Matador (MTDR) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Senior Vice President of Investor Relations - Mac Schmitz
• Founder, Chairman, and CEO - Joseph Wm. Foran
• EVP. CFO. - Christopher Calvert
• EVP for Reservoir Engineering - W. Thomas Elsener
• president - Bryan A. Erman
• EVP of Geoscience - Andrew Parker
• head of our gas marketing - Anton L. Langland

TAKEAWAYS

• Total Production -- 230,470 barrels of oil equivalent per day, increased 10% year over year driven by new wells turned to sales in the Delaware Basin.
• Oil Production -- 132,019 barrels of oil per day, increased 10% year over year and outperformed the guidance midpoint by 2%.
• Natural Gas Production -- 590.7 million cubic feet per day, increased 10% year over year and outperformed guidance by 4%.
• Natural Gas Revenue -- $162 million, an improvement from negative $39 million in the second quarter of 2026 due to the commissioning of the Hugh Brinson pipeline.
• Proved Reserves -- 771 million barrels of oil equivalent, increased 16% from 667 million barrels of oil equivalent on Dec. 31, 2025.
• Capital Expenditures -- $381 million, representing a 19% reduction year over year and 10% below the midpoint of guidance.
• Debt Repayment -- $150 million repaid in Oct. 2026, with management targeting total repayments of $350 million to $400 million by the end of 2026.
• Annual Dividend -- $1.75 per share, representing an 17% increase following the eighth increase in five years.
• San Mateo Adjusted EBITDA -- $400 million projected for full-year 2026, representing a 17% increase from 2025.
• Natural Gas Realizations -- $2.99 per thousand cubic feet, an improvement of $3.78 per thousand cubic feet from the second quarter of 2026 realization of negative $0.79 per thousand cubic feet.
• Woodford Well Performance -- 140,000 barrels produced in 5 months, outperforming the high-end initial expectation of 100,000 barrels in 100 days.
• Well Costs -- $804 per completed lateral foot, a 6% decrease from $855 per foot in the third quarter of 2025.
• Operating Expenses -- $33.67 per barrel of oil equivalent, which management reported was above the guidance midpoint due to non-recurring midstream costs.
• Lease Operating Expenses -- $5.66 per barrel of oil equivalent, outperforming expectations of $5.80 per barrel of oil equivalent due to lower repair costs.
• Share Repurchases -- $12 million spent to repurchase 253,603 shares at an average price of $47.64 per share.
• San Mateo Net Income -- $135 million for the first nine months of 2026.
• Leverage Ratio -- 1.5x projected by year-end 2026 following planned debt repayments.
• Q4 Production Guidance -- 238,000 to 242,000 barrels of oil equivalent per day, reflecting sequential growth of approximately 4%.
• Acreage Position -- 25,000 net acres added in the Delaware Basin through more than 1,100 transactions during 2025 and 2026.
• San Mateo Throughput -- 731 million cubic feet per day in natural gas gathering, representing a 38% increase year over year.
• Wells Turned to Sales -- 21 to 23 net operated horizontal wells expected in the fourth quarter of 2026.
• Midstream CapEx Guidance -- $170 million to $190 million for 2026, adjusted from previous guidance of $145 million to $165 million for the Marlan plant expansion.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Foran stated, "yes, we borrowed a lot of money, but we said we would make extra effort to pay it down," acknowledging the debt incurred for recent acquisitions.
• Stetson stated, "we have seen some oilfield service cost inflation with a higher commodity price," identifying cost pressures despite efficiency gains.
• Calvert stated, "operating expenses of $33.67 per BOE were above the midpoint of Matador's expected 2026 guidance range," citing higher midstream operating expenses and non-recurring costs.

SUMMARY

Matador Resources Company (NYSE:MTDR) reported third-quarter 2026 results featuring record oil production and a significant improvement in natural gas revenue realizations. Management reported that the integration of the Cardinal Midstream, Paloma, and Ridge Runner acquisitions contributed to a 10% year-over-year increase in total production. The company stated that the commissioning of the Hugh Brinson pipeline allowed for a transition away from Waha hub pricing, which had been negative in the second quarter, to positive realizations. Management reported generating sufficient free cash flow to support the eighth dividend increase in five years and the repayment of $150 million in debt during October 2026. Forward operations include the development of new federal lease acreage and the continued expansion of the Woodford discovery.

• CEO Foran noted the impact of the Hugh Brinson pipeline on gas pricing, stating, "last month, we were having to pay at Waha $0.79 for them to take our gas so we could keep our oil production going. And this month, we were getting paid $2.99, for our gas."
• Management confirmed a multiyear expansion project at the Marlan complex, which includes a new 300 million cubic feet per day processing facility underwritten by third-party commitments.
• The Woodford discovery has outperformed initial internal expectations, with Elsener stating, "we mentioned the over 800 thousand-barrel oil EUR on our first Woodford well. And we stand by that."
• Management reported that the company is currently using 100% treated produced water for hydraulic fracturing operations, which Stetson noted helps offset inflationary pressures.
• The company achieved drilling efficiencies that reduced average rig time by three days per well compared to previous periods.
• Management reported that 2080% of wells completed in the third quarter used fuel gas instead of trucked-in compressed natural gas, further reducing operating costs.
• President Erman reported that the company has already submitted 48 permits for development on the recently acquired federal lease acreage.

