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
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
118,329
|
|
|
$
|
16,732
|
|
Restricted cash
|
510
|
|
|
44,357
|
|
||
Accounts receivable
|
|
|
|
||||
Oil and natural gas revenues
|
14,748
|
|
|
16,616
|
|
||
Joint interest billings
|
16,807
|
|
|
16,999
|
|
||
Other
|
5,548
|
|
|
10,794
|
|
||
Derivative instruments
|
11,966
|
|
|
16,284
|
|
||
Lease and well equipment inventory
|
1,928
|
|
|
2,022
|
|
||
Prepaid expenses
|
3,250
|
|
|
3,203
|
|
||
Total current assets
|
173,086
|
|
|
127,007
|
|
||
Property and equipment, at cost
|
|
|
|
||||
Oil and natural gas properties, full-cost method
|
|
|
|
||||
Evaluated
|
2,192,053
|
|
|
2,122,174
|
|
||
Unproved and unevaluated
|
381,915
|
|
|
387,504
|
|
||
Other property and equipment
|
108,731
|
|
|
86,387
|
|
||
Less accumulated depletion, depreciation and amortization
|
(1,693,044
|
)
|
|
(1,583,659
|
)
|
||
Net property and equipment
|
989,655
|
|
|
1,012,406
|
|
||
Other assets
|
|
|
|
||||
Derivative instruments
|
60
|
|
|
—
|
|
||
Other assets
|
1,351
|
|
|
1,448
|
|
||
Total other assets
|
1,411
|
|
|
1,448
|
|
||
Total assets
|
$
|
1,164,152
|
|
|
$
|
1,140,861
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
5,930
|
|
|
$
|
10,966
|
|
Accrued liabilities
|
84,495
|
|
|
92,369
|
|
||
Royalties payable
|
12,518
|
|
|
16,493
|
|
||
Amounts due to affiliates
|
3,898
|
|
|
5,670
|
|
||
Derivative instruments
|
299
|
|
|
—
|
|
||
Advances from joint interest owners
|
3,225
|
|
|
700
|
|
||
Deferred gain on plant sale
|
5,367
|
|
|
4,830
|
|
||
Amounts due to joint ventures
|
3,115
|
|
|
2,793
|
|
||
Income taxes payable
|
385
|
|
|
2,848
|
|
||
Other current liabilities
|
161
|
|
|
161
|
|
||
Total current liabilities
|
119,393
|
|
|
136,830
|
|
||
Long-term liabilities
|
|
|
|
||||
Senior unsecured notes payable
|
391,553
|
|
|
391,254
|
|
||
Asset retirement obligations
|
17,177
|
|
|
15,166
|
|
||
Amounts due to joint ventures
|
3,634
|
|
|
3,956
|
|
||
Derivative instruments
|
2,282
|
|
|
—
|
|
||
Deferred gain on plant sale
|
100,896
|
|
|
102,506
|
|
||
Other long-term liabilities
|
4,065
|
|
|
2,190
|
|
||
Total long-term liabilities
|
519,607
|
|
|
515,072
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
||||
Common stock - $0.01 par value, 120,000,000 shares authorized; 93,327,432 and 85,567,021 shares issued; and 93,271,423 and 85,564,435 shares outstanding, respectively
|
933
|
|
|
856
|
|
||
Additional paid-in capital
|
1,169,860
|
|
|
1,026,077
|
|
||
Retained deficit
|
(646,584
|
)
|
|
(538,930
|
)
|
||
Total Matador Resources Company shareholders’ equity
|
524,209
|
|
|
488,003
|
|
||
Non-controlling interest in subsidiaries
|
943
|
|
|
956
|
|
||
Total shareholders’ equity
|
525,152
|
|
|
488,959
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,164,152
|
|
|
$
|
1,140,861
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
Oil and natural gas revenues
|
$
|
43,926
|
|
|
$
|
62,465
|
|
Realized gain on derivatives
|
7,063
|
|
|
18,504
|
|
||
Unrealized loss on derivatives
|
(6,839
|
)
|
|
(8,557
|
)
|
||
Total revenues
|
44,150
|
|
|
72,412
|
|
||
Expenses
