Matador Resources(US:MTDR)2023-04-28 20:20Production and Operations - For Q1 2023, Matador reported total oil equivalent production of 9.6 million BOE, with average daily production of 106,654 BOE per day, comprising 55% oil and 45% natural gas[93]. - Average daily oil production increased by 10% year-over-year to 58,941 Bbl per day, while average daily natural gas production rose by 18% to 286.3 MMcf per day[93][94]. - Average daily production increased by 13% to 106,654 BOE/d for the three months ended March 31, 2023, compared to 93,969 BOE/d for the same period in 2022[107]. - Average daily oil equivalent production in the Delaware Basin for Q1 2023 was 101,100 BOE per day, a 13% increase from 89,400 BOE per day in Q1 2022[99]. - In Q1 2023, Matador turned to sales a total of 54 gross (19.0 net) horizontal wells in the Delaware Basin[98]. - As of April 25, 2023, Matador operated eight contracted drilling rigs in the Delaware Basin, following the Advance Acquisition[97]. - The company plans to focus on the development of its Delaware Basin assets for the remainder of 2023, operating eight contracted drilling rigs as of April 25, 2023[131]. Financial Performance - Net income attributable to Matador shareholders for Q1 2023 was $163.1 million, or $1.36 per diluted share, down from $207.1 million, or $1.73 per diluted share, in Q1 2022[95]. - Adjusted EBITDA for Q1 2023 was $365.2 million, compared to $461.8 million in Q1 2022[95]. - Total revenues for the three months ended March 31, 2023, were $560.3 million, a slight decrease of 1% from $565.7 million in the same period of 2022[107]. - Oil and natural gas revenues decreased by $123.6 million, or 20%, to $502.9 million for the three months ended March 31, 2023, compared to $626.5 million for the same period in 2022[109]. - Revenues for the three months ended March 31, 2023, were $503.1 million, while expenses were $287.0 million, resulting in an operating income of $216.1 million[144]. - Net income attributable to shareholders decreased to $163.1 million for the three months ended March 31, 2023, down from $207.1 million in the same period of 2022[114]. - Adjusted EBITDA decreased by $96.6 million to $365.2 million for the three months ended March 31, 2023, compared to $461.8 million for the same period in 2022[150]. Expenses and Costs - Production taxes, transportation, and processing expenses decreased by $4.3 million, or 7%, to $55.5 million for the three months ended March 31, 2023[115]. - Lease operating expenses increased by $10.5 million, or 31%, to $44.4 million for the three months ended March 31, 2023, compared to $34.0 million in the same period of 2022[116]. - Depletion, depreciation, and amortization expenses increased by $30.5 million, or 32%, to $126.3 million for the three months ended March 31, 2023[119]. - General and administrative expenses decreased by $7.3 million, or 25%, to $22.4 million for the three months ended March 31, 2023, compared to $29.7 million for the same period in 2022[120]. - Interest expense for the three months ended March 31, 2023, was $19.6 million, a slight decrease from $19.8 million in the same period of 2022[121]. Cash Flow and Capital Expenditures - Net cash provided by operating activities increased by $10.5 million to $339.5 million for the three months ended March 31, 2023, compared to $328.9 million for the same period in 2022[136]. - Net cash used in investing activities increased by $91.6 million to $343.5 million for the three months ended March 31, 2023, primarily due to increased capital expenditures and an $80 million deposit for the Advance Acquisition[138]. - The company expects to fund 2023 capital expenditures through cash on hand, operating cash flows, and performance incentives, with potential borrowings if expenditures exceed cash flows[123]. - The 2023 estimated capital expenditure budget is between $1.18 billion and $1.32 billion for drilling, completing, and equipping activities, plus $150 million to $200 million for midstream capital expenditures[131]. - Net cash used in financing activities decreased by $3.9 million to $39.9 million for the three months ended March 31, 2023, compared to $43.8 million for the same period in 2022[139]. Debt and Obligations - As of March 31, 2023, Matador had no borrowings under its Credit Agreement and $699.2 million in outstanding senior notes due 2026[103]. - The company completed the sale of $500.0 million in senior notes due 2028, receiving net proceeds of approximately $487.6 million after expenses[104]. - Long-term debt stood at $695.5 million as of March 31, 2023[144]. - The company had total contractual cash obligations of $2.16 billion as of March 31, 2023[157]. - The company expects interest expense on the $699.2 million of outstanding 2026 Notes to be approximately $41.1 million each year until maturity[153]. Market Conditions and Pricing - For Q1 2023, oil prices averaged $75.99 per Bbl, down from $95.01 per Bbl in Q1 2022, reflecting a decrease of approximately 20%[161]. - The company realized a weighted average oil price of $75.74 per Bbl in Q1 2023, compared to $95.45 per Bbl in Q1 2022, indicating a decline of about 21%[161]. - Natural gas prices averaged $2.74 per MMBtu in Q1 2023, down from $4.59 per MMBtu in Q1 2022, representing a decrease of approximately 40%[162]. - The company realized a weighted average natural gas price of $3.93 per Mcf in Q1 2023, compared to $7.63 per Mcf in Q1 2022, a decline of about 48%[162]. - The Midland-Cushing oil price differential was approximately +$0.70 per Bbl as of April 25, 2023, highlighting market fluctuations[164]. - As of April 25, 2023, the Waha basis differential for natural gas was approximately ($1.20) per MMBtu, indicating significant volatility in pricing[165]. Risk Factors - The ongoing military conflict between Russia and Ukraine, along with political instability in various regions, continues to impact commodity price volatility, which is a significant risk to the company's financial results[159]. - The company is subject to extensive regulatory requirements that may impact operational costs and profitability, particularly in relation to environmental regulations[171]. Derivative Instruments and Hedging - The company utilizes costless collars, three-way collars, and swap contracts to manage risks related to oil, natural gas, and NGL price fluctuations[180]. - The company reported a realized gain on derivatives of $3.7 million for the three months ended March 31, 2023, compared to a loss of $22.4 million in the same period of 2022[112]. - The company reported an unrealized loss on derivatives of $7.1 million for the three months ended March 31, 2023, compared to a loss of $75.0 million for the same period in 2022[150]. - As of March 31, 2023, all derivative financial instruments are recorded at fair value, with PNC Bank as the counterparty for all instruments[181]. Internal Controls and Compliance - The company's disclosure controls and procedures were evaluated as effective as of March 31, 2023, ensuring timely reporting and decision-making[183]. - There were no changes in internal controls over financial reporting during the three months ended March 31, 2023, that materially affected the reporting[184].