Q2 2026 Matador Resources Co Earnings Call

August 6, 2026

Speaker #1: time, all participants are on a listen-only mode. We will facilitate a question-and-answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year as discussed in the company's earnings press release issued yesterday.

Speaker #1: I will now turn the call over to Mr. Mac Schmitz, Senior Vice President Investor Relations for Matador. Mr. Schmitz, you may proceed.

Speaker #2: Thank you, Michelle. Good morning, everyone, and thank you for joining us for Matador's second quarter 2026 earnings conference call. Some of the presenters this morning will reference certain non-GAAP financial measures, regularly used by Matador Resources in measuring the company's financial performance.

Mac Schmitz: Thank you, Michelle. Good morning, everyone, and thank you for joining us for Matador's Q2 2026 earnings conference call. Some of the presenters this morning will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings release issued yesterday. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements.

Speaker #2: 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 release issued yesterday.

Speaker #2: As a reminder, certain statements, included in this morning's presentation, may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available.

Speaker #2: Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release, and its most recent annual report on Form 10-K, and any subsequent quarterly reports on Form 10-Q.

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 report on Form 10-Q. In addition to our earnings press release issued yesterday, I would also like to remind everyone that you can find a slide presentation in connection with our Q2 2026 earnings release under the Investor Relations tab on our corporate website. With that, I would now like to turn the call over to Mr. Joe Foran, our Chairman, Founder, and CEO. Joe?

Speaker #2: In addition to our earnings press release issued yesterday, I would also like to remind everyone that you can find a slide presentation in connection with our second quarter 2026 earnings release under the Investor Relations tab on our corporate website.

Speaker #2: And with that, I would now like to turn the call over to Mr. Joe Foran, our Chairman, Founder, and CEO. Joe?

Speaker #3: Thank you very much, Mac. It's a pleasure to be here with you all again. I have an exchange of your questions and our answers, and your comments we appreciate.

Joseph Wm. Foran: Thank you very much, Mac. It is a pleasure to be here with you all again, have an exchange, your questions and our answers and your comments. We appreciate. We like to hear from you and want to be sure that all of you know that you are welcome here to come visit. If you do, you will be assured of meeting not only most of the senior staff, but also the opportunity to visit with some of our young staffers that have come in in geology and engineering, and you hear directly from them that are doing the work, how they feel about it, and their views on the future and the strength and technology that they are using being state-of-the-art. Second, I would like to give you an overall picture.

Joe Foran: Thank you very much, Mac. It is a pleasure to be here with you all again, have an exchange, your questions and our answers and your comments. We appreciate. We like to hear from you and want to be sure that all of you know that you are welcome here to come visit. If you do, you will be assured of meeting not only most of the senior staff, but also the opportunity to visit with some of our young staffers that have come in in geology and engineering, and you hear directly from them that are doing the work, how they feel about it, and their views on the future and the strength and technology that they are using being state-of-the-art. Second, I would like to give you an overall picture.

Speaker #3: We'd like to hear from you. We want to be sure that all of you know that you're welcome here to come visit, and if you do, you'll be assured of meeting not only most of the senior staff, but also the opportunity to visit with some of our young staffers that have come in in geology and engineering, and you'll hear directly from them—those that are doing the work—how they feel about it, their views on the future, and the strength in the technology that they're using, being state of the art.

Speaker #3: Second, I'd like to give you an overall picture. We've had near-record adjusted free cash flow for this quarter of $303 million, $200 million of which has been used to pay down the bank debt that we had on the acquisition of the federal leases. So now we're under $1 billion on that debt, and making progress to get it paid down further in these upcoming quarters.

Joseph Wm. Foran: We've had near record adjusted free cash flow for this quarter of $303 million, $200 million of which has been used to pay down the bank debt that we had on the acquisition of the federal leases. Now we're under $1 billion on that debt, making progress to get it paid down further in these upcoming quarters. I think that's an important point to remember when people wonder about how we really stand. We have 19 banks in our bank group, and they all scrubbed down our numbers pretty thoroughly and had some real good exchanges, and they raised good questions. All 19 have participated and have indicated more is available if we come across opportunities like that. Thank you, banks. We appreciate your backing us and working with us and our relationship with you.

Joe Foran: We've had near record adjusted free cash flow for this quarter of $303 million, $200 million of which has been used to pay down the bank debt that we had on the acquisition of the federal leases. Now we're under $1 billion on that debt, making progress to get it paid down further in these upcoming quarters. I think that's an important point to remember when people wonder about how we really stand. We have 19 banks in our bank group, and they all scrubbed down our numbers pretty thoroughly and had some real good exchanges, and they raised good questions. All 19 have participated and have indicated more is available if we come across opportunities like that. Thank you, banks. We appreciate your backing us and working with us and our relationship with you.

Speaker #3: And I think that's an important point to remember when people wonder about how we really stand. We have 19 banks in our bank group, and they all scrubbed down our numbers pretty thoroughly and had some real good exchanges, and they raised good questions but all 19 have participated and have indicated more is available if we come across opportunities like that.

Speaker #3: So thank you, banks. We appreciate your backing us, and working with us in our relationship with you. Last, two things on this report. If you're asking us how we're doing, we'll just say we've true answer is that we've exceeded the high end of our production guidance.

Joseph Wm. Foran: Last, two things on this report, or if you're asking us how we're doing, we'd just say the true answer is that we've exceeded the high end of our production guidance. It's nice to be sitting in that spot when also mentioned we've had a 5% increase in our oil and gas, natural gas reserves up from 667 million barrels of oil or gas equivalent to 703 million barrels of oil or gas equivalent. Nice increase for a quarter and want to say to all of our teams, our exploration and production teams that good work and keep it up. As I mentioned, these results, and cash flow generation has enabled us to pay down $200 million in the borrowings we had for the May federal lease sale on our RBL. We expect to now generate approximately $900 million in free cash flow for the year.

Joe Foran: Last, two things on this report, or if you're asking us how we're doing, we'd just say the true answer is that we've exceeded the high end of our production guidance. It's nice to be sitting in that spot when also mentioned we've had a 5% increase in our oil and gas, natural gas reserves up from 667 million barrels of oil or gas equivalent to 703 million barrels of oil or gas equivalent. Nice increase for a quarter and want to say to all of our teams, our exploration and production teams that good work and keep it up. As I mentioned, these results, and cash flow generation has enabled us to pay down $200 million in the borrowings we had for the May federal lease sale on our RBL. We expect to now generate approximately $900 million in free cash flow for the year.

Speaker #3: So it's nice to be sitting in that spot when also mentioned we've had a 5% increase in our oil and gas natural gas reserves up from 667 million barrels of oil or gas equivalent to 703 million barrels of oil or gas equivalent.

Speaker #3: So nice increase for a quarter. And I want to say to all of our teams, our expiration in production keep it up. As I mentioned, these results and cash flow generation has enabled us to pay down $200 million in the borrowings we had for the May federal lease sale on our RBL.

Speaker #3: We expect to now generate approximately $900 million in free cash flow for the year. So we'll have this largely paid down, if not paid off, by the end of the year.

Joseph Wm. Foran: We'll have this largely paid down, if not paid off, by the end of the year. Second, in this area, we remain very focused on prioritizing continued debt reduction, but it's not very often that you have an opportunity to buy three properties, like Cardinal, like Paloma, and like Range Rider of this quality to bring into your asset group and the upside of Ridge Runner and on these properties to continue growing our base in New Mexico. We've steadily risen in the ranks to where we're in the top 10 and top five in Lea County. I'm also pleased and excited to provide update. We began the year deciding we had four strategic catalysts that we were planning to execute on. First is the closing and integrating of Cardinal. On that score, that was a very professional work with the Cardinal team.

