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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________ 
FORM 10-Q
 _________________________________________________________  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission File Number 001-35410
 _________________________________________________________  
Matador Resources Company
(Exact name of registrant as specified in its charter)
  _________________________________________________________ 
Texas27-4662601
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
5400 LBJ Freeway, Suite 1500
Dallas, Texas
75240
(Address of principal executive offices)(Zip Code)
(972) 371-5200
(Registrant’s telephone number, including area code)
 _________________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareMTDRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
As of April 23, 2024, there were 124,780,249 shares of the registrant’s common stock, par value $0.01 per share, outstanding.


MATADOR RESOURCES COMPANY
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2024
TABLE OF CONTENTS
 Page


Part I — FINANCIAL INFORMATION
Item 1. Financial Statements — Unaudited
Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
(In thousands, except par value and share data)
March 31,
2024
December 31,
2023
ASSETS
Current assets
Cash$23,208 $52,662 
Restricted cash51,118 53,636 
Accounts receivable
Oil and natural gas revenues278,155 274,192 
Joint interest billings207,540 163,660 
Other42,778 35,102 
Derivative instruments3,027 2,112 
Lease and well equipment inventory39,927 41,808 
Prepaid expenses and other current assets108,382 92,700 
Total current assets754,135 715,872 
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated9,973,110 9,633,757 
Unproved and unevaluated1,407,512 1,193,257 
Midstream properties1,398,601 1,318,015 
Other property and equipment40,901 40,375 
Less accumulated depletion, depreciation and amortization(5,441,274)(5,228,963)
Net property and equipment7,378,850 6,956,441 
Other assets
Derivative instruments1,718 558 
Other long-term assets 92,626 54,125 
Total other assets94,344 54,683 
Total assets$8,227,329 $7,726,996 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$121,823 $68,185 
Accrued liabilities419,791 365,848 
Royalties payable178,506 161,983 
Amounts due to affiliates13,495 28,688 
Advances from joint interest owners37,725 19,954 
Other current liabilities80,001 40,617 
Total current liabilities851,341 685,275 
Long-term liabilities
Borrowings under Credit Agreement260,000 500,000 
Borrowings under San Mateo Credit Facility526,000 522,000 
Senior unsecured notes payable1,185,567 1,184,627 
Asset retirement obligations90,361 87,485 
Deferred income taxes625,682 581,439 
Other long-term liabilities52,216 38,482 
Total long-term liabilities2,739,826 2,914,033 
Commitments and contingencies (Note 10)
Shareholders’ equity
         Common stock - $0.01 par value, 160,000,000 shares authorized; 124,835,154 and 119,478,282 shares issued;
         and 124,780,297 and 119,458,674 shares outstanding, respectively
1,248 1,194 
Additional paid-in capital2,472,681 2,133,172 
Retained earnings1,946,412 1,776,541 
Treasury stock, at cost, 54,857 and 19,608 shares, respectively
(2,091)(45)
Total Matador Resources Company shareholders’ equity4,418,250 3,910,862 
Non-controlling interest in subsidiaries217,912 216,826 
Total shareholders’ equity4,636,162 4,127,688 
Total liabilities and shareholders’ equity$8,227,329 $7,726,996 




The accompanying notes are an integral part of these financial statements.
3

Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
(In thousands, except per share data)
 Three Months Ended
March 31,
 20242023
Revenues
Oil and natural gas revenues$703,540 $502,909 
Third-party midstream services revenues32,357 26,511 
Sales of purchased natural gas49,446 34,254 
Realized gain on derivatives275 3,669 
Unrealized gain (loss) on derivatives2,075 (7,067)
Total revenues787,693 560,276 
Expenses
Production taxes, transportation and processing70,153 55,486 
Lease operating76,295 44,407 
Plant and other midstream services operating39,623 31,045 
Purchased natural gas39,432 28,448 
Depletion, depreciation and amortization212,311 126,325 
Accretion of asset retirement obligations1,273 699 
General and administrative29,653 22,433 
Total expenses468,740 308,843 
Operating income318,953 251,433 
Other income (expense)
Interest expense(39,562)(16,176)
Other income577 339 
Total other expense(38,985)(15,837)
Income before income taxes279,968 235,596 
Income tax provision (benefit)
Current17,272 4,929 
Deferred49,506 51,743 
Total income tax provision66,778 56,672 
Net income213,190 178,924 
Net income attributable to non-controlling interest in subsidiaries(19,461)(15,794)
Net income attributable to Matador Resources Company shareholders$193,729 $163,130 
Earnings per common share
Basic$1.62 $1.37 
Diluted$1.61 $1.36 
Weighted average common shares outstanding
Basic119,721 119,034 
Diluted120,253 119,702 
The accompanying notes are an integral part of these financial statements.
4


Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED
(In thousands)
For the Three Months Ended March 31, 2024
Total shareholders’ equity attributable to Matador Resources Company
Non-controlling interest in subsidiariesTotal shareholders’ equity
 Common StockAdditional
paid-in capital
Retained earningsTreasury Stock
 SharesAmountSharesAmount
Balance at January 1, 2024119,478 $1,194 $2,133,172 $1,776,541 20 $(45)$3,910,862 $216,826 $4,127,688 
Dividends declared ($0.20 per share)
— — — (23,858)— — (23,858)— (23,858)
Issuance of common stock pursuant to employee stock compensation plan100 1 (11,382)— — — (11,381)— (11,381)
Issuance of common stock pursuant to public offering5,250 53 344,610 — — — 344,663 — 344,663 
Cost to issue equity— — (53)— — — (53)— (53)
Stock-based compensation expense related to equity-based awards including amounts capitalized— — 5,149 — — — 5,149 — 5,149 
Stock options exercised, net of options forfeited in net share settlements7 — — — — — — — — 
Restricted stock forfeited— — — — 35 (2,046)(2,046)— (2,046)
Contribution related to formation of San Mateo, net of tax of $0.3 million (see Note 7)
— — 1,185 — — — 1,185 — 1,185 
Contributions from non-controlling interest owners of less-than-wholly-owned subsidiaries— — — — — — — 7,350 7,350 
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries— — — — — — — (25,725)(25,725)
Current period net income— — — 193,729 — — 193,729 19,461 213,190 
Balance at March 31, 2024124,835 $1,248 $2,472,681 $1,946,412 55 $(2,091)$4,418,250 $217,912 $4,636,162 











The accompanying notes are an integral part of these financial statements.
5





Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED
(In thousands)

For the Three Months Ended March 31, 2023
Total shareholders’ equity attributable to Matador Resources Company
Non-controlling interest in subsidiariesTotal shareholders’ equity
Common StockAdditional
paid-in capital
Retained earningsTreasury Stock
SharesAmountSharesAmount
Balance at January 1, 2023118,953 $1,190 $2,101,999 $1,007,642 5 $(34)$3,110,797 $206,294 $3,317,091 
Dividends declared ($0.15 per share)
— — — (17,768)— — (17,768)— (17,768)
Issuance of common stock pursuant to employee stock compensation plan264 2 (17,592)— — — (17,590)— (17,590)
Stock-based compensation expense related to equity-based awards including amounts capitalized— — 3,894 — — — 3,894 — 3,894 
Stock options exercised, net of options forfeited in net share settlements15 — 12 — — — 12 — 12 
Restricted stock forfeited— — — — 21 (1,236)(1,236)— (1,236)
Contribution related to formation of San Mateo, net of tax of $3.1 million (see Note 7)
— — 11,613 — — — 11,613 — 11,613 
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries— — — — — — — (19,110)(19,110)
Current period net income— — — 163,130 — — 163,130 15,794 178,924 
Balance at March 31, 2023119,232 $1,192 $2,099,926 $1,153,004 26 $(1,270)$3,252,852 $202,978 $3,455,830 








The accompanying notes are an integral part of these financial statements.
6

Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(In thousands)
 Three Months Ended
March 31,
 20242023
Operating activities
Net income$213,190 $178,924 
Adjustments to reconcile net income to net cash provided by operating activities
Unrealized (gain) loss on derivatives(2,075)7,067 
Depletion, depreciation and amortization212,311 126,325 
Accretion of asset retirement obligations1,273 699 
Stock-based compensation expense2,838 2,290 
Deferred income tax provision49,506 51,743 
Amortization of debt issuance cost and other debt-related costs4,644 838 
Other non-cash changes(333) 
Changes in operating assets and liabilities
Accounts receivable(55,519)40,906 
Lease and well equipment inventory(2,044)(4,423)
Prepaid expenses and other current assets(1,474)(16,517)
Other long-term assets254 35 
Accounts payable, accrued liabilities and other current liabilities(4,814)(39,871)
Royalties payable16,522 376 
Advances from joint interest owners17,771 (9,805)
Income taxes payable16,025 723 
Other long-term liabilities487 190 
Net cash provided by operating activities468,562 339,500 
Investing activities
Drilling, completion and equipping capital expenditures(236,639)(224,144)
Acquisition of oil and natural gas properties(202,264)(103,863)
Midstream capital expenditures(105,086)(14,141)
Expenditures for other property and equipment(226)(1,769)
Proceeds from sale of assets900 451 
Net cash used in investing activities(543,315)(343,466)
Financing activities
Repayments of borrowings under Credit Agreement(930,000) 
Borrowings under Credit Agreement690,000  
Repayments of borrowings under San Mateo Credit Facility(65,000)(55,000)
Borrowings under San Mateo Credit Facility69,000 65,000 
Cost to amend credit facilities(11,292)(8,645)
Proceeds from issuance of common stock344,663  
Cost to issue equity(53) 
Dividends paid(23,858)(17,768)
Contributions related to formation of San Mateo1,500 14,700 
Contributions from non-controlling interest owners of less-than-wholly-owned subsidiaries7,350  
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries(25,725)(19,110)
Taxes paid related to net share settlement of stock-based compensation(13,515)(18,909)
Other(289)(204)
Net cash provided by (used in) financing activities42,781 (39,936)
Change in cash and restricted cash(31,972)(43,902)
Cash and restricted cash at beginning of period106,298 547,330 
Cash and restricted cash at end of period$74,326 $503,428 
Supplemental disclosures of cash flow information (Note 11)