INDUSTRY GLOSSARY

• BOE: Barrel of oil equivalent, a unit of energy representing the energy content of one barrel of crude oil.
• D/C/E: Drilling, completing, and equipping, referring to capital expenditures for bringing a well into production.
• EUR: Estimated Ultimate Recovery, the total amount of oil or gas expected to be recovered from a well.
• LOE: Lease operating expenses, the costs to operate and maintain wells and equipment after production starts.
• MMcfd: Million cubic feet per day, a standard measurement of natural gas production.
• San Mateo: A midstream joint venture 51% owned by Matador Resources Company.
• Waha: A natural gas pricing hub in West Texas.

Full Conference Call Transcript

Operator: Good morning, ladies and gentlemen. Welcome to the Third Quarter 26 Matador Resources Company Earnings Conference Call. My name is Sarah Gallant, and I will be serving as the operator for today's call. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes. The replay will be available on the company's website for 1 year as discussed in the company's earnings press release that was issued yesterday. I will now turn the call over to Mac Schmitz, Senior Vice President of Investor Relations for Matador. Mister Schmitz, you may proceed.

Mac Schmitz: Thank you, Sarah. Good morning, everyone, and thank you for joining us for Matador's third quarter 26 earnings conference call. Of the presenters today will reference certain non GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non GAAP financial measures with comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward looking and reflect the company's current expectations or forecasts of future events, based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements.

Additional information concerning factors that could cause actual results to differ materially are contained in the company's earnings release, and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10 Q. In addition to the earnings press release issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with our third quarter 26 earnings release under the Investor Relations tab on Matador's corporate website. And with that, I would now like to turn the call over to Mr. Joseph Wm. Foran, our Founder, Chairman, and CEO. Joseph?

Joseph Wm. Foran: Thank you, Mac. And it is a pleasure to visit with y'all today. And I want to begin first by thanking each of you who wrote a note that we thought. Mac and I thought the notes were more thoughtful and thorough. As well as any we have had in the back. In the last couple of years. And we really appreciate that and wanna reiterate to you. We would very much like to have each of you come visit us sometime, have lunch or breakfast with us. See our facility, and what we think makes a difference in our MaxComm room. It goes 24/7 and some other differences, and I think it would give you a more complete picture.

Of the future we have as well as meeting in person some of the people that visit with you during the in between. These analyst calls. that is first point. Second, is that we have had a lot of changes here for the better. This year, there is some opportunities came up, and we were able to take advantage of them. With the support of our banks and our shareholder groups and want to thank them for helping to lean in and let us execute on these. And since then, the pay down what we promised, yes, we borrowed a lot of money, but we said we would make extra effort to pay it down.

And we first did 100 million a month or so ago, and just recently, we did another 50 million. So on the money that we borrowed, I think it is 5 to 600 million. We have now paid down 150 million and hope to make further paydowns here in 2026. But certainly take care of it in 2027. Finally, shout out to the teams is that they put in a little extra work effort And what. That was our challenge to them as we were acquiring Cardinal, Paloma, and Ridge Runner. We said, we are going to ask y'all to put in a little extra time and effort to make sure this works out. And they have.

And I think you will see the effect in our results for this quarter, but even more so in the upcoming fourth quarter. But I look forward to taking your questions and seeing what we do. As you think of what questions you may wanna ask us, I would like to just say a few current remarks. To that size, our production has grown 10% to over 230 thousand BOEs from 12/31/2025 to reserves of 667. Now showing you the difference is that we have now increased that to over 700 million. So we continue to have growth in our reserve base, substantial growth. Which allowed us to increase the dividend 8 times in 5 years from $1.50 to $1.75.

A 17% increase. Finally, there are a lot of news to tell you, but we are trying to limit it. A lot of good news, but perhaps the most important, impactful, is that we are now moved away from Waha to selling our gas with the Hugh Brinson And so last month, we were having to pay at Waha $0.79 for them to take our gas so we could keep our oil production going. And this month, we were getting paid $2.99, for our gas. Which has made $162 million in cash flow compared to $8.038 billion in the second quarter of 2026. So, a big swing there. Of over $200 million.

And thanks ET for finishing the Huebner and we look forward to working further with them. In the meantime, we have talked and happy to have your questions about our strategic acquisitions We are currently drilling 3 Corby wells on the adjacent Viento Federal acreage. This is important because we got permits. We got the-- We got them going in a matter of months. So turned on. That may be 1 of the best wells that we will have drilled in Matador's history. So really have our fingers crossed there. Very hopeful. Teams are excited. We will see what happens, and I know we will talk about that in the future.

Woodford discovery continues to outperform our initial expectations. it is now produced over 140 thousand barrels in just over 5 months. So we were our high end of the range originally was 100 thousand barrels in 100 days, so we have outperformed that. So kudos to the team everybody working on that. So people have said, what are you going to do with your Paloma? Again, Paloma has a good eye for good acreage, and we were very excited to do the deal with them and get to know them better and see if we can find more to do.

