MTDR

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Transcript Summary

Matador Resources Company (MTDR) delivered a strong Q1 2026 performance, emphasizing production growth, debt reduction, and controlled capital spending. CEO Joseph Wm. Foran highlighted the company’s 40-year history of navigating volatility, asserting that Matador’s current balance sheet is the strongest it has ever been. Key operational highlights include a 13% improvement in average cycle times and the successful drilling of a three-mile lateral in less than 16 days. The company is leveraging AI and its MaxComm control room to monitor 40 million daily data points, optimizing everything from drilling targets to hydraulic fracturing logistics. A major strategic advantage remains Matador’s midstream integration through San Mateo. This provides flow assurance and allows for significant cost savings, such as using field-use gas to power frac fleets, saving $100,000 per well. The upcoming Hubrinson project is expected to boost gas price realizations by $0.50 per mcf by bypassing the Waha hub. Matador also revealed progress on its first Woodford well, which represents significant future upside not yet in the official inventory. With 55-60% of CapEx allocated to the first half of the year, Matador is positioned for a cash-flow-heavy second half while maintaining 10-15 years of high-return inventory.

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Full Earnings Call Transcript — Q1 • 2026-05-07

Operator: Good morning, ladies and gentlemen. Welcome to the first quarter 2026 Matador Resources Company Earnings Conference Call. My name is Stacy, and I will be serving as the operator today. We will facilitate a question-and-answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mac Schmitz, Senior Vice President, Investor Relations for Matador Resources Company. Mr. Schmitz, you may proceed.
Mac Schmitz: Thank you, Stacy, and good morning, everyone, and thank you for joining us for Matador Resources Company’s first quarter 2026 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources Company in measuring the company’s financial performance. Reconciliations of such non-GAAP financial measures with comparable financial measures calculated in accordance with GAAP are contained at the end of the company’s earnings press release. As a reminder, certain statements included in this morning’s presentation may be forward-looking and reflect the company’s current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. In addition to our earnings press release that we issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with the first quarter 2026 earnings release under the Investor Relations tab on our corporate website. With that, I would now like to turn the call over to Joseph Wm. Foran, our founder, chairman, and CEO. Joe?
Joseph Wm. Foran: Thank you, Mac, and good morning to everyone, and thank you for participating in today’s earnings conference call. We appreciate your time and your interest in Matador Resources Company very much. I have been coming to you for a long time. It is actually over 40 years, and I can unequivocally say that this is one of the more challenging times over that history, but I also feel very good that our team is experienced enough, our balance sheet is strong enough, and our lease position is strong enough that we can meet these challenges. I want to point out what I have heard over the years about keeping it simple: look at three things. Is production up? Yes, our production is up. Is our capital spending the same or down a little bit? It is. And finally, is your debt down? We have reduced debt. We have kept a lid on capital spending, and our production is up. Our balance sheet is in the best position that we have had during this entire time. We are ready to meet whatever challenges and opportunities may come along. I would like to emphasize the teamwork here. It has continually gotten better and better, and times like this get everybody working with extra effort. Over time, we have generally made our best gains in times like this. Everybody wants $100 oil or more, but these are often the times that help build the company. Thank you for your thoughtful analyst reports. We look forward to your questions. We want you all to know you are welcome to come visit us, where we will be able to spend more time and you can meet more of our people. Ask away, and I turn it back to you, Mac. Stacy, we are ready for Q&A. Thank you very much.
Operator: Thank you. We will now open the call for questions. Due to time constraints, we ask that you please limit yourself to one question until all have had a chance to ask a question, after which we would welcome additional follow-ups from you. Our first question comes from Neal Dingmann with William Blair. Neal, please go ahead.
Neal Dingmann: Good morning, and nice quarter. Joe, historically you have grown production a bit more than this year, and as you pointed out, there are certainly no balance sheet constraints. When you laid out the plan for this year and you think about the growth for the remainder of this year into next year, is it largely influenced by how you see the macro environment? Is it about potential incremental capital spend? What are the largest drivers behind your thinking about laying out the growth?