|
|
|
|
||||
Production taxes and marketing
|
7,902
|
|
|
7,049
|
|
||
Lease operating
|
15,489
|
|
|
13,046
|
|
||
Depletion, depreciation and amortization
|
28,923
|
|
|
46,470
|
|
||
Accretion of asset retirement obligations
|
264
|
|
|
112
|
|
||
Full-cost ceiling impairment
|
80,462
|
|
|
67,127
|
|
||
General and administrative
|
13,163
|
|
|
13,413
|
|
||
Total expenses
|
146,203
|
|
|
147,217
|
|
||
Operating loss
|
(102,053
|
)
|
|
(74,805
|
)
|
||
Other income (expense)
|
|
|
|
||||
Net gain (loss) on asset sales and inventory impairment
|
1,065
|
|
|
(97
|
)
|
||
Interest expense
|
(7,197
|
)
|
|
(2,070
|
)
|
||
Interest and other income
|
518
|
|
|
384
|
|
||
Total other expense
|
(5,614
|
)
|
|
(1,783
|
)
|
||
Loss before income taxes
|
(107,667
|
)
|
|
(76,588
|
)
|
||
Income tax (benefit) provision
|
|
|
|
||||
Deferred
|
—
|
|
|
(26,390
|
)
|
||
Total income tax (benefit) provision
|
—
|
|
|
(26,390
|
)
|
||
Net loss
|
(107,667
|
)
|
|
(50,198
|
)
|
||
Net loss (income) attributable to non-controlling interest in subsidiaries
|
13
|
|
|
(36
|
)
|
||
Net loss attributable to Matador Resources Company shareholders
|
$
|
(107,654
|
)
|
|
$
|
(50,234
|
)
|
Earnings (loss) per common share
|
|
|
|
||||
Basic
|
$
|
(1.26
|
)
|
|
$
|
(0.68
|
)
|
Diluted
|
$
|
(1.26
|
)
|
|
$
|
(0.68
|
)
|
Weighted average common shares outstanding
|
|
|
|
||||
Basic
|
85,305
|
|
|
73,819
|
|
||
Diluted
|
85,305
|
|
|
73,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity attributable to Matador Resources Company
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in subsidiary
|
|
Total shareholders’ equity
|
|||||||||||||||||
|
Common Stock
|
|
Additional
paid-in capital |
|
Retained deficit
|
|
Treasury Stock
|
|
|
|
|||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
Balance at January 1, 2016
|
85,567
|
|
|
$
|
856
|
|
|
$
|
1,026,077
|
|
|
$
|
(538,930
|
)
|
|
2
|
|
|
$
|
—
|
|
|
$
|
488,003
|
|
|
$
|
956
|
|
|
$
|
488,959
|
|
Issuance of common stock
|
7,500
|
|
|
75
|
|
|
142,275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
142,350
|
|
|
—
|
|
|
142,350
|
|
|||||||
Cost to issue equity
|
—
|
|
|
—
|
|
|
(830
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(830
|
)
|
|
—
|
|
|
(830
|
)
|
|||||||
Stock-based compensation expense related to equity-based awards
|
—
|
|
|
—
|
|
|
2,340
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,340
|
|
|
—
|
|
|
2,340
|
|
|||||||
Stock options exercised
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock issued
|
249
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Vesting of restricted stock units
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Current period net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(107,654
|
)
|
|
—
|
|
|
—
|
|
|
(107,654
|
)
|
|
(13
|
)
|
|
(107,667
|
)
|
|||||||
Balance at March 31, 2016
|
93,327
|
|
|
$
|
933
|
|
|
$
|
1,169,860
|
|
|
$
|
(646,584
|
)
|
|
56
|
|
|
$
|
—
|
|
|
$
|
524,209
|
|
|
$
|
943
|
|
|
$
|
525,152
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(107,667
|
)
|
|
$
|
(50,198
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities
|
|
|
|
||||
