Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our interim unaudited condensed
consolidated financial statements and related notes thereto contained herein and
the consolidated financial statements and related notes thereto contained in our
Annual Report on Form 10-K for the year ended December 31, 2020 (the "Annual
Report") filed with the Securities and Exchange Commission (the "SEC") on
February 26, 2021, along with Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Annual Report. The Annual
Report is accessible on the SEC's website at www.sec.gov and on our website at
www.matadorresources.com. Our discussion and analysis includes forward-looking
information that involves risks and uncertainties and should be read in
conjunction with the "Risk Factors" section of the Annual Report and the section
entitled "Cautionary Note Regarding Forward-Looking Statements" below for
information about the risks and uncertainties that could cause our actual
results to be materially different than our forward-looking statements.
In this Quarterly Report on Form 10-Q (this "Quarterly Report"), (i) references
to "we," "our" or the "Company" refer to Matador Resources Company and its
subsidiaries as a whole (unless the context indicates otherwise), (ii)
references to "Matador" refer solely to Matador Resources Company and (iii)
references to "San Mateo" refer to San Mateo Midstream, LLC, collectively with
its subsidiaries. For certain oil and natural gas terms used in this Quarterly
Report, please see the "Glossary of Oil and Natural Gas Terms" included with the
Annual Report.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Additionally, forward-looking
statements may be made orally or in press releases, conferences, reports, on our
website or otherwise, in the future by us or on our behalf. Such statements are
generally identifiable by the terminology used such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "forecasted," "hypothetical,"
"intend," "may," "might," "plan," "potential," "predict," "project," "should,"
"would" or other similar words, although not all forward-looking statements
contain such identifying words.
By their very nature, forward-looking statements require us to make assumptions
that may not materialize or that may not be accurate. Forward-looking statements
are subject to known and unknown risks and uncertainties and other factors that
may cause actual results, levels of activity and achievements to differ
materially from those expressed or implied by such statements. Such factors
include, among others: general economic conditions; our ability to execute our
business plan, including whether our drilling program is successful; changes in
oil, natural gas and natural gas liquids prices and the demand for oil, natural
gas and natural gas liquids; our ability to replace reserves and efficiently
develop current reserves; costs of operations; delays and other difficulties
related to producing oil, natural gas and natural gas liquids; delays and other
difficulties related to regulatory and governmental approvals and restrictions;
availability of sufficient capital to execute our business plan, including from
future cash flows, available borrowing capacity under our revolving credit
facilities and otherwise; our ability to make acquisitions on economically
acceptable terms; our ability to integrate acquisitions; weather and
environmental conditions; the impact of the worldwide spread of the novel
coronavirus ("COVID-19") on oil and natural gas demand, oil and natural gas
prices and our business; the operating results of San Mateo's Black River
cryogenic natural gas processing plant; the timing and operating results of the
buildout by San Mateo of oil, natural gas and water gathering and transportation
systems and the drilling of any additional salt water disposal wells; and the
other factors discussed below and elsewhere in this Quarterly Report and in
other documents that we file with or furnish to the SEC, all of which are
difficult to predict. Forward-looking statements may include statements about:
our business strategy;
our estimated future reserves and the present value thereof, including whether
or not a full-cost ceiling impairment could be realized;
our cash flows and liquidity;
the amount, timing and payment of dividends, if any;
our financial strategy, budget, projections and operating results;
the supply and demand of oil, natural gas and natural gas liquids;
oil, natural gas and natural gas liquids prices, including our realized prices
thereof;
the timing and amount of future production of oil and natural gas;
the availability of drilling, completion and production equipment;
the availability of oil storage capacity;
the availability of oil field labor;
the amount, nature and timing of capital expenditures, including future
exploration and development costs;
the availability and terms of capital;
our drilling of wells;
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Operating Data
Revenues (in thousands)(1)
Oil $ 325,560 $ 150,620 $ 853,953 $ 414,379
Natural gas 135,905 38,484 335,819 91,406
Total oil and natural gas revenues 461,465 189,104 1,189,772 505,785
Third-party midstream services revenues 20,486 19,363 55,774 49,861
Sales of purchased natural gas 38,770 13,358 54,198 37,883
Lease bonus - mineral acreage - - - 4,062
Realized (loss) gain on derivatives (57,419) (5,406) (125,943) 49,571
Unrealized gain (loss) on derivatives 9,049 (13,033) (77,178) (9,271)
Total revenues $ 472,351 $ 203,386 $ 1,096,623 $ 637,891
Net Production Volumes(1)
Oil (MBbl)(2) 4,669 3,895 13,263 11,512
Natural gas (Bcf)(3) 21.7 16.9 61.0 50.1
Total oil equivalent (MBOE)(4) 8,283 6,715 23,423 19,861
Average daily production (BOE/d)(5) 90,033 72,989 85,801 72,486
Average Sales Prices
Oil, without realized derivatives (per Bbl) $ 69.73 $ 38.67 $ 64.39 $ 36.00
Oil, with realized derivatives (per Bbl) $ 58.43 $ 37.28 $ 55.23 $ 40.30
Natural gas, without realized derivatives (per Mcf) $ 6.27 $ 2.27 $ 5.51 $ 1.82
Natural gas, with realized derivatives (per Mcf) $ 6.05 $ 2.27 $ 5.43 $ 1.82
_________________
(1)We report our production volumes in two streams: oil and natural gas,
Oct 29, 2021
COMTEX_396067950/2041/2021-10-29T16:47:55
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