Matador Resources Company Reports Fourth Quarter and Full Year 2015 Results and Provides Operational Update
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Matador was particularly pleased with its 2015 operating and financial
results despite the challenging commodity price environment, especially
considering the reduction in its drilling program from five rigs to two
rigs during the first quarter of 2015, returning to three rigs during
the third quarter and for the balance of the year. Matador's 2015
production was at the upper end of its 2015 guidance range as raised
twice during the year, despite the impact of winter storms in the
Year-over-year twelve-month-period comparisons of selected financial and operating items are shown in the following table:
| Year Ended | ||||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Oil production (MBbl) | 4,492 | 3,320 | 2,133 | |||||||||
| Natural gas production (Bcf) | 27.7 | 15.3 | 12.9 | |||||||||
| Average daily oil equivalent production (BOE/d) | 24,955 | 16,082 | 11,740 | |||||||||
| Average daily oil production (Bbl/d) | 12,306 | 9,095 | 5,843 | |||||||||
| Average daily natural gas production (MMcf/d) | 75.9 | 41.9 | 35.4 | |||||||||
| Oil and natural gas revenues (in millions) | $ | 278.3 | $ | 367.7 | $ | 269.0 | ||||||
| Average realized oil price, $/Bbl | $ | 45.27 | $ | 87.37 | $ | 99.79 | ||||||
| Average realized natural gas price, $/Mcf | $ | 2.71 | $ | 5.08 | $ | 4.35 | ||||||
|
Adjusted EBITDA(1) (in millions) |
$ | 223.2 | $ | 262.9 | $ | 191.8 | ||||||
|
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, please see "Supplemental Non-GAAP Financial Measures" below. |
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Summary of key operating results and comparisons for the year
ended
- Record oil production of 4.492 million barrels in 2015, a 35% year-over-year increase from 3.320 million barrels produced in 2014, and an increase of 111% from 2.133 million barrels produced in 2013.
- Record natural gas production of 27.7 billion cubic feet in 2015, an 81% year-over-year increase from 15.3 billion cubic feet produced in 2014, and an increase of 114% from 12.9 billion cubic feet produced in 2013.
- Record average daily oil equivalent production of 24,955 barrels of oil equivalent ("BOE") per day for the year ended December 31, 2015 (consisting of 12,306 barrels of oil per day and 75.9 million cubic feet of natural gas per day), a 55% year-over-year BOE increase from 16,082 BOE per day (consisting of 9,095 barrels of oil per day and 41.9 million cubic feet of natural gas per day) produced in 2014, and an increase of 113% from 11,740 BOE per day (consisting of 5,843 barrels of oil per day and 35.4 million cubic feet of natural gas per day) produced in 2013.
-
A 24% year-over-year decrease in oil and natural gas revenues from
$367.7 million reported for the year endedDecember 31, 2014 to$278.3 million for the year endedDecember 31, 2015 , and a 3% increase from$269.0 million reported for the year endedDecember 31, 2013 . The weighted average oil and natural gas prices of$45.27 per barrel and$2.71 per thousand cubic feet, respectively, realized for the year endedDecember 31, 2015 were significantly lower than the weighted average oil and natural gas prices of$87.37 per barrel and$5.08 per thousand cubic feet, respectively, realized in 2014 and$99.79 per barrel and$4.35 per thousand cubic feet, respectively, realized in 2013, as shown in the table above. -
A 15% year-over-year decrease in Adjusted EBITDA, a non-GAAP
financial measure, from
$262.9 million reported for the year ended December 31, 2014 to$223.2 million for the year ended December 31, 2015, and a 16% increase from$191.8 million reported for the year endedDecember 31, 2013 . The Adjusted EBITDA of$223.2 million reported for 2015 was the second best Adjusted EBITDA result in Matador's history, surpassed only by the record Adjusted EBITDA of$262.9 million reported for 2014. -
Cash operating expenses per BOE, a non-GAAP financial measure,
decreased 24%, or
$4.47 per BOE, to$14.47 per BOE for the year endedDecember 31, 2015 from$18.94 per BOE for the year endedDecember 31, 2014 , and decreased 19%, or$3.40 per BOE, from$17.87 per BOE for the year endedDecember 31, 2013 .
Sequential and year-over-year quarterly comparisons of selected financial and operating items are shown in the following table:
| Three Months Ended | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| 2015 | 2015 | 2014 | ||||||||||
| Oil production (MBbl) | 1,062 | 1,161 | 1,018 | |||||||||
| Natural gas production (Bcf) | 6.6 | 7.5 | 5.4 | |||||||||
| Average daily oil equivalent production (BOE/d) | 23,556 | 26,137 | 20,807 | |||||||||
| Average daily oil production (Bbl/d) | 11,547 | 12,617 | 11,062 | |||||||||
| Average daily natural gas production (MMcf/d) | 72.1 | 81.1 | 58.5 | |||||||||
| Oil and natural gas revenues (in millions) | $ | 56.2 | $ | 71.8 | $ | 93.1 | ||||||
| Average realized oil price, $/Bbl | $ | 38.55 | $ | 43.21 | $ | 69.09 | ||||||
| Average realized natural gas price, $/Mcf | $ | 2.30 | $ | 2.90 | $ | 4.24 | ||||||
| Adjusted EBITDA(1) (in millions) | $ | 48.3 | $ | 58.0 | $ | 70.3 | ||||||
|
(1) Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, please see "Supplemental Non-GAAP Financial Measures" below. |
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Summary of key operating results and comparisons for the three
months ended
-
Oil production of 1.062 million barrels for the three months ended
December 31, 2015, a 4% year-over-year increase from 1.018 million
barrels produced in the three months ended December 31, 2014, and a
sequential decrease of 9% from 1.161 million barrels produced in the
three months ended
September 30, 2015 , due to the impact of winter storms and rig reductions. -
Natural gas production of 6.6 billion cubic feet for the three
months ended
December 31, 2015 , a 23% year-over-year increase from 5.4 billion cubic feet produced in the three months endedDecember 31, 2014 , and a sequential decrease of 11% from 7.5 billion cubic feet produced in the three months endedSeptember 30, 2015 , due to the deferral by the operator of initial natural gas production from several non-operatedHaynesville shale wells from the fourth quarter of 2015 toJanuary 2016 . -
Average daily oil equivalent production of 23,556 BOE per day for
the three months ended December 31, 2015 (consisting of 11,547 barrels
of oil per day and 72.1 million cubic feet of natural gas per day), a
13% year-over-year BOE increase from 20,807 BOE per day (consisting of
11,062 barrels of oil per day and 58.5 million cubic feet of natural
gas per day) for the three months ended December 31, 2014, and a
sequential decrease of 10% from 26,137 BOE per day (consisting of
12,617 barrels of oil per day and 81.1 million cubic feet of natural
gas per day) for the three months ended
September 30, 2015 . -
A 40% year-over-year decrease in oil and natural gas revenues from
$93.1 million reported for the fourth quarter of 2014 to$56.2 million for the fourth quarter of 2015, and a sequential decrease of 22% from$71.8 million reported in the third quarter of 2015. The weighted average oil and natural gas prices of$38.55 per barrel and$2.30 per thousand cubic feet, respectively, realized in the fourth quarter of 2015 were significantly lower than the weighted average oil and natural gas prices of$69.09 per barrel and$4.24 per thousand cubic feet, respectively, realized in the fourth quarter of 2014 and$43.21 per barrel and$2.90 per thousand cubic feet, respectively, realized in the third quarter of 2015, as shown in the table above. -
A 31% year-over-year decrease in Adjusted EBITDA, a non-GAAP
financial measure, from
$70.3 million reported for the fourth quarter of 2014 to$48.3 million reported for the fourth quarter of 2015, and a sequential decrease of 17% from$58.0 million reported in the third quarter of 2015. -
Cash operating expenses per BOE, a non-GAAP financial measure,
decreased 13%, or
$2.39 per BOE, to$15.33 per BOE for the three months endedDecember 31, 2015 , as compared to$17.72 per BOE for the three months endedDecember 31, 2014 . Sequentially, cash operating expenses per BOE increased 7%, or$0.95 per BOE, as compared to$14.38 per BOE for the three months endedSeptember 30, 2015 .
