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spk00: Good morning, ladies and gentlemen. Welcome to the second quarter 2024 Matador Resource Company Earnings Conference Call. My name is Marvin Rivas, and I'll be serving as the operator for today. At this time, all participants are in listen-only mode. We will facilitate a question and answer session at the end of the company's remarks. As a reminder, this conference has been 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 issue yesterday. And I'll turn the call over to Mr. Max Schmitz, Senior Vice President, Investment Relations for Matador. Mr. Schmitz, you may proceed.
spk06: Thank you, Marvin. And good morning, everyone. And thank you for joining us for Matador's second quarter 2024 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, I would like to remind everyone that you can find a slide presentation in connection with the second quarter 2024 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 chairman, founder, and CEO. Joe?
spk16: Thank you, Mac. And welcome to the call. We appreciate you taking the time to tune in. We are excited by this quarter. We're even more excited about the quarters to come in the year ahead. The teams have really worked hard and I'd like to emphasize the amount of teamwork that's behind these numbers that everybody has done their part and want to invite all of you to come see us sometime to see the teamwork, have lunch with them or breakfast and you can hear how they really do come together and work as a team which I think has produced these good results. In particular, I have some slides that are on our website that connect to the press release itself and really encourage you to take a look at those. I think they help fill out the story. In particular, when we went public in 2012, we were making about 3,300 barrels a day, and today we're over 95,000. So it's been consistent growth across that time and a lot of teamwork and a lot of extra effort by a lot of people. And I want to thank them, and particularly our guys in the field who, like this past quarter, in very hot weather, have kept everything going. And in the cold weather, they're still out there getting it done. So without that help carrying through, it'd be difficult to sustain this. The net result is that we're reporting that we now have approved reserves of over 500 million of Matador only. And then AmeriDev, if that closes with the customary contingencies and government approvals, we will be boosted to over 600 million. So things are on the right track. We anticipate these next two quarters. There's a lot of work to be done. But if the teams keep working as they have been, I'm confident I'll be here in 90 days telling you again what a good quarter we have. If you like this last one, this next one should be better. And with that, let me open the phone to questions. I try to help, but again, I want you all to know that you all are welcome to come visit and meet with us. Of course, I think that for all the capital and all the technology this business requires, I still think it comes down to people and meeting us in person to get a feel for the way we do things and the caliber of people I think is important, but I don't want to try to tell you how to do your job. I just want you to know you're welcome. Marvin, we're ready for Q&A.
spk06: Thanks.
spk00: Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, we ask you to please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gabe Dowell of TD Cowen. Your line is now open.
spk08: Thanks. Hey, morning, everyone. Thanks for taking my questions. So we can maybe, Joe and team, just start with trajectory from here. Maybe for Matador standalone, it looks like 50% or so of the activity is done in the first half and the other 50% more or less in the second half. So just curious. What's maybe driving the big step up in expectations on 4Q volumes? Is it well at performance or maybe better base declines? Just kind of curious what's maybe behind the big step up in 4Q.
spk12: Hey, Gabe. We really appreciate that question. This is Brian Willey, Vice President and Chief Financial Officer. And I think you hit it on. I mean, it's really the work of the team. Jill started and talked about that from the beginning. And so it's the great teamwork and how the schedule works works out that Tom does a really great job with doing the drill schedule and constantly trying to make it better and optimize that schedule. So we had a really great second quarter, and as we look forward into the future, third quarter and fourth quarter, you're exactly right. We increased in the third quarter, as Joe said earlier, and then we expected to continue to increase and have that step up in the fourth quarter. And that's even before Meridev. I think Joe mentioned Meridev, which we're extremely excited about that closing and having the opportunity to do that, of course, subject to regulatory approvals and the other customary closing conditions, but excited to integrate those assets. I think one of the great stories of this quarter and the second quarter is the Dagger Lake Southwells, which I'll pass it off to Chris to talk about in a minute, but bringing those on efficiently and doing a very good job and bringing them on a little bit sooner than we even expected and just really integrating those advanced assets. I think it shows how consistent we are in integrating the assets and being able to do that over time. And we expect the same thing with AmeriDev, that we'll be able to integrate those assets and be consistent and integrate those into our program. I'm looking forward to that. So I'll pass it over to Chris. He can talk a little bit about the Dagger Lake Southwells and some of the efficiencies we have with those.
