Dallas, TX, United States

Matador Resources Company

www.matadorresources.com/
Dallas, TX, United States

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HOUSTON--(BUSINESS WIRE)--Crestwood Equity Partners LP (NYSE:CEQP) (“Crestwood Equity” or “Crestwood”) and First Reserve today announced that Crestwood Permian Basin Holdings LLC (“CPJV”), a joint venture focused on developing, owning and operating midstream infrastructure in the Delaware Basin, has agreed to acquire Crestwood’s Willow Lake gathering and processing assets located in Eddy County, New Mexico. Crestwood and First Reserve, a leading global private equity and infrastructure investment firm exclusively focused on energy, also announced that the joint venture has fully sanctioned the construction of a 200 million cubic feet per day (“MMcf/d”) cryogenic gas processing plant located near Orla, TX (the “Orla Plant”) and related infrastructure required to connect the Willow Lake system to the plant (the “Orla Express Pipeline”) and multiple third-party pipelines. Upon completion of the project the joint venture’s integrated gathering and processing footprint will span more than 100 miles and service customers across Eddy and Lea counties, NM and Loving, Ward, Reeves and Culberson counties, TX. “The announced Orla processing plant and the contribution of Willow Lake to our Permian joint venture with First Reserve is an important step in Crestwood’s strategy of expanding and integrating our Delaware Basin footprint to create a super system that spans over two million acres located in the heart of the most active development counties in the Delaware Basin,” stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. Mr. Phillips added, “Dropping the Willow Lake assets into our joint venture is consistent with our strategy of prudently pursuing organic growth opportunities while managing risk and maintaining balance sheet strength. As we continue to build out a large integrated platform in the Delaware Basin, Crestwood and First Reserve are aggressively evaluating new organic expansion opportunities for existing and new customers that will further expand our Permian presence and drive meaningful cash flow growth beginning in 2018.” Gary Reaves, Managing Director of First Reserve, stated, “First Reserve is excited to expand the size and scale of our Permian joint venture with Crestwood. This project, which expands the scope and adds processing capabilities to our joint venture, creates a Delaware Basin infrastructure footprint that we believe is ideally positioned to provide superior netbacks to our customers. It also will allow us to capitalize on incremental organic growth opportunities over the next 12 months in the Delaware Basin which, in our view, is currently the most attractive onshore resource play in the United States. As general partner of Crestwood, we remain highly committed to the long-term success of Crestwood and we believe the joint venture is well-positioned to generate accretive growth in the Delaware Basin that will generate substantial value for all of Crestwood’s stakeholders.” The initial project scope will include the Orla Express Pipeline, a 33 mile, 20 inch high pressure line connecting the existing Willow Lake gathering system in Eddy County, NM to the Orla plant. The Orla plant will offer full liquids handling and multiple residue and NGL interconnects. Initial project capital is expected to be approximately $170 million with an in-service date in the second half of 2018. The Orla Plant is supported by current dedications from existing Willow Lake customers, including Concho Resources Inc., Mewbourne Oil Company, Matador Resources Company, Cimarex Energy, Marathon Oil Corporation, and Exxon Mobil Corporation and is strategically located to attract processing volumes in Eddy County, NM as well as around the Orla Express Pipeline and Nautilus system, a new gas gathering system for a subsidiary of Royal Dutch Shell (SWEPI) in Loving and Ward counties, Texas. The Orla Plant will provide needed incremental processing capacity and enhanced netbacks to producers through improved connectivity to the best NGL and residue gas takeaway options out of the basin. Under the terms of the transaction, the joint venture will continue to be owned 50% by Crestwood and 50% by First Reserve. First Reserve will fund 100% of the initial capital requirements during the early-stage build-out of the Orla expansion, after which Crestwood will fund 100% of capital requirements until both parties have made an equal amount of capital contributions. In connection with the expansion, Crestwood will contribute its Willow Lake gathering and processing assets to the joint venture at a value of $151 million, and this value will be credited as part of Crestwood’s capital requirements to the joint venture. Capital requirements thereafter are expected to be funded 50/50 by Crestwood and First Reserve. Crestwood will continue to receive 100% of the available cash flow generated by the Willow Lake assets until the earlier of the Orla plant in-service date or June 30, 2018, at which time the parties will receive distributions on a 50/50 basis. Following the closing of this transaction, the joint venture will own all of Crestwood’s Delaware Basin assets, which include the Nautilus gas gathering system and the Willow Lake gas gathering and processing system (including the announced gas processing plant and Orla Express Pipeline). Once the Orla plant is placed into service, the joint venture’s asset footprint will include over 200,000 acres of dedication, 255 MMcf/d of processing capacity, 300 MMcf/d of gathering capacity, and over 360 miles of pipe. The Conflicts Committee of Crestwood’s Board of Directors unanimously recommended this transaction, and the board unanimously approved the transaction. The Willow Lake contribution is subject to anti-trust review, and the parties expect to close the transaction in June 2017. First Reserve is a leading global private equity and infrastructure investment firm exclusively focused on energy. With nearly 35 years of industry insight, investment expertise and operational excellence, the Firm has cultivated an enduring network of global relationships and raised approximately USD $31 billion of aggregate capital since inception. Putting these to work, First Reserve has completed more than 650 transactions (including platform investments and add-on acquisitions) on six continents. Its portfolio companies span the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and infrastructure. Visit us at www.firstreserve.com for more information. Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP) is a master limited partnership that owns and operates midstream businesses in multiple unconventional shale resource plays across the United States. Crestwood Equity is engaged in the gathering, processing, treating, compression, storage and transportation of natural gas; storage, transportation, terminalling, and marketing of NGLs; and gathering, storage, terminalling and marketing of crude oil. This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. The words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although Crestwood believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statements will materialize. Important factors that could cause actual results to differ materially from those expressed in or implied from these forward-looking statements include the risks and uncertainties described in Crestwood’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s view only as of the date made, and Crestwood assumes no obligation to update these forward-looking statements.


News Article | April 24, 2017
Site: www.businesswire.com

DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) today announced plans to release first quarter 2017 results after the close on May 3 and host a live conference call on Thursday, May 4 at 9:00 a.m. CT.


DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today reported financial and operating results for the first quarter of 2017. This release is divided into two parts—first, a “Highlights” section that summarizes key production and financial results for the three months ended March 31, 2017, and second, a section providing additional details related to the Company’s first quarter 2017 results and an operations update. Sequential and year-over-year quarterly comparisons of selected financial and operating items are shown in the following table: A short presentation summarizing the highlights of Matador’s first quarter 2017 earnings release is also included on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “The Board, the staff and I are very pleased to report better than expected operating and financial results. For the first quarter of 2017, Matador’s average daily oil and natural gas production and proved reserves were all at record highs. We have cash in the bank and our bonds are trading above par. Our first quarter results confirm the Company’s commitment to delivering consistent growth in shareholder value, highlighted by a significant increase in our proved reserves, as well as the continued strength of our balance sheet and our available borrowing capacity. “The northern Delaware Basin has continued to deliver exceptional results for Matador and continues to be the main focus of our exploration and production activities. Our Delaware Basin average daily oil equivalent production increased 19% sequentially from the fourth quarter of 2016 and 2.5-fold from the first quarter of 2016. We attribute this strong production growth to the quality well results achieved throughout our northern Delaware Basin acreage position and to the continued improvements in land acquisition, geologic understanding, oil and natural gas equipment, technology and facilities, and stimulation and production practices by our technical teams in each of our asset areas. “Adding to the ways Matador strives to create value for its shareholders, we are also excited about the formation during the first quarter of 2017 of a strategic joint venture to enhance and complement our Delaware Basin midstream assets, San Mateo Midstream, LLC. As anticipated, the joint venture is off to a solid start and has initiated construction on an additional 200 million cubic feet per day of incremental natural gas processing capacity in the Rustler Breaks asset area. San Mateo is also moving forward with its plans to build out oil, natural gas and salt water gathering capacity throughout the Wolf and Rustler Breaks asset areas, as well as drilling at least one additional salt water disposal well at Rustler Breaks in 2017. We look forward to the additional value creation that these midstream initiatives should provide for Matador and its shareholders. “We continued to strategically add to and improve our acreage position in the Delaware Basin at attractive prices during the first quarter of 2017 as well. This additional acreage was acquired primarily in our Rustler Breaks and Antelope Ridge asset areas in Lea and Eddy Counties, New Mexico. Antelope Ridge is a new asset area for Matador in southern Lea County, where other operators are drilling some excellent wells in the Delaware, Avalon, Bone Spring and Wolfcamp intervals. We look forward to beginning to test our acreage there as early as the latter part of this year. “Matador ended the first quarter with approximately $210 million in cash on hand and no borrowings under our credit facility, which, along with our anticipated cash flows, puts Matador in a very strong and well-funded financial and capital position to execute our drilling and midstream programs throughout the remainder of 2017. In addition, this past week, we were pleased to have our lenders increase the borrowing base under our credit facility from $400 million to $450 million. Although we chose to keep the ‘elected borrowing commitment’ at $400 million at this time, it is gratifying to us that our bank group continues to recognize the quality of our ever-growing Delaware Basin reserves base and to provide us with strong support for our growth plans. We also greatly appreciate the support of our vendors across the industry who work with us every day, in good times and tough times, to help us deliver ‘better wells for less money.’ “It was nice to visit with many of you recently at our Analyst Day on March 23 and during our recent travels to meet with shareholders. We look forward to providing you with additional details on our latest results and plans going forward at our upcoming Annual Meeting of Shareholders to be held here in Dallas on June 1. We hope you will plan to join us then.” Operating and Financial Results — First Quarter 2017 Average daily oil equivalent production increased 10% sequentially from 29,965 BOE per day (52% oil) in the fourth quarter of 2016 to 32,999 BOE per day (56% oil) in the first quarter of 2017, and increased 38% year-over-year from 23,846 BOE per day (48% oil) in the first quarter of 2016. Matador’s first quarter 2017 average daily oil equivalent production was the best quarterly result in the Company’s history. Average daily oil production increased 17% sequentially from 15,720 barrels per day in the fourth quarter of 2016 to 18,323 barrels per day in the first quarter of 2017, and increased 60% year-over-year from 11,473 barrels per day in the first quarter of 2016. Matador’s first quarter 2017 average daily oil production was the best quarterly result in the Company’s history. Average daily natural gas production increased 3% sequentially from 85.5 million cubic feet per day in the fourth quarter of 2016 to 88.1 million cubic feet per day in the first quarter of 2017, and increased 19% year-over-year from 74.2 million cubic feet per day in the first quarter of 2016. Matador’s first quarter 2017 average daily natural gas production was the best quarterly result in the Company’s history. Matador’s Delaware Basin average daily oil equivalent production was 24,535 BOE per day (74% of total oil equivalent production) in the first quarter of 2017, consisting of 15,685 barrels of oil per day (86% of total oil production) and 53.1 million cubic feet of natural gas per day (60% of total natural gas production). Matador’s Delaware Basin oil equivalent production increased 19% sequentially, as compared to 20,670 BOE per day in the fourth quarter of 2016, and increased 146% (2.5-fold) year-over-year, as compared to 9,958 BOE per day in the first quarter of 2016. Oil and natural gas revenues increased 21% sequentially from $94.8 million in the fourth quarter of 2016 to $114.8 million in the first quarter of 2017, and increased 161% year-over-year from $43.9 million in the first quarter of 2016. The increase in oil and natural gas revenues was attributable not only to the increased oil and natural production noted above, but also to improved commodity prices. Realized oil prices increased 7% from $47.34 per barrel in the fourth quarter of 2016 to $50.72 per barrel in the first quarter of 2017, and increased 76% from $28.89 per barrel in the first quarter of 2016. Realized natural gas prices increased 18% from $3.35 per thousand cubic feet in the fourth quarter of 2016 to $3.94 per thousand cubic feet in the first quarter of 2017, and increased 93% from $2.04 per thousand cubic feet in the first quarter of 2016. Third-party midstream services revenues decreased 31% sequentially from $2.3 million in the fourth quarter of 2016 to $1.6 million in the first quarter of 2017, but increased 229% year-over-year from $0.5 million in the first quarter of 2016. The sequential decrease primarily reflects increased usage of the Company’s salt water disposal capacity by Matador (revenues eliminated in consolidation) and less usage by third parties in the first quarter of 2017, as compared to the fourth quarter of 2016. The year-over-year increase is primarily attributable to a significant increase in third-party salt water being disposed of at Matador’s commercial facilities in the Wolf and Rustler Breaks asset areas and to the Black River processing plant in the Rustler Breaks asset area becoming operational in late August 2016. During the first quarter of 2016, Matador was still in the process of installing facilities on its second salt water disposal well operating in its Wolf asset area and had no salt water disposal wells operating in its Rustler Breaks asset area and no midstream services revenues attributable to natural gas processing plant operations. Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in Matador-operated wells; all revenues from Matador-owned production are eliminated in consolidation. Overall, including those midstream revenues attributable to Matador’s operations, total midstream services revenues increased 23% sequentially from the fourth quarter of 2016 and increased 360% from the first quarter of 2016. Total realized revenues, including realized hedging gains and third-party midstream services revenues, increased 19% sequentially from $95.9 million in the fourth quarter of 2016 to $114.2 million in the first quarter of 2017, and increased 122% year-over-year from $51.5 million in the first quarter of 2016. Realized hedging losses from oil and natural gas hedges were $2.2 million in the first quarter of 2017, as compared to realized hedging losses of $1.1 million in the fourth quarter of 2016 and realized hedging gains of $7.1 million in the first quarter of 2016. For the first quarter of 2017, Matador reported net income attributable to Matador Resources Company shareholders of approximately $44.0 million, or earnings of $0.44 per diluted common share on a GAAP basis, a decrease of 58% sequentially, as compared to net income attributable to Matador Resources Company shareholders of approximately $104.2 million, or earnings of $1.09 per diluted common share, in the fourth quarter of 2016, and as compared to a net loss attributable to Matador Resources Company shareholders of $107.7 million, or a loss of $1.26 per diluted common share, in the first quarter of 2016. During the fourth quarter of 2016, the Company recognized the remaining deferred gain of $104.1 million from the October 2015 sale of its natural gas processing plant and associated trunkline in Loving County, Texas. Portions of the first quarter 2017 net income attributable to Matador Resources Company shareholders (GAAP basis) were attributable to non-cash or non-recurring items, and excluding those items from the net income resulted in adjusted net income attributable to Matador Resources Company shareholders, a non-GAAP financial measure, of approximately $17.4 million, or adjusted earnings of $0.17 per diluted common share. Matador’s net income for the first quarter of 2017 was favorably impacted by (1) increased oil and natural gas production, (2) higher realized oil and natural gas prices, (3) a non-cash, unrealized gain on derivatives of $20.6 million, (4) no full-cost ceiling impairment in the quarter and (5) no income tax expense. Matador’s net income for the first quarter of 2017 was unfavorably impacted by (1) a realized loss on derivatives of $2.2 million and (2) one-time, non-recurring general and administrative expenses of $3.5 million attributable to the formation of San Mateo. For a reconciliation of adjusted net income (non-GAAP) and adjusted earnings (loss) per diluted common share (non-GAAP) to net income (loss) (GAAP) and earnings (loss) per diluted common share (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Adjusted EBITDA attributable to Matador Resources Company shareholders, a non-GAAP financial measure, increased 28% sequentially from $54.5 million in the fourth quarter of 2016 to $70.0 million in the first quarter of 2017, and increased 307% year-over-year from $17.2 million in the first quarter of 2016. The sequential and year-over-year increases in Adjusted EBITDA were primarily attributable to the increases in both oil and natural gas production and in realized oil and natural gas prices during the first quarter of 2017, as compared to the fourth quarter of 2016 and the first quarter of 2016. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA (non-GAAP) to net income (loss) (GAAP) and net cash provided by operating activities (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Production taxes, transportation and processing expenses on a unit-of-production basis decreased 10% sequentially from $4.43 per BOE in the fourth quarter of 2016 to $3.98 per BOE in the first quarter of 2017, and increased 9% year-over-year from $3.64 per BOE in the first quarter of 2016. Production taxes increased during the first quarter of 2017 primarily as a result of higher oil and natural gas revenues, as compared to the fourth quarter of 2016 and especially to the first quarter of 2016. The increase in production taxes was offset by a decrease in transportation and processing expenses year-over-year, primarily as a result of the start-up in late August 2016 of the Black River cryogenic natural gas processing plant in the Rustler Breaks asset area. On a unit-of-production basis, these first quarter 2017 expenses also benefited from significantly higher daily oil equivalent production of 10% and 38%, respectively, as compared to the fourth quarter of 2016 and the first quarter of 2016. Importantly, lease operating expenses on a unit-of-production basis decreased 2% sequentially from $5.41 per BOE in the fourth quarter of 2016 to $5.31 in the first quarter of 2017, and decreased 21% year-over-year from $6.69 per BOE in the first quarter of 2016. The year-over-year decrease in lease operating expenses on a unit-of-production basis was primarily attributable to several key factors, including (1) decreased field supervisory costs as a number of third-party contractors became full-time employees during the second quarter of 2016, (2) decreased costs associated with the Company’s Eagle Ford operations, including workover, salt water disposal and chemical costs, (3) additional salt water disposal and gathering capacity added in both the Wolf and Rustler Breaks asset areas and (4) higher total oil equivalent production as compared to the prior periods. Matador’s plant and other midstream services operating expenses on a unit-of-production basis increased 18% sequentially from $0.67 per BOE in the fourth quarter of 2016 to $0.79 per BOE in the first quarter of 2017, and increased 68% year-over-year from $0.47 per BOE in the first quarter of 2016. The increase in plant and other midstream services operating expenses is attributable to additional salt water disposal wells placed in service in the Wolf and Rustler Breaks asset areas during the first quarter of 2017, as well as to the overall increase in the scope of the Company’s midstream operations in the Delaware Basin since the first quarter of 2016. Also notable was the decrease in depletion, depreciation and amortization expenses on a unit-of-production basis. These expenses decreased 1% sequentially from $11.56 per BOE in the fourth quarter of 2016 to $11.45 per BOE in the first quarter of 2017, and decreased 14% year-over-year from $13.33 per BOE in the first quarter of 2016. The decrease in DD&A expenses resulted both from the increases in Matador’s total proved reserves between the respective periods, as well as both improved development costs associated with wells being drilled in the Delaware Basin on a unit-of-production basis and the decreases in unamortized property costs resulting from full-cost ceiling impairments in prior periods, including the first quarter of 2016. Matador recorded no full-cost ceiling impairment for the first quarter of 2017, as reflected on the Company’s interim unaudited condensed consolidated statement of operations for the three months ended March 31, 2017. General and administrative expenses on a unit-of-production basis decreased 3% sequentially from $5.65 per BOE in the fourth quarter of 2016 to $5.50 per BOE in the first quarter of 2017, and decreased 9% year-over-year from $6.07 per BOE in the first quarter of 2016, primarily due to the increase in total oil equivalent production, and despite approximately $3.5 million of one-time, non-recurring charges attributable to the formation of San Mateo. Excluding the $3.5 million in non-recurring charges, general and administrative expenses were $4.34 per BOE for the first quarter of 2017. General and administrative expenses for the first quarter of 2017 also included non-cash, stock compensation expense of $1.40 per BOE, as compared to $1.23 per BOE in the fourth quarter of 2016 and $1.03 per BOE in the first quarter of 2016. The following table summarizes Matador’s estimated total proved oil and natural gas reserves at March 31, 2017, December 31, 2016 and March 31, 2016. Matador’s estimated total proved oil and natural gas reserves were 117.1 million BOE at March 31, 2017, an all-time high, consisting of 62.9 million barrels of oil and 325.3 billion cubic feet of natural gas (both also all-time highs), with a Standardized Measure of $810.2 million (GAAP basis) and a PV-10, a non-GAAP financial measure, of $857.2 million, an increase of 11%, as compared to estimated total proved oil and natural gas reserves of 105.8 million BOE at December 31, 2016, consisting of 57.0 million barrels of oil and 292.6 billion cubic feet of natural gas, with a Standardized Measure of $575.0 million and a PV-10 of $581.5 million. The 41% increase in Standardized Measure and 47% increase in PV-10 at March 31, 2017, as compared to December 31, 2016, were attributable both to the increase in total proved reserves and the increase in oil and natural gas prices used to determine Standardized Measure and PV-10. At March 31, 2017, the 12-month arithmetic averages of oil and natural gas prices used to estimate proved reserves were $44.10 per barrel and $2.73 per MMBtu, respectively, as compared to $39.25 per barrel and $2.48 per MMBtu, respectively, at December 31, 2016. Proved oil reserves increased 10% from 57.0 million barrels at December 31, 2016 to 62.9 million barrels at March 31, 2017, and increased 24% from 50.7 million barrels at March 31, 2016. At March 31, 2017, approximately 54% of the Company’s total proved reserves were oil and 46% were natural gas. Approximately 43% of the Company’s total proved reserves were proved developed reserves at March 31, 2017, as compared to 37% at March 31, 2016. The reserves estimates at all dates presented in the table above were prepared by the Company’s internal engineering staff. These reserves estimates were prepared in accordance with the SEC’s rules for oil and natural gas reserves reporting and do not include any unproved reserves classified as probable or possible that might exist on Matador’s properties. For a reconciliation of PV-10 (non-GAAP) to Standardized Measure (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. During the first quarter of 2017, Matador continued focusing its efforts on the exploration, delineation and development of its Delaware Basin acreage in Loving County, Texas and Lea and Eddy Counties, New Mexico. Matador began 2017 operating four drilling rigs in the Delaware Basin and continued to do so throughout the first quarter. In late April 2017, Matador added a fifth drilling rig in the Delaware Basin and expects to operate five rigs in the Delaware Basin throughout the remainder of 2017. Matador also began drilling a five-well program in the Eagle Ford shale in South Texas during the first quarter of 2017. Three of these wells, on the Company’s Martin Ranch leasehold in La Salle County, have been drilled and are awaiting completion. At May 3, 2017, the fourth and fifth wells, the Falls City #1H and #2H wells, are being batch drilled from a single pad. Matador anticipates that drilling operations will be completed on the Falls City wells by the middle of May, and this rig will be released at that time. Matador expects these five Eagle Ford shale wells to be completed and placed on production late in the second quarter or early in the third quarter of 2017. Matador appreciates the close coordination provided by Patterson-UTI Drilling Company with regard to these wells. Patterson-UTI mobilized a rig out of its yard in South Texas ready to drill, enabling Matador to drill the three Martin Ranch wells very efficiently, including a record drilling time for an Eagle Ford well on the Martin Ranch leasehold. At May 3, 2017, Matador is operating five drilling rigs in the Delaware Basin, including three rigs in its Rustler Breaks asset area, one rig in its Wolf and Jackson Trust asset areas and one rig in its Ranger/Arrowhead and Twin Lakes asset areas. Matador intends to operate five drilling rigs in these asset areas throughout the remainder of 2017, although one rig may move to the Company’s new Antelope Ridge asset area in southern Lea County, New Mexico in the third or fourth quarter of 2017. Matador expects to direct 93% of its estimated 2017 capital expenditures to drilling and completion and midstream operations in the Delaware Basin. During the first quarter of 2017, Matador completed and placed on production a total of 14 gross (12.5 net) horizontal wells in the Delaware Basin, including 13 gross (12.4 net) operated wells and one gross (0.1 net) non-operated well. Of the operated wells, Matador completed and placed on production two gross (1.5 net) wells in its Wolf and Jackson Trust asset areas, eight gross (7.0 net) wells in its Rustler Breaks asset area and four gross (3.9 net) wells in its Ranger asset area. At May 3, 2017, Matador remains on track with its projected 2017 drilling and completions program and estimates that it will complete and place on production 88 gross (55.8 net) wells in the Delaware Basin, including 66 gross (52.6 net) operated wells and 22 gross (3.2 net) non-operated wells, all of which are expected to be horizontal wells. Matador continues to apply new technologies and innovative drilling and completion techniques to its Delaware Basin operations in an effort to both reduce costs and improve well performance. On the drilling side, Matador began using Schlumberger’s Axeblade* and Stinger* hybrid drilling bits (*marks of Schlumberger) in its vertical sections and horizontal laterals, leading to further improved rates of penetration and reduced drilling times. In late April 2017, Matador took delivery of a next-generation Patterson-UTI drilling rig with a new top drive capable of 50% higher torque and a third mud pump, in addition to all the features of the three previous rigs custom built for Matador. Matador expects to initially operate this rig in its Rustler Breaks asset area, and the Company anticipates additional improvements in drilling productivity using this next-generation rig, as well as continuing to optimize drilling practices on the other high technology rigs the Company is using in the Delaware Basin. In the area of well completions, Matador continues to improve the efficiency of its stimulation operations and to increase the number of fracturing stages it can successfully pump per day. One way the Company is achieving these results is by completing wells in pairs on its multi-well pads using simultaneous operations, allowing the wireline operations on the first well to be conducted simultaneously with the fracturing operations on the second well. By alternating these operations simultaneously, Matador believes it could save up to $150,000 per well in stimulation costs. During the first quarter of 2017, approximately 40% of Matador’s stimulation operations were conducted using these simultaneous operations, and the Company estimates that it saved approximately $750,000 in stimulation costs using this approach, which saves money while maintaining the effectiveness and quality of the fracture treatment. Finally, Matador is also working to reduce costs and increase efficiencies associated with the initial equipping of its wells for production. The Company has begun implementing expandable facility designs in conjunction with its multi-well pad drilling program and believes it can realize cost savings in excess of $300,000 per additional well. This innovative design also promotes optimized compression and centralized salt water disposal infrastructure, leading to increased natural gas sales and reduced LOE. In addition, on recent wells, Matador has tested having production equipment pre-fabricated and skid-mounted offsite to reduce the initial facility install times by up to 50%. As a result, new wells are being produced through permanent Matador facilities sooner following the wells’ initial flowback and testing periods, allowing for natural gas production to be turned to sales more quickly. Matador operated two drilling rigs in its Rustler Breaks asset area during the first quarter of 2017, and the Company completed and placed on production eight gross (7.0 net) horizontal wells in this area, including seven gross (6.9 net) operated wells and one gross (0.1 net) non-operated wells. The seven operated wells included one Second Bone Spring completion, two Wolfcamp A-XY completions, one Wolfcamp B-Middle completion and three Wolfcamp B-Blair completions. Matador previously announced the 24-hour initial potential test results from several of these wells, but for completeness, the test results from all seven wells are summarized in the table below. Overall, the well results achieved in the Rustler Breaks asset area in the first quarter of 2017 met or exceeded the Company’s expectations. Of particular note in the first quarter were the results from the Paul 25-24S-28E RB #121H (Paul #121H) well, a Second Bone Spring completion, and the Tom Walters 12-23S-27E RB #203H (Tom Walters #203H) well, a Wolfcamp A-XY completion. The Paul #121H well was the first Second Bone Spring well drilled by Matador in the Rustler Breaks asset area since Matador’s initial tests of that formation in 2015, and both its 24-hour initial potential test and its early performance exceed the results of the Company’s previous two Second Bone Spring wells drilled in this area. The Paul #121H well had a completed lateral length of approximately 4,600 feet and was stimulated with 23 stages, pumping 40 barrels of fluid and approximately 3,000 pounds of primarily 30/50 white sand per completed lateral foot. As of late April 2017, the Paul #121H well had produced approximately 45,000 BOE (83% oil) in two months, a 50% improvement in early well performance as compared to earlier Second Bone Spring completions. Matador attributes this improved well performance to the larger stimulation treatment pumped in the Paul #121H well, as the two previous Second Bone Spring completions were stimulated using only 20 barrels of fluid and approximately 1,300 pounds of primarily 30/50 white sand per completed lateral foot. As also observed in the Wolf and Ranger asset areas, it appears that the Second Bone Spring formation at Rustler Breaks responds well to the larger stimulation treatment. It is also important to note that Matador drilled, completed and equipped the Paul #121H well for approximately $4.8 million, which, along with the improved well performance and higher oil cut, should result in strong economic returns for similar Second Bone Spring completions in this area. Matador expects to drill and complete at least one additional operated Second Bone Spring test in the Rustler Breaks asset area during 2017. As Matador reported in its February 22, 2017 earnings release, the Tom Walters #203H well is located in the northwestern portion of the Rustler Breaks asset area, and the Company believes that the early performance of this well confirms the potential of the Wolfcamp A-XY interval throughout its Rustler Breaks acreage position. Since its completion in mid-January 2017, this well has continued to exhibit strong production performance. As of late April 2017, the Tom Walters #203H well had produced approximately 120,000 BOE (75% oil) in just over three months, and the well continues to track the performance of Matador’s best Wolfcamp A-XY well in the Rustler Breaks asset area, the Paul 25-24S-28E RB #221H (Paul #221H) well. As of late April 2017, the Paul #221H well had produced approximately 280,000 BOE (72% oil) in just over 11 months and continues to track 15 to 20% above Matador’s 900,000 BOE type curve for the Rustler Breaks asset area. Matador began operating a third drilling rig in the Rustler Breaks asset area in late April 2017 and continues to do so at May 3, 2017. Matador plans to operate three drilling rigs at Rustler Breaks throughout the remainder of 2017, although it may elect to move one of these rigs to its Antelope Ridge asset area late in the third quarter or early in the fourth quarter to begin testing recently acquired acreage in that area. Matador operated one drilling rig in its Wolf and Jackson Trust asset areas during the first quarter of 2017. During the first quarter, Matador completed and placed on production two gross (1.5 net) operated horizontal wells in its Wolf and Jackson Trust asset areas. One of these wells, the Totum E 18-TTT-C24 NL #211H (Totum #211H) well, was a Wolfcamp A-Lower completion and the other, the Barnett 90-TTT-B01 WF #124H (Barnett #124H) well, was a Second Bone Spring completion. Matador previously announced the 24-hour initial potential test results from both wells, but for completeness, the test results are summarized in the table below. In addition, during the first quarter of 2017, Matador drilled three gross (2.0 net) operated horizontal wells from a single pad in the southern portion of its Wolf asset area. These wells are currently flowing back following completion and include one gross (0.8 net) well in the Wolfcamp A-XY and two gross (1.2 net) wells in the Second Bone Spring. Matador has also drilled two gross (1.7 net) additional Second Bone Spring wells in the Wolf asset area early in the second quarter, and these wells are awaiting completion. The early performance of the Totum #211H well has continued to exceed expectations. As of late April 2017, the Totum #211H well had produced approximately 110,000 BOE (78% oil) in just over 2.5 months of production and was tracking about 75% above Matador’s 700,000 BOE Wolfcamp A-Lower type curve for the Wolf and Jackson trust asset areas. Matador plans to drill three additional Wolfcamp A-Lower wells in its Jackson Trust asset area during 2017. At May 3, 2017, Matador is operating one drilling rig in its Wolf and Jackson Trust asset areas, and the Company plans to operate one drilling rig in these areas throughout 2017. This rig has just begun drilling two new wells, the Barnett 90-TTT-B01 #224H and the Barnett 90-TTT-B01 #104H wells, which are planned to be the Company’s first tests of the Wolfcamp B and Avalon formations, respectively, in the Wolf asset area. Matador expects to complete these wells in mid-June and anticipates reporting results from these wells, in addition to several other recently drilled wells in the Wolf asset area, as part of its second quarter 2017 earnings release in early August. Ranger Asset Area - Lea County, New Mexico and Arrowhead Asset Area - Eddy County, New Mexico Matador operated one drilling rig in its Ranger asset area during the first quarter of 2017, and the Company completed and placed on production four gross (3.9 net) operated horizontal wells in this area. The four operated wells included two Second Bone Spring completions, one Third Bone Spring completion and one Wolfcamp A-Lower completion. Matador previously announced the 24-hour initial potential test results from two of these wells, but for completeness, the test results from all four wells are summarized in the table below. The two Eland wells are both Second Bone Spring wells completed in late March 2017. Both have completed lateral lengths of about 4,600 feet, and each well was stimulated with 19 stages pumping about 40 barrels of fluid per completed lateral foot. Matador stimulated the Eland #123H well with approximately 2,000 pounds of primarily 20/40 white sand per completed lateral foot, but stimulated the Eland #124H well with approximately 3,000 pounds of primarily 20/40 white sand per completed lateral foot, in order to determine the impact of using higher sand concentrations in the Second Bone Spring in this area. While it is still too early to draw any definitive conclusions as to the need for higher sand concentrations, it is noteworthy that the Eland #124H well has shown essentially no decline in its first month of production, while the Eland #123H well has begun to decline. Matador expects to test the higher sand concentrations (up to 3,000 pounds per foot) in future Second and Third Bone Spring completions, as well as closer perforation cluster spacings, as it continues to delineate its acreage throughout the Ranger and Arrowhead asset areas. The Cimarron 16-19S-34E RN State Com #133H (Cimarron #133H) well was completed in the Third Bone Spring and offsets the Cimarron 16-29S-34E RN State Com #134H (Cimarron #134H) well drilled and completed in the Third Bone Spring in 2015. The Cimarron #133H well was drilled from spud to total depth in 14.5 days, which was Matador’s best drilling time to date for a Bone Spring well in the Ranger asset area. The Cimarron #133H well had an approximately 4,400-foot completed lateral length and was stimulated with 18 stages, pumping 40 barrels of fluid and approximately 2,000 pounds of primarily 20/40 white sand per completed lateral foot. Early performance from the Cimarron #133H well has been very similar to that of the Cimarron #134H well. As of late April 2017, the Cimarron #134H well had produced approximately 200,000 BOE (93% oil) in almost 21 months and is projected to have an estimated ultimate recovery between 500,000 and 600,000 BOE (93% oil). In addition to these most recent completions, the Mallon wells, three Third Bone Spring completions in the Ranger asset area in the fourth quarter of 2016, continued to perform very well during their first few months of production. Following their 24-hour initial potential tests on 32/64-inch and 34/64-inch chokes, these wells were turned into Matador’s production facilities and have produced mostly on smaller 22/64-inch to 24/64-inch chokes since that time to manage the flowing bottomhole pressure and to extend the productive life of these wells. As of late April 2017, all three wells were still producing at flowing casing pressures between 750 and 1,000 psi. The Mallon #1H well has produced approximately 200,000 BOE (90% oil), the Mallon #2H well has produced approximately 165,000 BOE (91% oil) and the Mallon #3H well has produced approximately 170,000 BOE (91% oil) in their first 4.5 months of production. Each of these wells is significantly outperforming Matador’s 700,000 BOE Third Bone Spring type curve for the Ranger and Arrowhead asset areas. As of late April 2017, the Mallon #1H well performance is almost double that of the 700,000 BOE type curve, while the Mallon #2H and #3H wells are tracking about 70% above this type curve. At May 3, 2017, Matador is operating one rig in its Ranger and Arrowhead asset areas, and the Company plans to operate one rig in these areas and the Twin Lakes asset area throughout 2017. Matador recently drilled its first operated horizontal well in the Arrowhead asset area, the Stebbins 20 Federal #123H well, a Second Bone Spring test, and is currently drilling two additional Second Bone Spring tests in the Arrowhead asset area. The Company expects to report initial results from these first wells in the Arrowhead asset area as part of its second quarter 2017 earnings release in early August. In late March 2017, Matador began drilling the D. Culbertson State #234H well, the Company’s first horizontal test of the Wolfcamp D formation in the Twin Lakes asset area. At May 3, 2017, the well has been drilled but not yet completed. The well was drilled entirely within the 25-foot target window selected by the Company’s technical team, and Matador was encouraged by the faster-than-anticipated drilling time and by the hydrocarbon shows observed while drilling the Wolfcamp D formation. Matador expects to complete the well in late May or early June and anticipates reporting initial results from this well as part of its second quarter 2017 earnings release in early August. On February 17, 2017, Matador announced the formation of San Mateo Midstream, LLC (“San Mateo” or the “Joint Venture”), a strategic joint venture with a subsidiary of Five Point Capital Partners, LLC (“Five Point”). The midstream assets contributed to San Mateo include (1) the Black River cryogenic natural gas processing plant in the Rustler Breaks asset area (the “Black River Processing Plant”); (2) one salt water disposal well and a related commercial salt water disposal facility in the Rustler Breaks asset area; (3) three salt water disposal wells and related commercial salt water disposal facilities in the Wolf asset area; and (4) substantially all related oil, natural gas and water gathering systems and pipelines in both the Rustler Breaks and Wolf asset areas (collectively, the “Delaware Midstream Assets”). Matador received $171.5 million in connection with the formation of San Mateo and may earn up to an additional $73.5 million in performance incentives over the next five years. Matador continues to operate the Delaware Midstream Assets and retains operational control of the Joint Venture. The Company and Five Point own 51% and 49% of the Joint Venture, respectively. San Mateo will continue to provide firm capacity service to Matador at market rates, while also being a midstream service provider to third parties in and around the Wolf and Rustler Breaks asset areas. Subsequent to the formation of the Joint Venture, San Mateo has initiated the expansion of the Black River Processing Plant to add 200 million cubic feet per day of cryogenic, natural gas processing capacity. This incremental natural gas processing capacity is expected to come online in the first quarter of 2018. In addition, at May 3, 2017, San Mateo is moving forward with its plans to drill additional salt water disposal wells in the Rustler Breaks asset area and to build out additional oil, natural gas and salt water gathering systems in the Wolf and Rustler Breaks asset areas. Matador incurred approximately $10 million in capital expenditures related to these projects during the first quarter of 2017. At May 3, 2017, Matador held 178,600 gross (102,300 net) acres in the Permian Basin, primarily in the Delaware Basin in Lea and Eddy Counties, New Mexico and Loving County, Texas, as shown in the table below. From January 1 through May 3, 2017, Matador acquired approximately 15,900 gross (9,500 net) acres and approximately 1,000 BOE per day of related production from various lessors and other operators, mostly in and around its existing acreage in the Delaware Basin. Some of this acreage, and a portion of the production, includes properties identified at the time of Matador’s December 2016 equity and debt offerings. These transactions were pending at the time of those offerings and closed subsequent to December 31, 2016. Matador has incurred capital expenditures of approximately $121 million since January 1, 2017 to acquire these leasehold interests and the related production. Matador also continues to improve and block up its acreage position in its various asset areas by conducting mutually beneficial acreage trades with other operators working in these areas. As provided in its 2017 guidance estimates, as updated during its Analyst Day presentation on March 23, 2017, Matador anticipates that it will incur capital expenditures of (1) $400 to $420 million for drilling, completing and equipping operated and non-operated wells in 2017, primarily in the Delaware Basin and (2) $56 to $64 million for its share of various midstream projects undertaken by San Mateo, representing 51% of an estimated 2017 joint venture capital expenditure budget of $110 to $125 million. The Company’s estimated 2017 capital expenditures for drilling, completing and equipping its wells account for a 10 to 15% increase in expected well costs attributable to higher anticipated oilfield service costs and in particular, stimulation costs, in 2017 as compared to 2016. Matador has allocated substantially all of its estimated 2017 capital expenditures to the Delaware Basin, with the exception of amounts allocated to limited operations in the Eagle Ford (including the five wells being drilled and completed in 2017) and Haynesville shales to maintain and extend leases and to participate in those non-operated well opportunities where, in both cases, economic returns are expected to be comparable to Matador’s Delaware Basin wells. During the first quarter of 2017, Matador’s capital spending in these categories was approximately $93 million, including approximately $83 million for drilling and completion operations and approximately $10 million for midstream operations. Capital spending for drilling, completing and equipping wells of $83 million was less than projected for the quarter as a result of the timing of completion operations, with certain wells scheduled to be completed late in the first quarter actually being completed early in the second quarter. The midstream expenditures were somewhat higher than anticipated in the first quarter, but this is again a result of timing, with certain 2017 proposed midstream initiatives getting underway earlier than originally anticipated. Matador intends to continue acquiring acreage and mineral interests, principally in the Delaware Basin, throughout 2017. These expenditures are opportunity specific and per-acre prices can vary significantly based on the opportunity. As a result, it is difficult to estimate these 2017 capital expenditures with any degree of certainty; therefore, Matador has not provided estimated capital expenditures related to acreage and mineral acquisitions for 2017. Matador will provide periodic updates regarding completed acquisitions, as it has done in the Delaware Basin Acreage Update in this earnings release. At March 31, 2017, the borrowing base under Matador’s revolving credit facility was $400 million based on the lenders’ review of the Company’s proved oil and natural gas reserves at June 30, 2016. At that date, Matador had cash on hand totaling approximately $210 million, not including the Company’s 51% interest in approximately $15 million of restricted cash associated with San Mateo, no outstanding borrowings under the Company’s revolving credit facility and approximately $0.8 million in outstanding letters of credit. At May 3, 2017, the Company continues to have no outstanding borrowings under its credit facility, other than approximately $0.8 million in outstanding letters of credit. On April 28, 2017, Matador’s lenders unanimously increased the borrowing base under the Company’s revolving credit facility to $450 million based on their review of the Company’s proved oil and natural gas reserves at December 31, 2016. Given the Company’s current cash position, Matador chose to keep its “elected borrowing commitment” at $400 million. At May 3, 2017, Matador remains in a strong financial position and is well-funded to execute the remainder of its 2017 drilling program and midstream operations, primarily using cash on hand and anticipated cash flows from operations, but can call upon its fully undrawn line of credit should additional capital be needed. Currently, Matador does not have a separate line of credit for its midstream operations. From time to time, Matador uses derivative financial instruments to mitigate its exposure to commodity price risk associated with oil, natural gas and natural gas liquids prices and to protect its cash flows and borrowing capacity. At May 3, 2017, Matador has the following hedges in place, in the form of costless collars, for the remainder of 2017. Matador estimates that it now has approximately 65% of its anticipated oil production and approximately 70% of its anticipated natural gas production hedged for the remainder of 2017 based on the midpoint of its production guidance. At May 3, 2017, Matador has the following hedges in place, in the form of costless collars, for 2018. At May 3, 2017, Matador affirms its 2017 guidance as updated on March 23, 2017. Key elements of the Company’s 2017 guidance are as follows: As noted in both Matador’s February 22, 2017 earnings release and its Analyst Day presentation on March 23, 2017, the Company has planned for more multi-well pad drilling on its Delaware Basin acreage in 2017 than in previous years, which will likely cause the cadence of its production growth to be somewhat uneven from quarter to quarter. As a result, Matador projects that its sequential production growth will be the highest in the first and third quarters of 2017. In addition, third quarter production growth should also benefit from initial production attributable to Matador’s five-well drilling program in the Eagle Ford shale, as those wells are expected to be placed on production late in the second quarter or early in the third quarter of 2017. For the year as a whole, Matador continues to project that, at the midpoint of 2017 guidance, its oil production will increase by approximately 36% and its natural gas production will increase approximately 11%, respectively, from the fourth quarter of 2016 to the fourth quarter of 2017. As to the second quarter of 2017 specifically, Matador estimates that its oil production will increase by 2 to 4% and that its natural gas production will increase by 6 to 8%, resulting in total oil equivalent production growth of 3 to 5% from the first quarter of 2017. Natural gas production in the second quarter is expected to benefit from initial production associated with three recently completed non-operated wells in the Haynesville shale in the Company’s Elm Grove asset area, which were placed on production by an affiliate of Chesapeake Energy Corporation early in the second quarter. The Company will host a live conference call on Thursday, May 4, 2017, at 9:00 a.m. Central Time to review its first quarter 2017 financial results and operational highlights. To access the conference call, domestic participants should dial (855) 875-8781 and international participants should dial (720) 634-2925. The conference ID and passcode is 11238591. The conference call will also be available through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. The replay for the event will be available on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab through June 1, 2017. Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations, primarily through its midstream joint venture, San Mateo Midstream, LLC, in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the following risks related to financial and operational performance: general economic conditions; the Company’s ability to execute its business plan, including whether its drilling program is successful; the ability of the Company’s midstream joint venture to expand the Black River cryogenic processing plant, the timing of such expansion and the operating results thereof; the timing and operating results of the buildout by the Company’s midstream joint venture of oil, natural gas and water gathering systems and the drilling of any additional salt water disposal wells; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; and other important factors which could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. This press release includes the non-GAAP financial measure of Adjusted EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. “GAAP” means Generally Accepted Accounting Principles in the United States of America. The Company believes Adjusted EBITDA helps it evaluate its operating performance and compare its results of operations from period to period without regard to its financing methods or capital structure. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, certain other non-cash items and non-cash stock-based compensation expense, and net gain or loss on asset sales and inventory impairment. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or net cash provided by operating activities as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components of understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure. Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents the calculation of Adjusted EBITDA and the reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively, that are of a historical nature. Where references are pro forma, forward-looking, preliminary or prospective in nature, and not based on historical fact, the table does not provide a reconciliation. The Company could not provide such reconciliation without undue hardship because the forward-looking Adjusted EBITDA numbers included in this press release are estimations, approximations and/or ranges. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items, including future income taxes, full-cost ceiling impairments, unrealized gains or losses on derivatives and gains or losses on asset sales and inventory impairments. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results. This press release includes the non-GAAP financial measures of adjusted net income (loss) and adjusted earnings (loss) per diluted common share. These non-GAAP items are measured as net income (loss) attributable to Matador Resources Company shareholders, adjusted for dollar and per share impact of certain items, including unrealized gains or losses on derivatives, the impact of full cost-ceiling impairment charges, if any, and non-recurring transaction costs for certain acquisitions along with the related tax effect for all periods. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP financial measures. Additionally, these non-GAAP financial measures may be different than similar measures used by other companies. The Company believes the presentation of adjusted net income (loss) and adjusted earnings (loss) per diluted common share provides useful information to investors, as it provides them an additional relevant comparison of the Company’s performance across periods and to the performance of the Company’s peers. In addition, these non-GAAP financial measures reflect adjustments for items of income and expense that are often excluded by industry analysts and other users of the Company’s financial statements in evaluating the Company’s performance. The table below reconciles adjusted net income (loss) and adjusted earnings (loss) per diluted common share to their most directly comparable GAAP measure of net income (loss) attributable to Matador Resources Company shareholders. PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. PV-10 is not an estimate of the fair market value of the Company’s properties. Matador and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies and of the potential return on investment related to the companies’ properties without regard to the specific tax characteristics of such entities. PV-10 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by adding the discounted future income taxes associated with such reserves to the Standardized Measure.


DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) will hold its 2017 Annual Meeting of Shareholders on Thursday, June 1, 2017 at 9:30 a.m. Central Daylight Time. The Annual Meeting will be held in the Dallas Ballroom of the Westin Galleria hotel, located at 13340 Dallas Parkway, Dallas, Texas 75240. A continental breakfast will be provided beginning at 8:30 a.m. Central Daylight Time. The Annual Meeting will be webcast live. To access the live webcast, you can use the following link http://edge.media-server.com/m/p/enqdi9dg or visit the Events page of the Investors section of Matador’s website at www.matadorresources.com. On May 25, 2017, S&P Dow Jones Indices, a division of S&P Global, announced that Matador will be included in the S&P MidCap 400® Index effective prior to the market open on Friday, June 2, 2017. The S&P MidCap 400 is designed to provide investors with a benchmark for mid-sized companies. Matador will be added to the S&P MidCap 400 GICS (Global Industry Classification Standard) Oil & Gas Exploration & Production Sub-Industry index. Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations, primarily through its midstream joint venture, San Mateo Midstream, LLC, in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com.


DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today reported financial and operating results for the second quarter of 2017. This release is divided into two parts—first, a “Summary and Highlights” section that summarizes key production and financial results for the three months ended June 30, 2017, and second, a section providing additional details related to the Company’s second quarter 2017 results and a detailed operations update. Significant well results included in this earnings release include the following: As noted in both Matador’s prior earnings releases and its Analyst Day presentation on March 23, 2017, the Company has planned for more multi-well pad drilling on its Delaware Basin acreage in 2017 than in previous years, which will continue to cause the cadence of its production growth to be somewhat uneven from quarter to quarter. Matador’s sequential production growth was higher than projected in the second quarter of 2017 due to several wells in the Company’s Rustler Breaks asset area that exceeded its expectations for both oil and natural gas production and to the better-than-expected results associated with three non-operated Haynesville shale wells completed in the second quarter (along with flush production from offsetting Haynesville shale shut-in wells returned to production following the completion operations on the new wells), which resulted in much higher-than-expected natural gas production in the second quarter. In the third quarter, oil production growth should benefit from early production attributable to Matador’s five-well drilling program in the Eagle Ford shale, as two of those wells were turned to sales late in the second quarter and three were turned to sales early in the third quarter of 2017; however, the Company has a number of shut-in periods scheduled for producing wells in the Rustler Breaks, Wolf and Arrowhead asset areas in the third quarter, as new offsetting wells are completed in these areas. Given the stronger-than-expected growth in natural gas production observed in the second quarter of 2017, natural gas production for 2017 is likely to peak in the third quarter as initial production from the recently completed Haynesville shale wells and the flush production from the associated offset wells decline in the second half of 2017. As to the third quarter of 2017 specifically, Matador estimates that its oil production will increase by 5 to 7% and that its natural gas production will increase by 2 to 4%, resulting in sequential total oil equivalent production (BOE basis) growth of 4 to 6% from the second quarter of 2017. Sequential and year-over-year quarterly comparisons of selected financial and operating items are shown in the following table: A short presentation summarizing the highlights of Matador’s second quarter 2017 earnings release is also included on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “Not only was Matador’s average daily oil equivalent production (BOE basis) in the second quarter of 2017 the best quarterly result in the Company’s history, but our financial results also continued to be very strong. The Board, the management group and I would all like to express our appreciation to the entire Matador staff for its strong execution. It was a great team effort. As a result of this strong operating performance in the first half of 2017, Matador is pleased today to raise its production and Adjusted EBITDA guidance for the remainder of 2017, while keeping our capital spending estimates unchanged, as we continue to execute our 2017 business plan and prepare for 2018 and beyond. “The northern Delaware Basin continues to be the main focus of our exploration and production activities, and we continue to be very pleased with the results we are achieving in each of our key asset areas across the basin. Our Delaware Basin average daily oil equivalent production increased 13% sequentially from the first quarter of 2017 and 90% from the second quarter of 2016. In the second quarter of 2017, our average daily oil equivalent production from the Delaware Basin was 27,600 BOE per day, comprising approximately 75% of the Company’s average daily oil equivalent production. In addition, our total proved reserves increased 27% in the first six months of 2017 from 105.8 million BOE at December 31, 2016 to 134.4 million BOE at June 30, 2017, and the Delaware Basin comprises 80% of our total proved reserves. This increase in total proved reserves reflects not only the success of our drilling and completions operations, but also our success in acquiring additional acreage in and around areas actively being drilled in the Delaware Basin. Detailed information is contained herein on various successful wells we have recently drilled and completed—both exploratory and development—in this area. In this regard, our asset teams were pleased to report meaningful wells and successful tests of new formations in all of our key asset areas in the Delaware Basin. “Of particular interest this quarter was our first exploratory test of the Wolfcamp D formation in the Twin Lakes asset area, the D. Culbertson #234H well, in northern Lea County, New Mexico. Matador is pleased and encouraged by the initial results from this discovery well, which we believe confirms our exploration concept and validates the prospectivity of the Twin Lakes asset area. The drilling and completion of the D. Culbertson #234H well provides a solid first step in our understanding of the Wolfcamp D formation in this area, and we expect further improvements as we gain additional knowledge and experience from this well and future tests of the Wolfcamp D formation and as we seek to delineate our Twin Lakes acreage position from east to west. “We are also very pleased with the better-than-expected results of our five-well drilling program in the Eagle Ford shale in Karnes and La Salle Counties in South Texas. Each of these wells, which were completed and turned to sales from mid-June to early July, flowed between 1,100 and 1,700 BOE per day (91% oil on average) on choke sizes of 20 to 22/64-inch during 24-hour initial potential tests, and early performance from these wells is comparable to or better than some of Matador’s best Eagle Ford wells. Despite a two-year hiatus in Eagle Ford drilling, our operations teams drilled and completed these five wells very efficiently and demonstrated the ability to complete as many as ten fracturing stages in a single day. Further, we believe that we were successful in transferring our most recent stimulation techniques in the Delaware Basin to the completion of these new Eagle Ford wells. The initial production from these newly completed wells has almost doubled Matador’s average daily oil equivalent production from the Eagle Ford shale, as compared to its second quarter 2017 Eagle Ford production levels. “As in previous quarters, we continued to strategically add to and improve our acreage position in the Delaware Basin at attractive prices during the second quarter of 2017. This additional acreage was acquired primarily in and near our existing asset areas in the Delaware Basin in Lea and Eddy Counties, New Mexico and Loving County, Texas. We also executed several key acreage trades with other operators during the second quarter of 2017, which improved our ability to operate in certain areas while actually increasing our operated well locations in others. “Matador ended the second quarter with approximately $131 million in cash on hand and no borrowings under our credit facility, which, along with our anticipated cash flows, puts Matador in a very strong and well-funded capital position to execute our drilling and midstream programs throughout the remainder of 2017. Matador currently expects to continue operating five rigs drilling oil and natural gas wells in the Delaware Basin throughout the remainder of 2017, although we have considerable operational flexibility to modify our drilling program based upon fluctuations in commodity prices and other factors. We look forward to delivering strong results again in the second half of 2017 as we begin to solidify our plans for 2018.” Operating and Financial Results — Second Quarter 2017 Average daily oil equivalent production increased 12% sequentially from 32,999 BOE per day (56% oil) in the first quarter of 2017 to 36,922 BOE per day (53% oil) in the second quarter of 2017, and increased 32% year-over-year from 28,022 BOE per day (48% oil) in the second quarter of 2016. Matador’s increased oil production in the second quarter of 2017 exceeded the Company’s expectations resulting from better-than-expected initial results from several of the Company’s new wells in the Delaware Basin, and particularly in the Rustler Breaks asset area. Matador’s second quarter 2017 average daily oil equivalent production was the best quarterly result in the Company’s history. Average daily oil production increased 6% sequentially from 18,323 barrels per day in the first quarter of 2017 to 19,423 barrels per day in the second quarter of 2017, and increased 44% year-over-year from 13,516 barrels per day in the second quarter of 2016. Matador’s second quarter 2017 average daily oil production was the best quarterly result in the Company’s history. Average daily natural gas production increased 19% sequentially from 88.1 million cubic feet per day in the first quarter of 2017 to 105.0 million cubic feet per day in the second quarter of 2017, and increased 21% year-over-year from 87.0 million cubic feet per day in the second quarter of 2016. Matador’s increased natural gas production in the second quarter of 2017 was attributable not only to strong well results from the Delaware Basin, but also to the higher-than-expected initial contributions from three previously drilled Haynesville shale wells that were completed and turned to sales by an affiliate of Chesapeake Energy Corporation (“Chesapeake”) in the second quarter of 2017 (along with flush production from offsetting Haynesville shale shut-in wells returned to production following the completion operations on the new wells). Matador’s second quarter 2017 average daily natural gas production was the best quarterly result in the Company’s history. Matador’s Delaware Basin average daily oil equivalent production was 27,622 BOE per day (75% of total oil equivalent production) in the second quarter of 2017, consisting of 16,645 barrels of oil per day (86% of total oil production) and 65.9 million cubic feet of natural gas per day (63% of total natural gas production). Matador’s Delaware Basin oil equivalent production increased 13% sequentially, as compared to 24,535 BOE per day in the first quarter of 2017, and increased 90% year-over-year, as compared to 14,525 BOE per day in the second quarter of 2016. Oil and natural gas revenues were largely unchanged from $114.8 million in the first quarter of 2017, as compared to $113.8 million in the second quarter of 2017, but increased 64% year-over-year from $69.3 million in the second quarter of 2016. The increase in oil and natural gas production noted above helped to offset declining oil and natural gas prices during the second quarter of 2017, resulting in almost no change in oil and natural gas revenues between the first and second quarters of 2017. Realized oil prices decreased 9% from $50.72 per barrel in the first quarter of 2017 to $46.01 per barrel in the second quarter of 2017, but increased 7% from $42.84 per barrel in the second quarter of 2016. Realized natural gas prices decreased 14% from $3.94 per thousand cubic feet in the first quarter of 2017 to $3.40 per thousand cubic feet in the second quarter of 2017, but increased 62% from $2.10 per thousand cubic feet in the second quarter of 2016. Realized oil prices declined in the second quarter of 2017 as a result of both lower West Texas Intermediate oil prices, as well as somewhat higher oil price differentials, which were $2.13 per barrel in the second quarter, as compared to $1.06 per barrel in the first quarter of 2017. Realized natural gas prices were lower in the second quarter of 2017 as a result of both lower natural gas liquids (“NGL”) prices, particularly the heavier components reflecting lower oil prices, and somewhat wider basis differentials in the Delaware Basin. Including its NGL revenues in the realized average natural gas price, Matador reported an uplift of $0.32 per thousand cubic feet above the NYMEX Henry Hub average natural gas prices in the second quarter of 2017, as opposed to $0.92 per thousand cubic feet in the first quarter of 2017. Third-party midstream services revenues increased 35% sequentially from $1.6 million in the first quarter of 2017 to $2.1 million in the second quarter of 2017, and increased 129% year-over-year from $0.9 million in the second quarter of 2016. The sequential and year-over-year increases primarily reflect increased third-party natural gas processing and transportation revenues in the second quarter of 2017, as compared to the first quarter of 2017 and the second quarter of 2016. Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in Matador-operated wells; all revenues from Matador-owned production are eliminated in consolidation. Overall, including those midstream revenues attributable to Matador’s operations, total midstream services revenues increased 18% sequentially from the first quarter of 2017 and increased 228% from the second quarter of 2016. Total realized revenues, including realized hedging gains and losses and third-party midstream services revenues, increased 2% sequentially from $114.2 million in the first quarter of 2017 to $116.4 million in the second quarter of 2017, and increased 60% year-over-year from $72.7 million in the second quarter of 2016. Realized hedging gains from oil and natural gas hedges were $0.6 million in the second quarter of 2017, as compared to realized hedging losses of $2.2 million in the first quarter of 2017 and realized hedging gains of $2.5 million in the second quarter of 2016. For the second quarter of 2017, Matador reported net income attributable to Matador Resources Company shareholders of approximately $28.5 million, or earnings of $0.28 per diluted common share on a GAAP basis, a decrease of 35% sequentially, as compared to net income attributable to Matador Resources Company shareholders of approximately $44.0 million, or earnings of $0.44 per diluted common share, in the first quarter of 2017, and as compared to a net loss attributable to Matador Resources Company shareholders of $105.9 million, or a loss of $1.15 per diluted common share, in the second quarter of 2016. The decrease in net income in the second quarter of 2017 was primarily attributable to a decline in realized oil and natural gas prices of 9% and 14%, respectively, as well as changes in certain non-cash items, including a decrease in unrealized hedging gains, an increase in depletion, depreciation and amortization expenses and an increase in stock-based compensation expenses in the second quarter of 2017, as compared to the first quarter of 2017. Portions of the second quarter 2017 net income attributable to Matador Resources Company shareholders (GAAP basis) were specific non-cash or non-recurring items (including approximately $13.2 million in non-cash unrealized gain on derivatives and approximately $1.5 million in non-recurring stock-based compensation expenses attributable to a change in the vesting schedule applicable to equity awards granted to the Company’s directors). Excluding those items from net income resulted in adjusted net income attributable to Matador Resources Company shareholders (a non-GAAP financial measure) of approximately $10.9 million, or adjusted earnings of $0.11 per diluted common share, as compared to adjusted net income attributable to Matador Resources Company shareholders of approximately $0.17 per diluted common share in the first quarter of 2017, and an adjusted net loss attributable to Matador Resources Company shareholders of approximately $0.01 per diluted common share in the second quarter of 2016. Matador’s net income for the second quarter of 2017 was favorably impacted by (1) increased oil and natural gas production, (2) a realized gain on derivatives of $0.6 million, (3) a non-cash, unrealized gain on derivatives of $13.2 million, (4) no full-cost ceiling impairment in the quarter and (5) no income tax expense. Matador’s net income for the second quarter of 2017 was unfavorably impacted by (1) lower realized oil and natural gas prices, (2) a decrease in unrealized hedging gains, (3) increased non-cash expenses, including increased depletion, depreciation and amortization expenses and (4) increased non-cash stock-based compensation expenses, including, in particular, a one-time, non-recurring general and administrative expense of approximately $1.5 million attributable to a change in the vesting schedule applicable to equity awards granted to the Company’s directors. For a reconciliation of adjusted net income (non-GAAP) and adjusted earnings (loss) per diluted common share (non-GAAP) to net income (loss) (GAAP) and earnings (loss) per diluted common share (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Adjusted EBITDA attributable to Matador Resources Company shareholders, a non-GAAP financial measure, increased 4% sequentially from $70.0 million in the first quarter of 2017 to $72.7 million in the second quarter of 2017, and increased 87% year-over-year from $38.9 million in the second quarter of 2016. The sequential increase in Adjusted EBITDA was primarily attributable to the increases in both oil and natural gas production, which offset declines in realized oil and natural gas prices during the second quarter of 2017. The year-over-year increase in Adjusted EBITDA was primarily attributable to both the increases in oil and natural gas production and the increases in realized oil and natural gas prices between the second quarters of 2017 and 2016. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA (non-GAAP) to net income (loss) (GAAP) and net cash provided by operating activities (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Production taxes, transportation and processing expenses on a unit-of-production basis decreased 4% sequentially from $3.98 per BOE in the first quarter of 2017 to $3.83 per BOE in the second quarter of 2017, and decreased 7% year-over-year from $4.14 per BOE in the second quarter of 2016. Production taxes remained relatively unchanged in the second quarter of 2017, as compared to the first quarter of 2017, resulting from almost no change in oil and natural gas revenues between the quarters, although year-over-year, production taxes increased 80%, primarily as a result of the 64% year-over-year increase in oil and natural gas revenues. Year-over-year, Matador realized a decrease in transportation and processing expenses, primarily as a result of the start-up in late August 2016 of the cryogenic natural gas processing plant in the Rustler Breaks asset area (the “Black River Processing Plant”). On a unit-of-production basis, these second quarter 2017 expenses also benefited from significantly higher daily oil equivalent production of 12% and 32%, respectively, as compared to the first quarter of 2017 and the second quarter of 2016. Significantly, lease operating expenses on a unit-of-production basis decreased 10% sequentially from $5.31 per BOE in the first quarter of 2017 to $4.77 per BOE in the second quarter of 2017, and were essentially unchanged year-over-year from $4.78 per BOE in the second quarter of 2016. The sequential decrease in lease operating expenses on a unit-of-production basis was primarily attributable to higher daily oil equivalent production in the second quarter of 2017, as compared to the first quarter of 2017, but also resulted from lower workover expenses in the second quarter of 2017. Matador’s plant and other midstream services operating expenses increased 11% sequentially from $0.79 per BOE in the first quarter of 2017 to $0.88 per BOE in the second quarter of 2017, and increased 110% year-over-year from $0.42 per BOE in the second quarter of 2016. The increase in plant and other midstream services operating expenses is attributable to additional salt water disposal wells placed in service in the Wolf and Rustler Breaks asset areas during the first quarter of 2017, as well as to the overall increase in the scope of the Company’s midstream operations in the Delaware Basin since the second quarter of 2016. Matador’s plant and other midstream services operating expenses of $0.88 per BOE were in line with the Company’s projections of $0.90 per BOE for full-year 2017; year-to-date, these expenses have averaged $0.83 per BOE. Depletion, depreciation and amortization expenses on a unit-of-production basis increased 7% sequentially from $11.45 per BOE in the first quarter of 2017 to $12.28 per BOE in the second quarter of 2017, and remained essentially unchanged from $12.25 per BOE in the second quarter of 2016. The increase in DD&A expenses resulted from increased drilling and completion costs, primarily stimulation treatment costs, associated with the Company’s 2017 Delaware Basin drilling program. At June 30, 2017, DD&A expenses on a unit-of-production basis were below the Company’s full-year DD&A projection of $12.75 per BOE. The Company anticipates small quarterly increases in DD&A expenses on a unit-of-production basis for the remainder of 2017. Matador recorded no full-cost ceiling impairment for the second quarter of 2017, as reflected on the Company’s interim unaudited condensed consolidated statement of operations for the three months ended June 30, 2017. General and administrative expenses on a unit-of-production basis decreased 7% from $5.50 per BOE in the first quarter of 2017 to $5.11 per BOE in the second quarter of 2017. Year-over-year general and administrative expenses remained relatively unchanged from $5.18 per BOE in the second quarter of 2016. During the second quarter of 2017, general and administrative expenses included a one-time, non-recurring charge of approximately $1.5 million, which was attributable to a change in the vesting schedule applicable to equity awards granted to the Company’s directors. General and administrative expenses for the second quarter of 2017 also included total non-cash, stock-based compensation expenses of $2.09 per BOE, as compared to $1.40 per BOE in the first quarter of 2017 and $1.30 per BOE in the second quarter of 2016. Excluding the non-cash, stock-based compensation expenses, cash-based general and administrative expenses decreased 26% to $3.02 per BOE in the second quarter of 2017 from $4.10 per BOE in the first quarter of 2017, and decreased 22% from $3.88 per BOE in the second quarter of 2016. The following table summarizes Matador’s estimated total proved oil and natural gas reserves at June 30, 2017, December 31, 2016 and June 30, 2016. Matador’s estimated total proved oil and natural gas reserves were 134.4 million BOE at June 30, 2017, an all-time high, consisting of 75.0 million barrels of oil and 356.5 billion cubic feet of natural gas (both also all-time highs), with a Standardized Measure of $1.0 billion (GAAP basis) and a PV-10, a non-GAAP financial measure, of $1.1 billion, an increase of 27% from estimated total proved oil and natural gas reserves of 105.8 million BOE at December 31, 2016, consisting of 57.0 million barrels of oil and 292.6 billion cubic feet of natural gas, with a Standardized Measure of $575.0 million and a PV-10 of $581.5 million. The 74% increase in Standardized Measure and 87% increase in PV-10 at June 30, 2017, as compared to December 31, 2016, were primarily attributable both to the increase in total proved reserves and the increase in oil and natural gas prices used to determine Standardized Measure and PV-10. At June 30, 2017, the 12-month arithmetic averages of oil and natural gas prices used to estimate proved reserves were $45.42 per barrel and $3.01 per MMBtu, respectively, as compared to $39.25 per barrel and $2.48 per MMBtu, respectively, at December 31, 2016. Proved oil reserves increased 32% from 57.0 million barrels at December 31, 2016 to 75.0 million barrels at June 30, 2017, and increased 43% from 52.3 million barrels at June 30, 2016. At June 30, 2017, approximately 56% of the Company’s total proved reserves were oil and 44% were natural gas. Approximately 41% of the Company’s total proved reserves were proved developed reserves at June 30, 2017, as compared to 41% at both December 31 and June 30, 2016. The reserves estimates at all dates presented in the table above were prepared by the Company’s internal engineering staff and audited by an independent reservoir engineering firm, Netherland, Sewell & Associates, Inc. These reserves estimates were prepared in accordance with the SEC’s rules for oil and natural gas reserves reporting and do not include any unproved reserves classified as probable or possible that might exist on Matador’s properties. For a reconciliation of PV-10 (non-GAAP) to Standardized Measure (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. During the second quarter of 2017, Matador continued its focus on the exploration, delineation and development of the Company’s Delaware Basin acreage in Loving County, Texas and Lea and Eddy Counties, New Mexico. Matador began 2017 operating four drilling rigs in the Delaware Basin and continued to do so throughout the first quarter. In late April 2017, Matador added a fifth drilling rig in the Delaware Basin and expects to operate five rigs in the Delaware Basin throughout the remainder of 2017, including three rigs in its Rustler Breaks and Antelope Ridge asset areas, one rig in its Wolf and Jackson Trust asset areas and one rig in its Ranger/Arrowhead and Twin Lakes asset areas. Matador still expects to direct over 90% of its estimated 2017 capital expenditures to drilling and completion and midstream operations in the Delaware Basin. In July 2017, Matador took delivery of a sixth drilling rig on a temporary basis for the purpose of drilling a second salt water disposal well in the Rustler Breaks asset area for its midstream affiliate, San Mateo. The salt water disposal well will not be ready to spud until early August 2017 and, in the interim, Matador is using this rig to drill an additional oil and natural gas well in its Rustler Breaks asset area. At August 2, 2017, Matador had no plans to use this sixth rig to drill additional oil and natural gas wells for the remainder of 2017. Matador also finished drilling its five-well program in the Eagle Ford shale in South Texas during the second quarter of 2017. Two of these wells, the Falls City #1H and #2H wells, were completed and turned to sales in mid-June 2017. The other three wells, the Martin Ranch C #11H well and the Martin MAK D #49H and D #50H wells, were completed and turned to sales in early July, and thus, did not contribute to second quarter 2017 production volumes. The rig used to drill these five wells was released in May, and Matador has no additional operated drilling activities planned in the Eagle Ford shale for the remainder of 2017. Matador has built significant optionality into its drilling program. Three of its rigs are on longer-term contracts, with average remaining terms of approximately 18 months. The other three rigs, including the sixth rig to be used for drilling the second salt water disposal well at Rustler Breaks, are all on short-term contracts with obligations ranging from two months to six months. This affords Matador the opportunity to easily and quickly modify its drilling program as management may determine necessary based on changing commodity prices and other factors. During the second quarter of 2017, Matador completed and turned to sales a total of 31 gross (17.6 net) horizontal wells in its various operating areas, including 18 gross (15.5 net) operated wells and 13 gross (2.1 net) non-operated wells, as summarized in the table below. In particular, during the second quarter of 2017, Matador completed and turned to sales 21 gross (14.2 net) horizontal wells in its various asset areas in the Delaware Basin, including 16 gross (13.5 net) operated and five gross (0.7 net) non-operated wells, as summarized in the table below. At August 2, 2017, Matador was on track with its projected 2017 drilling and completions program as outlined in its March 2017 Analyst Day presentation. At August 2, 2017, Matador had completed and turned to sales the eight gross (5.8 net) operated and non-operated wells anticipated for 2017 in the Eagle Ford shale, as well as the five gross (0.6 net) non-operated wells anticipated for 2017 in the Haynesville shale. While the Company may participate in additional non-operated well opportunities in both of these areas during the remainder of 2017, any additional capital expenditures are anticipated to be minimal. Matador is pleased to announce the 24-hour initial potential test result from the D. Culbertson 26-15S-36E TL State #234H (D. Culbertson #234H) well, its first horizontal test of the Wolfcamp D formation in the eastern portion of its Twin Lakes asset area, as summarized in the table below. The D. Culbertson #234H well tested 600 BOE per day (82% oil) during a 24-hour initial potential test on ESP, including 493 barrels of oil per day and 640 thousand cubic feet of natural gas per day, from a completed lateral length of approximately 4,400 feet. To Matador’s knowledge, this is the northernmost horizontal test of the Wolfcamp formation in New Mexico. Matador is very pleased with the initial results from this discovery well, which the Company believes confirms the Company’s exploration concept and validates the prospectivity of the Wolfcamp D in the Twin Lakes asset area. This well demonstrates the potential for horizontal exploitation and development of the Wolfcamp formation far to the north of the most currently active areas of the Wolfcamp play in the Delaware Basin. The drilling and completion of the D. Culbertson #234H well provides a solid first step in our understanding of the Wolfcamp D formation in this area, and we expect further improvements as we gain additional knowledge and experience from this well and future tests of the Wolfcamp D formation and as we seek to delineate our Twin Lakes acreage position from east to west. The D. Culbertson #234H well confirmed a number of expectations that the Company had for the Wolfcamp D in its Twin Lakes area, based on its analysis of offset well data and core data taken in Matador’s Olivine State 5-16S-37E TL #1 (Olivine #1) well, as follows: The D. Culbertson #234H well drilled faster than anticipated. The well was drilled in approximately 23 days from spud to a total depth of 16,132 feet. The landing target chosen for this initial test was a higher porosity, highly organic section of the Wolfcamp D about 20 to 30 feet in thickness. The entire horizontal lateral length of this well was drilled fully within the identified target interval. Completion operations on the D. Culbertson #234H well were more challenging than anticipated, but Matador’s completion team successfully pumped 25 fracture stages with between five to eight perforation clusters per stage spaced at 24 to 35 feet per stage, pumping approximately 233,000 barrels of fluid and approximately 12.3 million pounds of primarily 30/50 sand. Stages typically ranged from 40 to 60 barrels of fracturing fluid carrying 2,500 to 3,500 pounds