Additional Highlights:
-
Total proved oil and natural gas reserves of 85.1 million BOE
(consisting of 45.6 million barrels of oil and 236.9 billion cubic
feet of natural gas) at December 31, 2015, a 24% year-over-year BOE
increase from 68.7 million BOE (consisting of 24.2 million barrels of
oil and 267.1 billion cubic feet of natural gas) at December 31, 2014,
and an 89% year-over-year increase in Matador's proved oil reserves at
December 31, 2015 as compared to
December 31, 2014 . The PV-10 of the Company's total proved reserves, a non-GAAP financial measure, decreased 48% year-over-year to$541.6 million at December 31, 2015, as compared to$1.04 billion at December 31, 2014, as a result of lower commodity prices used to estimate proved reserves at year-end 2015 as compared to year-end 2014. The average oil and natural gas prices used in preparing these estimates, as further adjusted for those factors affecting the oil and natural gas prices received at the wellhead, were$46.79 per barrel and$2.59 per million British Thermal Units ("MMBtu"), respectively, at December 31, 2015, as compared to$91.48 per barrel and$4.35 per MMBtu, respectively, at December 31, 2014. -
Matador reaffirmed its full year 2016 guidance estimates, based on
a three-rig drilling program, as provided at its Analyst Day on
February 3, 2016 , including (1) capital expenditures of$325 million , (2) oil production of 4.9 to 5.1 million barrels, (3) natural gas production of 26.0 to 28.0 billion cubic feet, (4) total oil equivalent production of 9.2 to 9.8 million BOE and (5) Adjusted EBITDA of$120 to $130 million based on estimated average realized prices of$34.00 per barrel for oil (West Texas Intermediate average oil price of$37.00 per barrel, less$3.00 per barrel of estimated price differentials, using the forward strip for oil prices as of lateJanuary 2016 ) and$2.37 per thousand cubic feet for natural gas (NYMEX Henry Hub average natural gas price using the forward strip for natural gas prices as of lateJanuary 2016 and assuming regional price differentials and uplifts from natural gas processing roughly offset).
A short slide presentation summarizing the highlights of Matador's fourth quarter and full year 2015 earnings release is also included on the Company's website at www.matadorresources.com on the Presentations & Webcasts page under the Investors tab.
Management Comments
Joseph Wm. Foran, Matador's Chairman and CEO, commented, "Despite a
challenging commodity price environment, 2015 was another excellent year
for Matador—one of the best in my 32 years in the business. As noted
above, Matador reported record oil production of 4.5 million barrels,
record natural gas production of 27.7 billion cubic feet and record
total oil equivalent production of 9.1 million BOE in 2015, all of which
were at or near the top of our 2015 production guidance as revised
upwards on two occasions during 2015. Our proved oil and natural gas
reserves also increased by 24% year-over-year to 85.1 million BOE at
"The Board, the staff and I were very pleased with our 2015 operating and financial results given the operating climate and especially considering the reduction in our drilling program from five rigs to two rigs during the first quarter of 2015, returning to three rigs during the third quarter for the balance of the year. Because this third drilling rig was not added until the third quarter, we did not expect to realize a significant contribution to production from wells drilled with this rig in 2015; rather, the production contribution associated with the initial wells drilled with the third rig should be realized in 2016.
"We also concluded several transformative transactions in 2015,
including our merger with
"As a result of these transactions and the continued success of our
"As we reported during our recent Analyst Day presentation in
"The Matador Board, staff and I are proud of our accomplishments in 2015 and believe we start 2016 in a very strong position to address the challenges and opportunities that lie ahead. We realize that it will not be easy, but we are confident in the ability of the Matador team to improve our operating results throughout the year and to continue to deliver value for our shareholders."
Fourth Quarter and Full Year 2015 Operating and Financial Results
The table below provides selected sequential and year-over-year operating data and unit cost comparisons for the periods shown.
| Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
2015 | 2014 | 2013 | ||||||||||||||||||||
| Net Production Volumes:(1) | |||||||||||||||||||||||||
| Oil (MBbl)(2) | 1,062 | 1,161 | 1,018 | 4,492 | 3,320 | 2,133 | |||||||||||||||||||
| Natural gas (Bcf)(3) | 6.6 | 7.5 | 5.4 | 27.7 | 15.3 | 12.9 | |||||||||||||||||||
| Total oil equivalent (MBOE)(4) | 2,167 | 2,405 | 1,914 | 9,109 | 5,870 | 4,285 | |||||||||||||||||||
| Average daily production (BOE/d)(5) | 23,556 | 26,137 | 20,807 | 24,955 | 16,082 | 11,740 | |||||||||||||||||||
| Average Sales Prices: | |||||||||||||||||||||||||
| Oil, with realized derivatives (per Bbl) | $ | 57.61 | $ | 57.90 | $ | 78.67 | $ | 59.13 | $ | 88.94 | $ | 98.67 | |||||||||||||
| Oil, without realized derivatives (per Bbl) | $ | 38.55 | $ | 43.21 | $ | 69.09 | $ | 45.27 | $ | 87.37 | $ | 99.79 | |||||||||||||
| Natural gas, with realized derivatives (per Mcf) | $ | 3.01 | $ | 3.28 | $ | 4.37 | $ | 3.24 | $ | 5.06 | $ | 4.47 | |||||||||||||
| Natural gas, without realized derivatives (per Mcf) | $ | 2.30 | $ | 2.90 | $ | 4.24 | $ | 2.71 | $ | 5.08 | $ | 4.35 | |||||||||||||
| Operating Expenses (per BOE): | |||||||||||||||||||||||||
| Production taxes and marketing | $ | 4.12 | $ | 3.86 | $ | 4.93 | $ | 3.90 | $ | 5.65 | $ | 4.89 | |||||||||||||
| Lease operating | $ | 7.05 | $ | 6.20 | $ | 8.68 | $ | 6.39 | $ | 8.75 | $ | 9.04 | |||||||||||||
| Depletion, depreciation and amortization | $ | 16.32 | $ | 18.81 | $ | 22.86 | $ | 19.63 | $ | 22.95 | $ | 22.96 | |||||||||||||
| General and administrative(6) | $ | 5.34 | $ | 5.05 | $ | 4.56 | $ | 5.50 | $ | 5.48 | $ | 4.85 | |||||||||||||
| Total(7) | $ | 32.83 | $ | 33.92 | $ | 41.03 | $ | 35.42 | $ | 42.83 | $ | 41.74 | |||||||||||||
| Cash operating expenses(8) | $ | 15.33 | $ | 14.38 | $ | 17.72 | $ | 14.47 | $ | 18.94 | $ | 17.87 | |||||||||||||
| (1) Production volumes and proved reserves reported in two streams: oil and natural gas, including both dry and liquids-rich natural gas. | |||||||||||||||||||||||||
| (2) One thousand barrels of oil. | |||||||||||||||||||||||||
| (3) One billion cubic feet of natural gas. | |||||||||||||||||||||||||
| (4) One thousand barrels of oil equivalent, estimated using a conversion ratio of one barrel of oil per six thousand cubic feet of natural gas. | |||||||||||||||||||||||||
| (5) Barrels of oil equivalent per day, estimated using a conversion ratio of one barrel of oil per six thousand cubic feet of natural gas. | |||||||||||||||||||||||||
| (6) Includes approximately $1.18, $0.73 and $0.45 per BOE of non-cash, stock-based compensation expenses in the fourth quarter of 2015, the third quarter of 2015 and the fourth quarter of 2014, respectively, and $1.04, $0.94 and $0.91 per BOE of non-cash, stock-based compensation for the years ended December 31, 2015, 2014 and 2013, respectively. | |||||||||||||||||||||||||
| (7) Total does not include the impact of full-cost ceiling impairment charges or immaterial accretion expenses. | |||||||||||||||||||||||||
|
(8) Cash operating expenses per BOE is a non-GAAP financial measure. For a definition of cash operating expenses per BOE and a reconciliation of cash operating expenses per BOE (non-GAAP) to operating expenses per BOE (GAAP), please see "Supplemental Non-GAAP Financial Measures." |
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Production and Revenues
Total oil production and average daily oil production for the year ended
December 31, 2015 were the best in Matador's history. Average daily oil
production increased 35% from 9,095 barrels of oil per day during the
year ended December 31, 2014 to 12,306 barrels of oil per day for the
year ended December 31, 2015. This increase in oil production was
primarily the result of Matador's ongoing delineation and development
operations in the
Total natural gas production and average daily natural gas production
for the year ended
Average daily oil equivalent production was also at record levels, increasing 55% from 16,082 BOE per day for the year ended December 31, 2014 to 24,955 BOE per day for the year ended December 31, 2015. Oil production comprised 49% of total production (using a conversion ratio of one barrel of oil per six thousand cubic feet of natural gas) for the year ended December 31, 2015, as compared to 57% for the year ended December 31, 2014.
Oil and natural gas revenues decreased 24% from
Total oil production increased 4% from 1.018 million barrels of oil, or
11,062 barrels of oil per day, during the fourth quarter of 2014 to
1.062 million barrels of oil, or 11,547 barrels of oil per day, during
the fourth quarter of 2015. This increase in oil production was
primarily the result of Matador's ongoing delineation and development
operations in the
Oil and natural gas revenues decreased 40% from
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP financial measure, decreased 15% from
Adjusted EBITDA, a non-GAAP financial measure, decreased 31% from
For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA (non-GAAP) to net income (GAAP) and net cash provided by operating activities (GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
For a definition of Cash Operating Expenses per BOE and a reconciliation of Cash Operating Expenses per BOE (non-GAAP) to Operating Expenses per BOE (GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
Net Income (Loss) and Earnings (Loss) Per Share
For the full year ended
For the year ended December 31, 2015, Matador reported a net loss of
approximately
Matador's net loss per diluted common share (GAAP basis) for the year
ended December 31, 2015 was unfavorably impacted by (1) lower realized
commodity prices, (2) a non-cash, unrealized loss on derivatives of
For the fourth quarter of 2015, Matador reported adjusted net income of
approximately
For the fourth quarter of 2015, Matador reported a net loss of
approximately
Matador's loss per diluted common share (GAAP basis) for the fourth
quarter of 2015 was unfavorably impacted by (1) lower realized commodity
prices, (2) a non-cash, unrealized loss on derivatives of
For a reconciliation of adjusted net income (non-GAAP) and adjusted earnings (loss) per diluted common share (non-GAAP) to net income (GAAP) and earnings (loss) per common share (GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
Sequential Production and Financial Results
Year Ended
- Oil production increased 35% from 3.320 million, or 9,095 barrels of oil per day, in 2014 to 4.492 million barrels, or 12,306 barrels of oil per day, in 2015.
- Natural gas production increased 81% from 15.3 billion cubic feet, or 41.9 million cubic feet per day, in 2014 to 27.7 billion cubic feet, or 75.9 million cubic feet per day, in 2015.
- Oil equivalent production increased 55% from 5.870 million BOE, or 16,082 BOE per day, in 2014 to 9.109 million BOE, or 24,955 BOE per day, in 2015.
-
Oil and natural gas revenues decreased 24% from
$367.7 million in 2014 to$278.3 million in 2015. -
Adjusted EBITDA decreased 15% from
$262.9 million reported in 2014 to$223.2 million reported in 2015.
Three Months Ended
- Oil production decreased 9% from 1.161 million barrels, or 12,617 barrels of oil per day, in the third quarter of 2015 to 1.062 million barrels, or 11,547 barrels of oil per day, in the fourth quarter of 2015.
- Natural gas production decreased 11% from 7.5 billion cubic feet, or 81.1 million cubic feet per day, in the third quarter of 2015 to 6.6 billion cubic feet, or 72.1 million cubic feet per day, in the fourth quarter of 2015.
- Oil equivalent production decreased 10% from 2.405 million BOE, or 26,137 BOE per day, in the third quarter of 2015 to 2.167 million BOE, or 23,556 BOE per day, in the fourth quarter of 2015.
-
Oil and natural gas revenues decreased 22% from
$71.8 million in the third quarter of 2015 to$56.2 million in the fourth quarter of 2015. -
Adjusted EBITDA decreased 17% from
$58.0 million in the third quarter of 2015 to$48.3 million in the fourth quarter of 2015.