Joseph Wm. Foran: Thank you, Neal. That is a great, multifaceted question. We are looking at it all different ways. As variable as this year has been, with the price of oil moving around, one thing has been somewhat chaotic. We have discussed different plans and what we do in each case. Management always tries to be nimble to be able to change plans as the business environment changes. We have been through COVID and came out better from that. We have been through various crises in the Mideast and came out better from that. That reflects a team with growing teamwork. We have people who have gotten to know each other very well over the years. It has been easy to go down one direction or another. Presently, we think the emphasis should be on getting production in, your debt paid down, and keeping a handle on capital spending. You want to spend some capital, of course, to keep growing, but you do not want to be reckless with it. Make each dollar count. That has been our approach, a collaborative effort with each of the department heads. If you or others come visit us and get around the table with us, I think you will see the interaction and teamwork, and you will leave feeling confident that this is a group that works together and has good ideas. In times like this, they can be trusted, and they have proven themselves in challenging environments and produced good results. That is how we have grown from $270,000 in 1983 to a present market cap somewhere around $8 billion.
Christopher Calvert: Neal, this is Christopher Calvert, EVP and CFO. When we think about growth and the optionality that comes with it, you have to forward-think about potential restrictions or constraints to growth. For Matador Resources Company, we attack those in a unique way. Inventory scarcity is not really an issue for us—10 to 15 years of inventory with extremely good returns, 50% or better at different commodity prices. On takeaway constraints, we look at catalysts like our fully integrated midstream business with San Mateo and the Hubrinson catalyst that will alleviate negative Waha pricing in the back half of this year. Operational efficiencies drive capital efficiencies. As we think about growth, we want capital efficiencies to come with it. We are in a position where we do not have some of the potential constraints that affect certain peers. We have the optionality to grow if we want to, but we are focused on profitable growth at a measured pace.
Operator: Stand by for our next question. Our next question comes from Scott Hanold with RBC Capital Markets. Scott, please go ahead.
Scott Hanold: Good morning, all. Good quarter. You have historically seen better efficiencies in your operations and have pulled forward activities. As you look at the balance of this year, what is the opportunity to continue that trend of pulling things forward, and how much more could that add to your growth this year without impacting capital too much?
Christopher Calvert: Hey, Scott. This is Christopher Calvert again. Looking at the first quarter, the outperformance was buoyed by wells that were turned online in the quarter and also by acceleration of activity—there were two additional net wells turned online in the quarter. The efficiency story that drives those results will play out through the remainder of the year. While we did not increase our full-year turn-in-line count, going back to the tail end of 2025, the operations team working hand in glove with the midstream team and the flow assurance it provides, we had the opportunity to accelerate activity at favorable oilfield service pricing, and we made the decision to do that. Historically, that is how we operate. As efficiencies continue to present themselves, there is likely to be the opportunity to potentially pull wells into the year. Right now, it is too early to make that judgment. We are focused on production growth from well outperformance and incremental growth on the back of efficiencies, which comes in leading wells faster into the quarters.
Joseph Wm. Foran: One other thing is we are opportunistic about acquisitions. The lease-by-lease, brick-by-brick approach we have talked about remains our strategy. Where there are deals coming down the line, we try to be careful to ensure, as Christopher said, that it is profitable growth at a measured pace.
Operator: Our next question comes from Gabe Daoud with Truist. Gabe, you have the floor.
Gabe Daoud: Thanks, operator. Good morning, everyone. Joe, could we get an update on your thoughts around San Mateo? Another good quarter out of that entity, and I am curious how we should think about any type of strategic options for that asset this year.
