DALLAS--(BUSINESS WIRE)--Feb. 12, 2014--
Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”), an
independent energy company engaged in the exploration, development,
production and acquisition of oil and natural gas resources, with an
emphasis on oil and natural gas shale and other unconventional plays and
with a current focus on its Eagle Ford operations in South Texas and its
Permian Basin operations in Southeast New Mexico and West Texas, today
provided an update on various aspects of its business.
Permian Basin Operations and Acreage Update
Matador is pleased to announce that its first horizontal well in Loving
County, Texas, the Dorothy White #1H well, flowed 1,355 barrels of oil
equivalent (“BOE”) per day, including 902 barrels (“Bbl”) of oil per day
and 2.7 million cubic feet (“MMcf”) of natural gas per day (67% oil), at
3,711 psi on a 22/64-in choke during a 24-hour initial potential test.
The Dorothy White #1H well is completed in the top portion of the
Wolfcamp formation, the Wolfcamp “A”, at approximately 10,700-ft
vertical depth, which is a highly geopressured interval having an
estimated bottomhole pressure gradient of 0.8 psi/ft, implying a
reservoir pressure of approximately 8,500 psi. Matador drilled and
completed a 5,000-ft horizontal lateral in the Wolfcamp “A” and
completed the well with 20 frac stages including approximately 200,000
Bbl of fluid and 9.8 million pounds of sand. The Dorothy White #1H well
has not yet been on production for a full 30 days, but during the past
three weeks, the well flowed at an average of 1,043 BOE per day,
including 693 Bbl of oil per day and 2.1 MMcf of natural gas per day at
approximately 3,600 psi, mostly on smaller chokes of 18/64-in to
20/64-in.
Matador continues to be pleased by the early performance of its first
horizontal well in Lea County, New Mexico, the Ranger 33 State Com #1H.
This well is a 4,300-ft horizontal lateral drilled and completed in the
Second Bone Spring sand with 18 frac stages, including 165,000 Bbl of
fluid and 7.5 million pounds of sand. The well was placed on production
at the end of October 2013 and has continued to exhibit strong
performance since that time. The well produced a total of approximately
15,000 Bbl of oil in December 2013 despite being shut in for several
days while tubing and gas lift valves were installed. In January 2014,
the well produced 15,400 Bbl of oil despite being shut in for two days
due to weather. During January, the well averaged 583 BOE per day,
including 531 Bbl of oil per day and 313 Mcf of natural gas per day (91%
oil). In only about three months on production, including its initial
cleanup phase, the well has already produced over 48,000 BOE, including
approximately 44,000 Bbl of oil, and continues to flow with gas lift
assist. These early results from the Ranger 33 State Com #1H and the
Dorothy White #1H have exceeded the Company’s initial expectations for
both wells.
Matador has recently completed drilling the Rustler Breaks 12-24-27 #1H
well, its first horizontal well in Eddy County, Texas. This well is a
4,500-ft horizontal lateral testing the Wolfcamp “B” formation at
approximately 9,800-ft vertical depth. Matador is currently completing
this well with a 19-stage hydraulic fracture treatment, including
180,000 Bbl of fluid and 8.5 million pounds of sand. The Wolfcamp “B” is
also an over-pressured reservoir like the Wolfcamp “A” in the Dorothy
White #1H well and exhibited encouraging hydrocarbon shows while
drilling. Upon completion of a 30-day production test, Matador expects
to announce the results of this well. To this point, this well has met
or exceeded the Company’s expectations. Matador is currently drilling
the Pickard 20-18-34 #2H well, which is planned to be a Wolfcamp “D”
test in the northern portion of its Ranger/Querecho Plains prospect area
in Lea County, New Mexico. Matador plans to drill 12 gross (9.8 net)
wells across its various acreage positions in the Permian Basin in 2014.
Matador began 2014 with approximately 70,800 gross (44,800 net) acres in
the Permian Basin in Southeast New Mexico and West Texas. During 2014,
the Company has acquired approximately 2,800 gross (1,600 net)
additional acres in its various prospect areas in Lea and Eddy Counties,
New Mexico. Including these acreage acquisitions, at February 12, 2014,
Matador’s total Permian Basin acreage position in Southeast New Mexico
and West Texas was approximately 73,600 gross (46,400 net) acres.
