Matador Resources Company · NYSE:MTDR
Matador Resources — Investor Presentation (August 2019)
61 slides from Matador Resources's investor presentation, August 2019
Slide 1: Investor Presentation
Investor Presentation August 2019 NYSE: MTDR
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 Summary
Ny ; (Matador % EE RESOURCES COMPANY Company Summary NYSE: MTDR
Slide 4: Matador Resources Company Overview
Matador Resources Company Overview Market Snapshot NYSE Symbol MTDR Market Cap(1) $1.8B Delaware Basin Q2 Avg. Daily Production 61.3 MBOE/d Assets Haynesville/ Q2 Net Debt / Adj. EBITDA(2) 2.3x Cotton Valley Assets YE 2018 Proved Reserves 215 MMBOE MATADOR HEADQUARTERS DALLAS, TEXAS Eagle Ford Asset
Slide 5: Executive Officer Ownership vs. Peer Group
Matador’s Significant Executive Officer % Ownership vs. Peer Group Joseph Wm. Foran Matthew V. Hairford David E. Lancaster Craig N. Adams Billy E. Goodwin Founder, Chairman President and EVP and CFO EVP and COO – EVP and COO – and CEO Chair of the Land, Legal and Drilling, Operating Committee Admini
Slide 6: Matador Has Made Tremendous Progress Since its IPO
Matador Has Made Tremendous Progress Since its IPO – “We Do What We Say We Will Do” At IPO(1): February 7, 2012 Today(2) Difference Share Price $12.00 $15.46(3) +29% 414 Bbl/d ~36,800 Bbl/d Oil Production (6% oil) +89-fold (60% oil) 27 MMBOE 215 MMBOE Proved Reserves (4% oil) (57% oil)(4) +8-fold Pr
Slide 7: Headlines and Highlights for Second Quarter 2019
Headlines and Highlights for Second Quarter 2019 Oil and total production were record numbers in Q2 2019 − Oil production of ~36,800 Bbl per day, up 7% sequentially from ~34,500 Bbl per day in Q1 2019 – Record Quarter! − Oil equivalent production of ~61,300 BOE per day, up 2% sequentially from ~59
Slide 8: Q2 2019 Oil and Oil Equivalent Volumes At Record Levels
Q2 2019 Oil and Oil Equivalent Volumes At Record Levels Average Daily Oil Production Average Daily Total Production (Bbl/d) (BOE/d) BOE up 2% sequentially; up 16% YoY 61,290 Oil up 7% sequentially; up 24% YoY 59,941 55,536 54,625 52,937 60,000 Oil Natural Gas 45,273 43,718 50,000 41,954 36,922 32,99
Slide 9: Consistent Proved Reserves per Share Growth
Consistent Proved Reserves per Share Growth Matador proved reserves per share at December 31, 2018 are at an all-time high despite a ~45% decrease in crude oil prices since mid-2014 Since Matador’s IPO, reserves per share have increased ~3.7x 2.00 Reflects Proved 215 MMBOE Reserves at 1.80 Decem
Slide 10: Selected Operating and Financial Results – Q2 2019 and Prior Periods
Selected Operating and Financial Results – Q2 2019 and Prior Periods Three Months Ended June 30, March 31, June 30, 2019 2019 2018 Net Production Volumes:(1) Oil (MBbl) 3,346 3,107 2,706 Natural gas (Bcf) 13.4 13.7 12.7 Total oil equivalent (MBOE) 5,577 5,395 4,817 Average Daily Production Volumes:(
Slide 11: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) Environmental Social Governance Commitment Reducing greenhouse to a proactive safety gas (GHG) emissions Certification of code culture with a total using advanced of conduct by all recordable incident rate capture and control employees well below the indust
Slide 12: Operations and Delaware Basin Update
Operations and Delaware Basin Update NYSE: MTDR
Slide 13: Expanding Opportunities in the Northern Delaware Basin
Expanding Opportunities in the Northern Delaware Basin Matador has been identifying new opportunities in the Northern Delaware Basin and has tested, or participated in testing, 16 discrete intervals across its acreage position 13
Slide 14: Building Delaware Basin Position “One Brick at a Time”
Building Delaware Basin Position “One Brick at a Time” 2012 2014 2016 Today ~7,500 Net Acres ~65,000 Net Acres ~94,700 Net Acres ~132,700 Net Acres EDDY LEA LEA LEA LEA EDDY EDDY EDDY LOVING LOVING LOVING LOVING Matador Acreage Matador Acreage Matador Acreage Matador Acreage Note: All acreage as of
Slide 15: Delaware Basin Acreage Position and Recent Operations and Results
Delaware Basin Acreage Position and Recent Operations and Results Matador Acreage TWIN LAKES Running six rigs in Delaware Basin ~44,100 gross / ~31,200 net acres Rustler Breaks: One to three rigs (at times) drilling primarily Wolfcamp A-XY and Wolfcamp B wells – no Rustler Breaks completions in Q2
