Matador Resources Company · NYSE:MTDR
Matador Resources — Q2 2020 Earnings Presentation
37 slides from Matador Resources's earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020 Earnings Release
Second Quarter 2020 Earnings Release July 28, 2020
Slide 2: Disclosure Statements
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 1933
Slide 3: Chairman's Remarks
Chairman’s Remarks July 28, 2020
Slide 4: Promising Results for Second Quarter 2020
SLIDE A Promising Results for Second Quarter 2020 • Oil production of ~43,100 Bbl/d, up 17% from ~36,800 Bbl/d in Q2 2019 – Record Quarter! Strong Production • Natural gas production of ~181.4 MMcf/d, up 23% from ~147.1 MMcf/d in Q2 2019 – Above Guidance! • Total production of ~73,300 BOE/d, up 20%
Slide 5: A Step Change in Capital Efficiency: Updated 2020 Expectations
SLIDE B A Step Change in Capital Efficiency: Updated 2020 Expectations(1) Average Lateral Length and % of Longer Laterals CapEx per Foot(2) and Lateral Footage Turned to Sales 100% 600,000 $1,700 Lateral Feet Turned to Sales 83% Average Drilling & Completions CapEx/foot, $/ft(2) 9,000 8,700 Average
Slide 6: Elements of 2020 Cost Savings & Cash Flow Enhancements
SLIDE C Elements of 2020 Cost Savings & Cash Flow Enhancements $355 Million Potential Improvement vs. Original Guidance Cost Savings + Cash Enhancements Already Realized YTD ($ in millions) Expected Remaining Cost Savings + Cash Enhancements for H2 2020 Total Expected 2020 Cost Savings + Cash Flow E
Slide 7: Rustler Breaks Asset Area – Eddy County, New Mexico
SLIDE D Rustler Breaks Asset Area – Eddy County, New Mexico RUSTLER BREAKS Asset Summary and Highlights ~47,900 gross / ~26,700 net acres • Approximately 47,900 gross (26,700 net) acres Acreage • Producing from 12 different intervals throughout the Overview stratigraphic column • TIL five additional
Slide 8: Delaware Basin Multi-Year Inventory of A+ Locations
SLIDE E Delaware Basin Multi-Year Inventory of “A+ Locations” • Future drilling locations with a projected minimum 15% rate of return at $30/Bbl WTI oil pricing and $1.75/Mcf gas pricing A+ − ~90% of Matador’s remaining 2020 oil production is hedged at a weighted average floor price of $38/Bbl Crite
Slide 9: 2020 Priorities – Protecting the Balance Sheet is First Priority
SLIDE F 2020 Priorities – Protecting the Balance Sheet is First Priority Balance Sheet Improvements Significant 2020 Milestones - Timeline 1 Reducing Rig Count from 6 to 3 rigs Q3 2020 and Beyond 1 First Rodney Robinson wells turned to sales • Operating three rigs in 2 Reducing Capital Costs, G&A an
Slide 10: Revolver Borrowings Outstanding – Quarterly Estimates for H2 2020
SLIDE G Revolver Borrowings Outstanding – Quarterly Estimates for H2 2020 ($ in millions) Borrowing Base $200 million Elected Commitment $180 million Net Debt/ LTM Adjusted EBITDA(1)(2): 2.2x 2.5x 3.0x 3.4x Realized Oil Price(3) ($/Bbl): $45.87 $24.03 $38.79 $39.43 Realized Gas Price(3) ($/Mcf): $1.
