Market Overview

Matador Resources Company Reports First Quarter 2017 Results and Provides Operational Update

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Matador Resources Company (NYSE:MTDR) ("Matador" or the "Company")
today reported financial and operating results for the first quarter of
2017. This release is divided into two parts—first, a "Highlights"
section that summarizes key production and financial results for the
three months ended March 31, 2017, and second, a section providing
additional details related to the Company's first quarter 2017 results
and an operations update.

Part I

First Quarter 2017 Highlights

Sequential Results

  • Matador reported net income attributable to Matador Resources Company
    shareholders (GAAP basis) of $44.0 million, or earnings of $0.44 per
    diluted common share, in the first quarter of 2017, a decrease of 58%
    sequentially, as compared to net income attributable to Matador
    Resources Company shareholders (GAAP basis) of $104.2 million, or
    earnings of $1.09 per diluted common share, in the fourth quarter of
    2016. Virtually all of the net income (GAAP basis) reported for the
    fourth quarter of 2016 was attributable to recognizing the remaining
    deferred gain of $104.1 million from Matador's October 2015 sale of
    its natural gas processing plant in Loving County, Texas.
  • Matador's adjusted net income attributable to Matador Resources
    Company shareholders, a non-GAAP financial measure, increased 142%
    sequentially from $7.2 million, or adjusted earnings of $0.08 per
    diluted common share, in the fourth quarter of 2016 to $17.4 million,
    or adjusted earnings of $0.17 per diluted common share, in the first
    quarter of 2017.
  • Adjusted earnings before interest expense, income taxes, depletion,
    depreciation and amortization and certain other items ("Adjusted
    EBITDA") attributable to Matador Resources Company shareholders, a
    non-GAAP financial measure, increased 28% sequentially from $54.5
    million in the fourth quarter of 2016 to $70.0 million in the first
    quarter of 2017.
  • Average daily oil production increased 17% sequentially from
    approximately 15,700 barrels per day in the fourth quarter of 2016 to
    approximately 18,300 barrels per day in the first quarter of 2017. Matador's
    first quarter 2017 average daily oil production was the best quarterly
    result in the Company's history.
  • Average daily natural gas production increased 3% sequentially from
    approximately 85.5 million cubic feet per day in the fourth quarter of
    2016 to approximately 88.1 million cubic feet per day in the first
    quarter of 2017. Matador's first quarter 2017
    average daily natural gas production was the best quarterly result in
    the Company's history.
  • Average daily oil equivalent production increased 10% sequentially
    from approximately 30,000 BOE per day (52% oil) in the fourth quarter
    of 2016 to approximately 33,000 BOE per day (56% oil) in the first
    quarter of 2017. Matador's first quarter 2017
    average daily oil equivalent production was the best quarterly result
    in the Company's history.
  • Delaware Basin average daily oil equivalent production increased 19%
    sequentially from approximately 20,700 BOE per day (consisting of
    12,800 barrels of oil per day and 47.0 million cubic feet of natural
    gas per day) in the fourth quarter of 2016 to approximately 24,500 BOE
    per day (consisting of 15,700 barrels of oil per day and 53.1 million
    cubic feet of natural gas per day) in the first quarter of 2017. The
    Delaware Basin contributed 86% of Matador's daily oil production, 60%
    of daily natural gas production and 74% of daily oil equivalent
    production in the first quarter of 2017.

