Good morning, ladies and gentlemen. Welcome to the First Quarter 2025 Matador Resources Company Earnings Conference call. My name is Tanya, and I will be serving as your 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, and the replay will be available on the company's website for one year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Matt Schmidt, Senior Vice President, Investor Relations for Matador. Mr. Schmidt, you may proceed.

Thank you, Tanya, and good morning, everyone, and thank you for joining us for Matador's first quarter 2025 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 are 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 with the first quarter 2025 earnings release under the Investor Relations tab on our corporate website. And finally, as a reminder, I would like to invite all of you to join us for our first-ever town hall conference call on Monday, April 28th at 3:30 PM Central Time. Please send any questions that you have in advance by email, to [email protected] no later than 3 PM Central Time on Friday, April 25th. The live conference call will be available 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. As we have often done in the past, I like to begin by sharing some insights from our earnings release. The first point is that we have been here before, in challenging times. And we have come out of it each time stronger than we went in. So we have confidence in the plans that we have submitted to you today. We feel we have the right tools in the toolbox that give us the flexibility and optionality to make the plans work and advance Matador's interest and value, regardless of the atmosphere or how much it changes throughout the year. Second, I'd like to call attention to not only our prudent decision-making but also the operational excellence of our field people and our operating staff. We have had growth in revenues to the point that we were able to repay $190 million of our debt. We have record gas processing. The Marlin plant is coming online; between the Merlin plant and Black River, we will have processing capacity of 720 million, which is quite an improvement from the original Black River plant that had only 60 million. This provides us a significant amount of flow assurance, which is critical in these times to get as much as we can to market. Finally, I want to emphasize that we have alignment of interest with our shareholders. This is one of the reasons why the board authorized a repurchase of shares to ensure people know of that alignment. Additionally, I want to point out what we did in the first quarter: virtually everybody on the management team bought shares, and we had over 100 other employees buying stock as well. While others were not as aggressive, our leadership team recognized a good deal when they saw it. We believe it is important to offer the opportunity to have a repurchase of shares at this price; we think it is a good buying opportunity and a solid entry point. There has been some concern about production—whether it is going up or down. We slowed down a little on our production, but it was not because the wells were not performing well. They performed better than expected, but we had some shut-ins due to maintenance and force majeure events. As a result, we were off by 1 or 2%, but we could have easily made that up. It was better to move slowly and surely to provide growth for this year, reduce expenses, and wait for the processing to come online, so we receive the full economic benefit of our production. By the end of the year, if we are 1% down now, we will be up 17%.

Latanya, with that, we would like to take a few questions.

Certainly. After which, we will welcome additional follow-up questions from you. First question will be from Tim Rezvan of KeyBanc Capital Markets. Your line is now open.

Good morning, folks, and thank you for taking my question. I would like to start on the midstream. Obviously, there has been a lot of volatility in the broader market that may be impacting the decision on that. You did use the phrase IPO in your fourth quarter earnings deck. We did not see that in this deck. Can you talk maybe about what you are thinking about with the path forward on the midstream side, given you have been pretty candid that you are looking to realize value from that segment? Thank you.

Yeah. We are looking at all these options regarding the possibility of IPOs and various other things. We are looking at opportunities to grow our business. When we think about our starting point, we began at 60 million a day at the Black River plant. As Joe mentioned, once we get this plant up and running, which should happen this quarter, we will be at 720 million a day of capacity. We are excited about the growth we are seeing now and see many opportunities to expand further. We have received a lot of inquiries on third-party gas that we are pursuing, and we believe there are lots of opportunities in that regard. So regarding your question on the IPO, yes, that is always a possibility, and we are investigating all those opportunities.

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

Thanks for taking my question. Given the changes in the operational plans, I wanted to talk about how you are thinking about the longer term. Historically, Matador has been a growth company. With this guidance update, your implied volumes are roughly in line with fourth-quarter oil at more of a maintenance level. In the current environment, how are you thinking about the longer term outlook for the company? Would you continue at maintenance levels, or would you anticipate growing again at some point?