The accompanying notes are an integral part of these financial statements.
7

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED
NOTE 1 — NATURE OF OPERATIONS
Matador Resources Company, a Texas corporation (“Matador” and, collectively with its subsidiaries, the “Company”), is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company’s current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, the Company conducts midstream operations primarily through its midstream joint venture, San Mateo Midstream, LLC and its subsidiaries (“San Mateo”), and Pronto Midstream, LLC and its subsidiary (“Pronto”) in support of the Company’s exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates
The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) but do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024 (the “Annual Report”). The Company consolidates certain subsidiaries and joint ventures that are less-than-wholly-owned and are not involved in oil and natural gas exploration, including San Mateo, and the net income and equity attributable to the non-controlling interest in these subsidiaries have been reported separately as required by Accounting Standards Codification, Consolidation (Topic 810). The Company proportionately consolidates certain joint ventures that are less-than-wholly-owned and are involved in oil and natural gas exploration. All intercompany balances and transactions have been eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all normal, recurring adjustments that are necessary for a fair presentation of the Company’s interim unaudited condensed consolidated financial statements as of March 31, 2024. Amounts as of December 31, 2023 are derived from the Company’s audited consolidated financial statements included in the Annual Report.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s interim unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and natural gas revenues, accrued assets and liabilities, stock-based compensation, valuation of derivative instruments, deferred tax assets and liabilities, purchase price allocations and oil and natural gas reserves. The estimates of oil and natural gas reserves quantities and future net cash flows are the basis for the calculations of depletion and impairment of oil and natural gas properties, as well as estimates of asset retirement obligations and certain tax accruals. While the Company believes its estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates.
8

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued
Revenues
The following table summarizes the Company’s total revenues and revenues from contracts with customers on a disaggregated basis for the three months ended March 31, 2024 and 2023 (in thousands).
Three Months Ended
March 31,
20242023
Revenues from contracts with customers$785,343 $563,674 
Realized gain on derivatives275 3,669 
Unrealized gain (loss) on derivatives2,075 (7,067)
Total revenues$787,693 $560,276 
Three Months Ended
March 31,
20242023
Oil revenues$598,514 $401,777 
Natural gas revenues105,026 101,132 
Third-party midstream services revenues32,357 26,511 
Sales of purchased natural gas49,446 34,254 
Total revenues from contracts with customers$785,343 $563,674 

Property and Equipment
The Company uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method, the Company is required to perform a ceiling test each quarter that determines a limit, or ceiling, on the capitalized costs of oil and natural gas properties based primarily on the after-tax estimated future net cash flows from oil and natural gas properties using a 10% discount rate and the arithmetic average of first-day-of-the-month oil and natural gas prices for the prior 12-month period. For each of the three months ended March 31, 2024 and 2023, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary.
The Company capitalized approximately $17.1 million and $12.6 million of its general and administrative costs for the three months ended March 31, 2024 and 2023, respectively. The Company capitalized approximately $5.9 million and $3.4 million of its interest expense for the three months ended March 31, 2024 and 2023, respectively.
Earnings Per Common Share
The Company reports basic earnings attributable to Matador shareholders per common share, which excludes the effect of potentially dilutive securities, and diluted earnings attributable to Matador shareholders per common share, which includes the effect of all potentially dilutive securities unless their impact is anti-dilutive.
The following table sets forth the computation of diluted weighted average common shares outstanding for the three months ended March 31, 2024 and 2023 (in thousands).
 Three Months Ended
March 31,
20242023
Weighted average common shares outstanding
Basic119,721 119,034 
Dilutive effect of options and restricted stock units532 668 
Diluted weighted average common shares outstanding 120,253 119,702 
9

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued
Recent Accounting Pronouncements
Segments. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. This ASU is effective retrospectively for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its disclosures.
Income Taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this standard provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid. This ASU is effective for the Company prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its disclosures.
Climate-Related Disclosures. On March 6, 2024, the SEC adopted a new set of rules that require a wide range of climate-related disclosures, including material climate-related risks, information on any climate-related targets or goals that are material to the registrant’s business, results of operations or financial condition, Scope 1 and Scope 2 greenhouse gas emissions on a phased-in basis by certain larger registrants when those emissions are material and the filing of an attestation report covering the same, and disclosure of the financial statement effects of severe weather events and other natural conditions including costs and losses. Compliance dates under the final rule are phased in by registrant category. Multiple lawsuits have been filed challenging the SEC’s new climate rules, which have been consolidated and will be heard in the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete. The Company is currently evaluating the impact of the final rules on its disclosures.
NOTE 3 — BUSINESS COMBINATIONS
Q1 2024 Acquisition

On February 15, 2024, a wholly-owned subsidiary of the Company acquired oil and natural gas producing properties and undeveloped acreage located in Lea County, New Mexico (the “Q1 2024 Acquisition”). The Q1 2024 Acquisition had an effective date of October 1, 2023 and consideration for the acquisition consisted of an amount in cash equal to approximately $155.1 million (which amount was subject to certain customary post-closing adjustments).
The Q1 2024 Acquisition was accounted for under the acquisition method of accounting as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations (“ASC Topic 805”). Under ASC Topic 805, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values as of the acquisition date, with any excess purchase price allocated to goodwill.
The preliminary allocation of the total purchase price for the Q1 2024 Acquisition is set forth below (in thousands). The Company anticipates that the allocation of the purchase price should be finalized during 2024 upon determination of the final purchase price adjustments.
10

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 3 — BUSINESS COMBINATIONS — Continued
Consideration Allocation
Cash consideration given$155,054 
Allocation of purchase price
Current assets$4,984 
Oil and natural gas properties
Evaluated45,778
Unproved and unevaluated105,446
Asset retirement obligations(1,154)
Net assets acquired$155,054 
The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation.
Significant inputs to the valuation of oil and gas properties include estimates of: (i) future production volumes, (ii) future commodity prices and (iii) recent market comparable transactions for unproved acreage. These inputs require significant judgments and estimates and are the most sensitive and subject to change.
The results of operations for the Q1 2024 Acquisition since the closing date have been included in the Company’s interim unaudited condensed consolidated financial statements for the three months ended March 31, 2024. The pro forma impact of this business combination to revenues and net income for 2024 would not be material to the Company’s 2024 revenues and net income as reported.
Advance Acquisition
On April 12, 2023, a wholly-owned subsidiary of the Company completed the acquisition of Advance Energy Partners Holdings, LLC (“Advance”) from affiliates of EnCap Investments L.P., including certain oil and natural gas producing properties, undeveloped acreage and midstream assets located primarily in Lea County, New Mexico and Ward County, Texas (the “Initial Advance Acquisition”). The Initial Advance Acquisition had an effective date of January 1, 2023 and an aggregate purchase price consisting of (i) an amount in cash equal to approximately $1.60 billion (which amount was subject to certain customary post-closing adjustments) (the “Cash Consideration”) and (ii) potential additional cash consideration of $7.5 million for each month of 2023 in which the average oil price (as defined in the securities purchase agreement) exceeded $85 per barrel (all such payments for the 12 months in 2023, the “Contingent Consideration”). The Cash Consideration was paid upon the closing of the Initial Advance Acquisition and was funded by a combination of cash on hand and borrowings under the Company’s reserves-based revolving credit facility (the “Credit Agreement”). In the fourth quarter of 2023, the Company paid Contingent Consideration of $15.0 million, as the average oil price for the months of September and October 2023 exceeded $85 per barrel.
On December 1, 2023, the Company acquired additional interests from affiliates of EnCap Investments L.P., including overriding royalty interests and royalty interests in certain oil and natural gas properties located primarily in Lea County, New Mexico, most of which were included in the Initial Advance Acquisition (the “Advance Royalty Acquisition”). The Advance Royalty Acquisition had an effective date of October 1, 2023 and an aggregate purchase price of approximately $81.0 million (which amount is subject to certain customary post-closing adjustments), and was funded by cash on hand.
The Initial Advance Acquisition and Advance Royalty Acquisition (collectively, the “Advance Acquisition”) were accounted for under the acquisition method of accounting as a business combination in accordance with ASC Topic 805. Under ASC Topic 805, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values as of the respective acquisition dates, with any excess purchase price allocated to goodwill. The Advance Acquisition was treated as an asset acquisition for tax purposes, as the Company acquired 100% of the membership interests of Advance in the Initial Advance Acquisition and acquired additional overriding royalty interests and royalty interests in the Advance Royalty Acquisition.
11

