Matador Resources Co. is seeing better than expected results from recently completed wells in the Permian Basin’s Delaware sub-basin, according to CEO Joseph Foran. 

matador asset map

As a result, Dallas, TX-based Matador is increasing the midpoints of its full-year 2022 production guidance from 21.7 to 21.85 million bbl for oil, and from 95.5 to 97.0 Bcf for natural gas, Foran said upon announcing the firm’s third-quarter 2022 results. 

The upwardly revised figures translate to about 59,863 b/d and 266 MMcf/d, respectively. The midpoint of expected 2022 capital expenditures remains unchanged at $800 million. 

“Operating efficiencies, which include faster drill times and use of existing facilities, continue to improve and help to mitigate service cost inflationary pressures realized in 2022,” Foran said.

“Sustainable efficiencies such as improved completion procedures, simultaneous and remote fracturing operations and 100% implementation of dual-fuel fracturing fleets constitute primary drivers against cost inflation by reducing days spent on wells and eliminating the need for certain materials such as diesel fuel.”

Matador’s drilling and completions costs year-to-date through the end of 3Q averaged $820 per completed lateral foot. “Matador continues to expect service cost inflation to continue into the fourth quarter of 2022 but still expects drilling and completion costs to average $890 per completed lateral foot for full-year 2022,” management said.

Matador added a seventh drilling rig during 3Q, “which has enhanced technical specifications highly sought after by the industry,” Foran said. “This rig’s increased set-back capabilities, for example, allow for an approximate 10% increase in drill-pipe to be racked in the derrick, while other unique features allow faster walk times on multi-well pads. 

“As Matador continues its push for longer lateral lengths and multi-well pads across its Delaware Basin assets, these advantages should continue to help to minimize drilling days and further improve operational and capital efficiency.”

Meanwhile, Matador’s “growing midstream business, including our 51%-owned joint venture San Mateo Midstream and our new acquisition Pronto Midstream, which is now fully integrated, has delivered strong results in the third quarter highlighted by all-time quarterly highs for third-party midstream revenues and water handling volumes,” Foran said. “The team’s strong execution continues to help us deliver wells both on time and on budget across approximately 450 miles of pipeline in our midstream business.”

Foran highlighted that Matador has reduced its outstanding debt by $775 million over the past two years, and that its reserves-based revolving credit facility has been completely repaid. 

Matador reported net income of $337.6 million ($2.82/share) up from $203.6 million ($1.71) in the same quarter last year. Quarterly revenue totaled $840.9 million, up from $472.4 million.

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Production averaged 105,215 boe/d, above expectations of about 101,000 boe/d, comprising 270.3 MMcf/d natural gas and 60,163 b/d oil. These figures compare to 90,033 boe/d, 235.7 MMcf/d and 50,747 b/d in the year-ago period.

The outperformance was driven by recently completed wells at Matador’s Stateline and Rodney Robinson assets in the Permian Delaware.

Matador’s production has risen by nearly 50% from 73,000 boe/d in 3Q2020, management highlighted.

Average sales prices after hedging were $7.55/Mcf for natural gas and $91.69/bbl for oil, compared to $6.05/Mcf and $58/43/bbl in 3Q2021.

Capital expenditures for drilling, completing and equipping totaled $241.8 million during the quarter, up from $121.1 million a year earlier.