Matador Resources(MTDR) - 2025 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION This section details the company's unaudited financial statements and management's discussion and analysis of operations Financial Statements — Unaudited This section presents the unaudited condensed consolidated financial statements for Matador Resources Company for the quarter ended March 31, 2025 - The company's primary operations are focused on oil and liquids-rich plays in the Delaware Basin (Southeast New Mexico and West Texas) and the Haynesville shale in Northwest Louisiana. It also conducts midstream operations through its joint venture, San Mateo Midstream, LLC[22] Condensed Consolidated Balance Sheets The balance sheet shows an increase in total assets to $11.08 billion as of March 31, 2025, from $10.85 billion at year-end 2024, driven by growth in net property and equipment, while total liabilities decreased slightly and total shareholders' equity increased to $5.64 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $891,134 | $927,345 | | Net Property and Equipment | $10,011,888 | $9,764,096 | | Total Assets | $11,082,041 | $10,850,109 | | Total Current Liabilities | $1,129,616 | $995,357 | | Total Long-Term Liabilities | $4,308,298 | $4,397,320 | | Total Liabilities | $5,437,914 | $5,392,677 | | Total Shareholders' Equity | $5,644,127 | $5,457,432 | | Total Liabilities and Shareholders' Equity | $11,082,041 | $10,850,109 | Condensed Consolidated Statements of Income For the first quarter of 2025, the company reported a net income of $262.2 million, a significant increase from $213.2 million in the same period of 2024, driven by a 29% rise in total revenues to over $1 billion, primarily from higher oil and natural gas revenues, with diluted earnings per share increased to $1.92 from $1.61 year-over-year Condensed Consolidated Statement of Income Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $1,013,958 | $787,693 | | Total Expenses | $624,807 | $468,740 | | Operating Income | $389,151 | $318,953 | | Net Income | $262,247 | $213,190 | | Net Income Attributable to Matador Shareholders | $240,085 | $193,729 | | Diluted Earnings Per Share | $1.92 | $1.61 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased substantially to $727.9 million in Q1 2025 from $468.6 million in Q1 2024, while investing activities used $511.7 million and financing activities used $233.4 million, resulting in a net decrease in cash and restricted cash of $17.2 million Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $727,879 | $468,562 | | Net Cash Used in Investing Activities | ($511,662) | ($543,315) | | Net Cash (Used in) Provided by Financing Activities | ($233,443) | $42,781 | | Change in Cash and Restricted Cash | ($17,226) | ($31,972) | | Cash and Restricted Cash at End of Period | $77,516 | $74,326 | Notes to Condensed Consolidated Financial Statements The notes provide crucial context to the financial statements, covering significant accounting policies, details on the Ameredev acquisition, debt structure, equity transactions, derivative instruments, commitments, and segment performance - The company completed the Ameredev Acquisition on September 18, 2024, for cash consideration of $1.83 billion. The preliminary purchase price allocation is ongoing[34][35][36] - During Q1 2025, the company sold its remaining South Texas assets in the Eagle Ford shale for $22.2 million[40] Total Long-Term Debt (in thousands) | Debt Component | March 31, 2025 | | :--- | :--- | | Credit Agreement due 2029 | $405,000 | | San Mateo Credit Facility due 2029 | $655,000 | | 6.875% senior notes due 2028 | $500,000 | | 6.500% senior notes due 2032 | $900,000 | | 6.250% senior notes due 2033 | $750,000 | | Total Long-Term Debt | $3,176,456 | - The Board declared a quarterly cash dividend of $0.3125 per share in February 2025, totaling $39.2 million. A subsequent dividend of the same amount was declared in April 2025[55] Segment Operating Income (in thousands) | Segment | Three Months Ended March 31, 2025 | | :--- | :--- | | Exploration and Production | $362,087 | | Midstream | $55,919 | | Corporate | ($28,855) | | Consolidated Operating Income | $389,151 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an analysis of the company's financial performance and condition for Q1 2025, highlighting a 33% year-over-year increase in average daily production, strong net income of $240.1 million, and Adjusted EBITDA of $644.2 million First Quarter Highlights and Operations Update In Q1 2025, average daily oil equivalent production rose to 198,631 BOE/day, a 33% increase YoY, driven by a 36% increase in oil production, with net income attributable to shareholders at $240.1 million ($1.92/share), up from $193.7 million ($1.61/share) in Q1 2024 Q1 2025 Performance vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Avg. Daily Oil Production (Bbl/day) | 115,030 | 84,777 | +36% | | Avg. Daily Natural Gas Production (MMcf/day) | 501.6 | 389.9 | +29% | | Net Income (attributable to MTDR) | $240.1M | $193.7M | +24% | | Adjusted EBITDA (non-GAAP) | $644.2M | $505.4M | +27% | - The company plans to reduce its drilling rig count from nine to eight in the Delaware Basin by mid-2025[112] Capital Plans and Shareholder Returns The company has decreased its 2025 D/C/E capital expenditure estimate to a range of $1.18-$1.37 billion, while midstream capital expenditures remain at $120-$180 million, and continues its shareholder return program with a quarterly dividend of $0.3125 per share and a new $400 million share repurchase program - Estimated 2025 drilling, completing, and equipping (D/C/E) capital expenditures were decreased to a range of $1.18 to $1.37 billion[113][143] - The Board declared a quarterly cash dividend of $0.3125 per share, payable in June 2025[114][137] - On April 16, 2025, the Board authorized a new share repurchase program of up to $400.0 million. Subsequently, on April 28, 2025, the company repurchased 