So as analysts, you can expect up to 25 wells on acreage associated with Paloma over the next year and 10-12 additional wells on associated federal lease sale acreage. The great advantage of the federal lease is it is an 1/8 lease so you have a higher net revenue. And 1 well holds the whole acreage. And even if you do not drill, you have 10 years to get your first well drilled. But we will drill all the federal acreage faster than that. it is exciting acreage, and we think best part of the basin.

The Cardinal acquisition has now been integrated bringing 9 new third-party customers to the San Mateo system it is been in good shape, and again, Plummer did a good job with that development of developing the Cardinal business plan. And that fits in, and now we have if you look at the maps, you will see that we are all around the basin We are adding a few connectors to it to make it that much more efficient. And I think in the coming time, you will hear what the material contributions that the Cardinal system has had going in now into the Matador San Mateo system.

So all in all, always like to be careful and say that is a lot of good news all at once. And everything is looking pretty good for us. And we are excited about the coming year. We will have more on that when we report on the fourth quarter. But I think what you will see is continuing good performance and continuing improvement in our efficiencies. it is great. Sarah, we would like to turn it over to Q&A.

Operator: Thank you, Mac and Jon. As a reminder, to ask a question, you will need to press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 again. Due to time constraints, we ask that you limit yourself to 1 question. Again, please limit yourself to 1 question until all have had a chance to ask a question. After which we would welcome additional follow-up questions you may have. Our first question comes from the line of Gabe Daoud with Truist. Gabriel, your line is open.

Gabe Daoud: Thanks, operator. Morning, Jon and team. Appreciate the time. I was hoping we can maybe unpack the comment you made in the release around mid single digit growth for 2027. On current commodity prices and service pricing. So, I guess the question is, is that implying you could essentially deliver that growth from flat budget relative to 2026? So maybe just talk a little bit about the moving pieces within capital budget. You have obviously inflationary pressures. You just announced the Marlin expansion on Monday, which could require some capital. So we would love to get maybe some more commentary on that.

Christopher Calvert: Hey, Gabe. It is Christopher Calvert, EVP. CFO. Great question. You know, I think we would like to point first to highlight 4 things to kind of set up that question. First, as we look at 2027, the first thing, you know, we have great properties that we can go out and develop that are included in some of these acquisitions, obviously, but then just great legacy properties that we can go out and develop. We have an ability to execute in a very capital efficient way Jon already spoke to the benefits of the Hugh Brinson before, We also have the people to prosecute the plan that we set forth.

And so I think as we look at 2027, we do see ourselves as being a potential relative grower. We think we could prosecute a plan that allows us to not only be a relative grower, but we could still achieve debt repayments We could still grow our reserve base, and then we could still potentially grow our acreage position through our brick by brick program. And so I think the commentary around CapEx, there are a lot of moving parts, Gabe. You know, I think, obviously, we have seen oil price change drastically in the last 48 hours.

You are going to have oilfield service that is somewhat following activity that could be based off of that oil price change. And so I think it is a little early to comment on what we think capital program could look like in 2027. However, when we think about the potential program in 2027, we think we can achieve a lot of our objectives, specifically debt repayment and production growth, and prosecute it in a very efficient way.

Joseph Wm. Foran: Thank you, Christopher. And I would just add is that if oil prices go down, the vendor prices tend to go down with it, and they just adjust And we have been Glenn W. Stetson has done a great job on these working with the completion team in driving down the cost of completion. So we are now on the rig 3 days less on average. So there is savings there. Those are big savings. And what else do you wanna say?

Glenn W. Stetson: Yeah, Gabe. Just as Jon said, we are very focused on efficiencies, and we have seen some oilfield service cost inflation with a higher commodity price. And we did highlight in our slide deck on slide 8, if you get a chance to see it, a lot of the things that the teams are working on, including, as Jon said, drilling wells, faster. that is kind of an easy 1 to say, but hard to actually do. And teams have done a fantastic job of doing that. Along with, you know, Simul and TrimulFrac, and some of the bigger knobs that we have been able to turn.

Have been in the categories of using tree to produce water for the hydraulic fracturing operation. This last quarter, was the first quarter that we used 100% of the water that we used for frac was treated produced water. And then also using fuel gas as the fuel to run our pressure pumping trucks. is another large mover, and something that we think is unique to Matador and our relationship with Van Mateo. And in Q3, 2080. Approximately 80% of the wells that we completed used fuel gas as opposed to trucked in compressed natural gas. And so those are a couple of the big highlights that are helping offset some of those inflationary pressures from oilfield service costs.

And just as Jon said, we will see what next year has in store and for us in that way.

Joseph Wm. Foran: Yeah. And I do wanna highlight Gabe, that you know, the relationships that we do have with our vendors and that we have built over time. And just as a reminder, Patterson has been a big part of that. Effort and currently, our contracts with Patterson are for all of our rigs. And then also, you know, on the pressure pumping side, next year, which is a Patterson owned company as well. And so along with Halliburton, and they have been great partners in helping us to achieve these efficiencies.

And, you know, focus on the win wins where we can get more stages in a day and we can get more lateral footage per day, those are, you know, those are win wins. So they have been great partners. And lastly, I would say, you know, it is important to make sure that pipe is on location when you need it and BNL Pipe Co. has also been crucial in making sure that, that is the fact that we are never sitting and waiting on pipe.