Slide 11: Strong, Organic Growth Coupled With Peer-Leading Financial Returns
SLIDE H Strong, Organic Growth Coupled With Peer-Leading Financial Returns Total MMBOE Proved Reserves Growth(1) E&P and Total Return on Capital Employed(2) 3-Year Average (YE2018 to YE2019) (2017 to 2019) MTDR Peer 6 28% 17% Peer 1 MTDR 20% 24% 15% Peer 2 14% Peer Average 15% Peer 3 14% Peer 7 15%
Slide 12: Operational and Financial Results
Operational and Financial Results July 28, 2020
Slide 13: Q2 2020 Selected Operating and Financial Results
Q2 2020 Selected Operating and Financial Results Three Months Ende d June 30, March 31, June 30, 2020 2020 2019 (1) Net Production Volumes: Oil (MBbl) 3,920 3,697 3,346 Natural gas (Bcf) 16.5 16.7 13.4 Total oil equivalent (MBOE) 6,670 6,476 5,577 (1) Average Daily Production Volumes: Oil (Bbl/d) 43
Slide 14: A Tightly Integrated Strategy: Growing E&P and Midstream Together
A Tightly Integrated Strategy: Growing E&P and Midstream Together Average Daily Total Production Average Daily Total Delaware Production (BOE/d) Delaware Basin (BOE/d) BOE up 3% sequentially; up 20% YoY BOE up 10% sequentially; up 28% YoY 73,749 73,302 71,161 69,645 66,005 61,493 60,268 70,000 61,29
Slide 15: Delaware Basin – Continuing to Deliver Strong Well Results
Delaware Basin – Continuing to Deliver Strong Well Results! Matador Acreage Reduced operated rigs in Delaware Basin TWIN LAKES ~43,900 gross / ~24,500 net acres from six to three by the end of Q2 2020 During remainder of 2020: Stateline: Two rigs drilling the first 12 wells on the western portion
Slide 16: Matador Federal Acreage and Permitting Update
Matador Federal Acreage and Permitting Update Delaware Leasehold Federal Leasehold % of Delaware • At June 30, 2020, Delaware Asset Area County (net acres) (net acres) Leasehold Matador held Antelope Ridge Lea 16,300 8,500 7% approximately 127,600 net leasehold and mineral Rustler Breaks Eddy 26,700
Slide 17: Wells Completed and Turned to Sales – Q2 2020
Wells Completed and Turned to Sales – Q2 2020 During Q2 2020, Matador completed and turned to sales 13 gross (8.3 net) wells in its various operating areas, including 11 gross (8.3 net) operated wells and two gross (<0.1 net) non-operated wells. Of the 11 operated wells, five were two-mile later
Slide 18: Significant Growth in All Parts of San Mateo's Delaware Midstream Business
Significant Growth in All Parts of San Mateo’s Delaware Midstream Business (51% Owned by Matador) San Mateo Average Water Disposal San Mateo Average Natural Gas Gathering(1) (MBbl/d) (MMcf/d) 250 300 Up 7% sequentially; 217 Down 3% sequentially; 262 up 17% YoY 203 up 2% YoY 250 200 186 190 190 216 1
Slide 19: San Mateo – Recent Highlights and Performance
San Mateo – Recent Highlights and Performance March 2020 – 10th commercial SWD well in Eddy County, NM online • Total of 13 commercial SWD wells in Eddy County, NM and Loving County, TX with ~335,000 Bbl/d of designed disposal capacity October 2019 – Expanded credit facility for a second time fr
Slide 20: Hedging Profile – Remainder of 2020, 2021 and 2022
Hedging Profile – Remainder of 2020, 2021 and 2022 Remainder of 2020, 2021 and 2022 Hedges(1) Oil (WTI) Costless Collars: ~1.8 million Bbl hedged for the remainder of 2020 at weighted average floor and ceiling prices of $48/Bbl and $66/Bbl, respectively; ~2.4 million Bbl hedged for 2021 at weighte
Slide 21: Updated Full Year 2020 Guidance
Updated Full Year 2020 Guidance July 28, 2020
Slide 22: Summary and Updated 2020 Guidance
Summary and Updated 2020 Guidance (as Provided on July 28, 2020) Six rigs operating in the Delaware Basin dropping to three – expect 53 gross (45.2 net) operated wells in 2020 − Released one rig at the end of March 2020 and released a second rig at the end of April 2020 − Released one additional r
Slide 23: Updated 2020 Capital Investment Plan Summary vs. Prior Guidance
Updated 2020 Capital Investment Plan Summary vs. Prior Guidance Prior 2020 CapEx Guidance(1)(2)(3) – $565 million Updated 2020 CapEx Guidance(2)(3)(4) – $565 million (Delaware: Moved from 6 to 3 operated rigs by end of Q2 2020) (Delaware: Moved from 6 to 3 operated rigs by end of Q2 2020) Midstream
