Q3 2022 Matador Resources Co Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good morning, ladies and gentlemen, welcome to the third quarter 2022 Matador Resources Company earnings Conference call. My name is Justin and I'll be serving as the operator for today.
At this time all participants are in a listen only mode. We will facilitate a question and answer session at the end of the company's remarks.
As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year as discussed in the Companys earnings press release issued yesterday.
I would now like to turn the call over to Mr. Max Smith, Vice President of Investor Relations for Matador. Mr. Schmidt you may begin.
Thank you Justin.
Morning, everyone and thank you for joining us for Matadors third quarter 2022 earnings conference call.
Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador resources in measuring the company's financial performance reconciliations of such non-GAAP financial measures with the comparable measures calculated in accordance with GAAP are contained at the end of the company's earnings press release.
As a reminder, certain statements included in this mornings presentation, maybe forward looking and reflect the company's current expectations or forecasts of future events based on information that is now available.
Actual results and future events could differ materially from those anticipated in such statements.
Additionally, information concerning factors that could cause actual results to differ materially.
You said with the third quarter of 2022 earnings release under the Investor Relations tab on our website and with that I would now like to turn the call over to Mister Joe Forehand, our founder Chairman and CEO joke.
Mac.
As we begin this call.
Very excited about the way this year has developed.
We're looking forward to finishing it off during the fourth quarter.
And have full year results, but everything to this point.
Has.
Been working for us and as you can see through the year that we've made a real effort to improve the fix dividend and and to.
Do that.
And to increase production.
Reserves.
Increase the value.
And contribution of our midstream assets and we feel we've made improvement in all areas and I appreciate your interest and support.
Notably just kind of put a couple of.
Numbers.
In perspective.
We went public a little over 10 years ago.
And we have more cash on the balance sheet today.
Then list.
<unk> market value of Matador.
At that time, we also have more cash on the balance sheet, then first matador so for.
So the improvement has come from a lot of people pushing on the rock.
Work and support our board and helping us make decisions great decision, making among the staff.
Here in a lot of individual ways out there in the field.
And.
We think are for download is his policy.
Eh.
Continued to grow.
As we say profitable growth at a measured pace and with that Mac I'm open for questions scraped congested, we'll start with some questions.
And thank you as a reminder of questions you'll need to press star one one again that is star one one.
And ladies and gentlemen, due to time constraints, we ask that you. Please limit yourself to one question and one follow up again, we ask that you. Please limit yourself to one question and one follow up until all have had a chance to ask a question after which we would welcome additional questions from you.
And one moment for our first question.
And our first question comes from Scott handles from RBC capital markets. Your line is now open.
Things to morning, and congrats on the quarter.
My first question is is actually gonna be directly referring to the comment you made Joe about the the cash balance you have it as it is growing and you know it looks like you've got a pretty good trajectory of <unk>.
Since even building that through next year so like.
How do you think about the best ways to use that cash <unk>, where do you feel comfortable with that position and how you Wanna allocated going forward and you know.
I guess, notably if I'm just gonna add in a little till to this it looks like you did a little bit of acquisition activity in the quarter. If you had some color on that as well.
Alright. Thank you Scott is a good question.
And we're in the process of of.
Ah.
Thinking about the different alternatives that we have in the different options that we have with that kind of opportunity that that cash provides.
And as you know are we tend not to do targets, what we like to do is think of it in terms of opportunities.
And playing not only for the immediate opportunity for the long term opportunity and.
The.
You know the nice thing is is when you're in turbulent times. So like as you are now.
Having.
Cash will assure that she'll get through.
If prices fall it'll have opportunities because drilling costs and operating costs are lower.
Or acquisition opportunities.
And if they should.
Stabilize and be consistent then you'd have a generally some more acquisition opportunities or.
And then you look at your number of eight plus locations and we've got plenty of eight plus locations you know well <unk>.
Similar between 10 and 20 years.
And at.
At the same time, you don't we can do those but we want to do them at the most opportune time.
And so we would like to see consistent.
Oil and gas prices.
[noise] wall Hawes been mentioned and we May someone might have a question currently navy on a part of it and so if you know those are.
Things that might happen, then you look towards getting it fixed takeaways.
Firm takeaway for bison and other bill so it isn't that one.
One decision game prices are low prices are high.
And the money as a resource and you don't want to spend it all at once you want to keep some dry powder or the changes we have a business it changes very rapidly.
