Q3 2024 Matador Resources Co Earnings Call
[music].
Okay.
Gigi: Good morning, ladies and gentlemen, welcome to the third quarter 2020 for Matador Resources Company Earnings Conference call. My name is Gigi and I'll be serving as the operator for today at this time all participants are in a listen only mode. We will facilitate a question and answer session at the end of the call.
Gigi: These 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 would now turn the call over to Mr. Mac Schmitz Senior Vice President Investor Relations for <unk>.
Speaker Change: The door Mr. Schmitz you May proceed.
Mac Schmitz: Thank you Gigi.
Mac Schmitz: Good morning, everyone and thank you for joining us for Matadors third quarter 2024 earnings conference call.
Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador resources in measuring the company's financial performance.
Mac Schmitz: 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.
Mac Schmitz: 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 the information that is now available.
Mac Schmitz: Results and future events could differ materially from those anticipated in such statements.
Mac Schmitz: Additional information 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.
Mac Schmitz: In addition to our earnings press release issued yesterday I would like to remind everyone that you can find the slide presentation in connection with the third quarter 2024 earnings release under the Investor Relations tab on our website.
Speaker Change: And with that I would now like to turn the call over to Mr. Joe Foran, our founder Chairman and CEO Joe.
Joe Foran: Thank you Mac.
Joe Foran: Great to be with everybody again at the analyst day leather.
For this question and answer time, and we wanted to be sure to talk about the matters that are most important to you.
Joe Foran:
Joe Foran: Yes.
James I'd like to emphasize here.
Joe Foran: Our first is that we.
Joe Foran: Got a lot of questions about the Merit Dev acquisition.
Joe Foran: Being integrated very well, it's ahead of schedule and doing better than expected.
Joe Foran: The same thing.
Joe Foran: Rapid currently.
Joe Foran: All the teams have worked in their areas as you will.
Joe Foran: Here from the various answers to your questions that each of the departments are contributing to the good performance that we had.
Joe Foran: This quarter and I'm very proud of waiver in place the way everybody is working together and helping each other and coordinating the science because each department is not an island, but works with the other departments at a cab it sounds corny.
Joe Foran: But it's really nice to see.
Joe Foran: Everybody working together and helping each other.
Joe Foran: As as events unfold.
Joe Foran: And it was a big quarter for us.
We did the merit to have we did.
Joe Foran: The offering two bond offerings with his stock offering.
Joe Foran: All the saves came to pass and.
Joe Foran: We drilled some very exciting wells that we.
Joe Foran: We think <unk> said that 2025.
Joe Foran: The bottom line.
Joe Foran: My message is if you like this quarter I think you'll like the fourth quarter even better.
Joe Foran: So with that.
Ill turn it back to you.
Speaker Change: J D.
J D: Take the first question.
J D: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced towards the draw. Your question. Please press star one one again.
Speaker Change: Ladies and gentlemen, due to time constraints, we ask that you. Please limit yourself to one question again, we ask that you. Please limit yourself to one question until all have had a chance to ask a question.
After which we would welcome additional follow up questions from you.
Speaker Change: One moment for our first question.
Speaker Change: First question is from the line of Neal Dingmann from Truest. Your line is now open.
Neal Dingmann: Good morning, Joe and team nice quarter, Joe I can't help but notice I would say, it's pretty commendable how actively you and the team continue to add shares in open market. Unlike what we're seeing from a lot of other companies like that slide that you put out highlighting this Adam just wondering these open market purchases to me demonstrate how cheap you think the shares continue to be and I'm just wondering.
Neal Dingmann: Given this continued discount would you all consider stock repurchases is a larger part of your shareholder return going forward, especially once you get that leverage quickly back under one times.
Thanks Neil.
Speaker Change: Thanks for noting reacted by not just from form four but from the whole staff.
Is that.
Neal Dingmann: Hi.
Neal Dingmann: That's the most gratifying.
Neal Dingmann: <unk> announced that the board and management group can have us there.
Neal Dingmann: To enjoy the confidence of the support of the staff.
Neal Dingmann: I really think they're they're knocking it out of the park in trying to get better ever.
Neal Dingmann: Every day and so it's fun to come to work.
Neal Dingmann: Now.
Speaker Change: Uh huh.
Speaker Change: Weak wheat.
Speaker Change: We believe they can see the future.
Speaker Change: And that is by us.
Speaker Change: And we would never sell this share of stock Terry is that test.
Speaker Change: That our best years are still ahead of us.
Speaker Change: Now to your specific question about buybacks, yes week, we consider them.
Speaker Change: And we talk with other companies that have implemented Dan.
Speaker Change: And so far we think the fixed dividend is the most effective way.
Speaker Change: To return value to our.
Speaker Change: Long term shareholders.
Speaker Change: The basic problem I have with buybacks as sometimes you're just exiting your short term shareholders. They are taken advantage of the <unk>.
But we are open minded about it.
Speaker Change: And we will continue to study it.
Speaker Change: And.
