x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Texas
|
27-4662601
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
5400 LBJ Freeway, Suite 1500
Dallas, Texas
|
75240
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
|
Page
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
13,887
|
|
|
$
|
8,407
|
|
Restricted cash
|
450
|
|
|
609
|
|
||
Accounts receivable
|
|
|
|
||||
Oil and natural gas revenues
|
23,743
|
|
|
28,976
|
|
||
Joint interest billings
|
13,361
|
|
|
6,925
|
|
||
Other
|
9,426
|
|
|
9,091
|
|
||
Derivative instruments
|
28,165
|
|
|
55,549
|
|
||
Assets held for sale
|
32,413
|
|
|
—
|
|
||
Lease and well equipment inventory
|
2,106
|
|
|
1,212
|
|
||
Prepaid expenses
|
2,989
|
|
|
1,649
|
|
||
Total current assets
|
126,540
|
|
|
112,418
|
|
||
Property and equipment, at cost
|
|
|
|
||||
Oil and natural gas properties, full-cost method
|
|
|
|
||||
Evaluated
|
2,018,241
|
|
|
1,617,913
|
|
||
Unproved and unevaluated
|
392,299
|
|
|
264,419
|
|
||
Other property and equipment
|
60,589
|
|
|
43,472
|
|
||
Less accumulated depletion, depreciation and amortization
|
(1,329,082
|
)
|
|
(603,732
|
)
|
||
Net property and equipment
|
1,142,047
|
|
|
1,322,072
|
|
||
Other assets
|
|
|
|
||||
Derivative instruments
|
2,028
|
|
|
—
|
|
||
Deferred income taxes
|
9,676
|
|
|
—
|
|
||
Other assets
|
231
|
|
|
—
|
|
||
Total other assets
|
11,935
|
|
|
—
|
|
||
Total assets
|
$
|
1,280,522
|
|
|
$
|
1,434,490
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
16,012
|
|
|
$
|
17,526
|
|
Accrued liabilities
|
102,327
|
|
|
109,502
|
|
||
Royalties payable
|
21,737
|
|
|
14,461
|
|
||
Advances from joint interest owners
|
306
|
|
|
—
|
|
||
Amounts due to Joint Ventures
|
2,250
|
|
|
—
|
|
||
Deferred income taxes
|
10,426
|
|
|
19,751
|
|
||
Income taxes payable
|
—
|
|
|
444
|
|
||
Other current liabilities
|
223
|
|
|
103
|
|
||
Total current liabilities
|
153,281
|
|
|
161,787
|
|
||
Long-term liabilities
|
|
|
|
||||
Borrowings under Credit Agreement
|
—
|
|
|
338,199
|
|
||
Senior unsecured notes payable
|
390,959
|
|
|
—
|
|
||
Asset retirement obligations
|
13,413
|
|
|
11,640
|
|
||
Amounts due to Joint Ventures
|
4,500
|
|
|
—
|
|
||
Deferred income taxes
|
—
|
|
|
53,783
|
|
||
Other long-term liabilities
|
1,765
|
|
|
2,540
|
|
||
Total long-term liabilities
|
410,637
|
|
|
406,162
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
||||
Common stock - $0.01 par value, 120,000,000 and 80,000,000 shares authorized; 85,687,475 and 73,373,744 shares issued; and 85,520,957 and 73,342,777 shares outstanding, respectively
|
857
|
|
|
734
|
|
||
Additional paid-in capital
|
1,023,425
|
|
|
724,819
|
|
||
Retained (deficit) earnings
|
(308,529
|
)
|
|
140,855
|
|
||
Total Matador Resources Company shareholders’ equity
|
715,753
|
|
|
866,408
|
|
||
Non-controlling interest in subsidiary
|
851
|
|
|
133
|
|
||
Total shareholders’ equity
|
716,604
|
|
|
866,541
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,280,522
|
|
|
$
|
1,434,490
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas revenues
|
$
|
71,815
|
|
|
$
|
96,617
|
|
|
$
|
222,128
|
|
|
$
|
274,605
|
|
Realized gain (loss) on derivatives
|
19,862
|
|
|
(701
|
)
|
|
52,146
|
|
|
(5,458
|
)
|
||||
Unrealized gain (loss) on derivatives
|
6,733
|
|
|
16,293
|
|
|
(25,356
|
)
|
|
7,950
|
|
||||
Total revenues
|
98,410
|
|
|
112,209
|
|
|
248,918
|
|
|
277,097
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Production taxes and marketing
|
9,291
|
|
|
8,617
|
|
|
26,598
|
|
|
23,739
|
|
||||
Lease operating
|
14,917
|
|
|
13,691
|
|
|
42,912
|
|
|
34,747
|
|
||||
Depletion, depreciation and amortization
|
45,237
|
|
|
35,143
|
|
|
143,477
|
|
|
90,970
|
|
||||
Accretion of asset retirement obligations
|
182
|
|
|
130
|
|
|
427
|
|
|
371
|
|
||||
Full-cost ceiling impairment
|
285,721
|
|
|
—
|
|
|
581,874
|
|
|
—
|
|
||||
General and administrative
|
12,151
|
|
|
8,099
|
|
|
38,523
|
|
|
23,417
|
|
||||
Total expenses
|
367,499
|
|
|
65,680
|
|
|
833,811
|
|
|
173,244
|
|
||||
Operating (loss) income
|
(269,089
|
)
|
|
46,529
|
|
|
(584,893
|
)
|
|
103,853
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Net loss on asset sales and inventory impairment
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
||||
Interest expense
|
(7,229
|
)
|
|
(673
|
)
|
|
(15,168
|
)
|
|
(3,685
|
)
|
||||
Interest and other income
|
999
|
|
|
267
|
|
|
1,885
|
|
|
715
|
|
||||
Total other expense
|
(6,230
|
)
|
|
(406
|
)
|
|
(13,380
|
)
|
|
(2,970
|
)
|
||||
(Loss) income before income taxes
|
(275,319
|
)
|
|
46,123
|
|
|
(598,273
|
)
|
|
100,883
|
|
||||
Income tax (benefit) provision
|
|
|
|
|
|
|
|
||||||||
Current
|
(295
|
)
|
|
(156
|
)
|
|
(295
|
)
|
|
2,658
|
|
||||
Deferred
|
(33,010
|
)
|
|
16,660
|
|
|
(148,750
|
)
|
|
34,017
|
|
||||
Total income tax (benefit) provision
|
(33,305
|
)
|
|
16,504
|
|
|
(149,045
|
)
|
|
36,675
|
|
||||
Net (loss) income
|
(242,014
|
)
|
|
29,619
|
|
|
(449,228
|
)
|
|
64,208
|
|
||||
Net income attributable to non-controlling interest in subsidiary
|
(45
|
)
|
|
—
|
|
|
(156
|
)
|
|
—
|
|
||||
Net (loss) income attributable to Matador Resources Company shareholders
|
$
|
(242,059
|
)
|
|
$
|
29,619
|
|
|
$
|
(449,384
|
)
|
|
$
|
64,208
|
|
Earnings (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(2.86