Well, thank you, Zach. It is a good question. The answer is yes; we are very open to and want to have reasons to grow again. It is not that we are downsizing now. As I mentioned, we are going to have 17% growth in oil production by year-end, and this is primarily a timing matter. Is this a temporary situation regarding oil prices, or a new reality? We are going to do what is profitable. We have never been about growth for growth's sake. Our motto has always been profitable growth at a measured pace. If you mean what you say about a measured pace, that means when prices are a little lower, you take a bit more time to think about what you are doing and do not rush into things. We manage our contracts with our vendors to give us optionality and flexibility, to either add or decrease operations. We intend to grow, and we are shareholders too; nobody here wants to own stock unless there will be increases in value over time. We are very well positioned because, yes, our production was a little bit off this quarter, but we paid down $190 million in debt. This leaves us with a lot of optionality whether we want to speed up CapEx expenses as the year continues, or pursue an acquisition. Either way, we have got the tools in the toolbox, including the share repurchase, to create more value for Matador quarter by quarter. We do not want to act blindly or rush into a turbulent time. We will approach growth slowly but steadily. We have ten to fifteen years of inventory, so there is no shortage of inventory. Every well we drill has a high net return, and it is about optimizing those locations and our field staff along with our midstream business to consistently generate growth and profitability.

Hey, this is Van Singleton. I just want to add one thing to what Joe was saying. In the first quarter, we not only replaced the reserves that were produced, but we added to them. Each year, we continue to replace and grow our reserves. There is never really one significant decision that makes all this happen; it involves hundreds of small decisions. We work together as a team across the company to determine the best actions at the right time while preserving our optionality and balance sheet. This will allow us to set ourselves up for more profitable growth in the near future.

Thank you. And our next question will be coming from Gabe Daoud of TD Cohen. Your line is open.

Thanks, Latanya. Hey, everyone. Good morning. Thanks for your time. I was hoping, Joe, maybe we could circle back to your comments around stock representing a good entry point. Is it fair to assume that you are getting after it on the buyback relatively soon? How do you prioritize the buyback against potential inorganic opportunities this year? As you have also noted, volatility presents typically good opportunities for attractive bolt-ons like you did with AECO about ten years ago. Thanks, guys.

If I may need you to repeat part of your question, but let me try to answer as best I can. What is nice about where we are today is that in our release, we mentioned several steps we took when we saw the fall in turbulence and chaos. We needed to be in a position to give us maximum flexibility regarding our plans. We paid down debt, implemented oil hedges to protect ourselves on price, sold non-core assets, and worked with our nineteen banks who authorized a bigger reserve-based loan for us. Now we are in a position to go either way. It is not that we are forced to go the route of acquisitions or drilling or share buybacks; we will need to see which option creates the most value for us. It is nice to have all three options available.

This is Van again. I also think it shows in our dividend. We have increased it six times in four years. We want to preserve our optionality to continue increasing it at the appropriate times moving forward.

We want to be recognized as that company that pays a regular dividend and tries to increase it year over year. Much of this alignment comes from the fact that other companies have not been as quick to buy back their shares.

Our next question will be coming from Leo Mariani of Roth. Line is open, Leo.

Hey, guys. I wanted to ask a little about the kind of activity reductions here. If I am looking at your slides right, it looks like you guys ended up cutting some of the activity on the new Meredith asset and Antelope Ridge but actually increased activity a little bit in West Texas. I was just kind of curious about that. From a turn-in-line perspective, is there something maybe driving you to put a little bit more CapEx in West Texas as opposed to these other areas? On your production, obviously, it is record second quarter, but I want to get a sense; should that be peak production for the year, or will production roll off a bit with the activity cuts in the second half?

