2015 Analyst Day Presentation February 5, 2015 NYSE: MTDR
Welcome and Opening Remarks
Previous Oil Price Declines Have Created Opportunities for Matador(1) Comparison of Major Oil Corrections and Major Matador Turning Points Since 1980 Length of Oil % Increase in Oil % Change in Price Decline Price Date Event Oil…
Todays Agenda Welcome and Opening Remarks Joseph Wm. Foran, Chairman and CEO Special Guests: George M. Yates, CEO, HEYCO Energy Group, Inc.; other HEYCO team members HEYCO Acquisition and Midstream Initiatives Matthew V. Hairford,…
Keys to Matadors Success Over Last 35 Years(1) People We have a strong, committed technical and financial team in place, and we continue to make additions and improvements to our staff, our capabilities and our processes Board and…
Matadors Execution History Doing What We Say Matador continues to execute on its core strategy of acquiring great assets, developing a highly professional, committed workforce, maintaining a strong balance sheet and generating…
2014 Was Another Very Solid Year for Matador Record oil, natural gas and total oil equivalent production Oil production of 3.32 million barrels, up 56% from 2.13 million barrels in 2013 Natural gas production of 15.3 Bcf, up 18% from…
2014 Was Another Very Solid Year for Matador Strong execution in each of our primary operating areas Eagle Ford Eagle Ford average daily oil production up 44% from 6,400 Bbl/d in Q4 2013 to 9,100 Bbl/d in Q4 2014 Continued improvement…
Matadors Continued Production Growth Average Daily Oil Production Average Daily Natural Gas Production (Bbl/d) 11,000 (MMcf/d) 68.5 9,095 41.9 5,843 39.8 34.1 35.4 3,317 23.0 422 91 2010 2011 2012 2013 2014 Jan. 2015…
Oil and Natural Gas Proved Reserves and PV-10(1) Growth By Area Permian 246.2 million, 24% Permian Permian 31.9 million, 5% 2.0 million, 1% Haynesville/CV 82.9 million, 13% Haynesville/CV 27.6 million, 6% Haynesville/CV 193.4…
Matador Has Experienced Strong Reserves and Adjusted EBITDA(1) Growth in Recent Years Growth in Proved Reserves Over Last 5 Years PV-10(2) per Share 30 300 ( per share) Haynesville Shale Eagle Ford Shale Start Permian Proved…
Adjusting to Significantly Lower Commodity Prices in 2015 160 16 Oil Price Oil/Gas Price Ratio 140 Gas Price 14 Oil Price /Bbl, Oil/Gas Price Ratio _ 120 12 Gas Price, /MMBtu 100 10 80 8 60 6 40 4 20 2 0…
Matadors Focus Points for 2015 1. Look for creative opportunities for deals and relationships, such as our pending joinder with HEYCO 2. Increase the cross-training and technical skills of Matadors staff to continue to improve…
HEYCO Combination Overview
Transaction Summary Matador is combining assets with the Harvey E. Yates Company (HEYCO), headquartered in Roswell, New Mexico, a subsidiary of HEYCO Energy Group, Inc., including certain oil and natural gas producing properties and…
Delaware Basin Combination Attributes Concho CTA State Com 4H: 1,063 BOE per day 830 Bbl oil + 1.4 MMcf natural gas per day (first 30 days) TWIN LAKES Concho CTA State Com 3H: 992 BOE per day 830 Bbl oil + 1.0 MMcf natural gas per…
Delaware Basin Combination Attributes Concho CTA State Com 4H: 1,063 BOE per day TWIN LAKES 830 Bbl oil + 1.4 MMcf natural gas per day (first 30 days) Concho CTA State Com 3H: 992 BOE per day 830 Bbl oil + 1.0 MMcf natural gas per…
MIDSTREAM
Longwood Gathering and Disposal Systems(1) in Delaware Basin Longwood Gathering and Disposal Systems Activities Loving County, TX Natural gas gathering and compression Water gathering Salt water disposal Oil gathering Cryogenic…
Midstream Initiatives Growing into Respectable Stand-Alone Business Expect to spend 38 million on midstream initiatives in the Permian Basin in 2015 Matador expects Longwood to be able to support its own sources of financing…