Joe Foran: We'll have this largely paid down, if not paid off, by the end of the year. Second, in this area, we remain very focused on prioritizing continued debt reduction, but it's not very often that you have an opportunity to buy three properties, like Cardinal, like Paloma, and like Range Rider of this quality to bring into your asset group and the upside of Ridge Runner and on these properties to continue growing our base in New Mexico. We've steadily risen in the ranks to where we're in the top 10 and top five in Lea County. I'm also pleased and excited to provide update. We began the year deciding we had four strategic catalysts that we were planning to execute on. First is the closing and integrating of Cardinal. On that score, that was a very professional work with the Cardinal team.

Speaker #3: Second in this area, we remain very focused on prioritizing continued debt reduction. But it's not very often that you have an opportunity to buy three properties like Cardinal, like Paloma, and like Range Rider.

Speaker #3: Of this quality, to bring into your asset group and in the upside Ridge Runner and on these properties to continue growing our base in New Mexico.

Speaker #3: And we've steadily risen in the ranks to where we're one of the we're in the top 10. And top 5 in Lee County. I'm also pleased and excited to provide update.

Speaker #3: We began the year citing we had four strategic catalysts that we were planning to execute on. First is the closing and integrating of Cardinal.

Speaker #3: And on that score, that was a very professional work with the Cardinal team. We had good relations with smoothly. And to the point where we gained increasing confidence on the capability of their people who might be interested in Matador.

Joseph Wm. Foran: We had good relations, went smoothly, and to the point where we gained increasing confidence on the capability of their people who might be interested in Matador, and we made offers to 26 of their field people, their whole staff out there, basically, and all 26 accepted the offer. We thought that was a good sign of how professional the negotiations went and the opportunities they feel are ahead of them, being with a company committed to the Delaware as we are. Also want to emphasize that midstream money was used to purchase Cardinal and for midstream assets. That's our policy, midstream money for midstream assets. On the E&P side, again, we're using Matador money for properties that'll end up in Matador.

Joe Foran: We had good relations, went smoothly, and to the point where we gained increasing confidence on the capability of their people who might be interested in Matador, and we made offers to 26 of their field people, their whole staff out there, basically, and all 26 accepted the offer. We thought that was a good sign of how professional the negotiations went and the opportunities they feel are ahead of them, being with a company committed to the Delaware as we are. Also want to emphasize that midstream money was used to purchase Cardinal and for midstream assets. That's our policy, midstream money for midstream assets. On the E&P side, again, we're using Matador money for properties that'll end up in Matador.

Speaker #3: And we made offers to 26 of their field people, their whole staff out there, basically, and all 26 accepted the offer. We thought that was a good sign of how professional the negotiations went and the opportunities they feel are ahead of them being with a company committed to the Delaware as we are.

Speaker #3: Also want to emphasize that Midstream money, which we used to purchase Cardinal and for Midstream assets, that's our policy—Midstream money for Midstream assets. And on the E&P side, again, we're using Matador money for properties that'll end up in Matador.

Speaker #3: So first, we've closed and we're integrating Cardinal. And as I said, we those are two separate companies, but we collaborate with each other and we think we help each other to better performance.

Joseph Wm. Foran: First, we've closed and we're integrating Cardinal, and as I said, those are two separate companies, but we collaborate with each other, and we think we help each other to better performance. That was the first strategic catalyst. The second one was BLM lease sale. We paid a lot of money for it. Would've been nervous about that. If you remember back to 2018, we were criticized some for buying and paying what we did for lease sales, and look what that did for us. That boosted us into the best cash flow and the best properties that we had for a number of times. The Rodney Robinson wells that were drilled and the Nina Cortell were all making over a million barrels apiece. That extra free cash flow has given us a lot of opportunities. We tried to take advantage of it.

Joe Foran: First, we've closed and we're integrating Cardinal, and as I said, those are two separate companies, but we collaborate with each other, and we think we help each other to better performance. That was the first strategic catalyst. The second one was BLM lease sale. We paid a lot of money for it. Would've been nervous about that. If you remember back to 2018, we were criticized some for buying and paying what we did for lease sales, and look what that did for us. That boosted us into the best cash flow and the best properties that we had for a number of times. The Rodney Robinson wells that were drilled and the Nina Cortell were all making over a million barrels apiece. That extra free cash flow has given us a lot of opportunities. We tried to take advantage of it.

Speaker #3: So that was the first strategic catalyst. The second one was being BLM lease sale. We paid a lot of money for it. Would have been nervous about that.

Speaker #3: But if you remember back to 2018, we were criticized some for buying and paying what we did for lease sales and look what that did for us.

Speaker #3: That boosted us in to the best cash flow and the best properties. That we had for a number of times. And the Rodney Robinson Wells that were drilled and the Nina Cortell were all making over a million barrels apiece.

Speaker #3: And that extra free cash flow has given us a lot of opportunities. We've tried to take advantage of it. So when the opportunity came up again, for BLM lease sale, years later, we really prepared for it.

Joseph Wm. Foran: When the opportunity came up again for BLM lease sale, years later, we really prepared for it and were excited by the leases that we received. It extended our inventory life to over 15 years. Good properties like that with nine different zones are likely to have a lot more than just 10 to 15 years of extension. They also are enhanced by the fact we have a midstream system that should be able to increase their cash flow, picking up this gas and getting it to market. I think in the succeeding years, flow assurance is going to play a bigger and bigger role. On page, I think it's page seven of the slides, we have a map showing how all these properties fit together. On Cardinal, it lays down to give us pipeline movement all around the basin.

Joe Foran: When the opportunity came up again for BLM lease sale, years later, we really prepared for it and were excited by the leases that we received. It extended our inventory life to over 15 years. Good properties like that with nine different zones are likely to have a lot more than just 10 to 15 years of extension. They also are enhanced by the fact we have a midstream system that should be able to increase their cash flow, picking up this gas and getting it to market. I think in the succeeding years, flow assurance is going to play a bigger and bigger role. On page, I think it's page seven of the slides, we have a map showing how all these properties fit together. On Cardinal, it lays down to give us pipeline movement all around the basin.

Speaker #3: And we're excited by the leases that we were received. And it extended our inventory life to over 15 years. And good properties like that with nine different zones are likely to have a lot more than just 10 to 15 years of extension.

Speaker #3: They also are enhanced by the fact we have a Midstream system that should be able to increase their cash flow, picking up this gas and getting it to market.

Speaker #3: I think in the succeeding years, low assurance is going to play a bigger and bigger role. On page—I think it's page seven of the slides—we have a map showing how all these properties fit together.

Speaker #3: And on Cardinal, you lays down to give us pipeline movement all around the basin. And you couldn't have really have a better fit than the way it fits in with our other pipeline systems.

Joseph Wm. Foran: You couldn't have really have a better fit than the way it fits in with our other pipeline systems. In that regard, you have 100 rigs approximately out there within 10 miles of our pipelines. That's a great opportunity for our group to pick up some additional business and relationships, and our teams are out there trying to take advantage of it now and bring in new customers and take on the existing customers of Cardinal and build that up and weave it into our existing pipeline systems. Finally, the future results of Cardinal and these BLM leases, we expect them to turn out to be better than expected, given the quality of the acreage from not only our acquisitions, but the E&P activities of other people in the area.