Speaker Change: That fixed dividend I'm really pleased to get it to a dollar.
Speaker Change: And as that dividend grows then buybacks may be.
Speaker Change: <unk>.
Speaker Change: May be more appropriate but.
Speaker Change: At present.
The shareholders seem to like.
Speaker Change:
Speaker Change: Keeping the fixed devotee added globally.
Speaker Change: And the second factor is that debt is with devotee of it.
Speaker Change: It doesn't require us to go in their beds.
Speaker Change: We're able to do that from our free cash flow.
Speaker Change: So.
Speaker Change: When we get our debt down.
Speaker Change: Sure.
Speaker Change: Guys like buybacks can be given extra consideration.
Speaker Change: The last thing.
Speaker Change: That I like to say is that.
Speaker Change: At our annual meeting, we haven't generally 200 or more.
Speaker Change: And.
Speaker Change: They're your rank and file long term shareholders and it hadn't been expressed.
Speaker Change: Yes.
Speaker Change: To do buybacks.
Speaker Change: <unk> indicated that preferred dividend races.
Speaker Change: Then buybacks because that moves them out and they don't get to enjoy the upside that we believe matador.
Speaker Change: Offers.
But we don't rule anything out.
Speaker Change: Hi.
Speaker Change: And the one thing we have we do feel also gratifying.
Speaker Change: That these variable dividends hadn't worked out that much and you see companies moving away from them. So.
Speaker Change: To me, it's down the fixed dividends or buybacks.
Speaker Change: At present.
Speaker Change: We take the fixed dividend helps all the shareholders.
Speaker Change: And.
Speaker Change: Okay.
Speaker Change: It seems to be the best were saved by our particular shareholder group.
Speaker Change: That answers your question Neal It is a good one.
Speaker Change: Yeah.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Scott Hanold from RBC capital markets.
Speaker Change: Okay.
Scott Hanold: Good morning.
Nice quarter.
Scott Hanold: My question and Joe you all provided some.
Scott Hanold: Framework on 2025, and I was hoping maybe to get a little bit more context and color.
Scott Hanold: Can you give us a sense of.
Scott Hanold: How youre thinking about capital allocation in.
Scott Hanold: In 25 to your respective areas, especially in light of obviously these new merit of assets that are performing really strongly although the box and.
Speaker Change: What does that mean in terms of like when you think about nine rigs how much capital.
Speaker Change: Would that potentially utilize.
Speaker Change: For next year.
Speaker Change: Scott Let me take your question in parts and shared Brian Willey.
Scott Hanold: Some of the answers to that or with Chris Calvert.
Speaker Change: Our chief operating officer.
Speaker Change: But.
Speaker Change: That.
Speaker Change: The very first thing is that we see.
Speaker Change: Yeah.
Speaker Change: Profitable growth at a measured pace as best you've heard that it's a corny expression, but we said it off and I know you've heard it that we've taken no growth is not what matadors culture has been having grown from $270000.
Speaker Change: 1983 to the present level.
Speaker Change: We've tried to grow every year and on average we've averaged during that was 40 years, a 20% annual growth now we know as we reach certain sizes now were over $11 billion in assets.
Maybe 20%.
Speaker Change: It may be more than ideal and more charter.
Speaker Change: Figure out as we grow.
Speaker Change: But we expect to grow and we're fortunate that our staff geology and engineering.
Speaker Change: Land have all work together.
Speaker Change: Come up with a whole lot of inventory 2000 locations.
Speaker Change: That we think will have a better than 50% rate of return on average.
Speaker Change: So when you can.
Speaker Change: Drill and get those kind of returns we think that base to be an active part now will be alert for acquisitions as you know, but you've known us for a long time now all the acts of this acquisitions. We made during that time. These last 15 years.
Speaker Change: It worked out.
Speaker Change: That again I credit the team, Tom Elsner and all the other.
Speaker Change: Engineers.
Speaker Change: <unk> is doing a good job on evaluating that and then Ned.
Speaker Change: Ran finding one.
Speaker Change: <unk>.
Speaker Change: Add new zones and.
Speaker Change: Uh huh.
Increased make better fracs with cliff that add to those reserves so.
Speaker Change: Ah.
It's a plan that's working but we try to.
Speaker Change: Stay open.
Speaker Change: To new ways to do it and to make course corrections or even in the middle of the year to optimize.
Speaker Change: Growth and returns to shareholders.
Speaker Change: So it's not that we have a five year plan.
Speaker Change: And then we go into it well this is year one so we do this in year two we do that.
Speaker Change: Much more.
Steve Kerr.
Speaker Change: To where the opportunity is.
And we proceed.
Speaker Change: Along those lines is that stay flexible and look for those special opportunities.
Speaker Change: Yes, Joe This is Brian Willey, Vice President and Chief Financial Officer.
Speaker Change: As Joe mentioned this profitable growth at a measured pace and Scott you made reference to it but it didn't exactly put out the number but we do expect to have over 200000 Boe per day next year.
