Q1 2025 Matador Resources Co Earnings Call
Thank you. Thank you.
Thank you.
Speaker Change: Good morning ladies and gentlemen. Welcome to the first quarter 2025, Matador Resources Company
Tanya: My name is Tanya and I'll be serving as your operator for today.
Tanya: At this time, all participants are in a listen only mode. We will facilitate a question and answer session at the end of the company's remarks.
Speaker Change: As a reminder, this conference was being reported 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. Max Schmitz.
Speaker Change: Senior Vice President, Investor Relations, Matador, Mrs. Schmitz, Remaker Sieg.
Speaker Change: Thank you, Latanya, and good morning everyone, and thank you for joining us for Matador's first quarter, 2025, Bernie's Conference Call.
Speaker Change: Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance.
Speaker Change: Reconciliation 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.
Speaker Change: As a reminder, certain statements included in this morning's presentation may be forward looking in reflect the company's current expectations or forecasts of future events based on the information that is now available.
Speaker Change: Actual results and future events could differ materially from those anticipated in such statements.
Speaker Change: Additional information concerning factors that could cause actual results to differ materially are contained in the company's earnings release and its most recent annual report in Form 10K and any subsequent court reports on Form 10Q.
Speaker Change: In finally, as a reminder, I would like to invite all of you to join us for our first ever Town Hall conference call on Monday, April 28th at 3.30pm Central Time.
Speaker Change: 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.
Joe Foran: As we've often done the past, I like to begin by insides and some of the things that…
Joe Foran: We expressed in our earnings release is that the first one is that we've been here before in challenges and times.
Joe Foran: and we've come out of it each time stronger than we went in. So we have confidence in the plans that we've submitted to you today. We feel we have the right tools in the tool box.
Joe Foran: Big give us the flexibility and the optionality to make the plans work and advance Matador's interest and value.
Joe Foran: Regardless of the atmosphere or how much it changes throughout the year.
Joe Foran: Second, is to call to the attention that not only will we try to make the prudent...
Joe Foran: Quite a bit better than the original Black River plant that was only 60 million.
So...
and that provides us.
A large amount of flow assurance, which is...
Joe Foran: Critical, these times to get all of it, you can to market.
Joe Foran: And finally, the point three is that we wanted to emphasize how we have an alignment of interest with our shareholders.
that's one of the ratings. [inaudible]
Joe Foran: that we have, the board authorized a repurchase of shares to be sure people knew of that alignment. But second is to point out what we did in the first quarter, what we'd be in the management leadership team. We'll see you in the next one.
Joe Foran: Ursula Everybody on the management team bought shares and then we had a hundred other, over a hundred other employees by stock where others were not, other companies were not. Thank you.
is aggressive, but our guys...
Blackar
Joe Foran: Leadership Team, recognized a good deal when they see it, so we felt it was important to offer the opportunity to have a repurchase of shares. At this price, we think it's a good buying opportunity and a good entry point. Um.
that, and so we welcome your questions and...
Joe Foran: You know, finally, there's been some concern about production. Is it going up or is it going day off?
Joe Foran: We slowed down a little bit on our production, but it wasn't because the Wells were performing well, they're done better than they expected, but what she had was she had some shut-ins due to maintenance. Thanks.
Joe Foran: We could have easily made that up, but we was better to lose slowly but surely to be sure to provide growth for this year, reduce expenses.
Joe Foran: and to wait for the processing to come online so we've received the full economic benefit of our production.
Joe Foran: And we'll have growth at the end of the year. Remind everybody that if we're 1% down now by the end of the year, we'll be up 17%.
© transcript Emily Beynon
Latani with that would like to take a few questions.
Joe Foran: Certainly. To ask the question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: We ask that you please limit yourself to one question, and so all have had a chance to ask a question, after which we will welcome additional follow-up questions from you. First question will be from Tim Rezvan of Keybank Capitol Market.
Your line is now open.
Tim Respin: Good morning, folks, and thank you for taking my question. I'd like to start on the midstream. Obviously there's been a lot of volatility in the broader markets.
Tim Respin: Let me be impacting the decision on that. You did use the phrase IPO in your fourth quarter earnings deck.
Tim Respin: We didn't see that in this deck. So can you talk maybe about what you're thinking about with the past forward on the midstream side, given you've been pretty candid that you're looking to kind of realize value from that segment. Thank you.
Greg Krug: Yeah, this is Greg Krug, the EVP of Marketing and Mystery and Strategy.
Thank you.
Greg Krug: Yeah, we're looking at all these options as far as possibility of IPOs and various other things, you know, we...
We're looking at opportunities to grow our business.
Greg Krug: And, you know, if we think about kind of where we started, you know, we started at 60 million a day at the Black River Plant, and as Joe mentioned, you know, we're it.