Loving County, TX Biggest Midstream Project to Date Natural gas gathering and compression Cryogenic natural gas processing plant Water gathering Salt water disposal Oil gathering SWD = Salt Water Disposal 22
2015 Capital Investment Plan
Matador Resources Company Operations Overview Market Capitalization(1) 1.8 billion Avg Daily Production Q4 2014(2) 20,807 BOE/d 30% of total production Almost no oil Oil (% total) 11,062 Bbl/d (53%) 65% of total natural gas…
2015 Capital Investment Plan Reducing Drilling Program in 2015 Reducing drilling program from 5 rigs to 2 rigs due to lower commodity prices, with primary focus on Permian (Delaware) Basin Increased working interests in Permian wells…
2015 Capital Investment Plan Summary 2015 estimated capital expenditures of 350 million 2015E CapEx by Expense Type Decrease of 43% from 2014 capital expenditures of just over Facilities, Infrastructure, Etc. 600 million 25 million…
2015 Production Estimates Oil Equivalent Growth of 41% 2015E Oil Production Oil Production Growth (Bbl/d) Estimated oil production of 4.0 to 4.2 million barrels 12,000 11,223 23% increase from 2014 despite decreased drilling 10,000…
2015 Financial Estimates Oil and Natural Gas Revenues(2) (millions) 2015E Revenues and Adjusted EBITDA(1)(2) Realized Oil and Natural Gas Prices, /Bbl and /Mcf Revenues and Adjusted EBITDA(1)(2) growth significantly impacted 76.39…
2015 Hedging Profile 2015 Hedges Oil Hedges: 1.7 million barrels of oil hedged for 2015 at weighted average floor and ceiling prices of 83/Bbl and 100/Bbl, respectively Approximately 41% of oil hedged for 2015 Natural Gas Hedges:…
Funding for 2015 Capital Investment Plan Anticipate funding 2015 capital expenditures through operating cash flows, borrowings under revolving credit facility, other bank debt and additional funding via capital markets Estimated…
Commodity Price and CapEx Estimates Significantly Impact Forecasts Sensitivity of 2015E Adjusted EBITDA(1) to Oil Price Relatively small improvements in oil price and service cost reductions can significantly improve financial…
Credit Agreement Status Strong, supportive bank group led by Royal Bank of Canada Borrowing base at 450 million (375 million conforming) based on July 31, 2014 reserves Not yet redetermined for YE 2014 reserves additions or any…
Shifting Focus to the Permian in 2015 Detail of 2015E CapEx 2015 Anticipated 2014 Drilled, 2015 Anticipated Drilling, 2015 Anticipated Drilling & 2016 Anticipated 2015 Anticipated Completion(1) Completion Completion(2) First…
2015 Eagle Ford Development Program EAGLE FORD ACREAGE TOTALS EAGLE FORD EAST Nickel Ranch 39,871 gross / 29,686 net acres Measured Depth: 17,000 18,000 Hennig Well Costs: 8-10 million 2015 CapEx 90 million 80-acre spacing Uvalde…
Permian Basin Acreage Position TWIN LAKES Permian Basin Total 42,537 gross / 29,714 net acres Gross Acres 151,293 acres(1) Net Acres 84,242 acres(1) RUSTLER BREAKS 63,473 gross / 26,704 net acres Successful performance of initial…
Wolf Area Wolfcamp X-Y Wells Performing Above Expectations 10000 Dorothy White 1H has produced 310,000 BOE (66% oil) in 12.5 months Norton Schaub 1H has produced 122,000 BOE (69% oil) in 6 months Johnson 44-02S-B53 204H has…
Ranger Area 2nd Bone Spring Wells Performing Above Expectations 10000 Ranger 33 State Com 1H has produced 184,000 BOE (91% oil) in 15 months Pickard State 20-18-34 1H has produced 71,000 BOE (92% oil) in 6 months 2nd Bone Spring…
Rustler Breaks Wolfcamp B Well Performing Above Expectations 10000 Rustler Breaks 12-24-27 1H has produced 134,000 BOE (43% oil) in 9 months Wolfcamp B horizontal well in Rustler Breaks Area - Eddy County, NM Daily Production Rate,…