Speaker Change: Look on slide and you can see that we're really excited about those those opportunities as Joe mentioned from a capital perspective, Scott as part of your question I think you mentioned the nine rigs, we're running 90 Super spec rigs, we like those rigs and hope to be able to keep them.
Your next year. This year, we only had nine rigs for half of the year and so we expect to have a little bit more capex next year and having those nine rigs and a full year and then you had also mentioned the Meredith properties and we are very excited about those properties already performing better than our expectations and we've mentioned in the past those have a high working interest over 85.
Speaker Change: And so we would expect that between the high working interest from some of the <unk> wells.
Speaker Change: The nine rigs for the full year that directionally.
Speaker Change: Capex will be a little bit higher than it was this year.
Speaker Change: $125 billion this year, so a little bit higher than that but the specifics will go into next year. When we do our plan in February 2025.
Speaker Change: Thank you <unk>.
One moment for our next question.
Speaker Change: Our next question comes from the line of Zack <unk> from J P. Morgan.
Speaker Change: Yes, thanks for taking my question.
Zack <unk>: You reported a tax refund this quarter and noted that you didn't expect to be subject to the A&P. In 2025 can you just give us a little color on where you expect cash taxes to be in 2025 at this point and maybe talk about how you would expect cash taxes to trend in future years.
Speaker Change: Hi, Zach this is Rob Mccormick.
Zack <unk>: And so.
Speaker Change: We're really proud of the work we did over the last three months. The team has really been firing on all cylinders not.
Speaker Change: Not only with the <unk> acquisition, but.
Speaker Change: Honestly on this cash tax part like Joe.
Speaker Change: References earlier I do feel like the team is.
Speaker Change: So really firing on all cylinders there. So I just wanted to start with that.
Speaker Change: As you noted in the release, we did reduce.
Speaker Change: Our estimate of the cash taxes as a percentage of pre tax income.
Speaker Change: And we're really confident in that answer for 2024.
The second thing that you noted.
Speaker Change: On the corporate alternative minimum tax for 2025, I think is another really big win for.
Speaker Change: For the company.
Speaker Change: I think as we go through our planning the actual cash tax rate for 2025 will be largely dependent on our plan.
Speaker Change: Where we come out in the available deductions that Matador will have for 2025 and so as we go through the plan we'll have.
Speaker Change: More to say on that in February.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of John Freeman from Raymond James.
John Freeman: Thanks, Hi, guys.
Hey, John.
Hi.
John Freeman: What I'm trying to think about what levers you can pull next year to continue this impressive rami can you further efficiency gains to keep lowering that.
John Freeman: E&C per side, obviously, you are expanding the use of our time on Frac seems seems pretty clear.
John Freeman: Other option.
John Freeman: Possibly be shifting from kind of dual fuel fleets. That's something you have looked at just.
John Freeman: Any sort of color on that topic potential savings et cetera.
John Freeman: Hey, John It's Chris Calvert, EVP, Chief operating officer, Yes, obviously, thank you for noticing that we're referring to slide in the deck and we're extremely proud of the fact that we've been able to pull.
John Freeman: Our drilling completion costs per lateral foot down from our January estimates of $1010 per foot down to know when the 930 range was about an 8% reduction.
John Freeman: We've talked in the second half of this year, we have seen a little bit of softening in the <unk> market in the oilfield services market. However, the primary drivers have been capital efficiencies from the operational front that you've that you've spoken to.
John Freeman: Really looking at what can push forward I think the effectiveness of pushing forward implementation of triangle Frac into our program. We pilot tested <unk> first part of this year.
We have successfully done two more triangle fracs in the second half of this year, one of which was actually done using remote frac operations and so I think when we look into 2025 the increase of remote operations is going to be even larger part of our portfolio simply because as we're able to tie potentially non simon or non triangle Frac wells together.
John Freeman: That continues our efficiency push up 250 to $350000 well savings respectively, but it also continues to solidify vendor relationships. Because every time, we can convert non similar triangle frac wells into a trauma, where thermal product batch.
John Freeman: This move times for our service companies on the completion side. So it really is a win win situation for us and so increase optimization of both of those completion processes continue you're going to be a high priority, which will include a larger percentage of those being remote frac operations and so from a completion standpoint that should about cover it on the drilling side, it's continuing to use with you.
Assistance of our Max Com Operation Center over 300 drilling records to date since the inception of Max Com in 2018, the continues to reduce drilling times. So if we look at our U turn technologies for example, which have continued to become a larger presence of our drilling portfolio.
John Freeman: We've reduced our drill time, specifically on five <unk> wells that are expected to be turned in line in the back half of this year by 30% as compared to our 2023, you turn wells and so I think the efficiencies that will pull forward into 2025 is going to continue to be the same story just continued improvement upon those processes and so we appreciate.
John Freeman: The shout out and the recognition for the accomplishments that we've made but I think levers are still there to be pulled I think we've proven ourselves. If you refer to slide eight as one of the most efficient operators in the basin, we've proven that from an operational standpoint, as well and so I think we're excited about 2025 holds and we'll continue to look forward to telling that story in February.