250,000 shares for $10.4 million[98][138] Results of Operations Total revenues for Q1 2025 increased 29% YoY to $1.01 billion, with oil and gas revenues rising 29% to $909.9 million, driven by a 34% increase in oil production and a 27% increase in natural gas production, offsetting a 7% decrease in realized oil prices Revenue Breakdown (in thousands) | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Oil Revenues | $749,322 | $598,514 | | Natural Gas Revenues | $160,596 | $105,026 | | Total Oil & Gas Revenues | $909,918 | $703,540 | | Third-party Midstream Services | $33,499 | $32,357 | | Total Revenues | $1,013,958 | $787,693 | Key Expenses per BOE | Expense per BOE | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Production taxes, transportation and processing | $5.25 | $5.15 | | Lease operating | $5.96 | $5.60 | | Depletion, depreciation and amortization | $15.77 | $15.58 | | General and administrative | $1.89 | $2.18 | Liquidity and Capital Resources The company's liquidity is supported by strong operating cash flow, which reached $727.9 million in Q1 2025, with total long-term debt at $3.18 billion as of March 31, 2025, and Adjusted EBITDA increased 27% YoY to $644.2 million Cash Flow Summary (in thousands) | Cash Flow | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $727,879 | $468,562 | | Net Cash from Investing Activities | ($511,662) | ($543,315) | | Net Cash from Financing Activities | ($233,443) | $42,781 | Adjusted EBITDA Reconciliation (in thousands) | Reconciliation Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $262,247 | $213,190 | | Interest Expense | $49,489 | $39,562 | | Income Tax Provision | $82,921 | $66,778 | | DD&A | $281,891 | $212,311 | | Other Adjustments | ($2,942) | $2,036 | | Consolidated Adjusted EBITDA | $673,806 | $533,877 | | Attributable to Non-controlling Interest | ($29,583) | ($28,507) | | Adjusted EBITDA Attributable to Matador | $644,223 | $505,370 | General Outlook and Trends Management notes that commodity price volatility remains a significant risk, with Q1 2025 realized oil prices lower YoY ($72.38/Bbl vs $77.58/Bbl) and natural gas prices higher ($3.56/Mcf vs $2.96/Mcf), and the company uses derivatives to mitigate price differential risks - The company's business is subject to commodity price volatility, geopolitical instability, and regulatory changes. The recent election of President Trump and a Republican-controlled Congress may alter the regulatory framework[164] Average Realized Prices (before derivatives) | Commodity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Oil (per Bbl) | $72.38 | $77.58 | | Natural Gas (per Mcf) | $3.56 | $2.96 | - The Waha-Henry Hub natural gas basis differential averaged ($2.46) per MMBtu for Q1 2025. The company has derivative contracts in place to mitigate exposure for a portion of its anticipated 2025 and 2026 natural gas production[170][171] Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, primarily from fluctuating oil, natural gas, and NGL prices, which Matador manages using derivative financial instruments like costless collars and swap contracts - The company is exposed to market risk from commodity price fluctuations and uses derivative instruments like costless collars and swaps to partially reduce this risk[180][181] - As of March 31, 2025, the company had open costless collar contracts for oil and natural gas, and natural gas basis differential swap contracts. It had no open contracts for NGL prices[183] Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company concluded that its disclosure controls and procedures were effective as of March 31, 2025, with no material changes were made in internal control over financial reporting during the first quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[185] - No material changes were made to the company's internal control over financial reporting during the three months ended March 31, 2025[186] PART II — OTHER INFORMATION This section provides information on legal proceedings, risk factors, equity repurchases, and other disclosures Legal Proceedings The company is involved in several legal proceedings that arise in the ordinary course of business, and management believes it is remote that these will have a material adverse impact on the company's financial condition, results of operations, or cash flows - The company states that it is remote that ongoing legal proceedings will have a material adverse impact on its financial condition[188] Risk Factors This section refers readers to the detailed discussion of risks and uncertainties in 'Item 1A. Risk Factors' of the company's Annual Report on Form 10-K - For a discussion of risks and uncertainties, the report refers to 'Item 1A. Risk Factors' in the Annual Report[190] Repurchase of Equity by the Company or Affiliates During the first quarter of 2025, the company re-acquired 58,599 shares of common stock at an average price of $57.15 per share, from employees to satisfy tax liabilities related to restricted stock vesting, not as part of a publicly announced repurchase program Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2025 | 1,764 | $60.47 | | Feb 1 - Feb 28, 2025 | 55,627 | $57.16 | | Mar 1 - Mar 31, 2028 | 1,208 | $51.89 | | Total | 58,599 | $57.15 | - The shares were re-acquired from employees to satisfy tax liabilities in connection with the vesting of restricted stock, not as part of a formal repurchase plan[191][192] Other Information The company reports that during the first quarter of 2025, no director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025[193] Exhibits This section lists all exhibits filed with the Form 10-Q, including supplemental indentures related to debt and certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act - The report includes several exhibits, such as supplemental indentures (Exhibits 4.1, 4.2, 4.3) and officer certifications required by the Sarbanes-Oxley Act (Exhibits 31.1, 31.2, 32.1, 32.2)[195]