Q4 2022 Matador Resources Co Earnings Call
Thank you Gerald and good morning, everyone and thank you for joining us for Matadors fourth quarter and full year 2022 earnings conference call.
Some of the presenters today will be referencing certain non-GAAP financial measures regularly used by Matador resources in measuring the Companys financial performance reconciliations of such non-GAAP financial measures with the comparable financial 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 companys 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.
Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release.
Most recent annual report on Form 10-K.
In addition to our earnings press release issued yesterday I would like to take a moment to remind everyone that you can find a slide presentation in connection with the fourth quarter and full year 2022 earnings release under the Investor Relations tab on our corporate website with that I would now like to turn the call over to Mr. Joe Foran, our chairman and CEO Joe. Thank you.
Mac.
Pleasure to be here again and report to you our progress at Matador and I'd like to begin.
With shell.
Celebrating what happened in the fourth quarter of 2022 first and then we'll get to that look for 2023 and 2024.
But beginning with the fourth quarter is we had over 100000 boe's per day.
And we had records across performance records across our whole.
Uh huh.
Operating outlook, despite the bad weather or other complications, but 100000 Boe's per day is a step forward and puts us at a different inflection point.
We had notably free cash flow of $1 2 billion.
And.
$249 million just in the fourth quarter.
Adjusted EBITDA for the year was $2 1 billion.
And it was $460 million in the fourth quarter. This is important because when we went public we weren't even $460 million. So you think about.
We werent, even $460 million in value and we had more than that earned in one quarter alone now when I speak of quarters.
We look at quarters here, but we prefer to look a little longer term.
Six months to a year in this instance, much of what we did in the fourth quarter was to help set us up for the.
The end of 2023.
And all of 2024, so thats coming together very well.
Thank.
It's important we think long term around here to look at more look at the quarter as much as you want but we asked lift longer too at one year.
Because some of the things that we're deferring on now sets us up for 2024.
As an example.
We've got.
85 by the end of the year, we will have 85 wells.
Wells drilled in the Rodney Robinson, and Boris and Bonnie.
Properties.
Yes.
We have right now that are flowing back.
Have.
Eight more.
Next year this year and then four at the end of the year is that right Tom Yes.
Yes, Joe Thats approximately correct.
Alright, so now remember we bought that.
Rodney Robinson Boris leases.
Over four years ago, and they are still contributing and if you add them all up that's.
89 wells and we still have more to go there so.
This.
Sure.
What's happened here at this rate and the analysts' reports concerned about the advanced deal is it really is very similar and comparable to what happened at BLM. If you remember when we bought the BLM tracks our stock was hammered.
As it was this morning and look at all that has turned out in the analyst a lot of the analysts route.
That was bad daily pay too much but.
They just failed to look at the quality of the rock that was in the BLM and what we can do with it because that was the transformation. We went from 19 drill at 98% of our wells is one mile laterals that go into 98% of our wells being two mile laterals or more.
And which has been a great improvement that set us up to do.
This advanced deal which is.
Four times, particularly the value of the.
The BLM acreage so.
I think that a little adjustment in absorbing that.
Is to be expected, but we're.
Yes.
We're very excited here if you were to go around and meet with all of the staff you had say we are.
Really excited about what it all day.
And the program and that we included in our slides a map showing how it fits in with our acreage and it's adjacent.
And this is some of the best rock in the whole basin.
And we're making great wells on what we're drilling we're going to have this and then when we spend the extra capex to connect it to our pipeline systems prompt our five point youre going to say that much more strategic value coming out of these properties.
And.
Uh huh.
That.
This sets us up for 2020.
2024.
In 2022, just to remind you we drilled 64 and a half.
Net oils.
In the first quarter.
2024.
At the end of the year, we'll be turning on 49 net wells. So we have a practice for us.
Again, the Kinect Wellesley, if possible, we try to set them up for the first quarter of.
The year, so we get a full year's benefit so think about that.
The proportion of that we're going from $64 five net wells in a given year to 49 net wells of similar quality.
And interest.
Uh huh.
In the first quarter of 2024.
Analysts noted.
That we werent getting things set up for 2024 and I commend you for.
Noting that in the last tie in.
Talking about.
They are saying the same question.
