Matador Resources Company

Good morning, ladies and gentlemen. Welcome to the third quarter, 2024 Matador Resources Company Earnings Conference Call. My name is Gigi, 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. Mac Schmitz, Senior Vice President, Investor Relations for Matador. Mr. Schmitz, you may proceed.

Thank you, Gigi. Good morning, everyone, and thank you for joining us for Matador's third 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 issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with the third quarter, 2024 earnings release under the Investor Relations tab on our 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, Mac. It's great to be with everybody again, the analysts and others for this question and answer time, and we want to be sure to talk about the matters that are most important to you. The things I'd like to emphasize here are first is that we've got a lot of questions about the Meredith acquisition. It's being integrated very well. It's ahead of schedule and doing better than expected. The same thing throughout the company. All the teams have worked in their areas as you will hear from the various answers to your questions that each of the departments are contributing to the good performance that we had this quarter. And I'm very proud of the way that, and pleased the way everybody is working together and helping each other in coordinating these things, because each department is not an island, but works with the other departments. And it sounds corny, but it's really nice to see everybody working together and helping each other as events unfold. And it was a big quarter for us. We did the merit, we did a bond offering, two bond offerings, we did stock offering. All these things came to pass, and we drilled some very exciting wells that we think are setting up 2025. So the bottom line, my message is, if you like this quarter, I think you'll like the fourth quarter even better. So with that, I turn it back to you, Gigi, and we'll take the first question.

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, we ask that you please limit yourself to one question until all have had a chance to ask a question, after which we would welcome additional follow-up questions from you. One moment for our first question. First question is from the line of Neil Digman from Truist. Your line is now open.

Morning, Joe and team, nice quarter. Joe, I can't help but notice, I would say, it's very commendable how actively you and the team continue to add shares in the open market, unlike what we're seeing from a lot of other companies like that slide that you put out highlighting this. And I'm just wondering, these open market purchases to me demonstrate how cheap you think the shares continue to be, and I'm just wondering, given this continued discount, would you all consider stock repurchases as a larger part of your shareholder return going forward? Especially once you get that leverage quickly back under one times.

Thanks, Neil. Thanks for noting the active buying, not just from Forum 4, but from the whole staff, is that I think that's the most gratifying compliments that the board and the management group can have is to enjoy the confidence and the support of the staff. And I really think they're knocking it out of the park and trying to get better every day, and so it's fun to come to work. Now, we believe they can see the future and that this buying by us, and we've never sold a share of stock too, is that our best years are still ahead of us. Now, to your specific question about buybacks, yes, we consider them, and we talk with other companies that have implemented them, and so far we think the fixed dividend is the most effective way to return value to our long-term shareholders. The biggest problem I have with buybacks is sometimes you're just exiting your short-term shareholders. They're taking advantage of the jump, but we are open-minded about it, and we'll continue to study it. And that fixed dividend, I'm really pleased to get it to a dollar, and as that dividend grows, then buybacks may be considered maybe more appropriate, but at present, the shareholders seem to like keeping the fixed dividend growing. And the second factor is that debt is with dividends, it doesn't require us to go into debts. We're able to do that from our free cash flow. So when we get our debt down, things like buybacks can be given extra consideration. Now, the last thing that I'd like to say is that at our annual meeting, we have generally 200 or more attend, and they're your -and-file long-term shareholders, and it hadn't been expressed to us to do buybacks. They have overwhelmingly indicated they'd prefer dividend raises than buybacks, because that moves them out, and they don't get to enjoy the upside that we believe Matador offers. But we don't rule anything out, and the one thing we have, we do feel also gratified that these variable dividends hadn't worked out that much, and you see companies moving away from them. So to me, it's down to fixed dividends or buybacks, and at present, we think the fixed dividend helps all the shareholders, and it seems to be the best received by our particular shareholder group. I hope that answers your question, Neil. It's a good one.

Thank you. One moment for our next question. Our next question comes from the line of Scott Hanold from RBC Capital Markets.