Christopher Calvert: Thank you for your question, Gabe.

Operator: Next, we have Neal Dingmann from William Blair, your line is open.

Neal Dingmann: Morning, Jon and team, and nice update yesterday, Jon, on all the Van Mateo and natural gas comments. Jon, my first question is on Van Mateo. Specifically, for you and the team, the asset certainly has notable value, obviously, given $400 million of EBITDA you all are suggesting. However, you know, I would argue that it does not seem like the value is being properly recognized in your stock price. I am just wondering how soon might you all consider some sort of monetization event or something to help better realize the value of this large asset.

Joseph Wm. Foran: Well, that is great. that is a great question, Neal. And we discussed this every day. What can we do better? What. How do we add value? Without spending a lot of money? And I think the midstream has that. it is undervalued right now in the market. We got into the business to ensure flow assurance out of the basin. With the increase in drilling activity in New Mexico, particularly in the Potash area, you are going to have a lot more gas coming to market And if you do not have your own midstream system, you may find that you are shut in.

And so we wanted to go ahead and realize that if you are going to make a lot of gas, you better have a system you control for you to get your gas to market. And it is a lesson we learned when we first went public years ago, and we have tried to maintain that being sure that we had a means of getting to market. Particularly as our gas kept growing, our gas volumes kept growing. As far as increasing the value of it, we are open to ideas at any time. 1 commonly is about going public. And we have had a good experience being public. We went. Matador went public at $12 a share.

And, well, until yesterday, $60 a share. But, you know, it will bounce back. It always does. It has not really lost value. It just the times, and you gotta adjust to it. So that is been a good experience. Even if we are $50 instead of $60. And I think the midstream could render that type of growth too, but you gotta wait till the time is the market is right. If you remember, at Matador, we were supposed to go public And, you know, we were all set to go. We got approval on September 10 of all days. And we know what happened on September 11. So we do not wanna rush into anything.

But we are planning to tap into that value. Would but we wanna do it without losing the option and the ability to control our future with the flow assurance because it is a meaningful amount of money. But Mhmm. that is also helped enable us to raise the dividend 8 times in 5 years. So it is paying off, and we feel we are building a better system, building up our customer base. In this last bill that we announced, with a prominent company pretty much fills up the line and we are very excited about working with them because that could be another value add to the midstream system.

So we are we are open to any and all ideas but trying to get it to where it is big enough, what we have learned from the market, wanna be big enough. You are not an afterthought. But you are a company actively being traded, and that people wanna meet with you. And work with you. And we feel we are building it is helped us to build better relations with a number of the major companies out there And, you know, we offload to them. They offload to us. And you are just building relationships and efficiencies.

Glenn W. Stetson: Yeah. That. that is right. Just what Jon said, and I think we have shown a track record of, you know, adding value to those you know, midstream assets, and that has helped, you know, the upstream business. Just as Jon said, both Matador and the customers that are on that system. And so know, when we started this year, I do not think the Cardinal acquisition was really, you know, part of the picture, but that opportunity came along. And I am very glad that we got that closed in the quarter, and, took over on August 1 and that integration has gone really well. Just as Jon said, we this quarter, have connected the 2 systems.

San Mateo and the legacy Cardinal system, and look forward to you know, further connections in 2027 that will add to, you know, the reliability of San Mateo and its customers on the system.

Joseph Wm. Foran: And Tom, is head of our gas marketing. Anton, do you add anything to that? That makes you more efficient?

Anton L. Langland: Is that right, Joseph? I agree with you completely because it is helped us with our surety of flow and knowing where our gas is going. And it is connected to Hugh Brinson that we know that we have all these gas plants in the future, and we have takeaway going from our gas plant in basin to Huebner and then Huebner all the way to the Gulf Coast. So this is where we are adding a lot of value to natural gas on the residue side. Also, the NGLs have added a lot of value to our gas, and that is where our gas plants where we get the better TNF by owning our own plants.

We get better transportation and fractionation, better natural gas liquids price.

Joseph Wm. Foran: Because we own our own plants. Well, I hope that answers your question, Neal. But do not hesitate to follow-up and call us. We will be around. And, Neal, we really appreciate your interest over time. it is getting to be that we have worked together for a long time, and I hope you feel that, we have always done what we said we would do. Thank you, Neal.

Operator: Our next question is from Tim Rezvan with KeyBanc Capital Markets. Tim, your line is open.

Timothy Rezvan: Good morning, folks. Thank you for taking our question. I wanted to follow-up on Neal's question on Van Mateo with a little different angle here. Very strong EBITDA number that you put up in the third quarter. I know 2 months of Cardinal had a little bit of impact to that. But you seem to be about $100 million run rate as we look Q4 and beyond without any drop down. For Matador into Van Mateo. So can you help us maybe understand the EBITDA growth outlook? I know you put guideposts out before, but a lot of this growth seems locked in with these recent third party agreements. And then sort of the work underway at Cardinal.

So can you talk more about organic growth that we can expect from Van Mateo?

