Good morning, ladies and gentlemen. Welcome to the second quarter, 2026 Matador Resource Company earnings conference call. My name is Michelle, and I'll be serving as the operator for today. At this time, all participants are in a listen-only mode. We'll 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. Max Schmitz, Senior Vice President Invest Relations for Matador. Mr. Schmitz, you may proceed.

Thank you, Michelle. Good morning, everyone, and thank you for joining us for Matador's second quarter 2026 earnings conference call. Some of the presenters this morning 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 release issued yesterday. 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 information that is now available. Actual results in 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 report on Form 10-Q. In addition to our earnings press release issued yesterday, I would also like to remind everyone that you can find a slide presentation in connection with our second quarter 2026 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 Chairman, Founder, and CEO.

Thank you very much. It's a pleasure to be here with y'all again, having an exchange, your questions and our answers and your comments. We appreciate it. We'd like to hear from you and want to be sure that all of you know that you're welcome here to come visit, and if you do, you'll be assured of meeting not only most of the senior staff, but also the opportunity to visit with some of our young staffers that have come in in geology and engineering and you hear directly from them they're doing the work how they feel about it and what they their views on the future and the strength and technology that they're using being state-of-the-art second I'd like to give you an overall picture we've had near record adjusted free cash flow for this quarter of $303 million, $200 million of which has been used to pay down the bank debt that we had on the acquisition of the federal leases. So now we're under a billion dollars on that debt and making progress to get it paid down further in these upcoming quarters. And I think that's an important point to remember when people wonder about how we really stand. We have 19 banks in our bank group, and they all scrubbed down our numbers pretty thoroughly and had some real good exchanges, and they raised good questions. But all 19 have participated and have indicated more is available if we come across opportunities like that. So thank you, Banks. We appreciate your backing us and working with us in our relationship with you. Last, two things on this report. If you're asking us how we're doing, we'd just say the true answer is that we've exceeded the high end of our production guidance. So it's nice to be sitting in that spot when also mentioned we've had a 5% increase in our oil and natural gas reserves up from 667 million barrels of oil or gas equivalent to 73 million barrels of oil or gas equivalent. So a nice increase for a quarter and I want to say to all of our teams, our exploration and production teams that good work and keep it up. As I mentioned, these results and cash flow generation has enabled us to pay down $200 million in the borrowings we had for the May federal lease sale on our RBL. We expect to now generate approximately $900 million in free cash flow for the year. So we'll have this largely paid down, if not paid off, by the end of the year. Second, in this area, we remain very focused on prioritizing continued debt reduction, but it's not very often that you have an opportunity to buy three properties, like Cardinal, like Paloma, and like Range Rider of this quality to bring into your asset group and the upside Ridge Runner and all these properties to continue growing our base in New Mexico. And we've steadily risen in the ranks to where we're in the top ten and top five in Lee County. I'm also pleased and excited to provide an update. We began the year deciding we had four strategic catalysts that we were planning to execute on. First is the closing and integrating of Cardinal. And on that score, that was a very professional work with the Cardinal team. We had good relations with smoothly and to the point where we gained increasing confidence on the capability of their people who might be interested in Matador. And we made offers to 26 of their field people. their whole staff out there, basically, and all 26 accepted the offer. We thought that was a good sign of how professional the negotiations went and the opportunities I feel are ahead of them being with a company committed to the Delaware as we are. Also want to emphasize that midstream money was used to purchase cardinal and you know for midstream assets that's our policy mystery money for midstream assets and on the E&P side we again we're using Matador money for properties that will end up in Matador so first we've closed and we're integrating Cardinal. And as I said, those are two separate companies, but we collaborate with each other and we think we help each other to better performance. So that was the first strategic catalyst. The second one was BLM Lease Sale. We paid a lot of money for him. Would have been nervous about that, but if you remember back to 2018, we were criticized some for buying and paying what we did for lease sales, and look what that did for us. That boosted us in to the best cash flow and the best properties that we had for a number of times, and the Rodney Robinson wells that were drilled and the Nina Quartel were all making over a million barrels apiece. And that extra free cash flow has given us a lot of opportunities. We've tried to take advantage of it. So when the opportunity came up again for BLM lease sale years later, we really prepared for it and were excited by the leases that we received. And it extended our inventory life to over 15 years. And, you know, good properties like that with nine different zones are likely to have a lot more than just 10 to 15 years of extension. They also are enhanced by the fact we have a midstream system that should be able to increase their cash flow, picking up this gas, and getting it to market. I think in the succeeding years, flow assurance is going to play a bigger and bigger role. On page, I think it's page 7 of the slides, we have a map showing how all these properties fit together. And on Cardinal, he lays down to give us pipeline movement all around the basin. And you couldn't have really have a better fit than the way it fits in with our other pipeline systems. But in that regard, you have 100 rigs, approximately, out there within 10 miles of our pipelines. So that's a great opportunity for our group to pick up some additional business and relationships. relationships, and our teams are out there trying to take advantage of it now and bring in new customers and take on the existing customers of Cardinal and build that up and weave it in to our existing pipeline systems. Finally, the future results of Cardinal and these BLM leases, should we expect them to turn out to be better than expected, given the quality of the acreage from not only our acquisitions, but the E&P activities of other people in the area. As I mentioned, it's 100 rigs out there working, and so you can expect if you are not lining up how to get your gas out of the Delaware, you need to be doing so because I think there will be some tightness in the markets. we'll try to take care of you as best we can but at this point you might want to take some action to be sure that's lined up for any investment you make in new wells all this we believe sets us up for a strong finish to 2026 and even stronger performance in 2027 is we're able to plan and coordinate our various activities. As a result, we've raised our production guidance from year-over-year oil growth of 4% to 7%. And all this is done with 1% less capital expenditures. One note about capital expenditures, of course, I started this company with some friends 43 years ago and with $270,000, and now we have over $12 billion in assets. And on that, we borrowed money the whole way, always paid it back, and we'll need to borrow some as we finish development of these undeveloped acres and extend the coverage the midstream has in these more prolific areas. So we think that outlook looks good. The capital will be put to good use and appreciate the support that we've had and think things look good going forward. And if not, I tell you so that we've got to work through some things. But it's very exciting to have the best acreage, you know, the best team that you've had with the opportunities provided with a bank group that is as solid as we've been fortunate to have in the group and the shareholders that we have. So we've been blessed with a lot of good things. We plan to be good stewards. That's always been our mark we didn't come up through private equity but friends and family and I can assure you your friends and family are rooting for you but they have a lot of questions and they're they're not afraid to ask the tough questions so we tried to answer for them is this transaction unbolded but now we're ready for yours and with that I turn you over for that first question back to you Michelle Thank you.

