Q4 2023 Matador Resources Co Earnings Call

February 21, 2024

Participants are in a listen only mode. We will facilitate a question and answer session at the end of the Companys 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 company's earnings press release issued yesterday.

I will now turn the call over to Mr. Mac Schmitz, Vice President Investor Relations for Matador, Mr. Schmitz may begin.

Thank you Tanya.

Everyone and thank you for joining us for Matadors fourth quarter and full year 2023 earnings conference call.

Some of the presenters today will reference 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 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 additional information.

Formation concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K, and any subsequent quarterly reports on Form 10-Q.

In addition to our earnings press release issued yesterday I would like to remind everybody that we can see you can find a slide presentation in connection with the fourth quarter and full year 2023 earnings release under the Investor Relations tab on our corporate website and with that I would now like to turn the call over to Mr. Joe Foran, our founder Chairman and CEO Joe.

Thank you Mac.

And thank you all for taking time to listen in.

This has been in the.

Last year was a very important year for us in this.

Year he has taken on.

Growing importance too.

The first thing that I like to mention.

Is simply.

That has been a remarkable year in that.

Production is up.

Revenues are up.

Lease.

The acreage is up 18% inventory of course is up and our dividends are up while costs are down.

Clothing, LOE is down drilling cost are down G&A is down and the dead as Dale.

So that's the big picture now.

But we're trying to improve around all of the edges on that but that's the basic story things are headed in the right Avenue.

The second thing.

Just like that.

Pointing out there.

We saw the advanced acreage and acquisition, that's the largest to date.

And.

It's integrated very well.

We owe a shout out to the professionalism.

They married Dev people were very professional in the hand off it went.

Very smoothly and we're delighted.

By how efficient.

And how the production and the rock has exceeded expectations. So.

Thanks to them.

Uh huh.

We're.

Trying to put those assets to full work and they will begin to report on that and those were two of the main points that I wanted to get across.

To start the conversation and now we are ready for your questions.

Yeah.

Certainly.

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 will welcome additional questions from you.

First question is from Scott Hanold of RBC capital markets.

And Scott.

Yes.

Yes can you hear me guys.

Sure Yes.

Okay.

Martin.

Hey.

Northern part of the Delaware Midstream constraints has been an industry issue.

<unk> alluded to some third party tightness can you give a little more color on what that is and how much it impacts you and your solutions going forward.

Well.

Scott that's a real good question I'll start it off and others around the table.

Fill in but.

The constraint is probably not the best word for it it's more about maintenance.

That the older systems.

You know theyre going to have a leak here or there there's going to be some part of the equipment that needs to be attended to.

<unk>.

They have ever raised it to get it repaired as quickly.

As they can because they are not receiving revenues, while it's down for maintenance and.

And of course, we're eager affirmative.

Get it repaired as quickly, but that's just part of the.

Part of the business and operations.

They're going to have a few more but we appreciate the way they've got an accurate we've appreciated their communications.

We've been fortunate.

Our part.

Of our midstream system that we have not been down but of course, we are.

Our equipment is out of the later vintage so everybody is working on the problem and it didn't matter of well productivity. It just.

These things go down they need to be attended to.

And.

But we have fairly limited exposure there.

But it has had the effect of about 5500 barrels a day.

For this month when you put that in perspective of the whole year.

This is one quarter that we're experiencing that and if you put it in the whole year, you're talking about maybe 1% of our expected annual production.

And we think we will make that up in the quarters to come.

Fairly easily we haven't taken into account any acquisitions in our.

Projected production.

Very little so you have that Upsized and you have the other efficiencies at our production group seems to come up with each year.

Hey, Scott This is Glenn I would just pile onto what Joe is saying.

Just the temporary nature of these.

This reduction in production for for Q1, we do feel very confident that the.

The issues will be resolved.

By the end of this quarter and will be.

<unk> ourselves up very nicely for the rest of the year I do want to highlight that.

The.

Connectors between the Pronto system and the advanced properties is very well underway.

We have the permits and right of way and the construction.

Is very well underway, there and same on the pronto to the San Mateo connector and we did highlight in the release, but just to say that the.

The uptime that we that we.

<unk> experienced with San Mateo and Pronto is.

We feel second to none and that.

That communication that goes on between the teams is is daily and we have a lot of visibility into.

The operations both on the.

Maintenance side, and what our development plans are and those too.

Really three businesses do go very well hand in hand with each other.

Got it appreciate the color.

And as my follow up question.

You've had the advance wells online for.

Probably getting close to.

Six months now can you give us a sense of.

How those wells are performing relative to your expectation and with the next batch of advanced tools, which I think are the digger wells.

Remind us like any differences, we should expect there and if you had any color on.

The timing within the second quarter, you do expect to bring those on.

Sure Scott This is Tom off in the first part of your question regarding the 21 Margarita Wells that we brought online back in August of 2023, we've been very pleased with those results just as we've always said those wells would come online with very high oil cuts and I think we've certainly gotten that it average oil cuts of over eight.

4%.

Very smoothly into integrating with.

Production facilities teams and.

Those wells are.

After off to a great start.

The next wells, they've got the data Lake South wells.

As we said in the slide deck on page page 11.

Those wells are very close to them operated wells with very similar rock quality, you're going to have very high oil cuts just like the Margarita is.

And those wells will come online in the second quarter of 2024 similar to how we brought the Margarita is online in a staggered staggered fashion. If it still is a very big project for us.

Those wells are amount of half laterals as opposed to the 2.25. Following Margaret is still at a very high working interest I believe its 21 growth and about 1919 net wells in.

Feeling very strong about those results and.

I can't wait to get them online soon.

I appreciate that thank you.

And when a moment for our next question.

And our next question will be coming from Neal Dingmann of Truest Neil Your line is open.

I'm sorry, guys if it goes on it.

Nice quarter My question is around.

Your regional focus so I'm just wondering.

Could you specifically talk about it seemed like that northern Lea area. You had very strong activity I'm. Just wondering in that is that going to be the focus of this area could you talk about how this gray area.

Sort of.

Compares to that very very strong Rodney Robinson state lender.

Neil if you could repeat your question you cut out in the middle of it.

So.

If you restate the question.

Better than trying to guess.

Okay.

I'm getting that is specifically you suggested 24 oil production is growing faster boosted I think by that northern Lea County activity.

I'm just wondering can I assume that posted natural gas connection that much of this year's activity will be in this in that northern linearity I'm just wondering.

How do you all think northern layer. It compares to that very strong state wide variety of Robinson.

Hey, Neil This is Tom I'll take the first part of that and then.

Net or Glenn may want to chime in as well, but.

We've kind of talked for quite some time that the bulk of this kind of the advance acreage that's in the kind of Lea County area.

Sandwiched between the Rodney Robinson.

Acreage to the south and some of the mallet acreage to the north and east.

We've been very pleased with the results not just from those two tracks, but also some of the other properties have been drilling joining that same area.

Give the oil cut on all of those are very high theyre not exactly the same amongst all areas, but very.

Very strong oil cut than we expect to continue to focus there I will highlight that.

This is one of the areas, where we've been very happy with the third bone spring carbonate interval, where we highlighted that one of our third bone spring carbonate wells that IP to approximately 2600 Boe per day, and I believe at about 86% oil.

Zone that we added to our inventory.

Over the last year and also we've also added the second bone spring carbonate to our inventory this year based on the strength of several wells drilled in and around that area. We have about 19 wells that we have had an interest in that help kind of delineate that zone for us.

But we've always been proud of that of that range of area and also kind of the Antelope ridge area, but but I would I would have all of our assets are contributing.

All around the basin and even.

He brought online 17 wells and the arrowhead acid area in the last quarter that we're very proud of and we're also connected to the San Mateo system and it also located generally speaking where that pronto San Mateo connect your line is.

Hopefully that helps.

Hi.

I think Neil a good point at this time since it's come up.

As we got some questions last night from people asking about the connector lines, where they'd be on or not and I want to.

Just say again for the record that we have a very high confidence level that there'll be on in the next quarter, Glenn do you want to elaborate.

Yeah, just a just a fed and Joe said women were.

We're very confident that those will be complete by the end of the first quarter and and we'll be we'll be ready to go there and another advantage to that system is just by tying those two together is really taking advantage of all 520 million cubic feet a day of processing and gathering so we're excited.

Good.

It's getting put in the ground right now and excited to put them in service while all the permits are taken all of the surface use agreements are done all the paper works then thereafter, they're working on it two crews so we're in control of our fate.