Good morning to you all. You know, nice quarter. You know, my question, and, you know, Joe, you all provided some framework on 2025, and I was hoping maybe to get a little bit more context and color if you can give us a sense of, you know, how you're thinking about like capital allocation, you know, in 25 to your respective areas, especially in light of obviously these new emerative assets that are performing, you know, really strong the out of the box, and, you know, what does that mean in terms of like, when you think about nine rigs, you know, how much capital, you know, would that potentially, you know, utilize, you know, for next year?

Well, Scott, let me take your question in parts and share with Brian Willie some of the answers to that or with Chris Calvert, our chief operating officer. But, you know, the very first thing is that we think, you know, proper growth at a measured pace is best. You've heard that it's a corny expression, but we've said it often, and I know you've heard it, that we think that no growth is not what Maddor's culture has been, having grown from $270,000 in 1983 to the present level, we've tried to grow every year, and on average, we've averaged during those 40 years at 20% annual growth. Now, we know as we reach certain sizes, now we're over 11 billion in assets, maybe 20% is maybe more than ideal, and we'll try to figure out as we grow, but we expect to grow, and we're fortunate that our staff, geology and engineering and land have all worked together to come up with a lot of inventory, 2,000 locations that we think will have a better than 50% rate of return on average. So, you know, when you can drill and get those kind of returns, we think that needs to be an active part. Now, we'll be alert for acquisitions, as you know, but you've known us for a long time now. All the acquisitions we've made during that time, these last 15 years, it worked out, you know, that, again, I credit the team, Tom Elsner and all the other engineers, Tanner was doing a good job on evaluating that, and then Ned and Glenn finding ways to add new zones and increase, you know, make better fracks with CLIF that add to those reserves. So, you know, it's a plan that's working, but we try to stay open to new ways to do it and to make course corrections even in the middle of the year to optimize growth and returns to shareholders. So, it's not that we have a five-year plan and that we go into it, well, this is year one, so we do this, and year two, we do that. It's much more sensitive to where the opportunity is, and we proceed along those lines, is that stay flexible and look for those special opportunities.

Yeah, and Joe, this is Brian Willie, the Executive Vice President and Chief Financial Officer. As Joe mentioned, the profitable growth of major pays, and, Scott, you made reference to it, but didn't exactly put out the number, but we do expect to have over 200,000 BOE per day next year, and if you look on slide M, you can see that. We're really excited about those opportunities, as Joe mentioned. From a capital perspective, Scott, as per your question, I think you mentioned the nine rigs we're running, nine super-spec, great rigs. We like those rigs and hope to be able to keep them throughout the year next year. This year, we only had nine rigs for half the year, and so we expect to have a little bit more cap ex next year in having those nine rigs the full year. And then you had also mentioned the Ameridev properties, and we are very excited about those properties already performing better than our expectations. And we've mentioned in the past that those have a high working interest, over 85 percent, and so we'd expect that between the high working interest from some of the Ameridev wells and the nine rigs for the full year, that directionally cap ex would be a little bit higher than it was this year, $1.25 billion this year. So a little bit higher than that, but the specifics will go into next year when we do our plan in February 2025.

Thank you. One moment for our next question. Our next question comes from the line of Zach Parham from JPMorgan.

Yes, thanks for taking my question. You reported a tax refund this quarter and noted that you didn't expect to be subject to the AMT in 2025. Can you just give us a little color on where you expect cash taxes to be in 2025 at this point, and maybe talk about how you would expect cash taxes to trend in future years?

Hi, Zach. This is Rob Machlick. I'm the EVP and CAO. We're really proud of the work we did over the last three months, and the team has really been firing at all cylinders, not only with the AmeriDev acquisition, but obviously on this cash tax part, like Joe referenced earlier, I do feel like the team is really firing at all cylinders there, so I just wanted to start with that. As you noted in the release, we did reduce our estimate of the cash taxes as a percentage of pre-tax income, and we're really confident in that answer for 2024. And the second thing that you noted on the corporate alternative minimum tax for 2025, I think is another really big win for the company. I think as we go through our planning, the actual cash tax rate for 2025 will be largely dependent on our plan and where we come out and the available deductions that Matador will have for 2025. And so as we go through the plan, we'll have more to say on that in February.

Thank you. One moment for our next question. Our next question comes in the line of John Freeman from Raymond James. Thanks, hi guys.