Joe Foran: You couldn't have really have a better fit than the way it fits in with our other pipeline systems. In that regard, you have 100 rigs approximately out there within 10 miles of our pipelines. That's a great opportunity for our group to pick up some additional business and relationships, and our teams are out there trying to take advantage of it now and bring in new customers and take on the existing customers of Cardinal and build that up and weave it into our existing pipeline systems. Finally, the future results of Cardinal and these BLM leases, we expect them to turn out to be better than expected, given the quality of the acreage from not only our acquisitions, but the E&P activities of other people in the area.

Speaker #3: But in that regard, you have 100 rigs approximately out there within 10 miles of our pipelines. So that's a great opportunity for our group to pick up some additional business and relationships and our teams are out there trying to take advantage of it now and bring in new customers and take on the existing customers of Cardinal and build that up into and weave it in to our existing pipeline systems.

Speaker #3: Finally, the future results of Cardinal and these BLM leases should we expect them to turn out to be better than expected given the quality of the acreage from not only our acquisitions but the E&P activities of other people in the area as I mentioned, it's 100 rigs out there working.

Joseph Wm. Foran: As I mentioned, it's 100 rigs out there working, you can expect if you are not lining up how to get your gas out of the Delaware, need to be doing so because I think there'll be some tightness in the markets. We'll try to take care of you as best we can. At this point, you might want to take some action to be sure that's lined up for any investment you make in new wells. All this, we believe, sets us up for a strong finish to 2026, and even stronger performance in 2027 as we're able to plan and coordinate our various activities. As a result, we've raised our production guidance from year-over-year oil growth of 4% to 7%. All this is done with 1% less capital expenditures.

Joe Foran: As I mentioned, it's 100 rigs out there working, you can expect if you are not lining up how to get your gas out of the Delaware, need to be doing so because I think there'll be some tightness in the markets. We'll try to take care of you as best we can. At this point, you might want to take some action to be sure that's lined up for any investment you make in new wells. All this, we believe, sets us up for a strong finish to 2026, and even stronger performance in 2027 as we're able to plan and coordinate our various activities. As a result, we've raised our production guidance from year-over-year oil growth of 4% to 7%. All this is done with 1% less capital expenditures.

Speaker #3: And so you can expect if you are not lining up how to get your gas out of the Delaware need to be doing so because I think it'll be some tightness in the markets.

Speaker #3: We'll try to take care of you as best we can. But at this point, you might want to take some action to be sure that's lined up for any investment you make in New Wells.

Speaker #3: All this, we believe, sets us up for a strong finish to 2026. And even stronger performance in 2027 is we're able to plan and coordinate our various activities.

Speaker #3: As a result, we've raised our production guidance from year over year oil growth of 4% to 7%. And all this is done with 1% less capital expenditures.

Joseph Wm. Foran: One note about capital expenditures, of course, I started this company with some friends 43 years ago, with $270,000, and now we have over $12 billion in assets. On that, we borrowed money the whole way, always paid it back. We'll need to borrow some as we finish development of these undeveloped acres and extend the coverage the midstream has in these more prolific areas. We think that outlook looks good. The capital will be put to good use, and appreciate the support that we've had. Think things look good going forward. If not, I'd tell you so that we got to work through some things.

Joe Foran: One note about capital expenditures, of course, I started this company with some friends 43 years ago, with $270,000, and now we have over $12 billion in assets. On that, we borrowed money the whole way, always paid it back. We'll need to borrow some as we finish development of these undeveloped acres and extend the coverage the midstream has in these more prolific areas. We think that outlook looks good. The capital will be put to good use, and appreciate the support that we've had. Think things look good going forward. If not, I'd tell you so that we got to work through some things.

Speaker #3: One note about capital expenditures, of course, I started this company with some friends 43 years ago. And with 270,000. And now we have over 12 billion in assets.

Speaker #3: And on that, we borrowed money the whole way, always paid it back. And we'll need to borrow some as we finish development of these undeveloped acres.

Speaker #3: And extend the coverage the Midstream has in these more prolific areas. So we think that outlook looks good. The capital will be put to good use.

Speaker #3: And appreciate the support that we've had, and things look good going forward. And if not, I'll tell you so that we know we've got to work through some things.

Speaker #3: But it's very exciting to have the best acreage the best team that you've had with the opportunities provided with a bank group that is as solid as we've been fortunate to have in the group.

Joseph Wm. Foran: It's very exciting to have the best acreage, the best team that you could have, with the opportunities provided with a bank group that is as solid as we've been fortunate to have in the group and the shareholders that we have. We've been blessed with a lot of good things. We plan to be good stewards. That's always been our mark. We didn't come up through private equity, but friends and family. I can assure you, your friends and family are rooting for you, but they have a lot of questions, and they're not afraid to ask the tough questions. We tried to answer for them as this transaction unfolded, but now we're ready for yours. With that, I turn you over for the first question.

Joe Foran: It's very exciting to have the best acreage, the best team that you could have, with the opportunities provided with a bank group that is as solid as we've been fortunate to have in the group and the shareholders that we have. We've been blessed with a lot of good things. We plan to be good stewards. That's always been our mark. We didn't come up through private equity, but friends and family. I can assure you, your friends and family are rooting for you, but they have a lot of questions, and they're not afraid to ask the tough questions. We tried to answer for them as this transaction unfolded, but now we're ready for yours. With that, I turn you over for the first question.

Speaker #3: And the shareholders that we have so we've been blessed with a lot of good things. We plan to be good stewards. That's always been our mark.

Speaker #3: We didn't come up through private equity, but friends and family and I can assure you your friends and family are rooting for you, but they have a lot of questions.

Speaker #3: And they're they're not afraid to ask the tough questions. So we tried to answer for them as this transaction unfolded. But now we're ready for yours.

Speaker #3: And with that, I turn the over for the first question.

Mac Schmitz: Back to you, Michelle. Thanks.

Speaker #1: Back to you, Michelle. . Thanks.

Speaker #2: Thank you. If you would like to ask a question, please press star 11. If your question hasn't been answered and you would like to remove yourself from the queue, press star 11 again.

Operator: Thank you. If you would like to ask a question, please press star 11. If your question has been answered and you would like to remove yourself from the queue, press star 11 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to 1 question. Again, we ask that you limit yourself to 1 question until all have had a chance to ask a question. After which, we would welcome additional follow-up questions from you. Our first question is from Neal Dingman of William Blair. Your line is open.

Speaker #2: Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, we ask that you limit yourself to one question until all have had a chance to ask a question.

Speaker #2: After which, we would welcome additional follow-up questions from you. Our first question is from Neil Dingman of William Blair. Your line is open.

Neal Dingmann: Morning, all. Joe, nice update. I'll jump right to my question. Joe, my question's around your new asset economics that you all highlighted last night. Specifically, you all suggest the rates of return on these newer properties likely to be over 80%. What's driving this outperformance, these new assets versus peers and your existing assets, which are already over 50%? Given these high returns, do you anticipate more activity in these newer areas?

Speaker #3: Morning all. Joe, nice update. Jump right to my question. Joe, my question's around your new asset economics that you all highlighted last night, specifically you all suggested the rates of return on these newer properties likely to be over 80%.

Speaker #3: So my question is, what's driving this outperformance these new assets versus peers in your existing assets? Which are already over 50%. And given these high returns, do you anticipate more activity in these newer areas?

Tom Oelsner: Hey, Neal. Thanks for the question. It's Tom Oelsner. We're very excited for these new properties, the 80% rate of return is really underpinned, first and foremost, just by the very high-quality rock. As you can see on the maps on slides five and six, you can see that the acreage we bought is in the core of the Delaware Basin. We expect that there'll be 15% to 20% higher oil EURs on those properties, which will greatly enhance the returns on those wells, along with the fact that there's nine or more different benches. That allows for batch development and longer laterals and will support getting our well costs down significantly, down into the $600 per foot range. Also, the high net revenue interest, particularly on the federal leases with a one-eighth royalty, will also enhance those economics.