It just continues they've already done a substantial amount of the work. So again, we're have a high degree it'll be finished in the same way with the other connector.

That is coming together nicely and again, we will have.

If we need to bring it to expedite matters will have a couple of extra crews. So.

They won't be waiting on us.

No that's exactly right.

Go ahead, but at this point.

On us and we're very good at it.

<unk> pipeline so.

That's fantastic detail and guys. My second question is on land acquisition.

Specifically you all continue to be highly successful just bolt on assets like that you mentioned about the besides the assets that added about 1000 Boe per day.

The latest additions I'm just wondering will this continue to be a priority going forward do you see these opportunities.

Yeah, Neil Thanks for asking that question is yes.

Answer is yes last year of course advance was.

Our biggest deal ever and has drawn a lot of attention, but our land group our business development group did another 200 transactions most of them or some of them are very very small.

Some of them are a little larger, but they're out there our land men.

In particular out there all the time.

Making deals.

What the deals last.

A couple of years have grown increasingly just a rationalization.

Of assets between companies.

You've tried out of your non op for somebody else's non op unit that you operate in.

And so things like that or little orphans out by themselves. So I think those will come along companies are being very cooperative with each other and.

These are small transactions that I don't have that kind of.

By themselves a big material impact, but in the aggregate they add up and make your operations that much more efficient. So there's a real rationale to do that and then at the same time.

Some of the.

The bigger outfits or are wanting to concentrate their assets in one area or another so those opportunities come up and then you have private equity.

As always got a few things coming out so.

I think it will continue.

And.

Vance Vance growth might want to say a word but he has the math here on the road a lot.

Okay.

And they've they're building relationships and just trying to do is things that makes sense for both sides.

Yeah, Hey, this is Ben.

I'll Echo, what Joe just said and add a little bit.

We try to make these win win deals for both sides I think we've got a long track record of our brick by brick approach I think you can expect to see that to continue we're off to a great start so far this year.

And have a pretty favorable outlook for the rest of the year, but also want to give a shout out to our counterparts that we do these deals too it takes both sides to make it a win win.

As Joe mentioned earlier, the professionalism that we saw on the other side for the advanced deal I think we see that only smaller deals too.

And relationships as you know are important to us and we want to be able to say that we did what we said we're going to do and I think you can just as I said expect to see more of the same going forward, that's our bread and butter and we're constantly evaluating different deals and trying to keep our pipeline full well that's been the other key.

Neil is advanced and his group.

One deal and then just stopped let the pipeline run dry they've just manage to keep the.

<unk> slowed me on the pipeline some of them fall out for one reason or another but by keeping deals in the pipeline all the time.

<unk>.

That brick by brick approach it happens each month at a time.

It has been effective and we like our chances we like our ability of our our land manta.

Build those relationships and make those deals.

Thank you Joe.

Thank you.

One moment for our next question.

Yeah.

Our next question will be coming from Tim residents of Keybanc capital markets. Your line is open.

Hey, good morning folks and thank you for taking my question I wanted to circle back on the.

'twenty, one Bagger Lake Wells you provided some comments on them earlier.

Clearly looked like they're going to underpin what is going to be a pretty big steep production ramp in the back half of the year. So they're obviously pivotal.

The guide you have out there can you give some specificity on exactly what is happening. There have you started completions or what is sort of a schedule over the next couple of months.

Get those on line with expectations.

Hey, Tim This is Chris Calvert EVP co CLO. It's a great question. If you look at slide 11 in our deck, we have a pretty good summary, slide on the advanced integration, but as far as timing on these 21 dagger Lake South wells. So everything is going as planned it's a very similar story to the.

The pronto connect are down to some of this acreage it's kind of business as usual on the operations front.

We we message that we are pilot testing are Simon or excuse me our triangle Frac, that's actually going on on this on the stagger Lake South project and so we're very excited about travel frac in and of itself, but just more specific to your question operations are moving forward as planned and we're pushing forward.

For that kind of Q2 turn in line date, but everything operationally seems to be going going according to plan.

And Tim this is Glenn.

And just wanted to highlight that the.

When we when we bought the advanced properties. They had built out our water gathering gathering system and they.

They had a disposal well there too and so we'll be tying into that on the water side and then on the gas side as I mentioned that.

That gas is planned to go to pronto.

With the connector.

So we're all we're all set up there from a takeaway standpoint.

Okay, and then I know you stagger the pills.

Do you have any timing you can provide on when that'll happen.

I think in April again, just trying to understand.

Yeah. Tim. This is this is Tom again.

Very similar to how we how we did things that on the Margarita side.

We'll probably have a little bit of a compressed ramp up compared to Margaret since many of these facilities are.

They are a little bit further along in the integration process, but.

Probably probably mid to late Q2 is probably my guess.

These forecast they do tend to change, but I agree with Chris things are things are going very well and we have great confidence in the second quarter.

Okay. Thank you for those details.

With my follow up.

Yeah.

And I'm sorry, our next question will be coming from Leo Mariani.

Hi, guys I honestly, just kind of wanted to kind of get a little bit more color on the midstream I think you guys. Obviously seem very confident the issues will sort of be behind you at the end of the first quarter here.

So once everything is kind of connected in terms of advanced the pronto and condo to San Mateo to get you really feel like this gives you a lot more redundancies in our system youre not as dependent upon third parties and then could you also just address kind of where you stand on potential partner conversations for the new 200 million in the plant.

Yeah.

Leo I'll start this is Glenn.

The short answer is yes.

The pronto to San Mateo connector.

We'll be set up such that those two systems can can flow.

One way or the other and so today it looks like it's more pronto to San Mateo, but once the the second plant the 200 million a day plant expansion that were.

Underway today on the pronto system that will expand the capacity of the system as a whole.

<unk> gas can can swing back and forth between.

Those two systems.

And and provide more flexibility and more flow assurance for.

Times, where there's either preventative maintenance going on or whatever the situation might be in and.

That that second plant is scheduled for the.

The second half of or excuse me the first half of 2025 and our BD teams are are we're going to fill a lot of that plant expansion up with with Matadors.

QWERTY volumes, but certainly there'll be extra capacity there and our teams are proactively working on what opportunities there are for third party.

Our third party <unk>.

<unk> that will deliver to that system and we feel like there is a lot of opportunity given the.

The nature of what exists today in that northern part of the basin.

Yeah.

Okay. That's helpful.

And any color on kind of where you stand with partner discussions potential partners for that new $200 million.

Yes, Les I'll I'll take that question is it.

Look where we are in a position we have.

Uh huh.

Plenty of money on our RV Yale to fund it we paid down our <unk> over $200 million for what we borrowed on the.

On the advantage acquisition. So that's the use of that is that it's there.

We have over $1 billion on our B L.

We have good stand and so it's not a problem our criteria is not because we need some partner we're interested in somebody's helps bring something extra to the table.

They are.

In some way that enhances the value or the efficiency of that.

Of the system in the plant, so our gifts drilling and saying they like what we have with San Mateo. So.

It's out there if.

If we can find a partner who can.

Enhance it we are interested in talking but we're not just trying to get financing and that doesn't have a lot of appeal because we already have that in place with our <unk>.

I appreciate the color.

Yes.

And one moment for our next question.

Okay.

And our next question will be coming from Zach <unk> of J P. M. Your line is open.

Hey, guys. Thanks for taking my question I guess first just on your cash taxes, the guidance at 5% to 10% of pre tax income was a bit better than we were modeling as we had assumed you'd be subject to the A&P could you give us some color on how are you able to still defer a majority of your taxes in 2024.

Any thoughts on how cash taxes will trend in 2025 and in future years.

Sure. This is Rob Mcleod Chief Accounting officer.

We continue to work really hard both internally and with our.

External tax providers, and we try and take every deduction in tax credit that were allowed to take under law.

2023, as you noted.

We were down about 1% on our current tax rate.

We knew that that was going to go up for 2024, I think it is a little bit better than even what we were anticipating just as we continue.

To work through.

Kind of vague guidance thats out there, but we feel very confident in our current estimation that we wont be subject to the kamke that alternative minimum tax that you referenced for 2024, we continue to evaluate that and look through just there's so many factors that could go into whether it will be subject to that.

Thousand 25, and we'll continue to monitor that but at the moment like you said, we feel very good about the 5% to 10%.

Our pre tax income would be cash taxes, but.

Like I said, we'll continue to work and drive that down as much as we can.

Thank you for that color.

One just quick follow up on the cash flow statement, there's a 68 million payment to advance this quarter can you detail what exactly that was and if there are any future expected payments.

In regards to that deal.

