Matador Resources Co. expects a significant increase in oil production this year compared with its 2016 results, thanks in large part to its decision to drill and complete a five-well operated program in the Eagle Ford Shale, the company said Thursday.

Dallas-based Matador updated its previously released 2017 guidance estimate for oil production to 6.9-7.2 million bbl, a 38% increase at the midpoint compared with 5.1 million bbl in 2016, with 2017 natural gas production expected to increase 11% to an estimated 33-35 Bcf. Total oil equivalent production in 2017 will be an estimated 12.4-13.0 million boe, a 25% increase at the midpoint compared with 10.2 million boe in 2016.

"These updated guidance estimates primarily reflect the company's decision to drill and complete a five-well operated program in the Eagle Ford shale in South Texas, with economic returns expected to be comparable to Matador's Delaware Basin wells, in order to maintain the leasehold associated with this drilling program and to enhance the value of its Eagle Ford asset," Matador said. Capital expenditures associated with the five-well operated program are anticipated to be approximately $30 million.

Matador has begun drilling the Eagle Ford program and expects all five wells will be completed and placed on production late in the second quarter. The company said it has four drilling rigs operating in the Delaware Basin and expects to add a fifth in the second quarter. Matador expects to direct 93% of its estimated capital expenditures to drilling and completion and midstream activities in the Delaware Basin this year.

Earlier this year, Matadorflagged initial test results from three Permian Basin wells in Lea County, NM, which in aggregate over 24 hours flowed 7,856 boe/d, consisting of 7,172 b/d of crude and 4.1 MMcf/d of natural gas. The Ranger asset wells, Mallon 27 Federal Com No. 1H, 2H and 3H, are the first three Matador-operated wells drilled on acreageacquired from Harvey E. Yates Co. two years ago.       

In February, units of Matador and private equity firm Five Point Capital Partners LLC formed joint venture San Mateo Midstream LLC to operate and expand Matador's midstream assets in the Permian's Delaware sub-basin in Eddy County, NM, and Loving County, TX.