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 3 — BUSINESS COMBINATIONS — Continued
The final allocation of the total purchase price for the Advance Acquisition is set forth below (in thousands).
Consideration Allocation
Cash$1,676,132 
Working capital adjustments(4,060)
Fair value of Contingent Consideration at April 12, 202321,151
Total consideration given$1,693,223 
Allocation of purchase price
Current assets$79,287 
Oil and natural gas properties
Evaluated1,418,668
Unproved and unevaluated213,835
Midstream assets63,644
Current liabilities(73,885)
Asset retirement obligations(8,326)
Net assets acquired$1,693,223 

NOTE 4 — ASSET RETIREMENT OBLIGATIONS
The following table summarizes the changes in the Company’s asset retirement obligations for the three months ended March 31, 2024 (in thousands).
Beginning asset retirement obligations$92,090 
Liabilities incurred during period2,326 
Divestitures during period(326)
Accretion expense1,273 
Ending asset retirement obligations95,363 
Less: current asset retirement obligations(1)
(5,002)
Long-term asset retirement obligations$90,361 
 _______________
(1)Included in accrued liabilities in the Company’s interim unaudited condensed consolidated balance sheet at March 31, 2024.
NOTE 5 — DEBT
At March 31, 2024, the Company had (i) $699.2 million of outstanding senior notes due 2026 (the “2026 Notes”), (ii) $500.0 million of outstanding senior notes due 2028 (the “2028 Notes”), (iii) $260.0 million in borrowings outstanding under the Credit Agreement and (iv) approximately $41.7 million in outstanding letters of credit issued pursuant to the Credit Agreement. Between March 31, 2024 and April 23, 2024, the Company (i) repurchased an aggregate principal amount of approximately $556.3 million of the 2026 Notes pursuant to the Company’s cash tender offer for the 2026 Notes announced on March 26, 2024 (the “2026 Notes Tender Offer”), (ii) exercised its optional right, under the indenture governing the 2026 Notes, to redeem the remaining aggregate principal amount of approximately $142.9 million of 2026 Notes outstanding on September 15, 2024 (the “2026 Notes Redemption”) and, in connection therewith, to satisfy and discharge the Company’s obligations under such indenture with respect to the 2026 Notes and (iii) repaid $235.0 million in borrowings outstanding under the Credit Agreement. See Note 13 for a further discussion of changes in the Company’s debt between March 31, 2024 and April 23, 2024.
12

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 5 — DEBT — Continued
At March 31, 2024, San Mateo had $526.0 million in borrowings outstanding under its revolving credit facility (the “San Mateo Credit Facility”) and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between March 31, 2024 and April 23, 2024, San Mateo repaid $31.0 million of borrowings under the San Mateo Credit Facility.
Credit Agreements
MRC Energy Company
The borrowing base under the Credit Agreement is determined semi-annually as of May 1 and November 1 by the lenders based primarily on the estimated value of the Company’s proved oil and natural gas reserves at December 31 and June 30 of each year, respectively. The Company and the lenders may each request an unscheduled redetermination of the borrowing base once between scheduled redetermination dates. On March 22, 2024, the Company and its lenders entered into an amendment to the Fourth Amended and Restated Credit Agreement, which amended the Credit Agreement to, among other things: (i) reaffirm the borrowing base at $2.50 billion, (ii) increase the elected borrowing commitments from $1.325 billion to $1.50 billion, (iii) increase the maximum facility amount from $2.00 billion to $3.50 billion, (iv) extend the maturity date from October 31, 2026 to March 22, 2029, (v) appoint PNC Bank, National Association as administrative agent thereunder and (vi) add five new banks to the lending group. This March 2024 reaffirmation of the borrowing base constituted the regularly scheduled May 1 redetermination.
The Credit Agreement requires the Company to maintain (i) a current ratio, which is defined as (x) total consolidated current assets plus the unused availability under the Credit Agreement divided by (y) total consolidated current liabilities less current maturities under the Credit Agreement, of not less than 1.0 to 1.0 at the end of each fiscal quarter and (ii) a debt to EBITDA ratio, which is defined as debt outstanding (net of cash or cash equivalents of up to the greater of (a) $150.0 million and (b) 10% of the elected commitment), divided by a rolling four quarter EBITDA calculation, of 3.5 to 1.0 or less. The Company believes that it was in compliance with the terms of the Credit Agreement at March 31, 2024.
San Mateo Midstream, LLC
The San Mateo Credit Facility is non-recourse with respect to Matador and its wholly-owned subsidiaries but is guaranteed by San Mateo’s subsidiaries and secured by substantially all of San Mateo’s assets, including real property. The outstanding borrowings under the San Mateo Credit Facility mature on December 9, 2026, and lender commitments under the facility were $535.0 million at March 31, 2024. The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in lender commitments of up to $735.0 million.
The San Mateo Credit Facility requires San Mateo to maintain a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.0 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo’s consolidated interest expense for such period, of 2.5 or more. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo’s liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility. The Company believes that San Mateo was in compliance with the terms of the San Mateo Credit Facility at March 31, 2024.
Senior Unsecured Notes
At March 31, 2024, the Company had $699.2 million of outstanding 2026 Notes, which had a 5.875% coupon rate. The 2026 Notes were jointly and severally guaranteed on a senior unsecured basis by certain subsidiaries of the Company (the “Guarantor Subsidiaries”). Neither San Mateo nor Pronto was a guarantor of the 2026 Notes.
At March 31, 2024, the Company had $500.0 million of outstanding 2028 Notes, which have a 6.875% coupon rate. The 2028 Notes mature April 15, 2028, and interest is payable on the 2028 Notes semi-annually in arrears on each April 15 and October 15. The 2028 Notes are jointly and severally guaranteed on a senior unsecured basis by the Guarantor Subsidiaries. Neither San Mateo nor Pronto is a guarantor of the 2028 Notes.
See Note 13 for a discussion of changes in the Company’s debt between March 31, 2024 and April 23, 2024.
13

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 5 — DEBT — Continued
Debt Maturities
The outstanding borrowings of $260.0 million at March 31, 2024 under the Credit Agreement mature on March 22, 2029. The outstanding borrowings of $526.0 million at March 31, 2024 under the San Mateo Credit Facility mature on December 9, 2026. The $699.2 million of outstanding 2026 Notes at March 31, 2024 were set to mature on September 15, 2026. The $500.0 million of outstanding 2028 Notes at March 31, 2024 mature on April 15, 2028.
NOTE 6 — INCOME TAXES
The Company recorded a current income tax provision of $17.3 million and a deferred income tax provision of $49.5 million for the three months ended March 31, 2024. For the three months ended March 31, 2023, the Company recorded a current income tax provision of $4.9 million and a deferred income tax provision of $51.7 million.
The Company’s effective income tax rate of 26% for each of the three months ended March 31, 2024 and 2023 differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico.
NOTE 7 — EQUITY
Equity Offering
On March 28, 2024, the Company completed an underwritten public offering of 5,250,000 shares of its common stock. After deducting underwriting discounts and offering expenses, the Company received net proceeds of approximately $344.2 million. The net proceeds from this offering were used for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under the Credit Agreement.
Stock-based Compensation
During the three months ended March 31, 2024, the Company granted awards to certain of its employees of 135,000 service-based restricted stock units to be settled in cash, which are liability instruments, and 170,000 performance-based stock units and 99,600 service-based shares of restricted stock, which are equity instruments. The performance-based stock units vest in an amount between zero and 200% of the target units granted based on the Company’s relative total shareholder return over the three-year period ending December 31, 2026, as compared to a designated peer group. The service-based restricted stock and restricted stock units vest over a three-year period. The fair value of these awards was approximately $22.8 million on the grant date.
Common Stock Dividend
Matador’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.20 per share of common stock in February 2024. The dividend, which totaled $23.9 million, was paid on March 13, 2024 to shareholders of record as of February 23, 2024. On April 17, 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on June 7, 2024 to shareholders of record as of May 17, 2024.
San Mateo Distributions and Contributions
During the three months ended March 31, 2024, San Mateo distributed $26.8 million to the Company and $25.7 million to a subsidiary of Five Point Energy LLC (“Five Point”), the Company’s joint venture partner in San Mateo. During the three months ended March 31, 2023, San Mateo distributed $19.9 million to the Company and $19.1 million to Five Point. During the three months ended March 31, 2024, the Company contributed $7.7 million and Five Point contributed $7.4 million of cash to San Mateo. During the three months ended March 31, 2023, there were no contributions to San Mateo by either the Company or Five Point.
Performance Incentives
Five Point paid the Company $1.5 million and $14.7 million of performance incentives during the three months ended March 31, 2024 and 2023, respectively. These performance incentives are recorded when received, net of the $0.3 million and $3.1 million deferred tax impact to Matador for the three months ended March 31, 2024 and 2023, respectively, in “Additional paid-in capital” in the Company’s interim unaudited condensed consolidated balance sheets. These performance incentives for the three months ended March 31, 2024 and 2023 are also denoted as “Contributions related to formation of San Mateo” under “Financing activities” in the Company’s interim unaudited condensed consolidated statements of cash flows and changes in shareholders’ equity.
14