Sure Zach this is van.

That was actually a tack on deals.

For some additional interest in the basin.

It was very complementary to what we had closed on last year.

And so.

Brian I don't know if you want to expand on that but it was just a.

More additional acreage from the same deal, which I think goes towards what we said earlier that these relationships are important they had this interest that they wanted to.

To move out and called US and we were able to make a deal.

Kevin This is Bryan I think thats exactly right and so on the cash flow statement as set forth as advanced because its really for accounting rules. They treat it as almost a continuation of the business combination we did before.

But it's just it's a great deal continue to add interest in some of the similar acres that we bought in and we're really excited about we already talked about the wells coming online. This year that we expect to come on between win additional wells on a toilet Margarita wells that came on last year, so great acreage in.

We really enjoy working with the Meredith folks and being able to continue to complete these transactions.

Okay.

Thanks, maybe if I could squeeze one more in can you detail any any production that came with those those acquisitions.

Yes. This is Brian so I think really that 1000.

Bo per day that we mentioned in the release that really is due to that advanced acquisition that additional advanced acreage and interest that we got and so.

I think thats.

A good deal for us and I think if we look at.

Going forward, it's 80% oil, 27% oil what we got and so it was really really good acreage and so good interest. So that's that's really from that specific deal and I think I mentioned earlier, we do blocking and tackling deals all the time and our land group does a very good job of that and they continue to add interests in ad.

And that way and so as we grow throughout this year part of that growth of course, though is that we.

We will do deals when you think that the Atlanta group's done a great job. The last few years doing 200 deals a year and I expect they'll continue to do that this year.

We we appreciate it also they didn't care.

And merit they have worked with us on that transaction.

They were primarily some minerals and some overrides.

And it was a good fit for us and so we appreciate the follow up in that.

We got that it isn't huge but.

If we do and that is like this that they will have a favorable impact.

Great. Thanks, Joe Thanks, Brian.

Yeah.

And one moment for our next question.

Our next question will be coming from Oliver Huang of Tpa <unk> Company. Your line is open Oliver.

Good morning, all and thanks for taking my questions.

Just on the operational side I think you all highlighted about 60% of completions. This year are going to be using some old.

Or trying multiple frac offs.

How much of the expected cost benefit and also the efficiency benefits from a cycle time perspective is kind of an underwritten into your 2024 outlook as it sits today.

Yeah, Oliver this is Chris Calvert.

Great question.

Referring to slide 15 in the deck, where we're talking about are completed lateral footage efficiencies and really that has kind of been the main focus of our operational teams is how do we put forward those capital efficiencies that really helped insulate from any sort of oss inflation or deflation and so when we look at the cost savings associated with <unk>.

Triangle Frac a lot of those savings are baked into our capital budgets.

We pilot tested Simon <unk> in 2021.

So I think now that it has become such a large percentage of our portfolio, we do calculate that and factor that into excuse me into our budget forward looking budget.

Triangle Frac from an efficiency standpoint.

We still like I said, we're in process of doing that right now and so as far as the efficiencies of what we will gain I think we will be talking about that more on the call in April.

But we're excited about about triangle Frac, we saw about a 20% to 30%.

Improvement in capital efficiencies from a completion standpoint, when we moved to Simon <unk>.

So we're expecting some similar numbers a significant improvement from an operational efficiency standpoint by incorporating <unk> into the operational portfolio.

Chris why Youre on that area I was going to ask Tom to talk about.

The U turn wells and the capital savings there.

The same thing when you look at slide am on page 16.

Sure Yeah. Thanks, Joe Oliver This is Tom Elsner.

Slide am on the on the U turn wells.

As we've kind of talked about before we drilled our first two you Turner for Schuh wells as we call them before done at our Wolf property.

And in Texas, and we've had very successful production results from those wells that even though there you turn wells. They perform just like a straight two mile long lateral very high pressures.

IP rates of between 2100, 2400 Boe per day.

Wouldn't know the difference if it was a U turn of our two mile lateral from the production results.

We monitor those wells for several months now and combined with the great cost savings that the team our team to execute it down there.

We're ready to kind of do a few more of those and I think we've highlighted that there may be up to 20 or so.

You turn wells that we may mix into the drill schedule kind of over.

Over the next two years.

We have some really nice rock that we would like to put into the program just.

What I want to drill most of your turns and so I think we're very excited for those and.

Sure.

I think that I think there'll be very successful we were.

Still are kind of in the warning phase.

When I learned about some different different targets and different areas.

So we still I still think we're kind of in the walking mode, we're not quite in the running mode yet.

But I think we're very optimistic about it.

Really it's.

Sure.

Group and you've had a lot of it.

Innovations for managed pressure drilling.

The rig design do you want to say anything else you're working on this or I mean, there was a good project and.

Three rigs out there on it.

It wasn't good engineers and did a really good job there getting those wells drilled and completed and.

It was a great operation just.

Well go ahead, and give a little shout out to Patterson and everything they've done to the last couple of decades I didn't just.

Build a rig and leave it there are likely to continue to add with their technology.

And their operating systems and techniques.

Techniques and.

This is another one they were out there with a set of extra people out there to make sure. It's a good good successful operation.

And also there.

Next year, we've worked with them they do a great job for US like you mentioned, Halliburton, Schlumberger and others that work with us and help us stay on top of our game, but.

Really.

A lot of good with Patterson.

Your turn wells supposedly was a was a holler, but also now we've picked up.

The larger rig 2000 horsepower rig and.

We're looking to do great things with that as well, we're just getting started with it and got or not.

Got the rig out there put together get our surface hole intermediate and fixing to get you to the game time Showtime with the with the <unk>.

After the production hold where we're expecting to set some new records there and.

While we're talking about record the Max Com group, where our geologists and engineers work together.

We've been doing a great job, there and we don't come into one of our board week.

A week or so ago, we had 262 records there since we started <unk> com and we are already up to three more to 265, so religious.

So we get better and better and that's worked out to be just too.

Great Great operation for Us.

All of our hands coming in we try to work all of our new people engineers and geologist spend a little time in there and get to know each other and it makes us a lot better.

Such as operations and.

We talk about the records and the money, we're saving drilling faster but.

And staying in zone.

Staying in zone is a big part we don't talk about a lot we talk about all the money $40 million, we say with all the records and the time.

Also when you drill 10000 foot lateral and you stay in zone.

99% to 100% of the time, you get an extra 10 barrels of oil per foot.

The extra 10000.

Barrels at all I mean.

That's a lot of money right. There so all around just a great efficient program and drilling.

Drilling and completion both of them doing a great job, Chris you want to add something.

Overall, just kind of close the loop I think what it really comes down to operationally for us as well.

We looked for technological improvements that we can continue to push every single year and those come through relationships such as Patterson next year and other vendors to help us drill and complete wells faster, but then also just engineering people efficiencies that we find here in the office and Thats. When you look at something like triangle Frac work Shlomo Frac and Thats really just kind of a re imagining.

Process, that's been around for a long time and that comes from from the people side Theres not a lot of new technology that goes into a sign will frac or a triangle for exits just re imagining a process of how to make it better and more of a win win situation for us and our partners, which in this case would be Patterson next year Halliburton and so I think it's it's a really good common combination approach of <unk>.

How we look to maintain and maximize our capital efficiencies from the operation standpoint.

Speaking of the efficiencies we.

While we're giving shout outs.

For Forrester Smith, who.

Is out there all the time pop is there we don't have to wait on it I appreciate.

And.

<unk>.

Yes, correct, Joe there is a lot of people the list as numerous but I think when we talk about anything that we're looking at as far as just timing until <unk> and things like that.

If you don't have pipe ready on location when you're ready to two case, a well youre going to be held up in our service provider has been really our casing provider for.

For decades, and so I think you have relationships that go back that that help weather the bad times and flourish in the good times and so I think whether it's halliburton's Patterson next year is the.

Vacation companies. It is something that we value at a tremendous level and we continue to kind of push forward to make it win win situations for both the vendor partnerships and Matador itself.

Thanks, that's great detail and for my follow up I know that you all have had extensive resolve and data kind of across the stack, but the increase of capital for wells targeting the first bone spring on our <unk> for the 2024 program. So any color with respect to just kind of the thought process behind that.

Decision and maybe if there is any sort of commentary on expectations for those wells and also assumptions and that is for year over year, while productivity trends for the program as a whole.

Sure Oliver This is this is Tom elsner.

Like the first bone Springs.

The reason, we're investing money in that specific interval is simply because the well results have been have been very solid.