Speaker Change: Chris just to add on.
Speaker Change: I would say Glenn down there why isn't his hand. He was he has turned it back too, but you mentioned and I want to underscore about the savings in time, because each time, you save a day its about $100000 and working closely with Patterson.
Speaker Change: Our frac crews in the like everybody has contributed.
Speaker Change: Some time savings and it adds up and that's why we're able.
Speaker Change: They use nine rigs and not have to go to 10 or 12, because we're drilling these wells faster, which means you can get more.
Speaker Change: Wells drilled and you all have done an outstanding job.
Speaker Change: But they are SaaS is that these savings are not coming because.
Speaker Change: We are playing one vendor against the other its development of their.
Speaker Change: Basic belief is.
Speaker Change: Build that relationship with your vendors.
Speaker Change: Lack our part.
Speaker Change: And others and.
Speaker Change: It will pay dividends.
Speaker Change: It will be worthwhile over the years and over the long term, so I want to call attention.
Speaker Change: So that is part of the efficiencies and again, the shatt app to the Max Commerce those guys go out 24 seven.
Speaker Change: Two shifts two week tranches and <unk>.
Speaker Change: Geologists and engineers and they're also really collaborating and.
Speaker Change: Helping.
Speaker Change: Work with you all in so that drilling team and their Max com to aim at.
Speaker Change: All of these groups the finance team.
Speaker Change: Everybody's worked together on this and I'm real pleased that.
Speaker Change: That you're making as much progress as you are.
Speaker Change: Dan.
Dan: John I, just wanted to pile on to what Chris and what Joe is saying to you on.
Speaker Change: The use of produced water produced water for hydraulic fracturing operations as just another cost efficiency that we see it helps a little bit on the capex, but it really does help on reducing opex and lease operating expenses as we use the wells produced water.
Speaker Change: For for Frac. So that's just another another place that we can see some cost efficiencies and then also has the added environmental benefit as well and the last last thing as we look at past one time get has helped our <unk> as it.
Speaker Change: We have a.
Speaker Change: Growth of lease operators and production staff in the field that's found ways to do more work with less people. So there.
Speaker Change: Their costs are spread over more wells and I think they're doing a terrific job.
Speaker Change: Absolutely.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Kevin Mccarthy from Pickering Energy partners.
Kevin Mccarthy: Hey, good morning, Matt at our team and congratulations on a good quarter.
Kevin Mccarthy: I wanted to ask about the merit of asset it looks like production from those assets has increased pretty materially since you closed the deal up to 31000 barrels a day from 26000 barrels a day in the third quarter. I was wondering if you could talk about what drove that increase and how are you envisioning the trajectory of production and activity on those.
Kevin Mccarthy: <unk> asset specifically over the medium term.
Glenn Patterson: Hi, Kevin This is Glenn again EVP production. So yes, it's just as you noted that the last 13 days of the quarter.
Kevin Mccarthy: The merit of assets averaged that 31500 Boe per day.
Kevin Mccarthy: We are forecasting that to be down a little bit in Q4, but that is related to.
Kevin Mccarthy: The shut ins that will be as a result of the fracturing operations of the 11 New Merit.
Kevin Mccarthy: Merit of wells that were.
Kevin Mccarthy: In the middle of of being drilled when we took over the asset so.
Kevin Mccarthy: A little bit.
Kevin Mccarthy: Also to answer your question about the the outperformance really in the last 13 days of our expectations a lot of that was related to the seven new T. All of wells.
Kevin Mccarthy: <unk> brought on in the quarter before closing and those wells.
Kevin Mccarthy: Our boats.
Kevin Mccarthy: Doing very well and better than our <unk>.
Kevin Mccarthy: Projections.
Speaker Change: Hey, Kevin.
Kevin: This isn't that frost EVP of geoscience.
Speaker Change: I think its worth taking a moment to commend the merit for putting this position together, we have always liked to the eastern side of the basin.
Speaker Change: Our Antelope Ridge area as we call. It if you look at slide 24, you can see a few of the well results called out here or Kathy Brian Wells, which are in the federal block and Eastern Antelope Ridge came on very strong rate and then the tea leaves as Glenn mentioned are also coming on strong.
Speaker Change: We had always been optimistic about this part of the basin like I said, but I think these well results are really kind of confirming the quality of the rock over here. So we're really excited.
Speaker Change: To keep developing.
Speaker Change: As part of the basin and bring in more.
Speaker Change: Great Wells forward in the next few years.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Our next question comes from the line of Gabe Daoud from TD Cowen.
Speaker Change: Sure.
Gabe Daoud: Thanks, Hey, good morning, everyone. Thanks for your time quick question.
Gabe Daoud: 66 billion in <unk>.
Gabe Daoud: This quarter did that come in any volumes and then the 200 <unk>.
Gabe Daoud: We had a target for next year does that contemplate any inorganic opportunities. Thanks guys.
