Good morning, ladies and gentlemen. Welcome to the Fourth Quarter and Full Year 2023 Matador Resources Company Earnings Conference Call. My name is Tanya, and I'll be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the company’s remarks. As a reminder, this conference is being recorded. For replay purposes, the replay will be available on the company's website for 1 year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Vice President, Investor Relations for Matador. Mr. Schmitz, you may begin.

Thank you, Tanya, and good morning, everyone, and thank you for joining us for Matador's fourth quarter and full year 2023 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. In addition to our earnings press release issued yesterday, I would like to remind everybody that you can find a slide presentation in connection with the fourth quarter and full year 2023 earnings release under the Investor Relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our Founder, Chairman and CEO. Joe?

Thank you, Mac, and thank you all for taking the time to listen in. Last year was a very important year for us, and this year has taken on growing importance, too. The first thing that I'd like to mention is simply that it's been a remarkable year in that production is up, revenues are up, lease acreage is up 18%, inventory, of course, is up, and our dividends are up. While costs are down, including LOE, drilling costs, G&A, and the debt is down. So that's the big picture now, but we're trying to improve around all the edges on that. But that's the basic story; things are headed in the right direction. The second thing, I'd just like to point out is that we've sorted the advanced acreage acquisition. That's the largest to date, and it's integrated very well. We always shout out to the professionalism. The Matador team was very professional in the hand-off. It went very smoothly, and we're delighted by how efficient and how the production and the rock have exceeded expectations. So thanks to them. We're trying to put those assets to full work, and we'll be getting a report on that. And those were two of the main points that I wanted to get across to start the conversation, and now we're ready for your questions.

The first question is from Scott Hanold of RBC Capital Markets.

Up in the northern part of the Delaware, I mean, midstream constraint has been an industry issue. You guys alluded to some third-party tightness. Can you give a little more color on what that is and how much it impacts you in your solutions going forward?

Well, Scott, that's a really good question, and I'll start it off, and others around the table can fill in. But constraints is probably not the best word for it. It's more about maintenance. The older systems are going to have a leak here or there. There’s going to be some part of the equipment that needs to be attended to. And they have every reason to get it repaired as quickly as they can because they're not receiving revenues while it’s down for maintenance. And of course, we're eager for them to get it repaired as quickly, but that's just part of the business and operations that they're going to have a few more. We appreciate the way they've gotten after it. We appreciate their communications. We've been fortunate on our part of our midstream system. We have not been down. But of course, our equipment is out of the later vintage. So everybody is working on the problem. And it didn’t matter of well productivity. It’s just these things go down; they need to be attended to. But we have fairly limited exposure there. But it has had the effect of about 5,500 barrels a day for this month. When you put that in perspective of the whole year, this is one quarter that we're experiencing it. And if you put in the whole year, you're talking about maybe 1% of our expected annual production, and we think we'll make that up in the quarters to come fairly easily. We haven't taken into account any acquisitions in our projected production, or very little, so you have that upside and you have the other efficiencies that our production group seems to come up with each year.

Scott, this is Glenn. I'll just pile on to what Joe was saying about the temporary nature of this reduction in production for Q1. We do feel very confident that the issues will be resolved by the end of this quarter, and we'll set ourselves up very nicely for the rest of the year. I do want to highlight that the connectors between the Pronto system and the advanced properties are very well underway. We have the permits in the right of way, and the construction is very well underway there, and same on the Pronto to the San Mateo Connector. We did highlight in the release, but just to say that the uptime that we experience with San Mateo and Pronto is second to none and that communication that goes on between the teams is daily, and we have a lot of visibility into the operations, both on the maintenance side and what our development plans are. And those two, really three businesses do go very well hand-in-hand with each other.

And as my follow-up question, you've had the advanced wells online for probably getting close to six months now. Can you give us a sense of how those wells are performing relative to your expectations? And with the next batch of advanced wells, which I think are the Dagger wells, remind us like any differences we should expect there? And if you had any color on the timing within the second quarter you do expect to bring those on.