Even going back too many years ago with our kind of first tested the first one is bring it at Marlin Downey and and Eastern Antelope Ridge, we've continued to delineate that zone kind of all kind of throughout the northern Delaware Basin and feel very confident in our endo.

In those in those targets.

Kind of go into your kind of well productivity question, Yeah, we put out a slide.

Slide slide number six our side, so I'd see showing our our average over the last four years being.

<unk> been a very very successful program and we can expect that to.

Continue there are there's a variety of different performances in order for that asset areas, but we continue to focus on investing.

The companys resources into the northern kind of oily or portions and you see that in the world where you aren't that we generated in the first bone spring would certainly certainly part of that.

Yeah.

Awesome. Thanks for the time guys.

One moment for our next question.

Yes.

Okay.

Our next question will be coming from John Freeman.

From Raymond James Your line is open.

Hi, guys.

Hey, John.

And again, we'll have, if we need to, to bring it to Expedite Matters, we'll have a couple extra crews. So they won't be waiting on us.

Yeah on the Marlin processing plant.

Laid out the return and the payback period, that's expected cannot can you speak to how you're all envision.

<unk> split on that plant between Matador and third parties once it's up and running next year.

Speaker Change: Now that's exactly right.

Speaker Change: At this point, it's on us and we're very good at building pipelines.

Yes, Joe. This is this is Brian I'm happy to take us out of that and then Glenn can clean up anything after event really I think right now at San Mateo, where 70%, 80% Matador.

Speaker Change: www.globalonenessproject.org

Speaker Change: That's fantastic details. And guys, my second question is on land acquisitions. Specifically, you all continue to be highly successful just bolting on assets like that. You mentioned about the besides the assets that added about a thousand BOE per day that came with the latest editions. I'm just wondering, will this continue to be a priority going forward? And do you see these opportunities?

I think as you move over to pronto, its almost the opposite right now, but I think going forward, you'll end up more with the new plant almost 50 50 split with the new plant.

So all in we'll probably end up being 60% Matador, 65% Matador and the other third party and we look forward to those third party opportunities. We think there are a lot of them up in that area and so a lot of good partnerships and a lot of repeat customers and so as we build the plan. We think there's a lot of real opportunity there.

Speaker Change: Yeah, Neal, thanks for asking that question is yes. The answer is yes. Last year, of course, advance was

Speaker Change: You know, our biggest deal ever, and it's drawn a lot of attention. But our land group, our business development group, did another 200 transactions. Most of them were, some of them were very, very small. Some of them were a little larger. But they're out there, our land men.

That's great and then my follow up and it kind of dovetails with you just mentioned, Brian which is you all talked about kind of the needs in this area for more processing for right. It seems like for probably about a year.

Speaker Change: In particular, out there all the time making deals, what the deals last

So I guess once we think about the Marlin plant coming with the expansion being completed next year is there another area you know.

Speaker Change: A couple years have grown increasingly, it's just a rationalization of assets between

Cross selling skills acreage footprint that you've already sort of identified as like another area that at some point you all would like to expand our processing capability.

Speaker Change: Companies, you know, you trade out of your non-op for somebody else's non-op that you operate and so things like that are a little orphans out by themselves. So I think those will come along. Companies are being very cooperative with each other and you know, these are small transactions that don't have that kind of kind of thing.

You know <unk>.

John.

That's still in the.

Thinking stage at that gave us a little time to firm up our.

That is in play and so we will be happy to share them with you.

Speaker Change: By themselves a big material impact but in the aggregate they add up and they make your operations that much more efficient. So there's a real rationale to do that and then at the same time some of the

But it's it's a little too.

Go out there and and then the.

Why did we do exactly what it is we've.

We're in the planning stage and there's a lot of factors and when.

When we come out we will have all that detail for you but.

Speaker Change: The bigger outfits are wanting to concentrate their assets in one area or another so those opportunities come up and Then you have private equity Is always got a few things coming out. So I think it'll continue and

It certainly is.

As a matter that's on our mind.

Thank you good opportunity to go along with their other opportunities, but we got to prioritize.

Because we have some great drilling opportunities and great third party AD reconciling doses.

Speaker Change: Vansgrove may want to say a word, but he has them out there on the road a lot.

Part of the process the gas around this table are we're all thinking about with each other.

Vansgrove: And they're building relationships and just trying to do things that make sense for both sides.

Thanks, Tim I appreciate the time guys.

I appreciate that question too.

And one moment for our next question.

Vansgrove: www.austincosmetic.com

Vansgrove: Yeah, hey, this is Ben. I'll echo what Joe just said and add a little bit that we try to make these win-win deals for both sides.

Our next question will be coming from Phillips Johnston of capital One Securities. Your line is open.

Hey, guys. Thanks, most of my questions have been answered, but maybe just a clarification on the additional advance property acquisition in Q4.

Ben: I think we've got a long track record of our brick-by-brick approach. I think you can expect to see that to continue. We're off to a great start so far this year and have a pretty favorable outlook for the rest of the year. But I also want to give a shout-out to our counterparts that we do these deals to. You know, it takes both sides to make it a win-win. And as Joe mentioned earlier, the professionalism that we saw on the other side for the advanced deal, I think we see that on these smaller deals too.

<unk> mentioned about 1000 date back to Q4.

Just in terms of timing of when that close was that a full quarter's impact or partial quarters impact.

Even at the current run rate impact.

Somewhere north of that number.

Yes. This is Brian I'm happy to answer that it really referring to the thousands of really referring to the full quarter impact.

Ben: And relationships, as you know, are important to us, and we want to be able to say that we did what we said we're going to do, and I think you can just, as I said, expect to see more of the same going forward. That's our bread and butter, and we're constantly evaluating different deals and trying to keep our pipeline full.

But you know on a go forward basis, I think that deal will continue to have really good returns for us going forward into 2024, I mean, I think again as I said the land guys have done a fantastic job I think if you look at page 12 of our deck, you'll see in 2012, we had 7500 net acres and now we're over 152000.

Ben: Well, that's been the other key, Neal, is that Van and his group.

Ben: It hadn't done one deal and then just stopped and let the pipeline run dry. They've just managed to keep, you know, deals floating down the pipeline. Some of them fall out for one reason or another, but by keeping deals in the pipeline all the time, there's...

Net acres and so they continue to build that brick by brick acquisition and add to our production and our reserves and <unk>.

Do a fantastic job.

Okay, great and just to clarify what's embedded in your production guidance.

Ben: That brick-by-brick approach, it happens each month, and it's been effective, and we like our chances. We like our ability of our landmen to build those relationships and make those deals.

The fourth quarter 'twenty four exit rate guidance assume any incremental volumes from these types of the future.

Small small scale acquisitions like the ones you've been doing or is it sort of organic from where we sit today.

Yes, so I think going forward. This year really it's more acquisitions that we know that are key.

Ben: www.globalonenessproject.org

Speaker Change: Thank you, Joe.

Speaker Change: Okay, and one more.

Close to being closed or being close we take those into account, but other than that it's in large measure its organic growth in and so you know I think that we do these brick by brick acquisitions as always some of that and we know there will be some of that so we take some of that into account, but really it's more on just the straight organic growth for for the year as we look at the exit rates 2024.

Speaker Change: www.globalonenessproject.org

Speaker Change: One moment for our next question.

Speaker Change: www.larryweaver.com

Speaker Change: Our next question will be coming from Tim Rezvan of KeyBank Capital Markets. Your line is open.

Tim Rezvan: www.globalonenessproject.org

Tim Rezvan: Good morning folks and thank you for taking my question. I want to circle back on the 21 Dagger Lake Wells. You provided some comments on them earlier. They clearly look like they're going to underpin what's going to be a pretty big, steep production ramp in the back half of the year. So they're obviously pivotal, you know, to the guide you have out there. Can you give some specificity on exactly what's happening there? Have you started completions or what is sort of the schedule over the next couple months?

Okay perfect. Thanks, so much.

Yes.

And the final question will be from Kevin Mccarty of.

Pickering Energy partners, Kevin Your line is open.

Yes.

Yeah.

For taking my question.

Yeah.

Tim Rezvan: to get those online with expectations.

I appreciate all the details on the first quarter turn lines in Capex.

Tim Rezvan: Hey Tim, this is Chris Calvert, EVP, co-COO. It's a great question. You know, if you look at slide 11 in our deck, we have a pretty good summary slide on the advanced integration, but as far as timing on these 21 Dagger Lake South wells, you know, everything is going as planned. It's a very similar story to the, you know, to the Pronto connector down to some of this acreage. It's kind of business as usual on the operations front.