Greg Krug: We should be at 720 million a day of capacity. [inaudible]
Greg Krug: We'd like our growth that we're seeing now and we see opportunities to go further.
We've got a lot of inquiries on third party guests that...
that we are, that work.
Greg Krug: Jason, and we think there's lots of opportunities there. So as far as, yeah, your question on IPO, yeah, that's, that is always a possibility and we're investigating all those opportunities. Thank you very much.
© transcript Emily Beynon
Speaker Change: And our next question will be coming from Zach Parham of J.P. Morgan, your line of open Zach.
Zach Barron: Thanks for taking my question. Just give them the changes in the operational plans.
Speaker Change: I wanted to talk about how you're thinking about longer term. I mean, historically, Matador's been a growth company.
Speaker Change: With this guidance update, your second half implied volumes are roughly in line with 4Q oil at the more of a maintenance level. In the current environment, how are you thinking about the longer term outlook for the company? [inaudible] I'm sorry, I'm sorry, I'm sorry
Speaker Change: You know, in the current commodity price environment, would you continue its maintenance levels, or would you anticipate growing again at some point.
Zach Barron: Well, thank you, Zach, it's a good question, and the answer is yes, we're, you know, we're very open to...
and Walter.
Zach Barron: Have reason to grow again. It's not that we're downsizing now because as I mentioned, we're going to have 17% growth in all production by year and this is primarily a timing. [inaudible]
Matter,
Zach Barron: and is this a temporary thing on all process, or is this a new world you live in? And we're going to do what's profitable. We've never been a growth for growth sake. It's always been our motto here has been profitable growth at a measured pace. [inaudible]
and if you...
Zach Barron: You know, mean what you say about a major pace. That means when prices get a little lower, you're a little more. [inaudible]
Zach Barron: You take a few more moments to think about what you're doing and don't rush into things.
and to manage your...
Zach Barron: to either add or to take Dale and you build relationships with him that gives you that kind of flexibility and optionality. So, we're very much, I intend to grow.
Zach Barron: And we're shareholders too. Nobody here wants to own stock unless there is going to be increases in value over time. And I think we're very well positioned for it because you may say...
Zach Barron: Well, your production was a little bit off this quarter. Yeah, but we paid down 190 million in debt, so that leads us with a lot of...
Speed Up, Cap X Expenses.
Zach Barron: as the year goes along and we want to make an acquisition.
But either way,
to make Matador more valued.
Zach Barron: Quarter by Quarter. What we don't want to do is to do it blindly, order a rush in in a time of turbulence. We're going to do it slow and steady, but that proper growth at a measured pace. [inaudible]
I'm out.
is governor, governor, governor our approach, but we have lots.
both locations and our field staff and our midstream business.
Growth and profitability, and if you look at our last...
Zach Barron: You know, since William Public, you see over and over again. [inaudible]
Zach Barron: We have generated profits per quarter, and we had a profit this quarter, so I don't know how many straight quarters that makes for it, but it's been very consistent that we haven't had a losing quarter, and that's...
Zach Barron: because of the professional approach of our office staff, our field staff, and that they have great properties to work with. The two big acquisitions we made in the last couple of years, both of which were about $2 billion. They've been integrated. Thank you very much.
Zach Barron: Very smoothly, and the performance has been better than expected, and so we're pretty excited, and that's why...
Zach Barron: You saw as much buying from insiders as you did and you can expect to begin this quarter.
For me, I've never sold a share. [inaudible]
Zach Barron: So this group collectively has made good decisions all along, and we've encountered these times numerous times.
and we've always come out.
Speaker Change: Hey, if you may, you know, you can, Zach, you've been around long enough to remember those but each time we've come out whether it's been COVID or the BLM leases that people were worried about that we'd paid too much for. Thank you very much for your time.
But we're paying out at $20.
Speaker Change: Barrel Oil in six months, and just consistently, and that's the nature of this business, is trying to be ready for whatever the circumstances are.
Speaker Change: By turn on 40 whales, people were concerned about timing on those whales, but turned on 40 whales, so this second quarter should be a record quarter. [inaudible]
Speaker Change: Not only do we have 10 to 15-year runway of really good locations right now, but every year we continue to replace those and grow the reserves. And so I think what you see right now is, as we said before, there's never really one smoking gun decision that makes all this happen. It's hundreds of small decisions. [inaudible]
Speaker Change: And we all work together as a team across the company to figure out what's the best thing to do at the right time. And by preserving our optionality and balance sheet, we're going to be able to set ourselves up for more profitable growth in the near future.
Speaker Change: Thank you. Our next question will be coming from Gabe Daoud of TD Cohen. Your line is from Gabe.