Sure, Scott. This is Tom Elsener. The first part of your question regarding the 21 Margarita wells we brought online back in August of 2023. We've been very pleased with those results. Just as we've always said, those wells would come online with very high oil cuts, and I think we've certainly gotten that at average oil cuts of over 84%. They've gone very smoothly into integrating with the production facilities teams. And those wells are off to a great start. The next wells we've got, the Dagger Lake South wells, as we said in the slide deck on Page 11, those wells are very close to the Margarita wells with very similar rock quality, going to have very high oil cuts just like the Margaritas. And those wells will come online in the second quarter of 2024, similar to how we brought the Margaritas online in a staggered fashion. It still is a very big project for us. Those wells are 1.5-mile laterals as opposed to the 2.25 long Margaritas but still at a very high working interest. I believe it's 21% growth in about 19 net wells and we're feeling very strong about those results, and I can't wait to get them online soon.

And our next question will be coming from Neal Dingmann of Truist. Neal, your line is open.

My question is about your regional focus. Could you specifically discuss the strong activity in the Northern area? Will that be the primary focus in this region? Additionally, how does this area compare to the very strong Roddy Robson Stateline?

Neal, if you could repeat your question, you cut out in the middle of it. So if you restate the question, I feel better than trying to guess.

Okay. Joe, what I'm getting at is, specifically, you suggested '24 oil production is growing faster boosted, I think, by that Northern Lea County activity. And I'm just wondering, can I assume that post the natural gas connection that much of the visors activity will be in that Northern Lea area? I'm just wondering how do you all think this Northern Lea area compares to that very strong state line of Rodney Robinson?

Neal, this is Tom. I'll take the first part of that and then Ned or Glen may want to chime in as well. But as we've talked for quite some time, the bulk of this advanced acreage in the kind of Lea County area is sandwiched between the Rodney Robinson acreage to the South and some of the Mallon acreage to the North and East. We've been very pleased with the results, not just from those two tracks, but also some of the other properties that we have been drilling in that same area. The oil cut on all of those are very high. They're not exactly the same amongst all areas, but very strong oil cut, and we expect to continue to focus there. I will highlight that this is one of the areas where we've been very happy with the Third Bone Spring Carbonate interval, where we highlighted that one of our Third Bone Spring Carbonate well had an IP of approximately 2,600 BoE per day, and I believe at about 86% oil. That's the zone that we added to our inventory over the last year. And also, we've also added the Second Bone Spring Carbonate to our inventory this year based on the strength of several wells drilled in and around that area. I believe we have about 19 wells that we have an interest in that helped kind of donate that zone for us. But we've always been proud of that range area and also kind of the Antelope Bridge area. But I would hit that all of our assets are contributing all around the basin. And even we brought online 17 wells in the Arrowhead asset area in the last quarter that we're very proud of and we're also connected to the San Mateo system and also located generally speaking, where that Pronto, the San Mateo connector line is. Hopefully, that helps.

I think, Neal, a good point at this time since come up as we got some questions last night from people asking about the connector lines, would they be on or not? And I want to just say again, for the record that we have a very high confidence level that they'll be on in the next quarter. Glenn, do you want to elaborate?

Yes. Just as Joe said, I mean, we're very confident that those will be complete by the end of the first quarter and we'll be ready to go there. And another advantage of that system is just by tying those two together is really taking advantage of all 520 million cubic feet a day of processing and gathering. So we're excited it's getting put in the ground right now and excited to put them in service.

All the permits are approved, all the surface use agreements are done, all the paperwork's done. They're out there working on it with two crews. So we're in control of our fate. They've already completed a substantial amount of the work. So again, we have a high degree of confidence it will be finished in the same way with the other connector that's coming together nicely. And again, we'll have if we need to, to bring to expedite matters. We'll have a couple of extra crews so they won't be waiting on us.

Go ahead.

At this point, it's on us, and we're very good at building pipeline.

That's great detail. My second question is about land acquisition. Specifically, you all continue to be very successful in adding assets, like the ones you mentioned that contributed about 1,000 BoE per day from the latest additions. I'm curious if this will remain a priority moving forward and if you foresee more opportunities in this area.

Yes, thank you for your question. The answer is yes. Last year, Advance was our largest deal ever and received a lot of attention, but our land group and business development team completed another 200 transactions. Most of these were small, while some were larger. Our land personnel are continuously making deals, and over the last few years, there has been a growing trend of rationalizing assets between companies. We are exchanging non-operated assets with others that we operate. These types of transactions may seem minor individually, but collectively, they can significantly enhance operational efficiency. There’s a strong rationale for pursuing such opportunities. At the same time, larger companies are looking to consolidate their assets in specific areas. Additionally, private equity continues to present opportunities. I think this trend will persist, and Van’s team is actively working on these relationships and aims to pursue mutually beneficial arrangements.