Hey John. Hi, when I'm trying to think about what leverage y'all can pull next year to continue this impressive run on the further efficiency gains to keep lowering that DMT per foot, obviously expanding the use of trimifracts seems pretty clear. Would another option possibly be shifting from kind of dual fuel to E-fleets, and if that's something y'all have looked at, just any sort of color on that topic, potential savings, et cetera?

Hey John, it's Chris Calvert, EVP, Chief Operating Officer. Yeah, obviously thank you for noticing that. Well, we're referring to slide F in the deck, and we're extremely proud of the fact that we've been able to pull our drilling completion cost per lateral foot down from our January estimates of $1,010 per foot down to now, in the 930 range, it's about an 8% reduction. We've talked, the second half of this year, we have seen a little bit of softening in the OFS market and the oil field services market, however, the primary drivers have been capital efficiencies from the operational front that you've spoken to. Really, looking at what can push forward, I think the effectiveness of pushing forward implementation of trimifrack into our program, we pilot tested trimifrack the first part of this year. We've successfully done two more trimifracks in the second half of this year, one of which was actually done using remote frack operations. And so I think when we look into 2025, the increase of remote operations is going to be even a larger part of our portfolio, simply because as we're able to tie potentially non-simal or non-trimal frack wells together, that continues our efficiency push of 250 or $350,000 well savings respectively, but it also continues to solidify vendor relationships because every time we can convert non-simal or trimifrack wells into a trimal or simal frack batch, it reduces move times for our service companies on the completion side. So it really is a win-win situation for us. And so increase optimization of both of those completion processes continue to be a high priority, which will include a larger percentage of those being remote frack operations. And so from a completion standpoint, that should about cover it. On the drilling side, it's continuing to use with the assistance of our Maxcom operation center over 300 drilling records to date since the inception of Maxcom in 2018, that continues to reduce drilling times. So if we look at our U-turn technologies, for example, which have continued to become a larger presence of our drilling portfolio, we've reduced our drill time specifically on five U-turn wells that expect to be turned in line in the back half of this year by 30% as compared to our 2023 U-turn wells. And so I think the efficiencies that we'll pull forward into 2025 is going to continue to be the same story, just continued improvement upon those processes. And so we appreciate the shout out and the recognition for the accomplishments that we've made, but I think levers are still there to be pulled. I think we've proven ourselves, if you refer to slide H as one of the most efficient operators in the basin, we've proven it from an operational standpoint as well. And so I think we're excited what 2025 holds and we'll continue to look forward to telling that story in February.

Chris, just to add on, I can see Glenn down there waving his hand, he wants his turn at bat too, but you mentioned, and I want to underscore about the savings in time, because each time you save a day, it's about $100,000. And working closely with Patterson and our frac crews and the like, everybody has contributed to some time savings and it adds up and that's why we're able to use nine rigs and not have to go to 10 or 12 because we're drilling these wells faster, which means you can get more wells drilled and you all have done an outstanding job, but the M size is that these savings are not coming because we're playing one vendor against the other, it's development of the basic belief is build a relationship with your vendors like our pipe and others, and it'll pay dividends, it'll be worthwhile over the years and over the long term. So I want to call attention to that as part of the efficiencies. And again, the shout out to the mass comm room, those guys go 24 seven, two shifts, two week launches and geologists and engineers, and they're also really collaborating and helping work with y'all. And so the drilling team and the mass comm team and all these groups, the finance team, everybody's worked together on this and I'm real pleased that you're making as much progress as you are. Glenn.

John, I just wanted to pile onto what Chris and what Joe was saying too on the use of produced water for hydraulic fracturing operations is just another cost efficiency that we see. It helps a little bit on the capex, but it really does help on reducing op-ex and lease operating expenses as we use the wells, produced water for fracks. So it's just another place that we can see some cost efficiencies and it also has the added environmental benefit as well.

Well, and the last thing is we look at this. One thing that has helped our LOE is that we have a group of lease operators and production staff in the field that's found ways to do more work with less people. So their costs are spread over more wells and I think they're doing a terrific job.

Thank you. One moment for our next question. Our next question comes in the line of Kevin McCurdy from Pickering Energy Partners.