Exit rate for <unk> oil was better than we expected can you kind of help us bridge that gap on how you hit that exit rate any more color you can provide on the capex of the turn in line cadence throughout the year. I mean, you mentioned the 21 wells that come on in the second quarter or is there another slug of wells or is that really what's going to drive production higher.

Yes. This is Brian Kevin Thanks for the question I think going through the year, we talked about those 21 wells will come on in the second quarter and those really do help to drive production higher in.

Tim Rezvan: You know, we message that we are...

Tim Rezvan: for pilot testing our TRIMOLFRAC.

Tim Rezvan: That's actually going on on this Dagger Lake South project.

In addition, this year in total we expect to turned to sales 2094, net wells and so those are spread out as well kind of throughout the second third quarter as we go forward into the fourth quarter and and so it's really it's really a mix there it's kind of split between the two quarters from third quarter and second quarter with with Norway.

Tim Rezvan: We're very excited about Trimofrac in and of itself, but just more specific to your question, operations are moving forward as planned and, you know, we're pushing forward for that kind of Q2 turn in line date, but everything operationally seems to be going according to plan.

Tim Rezvan: www.globalonenessproject.org

Tim Rezvan: And Kim, this is Glenn, that's an, um...

Speaker Change: I just wanted to highlight that when we bought the advanced properties, they had built out a water gathering system, and they had a disposal well there too, and so we'll be tying into that on the water side, and then on the gas side, as I mentioned.

Towards the second quarter, just because of those 21 wells that come online and so that sets us up for that great fourth quarter that we've talked about I think we're really excited about that exit rate and how it sets us up for next year.

Great.

My follow up you mentioned that you made some payments on the Marlin plant expansion in <unk>, how much of the 2020 for midstream budget is allocated to the processing plant expansion I think in the past you've said that that plant could cost $200 million overall.

Speaker Change: That gas is planned to go to Pronto with the connector.

Speaker Change: So we're all set up there from a takeaway standpoint.

Speaker Change: Okay, and then I know you staggered those, those, those tilts.

Yeah.

Yes, Hi, this is Kevin this is Glen.

Speaker Change: Do you have any timing you can provide on when that'll happen?

So for 2024, approximately 90 to 100 million is associated with the actual Marlin two plant.

Speaker Change: www.globalonenessproject.org

Speaker Change: like in April or June just trying to understand

Speaker Change: www.microsoft.com.ca

Speaker Change: This is Tom again. Very similar to how we did things on the Margarita side. We probably have a little bit of a compressed ramp up compared to Margarita since many of these facilities are

And then there is obviously capex.

We've attributed to the build out between the connectors that we're talking about there and the addition of a compressor stations and then building out to some of the.

Tom: We're a little bit further along in the integration process, but probably mid to late Q2 is probably my guess. These forecasts, they do tend to change, but I agree with Chris. Things are going very well, and we have great confidence in the second quarter.

Our properties on the Ranger North the northern part of Ranger.

Great. Thank you guys.

Thank you ladies and gentlemen, this ends the Q&A portion of this morning's conference call I'd now like to turn the call back to management for any closing remarks.

Speaker Change: Thank you for those details.

Speaker Change: With my follow-up, I'm...

Yes.

Speaker Change: http://www.globalonenessproject.org

Speaker Change: And I'm sorry, our next question will be coming from Leo Mariani.

Do have a few closing remarks.

First is just to refer you to slide <unk>, which summarizes our company highlights for last year. At this time last year I was saying that we were beginning the year at about 100000 barrels.

Leo Mariani: www.larryweaver.com

Leo Mariani: www.globalonenessproject.org

Leo Mariani: Hi guys, you know I should just kind of...

Leo Mariani: Wanted to kind of get a little bit more color on the midstream. I think you guys obviously seem very confident the issues will sort of be behind you at the end of the first quarter here. So once everything is kind of connected in terms of advance to Pronto and Pronto to San Mateo, do you guys really feel like this gives you a lot more redundancies in the system so you're not as dependent upon third parties? And then could you also just address kind of where you stand on potential partner conversations for the new $200 million that you plan?

Per day and that our thoughts are with the advance as our other drilling programs, we would boost that during the year and by 50% and sure enough we.

He did.

Our exit rate was 145000 barrels so great work.

By the team.

A second.

Speaker Change: Thank you.

Speaker Change: Leo, I'll start. This is Glenn. The short answer is yes. So the Pronto to San Mateo connector will be set up such that those two systems can flow.

In slide <unk>, just shows that and also emphasize that our alignment of interest that the amazement group itself has about <unk>.

6% of Matador, and we have over 90% participation in our employee stock purchase program. So.

Speaker Change: https://www.youtube.com or www.facebook.com or www.youtube.com or www.youtube.com or www.youtube.com

Everybody in this room and throughout the company.

Like you said, we've got chips on the table I'd also like to give a shout out to our measurement right. It runs 24, seven like our Maxx com and keeps an eye to be sure. We're getting paid for each barrel of oil in Mcf and that over the years in that time period.

Glenn: That will expand the capacity of the system as a whole, and gas can swing back and forth between those two systems, and provide more flexibility and more flow assurance for

They've added tens of millions of dollars I think 32 million was it remember we discussed at our board meeting so it's great work by them.

Glenn: https://www.youtube.com or the U.S. Department of Labor's YouTube channel.

In tracking that and checking.

Each barrel all at each invoice some of Thats tedious work, but they've stuck to it and it's it's paid off.

Glenn: The second half of, or excuse me, the first half of 2025, and our BD teams are

I'd also.

You all have asked a lot of really good questions but.

Glenn: are

Glenn: We're going to fill a lot of that plant expansion up with Matador's equity volumes, but certainly there will be extra capacity there, and our teams are actively working on what opportunities there are for third-party investments.

I just want to be sure some things to emphasize the reserve growth from $360 million.

The $450 million and.

If price all had the slip.

There'll be.

Glenn: volumes that that'll deliver to that system and and we feel like there there is a lot of opportunity given The the nature of what exists today in that northern part of the basin

More all of them that some some of those as you are.

We'd probably approaching $500 million and then the growth of the acreage itself I think the.

Speaker Change: Thank you.

Speaker Change: Okay that's that's helpful and just any any color on you know kind of where you stand with partner discussions potential partners for that new 20 million a plant

The land group van and his his gas in.

And the women men and women of his land group that they increase the Delaware basin position.

Speaker Change: Yeah, Leo, I'll take that question.

Uh huh.

Leo Mariani: Look, we're in a position, we have...

Hundred and <unk>.

19.

Acres.

Leo Mariani: www.globalonenessproject.org

152.

Leo Mariani: Plenty of money on our RBL to fund it. We paid down our RBL over $200 million for what we borrowed on the, you know, on the Advantage.

And if you remember when we went public in 2012 and we're establishing this is an area of interest where we began with 7500. So we've gone from 7500.

Leo Mariani: Acquisition. So that's the use of that is that

250 over 150 dialysis I didn't want that to go without being missed and that you have growing.

Leo Mariani: It's there.

Leo Mariani: We have over a billion dollars on our RBL.

Leo Mariani: We have good standing, so it's not a problem. Our criteria is not because we need some partner. We're interested in somebody who helps bring something extra to the table.

The.

Third party revenues from customers.

Out there in the basin and these are really the blue chip companies and we've tried to be careful.

Also I've always believe I've been in this business 40 years.

Leo Mariani: They, you know, uh...

Leo Mariani: in some way that enhances the value or the efficiency

So I'll start with 270000.

Leo Mariani: of the system and the plant, so, or gives drilling incentives like what we have with San Mateo. So, it's out there, if we can find a partner who can

Today, and I think he had put our assets are all together.

Approaching 10 billion and one things is just kind of at we're more of a tortoise and the Hare I get a little bit by a little bit year after year and slide K on page 14 shows you that it's been steady since we went.

Leo Mariani: enhance it. We're interested in talking, but we're not just trying to get financing. And that doesn't have a lot of appeal because we already have that in place with our RBL.

Public and we say for the foreseeable with a number of locations that Tom and his team have been putting together.

Speaker Change: Appreciate the color.

The growth of the midstream.

Speaker Change: Thank you.

Van to acquisitions.

Speaker Change: And one moment for our next question.

<unk> that this will continue and should be there barely stroke is saving money.

Speaker Change: And our next question will be coming from Zach Farrum of JPM. Your line is open.

On the cost, but he is also doing the innovations that <unk>.

