Matador Resources Company · NYSE:MTDR
Matador Resources — Investor Presentation (November 2015)
66 slides from Matador Resources's investor presentation, Nov 10, 2015
Slide 1: November 2015 Investor Presentation
November 2015 Investor Presentation NYSE: MTDR Exhibit 99.1
Slide 2: Disclosure Statements
2 Disclosure Statements Safe Harbor Statement – This presentation and statements made by representatives of Matador Resources Company (“Matador” or the “Company”) during the course of this presentation include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 19
Slide 3: Company Summary
merry aie 4 Matador J 4 cm dy A RESOURCES COMPANY a : ; Company Summary
Slide 4: Matador history and growth through the drill bit
2012, 2013 and 2014 capital spending focused primarily on developing Eagle Ford and transitioning to oil February 2012 IPO at $12.00; net cash proceeds of ~$136 million May 2014 Follow-on Offering at $25.00; net cash proceeds of ~$181 million September 2013 Follow-on Offering at $15.25; net cash pro
Slide 5: Company Overview
5 Company Overview Exchange: Ticker NYSE: MTDR Shares Outstanding(1) 85.6 million common shares Share Price(1) $26.70/share Market Capitalization(1) $2.3 billion Actual Previous Updated % YoY 2014 2015 Guidance(2) 2015 Guidance(3) Change Capital Spending $610 million $425 million $425 million - 30%
Slide 6: Matador Resources Company – Operations Overview
Matador Resources Company – Operations Overview Market Capitalization(1) $2.3 billion Avg. Daily Production – Q3 2015(2) 26,137 BOE/d Oil (% total) 12,617 Bbl/d (48%) Natural Gas (% total) 81.1 MMcf/d (52%) Proved Reserves @ 9/30/2015 87.1 million BOE % Proved Developed 39% % Oil 49% 2015E CapEx(3)
Slide 7: Matador's Execution History – Doing What We Say
Matador’s Execution History – “Doing What We Say” Oil Production 414 Bbl/d of oil 6% oil 4,916 Bbl/d of oil 46% oil 12,617 Bbl/d of oil 48% oil Proved Reserves 27 MMBOE 1.1 MMBbl of oil 4% oil 39 MMBOE 12.1 MMBbl of oil 31% oil 87 MMBOE 42.5 MMBbl of oil 49% oil PV-10(2
Slide 8: Quarterly production and revenue summary
September 30, June 30, September 30, September 30, September 30, 2015 2015 2014 2015 2014 Net Production Volumes:(1) Oil production (MBbl) 1,161 1,260 839 3,429 2,302 Natural gas production (Bcf) 7.5 7.0 3.8 21.1 9.9 Total oil equivalent production (MBOE) 2,405 2,421 1,481 6,941 3,956 Average daily
Slide 9: Oil and Natural Gas Proved Reserves and PV-10 by Area
9 December 31, 2013 Total proved reserves = 51.7 million BOE PV-10(1): $655.2 million $93.42 oil / $3.67 natural gas Total proved reserves = 68.7 million BOE PV-10(1): $1,043.4 million $91.48 oil / $4.35 natural gas December 31, 2014 Total proved reserves = 87.1 million BOE PV-10(1): $692.7 million
Slide 10: Matador's Continued Growth in Production and Permian Position
Matador’s Continued Growth in Production and Permian Position Average Daily Oil Production (Bbl/d) Average Daily Natural Gas Production (MMcf/d) Average Daily Total Production (MBOE/d) Total Permian Acreage (Net Acres) Growth since IPO Growth since IPO Growth since IPO Growth since IPO 3.9 7.0 9.0 1
Slide 11: We Remain Committed to Keeping our Balance Sheet Strong