Slide 16: Matador Delaware Frac Design – Larger Completions for Less Money
Matador Delaware Frac Design – Larger Completions for Less Money Completion 2018 2019 Metric Average Average(1) ~42 ~52 Bbl/ft Bbl/ft Fluid (Bbl/ft) ~30% ~90% In-Basin Sand (%) 22 26+ Stages/mile Stages/mile Stages/mile $830/ft $650/ft Completion Cost/ft (1) Metrics from all operated horizontal Dela
Slide 17: Regional Sand: Increasing Use to Enhance Operational Efficiency
Regional Sand: Increasing Use to Enhance Operational Efficiency $1,100 Potential Cost Savings, $000s Implementation and Cost Savings Cost savings are linear with $1,000 lateral length as Matador ramps − Initial tests conducted to evaluate smaller Northern White up long-lateral development 40/70 sand
Slide 18: A Step Change in Capital Efficiency: Longer Laterals and Increased Batch Drilling
A Step Change in Capital Efficiency: Longer Laterals and Increased Batch Drilling − Recent strategic trades and acquisitions have opened Average Lateral Length and % of Longer Laterals the door for a significant step change in lateral lengths 100% greater than one mile Average Lateral Length % of 2
Slide 19: A Step Change in Capital Efficiency: Driving Down D&C CapEx per Foot
A Step Change in Capital Efficiency: Driving Down D&C CapEx per Foot(1) 700,000 $1,700 Lateral Feet Turned to Sales Average Drilling & Completions CapEx/foot, $/ft(1) (1) Assumes constant Average D&C CapEx/ft rig count 600,000 583,000 $1,600 Lateral Footage Turned to Sales, ft -17% Decline in 500,00
Slide 20: Continuing to Drill Wells More Efficiently
Continuing to Drill Wells More Efficiently 1,400 91 In H1 2019, Matador Drilled Over 1.3 Million Feet (Annualized) 1,310 84 at the Fastest ROP(1) Achieved by the Company 1,231 80 77 1,200 78 72 1,030 1,000 65 60 Rate of Penetration, ft/hr Drilling Footage, 1000 ft 800 52 684 41 600 39 466 400 26 188
Slide 21: Delaware Basin Inventory Continues to Increase – Added 52,000 Net Acres
Delaware Basin Inventory Continues to Increase – Added 52,000 Net Acres Since January 1, 2017! Matador has identified up to 5,442 gross (2,472 net) potential locations(1) for future drilling (only locations yet to be drilled) on its Delaware Basin acreage – net identified locations up 26% since De
Slide 22: Delaware Basin Asset Areas
Delaware Basin Asset Areas NYSE: MTDR
Slide 23: Rustler Breaks and Stateline Asset Areas – Eddy County, New Mexico
Rustler Breaks and Stateline Asset Areas – Eddy County, New Mexico Asset Summary and Recent Highlights Black River Cryogenic Natural Gas Processing Plant − Approximately 44,600 gross (25,300 net) acres in Rustler and Salt Water Disposal Wells #1, #2, #3, #4, #5 and #6 Breaks (does not include Statel
Slide 24: Antelope Ridge Asset Area – Lea County, New Mexico
Antelope Ridge Asset Area – Lea County, New Mexico Asset Summary and Highlights − Approximately 20,800 gross (17,500 net) acres, including 4,800 net acres with 87.5% NRI added in September 2018 BLM lease sale Irvin Wall State Com #132H, #133H, #134H Bill Alexander State Com #111H Avg. 24-hr IP: 1,92
Slide 25: Wolf and Jackson Trust Asset Areas – Loving County, Texas
Wolf and Jackson Trust Asset Areas – Loving County, Texas Asset Summary and Recent Highlights − Approximately 15,000 gross (10,700 net) acres − Added ~1,300 strategic net acres in 2018 − Producing from four primary intervals, including 2nd Bone Spring, Wolfcamp A-XY, Wolfcamp A-Lower and Wolfcamp B
Slide 26: Arrowhead and Ranger Asset Areas – Eddy and Lea Counties, NM
Arrowhead and Ranger Asset Areas – Eddy and Lea Counties, NM Leo 15 B2DH Fed #1H 1st Bone Spring Mewbourne 51 month cum: 487 MBOE (70% oil) 2nd Bone Spring Baroque “BTQ” Fed Com #1H 3rd Bone Spring Yates Petroleum (EOG) Mallon 27 Fed Com #1H, #2H, #3H 39 month cum: 858 MBOE (70% oil) Wolfcamp A-XY C
Slide 27: Twin Lakes Asset Area – Lea County, New Mexico
Twin Lakes Asset Area – Lea County, New Mexico State LF 30 #4H NE Kemnitz #233H D. Culbertson State #234H Olivine 5-16-37 TL State #1 Cimarex Wolfcamp D (1.0-mile lateral) Wolfcamp D (1.0-mile lateral) Vertical Strawn Completion Wolfcamp D (1.0-mile lateral) 24-hr IP: 675 BOE/d (84% oil) 24-hr IP: 6
Slide 28: San Mateo Midstream Operations and Plans