Huh.
High prices the low prices in recent years, and Ah supply chain problems and environmental problems. So.
Keeping that cash gives you insurance plus the options to take advantage of the.
Special opportunities.
Each pricing environment gives you and I know that May sound.
I guess it depends answer.
But it really is that way and we're not gonna grow for the sake, just think of growth. We've we want it to be proper and value added.
And we want to have a reputation for what we do the really value added in and I think that's been proven out in the most recent example, with the midstream.
That's been integrated and there's a core part of our business now.
And we think it helps us with the environment.
It's becoming a bigger and bigger profit center it helps us with.
Timing, if we tell the market that we're gonna be predictions of Israel's on such and such a day to deliver it helps us on recycling and.
And that's one example of what.
What we feel we were able to take advantage of.
There are more difficult time so.
Whatever the situation is we want to have plan a for high prices plan b for medium and.
Plans seat for low prices and the and the and the cash that we have in the bank helps us make those transitions.
Orderly way as well as to take advantage of it.
Opportunities that those different Ah price environments in other circumstances generates so I know I'm Anna.
I don't want it to be a it depends cause it didn't where we're planning for it.
Anyway, So we can turn and make an adjustment as needed as new technology comes out.
For example in the completions were.
Doing our completions differently than say, what we did a year or two ago that have helped mitigate.
The increase the operating cost it you have a lot of credit to our completions group are coming up with those innovations that have made us a more efficient producer. So Scott I know you asked me a simple question and I've told you how to be able to watch.
But.
That's kinda.
That's our culture here is all the groups are talking together and we have Ah.
You know, we don't have 50 different plans, but we have different plans for for different scenario. So that's.
We think it helps us move.
More quickly as the.
Operating environment changes.
Scott This is a really good one.
And a doctor frosting on the table from your house.
<unk>, we could do with it.
Free cash flow.
Yeah, We you know hey, Mad here and that is a geologist slightly put fast it [laughter], we always have ideas on what to do with excess cash, but you know I I think to kind of reiterate what what Joe's that is there's a lot of good options in front of Matador and I think these options are definitely all sustainable through.
A wide range of commodity prices, but you know I know, where where it just kind of adding color on on the topic that that you asked about but.
Matadors really I think across this year come into a a really good position of.
Developing new acreage, adding value through they're testing, the new zones, and and really optimizing our our operations to Toronto efficiently in this environment, but a lot of good stuff going on.
Scuff disability.
Yeah, I noticed the mood was having to add some horsepower to his department there because of all the different targets and zones, we have to look at it now.
He has to get more people because there's so many so much eight plus rock.
You know for the for the geologist to be able to look at all of it. So you know the.
It's really exciting time right now.
Well and and you ask the question I didn't fully answer about the acquisition. This past quarter. That's an example, it's another both on transaction in an area, where we're active in.
And have been drilling and so there's.
You know the risk is much less because we're in those properties and it was just an add on and we'd like to do more of those as the opportunities presented themselves and that's done a great job of building up the Geoscience group dishes. Billy is built up our operations group.
And.
And then what.
Why they work together has been real very seamless so.
Good job to.
All the staff.
Right now I appreciate all that color and hopefully we just have to worry about the plan aimed plan b and the and the higher the medium priced or commodity price environment.
But.
Joe You did actually did also make a point done something that was going to ask and you know obviously, it's become a little bit more prominent invisible in the last few days with Waha going negative yesterday I think some of that is just recall transitory because of some pipeline maintenance, but you're we're also seeing Permian gas growth as well.
You know one of the pipelines that has gone down for maintenance as G. C X, which would you off for among can can you give us a sense of how this impacting your operations and and you know what that means in terms of like <unk>.
Production do do you need the dwells need to be shut in I don't think a lot of people want a flare at this point, but can you give us a little color on on what that means specifically for Ya.
All right Scott off gave it a try and to learn or Greg or somebody can jump in to follow up but first it's a four day.
<unk> Ah so it's not going to be.
Especially material the second we had planned ahead for this.
Even during the summer that you knew there is likely to be some maintenance work and we worked around it so that some of our production will be reduced some of the price. We're gonna get during that four day period will be reduced but I still think.
We're confident we will still.
Taken the steps that we did.
On a weighted average basis will still be getting somewhere between two and $3 for the gas. So it's not.