Unrealized loss on derivatives
|
6,839
|
|
|
8,557
|
|
||
Depletion, depreciation and amortization
|
28,923
|
|
|
46,470
|
|
||
Accretion of asset retirement obligations
|
264
|
|
|
112
|
|
||
Full-cost ceiling impairment
|
80,462
|
|
|
67,127
|
|
||
Stock-based compensation expense
|
2,243
|
|
|
2,337
|
|
||
Deferred income tax (benefit) provision
|
—
|
|
|
(26,390
|
)
|
||
Amortization of debt issuance cost
|
300
|
|
|
—
|
|
||
Net (gain) loss on asset sales and inventory impairment
|
(1,065
|
)
|
|
97
|
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Accounts receivable
|
7,307
|
|
|
2,140
|
|
||
Lease and well equipment inventory
|
150
|
|
|
(112
|
)
|
||
Prepaid expenses
|
(47
|
)
|
|
(364
|
)
|
||
Other assets
|
97
|
|
|
193
|
|
||
Accounts payable, accrued liabilities and other current liabilities
|
2,591
|
|
|
45,703
|
|
||
Royalties payable
|
(3,975
|
)
|
|
(2,907
|
)
|
||
Advances from joint interest owners
|
2,524
|
|
|
1,378
|
|
||
Income taxes payable
|
(2,463
|
)
|
|
(444
|
)
|
||
Other long-term liabilities
|
1,875
|
|
|
(353
|
)
|
||
Net cash provided by operating activities
|
18,358
|
|
|
93,346
|
|
||
Investing activities
|
|
|
|
|
|
||
Oil and natural gas properties capital expenditures
|
(74,370
|
)
|
|
(127,440
|
)
|
||
Expenditures for other property and equipment
|
(27,409
|
)
|
|
(14,241
|
)
|
||
Business combination, net of cash acquired
|
—
|
|
|
(24,028
|
)
|
||
Restricted cash
|
43,337
|
|
|
—
|
|
||
Restricted cash in less-than-wholly-owned subsidiaries
|
510
|
|
|
(383
|
)
|
||
Net cash used in investing activities
|
(57,932
|
)
|
|
(166,092
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Borrowings under Credit Agreement
|
—
|
|
|
70,000
|
|
||
Proceeds from issuance of common stock
|
142,350
|
|
|
—
|
|
||
Cost to issue equity
|
(614
|
)
|
|
—
|
|
||
Capital contribution from non-controlling interest owners in less-than-wholly-owned subsidiaries
|
—
|
|
|
450
|
|
||
Taxes paid related to net share settlement of stock-based compensation
|
(565
|
)
|
|
(50
|
)
|
||
Net cash provided by financing activities
|
141,171
|
|
|
70,400
|
|
||
Increase (decrease) in cash
|
101,597
|
|
|
(2,346
|
)
|
||
Cash at beginning of period
|
16,732
|
|
|
8,407
|
|
||
Cash at end of period
|
$
|
118,329
|
|
|
$
|
6,061
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information (Note 11)
|
|
|
|
|
|
|
Three Months Ended
March 31, |
||||
2016
|
|
2015
|
|||
Weighted average common shares outstanding
|
|
|
|
||
Basic
|
85,305
|
|
|
73,819
|
|
Dilutive effect of options, restricted stock units and preferred shares
|
—
|
|
|
—
|
|
Diluted weighted average common shares outstanding
|
85,305
|
|
|
73,819
|
|
|
|
||
Beginning asset retirement obligations
|
$
|
15,420
|
|
Liabilities incurred during period
|
303
|
|
|
Revisions in estimated cash flows
|
1,238
|
|
|
Accretion expense
|
264
|
|
|
Ending asset retirement obligations
|
17,225
|
|
|
Less: current asset retirement obligations
(1)
|
(48
|
)
|
|
Long-term asset retirement obligations
|
$
|
17,177
|
|
(1)
|
Included in accrued liabilities in the Company’s interim unaudited condensed consolidated balance sheet at
March 31, 2016
.