of 30/50 sand per completed lateral foot. Matador will continue to observe the performance of the D. Culbertson #234H well as the Company prepares for its second test of the Wolfcamp D formation in the western portion of its Twin Lakes acreage, the Northeast Kemnitz State #11H well, which is expected to begin late in the third quarter or early in the fourth quarter of 2017. The Wolfcamp D interval is about 800 feet thick in the western portion of the Twin Lakes asset area (as compared to about 400 feet thick at the D. Culbertson #234H location), and Matador plans to continue a methodical approach to this exploratory effort. Matador expects to drill a pilot hole to gather detailed well logs to identify the landing target prior to initiating the horizontal lateral. In addition, Matador expects to run cased-hole logs and to conduct several fracture initiation pressure tests in at least one existing vertical well drilled through the Wolfcamp D near the second well’s location to further help with identifying the landing target and designing the fracture treatments for this well. Of further note, Cimarex Energy Co. (“Cimarex”) recently proposed, and Matador has agreed to participate as a working interest owner in, a second test of Cimarex’s acreage position offsetting Matador’s western Twin Lakes acreage. Cimarex is proposing to drill a two-mile lateral test in an upper section of the Wolfcamp D. Given the results from its initial test of the Wolfcamp D in the D. Culbertson #234H well, Matador also sees the potential for longer laterals to optimize well productivity in the Twin Lakes area, and the Company’s acreage in several areas lends itself very well to future development with longer laterals. Matador also acquired approximately 800 net acres near the D. Culbertson #234H well at the July 2017 State of New Mexico lease sale. Matador operated three drilling rigs in its Rustler Breaks asset area during most of the second quarter of 2017, beginning in late April. During the second quarter of 2017, the Company completed and turned to sales 13 gross (8.2 net) horizontal wells in this area, including nine gross (7.6 net) operated wells and four gross (0.6 net) non-operated wells. The nine operated wells included five Wolfcamp A-XY completions, one Wolfcamp A-Lower completion and three Wolfcamp B-Blair completions. All nine wells had completed lateral lengths between 4,300 and 4,600 feet. The 24-hour initial potential test results from all nine wells are summarized in the table below. Overall, the well results achieved in the Rustler Breaks asset area in the second quarter of 2017 continued to meet or exceed the Company’s expectations. Of particular note in the second quarter were the results from the Guitar 10-24S-28E RB #205H (Guitar #205H) well, a Wolfcamp A-Lower completion, and the Joe Coleman 13-23S-27E RB #206H (Joe Coleman #206H) and Kathy Coleman 14-23S-27E RB #206H (Kathy Coleman #206H) wells, both Wolfcamp A-XY completions, each of which is described more fully below. The Wolfcamp B-Blair completions also continued to deliver strong results in the second quarter of 2017 and contributed to the Company’s 19% increase in natural gas production during the second quarter of 2017. The Guitar #205H well was Matador’s first Wolfcamp A-Lower completion in the Rustler Breaks asset area, and this well flowed 1,155 BOE per day (75% oil) during a 24-hour initial potential test from a completed lateral length of approximately 4,300 feet. This lower, more organic section of the Wolfcamp A is located about 150 to 200 feet below the Wolfcamp A-XY interval. Matador has successfully tested and produced the Wolfcamp A-Lower target in its Wolf and Jackson Trust asset areas in Loving County, Texas. Matador is pleased with these initial results from the Guitar #205H, which validates the Wolfcamp A-Lower as another completion target in the Rustler Breaks asset area. Matador plans to drill additional Wolfcamp A-Lower wells at Rustler Breaks going forward. The Joe Coleman #206H and the Kathy Coleman #206H wells were both Wolfcamp A-XY completions located in the northwestern portion of the Rustler Breaks asset area, close to the Tom Walters 12-23S-27E RB #203H (Tom Walters #203H) well discussed in the Company’s prior earnings releases. Both of these wells are among the best Wolfcamp A-XY wells drilled in the Rustler Breaks asset area, with early performance comparable to that of the Tom Walters #203H well. As of late July 2017, in approximately two months of production, the Joe Coleman #206H and Kathy Coleman #206H wells have produced approximately 92,000 BOE (74% oil) and 90,000 BOE (73% oil), respectively, and both wells are tracking 15 to 20% above the Company’s 900,000 BOE Wolfcamp A-XY type curve for the Rustler Breaks asset area. As of late July 2017, the Tom Walters #203H well had produced approximately 180,000 BOE (74% oil) in its first six months of production, including about 15 days of shut-in time, and is also tracking above the Company’s 900,000 BOE Wolfcamp A-XY type curve for this area. Both the Joe Coleman #206H and the Kathy Coleman #206H wells, as well as the Tom Walters #203H well, further confirm the potential for the Wolfcamp A-XY interval throughout the Rustler Breaks acreage position. As of late July 2017, Matador’s two best Wolfcamp A-XY wells in the Rustler Breaks asset area, the Dr. Scrivner Federal 01-24S-28E RB #208H and the Paul 25-24S-28E RB #221H wells, had produced, approximately 254,000 BOE (73% oil) in just over eight months of production and approximately 316,000 BOE (71% oil) in approximately 14 months of production, respectively. Both of these wells are tracking well above the Company’s 900,000 BOE Wolfcamp A-XY type curve for this area. Matador attributes the strong results from many of its recent Wolfcamp A-XY wells to the larger fracture treatments, consisting of approximately 40 barrels of fluid and 3,000 pounds of primarily 30/50 mesh sand per completed lateral foot, including the use of diverting agents, that it has pumped consistently in the Wolfcamp A-XY completions in the Rustler Breaks asset area since mid-2016. At August 2, 2017, Matador planned to operate three drilling rigs at Rustler Breaks throughout the remainder of 2017, although it may elect to move one of these rigs to its Antelope Ridge asset area late in the third quarter or early in the fourth quarter of 2017 to begin testing recently acquired acreage in that area. Matador’s drilling success at Rustler Breaks has resulted in natural gas volumes that exceed the 60 million cubic feet per day capacity of the Black River Processing Plant operated by San Mateo. San Mateo’s expansion of the Black River Processing Plant to provide an incremental 200 million cubic feet per day of natural gas processing capacity is expected to be operational late in the first quarter of 2018. In the meantime, Matador has secured and is using third-party options for its excess natural gas processing needs. Ranger and Arrowhead Asset Areas – Lea County, New Mexico and Eddy County, New Mexico Matador operated one drilling rig in its Ranger and Arrowhead asset areas during most of the second quarter of 2017. During the second quarter of 2017, the Company completed and turned to sales two gross (0.8 net) horizontal wells in these areas, including one gross (0.7 net) operated well and one gross (0.1 net) non-operated well. The operated well was a Second Bone Spring test in the Arrowhead asset area, the Stebbins 20 Federal #123H (Stebbins 20 #123H), and the non-operated well was also a Second Bone Spring test in the Ranger asset area. During the second quarter of 2017, Matador had several additional operated wells in progress in the Ranger and Arrowhead asset areas that should be completed and turned to sales during the third quarter. The 24-hour initial potential test result from the Stebbins 20 #123H well is summarized in the table below. The Stebbins 20 #123H well was Matador’s first operated well in the Arrowhead asset area. This Second Bone Spring test had a completed lateral length of approximately 4,300 feet and was completed with 15 fracture stages carrying a total of approximately 150,000 barrels of fracturing fluid and approximately 8.5 million pounds of primarily 20/40 mesh sand (or about 2,000 pounds of sand per completed lateral foot). Early performance from the Stebbins 20 #123H well has exceeded expectations, and the well has shown minimal decline, producing approximately 61,000 BOE, or almost 1,000 BOE per day, in just over two months of production as of late July 2017. After its first two months of production, the Stebbins 20 #123H well is tracking ahead of Matador’s 700,000 BOE Second Bone Spring type curve for the Ranger and Arrowhead asset areas. Matador also completed a second well on the initial Stebbins pad in early July 2017, the Stebbins 20 Federal #133H (Stebbins 20 #133H) well, which is a Third Bone Spring completion. At August 2, 2017, an ESP had just been installed on this well, and Matador expects to conduct the 24-hour initial potential test on this well once the ESP is fully operational. Matador is very pleased with the initial results from the Stebbins 20 #123H well and looks forward to the initial results from the Stebbins 20 #133H well. With continued encouraging results, the Stebbins acreage block could become a focus for future drilling activity in Matador’s Arrowhead asset area. The Company has recently received 14 federal permits for drilling additional wells on this acreage block over the next few years, and this acreage block also lends itself to laterals longer than one mile. As noted above, Matador also participated in one non-operated well in its Ranger asset area in the second quarter of 2017. This well, the COG Operating (Concho Resources Inc.) Geronimo Federal Com #11H well, a Second Bone Spring test, had a 24-hour initial potential test rate of 1,630 BOE per day (91% oil). Matador owns an approximate 11% working interest in this well, which is located about nine miles west of its Mallon wells and offsets other Matador acreage in the Ranger asset area. Matador operated one drilling rig in its Wolf asset area during the second quarter of 2017. During the second quarter of 2017, the Company completed and turned to sales five gross (4.2 net) operated horizontal wells in this area, including four wells completed in the Second Bone Spring and one well completed in the Wolfcamp A-XY. The 24-hour initial potential test results from each of these five wells are summarized in the table below. The Arno 78-TTT-B33 WF #121H (Arno #121H), Arno 78-TTT-B33 WF #122H (Arno #122H) and Arno 78-TTT-B33 WF #202H (Arno #202H) wells are located in the southernmost portion of the Wolf asset area, and all three wells were drilled in batch mode from the same pad. The results from the Arno #121H and #122H wells confirmed the prospectivity of the Second Bone Spring target across the entire Wolf asset area from the Billy Burt leasehold in the north through the Dorothy White leasehold in the center to the Arno leasehold to the south. As expected, and as has been observed in the Wolfcamp A formation as well, the Second Bone Spring exhibited a somewhat higher natural gas percentage at the Arno leasehold. Having confirmed the prospectivity of the Second Bone Spring target across the entire Wolf asset area, Matador expects to return its focus in the Wolf asset area to drilling and completing the Wolfcamp A-XY and additional new targets, such as the Avalon and the Wolfcamp B, for the remainder of 2017. Many of these wells will also be longer laterals, with most between 6,000 and 8,000 feet in length. Test results and early performance from the Arno #202H, a Wolfcamp A-XY completion, were similar to those from the original Wolfcamp A-XY test drilled on the Arno leasehold, the Arno 78-TTT-B33 WF #201H (Arno #201H) well. As of late July 2017, the Arno #201H well had produced 425,000 BOE (30% oil) in approximately 29 months of production, and Matador estimates the ultimate recovery from this well at approximately 1 million BOE. During the second quarter of 2017, Matador began drilling its first tests of the Avalon and Wolfcamp B formations in the Wolf asset area, the Barnett 90-TTT-B01 WF #104H (Barnett #104H) and Barnett 90-TTT-B01 WF #224H (Barnett #224H) wells, respectively. As of August 2, 2017, the Barnett #104H and #224H wells had been drilled and completed, and the fracturing plugs between stages were being drilled out prior to flowback. The Wolfcamp B formation has been tested successfully by other operators nearby in Loving and Reeves Counties, Texas, and Matador is optimistic about the prospectivity of the Wolfcamp B on its Wolf acreage. Although the nearest recent Avalon tests are approximately 10 miles away from Matador’s Wolf asset area, Matador was very encouraged by the results it observed in the Avalon from the whole core and detailed suite of well logs taken in a nearby pilot hole on the Barnett leasehold in 2016. The Avalon formation is over 800 feet thick in the Wolf asset area, and the interval being tested in the Barnett #104H well is the first of two potential landing targets in the Avalon identified by Matador’s geoscience team. Hydrocarbon shows during the drilling of the lateral section of the Avalon in the Barnett #104H well were also very encouraging. Finally, Matador is pleased to note that its land team acquired approximately 1,100 gross (760 net) acres in the Wolf asset area through a trade with another operator, leasing activities and working interest acquisitions. Matador estimates that this trade along with the new leases will provide up to 32 additional Matador-operated drilling locations in the Wolf asset area. Further, these acquisitions have enhanced the Company’s ability to drill longer laterals in several portions of the Wolf asset area. Matador expects to continue making similar trades and acquiring new leasehold and working interests where possible going forward, not only in its Wolf asset area, but also throughout its entire Delaware Basin acreage position. During the second quarter of 2017, Matador drilled and completed five wells in the Eagle Ford shale in South Texas. Two of these wells, the Falls City #1H and #2H wells, both located in Karnes County, were turned to sales in mid-June 2017. The other three wells, the Martin Ranch C #11H well and the Martin MAK D #49H and D #50H wells, all located in La Salle County, were turned to sales in early July 2017. Matador has a 100% working interest in each of these wells. The completion of these five wells concluded Matador’s operated drilling program in the Eagle Ford shale for 2017. The 24-hour initial potential test results from all five of these Eagle Ford shale wells are summarized in the table below. Matador was very pleased with the initial results from this five-well drilling program. While it is still early, production from each of these wells is tracking ahead of Matador’s best Eagle Ford well in each county, the Sickenius A #1H in Karnes County and the Martin Ranch A #1H in La Salle County. Further, although these newly completed Eagle Ford wells had minimal impact on the Company’s second quarter 2017 production, the initial production from these wells has almost doubled Matador’s average daily oil equivalent production from the Eagle Ford shale, as compared to its second quarter 2017 Eagle Ford production levels. The Falls City #1H and #2H wells had completed lateral lengths of approximately 5,900 and 5,400 feet, respectively, while the Martin Ranch and Martin MAK wells had completed lateral lengths of approximately 4,800 feet each. Matador had originally planned to drill up to 7,600-foot laterals on the two Falls City wells, but modified its plans to drill in front of, as opposed to drilling through, a large normal fault traversing the Falls City leasehold. Matador also appreciated the close coordination provided by Patterson-UTI Drilling Company with regard to these wells, mobilizing an inactive rig out of its South Texas yard and enabling Matador to drill these five Eagle Ford wells very efficiently, including a record drilling time for one of the Eagle Ford wells on the Martin Ranch leasehold. Matador completed these five wells using a new Eagle Ford Generation 8 stimulation design incorporating features from its fracture treatments in the Delaware Basin, including more fracture stages, tighter perforation cluster spacing and the use of diverting agents. Each of these wells was completed with seven perforation clusters per stage at 20-foot cluster spacing, with each stage consisting of 38 barrels of fluid and 2,000 pounds of primarily 30/50 mesh sand per completed lateral foot. Each of the Martin Ranch and Martin MAK wells was treated with 34 fracturing stages, while the longer Falls City #1H and #2H wells were treated with 42 and 39 fracturing stages, respectively. Diverting agents were used in each stage of all five treatments. Simultaneous fracturing operations were used to treat both sets of wells, which resulted in as many as ten treatment stages being pumped in a single day. During the second quarter of 2017, Matador participated as a non-operator in the completion of five gross (0.6 net) Haynesville shale wells, and all five of these wells were turned to sales during the second quarter. Of particular importance were the three gross (0.6 net) wells that were completed and turned to sales on the Blount leasehold operated by Chesapeake in the Company’s Elm Grove asset area. Chesapeake drilled these three wells in late 2015, but delayed completion until early 2017. All three of the Blount wells were completed using over 5,000 pounds of proppant per foot of completed lateral, and each well had a completed lateral length of about 4,700 feet. All three Blount wells were turned to sales with initial flow rates of between 16 and 18 million cubic feet of natural gas per day at flowing casing pressures in excess of 7,000 psi, and these wells have yet to exhibit much decline from their initial flow rates. In addition, the Company also benefited in the second quarter of 2017 from the flush production of several offsetting Haynesville shale wells that were returned to sales after being temporarily shut in while the Blount wells were completed. These results contributed to an increase of 14% in Matador’s Haynesville/Cotton Valley natural gas production in Northwest Louisiana and East Texas from approximately 29.2 million cubic feet per day in the first quarter of 2017 to approximately 33.2 million cubic feet per day in the second quarter of 2017. At August 2, 2017, Matador did not plan to conduct any operated drilling operations, nor did it expect to participate in any significant additional non-operated drilling and completion operations, in the Haynesville shale during the remainder of 2017. Matador may, from time to time, participate in non-operated well proposals with estimated economic returns comparable to its Delaware Basin drilling program, including the participation in one or more re-fracturing operations proposed on Haynesville wells in which the Company has a small working interest. Capital commitments to such projects are expected to be minimal in comparison to the Company’s 2017 total estimated capital expenditures. During the second quarter of 2017, Matador’s San Mateo midstream joint venture initiated the expansion of the Black River Processing Plant to add an incremental 200 million cubic feet per day to the existing 60 million cubic feet per day of cryogenic natural gas processing capacity. At August 2, 2017, the expansion project was proceeding on schedule, and the incremental natural gas processing capacity is expected to become operational late in the first quarter of 2018. At August 2, 2017, San Mateo was moving forward with its plans to drill an additional salt water disposal well in the Rustler Breaks asset area and to build out additional oil, natural gas and salt water gathering systems in the Wolf and Rustler Breaks asset areas. This second salt water disposal well in the Rustler Breaks asset area is expected to spud in early August. This well (and potentially others in the near future) is needed to handle Matador’s salt water disposal needs in the Rustler Breaks asset area, as well as other newly-contracted third-party salt water disposal volumes in the area. San Mateo recently entered into a salt water disposal agreement with another operator in the Rustler Breaks area to dispose of up to 12,000 barrels of salt water per day. Matador incurred approximately $12 million in capital expenditures related to these projects during the second quarter of 2017 and has incurred approximately $22 million through June 30, 2017, or approximately 37% of its anticipated 2017 midstream capital expenditures. Midstream capital expenditures are about $4 million ahead of the Company’s expectations at June 30, 2017, due primarily to certain midstream projects being initiated sooner than originally anticipated. Matador is very pleased with the first few months of operations and with the direction of the San Mateo joint venture following its inception in February 2017. At August 2, 2017, Matador held 189,500 gross (108,000 net) acres in the Permian Basin, primarily in the Delaware Basin in Lea and Eddy Counties, New Mexico and Loving County, Texas, as shown in the table below. During the second quarter of 2017 and through August 2, 2017, Matador acquired approximately 8,300 net acres in the Delaware Basin, mostly in and around its existing acreage positions, including new leasing activities, acquisition of small interests from mineral and working interest owners in Matador’s operated wells and acreage trades or term assignments with other operators. Matador closed over 20 such transactions in the period from April 1 through August 2, 2017. As an example, recent acreage acquisitions and the aforementioned trade in the Wolf asset area added approximately 760 net acres in this area, but more importantly, the Company estimates this acreage will provide up to 32 additional Matador-operated drilling locations, as well as additional proved undeveloped reserves. Matador incurred capital expenditures of approximately $28 million during this period to acquire this additional acreage throughout the Delaware Basin, as well as for new 3-D seismic data across portions of its Wolf asset area. As provided in its 2017 capital spending guidance estimates, as updated during its Analyst Day presentation on March 23, 2017 and affirmed on August 2, 2017, Matador anticipates that it will incur capital expenditures of (1) $400 to $420 million for drilling, completing and equipping operated and non-operated wells in 2017, primarily in the Delaware Basin and (2) $56 to $64 million for its share of various midstream projects undertaken by San Mateo, representing 51% of an estimated 2017 joint venture capital expenditure budget of $110 to $125 million. The Company’s estimated 2017 capital expenditures for drilling, completing and equipping its wells account for a 10 to 15% increase in expected total well costs attributable to higher anticipated oilfield service costs and in particular, stimulation costs, in 2017 as compared to 2016. Matador has allocated substantially all of its estimated 2017 capital expenditures to the Delaware Basin, with the exception of amounts allocated to limited operations in the Eagle Ford (including the five wells drilled and completed in 2017) and Haynesville shales to maintain and extend leases and to participate in those non-operated well opportunities where, in both cases, economic returns are expected to be comparable to Matador’s Delaware Basin wells. During the second quarter of 2017, Matador’s capital spending in these categories was approximately $148 million, including approximately $136 million for drilling and completion operations and approximately $12 million for midstream operations. Capital spending for drilling, completing and equipping wells of $136 million was in line with expectations for the second quarter (after being below expectations in the first quarter) as a result of the timing of completion operations as certain wells scheduled to be completed late in the first quarter were actually completed early in the second quarter. The midstream expenditures were somewhat higher than anticipated in the second quarter, but this outcome is again a result of timing, with certain 2017 proposed midstream initiatives getting underway earlier than originally anticipated. As of June 30, 2017, Matador had incurred approximately $241 million, or about 51%, of its anticipated 2017 projected capital expenditures. Matador’s capital spending at June 30, 2017 is on target with its projected capital expenditures of $242 million for the first six months of 2017, as provided in its March 23, 2017 Analyst Day presentation. Matador intends to continue acquiring acreage and mineral interests, principally in the Delaware Basin, throughout 2017. These expenditures are opportunity specific and per-acre prices can vary significantly based on the opportunity. As a result, it is difficult to estimate these 2017 capital expenditures with any degree of certainty; therefore, Matador has not provided estimated capital expenditures related to acreage and mineral acquisitions for 2017. Matador will provide periodic updates regarding completed acquisitions, as it has done in the Delaware Basin Acreage Update in this earnings release. At June 30, 2017, the borrowing base under Matador’s revolving credit facility was $450 million based on the lenders’ review of the Company’s proved oil and natural gas reserves at December 31, 2016, with the Company maintaining its “elected borrowing commitment” at $400 million. At June 30, 2017, Matador had cash on hand totaling approximately $131 million, not including approximately $15 million of restricted cash (most of which is associated with San Mateo), no outstanding borrowings under the Company’s revolving credit facility and approximately $0.8 million in outstanding letters of credit. At August 2, 2017, the Company continued to have no outstanding borrowings under its credit facility, other than approximately $0.8 million in outstanding letters of credit. At August 2, 2017, Matador remained in a strong financial position and is well funded to execute the remainder of its 2017 drilling program and midstream operations, primarily using cash on hand and anticipated cash flows from operations, but can call upon its fully undrawn line of credit should additional capital be needed. Currently, Matador does not have a separate line of credit for its midstream operations. From time to time, Matador uses derivative financial instruments to mitigate its exposure to commodity price risk associated with oil, natural gas and natural gas liquids prices and to protect its cash flows and borrowing capacity. At August 2, 2017, Matador had the following hedges in place, in the form of costless collars, for the remainder of 2017. Matador estimates that it now has approximately 65% of its anticipated oil production and approximately 70% of its anticipated natural gas production hedged for the remainder of 2017 based on the midpoint of its updated production guidance. At August 2, 2017, Matador had the following hedges in place, in the form of costless collars, for 2018. The Company will host a live conference call on Thursday, August 3, 2017, at 9:00 a.m. Central Time to review its second quarter 2017 financial results and operational highlights. To access the conference call, domestic participants should dial (855) 875-8781 and international participants should dial (720) 634-2925. The conference ID and passcode is 59566181. The conference call will also be available through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. The replay for the event will be available on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab through August 31, 2017. Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations, primarily through its midstream joint venture, San Mateo Midstream, LLC, in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, results in certain basins, objectives, project timing, expectations and intentions and other statements that are not historical facts. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the following risks related to financial and operational performance: general economic conditions; the Company’s ability to execute its business plan, including whether its drilling program is successful; the ability of the Company’s midstream joint venture to expand the Black River cryogenic processing plant, the timing of such expansion and the operating results thereof; the timing and operating results of the buildout by the Company’s midstream joint venture of oil, natural gas and water gathering systems and the drilling of any additional salt water disposal wells; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; and other important factors which could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. This press release includes the non-GAAP financial measure of Adjusted EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. “GAAP” means Generally Accepted Accounting Principles in the United States of America. The Company believes Adjusted EBITDA helps it evaluate its operating performance and compare its results of operations from period to period without regard to its financing methods or capital structure. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, certain other non-cash items and non-cash stock-based compensation expense, and net gain or loss on asset sales and inventory impairment. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or net cash provided by operating activities as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components of understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure. Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents the calculation of Adjusted EBITDA and the reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively, that are of a historical nature. Where references are pro forma, forward-looking, preliminary or prospective in nature, and not based on historical fact, the table does not provide a reconciliation. The Company could not provide such reconciliation without undue hardship because the forward-looking Adjusted EBITDA numbers included in this press release are estimations, approximations and/or ranges. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items, including future income taxes, full-cost ceiling impairments, unrealized gains or losses on derivatives and gains or losses on asset sales and inventory impairments. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results. This press release includes the non-GAAP financial measures of adjusted net income (loss) and adjusted earnings (loss) per diluted common share. These non-GAAP items are measured as net income (loss) attributable to Matador Resources Company shareholders, adjusted for dollar and per share impact of certain items, including unrealized gains or losses on derivatives, the impact of full cost-ceiling impairment charges, if any, and non-recurring transaction costs for certain acquisitions or other non-recurring expense items, along with the related tax effect for all periods. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP financial measures. Additionally, these non-GAAP financial measures may be different than similar measures used by other companies. The Company believes the presentation of adjusted net income (loss) and adjusted earnings (loss) per diluted common share provides useful information to investors, as it provides them an additional relevant comparison of the Company’s performance across periods and to the performance of the Company’s peers. In addition, these non-GAAP financial measures reflect adjustments for items of income and expense that are often excluded by industry analysts and other users of the Company’s financial statements in evaluating the Company’s performance. The table below reconciles adjusted net income (loss) and adjusted earnings (loss) per diluted common share to their most directly comparable GAAP measure of net income (loss) attributable to Matador Resources Company shareholders. PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. PV-10 is not an estimate of the fair market value of the Company’s properties. Matador and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies and of the potential return on investment related to the companies’ properties without regard to the specific tax characteristics of such entities. PV-10 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by adding the discounted future income taxes associated with such reserves to the Standardized Measure.


DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”), today reported financial and operating results for the three months and year ended December 31, 2016. The release is divided into two parts—first, a “Highlights” section that summarizes key production and financial results for the fourth quarter and year ended December 31, 2016, proved reserves at December 31, 2016, significant well results in the fourth quarter of 2016 and early first quarter of 2017 and Matador’s 2017 guidance estimates and second, a section providing additional details related to the Company’s fourth quarter and full year 2016 results. Sequential and year-over-year quarterly comparisons of selected financial and operating items are shown in the following table: Year-over-year twelve-month-period comparisons of selected financial and operating items are shown in the following table: Significant well results referenced in this earnings release include the following: Full year 2017 guidance estimates are as follows: (1) Oil production of 6.7 to 7.0 million barrels, an increase of 34% at the midpoint of 2017 guidance, as compared to 5.1 million barrels produced in 2016; (2) Natural gas production of 33.0 to 35.0 billion cubic feet, an increase of 11% at the midpoint of 2017 guidance, as compared to 30.5 billion cubic feet produced in 2016; (3) Total oil equivalent production of 12.2 to 12.8 million BOE, an increase of 23% at the midpoint of 2017 guidance, as compared to 10.2 million BOE produced in 2016; (4) Drilling and completions capital expenditures (including equipping wells for production) of $370 to $390 million, including estimated capital expenditures associated with non-operated well opportunities; (5) Midstream capital expenditures of $56 to $64 million, which represents Matador’s 51% share of an estimated 2017 capital expenditure budget of $110 to $125 million for San Mateo; (6) Adjusted EBITDA, a non-GAAP financial measure, of $245 to $265 million, an increase of 61% at the midpoint of 2017 guidance, as compared to Adjusted EBITDA of $157.9 million in 2016. Adjusted EBITDA guidance is based on estimated average realized prices of $51.72 per barrel for oil (West Texas Intermediate average oil price of $54.22 per barrel for oil, less $2.50 per barrel of estimated price differentials, using the forward strip for oil prices as of late February 2017) and $3.11 per thousand cubic feet for natural gas (NYMEX Henry Hub average natural gas price using the forward strip for natural gas prices as of late February 2017 and assuming regional price differentials and uplifts from natural gas processing roughly offset). These 2017 estimates reflect Matador’s reduced ownership in the Midstream Assets from 100% to 51% upon the formation of San Mateo and a corresponding projected reduction of about $15 to $20 million in Adjusted EBITDA. In addition, at these oil and natural gas prices, Matador estimates a realized loss on derivatives of about $11 million in 2017. As a result of the completion of the Mallon wells in late December 2016, as well as several additional wells that have been placed on production in early January 2017, Matador’s year-to-date oil production has increased by just over 10% sequentially, while its natural gas production has remained relatively flat, as compared to the fourth quarter of 2016. From January 1 through mid-February 2017, Matador has averaged oil production of approximately 17,500 barrels per day and natural gas production of approximately 85 million cubic feet per day, or a total oil equivalent production of approximately 31,500 BOE per day. At February 22, 2017, Matador estimates that its first quarter 2017 average oil equivalent production will be about 32,000 BOE per day (55% oil). In 2017, Matador projects more multi-well pad drilling on its Delaware Basin assets than in previous years, which may cause the cadence of its production growth to be somewhat uneven from quarter to quarter. For the year as a whole, Matador estimates its oil production will increase by approximately 30% and its natural gas production will increase by approximately 12%, respectively, from the fourth quarter of 2016 to the fourth quarter of 2017, at the midpoint of 2017 guidance. The Company will provide additional details on its estimated 2017 production growth and capital spending plans during its upcoming Analyst Day on Thursday, March 23, 2017 in Dallas, Texas. A short slide presentation summarizing the highlights of Matador’s fourth quarter and full year 2016 earnings release is also included on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “The entire Matador staff and board are to be commended for overcoming the challenging commodity price environment we faced in 2016. Our oil, natural gas and total oil equivalent production in 2016 were all record annual results for the Company and at the high end of our 2016 production guidance, despite raising our estimates for natural gas and total oil equivalent production on two occasions during 2016. Our proved oil and natural gas reserves increased 24% year-over-year and were also at an all-time high. “We focused our efforts almost entirely on our Delaware Basin assets in 2016. Matador’s Delaware Basin oil equivalent production grew by 2.5-fold in 2016, as compared to 2015, topping 20,000 BOE per day for the first time in the fourth quarter of 2016. At December 31, 2016, our Delaware Basin proved reserves comprised 75% of our total proved oil and natural gas reserves, as compared to 56% at December 31, 2015. Well results throughout our Delaware Basin acreage position have continued to meet or exceed our expectations. “This year is already off to a fast start. We began 2017 operating four drilling rigs in our various Delaware Basin asset areas and have recently announced plans to add a fifth drilling rig to our Delaware Basin program early in the second quarter. Last Friday, February 17, we were excited to announce the formation of a strategic joint venture, San Mateo Midstream, LLC, for our Delaware Basin midstream assets. Matador owns 51% of the joint venture and will operate these midstream assets, and we are pleased to have Five Point Capital Partners LLC, a high quality and experienced midstream equity partner, to help us build this business. San Mateo will provide firm capacity service to Matador at market rates while also providing similar services to third-party customers in and around our Rustler Breaks and Wolf asset areas. “Matador began 2017 with over $200 million in cash on hand and no outstanding borrowings under our credit facility as a result of our successful equity and bond offerings last December. The additional $172 million of cash received as initial consideration from the San Mateo transaction puts Matador in a very strong and well-funded financial and capital position to execute our drilling and midstream programs throughout 2017. We will, of course, continue to strategically add to and improve our acreage position in the Delaware Basin, which is now over 100,000 net acres. “Please know that we look forward to sharing more details on our recent results and plans going forward with shareholders and industry analysts at our upcoming Analyst Day to be held here in Dallas on March 23. We hope you will join us.” Operating and Financial Results - Fourth Quarter and Year Ended December 31, 2016 Average daily oil equivalent production increased 2% sequentially from 29,381 BOE per day (51% oil) in the third quarter of 2016 to 29,965 BOE per day (52% oil) in the fourth quarter of 2016, and increased 27% year-over-year from 23,556 BOE per day (49% oil) in the fourth quarter of 2015. Matador’s fourth quarter 2016 total oil equivalent production of approximately 2.8 million BOE was the best quarterly result in the Company’s history. Average daily oil production increased 5% sequentially from 14,960 barrels per day in the third quarter of 2016 to 15,720 barrels per day in the fourth quarter of 2016, and increased 36% year-over-year from 11,547 barrels per day in the fourth quarter of 2015. Matador’s fourth quarter 2016 oil production of approximately 1.45 million barrels was the best quarterly result in the Company’s history. Average daily natural gas production decreased by 1% sequentially from 86.5 million cubic feet per day in the third quarter of 2016 to 85.5 million cubic feet per day in the fourth quarter of 2016, and increased 19% year-over-year from 72.1 million cubic feet per day in the fourth quarter of 2015. Matador’s Delaware Basin average oil equivalent production was 20,670 BOE per day (69% of total oil equivalent production) in the fourth quarter of 2016, consisting of 12,828 barrels of oil per day (82% of total oil production) and 47.0 million cubic feet of natural gas per day (55% of total natural gas production). Matador’s Delaware Basin oil equivalent production increased 12% sequentially, as compared to 18,498 BOE per day in the third quarter of 2016, and increased 137% (2.4-fold) year-over-year, as compared to 8,720 BOE per day in the fourth quarter of 2015. Oil and natural gas revenues increased 14% sequentially from $83.1 million in the third quarter of 2016 to $94.8 million in the fourth quarter of 2016, and increased 69% year-over-year from $56.2 million in the fourth quarter of 2015. Oil revenues increased 17% sequentially from $58.6 million in the third quarter of 2016 to $68.5 million in the fourth quarter of 2016, and increased 67% year-over-year from $40.9 million in the fourth quarter of 2015. Natural gas revenues increased 8% sequentially from $24.5 million in the third quarter of 2016 to $26.3 million in the fourth quarter of 2016, and increased 72% year-over year from $15.3 million in the fourth quarter of 2015. Weighted average realized oil prices increased 11% sequentially from $42.57 per barrel realized in the third quarter of 2016 to $47.34 per barrel realized in the fourth quarter of 2016, and increased 23% year-over-year from $38.55 per barrel realized in the fourth quarter of 2015. Weighted average realized natural gas prices increased 9% sequentially from $3.08 per thousand cubic feet in the third quarter of 2016 to $3.35 per thousand cubic feet in the fourth quarter of 2016, and increased 46% year-over-year from $2.30 per thousand cubic feet realized in the fourth quarter of 2015. Total realized revenues, including realized hedging gains and losses and third-party midstream services revenues, increased 12% sequentially from $85.5 million in the third quarter of 2016 to $95.9 million in the fourth quarter of 2016, and increased 18% year-over-year from $81.6 million in the fourth quarter of 2015. Third-party midstream services revenues increased 44% sequentially from $1.6 million in the third quarter of 2016 to $2.3 million in the fourth quarter of 2016, and increased almost five-fold year-over-year from $0.5 million in the fourth quarter of 2015. Realized hedging losses were $1.1 million in the fourth quarter of 2016, as compared to realized hedging gains of $0.9 million in the third quarter of 2016 and $24.9 million in the fourth quarter of 2015. Average daily oil equivalent production increased 11% from 24,955 BOE per day (49% oil) for the year ended December 31, 2015 to 27,813 BOE per day (50% oil) for the year ended December 31, 2016. Matador achieved these increased production results despite reducing its operated rig count from five rigs at certain times in 2015 to three rigs for almost all of 2016, as well as a 29% decrease in capital expenditures to drill, complete and equip its wells during 2016, as compared to 2015. Matador’s 2016 total oil equivalent production of approximately 10.2 million BOE was the best annual result in the Company’s history and was at the high end of the Company’s 2016 oil equivalent production guidance, which was raised on two occasions during 2016. Average daily oil production increased 13% from 12,306 barrels per day for the year ended December 31, 2015 to 13,924 barrels per day for the year ended December 31, 2016. Matador’s 2016 total oil production of approximately 5.1 million barrels was the best annual result in the Company’s history and was at the high end of the Company’s 2016 oil production guidance. Average daily natural gas production increased 10% from 75.9 million cubic feet per day for the year ended December 31, 2015 to 83.3 million cubic feet per day for the year ended December 31, 2016. Matador’s 2016 total natural gas production of approximately 30.5 billion cubic feet was the best annual result in the Company’s history and was at the high end of the Company’s 2016 natural gas production guidance, which was raised on two occasions during 2016. Matador’s Delaware Basin average oil equivalent production was 15,941 BOE per day (57% of total oil equivalent production) for the year ended December 31, 2016, consisting of 10,395 barrels of oil per day (75% of total oil production) and 33.3 million cubic feet of natural gas per day (40% of total natural gas production). Matador’s Delaware Basin average oil equivalent production increased approximately 145% (2.5-fold), as compared to 6,518 BOE per day (26% of total oil equivalent production) for the year ended December 31, 2015, consisting of 4,648 barrels of oil per day (38% of total oil production) and 11.2 million cubic feet of natural gas per day (15% of total natural gas production). Oil and natural gas revenues increased 5% from $278.3 million for the year ended December 31, 2015 to $291.2 million for the year ended December 31, 2016. Oil revenues increased 3% from $203.4 million for the year ended December 31, 2015 to $209.9 million for the year ended December 31, 2016. Natural gas revenues increased 8% from $75.0 million for the year ended December 31, 2015 to $81.2 million for the year ended December 31, 2016. The 3% increase in oil revenues in 2016 was primarily attributable to the 13% increase in oil production during 2016, as compared to 2015, which partially mitigated a lower weighted average oil price of $41.19 per barrel realized in 2016, as compared to $45.27 per barrel realized in 2015. The 8% increase in natural gas revenues in 2016 was attributable to the 10% increase in natural gas production in 2016, as compared to 2015, which offset a slightly lower weighted average natural gas price of $2.66 per thousand cubic feet realized in 2016, as compared to $2.71 per thousand cubic feet realized in 2015. Total realized revenues, including hedging gains and third-party midstream services revenues, decreased 14% from $357.3 million for the year ended December 31, 2015 to $305.7 million for the year ended December 31, 2016. Third-party midstream services revenues increased almost three-fold from $1.9 million for the year ended December 31, 2015 to $5.2 million for the year ended December 31, 2016. Realized hedging gains of $77.1 million for the year ended December 31, 2015 were significantly larger than the realized hedging gains of $9.3 million for the year ended December 31, 2016. This significant decrease in realized hedging gains in 2016 resulted in the decrease in total realized revenues in 2016, as compared to 2015. For the fourth quarter of 2016, Matador reported net income of approximately $104.2 million and earnings of $1.09 per diluted common share on a GAAP basis, as compared to net income of approximately $11.9 million, or $0.13 per diluted common share, in the third quarter of 2016, and as compared to a net loss of approximately $230.4 million and a loss of $2.72 per diluted common share in the fourth quarter of 2015. During the fourth quarter of 2016, the Company recognized the remaining gain of $104.1 million from the October 2015 sale of its natural gas processing plant in Loving County, Texas. Portions of the fourth quarter 2016 net income (GAAP basis) were attributable to non-cash items, and excluding those items from the net income, as well as excluding the remaining gain on the processing plant sale, resulted in adjusted net income, a non-GAAP financial measure, of approximately $7.2 million, or $0.08 per diluted common share. Matador’s net income for the fourth quarter of 2016 was favorably impacted by (1) higher oil production, (2) higher realized oil and natural gas prices, as compared to the third quarter of 2016, (3) a non-cash gain on 2015 asset sales of $104.1 million recognized in the fourth quarter of 2016, (4) third-party midstream services revenue of $2.3 million and (5) no full-cost ceiling impairment in the fourth quarter of 2016. Matador’s net income for the fourth quarter of 2016 was unfavorably impacted by (1) a realized loss on derivatives of $1.1 million and (2) a non-cash, unrealized loss on derivatives of $11.0 million. For the year ended December 31, 2016, Matador reported a net loss of approximately $97.4 million and a loss of $1.07 per diluted common share on a GAAP basis, as compared to a net loss of approximately $679.8 million and a loss of $8.34 per diluted common share for the year ended December 31, 2015. Portions of the full year 2016 net loss (GAAP basis) were attributable to non-cash items, and excluding those items from the net loss, as well as excluding the remaining gain on the processing plant sale, resulted in an adjusted net loss of approximately $2.8 million or $0.03 per diluted common share. Matador’s net loss for the year ended December 31, 2016 was favorably impacted by (1) higher oil and natural gas production, as compared to the year ended December 31, 2015, (2) a realized gain on derivatives of $9.3 million, (3) a non-cash gain on 2015 asset sales of $107.3 million recognized in 2016 and (4) improvements in total operating expenses. Matador’s net loss for the year ended December 31, 2016 was unfavorably impacted by (1) lower realized oil and natural gas prices, as compared to the year ended December 31, 2015, (2) a non-cash, unrealized loss on derivatives of $41.2 million and (3) a non-cash, full-cost ceiling impairment of $158.6 million, exclusive of tax effect, realized in the first and second quarters of 2016. For a reconciliation of adjusted net income (non-GAAP) and adjusted earnings (loss) per diluted common share (non-GAAP) to net income (GAAP) and earnings (loss) per common share (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Adjusted EBITDA, a non-GAAP financial measure, increased 15% sequentially from $47.3 million in the third quarter of 2016 to $54.5 million in the fourth quarter of 2016, and increased 13% year-over-year from $48.3 million in the fourth quarter of 2015. The sequential increase in Adjusted EBITDA was primarily attributable to the increase in oil production and the increase in oil and natural gas prices realized during the fourth quarter of 2016, as compared to the third quarter of 2016. The year-over-year increase in Adjusted EBITDA was primarily attributable to the significant increases in both oil and natural gas production and oil and natural gas prices realized in the fourth quarter of 2016, as compared to the fourth quarter of 2015, which offset and mitigated a significant decrease of $26.0 million in realized hedging gains between the comparable periods. Adjusted EBITDA, a non-GAAP financial measure, decreased 29% from $223.2 million for the year ended December 31, 2015 to $157.9 million for the year ended December 31, 2016. This decrease was attributable in part to lower oil and natural gas prices realized for the year ended December 31, 2016, as compared to the year ended December 31, 2016, but was primarily attributable to the significant decrease of $67.8 million in realized hedging gains between the comparable periods. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA (non-GAAP) to net income (GAAP) and net cash provided by operating activities (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Production taxes, transportation and processing expenses on a unit-of production basis decreased 3% sequentially from $4.58 per BOE in the third quarter of 2016 to $4.43 per BOE in the fourth quarter of 2016, and increased 7% year-over-year from $4.12 per BOE in the fourth quarter of 2015. Total production taxes increased during the fourth quarter of 2016 as a result of higher oil and natural gas revenues, as compared to both the third quarter of 2016 and the fourth quarter of 2015. Transportation and processing expenses on a unit-of-production basis were lower in the fourth quarter of 2016 as a result of lower natural gas processing expenses, due to the late August 2016 start-up of the Black River cryogenic natural gas processing plant in the Rustler Breaks asset area constructed by the Company’s midstream affiliate. Production taxes, transportation and processing expenses on a unit-of-production basis increased 8% from $3.91 per BOE for the year ended December 31, 2015 to $4.23 per BOE for the year ended December 31, 2016. This increase in production taxes, transportation and processing expenses was attributable to higher production taxes resulting from the 5% increase in oil and natural gas revenues for the year ended December 31, 2016, as compared to the year ended December 31, 2015, as well as higher natural gas transportation and processing expenses resulting from both an increase in total natural gas production, as well as an increase in Matador’s natural gas production in the Delaware Basin. Lease operating expenses on a unit-of-production basis of $5.41 per BOE in the fourth quarter of 2016 were essentially flat sequentially, as compared to $5.40 per BOE in the third quarter of 2016, but decreased 19% year-over-year from $6.72 per BOE in the fourth quarter of 2015. Lease operating expenses decreased 8% on a unit-of-production basis from $6.01 per BOE for the year ended December 31, 2015 to $5.52 per BOE for the year ended December 31, 2016. The decreases achieved in lease operating expenses on a unit-of-production basis were primarily attributable to several key factors, including (1) decreased supervisory costs as a number of third-party contractors became full-time employees during the second quarter of 2016, (2) decreased salt water disposal and chemical costs associated with the Company’s Eagle Ford operations and (3) increased oil equivalent production as compared to 2015. Lease operating expenses exclude the operating expenses associated with Matador’s natural gas processing plant and other midstream operations, which are now shown separately in the Company’s consolidated statement of operations. Plant and other midstream services operating expenses on a unit-of-production basis increased 24% sequentially from $0.54 per BOE in the third quarter of 2016 to $0.67 per BOE in the fourth quarter of 2016, and increased 103% from $0.33 in the fourth quarter of 2015. This sequential increase is primarily attributable to the fourth quarter of 2016 being the first full quarter of operations at the Black River cryogenic natural gas processing plant constructed in the Company’s Rustler Breaks asset area. The year-over-year increase was primarily attributable to additional operating expenses associated with new salt water disposal wells drilled in the fourth quarters of 2015 and 2016 in the Wolf asset area. In all periods prior to the third quarter of 2016, these plant and other midstream operating services expenses had been reported primarily as part of the Company’s lease operating expenses. Plant and other midstream services operating expenses on a unit-of-production basis increased 39% from $0.38 per BOE for the year ended December 31, 2015 to $0.53 per BOE for the year ended December 31, 2016. This increase was primarily attributable to the addition of natural gas transportation and processing and salt water disposal facilities in the Company’s Wolf and Rustler Breaks asset areas in 2016, as compared to 2015. Depletion, depreciation and amortization expenses on a unit-of-production basis increased 4% sequentially from $11.10 per BOE in the third quarter of 2016 to $11.56 per BOE in the fourth quarter of 2016, and decreased 29% year-over-year from $16.32 per BOE in the fourth quarter of 2015. The slight sequential increase was attributable, in part, to increased depreciation expenses associated with new midstream assets constructed and placed into service in 2016. The year-over-year decrease in DD&A expenses on a unit-of-production basis resulted primarily from (1) the increase in Matador’s total proved reserves between the respective periods, (2) the decreased costs on a unit-of-production basis associated with wells drilled in 2016, as compared to prior periods and (3) the decrease in unamortized property costs resulting from full-cost ceiling impairments in 2015 and the first two quarters of 2016. Depletion, depreciation and amortization expenses on a unit-of-production basis decreased 39% from $19.63 per BOE for the year ended December 31, 2015 to $11.99 per BOE for the year ended December 31, 2016. This decrease in DD&A expenses on a unit-of-production basis resulted primarily from (1) the increase in Matador’s total proved reserves between the respective periods, (2) the decreased costs on a unit-of-production basis associated with wells drilled in 2016, as compared to prior periods and (3) the decrease in unamortized property costs resulting from full-cost ceiling impairments in 2015 and the first two quarters of 2016. The increase in total proved oil and natural gas reserves was primarily attributable to Matador’s continued delineation and development of its acreage position in the Delaware Basin. Matador recorded a full-cost ceiling impairment of $158.6 million, exclusive of tax effect, at December 31, 2016, as reflected in the Company’s consolidated statement of operations for the year ended December 31, 2016. These full-cost ceiling impairment charges for the year ended December 31, 2016 were realized in the first two quarters of 2016. Since that time, oil and natural gas prices have improved and as a result, no full-cost ceiling impairment charges were recorded in the third and fourth quarters of 2016. General and administrative expenses on a unit-of-production basis increased 16% from $4.86 per BOE in the third quarter of 2016 to $5.65 per BOE in the fourth quarter of 2016, and increased 6% from $5.34 per BOE in the fourth quarter of 2015. This increase in G&A expenses was primarily attributable to increased payroll and other expenses associated with additional employees joining Matador to support the Company’s increased land, geoscience, drilling, completion, production, midstream, accounting and administrative functions as a result of the continued growth of the Company. These increases on a unit-of-production basis were partially offset by increases in oil and natural gas production between the respective periods, as highlighted previously. General and administrative expenses on a unit-of-production basis decreased 2% from $5.50 per BOE for the year ended December 31, 2015 to $5.41 per BOE for the year ended December 31, 2016. This decrease in G&A expenses on a unit-of-production basis was primarily attributable to the 12% increase in total equivalent oil production in 2016 as compared to 2015, which more than offset increases in G&A expenses associated with additional employees joining the Company and increased stock-based compensation expenses in 2016. The following table summarizes Matador’s estimated total proved oil and natural gas reserves at December 31, 2016, 2015 and 2014. Matador’s estimated total proved oil and natural gas reserves were 105.8 million BOE at December 31, 2016, consisting of 57.0 million barrels of oil and 292.6 billion cubic feet of natural gas, with a Standardized Measure of $575.0 million and a PV-10, a non-GAAP financial measure, of $581.5 million, as compared to estimated total proved oil and natural gas reserves of 85.1 million BOE at December 31, 2015, consisting of 45.6 million barrels of oil and 236.9 billion cubic feet of natural gas with a Standardized Measure of $529.2 million and a PV-10, a non-GAAP financial measure, of $541.6 million. Total proved reserves of 105.8 million BOE at December 31, 2016 represent a 24% year-over-year increase, as compared to 85.1 million at December 31, 2015, and a 54% increase, as compared to 68.7 million BOE at December 31, 2014. At December 31, 2016, Matador’s proved oil and natural gas reserves were 41% proved developed reserves, as compared to 40% and 45% at December 31, 2015 and 2014, respectively. Accounting for total oil equivalent production of 10.2 million BOE, Matador’s proved reserves grew by 30.8 million BOE in 2016, approximately three times its 2016 annual production. Further, Matador added 42.0 million BOE in proved reserves attributable to extensions and discoveries in 2016, just over four times its 2016 annual production of 10.2 million BOE. Matador incurred approximately 11.2 million BOE in net downward revisions to its proved reserves during 2016 primarily as a result of the reclassification of proved undeveloped reserves, primarily in the Eagle Ford and the Haynesville shales, to contingent resources solely due to the lower oil and natural gas prices used to estimate proved reserves at December 31, 2016, as compared to December 31, 2015. The Company anticipates that these contingent resources will be reclassified to proved undeveloped reserves in future periods should the oil and natural gas prices used to estimate proved reserves improve from the prices at December 31, 2016. Nevertheless, the Company’s proved reserves to production ratio at December 31, 2016 was 10.4, an increase of 11% from 9.4 at December 31, 2015. Proved oil reserves increased 25% to 57.0 million barrels at December 31, 2016, as compared to 45.6 million barrels at December 31, 2015, and increased 136% (2.4-fold), as compared to 24.2 million barrels at December 31, 2014. Accounting for Matador’s 2016 oil production of approximately 5.1 million barrels, Matador increased its proved oil reserves by 16.4 million barrels in 2016 or approximately 3.2 times its 2016 annual production, despite the decline in the oil price used to estimate proved oil reserves at December 31, 2016 of $39.25 per barrel, as compared to $46.79 per barrel at December 31, 2015. The increase in year-over-year proved oil reserves resulted from Matador’s ongoing delineation and development operations in the Delaware Basin, which offset declining production and reserves from the Eagle Ford and Haynesville shales where Matador has significantly reduced its operated activity since late 2014 and early 2015. Proved oil reserves comprised 54% of the Company’s total proved reserves at December 31, 2016, as compared to 54% and 35% at December 31, 2015 and 2014, respectively. Proved natural gas reserves increased 24% to 292.6 billion cubic feet at December 31, 2016, as compared to 236.9 billion cubic feet at December 31, 2015, despite the decline in natural gas price used to estimate proved natural gas reserves at December 31, 2016 of $2.48 per MMBtu, as compared to $2.59 per MMBtu at December 31, 2015. The increase in year-over-year natural gas reserves resulted from the Company’s ongoing delineation and development operations in the Delaware Basin. Proved natural gas reserves comprised 46% of the Company’s total proved reserves at December 31, 2016, as compared to 46% and 65% at December 31, 2015 and 2014, respectively. Matador’s proved oil and natural gas reserves attributable to the Delaware Basin increased 68% from 47.1 million BOE at December 31, 2015 to 79.4 million BOE at December 31, 2016. Matador’s Delaware Basin proved oil and natural gas reserves increased 49% and 107%, respectively, from 31.4 million barrels and 94.4 billion cubic feet at December 31, 2015 to 46.9 million barrels and 195.1 billion cubic feet at December 31, 2016. Matador’s Delaware Basin proved reserves comprised 75% of the Company’s total proved oil and natural gas reserves at December 31, 2016, including 82% of its proved oil reserves and 67% of its proved natural gas reserves. For a reconciliation of PV-10 (non-GAAP) to Standardized Measure (GAAP), please see “Supplemental Non-GAAP Financial Measures” below. Throughout 2016, Matador focused its efforts on the continued exploration, delineation and development of its Delaware Basin acreage in Loving County, Texas and Lea and Eddy Counties, New Mexico. Matador began the fourth quarter of 2016 operating three drilling rigs in the Delaware Basin as it had done throughout 2016. Matador contracted a fourth drilling rig in late August 2016 to drill its first salt water disposal well in the Rustler Breaks asset area. After this well was drilled, Matador moved this rig to its Wolf asset area to drill a third salt water disposal well there. Following the drilling of these two salt water disposal wells, Matador moved this rig back to its Rustler Breaks asset area in late November to drill oil and natural gas wells there. At December 31, 2016 and at February 22, 2017, Matador continues to operate four drilling rigs in the Delaware Basin, including two rigs in its Rustler Breaks asset area, one rig in its Wolf asset area and one rig in its Ranger/Arrowhead and Twin Lakes asset areas. At February 22, 2017, Matador intends to operate four rigs in these asset areas throughout the remainder of 2017. As announced on February 17, 2017, Matador expects to add a fifth drilling rig in the Delaware Basin beginning early in the second quarter. Thereafter, the Company expects this fifth rig to operate in the Rustler Breaks asset area throughout the remainder of 2017. During the fourth quarter of 2016, Matador completed and placed on production a total of 13 gross (6.6 net) wells in the Delaware Basin, including eight gross (6.3 net) operated wells and five gross (0.3 net) non-operated wells. Of the operated wells, Matador completed and placed on production two gross (1.8 net) wells in its Wolf asset area, three gross (2.3 net) wells in its Rustler Breaks asset area and three gross (2.1 net) wells in its Ranger asset area. During the year ended December 31, 2016, Matador completed and began producing oil and natural gas from 55 gross (37.0 net) wells in the Delaware Basin, including 38 gross (33.6 net) operated horizontal wells, two gross (2.0 