Matador Resources Company

Good morning, ladies and gentlemen. Welcome to the third quarter 2026 Matador Resources Company earnings conference call. My name is Sarah Gallant, and I'll be serving as the operator for today's call. At this time, all participants are in a listen-only mode. We'll 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. The replay will be available on the company's website for one year as discussed in the company's earnings press release that was issued yesterday. I will now turn the call over to Mac Schmitz, Senior Vice President of Investor Relations for Matador. Mr. Schmitz, you may proceed.

Thank you, Sarah. Good morning, everyone, and thank you for joining us for Matador's third quarter 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 Thank you for joining us today. earns a release under the Investor Relations tab on Matador's 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 it is a pleasure to visit with you all today. And I want to begin first by thanking each of you who wrote a note that we thought Mac and I thought the notes were more thoughtful and thorough. As well as any that we've had in the last couple of years. And we really appreciate that and want to reiterate to you, we'd very much like to have each of you come visit us sometime, have lunch or breakfast with us, see our facility and what we think makes a difference in our MaxCom room. It goes 24-7 and some other differences, and I think it'd give you a more complete picture of the future we have as well as meet in person some of the people that visit with you during the in between these analyst calls. That's the first point. Second is that we've had a lot of changes here for the better. This year there's some opportunities came up and we were able to take advantage of them with the support of our banks and our shareholder groups. and want to thank them for helping to lean in and let us execute on these. And since then, the pay down that what we promised, yes, we borrowed a lot of money, but we said we would make extra effort to pay it down. And we first did $100 million a month or so ago. And just recently, we did another $50 million. So on the money that we borrowed, I think it's five to six hundred million. We've now paid down 150 million and hope to make further pay downs here in 2026, but certainly take care of it in 2027. Finally, a shout out to the teams is that they've put in a little extra work and effort And what was our challenge to them is we were acquiring Cardinal, Paloma, and Ridge Runner. We said, we're going to ask you all to put in a little extra time and effort to make sure this works out. And they have. And I think you'll see the effect in our results for this quarter, but even more so in the upcoming fourth quarter. But I look forward to taking your questions and seeing what we do. As you think of what questions you may want to ask us, I'd like to just say a few current remarks, emphasize that our production has grown 10% to over 230,000 BOEs from December 31, 2025 reserves of 667. Now, showing you the difference is that we've now increased that to over $700 million. So we continue to have growth in our reserve base, substantial growth, which allowed us to increase the dividend eight times in five years from $1.50 to $1.75, a 17% increase. Finally, There are a lot of news to tell you, but we're trying to live it. A lot of good news, but perhaps the most important, impactful, is we are now moved away from Waha to selling our gas with the Hugh Brinson. And so last month we were having to pay at Waha 79 cents for them to take our gas so we could keep our oil production going. And this month, we were getting paid $299 for our gas, which has made $162 million in cash flow compared to an $80-$38 million in the second quarter of 2026. So big swing there of over $200 million, and thanks E.T. for finishing the Hugh Brinson, and we look forward to working further with them. In the meantime, we've talked and happy to have your questions about our strategic acquisitions. We're currently drilling three Corby wells on the adjacent federal acreage. This is important because we got permits, we got the lead, and we got them going in a matter of months. So turned on, that may be one of the best wells that we will have drilled in Matador's history. So really have our fingers crossed there. Very hopeful. Teams are excited. We'll see what happens, and I know we'll talk about that in the future. Woodford Discovery continues to outperform our initial expectations. It's now produced over 140,000 barrels in just over five months. Our high end of the range originally was 100,000 barrels in 100 days. We've outperformed that. Kudos to the team, everybody working on that. Then people have said, what are you going to do with your Paloma? Again, Paloma has a good eye for Good Acreage, and we were very excited to do the deal with them and get to know them better and see if we can't find more to do. So as analysts, you can expect up to 25 wells on acreage associated with Paloma over the next year and 10 to 12 additional wells on associated federal lease sale acreage. and the great advantage of the federal lease is it's an eighth lease so you have a higher net revenue and one well holds the whole acreage and even if you don't drill you have 10 years to get your first well drilled. But we will drill all the federal acreage faster than that. It's exciting acreage and we think best part of the basin. The cardinal acquisition has now been integrated bringing nine new third-party customers to the San Mateo system. It's been in good shape, and again, Paloma did a good job with that development of developing the Cardinal business plan. And that fits in, and now we have, if you look at the maps, you'll see that we're all around the basin. We're adding a few connectors to it to make it that much more efficient. and I think in the coming time you'll hear what the material contributions that the cardinal system has said going in now into the Matador San Mateo system. So all in all, I always like to be careful and say that's a lot of good news all at once and Everything is looking pretty good for us, and we're excited about the coming year. We'll have more on that when we report on the fourth quarter. But I think what you'll see is continuing good performance and continuing improvement in our efficiencies.