0.0x 0.0x 0.1x 1.5x 0.2x 0.7x 1.1x 1.3x 1.5x 1.6x 0.8x 1.0x 1.2x 0.6x 1.0x 1.3x 1.6x 1.4x 1.0x 2008 2009 2010 2011 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Net Debt / LTM EBITDA $76 $240 $256 $416 $243 In itial P u b lic O ff e rin g Preserved and enhanced liquidi
Slide 12: Previous Oil Price Declines Have Created Opportunities for Matador
12 Previous Oil Price Declines Have Created Opportunities for Matador(1) Comparison of Major Oil Corrections and Major Matador Turning Points Since 1980 Date Event % Change in Oil Price Length of Oil Price Decline (in trading days) % Increase in Oil Price – 1-Year Post-Low 1986 Saudi Market Share Wa
Slide 13: Keys to Matador's Success
Keys to Matador’s Success Over Last 35 Years(1) 13 People We have a strong, committed technical and financial team in place, and we continue to make additions and improvements to our staff, our capabilities and our processes Board and Special Advisor additions have strengthened Board skills an
Slide 14: Permian (Delaware) Basin
Permian (Delaware) Basin Southeast New Mexico and West Texas
Slide 15: Delaware Basin – A World Class Hydrocarbon System
15 Delaware Basin – A “World Class” Hydrocarbon System DELAWARE BASIN CENTRAL BASIN PLATFORM MIDLAND BASIN Wolfcamp Simpson ~23,000’ Sediment Fill East West Source “Kitchens” Now Unconventional Resource Plays 70,000 square mile area Up to 25,000 feet of multiple, stacked, petroleum systems Ext
Slide 16: Spectrum of Unconventional Play Types
Spectrum of Unconventional Play Types In general there is no consensus on the what an “unconventional” reservoir is… At Matador, we think of an unconventional reservoir as a spectrum of play types. The distribution and quality of these play types are both spatially and temporally variable. Play type
Slide 17: Determining Good, Better, Best
Determining “Good, Better, Best” important as potential exceeds inter-formational stacked pay 2015 program will expand on intra-formational stacked pay tests performed in each asset area Wolf Area Type Log – Wolfcamp X/Y X Test Y Test 80 acre 100’ Rustler Breaks Type Log Wolfcamp B 350’ X Test Y
Slide 18: Permian Basin Acreage Position and Selective Well Results
Permian Basin Acreage Position and Selective Well Results Note: All acreage at November 4, 2015. Some tracts not shown on map. (1) As of early November 2015 unless otherwise noted. (2) Estimated ultimate recovery, thousands of barrels of oil equivalent. 18 Selected well performance(1) 1 2 3 4 5 6 7
Slide 19: Permian Basin Acreage Position and Recent Test Results
Permian Basin Acreage Position and Recent Test Results Note: All acreage at November 4, 2015. Some tracts not shown on map. 19 L E A LOVING WARD Matador Resources Acreage TWIN LAKES ~42,900 gross / ~30,000 net acres WOLF / LOVING AREA ~11,500 gross / ~7,300 net acres Jackson Trust RANGER ~32,300 gro
Slide 20: Matador is a Significant Delaware Basin Player
Matador is a Significant Delaware Basin Player MTDR MTDR MTDR Matador’s 90,700 net acres place it among the largest operators in the Delaware Basin − Matador holds largest Delaware Basin acreage position among small and mid-cap publicly traded energy companies(1) − Matador is the second largest op
Slide 21: Task at Hand – Understanding the Opportunities