|
)
|
|
$
|
0.40
|
|
|
$
|
(5.58
|
)
|
|
$
|
0.93
|
|
Diluted
|
$
|
(2.86
|
)
|
|
$
|
0.40
|
|
|
$
|
(5.58
|
)
|
|
$
|
0.92
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
84,685
|
|
|
73,341
|
|
|
80,481
|
|
|
69,185
|
|
||||
Diluted
|
84,685
|
|
|
74,028
|
|
|
80,481
|
|
|
69,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity attributable to Matador Resources Company
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in subsidiary
|
|
Total shareholders’ equity
|
||||||||||||||||||||
|
Common Stock
|
|
Preferred Stock
|
|
Additional
paid-in capital |
|
Retained earnings (deficit)
|
|
Treasury Stock
|
|
|
|
||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||||||||
Balance at January 1, 2015
|
73,374
|
|
|
$
|
734
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
724,819
|
|
|
$
|
140,855
|
|
|
31
|
|
|
$
|
—
|
|
|
$
|
866,408
|
|
|
$
|
133
|
|
|
$
|
866,541
|
|
Issuance of common stock
|
10,329
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
260,148
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260,252
|
|
|
—
|
|
|
260,252
|
|
||||||||
Issuance of preferred stock
|
—
|
|
|
—
|
|
|
150
|
|
|
1
|
|
|
32,489
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,490
|
|
|
—
|
|
|
32,490
|
|
||||||||
Cost to issue equity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,151
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,151
|
)
|
|
—
|
|
|
(1,151
|
)
|
||||||||
Conversion of preferred stock to common stock
|
1,500
|
|
|
15
|
|
|
(150
|
)
|
|
(1
|
)
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Stock-based compensation expense related to equity-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,660
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,660
|
|
|
—
|
|
|
6,660
|
|
||||||||
Stock options exercised
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||||
Liability-based stock option awards settled
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
467
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
467
|
|
|
—
|
|
|
467
|
|
||||||||
Restricted stock issued
|
392
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Vesting of restricted stock units
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Capital contribution from non-controlling interest owners in less-than-wholly-owned subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
600
|
|
||||||||
Distribution to non-controlling interest owners of less-than-wholly-owned subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
||||||||
Current period net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(449,384
|
)
|
|
—
|
|
|
—
|
|
|
(449,384
|
)
|
|
156
|
|
|
(449,228
|
)
|
||||||||
Balance at September 30, 2015
|
85,687
|
|
|
$
|
857
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,023,425
|
|
|
$
|
(308,529
|
)
|
|
167
|
|
|
$
|
—
|
|
|
$
|
715,753
|
|
|
$
|
851
|
|
|
$
|
716,604
|
|
|
Nine Months Ended
September 30, |
||||||
|
2015
|
|
2014
|
||||
Operating activities
|
|
|
|
||||
Net (loss) income
|
$
|
(449,228
|
)
|
|
$
|
64,208
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities
|
|
|
|
||||
Unrealized loss (gain) on derivatives
|
25,356
|
|
|
(7,950
|
)
|
||
Depletion, depreciation and amortization
|
143,477
|
|
|
90,970
|
|
||
Accretion of asset retirement obligations
|
427
|
|
|
371
|
|
||
Full-cost ceiling impairment
|
581,874
|
|
|
—
|
|
||
Stock-based compensation expense
|
6,886
|
|
|
4,665
|
|
||
Deferred income tax (benefit) provision
|
(148,750
|
)
|
|
34,017
|
|
||
Amortization of debt issuance cost (non-cash interest expense)
|
551
|
|
|
—
|
|
||
Net loss on asset sales and inventory impairment
|
97
|
|
|
—
|
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Accounts receivable
|
1,997
|
|
|
(12,605
|
)
|
||
Lease and well equipment inventory
|
(225
|
)
|
|
(193
|
)
|
||
Prepaid expenses
|
(329
|
)
|
|
(74
|
)
|
||
Other assets
|
665
|
|
|
(810
|
)
|
||
Accounts payable, accrued liabilities and other current liabilities
|
16,863
|
|
|
(820
|
)
|
||
Royalties payable
|
6,898
|
|
|
6,175
|
|
||
Advances from joint interest owners
|
306
|
|
|
—
|
|
||
Income taxes payable
|
(444
|
)
|
|
2,565
|
|
||
Other long-term liabilities
|
(497
|
)
|
|
(160
|
)
|
||
Net cash provided by operating activities
|
185,924
|
|
|
180,359
|
|
||
Investing activities
|
|
|
|
|
|
||
Oil and natural gas properties capital expenditures
|
(334,951
|
)
|
|
(407,023
|
)
|
||
Expenditures for other property and equipment
|
(46,738
|
)
|
|
(2,906
|
)
|
||
Business combination, net of cash acquired
|
(24,028
|
)
|
|
—
|
|
||
Restricted cash in less-than-wholly-owned subsidiaries
|
158
|
|
|
—
|
|
||
Net cash used in investing activities
|
(405,559
|
)
|
|
(409,929
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Repayments of borrowings
|
(476,982
|
)
|
|
(180,000
|
)
|
||
Borrowings under Credit Agreement
|
125,000
|
|
|
230,000
|
|
||
Proceeds from issuance of senior unsecured notes
|
400,000
|
|
|
—
|
|
||
Cost to issue senior unsecured notes
|
(9,479
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
188,720
|
|
|
181,875
|
|
||
Cost to issue equity
|
(1,151
|
)
|
|
(590
|
)
|
||
Proceeds from stock options exercised
|
10
|
|
|
6
|
|
||
Capital contribution from non-controlling interest owners in less-than-wholly-owned subsidiary
|