Disabling, it's just a little more work on our marketing group and a little more work for <unk>.
And we don't have plans to flare, we're pretty proud that on Ah our emissions, we've gotten our emissions down to less than one half of 1% or in there or thereabouts. So we don't want to spoil that that record so Glenn what.
Yeah, Joey you nailed it this is Scott Glenn said and so.
I commend our marketing team you know years years back to get that firm on Gtx, which has helped us reduce our exposure to two waha pricing as you mentioned for the for the four days, we'll we'll see a bit of a lower price.
Just for those four days and the marketing team you know going into the shoulder months Ah did a good job of of of.
Selling gas at a at a fixed monthly price and so has has also helped in that regard and as to the future. We're always in contact with marketing for 2023, if you see that tightening in a market. There are ways similar to you you know getting selling gas on that that fixed price.
There are other ways to to help mitigate that waha differential.
I appreciate that color things.
And thank you.
And one moment for our next question.
And our next question comes from Neil Demon from two Securities. Your line is now open.
Good morning team now the great quarter, and Joe your wife's probably happy with that increase dividend, it's nice to see out there on the base dividend desktop.
My question is going to be on the off side. So you guys continue do fantastic work with you know when I was on the road. The guys talks about all of the ones that they're having success no you do not have a twenty-three plan yet but could you give ideas I mean will will focus continue to think to be around the six seven rigs and would it be.
Some of those same areas around the Rodney Robinson Rustler or do you have any ideas.
Which would give yet on an early early twenty-three.
Yeah.
We're gonna be working a lot of those same areas are working well for us.
Finding new zones, as we as Ned and Billy talked about Tom.
And his teams he's got six teams. They all have good ideas there'll be more of the same plus trying to work and some new Tom do you want to elaborate yeah I think.
That's right and Neal you know we're gonna have.
We've got eight new riding Robinson cause we've talked about expected to come online. Some time in the you know like Q1 early kind of Q2 part of part of next year.
Will be spread the ball around I think that as as Ned mentioned, they've got a lot of great ideas all around the basin and yeah, particularly in the northern part of the Delaware based on your seen.
Boston other other good operators out there you know.
Trying to all sorts of different new targets and so statewide will will be in the mix as well. So we got a lot of wood to chop and as you mentioned.
Optionality is something that we really put a big emphasis on here. So we are very excited for for the for the future, but afford it and that's in our plans.
Early next year.
Now I'll look forward to.
Oh, I'm, sorry, yeah yeah.
Yeah, Neil I'd, just say the other big factor that goes into it is just kind of look and what commodity price is and what the costs are.
But our best gas is there gonna be about like what they are down we don't expect radical.
Change at this point and it seems to be stabilizing.
So I hope that pertains, because we can make money at this.
[noise] dollar all in these calls while I'm going up we're finding ways to mitigate and our marketing group for example, taken that fixed prices during the summer work. So that when this situation came up on maintenance.
It.
We've been able to mitigate the impact.
And make it minimal Ah <unk>.
Compared to where where.
Where it was so.
I.
I think they are.
Outlook is still very policy like our chances.
Yes, Sir I would really like you all stay with the steady growth program versus others that have no growth. My my My last question, just maybe Joe from Mike where one of the guys. You got the upgrade I think in September on.
From Moody's and the agencies.
And closer certainly appears like you guys should be to me investment grade any you know if you want to comment on that I think you've certainly getting close to their you know getting look your your financial speak for themselves operation speak for themselves and I'm. Just wondering what you guys think about getting to her house soon maybe to investment grade.
Well.
If it was up to me of course with the we'd be there tomorrow [laughter] it helps but.
The agencies and client that's it that night and.
And now they've got the rationale.
But they put it in the answers on size.
And.
You know that if we were 200000 barrels a day, we'd be a better candidate.
Then there's 100000, even if our leverage ratio.
Was 0.2 as it is now or a 0.1 and theirs is at two point and so they pay more attention.
Same to than they do the actual strength of the balance sheet. So you know, it's a little arbitrary mm.
Yeah, they're the umpire in that situation it doesn't do much good.
Question too much they're gonna do.
Things on their own pace, but we were real pleased that Moody's who's the most conservative was the very first stabbed writers.
And.
And I think we'll get.
We think we're good candidates for further upgrades. This next year if.
If we keep doing what we're doing it yeah.
