Matador Resources Company · NYSE:MTDR
Matador Resources — Investor Presentation (September 2014)
64 slides from Matador Resources's investor presentation, Sep 30, 2014
Slide 1: September 2014 Investor Presentation
September 2014 Investor Presentation NYSE: MTDR
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
Company Summary
Slide 4: Matador History
Founded by Joe Foran in 1983 – most participants are still shareholders today. Foran Oil funded with $270,000 in contributed capital from 17 friends and family members Sold to Tom Brown, Inc.(1) in June 2003 for an enterprise value of $388 million in an all-cash transaction Foran Oil & Matador
Slide 5: Company Overview
5 Company Overview Exchange: Ticker NYSE: MTDR Shares Outstanding(1) 73.3 million common shares Share Price(2) $25.43/share Market Capitalization(1)(2) $1.9 billion (1) Shares outstanding as reported in the Form 10-Q for the quarter ended June 30, 2014 filed on August 8, 2014. (2) As of September 26
Slide 6: 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 8,809 Bbl/d of oil 57% oil Proved Reserves 27 MMBOE 1.1 MMBbl of oil 4% oil 39 MMBOE 12.1 MMBbl of oil 31% oil 57 MMBOE 18.6 MMBbl of oil 33% oil PV-10(2)
Slide 7: Delivering Strong Results
Delivering Strong Results 7 Q2 2014 Achievements Oil Production(2) 2014 Capital Budget and Guidance Oil Production – Company Record! 8,809 Bbl/d; 79% growth versus Q2 2013 Oil & Natural Gas Revenues $99.1 million; 70% growth versus Q2 2013 Adjusted EBITDA(1) $69.5 million; 70% growth ver
Slide 8: Matador Resources Company Overview
8 Matador Resources Company Overview Market Capitalization(1) $1.9 billion Average Daily Production(2) 15,424 BOE/d Oil (% total) 8,809 Bbl/d (57%) Natural Gas (% total) 39.7 MMcf/d (43%) Proved Reserves @ 6/30/14 57.2 million BOE % Proved Developed 35% % Oil 33% 2014E CapEx $570 million % South Tex
Slide 9: Asset Highlights
Asset Highlights 9 Currently running a two-rig drilling program (177.7 net drilling locations(1)) ~62,000 net acres(2) in Lea and Eddy Counties, NM and Loving County, TX in the Permian Basin with multi-zone drilling potential Successful performance of 3 initial horizontal wells Ranger 33: Al
Slide 10: Keys to Matador's Success
Keys to Matador’s Success 10 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 process Board and Special Advisor additions have strengthened Board skills and stewardship Properti
Slide 11: Eagle Ford South Texas
a‘, {Mata ador ee ee Eagle Ford South Texas
Slide 12: 2014 South Texas Plan Details
2014 South Texas Plan Details 12 2014 projected capital expenditures of ~$318 million or ~56% of total 2-rig program with almost all of the 2014 South Texas capital budget directed to the Eagle Ford shale Drill and/or complete or participate in 50 gross (47.0 net) wells; 43 gross (40.0 net) we
Slide 13: Eagle Ford Overview
13 Eagle Ford Overview (1) At July 30, 2014. Includes two wells producing small volumes of oil from the Austin Chalk formation and two wells producing small quantities of natural gas from the San Miguel formation in Zavala County, Texas. (2) For the twelve months ended December 31, 2011. (3) For the
Slide 14: Eagle Ford Measured Depths and Well Costs
14 Eagle Ford Measured Depths and Well Costs Note: All acreage at August 6, 2014. Some tracts not shown on map. Karnes Uvalde Medina Zavala Frio Dimmit La Salle Webb Atascosa McMullen Live Oak Bee Goliad Dewitt Gonzales Wilson Matador Resources Acreage San Antonio Glasscock Ranch Martin Ranch Northc
Slide 15: Operational Improvements