600
|
|
|
—
|
|
||
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries
|
(38
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement of stock-based compensation
|
(1,565
|
)
|
|
(285
|
)
|
||
Net cash provided by financing activities
|
225,115
|
|
|
231,006
|
|
||
Increase in cash
|
5,480
|
|
|
1,436
|
|
||
Cash at beginning of period
|
8,407
|
|
|
6,287
|
|
||
Cash at end of period
|
$
|
13,887
|
|
|
$
|
7,723
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information (Note 12)
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
2015
|
|
2014
|
|
2015
|
|
2014
|
|||||
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
||||
Basic
|
84,685
|
|
|
73,341
|
|
|
80,481
|
|
|
69,185
|
|
Dilutive effect of options, restricted stock units and preferred shares
|
—
|
|
|
687
|
|
|
—
|
|
|
694
|
|
Diluted weighted average common shares outstanding
|
84,685
|
|
|
74,028
|
|
|
80,481
|
|
|
69,879
|
|
Consideration given
|
Allocation
|
||
Cash
|
$
|
24,648
|
|
Preferred shares issued
|
32,490
|
|
|
Common shares issued
|
71,478
|
|
|
Total consideration given
|
$
|
128,616
|
|
Allocation of purchase price
|
|
||
Cash acquired
|
$
|
620
|
|
Accounts receivable
|
3,536
|
|
|
Inventory
|
180
|
|
|
Other current assets
|
106
|
|
|
Oil and natural gas properties
|
|
||
Evaluated oil and natural gas properties
|
16,524
|
|
|
Unproved oil and unevaluated natural gas properties
|
201,521
|
|
|
Other property and equipment
|
178
|
|
|
Accounts payable
|
(2,551
|
)
|
|
Accrued liabilities
|
(1,504
|
)
|
|
Current note payable
|
(11,982
|
)
|
|
Asset retirement obligations
|
(2,046
|
)
|
|
Deferred tax liabilities incurred
|
(75,966
|
)
|
|
Net assets acquired
|
$
|
128,616
|
|
|
|
||
Beginning asset retirement obligations
|
$
|
11,951
|
|
Liabilities incurred during period
|
2,670
|
|
|
Liabilities settled during period
|
(436
|
)
|
|
Revisions in estimated cash flows
|
(788
|
)
|
|
Accretion expense
|
427
|
|
|
Ending asset retirement obligations
|
13,824
|
|
|
Less: current asset retirement obligations
(1)
|
(411
|
)
|
|
Long-term asset retirement obligations
|
$
|
13,413
|
|
(1)
|
Included in accrued liabilities in the Company’s unaudited condensed consolidated balance sheet at
September 30, 2015
.
|
•
|
incur indebtedness or grant liens on any of the Company’s assets;
|
•
|
enter into commodity hedging agreements;
|
•
|
declare or pay dividends, distributions or redemptions;
|
•
|
merge or consolidate;
|
•
|
make any loans or investments;
|
•
|
engage in transactions with affiliates;
|
•
|
engage in certain asset dispositions, including a sale of all or substantially all of the Company’s assets; and
|
•
|
take certain actions with respect to the Company’s senior unsecured notes.
|
•
|
failure to pay any principal or interest on the outstanding borrowings or any reimbursement obligation under any letter of credit when due or any fees or other amounts within certain grace periods;
|
•
|
failure to perform or otherwise comply with the covenants and obligations in the Credit Agreement or other loan documents, subject, in certain instances, to certain grace periods;
|
•
|
bankruptcy or insolvency events involving the Company or its subsidiaries; and
|
•
|
a change of control, as defined in the Credit Agreement.
|
Year
|
|
Redemption Price
|
2018
|
|
105.156%
|
2019
|
|
103.438%
|
2020
|
|
101.719%
|
2021 and thereafter
|
|
100.000%
|
•
|
incur or guarantee additional debt or issue certain types of preferred stock;
|
•
|
pay dividends on capital stock or redeem, repurchase or retire its capital stock or subordinated indebtedness;
|
•
|
transfer or sell assets;
|
•
|
make certain investments;
|
•
|
create certain liens;
|
•
|
enter into agreements that restrict dividends or other payments from its Restricted Subsidiaries (as defined in the Indenture) to the Company;
|
•
|
consolidate, merge or transfer all or substantially all of its assets;
|
•
|
engage in transactions with affiliates; and
|
•
|
create unrestricted subsidiaries.
|
•
|
default for
30
days in the payment when due of interest on the Notes;
|
•
|
default in the payment when due of the principal of, or premium, if any, on the Notes;
|
•
|
failure by Matador to comply with its obligations to offer to purchase or purchase Notes when required pursuant to the change of control or asset sale provisions of the Indenture or Matador’s failure to comply with the covenant relating to merger, consolidation or sale of assets;
|
•
|
failure by Matador for
180
days after notice to comply with its reporting obligations under the Indenture;
|
•
|
failure by Matador for
60
days after notice to comply with any of the other agreements in the Indenture;
|
•
|
payment defaults and accelerations with respect to other indebtedness of Matador and its Restricted Subsidiaries in the aggregate principal amount of
$25.0 million
or more;
|
•
|
failure by Matador or any Restricted Subsidiary to pay certain final judgments aggregating in excess of
$25.0 million
within
60
days;
|
•
|
any subsidiary guarantee by a guarantor ceases to be in full force and effect, is declared null and void in a judicial proceeding or is denied or disaffirmed by its maker; and
|
•
|
certain events of bankruptcy or insolvency with respect to Matador or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.