Yeah and you know this is this is Michael friends will EVP and Treasurer I don't Wanna put a pile on to what Joe said I mean, I think we're really very pleased to get the upgrade that we got I mean, the rating agencies do focus on size.
However, you know they really emphasized to us and in our discussions how how much the work that matters done improving Ah and really strengthening the balance sheets of mattered and in the cases that they made to their credit committees and also the track record they're mad at her as shown in the financial financial Prudence and.
And focus on continuing to drive value in those factors really really Wade well in Matadors corner. It was it was great to see that they consider those because we probably are a little bit small relative to our rating, but I think the track record really really shone through there.
Thanks, So thanks to them for the time.
And nice snail.
And one moment for our next question.
And our next question comes from sleep to move from Keybanc Capital. Your line is now open.
Hi, Good morning, Good morning, guys, which is Tim resident from K.
At the time.
So I wanted to follow up on your comments on San Mateo.
In the quarter. So record revenue there I know pronto was the driver of that.
You know, we look at the $400 million in cash on the balance sheet didn't know there's you know a lot of options for it but can you talk about how big the opportunity said is for midstream in the Delaware on M&A and really how how big your appetite is you know to kind of increase your presence.
Well again Tanisha great question.
Talk about virtually every day here, what we try to avoid as a target and.
Because when you get into targets.
You, sometimes while overpay.
On a target, but if you just look at the opportunity and be patient.
Opportunities will come along so we don't go into the year, Brian will has done a great job and.
Greg Krug, and and others maths faster, saying, we're we're going to be.
$300 million worth of midstream or something.
Ah we.
We'd just look for opportunities to say, where we're drilling wells. So that we can provide some of the anchor tenant aspects of it ensure the profitability of it as well as Ah to say where.
There isn't.
Ah.
Modern.
Oh I'd say recent.
Pipelines put in when we first came after the Permian.
The infrastructure was old and it was leaking and needed to be replaced a lot of it has already been replaced but we still look for areas where.
You know.
There aren't people and consider adding there as well as adding we're we're doing most of our girl at.
We say those opportunities are good but we also look at the the.
The drilling opportunities, we have or other Act act it's all.
It's all one big opportunity box and we made as a group and talk about them and we don't.
We're not trying to.
No one's an empire builder and that's what makes it work and everybody's looking to see what's best for Matador in the same way on our board is that there's.
And if you could be in this room as we prepare for the issue had city that everybody's here.
[noise] together as Billy likes to say better together and.
And will do whatever way is best for the shareholders Billy.
Yeah sure [noise].
There's a lot of our president [laughter] I Wanna make it clear how good resident operations and we do we have lots of opportunities and on the midstream. So there's there's.
Different things going on all the time and the different parts of the basement, where we're operating and things to look at and then like Joseph keeping that dropped out already.
We weigh that against all the other things were looking at so.
Just you don't Sodding time, and everybody's studying after you know so we keep winning the game but.
See a few more smiles now.
Yeah.
Okay I appreciate that the that color will stay tunes on that front. One more question related to cash down you know that $400 million is a big number on the balance sheet.
You've quadrupled the dividends you know in recent quarters, but to be Frank you know this is a high class problem with the share price doing what he's doing you yield is really not meaningful at this moment relative to a lot of peers.
So do you think at some point as the company matures, there's a yield.
More in line with the S and P 500, or you know how do you think about that dividend right now given it is sort of 10 minutes, you know relative to peers.
Well 10, you know one tiny thing that's different about us in a lot of companies is that our staff one salada chairs.
All big shareholders all of our V. PS you know I am our border all large shareholders. So we'd like dividends I mean make no mistake is that not many send back their checks.
They all seem that happy that cash them and we believe we think the dividends or the fairest way for a company to reward its shareholders.
And.
You know payback that cash.
Because everybody is treated the same base.
Based on the shares.
We can't think of a fair way to do that if you buy back it's just.
That's a small part of your shareholder group it.
You know really benefits directly from that so we live sure Ah we liked that we also wanted a day of it in.
That we.
We'll look in long term dental health.
Hopefully increase year to year and be one of those companies, which recognized as having a sustainable devotee and it goes up a little bit.
Every year and we're still failing.
Our way and we.
We hope that prices and cost and results will.
[noise] navalist to <unk>.
Comfortably increase the dividend next year, some time I don't want.