If you would like to ask a question, please press star 11. If your question has been answered and you would like to remove yourself from the queue, press star 11 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, we ask that you limit yourself to one question until all have had a chance to ask a question, after which we would welcome additional follow-up questions from you. Our first question is from Neil Dingman of William Blair. Your line is open.

Good morning, all, Joe. Nice update. I'll jump right to my question, Joe. My question is around your new asset economics that you all highlighted last night. Specifically, you all suggested the rates of return on these newer properties likely to be over 80%. So my question is, what's driving this outperformance, these new assets versus peers in your existing assets, you know, which are already over 50%, and given these high returns, do you anticipate more activity in these newer areas?

Hey, Neil, thanks for the question. It's Tom Ellisoner. We're very excited for these new properties, and the 80% rate of return is really underpinned, first and foremost, just by the very high-quality rock. As you can see on the maps on slides five and six, you can see just a few bought is in the core of the Delaware Basin, and we expect that there'll be 15 to 20% higher oil EURs on those properties, which will greatly enhance the returns on those wells, along with the fact that there's nine or more different benches, and that allows for batch development and longer laterals, and will support getting our well costs down significantly, down into the $600 per foot range. Also, the high net revenue interest, particularly on the federal leases with a one-eighth royalty, will also enhance those economics. Not included in the 80% is also the synergies with the midstream, which many of those properties are just a few miles away from our existing infrastructure.

Thank you. Our next question comes from Gabe Dowd of Truist. Your line is open.