On the midstream at 2023 that we have heavier capex and part of that is integrating the advanced properties into our system and if you go to the next slide which shows where our pipelines are.
We intend to connect up the pipelines. So you have that system can go all across the best areas of the Permian. So you add that additional capex to connect all of the systems and to build out.
<unk> two <unk>.
Other pipelines.
To advance and as a third party customers that we're signing up as we extend these pipelines the capex. The additional capex, we believe will be returned several times.
Over.
Finally.
I want just to remind everybody we're kind of signaled to you.
We're putting our money where our mouth this lead to increase the dividend, 50% to 15 cents a share per quarter.
<unk>.
The largest share individual shareholder I believe.
And I liked dividends and.
Other officers here are large shareholders have much of their net worth and nightlife, David adds to and our staff.
We implemented.
Buying program for them and we've got over 90% participation.
We like dividends, we want to keep increasing dividends over time.
As our financial situation continues to improve because we believe it's a ferrous way.
Reward long term shareholders.
And.
So now it's about 1% a little over 1%.
Value and I think it's a great buying opportunity.
You can clearly see the vision ahead.
2020, this year is going to be a very strong here, but 2024 is going to be even better as everything gets setup so with that.
Let me turn it over to you all for questions.
Okay.
Okay.
Thank you.
At this time, we will conduct a question and answer session.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
To withdraw your question you May also press Star one one again and this will withdraw your question. Please.
Please standby, while we compile our list.
And to note, ladies and gentlemen, due to time constraints. We please ask that you limit yourself to one question and one follow up again, we ask that you. Please limit yourself to one question and a follow up.
Until all have had a chance to ask a question after which we would welcome additional questions from.
Our first question is from Scott Hanold of RBC capital markets.
Brian Your line is now open.
Yes, Hello can you hear me I Ken. Please proceed.
Yeah, Thanks, Hey, Joe I appreciate some of the commentaries upfront.
I have is you talked about setting up for 2024 and it looks like you guys are going to have I think it's 62 drilled and uncompleted wells at the back half of this year, which I believe is a little bit in excess of what you would normally carry can you give us a sense of somewhat how much of a tailwind does that provide you into 2000.
<unk> 24.
Hey, Scott This is Tom yes, just to pay a little color on that thus.
That's 49 net wells that are going to be and progress at the end of the year.
Thats almost double the number of net wells that we had at the same period last year. So it's quite a big influence on the calendar year going going forward.
We're very excited about these wells some of which are the the wealth at advantest drilling currently.
Southern Ranger Northern Antelope bridge, so there should be very high oil cut and very very low water cuts. So we just can't wait to get these online.
Great.
<unk> that should help some of the capital efficiency I guess next year right.
Because I would assume you work that down to normal levels that is that a fair way to look at it.
Yes, Sir yes, Sir.
Okay.
Okay. This is Mike.
Follow up question, it's on the midstream the other point that you touched base with Joe and that there's some capital spend to connect all of those pieces can you give us a little bit of color on.
What the plan is to try to specifically accomplish with with that capital in.
Is it possible to connect like San Mateo to Pronto, I know one's in a JV and ones, obviously fully owned but is there a way to integrate those two.
Together and the benefits of doing that.
Hey, Scott this is Bryan.
They serve as the CFO and also the president midstream here, it's good to hear from you. Thanks for the question.
Yes. So look we're really excited about the opportunities at pronto and connecting those systems and to your question. Yes, We do plan to connect the San Mateo system and the processes. So you're right. The one of the JV and one is wholly owned but we do plan to connect those two systems and also on the process side, we plan to go down and get the wells that are in there.
Vance area and also some other wells for Matador that are in Lee County, and so there is there's good opportunities for US there both for Matador and for third party and so we're really excited about the chance we have to be able to do that this year.
And to spend that capital and we've made good investments in the past I think as we build our midstream business I think it's always been a good investment for us and we've had lots of opportunities with third parties and repeat customers and we expect that same thing on the printer side just as we have on the San Mateo side as we build out those businesses together. So we're looking forward to that would be a great opportunity for us.
Yeah.
Thank you we are now setting our question from Neal Dingmann of truth.
Your line is now open.