spk07: Yeah. Hi, Gabe. This is Chris Calvert, Executive Vice President, Chief Operating Officer. Brian highlighted the teamwork, and I think we can discuss on this call reduced D&C costs per foot. I'm sure people might ask about OFS pricing, but I think while those are great results, I think the underlying story is just everybody doing the small things and just kind of pushing on the rock in their respective manners. And I think Dagger Lake South is really kind of the prime example of all the culmination of those things. You look at, from an operational perspective, We had talked about our pilot test for our first trimal frac completion process, and Dagger Lake South was a perfect example of that to where we had a six-well pad that yielded about a $350,000 savings per well. But once again, that really could not have been done without the teamwork and the groups of the production team, the facilities team working with recycled water, the operations team planning with the land group for right-of-way and surface use agreements, a lot of things that had to come together to yield that $350,000 savings per well. And on top of that, the added benefit of getting accelerated production just due to reduced days on well. You know, the simulfrac and trimulfrac efficiencies that those pull forward, doing trimulfrac yields about a 50% reduction in completion time on well. And so I think, you know, the end result being we have wells online faster, but I think, you know, we don't want to forget or understate the teamwork that goes into the results of those processes.
spk00: Thank you. One moment for our next question. Our next question comes from the line of Scott Handel of RBC Capital Markets. Your line is now open.
spk09: Thanks. Good morning. Hey, you know, obviously you've had some pretty good success with both, well, with the two large pads you did with the Advanced Acquisition, the Margarita and the Dagger Lake. Just kind of curious if you can give us some color on, you know, really it's a two-part question here. One, the path forward on that set of assets, but number two, do you like that cube development strategy? Is that something that you think you could apply to a larger portion of your acreage position?
spk05: Hey, Scott Moore. This is Tom Olsener. Thank you for the question. Obviously, we're very proud of the Dagger Lake South and the Margarita properties. Their results have been excellent and have exceeded all of our expectations. We expect to drill another dozen or so wells on the advanced properties in the back half of this year. We'll have a couple of rigs heading out there in the third quarter to drill some really nice two and a half mile long laterals. We definitely like getting these wells drilled kind of all at the same time, but we work very closely with our midstream team and with Glenn Stetson. As Chris mentioned, all the teamwork and coordination to get these wells online. These are very prolific targets, and I would definitely have to give my hats off to Ned Frost and the geoscience team for identifying targets like third-bone-strain carbonate that would definitely be part of this next batch of development. This is something that we've transferred this knowledge between the different groups, and we expect to drill these wells all throughout the advanced properties. Those wells that I mentioned will most likely be online in the first half of 2025, so more to come on exactly how those do. But again, we expect very consistent results with the strong oil cuts in the mid-'80s and low water-to-oil ratios. And, you know, we've seen the great IPs on the Dagger Lake South, and we expect to see the same type of results on this next batch of wells.
spk02: Yeah. Hey, Scott. This is Glenn. I just want to kind of pile on to what Tom said. And when we think about cube development and, you know, Dagger Lake South is a pretty good example of having to consider, you know, all the different factors when we're going into it and, again, that careful coordination and planning. When we purchased the – advanced assets a year ago. We immediately put plans into place with Pronto to go out and build the connector from the Pronto system down to the Dagger Lake South properties and then the connector that goes from Pronto over to San Mateo. And really, the value of all that was exemplified this quarter as we turned on those 21 wells and we were making around $30 million cubic feet a day of gross gross gas, all that gas went to the Marlin plant, and there were days where we were exceeding, you know, the capacity of that plant, and we utilized the connector to send those volumes to San Mateo. All that resulted in days that were close to San Mateo and Pronto processing close to half a BCF a day of gas. And so, you know, and not to be ignored is that we were also making, you know, you know, thousands of barrels of oil a day, close to 20,000 barrels of oil and 70,000 barrels of water. And so, you know, these are things when you're developing on a cube basis that need to be, you know, planned out meticulously. And I think that our team has done a fantastic job with the careful coordination between all the groups to be able to execute on a project of that scale.
spk00: Thank you.
spk16: We'll move on to the next question. This is Joe. I'd just like to add to that. Our midstream business has really enabled, because they were there ready to go when the wells were ready to go, and they made it work even though they were approaching the nameplate capacity and get all that oil, gas, and water properly sold and disposed of. give a lot of credit to them, Justin, and others processing. Justin, you want to say what y'all were doing during that period?