Speaker Change: Hey, this is van Singleton.
Speaker Change: Far as the volumes go the acquisitions came with a little bit of production.
Speaker Change: Brian you may want to speak more to that piece of it but it was a very small component of kind of a brick by brick approach that we've.
Speaker Change: We've done for many years and will continue to do.
Speaker Change: Yes, Hey.
Speaker Change: Hey, This is Brian Willey, Vice President and Chief financial officers as Dan said it was the production was fairly minimal.
Speaker Change: The third quarter for those acquisitions that was about.
Speaker Change: Roughly 600 Boe per day, but.
Baked into our July guidance, and so fairly minimal and as we go into next year. We always look at what transactions are close and build that into our guidance as we go forward.
Joe: Gabe this is Joe.
I want a SaaS just what I said.
Joe: It was primarily the inventory.
Joe: Opportunity to have undeveloped acreage that drove most of these deals we were happy to pay for what production was received but one of the major themes that we've gotten questions on all year long as well as our inventory and so.
Joe: As we evaluated act.
Joe: Acquisition opportunities, we were weighted a little bit we're not a little bit, but we were weighted more.
Joe: To the inventory opportunity than just buying PDP and adding that not that we were disappointed in the cash flow.
Joe: <unk> delivered but.
Joe: The real target was adding to our 2000, well inventory and building up for the future.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Leo Mariani from Roth.
Speaker Change: Okay.
Leo Mariani: Yes, hi, guys.
Leo Mariani: To ask a little bit about the midstream.
Leo Mariani: Side of the business here, So you guys kind of specifically called out.
Leo Mariani: Midstream value in the company of greater than one 5 billion in the release and I think this has been a source of frustration.
Leo Mariani: For a while for the company and I wanted to see if maybe there is a plan in the works to try to unlock some of that value and then Additionally, obviously you spoke a little bit to.
Leo Mariani: Capex next year, saying do you see any capex would be up a little it makes sense with the slightly higher rig count and infrastructure Capex you guys have spent some capital in the last couple of years.
Leo Mariani: I think that is in many positioned to start to come down a little bit in 'twenty five.
Speaker Change: Well I'll take it.
Speaker Change: They are at it Brian.
Speaker Change: Brian or or Greg can add to it or Chris.
Chris Calvert: Chris but.
Speaker Change: The first thing is answer your question is yes, we're always open to more opportunities on what to do with midstream and several have been suggested you may remember that we added Susan Ward to our board and Susan had been the Chief financial Officer at shale.
Speaker Change: Uh huh.
Speaker Change: For their midstream business. So she brings a wealth of knowledge.
Speaker Change: Engineering background.
Speaker Change: Great experience along her career to help US study the various alternatives and opportunities that are open to us so.
Speaker Change: You know we.
Speaker Change: <unk>.
Really value most highly about midstream is providing us with flow assurance because most of the equipment out there is a little older.
Speaker Change: And maybe.
Speaker Change: <unk> taps.
Speaker Change: It's just.
Speaker Change: Older and we'd come in we've got new equipment, new part.
Speaker Change: And.
Speaker Change: We thought that was very important.
Speaker Change: And it really proved itself during this time, our vast storm Yuri.
Speaker Change: <unk> was shedding and because of the freezing temperatures and <unk>.
Speaker Change: <unk> guys.
Speaker Change: I don't know, whether it's because I own some stock.
Speaker Change: Or whatever but they were sleeping in their tracks only 5% of the plants, we're still operating and we were one of them and they were sleeping in their tracks and doing everything to keep the gas flowing which was very important to us into our.
Speaker Change: Participants in our system outside third parties.
Speaker Change: <unk>.
Speaker Change: It really prove that value. The second thing is when we talk about timing of money coming in.
Speaker Change: They are cooperating with the drillers and the completion team so that when they finish completing the well the pop is there waiting.
Speaker Change: And another one is area, where they've really contributed.
Speaker Change: Is on the water disposal.
Speaker Change: And reusing.
Speaker Change: Produced water, so we're not using hardly any fresh water. These days, but it's that produced water. So it's good for the environment good for the bottom line.
Speaker Change: Good day.
Speaker Change: The gas still flowing and and they all have some top line too. So our emissions are down to less than 2% I think is right Glen is that right.
Speaker Change: Absolutely right.
Glenn Patterson: Yes, there are.
Glenn Patterson: There are so many benefits to operating the midstream business and definitely want to commend.
Glenn Patterson: The staff on.
Glenn Patterson: A record quarter for San Mateo in terms of throughput on the water gathering side in terms of throughput on the gas gathering side same for pronto and resulted in record EBITDA for San Mateo. So so we often say we play a strike gain and we're open to.
Glenn Patterson: Propositions from other people that.
Glenn Patterson: That night wondering in this business, we've had a good partner and five point on the San Mateo side.
Glenn Patterson: That is.
Glenn Patterson: It's made us a better company and we like working with them.
Glenn Patterson: But we're open to others.