Yes. This is Ben. I'll echo what Joe just said and add a little bit that we try to make these win-win deals for both sides. I think we've got a long track record of our brick-by-brick approach. I think you can expect to see that to continue. We're off to a great start so far this year and have a pretty favorable outlook for the rest of the year. But also want to give a shout out to our counterparts that we do these deals with too. It takes both sides to make it a win-win. And as Joe mentioned earlier, the professionalism that we saw on the other side for the advanced deal, I think we see that on the smaller deals too. And relationships, as you know, are important to us, and we want to be able to say that we did what we said we're going to do. And I think you could just, as I said, expect to see more of the same going forward. That's our bread and butter. And we're constantly evaluating different deals and trying to keep our pipeline full.

Well, that's been the other key Neal is at Van and his group, hadn't done one deal and then just stopped to let the pipeline run dry. They just managed to keep deals floating on the pipeline; some may fall out for one reason or another. But by keeping deals in the pipeline all the time, there's that brick-by-brick approach. It happens each month. It's been effective, and we like our chances. We like our ability of our land men to build those relationships and make those deals.

Our next question will be coming from Tim Rezvan of KeyBanc Capital Markets. Your line is open.

I wanted to circle back on the 21 Dagger Lake wells. You provided some comments on them earlier. They clearly look like they're going to underpin what's going to be a pretty big steep production ramp in the back half of the year. So they're obviously pivotal to the guide you have out there. Can you give us specificity on exactly what's happening there? Have you started completions? Or what is sort of the schedule over the next couple of months to get those online with expectations?

Tim, this is Chris Calvert, EVP, Co-COO. It's a great question. If you look at Slide 11 in our deck, we have a pretty good summary slide on the advanced integration. Regarding the timing of the 21 Dagger Lake South wells, everything is progressing as planned. The situation mirrors the Pronto connector regarding some of this acreage. Operations are proceeding normally. We are in pilot testing for our Trimul-Frac, which is currently being implemented in the Dagger Lake South project. We're very enthusiastic about Trimul-Frac, and specifically addressing your question, operations are on track. We aim for a Q2 turn-in line date, and all operational activities appear to be proceeding according to our plan.

And Tim, this is Glenn Stetson. I just wanted to highlight that when we bought the advanced properties, they had built out a water gathering system and they had to dispose of a well there too. We'll be tying into that on the water side. And then on the gas side, as I mentioned, that gas is planned to go to Pronto with the connector. So we're all set up there from a takeaway standpoint.

And then I know you staggered those TILs, do you have any timing you can provide on when that will happen? Like in April or June? Just trying to understand.

Yes, Tim, this is Tom again. Very similar to how we did things on the Margarita side. We'll probably have a little bit of a compressed ramp-up compared to Margarita since many of these facilities are a little bit further along in the integration process. But probably mid- to late Q2 is probably my guess. And these forecasts tend to change, but I agree with Chris; things are going very well, and we have great confidence in the second quarter.

Our next question will be coming from Leo Mariani.

So just kind of wanted to get a little bit more color on the midstream. I think you guys obviously seem very confident the issues will sort of be behind you at the end of the first quarter here. So once everything is kind of connected in terms of advanced to Pronto and Pronto to San Mateo, do you feel like this gives you a lot more redundancy in the system? You're not as dependent upon third parties. And then could you also just address kind of where you stand on potential partner conversations for the new $200 million to your plan.

Glenn here, and to start, the answer is yes. The Pronto to San Mateo Connector will be designed to allow for two-way flow between the systems. Currently, it appears to be more biased towards Pronto to San Mateo, but once the $200 million expansion of the Pronto system, which will enhance overall capacity, is completed, gas will be able to move more freely between the two systems. This will provide increased flexibility and assurance of flow during maintenance or other situations. The second plant is expected to be operational in the first half of 2025. Our business development teams plan to utilize a significant portion of this expansion for Matador's equity volumes, but there will also be additional capacity available. Our teams are actively exploring opportunities for third-party volumes that can connect to the system, and we see considerable potential in that northern part of the basin.