Proved Oil and Natural Gas Reserves
Matador also announced today that the Company increased its total proved
oil and natural gas reserves from 10.5 million Bbl of oil and 80.0
billion cubic feet (“Bcf”) of natural gas, or a total of 23.8 million
BOE, at December 31, 2012 to 16.4 million Bbl of oil and 212.2 Bcf of
natural gas, or a total of 51.7 million BOE at December 31, 2013, an
increase of 117% in BOE. Matador reports its production and proved
reserves in two streams: oil and natural gas, including both dry and
liquids-rich gas. Where the Company produces liquids-rich natural gas,
such as in the Eagle Ford shale and the Permian Basin, the economic
value of the natural gas liquids (“NGL”) associated with the natural gas
is included as an uplift to the estimated wellhead natural gas price on
those properties where the NGL are extracted and sold. At times during
2013, this uplift amounted to as much as $2.50 per Mcf to $3.00 per Mcf
on the Company’s weighted average price received for its natural gas
production in the Eagle Ford shale as compared to prices realized for
its Haynesville shale natural gas production. Overall, NGL contributed
approximately $17 million to the Company’s total oil and natural gas
revenues in 2013.
Proved developed reserves included 8.3 million Bbl of oil and 53.5 Bcf
of natural gas, and proved undeveloped reserves included 8.1 million Bbl
of oil and 158.7 Bcf of natural gas. Proved developed reserves comprised
33% of the Company’s total proved oil and natural gas reserves at
December 31, 2013. Based on its 2013 year-end proved reserves and its
2013 production of approximately 4.3 million BOE, Matador improved its
proved reserves/production (“R/P”) ratio to 12.1 years at December 31,
2013, as compared to 7.2 years at December 31, 2012.
Matador’s proved oil reserves grew 56% from 10.5 million Bbl at December
31, 2012 to 16.4 million Bbl at December 31, 2013. Proved oil reserves
at December 31, 2013 comprised about one-third (32%) of the Company’s
total proved reserves (1 Bbl = 6 Mcf basis). During 2013, oil accounted
for approximately 50% of Matador’s total production by volume and
approximately 80% of the Company’s total oil and natural gas revenues.
This growth in proved oil reserves during 2013 was primarily
attributable to Matador’s ongoing drilling program in the Eagle Ford
shale in South Texas.
Proved natural gas reserves increased to 212.2 Bcf at December 31, 2013
from 80.0 Bcf at December 31, 2012. This large increase in proved
natural gas reserves was attributable to the Company’s drilling and
completion activities in 2013 and to improvements in natural gas prices
during 2013. In 2013, natural gas prices ranged from just above $3.00
per MMBtu to approximately $4.50 per MMBtu, as compared to a range of
just below $2.00 per MMBtu to approximately $4.00 per MMBtu during 2012.
At June 30, 2012, Matador removed 97.8 Bcf of previously classified
proved undeveloped natural gas reserves in the Haynesville shale in
Northwest Louisiana from its total proved reserves due to lower natural
gas prices, and these proved undeveloped reserves were likewise not
included in the Company’s total proved reserves at December 31, 2012. As
a result of the continued improvement in natural gas prices throughout
2013, Matador re-classified a portion of these natural gas volumes as
proved undeveloped reserves at June 30, 2013 and included additional
Haynesville proved undeveloped natural gas reserves in its total proved
reserves at December 31, 2013.
The present value, discounted at 10%, of the estimated future net cash
flows before income taxes (“PV-10”) of Matador’s total proved oil and
natural gas reserves at December 31, 2013 was $655.2 million, as
compared to a PV-10 of $423.2 million at December 31, 2012, an increase
of 55%. Matador has steadily increased the PV-10 of its proved reserves
at a compounded annual growth rate of approximately 75% since December
31, 2009. The December 31, 2013 PV-10 was determined using the 12-month
unweighted average of first-day-of-the-month oil and natural gas prices
for 2013 of $93.42 per Bbl of oil and $3.67 per MMBtu, respectively,
adjusted by lease for quality, energy content, regional price
differentials and other expenses as needed compared to the December 31,
2012 value, which was determined using comparable average prices of
$91.21 per barrel of oil and $2.757 per MMBtu, respectively, further
adjusted as described above.
Click
here for chart highlighting growth in PV-10
The following table presents Matador’s proved oil and natural gas
reserves at December 31, 2013.
