Matador Resources Company

good morning ladies and gentlemen welcome to the first quarter 2026 matador resources company's earnings conference call my name is stacy and i'll be serving as the operator for today at this time participants are in a listen only mode we 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 earning press release issued yesterday. I will now turn the call over to Mr. Mack Schmitz, Senior Vice President, Investor Relations for Matador. Mr. Schmitz, you may proceed.

Thank you, Stacey. And good morning, everyone, and thank you for joining us for Matador's first quarter of 2026 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 first quarter of 2026 earnings release under the Investor Relations tab on our corporate websites. 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 good morning to everyone. And thank you for participating in today's earnings conference call. We appreciate your time and your interest in Matador very much. I've been coming to you for a long time. It's actually 40 years, over 40 years in time. And And I can unequivocally say that this is one of the more challenging times over that history, but I also feel very good that our team is experienced enough and our balance sheet is strong enough and our lease position is strong enough that we can meet these challenges. And I just want to point out to you what I... over the years, keeping it simple, was to look at three things. Is production up? Yes. Is our production up? Is our capital spending the same or down a little bit? And then finally, is your debt down? So we've reduced debt. We kept the lid on capital spending for those, and our production is up. And our balance sheet is in the best position that we've had during this entire time. So we're ready to meet whatever challenges and opportunities as they may come along. And I'd like to say, emphasize the point about the teamwork here. It's continually gotten better and better. And times like this gets everybody working with extra effort And over time, we've generally made our best gains in times like this. So everybody wants $100 oil or more, but these are often times that help build the company. And so thank you for your thoughtful analyst reports, and we look forward to your questions and want it. say again that we're open to y'all. We want y'all to know you're welcome to come visit us where we will be able to spend more time and you meet more of our people. So ask away and I turn it back to you, Mac. Sounds great. Stacy, we're ready for Q&A. Thank you very much.

Thank you. 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-ups from you. And with that, our first question comes from Neil Dingman with William Blair. Morning, guys.

Yes, ma'am. Morning, guys. Nice quarter, Joe. Joe just loved what I asked, but I'll just try to focus my first and only question on production growth and just wondering, Historically, you all have grown production a bit more than this year. And as you pointed out, there's certainly absolutely no balance sheet constraints when you look at now the balance sheet and everything that you all have. So I'm just wondering, when you all laid out the plan for this year and you think about the growth for the remainder of this year and the next year, is it largely influenced by how you see the macro environment? Is it how you all are thinking about the potential growth? incremental capital spend, or what is the largest drivers behind how you're thinking about laying out the growth?

Thank you, Neil. That's a great question, multifaceted. As we're looking at it all different ways, is that obviously as variable as this year has been, you know, price of oil is up, war breaks out, you know, one thing has been somewhat chaotic. So we've discussed all those different plans and what we do in each case. And Matador's always tried to be nimble, to be able to change plans as the environment, business environment changes. And we've been through COVID and we came out better from that. We've been out of, I don't know, all the different crisis that you get in the Mideast. We've come out better from that. And that just reflects, I think, the growing teamwork. We're still getting better and better out here. We've got people we've gotten to know each other really well over the years, and it's really been easy to go down one direction or another. Presently, we think the emphasis should be on getting production up and your debt down and keeping a handle on your capital spending. You want to spend some capital, of course, to keep growing, but you just don't want to be reckless with it and make each dollar count. And that's been our approach, and it's been a collaborative effort with each of the department heads. And I can, you know, if you or others come to business and get around the table with us, I think you'll see the interaction and the teamwork and we'll leave feeling confident that this is a group that works together and has good ideas and in times like this they can be trusted and have proven themselves in challenging environments like this and have produced good results. So that's how we've grown from $270,000 in 1983 the present market cap, somewhere around $8 billion.

Neil, this is Chris Calvert, EVP, CFO. The one thing I would like to add to that, and obviously I think those are great comments from Joe, when we think about growth and the optionality as well that comes with that, you have to forward think about potential restrictions or constraints to growth. And I think for Matador, We attack those and we look at those in a very unique way. You know, the inventory scarcity question is something that's not really applied to Matador. You know, 10 to 15 years of inventory with extremely good returns, 50% or better at different commodity prices. Takeaway constraints. We look at the catalysts that Matador has, whether those are our fully integrated midstream business of San Mateo or the Hugh Brinson catalyst that will alleviate negative Waha pricing in the back half of this year. operational efficiencies that drive capital efficiencies. As we think about growth, you want to have capital efficiencies that come with that. And so for us, we think we're in a position to where when we think about growth, we don't have some of the potential constraints that I think some of our peers are affected by. And so we have that optionality to potentially grow if we want to, but obviously we're looking at it from kind of the profitable growth at a measured pace standpoint.