Slide 24: 2020 Oil and Natural Gas Production Estimates
2020 Oil and Natural Gas Production Estimates(1) Total Oil and Natural Gas Production 2020E CapEx(1)(2) (Midpoint): Natural Gas, Bcf D/C/E: $470 MM Midstream(3): $95 MM Oil, MBbl 2020E Oil Production – 11% Growth YoY Total: $565 MM • Estimated oil production of 15.35 to 15.65 million barrels Total (
Slide 25: Wells Completed and Turned to Sales – 2020 Updated Guidance
Wells Completed and Turned to Sales – 2020 Updated Guidance(1) During full year 2020, Matador expects to complete and turn to sales 93 gross (47.1 net) wells. Matador expects the Delaware Basin to account for 89 gross (47.1 net) wells, including 53 gross (45.2 net) operated and 36 gross (1.9 net)
Slide 26: Wells Completed and Turned to Sales – 2020 Updated Guidance
Wells Completed and Turned to Sales – 2020 Updated Guidance(1) In 2020, Matador expects to continue transitioning its operations to longer laterals greater than one mile. ‒ 83% of Matador’s gross operated horizontal wells completed and turned to sales in 2020 are expected to have lateral lengths g
Slide 27: 2020E Operating Cost Estimates (Unit Costs per BOE)
2020E Operating Cost Estimates (Unit Costs per BOE)(1) ($ per BOE) Unit Cost Category 2020E Q2 2020 Q1 2020 2019 Production taxes, transportation and processing $2.75 to $3.25 $2.82 $3.35 $3.82 Lease operating $4.25 to $4.75 $3.92 $4.77 $4.85 Plant and other midstream services operating $1.60 to $1.
Slide 28: Appendix
aN, ¢ Matador | RESOURCES COMPANY tins Appendix
Slide 29: Matador Resources and San Mateo I Credit Facilities
Matador Resources and San Mateo I Credit Facilities Matador Credit Agreement Summary Bank group led by Royal Bank of Canada Elected Borrowings Letters of Credit Financial Covenant: Maturity Borrowing Last Reserves Facility Size Borrowing Outstanding Outstanding Maximum Net Debt to Date Base Review C
Slide 30: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation This 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 the Company’s consolidated financial statements, such as industry analysts, inves
Slide 31: Adjusted EBITDA Reconciliation – Matador Resources Company, Consolidated
Adjusted EBITDA Reconciliation Matador Resources Company, Consolidated 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)
Slide 32: Adjusted EBITDA Reconciliation Continued – Consolidated
Adjusted EBITDA Reconciliation Continued Matador Resources Company, Consolidated 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
Slide 33: Adjusted EBITDA Reconciliation – San Mateo
Adjusted EBITDA Reconciliation San Mateo(1) The following table presents the calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by (used in) operating activities, respectively, for San Mateo Midstream, LLC an
Slide 34: Adjusted EBITDA Reconciliation – San Mateo
Adjusted EBITDA Reconciliation San Mateo(1) The following table presents the calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by (used in) operating activities, respectively, for San Mateo Midstream, LLC an
Slide 35: Adjusted Net (Loss) Income and Adjusted (Loss) Earnings Per Diluted Share
Adjusted Net (Loss) Income and Adjusted (Loss) Earnings Per Diluted Common Share This presentation includes the non-GAAP financial measures of adjusted net (loss) income and adjusted (loss) earnings per diluted common share. These non-GAAP items are measured as net (loss) income attributable to Mata
Slide 36: Return on Average Capital Employed (ROACE) Reconciliation
Return on Average Capital Employed (ROACE) Reconciliation The following table presents our calculation of E&P ROACE and Total ROACE and a reconciliation of such measures to the corresponding GAAP financial measures. Return on Average Capital Employed ($ in thousands) For the Years Ended December 31,
Slide 37: Cash Return on Capital Invested (CROCI) Reconciliation
Cash Return on Capital Invested (CROCI) Reconciliation The following table presents our calculation of CROCI and Total CROCI and a reconciliation of such measures to the corresponding GAAP financial measures. Cash Return on Capital Invested ($ in thousands) For the Years Ended December 31, 2019 2018
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