Proved Oil and Natural Gas Reserves at December 31, 2013
|
Category
|
|
|
Oil, MBbl
|
|
|
Natural Gas, MMcf
|
|
|
OilEq, MBOE
|
|
|
Undisc. CF, M$
|
|
|
PV-10, M$
|
|
Developed Producing
|
|
|
7,855
|
|
|
50,986
|
|
|
16,352
|
|
|
$
|
637,662
|
|
|
$
|
444,481
|
|
Developed Non-Producing
|
|
|
403
|
|
|
2,472
|
|
|
815
|
|
|
|
29,476
|
|
|
|
20,619
|
|
Undeveloped
|
|
|
8,104
|
|
|
158,738
|
|
|
34,561
|
|
|
|
475,114
|
|
|
|
190,085
|
|
Total*
|
|
|
16,362
|
|
|
212,195
|
|
|
51,728
|
|
|
$
|
1,142,252
|
|
|
$
|
655,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Totals may not add due to rounding.
Bbl, Barrels.
Bcf, Cubic feet in billions.
BOE, Barrels of oil
equivalent, using the ratio of 1 Bbl = 6 Mcf.
CF, Estimated future
net cash flows before income taxes.
MBbl, Barrels in thousands.
Mcf,
Cubic feet in thousands.
MMBtu, British Thermal Units in millions.
MMcf,
Cubic feet in millions.
MBOE, Barrels of oil equivalent in
thousands, using the ratio of 1 Bbl = 6 Mcf.
M$, Dollars in
thousands.
Chairman’s Remarks
Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “Our Permian
Basin program is off to a strong start, and we are delighted by the
initial performance of our first two Permian horizontal wells, the
Ranger 33 State Com #1H in Lea County, New Mexico and the Dorothy White
#1H in Loving County, Texas, both of which exceeded expectations. We
plan to run one rig continuously during 2014 in Lea and Eddy Counties,
New Mexico and Loving County, Texas to further appraise and delineate
our growing acreage position testing multiple geologic targets
throughout the year.
“In South Texas, we plan to run two rigs throughout 2014 as we move
forward with the development of our Eagle Ford shale properties. In the
Eagle Ford, we continue to drive down the drilling and completion costs
of our wells while experiencing better well performance due to
continuous improvements in our fracture treatment designs and production
operations. We are also pleased with the continued growth in our proved
oil and natural gas reserves and expect to achieve strong growth in our
proved reserves, and particularly in our proved oil reserves, again this
year. Our oil production grew by 76% in 2013 to 2.13 million barrels,
mostly attributable to our operations in the Eagle Ford shale, and we
expect to grow our oil production by another 40 to 50% in 2014.”
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 revenues. PV-10 is not an estimate of the fair market value
of our 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 December 31, 2008, 2009, 2010, 2011 and
2012 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. The PV-10 values at December
31, 2008, 2009, 2010, 2011 and 2012 were $44.1 million, $70.4 million,
$119.9 million, $248.7 million and $423.2 million, respectively. The
discounted future income taxes at December 31, 2008, 2009, 2010, 2011
and 2012 were $0.8 million, $5.3 million, $8.8 million, $33.2 million
and $28.6 million, respectively.
We have not provided a reconciliation of PV-10 to Standardized Measure
at December 31, 2013. We could not provide such a reconciliation without
undue hardship because we have not completed the audit of our December
31, 2013 financial statements. In addition, it would be difficult for us
to present a detailed reconciliation on account of many unknown
variables for the reconciling items.
About Matador Resources Company
Matador is an independent energy company engaged in the exploration,
development, production and acquisition of oil and natural gas resources
in the United States, with an emphasis on oil and natural gas shale and
other unconventional plays. Its current operations are focused primarily
on the oil and liquids-rich portion of the Eagle Ford shale play in
South Texas and the Wolfcamp and Bone Spring plays in the Permian Basin
in Southeast New Mexico and West Texas. Matador also operates in the
Haynesville shale and Cotton Valley plays in Northwest Louisiana and
East Texas. In addition, Matador has a large exploratory leasehold
position in Southwest Wyoming and adjacent areas of Utah and Idaho where
it is testing the Meade Peak shale.
For more information, visit Matador Resources Company at www.matadorresources.com.
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; 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; 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
SEC filings, including the “Risk Factors” section of Matador's most
recent Annual Report on Form 10-K and any subsequent Quarterly Reports
on Form 10-Q. Matador undertakes no obligation and does not intend to
update these forward-looking statements to reflect events or
circumstances occurring after the date of this press release, except as
required by law, including the securities laws of the United States and
the rules and regulations of the SEC. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the date of this press release. All forward-looking statements are
qualified in their entirety by this cautionary statement.
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Source: Matador Resources Company
Matador Resources Company
Mac Schmitz, 972-371-5225
Investor
Relations
mschmitz@matadorresources.com
