Matador Resources Company · NYSE:MTDR
Matador Resources — Investor Presentation (November 2020)
59 slides from Matador Resources's investor presentation, November 2020
Slide 1: Investor Presentation November 2020
Investor Presentation November 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: Company Overview and Investment Highlights
Company Overview and Investment Highlights
Slide 4: Matador Resources Company Overview
Matador Resources Company Overview Market Snapshot NYSE Symbol MTDR Enterprise Value(1) $3.0 billion Delaware Basin Q3 2020 Avg. Daily Production 73.0 MBOE/d Assets Q3 2020 Proved Reserves(2) 267.3 MMBOE Haynesville/ Cotton Valley Q3 2020 Net Debt / LTM Adj. EBITDA(3)(4) 2.8x Assets MATADOR HEADQUAR
Slide 5: Investment Highlights – Matador Resources Company
Investment Highlights – Matador Resources Company (NYSE: MTDR) High Quality E&P Assets and Rapidly Growing Midstream Business • Matador is achieving strong operating results across its ~128,000 net acre Delaware Basin leasehold and minerals position, acquired for a weighted average cost of ~$11,000
Slide 6: Matador's Significant Officer % Ownership vs. Peer Group
Matador’s Significant Officer % Ownership vs. Peer Group Interests Aligned with Shareholders • Since January 1, 2020, approximately 200 directors, special advisors and employees, or approximately two-thirds of the staff, have bought Matador stock in the open market! Joseph Wm. Foran Matthew V. Hairf
Slide 7: 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) Q4 2020E BOE up 9% sequentially; up 8% YoY Q4 2020E BOE up 12% sequentially; up 21% YoY 79,400 74,250 73,749 73,302 72,989 80,000 71
Slide 8: 2018 New Mexico Oil & Gas Association Production Rankings
2018 New Mexico Oil & Gas Association Production Rankings 2018 New Mexico Oil Production Ranking 2018 New Mexico Natural Gas Production Ranking Ranking Company Ranking Company 1 EOG Resources 1 Hilcorp Energy 2 Concho Operating 2 Concho Operating 3 Occidental Petroleum 3 EOG Resources 4 Devon Energy
Slide 9: Matador's Strong Q3 2020 Operating Efficiency vs. Peers
Matador’s Strong Q3 2020 Operating Efficiency vs. Peers(1) Netbacks(2)/O&G Revenues, % (excl. Deriv. Settlements) Netbacks(2)/O&G Revenues, % (incl. Deriv. Settlements) Strong operating margins vs. peers. Strong operating margins vs. peers. 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10%
Slide 10: Strong, Organic Growth Coupled With Peer-Leading Financial Returns
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% Peer 4 1
Slide 11: 2020 Priorities – Protecting the Balance Sheet is First Priority
2020 Priorities – Protecting the Balance Sheet is First Priority Balance Sheet Improvements Five Significant 2020 Milestones - Timeline 1 Reducing Rig Count from 6 to 3 rigs Q3 2020 and Beyond 1 Rodney Robinson wells turned to sales • Operating three rigs in 2 Reducing Capital Costs, G&A and LOE 2 R
Slide 12: Improved Capital Efficiency Translating to Better Wells for Less Money
Improved Capital Efficiency Translating to Better Wells for Less Money Delaware Estimated Ultimate Recovery per Foot Delaware Drilling and Completion (D&C) CapEx per Foot(1) (BOE/ft) ($/ft) “Better Wells” “Less Money” 175 $1,750 +10 BOE/ft on 2-mile well Average D&C CapEx/foot, $/ft(2) ≈ 100,000 BOE
Slide 13: Elements of 2020 Cost Savings & Cash Flow Enhancements
Elements of 2020 Cost Savings & Cash Flow Enhancements $360 Million Potential Improvement vs. Original Guidance Cost Savings + Cash Enhancements Already Realized YTD ($ in millions) Expected Remaining Cost Savings + Cash Enhancements for H2 2020 Total Expected 2020 Cost Savings + Cash Flow Enhanceme
Slide 14: Revolver Borrowings Outstanding – Quarterly Estimates for Q4 2020
Revolver Borrowings Outstanding – Quarterly Estimates for Q4 2020 ($ in millions) Borrowing Base $200 million Elected Commitment $25 million better than July 28, 2020 guidance projection $205 million Expect to generate positive free cash flow in Q4 2020! Net Debt/ LTM Adjusted EBITDA(1)(2): 2.2x 2.5
Slide 15: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) ~66% of oil and ~96% of Reducing emissions since 2017(2) water produced from the Greenhouse Gases (6%) Delaware Basin is transported on pipe(1) Emission Intensity Rate (33%) Methane Intensity Rate (33%) Forward Looking Infrared (FLIR) gas imaging cameras us
Slide 16: Operations and Delaware Basin Update
Operations and Delaware Basin Update
Slide 17: Delaware Basin Multi-Year Inventory of "A+ Locations"
Delaware Basin Multi-Year Inventory of “A+ Locations” A+ • Future drilling locations with projected minimum 15% rate of return at $30 - $40 WTI oil and $1.75/Mcf natural gas pricing Criteria • Most A+ locations are expected to achieve EURs of at least 900,000 barrels of oil or two million BOE • Mata
Slide 18: Delaware Basin – Continuing to Deliver Strong Well Results!