Operating Expenses
Production Taxes and Marketing
Production taxes and marketing expenses increased 7% on an absolute
basis, but decreased 31% on a unit-of-production basis, from
Lease Operating Expenses ("LOE")
Total lease operating expenses increased 13% on an absolute basis, but
decreased 27% on a unit-of-production basis, from
Depletion, Depreciation and Amortization ("DD&A")
Depletion, depreciation and amortization expenses increased 33% on an
absolute basis, but decreased 15% on a unit-of-production basis, from
Full-cost ceiling impairment
Matador uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method of accounting, the net capitalized costs of oil and natural gas properties are limited to the lower of unamortized costs less related deferred income taxes or the cost center "ceiling," defined as (1) the present value, discounted at 10%, of future net revenues of proved oil and natural gas reserves, reduced by the estimated costs of developing these reserves, plus (2) unproved and unevaluated property costs not being amortized, plus (3) the lower of cost or estimated fair value of unproved and unevaluated properties included in the costs being amortized, if any, less (4) income tax effects related to the properties involved. Any excess of the Company's net capitalized costs above the cost center ceiling is charged to operations as a full-cost ceiling impairment. The fair value of the Company's derivative instruments is not included in the ceiling test computation.
Due to the sharp decline in commodity prices since mid-year 2014, the
unweighted arithmetic average oil and natural gas prices that
exploration and production companies are required to use in estimating
total proved reserves and PV-10, a non-GAAP financial measure, have also
declined significantly. At
As a non-cash item, the full-cost ceiling impairment impacts the accumulated depletion and the net carrying value of the Company's assets on its consolidated balance sheet, as well as the corresponding consolidated shareholders' equity, but it has no impact on the Company's consolidated cash flows or Adjusted EBITDA as reported.
For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
General and Administrative ("G&A")
General and administrative expenses increased 56% on a total basis, but
were essentially flat on a unit-of-production basis, from
Proved Reserves and PV-10
The following table summarizes Matador's estimated total proved oil and
natural gas reserves at
| At December 31, | |||||||||||||||
| 2015 | 2014 | 2013 | |||||||||||||
| Estimated proved reserves:(1)(2) | |||||||||||||||
| Oil (MBbl)(3) | 45,644 | 24,184 | 16,362 | ||||||||||||
| Natural Gas (Bcf)(4) | 236.9 | 267.1 | 212.2 | ||||||||||||
| Total (MBOE)(5) | 85,127 | 68,693 | 51,729 | ||||||||||||
| Estimated proved developed reserves: | |||||||||||||||
| Oil (MBbl)(3) | 17,129 | 14,053 | 8,258 | ||||||||||||
| Natural Gas (Bcf)(4) | 101.4 | 102.8 | 53.5 | ||||||||||||
| Total (MBOE)(5) | 34,037 | 31,185 | 17,168 | ||||||||||||
| Percent developed | 40.0 | % | 45.4 | % | 33.2 | % | |||||||||
| Estimated proved undeveloped reserves: | |||||||||||||||
| Oil (MBbl)(3) | 28,515 | 10,131 | 8,104 | ||||||||||||
| Natural Gas (Bcf)(4) | 135.5 | 164.3 | 158.7 | ||||||||||||
| Total (MBOE)(5) | 51,090 | 37,508 | 34,561 | ||||||||||||
| PV-10 (in millions)(6) | $ | 541.6 | $ | 1,043.4 | $ | 655.2 | |||||||||
| Standardized Measure (in millions) | $ | 529.2 | $ | 913.3 | $ | 578.7 | |||||||||
| (1) Numbers in table may not total due to rounding. | |||||||||||||||
| (2) Production volumes and proved reserves are reported in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Our estimated proved reserves, PV-10 and Standardized Measure were determined using index prices for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the life of the properties. The unweighted arithmetic averages of the first-day-of-the-month prices for the period from January through December 2015 were $46.79 per Bbl for oil and $2.59 per MMBtu for natural gas, for the period from January through December 2014 were $91.48 per Bbl for oil and $4.35 per MMBtu for natural gas and for the period from January through December 2013 were $93.42 per Bbl for oil and $3.67 per MMBtu for natural gas. These prices were adjusted by property for quality, energy content, regional price differentials, transportation fees, marketing deductions and other factors affecting the price received at the wellhead. | |||||||||||||||
| (3) One thousand barrels of oil. | |||||||||||||||
| (4) One billion cubic feet of natural gas. | |||||||||||||||
| (5) One thousand barrels of oil equivalent, estimated using a conversion ratio of one barrel of oil per six thousand cubic feet of natural gas. | |||||||||||||||
|
(6) PV-10 is a non-GAAP financial measure. For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below. |
|||||||||||||||
Matador's estimated total proved oil and natural gas reserves were 85.1
million BOE at December 31, 2015 (consisting of 45.6 million barrels of
oil and 236.9 billion cubic feet of natural gas) with a PV-10, a
non-GAAP financial measure, of
The unweighted arithmetic averages of the first-day-of-the-month prices
for the year ended December 31, 2015 were
Proved oil reserves increased 89% to 45.6 million barrels at
December 31, 2015, as compared to 24.2 million barrels at December 31,
2014, and increased almost three-fold, as compared to 16.4 million
barrels at
Proved natural gas reserves decreased 11% to 236.9 billion cubic feet at
December 31, 2015, as compared to 267.1 billion cubic feet at
December 31, 2014. The decline in year-over-year natural gas reserves
resulted principally from the reclassification of proved undeveloped
natural gas reserves to contingent resources, primarily in the
For a reconciliation of Standardized Measure (GAAP) to PV-10 (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
Operations Update
During 2015, and particularly after the first quarter of 2015, Matador
focused most of its efforts on the continued exploration, delineation
and development of its
At
Matador continues to make significant progress with its midstream
operations in the
Given its recent drilling success in the Rustler Breaks prospect area in
Wolf Prospect Area -
Matador is currently operating two drilling rigs in its Wolf prospect
area and expects to run at least one rig in this area throughout 2016.
