Matador Resources Co. is moving forward with its plan to target the wet gas and oil-prone Eagle Ford Shale of South Texas this year while ramping down development of its dry gas Haynesville Shale acreage in North Louisiana, the Dallas-based company said Tuesday.

In a conference call with analysts, Matador reported record production of 48.1 MMcfe/d in 1Q2012, a 27% increase compared with 27.8 MMcfe/d in 1Q2011. Oil production for the first quarter of 2012 was 200,000 bbl -- more than the company produced during all of 2011 and 2010 combined -- while natural gas production slipped to 3.2 Bcf in 1Q2012 from 3.3 Bcf in 1Q2011.

"The decline in natural gas production is due primarily to the company's decision not to drill any operated Haynesville shale natural gas wells in 2012 and the partial curtailment of natural gas production from several non-operated Haynesville shale wells in North Louisiana," Matador said.

Matador is currently running two rigs in the Eagle Ford -- one in the western portion of the play (LaSalle, Dimmit and Zavala counties) and a second in the eastern portion (DeWitt, Karnes, Gonzalez, Wilson and Atascosa counties) -- and plans to keep both active for the rest of the year.

Five Eagle Ford wells were completed and placed on production in the western portion of the play during 1Q2012, all in LaSalle County, and a sixth well in the area was recently completed and placed on production, Matador said. The western rig recently finished drilling operations on Matador's first Eagle Ford test on the Glasscock Ranch lease in Zavala County and completion of that well is expected sometime in June. Matador plans to drill two more wells on the Glasscock Ranch, an upper Austin Chalk test and a lower Austin Chalk test, before moving the rig back to the Martin Ranch and Northcut properties. The company plans to keep the western rig active for the rest of the year.

In the eastern Eagle Ford, Matador in 1Q2012 completed and placed on production two wells and drilled three others which are scheduled for completion in late May. In addition, the company recently participated with EOG Resources in drilling an Eagle Ford well on joint acreage in Atascosa County; completion operations on that well are currently being finalized.

Matador participated in 12 gross/0.6 net non-operated Haynesville Shale wells that were placed on production in 1Q2012, but said it has no plans to drill any operated Haynesville shale wells this year.

Joining industry trend of transitioning from dry natural gas targets to more liquids-rich plays due to market economics, Matador said earlier this year that would target the Eagle Ford Shale while ramping down the development of its Haynesville Shale acreage (see Shale Daily, March 15).

The independent exploration and production company estimated its 2012 capital budget at approximately $313 million, with approximately 94%, or $295 million, earmarked for oil and liquids opportunities, including the allocation of approximately 84%, or $264 million, specifically to the exploration, development and acquisition of additional interests in the Eagle Ford.

Matador reported oil and natural gas revenues were $29.2 million in 1Q2012, leaping 113% from $13.7 million in 1Q2011.

Matador reaffirmed previously announced guidance metrics for 2012, including estimated oil production of 1.4-1.5 million bbl and total natural gas production of 12.5-13.5 Bcf.