Joseph Wm. Foran: Gabe, that is a great question. We give that a lot of thought. Midstream has turned into a very valuable asset, not just in monetary terms, but also in providing us with efficiencies and flow assurance in the basin, where sometimes that can be difficult. It has been a great asset. One thought has been to take it public, although we are not trying to time the market. We do not want to go out unless it is a good time and we need the capital. It is an important catalyst for us because it has grown significantly—you can see the miles of pipeline that we have for flowing water, gas, and oil. It has provided great flexibility to our operating group to ensure we get our product to market. The Hubrinson deal that we have discussed is an excellent example. When Waha has had so much negative pricing, Hubrinson is coming online and moves us away from the Waha market over to Henry Hub. We think it may make as much as $0.50 an m difference, and multiplied by our gas production this year, it is an enormous difference. We are very excited about working with ET. They have been a top-notch operator, very innovative, and we see that as a great relationship that can continue to expand. We have other good partners that have given us other opportunities. Our production in the Delaware is not in one location or one field—it is now throughout the basin. We think we are set with the property set, takeaway capacity, experienced rigs, and experienced people. This is our time to continue to progress.
Christopher Calvert: The one thing I would add, Gabe, is the strategic value of San Mateo and the Matador Resources Company wholly owned midstream assets to the upstream business—flow assurance and operational control. In the first quarter release, we talked at length about upstream efficiencies that come in partnership with San Mateo and the midstream business that resides here in Dallas with us. On water recycling, approximately 30% of Matador Resources Company’s water volumes used in the first quarter came from San Mateo and our wholly owned midstream assets. We are increasing investment—we began construction this quarter on a new water recycling facility that will assist and continue to grow both the upstream side from a CapEx savings perspective and revenue on the San Mateo side. From a gas use perspective, field-use gas has been utilized in Southeastern Lea with many Matador operations to mitigate diesel spend. Flow assurance and operational control are priorities as we analyze dropdowns or further strategic alternatives for San Mateo. We do not need the cash; we want the right deal that increases value to Matador Resources Company shareholders and pulls that value forward.
Glenn Stetson: Gabe, I would add on field gas. By using field gas as opposed to compressed natural gas that is trucked to location for frac, we save an average of $100,000 per well. That advantage is in large part due to our unique relationship with San Mateo, Matador Resources Company’s midstream company. In Q1, with prices at negative Waha, in addition to those $100,000 capital savings, we are burning that gas in the field for hydraulic fracturing operations as opposed to selling it at negative Waha pricing.
Operator: Our next question comes from an analyst with JPMorgan. Please go ahead.
Analyst: Hi. Good morning, and thanks for taking my question. One thing you mentioned in the release is that you drilled your first Woodford well. Could you give us a little more detail there—what are your expectations on that well, and what could the inventory opportunity set look like for the Woodford if that well proves successful?
Christopher Calvert: Hey, thanks. This is Christopher Calvert, and I will pass it to Andrew in a second. You can look at surrounding offset production. We have strong, encouraging expectations that this well will come on from a hydrocarbon perspective. Operationally, we are moving right along. This well has been successfully drilled and cased with completion operations ongoing. From a productivity standpoint, we expect to discuss this on the next call in July. Andrew?
Andrew Parker: Thanks. This is Andrew Parker, EVP of Geoscience. We are really excited about the Woodford. This is a huge catalyst for us this year. The land team has done a tremendous job putting this position together, and the whole team has done a tremendous job executing on this first well. It is still early, but we like our position and our chances here. We look forward to reporting more later in the year—so far, so good.
Tom Nelson: And I would just remind everyone that we have not currently counted any of the Woodford in our inventory today, either in reserves or in the lease position. That would be upside if we get success there.
Operator: Our next question comes from an analyst with Capital One. Please go ahead.
Analyst: Thanks for the time. I wanted to ask about your quarterly CapEx cadence for the year. Your second quarter guidance implies you will spend around 55% to 60% of the budget in the first half. How should we think about the shape for the second half—fairly ratable at a little over $300 million in both Q3 and Q4, or is one quarter significantly steeper than the other?
Christopher Calvert: This is Christopher Calvert. The 55% to 60% range that we guided to in February is intact. The first quarter, where we came in at the April 28 release, was right in line with expectations. The second quarter midpoint, combined with Q1, puts us right in that 55% to 60% range. About 50% of our turns-in-line are occurring in the first half of this year, so you would expect a sizable drop in the back half. As efficiencies shift, it is too early to put a precise capital cadence on Q3 and Q4, other than that both will be down from the second quarter number.
Operator: Our next question comes from Paul Diamond with Citi. Paul, please go ahead.