And just any color on kind of where you stand with partner discussions, potential partners for that new $200 million in plant?

Yes. Leo, I'll take that question is that look, we are in a position. We have plenty of money on our RBL to fund it. We paid down our RBL over $200 million for what we borrowed on the Advantage acquisition. So that's the use of that is that it's there. We have over $1 billion on our RBL. We have good standing. So it's not a problem. Our criteria is not because we need some partner; we're interested in somebody that helps bring something extra to the table that in some way that enhances the value or the efficiency of the system and the plant, or gives drilling incentives like what we have with San Mateo. It’s out there. If we can find a partner who can enhance it, we're interested in talking, but we're not just trying to get financing. And that doesn't have a lot of appeal because we already have that in place with our RBL.

And our next question will be coming from Zach Parham of JPM. Your line is open.

I guess first just on your cash taxes, the guidance at 5% to 10% of pretax income was a bit better than we were modeling as we had assumed you'd be subject to the AMT. Can you give us some color on how you're able to still defer a majority of your taxes in 2024? And any thoughts on how cash taxes will trend in 2025 in future years.

Sure. This is Rob Macalik. We continue to work really hard, both internally and with our external tax providers, and we try and take every deduction and tax credit that we're allowed to take under law. In 2023, as you noted, we were down about 1% on our current tax rate. We knew that, that was going to go up for 2024. I think it is a little bit better than even what we were anticipating just as we continue to work through the kind of vague guidance that's out there, but we feel very confident in our current estimation that we won't be subject to the KMP, that alternative minimum tax that you referenced for 2024. We continue to evaluate that and look through just there are so many factors that can go into whether we'll be subject to that in 2025, and we'll continue to monitor that. But at the moment, like you said, we feel very good about the 5% to 10% of our pretax income would be cash taxes. But like I said, we'll continue to work and drive that down as much as we can.

And then one just quick follow-up. On the cash flow statement, there's a $68 million payment to advance this quarter. Can you detail what exactly that was and if there are any future expected payments in regards to that deal?

Sure, Zach. This is Van. That was actually a tack-on deal for some additional interest in the basin that was very complementary to what we had closed on last year. And so Brian, I don't know if you want to expand on that, but it was just more additional acreage from the same deal, which I think goes towards what we said earlier that these relationships are important. They had this interest that they wanted to move out and called us, and we were able to make a deal.

Yes, Van, this is Brian. I think that's exactly right. The cash flow statement reflects this because, according to accounting rules, it's considered a continuation of the previous business combination. It's a great deal as we continue to acquire interest in similar acreage that we purchased earlier. We are very excited about the wells that are coming online this year, and we expect to see additional wells from the 21 Margarita wells that became operational last year. It's excellent acreage, and we appreciate collaborating with the team and continuing to complete these transactions.

Maybe if I could squeeze one more in. Can you detail any production that came with those acquisitions?

Yes. This is Brian. So I think really one thousand BoE per day that we mentioned in the release, that really is due to that advanced acquisition, the additional advanced acreage and the interest that we got. And so I think that's a good feel for us. And I think if we look at going forward, it's 80% oil, 77% oil is what we got. And so it's really, really good acreage. And so good interest. So that's really for that specific deal. I think we mentioned earlier, we do blocking and tackling deals all the time. And our land group does a very good job at that, and they continue to add interest and add production that way. And so as we grow throughout this year, part of that growth, of course, is always that we'll do deals. We think that the land group has done a great job the last few years doing 200 deals a year and expect they'll continue to do that this year.

We appreciated that they worked with us on that transaction. It involved some minerals and some overrides, which turned out to be a good fit for us. We value the follow-up and the completion of this deal. While it isn't significant, it could have a positive effect if we continue with similar transactions.

Our next question will be coming from Oliver Huang of TPH & Company. Your line is open, Oliver.

Just on the operational side, I think you all highlighted about 60% of completions this year are going to be using Simul- or Trimul-Frac ops. Just how much of the expected cost benefit and also the efficiency benefit from a cycle time perspective have kind of been underwritten into your 2024 outlook as it sits today?

