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Oil and Fuel 360


DALLAS–(BUSINESS WIRE)–Jun. 12, 2024– Matador Assets Firm (NYSE: MTDR) (“Matador” or the “Firm”) at the moment introduced {that a} wholly-owned subsidiary of Matador has entered right into a definitive settlement to amass a subsidiary of Ameredev II Father or mother, LLC (“Ameredev”), together with sure oil and pure fuel producing properties and undeveloped acreage positioned in Lea County, New Mexico and Loving and Winkler Counties, Texas (the “Ameredev Acquisition”). The Ameredev Acquisition additionally contains an approximate 19% stake in Piñon Midstream, LLC (“Piñon”), which has midstream belongings in southern Lea County, New Mexico. The consideration for the Ameredev Acquisition will include a money fee of $1.905 billion, topic to customary closing changes. Ameredev is a portfolio firm of EnCap Investments L.P. (“EnCap”).

The Ameredev Acquisition is topic to customary closing circumstances and is predicted to shut late within the third quarter of 2024 with an efficient date of June 1, 2024. A brief slide presentation summarizing the Ameredev Acquisition can be included on the Firm’s web site at www.matadorresources.com on the Occasions and Displays web page below the Investor Relations tab. Matador’s administration will host a reside convention name to debate the Ameredev Acquisition on Wednesday, June 12, 2024 at 10:00 am Central Time. Additional particulars are offered on the finish of this press launch.

Joseph Wm. Foran, Matador’s Founder, Chairman and CEO, commented, “Matador may be very excited to work with EnCap once more on this strategic bolt-on alternative (see Exhibit A). As with the profitable Advance Power deal we accomplished in April of 2023, we view the Ameredev transaction as one other distinctive alternative to work with EnCap and one other value-creating alternative for Matador and its shareholders. We evaluated this chance based mostly on the excessive rock high quality, the robust current manufacturing and money circulation profile, the numerous reserves additions, the high-quality stock, the strategic match inside our current portfolio of properties and the growth of our midstream footprint with an possession curiosity in Piñon. The fairness and debt securities choices and the revolving credit score facility modification we accomplished earlier this 12 months, along with our historic steadiness sheet conservatism, have offered Matador with the chance to amass these high-quality belongings and proceed Matador’s constant historical past of worthwhile progress at a measured tempo.”

Transaction Highlights

  • On a professional forma foundation following closing of the acquisition, Matador expects to have over 190,000 internet acres within the Delaware Basin, roughly 2,000 internet places, manufacturing of over 180,000 barrels of oil and pure fuel equal (“BOE”) per day, proved oil and pure fuel reserves of over 580 million BOE and an enterprise worth in extra of $10 billion (see Exhibit B)
  • Anticipated to generate ahead one-year Adjusted EBITDA1 of roughly $425 to $475 million at strip costs as of late Could 2024, which represents a pretty buy worth a number of of 4.2x for the upstream belongings:
    • Strip costs for the rest of 2024 averaged $77 per barrel of oil and $2.76 per MMBtu of pure fuel.
  • Accretive to related key monetary and valuation metrics
  • Vital enhance in prime quality professional forma drilling places in major growth zones (see Exhibit C)
  • PV-10 (current worth discounted at 10%)2 at Could 31, 2024 of $1.46 billion on whole proved oil and pure fuel reserves using strip pricing as of late Could 2024. The PV-10 of $1.46 billion doesn’t embrace the curiosity in Piñon or sure undeveloped however potential places included in Matador’s valuation of the Ameredev belongings:
    • PV-10 of proved developed (PD) oil and pure fuel reserves at Could 31, 2024 of $1.20 billion, or roughly $47,100 per flowing BOE, using strip pricing as of late Could 2024.
  • Preserves Matador’s robust steadiness sheet with professional forma leverage anticipated to be roughly 1.3x at closing and again beneath 1.0x by the center of 2025 based mostly upon present commodity costs, permitting Matador to keep up operational and monetary flexibility whereas persevering with to return worth to shareholders by its mounted quarterly dividend and defending money flows by its applicable commodity hedges
  • Increasing Matador’s midstream footprint with an approximate 19% stake in Piñon, which permits for elevated coordination between Matador and Piñon in gathering, transporting and treating pure fuel from the Ameredev properties