Hey, good morning, Matt at our team and congratulations on a good quarter. I wanted to ask about the meridive assets. It looks like production from those assets has increased pretty materially since you closed the deal up to 31,000 barrels a day from 26,000 barrels a day in the third quarter. I wonder if you could talk about what drove that increase and how you're envisioning the trajectory of production and activity on those, the meridive assets specifically over the medium term.

Hi, Kevin, this is Glenn again, EVP Production. So yes, it's just as you noted that the last 13 days of the quarter, the meridive assets averaged that 31,500 BOE per day. We are forecasting that to be down a little bit in Q4, but that is related to the shut-ins that will be as a result of the fracturing operations of the 11 new meridive wells that were in the middle of being drilled when we took over the assets. So a little bit, also to answer your question about the outperformance really in the last 13 days of our expectations, a lot of that was related to the seven new tea olive wells that a meridive brought on in the quarter before closing. And those wells are both doing very well and better than our projections.

Yeah, hey, Kevin, this is Ned Frost, EVP of Geoscience. I think it's worth taking a moment to commend the meridive for putting this position together. We have always liked the eastern side of the basin, our Antelope Ridge areas we call it. If you look at slide 24, you can see a few of the well results called out here. Our Cappy Bryce wells, which are in the federal block in eastern Antelope Ridge came on at a very strong rate. And then the tea olives, as Glenn mentioned, are also coming on at a strong rate. We had always been optimistic about this part of the basin, like I said, but I think these well results are really kind of confirming the quality of the rock over here. So we're really excited to keep developing this part of the basin and bringing more great wells forward in the next few years.

Thank you. One moment for our next question. Our next question comes in the line of Gabe Dowd from TD Cowan.

Thanks, hey, morning everyone. Thanks for the time. Quick question, the 66 million acquisitions this quarter, did that come in any volumes? And then the 200 MBU-E a day target for next year, does that cost the plant any inorganic opportunities? Thanks, guys.

Hey, this is Van Singleton. As far as the volumes go, the acquisitions came with a little bit of production. Brian, you may want to speak more to that piece of it, but it was a very small component of the kind of our brick by brick approach that we have done for many years and will continue to do.

Yeah, hey, Gabe, this is Brian Willis, the Vice President and Chief Financial Officer. As Van said, the production was fairly minimal for the third quarter for those acquisitions. It was about roughly 600 BOE per day, but those was already baked into our July guidance. And so fairly minimal. And as we go into next year, we always look at what transactions are close and build that into our guidance as we go forward.

Gabe, this is Joe. And I want to emphasize just what they said. It was primarily the inventory, the opportunity to have undeveloped acreage that drove most of these deals. We were happy to pay for what production was received, but one of the major themes that we've gotten questions on all year long is what is our inventory? And so as we evaluated acquisition opportunities, we were weighted a little bit, well, not a little bit, but we were weighted more to the inventory opportunity than just buying PDP and adding that. Not that we were disappointed in the cashflow that that delivered, but the real target was adding to our 2000 well inventory and building up for the future.

Thank you. One moment for our next question. Our next question comes from the line of Leo Mariani from Roth.

Yeah, hi guys. I wanted to ask a little bit about the midstream, you know, side of the business here. So you guys kind of specifically called out, you know, midstream business, the midstream value in the company of greater than one and a half billion dollars, you know, in the release. And I think this has been a source of frustration, you know, for a while, you know, for the company. And, you know, wanted to see if maybe there's a plan in the works to try to unlock some of that value. And then additionally, obviously you spoke a little bit to CapEx next year saying that, you know, DC and eCapEx would be up a little, makes sense with a slightly higher rig count, but an infrastructure CapEx, you guys have, you know, spent some capital the last couple of years. I mean, do you think that is in maybe a position to start to come down a little bit in 25?