Task at Hand – Understanding the Opportunities 3rd Bone Spring Lower Avalon 800’ Objective: We want to drill and complete the best wells at the lowest cost. Challenge: How do we identify the best targets within multiple prospective intervals across a geologically complex basin? Matador’s geoscience
Slide 22: Wolf Inventory – Multi-Pay Development Potential
Wolf Inventory – Multi-Pay Development Potential ~660’ Brushy Canyon Avalon 1st Bone Spring 2nd Bone Spring 3rd Bone Spring Wolfcamp X/Y Wolfcamp A 4 66 Eval. Ongoing 34 66 66 66 302 Full Development Location Gross Wells Development Well D&C(1) CapEx EUR(2) (MBOE) Bone Spring $5.5 – $6.5 million 450
Slide 23: Wolf Area Wolfcamp A/X Wells Performing Above Expectations
23 Wolf Area Wolfcamp “A”/“X” Wells Performing Above Expectations 500 MBOE Type Curve 1,000 MBOE Type Curve Note: Production as of early November 2015. 700 MBOE Type Curve 10 100 1,000 10,000 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 Production R ate, BO E/ d Time, Days Dorothy White
Slide 24: Rustler Breaks Inventory – Multi-Pay Development Potential
Rustler Breaks Inventory – Multi-Pay Development Potential Brushy Canyon Avalon 1st Bone Spring 2nd Bone Spring 3rd Bone Spring X/Y Wolfcamp B ~8 0 0 ’ 65 73 73 77 69 77 65 499 Full Development Location Gross Wells Development Well D&C(1) CapEx EUR(2) (MBOE) Bone Spring $4.0 – $5.0 million 300 – 600
Slide 25: First Three-Zone Stacked Lateral Test at Rustler Breaks
Historically oil productive interval. Matador’s First Three-Zone Stacked Lateral Test at Rustler Breaks Bone Spring Lime Upper Avalon Shale Lower Avalon Shale First Bone Spring Sand Second Bone Spring Carbonate Third Bone Spring Carbonate Wolfcamp / Pennsylvanian Strawn Wolfcamp “C” Third Bone Sprin
Slide 26: Rustler Breaks Wolfcamp B Wells Performing Above Expectations
26 Rustler Breaks Wolfcamp “B” Wells Performing Above Expectations 500 MBOE Type Curve 600 MBOE Type Curve 700 MBOE Type Curve 1,000 MBOE Type Curve Note: Production as of early November 2015. 10 100 1,000 10,000 0 40 80 120 160 200 240 280 320 360 400 440 480 520 560 Production R ate, BO E/ d Time,
Slide 27: Rustler Breaks Wolfcamp A/X-Y Wells, Off to Strong Start
27 Rustler Breaks Wolfcamp “A”/“X-Y” Wells, Off to Strong Start 700 MBOE Type Curve 500 MBOE Type Curve Note: Production as of early November 2015. 10 100 1,000 10,000 0 20 40 60 80 100 120 140 160 180 200 220 240 Production R ate, BO E/ d Time, Days Guitar #202H Tiger #204H 500 MBOE Type Curve 700
Slide 28: Ranger Inventory – Multi-Well Development Potential
Ranger Inventory – Multi-Well Development Potential ~1,320’ 1st Bone Spring 2nd Bone Spring 3rd Bone Spring X/Y Wolfcamp A-D ~7 5 0 ’ 43 55 30 70 6 204 1 mile MRC Horizontal Drilled Full Development Location Full Development Spacing Pattern (Cross-Section View) Gross Wells Development Well D&C(1) Ca
Slide 29: Ranger Area Second Bone Spring Wells Performing Above Expectations
29 Ranger Area Second Bone Spring Wells Performing Above Expectations 400 MBOE Type Curve 600 MBOE Type Curve Note: Production as of early November 2015. 10 100 1,000 10,000 0 100 200 300 400 500 600 700 Production R ate, BO E/ d Time, Days Ranger 33 #121H Pickard #121H 400 MBOE Type Curve 600 MBOE
Slide 30: Arrowhead – HEYCO Matador Acreage