Ameredev Asset Highlights

  • Estimated manufacturing within the third quarter of 2024 of 25,000 to 26,000 BOE per day (65% oil)
  • Roughly 33,500 extremely contiguous internet acres (82% held by manufacturing; over 99% operated) within the northern Delaware Basin, most of which is positioned in Matador’s Antelope Ridge asset space in southern Lea County, New Mexico and Matador’s West Texas asset space in Loving and Winkler Counties, Texas (see Exhibit A once more)
  • Provides 431 gross (371 internet) operated places (86% working curiosity) recognized for future drilling, together with potential targets all through the Wolfcamp and Bone Spring formations
    • Areas are according to Matador’s methodology for estimating stock with usually three to 4 (or fewer) places per part, or the equal of 160-acre (or larger) spacing, in all potential completion intervals
  • Previous to transaction closing, Matador expects Ameredev to function one drilling rig and to proceed operations on 13 drilled however uncompleted (DUC) wells with one completion crew:
    • The prospectivity of the Ameredev acreage instantly competes for growth capital with Matador’s current acreage (see Exhibit C once more), so Matador expects to proceed working a complete of 9 drilling rigs for the instant future on the mixed roughly 192,000 internet acres of the Matador-Ameredev properties.
    • The extra ninth drilling rig and the related Ameredev actions usually are not anticipated to extend the vary of Matador’s estimated drilling, finishing and equipping (“D/C/E”) capital expenditures of $1.10 to $1.30 billion for 2024. Extra info concerning the capital expenditures related to the Ameredev Acquisition and its impression on Matador’s steerage for 2024 might be included in Matador’s press launch saying its second quarter 2024 outcomes, which is predicted to be issued in late July 2024.

Matador estimates whole proved oil and pure fuel reserves related to the Ameredev properties of 118 million BOE (60% oil) at Could 31, 2024. The professional forma mixed firm is estimated to have 578 million BOE, a 26% enhance from Matador’s whole proved reserves at December 31, 2023 of 460 million BOE (see Exhibit D). PV-10 of the proved oil and pure fuel reserves of the Ameredev properties at Could 31, 2024 was roughly $1.66 billion utilizing the identical unweighted arithmetic common first-day-of-the-month worth methodology for the earlier 12-month interval getting used to worth the Firm’s reserves, that are $74.91 per barrel of oil and $2.35 per MMBtu of pure fuel. The PV-10 of $1.66 billion doesn’t embrace the curiosity in Piñon or sure undeveloped however potential places included in Matador’s valuation of the Ameredev belongings. Matador expects so as to add future proved reserves and reserves worth on account of the event of the Ameredev properties going ahead. These reserves estimates had been ready by Matador’s engineering workers and audited by Netherland, Sewell & Associates, Inc., impartial reservoir engineers, as of Could 31, 2024.

Mr. Foran additional commented, “We took important strides throughout and shortly after the primary quarter of 2024 to strengthen our steadiness sheet and permit us to take part in one other particular alternative like this one. The particular location and high quality of the Ameredev belongings, the robust current money circulation, the multi-pay potential and the associated fee financial savings related to creating these belongings by way of longer laterals on multi-well pads on blocky acreage had been key options that attracted us to this distinctive alternative and considerably improve our already robust Delaware Basin portfolio and prospect stock. This acquisition additionally positions Matador for continued success and progress all through 2024, 2025 and into the longer term as one of many prime ten producers within the Delaware Basin (see Exhibit E).

“To help in financing this all-cash transaction, Matador has acquired agency commitments from PNC Financial institution, the lead financial institution below our reserves-based credit score facility, to offer at closing (i) a 50% enhance within the elected dedication below our credit score facility from $1.5 billion to $2.25 billion and (ii) a $250 million Time period Mortgage A below our credit score facility to offer extra liquidity following the closing of the transaction. Importantly, this acquisition shouldn’t considerably impression Matador’s leverage profile within the long-term, as we anticipate our professional forma leverage ratio to return to a ratio beneath 1.0x by the center of 2025 based mostly upon present commodity costs. We particularly admire PNC Financial institution for his or her management and help in arranging this financing dedication and the arrogance and help we now have acquired from the opposite members of our financial institution group.