Anybody think I'm guaranteeing it but.
But look at things stay right now as they are with 80 dollar all costs and a liveable range all the areas working good I I'm hopeful that we could do that.
So.
And I look at other companies, and where where observers and if it works out that one of the methods that they're done that.
Is sustainable.
And.
And then in the public likes that.
Will will look at that we always reserves the right to get smarter, but we think.
At present that fits the evidence is what's what's the fairest they do.
It's better to be slow, but sure.
And.
That's the feeling of our shareholder group and if you look at the vote that we had at the annual meeting.
They clearly we're very happy with the way things were going and.
You know you're in a volatile business and so we want to be.
Again, it's better to be slow, but sure better it'd be a tortoise and a hare.
Some of these returned to shareholder batters and.
First Matador always pay the D V D S.
And we are glad to be at that inflection point or we could start paying it and then build it up now each year that we've been paying.
Paying it and we'd like to continue to do so for many years to come.
Okay, Yeah, that'll make sense I think the simple base dividend is gonna be the longterm winter. So I appreciate your comments on that thanks, everybody.
Face tamm good to hear from Ya.
And thank you.
And one moment for our next question.
And our next question comes from Zackham from J P. Morgan Your line is now open.
Hey, guys. Thanks for taking my question I guess, the first one on the quarter Y'all reported pretty minimal cash taxes, you're at three two in the first half you around 6% we have <unk>.
Expected that level of cash taxes to kind of continue through the year can you just give us some color on that three two number ones that just timing related maybe how do you expect cashback since the trend in fork you in into twenty-three.
Is that this is Rob Mac like Chief Accounting officer, So you're right. In Q3 current tack expense was was really close to zero and it was really for two reasons. The decrease in the strip price from June 30th to September 30th, but also some tax planning and and other strategies that our teams work really hard.
Basically reduced our expectations protects us for the year or two around $75 million, we expect Q for cash taxes. Therefore, it it'd be about $20 million or so but you know my team's working really hard we're working with.
The outside advisers, making sure that we're doing the right thing you know, making sure we get it right pay our fair share of taxes, and and that's really been our focus.
Got it and then any color on on how cats taxes contributed 23.
Well, we're looking at that it is very dependent upon just the amount of capex in the amount of income that we have so you know as we go into February will will continue to look at that but you know we definitely at this point are looking at you know somewhere in the neighborhood of under 10% of cash taxes for.
Next year as well.
It's Zachary it's a high class problem.
To start paying taxes, now, but I think our gas or.
It really worked hard to.
They make sure they get it they get it right and.
And that.
It's the same way on our audit is we try to make sure we do it right. So that if we're audited all the numbers will check out.
That's my instructions to them whatever you do make sure it's right because I don't Wanna be argued.
That we haven't we haven't done that and that applies we've been audited the number of times on state taxation and we've always had generally a clean bill of health.
Got it certainly a couple of class problem and then I guess just one follow up on Scott's question earlier on the acquisition were there any production volumes associated with that that acquisition.
Yeah. This is this is Tom all Sir we're we're always looking at you know bolt on both on purchases our teams do a great job working with with land in geology in accounting to to you know put that together.
There's probably a little bit I think Michael Michael May know the exact number but.
Most of these deals have a have a little bit of production associated with them, but not not a ton.
That's right this is Michael.
Yes, there there was a little bit, but we had factor that in when we gave our guidance in the in the last quarter, we were anticipating anticipating that transaction.
Got it thank you.
Good hands and thank you.
And one moment for our next question.
And our next question comes from Lille Mariani from M. K M Partners. Your line is now open.
Hey, guys wanted to follow up a little bit more on your exposure to Waha I know you do have some some firm on Gulf Coast Express, but when you look at kind of where the production is today on the gas side you guys offer is like a rough percentage do you guys feel like you're 70% exposed to.
Uh-huh any number you can kind of throw out there that might help us and then you also kind of alluded to the fact that you might be looking at some additional firm I know that some of these pipes I had done some open seasons and offered more firm. It's gonna come on the fourth quarter of twenty-three did you guys elect to take any more firm and maybe just in general just talk about you.
Strategy for mitigating we'd could be you know some sloppy maha prices and 23.
Yeah.
This is Glenn again, yeah, I mean, I think we you know just as I said before we're always evaluating and it certainly depends.
You know again to give you that answer but you know what what volumes are moving through same potatoes facility, what what what third party volumes and and then you know what.