Overview 15 Operational Improvements (Normalized) Eagle Ford Drilling Costs / Drilled Foot(1) Eagle Ford Completion Costs / Completed Foot(2) West Central East West Central East Over the past two years, made significant progress and increased knowledge of how to drill, complete and produce Eagle F
Slide 16: Advancing drilling and completion technology
16 New rigs arriving in 2015 have even more advanced technology than current Eagle Ford rigs Walking packages, hydraulic catwalks, reconfiguration of rig layouts, high pressure circulating systems, etc. New rig features designed to match drilling plans – i.e. reconfiguration of rig layout allo
Slide 17: 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 0 ft. 300 ft. 11,750 Bbl 650 Mlbs Gen 6 Evolution of Matador Eagle Ford Frac Design 17 Note: Figure depicts proppant and fluid volume pumped per 300 ft. of horizontal wellbore. (1) Mlbs = thousands o
Slide 18: Eagle Ford cumulative production by frac generation
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Cum ula tiv e P ro du cti on (B bl) Time (Days) GEN 2 (80 Acre) GEN 4 (80 Acre) GEN 5 (80 Acre) 0 10,000 20,000 30,000 40,000 50,000 60,000 7
Slide 19: Downspacing Comparison
0 10000 20000 30000 40000 50000 60000 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 C u m u la ti v e Oil P ro d u c tio n ( b b l) Days Online Average 40 Acre (Gen 5-6) Average 80 Acre (Gen 2-4) 0 10000 20000 30000 40000 50000 60000 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 C u m
Slide 20: Improvement in Drilling Efficiency – Moving Towards Batch Drilling
0 50,000 100,000 150,000 200,000 250,000 300,000 2014 2013 2012 2011 2010 Lateral Feet Drilled 20 La eral Fee Single Well Drilling PAD Drilling BATCH Drilling EXPLORATION DEVELOPMENT 1/3 RIG 2/3 RIG 2 RIGS 1 1/2 RIGS 2 RIGS 60 to 70% increase in Rig Efficiency from 2012 to 2014E! Improvement in Dril
Slide 21: Compressing Drill Times
Compressing Drill Times Improving rig fleet High tech, fast moving, faster drilling, walking style rigs Improving Rate of Penetration (ROP) Bit selection and development Bottom Hole Assembly (BHA) selection Rotary steerable systems Vertical seeking Directional drilling Minimize dir
Slide 22: Progression of Drilling Rig Technology from 2010 to 2014
Progression of Drilling Rig Technology from 2010 to 2014 22 RIG # ELECTRIC 1600 HP PUMPS INTEGRATED TOP DRIVE APEX RIG (FAST MOVE) HYDRAULIC CATWALK AC DRIVE SYSTEM TECHNOLOGY ROUND BOTTOM MUD PITS WALKING PACKAGE BOP HANDLER THREE SHAKERS 521 135 534 203 250 239
Slide 23: Artificial Lift Reducing Natural Production Declines
23 Flowing Rod Pumping Gas Lifting 300 Bbl/d 100 Bbl/d Accelerated Production Benefits of Gas Lift • Accelerates production • Reduces LOE • Lower maintenance • Helps wells recover faster from offset fracs Artificial Lift Reducing Natural Production Declines Time Note: Graph and data is for illustrat
Slide 24: Buda Wells Activity Since January 1, 2010
Buda Wells Activity Since January 1, 2010 – Potential Test 24 Note: Well information from public sources available as of August 2014. TX American Resources Buchanan-1H 5/3/2013 14 mo avg: 285 Bbl/d 466 Mcf/d Cum: 119 MBbl 1.9 Bcf Dan A. Hughes Heitz Lease 7 Buda Completions Dec. 2011 – May 2014 Cum:
Slide 25: Permian Basin Southeast New Mexico and West Texas
Permian Basin Southeast New Mexico and West Texas
Slide 26: 2014 Permian Plan