Delaware Basin – Continuing to Deliver Strong Well Results! Matador Acreage Reduced operated rigs in Delaware TWIN LAKES ~43,900 gross / ~24,500 net acres Basin from six to three at the end of Q2 2020 – expect to run three rigs for remainder of 2020 ARROWHEAD During remainder of 2020: ~66,000 gross
Slide 19: Matador Federal Acreage and Permitting Update
Matador Federal Acreage and Permitting Update % of Total • At June 30, 2020, Delaware Leasehold Federal Leasehold Delaware Asset Area County Delaware (net acres) (net acres) Leasehold Matador held approximately 127,600 Antelope Ridge Lea 16,300 8,500 7% net leasehold and mineral Rustler Breaks Eddy
Slide 20: A Step Change in Capital Efficiency: Updated 2020 Expectations
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 Lateral Feet Turned to Sales $1,700 83% (2) Average Drilling & Completions CapEx/foot, $/ft(1) 9,000 8,800 Average D&C
Slide 21: Marketing and Takeaway Overview
Marketing and Takeaway Overview Three-Stream Takeaway Marketing and Midstream Adding Value Oil The combined efforts of Matador’s marketing and midstream teams have significantly increased Matador has ~75% of its operated Delaware Basin realized pricing by: oil production on pipe Lowering transpo
Slide 22: Stateline Asset Area – Eddy County, New Mexico
Stateline Asset Area – Eddy County, New Mexico STATELINE Asset Summary and Highlights ~2,800 gross / ~ 2,800 net acres • Approximately 2,800 gross/net acres with 87.5% net Acreage revenue interest acquired in September 2018 BLM lease sale Overview • Approximately 88 gross two-mile and ~2.5-mile late
Slide 23: First Six Rodney Robinson Wells Online – Results Above Expectations!