Paul Diamond: Good morning, and thanks for taking the question. I wanted to touch on your D&C per lateral foot. Can you talk about the leverage you see available in the coming quarters and the trajectory to get down to that sub-$800 level?
Christopher Calvert: This is Christopher Calvert. The range we put forward at the beginning of the year—$785 to $805—is about 6% down from 2025. The levers to maintain and finish toward the bottom end of that range are similar to what we have discussed in the past: multi-well completions; utilization of Simul and TrimalFrac; full utilization of electric fleets with about a 90% reduction in diesel usage; continued improvements in water recycling—we recycled over 70% of our water from recycled sources in 2026 and are pushing that further; and drilling/completing wells in shorter cycle times. Year over year, we are about 13% faster on average cycle times. The really impressive gains are in the deeper parts of the basin as we extend laterals. For three-mile laterals, our best this year was drilled in under 16 days, a 40% improvement versus 2025. Additional levers include vendor relationships, AI integration within operational processes, MaxComm integration—our MaxComm room is now in its eighth year—continuing to see records broken, including three-mile U-turns. The list of levers to keep improving that number is long.
Operator: Our final question this morning comes from an analyst with BMO. Please go ahead.
Analyst: Thanks. Good morning. Another Delaware operator this week talked a lot about AI. How is Matador Resources Company either implementing or looking at this in its operations to enhance efficiencies on the optimization side and also help on the drilling and completion side?
Joseph Wm. Foran: Phil, we have team-tackled that here. Contributions to executing a competent AI program are coming from different people. It is a committee working together. Glenn Stetson is somewhat the leader, with Jordan Ellington, and the effort is to understand it, think about applications, and make sure there are not missteps. We are going in a controlled, organized fashion with the group working together. It builds confidence. We are learning it at a measured pace. We see uses for it, but like any tool, you have to be careful and be sure you understand its use. Glenn can give more specifics.
Glenn Stetson: We are continuing to increase our integration of AI-driven analytics in almost every facet of our operation. On the production side, we bring in over 40 million data points a day, and our control room monitors those data points with our field staff in real time. The goal is to make them actionable to reduce downtime and identify inefficiencies quickly. On the completion side, we are monitoring in real time the hydraulic fracturing operations—the pressures and volumes on the water and sand sides—and even logistics. That is increasingly important as we expand the use of Simul and TrimalFrac. On the drilling side, with MaxComm, we set over 36 records just in this quarter across different hole sections and in the lateral. We are using AI to help target in the lateral, ensuring we are not just in the preferred target, but in the preferred portion of the preferred target, while drilling faster. Putting it all together, you get the results you saw in Q1 that we hope to continue to replicate and improve.
Unknown Speaker: I think that is right, Joe. We are really proud of the methodical approach we are taking. We see clear benefits and real applications that deliver value. We will be fast followers here—we are not going to jump in and make a bunch of mistakes. We are taking the right measured approach.
Operator: Thank you. This ends the Q&A portion of this morning’s call. I would now like to turn it over to management for any closing remarks.
Joseph Wm. Foran: Thank you very much. I encourage those listening, if you have follow-up questions, to please call Mac Schmitz here at the office. Mac, give them your number.
Mac Schmitz: You can reach me at the investor’s inbox, which is investors@matadorresources.com, and the phone number is (972) 371-5225. We are always available.
Joseph Wm. Foran: Second, if you are in the area, come by. We are a public company, and we like meeting our shareholders. We began not through private equity, but through friends and family, and we try to perpetuate that feeling today. We like knowing our shareholders and all of our owners and want you to know that we are putting your interests first. I also want to invite you to our annual meeting this summer. We will have a display of equipment—you can see the drill bits we are actually using and meet the young engineers and geologists who have led this successful program, and the same on our completion activities. Cliff has done an excellent job of continuous improvement of our fracs, working closely with our vendors and their research. The industry has made great strides over the last 40 years and is still making progress. Our outlook is very good. We take a team approach on all of this. If you have other questions, call Mac and we will take care of you. Back to you, Stacy.
Operator: Ladies and gentlemen, thank you for your participation today. This concludes today’s program.