Matador Resources Company · NYSE:MTDR

Matador Resources — Investor Presentation (August 2014)

62 slides from Matador Resources's investor presentation, Aug 13, 2014

  1. Slide 1: August 2014 Investor Presentation

    August 2014 Investor Presentation NYSE: MTDR Exhibit 99.1

  2. 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

  3. Slide 3: Company Summary

    Company Summary

  4. 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

  5. Slide 5: Company Overview

    5 Company Overview Exchange: Ticker NYSE: MTDR Shares Outstanding(1) 73.3 million common shares Share Price(2) $26.91/share Market Capitalization(1)(2) $2.0 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 August 11, 2

  6. 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)

  7. 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

  8. Slide 8: Matador Resources Company Overview

    8 Matador Resources Company Overview Market Capitalization(1) $2.0 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

  9. 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: 12

  10. 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

  11. Slide 11: Eagle Ford South Texas

    a‘, {Mata ador ee ee Eagle Ford South Texas

  12. 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

  13. 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

  14. 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

  15. 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

  16. Slide 16: 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 16 Note: Figure depicts proppant and fluid volume pumped per 300 ft. of horizontal wellbore. (1) Mlbs = thousands o

  17. Slide 17: Eagle Ford Cumulative Production by Well 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

  18. Slide 18: 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

  19. Slide 19: 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 19 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

  20. Slide 20: 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

  21. Slide 21: Progression of Drilling Rig Technology from 2010 to 2014

    Progression of Drilling Rig Technology from 2010 to 2014 21 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  

  22. Slide 22: Artificial Lift

    22 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 Time Note: Graph and data is for illustrative purposes only and not meant to re

  23. Slide 23: Buda Wells Activity Since January 1, 2010

    Buda Wells Activity Since January 1, 2010 – Potential Test 23 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:

  24. Slide 24: Permian Basin Southeast New Mexico and West Texas

    Permian Basin Southeast New Mexico and West Texas

  25. Slide 25: 2014 Permian Basin Plan

    25  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 not on productio

  26. Slide 26: Permian Basin

    Permian Basin Total Gross Acres 94,045 acres Net Acres 61,951 acres Permian Basin (1) Presented as of December 31, 2013. (2) As of August 6, 2014. 26  Estimated 241 gross (177.7 net) engineered drilling locations(1); anticipated to grow over time Progress-to-date(2)  Successful performance of firs

  27. Slide 27: 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

  28. Slide 28: 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

  29. Slide 29: 2014 Wells Drilled Targeting Multiple Benches

    2014 Wells Drilled Targeting Multiple Benches in Permian Appraisal Program 29 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

  30. Slide 30: Wolf / Loving Prospect Area

    Wolf / Loving Prospect Area 30  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

  31. Slide 31: Ranger / Querecho Plains Prospect Area

    Ranger / Querecho Plains Prospect Area 31  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

  32. Slide 32: Indian Draw / Rustler Breaks Prospect Area

    32  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

  33. Slide 33: Twin Lakes Prospect Area

    Twin Lakes Prospect Area 33  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

  34. Slide 34: Twin Lakes Area Cross Section

    Twin Lakes Area Cross Section 34 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

  35. Slide 35: Matador Permian Basin – First Generation Frac Designs

    Bone Spring 0 ft. 300 ft. Wolfcamp Matador Permian Basin – First Generation Frac Designs 35 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

  36. Slide 36: Haynesville Shale

    Haynesville Shale

  37. Slide 37: 2014 Haynesville Shale Plan

    2014 Tier 1 Haynesville Shale Plan 37  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

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: 2014 Capital Investment Plan

    2014 Capital Investment Plan

  41. Slide 41: Summary and 2014 Guidance

    41 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

  42. Slide 42: 2014 Capital Investment Plan Summary

    42 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  Permian drilling program designed to

  43. Slide 43: Funding for 2014 Capital Investment Plan

    Funding for 2014 Capital Investment Plan 43  Anticipate funding 2014 capital expenditures through proceeds from May 2014 equity offering, operating cash flows and borrowings under revolving credit facility  1.1 million barrels of oil hedged for remainder of 2014, protecting cash flows below ~$88/B

  44. Slide 44: Investment Highlights

    44 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

  45. Slide 45: Appendix

    = AN, jMatadar RESOURCES COMPANY Appendix

  46. Slide 46: SEC Proved Reserves Value Growth By Area

    46 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

  47. Slide 47: 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

  48. Slide 48: Recent Semi-Annual Performance Metrics

    Recent Semi-Annual Performance Metrics Through Mid-Year 2014 Oil Equivalent Production (BOE in thousands) Adjusted EBITDA(1) ($ in millions) Oil and Natural Gas Revenues ($ in millions) Oil Production (Bbl in thousands) 84 485 729 908 1,225 1,463 2H 2011 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 1,277

  49. Slide 49: 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 $3.99 2009 2010 2011 2012 2013 2014E Matador Provides Growth on a Per Share(1) Basis 49 Oil and Natural Gas Revenues(4) per Share ($ per share) PV-

  50. Slide 50: 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

  51. Slide 51: Increasing Cash Operating Margin

    Increasing Cash Operating Margin 51 $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

  52. Slide 52: 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 52 Oil Production and Revenues Through Q2 2014 Average Daily Natural Gas Production (MMcf/d) Natural Gas Revenues ($ in mm) Oil Revenues ($

  53. Slide 53: 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 53 Quarterly Performance Metrics Through Q2 2014 Oil and Natural G

  54. Slide 54: 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 54 Quarterly Expense Metrics Through Q2 2014 Lease Operating (per BOE) General and A

  55. Slide 55: Hedging Profile

    55 Hedging Profile – Hedges in Place for Remainder of 2014 and 2015 At August 6, 2014, Matador had:  1.1 million barrels of oil hedged for remainder of 2014 at weighted average floor and ceiling of $88/Bbl and $99/Bbl, respectively  4.4 Bcf of natural gas hedged for remainder of 2014 at weighted a

  56. Slide 56: Board of Directors and Special Advisors

    Board of Directors and Special Advisors – Expertise and Stewardship 56 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

  57. Slide 57: Proven Management Team – Experienced Leadership

    Proven Management Team – Experienced Leadership 57 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

  58. Slide 58: PV-10 Reconciliation

    58 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

  59. Slide 59: Adjusted EBITDA Reconciliation

    59 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

  60. Slide 60: Adjusted EBITDA Reconciliation

    60 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

  61. Slide 61: Adjusted EBITDA Reconciliation

    61 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

  62. 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. (In thousands) 12/31/2011 6/30/2012 12/31/2012 6/30

Matador Resources — Investor Presentation (August 2014) on 6ix