At
Matador continues to be pleased with its progress in reducing drilling
times and well costs for both Wolfcamp and Bone Spring horizontal wells
in the Wolf prospect area. In the Wolfcamp, drilling times (spud to
total depth) have been reduced from 43 days in 2014 to as low as 18 days
on a recent well. In the Second Bone Spring, Matador drilled its most
recent well in the Wolf area without setting a second intermediate
casing string, saving both time and up to
In a three-rig program for 2016, Matador expects to complete and place
on production 17 gross (15.2 net) wells in its Wolf prospect area in
2016, including 14 Wolfcamp A-XY wells, one Wolfcamp A-Lower well and
two Second Bone Spring wells. Many of these wells will be drilled and
completed in a portion of the Wolf prospect area between the Dorothy
White and Norton Schaub properties, where initial Wolfcamp A-XY wells
have estimated ultimate recoveries at or above one million BOE. Both the
Dorothy White #1H and the Norton Schaub 84-TTT-B33 WF #201H continue to
be excellent wells. As of
In late
During the third quarter of 2015, Matador drilled a three-well stacked
horizontal lateral test in "batch" mode on its Jackson Trust C Unit in
northeast
In comparison to the Second Bone Spring, however, the Avalon and
Rustler Breaks Prospect Area -
At
In the Rustler Breaks prospect, where the Wolfcamp formation is
shallower, Matador has reduced Wolfcamp drilling times from an average
of 32 days in 2014 to as low as 15 days on recent wells. In addition,
Matador's most recent Second Bone Spring horizontal well at Rustler
Breaks was drilled from spud to total depth in 12 days, making it the
fastest horizontal Second Bone Spring well the Company has drilled to
date. As a result of both increased operational efficiencies and
continuing service cost declines, Wolfcamp A-XY and Wolfcamp B wells in
the Rustler Breaks area should be drilled and completed for
The delineation of the Rustler Breaks prospect area delivered strong
production results in both the Wolfcamp A-XY and Wolfcamp B formations
in 2015, and this trend has continued with wells drilled and placed on
production in the fourth quarter of 2015. During the fourth quarter of
2015, Matador completed and placed on production the Janie Conner
13-24S-28E RB #224H well in the Wolfcamp B formation. Of particular
note, the Janie Conner #224H well was stimulated with increased sand
concentrations of up to 3,000 pounds per foot of completed lateral to
observe the impact of higher sand concentrations on well performance;
Matador had pumped about 2,000 pounds per foot of completed lateral in
its earlier Wolfcamp completions. The Janie Conner #224H tested 1,703
BOE per day (59% oil), consisting of 1,005 barrels of oil per day and
4.2 million cubic feet of natural gas per day, at 3,000 psi on a
30/64-inch choke. This was the highest 24-hour initial potential test
rate recorded for any of Matador's Wolfcamp B wells in the Rustler
Breaks area. In fact, this was the best 24-hour initial potential test
of any well drilled by Matador thus far in the
During the fourth quarter of 2015, Matador also completed and placed on production the Dr. K 24-23S-27E RB #203H well in the Wolfcamp A-XY formation. This well was also stimulated with increased sand concentrations up to 3,000 pounds per foot of completed lateral and 40 barrels of fracturing fluid per foot of completed lateral. This well is located closer to the center of Matador's Rustler Breaks prospect area, northwest of the Guitar 10-24S-28E RB #202H and Tiger 14-24S-28E RB #204H wells, but south of the Scott Walker State 36-22S-27E RB #204H well. The Dr. K #203H well tested 1,241 BOE per day (69% oil), consisting of 856 barrels of oil per day and 2.3 million cubic feet of natural gas per day, at 1,890 psi on a 32/64-inch choke. This 24-hour initial potential test was comparable to the 1,274 BOE per day (79% oil) tested on the Guitar #202H well to the southeast and further established the prospectivity of the Wolfcamp A-XY formation across Matador's Rustler Breaks acreage. The Guitar #202H well and the Tiger #204H well, Matador's initial Wolfcamp A-XY completions at Rustler Breaks, continue to perform very well. Both wells continue to track above Matador's 800,000 BOE Wolfcamp A-XY type curve for the Rustler Breaks area. The majority of Matador's 2016 drilling program at Rustler Breaks is expected to be conducted to the south and southeast of the Dr. K #203H well.
Ranger Prospect Area -
Matador is not currently drilling in either of its Ranger or Arrowhead
prospect areas. (Note: Most of the acreage acquired by Matador in early
2015 as part of its merger with HEYCO is now included in Matador's
Arrowhead prospect area in northern
During the fourth quarter of 2015, Matador completed and placed on
production two Second Bone Spring wells in the northern portion of its
Ranger prospect area - the Conine 03-20S-35E RN #121H and the Hibiscus
State 08-19S-35E RN #124H wells. The Conine #121H well tested 578 BOE
per day (91% oil), consisting of 525 barrels of oil per day and 319
thousand cubic feet of natural gas per day. This well has continued to
perform very well on ESP and as of
Matador completed and began producing oil and natural gas from 18 gross (17.3 net) wells in the Eagle Ford shale in 2015, all in the early portion of the year, including 17 gross (17.0 net) operated wells and one gross (0.3 net) non-operated well. During the second quarter of 2015, Matador concluded its planned drilling and completion operations for 2015 and did not drill or complete any additional operated wells in the Eagle Ford shale for the remainder of 2015.
Matador does not plan to drill or complete any operated wells in the
Eagle Ford shale during 2016. At
Matador participated in 22 gross (1.9 net) non-operated wells in the
As of
At
Liquidity Update
At December 31, 2015, the borrowing base under the Company's revolving
credit facility was
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
-
Approximately 2.0 million barrels of oil at a weighted average floor
price of
$44 per barrel and a weighted average ceiling price of$65 per barrel. -
Approximately 10.0 billion cubic feet of natural gas at a weighted
average floor price of
$2.60 per MMBtu and a weighted average ceiling price of$3.53 per MMBtu.
Matador estimates that it has approximately 44% of its anticipated oil
production and approximately 44% of its anticipated natural gas
production hedged for the remainder of 2016 based on the midpoint of its
production guidance as provided at its Analyst Day on
At
-
Approximately 7.2 billion cubic feet of natural gas at a weighted
average floor price of
$2.25 per MMBtu and a weighted average ceiling price of$3.57 per MMBtu.
2016 Guidance Affirmation
At
As a result of additional pad drilling operations in 2016, Matador
estimates that its production growth profile will be somewhat uneven in
2016. As noted earlier, due to multi-well pad drilling operations
ongoing in the first quarter in its Wolf and Rustler Breaks prospect
areas, seven to nine wells being drilled in the first quarter will not
be stimulated and placed on production until late in the first quarter
or early in the second quarter. As a result, Matador estimates that its
first quarter oil production may be down approximately 3% and that its
total production will be relatively flat, as compared to the fourth
quarter of 2015. Should Matador continue with its three-rig program, the
Company estimates that its oil production should increase in the second
quarter of 2016, remain relatively flat for several months and then
increase again in the fourth quarter of 2016, with fourth quarter 2016
oil production being as much as one-third higher compared to the fourth
quarter of 2015. Natural gas production is expected to decline slightly
in the latter half of 2016, as increasing natural gas production in the
Key elements of the Company's 2016 guidance, based on the three-rig drilling program, are as follows.