net) operated vertical wells and 15 gross (1.4 net) non-operated horizontal wells. Matador (or the operator in the case of non-operated wells) completed and placed on production 18 gross (15.4 net) wells in the Wolf asset area, 29 gross (17.3 net) wells in the Rustler Breaks asset area, seven gross (3.4 net) wells in the Ranger and Arrowhead asset areas and one gross (1.0 net) well in the Twin Lakes asset area. Matador’s operations staff made significant improvements in drilling times, completion and stimulation practices and overall drilling and completion costs while achieving strong well results throughout 2016—in essence, drilling “better wells for less money.” Further, as both oil and natural gas prices have increased in recent months, the projected economic returns from these wells have improved significantly. New drilling assembly and bit technologies have resulted in an overall faster rate of penetration while drilling build sections, landing curves and drilling lateral sections. In the fourth quarter of 2016, Matador drilled its fastest Third Bone Spring well in the Ranger area, the Cimarron State 16-19S-34E RN #133H well (Cimarron State #133H), in 14.5 days from spud to total depth. Likewise, in the Rustler Breaks area, Matador drilled its fastest Wolfcamp B well, the Jimmy Kone 5-24S-28E RB #223H well (Jimmy Kone #223H), in 15.2 days from spud to total depth. These wells also set improved drilling cost benchmarks. Both the Cimarron State #133H well and the Jimmy Kone #223H well were completed during the first quarter of 2017. In addition, during 2016, Matador’s asset teams continued to identify and delineate new landing targets in the Bone Spring and Wolfcamp intervals throughout its Delaware Basin asset areas. The best examples of this during 2016 were the tests of the “Blair Shale,” the lowermost landing target in the Wolfcamp B interval in Matador’s Rustler Breaks asset area, many of which have resulted in 24-hour initial potential test results in excess of 2,000 BOE per day and estimated ultimate recoveries in excess of 1,000,000 BOE. During 2017, as noted above, Matador expects to operate as many as five rigs in the Delaware Basin. Matador projects that it will complete and place on production 88 gross (55.5 net) wells in the Delaware Basin, including 66 gross (52.3 net) operated wells and 22 gross (3.2 net) non-operated wells, the vast majority of which are expected to be horizontal wells. Additional details regarding the number of wells and the formations to be drilled and completed in each asset area are included in the discussions of each asset area below. Ranger Asset Area - Lea County, New Mexico and Arrowhead Asset Area - Eddy County, New Mexico During the fourth quarter of 2016, Matador completed and placed on production three gross (2.1 net) wells in the northern portion of its Ranger asset area. These three wells were the Mallon 27 Federal Com #1H, #2H and #3H wells, all of which were completed in the Third Bone Spring sand. These wells were the first operated wells that Matador had drilled on the acreage acquired in its 2015 merger with the Harvey E. Yates Company (“HEYCO”). For the year ended December 31, 2016, Matador completed and placed on production seven gross (3.4 net) wells in the Ranger and Arrowhead asset areas, including three gross (0.2 net) non-operated wells. The 24-hour initial potential test results from the Mallon wells are summarized in the table below. These results were previously released on February 2, 2017, but are included in this earnings release for completeness, as these well results were a key highlight of the fourth quarter of 2016. In aggregate, these three wells flowed 7,856 BOE per day, consisting of 7,172 barrels of oil per day and 4.1 million cubic feet of natural gas per day (91% oil). Each of the three Mallon wells are 7,300-foot horizontal laterals, and each has a completed lateral length of approximately 7,000 feet. Each well was completed with a 29-stage fracture treatment, including approximately 40 barrels of fluid and 3,000 pounds of primarily 20/40 white sand per completed lateral foot. These were the largest fracture treatments pumped to date by Matador in a Bone Spring completion. Since these initial potential tests, the wells were placed on production on smaller 22/64-inch chokes to allow Matador to increase the size of its production facilities on this lease and to allow the wells to continue to flow at higher surface pressures. Since that time, these wells have averaged producing between 900 and 1,200 barrels of oil per day on the reduced chokes. After only 2.5 months of production, these wells have each produced between 110,000 and 130,000 BOE, and the oil cut on each well has continued to be approximately 91%. Although it is very early in the life of these wells, Matador estimates that ultimate recoveries from each of these wells could be in excess of 1,000,000 BOE. Following the drilling of the Mallon wells, Matador drilled and completed the Airstrip State Com 31-18S-35E RN #201H (Airstrip #201H) well, which was completed and placed on production in late January 2017. This well was Matador’s first Wolfcamp A test in its Ranger asset area. Matador is pleased to announce today the early test results from this well, which is still continuing to clean up after its fracture treatment, including the 24-hour initial potential test result shown in the table below. The Airstrip #201H well had a completed lateral length of approximately 4,100 feet and was stimulated with approximately 40 barrels of fluid and 3,300 pounds of primarily 30/50 white sand per completed lateral foot. As shown in the table above, the Airstrip #201H well tested 926 BOE per day (97% oil) during a 24-hour initial potential test, consisting of 889 barrels of oil per day and 223 thousand cubic feet of natural gas per day. As expected, the Wolfcamp A in this area is not as highly over-pressured as in the Wolf and Rustler Breaks asset areas, but does have a much higher oil cut—in this case, testing 97% oil. Similar to many Bone Spring wells in the area, the higher oil cut and lower natural gas volumes necessitate the installation of artificial lift earlier in the life of these wells, and anticipating this need, Matador chose to begin lifting this well with an electrical submersible pump (“ESP”). In addition, the Airstrip #201H well is making much less water than Matador’s Wolfcamp A completions to the south. Matador is very pleased and encouraged by the results of its first Wolfcamp A test in the northern portion of its acreage. To the Company’s knowledge, the nearest horizontal test of the Wolfcamp A in the northern Delaware Basin is about 11 miles to the south, and the next closest horizontal test is about 29 miles to the southwest. Thus, the Airstrip #201H test marks a significant step-out from known Wolfcamp A horizontal production. In addition, early performance of this well is very similar to two of Matador’s early Second Bone Spring wells in the Ranger area, the Ranger 33 State Com #1H and the Pickard State #1H, which were also placed on artificial lift (in those cases, gas lift) shortly after completion. Both of those wells have performed very well, with the Ranger 33 State Com #1H having produced approximately 285,000 BOE (91% oil cut) in just over three years of production and the Pickard State #1H having also produced approximately 285,000 BOE (86% oil) in about 2.5 years of production. Matador will continue to monitor the early performance of the Airstrip #201H, but given the positive early performance, the Company is actively evaluating other locations for its next test of the Wolfcamp A, both the Wolfcamp A-XY and the Wolfcamp A-Lower intervals, across its northern Ranger and Arrowhead acreage position. At February 22, 2017, Matador plans to operate one rig in its northern Ranger/Arrowhead and Twin Lakes asset areas throughout 2017. Late in the first quarter of 2017, this rig will move north into Matador’s Twin Lakes asset area to drill the Company’s first Wolfcamp D test there. Matador expects to complete and place on production 14 gross (10.5 net) operated wells in its Ranger and Arrowhead asset areas in 2017, consisting primarily of Second and Third Bone Spring wells. Matador began operating a second drilling rig in its Rustler Breaks asset area late in the fourth quarter of 2016 and continues to operate two rigs in this area at February 22, 2017. During the fourth quarter of 2016, Matador completed and placed on production four gross (2.5 net) horizontal wells in the Rustler Breaks asset area, including three gross (2.4 net) operated wells and one gross (0.1 net) non-operated well. Of the three gross operated wells, one was a Wolfcamp A-XY completion and two were lower Wolfcamp B (Blair) completions. The one gross (0.1 net) non-operated well was also a Wolfcamp B (Blair) completion. For the year ended December 31, 2016, Matador completed and placed on production 29 gross (17.3 net) wells in the Rustler Breaks asset area, including 17 gross (15.1 net) operated horizontal wells, one gross (1.0 net) operated vertical well and 11 gross (1.2 net) non-operated horizontal wells. Matador is pleased to announce today the 24-hour initial potential test results from the three operated wells completed and placed on production in the Rustler Breaks asset area during the fourth quarter of 2016 and the 24-hour initial potential test result from the Tom Walters 12-23S-27E RB #203H well (Tom Walters #203H), which was completed and placed on production in early January 2017. These test results are summarized in the table below. Matador continues to be very pleased with its well results in the Rustler Breaks asset area, which consistently demonstrate the value of its Rustler Breaks acreage position. The 24-hour initial potential test result for the Dr. Scrivner Federal 01-24S-28E RB #208H well (Dr. Scrivner #208H) at 1,515 BOE per day (75% oil) is among the best test results reported for Wolfcamp A-XY completions in this area. Likewise, the 24-hour initial potential test results from the Dr. Scrivner Federal 01-24S-28E RB #228H (Dr. Scrivner #228H) and the Anne Com 15-24S-28E RB #221H (Anne Com #221H) wells are among the best results yet reported for Wolfcamp B (Blair) completions in this area. In fact, the Dr. Scrivner #228H well had the highest 24-hour initial potential test result of any well drilled and completed by Matador in the Rustler Breaks area to date. All three of these wells had completed lateral lengths of approximately 4,300 feet and were stimulated with 22 stages, pumping 40 barrels of fluid and approximately 3,000 pounds of primarily 30/50 white sand per completed lateral foot. Matador is especially pleased with the results of the Tom Walters #203H well, which was completed in the Wolfcamp A-XY and had a 24-hour initial potential test result of 1,554 BOE per day (74% oil); this is also among the best test results reported for Wolfcamp A-XY completions in this area. Of particular significance, the Tom Walters well is located in the far northwestern portion of Matador’s Rustler Breaks asset area and close to the previously completed Scott Walker 36-22S-27E RB #204H well (Scott Walker #204H). Upon its completion, the Scott Walker #204H well, also a Wolfcamp A-XY completion, tested 504 BOE per day (70% oil), much less than other Wolfcamp A-XY completions to the south and southeast in the Rustler Breaks asset area. The Scott Walker #204H had a completed lateral length of approximately 4,100 feet, while the completed lateral length in the Tom Walters #203H was approximately 4,600 feet. After the Scott Walker #204H well was completed and tested, Matador attributed the lower initial potential of that well, in part, to the smaller stimulation treatment pumped on the well, consisting of 14 stages, pumping 30 barrels of fluid and 2,000 pounds of primarily 30/50 white sand per completed lateral foot. The Tom Walters #203H well, by contrast, was stimulated with 24 stages, pumping 40 barrels of fluid and approximately 3,000 pounds of primarily 30/50 white sand per completed lateral foot. Matador believes that the 24-hour initial potential test results and early performance of the Tom Walters #203H well confirm that the Wolfcamp A-XY remains a highly prospective completion target in the northwest portion of its Rustler Breaks asset area. All of the Wolfcamp A-XY wells completed and placed on production at Rustler Breaks in 2016 were stimulated using the Company’s latest Generation 3 Wolfcamp stimulation design, consisting of approximately 40 barrels of fluid and 3,000 pounds of primarily 30/50 white sand per completed lateral foot. Similarly, Matador pumped this Generation 3 Wolfcamp treatment design on its Wolfcamp B (Blair) completions in the third and fourth quarters of 2016. Prior to this, most of the Company’s Wolfcamp A and B completions used approximately 30 to 40 barrels of fluid and 2,000 pounds of primarily 30/50 white sand per completed lateral foot. Matador also continued to pump diverting agents in most of its stimulation treatments during the third and fourth quarters of 2016. As a result of the success of its recent wells, the Company plans to continue using this Generation 3 stimulation design, including the use of diverting agents, in its upcoming Wolfcamp wells in the Rustler Breaks asset area. As noted earlier, Matador is operating two drilling rigs in its Rustler Breaks asset area at February 22, 2017, and plans to begin operating a third drilling rig at Rustler Breaks early in the second quarter of 2017. As a result, Matador estimates that it will complete and place on production 52 gross (32.5 net) horizontal wells in the Rustler Breaks asset area during 2017, including 36 gross (29.7 net) operated wells and 16 gross (2.8 net) non-operated wells. Of the 36 gross (29.7 net) operated wells to be completed and placed on production in its Rustler Breaks asset area in 2017, Matador estimates that 20 gross (16.1 net) wells will be Wolfcamp A-XY completions, 14 gross (12.0 net) wells will be Wolfcamp B completions and two gross (1.6 net) wells will be Second Bone Spring completions. Matador operated one drilling rig in its Wolf and Jackson Trust asset areas during the fourth quarter of 2016 and continues to operate one rig in its Wolf asset area at February 22, 2017. During the fourth quarter of 2016, Matador completed and placed on production two gross (1.8 net) operated horizontal wells in its Wolf asset area. One of these wells was a Wolfcamp A-Lower completion (below the Wolfcamp X and Y intervals) and one was a Second Bone Spring completion. For the year ended December 31, 2016, Matador completed and placed on production 18 gross (15.4 net) horizontal wells in the Wolf asset area, including 17 gross (15.4 net) operated horizontal wells and one gross non-operated horizontal well with a working interest of less than 1%. Matador is pleased to announce today the 24-hour initial potential test results from both of the wells completed and placed on production in the Wolf asset area during the fourth quarter of 2016, as well as two additional wells—one in the Wolf asset area and another in the Jackson Trust asset area that were completed and placed on production in early January 2017. These test results are summarized in the table below. The test result from the Totum E 18-TTT-C24 NL #211H (Totum #211H), a Wolfcamp A-Lower completion in the Jackson Trust asset area was particularly significant. The 24-hour initial potential test of 2,247 BOE per day (72% oil) on the Totum #211H well was the highest 24-hour initial potential test for any Wolfcamp A-Lower well completed by Matador in either its Wolf or Jackson Trust asset areas. This test result was approximately three times better and at a much higher flowing casing pressure than the 24-hour initial potential test result achieved on Matador’s first Wolfcamp A-Lower test in the Jackson Trust asset area, the Jackson Trust C 12-TTT-C24 NL #221H well (Jackson Trust #221H). Matador attributes this significant improvement in well performance in the Totum #211H to both the selection of an improved landing target in the Wolfcamp A-Lower and an improved stimulation design. In the Totum #211H, Matador’s geoscience team relied on additional well log and seismic data to identify a landing target approximately 120 feet lower in the Wolfcamp A-Lower interval that appeared to have better reservoir quality than the landing target drilled in the Jackson Trust #211H. Following completion, this well flowed at much higher rates and at a much higher flowing casing pressure as noted above, suggesting a higher quality reservoir interval was contacted. Second, Matador completed this well using a different stimulation design for the Wolfcamp A-Lower. The Totum #211H was stimulated with 36 fracture stages, including approximately 50 barrels of slickwater and 1,900 pounds of primarily 40/70 mesh white sand per completed lateral foot. In addition, the fracture cluster spacing was reduced to 20 feet on this well. This treatment design was intended to create more hydraulic fractures near the wellbore and to reduce the height of the fractures created—i.e., to create a higher density of induced fractures near the wellbore. Matador plans to continue to develop and improve its fracture treatment designs throughout the various Wolfcamp completion targets in each of its asset areas. The test result from the Wolfcamp A-Lower completion (below the Wolfcamp X and Y intervals) in the Barnett 90-TTT-B01 #217H well (Barnett #217H) in the Wolf asset area was consistent with the results observed from the Dick Jay 92-TTT-B33 WF #212H well (Dick Jay #212H) drilled and completed in the Wolfcamp A-Lower earlier in 2016. Early production performance from both of these wells exceeds that of Wolfcamp A-Lower wells that Matador completed and placed on production in 2015. The Dick Jay #212H well is tracking the Company’s 700,000 BOE type curve for Wolfcamp A-Lower wells in the Wolf asset area, and early performance from the Barnett #217H well is tracking above that of the Dick Jay #212H well. The Barnett #217H well was stimulated with a fracture treatment similar to that pumped on the Totum #211H. The results from the Barnett 90-TTT-B01 WF #124H well (Barnett #124H) and the Dick Jay 92-TTT-B01 WF #121H, both Second Bone Spring completions, continued the trend of significant improvement in Second Bone Spring well results in the Wolf asset area in 2016. Overall, Matador completed and placed on production six gross Second Bone Spring wells in 2016 and early 2017, and based on their performance to date, the Company estimates an average ultimate recovery of approximately 650,000 BOE from each of these wells, significantly better than for the two Second Bone Spring wells completed and placed on production in the Wolf asset area in 2015. Matador attributes the improvement in well performance and estimated ultimate recovery from these Second Bone Spring wells primarily to the increased stimulation treatments pumped on these wells. The Second Bone Spring wells in 2016 were completed with approximately 40 barrels of fluid and 2,000 pounds of sand of completed lateral foot, as compared to 20 barrels of fluid and about 1,300 pounds of sand per completed lateral foot in Matador’s Second Bone Spring tests in 2015. In addition, Matador has begun to test artificial lift in several of these wells as the flowing surface pressures decline. Early results are encouraging and suggest that the estimated ultimate recoveries from several of these 2016 Second Bone Spring completions may continue to increase over time. As noted in its third quarter 2016 earnings release, while drilling the Barnett #217H well, Matador initially drilled a vertical pilot hole through the Wolfcamp B interval and took 630 feet of whole core in the Wolfcamp A-Lower and the Wolfcamp B formations. The Company also cut rotary sidewall cores and measured gas isotopes from the Avalon through the Wolfcamp B intervals. In addition, Matador ran a complete suite of openhole well logs from the Avalon through the Wolfcamp B formations. As a result of its review and interpretation of these well data, Matador has identified several new targets to test in the Wolf asset area, including portions of the Avalon and the Wolfcamp B. The Company expects to test both of these intervals in the second quarter of 2017. Matador plans to operate one rig in its Wolf and Jackson Trust asset areas throughout 2017. The Company estimates that it will complete and place on production 15 gross (11.1 net) operated horizontal wells in these asset areas in 2017. Matador estimates five gross (3.3 net) wells will be Wolfcamp A-XY completions, three gross (1.5 net) wells will be Wolfcamp A-Lower completions and five gross (4.3 net) wells will be Second Bone Spring completions. The Company is also planning one gross (1.0 net) test of the Avalon shale and one gross (1.0 net) test of the Wolfcamp B interval in the Wolf asset area in 2017. Matador expects to drill its first horizontal well testing the Wolfcamp D in its Twin Lakes asset area beginning late in the first quarter of 2017. This well will be completed and placed on production during the second quarter of 2017, and the Company anticipates having initial results to report from this well sometime this summer. As discussed above, on February 17, 2017, Matador announced the formation of San Mateo, a strategic joint venture between Matador and a subsidiary of Five Point, an experienced midstream capital partner, to operate and expand Matador’s midstream assets in the Delaware Basin in Eddy County, New Mexico and Loving County, Texas. Matador received $171.5 million in connection with the formation of the Joint Venture and may earn up to an additional $73.5 million in performance incentives over the next five years. Matador continues to operate the Midstream Assets and retains operational control of the Joint Venture. Matador and Five Point own 51% and 49% of the Joint Venture, respectively. The implied value of the Midstream Assets and the associated gathering, processing and disposal agreements entered into with Matador was approximately $500 million at closing, after taking into account the performance initiatives. San Mateo will continue to provide firm capacity service to Matador at market rates, while also being a leading service provider to third party customers in and around Matador’s Rustler Breaks and Wolf asset areas. San Mateo expects to expand the Black River cryogenic natural gas processing plant in Matador’s Rustler Breaks asset area from its current inlet capacity of 60 million cubic feet of natural gas per day to as much as 260 million cubic feet of natural gas per day. This expansion is expected to begin immediately and may be operational as early as the first quarter of 2018; it will serve both Matador and third party customers. San Mateo also plans to accelerate the build-out of oil, natural gas and water gathering lines throughout both the Rustler Breaks and Wolf asset areas, as well as to drill and complete at least one additional salt water disposal well in the Rustler Breaks asset area in 2017. Included in the Midstream Assets contributed by the Joint Venture are the following: Matador retained all of its ownership in its midstream assets in South Texas and North Louisiana, which are not part of the Joint Venture. At formation, the parties to the Joint Venture committed to contribute up to an additional $150 million in aggregate capital to expand the Joint Venture’s midstream operations and asset base. At February 22, 2017, Matador estimates that San Mateo will incur capital expenditures of approximately $110 to $125 million in 2017, with Matador’s share being approximately $56 to $64 million. The majority of these 2017 capital expenditures will be incurred for the expansion of the Black River cryogenic processing plant, the build-out of additional oil, natural gas and water gathering systems in the Rustler Breaks and Wolf asset areas and the development of additional salt water disposal capacity in the Rustler Breaks asset area. At February 22, 2017, Matador held approximately 177,600 gross (101,400 net) acres in the Permian Basin, primarily in the Delaware Basin in Lea and Eddy Counties, New Mexico and Loving County, Texas shown in the table below. During 2016, Matador acquired additional mineral ownership throughout the Delaware Basin. At February 22, 2017, Matador’s total mineral ownership is approximately 7,900 gross (2,800 net) mineral acres, and approximately 46% of these mineral acres were being leased by Matador, 21% were leased to other operators and 33% were unleased. From January 1 through February 22, 2017, Matador acquired approximately 13,900 gross (8,200 net) leasehold acres and approximately 1,000 BOE per day of related production from various lessors and other operators, mostly in and around its existing acreage in the Delaware Basin. Some of this acreage, and a portion of the production, includes properties identified at the time of Matador’s December 2016 equity and debt offerings. These transactions were pending at the time of those offerings and closed subsequent to December 31, 2016. Matador has incurred capital expenditures of approximately $111 million since January 1, 2017 to acquire these leasehold interests and the related production. At December 31, 2016, the borrowing base under the Company’s revolving credit facility was $400.0 million, based on the lenders’ review of Matador’s proved oil and natural gas reserves as of June 30, 2016. At December 31, 2016, Matador had cash on hand totaling approximately $212.9 million and no outstanding borrowings under the Company’s revolving credit facility and approximately $0.8 million in outstanding letters of credit. At February 22, 2017, the Company continues to have no outstanding borrowings and approximately $0.8 million in outstanding letters of credit under its revolving credit facility. As provided in its 2017 guidance estimates announced today, Matador estimates that it will incur capital expenditures of (1) $370 to $390 million for drilling, completing and equipping operated and non-operated wells primarily in the Delaware Basin and (2) $56 to $64 million for its share of various midstream projects undertaken by San Mateo, representing 51% of an estimated 2017 joint venture capital expenditure budget of $110 to $125 million, as described in the Midstream Update of this earnings release. Matador expects to operate four drilling rigs in the Delaware Basin in the first quarter of 2017, adding a fifth drilling rig in the Delaware Basin in the second quarter of 2017. The Company’s estimated 2017 capital expenditures for drilling, completing and equipping its wells account for a 10 to 15% increase in expected well costs attributable to higher anticipated oilfield service costs and in particular, stimulation costs, in 2017 as compared to 2016. Matador has allocated substantially all of its estimated 2017 capital expenditures to the Delaware Basin, with the exception of amounts allocated to limited operations in the Eagle Ford and Haynesville shales to maintain and extend leases and to participate in those non-operated well opportunities where, in both cases, economic returns are expected to be comparable to Matador’s Delaware Basin wells. Accordingly, Matador projects that it will drill and place on production 91 gross (56.2 net) wells in 2017, including 66 gross (52.3 net) operated wells and including 25 gross (3.9 net) non-operated wells, almost all in the Delaware Basin. Matador intends to continue acquiring acreage and mineral interests, principally in the Delaware Basin, during 2017. These expenditures are opportunity-specific and per-acre prices can vary significantly based on the prospect. As a result, it is difficult to estimate these 2017 capital expenditures with any degree of certainty; therefore, Matador has not provided estimated capital expenditures related to acreage and mineral acquisitions for 2017. Matador will provide periodic updates regarding completed acquisitions. From time to time, Matador uses derivative financial instruments to mitigate its exposure to commodity price risk associated with oil, natural gas and natural gas liquids prices and to protect its cash flows and borrowing capacity. At February 22, 2017, Matador has the following hedges in place, in the form of costless collars, for the remainder of 2017. Matador estimates that it has approximately 70% of its anticipated oil production and approximately 50% of its anticipated natural gas production hedged for the remainder of 2017 based on the midpoint of its production guidance as provided in this earnings release. At February 22, 2017, Matador has the following hedges in place, in the form of costless collars, for 2018. The Company will host a live conference call on Thursday, February 23, 2017, at 9:00 a.m. Central Time to discuss its fourth quarter and full year 2016 financial and operational results. To access the live conference call, domestic participants should dial (855) 875-8781 and international participants should dial (720) 634-2925. The participant passcode is 56817823. The live conference call will also be available through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. The replay for the event will also be available on the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab through Friday, March 31, 2017. Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations primarily through its midstream joint venture, San Mateo Midstream, LLC, in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the following risks related to financial and operational performance: general economic conditions; the Company’s ability to execute its business plan, including whether its drilling program is successful; the ability of the Company’s midstream joint venture to expand the Black River cryogenic processing plant, the timing of such expansion and the operating results thereof; the timing and operating results of the buildout by the Company’s midstream joint venture of oil, natural gas and water gathering systems and the drilling of any additional salt water disposal wells; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; and other important factors which could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. This press release includes the non-GAAP financial measure of Adjusted EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. “GAAP” means Generally Accepted Accounting Principles in the United States of America. The Company believes Adjusted EBITDA helps it evaluate its operating performance and compare its results of operations from period to period without regard to its financing methods or capital structure. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized derivative gains and losses, certain other non-cash items and non-cash stock-based compensation expense, and net gain or loss on asset sales and inventory impairment. Adjusted EBITDA is not a measure of net income (loss) or net cash provided by operating activities as determined by GAAP. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or net cash provided by operating activities as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components of understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure. Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents the calculation of Adjusted EBITDA and the reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively, that are of a historical nature. Where references are pro forma, forward-looking, preliminary or prospective in nature, and not based on historical fact, the table does not provide a reconciliation. The Company could not provide such reconciliation without undue hardship because such Adjusted EBITDA numbers are estimations, approximations and/or ranges. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items, including future income taxes, full-cost ceiling impairments, unrealized gains or losses on derivatives and gains or losses on asset sales and inventory impairments. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results. This press release includes the non-GAAP financial measures of adjusted net income (loss) and adjusted earnings (loss) per diluted common share. These non-GAAP items are measured as net income (loss) attributable to Matador Resources Company shareholders, adjusted for dollar and per share impact of certain items, including unrealized gains or losses on derivatives, the impact of full cost-ceiling impairment charges, if any, and nonrecurring gains or losses or transaction costs for certain acquisitions and divestitures along with the related tax effects for all periods. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP financial measures. Additionally, these non-GAAP financial measures may be different than similar measures used by other companies. The Company believes the presentation of adjusted net income (loss) and adjusted earnings (loss) per diluted common share provides useful information to investors, as it provides them an additional relevant comparison of the Company’s performance across periods and to the performance of the Company’s peers. In addition, these non-GAAP financial measures reflect adjustments for items of income and expense that are often excluded by securities analysts and other users of the Company’s financial statements in evaluating the Company’s performance. The table below reconciles adjusted net income (loss) and adjusted earnings (loss) per diluted common share to their most directly comparable GAAP measure of net income (loss) attributable to Matador Resources Company shareholders. PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. PV-10 is not an estimate of the fair market value of the Company’s properties. Matador and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies and of the potential return on investment related to the companies’ properties without regard to the specific tax characteristics of such entities. PV-10 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by reducing PV-10 by the discounted future income taxes associated with such reserves.


