Matador Resources (MTDR) Q4 FY25 earnings call: guidance and Q&A

Was the 2% increase in net undrilled lateral footage due to delineation or brick-by-brick strategy, and what are the insights on inventory adds in Avalon, Third Bone Spring Carbonate, and Wolfcamp D?

Tom Elsener confirmed strong Avalon production, highlighted the Gavilon well (400k BOE), noted a 6% increase in average lateral length (3.4-mile laterals on Ameredev), and praised the Third Bone Spring Carbonate as a successful inventory addition.

“The production out of the Avalon in particular, has been very strong. I think we highlighted a particular well in our kind of Southern Ranger asset area called the Gavilon, a very strong upper Avalon well that has been a very, very high performer. I think it's getting close to estimate over 400,000 BOE, very high oil cuts.”

asked by Noah Hungness · answered by W. Elsener

With a 2026 plan targeting 3% oil growth and 11% reduced capital spend, is the key to value creation now capital and operational efficiency?

Joe Foran and Chris Calvert explained that value creation is profitability-focused, not just production-focused. They highlighted optimizing levers like improved gas realizations from Hugh Brinson, $130M in CapEx savings, and well cost reductions leading to 10% EUR improvements at lower investment costs.

“When we look at value creation, specifically long-term value creation, I think the fundamentals of your question really do kind of build the foundation of what we think that value creation is. It's profitability, profitability focused, not necessarily production focused when we look at that, then we try to figure out the ways to optimize the levers that build that strategy.”

asked by Neal Dingmann · answered by Christopher Calvert

What is the timeline for midstream value realization, specifically regarding dropping Matador assets into San Mateo, and the status of the Five Point continuation vehicle?

Joe Foran and Chris Calvert discussed the holistic approach to midstream, acknowledging the complexity of economic, political, and regulatory factors. They confirmed the Five Point continuation fund is making steady progress and is expected to be resolved soon, allowing them to be part of San Mateo's future growth.

“Five Point has been very good to work with. And that simply is a situation that they have an exit period in their fund, and they've got a continuation fund working so that they can work out long term. And that's headed -- that's making steady progress, and we expect it to be resolved in the near term.”

asked by Timothy Rezvan · answered by Joseph Wm. Foran

How is Matador thinking about using the buyback program going forward, and how will free cash flow be allocated to buybacks?

Rob Macalik stated pride in the dividend (6 raises in 4 years, 3% yield) and views the share buyback as an opportunistic tool, especially when the stock is undervalued. He emphasized a conservative approach, using it when there's a dislocation between the stock price and market.

“We just instituted the share buyback in 2025, and we think it's a really nice extra tool that we have at our discretion. As you can see through the management and employee share purchases, including the guys in the field, we as a management team feel like the stock is undervalued.”

asked by Zachary Parham · answered by Robert Macalik

Can you elaborate on the enhanced performance from surfactants, the potential for program expansion in 2026, and how much is baked into guidance?

Chris Calvert clarified that no production uplift from surfactants is baked into the 2026 guidance. He noted exciting early pilot results from 2025, but stated it's formation-specific and too early to quantify enhancements, with further testing planned for 2026.

“We have not baked any sort of uplift into our 2026 production guidance plan. So I'll put that out right now. As far as quantifying the successful results, we're excited about the pilot test we did in 2025.”

asked by Derrick Whitfield · answered by Christopher Calvert

What is the strategy for the Woodford play, with the first well in H1 2026 and additional pipeline capacity by year-end, and is further derisking planned for 2027?

Chris Calvert, Tom Elsener, and Andrew Parker expressed excitement for the Woodford, which would be additive to their 23 discrete horizons. They stated the first well's primary objective is to learn, with no inventory yet awarded to the Woodford, but significant running room in New Mexico based on successful results in Texas.

“This is our -- this will be our first one in the Woodford. And so I would say our primary objective is to learn as much as we can about the Woodford and all the other zones immediately adjacent to it. We'll be drilling a pilot hole and running logs.”

asked by John Abbott · answered by W. Elsener

With industry growth slowing, what are Matador's ways to add value going forward, and are there M&A opportunities left for consolidation?

Van Singleton and Bryan Erman highlighted the success of their "brick-by-brick" M&A, adding 17,500 net acres through 690 transactions last year, and confirmed they continue to seek the "right deals in the right neighborhoods." Joe Foran added historical context, noting the company's growth from $270k to $10B in assets, emphasizing being "better, not just bigger."

“I think you can see from last year that our brick-by-break approach was effective as it has been for some time and 17,500 acres without doing a major transaction that was 690-or-so individual transactions.”

asked by Scott Hanold · answered by Van Singleton

How are the improvements for the $7.95 D&C cost per foot in 2026 broken out among cycle times, lateral length, and batch development?

Chris Calvert attributed the $7.95 D&C cost per foot largely to efficiency gains, including longer laterals (3.4-mile batch on Ameredev) and 20% year-over-year completion efficiency improvements in completed lateral footage per day. These efficiencies enable the company to turn in line the same net lateral footage with $130M CapEx savings.

“I think, Paul, the first thing I would point to is, when we look at this improvement in D&C cost per foot, it is largely efficiency driven. As we look to -- we've talked a lot about these -- this well batch that sits on our Ameredev acreage, that's 3.4 mile laterals.”

asked by Paul Diamond · answered by Christopher Calvert