|
Commodity
|
Calculation Period
|
|
Notional
Quantity
(MMBtu/month)
|
|
Price
Floor
($/MMBtu)
|
|
Price
Ceiling
($/MMBtu)
|
|
Fair Value of
Asset
(Liability)
(thousands)
|
||||
Natural Gas
|
10/01/2015 - 10/31/2015
|
|
150,000
|
|
|
2.75
|
|
|
3.19
|
|
|
28
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
2.75
|
|
|
3.05
|
|
|
58
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
2.75
|
|
|
3.15
|
|
|
60
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
2.75
|
|
|
3.11
|
|
|
59
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
300,000
|
|
|
2.88
|
|
|
3.18
|
|
|
279
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
3.75
|
|
|
4.36
|
|
|
347
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
3.75
|
|
|
4.45
|
|
|
347
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
3.75
|
|
|
4.60
|
|
|
347
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
3.75
|
|
|
4.65
|
|
|
347
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
200,000
|
|
|
3.75
|
|
|
5.04
|
|
|
694
|
|
Natural Gas
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
3.75
|
|
|
5.34
|
|
|
346
|
|
Natural Gas
|
01/01/2016 - 12/31/2016
|
|
200,000
|
|
|
2.75
|
|
|
3.50
|
|
|
409
|
|
Natural Gas
|
01/01/2016 - 12/31/2016
|
|
200,000
|
|
|
2.75
|
|
|
3.86
|
|
|
501
|
|
Natural Gas
|
01/01/2016 - 12/31/2016
|
|
300,000
|
|
|
2.75
|
|
|
3.95
|
|
|
784
|
|
Total open natural gas costless collar contracts
|
|
|
|
|
|
|
|
4,606
|
|
Commodity
|
Calculation Period
|
|
Notional Quantity
(Gal/month)
|
|
Fixed Price
($/Gal)
|
|
Fair Value of Asset (Liability)
(thousands)
|
||||
Propane
|
10/01/2015 - 12/31/2015
|
|
150,000
|
|
|
1.000
|
|
|
239
|
|
|
Propane
|
10/01/2015 - 12/31/2015
|
|
100,000
|
|
|
1.030
|
|
|
168
|
|
|
Propane
|
10/01/2015 - 12/31/2015
|
|
68,000
|
|
|
1.073
|
|
|
123
|
|
|
Total open NGL swap contracts
|
|
|
|
|
|
|
530
|
|
|||
Total open derivative financial instruments
|
|
|
|
|
|
|
$
|
30,193
|
|
Derivative Instruments
|
Gross
amounts recognized |
|
Gross amounts
netted in the condensed consolidated balance sheets |
|
Net amounts presented in the condensed
consolidated balance sheets |
||||||
September 30, 2015
|
|
|
|
|
|
||||||
Current assets
|
$
|
29,131
|
|
|
$
|
(966
|
)
|
|
$
|
28,165
|
|
Other assets
|
2,685
|
|
|
(657
|
)
|
|
2,028
|
|
|||
Current liabilities
|
(979
|
)
|
|
979
|
|
|
—
|
|
|||
Other liabilities
|
(644
|
)
|
|
644
|
|
|
—
|
|
|||
Total
|
$
|
30,193
|
|
|
$
|
—
|
|
|
$
|
30,193
|
|
December 31, 2014
|
|
|
|
|
|
||||||
Current assets
|
$
|
56,255
|
|
|
$
|
(706
|
)
|
|
$
|
55,549
|
|
Current liabilities
|
(706
|
)
|
|
706
|
|
|
—
|
|
|||
Total
|
$
|
55,549
|
|
|
$
|
—
|
|
|
$
|
55,549
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
Type of Instrument
|
Location in Condensed Consolidated Statement of Operations
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Derivative Instrument
|
|
|
|
|
|
|
|
|
|
||||||||
Oil
|
Revenues: Realized gain (loss) on derivatives
|
|
$
|
17,056
|
|
|
$
|
(816
|
)
|
|
$
|
42,013
|
|
|
$
|
(4,523
|
)
|
Natural Gas
|
Revenues: Realized gain (loss) on derivatives
|
|
2,215
|
|
|
19
|
|
|
8,531
|
|
|
(757
|
)
|
||||
NGL
|
Revenues: Realized gain (loss) on derivatives
|
|
591
|
|
|
96
|
|
|
1,602
|
|
|
(178
|
)
|
||||
Realized gain (loss) on derivatives
|
|
19,862
|
|
|
(701
|
)
|
|
52,146
|
|
|
(5,458
|
)
|
|||||
Oil
|
Revenues: Unrealized gain (loss) on derivatives
|
|
6,421
|
|
|
14,106
|
|
|
(19,923
|
)
|
|
6,359
|
|
||||
Natural Gas
|
Revenues: Unrealized gain (loss) on derivatives
|
|
808
|
|
|
1,933
|
|
|
(4,035
|
)
|
|
1,362
|
|
||||
NGL
|
Revenues: Unrealized (loss) gain on derivatives
|
|
(496
|
)
|
|
254
|
|
|
(1,398
|
)
|
|
229
|
|
||||
Unrealized gain (loss) on derivatives
|
|
6,733
|
|
|
16,293
|
|
|
(25,356
|
)
|
|
7,950
|
|
|||||
Total
|
|
|
$
|
26,595
|
|
|
$
|
15,592
|
|
|
$
|
26,790
|
|
|
$
|
2,492
|
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2
|
Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that are valued with industry standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument and can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace.
|
Level 3
|
Unobservable inputs that are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources.