spk03: Yes, sir. Senior Vice President of Operations, Midstream, Justin. So, as Glenn said, we were filling up Marlin, and for the last 45 days or so, we've consistently exceeded the nameplate of that facility, so we're very excited about that, and then utilized the connector line to swing the gas over to the Black River as well. And so we look forward to the rest of the year and the development plans and approaching nameplate on both of those facilities. And then also setting water gathering records on the San Mateo side as well as we've turned a record number of wells to inline this quarter.
spk00: Thank you. One more for our next question. Again, as a reminder, please limit yourself to one question due to time constraint. Our next question comes from the line of Zach Farrum of JPM. Your line is now open.
spk15: Thanks for taking my question. You took down your DNC per foot guidance to 960 per foot at the midpoint. That's down about 5% versus the prior guidance and over 10% year-over-year. Can you just talk about the drivers of that decline in BNC costs? What's the split of cost deflation versus efficiency gain?
spk07: Yeah, hi, Zach. This is Chris Calvert again. I'll take that. Thank you for noticing, obviously, we're extremely proud of that revision down in the second half of the year down to kind of the 960 number that we're talking through. As far as the drivers behind that, I think it's still kind of the story that we've spoken to on the last few quarters. It's sustainable efficiencies and approved processes. As we look at simulfrac, trimulfrac, spending less days drilling on wells, U-turn savings, things of that like, we are focused on sustainable process improvements that we can carry forward regardless of OFS pricing environments. Now, moving into the second half of this year, we do feel like we are in a more competitive OFS market. There have been some services that have become a little bit more competitive from a pricing standpoint. However, a lot of the drivers that push that are efficiencies and win-win situations that we have between ourselves and our vendors. You look at something like Simulfrac and Trimulfrac. This is truly a win-win for us and our service providers, whether it's Halliburton or Patterson, BCV next year. to where when we're able to go out and simulfrac or trimulfrac wells, we are getting 12, 18 stages per day. And so that's really a win-win for both providers. And that just kind of continues that efficiency story for both us and our service providers. U-turns are the same story. We're spending less time drilling these wells. You know, on the third U-turn well that we drilled, we drilled it in about 50% of the time as the average of our first two. And so... You look at drivers that are really pushing these costs down, and while we are what we believe in a kind of a deflationary OFS market in the second half of this year, the majority of it is driven by efficiencies. And those efficiencies that are pulled forward by the operations team, once again, those really couldn't be possible without the work of the land teams, the geology team of identifying different subsurface targets, And so it's really, we get to tell the good story of the DNC cost per foot going down, but it really isn't possible without the work of everybody else that's kind of pushing on the process.
spk16: Yeah, Chris, that's a good answer. There are two things I want to emphasize is your MaxCom room is helping. When you talk about efficiencies, a lot of what that is is saving time on the well, saving days on the well. Every time you save a day, you save money. They've enabled a lot of that and helped you set your 300 drilling records. And the second part of that teamwork is that, again, the midstream is there to assure flow assurance and that when you're ready to go online, they're ready to go online. And working between Patterson and the other vendors we have next year, as you mentioned, is the more we work with them, there's a joint. We're not trying to beat them down on price. We are looking for ways to save time and make more effective whatever work that they're doing. And so there's real collaboration, which we hope to keep expanding.
spk07: Yeah, I think that's perfect color. I think, you know, if you, Zach, if you refer to Slide I, you know, we talked to our, excuse me, Slide H, we talked to the MaxCom you know, the benefits of MaxCom and the inception since that was kicked off in 2018, you know, the drilling records that have come from that room. But not only that, improved targeting, which ultimately yields better productivity, better well recoveries, improved processes that reduce days on well from the MaxCom room. And not only that, just as a training tool to where when we have young engineers and geologists that are coming to the company potentially out of college, They're working side by side, seven days on, seven days off, you know, working through well planning, working through steering to make these wells, to target these wells better and ultimately lead to better recoveries. And then after a year or two years, those asset, excuse me, those geologists and engineers join asset teams. And so they have built-in camaraderies of working side by side for a year or two years that just continues to improve the efficiencies and the communications between the teams.