HOUSTON, Feb. 17, 2017 /PRNewswire/ -- A wholly owned subsidiary of Five Point Capital Partners LLC ("Five Point") and Matador Resources Company (NYSE: MTDR)  ("Matador") today announced the formation of San Mateo Midstream, LLC ("San Mateo" or the "JV") to own, operate and expand natural...


DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today announced the formation of San Mateo Midstream, LLC (“San Mateo” or the “joint venture”), a strategic joint venture between a wholly-owned subsidiary of Matador and a subsidiary of Five Point Capital Partners LLC (“Five Point”) to operate and expand Matador’s midstream assets in the Delaware Basin in Eddy County, New Mexico and Loving County, Texas (the “Midstream Assets”). Matador received $171.5 million in connection with the formation of the joint venture and may earn up to an additional $73.5 million in deferred performance incentives over the next five years. Matador will continue to operate the Midstream Assets and control the joint venture. At formation, Matador and Five Point owned 51% and 49% of the joint venture, respectively. The implied value of the Midstream Assets and the associated gathering, processing and disposal agreements entered into with Matador, as described below, was approximately $500 million at closing after taking into account the performance incentives. Five Point provided initial cash consideration of $176.4 million to the joint venture in exchange for its 49% interest. Approximately $171.5 million of this cash contribution by Five Point was distributed by the joint venture to Matador as a special distribution. Matador contributed the Midstream Assets and $5.1 million in cash to the joint venture in exchange for its 51% interest. The parties to the joint venture also committed to spend up to an additional $150 million in the aggregate to expand the joint venture’s midstream operations and asset base. San Mateo will continue to provide firm capacity service to Matador at market rates while also being a leading service provider to third party customers in and around Matador’s Rustler Breaks and Wolf asset areas. San Mateo expects to expand the Black River Cryogenic Processing Plant in Matador’s Rustler Breaks asset area from its current inlet capacity of 60 million cubic feet of natural gas per day to as much as 260 million cubic feet of natural gas per day. This expansion is expected to be operational as early as the first quarter of 2018 and serve both Matador and third party customers. San Mateo also plans to accelerate the buildout of oil, natural gas and water gathering lines throughout both the Rustler Breaks and Wolf asset areas, as well as to drill and complete at least one additional commercial salt water disposal well in the Rustler Breaks asset area in 2017. Included in the Midstream Assets contributed by Matador to the joint venture are the following: Matador retained its ownership in its midstream assets in South Texas and North Louisiana, which are not part of the joint venture. In connection with the joint venture, Matador dedicated its current and future leasehold interests in the Rustler Breaks and Wolf asset areas pursuant to 15-year, fixed-fee natural gas, oil and salt water gathering agreements and salt water disposal agreements. In addition, Matador dedicated its current and future leasehold interests in the Rustler Breaks asset area pursuant to a 15-year, fixed fee natural gas processing agreement. The joint venture will provide Matador with firm service under each of these agreements in exchange for certain minimum volume commitments. Matador also announced its plans to add a fifth operated drilling rig in the Delaware Basin beginning early in the second quarter of 2017. This rig will begin drilling in Matador’s Rustler Breaks asset area. Matador anticipates operating the five drilling rigs in the Delaware Basin throughout the remainder of 2017, including three rigs primarily in its Rustler Breaks asset area, one rig primarily in its Wolf asset area and one rig primarily in its Arrowhead and Ranger asset areas. Matador intends to provide its 2017 operational and financial outlook and initial 2017 guidance with its fourth quarter and full-year 2016 earnings release scheduled for Wednesday, February 22, 2017. Joseph Wm. Foran, Chairman and Chief Executive Officer of Matador, said, “We are very pleased and excited to announce this transaction with Five Point, which recognizes the significant value that Matador has already created with our midstream assets in the Delaware Basin. In addition, this joint venture gives us and our partners at Five Point the opportunity to continue to build out and expand these assets to further enhance their value for our respective stakeholders, while giving Matador the opportunity to retain operational control of these important assets, which provide critical support to our ongoing exploration and production operations in the Delaware Basin. San Mateo will not only provide midstream services for Matador but will also serve third party customers in and around our Rustler Breaks and Wolf asset areas. We had many opportunities to make a deal on these assets with a number of different companies over the past year, and we are confident that Five Point is the right joint venture partner for Matador. We look forward to working together closely with the Five Point team going forward. “When we kicked off our midstream initiatives in the Delaware Basin in 2014, our primary goals were to ensure firm takeaway and processing capacity for our production and to generate significant value for our shareholders. Through the strong execution of our midstream team, combined with the success of our drilling efforts in both the Rustler Breaks and Wolf asset areas, we have achieved these goals. The Board and I congratulate our midstream team for the value it has created thus far, and we look forward to supporting this new joint venture as it continues to expand our midstream operations and create future value.” David Capobianco, CEO and Managing Partner of Five Point, said, “Our joint venture with Matador perfectly aligns with Five Point’s strategy of proactively identifying industry leading management teams to partner with to build out world-class midstream infrastructure companies. The joint venture will build oil, NGL, gas and water infrastructure to support the needs of Matador, as our anchor customer, as well as third party producers in the region who seek infrastructure solutions. We firmly believe that the joint venture will create significant value, as the Delaware is one of the most promising producing basins in North America, yet currently lacks sufficient permanent 'in-basin' midstream infrastructure.” Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Matador also conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com. Five Point Capital Partners is a private equity firm focused on midstream energy infrastructure and energy sector investments across North America. Five Point’s investment strategy is to partner with, develop and support strong management teams through buyouts and growth capital investments within the midstream energy sector. Based in Houston, Texas, Five Point is currently investing from Five Point Capital Midstream Fund II L.P. and manages more than $600 million of capital. For more information, please visit www.fivepointcp.com. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the following risks related to financial and operational performance: general economic conditions; the Company’s ability to execute its business plan, including whether its drilling program is successful; the joint venture’s ability to expand the Black River Processing Plant, the timing of such expansion and the operating results thereof; the timing and operating results of the buildout by the joint venture of oil, natural gas and water gathering lines and the drilling of an additional salt water disposal well; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; and other important factors which could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (the “SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.