Christopher Calvert: Hey, Tim. Great question. This is Christopher Calvert, EVP, CFO again. We appreciate the fact that you recognize the catalyst for growth within the Van Mateo business. I think in previous disclosures, we have talked about the integration of Cardinal contributing potentially $100 million in EBITDA in 2028. And so I think when we see the Van Mateo business and kind of piggybacking to Neal's question a little bit, We have got this question a lot about the value of San Mateo, and I think we have always said patience. We want to do the right deal, not just any deal. And so I think if you look back at 2025 EBITDA for the combined entity, was around $325 million.

We are up 17%, projecting to be up 17% in 2026. So I think that patience will be rewarded in the fact that Van Mateo EBITDA has not only grown but we feel within the Cardinal acquisition, the recent agreements that have been announced, and the third plant expansion that will be built at Marlin, we feel that gives pretty clear line of sight that we have disclosed EBITDA growth going into future.

Operator: Our next question is from John Freeman with Raymond James.

Analyst: Just following up on Gabe's earlier question. Obviously, the Marlin expansion looks like another really nice project for y'all. Just to sort of help us be at least on the right ZIP code on the midstream capital next year. I mean, can you give us sort of just a ballpark cost of that project? We can kind of get some idea of how that looks over 2027 to 2028 for midstream related to that?

Joseph Wm. Foran: John, thank you. What I wanna emphasize, we are getting a lot of these questions on the midstream. And the way we look at the midstream is really that if you are going to be, say, a cotton farmer in Gaines County, Texas, you need to be sure to own part of the cotton gin. And if you do not own part of the cotton gin, you may have trouble getting your cotton processed. And then when you do get it out, your price has already fallen some.

So what we wanted to have was that flow assurance that we could get it to market as fast as is commercially reasonable and get it processed by the best people and moved on. And we wanted that flow assurance. We it is been a lucky break for us that not only have we been able to maintain flow assurance, but we have the other thing that is generating a lot of profits and a lot of optionality. We know it is a valuable asset, and we plan to bring it public at the optimal What we consider optimal time with further growth ahead of us. I am gonna turn it back to Christopher for the detail.

To the rest of your questions. But it is it is like our you know, that we handle a lot of our water. We handle a lot of these other side deals, and we feel we saved a lot of money and make money for Matador. So again, this is 1 of those questions that John, when it works out for you sometime, please come up and have lunch or breakfast with us and meet with our young people and how we are all set up.

We have replicated the, what the plants look like, and I think you can see it is a it did not require to succeed in the business, but it is sure helpful to have a processing plant that can take your gas, process it, and move it to market as well as get more NGLs out of it. But again, we are open to ideas. If someone's got a better idea of what we could do with it, come see us. Christopher?

Christopher Calvert: Yeah. Hi, John. it is Christopher Calvert again. You know, the way we look at this build out, it will be a multiyear build out. You know, capital going out over time. And so we indicated it would be around 25 million in this quarter. And then spread out over the completion of the next project or the completion of the project Excuse me. And so as we get to February, we will provide more color on the cadence of that capital investment, but we just wanna remind people it will be a multiyear investment multiyear project. Thank you for your question.

Operator: Our next question will come from Arun Jayaram with JPMorgan Securities. Erin, your line is open.

Arun Jayaram: Yeah. Arun Jayaram with JPMorgan. I was wondering if you could comment on how you think about year over year capital efficiency upstream as you know, feathering in, you know, up to 15 Woodford wells and maybe 35 to 40 wells from a mix of Paloma. And the federal lease sale?

Joseph Wm. Foran: Okay. I am not sure I understand your question. Can you kind of rephrase it for either Glenn or me?

Arun Jayaram: Yeah. Just wanted to comment on how you think about year over year changes in capital efficiency. Which would include, obviously, well productivity, and CapEx is 1, is another important part of that. As you think about feathering in you know, the Woodford and 35-40 wells in the. You know, from the mix of the federal lease sale in Paloma. Hope that makes sense.

Glenn W. Stetson: Hey, Arun. Yeah. Thanks for thanks for the question. This is Glenn W. Stetson. I. I would just. I will start and maybe Tim can add some color on the Woodford. But you know, I think what. As we look at, you know, some of the wells that we completed in the quarter that were adjacent to Paloma, the Paloma properties, and the BLM properties. And as Jon mentioned, we actually have 3 wells that we are gonna turn on this quarter that are also adjacent to those BLM properties We have achieved D and C cost per foot in the $640 ZIP code.

And I think that is a testament of the efficiencies that not only that we projected, but we have actually been able to execute on. And it was some of the things that I had listed, you know, previous in the previous question about, you know, the use of treated produced water and field gas. And I do think that as we continue to drill longer laterals, and really focus on cycle times, we have a slide in the deck that refers to the lateral footage per rig gains that we have made in just a year with seeing a 30% improvement in that category. And. But we are not but we are not done yet.

I think that there are still, you know, records to be made And, Jon also mentioned it in his opening remarks about our MaxComm room. This is where our drilling engineers and GEO STEER and our geoscience team with Geosteering are, you know, are bringing in live feed data from the rigs and you know, they continue to show that know, in the. In our known targets, we see continuous improvement in cycle times and our ability to drill wells faster. And that, you know, is in, again, the known targets, but then also some of the exploration efforts and our 1 Woodford well was a single well test.