spk00: Our next question comes from the line of Neil Dingman of Truce. Your line is now open.
spk04: Morning, Joe and team. How are you doing? Hey, Neil. Hey, Neil. Hey, Joe, quick important one. You didn't mention if we come up there to see you all, if you'll be paying for breakfast. I wanted to get that out of the way first.
spk16: Say that again, please.
spk04: I just wanted to make sure you're going to be paying for breakfast when we come up to visit you. I thought that would be an important one to get out of the way first.
spk16: That depends on how many questions you ask.
spk04: Joe, my question is around the midstream position. Now that you've had Pinion and you've got San Mateo Prado Advanced, I would love to hear you guys take as far as how much more build-out you all think you need in the area, and now that you've added Pinion, does that sort of complete the full takeaway position in the area?
spk16: Yeah. No, I don't think so. We're going to be open to whatever makes sense or makes money and that enhances the system we already have. I mean, I don't think we'll put a loan pipeline up in Chavis County or something that we don't have anything near it. It'll be expected to be near our properties and where we can fold that in to make this system like these connectors give you more options and the ability to offload from one plant to another just makes us, that's much more effective. We're going to be careful on what we do and, you know, Greg Krug has done, I think, a magnificent job. If you remember, Neal, back when we were going public, we were asked on the road show all the time of, are we having any takeaway problems and that was primarily in the Eagleford at the time but everywhere we went we got asked that question so it meant that others were having that problem and we said what do we one night at dinner we said what are we going to do about that it seemed like others are having problems and the suggestion was made was go talk to Greg again who's been a friend for a long time and see if we can get him to come over and run that part of the show for us, and he did, and he's put together a great group, and not just in the midstream business, but also in measurement, and, you know, run a 24-7 measurement room, and helps out with the auditing of various accounts and finding lost barrels, big contributors, and in many respects and through him, we, he's been the strategic guy that says he'd recommend this and that. And it comes before, uh, again, the executive team and then possibly the board depend on size. And, uh, that's put us in a position like, just like, uh, Chris saves days on wells with drilling. We saved that days, not having to wait for the midstream connection. So, uh, I think we're very open and following the drill bit where if we open a new area to drill and the like and we look at the pipeline situation and we think we can enhance that area, we'll go and do it. We don't have any limits and say that's all you're ever going to get, Greg. He's put together a great team and where we're drilling, we expect to have a midstream presence? I hope I said that right, Greg.
spk14: Thanks, Joe. Neil, that's a good question. I think that in order to keep up with the drill bit, we're going to have to continue to grow our midstream presence out there. It's continually growing with good growth every year And we're going to have to keep up in order to have adequate and flow assurance takeaway. And so that's the primary goal, is to always stay on top of that, stay in front of it, actually. And so that's what we're going to be focusing on, is continually looking at opportunities.
spk16: Well, I have one other thing. Our third party... uh, participants has, has really continued to grow. And so that's made it more likely where their drill, it's not just our drill bit, but where their drill bit, we want to be sure we're servicing them properly.
spk14: Well, absolutely. And that's, you know, that's one thing we try to emphasize to, to third parties as well is that, uh, we're, we're going to be there for them as well because we have, we have, uh, we have a producer mentality when it comes to, uh, Shutting off production and curtailing production is just not an option for us. That's not what we do. We want to stay in front of this. With that, that is the benefit as far as to the third party as well, is that they'll get the benefit of that type of mentality.
spk02: Neil, as Glenn sets in, I would just continue to pile on for what Joe and Greg said and say two things. One is we're continuing to be focused on building this new 200 million cubic feet a day cryogenic gas processing facility at the Marlin plant. That project remains on time and on budget and looking forward to the first half of next year, getting that plant online. and do commend the teams of the efforts, you know, thus far in the year. They've built over 50 miles of pipe and compressor stations to accommodate the production from a lot of these new wells that were turned on this last quarter. And then, you know, also you mentioned Pinion. I just wanted not to be overlooked. We highlighted in the release that AmeriDev themselves have approximately 135 miles of pipeline of infield gathering that they have built themselves, which was a similar philosophy to Matador in controlling a lot of that gathering and processing. That 135 miles of height is crude water and gas gathering and high-pressure gas pipelines for gas lifts. So I think it just further exemplifies the strategic nature of the midstream business, and AmeriDev has a good chunk of it, too.
