Matador Resources Company

Good morning, ladies and gentlemen. Welcome to the second quarter 2023 Matador Resources Company earnings conference call. My name is Livia, and I'll be serving as the operator for today. At this time, all participants are on a listen-only mode. We will facilitate a question and answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Max Schmitz, Vice President of Resolations for Matador. Mr. Schmitz, you may proceed.

Thank you, Olivia. Good morning, everyone, and thank you for joining us for Matador's second quarter 2023 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. In addition to our earnings press release issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with the second quarter 2023 earnings release under the Investor Relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our founder, chairman, and CEO. Joe?

Thank you, Max. And welcome to the call today. to all out there and tell you how much we appreciate y'all taking the time to call in and listen and we'll provide you with the opportunity to ask questions. I'd simply like to begin with the simple fact that Matador is in very good health and we feel we have a very good plan that is underway and producing favorable In particular, I'd like to emphasize that it's pretty simple math. We are expecting 40% growth through 2023. And how do we get to that? We began the year at 101,000 barrels of oil or gas equivalent. and will end the year at over 140,000 barrels of oil or gas equivalent per day. In addition, we have added significantly 98 million barrels of oil or gas equivalent just since the end of last year. So for the first six months of this, where we are now, it's 98 million barrels, which is a far better indicator of our performance and our outlook than a 1% or 2% difference in production expectancy in the third quarter. Now, the reason, just to clarify further and put things into context, I want to talk about the production and what you're probably not aware of, That production difference is really related primarily to three different incidents. First, as we are upgrading the advanced facilities to make them more efficient, we've had to shut in those facilities, which is approximately 1,500 barrels of oil or gas equivalent. Second, we've had to shut in our state line production. due to offset fracks from the other operators adjoining us, which accounts for 1,150 barrels of oil or gas equivalent. And third, the Nina Quartel was forced to be shut in because the midstream company had a force majeure. There was a fire, and so we all got shut in. We had no control. over that, and that was 850 barrels. So total, that's 3,500 barrels a day. But again, in my view, it's far more significant that we're adding 98 million barrels of oil or gas equivalent than having 3,500 barrels that were shut in that made about 1% difference in the production rates. Now, going into the third quarter, The outlook is very strong, and you can continue to see us add to production. And then you look into next year, we're growing more confident every day that we meet the mark that we set up there of 150,000 barrels of oil or gas equivalent. And so when you look at real value, It's those kind of rates and those kind of outlook and those kind of growth that we believe makes the most difference, and we hope you all take that into account in making your investment decisions. The other thing is that I think you've heard me say this before, but our strategic plan for the year was to increase production and, secondly, is to reduce debt, and third, to reduce the cost of drilling and operations, and we're doing that. That's playing in the numbers that we presented to you. We're achieving that. Production's up, the debt is down by 140 million, a significant amount during the short term that we've added advance, and finally, you know, that we've gotten the operating expenses down, and the drilling costs appear to have peaked, and we'll do better in the third quarter, confident, than we did in the second quarter. So we think the outlook is very strong. Those are our reasons for thinking that.