30 Matador Acreage Most HEYCO acreage is Federal acreage Most held by production by older, vertical wells Typically 87.5% NRI on most Federal acreage Contiguous acreage aids in full development and minimizes costs for pads, facilities and LOE Matador Operated Horizontal Plans (Q1 2016) S
Slide 31: Future Bit Technology – The Evolution of the PDC Bit
Future Bit Technology – The Evolution of the PDC bit 31 Matador continues to be at the forefront of new bit technology Smith Bits latest technology StingBlade design StingBlade design features Alternating Stinger/PDC cutters Stinger cutters cut troughs in the formation with the PDC cutters
Slide 32: New Rig Technology for Horizontal Drilling – Saving Time and Money
7,500 psi Pressure Rating Estimated reduction in drilling time of 20 to 25% in the lateral on Wolfcamp wells Telescoping Flex-joint Estimated reduction in drilling time of 12 to 18 hours per well Integrated Mud-Gas Separator Estimated savings of 50% compared to rental separator BOP Wra
Slide 33: Latest Technology: Simultaneous Operations Capable Rigs
Latest Technology: Simultaneous Operations (Sim-Ops) Capable Rigs 33 Conventional Drilling Configuration Sim-Ops Capable with V-door turned 90° Space available for frac operations while simultaneously drilling on the same pad Drilling rig must leave location prior to frac operations
Slide 34: Improving Wolfcamp Drilling Times Significantly in 2015
43 32 35 26 22 15 0 5 10 15 20 25 30 35 40 45 50 Loving County Wolfcamp Eddy County Wolfcamp Dr illin g Da y s Historical Well 2015 Planned Well Recent Well Improving Wolfcamp Drilling Times Significantly in 2015 34 *Historical days averaged from 2014 wells. *Recent days from Billy Burt 90-TTT-B33 W
Slide 35: Cost Reduction Metrics (Drilling and Completion)
Completion Overall cost reduced by 50% since first well Cost of pumping and drill out has driven down costs Drill out days down from using micro trips Lowers the overall time per plug Cost Reduction Metrics (Drilling and Completion) 35 Drilling Overall cost reduced by 43% since first well
Slide 36: Evolution of Permian Basin Frac Design – Reservoir Specific
36 7,500 Bbl 9,000 Bbl 8,400 Bbl 600 Mlbs 420 Mlbs 500 Mlbs 375 ft. 300 ft. 50 ft. 75 ft. 210 ft. 35 ft. Gen 1 Gen 2 2,000 lbs/ft 1,333 lbs/ft 40 Bbl/ft 20 Bbl/ft 50’ cluster spacing 75’ cluster spacing Gen 1 Gen 2 2,000 lbs/ft 2,000 lbs/ft 40 Bbl/ft 30 Bbl/ft 35’ cluster spacing 50’ cluster spacing
Slide 37: Optimizing Artificial Lift Operations Across the Basin
Optimizing Artificial Lift Operations Across the Basin Starting to Use ESP’s Accelerated production while maintaining a controlled drawdown of bottomhole pressure BHP gauges aid in analyzing 3rd Bone Spring reservoir properties Quick startup after shut in for maintenance = minimal downtime
Slide 38: Permian well rate of return versus oil price
0 20 40 60 80 100 120 140 160 180 200 40 45 50 55 60 65 70 75 80 ROR , % Realized Oil Price, $ Rustler Breaks (Wolfcamp A-X/Y) 500 - 700 MBOE 700 MBOE, $6.5 MM D&C 700 MBOE, $5.5 MM D&C 500 MBOE, $6.5 MM D&C 500 MBOE, $5.5 MM D&C uses $3 flat Gas price 0 20 40 60 80 100 120 140 40 45 50 55 60 65 7 7
Slide 39: Significant Delaware Basin Inventory