|
|
Fair Value Measurements at
September 30, 2015 using
|
||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
|
|
||||||
Oil, natural gas and NGL derivatives
|
$
|
—
|
|
|
30,193
|
|
|
$
|
—
|
|
|
30,193
|
|
Total
|
$
|
—
|
|
|
30,193
|
|
|
$
|
—
|
|
|
30,193
|
|
|
Fair Value Measurements at
December 31, 2014 using
|
||||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Oil, natural gas and NGL derivatives
|
$
|
—
|
|
|
$
|
55,549
|
|
|
$
|
—
|
|
|
$
|
55,549
|
|
Total
|
$
|
—
|
|
|
$
|
55,549
|
|
|
$
|
—
|
|
|
$
|
55,549
|
|
|
|
Amount
|
||
2015
|
|
$
|
224
|
|
2016
|
|
2,017
|
|
|
2017
|
|
2,432
|
|
|
2018
|
|
2,488
|
|
|
2019
|
|
2,528
|
|
|
Thereafter
|
|
17,597
|
|
|
Total
|
|
$
|
27,286
|
|
|
September 30,
2015 |
|
December 31, 2014
|
||||
Accrued evaluated and unproved and unevaluated property costs
|
$
|
54,654
|
|
|
$
|
86,259
|
|
Accrued support equipment and facilities costs
|
6,815
|
|
|
4,290
|
|
||
Accrued lease operating expenses
|
12,970
|
|
|
9,034
|
|
||
Accrued interest on borrowings under the Credit Agreement and the Notes
|
12,757
|
|
|
206
|
|
||
Accrued asset retirement obligations
|
411
|
|
|
311
|
|
||
Accrued partners’ share of joint interest charges
|
4,081
|
|
|
3,767
|
|
||
Accrued stock-based compensation
|
1,082
|
|
|
—
|
|
||
Other
|
9,557
|
|
|
5,635
|
|
||
Total accrued liabilities
|
$
|
102,327
|
|
|
$
|
109,502
|
|
|
Nine Months Ended
September 30, |
||||||
|
2015
|
|
2014
|
||||
Cash paid for interest expense, net of amounts capitalized
|
$
|
2,617
|
|
|
$
|
3,667
|
|
Asset retirement obligations related to mineral properties
|
$
|
1,487
|
|
|
$
|
3,305
|
|
Asset retirement obligations related to support equipment and facilities
|
$
|
89
|
|
|
$
|
132
|
|
(Decrease) increase in liabilities for oil and natural gas properties capital expenditures
|
$
|
(30,282
|
)
|
|
$
|
43,692
|
|
Increase in liabilities for support equipment and facilities
|
$
|
2,525
|
|
|
$
|
2,488
|
|
Stock-based compensation expense recognized as liability
|
$
|
191
|
|
|
$
|
789
|
|
Transfer of inventory from oil and natural gas properties
|
$
|
586
|
|
|
$
|
300
|
|
•
|
our business strategy;
|
•
|
our reserves;
|
•
|
our technology;
|
•
|
our cash flows and liquidity;
|
•
|
our financial strategy, budget, projections and operating results;
|
•
|
our oil and natural gas realized prices;
|
•
|
the timing and amount of future production of oil and natural gas;
|
•
|
the availability of drilling and production equipment;
|
•
|
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;
|
•
|
government regulation and taxation of the oil and natural gas industry;
|
•
|
our marketing of oil and natural gas;
|
•
|
our exploitation projects or property acquisitions;
|
•
|
the integration of Harvey E. Yates Company with our business;
|
•
|
our costs of exploiting and developing our properties and conducting other operations;
|
•
|
general economic conditions;
|
•
|
competition in the oil and natural gas industry;
|
•
|
the effectiveness of our risk management and hedging activities;
|
•
|
environmental liabilities;
|
•
|
counterparty credit risk;
|
•
|
developments in oil-producing and natural gas-producing countries;
|
•
|
our future operating results;
|
•
|
estimated future reserves and the present value thereof;
|
•
|
our plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical; and
|
•
|
other factors discussed in the Annual Report.
|
|
September 30,
2015 |
|
December 31,
2014
|
|
September 30,
2014 |
||||||
Estimated Proved Reserves Data:
(1)
(2)
|
|
|
|
|
|
||||||
Estimated proved reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
42,531
|
|
|
24,184
|
|
|
21,519
|
|
|||
Natural Gas (Bcf)
(4)
|
267.5
|
|
|
267.1
|
|
|
236.7
|
|
|||
Total (MBOE)
(5)
|
87,109
|
|
|
68,693
|
|
|
60,969
|
|
|||
Estimated proved developed reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
17,413
|
|
|
14,053
|
|
|
12,192
|
|
|||
Natural Gas (Bcf)
(4)
|
97.7
|
|
|
102.8
|
|
|
78.3
|
|
|||
Total (MBOE)
(5)
|
33,685
|
|
|
31,185
|
|
|
25,242
|
|
|||
Percent developed
|
38.7
|
%
|
|
45.4
|
%
|
|
41.4
|
%
|
|||
Estimated proved undeveloped reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
25,118
|
|
|
10,131
|
|
|
9,327
|
|
|||
Natural Gas (Bcf)
(4)
|
169.8
|
|
|
164.3
|
|
|
158.4
|
|
|||
Total (MBOE)
(5)
|
53,424
|
|
|
37,508
|
|
|
35,727
|
|
|||
PV-10
(6)
(in millions)
|
$
|
692.7
|
|
|
$
|
1,043.4
|
|
|
$
|
952.0
|
|
Standardized Measure
(7)
(in millions)
|
$
|
673.8
|
|
|
$
|
913.3
|
|
|
$
|
835.1
|
|
(1)
|
Numbers in table may not total due to rounding.
|
(2)
|
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 October 2014 through September 2015 were
$55.73
per Bbl for oil and
$3.06
per MMBtu for natural gas, for the period from January 2014 through December 2014 were
$91.48
per Bbl for oil and
$4.35
per MMBtu for natural gas and for the period from October 2013 through September 2014 were
$95.56
per Bbl for oil and
$4.24
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. We report our proved reserves in two streams, oil and natural gas, and the economic value of the natural gas liquids associated with the natural gas is included in the estimated wellhead natural gas price on those properties where the natural gas liquids are extracted and sold.
|
(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 Bbl of oil per six Mcf of natural gas.
|
(6)
|
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. We 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. Our PV-10 at
September 30, 2015
,
December 31, 2014
and
September 30, 2014
may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by reducing our PV-10 by the discounted future income taxes associated with such reserves. The discounted future income taxes at
September 30, 2015
,
December 31, 2014
and
September 30, 2014
were, in millions,
$18.9
,
$130.1
and
$116.9
, respectively.
