Matador Resources Company Reports First Quarter 2013 Results and Provides Operational and Guidance Update
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Oil production of 460,000 Bbl for the quarter ended
March 31, 2013 , a year-over-year increase of 130% from 200,000 Bbl of oil produced in the quarter endedMarch 31, 2012 and a sequential increase of 8% from 426,000 Bbl of oil produced in the quarter endedDecember 31, 2012 . -
Average daily oil equivalent production of approximately 10,900 BOE
per day for the quarter ended
March 31, 2013 , consisting of about 5,100 Bbl of oil per day and 34.7 MMcf of natural gas per day, a year-over-year BOE increase of 36% from approximately 8,000 BOE per day, consisting of about 2,200 Bbl of oil per day and 34.9 MMcf of natural gas per day, for the quarter endedMarch 31, 2012 . -
Total realized revenues of
$59.7 million in the first quarter of 2013, including$0.4 million in realized gain on derivatives, a year-over-year increase of 85% from total realized revenues of$32.2 million , including$3.1 million in realized gain on derivatives, reported in the first quarter of 2012. -
Oil and natural gas revenues of
$59.3 million for the quarter endedMarch 31, 2013 , a year-over-year increase of 103% from$29.2 million reported for the quarter endedMarch 31, 2012 . -
Adjusted EBITDA of
$40.7 million for the quarter endedMarch 31, 2013 , a year-over-year increase of 91% from$21.3 million reported for the quarter endedMarch 31, 2012 . - Increased 2013 annual oil production guidance from 1.6 to 1.8 million Bbl to 1.8 to 2.0 million Bbl.
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Increased 2013 annual Adjusted EBITDA guidance from
$140 to $160 million to$155 to $175 million .
Joseph Wm. Foran, Matador’s Chairman, President and CEO, commented,
“Matador is off to a strong start in 2013. Our average daily production
for the first quarter of 5,100 Bbl of oil per day and 34.7 MMcf of
natural gas per day exceeded our expectations for the quarter and our
previous guidance of approximately 4,000 Bbl of oil per day and 31 MMcf
of natural gas per day provided during our
“As to our plans forward, in March and
Production and Revenues
First Quarter Ended
Oil production in the first quarter of 2013 increased 130% to
approximately 460,000 Bbl of oil, or about 5,100 Bbl of oil per day, as
compared to approximately 200,000 Bbl of oil, or about 2,200 Bbl of oil
per day, in the first quarter of 2012. This increase in oil production
is a direct result of the Company’s ongoing drilling operations in the
Eagle Ford shale in
Total realized revenues, including realized gain on derivatives,
increased 85% to
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP financial measure, increased 91% to
Proved Reserves and PV-10
Matador’s total proved reserves were 23.6 million BOE, including 10.7
million Bbl of oil and 77.5 Bcf of natural gas at
Net (Loss) Income
For the quarter ended
Sequential Operating and Financial Results
- Oil production increased 8% from approximately 426,000 Bbl, or 4,630 Bbl of oil per day, in the fourth quarter of 2012, to approximately 460,000 Bbl, or 5,100 Bbl of oil per day, in the first quarter of 2013.
-
Total proved oil and natural gas reserves remained essentially
flat at 23.6 million BOE at
March 31, 2013 , as compared to 23.8 million BOE atDecember 31, 2012 , but proved developed oil reserves increased 13% from 4.8 million Bbl atDecember 31, 2012 to 5.4 million Bbl atMarch 31, 2013 . -
Oil and natural gas revenues increased 13% from
$52.7 million in the fourth quarter of 2012 to$59.3 million in the first quarter of 2013. -
Adjusted EBITDA increased 7% from
$38.0 million in the fourth quarter of 2012 to$40.7 million in the first quarter of 2013.