First Six Rodney Robinson Wells Online – Results Above Expectations! “Rodney Robinson” Acreage Rodney Robinson Summary and Highlights Matador Acreage • First six wells turned to sales on the Rodney Robinson tract Acreage in western Antelope Ridge in late Q1 2020 Overview • Matador acquired this 1,20
Slide 24: Greater Stebbins Area – Eddy County, New Mexico
Greater Stebbins Area – Eddy County, New Mexico Greater Stebbins Area Summary and Highlights ARROWHEAD ~66,900 gross / ~26,900 net acres • Approximately 13,000 gross (5,450 net) acres Acreage • Currently producing from three primary intervals, including Overview 2nd Bone Spring, 3rd Bone Spring and
Slide 25: Rustler Breaks Asset Area – Eddy County, New Mexico
Rustler Breaks Asset Area – Eddy County, New Mexico RUSTLER BREAKS ~47,900 gross / ~26,700 net acres Asset Summary and Highlights • Approximately 47,900 gross (26,700 net) acres Acreage • Producing from 12 different intervals throughout the Overview stratigraphic column • TIL five recent two-mile la
Slide 26: San Mateo Midstream Operations and Plans
San Mateo Midstream Operations and Plans
Slide 27: San Mateo Assets and Operations – "Three-Pipe" Offering
San Mateo(1) Assets and Operations – “Three-Pipe” Offering Eddy County, NM Assets Loving County, TX Assets 1 Mile Greater Stebbins Area Wolf Loving ~43 miles Natural Gas and Oil Pipelines – IN SERVICE! Reeves Loving Ward 1 Mile Rustler Breaks Eddy Lea Natural Gas Gathering and Processing Processing
Slide 28: Continued Progress in All Parts of San Mateo's Delaware Midstream Business
Continued Progress in All Parts of San Mateo’s Delaware Midstream Business (51% Owned by Matador) San Mateo Average Water Handling San Mateo Average Natural Gas Gathering(1) (MBbl/d) (MMcf/d) Up 8% sequentially; 250 233 300 Down 1% sequentially; up 13% YoY 213 216 217 down 11% YoY 262 206 200 250 20
Slide 29: San Mateo – Recent Highlights and Performance
San Mateo – Recent Highlights and Performance October 2020 – Matador and Five Point(1) completed the successful merger of San Mateo I and San Mateo II into a single entity Q3 2020 – San Mateo II expansion projects completed, including: • Expansion of the Black River Processing Plant to designed
Slide 30: Updated Full Year 2020 Guidance
Updated Full Year 2020 Guidance
Slide 31: Summary and Updated 2020 Guidance
Summary and Updated 2020 Guidance (as Provided on October 27, 2020) Three rigs operating in the Delaware Basin during Q4 2020 – expect 53 gross (45.7 net) operated wells in 2020 − Operating three rigs in the Delaware Basin during Q4 2020, two of which are anticipated to be operating in the Stateli
Slide 32: Updated 2020 Capital Investment Plan Summary vs. Prior Guidance
Updated 2020 Capital Investment Plan Summary vs. Prior Guidance Updated 2020 CapEx Guidance(1)(2)(3) – $560 million (down $5 million vs. Prior Guidance of $565 million(4)) (Delaware: Moved from 6 to 3 operated rigs by end of Q2 2020) 2020E Wells Turned to Sales Midstream $95 million(3) Prior Guidanc
Slide 33: 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: $465 MM Midstream(3): $95 MM Oil, MBbl 2020E Oil Production – 13% Growth YoY Total: $560 MM • Estimated oil production of 15.7 to 15.8 million barrels Total (MB
Slide 34: 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 (47.9 net) wells. Matador expects the Delaware Basin to account for 89 gross (47.9 net) wells, including 53 gross (45.7 net) operated and 36 gross (2.2 net)
Slide 35: Hedging Profile – Remainder of 2020, 2021 and 2022
Hedging Profile – Remainder of 2020, 2021 and 2022(1) Oil Collars, Swaps, Puts Midland-Cushing Basis Swaps Natural Gas Collars ~70-75% hedged for Q4 2020 ~60% hedged for Q4 2020 ~60% hedged for Nov 2020 – Dec 2020 9,000 16.0 WTI Collars 6,240 8,400 15.0 6,000 WTI Swaps 8,000 14.0 Natural Gas Volume
Slide 36: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG)
Slide 37: ESG: Environmental – Air
ESG: Environmental – Air Reducing greenhouse gas (GHG) Reducing emissions since 2017(1) emissions using advanced capture Greenhouse Gases (6%) and control equipment Vapor recovery units (VRU) on 100% of newly Emission Intensity Rate (33%) constructed tank batteries; recovery of flash gas volumes inc
Slide 38: ESG: Environmental – Water