|
Commodity
|
Calculation Period
|
|
Notional Quantity (Bbl or MMBtu)
|
|
Weighted Average Price Floor ($/Bbl or
$/MMBtu) |
|
Weighted Average Price Ceiling ($/Bbl or
$/MMBtu) |
|
Fair Value of Asset (Liability) (thousands)
|
|||||||
Oil
|
04/01/2016 - 12/31/2016
|
|
2,070,000
|
|
|
$
|
42.48
|
|
|
$
|
61.16
|
|
|
$
|
7,998
|
|
Oil
|
01/01/2017 - 12/31/2017
|
|
1,560,000
|
|
|
$
|
38.62
|
|
|
$
|
47.62
|
|
|
(2,571
|
)
|
|
Natural Gas
|
04/01/2016 - 12/31/2016
|
|
9,000,000
|
|
|
$
|
2.60
|
|
|
$
|
3.53
|
|
|
4,130
|
|
|
Natural Gas
|
01/01/2017 - 12/31/2017
|
|
9,000,000
|
|
|
$
|
2.27
|
|
|
$
|
3.50
|
|
|
(112
|
)
|
|
Total open derivative financial instruments
|
|
|
|
|
|
|
|
$
|
9,445
|
|
Derivative Instruments
|
Gross
amounts recognized |
|
Gross amounts
netted in the condensed consolidated balance sheets |
|
Net amounts presented in the condensed
consolidated balance sheets |
||||||
March 31, 2016
|
|
|
|
|
|
||||||
Current assets
|
$
|
16,196
|
|
|
$
|
(4,230
|
)
|
|
$
|
11,966
|
|
Other assets
|
5,442
|
|
|
(5,382
|
)
|
|
60
|
|
|||
Current liabilities
|
(4,529
|
)
|
|
4,230
|
|
|
(299
|
)
|
|||
Other liabilities
|
(7,664
|
)
|
|
5,382
|
|
|
(2,282
|
)
|
|||
Total
|
$
|
9,445
|
|
|
$
|
—
|
|
|
$
|
9,445
|
|
December 31, 2015
|
|
|
|
|
|
||||||
Current assets
|
$
|
16,767
|
|
|
$
|
(483
|
)
|
|
$
|
16,284
|
|
Current liabilities
|
(483
|
)
|
|
483
|
|
|
—
|
|
|||
Total
|
$
|
16,284
|
|
|
$
|
—
|
|
|
$
|
16,284
|
|
Level 1
|
Unadjusted quoted prices for identical, unrestricted assets or liabilities in active markets.
|
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
|
Level 3
|
Unobservable inputs that are not corroborated by market data which reflect a company’s own market assumptions.
|
|
Fair Value Measurements at
March 31, 2016 using |
||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
|
|
||||||
Oil and natural gas derivatives
|
$
|
—
|
|
|
9,445
|
|
|
$
|
—
|
|
|
9,445
|
|
Total
|
$
|
—
|
|
|
9,445
|
|
|
$
|
—
|
|
|
9,445
|
|
|
Fair Value Measurements at
December 31, 2015 using |
||||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas derivatives
|
$
|
—
|
|
|
$
|
16,284
|
|
|
$
|
—
|
|
|
$
|
16,284
|
|
Total
|
$
|
—
|
|
|
$
|
16,284
|
|
|
$
|
—
|
|
|
$
|
16,284
|
|
|
March 31,
2016 |
|
December 31, 2015
|
||||
Accrued evaluated and unproved and unevaluated property costs
|
$
|
41,423
|
|
|
$
|
54,586
|
|
Accrued support equipment and facilities costs
|
10,303
|
|
|
17,393
|
|
||
Accrued cost to issue equity
|
216
|
|
|
—
|
|
||
Accrued lease operating expenses
|
10,066
|
|
|
7,743
|
|
||
Accrued interest on debt
|
12,681
|
|
|
5,806
|
|
||
Accrued asset retirement obligations
|
48
|
|
|
254
|
|
||
Accrued partners’ share of joint interest charges
|
4,712
|
|
|
4,565
|
|
||
Accrued stock-based compensation
|
872
|
|
|
—
|
|
||
Other
|
4,174
|
|
|
2,022
|
|
||
Total accrued liabilities
|
$
|
84,495
|
|
|
$
|
92,369
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Cash paid for interest expense, net of amounts capitalized
|
$
|
—
|
|
|
$
|
1,990
|
|
Asset retirement obligations related to mineral properties
|
$
|
1,606
|
|
|
$
|
1,507
|
|
Asset retirement obligations related to support equipment and facilities
|
$
|
(65
|
)
|
|
$
|
32
|
|
(Decrease) increase in liabilities for oil and natural gas properties capital expenditures
|
$
|
(11,622
|
)
|
|
$
|
8,654
|
|
