Matador Resources(US:MTDR)2022-07-29 20:10Financial Performance - Net income attributable to Matador shareholders for Q2 2022 was $415.7 million, or $3.47 per diluted share, compared to $105.9 million, or $0.89 per diluted share, in Q2 2021 [111]. - Adjusted EBITDA for Q2 2022 was $663.8 million, up from $261.0 million in Q2 2021 [112]. - For the first half of 2022, net income attributable to Matador shareholders was $622.8 million, or $5.20 per diluted share, compared to $166.6 million, or $1.40 per diluted share, in the same period of 2021 [113]. - Revenues for the six months ended June 30, 2022, were $1.44 billion, with operating income of $822.9 million [177]. - Adjusted EBITDA increased by $666.6 million to $1.13 billion for the six months ended June 30, 2022, compared to $459.1 million for the same period in 2021, driven by higher oil and natural gas production and prices [185]. Production and Operations - For Q2 2022, Matador reported total oil equivalent production of 10.1 million BOE, with an average daily production of 110,750 BOE per day, comprising 58% oil and 42% natural gas [110]. - The company operated six drilling rigs in the Delaware Basin throughout Q2 2022 and plans to increase to seven rigs by September 2022 [115]. - In Q2 2022, Matador turned to sales a total of 29 gross (7.7 net) horizontal wells in the Delaware Basin [116]. - Average daily oil equivalent production in the Delaware Basin for Q2 2022 was 105,200 BOE per day, a 20% increase from 87,500 BOE per day in Q2 2021 [117]. - The company expects to focus on the development of its Delaware Basin assets for the remainder of 2022, with an emphasis on longer horizontal wells [165]. Revenue and Pricing - Oil and natural gas revenues increased by $480.7 million, or 117%, to $892.8 million for the three months ended June 30, 2022, compared to $412.1 million for the same period in 2021 [127]. - Oil revenues rose by $335.1 million, or 106%, to $650.2 million for the three months ended June 30, 2022, driven by a 71% increase in the average oil price to $111.06 per Bbl [127]. - Natural gas revenues increased by $145.6 million, or 150%, to $242.5 million for the three months ended June 30, 2022, due to a 115% rise in the average natural gas price to $9.57 per Mcf [127]. - For the six months ended June 30, 2022, oil and natural gas revenues increased by $791.0 million, or 109%, to $1.5 billion compared to $728.3 million for the same period in 2021 [132]. Expenses and Costs - Total operating expenses for the three months ended June 30, 2022, increased by 64% to $348.9 million, compared to $212.3 million for the same period in 2021 [138]. - Production taxes, transportation, and processing expenses rose by 95% to $85.7 million for the three months ended June 30, 2022, from $43.8 million in the same period of 2021 [139]. - Lease operating expenses increased by 39% to $39.9 million for the three months ended June 30, 2022, compared to $28.8 million for the same period in 2021 [140]. - Depletion, depreciation, and amortization expenses increased by 31% to $120.0 million for the three months ended June 30, 2022, from $91.4 million in the same period of 2021 [143]. Cash Flow and Investments - Net cash provided by operating activities for the six months ended June 30, 2022, was $975.3 million, compared to $427.6 million for the same period in 2021 [170]. - Net cash used in investing activities rose by $269.9 million to $521.0 million for the six months ended June 30, 2022, primarily due to increased capital expenditures and acquisitions [172]. - Net cash used in financing activities increased by $70.2 million to $258.9 million for the six months ended June 30, 2022, with significant cash used for repurchasing Notes and repaying borrowings [173]. Taxation - The effective tax rate for the three months ended June 30, 2022, was 25%, differing from the U.S. federal statutory rate due to permanent differences and state taxes [146]. - Total income tax provision for the six months ended June 30, 2022, was $204.5 million, compared to $8.2 million for the same period in 2021 [138]. - The company recorded an income tax provision of $51.7 million and a deferred income tax provision of $152.8 million for the six months ended June 30, 2022, resulting in an effective tax rate of 25% [154]. Derivatives and Risk Management - Realized net loss on derivatives was $61.2 million for the three months ended June 30, 2022, compared to a loss of $42.6 million for the same period in 2021 [130]. - Unrealized gain on derivatives amounted to $30.4 million for the three months ended June 30, 2022, compared to an unrealized loss of $42.8 million for the same period in 2021 [131]. - The company utilizes derivative financial instruments to manage commodity price exposure, aiming to cover a significant portion of anticipated future production [213]. Regulatory and Market Conditions - Commodity price volatility remains a significant risk, influenced by factors such as geopolitical events and market supply and demand dynamics [192]. - New Mexico aims for a 45% reduction in greenhouse gas emissions by 2030 compared to 2005 levels, impacting the oil and natural gas industry [205]. - The New Mexico Oil Conservation Division requires a 98% natural gas capture rate by the end of 2026, which could affect production operations [205]. - Federal actions and lawsuits may delay lease sales and drilling permits, potentially impacting production volumes and revenues [206]. - Stricter regulations on produced water disposal due to induced seismicity concerns could increase operational costs and restrict drilling activities [207].