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 8 — DERIVATIVE FINANCIAL INSTRUMENTS
At March 31, 2024, the Company had natural gas basis differential swap contracts open and in place to mitigate its exposure to natural gas price volatility, with a specific term (calculation period), notional quantity (volume hedged) and fixed price. The Company had no open contracts associated with oil or natural gas liquids prices at March 31, 2024.
The following is a summary of the Company’s open basis differential swap contracts at March 31, 2024.
CommodityCalculation PeriodNotional Quantity (MMBtu)Fixed Price
($/MMBtu)
Fair Value of
Asset
(Liability)
(thousands)
Natural Gas Basis Differential4/01/2024 - 12/31/202519,200,000 $(0.59)$4,745 
Total open basis differential swap contracts$4,745 
The Company’s derivative financial instruments are subject to master netting arrangements, and the Company’s counterparties allow for cross-commodity master netting provided the settlement dates for the commodities are the same. The Company does not present different types of commodities with the same counterparty on a net basis in its interim unaudited condensed consolidated balance sheets.
The following table presents the gross asset and liability fair values of the Company’s commodity price derivative financial instruments and the location of these balances in the interim unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 (in thousands).
Derivative InstrumentsGross
amounts
recognized
Gross amounts
netted in the condensed
consolidated
balance sheets
Net amounts presented in the condensed
consolidated
balance sheets
March 31, 2024
Current assets$3,739 $(712)$3,027 
Other assets$1,798 (80)1,718 
Total$5,537 $(792)$4,745 
December 31, 2023
Current assets$2,573 $(461)$2,112 
Other assets1,743 (1,185)558 
Total$4,316 $(1,646)$2,670 
The following table summarizes the location and aggregate gain (loss) of all derivative financial instruments recorded in the interim unaudited condensed consolidated statements of income for the periods presented (in thousands).
 Three Months Ended
March 31,
Type of InstrumentLocation in Condensed Consolidated 
Statement of Income
20242023
Derivative Instrument
Natural GasRevenues: Realized gain on derivatives$275 $3,669 
Realized gain on derivatives$275 $3,669 
Natural GasRevenues: Unrealized gain (loss) on derivatives2,075 (7,067)
Unrealized gain (loss) on derivatives2,075 (7,067)
Total$2,350 $(3,398)
15

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 9 — FAIR VALUE MEASUREMENTS
The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements are classified and disclosed in one of the following categories.
Level 1    Unadjusted quoted prices for identical, unrestricted assets or liabilities in active markets.
Level 2    Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that are valued with industry standard models that consider various inputs, including: (i) quoted forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument and can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace.
Level 3    Unobservable inputs that are not corroborated by market data that reflect a company’s own market assumptions.
Financial and non-financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.
The following tables summarize the valuation of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis in accordance with the classifications provided above as of March 31, 2024 and December 31, 2023 (in thousands).
 
Fair Value Measurements at
 March 31, 2024 using
DescriptionLevel 1Level 2Level 3Total
Assets (Liabilities)
Natural gas basis differential swaps$ $4,745 $ $4,745 
Total$ $4,745 $ $4,745 
 
Fair Value Measurements at
December 31, 2023 using
DescriptionLevel 1Level 2Level 3Total
Assets (Liabilities)
Natural gas basis differential swaps$ $2,670 $ $2,670 
Total$ $2,670 $ $2,670 

Additional disclosures related to derivative financial instruments are provided in Note 8.
Other Fair Value Measurements
At March 31, 2024 and December 31, 2023, the carrying values reported on the interim unaudited condensed consolidated balance sheets for accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, royalties payable, amounts due to affiliates, advances from joint interest owners and other current liabilities approximated their fair values due to their short-term maturities.
At March 31, 2024 and December 31, 2023, the carrying value of borrowings under the Credit Agreement and the San Mateo Credit Facility approximated their fair value as both are subject to short-term floating interest rates that reflect market rates available to the Company at the time and are classified at Level 2 in the fair value hierarchy.
At March 31, 2024 and December 31, 2023, the fair value of the 2026 Notes was $699.5 million and $694.1 million, respectively, based on quoted market prices, which represent Level 1 inputs in the fair value hierarchy.
16

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 9 — FAIR VALUE MEASUREMENTS — Continued
At March 31, 2024, and December 31, 2023, the fair value of the 2028 Notes was $511.3 million and $510.9 million, respectively, based on quoted market prices, which represent Level 1 inputs in the fair value hierarchy.
Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets and liabilities acquired in a business combination, lease and well equipment inventory when the market value is determined to be lower than the cost of the inventory and other property and equipment that are reduced to fair value when they are impaired or held for sale. See Note 3 for discussion of the fair value measurement of assets acquired and liabilities assumed as part of the Q1 2024 Acquisition and the Advance Acquisition.
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Processing, Transportation and Produced Water Disposal Commitments
Firm Commitments
From time to time, the Company enters into agreements with third parties whereby the Company commits to deliver anticipated natural gas and oil production and produced water from certain portions of its acreage for transportation, gathering, processing, fractionation, sales and disposal. The Company paid approximately $15.3 million and $10.7 million for deliveries under these agreements during the three months ended March 31, 2024 and 2023, respectively. Certain of these agreements contain minimum volume commitments. If the Company does not meet the minimum volume commitments under these agreements, it will be required to pay certain deficiency fees. If the Company ceased operations in the areas subject to these agreements at March 31, 2024, the total deficiencies required to be paid by the Company under these agreements would be approximately $537.0 million.
San Mateo Commitments
The Company dedicated to San Mateo its current and certain future leasehold interests in the Rustler Breaks asset area and the Wolf portion of the West Texas asset area and acreage in the southern portion of the Arrowhead asset area (the “Greater Stebbins Area”) and the Stateline asset area pursuant to 15-year, fixed-fee oil transportation, oil, natural gas and produced water gathering and produced water disposal agreements. In addition, the Company dedicated to San Mateo its current and certain future leasehold interests in the Rustler Breaks asset area and acreage in the Greater Stebbins Area and Stateline asset area pursuant to 15-year, fixed-fee natural gas processing agreements (collectively with the transportation, gathering and produced water disposal agreements, the “Operational Agreements”). San Mateo provides the Company with firm service under each of the Operational Agreements in exchange for certain minimum volume commitments. The remaining minimum contractual obligation under the Operational Agreements at March 31, 2024 was approximately $191.3 million.
Legal Proceedings
The Company is a party to several legal proceedings encountered in the ordinary course of its business. While the ultimate outcome and impact on the Company cannot be predicted with certainty, in the opinion of management, it is remote that these legal proceedings will have a material adverse impact on the Company’s financial condition, results of operations or cash flows.


17

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 11 — SUPPLEMENTAL DISCLOSURES
Accrued Liabilities
The following table summarizes the Company’s current accrued liabilities at March 31, 2024 and December 31, 2023 (in thousands).
March 31,
2024
December 31,
2023
Accrued evaluated and unproved and unevaluated property costs$219,651 $144,443 
Accrued midstream properties costs36,898 55,195 
Accrued lease operating expenses69,034 62,005 
Accrued interest on debt20,092 22,857 
Accrued asset retirement obligations5,002 4,605 
Accrued partners’ share of joint interest charges37,404 42,101 
Accrued payable related to purchased natural gas8,273 10,400 
Other23,437 24,242 
Total accrued liabilities$419,791 $365,848 

Supplemental Cash Flow Information
The following table provides supplemental disclosures of cash flow information for the three months ended March 31, 2024 and 2023 (in thousands).
 Three Months Ended
March 31,
 20242023
Cash paid for interest expense, net of amounts capitalized$42,697 $26,228 
Increase in asset retirement obligations related to mineral properties$1,846 $159 
Increase in asset retirement obligations related to midstream properties$154 $352 
Increase in liabilities for drilling, completion and equipping capital expenditures$115,386 $69,593 
Increase (decrease) in liabilities for acquisition of oil and natural gas properties$200 $(121)
Decrease in liabilities for midstream properties capital expenditures$(18,311)$(1,099)
Stock-based compensation expense recognized as a liability$5,539 $1,026 
Transfer of inventory (to) from oil and natural gas properties$(3,149)$433 