Yes, Oliver, this is Chris Calvert. That's a great question. You're referring to Slide 15 in the deck where we're discussing our completed lateral footage efficiencies. Our operational teams have been focused on implementing capital efficiencies to protect against any OFS inflation or deflation. We have integrated cost savings from Simul-Frac and Trimul-Frac into our capital budgets. We tested Simul-Frac in 2021, and since it now represents a significant portion of our portfolio, we account for it in our forward-looking budget. We are currently evaluating Trimul-Frac for efficiency gains, and we will provide more details on that in April. However, we are optimistic about Trimul-Frac, as we previously achieved a 20% to 30% improvement in capital efficiencies with Simul-Frac, and we anticipate similar improvements in operational efficiency with Trimul-Frac.

Chris, while you're on that area, I was going to ask Tom to talk about the U-Turn wells and the capital savings there. The same thing, and you look at Slide M on Page 16.

Sure. Thanks, Joe. Albert, this is Tom Elsener. Yes, looking at Slide on the U-Turn wells. As we've talked about before, we drilled our first two U-Turn wells on our Wolf property in Texas. We’ve had very successful production results from those wells that, even though they're U-Turn wells, they performed just like a straight two-mile-long lateral, very high pressures and IP rates of between 2,100 and 2,400 BoE per day. You wouldn't know the difference if it was a U-Turn or two-mile lateral from the production results. We monitor those wells for several months now. Combined with the great cost savings that the team seems to execute down there, we're ready to kind of do a few more of those. I think we've highlighted that there may be up to 20 or so U-Turn wells that we may mix into the drill schedule over the next couple of years. We had some really nice rock that we would like to put into the program, just want to drill more of U-Turn. I think we're very excited for those, and I think they'll be very successful. We're still kind of in the learning phase. We're going to learn about some different targets in different areas. So I still think we're kind of in the walking mode; we're not quite in the running mode yet. But I think we're very optimistic about it.

Billy, your group and you've had a lot of innovations for managed pressure drilling to the rig design. Do you want to say anything else you're working on?

Yes, that was a good project, and we had Patterson rigs on site with competent engineers who did an excellent job drilling and completing those wells. It was a great operation. I want to acknowledge Patterson for their contributions over the past few decades. They didn't just set up a rig and walk away; they have continuously improved their technology and operating systems. They provided extra personnel to ensure our operation was successful. We also have been collaborating with them on the fracking side, and they consistently do a great job for us. It's important to mention Halliburton, Schlumberger, and others who support us in maintaining our competitive edge. Our work with Patterson, particularly on the U-Turn wells, has been a highlight, and we've acquired a larger 2,000-horsepower rig that we're excited about. We're just getting started with it, having set up the rig, and we're ready to move forward with the production phase, expecting to achieve new records. Recently, our geologists and engineers at Maxcom have excelled, achieving 262 records since the start of Maxcom, which we've now increased to 265. They continually improve, making it a great operation. We ensure that our new engineers and geologists spend time together to enhance our overall effectiveness. While we've saved a lot of money and significant time by drilling faster, staying within the targeted zone is crucial and often overlooked. Saving $40 million thanks to our records is impressive, but when you drill a 10,000-foot lateral and achieve a 99% to 100% zone stay, you can gain an additional 10 barrels of oil per foot, resulting in 10,000 extra barrels of oil. That’s a significant financial advantage. Overall, our drilling and completion programs have been very efficient. Chris, do you want to add anything?

Yes, Oliver, I'll wrap this up. What it ultimately comes down to for us operationally is our focus on technological advancements to ensure we make progress each year. We rely on partnerships with companies like Patterson, Nextier, and others to expedite the drilling and completion of wells. Additionally, we enhance our efficiency through engineering and staff improvements. Take for example Trimul-Frac or Simul-Frac; these methods are essentially a rethinking of longstanding processes and stem from our team's efforts. There isn’t much new technology involved in a Simul-Frac or a Trimul-Frac; it’s about innovating how we execute tasks to create benefits for us and our partners, like Patterson, Nextier, and Halliburton. Overall, we have a solid approach to maintaining and maximizing our capital efficiency from an operational perspective.

Speaking of the efficiencies, while we're giving shout-outs, we need to do some for Forrester Smith, who is out there all the time; pipe is there. We don't have to wait on it. I appreciate him.