Tom Elsener: Hey, Neal. Thanks for the question. It's Tom Oelsner. We're very excited for these new properties, the 80% rate of return is really underpinned, first and foremost, just by the very high-quality rock. As you can see on the maps on slides five and six, you can see that the acreage we bought is in the core of the Delaware Basin. We expect that there'll be 15% to 20% higher oil EURs on those properties, which will greatly enhance the returns on those wells, along with the fact that there's nine or more different benches. That allows for batch development and longer laterals and will support getting our well costs down significantly, down into the $600 per foot range. Also, the high net revenue interest, particularly on the federal leases with a one-eighth royalty, will also enhance those economics.

Speaker #1: Hey, Neil, thanks for the question. It's Tom Elsener. We're very excited for these new properties, and the 80% rate of return is really underpinned, first and foremost, just by the very high-quality rock.

Speaker #1: As you can see on the maps on slides 5 and 6, you can see that the A through bought is in the core of the Delaware basin.

Speaker #1: And we expect that there'll be 15 to 20 percent higher oil EURs on those properties. Which will greatly enhance the returns on those wells along with the fact that there's nine or more different benches.

Speaker #1: And that allows for batch development, longer laterals, and will support getting our well costs down significantly—down into the $600 per foot range.

Speaker #1: Also, the high net revenue interest, particularly on the federal leases with a one-eighth royalty, will also enhance those economics. Not included in the 80% is also the synergies with the Midstream, which many of those properties are just a few miles away from our existing infrastructure.

Tom Oelsner: Not included in the 80% is also the synergies with the midstream, which many of those properties are just a few miles away from our existing infrastructure.

Tom Elsener: Not included in the 80% is also the synergies with the midstream, which many of those properties are just a few miles away from our existing infrastructure.

Speaker #2: Thank you. Our next question comes from Gabe Dowd of Truist. Your line is open.

Operator: Thank you. Our next question comes from Gabe Daoud of Truist. Your line is open.

Speaker #3: Thanks, operator. Morning, Joe, and everyone. Thanks for all the comments and prepared remarks so far. Guys, just wondering if we could maybe get an updated view on how you think about '27 at this point.

Gabe Daoud: Thanks, operator. Morning, Joe and everyone. Thanks for all the comments and prepared remarks so far. Guys, just wondering if we could maybe get an updated view on how you think about 2027. At this point, I know profitable growth at a measured pace had always kind of been the strategy here. So, kind of targeting a mid-single-digit oil growth for 2027. Is that fair? Would that require the same level of spending that you're guiding to for this year, or would that require a step up in CapEx? Thanks, guys.

Speaker #3: I know profitable growth at a measured pace had always kind of been the strategy here. And so kind of targeting a mid-single digit oil growth for '27, is that fair?

Speaker #3: And would that require the same level of spending that you're guiding through for this year, or would that require a step up in CapEx?

Speaker #3: Thanks, guys.

Joseph Wm. Foran: Gabe, I'll start and some of the others may chip in. First, you got it right. That's our basic policy, profitable growth at a measured pace. That's the way we plan to go. Now, for example, if prices were to collapse to $30 a barrel instead of $70, you wouldn't do the same program. We're expecting right now, despite the volatility in the Mid East, that it's going to level out somewhere in this $70 to $80 range. It might be better, and we will adjust accordingly. I think we can count on making money even at $70 a barrel from these properties. They're that good. We will be careful about our debt, and we will pay that down as reasonable as we can and make adjustments in the year. Since it's an elective repayment, we'll adjust it to the cash flow per month.

Joe Foran: Gabe, I'll start and some of the others may chip in. First, you got it right. That's our basic policy, profitable growth at a measured pace. That's the way we plan to go. Now, for example, if prices were to collapse to $30 a barrel instead of $70, you wouldn't do the same program. We're expecting right now, despite the volatility in the Mid East, that it's going to level out somewhere in this $70 to $80 range. It might be better, and we will adjust accordingly. I think we can count on making money even at $70 a barrel from these properties. They're that good. We will be careful about our debt, and we will pay that down as reasonable as we can and make adjustments in the year. Since it's an elective repayment, we'll adjust it to the cash flow per month.

Speaker #4: Gabe, I'll start and some of the others may chip in. But first, you got it right. That's our basic policy. Profitable growth at a measured pace.

Speaker #4: So if that's the way we plan to go. Now, for example, if prices were to collapse to $30 a barrel instead of 70, you wouldn't do the same program.

Speaker #4: But we're expecting right now, despite the volatility in the Mideast, that it's going to level out somewhere in this 70 to 80 dollar range.

Speaker #4: It might be better, and we will adjust accordingly. But I think we can count on making money even if it's $70 a barrel from these properties.

Speaker #4: They're that good. We will be careful about our debt and we will pay that down as reasonable as we can and make adjustments in the year since it's an elective repayment.

Speaker #4: We'll adjust it to the cash flow per month. But our target would be something in at present prices, some in that range of $100 a month.

Joseph Wm. Foran: Our target would be something at present prices, somewhere in that range of $100 a month, so it's paid off within a year to 15 months on the acquisition. Now, the money's used to acquire Cardinal. We've already brought it down from $1.25 billion to less than $1 billion, a little less than $1 billion. We're pleased with that activity, and we're going to keep that up. We've always had When you come not from private equity, who has more access to money, but you're relying on friends and neighbors, you're always very careful. They may be your friends and neighbors, but if the debt gets too high, you can be sure they'll be calling in and expressing concern. We've always tried to be forward-looking on getting the debt paid down.

Joe Foran: Our target would be something at present prices, somewhere in that range of $100 a month, so it's paid off within a year to 15 months on the acquisition. Now, the money's used to acquire Cardinal. We've already brought it down from $1.25 billion to less than $1 billion, a little less than $1 billion. We're pleased with that activity, and we're going to keep that up. We've always had When you come not from private equity, who has more access to money, but you're relying on friends and neighbors, you're always very careful. They may be your friends and neighbors, but if the debt gets too high, you can be sure they'll be calling in and expressing concern. We've always tried to be forward-looking on getting the debt paid down.

Speaker #4: So it's paid off within a year to 15 months. On the acquisition of the monies used to acquire Cardinal. We've already brought it down from a billion point 25 to less than a billion, a little less than a billion.

Speaker #4: And we're pleased with that activity. And we're going to keep that up. And we've always had when you come not from private equity, who has more access to money, but you're relying on friends and neighbors, you're always very careful they may be your friends and neighbors, but if the debt gets too high, you can be sure they'll be calling in and expressing concern.

Speaker #4: So we've always tried to be forward-looking on getting the debt paid down. It also gives insurance to our bank. So they're that much more agreeable to make a lend loans if another acquisition opportunity the quality of what we had at the federal lease sale or acquiring Cardinal and then you couldn't line up two more companies that had a better fit on their undeveloped acreage.

Joseph Wm. Foran: It also gives insurance to our banks, they're that much more agreeable to make a lend, loans if another acquisition opportunity, the quality of what we had at the federal lease sale or acquiring Cardinal, then you couldn't line up two more companies that had a better fit on their undeveloped acreage or production than what we've had with Paloma and with Ridge Runner. Those are quality companies that have had great success in developing some of these properties and selling them on and then getting back to putting together another quality group. That relationship's gone well. We have great respect and admiration for them as well as for EnCap as a sponsor of those companies. That's kind of what I foresee. I hope that answers your question. If not, I'll give it another try.

