Matador Resources Q4 Earnings Call Highlights

Key Points

• Management said Matador strengthened its inventory and production quality in 2025, citing a 9% increase in reserves, a 2% rise in net undrilled lateral footage and a 6% increase in average lateral length while drilling 3.4‑mile laterals on key acreage.
• For 2026 the company is “profitability‑focused,” cutting capital by 11% (about $130 million saved), prioritizing free cash flow over volume growth, staying 50% oil‑hedged, and using buybacks opportunistically alongside a dividend that has risen sixfold to a ~3% yield.
• Operational and midstream priorities include San Mateo development and midstream value realization, increased produced‑water reuse (about 72% of frac water in 2025) to lower costs, a surfactant pilot with early promise (not in guidance), and a planned Woodford test to evaluate incremental upside.

Matador Resources NYSE: MTDR executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight what they described as a deep, improving inventory position in the Delaware Basin, continued balance sheet progress, and an operating plan for 2026 that prioritizes free cash flow and efficiency over aggressive volume growth.

Founder, Chairman and CEO Joe Foran repeatedly emphasized Matador’s long-held view that its Delaware Basin position is “the best rock in the country,” noting the company has built a position of more than 200,000 acres over time. Foran said the company increased production during the quarter, reduced debt, and generated strong cash flow despite commodity price volatility. He also pointed to a 9% increase in reserves, as measured by independent engineering firm Netherland, Sewell.

Inventory growth and longer laterals

In response to questions on inventory additions, EVP of Reservoir Engineering Tom Elsener said Matador increased net undrilled lateral footage by 2% in 2025 and cited a 6% increase in average lateral length in the company’s inventory from 2024 to 2025. Elsener attributed the improvements to trades, extending laterals, and operational execution.

Elsener highlighted the Avalon as a strong performer, pointing to an “upper Avalon” well in the company’s Southern Ranger area that he said had produced close to 400,000 BOE with a high oil cut. He also discussed the Third Bone Spring Carbonate as a target that was not included in Matador’s inventory several years ago but has since been drilled successfully across the Delaware position, expanding from earlier activity in the company’s Wolf area to other properties including Ranger and Rustler Breaks.

On operational execution, Elsener said Matador has been drilling 3.4-mile laterals on its Ameredev acreage, which he said has helped increase average lateral lengths. He credited operations and geoscience teams for improving the quality of the inventory through targeting and execution.

2026 focus: efficiencies, free cash flow and “profitability-focused” growth

Management framed the 2026 plan as an extension of a shift toward capital discipline. Foran said Matador faced criticism previously for increasing both production and capital spending. He contrasted that with the company’s current outlook, stating Matador reduced capital expenditures by 11% while largely maintaining comparable production, and still increased reserves by 9%.

Chief Operating Officer Chris Calvert described the company’s approach as “profitability focused, not necessarily production focused,” and said management is looking to optimize levers across revenue and costs. Calvert referenced:

• Expected benefits from the Hugh Brinson project coming online toward the back end of the year, which he said should help improve gas realizations.
• An 11% capital reduction in the 2026 plan, including $130 million in forecasted CapEx savings for 2026.
• Efficiency gains that Calvert said include longer laterals and reduced cycle times.

Calvert also said Matador is targeting improvements in well productivity alongside lower costs, citing “10% improvements” from an estimated ultimate recovery (EUR) perspective while spending less per well.

Midstream priorities and San Mateo development

Analysts asked about “midstream value realization” as a stated priority for 2026, including potential asset “drop-down” steps into San Mateo. Foran said the company takes a “holistic approach” to planning and emphasized flexibility given shifting macro conditions, including commodity prices and geopolitical risk. He added that Matador is 50% hedged on oil to protect the balance sheet.

Foran said Five Point’s continuation vehicle process is making steady progress and that Matador expects it to be resolved in the near term, while also noting Matador does not control that process. Calvert said the company is encouraged by Five Point’s continued support and noted the partner has supported plant expansions and interconnects, describing the continuation vehicle as another sign of backing for San Mateo’s growth.

Foran also highlighted relationships with vendors and service providers as contributors to operational planning and execution, and said the company is taking a deliberate approach to artificial intelligence adoption by working with vendors that may have more experience with those tools.

Capital returns: dividend growth and a more opportunistic buyback

CFO Rob Macalik said Matador is “proud of the cash” returned to shareholders through dividends and buybacks. He said the company has raised its dividend sixfold over the past four years and currently has a dividend yield of 3%.

Macalik said Matador instituted its share repurchase program in 2025 and views it as a discretionary tool. He pointed to management and employee share purchases as a signal that leadership views the stock as undervalued, adding that the company expects to use buybacks opportunistically—particularly when there is “a dislocation” between Matador’s stock price and the broader market.

Operational initiatives: surfactants, Woodford test, and produced water reuse

Calvert addressed questions about surfactants, saying Matador ran a pilot test in 2025 and is encouraged by early results. However, he emphasized the company has not included any production uplift from surfactants in its 2026 guidance and said performance appears to be formation specific. The capital to continue the program is projected in the budget, he said, but not production upside.

On deeper potential, Calvert and the technical team discussed an upcoming Woodford test, which they described as additive to Matador’s existing set of producing horizons in the basin. Elsener said this will be Matador’s first Woodford well and that the objective is to learn more, including through a pilot hole and logs. He said the Woodford would be “purely incremental” to current inventory and that Matador has not yet assigned inventory to the Woodford.

During closing remarks, EVP of Production Glenn Stetson provided an example of E&P and midstream coordination, stating that 72% of the water used in 2025 hydraulic fracturing operations was produced water. Stetson said this helped reduce CapEx per foot and lease operating expenses, and that the results relied on support from San Mateo and Matador’s wholly owned midstream assets.

Foran closed by reiterating Matador’s optimism, while also expressing hope for more stable oil prices and a strong economy. He invited analysts and investors to engage further with management and the broader team.

About Matador Resources NYSE: MTDR

Matador Resources Company is an independent energy firm primarily engaged in the exploration, development and production of oil, natural gas liquids (NGLs) and natural gas. The company focuses on upstream operations, utilizing horizontal drilling and hydraulic fracturing techniques to unlock hydrocarbons from key reservoirs. Its asset base includes both operated and non‐operated positions, with a particular emphasis on the Permian Basin, one of the most prolific oil-producing regions in North America.

Matador's core operations are concentrated in the Delaware Basin segment of the Permian Basin, where it holds substantial acreage in both Reeves and Culberson counties in West Texas and Eddy and Lea counties in New Mexico.

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