Gabe Dow: Thanks for telling us. Hey, everyone, good morning. Thanks for your time. It was hoping, Joe, maybe we could circle back to your comments around stock representing a good entry point. Is it fair to soon then? You're maybe getting after it on the buyback? Thanks.
Gabe Dow: relatively soon, just how do you prioritize the buyback against potential and organic opportunities this year, as you've also noted, volatility presents.
Gabe Dow: Typically good opportunities for a tech to bolt on, like you guys did with Aiko, maybe about 10 years ago. Thanks guys.
Thank you.
Speaker Change: If you guys may need you to repeat part of your question, but let me try to answer as best I can, is that first thing is what's nice about
Speaker Change: Where we are today is in our release, we mentioned five or six things that we did when we saw the fall, enough turbulence and chaos and what does this mean? I mean, it's...
You know, what, what, what, direction or process going up or down and what's the world situation?
Speaker Change: What you saw is we paid down debt. You know that we took these other steps.
Speaker Change: You know, to pay down debt, we had all hedges, implemented all hedges to protect us on price. We sold non-core assets.
Speaker Change: and in the Eagle Ferd, you know, sold all of the rest of our position there.
Speaker Change: So now we're in a position to go either way, and it's not that [inaudible]
Speaker Change: You know, we're forced to go either go the round of acquisitions or drilling or share buybacks, but I think we'll have to see which of those
to go with.
Speaker Change: This is Van again, Van Singleton, I think also to add to that, Joe is just the dividend. You know, six times in four years we've increased it, and I think we want to preserve our optionality to continue to increase that at the appropriate times going forward.
Yeah, we want to be known as that regular...
Speaker Change: That company that pays a regular dividend and tries to increase it year to year. So that's another thing. So the alignment, a lot of this comes from that alignment that other companies haven't been as quick to buy. [inaudible]
their shares back or to buy them for themselves.
Speaker Change: and, you know, we have, if you look at companies, I think ours is our ownership between officers and directors is six and a half, six, six percent, some are going towards seven percent. [inaudible]
Thank you.
Speaker Change: And our next question will be coming from Leo Mariani of Raw. Your line is open, Leo.
Leo Mariani: Hey guys, why don't you just ask a little about the kind of activity, you know, reductions here if I'm looking at your slides, right?
Leo Mariani: Looks like you guys ended up cutting some of the activity on the new Emeritev asset and also at Antelope Bridge but actually increased activity a little bit in West Texas so I was just kind of...
Leo Mariani: Curious about that, you know, from a turn in line, you know, perspective, if there was something, maybe it was kind of driving you to put a little more cat-back and West Texas in favor of some of these.
Leo Mariani: These other areas, and then just on your production, obviously it's like the second record quarter, but it's want to get a sense that that be kind of peak production for the year and this production roll off a little bit with the activity cut to the second half.
Tom Elstner: Hey, Leo, this is Tom Elsener, EVP at Rezvan Engineering. I'll probably take the first part of that, and then I'll bypass the second part over the Glenn Stetson, but...
Joseph, just in the normal course of... [inaudible]
Tom Elstner: You know, funneling the operations from a nine-rig program down to an eight-rig program, there's just some shifting of the timing of the wells.
Tom Elstner: around all that. I know Chris and the team are, you know, optimizing the completion schedule. And I think it's just shifting some wells around between different buckets, maybe carrying over some wells in different quarters.
Tom Elstner: We're proud of all of our assets. Certainly West Texas has been a big part of us for a very long time, but we're real happy with the returns of all the wells and things are going better than expected. [inaudible]
Tom Elstner: Yeah, and hey, Leo, this is, this is Glennia, I just wanted to pile on to what Tom was saying on the...
Tom Elstner: We highlighted in the release the 11 wells that we turned online that had an average IP of 1,450 DOE per day.
You know, all combined, was around 15,000. [inaudible]
Tom Elstner: all together. So, we're really happy with those results and I think it confirms the prospectivity of the eastern side of that acreage position. Thank you very much.
Tom Elstner: Lower than Q2, as you said, and then Q4 is projected to be slightly higher than Q3, but could change depending on the timing of these capital-efficient batches that we're doing.
Thank you. Thank you.
Speaker Change: Thank you. Our next question will come from Kevin MacCurdy of Pickering Energy Partners. Kevin, your line is open.
Thank you.
Kevin McCurdy: Hey, good morning. Thanks for taking my question. And I for one appreciate the leadership you're showing here by reducing activity amidst the macro uncertainty. Thank you very much.
Kevin McCurdy: We appreciate that law, and I would like to say is that the fourth quarter may not go down, but we have the optionality to...
Kevin McCurdy: Durampa, production in that area, or the keep it is. [inaudible]
is we didn't want to promise something that we weren't. [inaudible]
Kevin McCurdy: Cerdna of Delivering, we can deliver, feel very certain about that, but don't want to do that unless the oil price is up, you know.