What the amount of volumes that are being produced that out of the base and it it really just depends and so again, we have the 115 million on Gtx and then you know the the the remainder of of all those volumes has the potential to is exposed to wahhab, but we have.
The pricing structures that can be fixed and variable so.
Yes.
Yeah. So this is Greg Crook T V P of marketing.
Ah Ah.
As far as what Glenda said, that's that is correct as far as the the G. C. H peace. We also has seasonality transport southern Cal Ah to Socal. So.
It's we do have exposure to to the wall Hall, but there are ways of mitigating mad and that's kind of what we have already did like last summer for instance, as far as.
Selling our gas on a fixed basis based on the Houston ship channel.
And that allows the that allows for us to kind of pinpoint timing, a little better than going out and actually taking on.
A transport deal that you may be committed to for 15 20 years. So.
Those are all things that that we have to look at each each time that that we.
That one of those deals come up as far as the transport opportunities.
Okay. So just to be clear on that it sounds like you guys did not allowed to take any new firm on some of the parts that are coming on the fourth floor to 23.
No we did not.
Okay.
Oh alright.
Just shifting gears, a little bit and you folks can talk with a bit more about your your bond buyback program.
Program here recently, obviously, you've bought back quite a bit of those bonds. It looks like you did about 7 million Bucks. So far I mean October can you just speak to what your your appetite is to buy more of those and you think there's bonds available to take time another meaningful dent.
In that you know get number at this point you think it's gonna be just kind of little tiny pieces around the edges sort of going forward.
Now lay out will be opportunistic it like we were this year is that you know, we we set a goal of.
You know that what we might be willing to do we have to disclose that goal is ah.
You know as we were buying.
Buying in the open market and we.
Sweet.
Rates that and.
And we're looking at certain.
You know entering they all open market again and on the buying opportunities where.
In all probability with a high probability will keep some dead on the books of the rating agencies now that we're handling the dead and in a professional manner and but.
If the bond prices fall much below par.
We're likely to to buy some because that has the advantage is when we bomb we increase our cashflow because we don't we say the interest expense and we save our money on the ultimate redemption.
The bonds and.
And allows us to continue to have bond partners, they get to nellis and develop confidence in us and we found that we.
Ah Santa bonds out people, who bought bonds came to buy the stock and people around the stock came to buy the bonds Ah because that mutual trust and confidence. So we think will keep our.
Are telling the water and to continue to have some bonds on the other hand.
We.
You know under the appropriate conditions wavelet.
Redeem more bonds now.
And.
And very pleased with white things work, we provided liquidity to Sir.
Out of our bondholders, who during the year Navy did and I think that was just a win win.
Situation and well private continued to build relation with our bondholders as well as their shareholders. So whatever we can do in that regard.
We want to keep up the good feelings, we think we built up already.
Okay. I appreciate that response and I guess, just one one last one here for me what is matadors kind of appetite to look at you know slightly larger.
Deals is there anything out there that's kind of in the several hundreds of millions just noticed recently allowed to deals you guys done had been you know really small so just curious on their availability of anything a little bit bigger on the packages out there and D. As an appetite for that do you think you can kind of continue to put up you know 50, 60 70 million kind of small deals.
You know every other corner or something.
Well lay out we've done big deals Ah you know proportionate to our size for example, the B L. M deal, we spent about $400 million a bomb those be a land leases for which the market trade this pretty roughly but now that when I leave girls.
54 wells on the state line and had the results that we have nobody's, saying, we didn't do right.
But when we.
Fifth at $400 million that was a very big percentage of our then market value. So.
We're not restricted to just buy and safety or.
100 million dollar deals Ah, we find those have the least risk if they're in our operational areas. It's hard to find deals that have a concentration like that and.
You know that usually.
Usually a bigger time, they or their cell and I put in it's not all choice acreage. So we we liked the selectivity goin'.
Goin' for these tracks that are joining our our operations are in the center of it and we cause we have reduced risk and can lately incorporate them or trades are are the like but we.
And we'd been on some bigger deals Ah, but again, we try to be cautious and I. Appreciate the the inflection point that we have of staying out of debt.
You know if you go into debt when prices are high up here at 80 or 90 in this volatile you've taken on a lot of risk were growing double digit growth.
Right now without taking those risks and.