26 2014 projected capital expenditures of ~$190 million or ~33% of total Continue 2-rig program working in Lea and Eddy Counties, NM and Loving County, TX Drill and/or complete or participate in 14 gross (12.3 net) wells; several Wolf area wells drilled with second Permian rig on production in
Slide 27: Permian Basin
Permian Basin Total Gross Acres 94,045 acres Net Acres 61,951 acres Permian Basin (1) As of September 8, 2014. (2) As of September 26, 2014. (3) At August 6, 2014 27 Progress-to-date(1) Successful performance of first 3 initial horizontal wells Ranger 33: Almost 140,000 BOE in 10 months; produci
Slide 28: Permian Basin Petroleum Systems and the Wolfcamp Kitchens
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 Extensive drilling, coring and geological studies since 19
Slide 29: Wolf-Bone Geological Setting
265 mya End of Bone Springs – Warmer! Delaware Basin San Andres Yeso Abo Delaware Mountain Group 1st, 2nd, 3rd Bone Spring Sands Sands confined to channels and distributary systems 1st, 2nd, 3rd Bone Spring Carbonates Wolfcamp “A” Carbonates Wolfcamp “D” Carbonates More limited in areal extent Wolfc
Slide 30: 2014 Wells Drilled Targeting Multiple Benches in Permian
2014 Wells Drilled Targeting Multiple Benches in Permian Appraisal Program 30 Sand Carbonates (Limestones and Dolomites) Shale/ Mudstone Bone Spring Lime Upper Avalon Shale Lower Avalon Shale First Bone Spring Sand Second Bone Spring Carbonate Second Bone Spring Sand Third Bone Spring Carbonate Wolf
Slide 31: Wolf / Loving Prospect Area
Wolf / Loving Prospect Area 31 11,183 gross (7,155 net) acres 50 gross (35.4 net) locations(1) Primary Targets Wolfcamp “A” 3rd Bone Spring Avalon Other Potential Targets 1st Bone Spring 2nd Bone Spring Wolfcamp “B” 6 wells planned for 2014 Location of Matador wells Note: All M
Slide 32: Ranger / Querecho Plains Prospect Area
Ranger / Querecho Plains Prospect Area 32 14,635 gross (10,202 net) acres 83 gross (59.6 net) locations(1) Primary Targets 2nd Bone Spring 3rd Bone Spring Wolfcamp “A”, “B” and “D” Other Potential Targets Delaware Avalon 1st Bone Spring Bone Spring Carbonates 3 wells planned
Slide 33: Indian Draw / Rustler Breaks Prospect Area
33 18,148 gross (13,376 net) acres 108 gross (82.8 net) locations(1) Primary Targets Wolfcamp “B” 2nd Bone Spring Delaware Other Potential Targets Avalon 1st Bone Spring 3rd Bone Spring Wolfcamp “A” 4 wells planned for 2014 Indian Draw / Rustler Breaks Prospect Area Location
Slide 34: Twin Lakes Prospect Area
Twin Lakes Prospect Area 34 37,702 gross (26,408 net) acres Primary Targets Wolfcamp “D” Strawn Abo Other Potential Targets Cisco/Canyon Devonian Glorieta/San Andres 1 vertical well planned for late 2014 or early 2015 − Vertical pilot hole to collect whole core and log data Locat
Slide 35: Twin Lakes Area Cross Section
Twin Lakes Area Cross Section 35 A TEST VOLUMES: 268 Bbl/d oil 350 Mcf/d gas No water TEST VOLUMES: 118 Bbl/d oil 625 Mcf/d gas 1,155 Bbl/d water Wolfcamp “D” A’ ~400ft
Slide 36: Matador Permian Basin – First Generation Frac Designs
Bone Spring 0 ft. 300 ft. Wolfcamp Matador Permian Basin – First Generation Frac Designs 36 Note: Figure depicts proppant and fluid volume pumped per 300 ft. of horizontal wellbore. (1) Mlbs = thousands of pounds of proppant pumped. 550 Mlbs 600 Mlbs 11,750 Bbl 11,750 Bbl Fluid Volume Pumped Proppan
Slide 37: Haynesville Shale
Haynesville Shale
Slide 38: 2014 Haynesville Shale Plan
2014 Tier 1 Haynesville Shale Plan 38 2014 projected capital expenditures of ~$62 million or about 11% of total Estimated participation in up to 56 gross (7.8 net) non-operated wells Chesapeake may drill up to 30 gross (6.3 net to Matador) wells at Elm Grove in 2014; estimated CapEx of $50 mil
