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spk01: Good morning, ladies and gentlemen. Welcome to the fourth quarter and full year, 2023, MetaDOR Resources Company Earnings Conference Call. My name is Tanya, and I'll be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question and answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes, 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. Mack Schmidt, Vice President, Investor Relations for MetaDOR. Mr. Schmidt may begin.
spk05: Thank you, Tanya, and good morning, everyone, and thank you for joining us for MetaDOR's fourth quarter and full year, 2023, Earnings Conference Call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by MetaDOR 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 issue yesterday, I would like to remind everybody that you can find a slide presentation in connection with the fourth quarter and full year, 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?
spk18: Thank you, Mac. And thank you all for taking the time to listen in. This has been, and last year was a very important year for us and this year has taken on growing importance too. The first thing that I'd like to mention is simply that it's been a remarkable year in that production is up, revenues are up, lease acreage is up 18%, inventory of course is up, and our dividends are
spk19: up.
spk18: While costs are down, including LOE is down, drilling costs are down, G&A is down, and the debt is down. So that's the big picture. Now, but we're trying to improve around all the edges on that but that's the basic story. Things are headed in the right avenue. The second thing I'd just like to point out that we've absorbed the advanced acreage and acquisition that's the largest to date and it's integrated very well. We owe a shout out to the professionalism. The AmeriDev people were very professional in the handoff. It went very smoothly and we're delighted by how efficient and how the production and the ROC have exceeded expectations. So thanks to them, we're trying to put those assets to full work and you'll be getting a report on that. And those were two of the main points that I wanted to get across to start the conversation and now we're ready for your questions.
spk01: Certainly. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question and one follow-up. Again, we ask that you please limit yourself to one question and one follow-up until all have had a chance to ask a question, after which we will welcome additional questions from you. First question is from Scott Hanold of RBC Capital Markets. And Scott,
spk09: you're going into
spk01: the event.
spk09: Yep, hey, can you hear me guys?
spk10: Sure.
spk09: Hi Scott. Good morning. You know, hey, up in the northern part of the Delaware, I mean, midstream constraints has been an industry issue. You guys alluded to some third-party tightness. Could you give a little more color on what that is and how much it impacts you in your solutions going forward?
spk18: Well, Scott, that's a real good question. Now I'll start it off and others around the table can fill in. But constraints is probably not the best word for it. It's more about maintenance that the older systems, you know, they're gonna have a leak here or there, there's gonna be some part of the equipment that needs to be attended to. And they have every reason to get it repaired as quickly as they can because they're not receiving revenues while it's down for maintenance. And of course, we're eager for them to, you know, to get it repaired as quickly, but that's just part of the, you know, part of the business and operations that they're gonna have a few more. But we appreciate the way they've gotten after it. We've appreciated their communications. We've been fortunate on our part of our midstream system we have not been down, but of course, our equipment is out of the later vintage. So everybody's working on the problem and it isn't a matter of well productivity. It's just these things go down, they need to be attended to. But we have fairly limited exposure there, but it has had the effect of about 5,500 barrels a day for this month. When you put that in perspective of the whole year, this is one quarter that we're experiencing it. And if you put in the whole year, you're talking about maybe 1% of our expected annual production. And we think we'll make that up in the quarters to come fairly easily. We, you know, we haven't taken into account any acquisitions in our projected production, or very little. So you have that upside and you have the other efficiencies that our production group seems to come up with each year.