Speaker Change: www.larryweaver.com

Zach Farrum: Good morning guys, thanks for taking my question. I guess first just on your cash taxes, the guidance said five to ten percent of pre-tax income.

Mike as more capital efficient such as you know.

Yes.

<unk>.

Using these modern rigs.

Zach Farrum: was a bit better than we were modeling. We had assumed you'd be subject to the AMT.

They come in and as Max Com room is.

Zach Farrum: Can you give us some color on how you're able to still defer a majority of your taxes in 2024 and any thoughts on how cash taxes will trend in 2025 and future years?

Travel Fracked at my saying that right George.

Give me a hard time on some pronunciations, but.

Zach Farrum: Sure, this is Rob Macklik, I'm the Chief Accounting Officer.

That's been a big.

And you can see the outperformance that we've had over the years on slide Oh.

Rob Macklik: You know, we continue to work really hard, both internally and with our external tax providers, and we try and take every deduction and tax credit that we're allowed to take under law. You know, in 2023, as you noted, you know, we were down about 1% on our current tax rate. We knew that that was going to go up for 2024. I think it is a little bit better than, you know, even what we were anticipating, just as we continue.

Compared to the S&P 500 oil price X L P.

And I think that's a lot of what we have to offer a consistent.

Performance with us with a strong balance sheet.

Our leverage ratio of less than one and we intend to continue.

Continue to keep an eye on the balance sheet, because we're shareholders too and look for.

Rob Macklik: to work through the...

Rob Macklik: You know, kind of vague guidance that's out there, but we feel very confident in our current estimation that we won't be subject to the CAMP E.

I used to boost the dividend so.

Once you also to know that look we are available to you if you've got questions.

Rob Macklik: That alternative minimum tax that you referenced for 2024. We continue to evaluate that and look through, there are so many factors that can go into...

You need answers Mac is really good we have come to your questions. Brian will take them. If you come visit this will have a will buy your lunch or breakfast in.

Rob Macklik: We'll continue to monitor that, but at the moment, like you said, we feel very good about the 5-10% of our pre-tax income would be cash taxes, but like I said, we'll continue to work and drive that down as much as we can.

And and we will have a more expensive. So we wanted to be open to us.

We're proud of what we're getting done and thats kind of the old fashioned.

Pick and shovel breakfast.

And little by little.

<unk>.

And we think our.

Speaker Change: Thanks for that, Culler. And then one just quick follow-up. On the cash flow statement, there's a $68 million payment to advance this quarter. Can you detail what exactly that was and if there are any future expected payments in regards to that deal?

People on staff.

Our working.

Trying to get better every day, it's corny to say that get better every day and helps teams get better but that's what we're.

That's what we aim for and I think you can say it's.

Speaker Change: Sure Zach, this is Van. That was actually a tack-on deal for some additional interest in the basin that was very complementary to what we had closed on last year and so

Yeah.

From where we were a year ago.

Where we are today and the outlook going forward, we're still making very steady progress up into the right.

So with that I'm going to sign off but no. Our phone lines are open if you need further follow up and information and thank you for taking the time that you have talked to us as well as steady.

Speaker Change: Brian , I don't know if you want to expand on that, but it was just a...

Van: More additional acreage from the same deal, which I think goes towards what we said earlier that these relationships are important, you know, they had this interest that they they wanted to do.

Yeah.

Ladies and gentlemen, thank you for your participation today. This concludes today's program.

Van: To move out and called us and we were able to make a deal

Van: Yeah, man, this is Brian . I think that's exactly right. And so on the cash flow statement, it's set forth as advanced because it's really, for accounting rules, they treat it as almost a continuation of the business combination we did before.

Van: But it's a great deal. Continue to add interest in some of the similar acres that we bought.

Speaker Change: And we're really excited about, we already talked about the wells coming online this year that we expect to come on, the 21...

Speaker Change: Additional Wells, and the 21 Margarita Wells that came on last year, so great acreage.

Speaker Change: You know, we really enjoy working with the AmeriDev folks and being able to continue to complete these transactions.

Speaker Change: https://www.youtube.com.au

Speaker Change: Thanks. Maybe if I could squeeze one more in. Can you detail any production that came with those acquisitions?

Speaker Change: www.globalonenessproject.org

Speaker Change: Yeah, this is Brian . So, I think really that the 1,000...

Brian: D.O.E. per day that we mentioned in the release, that really is due to that advance acquisition, that additional advance acreage and interest that we got. And so, you know, I think that's a good deal for us, and I think if we look at...

Brian: You know, going forward, it's 80% oil, 77% oil what we got, and so it's really, really good acreage.

Brian: https://www.youtube.com

Brian: That's really for that specific deal. I think I mentioned earlier, we do blocking and tackling deals all the time.

Brian: Our land group does a very good job at that, and they continue to add interest and add production that way. And so, as we grow throughout this year, part of that growth, of course, is always that we'll do deals. We think that the land group's done a great job the last few years doing 200 deals a year, and I expect they'll continue to do that this year.

Brian: We appreciated also that NCAP and AmeriDev worked with us on that transaction. They were primarily some minerals and some overrides, and it was a good fit for us. And so we appreciate the follow-up and that...

Brian: We got that. It isn't huge, but...

Brian: If we do enough like this, they'll have a favorable impact.

Speaker Change: Great. Thanks, Joe. Thanks, Brian .

Speaker Change: And one moment for our next question.

Speaker Change: Our next question will be coming from Oliver Huang of TPH and Company. Your line is open, Oliver.

Oliver Huang: Good morning all and thanks for taking my questions.

Oliver Huang: Just on the operational side, I think you all highlighted about 60% of completions this year are going to be using SAML or tri-multipract ops.

Oliver Huang: Just how much of the expected cost benefit and also the efficiency benefits from a cycle time perspective have kind of been underwritten into your 2024 outlook as it sits today?

Oliver Huang: www.globalonenessproject.org

Speaker Change: Yeah, Oliver, this is Chris Calvert. That's a great question.

Chris Calvert: You know, you're referring to slide 15 in the deck where we're talking about our completed lateral footage efficiencies, and really that has kind of been the main focus of our operational teams is how do we put forward those capital efficiencies that really help.

Chris Calvert: Insulate for many sort of OFS inflation or deflation, and so when we looked at the cost savings associated with SymoFract and or TRIMOFract, a lot of those savings are baked into our capital budgets.

Chris Calvert: You know, we pilot-tested SimulFrac in 2021.

Chris Calvert: So, I think, you know, now that it has become such a large percentage of our portfolio, you know, we do calculate that and factor that into, excuse me, into our budget, forward looking budget.

Chris Calvert: Trimulfrac from an efficiency standpoint, you know, we still, like I said, we're in process of doing that right now, and so as far as the efficiencies of what we will gain, I think we'll be talking about that more on the call in April , you know, but we're excited about Trimulfrac, you know, we saw about a 20 to 30 percent

Chris Calvert: of improvement in capital efficiencies from the completion standpoint when we move to SimoFract. You know, so we're expecting some similar numbers of significant improvement from an operational efficiency standpoint by incorporating thermal effect into the operational portfolio.

Speaker Change: You know, Chris, while you're on that area, I was going to ask Tom to talk about the U-turn wealth and the capital savings there, the same thing, and you look at slide M on page 16.

Speaker Change: www.globalonenessproject.org

Tom Nelsoner: Sure, yeah, thanks, Joey. Oliver's is Tom Nelsoner. Yeah, but we'll get inside and on the on the U-turn wells, you know Ed.

Tom Wilson: You know, as we've kind of talked about before, we drilled our first two U-turn or horseshoe wells, as we've called them before, down at our Wolf property.

Tom Wilson: In Texas, and we've had very successful production results from those wells that, you know, even though they're U-turn wells, they perform just like a straight two-mile-long lateral, very high pressures and IP rates of between 2,100 and 2,400 BOE per day. You wouldn't know the difference if it was a U-turn or a two-mile lateral from the production results.

Tom Wilson: We've monitored those wells for several months now.

Tom Wilson: You know, combine with the great cost of savings that, you know, the team actually get it down there.

Tom Wilson: We're ready to kind of do a few more of those, and I think we've highlighted that there may be up to 20 or so U-turn wells that we may mix into the drill schedule kind of over the next kind of two years.

Tom Wilson: We have some really nice rock that we would like to put into the program, just want to drill them with some U-turns. So I think we're very excited for those.

Tom Wilson: I think they'll be very successful. We still are kind of in the learning phase. We're gonna learn about some different targets in different areas. So I still think we're kind of in the walking mode. We're not quite in the running mode yet. But I think we're very optimistic about it.