|
(7)
|
Standardized Measure represents the present value of estimated future net cash flows from proved reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect the timing of future cash flows. Standardized Measure is not an estimate of the fair market value of our properties.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Operating Data:
|
|
|
|
|
|
|
|
||||||||
Revenues (in thousands):
(1)
|
|
|
|
|
|
|
|
||||||||
Oil
|
$
|
50,173
|
|
|
$
|
77,546
|
|
|
$
|
162,424
|
|
|
$
|
219,714
|
|
Natural gas
|
21,642
|
|
|
19,071
|
|
|
59,704
|
|
|
54,891
|
|
||||
Total oil and natural gas revenues
|
71,815
|
|
|
96,617
|
|
|
222,128
|
|
|
274,605
|
|
||||
Realized gain (loss) on derivatives
|
19,862
|
|
|
(701
|
)
|
|
52,146
|
|
|
(5,458
|
)
|
||||
Unrealized gain (loss) on derivatives
|
6,733
|
|
|
16,293
|
|
|
(25,356
|
)
|
|
7,950
|
|
||||
Total revenues
|
$
|
98,410
|
|
|
$
|
112,209
|
|
|
$
|
248,918
|
|
|
$
|
277,097
|
|
Net Production Volumes:
(1)
|
|
|
|
|
|
|
|
||||||||
Oil (MBbl)
(2)
|
1,161
|
|
|
839
|
|
|
3,429
|
|
|
2,302
|
|
||||
Natural gas (Bcf)
(3)
|
7.5
|
|
|
3.8
|
|
|
21.1
|
|
|
9.9
|
|
||||
Total oil equivalent (MBOE)
(4)
|
2,405
|
|
|
1,481
|
|
|
6,941
|
|
|
3,956
|
|
||||
Average daily production (BOE/d)
(5)
|
26,137
|
|
|
16,096
|
|
|
25,427
|
|
|
14,490
|
|
||||
Average Sales Prices:
|
|
|
|
|
|
|
|
||||||||
Oil, with realized derivatives (per Bbl)
|
$
|
57.90
|
|
|
$
|
91.42
|
|
|
$
|
59.61
|
|
|
$
|
93.48
|
|
Oil, without realized derivatives (per Bbl)
|
$
|
43.21
|
|
|
$
|
92.39
|
|
|
$
|
47.36
|
|
|
$
|
95.45
|
|
Natural gas, with realized derivatives (per Mcf)
|
$
|
3.28
|
|
|
$
|
4.99
|
|
|
$
|
3.31
|
|
|
$
|
5.44
|
|
Natural gas, without realized derivatives (per Mcf)
|
$
|
2.90
|
|
|
$
|
4.95
|
|
|
$
|
2.83
|
|
|
$
|
5.53
|
|
(1)
|
We report our production volumes in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Revenues associated with extracted natural gas liquids are included with our natural gas revenues.
|
(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 Bbl of oil per six Mcf of natural gas.
|
(5)
|
Barrels of oil equivalent per day, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands, except expenses per BOE)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Production taxes and marketing
|
$
|
9,291
|
|
|
$
|
8,617
|
|
|
$
|
26,598
|
|
|
$
|
23,739
|
|
Lease operating
|
14,917
|
|
|
13,691
|
|
|
42,912
|
|
|
34,747
|
|
||||
Depletion, depreciation and amortization
|
45,237
|
|
|
35,143
|
|
|
143,477
|
|
|
90,970
|
|
||||
Accretion of asset retirement obligations
|
182
|
|
|
130
|
|
|
427
|
|
|
371
|
|
||||
Full-cost ceiling impairment
|
285,721
|
|
|
—
|
|
|
581,874
|
|
|
—
|
|
||||
General and administrative
|
12,151
|
|
|
8,099
|
|
|
38,523
|
|
|
23,417
|
|
||||
Total expenses
|
$
|
367,499
|
|
|
$
|
65,680
|
|
|
$
|
833,811
|
|
|
$
|
173,244
|
|
Operating (loss) income
|
$
|
(269,089
|
)
|
|
$
|
46,529
|
|
|
$
|
(584,893
|
)
|
|
$
|
103,853
|
|
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Net loss on asset sales and inventory impairment
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
||||
Interest expense
|
(7,229
|
)
|
|
(673
|
)
|
|
(15,168
|
)
|
|
(3,685
|
)
|
||||
Interest and other income
|
999
|
|
|
267
|
|
|
1,885
|
|
|
715
|
|
||||
Total other expense
|
(6,230
|
)
|
|
(406
|
)
|
|
(13,380
|
)
|
|
(2,970
|
)
|
||||
(Loss) income before income taxes
|
(275,319
|
)
|
|
46,123
|
|
|
(598,273
|
)
|
|
100,883
|
|
||||
Total income tax (benefit) provision
|
(33,305
|
)
|
|
16,504
|
|
|
(149,045
|
)
|
|
36,675
|
|
||||
Net income attributable to non-controlling interest in subsidiary
|
(45
|
)
|
|
—
|
|
|
(156
|
)
|
|
—
|
|
||||
Net (loss) income attributable to Matador Resources Company shareholders
|
$
|
(242,059
|
)
|
|
$
|
29,619
|
|
|
$
|
(449,384
|
)
|
|
$
|
64,208
|
|
Expenses per BOE:
|
|
|
|
|
|
|
|
||||||||
Production taxes and marketing
|
$
|
3.86
|
|
|
$
|
5.82
|
|
|
$
|
3.83
|
|
|
$
|
6.00
|
|
Lease operating
|
$
|
6.20
|
|
|
$
|
9.25
|
|
|
$
|
6.18
|
|
|
$
|
8.78
|
|
Depletion, depreciation and amortization
|
$
|
18.81
|
|
|
$
|
23.73
|
|
|
$
|
20.67
|
|
|
$
|
23.00
|
|
General and administrative
|
$
|
5.05
|
|
|
$
|
5.47
|
|
|
$
|
5.55
|
|
|
$
|
5.92
|
|
|
Amount
(in millions)
|
||
Exploration, development drilling and completion costs
|
$
|
307.0
|
|
Midstream activities
|
48.0
|
|
|
Pipeline and infrastructure expenditures
|
30.0
|
|
|
Leasehold acquisition and 2-D and 3-D seismic data
|
40.0
|
|
|
Total
|
$
|
425.0
|
|
|
Nine Months Ended
September 30, |
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Net cash provided by operating activities
|
$
|
185,924
|
|
|
$
|
180,359
|
|
Net cash used in investing activities
|
(405,559
|
)
|
|
(409,929
|
)
|
||
Net cash provided by financing activities
|
225,115
|
|
|
231,006
|
|
||
Net change in cash
|
$
|
5,480
|
|
|
$
|
1,436
|
|
Adjusted EBITDA
(1)
|
$
|
174,856
|
|
|
$
|
192,624
|
|
(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, see “— Non-GAAP Financial Measures” below.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Unaudited Adjusted EBITDA Reconciliation to Net (Loss) Income:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Matador Resources Company shareholders
|
$
|
(242,059
|
)
|
|
$
|
29,619
|
|
|
$
|
(449,384
|
)
|
|
$
|
64,208
|
|
Interest expense
|
7,229
|
|
|
673
|
|
|
15,168
|
|
|
3,685
|
|
||||
Total income tax (benefit) provision
|
(33,305
|
)
|
|
16,504
|
|
|
(149,045
|
)
|
|
36,675
|
|
||||
Depletion, depreciation and amortization
|
45,237
|
|
|
35,143
|
|
|
143,477
|
|
|
90,970
|
|
||||
Accretion of asset retirement obligations
|
182
|
|
|
130
|
|
|
427
|
|
|
371
|
|
||||
Full-cost ceiling impairment
|
285,721
|
|
|
—
|
|
|
581,874
|
|
|
—
|
|
||||
Unrealized (gain) loss on derivatives
|
(6,733
|
)
|
|
(16,293
|
)
|
|
25,356
|
|
|
(7,950
|
)
|
||||