San Mateo Midstream Operations and Plans
Slide 29: Midstream Business Continues to Grow – San Mateo’s “Three-Pipe” Offering
Midstream Business Continues to Grow – San Mateo’s “Three-Pipe” Offering Gas Gathering and Processing Water Gathering and Disposal Oil Gathering and Transportation 260 MMcf/d of designed natural gas Ten salt water disposal wells (SWDs) and Loving County, TX oil terminal facility cryogenic proc
Slide 30: Significant Growth in Delaware Midstream Business Over Last Three Years
Significant Growth in Delaware Midstream Business Over Last Three Years Q2 2016 Q2 2017 Q2 2018 Q2 2019 Growth(1) Designed Water Disposal 45,000 Bbl/d 95,000 Bbl/d 160,000 Bbl/d 250,000 Bbl/d 5.6x Capacity Average Water Disposed 30,000 Bbl/d 62,000 Bbl/d 111,000 Bbl/d 186,000 Bbl/d 6.2x Gathering Li
Slide 31: San Mateo Asset Overview – Including Planned San Mateo Expansion
San Mateo Asset Overview – Including Planned San Mateo Expansion − San Mateo I (Formed February 2017): − Gas processing plant – 260 MMcf/d designed inlet capacity − Gas, oil and water gathering − Nine commercial SWDs (tenth in progress) Greater Stebbins Area − San Mateo II (Formed February 2019): −
Slide 32: Significant Midstream Value Created and More Opportunities Exist
Significant Midstream Value Created and More Opportunities Exist $2,000 Matador’s midstream business has grown from negligible San Mateo and San Mateo II Combined Estimated Value ($ in millions)(2) to >$1.0 billion(1) business, essentially self-funded San Mateo continues to attract third-party v
Slide 33: San Mateo – Recent Highlights and Performance
San Mateo – Recent Highlights and Performance June 2019 – Expanded credit facility to $325 million from $250 million (originally entered into facility in December 2018) February 2019 – Matador entered into second strategic midstream transaction with Five Point to expand San Mateo’s operations in
Slide 34: Marketing Overview
Marketing Overview NYSE: MTDR
Slide 35: Crude Oil Marketing Overview
Crude Oil Marketing Overview Matador currently has on pipe almost all of its oil production from the Wolf and Rustler Breaks asset areas, which comprised ~55% of the Company’s Central Delivery Points Delaware Basin oil production in Q2 2019 Contracted a long-term, fixed transport rate Existing P
Slide 36: Natural Gas Marketing Overview
Natural Gas Marketing Overview Matador believes it has sufficient firm capacity for Black River Processing Plant existing production and expected production volumes from future drilling Matador currently sells residue gas at Waha via firm transport on Oasis, El Paso and Enterprise pipelines Ma
Slide 37: Natural Gas Liquids Marketing Overview
Natural Gas Liquids Marketing Overview 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 Processing Pl
Slide 38: 2019 Capital Investment Plan
2019 Capital Investment Plan NYSE: MTDR
Slide 39: Updated 2019 Guidance (as Revised on July 31, 2019)
Updated 2019 Guidance (as Revised on July 31, 2019) Plan to run six rigs in the Delaware Basin throughout remainder of 2019 − Four rigs in Rustler Breaks and Antelope Ridge, one rig in Wolf/Jackson Trust and one rig in Ranger/Arrowhead/Twin Lakes Estimated D/C/E CapEx unchanged at $640 to $680 m
Slide 40: Updated 2019 Capital Investment Plan Summary
Updated 2019 Capital Investment Plan Summary (as of July 31, 2019) 2019E D/C/E CapEx Guidance of $640 to $680 million 2019E Wells Turned to Sales − Affirmed full year 2019 D/C/E capital expenditures guidance at Original Guidance(1) Updated Guidance(2) July 31, 2019 − Expect to complete and turn to
Slide 41: 2019 Oil and Natural Gas Production and Adjusted EBITDA Estimates
2019 Oil and Natural Gas Production and Adjusted EBITDA Estimates(1)(2) 2019E Oil Production – 20% Growth YoY Total Oil and Natural Gas Production Estimated oil production of 13.3 to 13.45 million barrels 2019E CapEx(3) (Midpoint): 18% 20% Natural Gas, Bcf D/C/E: $660 MM Oil, MBbl 40% 22,400 22,87
Slide 42: Delaware Basin Operated Well Completions in 2019 – Updated
Delaware Basin Operated Well Completions in 2019 – Updated(1) At July 31, 2019, Matador expects to complete 85 gross (69.7 net) operated wells in 2019, including four gross (3.8 net) vertical wells, seven gross (6.9 net) Eagle Ford wells and one gross (1.0 net) Austin Chalk well in 2019 Matador