spk14: Yeah, this is Greg again. I do want to kind of pile on what Joe mentioned as far as the measurement audit group that we have. That's something that some companies don't have and that's something that we've taken very serious and we've been able to find millions of dollars over the years that probably would have just been unnoticed and lost because we audit All of our systems, we do balance checks every month, and we just don't let anything get by us. And I think we've got a reputation throughout the industry of always staying on top of our business when it comes to measurement. So I take a lot of pride in that.
spk00: Our next question comes from our line of Leo Mariani of Roth. Your line is now open.
spk11: Hey, guys. I was hoping to dive into AmeriDev a little bit more here. Can you give us maybe an update on where, you know, kind of current production is, you know, there on the asset? And I want to say that they are maybe running a rig, so just wanted to confirm here that the The ninth rig that you're bringing on, you know, might be a replacement rig, you know, for the rig they're running, you know, once the deal closes. Just wanted to kind of get a sense of how you're approaching that asset. I assume you're going to continue to drill on it, you know, post-close. I know you've replaced some rigs on other properties in the past. Somebody call around. That would be great.
spk12: Yeah, Leo. Hey, this is Brian Willey. Happy to take that one to start. I'm going to pass it on. I just really appreciate the question. You know, the Meredith folks have just been very professional. and great to work with. You know, it's the same team that we worked with when we did the Advance acquisition. And so, you know, they ran a rig before we acquired Advance and did just a fantastic job. And we're really excited that they're continuing to do a good job here with AmeriDev. As they go forward, and they're running that rig right now, doing a good job as a team. We're coordinating with them. Of course, they're in control of it. And they make the decisions here. But we'll move forward towards closing, you know, subject to the regulatory approvals, as mentioned earlier. And so... But they do just a fantastic job. Our teams are coordinating with theirs. I know that we had a group of our folks down in Austin and working with them very closely. Just getting ready as we do the due diligence and move forward on the transaction. So very excited about the acreage. It really starts with the rock, and it's a fantastic rock. And maybe I'll pass it over to Tom to talk a little bit more about the rock and then about what AmeriDev is doing.
spk05: Sure. Thanks, Brian. This is Tom Elstner again. Leo, it's a good question. We're clearly very excited about the Merida properties and acquisitions. Again, we're kind of in an observation role, and they're clearly doing a very nice job. As Brian mentioned, we expect the same kind of performance. They're not letting up. They're doing a great job down there. They are running one rig, as was noted. They also, at the time of the announcement, had 13 drilled but uncompleted laterals. They're in the process of getting those. There's kind of two groups. They're in the process of getting the first half of those finished out and brought online. As we noted in the prior release, the estimated production for the third quarter is approximately 25,000 BLE per day and a good 65% oil cut. We're excited to get to work on these properties. They have over 200 federal permits, and we're very excited to get to work out there. I think that the ninth rig will be ready to be put to work as soon as we can, and we'll be drilling some very nice wolf bone wells and some bone spring targets as well. As we noted, we had 431 gross, 371 net locations that we're very excited to put to work and get to work with our midstream group and working with Pinion. We just can't wait to get that going. We'll We'll look forward to talking about that more once we close the deal. It's expected to happen late in the third quarter, and then we'll give you an update from then.
spk00: Our next question comes from the line of John Freeman of Raymond James. Your line is now open.
spk01: Hey, guys.
spk16: Hey, John.
spk01: The topic I wanted to follow up on was just some of what Chris was talking about earlier on just the reduced days on wells, cycle term improvements, and just trying to kind of reconcile maybe the updated guidance with the ninth rig. So it looks like y'all are saying you get an incremental four gross operated wells with the addition of that ninth rig. And in 2Q alone, y'all were able to bring online four more gross operator wells than y'all had planned on. So I'm just trying to understand how much of those incremental wells in 2Q was due to kind of what you were talking about earlier, Chris, just cycle time improvements versus just maybe kind of a timing sort of an issue and how to think about maybe that four-year guide if it necessarily might have an upward bias if these kind of cycle times kind of continue.