-
2016 capital expenditures of
$325 million , including$260 million for drilling, completions, facilities and infrastructure costs,$40 million for midstream activities in theDelaware Basin and$25 million for discretionary land and seismic data; - 2016 oil production guidance of 4.9 to 5.1 million barrels, an increase of approximately 11% from 2015 actual oil production of 4.5 million barrels to the midpoint of 2016 production guidance;
- 2016 natural gas production guidance of 26.0 to 28.0 billion cubic feet, a decrease of approximately 3% from 2015 actual natural gas production of 27.7 billion cubic feet to the midpoint of 2016 production guidance;
- 2016 total oil equivalent production guidance of 9.2 to 9.8 million BOE, an increase of approximately 4% from 2015 actual oil equivalent production of 9.1 million BOE at the midpoint of 2016 production guidance; and
-
2016 Adjusted EBITDA guidance of
$120 to $130 million , a decrease of approximately 44% from 2015 Adjusted EBITDA of$223.2 million based on estimated average oil prices of$34.00 per barrel for oil (West Texas Intermediate average oil price of$37.00 per barrel, less$3.00 per barrel of estimated price differentials, using the forward strip for oil prices in lateJanuary 2016 ) and$2.37 per thousand cubic feet for natural gas (NYMEX Henry Hub average natural gas price using the forward strip for natural gas prices in lateJanuary 2016 and assuming regional price differentials and uplifts from natural gas processing roughly offset). These estimated 2016 realized prices compare to 2015 realized oil and natural gas prices of$45.27 per barrel and$2.71 per thousand cubic feet, respectively.
Conference Call Information
The Company will host a live 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," "hypothetical," "forecasted" 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; the Company's
ability to execute its business plan, including whether its 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; its 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; its ability to make
acquisitions on economically acceptable terms; its ability to integrate
acquisitions, including the HEYCO merger; availability of sufficient
capital to execute its business plan, including from future cash flows,
increases in its 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
| Matador Resources Company and Subsidiaries | ||||||||||
| CONSOLIDATED BALANCE SHEETS - UNAUDITED | ||||||||||
| (In thousands, except par value and share data) | December 31, | |||||||||
| 2015 | 2014 | |||||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash | $ | 16,732 | $ | 8,407 | ||||||
| Restricted cash | 44,357 | 609 | ||||||||
| Accounts receivable | ||||||||||
| Oil and natural gas revenues | 16,616 | 28,976 | ||||||||
| Joint interest billings | 16,999 | 6,925 | ||||||||
| Other | 10,794 | 9,091 | ||||||||
| Derivative instruments | 16,284 | 55,549 | ||||||||
| Lease and well equipment inventory | 2,022 | 1,212 | ||||||||
| Prepaid expenses and other assets | 3,203 | 1,649 | ||||||||
| Total current assets | 127,007 | 112,418 | ||||||||
| Property and equipment, at cost | ||||||||||
| Oil and natural gas properties, full-cost method | ||||||||||
| Evaluated | 2,122,174 | 1,617,913 | ||||||||
| Unproved and unevaluated | 387,504 | 264,419 | ||||||||
| Other property and equipment | 86,387 | 43,472 | ||||||||
| Less accumulated depletion, depreciation and amortization | (1,583,659 | ) | (603,732 | ) | ||||||
| Net property and equipment | 1,012,406 | 1,322,072 | ||||||||
| Other assets | ||||||||||
| Other assets | 1,448 | — | ||||||||
| Total other assets | 1,448 | — | ||||||||
| Total assets | $ | 1,140,861 | $ | 1,434,490 | ||||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 10,966 | $ | 17,526 | ||||||
| Accrued liabilities | 92,369 | 107,356 | ||||||||
| Royalties payable | 16,493 | 14,461 | ||||||||
| Amounts due to affiliates | 5,670 | 2,146 | ||||||||
| Advances from joint interest owners | 700 | — | ||||||||
| Deferred gain on plant sale | 4,830 | — | ||||||||
| Amounts due to joint ventures | 2,793 | — | ||||||||
| Income taxes payable | 2,848 | 444 | ||||||||
| Other current liabilities | 161 | 103 | ||||||||
| Total current liabilities | 136,830 | 142,036 | ||||||||
| Long-term liabilities | ||||||||||
| Borrowings under Credit Agreement | — | 338,199 | ||||||||
| Senior unsecured notes payable | 391,254 | — | ||||||||
| Asset retirement obligations | 15,166 | 11,640 | ||||||||
| Amounts due to joint ventures | 3,956 | — | ||||||||
| Deferred income taxes | — | 73,534 | ||||||||
| Deferred gain on plant sale | 102,506 | — | ||||||||
| Other long-term liabilities | 2,190 | 2,540 | ||||||||
| Total long-term liabilities | 515,072 | 425,913 | ||||||||
|
Shareholders' equity |
||||||||||
| Common stock — $0.01 par value, 120,000,000 and 80,000,000 shares authorized; 85,567,021 and 73,373,744 shares issued; 85,564,435 and 73,342,777 shares outstanding, respectively | 856 | 734 | ||||||||
| Additional paid-in capital | 1,026,077 | 724,819 | ||||||||
| Retained (deficit) earnings | (538,930 | ) | 140,855 | |||||||
|
Total Matador Resources Company shareholders' equity |
488,003 | 866,408 | ||||||||
| Non-controlling interest in subsidiaries | 956 | 133 | ||||||||
|
Total shareholders' equity |
488,959 | 866,541 | ||||||||
|
Total liabilities and shareholders' equity |
$ | 1,140,861 | $ | 1,434,490 | ||||||
| Matador Resources Company and Subsidiaries | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | |||||||||||||||
| (In thousands, except per share data) | For the Years Ended December 31, | ||||||||||||||
| 2015 | 2014 | 2013 | |||||||||||||
| Revenues | |||||||||||||||
| Oil and natural gas revenues | $ | 278,340 | $ | 367,712 | $ | 269,030 | |||||||||
| Realized gain (loss) on derivatives | 77,094 | 5,022 | (909 | ) | |||||||||||
| Unrealized (loss) gain on derivatives | (39,265 | ) | 58,302 | (7,232 | ) | ||||||||||