(Decrease) increase in liabilities for support equipment and facilities
|
$
|
(5,000
|
)
|
|
$
|
6,865
|
|
Increase in liabilities for accrued cost to issue equity
|
$
|
216
|
|
|
$
|
—
|
|
Issuance of restricted stock units for Board and advisor services
|
$
|
138
|
|
|
$
|
142
|
|
Issuance of common stock for advisor services
|
$
|
—
|
|
|
$
|
4
|
|
Stock-based compensation expense recognized as liability
|
$
|
(98
|
)
|
|
$
|
263
|
|
Transfer of inventory from oil and natural gas properties
|
$
|
64
|
|
|
$
|
310
|
|
•
|
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;
|
•
|
our ability to negotiate and consummate acquisition and divestiture opportunities;
|
•
|
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 acquisitions, including the integration of Harvey E. Yates Company, with our business;
|
•
|
our ability to construct and operate midstream facilities;
|
•
|
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; and
|
•
|
our plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q that are not historical.
|
|
March 31,
2016 |
|
December 31,
2015 |
|
March 31,
2015 |
||||||
Estimated Proved Reserves Data:
(1)
(2)
|
|
|
|
|
|
||||||
Estimated proved reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
50,718
|
|
|
45,644
|
|
|
32,506
|
|
|||
Natural Gas (Bcf)
(4)
|
236.7
|
|
|
236.9
|
|
|
280.5
|
|
|||
Total (MBOE)
(5)
|
90,168
|
|
|
85,127
|
|
|
79,262
|
|
|||
Estimated proved developed reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
16,818
|
|
|
17,129
|
|
|
15,889
|
|
|||
Natural Gas (Bcf)
(4)
|
96.9
|
|
|
101.4
|
|
|
104.7
|
|
|||
Total (MBOE)
(5)
|
32,968
|
|
|
34,037
|
|
|
33,340
|
|
|||
Percent developed
|
36.6
|
%
|
|
40.0
|
%
|
|
42.1
|
%
|
|||
Estimated proved undeveloped reserves:
|
|
|
|
|
|
||||||
Oil (MBbl)
(3)
|
33,900
|
|
|
28,515
|
|
|
16,617
|
|
|||
Natural Gas (Bcf)
(4)
|
139.8
|
|
|
135.5
|
|
|
175.8
|
|
|||
Total (MBOE)
(5)
|
57,200
|
|
|
51,090
|
|
|
45,922
|
|
|||
PV-10
(6)
(in millions)
|
$
|
501.9
|
|
|
$
|
541.6
|
|
|
$
|
1,070.1
|
|
Standardized Measure
(7)
(in millions)
|
$
|
495.6
|
|
|
$
|
529.2
|
|
|
$
|
949.2
|
|
(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 April 2015 through March 2016 were
$42.77
per Bbl for oil and
$2.40
per MMBtu for natural gas, for the period from January 2015 through December 2015 were
$46.79
per Bbl for oil and
$2.59
per MMBtu for natural gas and for the period from April 2014 through March 2015 were
$79.21
per Bbl for oil and
$3.88
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
March 31, 2016
,
December 31, 2015
and
March 31, 2015
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
March 31, 2016
,
December 31, 2015
and
March 31, 2015
were, in millions,
$6.3
,
$12.4
and
$120.9
, 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
March 31, |
||||||
|
2016
|
|
2015
|
||||
Operating Data:
|
|
|
|
||||
Revenues (in thousands):
(1)
|
|
|
|
||||
Oil
|
$
|
30,157
|
|
|
$
|
43,736
|
|
Natural gas
|
13,769
|
|
|
18,729
|
|
||
Total oil and natural gas revenues
|
43,926
|
|
|
62,465
|
|
||
Realized gain on derivatives
|
7,063
|
|
|
18,504
|
|
||
Unrealized loss on derivatives
|
(6,839
|
)
|
|
(8,557
|
)
|
||
Total revenues
|
$
|
44,150
|
|
|
$
|
72,412
|
|
Net Production Volumes:
(1)
|
|
|
|
||||
Oil (MBbl)
(2)
|
1,044
|
|
|
1,009
|
|
||
Natural gas (Bcf)
(3)
|
6.8
|
|
|
6.6
|
|
||