Leo, I'll take a stab at it and Brian or Greg can add to it or Chris, but the first thing is, answer your question is yes. We're always open to more opportunities on what to do with midstream. And several have been suggested, you may remember that we added Susan Ward to our board and Susan had been the chief financial officer at Shell for their midstream business. So she brings a wealth of knowledge, engineering background, you know, great experience along her career to help us study the various alternatives and opportunities that are open to us. So, you know, we really value most highly about midstream is providing us with flow assurance because most of the equipment out there is a little older and maybe leaky at times. I'm, you know, it's just older and we'd come in, we've got new equipment, new pipe and we thought that was very important. And it really proved itself during the time of ice storm Uri, everybody else was shutting in because of the freezing temperatures. And our guys, I don't know whether it's because they own some stock in it or whatever, but they were sleeping in their trucks, only 5% of the plants were still operating and we were one of them and they were sleeping in their trucks and doing everything to keep the gas flowing, which was very important to us and to our participants in our system outside third parties. And it really proved that value. The second thing is when we talk about timing and money coming in, they're cooperating with the drillers and the completion team so that when they've finished completing the well, the pipe is there waiting. And another one is area where they've really contributed is on the water disposal and reusing produced water. So we're not using hardly any fresh water these days, but it's the produced water. So it's good for the environment, you know, good for the bottom line, good to have the gas still flowing and the oil is on pipeline too. So our emissions are down to less than 2%, I think is right, Glenn, is that right?

Yeah, that's absolutely right. Yeah, just there are so many benefits, you know, to operating the midstream business and definitely wanna commend the staff on a record quarter for San Mateo in terms of throughput on the water gathering side, in terms of throughput on the gas gathering side, same for Pronto and resulted in record EBIDA for San Mateo. So

we often say we play a straight game and we're open to propositions from other people that may want to end this business. We've had a good partner in FivePoint on the San Mateo side that has, you know, has made us a better company and we like working with them but we're open to others. Pronto has come about in a really timely fashion for us when we acquired it, we've got a second plant, as you know, going, again, reflecting the value and if we have to divert some capital from our drilling budget to finish out this system, I think we'll all be glad that's good insurance money that our gas will be flowing and the others. And Ryan has something he wants to

say. Yeah, Leo, great question. Maybe the second half of the question and building upon what Joe said, the flow assurance, if you look on slide I, you can see that our plant had over 99% uptime and that new plant that we're building is on time and on budget for next year. As we think about the capital expenditures for next year, we, of course, will finish that plant and then, you know, we'll also have other capital that we'll do as we build out the system. This year we had about 225 million in capital expenditures on the midstream side. I think a maintenance capital expenditure program is probably in the 50 to 75 million range. I don't think we're quite there yet. I think next year we're somewhere between that maintenance program, the 50 to 75 and the 225 from this year. But I do think it's less than this year. And then when we get to 2026 with the system fully built out, then I think we'll be more to that maintenance cap level, if there's not any other great projects, of course. I think we always are looking for projects and our guys do a fantastic job with the third parties and those opportunities. So, but absent any of those types of opportunities in 2026, we'd expect we'd be more in that maintenance capital.

We'll also give a shout out to Ronnie Raines and his work on building that plant and to Justin and to Sean that are here that have worked out there and spent days in the field to make sure it goes right. So, you know, great effort by everybody and Jason Thibodeau and Greg, great, Prejean have all, I'm sorry, I mumbled, my friend Prejean's name, but I can't express it. He and Jason just do a wonderful job and it's got everybody working. So, you know, again, that's just another illustration of the way there's been great collaboration between the teams to get to a good result. And Sam Thomas and, you know, Sam is another one who's been with us a long time. That Sam Whitten and Thomas Green have been with us a long time and they've really contributed. So, I know I've gone beyond your question to mention these guys, but they need to be credited with the job they've done.

Thank you. One moment for our next question. Our next question comes from the line of Michael Schala from Stevens.

Hi, good morning, everybody. Chris, you mentioned you expect more trimal fracks going forward and more of the remote operations. I was just wondering if you could maybe explain the mechanics behind and maybe some of the advantages of the remote aspect of the simulfrac and trimal fracs.

