Matador Resources(US:MTDR)2025-10-22 16:02Financial Data and Key Metrics Changes - The company reported over $3 billion in retained earnings for the first time this quarter, a significant improvement from an accumulated deficit just three and a half years ago [13] - The leverage ratio stands at 0.4, indicating a strong balance sheet [13] - The company paid down $670 million of its revolving debt over the past year and has approximately $2 billion in liquidity, providing flexibility for future opportunities [14] Business Line Data and Key Metrics Changes - The capital program includes 12 additional wells with a rate of return exceeding 50%, particularly in the Antelope Ridge area, which has some of the highest estimated ultimate recoveries (EURs) [10] - Well costs have been reduced from an initial guidance of $880 per completed lateral foot to a revised range of $835-$855, resulting in capital savings of approximately $50-$60 million [10][11] - The company expects to turn on about 1.2 million net lateral feet this year, with a positive outlook for 2026, anticipating 13.6 net wells to be turned on at the beginning of January [11][12] Market Data and Key Metrics Changes - The company has maintained a strong position in the Dallas-Fort Worth area, being recognized as one of the larger companies in the region [6] - The midstream business is performing well, processing a record 533 million cubic feet per day of natural gas [40] Company Strategy and Development Direction - The company plans to continue its capital spending strategy while balancing production growth and capital efficiency [17][19] - There is a focus on maintaining optionality in capital decisions, allowing for adjustments based on market conditions [25] - The midstream business is seen as a critical component, providing fee-based revenue that is less affected by commodity price fluctuations [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the potential for continued growth and the ability to adapt to changing market conditions [76] - The company is confident in its operational efficiencies and the quality of its assets, which are expected to yield strong returns even in lower oil price environments [66][76] Other Important Information - The company raised its dividend by 20% this quarter, marking the fourth increase in seven years [14][22] - Management emphasized the importance of maintaining strong relationships with service companies to enhance operational efficiency [36] Q&A Session Summary Question: On operational efficiency and capital spending decisions - Management indicated that decisions on capital spending are a balance between production growth and cost efficiency, influenced by various factors including oil prices and operational efficiencies [17][18] Question: Opportunities for continued efficiency gains - Management noted that there are still opportunities for efficiency improvements, particularly in completion operations and logistics [29] Question: Impact of oil market conditions on spending decisions - Management stated that they do not solely rely on oil prices for capital decisions, considering other factors such as operational efficiencies and the quality of prospects [34][36] Question: Growth outlook for the water handling business - Management highlighted a significant investment in water handling capabilities, which is expected to enhance operational efficiency and reduce costs [54][55] Question: Natural gas pricing outlook - Management discussed the anticipated relief in capacity issues in the Waha market due to new pipeline projects coming online in 2026, which should improve gas pricing [59][61] Question: Well productivity expectations - Management expects well productivity to remain strong in 2026, with longer lateral lengths contributing positively to overall performance [65][66] Question: Impact of increased activity on midstream volumes and EBITDA - Management indicated that growth in Matador often leads to growth in the San Mateo midstream business, with plans for significant capital expenditures to support this growth [70][71]