Stand by for our next question. Our next question comes from Scott Hanold with RBC Capital Markets. Scott, go ahead with your question.

Yeah, good morning, all. Good quarter. And, you know, I may actually, you know, kind of keep down the same line as Neil's question. And, you know, look, you guys have historically seen better and better efficiencies in your operations and have pulled forward activities. So as you look at the balance of this year, you know, what is the opportunity to kind of continue that trend of pulling things forward? And, you know, how much more could that, you know, add to, you know, your growth this year without, like, impacting, you know, capital too much?

Yeah. Hey, Scott, this is Chris Calvert again. You know, when we look at it, you look at the first quarter, the outperformance of the first quarter, you know, the production outperformance itself was buoyed by and it helped with, outperformance of wells that were turned online in the quarter. Then you also had acceleration of activity. There were two additional net wells that were turned on in the quarter. The efficiency story that drives those results will play out through the remainder of the year. And so while we did not increase our full year turn in line count, you can go back to the tail end of 2025, the operations team working hand in glove with the midstream team, flow assurance that it provides, we were presented with the opportunity at the back half of last year, the option to accelerate activity at favorable oil field service pricing. And so we made the decision to do that. And so that seems to be historically operationally how we view the world. And so as efficiencies continue to present themselves, there's likely gonna be the opportunity to potentially pull wells into the year. But right now it's just a little too early to kind of make that judgment. So I think for us, we're focused on the production growth that we can from well out performance And then incremental production growth that is on the back of efficiencies, which comes in leading wells faster into the quarters.

And one other thing is we're opportunistic about acquisitions. The lease-by-lease, brick-by-brick approach that we've talked to before and whatever else there are deals coming down the line, we just try to be careful to be sure that as Chris said is that it's proper growth at a major pace.

Our next question comes from Gabe doubt with truest. Gabe, you have the floor.

Thanks, operator. Morning, everyone. Morning, Joe. Thanks for the time. Was maybe hoping Joe could just get an update on your thoughts around San Mateo, another good quarter out of that entity, and just curious how we should think about any type of strategic options for that asset this year. Thanks, everyone.

Gabe, that's a great question, too. If we give that a lot of thought, the midstream has turned into a very valuable asset, not just in money terms, but also in providing us with efficiencies and flow assurance out there in the basin where sometimes that can be difficult. So it's been a great asset. Obviously, one thought has been is to take it public, although we can't really say that, but we're not trying to tempt the market. It's just we don't want to go out unless it's a good time. We don't need the money, but it's an important catalyst for us because it's grown in our summer literature. You can see how many miles of pipeline that we have. It's flowing water, gas, and oil. It provided great flexibility to our operating group to be sure we get our our product to market. The Hugh Brinson deal that we've discussed is an excellent example of what it's done for us. When Wahaugh has had so much Navy pricing, the Hugh Brinson is coming online and moves us away from the Wahaugh market, which is Navy, over to Henry Hub, and we think it may make as much as 50 cents an M difference and multiply that by the number of the gas production we'll have this year and it's an enormous difference and we're very excited about that and getting to work with ET. I think they've been a top notch operator, very innovative and we see that as a great relationship with each other that can continue to expand. And we have other good partners that have been midstream that will give us other opportunities as our production in the Delaware is all around the Delaware. And it's not in one location or one field, but it's now throughout that basin. So we think we're set with a property set, you know, takeaway capacity, you know, experienced regs, experienced people, that this is our time to continue to progress. Our next question.

Anything, Chris? Yeah, I think the one thing I would add to that, you know, Gabe, the one thing with San Mateo and the Matador-Jolion midstream assets, you know, the strategic value of those as they pertain to the Matador E&P upstream side is the flow assurance and really the operational control. We talked in the first quarter release at length about the efficiencies on the upstream side that come in partnership with the San Mateo and really just the midstream business that resides here in Dallas with us. You can talk to water recycling, whereas 30% of the volumes of the Matador EMP recycled water volumes that we used in the first quarter came from San Mateo or Matador-Jolion midstream assets. We're actually increasing an investment. We're building a new water recycling facility, began construction this quarter that will assist and continue to grow both the upstream side from a capex savings perspective, but also a revenue side on the San Mateo side. From a gas use perspective, field use gas has been utilized in southeastern Lee County with a lot of Matador operations that we talked about that mitigate diesel spend, and so The flow assurance and the operational control is something that we are going to be focusing on as we continue to analyze the drop-down for the strategic alternatives with San Mateo. But first and foremost, it's that integrated business that we want to make sure we're thoughtful of because, once again, we don't need the cash. We just want to find the right deal, specifically the right deal that increases the value to the Matador shareholders to where we can pull that value forward.