spk03: And hey, Scott, this is Glenn. I just pile on to what Joe was saying and just the temporary nature of these, this reduction in production for Q1. We do feel very confident that the issues will be resolved by the end of this quarter and we'll be, you know, setting ourselves up very nicely for the rest of the year. I do wanna highlight, you know, that the connectors between the PRONTO system and the advanced properties is very well underway. We have the permits in the right of way and the construction is very well underway there. And same on the PRONTO to the San Mateo connector. And we did highlight in the release, but just to say that, you know, the uptime that we experienced with San Mateo and PRONTO is, we feel second to none and that, you know, that communication that goes on between the teams is daily and we have a lot of visibility into the operations both on the maintenance side and what our development plans are. And those two, you know, really three businesses do go very well hand in hand with each other,
spk09: so. Got it, appreciate the caller. And as my follow up question, you know, you've had the advanced wells online for, you know, probably getting close to, you know, six months now. Can you give us a sense of, you know, how those wells are performing relative to your expectation and with the next batch of advanced wells, which I think are the Dagger wells, remind us like in any differences we should expect there and if you had any color on, you know, the timing within the second quarter, you do expect to bring those on? Sure,
spk06: Scott,
spk09: this
spk06: is Tom Lawson. The first part of your question regarding the 21 Margarita wells that we brought online back in August of 2023, we've been very pleased with those results. Just as we've always said, those wells would come online with very high oil cuts and I think we've certainly gotten that at average oil cuts of over 84%. They've gone very smoothly into integrating with the production facility teams and those wells are off to a great start. The next wells we've got, the Dagger Lake South wells, as we said in the slide deck on page 11, those wells are very close to the Margarita wells with very similar rock quality, gonna have very high oil cuts just like the Margarita's and those wells will come online in the second quarter of 2024. Similar to how we brought the Margarita's online in a staggered fashion, it's still a very big project for us. Those wells are a mile and a half laterals as opposed to the 2.25 mile long Margarita's, but still at a very high working interest. I believe it's 21 growth and about 19 net wells and we're feeling very strong about those results and
spk08: I
spk06: can't wait to get them online soon.
spk09: Appreciate that, thank you.
spk01: In one moment for our next question. And our next question will be coming from Neil Dingman of Truist. Neil, your line is open.
spk10: Sorry guys, I think I was on mute. Nice quarter, my question is around your regional focus and I'm just wondering, could you specifically talk about, it seemed like that -A-Lee area, you had very strong activity. I'm just wondering in that, is that gonna be the focus of this area and could you talk about how this gray area sort of compares to that very, very strong Rodney Robinson state line area?
spk18: Neil, if you could repeat your question, you cut out in the middle of it. So if you'd restate the question, I'd feel better than trying to guess.
spk10: Joe, what I'm getting at is specifically, you suggest that 24-L production is growing faster, boosted I think by that Northern Lee County activity and I'm just wondering, can I assume that post the natural gas connection, that much of the Vichars activity will be in that Northern Lee area? I'm just wondering then, how do you all think this Northern Lee area compares to that very strong state line of Rodney Robinson?
spk06: Hey Neil, this is Tom Elston. I'll take the first part of that and then Ned or Glenn may wanna chime in as well. But as we've kind of talked for quite some time, the bulk of this kind of advanced acreage that's in the kind of Lee County area is sandwiched between the Rodney Robinson acreage to the South and some of the Mallin acreage to the North and East. We've been very pleased with the results, not just from those two tracks, but also from the other properties that have been drilling in that same area. The oil cuts on all of those are very high and they're not exactly the same amongst all areas, but very strong oil cuts and we expect to continue to focus there. I will highlight that this is one of the areas where we've been very happy with the third bone spring carbonate interval, where we highlighted that one of our third bone spring carbonate wells had IP'd at approximately 2,600 DOE per day and I believe at about 86% oil. That's the zone that we added to our inventory over the last year and also, we've also added the second bone spring carbonate to our inventory this year based on the strength of several wells drilled in and around that area. We have about 19 wells that we have an interest in that help kind of dilinate that zone for us. We've always been proud of that ranger area and also kind of the Antelope Ridge area, but I would highlight that all of our assets are contributing all around the basin and even we brought on line 17 wells in the Arrowhead Acid area in the last quarter that we're very proud of and we're also connected to the San Mateo system and also located generally speaking where that pronto San Mateo connector line is. Hopefully that helps.
spk18: You know, I think, Neil, a good point at this time since come up is we got some questions last night from people asking about the connector lines, would they be on or not? And I wanna just say again for the record that we have a very high confidence level that they'll be on in the next quarter. Glenn, do you wanna elaborate?
spk03: Yeah, just as said and Joe said, we're very confident that those will be complete by the end of the first quarter and we'll be ready to go there and another advantage to that system is just by tying those two together is really taking advantage of all 520 million cubic feet a day of processing and gathering. So we're excited, it's getting put in the ground right now and excited to put them in service.
spk18: Well, all the permits are taken, all the surface use agreements are done, all the paperwork's done, they're out there working on it, two crews. So we're in control of our fate, you know, it's just continuing. They've already done a substantial amount of the work. So again, we have a high degree it'll be finished in the same way with the other connector that's coming together nicely. And again, we'll have, if we need to, to bring it to expedite matters, we'll have a couple of extra crews. So they won't be waiting on us.
spk03: Now that's exactly right. Go ahead, Gov. At this point, it's on us and we're very good at building pipelines.