Slide 39: Significant Option Value on Natural Gas
Significant Option Value on Natural Gas Significant acreage position in the Haynesville Added 3 sections in 2014 to provide more operated drilling opportunities Also prospective for the Cotton Valley, Travis Peak / Hosston and other shallow formations Highly competitive well economics on Tie
Slide 40: Elm Grove Tier 1 Haynesville – Chesapeake Operated
0 25 50 75 100 125 150 175 200 225 250 275 300 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 Es tim at ed R at e of R et ur n, % Natural Gas Price, $/Mcf 10 Bcf - $7.0mm D&C Cost 10 Bcf - $8.0mm D&C Cost 10 Bcf - $9.0mm D&C Cost 8 Bcf - $7.0mm D&C Cost 8 Bcf - $8.0mm D&C Cost 8 Bcf - $9.0mm D&C Cost Elm
Slide 41: 2014 Capital Investment Plan
2014 Capital Investment Plan
Slide 42: Summary and 2014 Guidance
42 Summary and 2014 Guidance(1) (1) As reaffirmed on August 6, 2014. (2) The Company guided investors to the top end of its oil production guidance range. (3) Estimated 2014 oil and natural gas revenues and Adjusted EBITDA based on production guidance range. Estimated average realized prices for oil
Slide 43: 2014 Capital Investment Plan Summary
43 2014 Capital Investment Plan Summary Continue 4-rig program full time in H2 2014: 2 rigs in the Eagle Ford and 2 rigs in the Permian 2014E capital expenditures of $570 million Eagle Ford development expected to be the major driver of our growth in 2014 with growing Permian contribution Pe
Slide 44: Funding for 2014 Capital Investment Plan
Funding for 2014 Capital Investment Plan 44 Anticipate funding 2014 capital expenditures through proceeds from May 2014 equity offering, operating cash flows and borrowings under revolving credit facility 0.9 million barrels of oil hedged for remainder of 2014, protecting cash flows below ~$88/B
Slide 45: Investment Highlights
45 Investment Highlights Strong Growth Profile with Increasing Focus on Oil / Liquids YE2011 to 2014E oil production CAGR of ~172%(1) with expected year-over-year growth of ~45%(1) in 2014 ~89% of 2014E CapEx program focused on oil / liquids exploration and development High Quality Asset Base in
Slide 46: Appendix
= AN, jMatadar RESOURCES COMPANY Appendix
Slide 47: SEC Proved Reserves Value Growth By Area
47 SEC Proved Reserves Value Growth By Area Eagle Ford $467.2 million, 89% Permian $2.9 million, 1% June 30, 2014 PV-10(1): $826.0 million $96.75 oil(2), $4.10 natural gas(2) (Standardized Measure = $723.0 million) (1) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measu
Slide 48: Matador's Continued Growth
$18.4 $15.2 $23.6 $49.9 $115.9 $191.8 2008 2009 2010 2011 2012 2013 $30.6 $19.0 $34.0 $67.0 $156.0 $269.0 2008 2009 2010 2011 2012 2013 7% 4% 2% 6% 37% 50% 2008 2009 2010 2011 2012 2013 1.5 2.3 3.9 7.0 9.0 11.7 2008 2009 2010 2011 2012 2013 Matador’s Continued Growth Average Daily Production (MBOE/d
Slide 49: Recent Semi-Annual Performance Metrics
$24.4 $49.3 $66.7 $81.5 $110.3 $125.8 2H 2011 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 $32.4 $65.2 $90.8 $117.5 $151.5 $178.0 2H 2011 1H 201 2H 2012 1H 2013 2H 2013 1H 2014 84 485 729 908 1,225 1,463 2H 2011 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 Recent Semi-Annual Performance Metrics Through Mid-Ye
Slide 50: Matador Provides Growth on a Per Share Basis
$0.47 $0.83 $1.57 $2.89 $4.58 $5.55 2009 2010 2011 2012 2013 2014E $1.75 $2.92 $5.82 $7.84 $11.15 2009 2010 2011 2012 2013 $0.38 $0.58 $1.17 $2.15 $3.26 $3.99 2009 2010 2011 2012 2013 2014E Matador Provides Growth on a Per Share(1) Basis 50 Oil and Natural Gas Revenues(4) per Share ($ per share) PV-