Good morning, all thanks for the time, maybe just a little follow up on Scott's on on that future production, specifically certainly not expected in 'twenty four guide, but I'm just hoping maybe you can give a little bit more color on your view of either this year's exit rate or maybe asked another way I mean, it definitely seems like you could have some really strong even maybe call it stronger than normal.
Production growth through the end of the year into 24 I'm. Just wondering if you can give any sort of sense of that versus.
Versus other years.
Well.
The first thing I'd say is we're at a point.
Point in time, and especially this year.
I'd be wary of lurking there Sai just on a quarter basis that you got to look a little longer.
Rather than limited to an arbitrary deadline of this quarter or this year, but.
Either we'll we'll play it.
As the operations decay.
Xactly, how we're going to do it and so we're not trying to have a target for the fourth quarter of this year or the first quarter of next year, but whatever is operationally.
Make sense.
Tom you want to take that question again.
To add a little bit of color.
In our in our slide deck, we have a slide there.
It kind of shows our production growth by quarter. It nets to Joe mentioned, we don't want emphasize every quarterly as opposed to the long term kind of yearly rates, but you can see there in the fourth quarter, we get to about 143000 Boe per day.
Yes, no that makes sense, okay like definitely like the ramp there and then my second question is just on Fracs as some of the Frac shut ins you you all spoke about it in the press release, specifically I'm. Just wondering is is around that Joe you mentioned about the Rodney Robinson been around so long. So is that the reason or should we think.
About that area has been the primary.
Sort of a typical area for shut ins or is this really just a typical part of of overall operations going forward as you continue to have your development plan.
Yes Nate.
One thing I want to make a point on the production side.
It's affected.
A lot when you have these facilities in multiple wells at the offset operator is undertaking fracking operations too because you got to shut in your wells and sometimes that has bigger impact in weather and you don't control. It either you get a call, saying, we're going to Frac and then you've got to.
Make those adjustments.
Uh huh.
So.
That may delay or you may get a call and you accelerate something for that reason. So that's one of the other adjustment that I wanted to note that we've had to work around and I think our staff has done a good job now the second part of your question do you mind repeating it.
To me because I.
I was sitting here in the first question because you were saying that second question.
Okay.
Nail or are you still there.
Okay.
Gerald did Neil drop off.
Unfortunately, I think he did.
Would you like me to proceed to the next question.
Yes.
I would just say something.
To elaborate on that Glenn Stetson EVP of production just as Joe mentioned in this case, we had 19 existing Rodney Wells, where the addition of the eight Rodney wells required us to shut in 17.
Existing producers.
To be able to conduct a hydraulic fracturing operations.
On the new wells and so it is just kind of a nature of this key development as we come in in and fully develop these assets that we go in and shut in the existing producers.
To protect them and so.
Similarly at state line.
When we're going to.
Complete these eight new wells in the state line.
There's a similar operation and so we do forecast that and account for it.
And so really then it just comes down to the timing of it and so we shut in we started.
Hydraulic fracturing operations on the eight new Rodney wells are.
Right at the beginning of the year. So we shut all those wells in and and as Tom mentioned, our Joe add debt.
Beginning flowback operations on those eight new wells and so that all the existing producers have come along with it. So it really is a timing thing.
And.
The fact that these wells are so so productive and have high working interest and high NRI. So it does have an impact but really just a timing thing. The other thing is to note that when you do this it doesn't impair eight of the proved reserves of any individual wells when you shut them in.
Or any effect on the future production and so it's becoming more of a <unk>.
Part of the operation and any.
Long long term effects.
Thank you. Our next question comes from Leo Mariani of Roth. Your line is now open.
Hi, I wanted to dive a little bit more into the production guidance here for 2023, I understand that a lot of what you guys are doing is setting up for 2024 and it sounds like you'd have some high growth to start the year next year, but if I just kind of look at some of the high level math here it looks.
You added around 25000 Boe per day from the advanced deal I guess, if I assume that closes sometime early in the second quarter of <unk> 23 per your guidance and kind of back out.
<unk> volumes in 'twenty, three and just kind of looking what that leaves me. It looks to me like your base production in 'twenty three is kind of flattish with 22 per your guidance. Despite having kind of a couple of more turn in lines on the base property. So I just wanted to kind of understand that a little bit.