The following table provides a reconciliation of cash and restricted cash recorded in the interim unaudited condensed consolidated balance sheets to cash and restricted cash as presented on the interim unaudited condensed consolidated statements of cash flows (in thousands).
 Three Months Ended
March 31,
 20242023
Cash$23,208 $448,723 
Restricted cash51,118 54,705 
Total cash and restricted cash$74,326 $503,428 
18

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED


NOTE 12 — SEGMENT INFORMATION
The Company operates in two business segments: (i) exploration and production and (ii) midstream. The exploration and production segment is engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States and is currently focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. The midstream segment conducts midstream operations in support of the Company’s exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties. The majority of the Company’s midstream operations in the Rustler Breaks, West Texas and Stateline asset areas and the Greater Stebbins Area in the Delaware Basin are conducted through San Mateo. In addition, at March 31, 2024, the Company operated a cryogenic gas processing plant, compressor stations and natural gas gathering pipelines in Lea and Eddy Counties, New Mexico through Pronto, which is a wholly-owned subsidiary of the Company. At March 31, 2024, neither San Mateo nor Pronto was a guarantor of the 2026 Notes or the 2028 Notes.
The following tables present selected financial information for the periods presented regarding the Company’s business segments on a stand-alone basis, corporate expenses that are not allocated to a segment and the consolidation and elimination entries necessary to arrive at the financial information for the Company on a consolidated basis (in thousands). On a consolidated basis, midstream services revenues consist primarily of those revenues from midstream operations related to third parties, including working interest owners in the Company’s operated wells. All midstream services revenues associated with Company-owned production are eliminated in consolidation. In evaluating the operating results of the exploration and production and midstream segments, the Company does not allocate certain expenses to the individual segments, including general and administrative expenses. Such expenses are reflected in the column labeled “Corporate.”
Exploration and ProductionConsolidations and EliminationsConsolidated Company
MidstreamCorporate
Three Months Ended March 31, 2024
Oil and natural gas revenues$701,425 $2,694 $ $(579)$703,540 
Midstream services revenues 99,846  (67,489)32,357 
Sales of purchased natural gas5,078 44,368   49,446 
Realized gain on derivatives275    275 
Unrealized gain on derivatives2,075    2,075 
Expenses(1)
416,498 94,138 26,172 (68,068)468,740 
Operating income(2)
$292,355 $52,770 $(26,172)$ $318,953 
Total assets$6,836,353 $1,333,992 $56,984 $ $8,227,329 
Capital expenditures(3)
$551,920 $86,412 $226 $ $638,558 
_____________________
(1)Includes depletion, depreciation and amortization expenses of $201.2 million and $10.8 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $0.3 million.
(2)Includes $19.5 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment.
(3)Includes $201.3 million attributable to land and seismic acquisition expenditures related to the exploration and production segment and $7.1 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment.
19

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED
NOTE 12 — SEGMENT INFORMATION — Continued
Exploration and ProductionConsolidations and EliminationsConsolidated Company
MidstreamCorporate
Three Months Ended March 31, 2023
Oil and natural gas revenues$501,348 $1,561 $ $ $502,909 
Midstream services revenues 75,251  (48,740)26,511 
Sales of purchased natural gas5,830 28,424   34,254 
Realized gain on derivatives3,669    3,669 
Unrealized loss on derivatives(7,067)   (7,067)
Expenses(1)
267,580 69,849 20,154 (48,740)308,843 
Operating income(2)
$236,200 $35,387 $(20,154)$ $251,433 
Total assets$4,266,414 $1,039,845 $475,846 $ $5,782,105 
Capital expenditures(3)
$318,505 $13,280 $1,769 $ $333,554 
_____________________
(1)Includes depletion, depreciation and amortization expenses of $116.6 million and $9.4 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $0.3 million.
(2)Includes $15.8 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment.
(3)Includes $23.7 million attributable to land and seismic acquisition expenditures related to the exploration and production segment and $4.6 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment.





20

Matador Resources Company and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
UNAUDITED — CONTINUED

NOTE 13 — SUBSEQUENT EVENTS
2026 Notes Tender Offer and Redemption
On April 2 and April 4, 2024, the Company completed the repurchase of an aggregate principal amount of approximately $556.3 million of the 2026 Notes outstanding as part of the 2026 Notes Tender Offer announced on March 26, 2024. On April 2, 2024, the Company exercised its optional right, under the indenture governing the 2026 Notes, to redeem the remaining aggregate principal amount of approximately $142.9 million of 2026 Notes outstanding on September 15, 2024 as part of the 2026 Notes Redemption and, in connection therewith, to satisfy and discharge the Company’s obligations under such indenture with respect to the 2026 Notes. In connection with the 2026 Notes Tender Offer and 2026 Notes Redemption, the Company incurred a loss of approximately $3.0 million.
2032 Senior Notes
On April 2, 2024, the Company completed the sale of $900.0 million in aggregate principal amount of the Company’s 6.50% senior notes due 2032 (the “2032 Notes”). The 2032 Notes mature on April 15, 2032. Interest on the 2032 Notes is payable in arrears on each April 15 and October 15 and the first interest payment date for the 2032 Notes will be October 15, 2024. The 2032 Notes are guaranteed on a senior unsecured basis by the Guarantor Subsidiaries. Neither San Mateo nor Pronto is a guarantor of the 2032 Notes.
The Company received net proceeds from the issuance and sale of the 2032 Notes (the “2032 Notes Offering”) of approximately $885.0 million after deducting the initial purchasers’ discounts and estimated offering expenses. The net proceeds from the 2032 Notes Offering were used to fund the 2026 Notes Tender Offer and 2026 Notes Redemption and for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under the Credit Agreement.
At April 23, 2024, the Company had (i) $500.0 million of outstanding 2028 Notes, (ii) $900.0 million of outstanding 2032 Notes, (iii) $25.0 million of borrowings outstanding under the Credit Agreement and (iv) approximately $52.6 million in outstanding letters of credit issued pursuant to the Credit Agreement.


21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes thereto contained herein and the consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024, along with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report. The Annual Report is accessible on the SEC’s website at www.sec.gov and on our website at www.matadorresources.com. Our discussion and analysis includes forward-looking information that involves risks and uncertainties and should be read in conjunction with the “Risk Factors” section of the Annual Report and the section entitled “Cautionary Note Regarding Forward-Looking Statements” below for information about the risks and uncertainties that could cause our actual results to be materially different than our forward-looking statements.
In this Quarterly Report on Form 10-Q (this “Quarterly Report”), (i) references to “we,” “our” or the “Company” refer to Matador Resources Company and its subsidiaries as a whole (unless the context indicates otherwise), (ii) references to “Matador” refer solely to Matador Resources Company, (iii) references to “San Mateo” refer to San Mateo Midstream, LLC, collectively with its subsidiaries, (iv) references to “Pronto” refer to Pronto Midstream, LLC together with its subsidiary, (v) references to “Advance” refer to Advance Energy Partners Holdings, LLC and (vi) references to the “Advance Acquisition” refer to the acquisition of Advance from affiliates of EnCap Investments L.P., including certain oil and natural gas producing properties, undeveloped acreage and midstream assets located primarily in Lea County, New Mexico and Ward County, Texas, that was completed by a subsidiary of the Company on April 12, 2023, and the acquisition of additional interests from affiliates of EnCap Investments L.P., including overriding royalty interests and royalty interests in certain oil and natural gas properties located primarily in Lea County, New Mexico on December 1, 2023. For certain oil and natural gas terms used in this Quarterly Report, please see the “Glossary of Oil and Natural Gas Terms” included with the Annual Report.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future by us or on our behalf. Such statements are generally identifiable by the terminology used such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecasted,” “hypothetical,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “would” or other similar words, although not all forward-looking statements contain such identifying words.
By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include those described in the “Risk Factors” section of the Annual Report, as well as the following factors, among others: general economic conditions; our ability to execute our business plan, including whether our drilling program is successful; changes in oil, natural gas and natural gas liquids (“NGL”) prices and the demand for oil, natural gas and NGLs; our ability to replace reserves and efficiently develop current reserves; the operating results of our midstream business’s oil, natural gas and water gathering and transportation systems, pipelines and facilities, the acquiring of third-party business and the drilling of any additional salt water disposal wells; costs of operations; delays and other difficulties related to producing oil, natural gas and NGLs; delays and other difficulties related to regulatory and governmental approvals and restrictions; impact on our operations due to seismic events; availability of sufficient capital to execute our business plan, including from future cash flows, available borrowing capacity under our revolving credit facilities and otherwise; our ability to make acquisitions on economically acceptable terms; our ability to integrate acquisitions; the operating results of and availability of any potential distributions from our joint ventures; weather and environmental conditions; disruption from our acquisitions making it more difficult to maintain business and operational relationships; significant transaction costs associated with our acquisitions; the risk of litigation and/or regulatory actions related to our acquisitions; and the other factors discussed below and elsewhere in this Quarterly Report and in other documents that we file with or furnish to the SEC, all of which are difficult to predict. Forward-looking statements may include statements about:
our business strategy;
our estimated future reserves and the present value thereof, including whether or not a full-cost ceiling impairment could be realized;
our cash flows and liquidity;
the amount, timing and payment of dividends, if any;
our financial strategy, budget, projections and operating results;
the supply and demand of oil, natural gas and NGLs;
22