Tom Wilson: Billy, you know, it's your group and you've had a lot of...

Billy: and the Innovations from Managed Pressure Drillick to the rig design. Do you want to say anything else you're working on? This is a good project and we have potassium rigs out there on it.

Billy: That's some good engineers and did a really good job there getting those wells drilled and and completed and

Billy: It was a great operation, just while we're at it, go ahead and give a little shout out to Patterson and everything they've done through the last couple decades, they didn't just...

Billy: Build a rig and leave it there. They continued to add with their technology and their operating systems and techniques and this is another one they were out there with. It's had extra people out there to make sure it's a good successful operation.

Billy: You know, also their crack side, next tier and all, we've worked with them. They do a great job for us. I'd like to mention Halliburton, Slumber Day, and others that work with us and help us stay on top of our game.

Billy: Really have done a lot of good with Patterson on the U-turn wheels, especially was a highlight. But also now we've picked up, you know, the larger rig, 2,000 horsepower rig.

Billy: We're looking to do great things with that as well. We're just getting started with it and got our...

Billy: We got the rig out there, put together, got our surface hole, intermediate, and fixing to get to the game time showtime with the, you know, getting after the production hole and we're expecting to set some new records there. And while we're talking about records at Max Com Group where geologists and engineers work together, they've, uh,

Billy: been doing a great job there and you know coming up on our board week

Billy: A week or so ago, we had 262 records there since we started MaxCom, and we already upped that three more to 265, so they just continuously get better and better, and that's worked out to be just a

Billy: Agreed.

Billy: Great operation for us there, and...

Billy: All of our hands coming in. We try to work all of our new people, engineers and geologists, spend a little time in there.

Speaker Change: Get to know each other and it makes us a lot better.

Speaker Change: On both sides of the operations and, you know, we talk about the records and the money we're saving, drilling faster, but, uh...

Speaker Change: And staying in zone, and that staying in zone is a big part, we don't talk about a lot, you know, we talk about all the money, 40 million dollars we've saved with all the records and the time.

Speaker Change: Also, when you drill a 10,000 foot lateral and you stay in zone 99-100% of the time and you get an extra 10 barrels of oil per foot, you get an extra 10,000 barrels of oil. That's a lot of money right there.

Speaker Change: All around, just a great, efficient program.

Speaker Change: Drilling and completion both have been doing a great job. Chris, you want to add something? Yeah, hey, I'll just kind of close the loop. I think, you know, what it really comes down to operationally for us is

Chris Calvert: We look for technological improvements that we can continue to push every single year and those come through relationships such as Patterson Nextier and other vendors to help us drill and complete wells faster, but then also just engineering and people efficiencies that we find here in the office.

Chris Calvert: You know, you look at something like Trimulfrac or Simulfrac, and that's really just kind of reimagining a process. It's been around for a long time, and that comes from the people side. There's not a lot of new technology that goes into a Simulfrac or a Trimulfrac. It's just reimagining a process of how to make it better and more of a win-win situation for us and our partners, which in this case would be, you know, Patterson next year, Halliburton. So I think it's...

Chris Calvert: It's a really good combination approach of how we look to maintain and maximize our capital efficiencies from the operations standpoint.

Chris Calvert: www.larryweaver.com

Chris Calvert: Speaking of the efficiencies, while we're giving shout-outs, we need to do some for Forrester Smith, who is out there all the time. Pipe is there. We don't have to wait on it. I appreciate him.

Speaker Change: Yeah, correct. So there's a lot of people. The list is numerous, you know, but I think...

Speaker Change: When we talk about anything that we're looking of, as far as just timing and tills and things like that.

Speaker Change: If you don't have pipe ready on location when you're ready to case a well, you're going to be held up. And our service provider has been really our casing provider for decades. And so I think you have relationships that go back that help weather the bad times and flourish in the good times. And so I think whether it's Halliburton's, Patterson, Nextier's, the casing companies, it is something that we value at a tremendous level. And we continue to kind of push forward to make it win-win situations for both the vendor partnerships and Matador itself.

Speaker Change: www.globalonenessproject.org

Speaker Change: Thanks. That's a great detail. And for my follow-up, I know that you all have had extensive results and data kind of across the stack, but the increase of capital for wells targeting the first bone spring caught our eye for the 2024 program. So any color with respect to just kind of the thought process behind that decision, and maybe if there's any sort of commentary on expectations for those wells and also assumptions embedded for year-over-year well productivity trends for the program as a whole.

Speaker Change: Thank you.

Speaker Change: Sure, Oliver, this is this is Tom Olsner. Yeah, we really like the First Moon Springs and the reason we're investing money in that specific interval is simply because the well results have been have been very solid. You know, even going back to, you know, many years ago with our kind of first test of the First Moon Spring at Marlin Downey,

Speaker Change: In Eastern Antelope Ridge, we continue to delineate that zone, kind of all kind of throughout the Northern Delaware Basin and feel very confident in those targets.

Tom Wilson: Going to your well productivity question, we put out slide number 6 or slide C showing our average UR over the last 4 years.

Speaker Change: Thank you all for being a very, very successful program and we can expect that to continue.

Speaker Change: There's a variety of different performances in all different asset areas, but we continue to focus on investing the company's resources into the northern, kind of the oilier portions. And you see that in the oil URs that we've generated in the first bone spring, which is certainly part of that.

Speaker Change: www.globalonenessproject.org

Speaker Change: Awesome, thanks for the time guys.

Speaker Change: In one moment for our next question.

Speaker Change: Thank you. Thank you.

Speaker Change: Our next question will be coming from John Freeman.

John Freeman: I'm Raymond James. Your line is open.

John Freeman: Bye, guys.

John Freeman: Hey John !

John Freeman: On the Marlin processing plant, y'all laid out the return and the payback period that's expected. Can y'all speak to how y'all envision the volume split on that plant between Matador and third parties once it's up and running next year?

John Freeman: www.globalonenessproject.org

John Freeman: Yeah, John , this is Brian . I'm happy to take a shot at that and then Glenn can clean up anything after, but really I think right now at San Mateo we're 70%, 80% Matador.

Brian: I think as you move over to Pronto, it's almost the opposite right now.

Brian: But I think going forward, you'll end up more with the new plant, almost 50-50 split with the new plant.

Brian: So all in, you know, we'll probably end up being 60% Matador, 65% Matador, and the other third party, and we look forward to those third party opportunities. We think there are a lot of them up in that area, and so a lot of good partnerships and a lot of repeat customers. And so as we build the plant, we think there's a lot of real opportunity there.

Speaker Change: That's great. And then my follow-up, and it kind of dovetails.

Speaker Change: You just mentioned Brian , which is, you know, y'all talked about kind of a need in this area.

Speaker Change: for more processing for, it seems like, for probably about a year. And so I guess once we think about, you know, the Marlin plant coming, the expansion at least being completed next year,

Speaker Change: Is there another area?

Speaker Change: you know across y'all's acreage footprint that you've already sort of identified as like another area that

Speaker Change: At some point, y'all would like to expand processing capability.

Speaker Change: www.globalonenessproject.org

Speaker Change: You know

Speaker Change: Job that's...

Speaker Change: That's still in the thinking stage and give us a little time to firm up our ideas and plans and we'll be happy to share them with you.

Speaker Change: But it's a little too tentative to go out there and...

Speaker Change: And then the, you know, why didn't we do exactly what that is? We're in the planning stage, and there's a lot of factors. And when we come out, we'll have all that detailed for you. But it certainly is.

Speaker Change: As a matter that's on our mind, we think you're good opportunity to go along with our other opportunities, but we've got to prioritize because we have some great grilling opportunities and great third party and reconciling those issues.

Speaker Change: Part of the process, the guys around this table, we're all thinking about with each other.

Speaker Change: www.subsedit.com

Speaker Change: Thanks, Joe. I appreciate the time, guys.

Speaker Change: Appreciate the question too.

Speaker Change: In one moment for our next question.

John Freeman: Our next question will be coming from Philips Johnston of Capital One Securities. Philips, your line is open.

John Freeman: www.globalonenessproject.org

Philips Johnston: Hey guys, thanks. Most of my questions have been answered, but maybe just a clarification on the...

Philips Johnston: Additional Advanced Property Acquisition in Q4, you mentioned about a thousand-a-day impact to Q4. Just in terms of timing of when that closed, was that a full quarters impact or a partial quarters impact?

Philips Johnston: Meaning that the current run rate impact is somewhere north of that number.