“This transaction marks the second important deal Matador has carried out with EnCap within the final 18 months. Gary Petersen, one in every of EnCap’s Founders, and I’ve recognized one another for a few years. Just like the Advance Power transaction we closed in April of 2023, the lengthy relationship with Gary and EnCap was crucial to the sleek negotiation of this transaction. Thanks to Gary, the opposite senior members of the EnCap staff, Parker Reese and the remainder of the Ameredev staff and the Matador staff for his or her onerous work and integrity in effectively reaching a deal that we imagine is a constructive growth for all events. We additionally admire the help of our different mates, shareholders, bankers and distributors in making this deal occur. We sit up for the extra industrial alternatives and free money circulation that this new acreage and manufacturing will present for Matador.”

Convention Name Info

Administration will host a reside convention name to debate the Ameredev Acquisition on Wednesday, June 12, 2024 at 10:00 am Central Time. To entry the reside convention name by telephone, you should use the next hyperlink https://register.vevent.com/register/BI43dafc62d9a54c13a8b9fab5e226a923 and you can be supplied with dial-in particulars after registering. To keep away from delays, it is suggested that contributors dial into the convention name no less than quarter-hour forward of the scheduled begin time.

The reside convention name may even be out there by the Firm’s web site at www.matadorresources.com on the Occasions and Displays web page below the Investor Relations tab. The replay for the occasion might be out there on the Firm’s web site at www.matadorresources.com on the Occasions and Displays web page below the Investor Relations tab for one 12 months following the date of the convention name.

Advisors

Baker Botts LLP served as authorized advisor to Matador for the transaction. Vinson & Elkins LLP served as authorized advisor and JP Morgan served as monetary advisor to Ameredev and EnCap.

About Matador Assets Firm

Matador is an impartial power firm engaged within the exploration, growth, manufacturing and acquisition of oil and pure fuel sources in america, with an emphasis on oil and pure fuel shale and different unconventional performs. Its present operations are centered totally on the oil and liquids-rich portion of the Wolfcamp and Bone Spring performs within the Delaware Basin in Southeast New Mexico and West Texas. Matador additionally operates within the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley performs in Northwest Louisiana. Moreover, Matador conducts midstream operations in help of its exploration, growth and manufacturing operations and gives pure fuel processing, oil transportation companies, oil, pure fuel and produced water gathering companies and produced water disposal companies to 3rd events.

For extra info, go to Matador Assets Firm at www.matadorresources.com.