Glenn Patterson: <unk> has come about NII.
Glenn Patterson: Really timely fashion for us.
Glenn Patterson: When we acquired it we've got a second plant as you know gully again, reflecting the value and if we have to divert.
Glenn Patterson: Some capital from our drilling budget.
Glenn Patterson: Finish at the system.
Glenn Patterson: I think we'll all be glad that's that's good insurance money that our gas will be flowing.
Speaker Change: And the others and Brian has something he wants that.
Yeah, Great question, maybe the second half of the question and building upon what Joe said that flow assurance. If you look on slide <unk>.
Speaker Change: You can see that our plant had over 99% uptime and that new plant that we're building is on time and on budget for next year as we think about the capital expenditures for next year and.
Speaker Change: We of course will finish that plant and then.
Speaker Change: We will also have other capital that we will do as we build out the system. This year, we had about $225 million in capital expenditures on the midstream side.
Speaker Change: I think our maintenance capital expenditure program is probably in the $50 million to $75 million range.
Speaker Change: Think we're quite there yet I think next year, we're somewhere between that maintenance program at $50 to 75, and the $2 25 from this year, but I do think it's less than less than this year and then when we get to 2026 with the system fully built out then I think it will be more to that maintenance cap level. If there is not any other great projects of course, I think we always are looking for projects.
Did a fantastic job with the third parties and those opportunities so but absent any of those types of opportunities in 2026, we would expect we'd be more in that maintenance capital level will also give a shout out.
Speaker Change: Romney rains.
Speaker Change: And his work on building that plant and to <unk>.
Speaker Change: Justin and its Sean.
Speaker Change: That are here that have worked out there and spent days in the field to make sure. It goes right. So.
Speaker Change: Great effort by everybody in there Jason pivot, though.
Greg: Hey, Greg.
Greg: Great praise John.
Oh I'm sorry.
Greg: Marvel fans.
Greg: Yeah.
Greg: Characterize jobs name, but I can't express.
Greg: He and that Jason just a wonderful job and.
Greg: He has got everybody working so again, that's just another illustration of the way there has been a great collaboration between the teams to get to a good result.
Greg: Sam.
Greg: Thomas and Sam is in there.
Greg: The one <unk> been with US a long time.
Greg: That.
Speaker Change: Sam Whiddon and Thomas Greene.
Speaker Change: I have been with us a long time and they've really contributed so.
Speaker Change: I know I've gone beyond your question you mentioned these guys what they need to be credited with.
Speaker Change: With the job that Doug.
Speaker Change: Thank you one moment our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Michael Shah from Stephens.
Speaker Change: Yes.
Michael Shah: Hi, good morning, everybody.
Chris You mentioned, you expect more terminal fracs going forward and more of the remote operations. So I'm just wondering if you could maybe explain the mechanics behind.
Michael Shah: And maybe some of the advantages of the remote aspect of the <unk>.
Speaker Change: Yes, sure Mike that's a great question.
Speaker Change: Really starts with collaboration and teamwork between the teams between the asset teams the surface land team and then finally kind of culminating with the operations team.
Speaker Change: The fundamental thought behind it is if you have two surface locations that are some distance apart, maybe 1000 feet or 2000 feet.
Speaker Change: That you can take those two those two individual pads and use whether its surface casing casing. That's truly just laid on the surface to connect them together and complete those wells as a one operation with one Frac fleet and so that was really kind of the theme of behind this we pilot tested it in 2021 successfully pilot.
Speaker Change: It down on actually on our Stateline acreage on the <unk> pad, where we strong two three well pads together that would not have been signed more frac candidates and made them a six well pad that we were able to use simulcast <unk> and so that's really kind of the fundamental theme behind it of where it's truly an engineering efficiency we're taking.
Speaker Change: Taking two pads that otherwise would not be able to benefit from the process and with engineering and collaborative teamwork with the land team and everybody else, we feel that we've been able to transition over 90 wells that otherwise would not have been similar trammell frac candidates into those type of well completions and the savings that has been tight.
Speaker Change: To those who has been upwards of $20 million and so that's really the idea of we work with the teams to set up well pads that will naturally be a.
<unk> to be similar triangle, but in the instance, where it's not we can tie those two pads together and convert them to a similar trammell frac well completion.
Speaker Change: Okay.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Oliver Kuang from Tudor, Pickering, Holt and company.
Speaker Change: Good morning, all and thanks for taking my question.
Oliver Kuang: Just wanted to hit on LOE, you all point towards some trends as a result of merida volumes flowing through for Q4 and into 2025, just wanted to see how's the pending sale of your opinion on interest being flowed through within where the Q4 guidance range sits today and also any more specifics of things that you all are planning to do in the air.
Oliver Kuang: Area that would allow for your ALDA reduces component on ops and the merit of area.
Glenn Patterson: Hey, Oliver this is Glenn I'll take the question so.
Oliver Kuang: As it.