You know so we're great in a lot of value, you're adding value demand a door without the risk. If there comes a time that we make a larger acquisition. There's risk factors are no more than what we currently have.
<unk>.
Go for it, but it's a risk and opportunity, but we wanted to fit into our drilling program. So we don't Wanna buy some in Wyoming.
Even if it's at a good price it needs to be in the operational Larry we need to be able to integrate it we need to be able to.
Incorporated into our drilling plans and program. So the size of the deal doesn't really <unk>.
Bother us.
Unless we.
Gotta go into debt and.
And we'll do that just as we did in the Bill M deal if the price is big enough.
But don't Wanna take a lot of chances for a very average.
Ah growth, we you know we want to emphasize the quality.
Of the deal has more effect.
On our willingness to.
Go after bigger deals you weren't the overall quality to be.
Very high.
It's easier.
Compressed air quality in a smaller deal, but you know we play a strike game here and we'll go for a bigger deal if the quality is there and it fits our.
Our our own properties.
Well and with our operating plants and so if anybody's got a really good deal out there we wished they'd come see us.
Alright that was a very thorough answer I really appreciate that thank you.
Well thanks lay on.
You know again I didn't mean to tell you how to build watch but.
We give thought to that every day you know how do we grow.
You know.
Most value creating way.
And thank you.
And one moment for our next question.
And our next question comes from John Freeman from Raymond James Your line is now open.
Thanks, Good morning.
Hey, John Jones, Okay.
I I realize y'all are still working through the the 2023 plan just sort of given tightness in the Royal service side of things the supply chain and she said you know everybody dealing with globally, especially with steel and just it seems like you'd probably have to lock in a lot of damage or secure a lot of those.
Services and if you have any swelling of your services and equipment sooner than that maybe in years past can you just give some sense of kind of how you. All go about that do you have a certain base level of activity with Sony sort of locked in in terms of all the necessary.
Appointment et cetera, just maybe how y'all go about that process, and where you where you stand today versus anywhere you would've stood in in years past I'm going through that process.
[noise], Yeah, Hi, John This is Chris Calvert your Ah Sweet few of operations.
You know it really starts with with planning and it really kind of liking appointment we have a seven year cause we have and then working with our vendors that we've had for <unk>.
40 years since since Matador in one form or the other has been in business you know and on the drilling side you know.
Happy with the southern rigs that we have both performance and and staffing on the drilling side with the seven or eight so we do have.
Which results to steal with regards to steal it. It's another one of those 40 relationships, we cultivate and built upon in our history and it and it comes down to transparency with that service provider and the trust that we have with them and that they have with us the that we're gonna say, what we're gonna do and Saddam as well and from a logistics standpoint.
We have had no operational downtime so to speak.
Due to any supply chain constraint, whether it's San Steeler fuel you know on the same side, it's working with service providers, such as Universal Halliburton, which we've been happy with making sure that we have seen it on location and as far as securing these services into the fourth quarter of this year into 2023.
On on the casing side, you know we have casein with Matadors name on it on the same site, it's working with those service providers and giving them, giving them line of sight into our activity in into our plan with our seven rigs in the amount of Frank fleets that that will be.
And so we're confident once again, we're confident in our position operationally to execute on the plan that we have on the we've set forward and into 2000 twenty-three. We're confident while we have you know obviously, regardless of where price goes we're going to continue to operate at a high level and and and and kind of push forward. The plan that we have so forward.
Alright, Thanks, Chris I appreciate that and then just my follow up question, obviously in years past when y'all entering your y'all got typically been more like 35 40 per cent has in chaos hedging policy has been kind of protect the balance sheet, but just given the yard.
Roughly zero leverage almost at this point should we just assume that kind of going forward that the the hedging strategy I just expect it to be a lot less.
Hedges and you would've been in years past going forward, just give them the strength of the balance sheet and then how much is maybe the backwardated curve also plan to that.
John that's a good question.
Most I've always been as a philosophy, our philosophy has been grounded in the notion that you had when you need to protect yourself on your debt.
You don't get crosswise with.
Price is really coming down and having a lot of that so when you have that.
You need a certain amount of hedge protection.
So you're not at risk of your debt tripping, you up or the banks, calling in things. So we've always tried to maintain that and we have we never been in a situation.
Each time on our desk with our Bank group, we have had a great bank grow and they've always renewed our credit generally without any change and have never cut us back.