spk10: That's fantastic details. And guys, my second question is on land acquisition. Specifically, you all continue to be highly successful just building on assets like the, I think you mentioned about the, besides the assets that add about a thousand .W.E. per day that came to the latest editions. I'm just wondering, will this continue to be a priority going forward and you see these opportunities?
spk18: Yeah, Neil, thank you for asking that question is yes. The answer is yes. Last year, of course, advance was, you know, our biggest deal ever and it's drawn a lot of attention. But our land group, our business development group did another 200 transactions. Most of them were, some of them were very, very small. Some of them were a little larger, but they're out there, our land men, in particular out there all the time making deals. What the deals last couple of years have grown increasingly is just a rationalization of assets between companies. We, you know, you trade out of your non-op for somebody else's non-op that you operate. And so things like that are little orphans out by themselves. So I think those will come along. Companies are being very cooperative with each other. And, you know, these are small transactions that don't have that kind of by themselves a big material impact, but in the aggregate, they add up and they make your operations that much more efficient. So there's a real rationale to do that. And then at the same time, some of the bigger outfits are wanting to concentrate your assets in one area or another, so those opportunities come up. And then you have private equity is always got a few things coming out. So I think it'll continue. And Van's group may want to say a word, but he has them out there on the road a lot. And they're building relationships and just trying to do things that make sense for both sides.
spk14: Yeah, hey, this is Van. I'll echo what Joe just said and add a little bit that we try to make these win-win deals for both sides. I think we've got a long track record of our brick by brick approach. I think you can expect to see that to continue. We're off to a great start so far this year and have a pretty favorable outlook for the rest of the year, but also want to give a shout out to our counterparts that we do these deals to, you know, it takes both sides to make it a win-win. And as Joe mentioned earlier, the professionalism that we saw on the other side for the advanced deal, I think we see that on these smaller deals too. And relationships, as you know, are important to us, and we want to be able to say that we did what we said we're going to do. And I think you can just, as I said, expect to see more of the same going forward. That's our bread and butter. And we're constantly evaluating different deals and trying to keep our pipeline full.
spk18: Well, that's been the other key, Neil, is that Van and his group hadn't done one deal and then just stopped and let the pipeline run dry. They've just managed to keep, you know, deals floating down the pipeline. Some of them fall out for one reason or another, but by keeping deals in the pipeline all the time, there's that -by-brick approach that happens each month. And it's been effective, and we like our chances. We like our ability of our land men to build those relationships and make those deals. Thank you, Joe.
spk01: Okay, and one moment for our next question. Thank you. One moment for our next question. Our next question will be coming from Tim Resven of KeyBank Capital Markets. Your line is open.
spk17: Good morning, folks, and thank you for taking my question. I wanted to circle back on the 21 Dagger Lake wells. You provided some comments on them earlier. They clearly look like they're going to underperform what's going to be a pretty big, steep production ramp in the back half of the year, so they're obviously pivotal to the guide you have out there. Can you give some specificity on exactly what's happening there? Have you started completions, or what is sort of the schedule over the next couple months to get those online with expectations?
spk15: Hey, Tim, this is Chris Calvert, EVP Co-COO. It's a great question. You know, if you look at slide 11 in our deck, we have a pretty good summary slide on the advanced integration, but as far as timing on these 21 Dagger Lake South wells, you know, everything is going as planned. It's a very similar story to the, you know, to the Pronto connector down to some of this acreage. It's kind of business as usual on the operations front. You know, we message that we are pilot testing our Trimelfreq. That's actually going on on this Dagger Lake South project, and so we're very excited about Trimelfreq in and of itself, but just more specific to your question, operations are moving forward as planned, and you know, we're pushing forward for that kind of Q2 turn-in line date, but everything operationally seems to be going according to plan.
spk03: And Tim, this is Glenn Detson. I just wanted to highlight that, you know, when we bought the advanced properties, they had built out a water gathering system, and they had a disposal well there too, and so we'll be tying into that on the water side, and then on the gas side, as I mentioned, that gas is planned to go to Pronto with the connector. So we're all set up there from a takeaway standpoint.
spk17: Okay, and then I know you staggered those tills. Do you have any timing you can divide on when that'll happen? Like in April or June, just trying to understand.