oil, natural gas and NGL prices, including our realized prices thereof;
the timing and amount of future production of oil and natural gas;
the availability of drilling and production equipment;
the availability of oil storage capacity;
the availability of oil field labor;
the amount, nature and timing of capital expenditures, including future exploration and development costs;
the availability and terms of capital;
our drilling of wells;
our ability to negotiate and consummate acquisition and divestiture opportunities;
the integration of acquisitions with our business;
government regulation and taxation of the oil and natural gas industry;
our marketing of oil and natural gas;
our exploitation projects or property acquisitions;
the ability of our midstream business to construct, maintain and operate midstream pipelines and facilities, including the operation of cryogenic natural gas processing plants and the drilling of additional salt water disposal wells;
the ability of our midstream business to attract third-party volumes;
our costs of exploiting and developing our properties and conducting other operations;
general economic conditions;
competition in the oil and natural gas industry, including in both the exploration and production and midstream segments;
the effectiveness of our risk management and hedging activities;
our technology;
environmental liabilities;
our initiatives and efforts relating to environmental, social and governance matters;
counterparty credit risk;
geopolitical instability and developments in oil-producing and natural gas-producing countries;
our future operating results;
the impact of the Inflation Reduction Act of 2022; and
our plans, objectives, expectations and intentions contained in this Quarterly Report or in our other filings with the SEC that are not historical.
Although we believe that the expectations conveyed by the forward-looking statements in this Quarterly Report are reasonable based on information available to us on the date hereof, no assurances can be given as to future results, levels of activity, achievements or financial condition.
You should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We undertake no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.
Overview
We are an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Our current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. We also operate in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, we conduct midstream operations in support of our exploration, development and production operations and provide natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.
23

First Quarter Highlights
For the three months ended March 31, 2024, our total oil equivalent production was 13.6 million BOE, and our average daily oil equivalent production was 149,760 BOE per day, of which 84,777 Bbl per day, or 57%, was oil and 389.9 MMcf per day, or 43%, was natural gas. Our average daily oil production of 84,777 Bbl per day for the three months ended March 31, 2024 increased 44% year-over-year from 58,941 Bbl per day for the three months ended March 31, 2023. Our average daily natural gas production of 389.9 MMcf per day for the three months ended March 31, 2024 increased 36% year-over-year from 286.3 MMcf per day for the three months ended March 31, 2023.
For the first quarter of 2024, we reported net income attributable to Matador shareholders of $193.7 million, or $1.61 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of $163.1 million, or $1.36 per diluted common share, for the first quarter of 2023. For the first quarter of 2024, our Adjusted EBITDA, a non-GAAP financial measure, was $505.4 million, as compared to Adjusted EBITDA of $365.2 million during the first quarter of 2023.
For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income and net cash provided by operating activities, see “—Liquidity and Capital Resources—Non-GAAP Financial Measures.” For more information regarding our financial results for the three months ended March 31, 2024, see “—Results of Operations” below.
Operations Update
We began 2024 operating seven drilling rigs in the Delaware Basin. We added an eighth operated drilling rig in the first quarter of 2024. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors.
Our average daily oil equivalent production in the Delaware Basin for the first quarter of 2024 was 144,700 BOE per day, consisting of 83,900 Bbl of oil per day and 364.7 MMcf of natural gas per day, a 43% increase from 101,100 BOE per day, consisting of 58,200 Bbl of oil per day and 257.3 MMcf of natural gas per day, in the first quarter of 2023. These increases were primarily attributable to the Advance Acquisition and the increased number of wells being operated by us and other operators (where we own a working interest). The Delaware Basin contributed approximately 99% of our daily oil production and approximately 94% of our daily natural gas production in the first quarter of 2024, as compared to approximately 99% of our daily oil production and approximately 90% of our daily natural gas production in the first quarter of 2023.
In March 2024 we completed our natural gas pipeline connections between Pronto and San Mateo and between Pronto and Matador’s acreage obtained in the Advance Acquisition. These connector pipelines will provide further flow assurance and options for Matador and third-party customer natural gas.
At March 31, 2024, Pronto’s midstream system included a cryogenic natural gas processing plant with a designed inlet processing capacity of 60 MMcf per day (the “Marlan Processing Plant”), four compressor stations and approximately 110 miles of natural gas gathering pipelines in Eddy and Lea Counties, New Mexico, spanning from the northeastern portion of the Arrowhead asset area into the Ranger asset area. Pronto has begun construction on an additional natural gas processing plant with a designed inlet processing capacity of 200 MMcf per day, including a nitrogen rejection unit and additional related facilities, to expand the Marlan Processing Plant.
Capital Resources Update
In February 2024, Matador’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.20 per share of common stock, which was paid on March 13, 2024 to shareholders of record as of February 23, 2024. On April 17, 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on June 7, 2024 to shareholders of record as of May 17, 2024.
On March 22, 2024, we and our lenders entered into an amendment to the Fourth Amended and Restated Credit Agreement, which amended our reserves-based revolving credit facility (the “Credit Agreement”) to, among other things: (i) reaffirm the borrowing base at $2.50 billion, (ii) increase the elected borrowing commitments from $1.325 billion to $1.50 billion, (iii) increase the maximum facility amount from $2.00 billion to $3.50 billion, (iv) extend the maturity date from October 31, 2026 to March 22, 2029, (v) appoint PNC Bank, National Association as administrative agent thereunder and (vi) add five new banks to the lending group. This March 2024 reaffirmation of the borrowing base constituted the regularly scheduled May 1 redetermination.
On March 28, 2024, we completed an underwritten public offering of 5,250,000 shares of our common stock (the “2024 Equity Offering”). After deducting underwriting discounts and offering expenses, we received net proceeds of approximately $344.2 million. The net proceeds from the 2024 Equity Offering were used for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under our Credit Agreement.
24