Yeah, sure, Mike, that's a great question. It really starts with collaboration and teamwork between the teams, between the asset teams, the surface land team, and then finally kind of culminating with the operations team. And the fundamental thought behind it is if you have two surface locations that are some distance apart, maybe 1,000 feet or 2,000 feet, that you can take those two individual pads and use whether it's surface casing, casing that's truly just laid on the surface, to connect them together and complete those wells as a one operation with one frac fleet. And so that was really kind of the theme behind this. We pilot tested it in 2021, successfully piloted it down on actually on our state line acreage on the Vaughney pad where we strung two, three well pads together that would not have been simulfrac candidates and made them a six well pad that we were able to use simulfrac on. And so that's really kind of the fundamental theme behind it where it's truly an engineering efficiency. We're taking two pads that otherwise would not be able to benefit from the process. And with engineering collaborative teamwork with the land team and everybody else, we feel that we've been able to transition over 90 wells that otherwise would not have been simulfrac candidates into those type of well completions. And the savings that has been tied to those has been upwards of $20 million. And so that's really the idea of we work with the teams to set up well pads that will naturally be able to be simul or trimel, but in the instance where it's not, we can tie those two pads together and convert them to a simul or trimelfrac well completion.

Thank you. One moment for our next question. Our next question comes from the line of Oliver Kwong from Tudor Pickering Holt & Company.

Good morning all and thanks for taking my question. Just wanted to hit on LOE. You all point towards some trends as a result of emerita volumes flowing through for Q4 and into 2025. Just wanted to see how's the pending sale of your opinion interest being flowed through within where the Q4 guidance range sits today and also any more specifics of things that you all are planning to do in the area that would allow for you all to reduce this component on ops in the emerita area.

Hey Oliver, this is Glenn. I'll take the question. So as it relates to opinion, that really doesn't have any effects. The sale of opinion doesn't really have any effect on the op-ex for those properties. So I'll start with that. And then second, I do want to thank and express my appreciation for the professionalism of the emerita dev employees that helped us this quarter in transitioning and ensuring that we did have a smooth transition as we took over operations for those properties. As we mentioned in the release, the operating expenses for those properties are notionally higher than Matadors legacy production, base production and so as a result, we did guide up slightly in Q4. I would say Oliver, give us a little bit of time. We have recognized already a million dollars a month in potential savings. A lot of that relates to the use of recycled produced water as I mentioned for hydraulic fracturing operations and then production chemical spend is a place where there's some room for optimization we feel and are already implementing plans to get those costs reduced and more efficient chemical usage. And then also on the personnel front, we've seen optimization there as well as we've really kind of moved their operation center from Austin out to New Mexico where it's field-based. So there's three examples and we're looking at other ways to improve OPEX and looking forward to telling you a little bit more about it as we continue our operations out there. We're in it about a month so give us some time and there'll be a lean machine. Yeah,

emphasize that we don't have any problems with the way AmeriDev did it but we lean towards the practice of having a field-based operations as opposed to more remote on that. But very pleased with the quality of work. But again, what excites us most about AmeriDev as well as the advance is the quality of the rock. I'm not a geologist but our geological and engineering group to a person talk about that's good to have this kind of rock. It matches up with whatever we have advanced fit very perfectly adjacent to much of our properties and the same with AmeriDev. It fits in adjacent to ours so that was also an argument for that it'd be a good fit in the long run for us. But it's a good question and again, I would say to all of you, if you, after this call is over, don't hesitate to call in and we'll try to answer all your follow-ups and make sure you understand that this is, was really a great quarter for us and really sets up 2025. So I think we have one more question. Go ahead. Go ahead, E.

Thank you. One moment. Our last question comes from the line of Scott Hanold from RBC Capital Markets.

Hey, thanks. Just hoping to get the one follow-up and obviously the commodity market's been very volatile out there and you all have been very diligent in terms of looking at different ways of building the business and ground game is obviously a big component of that and I'm just kind of curious, what are you seeing on the ground game front right now? What's the appetite out there from buyers and sellers and do you think, looking into 2025, do you feel good about your ability to continue what you've done so far?