And we did a lot of we did a lot of geoscience work on that well. It was a longer well, and so I think that there are plenty of improvements that we can make as we drill more and more of those Woodford wells.

W. Thomas Elsener: And it is. Hey, Arun. Hey, Arun. it is W. Thomas Elsener, our EVP for Reservoir Engineering. Yeah. I would just I would just tack on that, you know, back in back in August, we mentioned you know, some of our you know, really big improvements in our productivity and capital efficiency. We mentioned that our 12-month cumulative oil production will be 20%-30% higher you know, than it is been in previous years. A lot of that is driven by the really high value targets on the BLM acreage and on the Paloma. Properties. But I would also mention that, you know, we mentioned the over 800 thousand-barrel oil EUR on our first Woodford well. And we stand by that.

You know, we expect it to do even better than that, and it is trended even stronger. So I think we are seeing, a lot of great improvements on our EUR per foot and our 6-month cumulative production metrics. But, also, you know, just kind of to put a number on some of the immediate offset well costs, we achieved $640 per foot. On some of the properties just immediate adjacent to some of the new BLM and Paloma properties. So we are as Glenn mentioned on the on the capital side, we are doing a lot of incredible things, and we are all seeing it on the productivity side as well.

Operator: Thank you for your question.

Joseph Wm. Foran: Yes, just to say. remember that you got to spend some money to make some money. You know? And so the capital, you know, we do not wanna put capital out there. It takes us 10 to 20 years to recover. What we are good is in effect, is doing some short term financing of our own projects, and it is working out really well. And you can see the difference in Matador today versus 10 years ago. And we were going public, and we did not have a system then. And each meeting we went to during the public roadshow, we got asked, well, how are you getting your gas out of the market?

We were not having trouble but the fact we are getting that question in every meeting meant others were. We looked into it, and we thought we had the pieces to make a midstream team, and we did. And to our operating group, that is. They tell you that our life has been a lot simpler. Since then. I have now met a sort of control. Over the future and being ready, and it is helped us offload and build relations with other midstream companies. And that is the way we look at it. it is just something if you wanna be 1 of the most efficient companies, you are gonna need your own midstream system.

Or have built a real close relationship with somebody who does. So, that is where we are coming from. And so far, it is been money well spent. And help made us overall more efficient and more productive. So I would not wanna have to do it on every well we drill. But the fact that we can do it helps us negotiate, be better negotiators with other midstream companies, and we all somewhat work together because we need each other. if systems go down or they need to do service work of some sort. So that is been 1 of the unexpected pleasures having the midstream.

Having this so called cotton gin, because we are cotton farmers in this area. And we all need that outside help. Thank you.

Operator: Our next question comes from the line of Scott Hanold with RBC. Scott, your line is open.

Scott Hanold: Yeah. Thanks. Good morning. You know, I was wondering if I could touch base maybe a little bit on some of that new federal acreage. I think you talked about maybe drilling a dozen wells on the new land. I know you have got it. I think you have identified, what, 140-some locations. Utilizing 2-mile laterals. But can you give us a sense of how you think about development of that land over the next, say, 1 to 2 years? And you know, I think you did hint toward you know, potentially improved efficiency. I think you all kinda mentioned, like, that $650 D&C cost on some recent wells in the area.

But you know, I would be interested to know, like, how you think about, like, developing the package sizes the lateral lengths, and how do you wanna scale that asset up over the next couple of years?

Joseph Wm. Foran: Well, Scott, good question. I am going to have 1 of the other guys speak . But remember, you were around when we bought the other federal leases back in 2018, and everybody thought we paid too much, and, you know, that. But look what that did. We have made over $2 billion for the wells that we drilled over there at net profit. And that is helped make Matador and put Matador in the position where they could be aggressive about bidding on these federal leases and we are real. Really excited we are not waiting around years. We have, as I said, we are out there right now. Making plans and preparations to drill it.

Number of these federal wells in different areas to prove them up. But it is Deja Vu all over again. And if you remember, Matador's price got knocked down right after disclosure that we bought those federal leases in 2018. Well, these leases are gonna be just as good, if not better, because they are gonna be longer laterals. Got a midstream system. And there is been a lot of work done on them. We know these formations, and we have experience So we are really excited that all seems to be coming together.

Bryan A. Erman: This is Bryan A. Erman, president. Just to add on to what Jon was saying, obviously, we are really excited, as you noted, Scott, about the federal acreage. And I And I think the. 1 of the advantages of getting the tracks that we targeted, we really hit the ground running on the permitting side. And we, you know, we have disclosed that we are submitting permits actively. We have 48 actually submitted to date, and we expect to have a few more submitted by the end of this week.

And so that is what is given us confidence in that 12-well number that you mentioned, Scott, and think, you know, we talked a lot, and you mentioned it about the efficiencies in this area and has expected EUR uplifts, 15%-20% lower on a DMC cost per foot basis compared to the corporate average and 15%-20% higher on the EURs. So you know, that is all to say that, you know, we are we are actually working to get those properties ready and are excited about hitting the ground running, you know, hopefully as early as Q1 of 2027. But I will let Tim talk about the kind of the package sizes and things on that part of your question.