At March 31, 2024, we had (i) $260.0 million in borrowings outstanding under our Credit Agreement, (ii) approximately $41.7 million in outstanding letters of credit issued pursuant to the Credit Agreement, (iii) $699.2 million of outstanding 5.875% senior notes due 2026 (the “2026 Notes”) and (iv) $500.0 million of outstanding 6.875% senior notes due 2028 (the “2028 Notes”).
On April 2 and April 4, 2024, we completed the repurchase of an aggregate principal amount of approximately $556.3 million of the 2026 Notes outstanding as part of our cash tender offer announced on March 26, 2024 (the “2026 Notes Tender Offer”). On April 2, 2024, we exercised our optional right, under the indenture governing the 2026 Notes, to redeem the remaining aggregate principal amount of approximately $142.9 million of 2026 Notes outstanding on September 15, 2024 (the “2026 Notes Redemption”) and, in connection therewith, to satisfy and discharge the Company’s obligations under such indenture with respect to the 2026 Notes.
On April 2, 2024, we completed the sale of $900.0 million in aggregate principal amount of the Company’s 6.50% senior notes due 2032 (the “2032 Notes”). We used the net proceeds from the sale of the 2032 Notes (the “2032 Notes Offering”) of approximately $885.0 million, after deducting the initial purchasers’ discounts and estimated offering expenses, to fund the 2026 Notes Tender Offer and 2026 Notes Redemption and for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under our Credit Agreement.
At April 23, 2024, we had (i) $500.0 million of outstanding 2028 Notes, (ii) $900.0 million of outstanding 2032 Notes, (iii) $25.0 million of borrowings outstanding under the Credit Agreement and (iv) approximately $52.6 million in outstanding letters of credit issued pursuant to the Credit Agreement.
At March 31, 2024, San Mateo had $526.0 million in borrowings outstanding under San Mateo’s revolving credit facility (the “San Mateo Credit Facility”) and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between March 31, 2024 and April 23, 2024, San Mateo repaid $31.0 million of borrowings under the San Mateo Credit Facility.
Critical Accounting Policies
There have been no changes to our critical accounting policies and estimates from those set forth in the Annual Report.
Recent Accounting Pronouncements
See Note 2 to the interim unaudited condensed consolidated financial statements for a description of recent accounting pronouncements.
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Results of Operations
Revenues
The following table summarizes our unaudited revenues and production data for the periods indicated:
 Three Months Ended
March 31,
 20242023
Operating Data
Revenues (in thousands)(1)
Oil$598,514 $401,777 
Natural gas105,026 101,132 
Total oil and natural gas revenues703,540 502,909 
Third-party midstream services revenues32,357 26,511 
Sales of purchased natural gas49,446 34,254 
Realized gain on derivatives275 3,669 
Unrealized gain (loss) on derivatives2,075 (7,067)
Total revenues$787,693 $560,276 
Net Production Volumes(1)
Oil (MBbl)(2)
7,715 5,305 
Natural gas (Bcf)(3)
35.5 25.8 
Total oil equivalent (MBOE)(4)
13,628 9,599 
Average daily production (BOE/d)(5)
149,760 106,654 
Average Sales Prices
Oil, without realized derivatives (per Bbl)$77.58 $75.74 
Oil, with realized derivatives (per Bbl)$77.58 $75.74 
Natural gas, without realized derivatives (per Mcf)$2.96 $3.93 
Natural gas, with realized derivatives (per Mcf)$2.97 $4.07 
_________________
(1)We report our production volumes in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Revenues associated with NGLs are included with our natural gas revenues.
(2)One thousand Bbl of oil.
(3)One billion cubic feet of natural gas.
(4)One thousand Bbl of oil equivalent, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas.
(5)Barrels of oil equivalent per day, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas.
Three Months Ended March 31, 2024 as Compared to Three Months Ended March 31, 2023
Oil and natural gas revenues. Our oil and natural gas revenues increased $200.6 million, or 40%, to $703.5 million for the three months ended March 31, 2024, as compared to $502.9 million for the three months ended March 31, 2023. Our oil revenues increased $196.7 million, or 49%, to $598.5 million for the three months ended March 31, 2024, as compared to $401.8 million for the three months ended March 31, 2023. The increase in oil revenues resulted from a 45% increase in our oil production to 7.7 million Bbl for the three months ended March 31, 2024, as compared to 5.3 million Bbl for the three months ended March 31, 2023, and a 2% increase in the weighted average oil price realized for the three months ended March 31, 2024 to $77.58 per Bbl, as compared to $75.74 per Bbl for the three months ended March 31, 2023. Our natural gas revenues increased $3.9 million, or 4%, to $105.0 million for the three months ended March 31, 2024, as compared to $101.1 million for the three months ended March 31, 2023. The increase in natural gas revenues resulted from a 38% increase in our natural gas production to 35.5 Bcf for the three months ended March 31, 2024, as compared to 25.8 Bcf for the three months ended March 31, 2023, which was partially offset by a 25% decrease in the weighted average natural gas price realized for the three months ended March 31, 2024 to $2.96 per Mcf, as compared to a weighted average natural gas price of $3.93 per Mcf realized for the three months ended March 31, 2023.
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Third-party midstream services revenues. Our third-party midstream services revenues increased $5.8 million, or 22%, to $32.4 million for the three months ended March 31, 2024, as compared to $26.5 million for the three months ended March 31, 2023. Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in our operated wells. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to $14.0 million for the three months ended March 31, 2024, as compared to $10.5 million for the three months ended March 31, 2023, and an increase in our third-party natural gas gathering and processing revenues to $15.2 million for the three months ended March 31, 2024, as compared to $13.6 million for the three months ended March 31, 2023.
Sales of purchased natural gas. Our sales of purchased natural gas increased $15.2 million, or 44%, to $49.4 million for the three months ended March 31, 2024, as compared to $34.3 million for the three months ended March 31, 2023. This increase was primarily the result of a 45% increase in natural gas volumes sold. Sales of purchased natural gas reflect those natural gas purchase transactions that we periodically enter into with third parties whereby we purchase natural gas and (i) subsequently sell the natural gas to other purchasers or (ii) process the natural gas at either Pronto’s or San Mateo’s cryogenic natural gas processing plant and subsequently sell the residue natural gas and NGLs to other purchasers. These revenues, and the expenses related to these transactions included in “Purchased natural gas,” are presented on a gross basis in our interim unaudited condensed consolidated statements of income.
Realized gain on derivatives. Our realized gain on derivatives was $0.3 million for the three months ended March 31, 2024, as compared to a realized gain of $3.7 million for the three months ended March 31, 2023. We realized a net gain of $0.3 million related to our natural gas basis differential swap contracts for the three months ended March 31, 2024, resulting primarily from natural gas basis differentials that were below the fixed prices of certain of our natural gas basis differential swap contracts. For the three months ended March 31, 2023, we realized a net gain of $3.7 million related to our natural gas costless collar and natural gas basis swap contracts, resulting primarily from natural gas prices that were below the floor prices of certain of our natural gas costless collar contracts, offset by natural gas basis differential prices that were above the fixed price of our natural gas basis swap contract. We realized an average gain on our natural gas derivatives of approximately $0.01 per Mcf produced during the three months ended March 31, 2024, as compared to an average gain of approximately $0.14 per Mcf produced during the three months ended March 31, 2023.
Unrealized gain (loss) on derivatives. During the three months ended March 31, 2024, the aggregate net fair value of our open natural gas basis differential swap contracts changed to a net asset of $4.7 million from a net asset of $2.7 million at December 31, 2023, resulting in an unrealized gain on derivatives of $2.1 million for the three months ended March 31, 2024. During the three months ended March 31, 2023, the aggregate net fair value of our open oil and natural gas derivative contracts changed to a net liability of $3.1 million from a net asset of $3.9 million at December 31, 2022, resulting in an unrealized loss on derivatives of $7.1 million for the three months ended March 31, 2023.
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Expenses
The following table summarizes our unaudited operating expenses and other income (expense) for the periods indicated:
 Three Months Ended
March 31,
(In thousands, except expenses per BOE)20242023
Expenses
Production taxes, transportation and processing $70,153 $55,486 
Lease operating
76,295 44,407 
Plant and other midstream services operating39,623 31,045 
Purchased natural gas39,432 28,448 
Depletion, depreciation and amortization212,311 126,325 
Accretion of asset retirement obligations1,273 699 
General and administrative29,653 22,433 
Total expenses468,740 308,843 
Operating income318,953 251,433 
Other income (expense)
Interest expense(39,562)(16,176)
Other income577 339 
Total other expense(38,985)(15,837)
Income before income taxes279,968 235,596 
Income tax provision (benefit)
Current17,272 4,929 
Deferred49,506 51,743 
Total income tax provision66,778 56,672 
Net income213,190 178,924 
Net income attributable to non-controlling interest in subsidiaries(19,461)(15,794)
Net income attributable to Matador Resources Company shareholders$193,729 $163,130 
Expenses per BOE
Production taxes, transportation and processing $5.15 $5.78 
Lease operating$5.60 $4.63 
Plant and other midstream services operating$2.91 $3.23 
Depletion, depreciation and amortization$15.58 $13.16 
General and administrative$2.18 $2.34 
Three Months Ended March 31, 2024 as Compared to Three Months Ended March 31, 2023
Production taxes, transportation and processing. Our production taxes and transportation and processing expenses increased $14.7 million, or 26%, to $70.2 million for the three months ended March 31, 2024, as compared to $55.5 million for the three months ended March 31, 2023. The increase was primarily attributable to a $13.9 million increase in production taxes to $54.0 million for the three months ended March 31, 2024, as compared to $40.1 million for the three months ended March 31, 2023, primarily due to the increase in oil and natural gas revenues between the two periods. On a unit-of-production basis, our production taxes and transportation and processing expenses decreased 11% to $5.15 per BOE for the three months ended March 31, 2024, as compared to $5.78 per BOE for the three months ended March 31, 2023. This decrease was primarily attributable to a decrease in the transportation and processing expense per BOE that resulted from the mix of revenue contracts, including from San Mateo and Pronto, between the two periods.
Lease operating. Our lease operating expenses increased $31.9 million, or 72%, to $76.3 million for the three months ended March 31, 2024, as compared to $44.4 million for the three months ended March 31, 2023. Our lease operating expenses on a unit-of-production basis increased 21% to $5.60 per BOE for the three months ended March 31, 2024, as compared to $4.63 per BOE for the three months ended March 31, 2023. These increases were primarily attributable to the increased number
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of wells being operated by us, including 127 wells from the Advance Acquisition, and operated by other operators (where we own a working interest) and to operating cost inflation for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.