Operating Expenses Update
First Quarter Ended
Production Taxes and Marketing
Production taxes and marketing expenses increased to
Lease Operating Expenses (“LOE”)
Lease operating expenses increased to
Depletion, depreciation and amortization (“DD&A”)
Depletion, depreciation and amortization expenses increased to
General and administrative (“G&A”)
General and administrative expenses increased to
Operations Update
During the first quarter of 2013, Matador’s operations were principally
focused on the exploration and development of its Eagle Ford shale
properties in
Matador had two contracted drilling rigs operating in
Acreage Acquisitions
During March and
Liquidity Update
On
Hedging Positions
From time to time, Matador uses derivative financial instruments to
mitigate its exposure to commodity price risk associated with oil,
natural gas and natural gas liquids prices and to protect its cash flows
and borrowing capacity. At
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Approximately 1.08 million Bbl of oil at a weighted average floor
price of
$88 /Bbl and a weighted average ceiling price of$107 /Bbl. -
Approximately 5.8 Bcf of natural gas at a weighted average floor price
of
$3.25 /MMBtu and a weighted average ceiling price of$4.52 /MMBtu. -
Approximately 6.7 million gallons of natural gas liquids at a weighted
average price of
$1.21 /gallon.
At
-
Approximately 1.68 million Bbl of oil at a weighted average floor
price of
$88 /Bbl and a weighted average ceiling price of$99 /Bbl. -
Approximately 8.4 Bcf of natural gas at a weighted average floor price
of
$3.32 /MMBtu and a weighted average ceiling price of$5.15 /MMBtu. -
Approximately 3.7 million gallons of natural gas liquids at a weighted
average price of
$1.44 /gallon.
2013 Guidance Update
Matador provides the following guidance update for 2013 compared to
guidance previously announced at its Analyst Day presentation on
Matador is raising its guidance for 2013 due to encouragement from its
fourth quarter 2012 and its first quarter 2013 drilling and operational
results, which were above expectations and earlier guidance.
Nevertheless, Matador cautions that production and financial results in
future periods are likely to be uneven and subject to various operating
conditions and operating practices followed by Matador. As noted earlier
in the Operations Update of this press release, the Company has drilled
and expects to complete and begin producing oil and natural gas from
seven operated and two non-operated Eagle Ford wells in the second
quarter of 2013. Six of these wells were drilled on two three-well pads
and each group of three wells is being completed using zipper style,
hydraulic fracturing operations. All seven operated Eagle Ford wells are
expected to be placed on production in the latter half of the second
quarter and, therefore, will not contribute fully to second quarter
production volumes. The Company also continues its practice of
shutting-in producing wells from time to time as it completes offsetting
wells, which causes production to fluctuate. As an example, at
The Company’s updated guidance for 2013 estimated oil production of 1.8
to 2.0 million Bbl represents a significant year-over-year increase of
50% to 67%, as compared to the 1.2 million Bbl of oil produced in 2012.