Joe Foran: It also gives insurance to our banks, they're that much more agreeable to make a lend, loans if another acquisition opportunity, the quality of what we had at the federal lease sale or acquiring Cardinal, then you couldn't line up two more companies that had a better fit on their undeveloped acreage or production than what we've had with Paloma and with Ridge Runner. Those are quality companies that have had great success in developing some of these properties and selling them on and then getting back to putting together another quality group. That relationship's gone well. We have great respect and admiration for them as well as for EnCap as a sponsor of those companies. That's kind of what I foresee. I hope that answers your question. If not, I'll give it another try.

Speaker #4: Or production than what we've had with Paloma and with RichRutter. And those are quality companies that have had great success in developing some of these properties.

Speaker #4: And selling them on and then getting back to putting together another quality group. So that relationship's gone well. We have great respect and admiration for them as well as for NCAP as a sponsor of those companies.

Speaker #4: And that's kind of what I foresee. I hope that answers your question. If not, I'll give it another try.

Speaker #2: Thank you. Our next question comes from Scott Hanold with RBC. Your line is open.

Operator: Thank you. Our next question comes from Scott Hanold with RBC. Your line is open.

Speaker #5: Yeah. Thanks. Obviously, the federal acreage is a big highlight for you all. And can you give us a sense on the path on activity for that?

Scott Hanold: Yeah, thanks. Obviously, the federal acreage is a big highlight for you all. Can you give us a sense on the path on activity for that? Like, when do you expect permits? Have you gotten some visibility? What is sort of the targeting strategy when you get to there? Are we looking at large pad development that's going to be a good part of your early 2027 activity? Or how do you see that unfolding, just the development of that asset?

Speaker #5: When do you expect permits? Have you gotten some visibility? And what is sort of the targeting strategy when you get there? Are we looking at large pad development that's going to be a good part of your early 2027 activity?

Speaker #5: Or how do you see that unfolding? Just the development of that asset?

Bryan Erman: Hey, Scott, this is Bryan Erman. Yeah, I'll tackle the first part of your question. I think the advantage of that acreage for us is it's something that we've been targeting for many months. The advantage of that is from the federal permitting process, we hit the ground running day one after the lease sale and are already making significant progress on those permits. We talked about that we'd like to potentially get on those leases as early as the end of this year, if not early part of next year. I just want to highlight the fact that I do think we had a significant advantage on being able to hit the ground running on those because we have looked at those for so long. I'll let Chris or Tom talk about the kind of development plan for-

Speaker #3: Hey, Scott. This is Brian Herman. Yeah. I'll tackle the first part of your question. I mean, I think the advantage of that acreage for us is it's something that we've been targeting for many months.

Speaker #3: And so the advantage of that is from the federal permitting process, we hit the ground running day one after the lease sale and are already making significant progress on those permits.

Speaker #3: So we talked about that we'd like to potentially get on those leases as early as the end of this year, if not early part of next year.

Speaker #3: But I just want to highlight the fact that I do think we had a significant advantage on being able to hit the ground running on those because we had looked at those for so long.

Speaker #3: But I'll let Chris or Tom talk about the kind of development plan.

Chris Calvert: Well, yeah. Scott, I would just add to, and I'd love for Chris and Tom to add as well. We highlighted in the release, too, that there are 12 operated wells that are close to this acreage that we're currently in the process of completing and will plan on turning online in Q3, which I think is important. Also we highlighted the increase in the midstream spend to be able to build out both San Mateo and Matador to these federal properties, which I think is an indicator that we're planning on spudding some wells this year in that vicinity to what was acquired in May.

Speaker #5: Well, yeah. And Scott, I would just yeah, add to and love for Chris and Tom to add as well. But we highlighted in the release too that there are 12 operated wells that are close to this acreage that were currently in the process of completing and will plan on turning online.

Speaker #5: In Q3, which I think is important. And then also we highlighted the increase in the midstream spend to be able to build out both San Mateo and Matador too.

Speaker #5: These federal properties, which I think is an indicator that we are that we're planning on splitting some wells this year in that vicinity to what was acquired in May.

Operator: Thank you. Our next question comes from Derrick Whitfield with Axis Capital. Your line is open.

Speaker #2: Thank you. Our next question comes from Derek Whitfield. What's Texas Capital? Your line is open.

Derrick Whitfield: Good morning, guys. Great quarter and great update.

Speaker #6: Good morning, guys. Great quarter and great update. Thanks, Derek. I wanted to focus on the recent acquisitions. The strategic fit is very clear as shown on slide 6 and 7.

Joseph Wm. Foran: Thank you.

Joe Foran: Thank you.

Bryan Erman: Thanks, Derek.

Derrick Whitfield: I wanted to focus on the recent acquisitions. The strategic fit is very clear as shown on slides six and seven. With that said, how do the acquisitions impact your view on the path forward with the midstream business?

Speaker #6: With that said, how did the acquisitions impact your view on the path forward with the midstream business?

Joseph Wm. Foran: I just think it shows the importance of having a midstream business of some sort are tied. The way this came about, Derrick, was when we were going public back in 2012, we were going around one investment house to the other, each time we weren't having any trouble getting our gas to market. Each of those visits to each of those investment houses, we would get a question on how are you going to get your gas to market? Which meant that we weren't having trouble necessarily, but others were. We got on the horn with one of our friends and colleagues that's worked with us in the past and asked him if he'd help us start up a midstream company to alleviate some of that problem. He did.

Joe Foran: I just think it shows the importance of having a midstream business of some sort are tied. The way this came about, Derrick, was when we were going public back in 2012, we were going around one investment house to the other, each time we weren't having any trouble getting our gas to market. Each of those visits to each of those investment houses, we would get a question on how are you going to get your gas to market? Which meant that we weren't having trouble necessarily, but others were. We got on the horn with one of our friends and colleagues that's worked with us in the past and asked him if he'd help us start up a midstream company to alleviate some of that problem. He did.

Speaker #4: I've just think it shows the importance of being having a midstream business of some sort or ties. And the way this came about, Derek, was when we were going public back in 2012, we were going around one investment house to the other.

Speaker #4: And each time we weren't having any trouble getting our gas to market. But then each of those visits, each of those investment houses we would get a question on, how are you going to get your gas to market?

Speaker #4: Which meant that we weren't having trouble, necessarily. But others were. And so we got on the horn with one of our friends and colleagues that's worked with us in the past and asked him if he'd help us start up a midstream company to alleviate some of that problem.

Speaker #4: And he did. He came. He built it up to what it is now, brought people in like Anton and others, Ryan, that whole group, Sean, Malai.

Joseph Wm. Foran: He came, he built it up to what it is now, brought people in like Anton and others, Ryan, that whole group, Sean Malloy, we built a midstream business. Now we're starting to hear those same notes from people about There's a looming shortage because, as I mentioned, if you draw a line with the Cardinal system down there to hook up so we're all around the basin, there is concern about flow assurance now. That was a big mover for us, was that we felt this really assured us continued flow assurance out of the basin. You have 100 rigs that are operating within 10 miles of the pipeline. You know production's going to go up in this area with that many rigs running, so you better have some flow assurance lined up, or that's our philosophy, rather than wait.