Philips Johnston: Yeah, this is Brian . I'm happy to answer that. It really, when we're referring to the thousand, we're really referring to the full quarter impact.

Brian: So, you know, on a go-forward basis, I think that that deal will continue to have really good returns for us going forward into 2024. I mean, I think, again, as I said, the land guys have done just a fantastic job. I think if you look at page 12 of our deck, you'll see in 2012 we had 7,508 acres, and now we're over 152,000 acres, and so they continue to build that brick-by-brick acquisition and add to our production, add to our reserves.

Brian: and do a fantastic job.

Brian: Go to Beadaholique.com for all of your beading supply needs!

Speaker Change: Okay, great. And just to clarify what's embedded in your production guidance, does the fourth quarter 24 exit rate guidance assume any incremental volumes from these types of feature?

Speaker Change: Small-scale acquisitions like the ones you've been doing or is it sort of organic from where we stand today?

Speaker Change: Yeah, so I think going forward this year, really it's more, you know, acquisitions that we know that are, you know, close to being closed or being closed. We take those into account. But other than that, it's...

Speaker Change: In large measure, it's organic growth, and so, you know, I think that we do these brick-by-brick acquisitions. There's always some of that, and we know there will be some of that, so we take some of that into account. But really, it's more on just the straight organic growth for the year, as we look at the exit rates of 2024.

Speaker Change: Okay, perfect. Thank you so much.

Speaker Change: And the final question will be from Kevin MacCurdy.

Kevin Moreland MacCurdy: of Pickering Energy Partners. Kevin, your line is open.

Kevin Moreland MacCurdy: for taking my question.

Kevin Moreland MacCurdy: I appreciate all the details on the first quarter turn lines and CapEx. Your guided exit rate for 4Q oil was better than we expected. Can you kind of help us bridge that gap on how you hit that exit rate? Any more color you can provide on the CapEx or the turning line cadence throughout the year? I mean, you mentioned the 21 wells that come on in the second quarter. Is there another slug of wells or is that really what's going to drive the production higher?

Kevin Moreland MacCurdy: Yeah, this is Brian . Kevin, thanks for the question.

Brian: I think, you know, going through the year, we talked about those 21 wells that will come on in the second quarter, and those really do help drive production higher.

Brian: In addition, you know, this year on total, we expect to turn to sell 94 net wells. And so, you know, those are spread out as well, kind of throughout the second, third quarter as we go forward into the fourth quarter.

Brian: And so, you know, it's really a mix there. It's kind of split between the two quarters from third quarter and second quarter with more weighted towards the second quarter just because those 21 wells have come online. And so, that sets us up for that great fourth quarter that we've talked about. I think we're really excited about that exit rate and how it sets us up for next year.

Brian: www.globalonenessproject.org

Speaker Change: Great, and as my follow-up, you mentioned that you made some payments on the Marlin plant expansion in 4Q. How much of the 2024 midstream budget is allocated to the processing plant expansion? I think in the past you've said that that plant could cost $200 million overall.

Speaker Change: www.globalonenessproject.org

Speaker Change: Yeah, hi, this is Kevin, this is Glenn. So for 2024, approximately $90 to $100 million is associated with the actual Marlin 2 plane.

Speaker Change: .

Glenn: And then, you know, there's obviously CapEx.

Kevin Moreland MacCurdy: That we've attributed to the, you know, the build out between, you know, the connectors that we're talking about there and the addition of compressor stations and then building out to some of the properties on the ranger north, the northern part of ranger.

Speaker Change: Great, thank you guys.

Speaker Change: Thank you.

Speaker Change: And thank you ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd now like to turn the call back to management for any closing remarks.

Speaker Change: Yes, I do have a few closing remarks.

Speaker Change: The first is just to refer you to slide D, which summarizes our company highlights for last year. At this time last year, I was saying that we were beginning the year at about 100,000 barrels VOE per day, and that I thought with the advance and our other drilling programs,

Speaker Change: We would...

Speaker Change: boost that during the year.

Speaker Change: And come up by 50%. And sure enough, we did.

Speaker Change: Our exit rate was 145,000 barrels, so great work by the team. A second, and slide D just shows that, and also emphasize that our alignment of interest that the management group itself has about

Speaker Change: 6% of Matador.

Speaker Change: And we have over 90% participation in our Employee Stock Purchase Program. So, everybody in this room and throughout the company, just like you, we've got chips on the table. I'd also like to give a shout-out to our measurement room. It runs 24-7 like our MaxCom.

Speaker Change: And keeps an eye to be sure we're getting paid for each barrel of oil in MCF. And now over the years of the time period, they've added tens of millions of dollars. I think $32 million was the number we discussed.

Speaker Change: at our board meeting. So, it's great work by them in tracking that and checking each barrel of oil at each invoice. Some of that's tedious work, but they've stuck to it and it's paid off.

Speaker Change: Just, you know, y'all have asked a lot of really good questions, but I just want to be sure, some things to emphasize, the reserve growth from $360 million to $460 million.

Speaker Change: If price of oil hadn't slipped, there'd be more oil than that, some of those as you...

Speaker Change: would probably be approaching 500 million.

Speaker Change: And then the growth of the acreage itself, I think that the land group, Ben and his guys,

Speaker Change: and the men and women of his land group, that they increased the Delaware Basin position from a hundred and...

Speaker Change: 19,000 acres to 152.

Speaker Change: And if you remember, when we went public in 2012 and we're establishing this as an area of interest, we began with 7,500. So we've gone from 7,500.

Speaker Change: to over $150,000. I didn't want that to go without being missed and that you have growing third-party revenues from customers.

Speaker Change: www.globalonenessproject.org

Speaker Change: Out there in the basin and these are really the blue chip companies and we've tried to be careful Also, I've always believed yeah, I've been in this business 40 years

Speaker Change: I started with $270,000 today, and I think you'd put our assets all together.

Speaker Change: You know, approaching 10 billion.

Speaker Change: And one thing is just kind of, we're more of a tortoise than a hare, getting a little bit by a little bit, year after year.

Speaker Change: And slide K on page 14 shows you that it's been steady since we went.

Speaker Change: public. And we see for the foreseeable with the number of locations that Tom and his team have been putting together, the growth of the midstream,

Speaker Change: Vance Acquisition

Speaker Change: team that this will continue and should be there. Billy's group is saving money on the cost, but he's also doing innovations.

Speaker Change: that

Speaker Change: https://www.youtube.com

Speaker Change: You know, the, uh, the, uh...

Speaker Change: https://www.youtube.com or www.facebook.com or www.instagram.com

Speaker Change: Tribal Fract. Am I saying that right? They give me a hard time on some of my pronunciations but that's been a big

Speaker Change: And you can see the outperformance that we've had over the years on slide O, you know, comparing the S&P 500 oil price to XOP, and I think that's a lot of what we have to offer, a consistent

Speaker Change: www.globalonenessproject.org

Speaker Change: Performance with a strong balance sheet, you know, with our leverage ratio less than one. And we intend to...

Speaker Change: Continue to keep an eye on the balance sheet because we're shareholders too and look for ways to boost the dividend. So I do want you also to know that, look, we're available to you. If you've got questions, you need answers, Mac is really good, welcomes your questions. Brian will take them. If you come visit us, we'll buy you lunch or breakfast.

Speaker Change: We want to be open because we're proud of what we're getting done, and it's kind of the old-fashioned.

Speaker Change: Uh...

Speaker Change: Pick and Shovel Method, and Little by Little.

Speaker Change: and we think our people on staff.

Speaker Change: are working, trying to get better every day. It's corny to say that, get better every day and help the team get better, but that's what we're, that's what we aim for and I think you can see it's.

Speaker Change: from where we were a year ago.

Speaker Change: To where we are today and the outlook going forward, we're still making very steady progress up and to the right.

Speaker Change: So with that, I'm going to sign off, but know our phone lines are open if you need further follow-up and information, and thank you for taking the time that you have to talk to us as well as study.

Speaker Change: Ladies and gentlemen, thank you for your participation today. This concludes today's program.

Speaker Change: [inaudible] David Lancaster, David Lancaster, David Lancaster, Michael

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Speaker Change: Ben Wyatt, Gabriel Daoud, Ben Wyatt, Jeff Grampp, Neal Dingmann, Michael Scialla, Scott Hanold, Tim Rezvan, Neal Dingmann, Matthew Mariani, Ben Wyatt, Jeff Grampp, Matador Resources Co Ben Wyatt, Gabriel Daoud, Ben Wyatt, Jeff Grampp, Matador Resources Co

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Q4 2023 Matador Resources Co Earnings Call

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