Given the operational matters noted above, however, production may not
grow sequentially from quarter to quarter during 2013, even though the
year-over-year oil production growth is anticipated to be in the 50% to
67% range as indicated above. For instance, at
Finally, Matador realized a weighted average oil price of
Conference Call Information
The Company will host a conference call on
About
Matador is an independent energy company engaged in the exploration,
development, production and acquisition of oil and natural gas resources
in
For more information, visit
Forward-Looking Statements
This press release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
“Forward-looking statements” are statements related to future, not past,
events. Forward-looking statements are based on current expectations and
include any statement that does not directly relate to a current or
historical fact. In this context, forward-looking statements often
address expected future business and financial performance, and often
contain words such as “could,” “believe,” “would,” “anticipate,”
“intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,”
“predict,” “potential,” “project” and similar expressions that are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. Actual
results and future events could differ materially from those anticipated
in such statements, and such forward-looking statements may not prove to
be accurate. These forward-looking statements involve certain risks and
uncertainties, including, but not limited to, the following risks
related to financial and operational performance: general economic
conditions; our ability to execute our business plan, including whether
our drilling program is successful; changes in oil, natural gas and
natural gas liquids prices and the demand for oil, natural gas and
natural gas liquids; our ability to replace reserves and efficiently
develop current reserves; costs of operations; delays and other
difficulties related to producing oil, natural gas and natural gas
liquids; our ability to make acquisitions on economically acceptable
terms; availability of sufficient capital to execute our business plan,
including from future cash flows, increases in our borrowing base and
otherwise; weather and environmental conditions; and other important
factors which could cause actual results to differ materially from those
anticipated or implied in the forward-looking statements. For further
discussions of risks and uncertainties, you should refer to Matador’s
CONDENSED CONSOLIDATED BALANCE SHEETS – UNAUDITED
| (In thousands, except par value and share data) | March 31, | December 31, | |||||||||
| 2013 | 2012 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 4,652 | $ | 2,095 | |||||||
| Certificates of deposit | 141 | 230 | |||||||||
| Accounts receivable | |||||||||||
| Oil and natural gas revenues | 22,232 | 24,422 | |||||||||
| Joint interest billings | 4,862 | 4,118 | |||||||||
| Other | 668 | 974 | |||||||||
| Derivative instruments | 1,142 | 4,378 | |||||||||
| Deferred income taxes | 1,008 | - | |||||||||
| Lease and well equipment inventory | 966 | 877 | |||||||||
| Prepaid expenses | 1,597 | 1,103 | |||||||||
| Total current assets | 37,268 | 38,197 | |||||||||
| Property and equipment, at cost | |||||||||||
| Oil and natural gas properties, full-cost method | |||||||||||
| Evaluated | 830,254 | 763,527 | |||||||||
| Unproved and unevaluated | 151,161 | 149,675 | |||||||||
| Other property and equipment | 27,596 | 27,258 | |||||||||
| Less accumulated depletion, depreciation and amortization | (398,832 | ) | (349,370 | ) | |||||||
| Net property and equipment | 610,179 | 591,090 | |||||||||
| Other assets | |||||||||||
| Derivative instruments | 1,143 | 771 | |||||||||
| Deferred income taxes | - | 411 | |||||||||
| Other assets | 1,732 | 1,560 | |||||||||
| Total other assets | 2,875 | 2,742 | |||||||||