Ahead-Trying Statements

This press launch contains “forward-looking statements” inside the which means of Part 27A of the Securities Act of 1933, as amended, and Part 21E of the Securities Change Act of 1934, as amended. “Ahead-looking statements” are statements associated to future, not previous, occasions. Ahead-looking statements are based mostly on present expectations and embrace any assertion that doesn’t straight relate to a present or historic truth. On this context, forward-looking statements usually tackle anticipated future enterprise and monetary efficiency, and sometimes comprise phrases resembling “might,” “imagine,” “would,” “anticipate,” “intend,” “estimate,” “anticipate,” “could,” “ought to,” “proceed,” “plan,” “predict,” “potential,” “challenge,” “hypothetical,” “forecasted” and related expressions which might be meant to establish forward-looking statements, though not all forward-looking statements comprise such figuring out phrases. Such forward-looking statements embrace, however usually are not restricted to, statements concerning the consummation and timing of the Ameredev Acquisition, the anticipated advantages, alternatives and outcomes with respect to the acquisition, together with the anticipated worth creation, reserves additions, midstream alternatives and different anticipated impacts from the Ameredev Acquisition, in addition to different features of the transaction, steerage, projected or forecasted monetary and working outcomes, future liquidity, the fee of dividends, ends in sure basins, targets, challenge timing, expectations and intentions, regulatory and governmental actions and different statements that aren’t historic details. Precise outcomes and future occasions might differ materially from these anticipated in such statements, and such forward-looking statements could not show to be correct. These forward-looking statements contain sure dangers and uncertainties, together with, however not restricted to, the flexibility of the events to consummate the Ameredev Acquisition within the anticipated timeframe or in any respect; dangers associated to the satisfaction or waiver of the circumstances to closing the Ameredev Acquisition within the anticipated timeframe or in any respect; dangers associated to acquiring the requisite regulatory approvals; disruption from the Ameredev Acquisition making it tougher to keep up enterprise and operational relationships; important transaction prices related to the Ameredev Acquisition; the danger of litigation and/or regulatory actions associated to the Ameredev Acquisition, in addition to the next dangers associated to monetary and operational efficiency: normal financial circumstances; the Firm’s potential to execute its marketing strategy, together with whether or not its drilling program is profitable; modifications in oil, pure fuel and pure fuel liquids costs and the demand for oil, pure fuel and pure fuel liquids; its potential to exchange reserves and effectively develop present reserves; the working outcomes of the Firm’s midstream oil, pure fuel and water gathering and transportation programs, pipelines and services, the buying of third-party enterprise and the drilling of any extra salt water disposal wells; prices of operations; delays and different difficulties associated to producing oil, pure fuel and pure fuel liquids; delays and different difficulties associated to regulatory and governmental approvals and restrictions; impression on the Firm’s operations attributable to seismic occasions; its potential to make acquisitions on economically acceptable phrases; its potential to combine acquisitions; disruption from the Firm’s acquisitions making it tougher to keep up enterprise and operational relationships; important transaction prices related to the Firm’s acquisitions; the danger of litigation and/or regulatory actions associated to the Firm’s acquisitions; availability of enough capital to execute its marketing strategy, together with from future money flows, out there borrowing capability below its revolving credit score services and in any other case; the working outcomes of and the provision of any potential distributions from our joint ventures; climate and environmental circumstances; and the opposite components that would trigger precise outcomes to vary materially from these anticipated or implied within the forward-looking statements. For additional discussions of dangers and uncertainties, you must consult with Matador’s filings with the Securities and Change Fee (“SEC”), together with the “Threat Components” part of Matador’s most up-to-date Annual Report on Type 10-Okay and any subsequent Quarterly Reviews on Type 10-Q. Matador undertakes no obligation to replace these forward-looking statements to mirror occasions or circumstances occurring after the date of this press launch, besides as required by regulation, together with the securities legal guidelines of america and the principles and rules of the SEC. You’re cautioned to not place undue reliance on these forward-looking statements, which converse solely as of the date of this press launch. All forward-looking statements are certified of their entirety by this cautionary assertion.

1 Adjusted EBITDA is a non-GAAP monetary measure. The Firm defines Adjusted EBITDA as earnings earlier than curiosity expense, earnings taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, property impairments, unrealized spinoff features and losses, sure different non-cash gadgets and non-cash stock-based compensation expense and internet acquire or loss on asset gross sales and impairment. Probably the most comparable GAAP measures to Adjusted EBITDA are internet earnings or internet money offered by working actions. The Firm has not offered such GAAP measures or a reconciliation to such GAAP measures as a result of they might be preliminary and potential in nature and wouldn’t be capable to be ready with out estimation of a lot of variables which might be unknown at the moment.
2 PV-10 is a non-GAAP monetary measure, which differs from the GAAP monetary measure of “Standardized Measure” as a result of PV-10 doesn’t embrace the results of earnings taxes on future earnings. The earnings taxes associated to the acquired properties is unknown at the moment as a result of the Firm’s tax foundation in such properties won’t be recognized till the closing of the transaction and is topic to many variables. As such, the Firm has not offered the Standardized Measure of the acquired properties or a reconciliation of PV-10 to Standardized Measure.

Mac Schmitz
Senior Vice President – Investor Relations
(972) 371-5225
buyers@matadorresources.com

Supply: Matador Assets Firm




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