| Total revenues | 316,169 | 431,036 | 260,889 | ||||||||||||
| Expenses | |||||||||||||||
| Production taxes and marketing | 35,535 | 33,172 | 20,973 | ||||||||||||
| Lease operating | 58,193 | 51,353 | 38,720 | ||||||||||||
| Depletion, depreciation and amortization | 178,847 | 134,737 | 98,395 | ||||||||||||
| Accretion of asset retirement obligations | 734 | 504 | 348 | ||||||||||||
| Full-cost ceiling impairment | 801,166 | — | 21,229 | ||||||||||||
| General and administrative | 50,105 | 32,152 | 20,779 | ||||||||||||
| Total expenses | 1,124,580 | 251,918 | 200,444 | ||||||||||||
| Operating (loss) income | (808,411 | ) | 179,118 | 60,445 | |||||||||||
| Other income (expense) | |||||||||||||||
| Net gain (loss) on asset sales and inventory impairment | 908 | — | (192 | ) | |||||||||||
| Interest expense, net of amounts capitalized | (21,754 | ) | (5,334 | ) | (5,687 | ) | |||||||||
| Interest and other income | 2,365 | 1,345 | 225 | ||||||||||||
| Total other expense | (18,481 | ) | (3,989 | ) | (5,654 | ) | |||||||||
| (Loss) income before income taxes | (826,892 | ) | 175,129 | 54,791 | |||||||||||
| Income tax provision (benefit) | |||||||||||||||
| Current | 2,959 | 133 | 404 | ||||||||||||
| Deferred | (150,327 | ) | 64,242 | 9,293 | |||||||||||
| Total income tax (benefit) provision | (147,368 | ) | 64,375 | 9,697 | |||||||||||
| Net (loss) income | (679,524 | ) | 110,754 | 45,094 | |||||||||||
| Net (income) loss attributable to non-controlling interest in subsidiaries | (261 | ) | 17 | — | |||||||||||
|
Net (loss) income attributable to Matador Resources Company shareholders |
$ | (679,785 | ) | $ | 110,771 | $ | 45,094 | ||||||||
| Earnings (loss) per common share | |||||||||||||||
| Basic | $ | (8.34 | ) | $ | 1.58 | $ | 0.77 | ||||||||
| Diluted | $ | (8.34 | ) | $ | 1.56 | $ | 0.77 | ||||||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 81,537 | 70,229 | 58,777 | ||||||||||||
| Diluted | 81,537 | 70,906 | 58,929 | ||||||||||||
| Matador Resources Company and Subsidiaries | |||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED | |||||||||||||||
| (In thousands) | For the Years Ended December 31, | ||||||||||||||
| 2015 | 2014 | 2013 | |||||||||||||
| Operating activities | |||||||||||||||
| Net (loss) income | $ | (679,524 | ) | $ | 110,754 | $ | 45,094 | ||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities | |||||||||||||||
| Unrealized loss (gain) on derivatives | 39,265 | (58,302 | ) | 7,232 | |||||||||||
| Depletion, depreciation and amortization | 178,847 | 134,737 | 98,395 | ||||||||||||
| Accretion of asset retirement obligations | 734 | 504 | 348 | ||||||||||||
| Full-cost ceiling impairment | 801,166 | — | 21,229 | ||||||||||||
| Stock-based compensation expense | 9,450 | 5,524 | 3,897 | ||||||||||||
| Deferred income tax (benefit) provision | (150,327 | ) | 64,242 | 9,293 | |||||||||||
| Amortization of debt issuance costs and discounts | 852 | — | — | ||||||||||||
| Net (gain) loss on asset sales and inventory impairment | (908 | ) | — | 192 | |||||||||||
| Changes in operating assets and liabilities | |||||||||||||||
| Accounts receivable | 3,633 | (13,318 | ) | (2,160 | ) | ||||||||||
| Lease and well equipment inventory | (180 | ) | (211 | ) | 243 | ||||||||||
| Prepaid expenses | (544 | ) | (783 | ) | (668 | ) | |||||||||
| Other assets | (552 | ) | 1,212 | (548 | ) | ||||||||||
| Accounts payable, accrued liabilities and other current liabilities | 1,375 | 607 | (3,638 | ) | |||||||||||
| Royalties payable | 1,654 | 6,663 | 1,257 | ||||||||||||
| Advances from joint interest owners | 700 | — | (1,515 | ) | |||||||||||
| Income taxes payable | 2,405 | 39 | 404 | ||||||||||||
| Other long-term liabilities | 489 | (187 | ) | 415 | |||||||||||
| Net cash provided by operating activities | 208,535 | 251,481 | 179,470 | ||||||||||||
| Investing activities | |||||||||||||||
| Proceeds from sale of assets | 139,836 | 79 | — | ||||||||||||
| Oil and natural gas properties capital expenditures | (432,715 | ) | (560,849 | ) | (363,192 | ) | |||||||||
| Expenditures for other property and equipment | (64,499 | ) | (9,152 | ) | (3,977 | ) | |||||||||
| Business combination, net of cash acquired | (24,028 | ) | — | — | |||||||||||
| Maturities of certificates of deposit, net of purchases | — | — | 230 | ||||||||||||
| Restricted cash | (43,098 | ) | — | — | |||||||||||
| Restricted cash in less-than-wholly-owned subsidiaries | (650 | ) | (609 | ) | — | ||||||||||
| Net cash used in investing activities | (425,154 | ) | (570,531 | ) | (366,939 | ) | |||||||||
| Financing activities | |||||||||||||||
| Repayments of borrowings under Credit Agreement | (476,982 | ) | (180,000 | ) | (130,000 | ) | |||||||||
| Borrowings under Credit Agreement | 125,000 | 320,000 | 180,000 | ||||||||||||
| Proceeds from issuance of common stock | 188,720 | 181,875 | 149,069 | ||||||||||||
| Proceeds from issuance of senior unsecured notes | 400,000 | — | — | ||||||||||||
| Costs to issue equity | (1,158 | ) | (590 | ) | (7,390 | ) | |||||||||
| Cost to issue senior unsecured notes | (9,598 | ) | — | — | |||||||||||
| Proceeds from stock options exercised | 10 | 43 | — | ||||||||||||
| Capital commitment from non-controlling interest owners of less-than-wholly-owned subsidiaries | 562 | 150 | — | ||||||||||||
| Taxes paid related to net share settlement of stock-based compensation | (1,610 | ) | (308 | ) | (18 | ) | |||||||||
| Net cash provided by financing activities | 224,944 | 321,170 | 191,661 | ||||||||||||
| Increase in cash | 8,325 | 2,120 | 4,192 | ||||||||||||
| Cash at beginning of year | 8,407 | 6,287 | 2,095 | ||||||||||||
| Cash at end of year | $ | 16,732 | $ | 8,407 | $ | 6,287 | |||||||||
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 the Company's
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 pro forma, forward-looking, preliminary 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 such Adjusted EBITDA numbers 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.