| Total assets | $ | 650,322 | $ | 632,029 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 19,675 | $ | 28,120 | |||||||
| Accrued liabilities | 40,214 | 59,179 | |||||||||
| Royalties payable | 7,706 | 6,541 | |||||||||
| Derivative instruments | 2,215 | 670 | |||||||||
| Advances from joint interest owners | 2,549 | 1,515 | |||||||||
| Income taxes payable | 46 | - | |||||||||
| Deferred income taxes | - | 411 | |||||||||
| Other current liabilities | 78 | 56 | |||||||||
| Total current liabilities | 72,483 | 96,492 | |||||||||
| Long-term liabilities | |||||||||||
| Borrowings under Credit Agreement | 205,000 | 150,000 | |||||||||
| Asset retirement obligations | 5,746 | 5,109 | |||||||||
| Derivative instruments | 416 | - | |||||||||
| Deferred income taxes | 1,008 | - | |||||||||
| Other long-term liabilities | 1,564 | 1,324 | |||||||||
| Total long-term liabilities | 213,734 | 156,433 | |||||||||
| Shareholders' equity | |||||||||||
|
Common stock - $0.01 par value, 80,000,000 shares authorized; 57,104,489 and 56,778,718 shares issued; and 55,842,938 and 55,577,667 shares outstanding, respectively |
571 | 568 | |||||||||
| Additional paid-in capital | 404,814 | 404,311 | |||||||||
| Retained deficit | (30,515 | ) | (15,010 | ) | |||||||
| Treasury stock, at cost, 1,261,551 and 1,201,051 shares, respectively | (10,765 | ) | (10,765 | ) | |||||||
| Total shareholders' equity | 364,105 | 379,104 | |||||||||
| Total liabilities and shareholders' equity | $ | 650,322 | $ | 632,029 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
| (In thousands, except per share data) | Three Months Ended March 31, | ||||||||||
| 2013 | 2012 | ||||||||||
| Revenues | |||||||||||
| Oil and natural gas revenues | $ | 59,319 | $ | 29,164 | |||||||
| Realized gain on derivatives | 392 | 3,063 | |||||||||
| Unrealized loss on derivatives | (4,825 | ) | (3,270 | ) | |||||||
| Total revenues | 54,886 | 28,957 | |||||||||
| Expenses | |||||||||||
| Production taxes and marketing | 4,097 | 2,165 | |||||||||
| Lease operating | 10,899 | 4,645 | |||||||||
| Depletion, depreciation and amortization | 28,232 | 11,205 | |||||||||
| Accretion of asset retirement obligations | 81 | 53 | |||||||||
| Full-cost ceiling impairment | 21,230 | - | |||||||||
| General and administrative | 4,602 | 3,789 | |||||||||
| Total expenses | 69,141 | 21,857 | |||||||||
| Operating (loss) income | (14,255 | ) | 7,100 | ||||||||
| Other income (expense) | |||||||||||
| Interest expense | (1,271 | ) | (308 | ) | |||||||
| Interest and other income | 67 | 73 | |||||||||
| Total other expense | (1,204 | ) | (235 | ) | |||||||
| (Loss) income before income taxes | (15,459 | ) | 6,865 | ||||||||
| Income tax provision | |||||||||||
| Current | 46 | - | |||||||||
| Deferred | - | 3,064 | |||||||||
| Total income tax provision | 46 | 3,064 | |||||||||
| Net (loss) income | $ | (15,505 | ) | $ | 3,801 | ||||||
| Earnings (loss) per common share | |||||||||||
| Basic | |||||||||||
| Class A | $ | (0.28 | ) | $ | 0.08 | ||||||
| Class B | $ | - | $ | 0.15 | |||||||
| Diluted | |||||||||||
| Class A | $ | (0.28 | ) | $ | 0.08 | ||||||
| Class B | $ | - | $ | 0.15 | |||||||
| Weighted average common shares outstanding | |||||||||||
| Basic | |||||||||||
| Class A | 55,272 | 49,597 | |||||||||
| Class B | - | 419 | |||||||||
| Total | 55,272 | 50,016 | |||||||||
| Diluted | |||||||||||
| Class A | 55,272 | 49,666 | |||||||||
| Class B | - | 419 | |||||||||
| Total | 55,272 | 50,085 | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
| (In thousands) | Three Months Ended March 31, | ||||||||||
| 2013 | 2012 | ||||||||||
| Operating activities | |||||||||||
| Net (loss) income | $ | (15,505 | ) | $ | 3,801 | ||||||
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities |
|||||||||||
| Unrealized loss on derivatives | 4,825 | 3,270 | |||||||||
| Depletion, depreciation and amortization | 28,232 | 11,205 | |||||||||