spk06: Yeah, Tim, this is Tom again. Very similar to how we did things on the Margarita side. We'll probably have a little bit of a compressed ramp-up compared to Margarita, since many of these facilities are, you know, they're a little bit further along in the integration process, but probably mid to late Q2 is probably my guess, and these forecasts they do tend to change, but I agree with Chris. Things are going very well, and we have great confidence in the second quarter.
spk17: Okay, thank you for those details. With my follow-up, I'm
spk01: sorry. And I'm sorry, our next question will be coming from Leo Mariani.
spk02: Hi guys, wanted to just kind of get a little bit more color on the midstream. I think you guys obviously seem very confident the issues will sort of be behind you at the end of the first quarter here. So once everything's kind of connected in terms of advanced to pronto and pronto to San Mateo, to get you to feel like this gives you a lot more redundancies in the system, Junot is dependent upon third parties, and then could you also just address kind of where you stand on potential partner conversations for the new 200 million that you plan?
spk03: Leo, I'll start, this is Glenn. The short answer is yes. So the pronto to San Mateo connector will be set up such that those two systems can flow one way or the other. And so today it looks like it's more pronto to San Mateo, but once the second plant, the 200 million a day plant expansion that is underway today on the pronto system, that will expand the capacity of the system as a whole, and gas can swing back and forth between those two systems and provide more flexibility and more flow assurance for times where there's either preventative maintenance going on or whatever the situation might be. And that second plant is scheduled for the first half of 2025, and our BD teams are, we're gonna fill a lot of that plant expansion up with Matadors equity volumes, but certainly there'll be extra capacity there, and our teams are actively working on what opportunities there are for third party volumes that'll deliver to that system, and we feel like there is a lot of opportunity given the nature of what exists today in that northern part of the basin.
spk02: Okay, that's helpful. Any color on kind of where you stand with partner discussions, potential partners for that new 200 million a day plant?
spk18: Yeah, Leo, I'll take that question. Look, we're in a position, we have plenty of money on our RBL to fund it. We've paid down our RBL over 200 million for what we borrowed on the advantage acquisition, so that's the use of that is that it's there. We have over a billion dollars on our RBL. We have good standing, so it's not a problem. Our criteria is not because we need some partner. We're interested in somebody who helps bring something extra to the table that, you know, in some way that enhances the value or the efficiency of the system and the plant, or gives drilling incentives like what we have with San Mateo, so it's out there. If we can find a partner who can enhance it, we're interested in talking, but we're not just trying to get financing, and that doesn't have a lot of appeal because we already have that in place with our RBL.
spk11: Appreciate the call, sir.
spk01: And one moment for our next question. And our next question will be coming from Zach Farum of JPM. Your line is open.
spk04: Good morning, guys. Thanks for taking my question. I guess first, just on your cash taxes, the guidance that five to 10% of pre-tax income was a bit better than we were modeling as we had assumed you'd be subject to the AMT. Can you give us some color on how you're able to still defer a majority of your taxes in 2024, and any thoughts on how cash taxes will trend in 2025 and in future years?
spk08: Sure, this is Rob Macklick. I'm the chief accounting officer. We continue to work really hard, both internally and with our external tax providers, and we try and take every deduction and tax credit that we're allowed to take under law. In 2023, as you noted, we were down about 1% on our current tax rate. We knew that that was gonna go up for 2024. I think it is a little bit better than even what we were anticipating, just as we continue to work through the kind of vague guidance that's out there, but we feel very competent in our current estimation that we won't be subject to the CAMP, that alternative minimum tax that you referenced for 2024. We continue to evaluate that and look through, there are so many factors that can go into whether we'll be subject to that in 2025, and we'll continue to monitor that. But at the moment, like you said, we feel very good about the five to 10% of our pre-tax income would be cash taxes, but like I said, we'll continue to work and drive that down as much as we can.
spk04: Thanks for that, Coller. And then, one just quick follow-up. On the cash flow statement, there's a 68 million payment to advance this quarter. Can you detail what exactly that was and if there are any future expected payments in regards to that deal?
spk14: Sure, Zach, this is Van. That was actually a tack-on deal for some additional interest in the basin that was very good. Complimentary to what we had closed on last year. And so, Brian, I don't know if you wanna expand on that, but it was just a more additional acreage from the same deal, which I think goes towards what we said earlier that these relationships are important. They had this interest that they wanted to move out and called us and we were able to make a
spk19: deal. Yeah, Van, this is Brian. I think that's exactly right. And so, on the cash flow statement, that's set forth as advanced because it's really, for accounting rules, they treat it as almost a continuation of the business combination we did before. But it's a great deal, continue to add interest in some of the similar acres that we bought. And we're really excited about, we already talked about the wells coming online this year that we expect to come on, the 21 additional wells and the 21 margarita wells that came on last year. So, great acreage and we really enjoy working with the AmeriDev folks and being able to continue to complete these transactions.