spk12: Yeah, John, this is Brian. We'll pass it to Chris in a minute, but just to Thanks for the question. I think it's a fantastic question and we're excited to be able to talk about efficiencies. Chris always likes that. Looking to Q2, you're right. We brought on four additional gross wells than we had expected. That's part of the beat that we had. As we go forward, we do think that additional rig, that ninth rig, will add about four wells. Not much production in the year just because those wells will be turned online late in December, but we are excited about that rig and Chris can talk a little bit more about the ninth rig and some of the efficiencies that it'll produce for us.
spk07: Hey, John. Chris Calvert. Good question. The efficiencies and spending less time on wells is, like I said, it's a story that we've been talking through for many quarters now. When we look at quarterly timing, there's always a lot of push-pull with wells when they're coming on, especially if they straddle the quarter. But the ninth rig specifically, like Tom had mentioned, we're excited to be able to use that to do the AmeriDev integration once that closes. But looking at really the efficiencies, I think one of the things that I would truly point to is the increased utilization of TrimalFrac. We did our first pilot test of TrimalFrac with the six Dagger Lake Southwells. We're actually on our second test of TrimalFrac right now, and we've potentially identified a third trimal frac, which will be a remote trimal frac potentially later this quarter. And so I think those are the efficiencies that are really pushing or I guess reducing, you know, those cycle times. And so, you know, we've factored in savings from simulfrac, reduced drilling days from simulfrac, but the incremental that we're seeing from trimal frac is something that we really didn't guide to at the beginning of the year. And so you look at the, you know, reduction in days on well, whether it's on the drilling side or completion side, It does. It stems back to just improved processes, getting upgraded better equipment from Patterson. When we look at the ability to drill longer laterals, upsized pumps, high torque top drives, increased setback ability that allows us to push lateral lengths north of two, two and a half miles, improved cycle times with U-turn wells, which I had said before, but It's these partnerships with our vendors that have allowed us to get kind of the better equipment, which that ninth rig is definitely one of. And so that really kind of all comes together with these reduced cycle times. And so it's hard to kind of put a, you know, these four wells equate to this efficiency, but it's something that we're just continually looking at and pushing throughout the program looking forward.
spk00: Our next question comes from the line of Phillips Johnson of Capital One Securities. Your line is now open.
spk13: Hey, guys. Thank you. Just a follow-up on Leo's question regarding the AmeriDev properties. I realize that production is still on track for $25,000 to $26,000 a day for Q3, but as we think out to Q4, just given the uncompleted lateral, would you expect the AmeriDev standalone volumes to be
spk05: directionally flat versus the third core or would you expect a little bit of growth there hey philip this is this is tom elsner you know i think we would look forward to commenting more on that you know again after after the after the deal closes um there are two there are two groups of of drilled but uncompleted laterals the the first group going on now and the second you know is is a little bit more uncertain as to the exact timing and i think it'd probably just be um more appropriate for us to comment on that once we close.
spk00: Our last question comes from the line of Kevin McCurdy of Pickering Energy Partners. Your line is now open.
spk18: Hey, good morning, and thank you for taking my question. This year, your legacy program will be about eight and a half rigs, with really just the eight rigs contributing to production in 2024. And that resulted in pretty material growth throughout the year. Obviously, when you get the AmeriDev volumes in, your maintenance production levels will increase. Without asking for too much detail on 2025, do you think that a nine-rig program is sufficient to hold those volumes flat or even grow a little bit?