| Accretion of asset retirement obligations | 81 | 53 | |||||||||
| Full-cost ceiling impairment | 21,230 | - | |||||||||
| Stock-based compensation expense | 492 | (363 | ) | ||||||||
| Deferred income tax provision | - | 3,064 | |||||||||
| Changes in operating assets and liabilities | |||||||||||
| Accounts receivable | 1,752 | (8,456 | ) | ||||||||
| Lease and well equipment inventory | 121 | - | |||||||||
| Prepaid expenses | (493 | ) | (544 | ) | |||||||
| Other assets | (172 | ) | 13 | ||||||||
|
Accounts payable, accrued liabilities and other current liabilities |
(10,788 | ) | (8,563 | ) | |||||||
| Royalties payable | 1,165 | 1,341 | |||||||||
| Advances from joint interest owners | 1,034 | - | |||||||||
| Income taxes payable | 46 | - | |||||||||
| Other long-term liabilities | 209 | 289 | |||||||||
| Net cash provided by operating activities | 32,229 | 5,110 | |||||||||
| Investing activities | |||||||||||
| Oil and natural gas properties capital expenditures | (83,387 | ) | (51,959 | ) | |||||||
| Expenditures for other property and equipment | (1,374 | ) | (1,413 | ) | |||||||
| Purchases of certificates of deposit | (61 | ) | (150 | ) | |||||||
| Maturities of certificates of deposit | 150 | 758 | |||||||||
| Net cash used in investing activities | (84,672 | ) | (52,764 | ) | |||||||
| Financing activities | |||||||||||
| Repayments of borrowings under Credit Agreement | - | (123,000 | ) | ||||||||
| Borrowings under Credit Agreement | 55,000 | 25,000 | |||||||||
| Proceeds from issuance of common stock | - | 146,510 | |||||||||
| Cost to issue equity | - | (11,330 | ) | ||||||||
| Proceeds from stock options exercised | - | 2,660 | |||||||||
| Payment of dividends - Class B | - | (96 | ) | ||||||||
| Net cash provided by financing activities | 55,000 | 39,744 | |||||||||
| Increase (decrease) in cash | 2,557 | (7,910 | ) | ||||||||
| Cash at beginning of period | 2,095 | 10,284 | |||||||||
| Cash at end of period | $ | 4,652 | $ | 2,374 | |||||||
SELECTED OPERATING DATA – UNAUDITED
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net Production Volumes: | ||||||||
| Oil (MBbl) | 460 | 200 | ||||||
| Natural gas (Bcf) | 3.1 | 3.2 | ||||||
| Total oil equivalent (MBOE)(1),(2) | 981 | 730 | ||||||
| Average daily production (BOE/d)(2) | 10,897 | 8,023 | ||||||
| Average Sales Prices: | ||||||||
| Oil, with realized derivatives (per Bbl) | $ | 105.20 | $ | 107.57 | ||||
| Oil, without realized derivatives (per Bbl) | $ | 105.72 | $ | 107.57 | ||||
| Natural gas, with realized derivatives (per Mcf) | $ | 3.61 | $ | 3.36 | ||||
| Natural gas, without realized derivatives (per Mcf) | $ | 3.41 | $ | 2.40 | ||||
| Operating Expenses (per BOE): | ||||||||
| Production taxes and marketing | $ | 4.18 | $ | 2.96 | ||||
| Lease operating | $ | 11.11 | $ | 6.36 | ||||
| Depletion, depreciation and amortization | $ | 28.79 | $ | 15.35 | ||||
| General and administrative | $ | 4.69 | $ | 5.19 | ||||
|
(1) Thousands of barrels of oil equivalent. |
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|
(2) Estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas. |
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SELECTED ESTIMATED PROVED RESERVES DATA – UNAUDITED
| At March 31,(1) | At December 31,(1) | At March 31,(1) | |||||||||||||
| 2013 | 2012 | 2012 | |||||||||||||
| Estimated proved reserves: | |||||||||||||||
| Oil (MBbl) | 10,712 | 10,485 | 5,738 | ||||||||||||
| Natural Gas (Bcf) | 77.5 | 80.0 | 168.7 | ||||||||||||
| Total (MBOE)(2) | 23,626 | 23,819 | 33,855 | ||||||||||||
| Estimated proved developed reserves: | |||||||||||||||
| Oil (MBbl) | 5,374 | 4,764 | 2,678 | ||||||||||||
| Natural Gas (Bcf) | 52.2 | 54.0 | 56.1 | ||||||||||||
| Total (MBOE)(2) | 14,070 | 13,771 | 12,028 | ||||||||||||
| Percent developed | 59.6 | % | 57.8 | % | 35.5 | % | |||||||||
| Estimated proved undeveloped reserves: | |||||||||||||||