spk04: Thanks, maybe if I could squeeze one more in, can you detail any production that came with those acquisitions?
spk19: Yeah, this is Brian. So, I think really that 1,000 BLE per day that we mentioned in the release, that really is due to that advanced acquisition, the additional advanced acreage and interest that we got. And so, I think that's a good, deal for us and I think if we look at, going forward, it's 80% oil, 77% oil, what we got. And so, it's really good acreage and so, good interest. So, that's really from that specific deal. I think mentioned earlier, we do blocking and tackling deals all the time. And our land group does a very good job at that and they continue to add interest and add production that way. And so, as we grow throughout this year, part of that growth, of course, is always that we will do deals. We think that the land groups done a great job the last few years doing 200 deals a year and expect they'll continue to do that this year.
spk18: We appreciated also that Incap and AmeriDev worked with us on that transaction. They were primarily some minerals and some overrides and it was a good fit for us. And so, we appreciate the follow-up and that we got that. It isn't huge, but if we do enough like this, they'll have a favorable impact. Great, thanks Joe, thanks Brian.
spk01: And one moment for our next question. Our next question will be coming from Oliver Huong of TPH and Company. Your line is open, Oliver.
spk12: Good morning all and thanks for taking my questions. Just on the operational side, I think you all highlighted about 60% of completions this year are gonna be using some old or tri-mold crack ops. Just how much of the expected cost benefit and also the efficiency benefit from a cycle time perspective has kind of been underwritten into your 2024 outlook as it sits today?
spk15: Yeah, Oliver, this is Chris Calvert. That's a great question. You're referring to slide 15 in the deck where we're talking about our completed lateral footage efficiencies. And really that has kind of been the main focus of our operational teams is how do we put forward those capital efficiencies that really help insulate from any sort of OFS inflation or deflation. And so, when we looked at the cost savings associated with simulfrac and or tri-mulfrac, a lot of those savings are baked into our capital budgets. We pilot tested simulfrac in 2021. So I think now that it has become such a large percentage of our portfolio, we do calculate that and factor that into, excuse me, into our forward-looking budget. Tri-mulfrac from an efficiency standpoint, we still, like I said, we're in process of doing that right now. And so as far as the efficiencies of what we will gain, I think we'll be talking about that more on the call in April. But we're excited about tri-mulfrac. We saw about a 20 to 30% improvement in capital efficiencies from the completion standpoint when we moved to simulfrac. So we're expecting some similar numbers, a significant improvement from an operational efficiency standpoint by incorporating tri-mulfrac into the operational portfolio. Chris, while
spk18: you're on that area, I was gonna ask Tom to talk about the U-turn wealth and the capital savings there. The same thing, and you look at slide M on page 16.
spk06: Sure, yeah, thanks, Joe. Albert, this is Tom Elstner. Yeah, looking at slide M on the U-turn wells, as we kind of talked about before, we drilled our first two U-turn or horseshoe wells, as we've called them before, down on our Wolf property in Texas. And we've had very successful production results from those wells that, even though they're U-turn wells, they perform just like a straight two-mile long lateral, very high pressures and IP rates of between 2,100 and 2,400 BOE per day. You wouldn't know the difference if it was a U-turn or a two-mile lateral from the production results. We monitor those wells for several months now, and combined with the great cost savings that the team executed down there, we're ready to kind of do a few more of those. And I think we've highlighted that there may be up to 20 or so U-turn wells that we may mix into the drill schedule kind of over the next kind of two years. We have some really nice rock that we would like to put into the program, just wanna drill most of U-turns. And so I think we're very excited for those. And I think they'll be very successful. We still are kind of in the learning phase. We're gonna learn about some different targets in different areas. So I still think we're kind of in the walking mode. We're not quite in the running mode yet. But I think we're very optimistic about it.
spk18: Billy, it's your group, and you've had a lot of innovations from managed pressure drilling to the rig design. Do you wanna say anything else you're working on?
