Matador Resources Company · NYSE:MTDR
Matador Resources — Investor Presentation (November 2012)
54 slides from Matador Resources's investor presentation, Nov 13, 2012
Slide 1: Investor Presentation
Exhibit 99.3 Investor Presentation November 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 1933, as amended, and S
Slide 3: Company Summary
oy, 4 Matador {Wor RESOURCES COMPANY Company Summary
Slide 4: Matador History
Matador History Predecessor Entities Foran Oil & Matador Petroleum Founded by Joe Foran in 1983 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 Matador
Slide 5: Investment Highlights
Investment Highlights Strong Growth Profile with Increasing Focus on Oil / Liquids Oil production up almost five-fold in 2011 and projected to increase 8x to 9x in 2012 2012E capital expenditure program focused on oil and liquids exploration and development High Quality Asset Base in Attractive Area
Slide 6: Matador Resources Snapshot
Matador Resources Snapshot Daily Production(1) 8,534 BOE/d Oil Production (% total) 2,876 Bbl/d (34%) Proved Reserves @ 9/30/12 20.9 Million BOE % Proved Developed 61% % Oil 40% (and growing) 2012E CapEx $313 million % Eagle Ford 84% % Oil and Liquids 94% 2012E Anticipated Drilling 29.5 net wells Ea
Slide 7: Eagle Ford
a“, Wen Eagle Ford South Texas
Slide 8: Eagle Ford and Austin Chalk Overview
Eagle Ford and Austin Chalk Overview Acreage positioned in some of the most active counties for Eagle Ford Proved Reserves @ 9/30/12 11.1 Million BOE and Austin Chalk (including “Chalkleford”) % Proved Developed 46% Two rigs running, primarily focused on % Oil / Liquids 75% oil and liquids Daily Oil
Slide 9: Leading Eagle Ford Exposure
Leading Eagle Ford Exposure Leverage to Eagle Ford (Net Eagle Ford Acres / EV) (Net Acres / $mm) 2012E Capex (1) Matador offers significant leverage % Eagle Ford and focus to the Eagle Ford SFY 53.4 57% Approximately 90% of Eagle Ford MTDR 51.8 84% acreage is in the prospective oil FST 38.6 45% and
Slide 10: Eagle Ford Properties are in Good Neighborhoods
Eagle Ford Properties are in Good Neighborhoods Highlights MTDR acreage in counties with robust transaction activity – “good neighborhoods” Transaction values ranging from $10,000 to $30,000 per acre Our Eagle Ford position has grown to approximately 30,000 net acres Acreage in both the eastern and
Slide 11: Eagle Ford and Austin Chalk Properties
Eagle Ford and Austin Chalk Properties EAGLE FORD ACREAGE TOTALS EAGLE FORD EAST Nickel Ranch 47,956 gross / 29,872 net acres Bexar 7,567 gross / 6,170 net acres Hennig San Antonio Uvalde Medina Gonzales Lewton EOG OPERATED, MTDR WI ~21% Finney 17,256 gross / 3,402 net acres Keseling Love Wilson Cow
Slide 12: Eagle Ford 24-Hour Stabilized Rates
Eagle Ford 24-Hour Stabilized Rates (1) (2)(3) (2)(3) (4) Well Name County Completion Date Perforated Length Frac Stages Oil IP Gas IP Oil Equiv IP Choke Pressure Total (ft.) (Bbl/day) (Mcf/day) (BOE/day) (inch) (psi) 2011 Wells JCM Jr. Minerals 1H La Salle 11/10/2010 3,774 15 164 3,648 772 15/64 3,
Slide 13: Eagle Ford Well Costs Averaging 15% Less than 2012 Budget Estimates
Eagle Ford Well Costs Averaging 15% Less than 2012 Budget Estimates 14.0 Eastern Acreage Western Acreage 12.0 10.0 8.0 Budgeted Cost Actual Cost 6.0 4.0 2.0 0.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Note: 2012 Eagle Ford well drilling and completions costs only compared to budget estimates; costs d
Slide 14: Average Frac Stage Cost per Well
Average Frac Stage Cost per Well $400,000 Bauxite Resin Coated Sand White Sand $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Note: Wells are displayed in chronological order 13
Slide 15: Eagle Ford Well Estimated ROR as a Function of EUR and Well Cost
Eagle Ford Well Estimated ROR as a Function of EUR and Well Cost $90.00/Bbl NYMEX oil; $3.00/Mcf NYMEX natural gas Note: Individual well economics only. NGL price differential +$2.50/Mcf. Oil price differential +$4.30/Bbl. 14