And I think al hedging played one part isn't that now we don't have that we don't have to do it that region.
Still opportunities, where you want a hedge which in effect as what Greg did last summer.
So we were selling on a fixed price and not subject to problems at Waha I thought there was a very clever.
Stratagem that.
Greg and Anton and his group had so.
There are sometimes reasons and we will too.
Different facets of our business will hedged in one way or another there's lots of different ways to do it other than just.
Buying afford <unk>.
Contract.
But it is an added cost.
And if you don't need it.
You shouldn't do it but you do it to protect yourself either that you <unk>.
Don't go Navy Vaughn prices, we did.
Yeah that is why we did it on that this summer and the and the fixed price scenario. So it's a useful tool Ah will use it we won't Ah.
You know use it.
Just as a reflex or as a matter of course, but it needs to be tied to in support of our main activity Michael huge kind of in charge to you and Greg are in charge of the area, where did I leave out Yeah. I think you you you hit how we think about it really well Joe I mean, obviously.
Do you think about it it's just like we do other things, we Wanna be would it be opportunistic and we want to protect the balance sheets, and obviously backwardation makes it a little bit more difficult to urge to your to your question, John but we want to we want to make sure that we're doing the right thing for Ah for Mad at her but it really is a good a good team effort.
A committee that they get together and we discuss the hedges that are available and and I think we've come to good decisions will tell them who's on the committee a few of the makeup of the community because it.
It's a cross section of the whole company, Yeah, Obviously, you know myself and Greg and Joe participate Billy Goodwin, President and Craig Adams E. P. P E.
AVP and and ER chief of staff.
Obviously, Ryan Ryan Bellinger.
Tom Elsner, and Glen and Chris I'll participate and of course covered all participate as well. So we've got a good cross section and you know, we really try to be strategic about it.
Thanks, guys I appreciate the answers.
Well I appreciate you John tiny come say, yes.
And thank you and I am showing no further questions.
To turn the call back over to Joe for closing remarks.
Thank you Ah.
What did you want to thank you all again for your time listening in your note and won it once again they extend the invitation to come see us and we'll have.
Breakfast or lunch or dinner and have more substantive discussion.
Discussions on what are we all want to talk about and we wanted to develop the same kind of relationships with you that we have with with our various vendors and supply chain and.
We.
You know Barbara aim is to continue to be fairly transparent and what we're doing <unk>.
And.
So we won't invite all the shareholders and not just analysts to come in and see us sometime.
And.
Ah just appreciate these 10 years that [laughter] Ah Ah Ah.
I hope that we've gotten better on these calls I'm not sure I'm more sustained than I.
Ever was but we.
The real important point is this is a team effort.
Everybody's can trips in and make that train run on time and this is this is what we think it takes and to meet new challenges like the S G and.
We appreciate your questions. We thank you I'll make is better and sharper that each quarter that we got to meet with you. All so please now we appreciate y'all and what to.
But you're you're always welcome here.
And thanks to all the staff for pitch.
Pitching in in getting this ready here and for their hard work and planning and that's a big part.
We thank them, while the years worked out we weren't reacting at the last minute, but the planning effort was done months ahead of time.
And you feel good when it when it.
When circumstances comes up in your plan for it and you were ready and I think the gas.
At a wall Hall is an example of that it's it's it's effect on us is.
Ah minimal we're kind of prepared for it and I think they handled it in a very professional way and.
And.
And hope that you all get a sense that.
Planning on that and on the taxes and other areas.
Around there were experiencing at this time that are great thought about it and supply chain.
Everything else I started on that long time ago. So I gave you.
Give a lot of credit to our board and staff.
For.
For being prepared.
Thanks, everybody.
Ladies and gentlemen, thank you for participants for your participation today. This concludes today's program.
The conference will begin to T to raise your hand doing <unk> you can dial 911.
Mmm Mmm Mmm Mmm.
[music].
Mmm.
Mmm.
Mmm.
Yeah.
[noise].
Mmm.
[music].
Mmm.
Mmm.
Mmm.
[music].
Mmm.
[noise].
Yeah.
Mmm.
Mhm.
[music].
Mmm.
[music].
The conference will begin to T to raise your hand doing <unk> you can dial 911.
Mmm.
Mmm.
Mmm.
[music].
Mhm.
Mmm.
Mmm.
[music] [music].
Mhm.
[noise].