spk16: Yes, sir. I mean, that was a good project. And we had Patterson Rigs out there on it, had some good engineers and did a really good job there getting those wells drilled and completed. And it was a great operation. Just while we're at it, go ahead and give a little shout out to Patterson and everything they've done through the last couple of decades. They didn't just build a rig and leave it there. They've continued to add with their technology and their operating systems and techniques. And this is another one they were out there with us, had extra people out there to make sure it was a good successful operation. And also their trackside next here and all, we've worked with them. They do a great job for us. I'd like to mention Halliburton, Slumber Day, and others that work with us and help us stay on top of our game. But really have done a lot of good with Patterson on the U-turn wells especially was a highlight. But also now we picked up the larger rig, 2,000 horsepower rig. And we're looking to do great things with that as well. We're just getting started with it and got the rig out there put together, got our surface hole intermediate and fixing to get to the game time, show time, with getting after the production hole. We're expecting to set some new records there. And while we're talking about records, the MaxCom group, where our geologists and engineers work together, they've been doing a great job there. And coming up on our board week or so ago, we had 262 records there since we started MaxCom. And we already up that three more to 265. So they just continuously get better and better. That's worked out to be just a great, great operation for us there. And all of our hands coming in, we try to work all of our new people, engineers and geologists, spend a little time in there and get to know each other. And it makes us a lot better on both sides of the operations. And we talk about the records and the money we're saving, drilling faster, but then staying in zone. And that staying in zone is a big part. We don't talk about a lot. We talk about all the money, $40 million we saved with all the records and the time. But also when you drill a 10,000 foot lateral and you stay in zone, 99 to 100% of the time, you get an extra 10 barrels of oil per foot, you get an extra 10,000 barrels of oil. I mean, that's a lot of money right there. So all around just a great, efficient program and drilling and completion both have been doing a great job. Chris, you wanna add something?
spk15: Yeah, hey, Oliver, I'll just kind of close the loop. I think, you know, what it really comes down to operationally for us is, you know, we look for technological improvements that we can continue to push every single year. And those come through relationships such as Patterson Next Tier and other vendors to help us drill and complete wells faster. But then also just, you know, engineering and people efficiency that we find here in the office. And that's, you know, you look at something like Trimelfrac or Trimelfrac, and that's really just kind of reimagining a process. It's been around for a long time and that comes from the people side. There's not a lot of new technology that goes into a Trimelfrac or a Trimelfrac. It's just reimagining a process of how to make it better and more of a win-win situation for us and our partners, which in this case would be, you know, Patterson Next Tier Halliburton. So I think it's a really good combination approach of how we look to maintain and maximize our capital efficiencies from the operations standpoint.
spk18: Speaking of the efficiencies, while we're giving shout outs, need to do some for Forrester Smith, who is out there all the time. Pipe is there, we don't have to wait on it. I appreciate him.
spk15: Yeah, correct. There's a lot of people, the list is numerous, you know, but I think when we talk about anything that we're looking of as far as just timing and tills and things like that, you know, if you don't have Pipe ready on location, when you're ready to case a well, you're gonna be held up. And our service provider has been really our casing provider, you know, for decades. And so I think you have relationships that go back that help weather the bad times and flourish in the good times. And so I think, you know, whether it's Halliburton, Patterson Next Tier, you know, the casing companies, it is something that we value at a tremendous level, and we continue to kind of push forward to make it win-win situations for both the vendor partnerships and Matador itself.
spk12: Thanks, that's great detail. And for my follow-up, I know that you all have had extensive results and data kind of across the stack, but the increase of capital for wells targeting the first bone spring caught our eye for the 2024 program. So any color with respect to just kind of the thought process behind that decision, and maybe if there's any sort of commentary on expectations for those wells, and also assumptions embedded for -over-year well productivity trends for the program as a whole?
spk06: Sure, Oliver, this is Tom Olsner. We really like the first bone springs, and the reason we're investing money in that specific interval is simply because the well results have been very solid. Even going back
spk08: to
spk06: many years ago with our kind of first test of the first bone spring at Marlin Downey in Eastern Antelope Ridge, we continued to delineate that zone kind of all kind of throughout the Northern Delaware Basin and feel very confident in those targets. Kind of going to your kind of well productivity question, yeah, we put out slide number six or slide C, showing our average EUR over the last four years being a very, very successful program, and we can expect that to continue. There's a variety of different performances in all different acid areas, but we continue to focus on investing the company's resources into the Northern, kind of the oilier portions, and you see that in the oil you are that we've generated in the first bone spring was certainly part of that.
