

 

 

 

 

 

 

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, on a consolidated basis and for San Mateo, Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, certain other non-cash items and non-cash stock-based compensation expense and net gain or loss on asset sales and impairment. Adjusted EBITDA for San Mateo includes the combined financial results of San Mateo Midstream, LLC and San Mateo Midstream II, LLC prior to their October 2020 merger. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. All reference to Matador’s Adjusted EBITDA are those values attributable to Matador Resources Company shareholders after giving effect to Adjusted EBITDA attributable to non-controlling interests, including in San Mateo.

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 such Adjusted EBITDA numbers are estimations, approximations and/or ranges. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items, including future income taxes, full-cost ceiling impairments, unrealized gains or losses on derivatives and gains or losses on asset sales and impairment. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Adjusted EBITDA – Matador Resources Company

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Unaudited Adjusted EBITDA Reconciliation to Net Income (Loss):

 

 

 

 

 

 

Net income (loss) attributable to Matador Resources Company shareholders

$

105,905

 

 

$

60,645

 

 

$

(353,416

)

 

Net income attributable to non-controlling interest in subsidiaries

 

15,926

 

 

 

8,853

 

 

 

7,473

 

 

Net income (loss)

 

121,831

 

 

 

69,498

 

 

 

(345,943

)

 

Interest expense

 

17,940

 

 

 

19,650

 

 

 

18,297

 

 

Total income tax provision (benefit)

 

5,349

 

 

 

2,840

 

 

 

(109,823

)

 

Depletion, depreciation and amortization

 

91,444

 

 

 

74,863

 

 

 

93,350

 

 

Accretion of asset retirement obligations

 

511

 

 

 

500

 

 

 

495

 

 

Full-cost ceiling impairment

 

 

 

 

 

 

 

324,001

 

 

Unrealized loss on derivatives

 

42,804

 

 

 

43,423

 

 

 

132,668

 

 

Non-cash stock-based compensation expense

 

1,795

 

 

 

855

 

 

 

3,286

 

 

Net loss on asset sales and impairment

 

 

 

 

 

 

 

2,632

 

 

Consolidated Adjusted EBITDA

 

281,674

 

 

 

211,629

 

 

 

118,963

 

 

Adjusted EBITDA attributable to non-controlling interest in subsidiaries

 

(20,708

)

 

 

(13,514

)

 

 

(11,369

)

 

Adjusted EBITDA attributable to Matador Resources Company shareholders

$

260,966

 

 

$

198,115

 

 

$

107,594

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Net cash provided by operating activities

$

258,200

 

 

$

169,395

 

 

$

101,013

 

 

Net change in operating assets and liabilities

 

6,465

 

 

 

23,308

 

 

 

368

 

 

Interest expense, net of non-cash portion

 

17,009

 

 

 

18,926

 

 

 

17,582

 

 

Adjusted EBITDA attributable to non-controlling interest in subsidiaries

 

(20,708

)

 

 

(13,514

)

 

 

(11,369

)

 

Adjusted EBITDA attributable to Matador Resources Company shareholders

$

260,966

 

 

$

198,115

 

 

$

107,594

 

 

 

 

 

 

 

 

 

Adjusted EBITDA – San Mateo (100%)

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Unaudited Adjusted EBITDA Reconciliation to Net Income:

 

 

 

 

 

 

Net income

$

32,562

 

$

18,068

 

 

$

15,252

 

Depletion, depreciation and amortization

 

7,521

 

 

7,523

 

 

 

4,786

 

Interest expense

 

2,118

 

 

1,928

 

 

 

1,854

 

Accretion of asset retirement obligations

 

61

 

 

60

 

 

 

49

 

Net loss on impairment

 

 

 

 

 

 

1,261

 

Adjusted EBITDA

$

42,262

 

$

27,579

 

 

$

23,202

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Net cash provided by operating activities

$

25,261

 

$

41,198

 

 

$

20,164

 

Net change in operating assets and liabilities

 

15,210

 

 

(15,308

)

 

 

1,354

 

Interest expense, net of non-cash portion

 

1,791

 

 

1,689

 

 

 

1,684

 

Adjusted EBITDA

$

42,262

 

$

27,579

 

 

$

23,202

 

 

 

 

 

 

 

 

Adjusted Net Income and Adjusted Earnings Per Diluted Common 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 non-recurring transaction costs for certain acquisitions or other non-recurring expense items, 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 industry 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

 

 

June 30,

 

March 31,

 

June 30,

 

 

2021

 

2021

 

2020

 

(In thousands, except per share data)

 

 

 

 

 

 

Unaudited Adjusted Net Income and Adjusted Earnings Per Share Reconciliation to

Net Income (Loss):

 

 

 

 

 

 

Net income (loss) attributable to Matador Resources Company shareholders

$

105,905

 

$

60,645

 

$

(353,416

)

 

Total income tax provision (benefit)

 

5,349

 

 

2,840

 

 

(109,823

)

 

Income (loss) attributable to Matador Resources Company shareholders before taxes

 

111,254

 

 

63,485

 

 

(463,239

)

 

Less non-recurring and unrealized charges to income (loss) before taxes:

 

 

 

 

 

 

Full-cost ceiling impairment

 

 

 

 

 

324,001

 

 

Unrealized loss on derivatives

 

42,804

 

 

43,423

 

 

132,668

 

 

Net loss on asset sales and impairment

 

 

 

 

 

2,632

 

 

Adjusted income (loss) attributable to Matador Resources Company shareholders before taxes

 

154,058

 

 

106,908

 

 

(3,938

)

 

Income tax expense (provision)(1)

 

32,352

 

 

22,451

 

 

(827

)

 

Adjusted net income (loss) attributable to Matador Resources Company shareholders (non-GAAP)