2015 Permian Basin Drilling Plan 36 gross (23.7 net) wells planned in 2015 - TWIN LAKES 42,537 gross / 29,714 net acres 2015 Permian Basin Program 33 gross (21.0 net) wells turned to sales Estimated capital expenditures of 245…
Haynesville Chesapeake Elm Grove Operations 2014 non-op drilling program, primarily by Chesapeake Currently at Elm Grove, very successful Producing wells producing 17 gross (3.8 net) wells with estimated recoveries of 8 to 12 Bcf and…
Summary and 2015 Guidance Moving from 5 rigs to 2 rigs in 2015, with 2 rigs operating in Permian after Q1 2015 Permian drilling focused on Wolf development and further delineation of Ranger and Rustler Breaks prospect areas, plus…
Eagle Ford
Eagle Ford 2014 Accomplishments 300 Increased net oil production rate by 43% from 6,400 Bbl/d for 2013 to 9,100 12/31/2013 12/31/2014 Bbl/d for 2014 244 250 229 Added 2,900 net acres 63 net locations 200 Evolved from Generation…
Eagle Ford Production Oil Rate Increased 43% EAGLE FORD NET PRODUCTION 12000 60,000 11000 10000 50,000 9000 8000 40,000 Gas Production, Mcf/d Oil Production, Bbl/d 7000 6000 30,000 5000 4000 20,000…
Eagle Ford Well Positioned for Future Development Added 2,900 net acres in 2014 (63 net locations) Nickel Ranch Guadalupe Hennig Bexar Gonzales Uvalde Medina Lewton Wilson Added 2,900 net acres Love Cowey Repka De…
Eagle Ford Drilling Cost Reductions Batch mode cut costs by 10% vs pad drilling 21% vs single well drilling Shaved 2.5 days per well 219/ft Modern rigs 194/ft Latest technology & 173/ft equipment Improved drilling techniques…
Eagle Ford Completions Industry Comparison Matador designs some of the biggest fracs in the Eagle Ford Average 2014 Lateral Length (ft) 3,500 5,380 5,040 6,430 6,970 5,450 5,500 5,690 4,910 7,360 4,830 6,360 5,110 5,510 4,590 5,220…
Eagle Ford Completions Better Fracs for Less Money .75 Nearly doubled proppant volume 2000 Cut cost by 50% per lb. of proppant pumped 1500 .50 Service prices are expected to drop dramatically in 2015 Proppant lbs/ft…
Eagle Ford Completions Cost Reductions 318 Toe Prep Non-frac completion costs cut by: Drill Out 50% since Q1 2012 (savings of over 750,000 per well(1)) Frac Auxiliary Cut toe-prep costs by 70% 238 Cut drill out costs by 47% Cut…
Permian Basin
Understanding the Petroleum Systems for Maximum Oil Recovery Rock Mechanics and Completion Strategy Varies Conventional Unconventional Decoupled Coupled Micro-Coupled In-Situ Source Rock and Reservoir Bone Spring Bone Spring…
4,000 feet of Hydrocarbon Column Creates Opportunity Determining Good, Better, Best important as potential INTER-Formational Stacked Pay exceeds inter-formational stacked pay GR RES Bone Spring Lime 2015 program will expand on…
The Key: Good Science, Technology and Execution TWIN LAKES Twin Lakes: Prioritizing reservoir and target inventory focusing on Chaves Pennsylvanian-Wolfcamp micro-coupled source rocks; existing 3D seismic interpretation under way…
New Rig Improvements 7,500 psi Pressure Rating Estimated reduction in drilling time of 15 to 20% in the lateral on Wolfcamp wells Telescoping Flex-joint Estimated reduction in drilling time of 12 to 18 hours per well…
Latest Technology: Simultaneous Operations (Sim-Ops) Capable Rigs Conventional Drilling Configuration Sim-Ops Capable with V-door turned 90 Drilling rig must leave location Space available for frac prior to frac operations…
Simultaneous Operations (Sim-Ops) Drilling Reduces time from spud-to-sales by up to 25 days on 2-well pads Bone Spring Wolfcamp
Microseismic in Wolf Prospect Fractures generate sonic events as they propagate through the rock 80 acre spacing appears optimal for Wolfcamp A-XY Microseismic uses downhole geophones installed development in offset horizontals to…
