Matador Resources(MTDR) - 2025 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a capital expenditure (CapEx) reduction of $100 million, representing a 7% decrease, while still achieving a 17% year-over-year increase in production [9][10] - The company reduced its debt by$ 190 million, bringing the total debt to approximately $400 million, with a projected free cash flow of 1.5 to 2 times that debt this year [26][27] Business Line Data and Key Metrics Changes - The company is prioritizing capital efficiency, with a focus on high grading operational equipment and drilling efficiencies, which is expected to maintain a 17% year-over-year growth in barrels of oil equivalent (BOE) per day [11][12] - The midstream business is projected to have an unrealized value of approximately$ 1.5 billion that is not reflected in the stock price, with plans for an initial public offering and other strategic transactions [13][14] Market Data and Key Metrics Changes - The company has identified a potential gas bank in the Haynesville and Cotton Valley formations, estimating between 200 to 300 billion cubic feet (Bcf) of gas potential that can be accessed when prices stabilize [33][34] Company Strategy and Development Direction - The company is focused on a balanced approach, maintaining a strong balance sheet while exploring opportunities for share buybacks, acquisitions, and increasing dividends, which have been raised six times in four years [25][26] - The company is committed to a "brick by brick" acquisition strategy, closing deals weekly and maintaining a pipeline of opportunities [21][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, projecting a 17% increase in reserves while managing costs effectively [30][31] - The company is hedging production to protect against price volatility, while also preparing for potential opportunities if commodity prices rise [27][28] Other Important Information - The company has initiated a share repurchase program, buying back 250,000 shares at approximately $41.5 each, with plans to continue as long as the buying opportunity exists [5][6] - The annual shareholders meeting is scheduled for June 12, providing an opportunity for shareholders to engage directly with the management team [7] Q&A Session Summary Question: What adjustments are being made to activity levels? - The company is reducing CapEx by 7% while still achieving a 17% year-over-year growth in production, indicating a more capital-efficient program [9][10] Question: What is the outlook for the midstream business? - The midstream business is expected to have significant unrealized value, with plans for strategic transactions to help shareholders realize this value [13][14] Question: Can you explain the gas bank concept? - The gas bank refers to the potential in the Haynesville and Cotton Valley formations, with significant gas reserves that can be accessed when market conditions are favorable [33][34]