And Gabe, this is Glenn Stetson. I would just add on to what Chris said in terms of the use of field gas. And so we highlighted in the release, but by using field gas as opposed to compressed natural gas that is trucked to location for frack, we save an average of $100,000 per well. And that advantage is in large part due to our relationship with our unique relationship with San Mateo and Matador's midstream company. And in Q1 and today, where prices are negative, in addition to those $100,000 in capital savings, we are burning that gas in the field for hydraulic fracturing operations as opposed to selling them at what negative Waha pricing.

Our next question comes from Zach Harmon with JP Morgan. Zach, go ahead with your question.

Hey, good morning. Thanks for taking my question. One thing you mentioned in the release is that you drilled your first Woodford well. Could you give us a little more detail there? What are your expectations on that well? And maybe could you talk about what the inventory opportunity set could look like for the Woodford if that well does prove to be successful?

Thanks. Hey, Zach, this is Chris Calvert again, and I'll pass it over to Andrew Parker here in a second. But I think, you know, expectations of this well, you can look at surrounding offset production. We have strong encouraging expectations that this well will come on from a hydrocarbon perspective. Operationally, things are moving right along. This well has been successfully drilled and cased with completion operations ongoing. From a productivity standpoint, you know, we can expect to discuss this probably on the next call in July. but I think I can take it over to Andrew Parker here to talk about some of the geoscience. Yeah, thanks. This is Andrew Parker, ADP of Geoscience. Thanks for the question. We're real excited about the Woodford. This is a huge catalyst for us this year, and the land team has really done a tremendous job putting this position together, but more importantly, the whole team has really just done a tremendous job executing on this first well. So we're excited about it. It's still early. But, you know, we like our position and we like our chances here. And, you know, we're looking forward to reporting more later in the year. But so far, so good.

And, Zach, this is Tom. I'd just like to remind everybody that we haven't currently counted any of the wood in our inventory today. So that would be the upside if we get success there.

Either in the reserves or in the lease position, it's just been done.

Our next question comes from Phillips Johnston with Capital One. Phillips, go ahead with your question.

Hey, thanks for the time. I wanted to ask you about your quarterly CapEx cadence for the year. Your second quarter guidance implies you'll spend around 55% to 60% of the budget in the first half of the year. So I wanted to get a sense around the shape for the second half. Would you expect it to be fairly rateable at a little over $300 million in both Q3 and Q4, or is one quarter significantly cheaper than the other?

Yeah, this is Chris Calvert again. Thank you for referring back to the first quarter. I think the 55% to 60% guidance that we put out with the February release. First quarter, where we came in the first quarter, 428 was right in line with what we expected. The second quarter, midpoint, if you put those two together, it puts us right in that 55% to 60% range. And so the first half of this year, the capital spending is exactly in line with what we told everyone. As you look at the back half of this year, It definitely steps down from where it is on a quarterly basis. We haven't really put any sort of forward messaging to it. But you can look at whether it's till cadence, you know, over 50% of our tills are occurring in the first half of this year. So you would expect a sizable drop in the back half of this year. But once again, as efficiency shifts, you know, I think it's a little too early to put any sort of capital cadence to the third and the fourth quarter, other than they will be down from the second quarter number.

Our next question comes from Paul Diamond with Citi. Paul, go ahead with your question.

Good morning, all. Thanks for taking the call. I wanted to touch base on your improvement in BNC Prolateral Foot. Talk about the levers you see available in the next coming quarters and I guess the trajectory here getting down to that sub-800 level.

Yeah, this is Chris Calvert again, and I think The range that we put forward in the beginning of the year, 785 to 805, you know, 6% down from where we were in 2025. And I think as we look at the leverage to maintain and finish towards the bottom end of that range target for the year, it's a lot of the similar levers that we have spoken to in the past. It's multi-well completions, utilization of simul and trimul frac. It's the full utilization of electric fleets with, you know, 90% reduction in diesel usage. Continued water recycling usage and improvements in water recycling. In the first quarter of 2026, we recycled over 70% of our water came from recycled sources. And so looking forward, how do we continue to push that? It's drilling and completing wells in shorter cycle times. Year over year, we're about 13% faster just on average from cycle times. But I think the really impressive parts of this are in the deeper parts of the basin as we extend laterals, the improvement grounds that we have made. And so if you look at three mile well laterals, for example, in 2025 versus 2026, our best three mile well we've drilled this year in under 16 days, which was a 40% improvement versus 2025. And so I think as we look at levers going forward, it's going to be reduced drilling times, increased use of recycled water, vendor relationships, AI integration within certain operational processes, MaxCom integration, our MaxCom room here, we're in our eighth year of MaxCom, continuing to see improvements, continuing to see records broken, three-mile U-turns. I think the laundry list is long of levers on how we can continue to improve upon that number.