Joe Foran: He came, he built it up to what it is now, brought people in like Anton and others, Ryan, that whole group, Sean Malloy, we built a midstream business. Now we're starting to hear those same notes from people about There's a looming shortage because, as I mentioned, if you draw a line with the Cardinal system down there to hook up so we're all around the basin, there is concern about flow assurance now. That was a big mover for us, was that we felt this really assured us continued flow assurance out of the basin. You have 100 rigs that are operating within 10 miles of the pipeline. You know production's going to go up in this area with that many rigs running, so you better have some flow assurance lined up, or that's our philosophy, rather than wait.

Speaker #4: And we built a midstream business. And now we're starting to hear those same notes from people about there is a looming shortage because as I mentioned, if you draw a line with the Cardinal system, down there to hook up so we're all around the basin, there's concern about flow assurance now.

Speaker #4: And so that was a big mover for us, was that we felt this really assured us to continue flow assurance out of the basin.

Speaker #4: You have 100 rigs that are operating within 10 miles of the pipeline. And so you know production's going to go up in this area with that many rigs.

Speaker #4: And running that so you better have some flow assurance lined up. Or that's our philosophy. Rather than wait. And this way we can do it in a coordinated fashion that's that takes into account capital so you're not spending a lot of capital to catch up.

Joseph Wm. Foran: This way we can do it in a coordinated fashion that takes into account capital, so you're not spending a lot of capital to catch up. It can progress conservatively as needed. You know that the level of production's going to be up, and we want to be prepared to take care of it, not just for ourselves, but for some of our friendly competitors, if we can help them. It's a win-win opportunity, I think, for the industry. Just as it was back in 2012 when we built our first lines and started taking on third-party gas. It's one of those businesses that's win-win. They need an outlet. They need flow assurance. We need the customers. It's helped us develop some good relationships, and we see this serving the same purpose. Now, someone else may build a line, that's fine.

Joe Foran: This way we can do it in a coordinated fashion that takes into account capital, so you're not spending a lot of capital to catch up. It can progress conservatively as needed. You know that the level of production's going to be up, and we want to be prepared to take care of it, not just for ourselves, but for some of our friendly competitors, if we can help them. It's a win-win opportunity, I think, for the industry. Just as it was back in 2012 when we built our first lines and started taking on third-party gas. It's one of those businesses that's win-win. They need an outlet. They need flow assurance. We need the customers. It's helped us develop some good relationships, and we see this serving the same purpose. Now, someone else may build a line, that's fine.

Speaker #4: It can progress conservatively as needed. And so you know that level of production is going to be up. And we want to be prepared to take care of it not just for ourselves, but for other for some of our friendly competitors if we can help them.

Speaker #4: It's a win-win opportunity, I think, for the industry. Just as it was back in 2012 when we built our first lines and started taking on third-party gas, it's one of those businesses that's win-win.

Speaker #4: They need an outlet. They need flow assurance. We need the customers. And it's helped us develop some good relationships. And we see this serving the same purpose.

Speaker #4: Now, someone else may build a line. That's fine. But we hope that this will be sufficient that we take care of our own gas as well as help some of the others.

Joseph Wm. Foran: We hope that this will be sufficient, that we take care of our own gas as well as help some of the others, and make it win-win, as I said. I turn that over to Bryan. Any further thoughts?

Joe Foran: We hope that this will be sufficient, that we take care of our own gas as well as help some of the others, and make it win-win, as I said. I turn that over to Bryan. Any further thoughts?

Speaker #4: And make it win-win as I said. I turned that over to Brian. Any further thoughts?

Bryan Erman: Sure. No, I think similar to what you said, Joe, I think you can see the fit in the map on page seven, and you can see it in the map of the acquisitions. The Paloma deal, we talked about the $50 million in midstream value that was ascribed to that, and then similarly in the federal lease sale, closer to $100 million of midstream value. I think these assets stand on their own from the E&P side, but they also have the added benefit of fitting very nicely with our midstream infrastructure and bringing value to that business as well.

Speaker #3: Sure. No, I think similar to what you said, Joe. I mean, I think you can see you can see the fit in the map on page 7.

Speaker #3: And you can see the see it in the map of the acquisitions. But I mean, the Paloma deal we talked about the $50 million in midstream value that was ascribed to that.

Speaker #3: And then, similarly, in the federal lease sale, closer to $100 million of midstream value. So I think these assets stand on their own from the E&P side, but they also have the added benefit of fitting very nicely with our midstream infrastructure and bringing value to that business as well.

Joseph Wm. Foran: I would just add this, we try to have a balanced approach to how we do the capital spend. That some years it's been for enhancements, laying pipeline, doing whatever, till now that San Mateo is independent. The second, of course, have an active drilling program. We've got an active ground game that has delivered a lot of growth. Last year, I think it was 17,000 acres. We've got a program that's kind of along those same lines this year. Finally is some bigger acquisitions like these if they come to the front. We hate to be tied down to a single strategy. We're supporting all three and see where the opportunities emerge.

Speaker #4: And I would just add this. We try to have a balanced approach to how we do the capital spend. That some years, it's been for for enhancements, laying pipeline, doing whatever.

Joe Foran: I would just add this, we try to have a balanced approach to how we do the capital spend. That some years it's been for enhancements, laying pipeline, doing whatever, till now that San Mateo is independent. The second, of course, have an active drilling program. We've got an active ground game that has delivered a lot of growth. Last year, I think it was 17,000 acres. We've got a program that's kind of along those same lines this year. Finally is some bigger acquisitions like these if they come to the front. We hate to be tied down to a single strategy. We're supporting all three and see where the opportunities emerge.

Speaker #4: Till now that San Mateo is independent, and the second, of course, having active drilling program. We've got an active ground gauge that has delivered a lot of growth.

Speaker #4: Last year, I think it was 17,000 acres. So we've got programs that's kind of almost same lines this year. And then that finally is some bigger acquisitions like these.

Speaker #4: If they come to the front, so we hate to be tied down to a single strategy. We're supporting all three and will see where the opportunities emerge.

Speaker #2: Thank you. Our next question comes from Kevin McCurdy. With Pickering Energy Partners, your line is open.

Operator: Thank you. Our next question comes from Kevin MacCurdy with Pickering Energy Partners. Your line is open.

Kevin MacCurdy: Hey, good morning, Joe and everybody there. Great to see the stock reacting well this morning. We noticed the marketing gain was pretty significant this quarter. Maybe you can talk a little bit about that and maybe if that's a result of the midstream strategy or other initiatives you've undergone.

Speaker #5: Hey, good morning, Joe, and everybody there. Great to see the stock reacting well this morning. We noticed the marketing game was pretty significant this quarter.

Speaker #5: Maybe you can talk a little bit about that and maybe if that's a result of the midstream strategy or other initiatives you've undergone.

Speaker #6: Hey, Kevin, this is Michael Frenzel, EVP and Treasurer. I'm happy to comment on it. I think that gain is really a good reflection on our marketing team, Anton Langland and Ryan Bellinger.

Michael Frenzel: Hi, Kevin. This is Michael Frenzel, EVP and Treasurer. I'm happy to comment on it. I think that gain is really a good reflection on our marketing team, Anton Langland and Ryan Bellinger, and the efforts that they make to mitigate the weakness in Waha pricing. That gain was not something that we expect to see necessarily going forward, we do expect a very strong improvement in natural gas realizations. Obviously, from the Hugh Brinson Pipeline that we expect to come on early and from the other deals that we've done with Energy Transfer.

Speaker #6: And the efforts that they make to mitigate the weakness in Waha pricing—that gain was not something that we expected to see necessarily going forward, but we do expect a very strong improvement in natural gas realizations.

Speaker #6: Obviously, from the Hugh Brenton pipeline that we expect to come on early. And from the other deals that we've done with energy transfer.