Total oil equivalent (MBOE)
(4)
|
2,170
|
|
|
2,116
|
|
||
Average daily production (BOE/d)
(5)
|
23,846
|
|
|
23,513
|
|
||
Average Sales Prices:
|
|
|
|
||||
Oil, with realized derivatives (per Bbl)
|
$
|
34.12
|
|
|
$
|
57.68
|
|
Oil, without realized derivatives (per Bbl)
|
$
|
28.89
|
|
|
$
|
43.37
|
|
Natural gas, with realized derivatives (per Mcf)
|
$
|
2.27
|
|
|
$
|
3.43
|
|
Natural gas, without realized derivatives (per Mcf)
|
$
|
2.04
|
|
|
$
|
2.82
|
|
(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
March 31, |
||||||
(In thousands, except expenses per BOE)
|
2016
|
|
2015
|
||||
Expenses:
|
|
|
|
||||
Production taxes and marketing
|
$
|
7,902
|
|
|
$
|
7,049
|
|
Lease operating
|
15,489
|
|
|
13,046
|
|
||
Depletion, depreciation and amortization
|
28,923
|
|
|
46,470
|
|
||
Accretion of asset retirement obligations
|
264
|
|
|
112
|
|
||
Full-cost ceiling impairment
|
80,462
|
|
|
67,127
|
|
||
General and administrative
|
13,163
|
|
|
13,413
|
|
||
Total expenses
|
$
|
146,203
|
|
|
$
|
147,217
|
|
Operating loss
|
$
|
(102,053
|
)
|
|
$
|
(74,805
|
)
|
Other income (expense):
|
|
|
|
||||
Net gain (loss) on asset sales and inventory impairment
|
$
|
1,065
|
|
|
$
|
(97
|
)
|
Interest expense
|
(7,197
|
)
|
|
(2,070
|
)
|
||
Interest and other income
|
518
|
|
|
384
|
|
||
Total other expense
|
$
|
(5,614
|
)
|
|
$
|
(1,783
|
)
|
Loss before income taxes
|
$
|
(107,667
|
)
|
|
$
|
(76,588
|
)
|
Total income tax (benefit) provision
|
—
|
|
|
(26,390
|
)
|
||
Net loss (income) attributable to non-controlling interest in subsidiaries
|
13
|
|
|
(36
|
)
|
||
Net loss attributable to Matador Resources Company shareholders
|
$
|
(107,654
|
)
|
|
$
|
(50,234
|
)
|
Expenses per BOE:
|
|
|
|
||||
Production taxes and marketing
|
$
|
3.64
|
|
|
$
|
3.33
|
|
Lease operating
|
$
|
7.14
|
|
|
$
|
6.16
|
|
Depletion, depreciation and amortization
|
$
|
13.33
|
|
|
$
|
21.96
|
|
General and administrative
|
$
|
6.07
|
|
|
$
|
6.34
|
|
|
Three Months Ended
March 31, |
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Net cash provided by operating activities
|
$
|
18,358
|
|
|
$
|
93,346
|
|
Net cash used in investing activities
|
(57,932
|
)
|
|
(166,092
|
)
|
||
Net cash provided by financing activities
|
141,171
|
|
|
70,400
|
|
||
Net change in cash
|
$
|
101,597
|
|
|
$
|
(2,346
|
)
|
Adjusted EBITDA
(1)
|
$
|
17,209
|
|
|
$
|
50,146
|
|
(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
March 31, |
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Unaudited Adjusted EBITDA Reconciliation to Net Loss:
|
|
|
|
||||
Net loss attributable to Matador Resources Company shareholders
|
$
|
(107,654
|
)
|
|
$
|
(50,234
|
)
|
Interest expense
|
7,197
|
|
|
2,070
|
|
||
Total income tax (benefit) provision
|
—
|
|
|
(26,390
|
)
|
||
Depletion, depreciation and amortization
|
28,923
|
|
|
46,470
|
|
||
Accretion of asset retirement obligations
|
264
|
|
|
112
|
|
||
Full-cost ceiling impairment
|
80,462
|
|
|
67,127
|
|
||
Unrealized loss on derivatives
|
6,839
|
|
|
8,557
|
|
||
Stock-based compensation expense
|
2,243
|
|
|
2,337
|
|
||
Net (gain) loss on asset sales and inventory impairment
|
(1,065
|
)
|
|
97
|
|
||
Adjusted EBITDA
|
$
|
17,209
|
|
|
$
|
50,146
|
|
|
Three Months Ended
March 31, |
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities:
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