If I look at last year, you guys added 70 net wells you grew production, 20% and now looks like outside of the advanced deal Youre, adding a few more than 70 wells this year, but it looks like the the base production is closer to flattish if I back out advance. So can you just help me kind of understand that a little bit I guess I would've thought it would've been.
Little better.
Well I can understand that because youre not taking into account that when we're doing the advanced deal. We're shifting some of our staff resources and rigs and other ways that we would have production if we werent doing the advanced deal it wouldn't be flattish you would have.
<unk>.
<unk>.
Our staff base fully operated on.
Drilling some of our inventory, which the quality of the rock and our inventory is outstanding and we got over a decade worth of inventory. So when we've been on the road, we've got an inventory questions.
We have plenty, we could we would be addressing that instead of advance.
And connecting update.
Yeah.
The pipeline our midstream system. So we rate again lapping its important to look the quality of rock that we're obtaining and if we don't obtain it now we'll never have a chance to add on adjacent to our acreage that kind of quality rock. So.
It would be like selling.
Tell him that.
Football coach Hey, Youre running back only gained.
<unk> gain.
And each of those five touchdown passes.
At the passes Werent working you what do you use the running game more and we were in that situation. Unfortunately, we really got advanced so we have a choice do in advance or some of our own properties or properties or H B P.
We're going to work and the advance, particularly.
Particularly where they have ducks.
Because that will accelerate production coming off of that and so looking at our asset base and our options. It made sense to focus more on advance and.
Bringing in less of our inventory, but if we didnt have advance you had say growth much better than the 3% that you're you're talking about and.
But you take out a couple of rigs she puts your focus on the new properties and taken advantage of that opportunity to connect up your pipeline, we think thats a better program.
Okay I appreciate that color and then just around the midstream obviously your midstream Capex is up a fair bit this year and 23, you guys kind of explained what youre doing there. So that was helpful. But just as we look into say next year do.
Do you expect to have a.
Midstream and expense still kind of be elevated on the capital or do you think kind of comes down a bit is a lot of this is more I'll just call. It near term kind of one time spending on the midstream.
Hey, Leo this is Brian really again, an unprecedented stream here and thanks for the question I think that.
We haven't said a lot about 2024 and relates to capital expenditures. There. So I don't know the word prepared to go into a lot of detail about what that would look like.
For 2023, but we will want to take advantage in 2024, if there are opportunities.
And so you know as we go forward throughout the year, if Theres third party opportunities.
James with Matador that we'd wanted to continue to take advantage of those and so we will evaluate those as the year progresses and as we get closer to 2024.
Yes, I would say it's good answer Brian is we are very opportunistic driven that we didn't know we were going to be buying pronto, but it was offered to us.
In April I believe in May.
Dan.
And of course, we did it it was too good of a deal to turn down.
And it just fit in very well with the other assets and so as we go into.
These next years, whether it's an acquisition of all properties or midstream or.
Our federal sale.
I am from the Bureau of land measure oriented to try to take advantage of it and that's why we built up our financial statement to be able to take advantage of those opportunities.
So we tried not to do a five year plan and stick to it originally.
But go where the opportunity lies.
Okay.
Thank you. Our next question comes from Gabe Daoud of Cowen. Your line is now open.
Okay.
Yes.
And the payout of Cowen Your line is now open.
Sorry about that hey, guys. Thanks for the prepared remarks.
Guys I guess I was just curious with the 49.
Well, it's exiting the year.
You kind of beat expectations on cycle times.
Likelihood that some of these wells could could even come on or did you pull forward by the end of this year.
Hey, Dave This is Tom so Jos to Joe's point about trying to keep our options open.
We do expect these wells to be kind of kind of into 2024, but.
If the drilling guys go faster in the completions guys go faster I think there's always a chance that they could.
I called them forward.
Bring them online a little bit sooner, but it's just too early to tell at this point in the year.
Got it got it okay. Thanks for that.
And then maybe just a question on <unk> it looks like <unk> kind of during the year low and then it kind of increases on the back of advance could you maybe just talk a little bit about what's driving the increase on the low side as a result of advanced and is there the potential for that to be worked lower overtime.
Yes, Hi, Gabe this is Glenn Stetson EVP of production and we did highlight a little bit of this in the slide deck, but ultimately.