Glenn Patterson: As it relates to opinion that really doesn't have any any effects. The sale opinion doesn't really have any effect on on the opex for those properties.
Oliver Kuang: So I'll start with that and then second I do want to add.
Oliver Kuang: Thanks.
Oliver Kuang: And express my appreciation for the professionalism of the Amira Dev employees that helped us this quarter and transitioning and ensuring that we did have a smooth transition as we took over operations.
Oliver Kuang: For those properties as we mentioned in the release the operating expenses for those properties are nationally higher than than Matadors legacy production base production and so as a result, we did guide up slightly in Q4.
Oliver Kuang: I would say all of our give us a little bit of time, we have recognized already $1 billion, a month and potential savings a lot of that relates to the use of.
Oliver Kuang: Recycled produced water as I mentioned for hydraulic fracturing operations and then.
Oliver Kuang: Chemical production chemical spend.
Oliver Kuang: Is a place where there is some room for optimization, we feel and are already implementing plans to get those.
Oliver Kuang: Those.
Oliver Kuang: Cost reduced and more efficient more efficient chemical usage and then also on the personnel front.
Oliver Kuang: <unk> seen optimization, there as well as we've really kind of move their operation Center from Austin out to New Mexico, where it's where it is field based so there is three examples and.
Oliver Kuang: We're looking at other ways to improve opex in <unk>.
Looking forward to telling you a little bit more about it as we continue our operations out there. We're in about a month, so give us some time and we'll be a there'll be a lean lean machine.
Oliver Kuang: Yeah.
Oliver Kuang: <unk> SaaS, we don't have any problems with Meredith did it but we lean towards the practice of having a field base operations as opposed to more remote.
Oliver Kuang: On that but very pleased with the quality of work, but again, what excites us most about <unk> as well as the advance is the quality of the rock.
Oliver Kuang: I'm not a geologist, but our geological and engineering group to a person talk about that.
Oliver Kuang: It's good to have this kind of rock it matches up with whatever we have advance fit very.
Oliver Kuang: Perfectly adjacent to much of our properties and the same with ameridata fits and adjacent to or so.
Oliver Kuang: That was also argument for.
Oliver Kuang: It would be a good fit in the long run for us.
Oliver Kuang:
Oliver Kuang: And.
Oliver Kuang: But it's a good question and again I would say to all of you. If you you.
Oliver Kuang: After this call is over don't hesitate.
Oliver Kuang: Call in and we will try to answer all your follow ups and.
Oliver Kuang: Make sure you understand that this was really a great quarter.
Oliver Kuang: For us and really sets up 2025, so I think we have one more.
Oliver Kuang: Question.
Oliver Kuang: Go ahead go ahead.
Oliver Kuang: Thank you one moment.
Speaker Change: Our last question comes from the line of Scott Hanold from RBC capital markets.
Scott Hanold: Hey, Thanks, just hoping to get the one follow up.
Scott Hanold: The commodity market has been very volatile out there.
You all are.
Scott Hanold: <unk> been very <unk>.
Scott Hanold: Just in terms of looking at different ways of building the business in ground game is obviously, a big component of that and I'm just kind of curious like what are you seeing on the ground Green ground game front right now.
Scott Hanold: What's the appetite out there from kind of buyers and sellers and do you think.
Scott Hanold: Looking into 2025 do you feel good about like your ability to continue what you've done so far.
Scott Hanold: Yeah.
Speaker Change: Yes, it's an interesting point, Scott, but what I'd like to answer SaaS, what I've seen over my 40 years is that when you have a period of time, where you have a lot of M&A is followed by time of rationalization.
Scott Hanold: Particularly the larger the transaction.
Scott Hanold: By the Big companies for example, they'll buy all of it is a whole bucket full of properties some of those won't fit their plans and they will rationalize.
Scott Hanold: Sell them and that creates a bow.
Scott Hanold: Buying opportunity not only for us, but others, where they where they would fit.
Scott Hanold: I think youll see some of those come along a fair amount of rationalization will lead to some and the second is that there are.
Some people.
Scott Hanold: And then the private equity area.
Scott Hanold: <unk> equity companies tend to turn over their assets ever for five years or some period of time. So you always have some of that was coming on the market.
Scott Hanold: And then.
Scott Hanold: You have situations where.
Scott Hanold: Were proposed wells don't fit.
Scott Hanold: Fit their plan or fit their budget.
Scott Hanold: We like that try to be that company that turned to when they made a quick answer.
Scott Hanold: Or help to have more.
Scott Hanold: More interest and they really want and want a lifestyle malls. So we always try to be open to that.
<unk> surprising.
Scott Hanold: That that things are going on all the time same way in agriculture farms and ranches trading all the time.
Speaker Change: Got it.
Scott Hanold: And.
Scott Hanold: There'll be some years, where there are more than seven years, where they are less but if you have a continuing presence.
Scott Hanold: And tape out there, making deals and if you do a deal and it ends on a happy note like advance Ameridata believe we hope that leads to other deals.
Scott Hanold: We did a lot of deals last year somewhere for.