W. Thomas Elsener: Sure. Hey, Scott. it is W. Thomas Elsener again. Clearly, we are very excited about these new BLM properties. Know, the final the final details would be a little bit easier to discuss once we get to you know, February. But we are currently moving very quickly. on these new federal properties. Our teams have conducted many of the on-site reviews, and we are drilling immediately adjacent to it. 1 thing that is very important to us clearly is from the midstream perspective that we wanna make sure that we synchronize the timing of our of our development with the midstream solutions, the oil takeaway, water takeaway, gas takeaway.

Is something that we put a lot of value in, and it is key to the kind of development of these assets and getting that cost per foot down you know, as low as possible. Do have a wealth of opportunities in 2027 as mentioned with the you know, the number of properties on Paloma and also in the Woodford. And so we are still refining the exact kind of quarterly cadence and timing, but it is something we are very, very proud of. These BLM properties offer 9-10 zones or more. In many cases, and so we are looking to optimize how we how we put together the batches of the wells and stack them together.

But it is something that we have done a very good job in. Many of the wells that were key to the drivers of outperformance in our third quarter here We are very, very close to some of these new BLM properties. And so see a lot of opportunity and a lot of success. You know, going forward, and we will get more to the details in February.

Joseph Wm. Foran: Again, I would say come see us. And you might get an early preview of some of what we are doing. And get a better feel that they are the planning is going into this. We are experienced, and we are you know, we believe we execute. Have executed well. On our other acquisitions and other buys at these lease sales. And we think this is our best opportunity yet. And, we look forward to the next quarter when we visit and report further progress. Jon, I would like to Also, and further progress not just on operations, but also on the debt side. Which I know concerns a lot. But we are moving in the right directions.

Go ahead, Anthony. I want to add the cooperation with these larger pads that Tim talked about, the great efficiency from these large pads. it is We work with San Mateo hand in hand, and San Mateo has been able to provide the takeaway on that. And so the seamlessness of our planning with our drill bit Van Mateo knows where the drill bit is. Van Mateo will get ahead of that with plants. Compression, takeaway so that works great having them in the building. The Pendant Hills has been providing great takeaway for us and redundancy with work with the other midstream where Van Mateo is connected to those guys. Van Mateo issue. Has an issue.

We can offload to other midstream. So it is provided a lot of surety of flow. Same tail, and the deal on acreage with the large batches I think, works well having San Mateo there for takeaway. Y'all done a real good job of being there with the pipe. When the well is completed and ready to go. So Not easy, but to keep up with our drill bit, we are we are working hard on that, though. Alright. Well, y'all done a real good job. Thank you for your questions, Scott.

Operator: Our next question will come from the line of Derek Whitfield with Texas Capital. Derek, your line is open.

Derrick Whitfield: Thank you. Good morning, and congrats on the quarter and all the positive updates. Thanks, Derek. Wanted to focus on the Woodford with my question. it is clear through your update that you guys are excited about the Intrabasin, what you have acquired. With the benefit of another quarter of data and industry results, could you offer some perspective on what you are seeing in the data? How large the oil focused runway could be for you? Where you think you could drive cost over time.

Joseph Wm. Foran: Well, I think, I would like to be able to give that to you now, but let have a few more wells. And we can provide you that data or it will be in the public. Records. But we are excited. You know, what. The 1 the 1 data point that we have is that Woodford well that we drilled made a over 100 thousand barrels in 100 days. So at least on 1 data point, it looks pretty good. But we have a lot of other wells that we are drilling that we think are gonna render you know, also really good results. We plan, I think, with 110-112 wells you expect to drill this year. Yes.

Net. that is that is exactly right.

Glenn W. Stetson: And so, yeah, just as Jon said, Derek, this is Glenn Stetson again. I just I. I would mentioned it before, but we have the 1 we have the 1 well. But very confident in our team's ability to get out here And as we drill more Woodford wells, we learned a lot. Drilling that first drilling that first well. And we are gonna we are gonna take those, learnings and apply them to the next wells. Along with some of these, again, efficiencies that we have talked about. But looking at drilling longer laterals, looking at drilling multiple wells the same time to achieve some of those batch savings.

And so, again, very, very confident in our team's ability come out here. And as we you know, repeat drilling Woodford wells, we will absolutely be able to capture those efficiencies and reduce our costs. On a go forward basis.

Joseph Wm. Foran: And, Derek, not to be a broken record, we again invite you to come have had lunch breakfast, see the see a ballroom, see your MaxComm room, and meet the people behind us and ask them your questions. And, hopefully, you will feel comfortable with their answers because we think we have a great opportunity but it still takes great execution. And we are working on that. And Glenn's been real good about getting better on each time he drills a well into different formation. And we are glad that Anton is looking for the wells to come on because he is got places to go with the product, the oil, the gas, and the like.

So great question, and look forward to further updates. But if you wanna come out here, we would love to see you. Thank you, Derek.

Operator: Our last question for today's call is from the line of Noah Hungness with Wells Fargo. Noah, your line is open.

Noah Hungness: Good morning. For my question, I was hoping to kind of go back to the Woodford and not necessarily the Woodford bench, but more. When you guys went and looked the deal, and did this deal, you acquired a bunch of locations for very cheap, and it is seems like the first well is very strong. And I understand it is only 1 well, but with the success that you had. That you have had with this well and the entry price, that you had it.