The increase that we've seen is primarily.
That we're forecasting is primarily due to.
<unk> drilling a number of wells in Lea County.
Specifically.
Attributed to.
To the advanced acquisition as well so.
Part of that.
As a function of the fact that San Mateo isn't.
Servicing those properties.
But.
That is another reason why we're we're excited about pronto coming and hooking up to the advanced properties and a lot of the properties in our Ranger asset area and so.
We do think that as we go forward.
But those are.
That's certainly a metric that we can improve upon.
With the expanse, our pronto and.
Folding in the advanced properties into into Matador.
Thank you. Our next question comes from John Freeman of Raymond James John .
John Your line is now open.
Thank you I just wanted to follow up on <unk> question on the.
Midstream Capex and obviously understand that 24 is a little ways off but I think just to sort of maybe help us.
We can kind of.
Yes.
<unk> caught by surprise, maybe when we're trying to set our model for 2020 for our midstream just if there are certain things you feel like are still going to need to be done versus one off projects that maybe you all may or may not pursue.
For various reasons, just trying to get a ballpark idea.
The midstream spend is it a number that is meaningfully lower next year and it's somewhere in the 22.
Or just I think just anything we can kind of help us kind of frame.
And our model just where we sit today when you all look at it again I realize it 24 is a ways off but it would certainly kind of help us have a better idea.
Well, John this is Joe and.
And I'd say I'd like to help you out.
I'll give Brian the opportunity to comment a little bit.
But again, it's just hard to predict <unk> third party business that we will get during that time, which will build out to them.
It's it's also.
Probably highly likely that will connect app.
Our three system. So that Arizona is you can say on that map that much distance between connect points between San Mateo and pronto.
And pronto in the advanced system. So.
That's more likely.
To be done.
Can't say what would stop that.
As far as third party, that's hard to know.
Certainly the easiest decided with connective there.
Right along our route.
Yes.
Again, it depends on the terms of the terms or as such we would build a long a long way but.
That doesn't happen very often.
<unk>.
Respect, if youll give us another quarter or so we.
We will have <unk>.
More definition for Ya.
Six six months or.
And again I invite all of you analysts to come here to Dallas and meet with US one time or another and we'll try to.
Everybody here and you can have unlimited time to ask your questions and.
Nature, but it's a fair question you've asked and.
Aye.
Over in Lea County, there is a number of options that we would not do that it's just hard to I don't want to give you a number you have to understand that there may be others, but how.
Oldest.
Sure.
That number it wouldn't understand that it's.
Plans are still in the formation stage.
Hello, Brian I appreciate how Canada, Japan, yes.
And John This is Bryan really and I'll just add on a little bit that just as a reminder.
San Mateo was $51 49, so when we have capital projects at San Mateo, which we have a number of great ones.
<unk> building out our water system and some other opportunities for third parties, we only paid 51% of those capital expenditures. However over on pronto, its 100% owners and so we pay a 100% of those capital expenditures and so that is something that we're thinking through kind of into the future and otherwise that as we expand into Lea.
Any of those those capital expenditures on the midstream side are 100% Matadors and up 51% like they are in San Mateo.
I appreciate it guys and then just a follow up question.
Thank you man.
The 10% kind of cost inflation versus <unk>.
22 levels.
Obviously, just given the kind of the pullback we've had in commodity prices rig count Frac Frac counts down from kind of a November levels.
Starting to hear a lot more about service cost inflation, maybe losing some momentum and just trying to get a sense of maybe.
As you all stand right now kind of look at the rigs you got the Frac crews are running sort of the opportunity. When these things are kind of getting re priced kind of I guess, how much maybe conservatism is built in.
That number just any any additional details on kind of leading edge.
Pricing would be helpful.
Yes, Hi, John This is Chris Calvert.
<unk> COO I think.
To speak to the 10% to 20% inflation, we do price things in a little bit conservatively, we would rather come to you guys and say that we beat these numbers versus versus a miss and so while we think that might be a little conservative towards the market really has recently pulled back too.
We still think that's a fairly good estimate for US now to answer. Your question. We are happy with our rig fleets that we have with us our frac crews that we have with US. It does feel like maybe there is a little bit of softening in the market you've had maybe some slowdowns in other basins, but really that brings competition to the Permian we are in the best rock.