Matador Wolfcamp Frac Design Starting Big in the Permian 2500 OTHER OPERATORS MATADOR WELLS 2000 1500 Lbs Proppant/Ft 1000 500 0 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/2/2015 Date of Completion…
Evolution of Permian Basin Frac Design Reservoir Specific Bone Spring 375 ft. Gen 1 Gen 2 75 ft. 2,000 lbs/ft 1,333 lbs/ft Coupled 500 Mlbs 40 Bbl/ft 20 Bbl/ft 7,500 Bbl 50 cluster spacing 75 cluster spacing Upper…
WTI Oil Price and Service Prices Frac Index Price reductions of 31% ...equivalent to a 7.50/Bbl uplift in oil prices /Bbl Drilling Spread Rate reductions of 18% ...equivalent to a 4.50/Bbl uplift in oil prices Note: Frac…
Infrastructure Development Saltwater disposal savings Oil pipeline fee reduction 1.30/Bbl of produced water ...equivalent to a 5.10/Bbl uplift in oil prices ...an uplift of .90/Bbl in oil prices 61
Potential Water Recycling Savings for Loving County Potential savings of up to 600,000 per well ...equivalent to a 3.00/Bbl uplift in oil prices Produced Purchase Water Frac Water Recycling Frac Additives Saltwater…
Lease Development Wolf Billy Burt 90-TTT-B33 WF 202H & 203H Wolfcamp X/Y Currently Batch Drilling Dorothy White 1H Johnson 44-02S-B53 204H Wolfcamp X/Y Wolfcamp X/Y 12.5 mo.cum: 4 mo. cum: 310,000 BOE (66% oil) 117,000 BOE…
Well Inventory Wolf Development Well D&C Capex (MM) EUR (MBOE) Bone Spring 7-8 450 - 600 Wolfcamp 9 - 10 650 1,100 Full Development Spacing Pattern (Cross-Section View) Gross Wells 1 mile Brushy 4 Canyon Avalon 66 1st…
Well Inventory Rustler Breaks Development Well D&C Capex (MM) EUR (MBOE) Bone Spring 6-7 350 - 650 Wolfcamp 7-8 500 - 900 Full Development Spacing Pattern (Cross-Section View) Gross Wells 1 mile Brushy 65 Canyon Avalon…
Well Inventory Ranger Development Well D&C Capex (MM) EUR (MBOE) Bone Spring 7-8 400 - 600 Wolfcamp 8-9 200 - 800* * Based on Volumetrics and 4-8% Recovery Factor Full Development Spacing Pattern (Cross-Section View) Gross…
Delaware Basin Inventory Matador has identified 1,445 gross / 960 net locations Twin Lakes Chaves This inventory does not yet include HEYCO properties or Twin Lakes Formation Gross Locations Net Locations Ranger Delaware…
HEYCO Acreage a Strategic Fit CTA State Com 3H - IP(30): 992 BOE/d (84% Oil) - 37.6 MBO Cum to date (46 days) CTA State Com 1 Type Log CTA State Com 4H - IP(30): 830 BOE/d (84% Oil) - 26.3 MBO Cum to date (33 days)…
Permian Basin Economics Oil Price Sensitivities Ranger 33 400-700 MBOE ROR vs Oil Price Dorothy White 700-1000 MBOE ROR vs Oil Price 250 100 700 MBOE, 7.5 MM D&C 1000 MBOE, 9.6 MM D&C 90 700 MBOE, 6 MM D&C 1000 MBOE, 8 MM D&C 200…
Haynesville Shale Update
Haynesville 260% Increase in Net Natural Gas Production 60.0 50 Gross (5 Net) Wells Estimated CapEx 40 to 45MM 50.0 (Less than 10% of 2014 CapEx) MMcf/d MMcf/Day 40.0 Gas Production, 30.0 Gas Production, 20.0…
Haynesville Chesapeake Elm Grove Program Currently MTDR anticipates 10 gross producing (1.8 net) wells in 2015 Anticipated future wells Currently Recently Reported Results by CHK drilling Flowing Choke Sales Date IP (MCFD)…
Economics of Tier 1 (10 Bcf) Haynesville at Elm Grove 500 7.0MM D&C Cost 450 8.0MM D&C Cost 400 9.0MM D&C Cost 350 300 Rate of Return, % 250 200 150 100 50 0 3.00 3.50 4.00 4.50 5.00 5.50 6.00 Natural Gas…
2015 Analyst Day Presentation February 5, 2015 NYSE: MTDR
Appendix
PV-10 Reconciliation PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net…
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities,…
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities,…
Adjusted EBITDA Reconciliation The following table presents our calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities,…
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