Stock-based compensation expense
|
1,755
|
|
|
1,038
|
|
|
6,886
|
|
|
4,665
|
|
||||
Net loss on asset sales and inventory impairment
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
58,027
|
|
|
$
|
66,814
|
|
|
$
|
174,856
|
|
|
$
|
192,624
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
72,535
|
|
|
$
|
66,883
|
|
|
$
|
185,924
|
|
|
$
|
180,359
|
|
Net change in operating assets and liabilities
|
(20,846
|
)
|
|
(586
|
)
|
|
(25,234
|
)
|
|
5,922
|
|
||||
Interest expense, net of non-cash portion
|
6,678
|
|
|
673
|
|
|
14,617
|
|
|
3,685
|
|
||||
Current income tax (benefit) provision
|
(295
|
)
|
|
(156
|
)
|
|
(295
|
)
|
|
2,658
|
|
||||
Net income attributable to non-controlling interest in subsidiary
|
(45
|
)
|
|
—
|
|
|
(156
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
58,027
|
|
|
$
|
66,814
|
|
|
$
|
174,856
|
|
|
$
|
192,624
|
|
|
Payments Due by Period
|
||||||||||||||||||
(In thousands)
|
Total
|
|
Less
Than
1 Year
|
|
1 - 3
Years
|
|
3 - 5
Years
|
|
More
Than
5 Years
|
||||||||||
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit borrowings, including letters of credit
(1)
|
$
|
571
|
|
|
$
|
571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior unsecured notes
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
Office leases
|
27,286
|
|
|
1,645
|
|
|
4,894
|
|
|
5,087
|
|
|
15,660
|
|
|||||
Non-operated drilling commitments
(2)
|
21,843
|
|
|
21,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Drilling rig contracts
(3)
|
43,812
|
|
|
23,440
|
|
|
20,372
|
|
|
—
|
|
|
—
|
|
|||||
Asset retirement obligations
|
13,824
|
|
|
411
|
|
|
958
|
|
|
2,826
|
|
|
9,629
|
|
|||||
Gas processing and transportation agreement
(4)
|
3,750
|
|
|
2,102
|
|
|
1,648
|
|
|
—
|
|
|
—
|
|
|||||
Gas plant engineering, procurement, construction and installation agreement
(5)
|
2,098
|
|
|
2,098
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
513,184
|
|
|
$
|
52,110
|
|
|
$
|
27,872
|
|
|
$
|
7,913
|
|
|
$
|
425,289
|
|
(1)
|
At
September 30, 2015
, we had no borrowings outstanding under our Credit Agreement and approximately
$0.6 million
in outstanding letters of credit issued pursuant to the Credit Agreement. At
September 30, 2015
, the Credit Agreement was scheduled to mature in December 2016; it was amended in October 2015 to extend the maturity to October 2020.
|
(2)
|
At
September 30, 2015
, we had outstanding commitments to participate in the drilling and completion of various non-operated wells. Our working interests in these wells are typically small, and several of these wells were in progress at
September 30, 2015
. If all of these wells are drilled and completed, we will have minimum outstanding aggregate commitments for our participation in these wells of
$21.8 million
at
September 30, 2015
, which we expect to incur within the next few months.
|
(3)
|
We do not own or operate our own drilling rigs, but instead enter into contracts with third parties for such rigs. These contracts establish daily rates for the drilling rigs and the term of our commitments for the drilling services to be provided, which have typically been for one year or less, although we have recently begun to enter into longer-term contracts in order to secure new drilling rigs equipped with the latest technology in plays that were until recently experiencing heavy demand for drilling rigs. Should we elect to terminate a contract and if the drilling contractor were unable to secure work for the contracted drilling rig or if the drilling contractor were unable to secure work for the contracted drilling rig at the same daily rates being charged to us prior to the end of their respective contract terms, we would incur termination obligations. Our maximum outstanding aggregate termination obligations under our drilling rig contracts were
$43.8 million
at
September 30, 2015
.
|
(4)
|
Effective September 1, 2012, we entered into a firm five-year natural gas processing and transportation agreement for a significant portion of our operated natural gas production in South Texas. The undiscounted minimum commitments under this agreement totaled approximately
$3.8 million
at
September 30, 2015
.
|
(5)
|
We entered into an agreement with a third party for the engineering, procurement, construction and installation of the Processing Plant in 2014. The Processing Plant was designed to process a portion of our natural gas produced from certain of our wells in the Permian Basin, as well as third-party natural gas. The Processing Plant was completed and placed in service in the third quarter of 2015 and was subsequently sold in the fourth quarter of 2015 as part of the sale of the Loving County System (see Note 15 to the unaudited condensed consolidated financial statements in this Quarterly Report). A final payment under this agreement of approximately $2.1 million remained outstanding at September 30, 2015. In conjunction with the sale of the Loving County System, we entered into a
15
-year, fixed-fee gathering and processing agreement and provided a volume commitment in exchange for priority one service. The future undiscounted minimum obligation related to the gathering and processing agreement totals approximately $215 million, which is not included in the above table as the sale closed after
September 30, 2015
.
|
|
|
|
MATADOR RESOURCES COMPANY
|
|
|
|
|
Date: November 5, 2015
|
By:
|
|
/s/ Joseph Wm. Foran
|
|
|
|
Joseph Wm. Foran
|
|
|
|
Chairman and Chief Executive Officer
|
Date: November 5, 2015
|
By:
|
|
/s/ David E. Lancaster
|
|
|
|
David E. Lancaster
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Exhibit
Number
|
|
Description
|
2.1
|
|
Amendment No. 6 to Agreement and Plan of Merger, dated as of July 20, 2015, by and among HEYCO Energy Group, Inc., Matador Resources Company and MRC Delaware Resources, LLC (filed herewith).