News Article | February 21, 2017
Site: www.businesswire.com

DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today announced the dates for its upcoming 2017 Analyst Day and 2017 Annual Meeting of Shareholders, both to be held in Dallas, Texas. Matador will hold its 2017 Analyst Day on Thursday, March 23, 2017 beginning at 9:00 a.m. Central Daylight Time in the Pegasus I and II meeting rooms at the Tower Club Dallas, located on the 48th floor of Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75201. During its Analyst Day presentation, Matador plans to provide additional details regarding its 2017 operational plans, capital budget and forecasts and to provide an update on its ongoing operations and continued improvements in drilling, completion and production techniques, as well as its current understanding of and outlook for each of its primary asset areas in the Delaware Basin. The presentation will conclude with a question and answer session for those in attendance. A continental breakfast will be provided beginning at 8:00 a.m. Central Daylight Time; following the presentation, lunch will also be provided. The Company has limited space to attend this event in Dallas and reservations will be required. All inquiries to attend in person should be directed to Mac Schmitz at mschmitz@matadorresources.com. Individuals who are unable to attend in person can participate in the live conference call or virtual webcast of the event. To access the Analyst Day conference call in a listen-only mode, domestic participants should dial (855) 875-8781 and international participants should dial (720) 634-2925. The participant passcode is 57940638. To access the virtual webcast, participants should use the following link: http://edge.media-server.com/m/p/endibbxh. All details can be accessed through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. A replay of the Analyst Day conference call will be made available through April 30, 2017 via webcast. A link to the replay webcast will be available through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. A copy of the Company’s Analyst Day presentation will be available prior to the event through the Company’s website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab. Matador will hold its 2017 Annual Meeting of Shareholders on Thursday, June 1, 2017 beginning at 9:30 a.m. Central Daylight Time. The Annual Meeting will be held in the Dallas Ballroom of the Westin Galleria hotel, located at 13340 Dallas Parkway, Dallas, Texas 75240. A continental breakfast will be provided beginning at 8:30 a.m. Central Daylight Time to provide shareholders with the opportunity to have a social time with directors, management and staff prior to the meeting. The Annual Meeting will also be webcast. Participation details for the live webcast will be provided closer to the meeting date and will also be located on the Events page of the Investors section of Matador’s website at www.matadorresources.com. Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Matador also conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. For more information, visit Matador Resources Company at www.matadorresources.com.


News Article | December 5, 2016
Site: www.businesswire.com

DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador”) announced today that it has commenced an underwritten public offering of 5,000,000 shares of its common stock. Matador intends to use the net proceeds from this offering to fund the aggregate purchase price for approximately 4,600 net leasehold acres and estimated current net production of approximately 1,150 barrels of oil equivalent per day from wells producing on this acreage in Eddy and Lea Counties, New Mexico as well as approximately 475 net mineral acres in Eddy and Lea Counties, New Mexico, to fund the capital expenditures for a number of midstream initiatives in the Delaware Basin that are either in progress or that we expect to begin by the end of the first quarter of 2017, to repay outstanding borrowings under our revolving credit facility and for general corporate purposes, including capital expenditures associated with the addition of a fourth drilling rig. BofA Merrill Lynch is acting as book-running manager for the offering. The underwriters may offer the shares of Matador’s common stock from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. When available, copies of the preliminary prospectus supplement, prospectus supplement and accompanying base prospectus relating to the offering may be obtained free of charge on the Securities and Exchange Commission’s website at www.sec.gov or by sending a request to: The shares of common stock will be offered and sold pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering is being made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”). Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, Matador conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the following risks related to financial and operational performance: general economic conditions; Matador’s ability to execute its business plan, including whether its drilling program is successful; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; its ability to integrate acquisitions, including the merger with Harvey E. Yates Company; its ability to make other acquisitions on economically acceptable terms; availability of sufficient capital to execute its business plan, including from future cash flows, increases in its borrowing base and otherwise; weather and environmental conditions; and other important factors which could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador's filings with the Securities and Exchange Commission (the “SEC”), including the “Risk Factors” section of Matador's most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

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