Is optional.
Kevin McCurdy: Lef to bring that around if the incentive of higher commodity prices are there.
Go ahead, Kevin, if you want to...
Kevin McCurdy: My question is only criteria for the buyback. Just conceptually, how would you think about the number of shares you're going to be buying back? Will you be looking at certain valuation metrics and will it be governed by kind of a percentage of cash though on a quarterly or an annual basis?
Kevin McCurdy: Yeah, hey, Kevin, this is Brian Willey, Executive Vice President, Chief Financial Officer. Appreciate the question. You know, it's not a single metric or single variable that we're looking at. I think it's a mix. And so as Jill mentioned earlier, we really have a lot of great options in front of us, whether that's...
Kevin McCurdy: You know, using our cast for debt repayment for the Sherry purchases. [inaudible]
Kevin McCurdy: You know, making opportunistic land acquisitions that Joe mentioned that we've made in these times, and there've been challenging times. I'm sorry, I'm sorry
Kevin McCurdy: and in a shareholders. Joe mentioned earlier, we're all very large shareholders and so as we look at it, we want to provide the most value for us and our shareholders over the long term.
Michael, John , John , John , John
Speaker Change: And our last question. We'll come from the line of John Freeman, of Raymond James, your line of open John .
John Freeman: Thank you, good morning. I saw that you all stepped up the hedging activity quite a bit, both on oil and gas, but the other thing that sort of jumped out was...
John Freeman: Yellow willing to lock in, being through wider gaskets in 2026, so just interesting to what y'all are seeing on the marketing side that drove that decision. Thank y'all very much.
Right. Yeah, this is Greg Krug, again.
Thank you.
Thank you.
Speaker Change: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call back to management for closing remarks.
Speaker Change: Thank you very much. And to those that ask questions is that if you have further inquiries, don't hesitate to call us, we'll be happy to visit with you. And once again, we want to invite all of you to come see us sometime and meet our people in person.
Speaker Change: as well as see what we think are the most lightest...
tools
in the toolbox, including the Max Carmer Room.
Speaker Change: that goes 24-7, or a Measuring Measurement Room that does the same thing that is generated a lot of value.
Speaker Change: and also to emphasize, too, because I don't want anybody to feel, oh, we're throwing in the towel towards the end of the year or worried by it. Now we think matters will straighten out. Let's watch.
Speaker Change: Over these next couple of quarters, and it'll be clear what needs to be done in the fourth quarter to make optimal our year for our shareholders and they hide.
Speaker Change: Brian Willey made a lot of mention of the tools including increasing the dividend as a way of returning value to it.
Speaker Change: to the shareholders, and there's no shortage of rigs or...
Speaker Change: Vendors out there that we can get to work done in a first class way. So I'm very optimistic about the year. It's going to get better from here. We said second quarter is going to be a record quarter. Let's go.
Speaker Change: Third quarter will be strong but there we may be, we'll be making those...
Speaker Change: Concrete Plants for the fourth quarter and for 2026. And as I said, we've done this for 40 years, Rezvan from...
Speaker Change: 270,000 to the present bill. So this is a group that's had to react to it.
Very rapid change in the business, one week. [inaudible]
Speaker Change: came in, you know, you had Kelly Drive type of rigs and now you've got top drive and...
Speaker Change: and, you know, you're drilling three mile laterals. That was unforeseen, but that's working out well for us. So, there's a lot of knobs to play with, and...
Speaker Change: and particularly when the outside factors of world process, world governments, you know.
You know, you've got to be ready to shift. You're going to have to shift.
Speaker Change: as the atmosphere changes. And I think this is the group that...
Speaker Change: is doing it now, and we have alternatives, but we see a lot of options in the past, that's what led to certain breakthroughs, y'all mention the...
Speaker Change: and the Yades Transaction, but also the BLM one about those properties that always, you know, had COVID, those made a difference. And you go back to getting people, then we start out.
Speaker Change: Some of those big events in the past has come back to help us. [inaudible]
Speaker Change: and they generally occurred in times where commodity prices were down. For right now, I feel the field is really open, and we've got more tools than we've ever had to use and to add value. So, uh,
Speaker Change: I think it's a great time to get in, and you'll see Brian from us, but you also now see the company ready to put money on the line and buy back shares if people are...
Ah.
Speaker Change: You know, at a price we think is a bargain for our shareholders.
Speaker Change: That's my last comment. I promise, unless you want to call in or come see us.
Speaker Change: Ladies and gentlemen, thank you for your participation today. This concludes today's program. Have a wonderful day.
Michael Schmitz, Robert MacCurdy, John Freeman, John Freeman