In the best parts of the Permian Basin and so.
We do see that inflation there are some upward pressures on certain components of our operations, but but youre right. There has been a little bit of slowdown in so.
Like Brian said, we will we will speak more to this as the year progresses, but one thing that I do always like to mention simulcast <unk> remote Simon.
Drilling wells faster. This is the fifth anniversary of our of our Max Com room being in service none of those efficiencies are priced in to these to these numbers that we released last night and so we do expect operationally to continue catheter food capital efficiencies going forward, whether thats increased use of simultaneous dual fuel technologies.
So thats really kind of the story to inflation of where we see it going in 2023, John I have one other personal I.
I have one other personal footnoted to put.
Is that.
As someone who started.
<unk> first Matador $270000 I am very sensitive to every dollar spent.
Capital expense, so the only part of antibodies commentary on her quarters, when they accuse us of being capital inefficient that really hurt when you're short of $270000 every nickel and dime counts and we started the second matador at $6 million.
It's over $10 billion, but we still watch.
Our money in and sharpen our pencils.
And so.
If there's any follow up in the capital efficiency Blind me, but this staff really works hard to work with vendors on the most economical way to do things and try to do things in a planned fashion that <unk> SaaS is as I mentioned earlier, the BLM was done with a view.
Improving our capital efficiency and then we.
Got knocked around four.
Spending that kind of money, but now you've drilled we drilled 78 wells or so.
Nobody is saying that and you've seen the result so.
We hope there is a direct correlation between our our reserves which are now.
$350 million.
350 million barrels in our gas is nearly at a trillion cubic feet that we had been capital efficient.
And.
So we're trial once you know there is a 100% of effort.
To be capital efficient and we're always open to suggestions.
If theres a better way to do it.
Thank you we will be accepting our last question from Tien Ramsey.
Key Bank capital markets. Your line is now open.
Good morning folks I'd like to start on your.
You have plans to drill in on the northern part of your acreage. This year it looks like about 42% of your net turn in lines are in a ranger and arrowhead.
I think the stock price reaction today reflects concerns on overall.
Patient team productivity. So as you have a little less stateline and a little more northern activity. This year can you talk about your expectations in the north and if you view those wells is more.
Development are exploratory in nature.
Hey, This is Tom Paulson, our EVP of reservoir engineering, and I'm going to I'm going to start and I'm going to pass it off to Matt here in a minute, but this is an area, where we drilled the Rodney Robinson wells or five years ago.
And those wells are the third bone spring sand and each of those three wells has now produced over over 1 million barrels of oil.
In this area, where the advanced acreage in.
Southern Ranger in Northern Oak Ridge is a place where we've been drilling.
Quite a bit and so we're quite familiar with the area. So I wouldn't classify it as much exploration as more as more development.
That being said there are still some are some very exciting wealth I know, Matt and his team are excited to try out at some point.
But this is an area between Rodney Robinson, as well and we've drilled.
First bone spring and Avalon.
Second bone spring sand and third bone spring sand Wolfcamp X Y and we've got some some second bone carve in some third bone spring carbons Wolfcamp BS.
Coming online here in the first quarter, So I think we're.
Net at his team have done a marvelous job exploring for a lot of different targets here, but today, we feel very comfortable with the productivity of these wells, they're known have high oil cuts.
And that produced a lot of water. So we'll be working on that will be down.
That being said these wells they don't have quite.
Quite the flashy high pressures of some of the places down further south but they have nice steady decline rates that will provide good long term value and with that I'll pass it over to Ned.
Hey, Tim This is Ned Frost EVP of Geoscience.
I think Tom did a really nice job of kind of framing that I mean, we've said it before we kind of joke that the advance acreage is a nice acreage block between now and then Rodney Robinson and this is really an area of the basin that we've been focused on for a long time very high quality well results.
Again tip, our hat to advance for for developing a lot of quality benches on that asset and bringing a lot of a lot of value forward. We think that there's still a lot to do in this area that will be accretive to matador and will generate long term value for Matador shareholders, we're very optimistic on.
On this area and you'd also asked about Arrowhead Arrowhead, we took a little bit of a break from.