Significant Delaware Basin Inventory Matador has identified 1,445 gross (960 net) locations(1) This inventory does not yet include the HEYCO properties (mostly Arrowhead prospect area) or Twin Lakes locations Formation Gross Locations Net Locations Delaware Group 109 67 Avalon 160 112 1st Bone S
Slide 40: Midstream
a‘, . 4 Matador ae cm Wore = Midstream
Slide 41: Longwood Gathering and Disposal Systems Activities
41 Loving County, Texas Natural gas gathering Water gathering Oil gathering Salt water disposal Commercial facility disposing of 20,000 Bbl/d Saved Matador $4 million to date Cryogenic natural gas processing plant Sold to EnLink for ~$143 million(2) Eddy County, New Mexico Natu
Slide 42: Summary: Sale of Loving County Gas Gathering & Processing Assets
Summary: Sale of Loving County Gas Gathering & Processing Assets (1) A subsidiary of EnLink Midstream Partners, LP (NYSE: ENLK) (2) Excluding customary purchase price adjustments. (3) Net Debt at October 1, 2015. LTM Adjusted EBITDA at September 30, 2015. Adjusted EBITDA is a non-GAAP financial meas
Slide 43: Eagle Ford "Oil Bank"
Citar a Wor nesounces dor Eagle Ford “Oil Bank”
Slide 44: Eagle Ford Is Still a Valuable Asset
44 Eagle Ford Is Still a Valuable Asset Note: All acreage at November 4, 2015. Some tracts not shown on map. Karnes Uvalde Medina Zavala Frio Dimmit La Salle Webb Atascosa McMullen Live Oak Bee Goliad Dewitt Gonzales Wilson San Antonio Glasscock Ranch Martin Ranch Northcut Affleck Troutt Sutton Love
Slide 45: Evolution of Matador Eagle Ford Frac Design
Gen 2 Gen 3 Gen 4 Gen 5 5,770 Bbl 7,825 Bbl 9,550 Bbl 11,750 Bbl 375 Mlbs 500 Mlbs 405 Mlbs 515 Mlbs 11,750 Bbl 650 Mlbs Gen 6 45 Note: Figure depicts proppant and fluid volume pumped per 300 ft. of horizontal wellbore. (1) Mlbs = thousands of pounds of proppant pumped. Fluid Volume Pumped Proppant
Slide 46: Haynesville Shale "Gas Bank"
Haynesville Shale “Gas Bank”
Slide 47: 2015 Haynesville Non-Op Program
47 2015 Haynesville Non-Op Program Estimated capital expenditures of ~$25 million for non-operated well participation interests ˗ Only ~6% of 2015 estimated capital expenditures ˗ Originally budgeted ~$15 million for 2015 Haynesville & Cotton Valley average daily natural gas production up 137% t
Slide 48: Economics of Tier 1 Wells Haynesville at Elm Grove
48 Note: Individual well economics only. Excludes costs prior to drilling (i.e. acquisition or acreage costs). Economics use a NRI / WI of 85% but actual interests vary. D&C cost = drilling and completion cost. 0 50 100 150 200 250 300 350 400 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 R a te o f R e turn
Slide 49: 2015 Updated Capital Investment Plan
2015 Updated Capital Investment Plan
Slide 50: 2015 Capital Investment Plan
50 2015 Capital Investment Plan At the beginning of 2015, reduced drilling program from 5 rigs to 2 rigs due to lower commodity prices, with primary focus on Permian (Delaware) Basin In late July 2015, took delivery of a third rig in the Delaware Basin Currently operating 3 rigs – all in the D
Slide 51: 2015E Oil and Natural Gas Production
0 10 20 30 40 50 60 70 80 2011 2012 2013 2014 2015E Haynesville/CV Eagle Ford Permian 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2011 2012 2013 2014 2015E Eagle Ford Permian 422 3,318 5,843 9,095 12,192 (1) 39.8 34.1 35.4 41.9 75.3 (2) 2015E Oil Production Estimated oil production of 4.4 to 4.