That you got it for, does this at all kinda change how you guys think about M and A and maybe thinking about acquiring Acreage and other developing or less proven parts of the Delaware where you guys can really leverage your geologic expertise?

Joseph Wm. Foran: Yeah. You know, that is a fair question. And we do not wanna. I mean, take like a football team. They wanna advance the ball by running. Wanna advance ball by passing. They wanna pass, you know, they wanna gain yards however they can, and we do too. We do not wanna be saying we are only gonna drill wells or we are only gonna do the acquisitions. We just take what the environment gives us and how other companies. We are not trying to grow simply 1 way, but always. We like the diversified approach that we have where we drill wells that we put together. You know? We have the midstream.

And we have this break by break strategy of buying smaller amounts, but in good areas. And trying to build a position from being there as well. So and so whatever helps contribute to building a good company is what we try to try to do. And that is the challenge for everybody in the room is help find additional ways to be more efficient and to go with the times. You have been the head of that project Bryan. So tell us what you think.

Bryan A. Erman: Noah. I agree with this is Bryan again. I agree with what Jon is saying. I mean, exploration has always been a part a part of our program. We have always had, you know, some portion of our program that was devoted to that, and I expect that will continue. I think the Woodford is a great success story of that. I commend our technical team for identifying, this play and being at the forefront of it. There. You know, we were the first.

We drilled the first successful Woodford horizontal well in New Obviously, there were some in Texas, but I commend our team for being at the tip of the spear on identifying this and our land team for putting together this position that you talked about. You know, as we were drilling this well, putting together a really sizable position at an attractive cost, it is gonna generate what we think are gonna be really attractive full cycle return. So I think this was a total team effort from all of our groups but, you know, it will be something to from an expiration standpoint, it is something that we are always looking at going forward.

Andrew Parker: Hey. This is Andrew Parker. I am the EVP of Geoscience. I just wanna add to Bryan's observation. We were in a unique position for pushing this Woodford play north into New Mexico because of the data you know, management has supported us acquiring here. Are we you know, the team really leveraged our 3D seismic data in a way that, you know, honed us in on this fairway in a way that, other operators were not comfortable doing. So I am really proud of the team there and also that data leverage is also what allowed us to execute you know, so well on our first well.

We are gonna continue to refine that process and do better and better going forward.

Operator: Thank you, Noah. This ends the Q and A portion of today's conference call. I would now like to turn the call over to management for any final remarks.

Joseph Wm. Foran: Well, thank you very much. I just like to thank everybody on the call. I thought all the questions were very good. We enjoyed the discussion. We think we always learn from having these discussions, and that makes us think about our own plan. And how we might improve it. Andrew, I appreciate you. Stepping in and saying this a kinda throw the dart at the board and see what we might do next. But this is something that y'all worked on. And taking your time, and you got it right. And it is the same way a lot of the federal leases. We paid a lot of money for it. I would.

I would have liked to have paid less. But that is what it took to get the leases. We have got the locations, our federal team has done a great job of getting permits and so that we are ready to go, and it is not sitting on the shelf. But all of these are under active plans to see how fast we can drill them. but first, we want to make sure the geological work is being done to support the effort. there is been hope. Hopefully, you can. As you listen that there is been great teamwork and coordination between our professional staff and our operating group.

And we think we have made a lot of progress this year and this is gonna kinda have to be 1 of our better years. But we are also very excited about what may happen for next year. And so we are ready if to buy properties. We are ready to farm out properties. We are ready to do joint ventures with people. We are ready to help with their midstream business. In a word, we are just here like anybody else. And we wanna build relationships, and yet increase revenues and lower the cost. And I think that we are making progress on all those grounds.

And that is reflected in the reduction of CapEx that we are drilling these wells on 15% or less per foot. That we are doing, plus that we are out there actively chasing minerals and leases and again, very pleased with Glenn. Drilling these wells faster, 2 or 3 days faster. So you make money all the different ways. And wanna thank all of you. I thought the questions were really good. We would like to continue the conversations. And know that we are. Everybody here is working extra and in the last say, 2 quarters, it is been a lot more. A little bit extra effort put on by everybody.

And hopefully, you can see the results for this quarter reflect that increased effort and efficiency. Really proud of the team and their work. And Anton has brought a lot of expertise for us on the gas marketing and on the midstream. I think you will see further progress in that area too. Very proud of our geological team for identifying Woodford and the different zones. that we think will be prospective in the federal lease area. That are gonna we will be talking about in you know, in some in 2027. Of what we are getting. And the increase in reserves is very significant. That we have had over this past year.

So I look forward to when the reserve engineers from Netherland Sewell come in and weigh and see how much they have grown. in the past. You do not have to take our word for it. You can look on the end-of-year financial reports and see the growth for yourself. So it is a good direction. And, you know, that we started this business. remember, in 2083 out of a windowless office? And with $270 thousand. And now I think our reserves are approaching 10 billion. The value of our reserves, $10 billion or more. So long consistency of 40 years. But it is a great team. We have now. I am really enjoying working with these young fellas.

Operator: We appreciate your participation in today's call. This concludes our program, and you may now disconnect. Thank you.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.