| Oil (MBbl) | 5,338 | 5,721 | 3,060 | ||||||||||||
| Natural Gas (Bcf) | 25.3 | 26.0 | 112.6 | ||||||||||||
| Total (MBOE)(2) | 9,556 | 10,048 | 21,827 | ||||||||||||
| PV-10 (in millions) | $ | 438.1 | $ | 423.2 | $ | 329.6 | |||||||||
| Standardized Measure (in millions) | $ | 407.0 | $ | 394.6 | $ | 287.4 | |||||||||
|
(1) Numbers in table may not total due to rounding. |
|||||||||||||||
|
(2) Thousands of barrels of oil equivalent, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas. |
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Supplemental Non-GAAP Financial Measures
Adjusted EBITDA
This press release includes the non-GAAP financial measure of Adjusted
EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of consolidated financial
statements, such as industry analysts, investors, lenders and rating
agencies. “GAAP” means Generally Accepted Accounting Principles in
Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or net cash provided by operating activities as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components of understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure. Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents the calculation of Adjusted EBITDA and the reconciliation of Adjusted EBITDA to the GAAP financial measures of net income (loss) and net cash provided by operating activities, respectively, that are of a historical nature. Where references are forward-looking or prospective in nature, and not based on historical fact, the table does not provide a reconciliation. The Company could not provide such reconciliation without undue hardship because the forward-looking Adjusted EBITDA numbers included in this press release are estimations, approximations and/or ranges. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items.
| Three Months Ended | ||||||||||||||||
| (In thousands) | March 31, | December 31, | March 31, | |||||||||||||
| 2013 | 2012 | 2012 | ||||||||||||||
|
Unaudited Adjusted EBITDA reconciliation to Net Income (Loss): |
||||||||||||||||
| Net (loss) income | $ | (15,505 | ) | $ | (21,188 | ) | $ | 3,801 | ||||||||
| Interest expense | 1,271 | 549 | 308 | |||||||||||||
| Total income tax provision (benefit) | 46 | (188 | ) | 3,064 | ||||||||||||
| Depletion, depreciation and amortization | 28,232 | 27,655 | 11,205 | |||||||||||||
| Accretion of asset retirement obligations | 81 | 86 | 53 | |||||||||||||
| Full-cost ceiling impairment | 21,230 | 26,674 | - | |||||||||||||
| Unrealized loss on derivatives | 4,825 | 3,653 | 3,270 | |||||||||||||
| Stock-based compensation expense | 492 | 363 | (363 | ) | ||||||||||||
| Net loss on asset sales and inventory impairment | - | 425 | - | |||||||||||||
| Adjusted EBITDA | $ | 40,672 | $ | 38,029 | $ | 21,338 | ||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||
| 2013 | 2012 | 2012 | ||||||||||||||
|
Unaudited Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities: |
||||||||||||||||
| Net cash provided by operating activities | $ | 32,229 | $ | 43,903 | $ | 5,110 | ||||||||||
| Net change in operating assets and liabilities | 7,126 | (6,235 | ) | 15,920 | ||||||||||||
| Interest expense | 1,271 | 549 | 308 | |||||||||||||
| Current income tax provision (benefit) | 46 | (188 | ) | - | ||||||||||||
| Adjusted EBITDA | $ | 40,672 | $ | 38,029 | $ | 21,338 | ||||||||||
PV-10
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 revenues. PV-10 is not an estimate of the fair market value
of the Company’s properties. Matador and others in the industry use
PV-10 as a measure to compare the relative size and value of proved
reserves held by companies and of the potential return on investment
related to the companies’ properties without regard to the specific tax
characteristics of such entities. The PV-10 at
Source:
Matador Resources Company
Mac Schmitz, 972-371-5225
Investor
Relations
mschmitz@matadorresources.com