spk12: Awesome, thanks for the time, guys.
spk01: In one moment for our next question. Our next question will be coming from John Freeman. Raymond James, your line is open.
spk13: Hi, guys.
spk11: Hey,
spk13: John. On the Marlin Processing Plant, y'all laid out the return and the payback period that's expected. Can y'all speak to how y'all envision the volume split on that plant between Matador and third parties once it's up and running next year?
spk19: Yeah, John, this is Brian. I'm happy to take a shot of that, and then Glenn can clean up anything after, but really I think right now at San Mateo, we're 70%, 80% Matador. I think as you move over to Pronto, it's almost the opposite right now, but I think going forward, you'll end up more with the new plant, almost 50-50 split with the new plant. So all in, we'll probably end up being 60% Matador, 65% Matador, and the other third party, and we look forward to those third party opportunities. We think there are a lot of them up in that area, and so a lot of good partnerships and a lot of repeat customers. And so as we build the plant, we think there's a lot of real opportunity there.
spk13: That's great, and then my follow-up, and it kind of dovetails with what you just mentioned, Brian, which is, y'all talked about kind of the needs in this area for more processing for, it seems like for probably about a year. And so I guess once we think about the Marlin plant the expansion at least being completed next year, is there another area across y'all's, y'all's acreage footprint that you've already sort of identified as like another area that at some point y'all would like to expand processing capability?
spk18: You know, John, that's still in the thinking stage, and give us a little time to firm up our ideas and plans, and we'll be happy to share them
spk11: with you.
spk18: But it's a little too tentative to go out there and then be, you know, why didn't we do exactly what that is? We're in the planning stage, and there's a lot of factors, and when we come out we'll have all that detail for you, but it certainly is a matter that's on our mind, and we think a good opportunity to go along with our other opportunities. But we've got to prioritize, because we have some great grilling opportunities and great third party, and reconciling those is part of the process, the guys around this table, are we're all thinking about with each other.
spk13: Thanks, Joe, I appreciate the time,
spk18: guys. Appreciate it, question two.
spk01: In one moment for our next question. Our next question will be coming from Phillips Johnston of Capital One Securities. Phillips, your line is open.
spk11: Hey guys, thanks. Most of my questions have been answered, but maybe just a clarification on the additional advanced property acquisition in Q4. You mentioned about 1,000 a day impact to Q4. Just in terms of timing of when that closed, was that a full quarters impact or a partial quarters impact, meaning that the current run rate impact is somewhere north of that number?
spk19: Yeah, this is Brian, I'm happy to answer that. It really, when we're referring to the 1,000, referring to the full quarter impact, if we don't go forward basis, I think that that deal will continue to have really good returns for us going forward into 2024. Again, as I said, the land guys have done just a fantastic job. I think if you look at page 12 of our deck, you'll see in 2012 we had 7,508 acres, and now we're over 152,000 acres. They continue to build that brick by brick acquisition and add to our production, add to our reserves, and do a fantastic job.
spk11: Okay, great, and just to clarify what's embedded in your production guidance, is the fourth quarter 24 exit rate guidance has doomed any incremental volumes from these types of feature small scale acquisitions like the ones you've been doing, or is it sort of organic from where we stand today?
spk19: Yeah, so I think going forward this year, really it's more acquisitions that we know that are close to being closed or being closed. We take those into account, but other than that, it's in large measure, it's organic growth. I think that we do these brick by brick acquisitions. There's always some of that, and we know there will be some of that, so we take some of that into account, but really it's more on just a straight organic growth for the year as we look at the exit rate to 2024.
spk11: Okay, perfect, thanks so much.
spk01: Okay, and the final question will be from Kevin McCarty of Pickering Energy Partners. Kevin, your line is open.
spk07: Thank you for taking my question. I appreciate all the details on the first quarter turn lines and capex. Your guided exit rate for 4Q oil was better than we expected. Can you kind of help us bridge that gap on how you hit that exit rate? Any more color you can provide on the capex or the turn in line cadence throughout the year? I mean, you mentioned the 21 wells that come on in the second quarter. Is there another slug of wells, or is that really what's gonna drive the production higher?
spk19: Yeah, this is Brian. Kevin, thanks for the question. I think going through the year, we talked about those 21 wells will come on in the second quarter, and those really do help drive production higher. In addition, this year, on total, we expect to turn to sell 94 net wells. And so, those are spread out as well kind of throughout the second, third quarter as we go forward into the fourth quarter. And so, it's really a mix there. It's kind of split between the two quarters from third quarter and second quarter with more weighted towards the second quarter just because those 21 wells would come online. And so, that sets us up for that great fourth quarter that we talked about. I think we're really excited about that exit rate and how it sets us up for next year.