Speaker #2: Thank you. Our last question comes from Tim Rezvan with Key Bank Capital Markets. Your line is open.

Operator: Thank you. Our last question comes from Tim Rezvan with KeyBank Capital Markets. Your line is open.

Speaker #7: Good morning, folks. Thank you for taking our question. This is more big picture strategy. We've seen this pattern from Matador in the past with advanced and Ameradev where you make a large acquisition, generally cash, and then there's a period of sort of digesting and delevering after that.

Tim Rezvan: Good morning, folks. Thank you for taking our question. This is more big picture strategy. We've seen this pattern from Matador in the past with Advance Energy and Ameredev, where you make a large acquisition, generally cash, and then there's a period of sort of digesting and de-levering after that. Given kind of where you are now, I'm sure there's still other opportunities out there. Would you say you're in sort of a digest and de-lever mode now, or are you still if there's more opportunities that come out, are you still going to be active? Just trying to understand how, is it all about the balance sheet right now, or do you have to keep one eye open for other opportunities? Thank you.

Speaker #7: So given kind of where you are now, I'm sure there's still other opportunities out there. Would you say you're in sort of a digest and delever mode now, or are you still kind of if there's more opportunities that come out, are you still going to be active?

Speaker #7: Just trying to understand kind of how is it all about the balance sheet right now, or do you have to keep kind of one eye open for other opportunities?

Speaker #7: Thank you.

Speaker #4: Well, Tim, I think you said it real well. We're delevering—that's the first priority. But we're also keeping our eyes open if an opportunity comes forward, like Cardinal, that just fit us as well as we could have designed it.

Joseph Wm. Foran: Well, Tim, I think you said it real well, is we're de-levering. That's the first priority, but we're also keeping our eye open. If an opportunity comes forward like Cardinal, that just fit us about as well as we could have designed it. Acreage, like another federal lease sale, which isn't going to happen. At quality, we will keep that eye open. Our aim is to de-lever, as we've done each time over 43 years. We acquire, we try to make them better, and then we de-lever, so that we can be ready again. On capital, I always emphasize here our policy is, look, on capital, it isn't so much how much capital you spend, but how you spend it. Getting federal leases with a royalty at 12.5% instead of 25%, and that is within a few miles of our pipeline, that's an opportunity.

Joe Foran: Well, Tim, I think you said it real well, is we're de-levering. That's the first priority, but we're also keeping our eye open. If an opportunity comes forward like Cardinal, that just fit us about as well as we could have designed it. Acreage, like another federal lease sale, which isn't going to happen. At quality, we will keep that eye open. Our aim is to de-lever, as we've done each time over 43 years. We acquire, we try to make them better, and then we de-lever, so that we can be ready again. On capital, I always emphasize here our policy is, look, on capital, it isn't so much how much capital you spend, but how you spend it. Getting federal leases with a royalty at 12.5% instead of 25%, and that is within a few miles of our pipeline, that's an opportunity.

Speaker #4: And. Or acreage like another federal lease sale, which isn't going to happen, but a quality we will keep that eye open. But our aim is to delever as we've done each time over 43 years.

Speaker #4: We acquire. We try to make them better. And then we delever, so that we can be ready again. And on capital, I always emphasize here, our policy is—look, on capital it isn't so much how much capital you spend, but how you spend it.

Speaker #4: And getting federal leases with a royalty 12 and a half percent instead of 25%. And that is within a few miles of our pipeline.

Speaker #4: That's an opportunity. And it's Rock with nine different zones. That's one that's that we knew we were going to get involved in. And we try to be careful and bid what we thought would work.

Joseph Wm. Foran: It's rock with nine different zones. That's one that we knew we were going to get involved in, and we tried to be careful and bid what we thought would work. We were successful on the key tracks that we wanted. We immediately started paying back on that, so that helped us get ready to have the funds available, and the bank relationships, where they saw that we did what we said we'd do, and paid it down. They were ready to loan us more money for another acquisition. That's a pattern we want to maintain, is having the support of 19 banks if we want to do something. They have actually raised our RBL. We have a couple of billion, whatever we need for opportunity that may come up. Until then, we're going to keep paying down our debt.

Joe Foran: It's rock with nine different zones. That's one that we knew we were going to get involved in, and we tried to be careful and bid what we thought would work. We were successful on the key tracks that we wanted. We immediately started paying back on that, so that helped us get ready to have the funds available, and the bank relationships, where they saw that we did what we said we'd do, and paid it down. They were ready to loan us more money for another acquisition. That's a pattern we want to maintain, is having the support of 19 banks if we want to do something. They have actually raised our RBL. We have a couple of billion, whatever we need for opportunity that may come up. Until then, we're going to keep paying down our debt.

Speaker #4: We were successful on the key tracks that we wanted. But we immediately started paying back on that. So that helped us get ready to have the funds available.

Speaker #4: And the bank relationships, where they saw that we did what we said we'd do and paid it down, so they were ready to loan us more money for another acquisition.

Speaker #4: And that's a pattern we want to maintain is having the support at 19 banks. If we want to do something. And they have actually raised our RBL, so we have a couple of billion, whatever we need for opportunity that may came up.

Speaker #4: But until then, we're going to keep paying down our debt. But we're also being very careful about our spend on these wells. And I got to give a lot of credit to our operations group for drilling the wells as they have and as an example of what they've done that saved us is saving us a lot of money when we first drilled the three-mile wells.

Joseph Wm. Foran: We're also being very careful about our spend on these wells. I've got to give a lot of credit to our operations group for drilling the wells as they have. It's an example of what they've done that is saving us a lot of money. When we first drilled the Three Mile wells, they were about 20 days, if I'm right. Isn't that right, that they were about 20 days? They've now reduced it to about 10 days. Well, there's a lot of savings there. The capital spend initially was maybe kind of high. They've brought it down to make those properties that much more economical. When you buy something, you hope that you can improve it to the point where it's actually repaying some of it back.

Joe Foran: We're also being very careful about our spend on these wells. I've got to give a lot of credit to our operations group for drilling the wells as they have. It's an example of what they've done that is saving us a lot of money. When we first drilled the Three Mile wells, they were about 20 days, if I'm right. Isn't that right, that they were about 20 days? They've now reduced it to about 10 days. Well, there's a lot of savings there. The capital spend initially was maybe kind of high. They've brought it down to make those properties that much more economical. When you buy something, you hope that you can improve it to the point where it's actually repaying some of it back.

Speaker #4: They were about 20 days if I'm right. Isn't that right? That they were about 20 days. They've now reduced it to about 10 days.

Speaker #4: Well, there's a lot of savings there. So the capital spend initially was maybe kind of high. They brought it down to make those properties that much more economical.

Speaker #4: So when you buy something, you hope that you can improve it to the point where it's actually repaying some of it back. You spend less on each succeeding well because you're drilling them faster.

Joseph Wm. Foran: You spend less on each succeeding well because you're drilling them faster, and you have a better idea of how to complete them. What I'm trying to say is that we are trying to be prudent, and we're not afraid to borrow money because over a 44-year deal, we've paid every dollar back. Even in COVID, and even when the bust was in the early '80s and the '90s, every time. The banks are feeling more and more comfortable with us all the time. They know that we'll be careful with it, and really just spend it on properties that have a high percentage success rate, and they're going to get paid. That's a formula that's worked for us, and we've made sure we've paid them all back. It's another win-win situation.