Slide 16: Technical Advancements in the Eagle Ford
Technical Advancements in the Eagle Ford Rotary Steerable Tools Drilling time in curve and lateral reduced by 2 days Measurement While Drilling (MWD) telemetry closer to drill bit Improves ability to stay in “sweet-spot” Removes sumps and high-angle curves Improved frac design Increases Stimulated R
Slide 17: Zavala
Zavala Eagle Ford & Pearsall Trend
Slide 18: South Texas Multi-Pay Petroleum Systems: Upside Potential in Zavala County
South Texas Multi-Pay Petroleum Systems: Upside Potential in Zavala County 8,891 gross / 8,891 net acres 100% Held By Production (HBP) All Rights, All Depths Matador Resources Acreage Note: All acreage at September 30, 2012 Oil and Gas Fields: Olmos/Navarro Austin Chalk Edwards Buda Wilcox Note: Inf
Slide 19: Multi-Pay Fairway: Productive and Prospective Pay Zones
Multi-Pay Fairway: Productive and Prospective Pay Zones Historic Conventional Zones Navarro Olmos-Navarro Gas and oil fields in shallow section Austin Chalk Olmos Upper Austin horizontal drilling Fractured reservoir Buda Primarily productive on structure Fractured reservoir ANCC Edwards Productive o
Slide 20: Emerging Multi-Pay Area in Eagle Ford Oil Fairway and MTDR Acreage
Emerging Multi-Pay Area in Eagle Ford Oil Fairway and MTDR Acreage San Antonio Multi-Pay Fairway with Pearsall, Austin Chalk and Buda potential OIL FAIRWAY Matador Resources Acreage DRY GAS FAIRWAY Note: All acreage at September 30, 2012 19
Slide 21: South Texas Pearsall Play: Activity & Liquids to Dry Gas Distribution Model
South Texas Pearsall Play: Activity & Liquids to Dry Gas Distribution Model PXP Cabot Chesapeake Drilling first Horiz’s Wilson C#1HP after pilot program IP 250 BCPD/ 3 MMCFPD Showed Encouraging Cheyenne Cond yield (30% stream) Chesapeake Avant D#1HP 300 BC/mo. Chesapeake Brownlow #3H EOG Tests Anada
Slide 22: Zavala, Frio, La Salle and Dimmit Counties: Important Matador and Competitor Eagle Ford Wells
Zavala, Frio, La Salle and Dimmit Counties: Important Matador and Competitor Eagle Ford Wells Since 2011 (CHK) Traylor North 2H (BBOG) Oppenheimer A1 OIL IP: 405; GAS IP: 78 (CHK) Winterbotham A 4H OIL IP: 273; GAS IP: 1400 14/64” choke OIL IP: 909 38/64” choke Best 3 Oil - 19,476 13/64” choke Best
Slide 23: Haynesville & Cotton Valley
Haynesville & Cotton Valley Northwest Louisiana and East Texas
Slide 24: Haynesville Positioning
Haynesville Positioning Highlights Central Approximately 12,500 gross Southwest Pine Island Pine Island and 5,800 net acres in TIER 3 Haynesville Tier 1 core area Fee Minerals Bossier Webster Rudd #1H Almost all prospective Caddo TIER 2 Haynesville acreage is HBP – TIER 1 provides “natural gas bank”
Slide 25: Haynesville Well Economics – Tier 1 Area
Haynesville Well Economics – Tier 1 Area 250 8 Bcf - $8.5 MM D&C Cost 225 9 Bcf - $8.5 MM D&C Cost 10 Bcf - $8.5 MM D&C Cost 200 8 Bcf - $9.5 MM D&C Cost 175 9 Bcf - $9.5 MM D&C Cost 10 Bcf - $9.5 MM D&C Cost 150 125 100 75 50 25 0 3 3.5 4 4.5 5 5.5 6 Natural Gas Price, $/Mcf Note: Individual well e
Slide 26: Cotton Valley Horizontal Well Economics
Cotton Valley Horizontal Well Economics 100.0 4.0 Bcf - $6 MM D&C Cost 90.0 5.0 Bcf - $6 MM D&C Cost 6.0 Bcf - $6 MM D&C Cost 80.0 4.0 Bcf - $7 MM D&C Cost 5.0 Bcf - $7 MM D&C Cost 70.0 6.0 Bcf - $7 MM D&C Cost 60.0 50.0 40.0 30.0 20.0 10.0 0.0 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 Natural Gas Price,
Slide 27: Delaware Basin
Delaware Basin Southeast New Mexico and West Texas
Slide 28: Southeast New Mexico / West Texas
Southeast New Mexico / West Texas Matador Today Gross Acres (1) 15,528 acres Net Acres (1) 7,534 acres Foothold of existing production and reserves On August 10, 2012, acquired approx. 4,900 gross and 2,900 net acres RANGER- prospective for the Wolfbone play in the QUERECHO Delaware Basin in Loving