Plant and other midstream services operating. Our plant and other midstream services operating expenses increased $8.6 million, or 28%, to $39.6 million for the three months ended March 31, 2024, as compared to $31.0 million for the three months ended March 31, 2023. This increase was primarily attributable to increased throughput volumes from Matador and other San Mateo and Pronto customers, which resulted in (i) increased expenses associated with our expanded pipeline operations of $16.2 million for the three months ended March 31, 2024, as compared to $10.1 million for the three months ended March 31, 2023, and (ii) increased expenses associated with our commercial produced water disposal operations of $14.4 million for the three months ended March 31, 2024, as compared to $12.8 million for the three months ended March 31, 2023.
Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased $86.0 million, or 68%, to $212.3 million for the three months ended March 31, 2024, as compared to $126.3 million for the three months ended March 31, 2023, primarily as a result of the Advance Acquisition and a 42% increase in our total oil equivalent production for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. On a unit-of-production basis, our depletion, depreciation and amortization expenses increased 18% to $15.58 per BOE for the three months ended March 31, 2024, as compared to $13.16 per BOE for the three months ended March 31, 2023, primarily as a result of the Advance Acquisition and an increase in actual costs and estimated future costs to drill, complete and equip our wells between the two periods.
General and administrative. Our general and administrative expenses increased $7.2 million, or 32%, to $29.7 million for the three months ended March 31, 2024, as compared to $22.4 million for the three months ended March 31, 2023. This increase was primarily attributable to an increase in employee stock-based compensation expense primarily associated with our cash-settled stock awards, the values of which are remeasured at each reporting period. The share price of our common stock increased by 17% from $56.86 at December 31, 2023 to $66.77 at March 31, 2024. Our general and administrative expenses decreased by 7% on a unit-of-production basis to $2.18 per BOE for the three months ended March 31, 2024, as compared to $2.34 per BOE for the three months ended March 31, 2023, primarily as a result of a 42% increase in our total oil equivalent production between the two periods.
Interest expense. For the three months ended March 31, 2024, we incurred total interest expense of $45.4 million. We capitalized $5.9 million of our interest expense on certain qualifying projects for the three months ended March 31, 2024 and expensed the remaining $39.6 million to operations. For the three months ended March 31, 2023, we incurred total interest expense of $19.6 million. We capitalized $3.4 million of our interest expense on certain qualifying projects for the three months ended March 31, 2023 and expensed the remaining $16.2 million to operations. The increase in interest expense for the three months ended March 31, 2024 is a result of borrowings under the Credit Agreement that were used in connection with the Advance Acquisition, borrowings under the San Mateo Credit Facility, the issuance of the 2028 Notes in April 2023 and the significant increase in interest rates between the two periods.
Income tax provision. We recorded a current income tax provision of $17.3 million and a deferred income tax provision of $49.5 million for the three months ended March 31, 2024. We recorded a current income tax provision of $4.9 million and a deferred income tax provision of $51.7 million for the three months ended March 31, 2023. Our effective income tax rate of 26% for each of the three months ended March 31, 2024 and 2023 differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico.
Liquidity and Capital Resources
Our primary use of capital has been, and we expect will continue to be during the remainder of 2024 and for the foreseeable future, for the acquisition, exploration and development of oil and natural gas properties and for midstream investments. Excluding any future significant acquisitions, we expect to fund our 2024 capital expenditures through a combination of cash on hand, operating cash flows and performance incentives paid to us by Five Point Energy, LLC or its affiliates. If capital expenditures were to exceed our operating cash flows during the remainder of 2024, we expect to fund any such excess capital expenditures, including for significant acquisitions, through borrowings under the Credit Agreement or the San Mateo Credit Facility (assuming availability under such facilities) or through other capital sources, including borrowings under expanded or additional credit arrangements, the sale or joint venture of midstream assets, oil and natural gas producing assets, leasehold interests or mineral interests and potential issuances of equity, debt or convertible securities, none of which may be available on satisfactory terms or at all. Our future success in growing proved reserves and production will be highly dependent on our ability to generate operating cash flows and access outside sources of capital.
In February 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock, which was paid on March 13, 2024 to shareholders of record as of February 23, 2024. In April 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on June 7, 2024 to shareholders of record as of May 17, 2024.
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On March 22, 2024, we and our lenders entered into an amendment to the Fourth Amended and Restated Credit Agreement, which amended our Credit Agreement to, among other things: (i) reaffirm the borrowing base at $2.50 billion, (ii) increase the elected borrowing commitments from $1.325 billion to $1.50 billion, (iii) increase the maximum facility amount from $2.00 billion to $3.50 billion, (iv) extend the maturity date from October 31, 2026 to March 22, 2029, (v) appoint PNC Bank, National Association as administrative agent thereunder and (vi) add five new banks to the lending group. This March 2024 reaffirmation of the borrowing base constituted the regularly scheduled May 1 redetermination.
The Credit Agreement requires us to maintain (i) a current ratio, which is defined as (x) total consolidated current assets plus the unused availability under the Credit Agreement divided by (y) total consolidated current liabilities less current maturities under the Credit Agreement, of not less than 1.0 to 1.0 at the end of each fiscal quarter and (ii) a debt to EBITDA ratio, which is defined as debt outstanding (net of cash or cash equivalents of up to the greater of (a) $150.0 million and (b) 10% of the elected commitment), divided by a rolling four quarter EBITDA calculation, of 3.5 to 1.0 or less. We believe that we were in compliance with the terms of the Credit Agreement at March 31, 2024.
On March 28, 2024, we completed the 2024 Equity Offering. After deducting underwriting discounts and offering expenses, we received net proceeds of approximately $344.2 million. The net proceeds from the 2024 Equity Offering were used for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under our Credit Agreement.
At March 31, 2024, we had cash totaling $23.2 million and restricted cash totaling $51.1 million, which was primarily associated with San Mateo. By contractual agreement, the cash in the accounts held by our less-than-wholly-owned subsidiaries is not to be commingled with our other cash and is to be used only to fund the capital expenditures and operations of these less-than-wholly-owned subsidiaries.
At March 31, 2024, we had (i) $699.2 million of outstanding 2026 Notes, (ii) $500.0 million of outstanding 2028 Notes, (iii) $260.0 million in borrowings outstanding under the Credit Agreement and (iv) approximately $41.7 million in outstanding letters of credit issued pursuant to the Credit Agreement.
On April 2, 2024, we completed the 2032 Notes Offering. We used the net proceeds from the 2032 Notes Offering of approximately $885.0 million, after deducting the initial purchasers’ discounts and estimated offering expenses, to fund the 2026 Notes Tender Offer and 2026 Notes Redemption and for general corporate purposes, including the funding of acquisitions and the repayment of borrowings outstanding under our Credit Agreement.
At April 23, 2024, we had (i) $500.0 million of outstanding 2028 Notes, (ii) $900.0 million of outstanding 2032 Notes, (iii) $25.0 million of borrowings outstanding under the Credit Agreement and (iv) approximately $52.6 million in outstanding letters of credit issued pursuant to the Credit Agreement.
At March 31, 2024, San Mateo had $526.0 million in borrowings outstanding under the San Mateo Credit Facility and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between March 31, 2024 and April 23, 2024, San Mateo repaid $31.0 million of borrowings under the San Mateo Credit Facility. The outstanding borrowings under the San Mateo Credit Facility mature on December 9, 2026, and lender commitments under the facility were $535.0 million at March 31, 2024. The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in lender commitments of up to $735.0 million. The San Mateo Credit Facility is non-recourse with respect to Matador and its wholly-owned subsidiaries but is guaranteed by San Mateo’s subsidiaries and secured by substantially all of San Mateo’s assets, including real property. The San Mateo Credit Facility requires San Mateo to maintain a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.00 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo’s consolidated interest expense for such period, of 2.50 or more. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo’s liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility. We believe that San Mateo was in compliance with the terms of the San Mateo Credit Facility at March 31, 2024.
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We expect that development of our Delaware Basin assets will be the primary focus of our operations and capital expenditures for the remainder of 2024. We began 2024 operating seven drilling rigs in the Delaware Basin. We added an eighth operated drilling rig in the first quarter of 2024. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors. Our estimated capital expenditures for drilling, completing and equipping wells (“D/C/E capital expenditures”) and midstream capital expenditures for 2024 consists of $1.10 to $1.30 billion and $200.0 to $250.0 million, respectively. The anticipated midstream capital expenditures include our proportionate share of San Mateo’s estimated 2024 capital expenditures as well as the estimated 2024 capital expenditures for other wholly-owned midstream projects, including projects completed by Pronto. The midstream capital budget includes 100% of the costs associated with the Marlan Processing Plant expansion noted above, although, at April 23, 2024, we were continuing to evaluate potential partners in Pronto that would share in these capital expenditures and strategic opportunities. Substantially all of these 2024 estimated capital expenditures are expected to be allocated to (i) the further delineation and development of our leasehold position, (ii) the construction, installation and maintenance of midstream assets and (iii) our participation in certain non-operated well opportunities in the Delaware Basin, South Texas and Haynesville shale. Our 2024 Delaware Basin operated drilling program is expected to focus on the continued development of our various asset areas throughout the Delaware Basin, with a continued emphasis on drilling and completing a high percentage of longer horizontal wells in 2024, including 99% with anticipated completed lateral lengths of one mile or greater.
As we have done in recent years, we may divest portions of our non-core assets, particularly in the Eagle Ford shale in South Texas and the Haynesville shale in Northwest Louisiana, as well as consider monetizing other assets, such as certain midstream assets and mineral and royalty interests, as value-creating opportunities arise. In addition, during 2024, we intend to continue evaluating the opportunistic acquisition of producing properties, acreage and mineral interests and midstream assets, principally in the Delaware Basin. These monetizations, divestitures and expenditures are opportunity-specific, and purchase price multiples and per-acre prices can vary significantly based on the asset or prospect. As a result, it is difficult to estimate these 2024 monetizations, divestitures and capital expenditures with any degree of certainty; therefore, we have not provided estimated proceeds related to monetizations or divestitures or estimated capital expenditures related to acquiring pr