Yes, correct, Joe. There's a lot of people. The list is numerous. But I think when we talk about anything that we're looking at as far as just timing and TILs and things like that, if you don't have pipe ready on location when you're ready to case a well, you're going to be held up and our service provider has been really our casing provider for decades. I think you have relationships that go back that help weather the bad times and flourish in the good times. So I think whether it's Halliburton, Patterson, Nextier, the casing companies, it is something that we value at a tremendous level, and we continue to kind of push forward to make win-win situations for both the vendor partnerships and Matador itself.

And for my follow-up, I know that you all have had extensive results and data kind of across the stack, but the increase of capital for wells targeting the First Bone Spring Carbonate for the 2024 program, so any color with respect to just kind of the thought process behind that decision? And maybe if there's any sort of commentary on expectations for those wells and also assumptions embedded for year-over-year well productivity trends for the program as a whole.

Sure, Oliver, this is Tom Elsener. Yes, we really like the First Bone Spring and the reason we're investing money in that specific interval is simply because the well results have been very solid even going back to many years ago with our kind of first tested the first ones bring at Marlin Downey in Eastern Antelope Ridge. We continue to delineate that zone throughout the Northern Delaware Basin and feel very confident in those targets. Kind of going to your well productivity question, yes, we put out Slide number 6 or Slide C showing our average EOR over the last 4 years has been a very, very successful program, and we could expect that to continue. There's a variety of different performances in all different asset areas, but we continue to focus on investing the company's resources into the northern kind of the oilier portion, and you see that in the oil awards that we've generated in the First Bone Spring was certainly part of that.

Our next question will be coming from John Freeman of Raymond James. Your line is open.

On the Marlin processing plant, you laid out the return and the payback period that's expected. Can you also speak to how you all envision the volume split on that plant between Matador and third parties once it's up and running next year?

Yes, John, this is Brian. I'm happy to take a shot at that, and then Glenn can clean up anything after. But really, I think right now at San Mateo, we're 70%, 80% Matador. I think as you move over to Pronto, it's almost the opposite right now. I think going forward, you'll end up more with the new plant, almost 50-50 split with the new plant. So all in, we'll probably end up being 60% Matador, 65% Matador and the other third party. We look forward to those third-party opportunities. We think there are a lot of them up in that area. So a lot of good partnerships and a lot of repeat customers. As we build the plan, we think there's a lot of real opportunity there.

I have a follow-up related to what you just mentioned, Brian. You've talked about the need for more processing in this area for about a year. Once we consider the Marlin plant expansion being completed next year, do you have another area across your entire acreage that you have identified for potential expansion of processing capability?

That idea is still in the early stages, and we need some time to refine our concepts and plans before sharing them. It's too soon to provide specifics about it. We are currently in the planning phase, considering various factors. When we are ready, we will present all the details, but it is definitely something we are contemplating as a good opportunity alongside our other ventures. We need to prioritize because we have excellent drilling prospects, and reconciling those with other opportunities is part of the process that everyone here is discussing together.

Our next question will be coming from Philips Johnston of Capital One Securities.

Most of my questions have been answered, but maybe just a clarification on the additional advanced property acquisition in Q4. You mentioned about 1,000 a day BoE back to Q4. Just in terms of timing of when that closed, was that a full quarter's impact or a partial quarter's impact, meaning that the current run rate impact is somewhere north of that number.

Yes, this is Brian. I'm happy to answer that. We are indeed referring to the 1,000; we are talking about the full quarter impact. Looking ahead, I believe that deal will continue to yield strong returns for us as we move into 2024. As I mentioned, the land team has done an exceptional job. If you check Page 12 of our presentation, you'll see that in 2012, we had 7,580 acres, and now we've expanded to over 152,000 net acres. They consistently build up our acquisitions and enhance our production and reserves while doing an excellent job.

And just to clarify what's embedded in your production guidance, does the fourth quarter '24 exit rate guidance assume any incremental volumes from these types of future small-scale acquisitions like the ones you've been doing? Or is it sort of organic from where we see today?

Yes, I think going forward this year, really, it's more acquisitions that we know that are close to being closed or being closed; we take those into account. But other than that, it's in large major, it's organic growth. I think that we do these brick-by-brick acquisitions. There's always some of that, and we know there will be some of that. So we take some of that into account. But really, it's more on just a straight organic growth for the year as we look at the exit rates for 2024.

And the final question will be from Kevin MacCurdy of Pickering Energy Partners. Kevin, your line is open.