Slide 29: Wolfbone Play in the Delaware Basin (West Texas) Stratigraphic Column
Wolfbone Play in the Delaware Basin (West Texas) Stratigraphic Column Horizontal Targets Avalon Shale Depth: 7,900’ –8,300’ (Oil Window) Density Porosity: 12-14% Thickness: 300-500 ft. Normal Pressure (0.45 psi/ft.) Total Organic Carbon (TOC) 5-8% XRD: 15-20% clay and 40-60% silica IP: 100-270 Bbl/d
Slide 30: Wolfbone Play in the Delaware Basin (West Texas)
Wolfbone Play in the Delaware Basin (West Texas) Matador Resources ~4,900 gross / ~2,900 net acres Wolfcamp 10 mo.cum: 72 MBO, 295 MMcf Wolfcamp 17 mo.cum: Wolfcamp 122 MBO, 344 MMcf 22 mo.cum: 140 MBO, 475 MMcf rd Dorothy White #1 3 BS / Upr Wolfcamp Cum Wolfcamp 6 mo.cum: 25 MBO,93 MMcf 51 MBO, 12
Slide 31: Ranger-Querecho Prospect Area, Lea County, New Mexico: ~1,700 acres
Ranger-Querecho Prospect Area, Lea County, New Mexico: ~1,700 acres IP: 511 Bopd IP: 480 Bopd 617 Mcfd 293 Mcfd 9 Month Cum: 158,754 Bo 106,038 Mcf Producing Zone Legend BS Cum 238,827 Bo, 479,129 Mcf Queen Producer BS Cum 48,400 Bo, 126,233 Mcf IP: 148 Bopd 270 Mcfd San Andres Producer BS Cum 580,8
Slide 32: Gracie
Gracie Wyoming, Utah and Idaho
Slide 33: Wyoming, Utah and Idaho (Meade Peak Shale)
Wyoming, Utah and Idaho (Meade Peak Shale) Matador Today Gross Acres(1) 65,712 acres WYOMING Net Acres(1) 31,621 acres IDAHO Fremont 2012E CapEx Budget $2.5 million Caribou Sublette Initial test well drilled and cored through the Bannock Meade Peak shale Detailed petrophysical and rock property test
Slide 34: Financials
oN, ¢ Matador {We (eae TSCUREES Conran Financials
Slide 35: Continued Growth
Continued Growth AVERAGE DAILY OIL TOTAL REALIZED (1) EQUIVALENT PRODUCTION REVENUES ADJUSTED EBITDA (INCLUDING REALIZED GAIN ON DERIVATIVES) 8,838 8,738 $77.9 8,023 $114.4 7,048 $49.9 $74.1 3,926 $39.3 $23.6 2,285 $29.3 $26.7 $18.4 1,506 $15.2 911 $14.2 $8.1 2007 2008 2009 2010 2011 2012 2012 2012
Slide 36: Transition to Oil
Transition to Oil TOTAL OIL PRODUCTION OIL BY VOLUME OIL BY REVENUE 788 79% 34% 22% 154 7% 7% 6% 12% 12% 4% 9% 2% 7% 22 37 30 33 2007 2008 2009 2010 2011 YTD 2007 2008 2009 2010 2011 YTD 2007 2008 2009 2010 2011 YTD 2012 2012 2012 Year Ended December 31, Year Ended December 31, Year Ended December 3
Slide 37: Recent Production and Financial Highlights
Recent Production and Financial Highlights Record results in Q3 2012 Oil production of 303,000 Bbl, a sequential quarterly increase of 6% from 285,000 Bbl produced in Q2 2012 and a year-over-year increase of 7-fold 25% sequential increase in oil reserves to 8.4 million Bbl and 20% sequential increas
Slide 38: Financial Flexibility
Financial Flexibility Funding 2012 capital budget with a portion of IPO net proceeds, cash flows from operations and available borrowings under credit facility Closed an amended and restated credit facility to increase the Company’s borrowing capacity to $200 million primarily as a result of increas
Slide 39: Hedging Profile
Hedging Profile Oil Hedges (Costless Collars) 4Q 2012 FY 2013 Total Volume Hedged by Ceiling (Bbl) 360,000 1,260,000 Weighted Average Price ($ / Bbl) $110.31 $110.26 Total Volume Hedged by Floor (Bbl) 360,000 1,260,000 Weighted Average Price ($ / Bbl) $90.83 $87.14 Natural Gas Hedges (Costless Colla
Slide 40: Reserves Summary – September 30, 2012
Reserves Summary – September 30, 2012 Total proved reserves: 20.9 million BOE (125.4 Bcfe) at September 30, 2012, including 8.4 million Bbl of oil and 74.9 Bcf of natural gas Oil reserves grew 25% to 8.4 million Bbl from 6.7 million Bbl at June 30, 2012 Oil reserves grew 122% from December 31, 2011
Slide 41: Proved Reserves Value Up Sharply and Shifting to Oil Over Past Year