$

121,706

 

$

84,457

 

$

(3,111

)

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding, without participating securities

 

116,398

 

 

116,249

 

 

116,071

 

 

Dilutive effect of participating securities

 

403

 

 

558

 

 

 

 

Weighted average shares outstanding, including participating securities - basic

 

116,801

 

 

116,807

 

 

116,071

 

 

Dilutive effect of options and restricted stock units

 

2,192

 

 

1,862

 

 

 

 

Weighted average common shares outstanding - diluted

 

118,993

 

 

118,669

 

 

116,071

 

 

Adjusted earnings (loss) per share attributable to Matador Resources Company

shareholders (non-GAAP)

 

 

 

 

 

 

Basic

$

1.04

 

$

0.72

 

$

(0.03

)

 

Diluted

$

1.02

 

$

0.71

 

$

(0.03

)

 

 

 

(1)

 

Estimated using federal statutory tax rate in effect for the period.

Adjusted Free Cash Flow

This press release includes the non-GAAP financial measure of adjusted free cash flow. This non-GAAP item is measured, on a consolidated basis for the Company and for San Mateo, as net cash provided by operating activities, adjusted for changes in working capital and cash performance incentives that are not included as operating cash flows, less cash flows used for capital expenditures, adjusted for changes in capital accruals. On a consolidated basis, these numbers are also adjusted for the cash flows related to non-controlling interest in subsidiaries that represent cash flows not attributable to Matador shareholders. Adjusted free cash flow should not be considered an alternative to, or more meaningful than, net cash provided by operating activities as determined in accordance with GAAP or an indicator of the Company’s liquidity. Adjusted free cash flow is used by the Company, securities analysts and investors as an indicator of the Company’s ability to manage its operating cash flow, internally fund its D/C/E capital expenditures, pay dividends and service or incur additional debt, without regard to the timing of settlement of either operating assets and liabilities or accounts payable related to capital expenditures. Additionally, this non-GAAP financial measure may be different than similar measures used by other companies. The Company believes the presentation of adjusted free cash flow provides useful information to investors, as it provides them an additional relevant comparison of the Company’s performance, sources and uses of capital associated with its operations across periods and to the performance of the Company’s peers. In addition, this non-GAAP financial measure reflects adjustments for items of cash flows that are often excluded by securities analysts and other users of the Company’s financial statements in evaluating the Company’s cash spend.

The table below reconciles adjusted free cash flow to its most directly comparable GAAP measure of net cash provided by operating activities. All references to Matador’s adjusted free cash flow are those values attributable to Matador shareholders after giving effect to adjusted free cash flow attributable to third-party non-controlling interests, including in San Mateo. Adjusted free cash flow for San Mateo includes the combined financial results of San Mateo Midstream, LLC and San Mateo Midstream II, LLC prior to their October 2020 merger.

Adjusted Free Cash Flow - Matador Resources Company

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Net cash provided by operating activities

$

258,200

 

 

$

169,395

 

 

$

101,013

 

 

Net change in operating assets and liabilities

 

6,465

 

 

 

23,308

 

 

 

368

 

 

San Mateo discretionary cash flow attributable to non-controlling interest in subsidiaries(1)

 

(19,831

)

 

 

(12,686

)

 

 

(10,544

)

 

Performance incentives received from Five Point

 

16,250

 

 

 

15,376

 

 

 

 

 

Total discretionary cash flow

 

261,084

 

 

 

195,393

 

 

 

90,837

 

 

 

 

 

 

 

 

 

Drilling, completion and equipping capital expenditures

 

124,739

 

 

 

85,986

 

 

 

150,192

 

 

Midstream capital expenditures

 

8,712

 

 

 

16,380

 

 

 

49,899

 

 

Expenditures for other property and equipment

 

112

 

 

 

133

 

 

 

594

 

 

Net change in capital accruals

 

(24,938

)

 

 

33,376

 

 

 

(14,119

)

 

San Mateo accrual-based capital expenditures related to non-controlling interest in subsidiaries(2)

 

(3,812

)

 

 

(4,356

)

 

 

(31,928

)

 

Total accrual-based capital expenditures(3)

 

104,813

 

 

 

131,519

 

 

 

154,638

 

 

Adjusted free cash flow

$

156,271

 

 

$

63,874

 

 

$

(63,801

)

 

 

 

 

 

 

 

 

(1)

Represents Five Point Energy LLC’s (“Five Point”) 49% interest in San Mateo discretionary cash flow, as computed below.

(2)

Represents Five Point’s 49% interest in accrual-based San Mateo capital expenditures, as computed below.

(3)

Represents drilling, completion and equipping costs, Matador’s share of San Mateo capital expenditures plus 100% of other immaterial midstream capital expenditures not associated with San Mateo.

Adjusted Free Cash Flow - San Mateo (100%)

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

(In thousands)

2021

 

2021

 

2020

 

Net cash provided by San Mateo operating activities

$

25,261

 

 

$

41,198

 

 

$

20,164

 

 

Net change in San Mateo operating assets and liabilities

 

15,210

 

 

 

(15,308

)

 

 

1,354

 

 

Total San Mateo discretionary cash flow

 

40,471

 

 

 

25,890

 

 

 

21,518

 

 

 

 

 

 

 

 

 

San Mateo capital expenditures

 

8,688

 

 

 

15,332

 

 

 

50,524

 

 

Net change in San Mateo capital accruals

 

(909

)

 

 

(6,442

)

 

 

14,635

 

 

San Mateo accrual-based capital expenditures

 

7,779

 

 

 

8,890

 

 

 

65,159

 

 

San Mateo adjusted free cash flow

$

32,692

 

 

$

17,000

 

 

$

(43,641

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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