spk07: Great, and as my follow-up, you mentioned that you made some payments on the Marlin plant expansion in 4Q. How much of the 2024 midstream budget is allocated to the processing plant expansion? I think in the past, you've said that that plant could cost $200 million overall.
spk03: Yeah, hi, this is Kevin, this is Glenn. So, for 2024, approximately 90 to 100 million is associated with the actual Marlin II plant. And then, there's obviously capex that we've attributed to the buildout between the connectors that we're talking about there and the addition of compressor stations and then building out to some of our properties on the ranger north, the northern part of ranger.
spk07: Great, thank you guys.
spk01: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd now like to turn the call back to management for any closing remarks.
spk18: Yes, I do have a few closing remarks. The first is just to refer you to slide D, which summarized our company highlights for last year. At this time last year, I was saying that we were beginning the year at about 100,000 barrels BOE per day and that I thought with the advance and our other drilling programs, we would boost that during the year and come at by 50%. And sure enough, we did. Our exit rate was 145,000 barrels, so great work by the team. A second in slide D just shows that and also emphasized that our alignment of interest, that the management group itself has about 6% of Matador and we have over 90% participation in our employee stock purchase program. So everybody in this room and throughout the company, it's just like you that we've got chips on the table. I'd also like to give a shout out to our measurement room. It runs 24-7 like our MaxCom and keeps an eye to be sure we're getting paid for each barrel of oil and MCF and now over the years of the time period, they've added tens of millions of dollars. I think 32 million was the number we discussed at our board meeting. So it's great work by them in tracking that and checking each barrel of oil at each invoice. Some of that's tedious work, but they've stuck to it and it's paid off. I'd also just, you know, you all have asked a lot of really good questions, but I just wanna be sure some things to emphasize, the reserve growth from 360 million to 460 million. And if price of oil hadn't slipped, there'd be more oil than that. Some of those as you would probably approach in 500 million and then the growth of the acreage itself, I think that the land group, Van and his guys and the men and women of his land group, that they increased the Delaware basin position from 119,000 acres to 152. And if you remember when we went public in 2012 and we were establishing this as an area of interest, we began with 7,500. So we've gone from 7,500 to over 150,000. I didn't want that to go without being missed and that you have growing third party revenues from customers out there in the basin. And these are really the blue chip companies and we've tried to be careful. Also, I've always believed, I've been in this business 40 years. So I started with 270,000 today and I think you'd put our assets all together, approaching 10 billion. And one thing is just kinda, we're more of a tortoise than a hare again a little bit by little bit year after year. And slide K on page 14 shows you that it's been steady since we went public. And we see for the foreseeable with the number of locations that Tom and his team have been putting together, the growth of the midstream, Vans acquisition team, that this will continue and should be there. Billy's group is saving money on the cost, but he's also doing innovations that make us more capital efficient, such as using these modern rigs to come in and his max com room is tribal fracked. Am I saying that right?
spk16: You are, Joe, yes.
spk18: They give me a hard time on some of my pronunciations, but that's been a big add. And you can see the outperformance that we've had over the years on slide O, comparing the S&P 500, oil price, XLP. And I think that's a lot of what we have to offer a consistent performance with a strong balance sheet, with our leverage ratio less than one. And we intend to continue to keep an eye on the balance sheet, because we're shareholders too, and look for ways to boost the dividend. So I do want you also to know that, look, we're available to you. If you've got questions, you need answers. Mack is really good, welcomes your questions. Brian will take them. If you come visit us, we'll buy you lunch or breakfast
spk08: and
spk18: we'll have a more extensive. So we wanna be open, because we're proud of what we're getting done. And it's kind of the old fashioned pick and shovel method, and little by little. And we think our people on staff are working, trying to get better every day. It's corny to say that, get better every day and helps the team get better. But that's what we aim for. And I think you can see it's from where we were a year ago to where we are today, and the outlook going forward, we're still making very steady progress up and to the right. So with that, I'm gonna sign off, but know our phone lines are open. If you need further follow-up and information, and thank you for taking the time that you have to talk to us as well as study.
spk01: Ladies and gentlemen, thank you for your participation today. This concludes today's program.
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