ESG: Environmental – Water 700 Over 680 million 2020E Stimulation Cumulative Recycled Production Water 600 gallons recycled water +32% Fluid Volumes 500 used by YE 2020 Fresh 6% ~$8.9 million (million gallons) 400 cost savings(1) 300 Wolf as alternative to Asset 200 fresh water Area 100 sourcing and
Slide 39: ESG: Increased Use of Recycled Water in Fracturing Operations
ESG: Increased Use of Recycled Water in Fracturing Operations 680 Gallons of recycled produced water expected to be used for fracture ~$8.9 Estimated cost savings(2) as alternative to fresh water sourcing and produced million stimulation from 2015 to 2020E(1) million water disposal Estimated fractur
Slide 40: ESG: Environmental – Land
ESG: Environmental – Land # of Pads Built Reducing surface ~66% of oil and ~98% of footprint with fewer pads water produced from the 36 More batch drilling, longer laterals 31 Delaware Basin is and commingling production transported on pipe(1) 58% fewer pads anticipated to be built in 2020 vs. 2018
Slide 41: ESG: Social
ESG: Social 18,000 Commitment to a 16,000 Over 17,000 hours of proactive safety culture 14,000 employee continuing 12,000 education in 2019 No recordable employee injuries 10,000 since 2014 8,000 6,000 Over 1.8 million employee man-hours 4,000 and zero lost time accidents (LTA) 2,000 since 2017 0 20
Slide 42: ESG: Governance
ESG: Governance Engaged Board of Directors Annual with majority voting “Say on Pay” Diverse and independent standard voting board Commitment to Women on Board Lead Independent ethical conduct since 1988(1) Director and compliance Board Composition Certification of code of conduct by No “overboarding
Slide 43: Appendix
aN, ¢ Matador | RESOURCES COMPANY tins Appendix MIDR NYSE
Slide 44: Strong Results for Third Quarter 2020
Strong Results for Third Quarter 2020 • Oil production of ~42,300 Bbl/d, up 6% from ~39,800 Bbl/d in Q3 2019 – Above Guidance! Strong Production • Natural gas production of ~183.9 MMcf/d, up 3% from ~179.2 MMcf/d in Q3 2019 – Above Guidance! • Total production of ~73,000 BOE/d, up 5% from ~69,600 BO
Slide 45: Q3 2020 Selected Operating and Financial Results
Q3 2020 Selected Operating and Financial Results Three Months Ended September 30, June 30, September 30, 2020 2020 2019 (1) Net Production Volumes: Oil (MBbl) 3,895 3,920 3,659 Natural gas (Bcf) 16.9 16.5 16.5 Total oil equivalent (MBOE) 6,715 6,670 6,407 (1) Average Daily Production Volumes: Oil (B
Slide 46: Delaware Basin Extended Lateral Well Location Inventory
Delaware Basin Extended Lateral Well Location Inventory • Matador has identified up to 4,548 gross (1,600 net) remaining potential locations(1) for future drilling on its Delaware Basin acreage − Location counts assume extended lateral lengths whenever viable, and the total locations have an average
Slide 47: Delaware Basin Drilling Records Since MAXCOM Implementation
Delaware Basin Drilling Records Since MAXCOM Implementation Recent Spud to TD Drilling Records: 97 MTDR Drilling Records and ~$10.8 Million Ace Stern Vegas #204H – 14.7 days – 2-mile well Estimated Savings Since MAXCOM Ray State #123H – 13.4 days – 2-mile well Implementation Through September 20
Slide 48: Crude Oil Marketing Overview
Crude Oil Marketing Overview Matador expects to have almost all its operated Eddy Lea Andrews Delaware Basin oil production on pipe by late Q4 2020 Central Delivery Points Contracted a long-term, fixed transport rate New Mexico Texas Existing Plains Pipeline Market optionality into Midland, Gu
Slide 49: Natural Gas Marketing Overview
Natural Gas Marketing Overview San Mateo’s In late September 2019, Matador began Eddy Black RiverLea Processing Plant Andrews transporting most of its Delaware Basin residue natural gas production to the Texas Gulf Coast on the newly commissioned Gulf Coast Express New Mexico Pipeline Project for
Slide 50: Natural Gas Liquids Marketing Overview
Natural Gas Liquids Marketing Overview Chaves Matador Acreage Completed NGL connection at the Black River Black River Processing Plant Processing Plant on EPIC’s Y-Grade pipeline EPIC Y-Grade Pipeline in March 2018 − BP Energy Company has continued to buy NGLs at tailgate of the Black River Proces
Slide 51: Matador Resources and San Mateo I Credit Facilities
Reaffirmed October 2020! 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 D
Slide 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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
Matador Resources Company — Investor Presentation (November 2020) on 6ix