Yeah, it's an interesting point, Scott, but what I'd like to emphasize, what I've seen over my 40 years is that when you have a period of time where you have a lot of M&A, it's followed by a time of rationalization, particularly the larger the transaction by the big companies, for example, they'll buy all of these, a whole bucket full of properties. Some of those won't fit their plans and they will rationalize them and sell them and that creates a buying opportunity, not only for us but others, where they would fit. I think you'll see some of those come along, a fair amount of rationalization will lead to some and the second is that there are some people in the private equity area, the private equity companies tend to turn over their assets every four or five years or some period of time, so you always have some of those coming on the market and then you have situations where proposed wells don't fit their plan or fit their budget and we like to try to be that company they turn to when they need a quick answer or help that they have more interest than they really want and wanna lay some off, so we always try to be open to that and it's surprising that things are going on all the time. Same way in agriculture, you have farms and ranches trading all the time and there'll be some years where there are more and some years where there are less but if you have a continuing presence and keep out there making deals and if you do a deal and it ends on a happy note like advance and AmeriDev, we hope that leads to other deals. We did a lot of deals last year, some were for more and some were for less but I think our land department, give a big shout out to Van and John that they ended those happy where a lot of repeat business. Van, did I

say that right? I know you did and I'll add just a little bit to that. Scott, you've known us a long time and we've had this program consistently over the years the things we focus on are one, creating situations that are win-win for both sides and I think that leads to keeping our pipeline of opportunities full but also focusing on the best rock and focusing on the balance sheet and making sure that whatever deals we're looking at fit really well into what our operational plans are and again, our win-win on both sides. So with that, I think we're gonna continue these relationships and continue to keep our pipeline of opportunities full and then make the decision at the time that's appropriate whether or not it's something right for us.

Yeah, this is Brian Willie, I think this is the last question. So just a couple of things for those that might be doing the models out there. First, as regards to the gas to oil ratio, we appreciate the street's optimism about our gas to oil ratio. I think as we look at the streets, it's probably close to 62% going forward which we appreciate that but I think once we factor in our Haynesville assets, that's probably closer to more of a 60% number which really leads me to my second point which is, I think there's been a lot of talk about gas recently whether it's through AI or the new LNG terminals and I just wanna remind everybody that we have a significant gas bank that's in the Cotton Valley. I'd expect over 200 to 300 MCF of gas opportunities there. We obviously don't have those, or BCF, I'm sorry, BCF of gas. We don't have those on our reserves report yet because we don't have a plan to drill those in the next five years but if gas prices were to stabilize higher, then we could if we wanted to quickly pivot over there. In addition to the significant gas reserves we have that are over in the Delaware Basin, I think we have over 1.4 TCF right now in gas reserves and so we can increase those and become more gas if that's what's needed. And then maybe finally, I think Joe probably won't want me to say this but I'm gonna say it anyway. DCEO Magazine, which is the leading magazine here in Dallas has recently selected Joe to receive its Legacy Award. It'll be presented at a special awards presentation next week and so this is a very prestigious award. Prior Legacy Award winners include Kelsey Warren, Trevorese Jones, Scott Sheffield and Boone Pickens and just Joe's accomplishments over the last 40 years will put him right there with some of the best oilmen that our country has known. And so congratulations to Joe. I think it's well deserved. As he's grown mad at or from a company that started with $270,000 from friends and family to a public company with a market cap of six and a half billion so just wanna say he probably won't like it but just wanted to mention that and congratulations, Joe on this great honor. Yeah,

there's a lot of disbelief among my friends for this and they said they have to see it to believe it so I was really surprised by that and it just shows you if you have enough relatives, you can be elected to anything. But thank you, Brian. But again,

I

have to say that none of this would be possible without the participation of a lot of people over time, including some people from Mesa. We're sitting in the gym up church room and he came from Mesa as Boone's top engineer, Marlon Downey, these are great men that really contributed a lot. Jack Sleeper, the former president of the Gordian McNaughton. Marlon was president of both Shell and ARCO and great staff members along the way working together so I really haven't done so much. I can credit myself as much as just directing traffic among all these guys who have gone out and made it happen. So that's the main reason I like our chances going forward. Economics may change, commodity prices don't change but this group of people that are in the habit and have gotten to the point where they're making good decisions and the process is working with the collaboration, I'll agree to accept the award but you gotta know that I didn't do it without the help of everybody that's here in this room and it's probably a good time to thank all of y'all for making me look so good. Thank you. So I think that's, Gigi, I think that's our closing remarks unless somebody else has a question but thank you and thank all of you. This is a, as I said, supposedly a lifetime achievement but I'd like to think my life isn't over yet.

Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call and thank you for your participation today. This concludes today's program. You may now disconnect.