Slide 52: 2015E Revenues and Adjusted EBITDA
$23.6 $49.9 $115.9 $191.8 $262.9 $225.0 $0.0 $100.0 $200.0 $300.0 2010 2011 2012 2013 2014 2015E $34.0 $67.0 $156.0 $269.0 $367.7 $295.0 $0.0 $100.0 2 . $300.0 $400.0 2010 2011 2012 2013 2014 2015E 2015E Revenues and Adjusted EBITDA(1)(2) Revenues and Adjusted EBITDA(1)(2) growth significantly imp
Slide 53: Appendix
Fan . ) (Matador Pm cm ween el’ = Appendix
Slide 54: Credit Agreement Status
Strong, supportive bank group led by Royal Bank of Canada Borrowing base reaffirmed on October 16, 2015 at $375 million based on June 30, 2015 reserves Maturity of credit facility extended from December 2016 to October 2020 Bank group unanimous in supporting borrowing base affirmation and ma
Slide 55: Hedging Profile
420,000 680,000 810,000 810,000 390,000 390,000 390,000 390,000 $99.75 $87.72 $84.60 $84.60 $74.64 $74.64 $74.64 $74.64 $83.00 $70.38 $67.11 $67.11 $47.46 $47.46 $47.46 $47.46 $0 $50 $100 $150 $200 $250 $300 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Q1 2015 Q2 2015 Q3
Slide 56: North Ranger-Twin Lakes Area Pennsylvanian/Wolfcamp Production Distribution
North Ranger-Twin Lakes Area Pennsylvanian/Wolfcamp Production Distribution 56 A A’ MATADOR RESOURCES COMPANY PICKARD STATE 20-18-34 #2H Northern Delaware Horizontal Pennsylvanian/Wolfcamp Shale Test Vacuum Field Townsend Field 166 wells 25 million Bbl, 49 Bcf Sanmal & Leamex Fields Corbin Field Kem
Slide 57: Pennsylvanian/Wolfcamp Hybrid Production Target Interval
0 1 5 0 G R (C TR ) 2 2 0 0 0 0 L L D 0 .3 0 D P H I 0 .3 0 N P H I 0 1 5 0 GR (C TR ) 0 .3 0 D P H I 0 .3 0 N P H I 0 1 5 0 G R (C TR ) 2 2 0 0 0 0 ILM 2 2 0 0 0 0 L L D 0 .3 0 D P H I 0 .3 0 N P H I 0 1 5 0 GR (C TR ) 2 2 0 0 0 0 ILM 2 2 0 0 0 0 L L D 0 .3 0 D P H I 0 .3 0 N P H I 0 1 5 0 G R (C T
Slide 58: Board of Directors – Expertise and Stewardship
Board of Directors – Expertise and Stewardship Board Members Professional Experience Business Expertise David M. Laney Lead Director - Past Chairman, Amtrak Board of Directors - Former Partner, Jackson Walker LLP Law and Investments Reynald A. Baribault Director - Vice President / Engineering and Co
Slide 59: Special Board Advisors
Special Board Advisors Professional Experience Business Expertise Ronney F. Coleman - Retired President – North America, Archer - Former Vice President North America Pumping, BJ Services Co. Oilfield Services Marlan W. Downey - Retired President, ARCO International - Former President, Shell Pecten I
Slide 60: Proven Management Team – Experienced Leadership
Proven Management Team – Experienced Leadership Management Team Background and Prior Affiliations Industry Experience Matador Experience Joseph Wm. Foran Founder, Chairman and CEO - Matador Petroleum Corporation, Foran Oil Company, James Cleo Thompson Jr. 35 years Since Inception Matthew V. Hairford
Slide 61: Adjusted EBITDA Reconciliation
61 Adjusted EBITDA Reconciliation This investor presentation includes the non-GAAP financial measure of Adjusted EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of consolidated financial statements, such as industry analysts, investo
Slide 62: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively. 62 (In thousands) 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2
Slide 63: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively. 63 Note: LTM is last 12 months. (In thousands) 2008 20
Slide 64: Adjusted Net Income and Adjusted Earnings Per Share Reconciliation
(In thousands, except per share data) 6/30/2015 9/30/2015 9/30/2015 Unaudited Adjusted Net Income and Adjusted Earnings Per Share Reconcilliation to Net Loss: Net loss attributable to Matador Resources Company shareholders ($157,091) ($242,059) ($449,384) Total income tax benefit (89,350) (33,305) (
Slide 65: Cash Operating Expenses per BOE Reconciliation
Cash Operating Expenses per BOE Reconciliation 65 Cash operating expenses per BOE is a non-GAAP financial measure and is measured as operating expenses per BOE excluding non-cash DD&A expense, non-cash stock- based compensation expense and non-recurring transaction costs associated with the HEYCO me
Slide 66: PV-10 Reconciliation
66 PV-10 Reconciliation PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. PV-10 is not an estimate of the fair market value of the
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