Slide 51: Historical Financials and Margins
Year Ended December 31, 2011 2012 2013 Production Oil Production (MBbl) 154 1,214 2,133 Natural Gas Production (Bcf) 14.5 12.5 12.9 % Oil 6% 37% 50% Total Production (MBOE) 2,573 3,294 4,285 Average Daily Production (BOE/d) 7,049 9,000 11,740 Realized Oil Price ($/Bbl)(1) $93.80 $103.55 $98.67 Reali
Slide 52: Increasing Cash Operating Margin
Increasing Cash Operating Margin 52 $31.97 $27.45 $28.80 $51.60 $62.57 $17.27 $16.24 $19.27 $35.13 $44.70 54.0% 59.2% 66.9% 68.1% 71.4% 2009 2010 2011 2012 2013 Revenue/BOE with Derivatives Cash Margin per BOE % Margin
Slide 53: Oil Production and Revenues Through Q2 2014
12.0 15.8 13.8 10.9 7.6 6.7 7.9 10.1 10.6 13.5 17.6 14.4 15.3 20.6 0.0 6.0 12.0 18.0 24.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 53 Oil Production and Revenues Through Q2 2014 Average Daily Natural Gas Production (MMcf/d) Natural Gas Revenues ($ in mm) Oil Revenues ($
Slide 54: Quarterly Performance Metrics Through Q2 2014
6,300 8,004 6,931 6,953 8,023 8,738 8,838 10,385 10,897 10,582 13,482 11,968 11,904 15,424 0 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 15,000 16,500 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 54 Quarterly Performance Metrics Through Q2 2014 Oil and Natural G
Slide 55: Quarterly Expense Metrics Through Q2 2014
$2.2 9 $2. 27 $2. 90 $2. 31 $2. 95 $3. 29 $3. 47 $4. 26 $4 .18 $4. 62 $5. 29 $5. 33 $5. 61 $6. 50 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 55 Quarterly Expense Metrics Through Q2 2014 Lease Operating (per BOE) General and A
Slide 56: Hedging Profile
56 Hedging Profile – Hedges in Place for Remainder of 2014 and 2015 At September 26, 2014, Matador had: 0.9 million barrels of oil hedged for remainder of 2014 at weighted average floor and ceiling of $88/Bbl and $99/Bbl, respectively 3.3 Bcf of natural gas hedged for remainder of 2014 at weight
Slide 57: Credit Facility and Borrowing Base
Strong, supportive bank group led by RBC Borrowing base at $450 million, based on July 31, 2014 reserves, increased from $385 million based on December 31, 2013 reserves, and increased from $125 million at time of IPO in February 2012 Borrowings outstanding of $210 million at September 8, 2014
Slide 58: Board of Directors and Special Advisors
Board of Directors and Special Advisors – Expertise and Stewardship 58 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 Presid
Slide 59: Proven Management Team – Experienced Leadership
Proven Management Team – Experienced Leadership 59 Management Team Background and Prior Affiliations Industry Experience Matador Experience Joseph Wm. Foran Founder, Chairman and CEO - Matador Petroleum Corporation, Foran Oil Company and James Cleo Thompson Jr. 33 years Since Inception Matthew V. Ha
Slide 60: PV-10 Reconciliation
60 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
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
62 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. Note: LTM is last 12 months LTM at LTM at (In thous
Slide 63: Adjusted EBITDA Reconciliation
63 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. (In thousands) 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2
Slide 64: Adjusted EBITDA Reconciliation
64 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. (In thousands) 12/31/2011 6/30/2012 12/31/2012 6/30
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