18,358
|
|
|
$
|
93,346
|
|
Net change in operating assets and liabilities
|
(8,059
|
)
|
|
(45,234
|
)
|
||
Interest expense, net of non-cash portion
|
6,897
|
|
|
2,070
|
|
||
Net loss (income) attributable to non-controlling interest in subsidiary
|
13
|
|
|
(36
|
)
|
||
Adjusted EBITDA
|
$
|
17,209
|
|
|
$
|
50,146
|
|
|
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
(2)
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
Office leases
|
26,837
|
|
|
2,390
|
|
|
4,945
|
|
|
5,172
|
|
|
14,330
|
|
|||||
Non-operated drilling commitments
(3)
|
4,743
|
|
|
4,743
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Drilling rig contracts
(4)
|
43,228
|
|
|
22,950
|
|
|
20,278
|
|
|
—
|
|
|
—
|
|
|||||
Asset retirement obligations
|
17,225
|
|
|
48
|
|
|
1,666
|
|
|
4,118
|
|
|
11,393
|
|
|||||
Gas processing and transportation agreements
(5)
|
11,469
|
|
|
7,157
|
|
|
4,312
|
|
|
—
|
|
|
—
|
|
|||||
Gas plant engineering, procurement, construction and installation contract
(6)
|
8,602
|
|
|
8,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
512,675
|
|
|
$
|
46,461
|
|
|
$
|
31,201
|
|
|
$
|
9,290
|
|
|
$
|
425,723
|
|
(1)
|
At
March 31, 2016
, 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. The Credit Agreement matures in October 2020.
|
(2)
|
These amounts represent principal maturities only.
|
(3)
|
At
March 31, 2016
, 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
March 31, 2016
. If all of these wells are drilled and completed, we will have minimum outstanding aggregate commitments for our participation in these wells of
$4.7 million
at
March 31, 2016
, which we expect to incur within the next few months.
|
(4)
|
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 entered 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
$43.2 million
at
March 31, 2016
.
|
(5)
|
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
$2.5 million
at
March 31, 2016
. Effective October 1, 2015, we entered into a 15-year fixed-fee natural gas gathering and processing agreement for a significant portion of our operated natural gas production in Loving County, Texas. The undiscounted minimum commitments under this agreement total approximately
$212.6 million
at
March 31, 2016
; however, at the end of each year of the agreement, we can elect to have the previous year’s actual gathering and processing volumes be the new minimum commitment for each of the remaining years under the contract. As such, we have the ability to unilaterally reduce the gathering and processing commitment if our production in the Loving County area is less than our currently projected production. In addition, if we elect to reduce the gathering and processing commitment in any year, we have the ability to elect to increase the committed volumes in any future year to the originally agreed gathering and processing commitment. If we do not meet the volume commitment for gathering and processing at the facility in a contract year, we will be required to pay a deficiency fee per MMBtu of natural gas deficiency. If we did not use any of our commitment and elected to reduce our future years’ commitment to zero, the deficiency payment required to be paid under the contract would be approximately
$8.9 million
at
March 31, 2016
and no further deficiency payments would be required in future years.