I appreciate all the details on the first quarter turn lines and CapEx. You guided exit rate for 4Q oil was better than we expected. Can you kind of help us bridge that gap on how you hit that exit rate, any more color you can provide on the CapEx or the turn-in-line cadence throughout the year? I mean, you mentioned the 21 wells that come on in the second quarter. Is there another slug of wells? Or is that really what's going to drive the production higher?

Yes. This is Brian. Kevin, thanks for the question. I think going through the year, we talked about those 21 wells will come on in the second quarter, and those really do help drive production higher. In addition, this year, in total, we expect to turn to sales 94 net wells. Those are spread out as well kind of throughout the second, third quarter as we go forward into the fourth quarter. It's really a mix there. It's kind of split between the two quarters from third quarter and second quarter with more weighted towards the second quarter just because those 21 wells will come online. That sets us up for that great fourth quarter that we've talked about. I think we're really excited about that exit rate and how it sets us up for next year.

And as my follow-up, you mentioned that you made some payments on the Marlin plant expansion in 4Q, how much of the 2024 midstream budget is allocated to the processing plant expansion? I think in the past, you've said that, that plant could cost $200 million overall.

This is Glenn. For 2024, approximately $90 million to $100 million is related to the actual Marlin 2 plant. There is also capital expenditure that we've assigned to the build-out between the connectors we discussed and the addition of compressor stations, as well as developing some of our properties in the northern part of Ranger.

Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd now like to turn the call back to management for any closing remarks.

Yes, I have a few closing remarks. First, please refer to Slide 3, which summarizes our company highlights from last year. At this time last year, I noted that we were starting the year at roughly 100,000 barrels of oil equivalent per day, and I anticipated that with our advancements and drilling programs, we could increase that by 50% over the year. We successfully achieved an exit rate of 145,000 barrels, thanks to the great work of our team. Secondly, Slide 8 illustrates our management's alignment of interests, as the management group holds about 6% of Matador, and over 90% of our employees participate in the stock purchase program. Everyone within the company has a stake in our success. I also want to acknowledge our measurement team, which operates around the clock, ensuring we receive payment for every barrel of oil and MCF. Over the years, their diligence has added tens of millions of dollars in value, with $32 million mentioned at our recent Board meeting, reflecting their thorough tracking of each invoice. I want to stress our reserve growth from $360 million to $460 million; had oil prices remained stable, that figure could have been closer to $500 million. Our land team has significantly expanded our Delaware Basin position from 119,000 acres to 152,000 acres, beginning with just 7,500 acres at our public debut in 2012. Additionally, we have increasing revenues from third-party customers in the basin, comprising reputable companies. With my 40 years in the business, I started with $270,000 in assets and now we approach $10 billion altogether. Our approach is more gradual, akin to the tortoise rather than the hare, with steady progress since going public. Slide K on Page 14 illustrates this consistency. Looking ahead, based on the locations identified by Tom and his team, combined with growth in our midstream operations through Van's acquisition efforts, we expect this momentum to continue. Billy's team is not only reducing costs but also innovating to enhance our capital efficiency, such as employing modern rigs. We've made significant strides in this area. As for Maxcom, I hope I pronounced that correctly.

You are Joe, yes.

They gave me a hard time on my some of my pronunciation, but that's been a big add. You can see the outperformance that we've had over the years on Slide O compared to the S&P 500, oil price ex-LP. I think that's a lot of what we have to offer a consistent performance with a strong balance sheet with our leverage ratio less than 1, and we intend to continue to keep an eye on the balance sheet because we're shareholders too and look for ways to boost the dividend. I do want you also to know that, look, we are available to you. If you've got questions, you need answers. Mac is really good. Welcome to your questions. If you come visit us, we'll buy you lunch or breakfast, and we'll have a more extensive. We want to be open because we're proud of what we're getting done. It's kind of the old-fashioned pick and shovel basis of little by little. We think our people on staff are working to try to get better every day. It's corny to say that, get better every day and help the team get better. But that's what we aim for. I think you can see it's from where we were a year ago to where we are today and the outlook going forward, we're still making very steady progress up and to the right. So with that, I'm going to sign off, but now our phone lines are open. If you need further follow-up and information, and thank you for taking the time that you have talked to us as well as study.

Ladies and gentlemen, thank you for your participation today. This concludes today's program.