Proved Reserves Value Up Sharply and Shifting to Oil Over Past Year SE New Mexico Cotton Valley SE New Mexico $2.2 million, 1% $9.4 million, 3% $2.2 million, 1% Haynesville Cotton Valley $23.8 million, 7% $23.2 million, 15% Eagle Ford $37.2 million, 24% Haynesville Eagle Ford $92.6 million, 60% $328
Slide 42: Financial Statements – Quarterly Period Ended September 30, 2012
Financial Statements – Quarterly Period Ended September 30, 2012 Matador Resources Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (In thousands, except par value and share data) September 30, December 31, 2012 2011 ASSETS Current assets Cash and cash equivalents $4.4 mill
Slide 43: Financial Statements – Quarterly Period Ended September 30, 2012
Financial Statements – Quarterly Period Ended September 30, 2012 Matador Resources Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (In thousands, except par value and share data) September 30, December 31, 2012 2011 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities
Slide 44: Financial Statements – Quarterly Period Ended September 30, 2012
Financial Statements – Quarterly Period Ended September 30, 2012 Matador Resources Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2012 2011 2012 2011 O&G Reven
Slide 45: Financial Statements – Quarterly Period Ended September 30, 2012
Financial Statements – Quarterly Period Ended September 30, 2012 Matador Resources Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (In thousands, except par value and share data) Nine Months Ended September 30, 2012 2011 Operating activities Net loss $ (12,073) $
Slide 46: Statements of Operations - Selected Quarterly Periods in 2012 and 2011
Statements of Operations - Selected Quarterly Periods in 2012 and 2011 Matador Resources Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (In thousands, except per share data) Three Months Ended September 30, Three Months Ended June 30, Three Months Ended March 31
Slide 47: Appendix
oN, ¢ Matador {We (eae TSCUREES Conran Appendix
Slide 48: Board of Directors and Special Board Advisors – Expertise and Stewardship
Board of Directors and Special Board Advisors – Expertise and Stewardship Board Members Professional Experience Business Expertise and Advisors - Professor and Former Head of Dept. of Petroleum Engineering, Texas A&M University Dr. Stephen A. Holditch - Founder / President S.A. Holditch & Associates
Slide 49: Proven Management Team – Experienced Leadership
Proven Management Team – Experienced Leadership Industry Matador Management Team Background and Prior Affiliations Experience Experience Joseph Wm. Foran - Matador Petroleum Corporation, Foran Oil Company, Founder, Chairman and CEO 32 years Since Inception J Cleo Thompson Jr. and Thompson Petroleum
Slide 50: Quarterly Performance Metrics Through Q3 2012
Quarterly Performance Metrics Through Q3 2012 Average Daily Equivalent Production Oil and Natural Gas Revenues (BOE/d) ($ in mm) Adjusted EBITDA (1) Total Realized Revenues ($ in mm) ($ in mm) (1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliati
Slide 51: Oil and Natural Gas Prices Since January 2011
Oil and Natural Gas Prices Since January 2011 160 8 Oil Price Oil/Gas Price Ratio 140 Gas Price 7 120 Oil prices have declined since mid-September 6 100 5 80 4 60 3 40 2 20 Natural gas prices have rallied since late April 1 0 0 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/201
Slide 52: 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 (loss) income and cash provided by operating activities, respectively. Nine Months Ended Year Ended December 31, September 30, (I
Slide 53: Adjusted EBITDA Reconciliation (Cont.)
Adjusted EBITDA Reconciliation (Cont.) The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net (loss) income and cash provided by operating activities, respectively. (In thousands) 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q
Slide 54: PV-10 Reconciliation
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 our pr
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