Matador Resources Company

Good morning, ladies and gentlemen. Welcome to the fourth quarter and full year 2024 Matador Resources Company earnings conference call. My name is Lisa, 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 the replay purposes, And the replay will be available on the company's website for one year, as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Max Schmidt, Senior Vice President, Investor Relations for Matador. Mr. Schmidt, you may proceed.

Thank you, Lisa. Good morning, everyone, and thank you for joining us for Matador's fourth quarter and full year 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 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 that we issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with the fourth quarter and full year 2024 earnings release under our investor relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our founder, chairman, and CEO. Joe?

Thank you, Mac, and thank you all for listening today. I would like to begin by thanking everybody for the thought and effort they put into their notes, but I'd also like to start out by re-emphasizing what we consider most important When we take over a property like the AmeriDev, it's a $2 billion deal. Obviously, it's going to have a big impact. So how do we treat that? And we really treat it like we do all of our other properties. For the past 40 years as I've done this job as CEO, we put an emphasis on year-to-year growth. We think that's the most important number. You can look at other statistics, and I would say they're all important, but for us, the most important is year-over-year growth. At the same time, when we buy property, the first thing we try to do is look for the efficiency gains that we can do. Also, a development plan. that we can do. And from there, we worked to incorporate it and assess what you can do. The AmeriDev properties were special because it's such great quality rock that gives us a lot of choice. Most times when people sell things, it's not their best rock. But in the AmeriDev case, it was really good rock. They had done a good job operating it, and we wanted to find those. What else could we do? And we could have easily – we put a rig out there. Our first rig went out there nine days after acquiring the property, so we could have put more rigs out there and easily increased the production in a sequential basis. But we thought it was more important – to set it up for long-term by the year-over-year growth standard. And in that regard, for 40 years in buying properties for Matador, in those 40 years, we've grown a little over 20% a year for 40 years. And that's kind of the standard we have. And we feel the AmeriDev properties will meet that standard, particularly as we organize a drilling plan, how exactly we want to develop it between the development wells and the step-out wells. So we thought a little time on that should be done. Now, we will have one of the ways of the efficiency is our batch drilling that we've done there, and that has saved us an estimated $30 to $50 million by drilling them in the batch mode and then bringing them on. But it does have an effect on the sequential growth, which is essentially a timing problem. It's not a reserve problem. It's a timing deal. And in the first quarter of last year, I mean fourth quarter of last year, in the first half, we only put two wells online because we had a big group coming up behind it. And so in the next 45 days or so, we'll probably bring on 30 wells or more. And you can see what I mean. It's a timing problem. If we had closed and taken over AmeriDev two weeks earlier, we wouldn't have this discussion of of whether we have a sequential problem or a miss as some of y'all described it. And so we ask that, you know, if you're uncertain about our timing on things, please give us a call. But the year over year matters because I can report that we expect to have growth, uh, approximately 30% for the first quarter of this year compared to the first quarter last year. Second quarter is going to be about the same, 29% or 30%. Third quarter, you know, again, 20% or more. And by the time we finish the drilling program in the fourth quarter, we think that will be comparable numbers as well. So we're very excited about this. We're not seeing any disappointments, but want you to know that I don't want to tell you how to do, you know, your analysis, it's certainly understandable why some people want to do sequential. But in this case, I think you have to look at the year-on-year numbers. And when you look at the total reserve picture for us, year over year, from the fourth quarter of 2024 to the, you know, from the fourth quarter of 2023 to the fourth quarter of 2024, you see that we've grown our production from like 4.6 million BOEs to over 6 billion BOEs. And that's what I think matters. Has our shareholders increased their assets? Yeah, and that's why we felt so comfortable raising our dividend. Could we have done more? Yeah, I think that we could have easily done some more, but it's probably more prudent given the volatility of commodity prices to wait until the fall when we've typically given a raise, but wanted to express to you our confidence. And second is to note the insider buy-in that has occurred. You had over 30 transactions by the senior management. That's SVPs and higher, VPs. And so you have that. But even more important statistic to us and comforting to me personally is that over 95% of the staff are participating in the employee stock purchase plan. So everybody here they've been here at any time at all, has become a shareholder and an owner. And if you've ever attended our annual meetings, you'd meet many people, a good percentage of them are shareholders. They've been shareholders for 40 years or more, going back to when we had the partnerships and the like. So there's great confidence, and we thought it was most prudent not to rush in with trying to drill wells and boost production but it was ever bit important and more so to look at containing the cost and making sure of what we wanted to do next. So saving 30 to 50 million should not be disregarded but taken into account of whether you want to emphasize year over year growth or quarter-to-quarter growth and look at the timing when you're bringing on wealth. So if two weeks is the difference, I would go with the year-over-year growth that I mentioned is going to be 20% to 30%. So with that, I'd like to open it up to questions, Mac, but give you an idea of how we evaluate it and why we've emphasized year-over-year growth, but we still think it's important to look at sequential, and that's why we provide you those numbers itself. But our personal view is that year-over-year number is the most important.