Scott Hanold: More and sell more for less but.
Speaker Change: Thank you our land department to give a big shout out to ban.
And John.
Speaker Change: That they ended those happy where.
Speaker Change: A lot of repeat business fans say that right now I'll add just a little bit to that.
Scott Hanold: Scott you've known US a long time and we've had this program consistently over the years.
Speaker Change: Things we focus on.
Speaker Change: One creating situations that are win win for both sides and I think that leads to keeping our pipeline of opportunities full but also focusing on the best rock and focusing on the balance sheet and making sure that whatever deals we're looking at.
Speaker Change: Fit really well into what our operational plans are and again.
Speaker Change: Win win on both sides. So with that I think we're going to continue these relationships and continue to keep our pipeline of opportunities full and then make the decision at the time, that's appropriate whether or not it's something right for us.
Speaker Change: Yes. This is Bryan I think this is the last question. So just a couple of things for those that might be.
Speaker Change: Doing the models out there.
Speaker Change: First as it regards to the gas to oil ratio.
Speaker Change: I appreciate the street's optimism.
Speaker Change: And all of our gas to oil ratio I think as we look at the streets, it's probably close to 62% going forward was we appreciate that but I think once we factor in our haynesville assets.
Speaker Change: Probably closer to more of a 60% number.
Speaker Change: Really leads me to my second point, which is I think there's been a lot of talk about gas recently, whether it's through AI or.
Speaker Change: The new LNG terminals and I, just want to remind everybody that we have a significant gas bank that's in the cotton Valley.
Speaker Change: I would expect two to 300.
Speaker Change: Gas.
Speaker Change: <unk> there, we obviously don't have a bcf im sorry Bcf of gas, we don't have those on our.
Speaker Change: Reserve report, yet because we don't have a plan to drill those in the next five years, but if gas prices were to stabilize higher than we could if we wanted to quickly pivot over there in.
Speaker Change: In addition to the significant gas reserves, we have that are over in the Delaware Basin. I think we have over one four tcf right now in gas reserves. So we can we can increase those in.
Speaker Change: Become more gassy, if that's what's needed.
Speaker Change: And then maybe finally I think Joe probably won't want me to say this but I'm going to say it anyway.
Speaker Change: These CEO magazine.
Speaker Change: It was just the leading magazine here in Dallas.
Speaker Change: Has recently selected <unk> to receive its legacy award will be presented a special awards presentation next week and so this is a very prestigious award. Prior Legacy Award winners include Kelcey, Warren Treasuries Jones, Scott, Sheffield and Boone Pickens and just.
Speaker Change: Those accomplishments over the last 40 years and put them right there with some of the best oil man that our country has now and so congratulations to Joe I think its well deserved because he's gone Matador from a company that started with $270000 from friends and family to a public company with a market cap of $6 5 billion. So just wanted to say he probably won't like it but just wanted to mentioned that and congratulations.
John Freeman: John This great honor.
Joe Foran: Yes, there is a lot of disbelief among my friends for this.
Joe Foran: And they said they have to see it to believe it so.
John Freeman: I was really surprised by the added and it just shows you. If you have enough relatives you can be elected day any day.
Joe Foran: Yes.
Joe Foran: But thank you, Brian but again that.
Joe Foran: I have to say that none of this would be possible without.
Joe Foran: The participation of a lot of people over time, including some.
Joe Foran: People from mice that were sitting in the gym at church room, and he came from Macy's Boons top engineer Marlin Danny.
Joe Foran: Great man that.
Joe Foran: Really can attributed a law jacks lafer that former president of the gory Mcnaughton.
Joe Foran: Marlin was president of both shell and Arco.
Joe Foran: And and.
Joe Foran: And.
Joe Foran: Great staff members, along the way working together so.
Speaker Change: Uh huh.
Speaker Change: Hi.
Speaker Change: I really Havent then.
Speaker Change: So much can credit myself as much as just directing traffic among all of these guys have gone out and made it happen. So.
Speaker Change: That's the main reason I like our chances going forward.
Speaker Change: Economics might change commodity prices haven't changed but this group of people that are in the habit and they've gotten to the point, where theyre, making good decisions and the process is working with the collaboration.
Speaker Change: Oh, great to accept the award, but you got it now that <unk>.
Speaker Change: I didn't do it without the help of.
Speaker Change: Everybody that's here in this room and App.
I'll be a good time to thank all of you all for making me look so good.
Yes.
Speaker Change: Sure.
Speaker Change: So I think that's a J J I think thats, our closing remarks.
Speaker Change: I'll, let somebody else has a question, but thank you and thank all of you. This is a as I said.
Speaker Change: Supposedly.
Speaker Change: Lifetime achievement, but I'd like to thank my life isn't over yet.
Speaker Change: Sure.
Speaker Change: Thank you ladies and gentlemen, this ends the Q&A portion of this morning's conference call.
Speaker Change: And thank you for your participation today. This concludes today's program you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Yes.
Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Yes.