|
(6)
|
We entered into an agreement with a third party for the engineering, procurement, construction and installation of a natural gas processing plant in the Rustler Breaks prospect area in Eddy County, New Mexico in 2015. This plant is expected to process a portion of our natural gas produced from certain of our wells in the Delaware Basin, as well as third-party natural gas. The plant is scheduled to be completed and placed in service in the third quarter of 2016.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs
|
|||||
January 1, 2016 to January 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
February 1, 2016 to February 29, 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
March 1, 2016 to March 31, 2016
|
|
21,931
|
|
|
20.34
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
21,931
|
|
|
$
|
20.34
|
|
|
—
|
|
|
—
|
|
|
|
|
MATADOR RESOURCES COMPANY
|
|
|
|
|
Date: May 6, 2016
|
By:
|
|
/s/ Joseph Wm. Foran
|
|
|
|
Joseph Wm. Foran
|
|
|
|
Chairman and Chief Executive Officer
|
Date: May 6, 2016
|
By:
|
|
/s/ David E. Lancaster
|
|
|
|
David E. Lancaster
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Exhibit
Number
|
|
Description
|
2.1
|
|
Amendment No. 9 to Agreement and Plan of Merger, dated as of March 1, 2016, by and among HEYCO Energy Group, Inc., Matador Resources Company and MRC Delaware Resources, LLC (filed herewith).*
|
|
|
|
3.1
|
|
Certificate of Merger between Matador Resources Company (now known as MRC Energy Company) and Matador Merger Co. (incorporated by reference to Exhibit 3.4 to our Registration Statement on Form S-1 filed on August 12, 2011).
|
|
|
|
3.2
|
|
Amended and Restated Certificate of Formation of Matador Resources Company (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 13, 2012).
|
|
|
|
3.3
|
|
Certificate of Amendment to the Amended and Restated Certificate of Formation of Matador Resources Company (incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).
|
|
|
|
3.4
|
|
Amended and Restated Bylaws of Matador Resources Company, as amended (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 25, 2016).
|
|
|
|
3.5
|
|
Statement of Resolutions for Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 2, 2015).
|
|
|
|
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 (furnished 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 (furnished 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 March 31, 2016 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/ Craig N. Adams
|
|
Name:
|
|
Craig N. Adams
|
|
Title:
|
|
Executive Vice President
|
|
MERGER SUBSIDIARY:
|
|
||
|
|
|
|
MRC DELAWARE RESOURCES, LLC
|
|||
|
|
||
|
|
|
|
By:
|
|
/s/ Craig N. Adams
|
|
Name:
|
|
Craig N. Adams
|
|
Title:
|
|
Executive Vice President
|
|
|
|
Exhibit 23.1
|
|
|
|
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
||
|
|
|
By:
|
|
/s/ G. Lance Binder, P.E.
|
|
|
G. Lance Binder, P.E.
|
|
|
Executive Vice President
|
May 6, 2016
|
/s/ Joseph Wm. Foran
|
|
|
Joseph Wm. Foran
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
May 6, 2016
|
/s/ David E. Lancaster
|
|
|
David E. Lancaster
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
May 6, 2016
|
/s/ Joseph Wm. Foran
|
|
|
Joseph Wm. Foran
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
May 6, 2016
|
/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
|
|
16,171
|
|
|
94,431
|
|
|
451,545
|
|
|
316,245
|
|
Proved Developed Non-Producing
|
|
647
|
|
|
2,459
|
|
|
19,978
|
|
|
15,456
|
|
Proved Undeveloped
|
|
33,900
|
|
|
139,806
|
|
|
476,206
|
|
|
170,208
|
|
|
|
|
|
|
|
|
|
|
||||
Total Proved
|
|
50,718
|
|
|
236,696
|
|
|
947,730
|
|
|
501,909
|
|