| Year Ended December 31, | Three Months Ended | |||||||||||||||||||||||||||||
| (In thousands) | 2015 | 2014 | 2013 |
December 31, |
September 30, 2015 |
December 31, 2014 |
||||||||||||||||||||||||
| Unaudited Adjusted EBITDA Reconciliation to Net (Loss) Income: | ||||||||||||||||||||||||||||||
| Net (loss) income attributable to Matador Resources Company shareholders | $ | (679,785 | ) | $ | 110,771 | $ | 45,094 | $ | (230,401 | ) | $ | (242,059 | ) | $ | 46,563 | |||||||||||||||
| Interest expense | 21,754 | 5,334 | 5,687 | 6,586 | 7,229 | 1,649 | ||||||||||||||||||||||||
| Total income tax (benefit) provision | (147,368 | ) | 64,375 | 9,697 | 1,677 | (33,305 | ) | 27,701 | ||||||||||||||||||||||
| Depletion, depreciation and amortization | 178,847 | 134,737 | 98,395 | 35,370 | 45,237 | 43,767 | ||||||||||||||||||||||||
| Accretion of asset retirement obligations | 734 | 504 | 348 | 307 | 182 | 134 | ||||||||||||||||||||||||
| Full-cost ceiling impairment | 801,166 | — | 21,229 | 219,292 | 285,721 | — | ||||||||||||||||||||||||
| Unrealized loss (gain) on derivatives | 39,265 | (58,302 | ) | 7,232 | 13,909 | (6,733 | ) | (50,351 | ) | |||||||||||||||||||||
| Stock-based compensation expense | 9,450 | 5,524 | 3,897 | 2,564 | 1,755 | 857 | ||||||||||||||||||||||||
| Net (gain) loss on asset sales and inventory impairment | (908 | ) | — | 192 | (1,005 | ) | — | — | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 223,155 | $ | 262,943 | $ | 191,771 | $ | 48,299 | $ | 58,027 | $ | 70,320 | ||||||||||||||||||
| Year Ended December 31, | Three Months Ended | |||||||||||||||||||||||||||||
| (In thousands) | 2015 | 2014 | 2013 |
December 31, |
September 30, 2015 |
December 31, 2014 |
||||||||||||||||||||||||
| Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities: | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 208,535 | $ | 251,481 | $ | 179,470 | $ | 22,611 | $ | 72,535 | $ | 71,123 | ||||||||||||||||||
| Net change in operating assets and liabilities | (8,980 | ) | 5,978 | 6,210 | 16,254 | (20,846 | ) | 56 | ||||||||||||||||||||||
| Interest expense, net of non-cash portion | 20,902 | 5,334 | 5,687 | 6,285 | 6,678 | 1,649 | ||||||||||||||||||||||||
| Current income tax provision (benefit) | 2,959 | 133 | 404 | 3,254 | (295 | ) | (2,525 | ) | ||||||||||||||||||||||
| Net (income) loss attributable to non-controlling interest in subsidiaries | (261 | ) | 17 | — | (105 | ) | (45 | ) | 17 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 223,155 | $ | 262,943 | $ | 191,771 | $ | 48,299 | $ | 58,027 | $ | 70,320 | ||||||||||||||||||
Adjusted Net Income and Adjusted Earnings Per Share
This press release includes the non-GAAP financial measures of adjusted
net income and adjusted earnings per diluted common share. These
non-GAAP items are measured as net income (loss) attributable to
|
Three Months Ended |
Year Ended |
|||||||||
| (In thousands, except per share data) | ||||||||||
| Unaudited Adjusted Net Income and Adjusted Earnings Per Share Reconciliation to Net Loss: | ||||||||||
| Net loss attributable to Matador Resources Company shareholders | $ | (230,401 | ) | $ | (679,785 | ) | ||||
| Total income tax provision (benefit) | 1,677 | (147,368 | ) | |||||||
| Loss attributable to Matador Resources Company shareholders before taxes | (228,724 | ) | (827,153 | ) | ||||||
| Less non-recurring and unrealized charges to net income before taxes: | ||||||||||
| Full-cost ceiling impairment | 219,292 | 801,166 | ||||||||
| Unrealized loss on derivatives | 13,909 | 39,265 | ||||||||
| Net gain on asset sales and inventory impairment | (1,005 | ) | (908 | ) | ||||||
| Non-recurring transaction costs associated with the HEYCO merger | — | 2,510 | ||||||||
| Adjusted income attributable to Matador Resources Company shareholders before taxes | 3,472 | 14,880 | ||||||||
| Income tax expense | 1,111 | 5,119 | ||||||||
| Adjusted net income attributable to Matador Resources Company shareholders | $ | 2,361 | $ | 9,761 | ||||||
| Basic weighted average shares outstanding, without participating securities | 84,705 | 81,537 | ||||||||
| Dilutive effect of participating securities | 849 | 769 | ||||||||
| Weighted average shares outstanding, including participating securities - basic | 85,554 | 82,306 | ||||||||
| Dilutive effect of options, restricted stock units and preferred shares | 461 | 544 | ||||||||
| Weighted average common shares outstanding - diluted | 86,015 | 82,850 | ||||||||
| Adjusted earnings per share attributable to Matador Resources Company shareholders (non-GAAP) | ||||||||||
| Basic | $ | 0.03 | $ | 0.12 | ||||||
| Diluted | $ | 0.03 | $ | 0.12 | ||||||
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. PV-10 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by reducing PV-10 by the discounted future income taxes associated with such reserves. Where references are hypothetical 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 such amounts are estimations and/or approximations. In addition, it would be difficult for the Company to present a detailed reconciliation on account of many unknown variables for the reconciling items.
| (in millions) |
At December 31, 2015 |
At December 31, 2014 |
At December 31, 2013 |
||||||||||||
| PV-10 | $ | 541.6 | $ | 1,043.4 | $ | 655.2 | |||||||||
| Discounted future income taxes | (12.4 | ) | (130.1 | ) | (76.5 | ) | |||||||||
| Standardized Measure | $ | 529.2 | $ | 913.3 | $ | 578.7 | |||||||||
Cash Operating Expenses per BOE
This press release includes the non-GAAP financial measure of cash operating expenses per BOE. This non-GAAP item is measured as operating expenses per BOE excluding non-cash DD&A expense, non-cash stock-based compensation expense and non-recurring transaction costs associated with the HEYCO merger, each as adjusted on a per BOE basis. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP financial measures. Additionally, this non-GAAP financial measure may be different than similar measures used by other companies. The Company believes the presentation of cash operating expenses per BOE provides useful information to investors and other users of the Company's financial information in evaluating the Company's operating performance. The following table reconciles cash operating expenses per BOE (non-GAAP) to operating expenses per BOE (GAAP).
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
December 31, |
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|
Cash Operating Expenses per BOE Reconciliation to Operating Expenses per BOE: |
|||||||||||||||||||||||||||||||
| Total operating expenses (per BOE)(1) | $ | 32.83 | $ | 33.92 | $ | 41.03 | $ | 35.42 | $ | 42.83 | $ | 41.74 | |||||||||||||||||||
| Depletion, depreciation and amortization expenses (per BOE) | (16.32 | ) | (18.81 | ) | (22.86 | ) | (19.63 | ) | (22.95 | ) | (22.96 | ) | |||||||||||||||||||
| Non-cash stock-based compensation expense (per BOE) | (1.18 | ) | (0.73 | ) | (0.45 | ) | (1.04 | ) | (0.94 | ) | (0.91 | ) | |||||||||||||||||||
| Non-recurring transaction costs (per BOE) | — | — | — | (0.28 | ) | — | — | ||||||||||||||||||||||||
| Cash operating expenses (per BOE) | $ | 15.33 | $ | 14.38 | $ | 17.72 | $ | 14.47 | $ | 18.94 | $ | 17.87 | |||||||||||||||||||
| (1) Total does not include the impact of full-cost ceiling impairment charges or immaterial accretion expenses. | |||||||||||||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160224006461/en/
Source:
Matador Resources Company
Mac Schmitz, 972-371-5225
Capital
Markets Coordinator
mschmitz@matadorresources.com