Hey, Leo. This is Tom Elsener. I will take the first part of that, and then I will pass the second part over to Glenn Stetson. In the normal course of funneling operations from a nine-rig program down to an eight-rig program, there is just some shifting of the timing of the wells involved. Chris and the team are optimizing the completion schedule, which may involve shifting some wells between different quarters. We are proud of all our assets; West Texas has been a big part of us for a long time and we are very happy with the returns of all the wells.

Yeah, and hey, Leo. This is Glenn. I just wanted to add to what Tom was saying regarding our Meritev properties. We highlighted in the release the eleven wells that we turned online that had an average initial production rate of 1,450 BOE per day. All combined, that was around 15,000. We are really pleased with those results, and I think it confirms the promise of the eastern side of our acreage position. Regarding your second question, I would say that Q3 will indeed be lower than Q2 as you mentioned, but Q4 is projected to be slightly higher than Q3. However, that could change depending on the timing of the capital-efficient batches we are executing.

Thank you. Our next question will come from Kevin McCurdy of Pickering Energy Partners. Kevin, your line is open.

Hey, good morning. Thanks for taking my question. I appreciate the leadership you are showing here by reducing activity in light of the macro uncertainty.

Thank you. We appreciate that a lot. I'd like to clarify that while the fourth quarter may not go down, we have the optionality to ramp up production in that area or to maintain the status quo. We do not want to promise something that we cannot deliver, but we can deliver. I feel confident about that, but we do not want to do that unless the oil price conditions are optimal. There is plenty of time left to move in that direction if the incentive of higher commodity prices presents itself.

My question is about the criteria for the buyback. Just conceptually, how would you think about the number of shares you are going to be buying back? Will you be looking at certain valuation metrics and will it be governed by a percentage of cash flow on a quarterly or annual basis?

Yeah. Hey, Kevin. This is Brian Willey. I appreciate the question. It is not a single metric or variable that we are looking at. It is a mix. As Joe mentioned earlier, we have many great options in front of us, whether that is using our cash for debt repayment, share repurchases, making opportunistic land acquisitions like Joe mentioned before, and possibly expanding our midstream business. We could also add back rigs, as Joe indicated earlier, or increase the dividend. We will evaluate those and determine what is best for Matador long-term, as well as for our shareholders. As Joe mentioned earlier, we are all very large shareholders.

And our last question will come from the line of John Freeman of Raymond James. Your line is open, John.

Thank you. Good morning. I saw that you stepped up the hedging activity quite a bit, both on oil and gas. However, what stood out was that you are willing to lock in mainly wider gas dips in twenty twenty-six. I am just interested in what you are seeing on the marketing side that drove that decision.

Yeah. This is Gregg Krug again. We are constantly reviewing those hedges. We saw an opportunity to layer on additional hedges. We felt that twenty-six had some vulnerabilities due to capacity issues we were observing, and we wanted to have some extra protection. So that was the driver behind that action; we felt we needed that additional insurance policy.

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

Thank you very much. To those who asked questions, feel free to reach out further if you have additional inquiries; we are happy to engage. Once again, we would like to invite all of you to come see us sometime and meet our team in person, as well as see some of what we believe are the latest tools in our toolbox. This includes our Max Com room that operates twenty-four seven or our measurement room that works the same way. I want to emphasize that we are not throwing in the towel towards the end of the year, nor should you be worried; we believe matters will straighten out over the next couple of quarters. It will become clear what needs to be done in Q4 to optimize our year for our shareholders. Brian Willey discussed several tools, including increasing the dividend as a way to return value to shareholders. We currently have no shortage of rigs or vendors available to ensure top-notch execution; I am confident about the year ahead, and it is only going to improve from here. We have stated that Q2 will be a record quarter, and Q3 will also be strong, but we may use this time to make concrete plans for Q4 and for twenty twenty-six. We have been in this business for forty years, evolving from 270,000 to where we are now. We have learned to react to rapid changes in the business, and we now have more tools available than ever to leverage and add value. I believe it is a great time to invest, and if some shareholders cannot see the value opportunities we are creating, we will buy their stock back. This is my last comment, unless you want to reach out or visit us.

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