We're excited to get back there and I think you will see our rigs kind of spread across all our asset areas. This year and I think in many ways. That's a testimony to the to the high quality projects that we're capable of bringing forward across our entire acreage footprint. So I think there's a great amount of staff to get after this year.
And as we always do we're always looking for that next.
Next exploration target to go after so I would continue to watch this space and Im sure well have some more to bring forward in the future.
Yes.
Okay. Thanks for the comprehensive answer and as my follow up I'd like to add on a little bit tickets Jon's question on cost inflation earlier, you put out that number 1100 $25 per foot.
Obviously, its calendar year average, but.
Is there some sort of implied reduction you believe over the course of the year I know you recognize its conservative but.
There's line of sight on steel prices softening and you could see rig count reductions, but just kind of curious how we could expect that to trend or what you've assumed for the year.
Yes, Hi, Tim This is Chris covered again I think.
From an expectation standpoint, obviously, our goal operationally is to go out and beat our estimates we look to to continuously improve upon operations, whether that's drilling wells faster or increasing sign will frac percentages things like that and so while it's you know it's difficult to say to give you some sort of garden.
<unk> on 2023, I guess, we would just simply look to past performance to where every year that we have gone out whether we started simulcast <unk> in 2021, we've increased the number of wells that we've done that on in 2021 than in 2022, and so while it's hard to give you an estimate on where we think we could beat.
I think that we look to our past performance from an operating group and say that we always execute in an extremely high level, we continuously approve upon the areas that we know are our capital capital efficient areas, whether thats redesigning casing strings.
Dual fuel usage things like that and so while it's hard to give you any sort of a guardrail.
I'd like to just continuously approve on the statistics that we put forward last year and Thats things such as increasing sign will frac that.
Still do have a very nice dollar savings when we do those procedures.
Okay. Thanks for all the color.
Good question. Thank you Cam.
Thank you ladies and gentlemen, this in the Q&A portion of this morning's conference call I'd like to turn the call over to management for any closing remarks.
This is Joe the founder and chairman and CEO .
First like to thank you for your interest in Matador and extend the once again, our invitation to come by and see us and we'll have more extensive visit.
The second thing I want to know is that we try.
To look.
Longer term than just a quarter I think we had a great quarter in the fourth quarter of 2022.
But we're not trying to rest on our laurels, but might plans.
Not just for the first quarter of this year to be good, but the whole year to be good and they set it up in such a way that will.
Get better and progress in value, but set it up again for 2024, we've seen that for some time that that was really going to be a good year for us and.
But.
We also think the rest of 2023 will be very productive.
So.
You know on cost inflation add I do think that's we're getting a better handle on it and I want to be conservative.
It might be overly conservative on that and overly conservative on production, but if we werent known in advance we would have a lot bigger growth and 3% and I. Thank you all and trust us with our history that we would be back more along the historic curve.
Bob.
And <unk>.
And with the midstream.
Strategic and again when you have <unk>.
Different units at halfway involved it just takes a little more time in planning.
I think youre going to see.
<unk>.
Companies with midstream have a real advantage.
Because there is some capacity limits.
You got to get your water disposed of and if you own it and control it.
You just have some advantages of getting your product to market or your saltwater dispose and thats what were trying to build something that has real long term.
Value and have what we say.
Profitable growth at a measured pace and some of that relates to timing.
That.
You know that you've got to wait for your neighbors to finish their fracking before you could come in and do it in.
Timing of.
The midstream or getting a rig in and when you have the high class problem of all your we have six teams in each of them have wells I wanted to drill in their sector and so we've got to allocate capital and rigs.
To help them do that that takes a little more planning and a little more timing so.
We've always tried to look.
We look at the quarter, but we also look at the year and then the year after to keep up this momentum. So if you want more detail. We invite you to come in and see us and I think youll see the plan.
Makes sense when you get to see it all at once and you get to meet the caliber of our our staff and I always like to emphasize the quality of our rock and the quality of our people is the best assurance of future success is Mad Dor continues it's <unk>.
To $10 billion company.
So with that.
I'll sign off but.
Don't hesitate to call US we will always return calls.
Ladies and gentlemen, thank you for your precedent participation today. This concludes today's program.
Okay.
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
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The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
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