Slide 43: South Texas Asset Area
South Texas Asset Area All wells in the nine-well program are on production (eight Eagle Ford and one Austin Chalk) − Combined drilling and completion costs for the nine-well program are significantly under budget with an estimated $7.5 million of savings from operational efficiencies − Seven of t
Slide 44: Reserves-Based Credit Agreement – Borrowing Base Increased in Q2 2019
Reserves-Based Credit Agreement – Borrowing Base Increased in Q2 2019 Strong, supportive bank group led by Royal Bank of Canada In October 2018, amended Credit Agreement increased facility size to $1.5 billion (from $500 million); maturity extended to October 2023 Borrowing base increased to $
Slide 45: San Mateo I Credit Facility Increased to $325 million in June 2019
San Mateo I Credit Facility Increased to $325 million in June 2019 Led by The Bank of Nova Scotia and supported by all banks in Matador’s reserves-based credit facility Covers San Mateo I only, not San Mateo II Facility initially sized at $250 million in December 2018 and increased to $325 mil
Slide 46: Hedging Profile – Remainder of 2019 and 2020
Hedging Profile – Remainder of 2019 and 2020 Remainder of 2019 and 2020 Hedges(1) Oil (WTI) Costless Collars: ~3.9 million Bbl hedged for remainder of 2019 at weighted average floor and ceiling prices of $50/Bbl and $71/Bbl, respectively; ~4.9 million Bbl hedged for 2020 at weighted average floor
Slide 47: Appendix
Ny ; { Matador the Appendix NYSE: MTDR
Slide 48: Wells Completed and Turned to Sales – Q2 2019
Wells Completed and Turned to Sales – Q2 2019 During the second quarter of 2019, the Delaware Basin accounted for 19 gross (15.2 net) wells completed and turned to sales, including 16 gross (15.1 net) operated and 3 gross (0.1 net) non-operated wells Includes three gross (2.4 net) wells above th
Slide 49: Matador’s Proved Reserves ~215 Million BOE at December 31, 2018
Matador’s Proved Reserves ~215 Million BOE at December 31, 2018(1) Reserves and Oil Production Doubled Over Last Two Years! Haynesville/CV Haynesville/CV Haynesville/CV 11.4 MMBOE, 8% 11.6 MMBOE, 5% 13.1 MMBOE, 12% Eagle Ford Eagle Ford 12.2 MMBOE, 6% Eagle Ford 12.4 MMBOE, 8% 13.3 MMBOE, 13% Delawa
Slide 50: Matador Screens Well Against Peers on Return Metrics
Matador Screens Well Against Peers on Return Metrics “E&P” Return on Average Capital Employed Cash Return on Cash Invested (CROCI)(2) (ROACE)(1) 2018 2018 Peer 1 31% Peer 3 29% Peer 2 28% Peer 5 17% Peer 3 28% MTDR 14% 14% MTDR 22% 23% Peer 10 14% Peer 4 22% Peer 6 12% Peer 5 17% Peer 11 10% Peer 6
Slide 51: Haynesville Asset Area – 2019 Non-Operated Drilling Program
Haynesville Asset Area – 2019 Non-Operated Drilling Program Haynesville / Cotton Valley 2019 Haynesville Non-Op Program ~24,600 gross / ~21,900 net acres − Matador expects to participate in 26 gross (1.7 net) Pace 24-13HC 1 & 2 Alt and non-operated Haynesville wells in 2019 J M Pearce 24-13HC 1 & 2
Slide 52: Taking Operations to the Next Level: MAXCOM
Taking Operations to the Next Level: MAXCOM MAXCOM − Matador team dedicated to real-time, 24/7 operations support − Interdisciplinary team approach MAXCOM Update − Over one year since MAXCOM operations began with twelve months in the new monitoring room − Team is fully operational − Drilling − G
Slide 53: 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 54: 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 55: 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 56: 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. Year Ended Dec
Slide 57: 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 58: Adjusted Net Income and Adjusted Earnings Per Diluted Common Share
Adjusted Net Income and Adjusted Earnings Per Diluted Common Share This presentation includes the non-GAAP financial measures of adjusted net income and adjusted earnings per diluted common share. These non-GAAP items are measured as net income attributable to Matador Resources Company shareholders,
Slide 59: 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 3
Slide 60: 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, 2018 2017
Slide 61: 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 the Co
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