Our final question this morning comes from Philip Jungworth with BMO. Philip, go ahead with your question.

Thanks. Good morning. One of the other Delaware operators this week was talking a lot about AI and just wondering how is Matador either implementing or looking at this in its own operations to enhance efficiencies on the production optimization side or also help on the drilling and completion side?

Phil, we kind of game tackled that around here, and it's coming – contributions to executing a competent AI program is coming from different people. It's a committee working together. Glenn Stenson is somewhat the leader and Jordan Ellington of that. And the effort is to understand it, think about applications, but again, make sure they're not missteps and that people As you go in a controlled, organized fashion with your group working together, it builds confidence. So we're trying to learn at a measured pace, too. And I think Lynn can give you more specifics, but we see use of it. But again, you want to build confidence if you put it to use and It fails in some aspect of it. You get people that might be leery, so we want to go slow but sure and make sure it's practical and fits in with what we're doing. It's pretty remarkable, but I think it's like any tool. You've got to be careful and be sure you understand its use, Glenn.

Yeah, Joe said it, I think, nicely. We're continuing to increase our integration of AI-driven analytics in pretty much every facet of our operations. On the production side, we've looked at this and we bring in over 40 million data points a day. And we have a control room that is is monitoring those data points along with our field staff in real time. And the goal for us is to make those actionable and help to reduce downtime and identify inefficiencies so that we can address them as quickly as possible. On the completion side, similarly, activating in real-time monitoring what the hydraulic fracturing operations, the pressures, the volumes that are coming in from a water side and from a sand side, even in terms of logistics, I think is helping us out greatly as we expand the use of simul and trimulfrac all of that becomes paramount. And then on the drilling side, Chris mentioned MaxCom. We set over 36 records just in this quarter in different hole sections and in the lateral using AI to help target in the lateral to make sure that we're not just in the preferred target but in the preferred portion of the preferred target and making sure that we can drill faster, that ultimately, you know, you put it all together and we get the results that you saw in Q1 that we hope to replicate and continue to replicate and get better.

Yeah, I think y'all have done an excellent job. And I'd like to stress that the committee is made up from people, all departments, not that everybody in that department is still, but there's a representative from each of the departments so that it's, you know, that they're, are backed by a whole team, and they've been working together in a very nice way, monitored by our board, and we're optimistic that it's going to have an application, more so in some areas than others, but it's for real, but you just don't want to make a bunch of mistakes as a caution and have the staff lose confidence in the work that it's doing. So I'm very pleased. I think the whole management team, Van and Brian, are all in the same view as others that this can become a very important tool for us going forward. Brian?

I think that's right, Joe. I think we're taking – we're really, really proud of the approach we're taking to this. be methodical about it. We see the benefit of it. And as Glenn and Joe talked about, we're seeing real applications that we're able to get real value from. But I think as Joe said, we're going to be fast followers on this. We're not going to jump in and make a bunch of mistakes. And so I think we're taking the right measured approach with it.

Thank you. Ladies and gentlemen, this ends the Q&A portion of this morning's call. I'd now like to turn it over to management for any closing remarks.

Thank you very much for that. And I do want to encourage, you know, the people that are listening, if you have follow-up questions, to please call Mac Smith here at the office. And, Mac, give them your number.

Yeah, you can reach me at the Investors Inbox, which is investors at matadorresources.com, and the phone number is 972- 371-5225, and we're always available.

And second is, you know, if you're here in the area, come by. We are a public company, and we like meeting our shareholders. As you know, we begin not through private equity but through friends and family, and we try to perpetuate that feeling even today that we like knowing our shareholders and like all of the owners, and to be sure that you know that we're putting your interest first and want to invite you to our annual meeting this summer. And I think we have a display of equipment that when you get to see the drill bits that we're actually using and meet the young engineers and geologists that have led this to a successful program and same thing on our completion activities i don't think cliff gets enough attention on those but has done an excellent job of continuous improvement of our fracs working closely with our vendors on that and their research so we We think that some of this that you get to see, that industry has made great strides over the last 40 years. And when they see pictures of me on the first year out there in the old Kelly rigs, the drilling engineers think I was driving a Model T or something like that. industry's made a lot of progress and still making a lot of progress. So I think our outlook is very good, and we take a team approach on all of this. So if you have other questions, call in to Mac, and we'll try to take care of you. Back to you, Stacy.

Ladies and gentlemen thank you for your participation today. This concludes today's program.