Thanks, Operator. Morning, Joe and everyone. Thanks for all the comments and prepared remarks so far. I was just wondering if we could maybe get an updated view on how you think about 27. At this point, I know profitable growth at a measured pace had always kind of been the strategy here. And so, you know, kind of targeting a mid-single-digit oil growth for 27, is that fair? And would that require, you know, the same level of spending that you're guiding through for this year, or would that require a step up in CapEx? Thanks, guys.

Well, Gabe, I'll start, and some of the others may chip in, but first, you got it right. That's our basic policy, profitable growth at a measured pace. So that's the way we plan to go. Now, for example, if prices were to collapse to $30 a barrel until $70, you wouldn't do the same program. But we're expecting right now, despite the volatility in the Mideast, that it's going to level out somewhere in this $70 to $80 range. It might be better, and we will adjust accordingly, but I think we can count on making money even at $70 a barrel from these properties. They're that good. We will be careful about our debt, and we will pay that down as reasonable as we can and make adjustments in the year. Since it's an elective repayment, we'll adjust it to the cash flow per month. but our target would be something at present prices somewhat in that range of $100 a month, so it's paid off within a year to 15 months on the acquisition. Now, the money is used to acquire Cardinal. We've already brought it down from $1.25 billion to less than a billion, a little less than a billion, and we're pleased with that activity, and we're going to keep that up. And we've always had, you know, when you come not from private equity who has more access to money but you're relying on friends and neighbors, you're always very careful. They may be your friends and neighbors, but if the debt gets too high, you can be sure they'll be calling in and expressing concern, so we've always tried to be forward-looking on getting the debt paid down. It also gives insurance to our banks, so they're that much more agreeable to making loans if another acquisition opportunity, the quality of what we had at the federal lease sale, or acquiring Cardinal, and then you couldn't line up two more companies that had a better fit on their undeveloped acreage or production than what we've had with Paloma and with Ridge Runner. And those are quality companies that, you know, have had great success in developing some of these properties and selling them on and then getting back to putting together another quality group. So that relationship's gone well. We have great respect and admiration for them as well as for NCAT as a sponsor of those companies. And that's kind of what I foresee. I hope that answers your question. If not, I'll give it another try.

Thank you. Our next question comes from Scott Hanold with RBC. your line is open.

Yeah, thanks. Obviously, the federal acreage is a big highlight for you all, and can you give us a sense on, you know, the path on activity for that? Like, when do you expect permits? Like, have you gotten some visibility, and what is sort of the targeting strategy when you get to there? Are we looking at large pad development that's going to be a good part of your, you know, early 2027 activity, or how do you see that unfolding just the development of that asset. Hey, Scott, this is Brian Ehrman. Yeah, I'll tackle the first part of your question. I mean, I think the advantage of that acreage for us is it's something that we've been targeting for many months. And so the advantage of that is from the federal permitting process, you know, we hit the ground running day one after the lease sale and are already making significant progress on those permits. So, you know, we talked about that we'd like to, you know, potentially get on those leases as, you know, early as the end of this year, if not, you know, early part of next year. But I just want to highlight the fact that, you know, that I do think we had a significant advantage on being able to hit the ground running on those because we have looked at those for so long. But I'll let Chris or Tom talk about the kind of development plan. Well, yeah, and Scott, I would just, yeah, add to, and I'd love for Chris and Tom to add as well. But, you know, we highlighted in the release, too, that there are 12 operated wells that are close to this acreage that we're currently in the process of completing and will plan on turning online in Q3, which I think is important. And then also we highlighted the increase in the midstream spend to be able to build out both San Mateo and Matador to these federal properties, which I think is an indicator that we're planning on sputting some well this year in that vicinity to what was acquired in May.

Thank you. Our next question comes from Derek Whitfield with Texas Capital. Your line is open.

Good morning, guys. Great quarter and great update. Thank you. Thanks, Derek. I wanted to focus on the recent acquisitions. The strategic fit is very clear, as shown on slide 6 and 7. With that said, how do the acquisitions impact your view on the path forward with the midstream business?