Joe Foran: You spend less on each succeeding well because you're drilling them faster, and you have a better idea of how to complete them. What I'm trying to say is that we are trying to be prudent, and we're not afraid to borrow money because over a 44-year deal, we've paid every dollar back. Even in COVID, and even when the bust was in the early '80s and the '90s, every time. The banks are feeling more and more comfortable with us all the time. They know that we'll be careful with it, and really just spend it on properties that have a high percentage success rate, and they're going to get paid. That's a formula that's worked for us, and we've made sure we've paid them all back. It's another win-win situation.

Speaker #4: And you have a better idea how to complete them. And so I'm trying to say is that we are trying to be prudent and we're not afraid to borrow money because over a 44-year deal, we've paid every dollar back.

Speaker #4: Even in COVID and even when the bust was in the early '80s and the '90s, every time, and the banks are feeling more and more comfortable with us all the time.

Speaker #4: They know that we'll be careful with it and really just spend it on properties that have a high percentage success rate. And they're going to get paid.

Speaker #4: And that's a formula that's worked for us. And we've made sure we've paid them all back. And it's win-win another win-win situation.

Speaker #2: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call over to management for any closing remarks.

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

Speaker #4: Okay. I just have this and then I'm going to be quiet. I feel like I've talked enough. But I want to be sure y'all know that you're if you're not getting all your questions answered, you're welcome to come here.

Joseph Wm. Foran: Okay. I just have this, then I'm going to be quiet. I feel like I've talked enough. I want to be sure you all know that if you're not getting all your questions answered, you're welcome to come here, have lunch with us or breakfast or whatever you want, we'll have a longer session. We appreciate your involvement with us, we like our shareholder group. Want to know that everybody's welcome. We know we're a public company, we want to be sure that you feel you have access to the decision makers to answer whatever questions that you may have. Thank you very much.

Joe Foran: Okay. I just have this, then I'm going to be quiet. I feel like I've talked enough. I want to be sure you all know that if you're not getting all your questions answered, you're welcome to come here, have lunch with us or breakfast or whatever you want, we'll have a longer session. We appreciate your involvement with us, we like our shareholder group. Want to know that everybody's welcome. We know we're a public company, we want to be sure that you feel you have access to the decision makers to answer whatever questions that you may have. Thank you very much.

Speaker #4: Have lunch with us or breakfast or whatever you want. And we'll have a longer session. And we appreciate your involvement with us. And we like our shareholder group.

Speaker #4: But want to know that we'll everybody's welcome. We know we're a public company and we want to be sure that you feel you have access to the decision makers to answer whatever questions that you may have.

Speaker #4: So thank you. Very much. We are available. And we'd like to have you in particular to see some of the uses of capital that we have like our we call our max calm room.

Joseph Wm. Foran: We are available, we'd like to have you in particular to see some of the uses of capital that we have, like we call our MAXCOM room that we set up years ago at the suggestion of our head of drilling at that time, Billy Goodwin, that has worked out great. They keep the drill bit in the zone. Instead of the snipe being in zone 90% of the time, we're in zone 98%, 99%, which adds, again, a lot of return, spreads that capital spending over more production. I want to leave that with you, we're excited. I hope you can sense from the answers going around about the opportunities that these four acquisitions have done for us. Nobody's asked about Rae's Creek, I'm just going to volunteer it here. As we drill the Rae's Creek well, we've got 50,000 acres here.

Joe Foran: We are available, we'd like to have you in particular to see some of the uses of capital that we have, like we call our MAXCOM room that we set up years ago at the suggestion of our head of drilling at that time, Billy Goodwin, that has worked out great. They keep the drill bit in the zone. Instead of the snipe being in zone 90% of the time, we're in zone 98%, 99%, which adds, again, a lot of return, spreads that capital spending over more production. I want to leave that with you, we're excited. I hope you can sense from the answers going around about the opportunities that these four acquisitions have done for us. Nobody's asked about Rae's Creek, I'm just going to volunteer it here. As we drill the Rae's Creek well, we've got 50,000 acres here.

Speaker #4: That we set up years ago. At the suggestion of our head of drilling at that time, Billy Goodwin, that has worked out great. They keep the drill bit in the zone.

Speaker #4: So instead of just not being in zone 90% of the time, we're in zone 98, 99%, which adds again a lot of return and spreads that capital spending over more production.

Speaker #4: So I want to leave that with you. And we're excited. I hope you can sense from the answers going around about the opportunities that these four acquisitions have done for us.

Speaker #4: Nobody's asked about Race Creek, so I'm just going to volunteer it here. As we drill the Race Creek well, we've got 50,000 acres here.

Speaker #4: And the first test was over 2,200 barrels. Tom, or Andrew, you want to say anything to that?

Joseph Wm. Foran: The first test was over 2,200 barrels. Tom or Andrew, you want to say anything to that?

Joe Foran: The first test was over 2,200 barrels. Tom or Andrew, you want to say anything to that?

Tom Oelsner: Certainly. This is Tom. I'll start and I'll pass it to Andrew. Hats off to all of our teams for working so well together to put this prospect together. From the geoscience side, the reservoir, the land team, everybody did their part. I think we are very excited for this very first Rae's Creek well to come online so strong and come online better than we expected. We look forward to a bright future for that zone and excited to get that target into the mix. I'll pass over to Andrew Parker for any additional comments.

Tom Elsener: Certainly. This is Tom. I'll start and I'll pass it to Andrew. Hats off to all of our teams for working so well together to put this prospect together. From the geoscience side, the reservoir, the land team, everybody did their part. I think we are very excited for this very first Rae's Creek well to come online so strong and come online better than we expected. We look forward to a bright future for that zone and excited to get that target into the mix. I'll pass over to Andrew Parker for any additional comments.

Speaker #3: Certainly. I'll just Tom, I'll start and I'll pass it to Andrew. But hats off to all of our teams for working so well together to put this prospect together.

Speaker #3: From the geoscience side, the reservoir, the land team, everybody did their part. And I think we're very excited for this very first Race Creek well to come online so strong and come online better than we expected.

Speaker #3: And we look forward to a bright future for that zone and excited to get that target into the mix. But I'll pass it over to Andrew Parker for any additional comments.

Speaker #4: Thanks, Tom. Andrew Parker, I just had this the reason we want you guys to come in and meet the team is because they are so talented and the Race Creek is a perfect example of how well we've executed from geoscience putting the concept together, land putting the position together, and operations getting this well in the ground and really exceeding expectations and knocking it out of the park.

Andrew Parker: Thanks, Tom. Andrew Parker. I'll just add that the reason we want you guys to come in and meet the team is because they are so talented. Rae's Creek is a perfect example of how well we've executed from geoscience putting the concept together, land putting the position together, and operations getting this well in the ground and really exceeding expectations and knocking it out of the park. We're going to continue to do that, and continue to bring these things forward and execute.

Speaker #4: And so we're going to continue to do that. And continue to bring these things forward and execute.

Speaker #5: And Andrew is our head of our geological group. He's the EVP for that.

Joseph Wm. Foran: Andrew is our head of our geological group.

Joe Foran: Andrew is our head of our geological group.

Andrew Parker: Yeah.

Joseph Wm. Foran: He's the EVP for that group, and thank you. Anyway, we appreciate it, and we appreciate the people that are helping Matador be in positive territory this morning. We hope you'll come see us.

Joe Foran: He's the EVP for that group, and thank you. Anyway, we appreciate it, and we appreciate the people that are helping Matador be in positive territory this morning. We hope you'll come see us.

Speaker #4: Right.

Speaker #5: That group. And thank you. But anyway, we appreciate it. And we appreciate the people that are helping Matador being positive territory this morning. And hope you'll come see us.

Operator: Ladies and gentlemen, thank you for your participation today. This concludes the program. You may now disconnect.

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