Matador Resources Company (NYSE:MTDR) Q3 2023 Earnings Call Transcript

Matador Resources Company (NYSE:MTDR) Q3 2023 Earnings Call Transcript October 25, 2023

Operator: Good morning, ladies and gentlemen. Welcome to the Third Quarter 2023 Matador Resources Company Earnings Conference Call. My name is Latif, and I’ll be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the company’s remarks. As a reminder, this conference is being recorded for replay purposes and the replay will be available in the company’s website for one year as discussed in the company’s earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Vice President, Investor Relations for Matador. Mr. Schmitz, you may proceed. Mr. Schmitz, your line is open sir.

Mac Schmitz: Thank you, Latif and good morning, everyone, and thank you for joining us for Matador’s third quarter 2023 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company’s financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company’s earnings press release. As a reminder, certain statements included in this morning’s presentation may be forward-looking and reflect the company’s current expectations or forecasts of future events based on information that is now available. Actual results and future events could differ materially from those anticipated in such statements.

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Additional information concerning factors that could cause actual results to differ materially is contained in the company’s earnings release and its most recent Annual Report on Form 10-K in any subsequent quarterly reports on Form 10-Q. In addition, to our earnings press release issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with the third quarter 2023 earnings release under the Investor Relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our Founder, Chairman and CEO. Joe?

Joe Foran: Thank you, Mac and thank you all for listening in. It's a pleasure to be here today and a pleasure to give you this report. In very simplest terms, we said at the beginning of the year that we began the year at 100,000 BOE equivalent, and we're going to finish the year at 140,000. I was wrong. It's going to be 145,000. And we're pleased to report in addition to production being up, our debt is down, costs are down, and we think our opportunities are also up that the plans that we put into place are proceeding as expected or better than expected and we're excited to report this to you and look for your questions, but we feel we've ended the year 2023 with more inventory, more options, and the outlook for 2024 is even better.

As strong as this year is, I repeat 2024 is better. I would point to you, I had two slides in the materials, which shows -- first one shows our performance over the last five years against our peers as selected and we've done -- we've done performed, we feel like we've outperformed them. And the second one is more interesting is our performance since the IPO. The team has made great strides. I give them the credit. People are really working well together. They've come up with good ideas and Matador has continued to grow. When we went public, we were about $300 million and today the market cap is somewhere around $7.5 billion. But it should get better as the year goes along. We've given projections, but they are confident they will all be realized.

I think on slide B, some that struck me as we prepared this was that three times we have announced what were very meaningful deals to us. The first one was the HEYCO deal and immediately announcing it, we thought anticipating it would go up but things went down, which was a big surprise to us. And then when we bought the BLM leases, again, we thought the market would easily recognize the potential of these wells. We have now drilled close to 90 wells on these leases, but instead of going up, things plunged. And in this deal, besides 98 wells happening and the production from them, we -- it enabled us to go from 98% of our wells being one mile laterals to 98% of our wells being two miles or more. And you see the dramatic effect of that. Right after that, as things started to stabilize, we ran into COVID, and things plunged again.

But as we turned on the state line wells, and these wells were paid now in less than a year, at some even paid out at $20 a barrel, you can see where that's taken us to much higher levels. Now, we had -- and again, but the third time was the charm. We had announced the advance bill and instead of going up, it went down again. So, but since then, things have been going good for us, as you can see, as we've increased the production, as I mentioned, first of the year, 100,000, and at the end of the year, pretty simple math, 145,000. We're headed in the right direction. Now, just again, a brief history of our Delaware position, we started when we went public in 2012. At that time, we had six wells. This is slide C. Five years later, in 2017, we've got 212 and now in 2023 we have 751 wells.

And our market cap has increased and all the other important categories have too, including the dividend. And it's with pleasure. We like dividends here. I would like to emphasize that. We're all large shareholders, and over 95% of our employees are participating in the employees' purchase plan of our stock. So I appreciate the vote of confidence from the staff. We're going to try to deliver, but again, pleased that we've had four raises of the dividend, and now we're at $0.85. The other progress as you get into it, so we've got production up. Our costs are down. We think our inventory selection is better than ever, and debt is down, $200 million. So we’re at $500 million. We have almost $1 billion in availability under our RBL with our bank group.

So we think we're ready for the opportunities that will come along this year. And but want to answer or address any concerns that you might have. But again, I'm just stating simply that I think you can count on us to perform even better in 2024 than in 2023. And we're making plans accordingly because you have a lot of volatility and uncertainty that we're trying to be ready for everything, not only on the operations side, but in the -- in the world and in Congress and all the other things has happened in whichever way it goes, we're confident we have a good plan to make progress. So with that, I'll open up the floor for questions.

Mac Schmitz: Lateef, we'll jump into Q&A. Thanks.

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