I just think it shows the importance of having a midstream business of some sort or tie. And the way this came about, Derek, was when we were going public back in 2012, we were going around one investment house to the other. And each time, we weren't having any trouble getting our gas to market. But in each of those visits to each of those investment houses, we would get a question on, how are you going to get your gas to market? Which meant that we weren't having trouble necessarily, but others were. And so we got on the horn with one of our friends and colleagues who's worked with us in the past and asked him if he'd help us start up a midstream company to alleviate some of that problem. And he did. He came. He built it up to what it is now, brought people in like Anton and others, Ryan, that whole group, Sean, Malai, and we built a midstream business. And now we're starting to hear those same notes from people about there's a looming shortage because, as I mentioned, if you draw a line with the cardinal system down there to hook up so we're all around the basin, there's concern about flow assurance now. And so that was a big mover for us was that we felt this really assured us continued flow assurance out of the basin. You have 100 rigs that are operating within 10 miles of the pipeline. And so you know production is going to go up in this area with that many rigs and running that. So you better have some flow assurance lined up, or that's our philosophy, rather than the way. And this way we do it in a coordinated fashion that takes into account capital so you're not spending a lot of capital to catch up. It can progress conservatively as needed. and so you know that the level of production is going to be up and we want to be prepared to take care of it not just for ourselves but for other for some of our friendly competitors if we can help them it's a win-win opportunity I think for the industry just as it was back in 2012 when we built our first lines and started taking on third-party gas It's one of those businesses that's win-win. They need an outlet. They need flow assurance. We need the customers. And it's helped us develop some good relationships, and we see this serving the same purpose. Now, someone else may build a line. That's fine. But we hope that this will be sufficient, that we take care of our own gas as well as help some of the others. and make it win-win, as I said. I'll turn that over to Brian.

Any further thoughts? No, I think similar to what you said, Joe, I mean, I think you can see the fit in the map on page 7, and you can see it in the map of the acquisitions. I mean, the Paloma deal, we talked about the $50 million in midstream value that was ascribed to that, And then, you know, similarly in the federal lease sale, you know, closer to $100 million of midstream value. So I think, you know, these assets stand on their own from the E&P side, but they also have the added benefit of fitting very nicely with our midstream infrastructure and bringing value to that business as well.

I would just add this. We try to have a balanced approach to how we do a capital spend. Some years it's been for enhancements, laying the pipeline, doing whatever, until now that San Mateo is independent. And the second is, of course, they have an active drilling program. We've got an active ground game that has delivered a lot of growth. Last year, I think it was 17,000 acres. So we've got a program that's kind of on those same lines this year. And then, you know, that finally is some bigger acquisitions like these if they come to the front. So we hate to be tied down to a single strategy. We're supporting all three and see where the opportunities emerge.

Thank you. Our next question comes from Kevin McCurdy with Pickering Energy Partners. Your line is open.

Hey, good morning, Joe, and everybody there. Great to see the stock reacting well this morning. We noticed the marketing gain was pretty significant this quarter. Maybe you can talk a little bit about that, and maybe if that's a result of the midstream strategy or other initiatives you've undergone.

Hey, Kevin, this is Michael Frenzel, EVP and Treasurer. I'm happy to comment on it.

I think that gain is really a good reflection on our marketing team, Anton Langland and Ryan Bellinger and the efforts that they make to mitigate the weakness in Waha pricing. That gain is not something that we expect to see necessarily going forward, but we do expect a very strong improvement in natural gas realizations, obviously from the Hugh Brinson pipeline that we expect to come on early and from the other deals that we've done with energy transfer.

Thank you. Our last question comes from Tim Resvan with KeyBank Capital Markets. Your line is open.

Good morning, folks. Thank you for taking our question. This is more big picture strategy. You know, we've seen this pattern from Matador in the past with advanced and AmeriDev where you make a large acquisition, generally cash, and then there's a period of sort of digesting and delevering after that. So given kind of where you are now, I'm sure there's still other opportunities out there. Would you say you're in sort of a digest and de-lever mode now, or are you still kind of, you know, if there's more opportunities that come out, are you still going to be active? Just trying to understand kind of how, is it all about the balance sheet right now, or do you have to keep kind of one eye open for other opportunities? Thank you.