|
|
|
|
2.2
|
|
Amendment No. 7 to Agreement and Plan of Merger, dated as of August 24, 2015, by and among HEYCO Energy Group, Inc., Matador Resources Company and MRC Delaware Resources, LLC (filed herewith).
|
|
|
|
2.3
|
|
Amendment No. 8 to Agreement and Plan of Merger, dated as of September 18, 2015, by and among HEYCO Energy Group, Inc., Matador Resources Company and MRC Delaware Resources, LLC (filed herewith).
|
|
|
|
4.1
|
|
First Supplemental Indenture, dated as of October 1, 2015, by and among Matador Resources Company, DLK Wolf Midstream, LLC, the Guarantors named therein, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on October 5, 2015).
|
|
|
|
4.2
|
|
Second Supplemental Indenture, dated as of November 4, 2015, by and among Matador Resources Company, MRC Permian LKE Company, LLC, the Guarantors named therein, and Wells Fargo Bank, National Association, as trustee (filed herewith).
|
|
|
|
10.1
|
|
Seventh Amendment to Third Amended and Restated Credit Agreement, dated as of October 16, 2015, by and among MRC Energy Company, as Borrower, the Lenders party thereto and Royal Bank of Canada, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 21, 2015).
|
|
|
|
12.1
|
|
Statement of Computation of Ratio of Earnings to Fixed Charges (filed herewith).
|
|
|
|
23.1
|
|
Consent of Netherland, Sewell & Associates, Inc. (filed herewith).
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
99.1
|
|
Audit report of Netherland, Sewell & Associates, Inc. (filed herewith).
|
|
|
|
101
|
|
The following financial information from Matador Resources Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets - Unaudited, (ii) the Condensed Consolidated Statements of Operations - Unaudited, (iii) the Condensed Consolidated Statement of Changes in Shareholders’ Equity - Unaudited, (iv) the Condensed Consolidated Statements of Cash Flows - Unaudited and (v) the Notes to Condensed Consolidated Financial Statements - Unaudited (submitted electronically herewith).
|
SOLE SHAREHOLDER:
|
|
||
|
|
|
|
HEYCO ENERGY GROUP, INC.
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ George M. Yates
|
|
Name:
|
|
George M. Yates
|
|
Title:
|
|
President
|
|
PARENT:
|
|
||
|
|
|
|
MATADOR RESOURCES COMPANY
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
MERGER SUBSIDIARY:
|
|
||
|
|
|
|
MRC DELAWARE RESOURCES, LLC
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
SOLE SHAREHOLDER:
|
|
||
|
|
|
|
HEYCO ENERGY GROUP, INC.
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ George M. Yates
|
|
Name:
|
|
George M. Yates
|
|
Title:
|
|
President
|
|
PARENT:
|
|
||
|
|
|
|
MATADOR RESOURCES COMPANY
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
MERGER SUBSIDIARY:
|
|
||
|
|
|
|
MRC DELAWARE RESOURCES, LLC
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
SOLE SHAREHOLDER:
|
|
||
|
|
|
|
HEYCO ENERGY GROUP, INC.
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ George M. Yates
|
|
Name:
|
|
George M. Yates
|
|
Title:
|
|
President
|
|
PARENT:
|
|
||
|
|
|
|
MATADOR RESOURCES COMPANY
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
MERGER SUBSIDIARY:
|
|
||
|
|
|
|
MRC DELAWARE RESOURCES, LLC
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ David E. Lancaster
|
|
Name:
|
|
David E. Lancaster
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|
|
|
For the nine months ended September 30,
|
|
|
|
|
|
|
For the years ended December 31,
|
|||||
|
2015
|
2014
|
2013
|
2012
|
2011
|
2010
|
Ratio of earnings to fixed charges
|
(a)
|
20.09
|
7.53
|
(a)
|
(a)
|
179.99
|
(a)
|
During the period noted, our coverage ratio was less than 1:1. We would have needed to generate additional earnings of approximately $600.5 million during the nine months ended September 30, 2015, $36.1 million during the year ended December 31, 2012 and $17.1 million during the year ended December 31, 2011 to achieve a coverage ratio of 1:1.
|
•
|
“earnings” consist of income (loss) before income taxes plus fixed charges, amortization of capitalized interest less interest capitalized and (income) loss attributable to non-controlling interest in subsidiaries that have not incurred fixed charges; and
|
•
|
“fixed charges” consist of interest expense (gross of interest income), capitalized interest, amortization of deferred loan costs and the estimated interest component of rental expense.
|
|
|
Exhibit 23.1
|
|
|
|
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
||
|
|
|
By:
|
|
/s/ G. Lance Binder, P.E.
|
|
|
G. Lance Binder, P.E.
|
|
|
Executive Vice President
|
November 5, 2015
|
/s/ Joseph Wm. Foran
|
|
|
Joseph Wm. Foran
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
November 5, 2015
|
/s/ David E. Lancaster
|
|
|
David E. Lancaster
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
November 5, 2015
|
/s/ Joseph Wm. Foran
|
|
|
Joseph Wm. Foran
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
November 5, 2015
|
/s/ David E. Lancaster
|
|
|
David E. Lancaster
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
Net Reserves
|
|
Future Net Revenue (M$)
|
||||||||
|
|
Oil
|
|
Gas
|
|
|
|
Present Worth
|
||||
Category
|
|
(MBBL)
|
|
(MMCF)
|
|
Total
|
|
at 10%
|
||||
|
|
|
|
|
|
|
|
|
||||
Proved Developed Producing
|
|
16,931
|
|
|
96,817
|
|
|
696,749
|
|
|
465,469
|
|
Proved Developed Non-Producing
|
|
482
|
|
|
816
|
|
|
17,996
|
|
|
12,253
|
|
Proved Undeveloped
|
|
25,118
|
|
|
169,836
|
|
|
601,157
|
|
|
214,973
|
|
|
|
|
|
|
|
|
|
|
||||
Total Proved
|
|
42,531
|
|
|
267,469
|
|
|
1,315,902
|
|
|
692,695
|
|