spk16: This is Joe, and I'm going to, I guess, kick it off and then ask Tom and Chris and Brian to comment. But this is where that days on wells become important. is that if you can reduce the days on well, your existing rig fleet can drill that many more wells. So we hope that the rigs will become more efficient and as Chris pointed out, they're coming with new equipment, new techniques that also should reduce the days on well. So that's an important factor as we plan out 2025 how many rigs we need and how many wells we're going to drill by how effective are they going to be. So these next two quarters are going to help us understand that better and we'll go from there. We've never been a company that's just grown for growth's sake, but it is part of a plan and a team game of where does this situate us so that our capital spend is it goes to the right sources. Some of it years we could have grown if we didn't put some into the midstream, but look where we'd be if we didn't have the midstream today. How vulnerable we'd be to a lot of situations and we wouldn't have the flow assurance and we wouldn't necessarily have the quick hookups or the you know, the water disposal capacity and the like. So that was a deal where we were playing for the long term, diverting some capex we could have spent on drilling rigs for a midstream business, and we think that was the right thing. And as far as drilling, we expect to fully challenge our teams to come up with a growth strategy, but at the same time, we want to keep our flexibility when an opportunity like AmeriDev or Advance comes up because a lot of people don't or won't sell their good rock, their best rock. They keep for themselves. So when you had opportunities like them come up where you had a chance at acquiring really quality rock, we wanted to be sure we did that. So we've we've done the slow but careful steps with our rig count this year to where we could grow the rig count or lessen it depending on things. Fortunately, we were ready when Meridev came up and we paid down our line of credit like our current RBL has paid off completely. We have zero borrowed on it. And so we have that line of credit to go towards Meridev or building out some of the midstream, and that's been helpful. So a lot of our strategy, to be direct, is we try to build in as many options as we can each year because each year is a surprise. There are some surprises that occur every year, and we just want that flexibility financially as well as having the right equipment and the right people. So it's a balancing act through that, and our teams have done, I think, a really good job making adjustments as things go along. I mean, you couldn't predict COVID, and that happened. Not that I hope we get another situation like that, but, you know, you just try to prepare for all the contingencies and keep your flexibility and options open. I know that. It may sound like platitudes, but we tried to maintain that flexibility, and we found that's been a good strategy over 40 years. As you know, we started out with $270,000 in 1983. We didn't have many options in. Each year we've tried to get better on that, and the teams have done a real good job ready to pivot as those circumstances change. So, you know, I'll ask my chief financial officer, Rod, to say is that, I hope that coincides with what he's planning.
spk12: Yes, sir, Joe. I fully agree. I think this is a, you know, we often talk about it being a people and a relationship business. And, you know, maybe two things I would just note on the relationship side with the banks that we've talked about a narrative a few times today is And just wanted to thank our banks and the great support that they have been. We visited each one of the 19 banks in their offices earlier this year, and we were able to develop those relationships, and those have proved very fruitful now as they've been supportive of the emeritus acquisition. And then, you know, the relationships and the people that are employees. It really starts with our employees. And we have a great intern program this summer. I think 30 interns. They've been fantastic. We just keep getting better and bringing them in, and the best and the brightest. And You know, I look at our employee stock purchase plan. That's an opportunity where our employees can buy shares in the company. And normally in an employee stock purchase plan, a good participation rate is probably 50%, 60%. And I think in our last period we had where people could participate, we actually had 95% participation, which is almost unheard of. And so it really just shows that we're all rolling in the same direction. Everybody's working together. And it really just comes down to the people and the teams. And it's a great business. It's a fun business to be in.
spk16: One other thing I want to add to show the importance and the integral nature of our midstream, we've added to our board Susan Ward, who was at Shell for many years and was their chief financial officer when Shell Pipeline went public. That gives us another pair of eyes. Are we headed in the right direction and are we using it to its best advantage? Greg and his team have put together just a great group and I know that the results that we have and what the midstream has done and also built out relationships with a real blue chip list of companies that are third party partners and it's just as important that we treat them right as any of our teams on their deals so There's still a lot of wood for us to chop there, but I think that attention is making us a better company.
spk00: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call over to management for closing remarks.
spk16: Well, thank you very much and thank you for the participation. Now that I've had some time to think about Truist's comment about breakfast, I just want to assure everybody that if you come have breakfast with us, you will not have to pay. We'll be happy to buy that breakfast. The last thing I do want to close on, because it didn't quite get the attention, the teams working have turned out an amazing amount of work, and Ned I want you to talk about when we came out here, we had three zones that we were after, and where have we gone from there?
spk17: Sure, Joe. Thank you. This is Ned Frost, EVP of Geosciences. Joe's referring to when we started out in the Delaware Basin, we had three discrete zones that we targeted, the second bone spring, the Wolf Camp AXY, and the Wolf Camp B. Today, we are producing out of 11 different zones with 25 discrete target intervals that we can map regionally around the basin. To do this, it's like so many other parts of Matador. It requires all the teams working together. A lot of people have their hands on that from reservoir engineers to land to drilling and operations from being able to complete these wells. We're really proud of how we've advanced the ball over the years, and we're very confident that there's a lot more to come. So we appreciate your support, and we'll continue to do what we do.
spk16: All right. With that, I'm through. But thank you all for listening in and your time. We really appreciate it. We know it's valuable and appreciate the relationship.
spk00: Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.
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