Well, Tim, I think you said it real well, is we're de-levering. that's the first priority but we're also keeping our eye open if an opportunity comes forward like Cardinal that just fit us as well as we could have designed it or acreage like another federal leak sale which isn't going to happen but equality we will keep that eye open but our aim is to delever as we've done each time over 43 years. We acquire we try to make them better and then we deliver and so that we can be ready again and on capital I always you know emphasize here our policy is is look if you on capital it isn't so much how much capital you spend but how you spend it And, you know, getting federal leases with a, you know, royalty at, you know, 12.5% instead of 25%, and that is within a few miles of our pipeline, that's an opportunity. And it's rocked with nine different zones. That's one that we knew we were going to get involved in. And we tried to be careful and did what we thought would work. We were successful on the key tracks that we wanted, but we immediately started paying back on that. So that helped us get ready to have the funds available and the bank relationships where they saw that we did what we said we'd do and paid it down. So they ready to loan us more money for another acquisition. And that's a pattern we want to maintain is having the support of 19 banks if we want to do something. And they have actually raised our RBL, so we have a couple of billion, whatever we need for opportunity that may came up. But until then, we're going to keep paying down our debt, but we're also being very careful about our spend on these wells. And I've got to give a lot of credit to our operations group for drilling the wells as they have. And it's an example of what they've done that's saving us a lot of money. When we first drilled the three-mile wells, they were about 20 days, if I'm right. Isn't that right? They were about 20 days. They've now reduced it to about 10 days. Well, there's a lot of savings there. So, you know, the capital spend initially was maybe kind of high. They brought it down to make those properties that much more economical. So when you buy something, you hope that you can improve it to the point where it's actually repaying some of it back. You spend less on each seeding well because you're drilling them faster and you have a better idea of how to complete them. And so what I'm trying to say is that we are trying to be prudent and we're not afraid to borrow money because over a 44-year deal, we paid every dollar back, you know, even in COVID and even when the bust was in the early, in the 80s and the 90s, every time, and the banks are feeling more and more comfortable with us all the time. They know that we'll be careful with it and really just spend it on properties that have a high percentage success rate, and they're going to get paid, and that's a formula that's worked for us, and we've made sure we've paid them all back, and it's win-win. another win-win situation.

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

Okay. I just have this, and then I'm going to be quiet. I feel like I've talked enough. But I want to be sure you all know that if you're not getting all your questions answered, you're welcome to come here, have lunch with us, or breakfast, or whatever you want, and we'll have a longer session. and we appreciate your involvement with us and we like our shareholder group but want to know that everybody's welcome. We know we're a public company and we want to be sure that you feel you have access to the decision makers to answer whatever questions that you may have. So thank you very much. We are available, and we'd like to have you in particular to see some of the uses of capital that we have, like we call our max calm room that we set up years ago at the suggestion of our head of drilling at that time, Billy Goodwin, that has worked out great. They keep the drill bit in the zone, so instead of just not being in zone 90% of the time, We're in zone 98%, 99%, which adds, again, a lot of return and spreads that capital spending over more production. So I want to leave that with you, and we're excited. I hope you can sense from the answers going around about the opportunities these four acquisitions have done for us. Nobody's asked about Rays Creek, so I'm just going to volunteer it here as we drill the Rays Creek. Well, we've got 50,000 acres here, and the first test was over 2,200 barrels. Tom or Andrew, you want to say anything to that?

Certainly. This is Tom. I'll start and I'll pass it to Andrew. Hats off to all of our teams for working so well together to you know put this prospect together uh you know from the geoscience side the reservoir the land team you know everybody everybody did their part and i i think we're very excited for this very first raised creek well to uh you know come online so strong and come online you know better than we expected and uh we look forward to you know a bright future for that zone and um you know excited to get that target into the mix but i'll uh pass over to andrew parker for any additional comments.

Thanks, Tom. Andrew Parker, you know, I'll just add that, you know, the reason we want you guys to come in and meet the team is because they are so talented, and the Rays Creek is a perfect example of how well we've executed from geoscience, putting the concept together, land, putting the position together, and operations, you know, getting this well in the ground and really, really exceeding expectations and knocking it out of the park. And so we're We're going to continue to do that and continue to bring these things forward and execute.

And Andrew is our head of our geological group, the EVP for that group, and thank you. But anyway, we appreciate it, and we appreciate the people that are helping Matador to be in positive territory this morning, and hope you'll come see us.

Ladies and gentlemen, thank you for your participation today. This concludes the program. You may now disconnect.