Year-Over-Year Results

  • On a year-over-year basis, Matador's net income attributable to
    Matador Resources Company shareholders (GAAP basis) of $44.0 million,
    or earnings of $0.44 per diluted common share, in the first quarter of
    2017 increased from a net loss attributable to Matador Resources
    Company shareholders (GAAP basis) of $107.7 million, or a loss of
    $1.26 per diluted common share, in the first quarter of 2016.
    Matador's adjusted net income attributable to Matador Resources
    Company shareholders, a non-GAAP financial measure, of $17.4 million,
    or adjusted earnings of $0.17 per diluted common share, in the first
    quarter of 2017 increased from an adjusted net loss attributable to
    Matador Resources Company shareholders (non-GAAP) of $13.9 million, or
    an adjusted loss of $0.16 per diluted common share, in the first
    quarter of 2016.
  • Matador's Adjusted EBITDA attributable to Matador Resources Company
    shareholders, a non-GAAP financial measure, increased 307%
    year-over-year from $17.2 million in the first quarter of 2016 to
    $70.0 million in the first quarter of 2017.
  • Year-over-year, from the first quarter of 2016 to the first quarter of
    2017:
    • Average daily oil production increased 60% from approximately
      11,500 barrels per day to approximately 18,300 barrels per day;
    • Average daily natural gas production increased 19% from
      approximately 74.2 million cubic feet per day to approximately
      88.1 million cubic feet per day; and
    • Average daily oil equivalent production increased 38% from
      approximately 23,800 BOE per day to approximately 33,000 BOE per
      day.

Proved Reserves at March 31, 2017

  • Matador's total proved oil and natural gas reserves increased 11%
    sequentially from 105.8 million BOE (consisting of 57.0 million
    barrels of oil and 292.6 billion cubic feet of natural gas) at
    December 31, 2016 to 117.1 million BOE (consisting of 62.9 million
    barrels of oil and 325.3 billion cubic feet of natural gas) at March
    31, 2017. Oil, natural gas and total proved
    reserves at March 31, 2017 were all-time highs for Matador.

    At March 31, 2017, approximately 54% of Matador's total proved oil and
    natural gas reserves were oil and approximately 43% were proved
    developed reserves.

Acreage Acquisitions

  • Matador acquired approximately 13,900 gross (8,200 net) acres in the
    first quarter of 2017, including production of approximately 1,000 BOE
    per day, for an average acreage cost of approximately $9,000 per acre.
    This acreage was acquired primarily in our Rustler Breaks and Antelope
    Ridge asset areas in Lea and Eddy Counties, New Mexico.
  • Early in the second quarter of 2017, Matador acquired approximately
    2,000 gross (1,300 net) additional acres in and around its various
    asset areas, also for an acreage cost of approximately $9,000 per
    acre, bringing Matador's total acreage position in the Delaware Basin
    to approximately 102,300 net acres at May 3, 2017.

Sequential and year-over-year quarterly comparisons of selected
financial and operating items are shown in the following table:

   
Three Months Ended

March 31,
2017

   

December 31,
2016

 

March 31,
2016

Net Production Volumes:(1)
Oil (MBbl)(2) 1,649 1,446 1,044
Natural gas (Bcf)(3) 7.9 7.9 6.8
Total oil equivalent (MBOE)(4) 2,970 2,757 2,170
Average Daily Production Volumes:(1)
Oil (Bbl/d) 18,323 15,720 11,473
Natural gas (MMcf/d)(5) 88.1 85.5 74.2
Total oil equivalent (BOE/d)(6) 32,999 29,965 23,846
Average Sales Prices:
Oil, without realized derivatives (per Bbl) $ 50.72 $ 47.34 $ 28.89
Oil, with realized derivatives (per Bbl) $ 49.73 $ 46.65 $ 34.12
Natural gas, without realized derivatives (per Mcf) $ 3.94 $ 3.35 $ 2.04
Natural gas, with realized derivatives (per Mcf) $ 3.86 $ 3.34 $ 2.27
Revenues (millions):
Oil and natural gas revenues $ 114.8 $ 94.8 $ 43.9
Third-party midstream services revenues $ 1.6 $ 2.3 $ 0.5 (14)
Realized (loss) gain on derivatives $ (2.2 ) $ (1.1 ) $ 7.1
Operating Expenses (per BOE):
Production taxes, transportation and processing $ 3.98 $ 4.43 $ 3.64
Lease operating $ 5.31 $ 5.41 $ 6.69 (15)
Plant and other midstream services operating $ 0.79 $ 0.67 $ 0.47
Depletion, depreciation and amortization $ 11.45 $ 11.56 $ 13.33
General and administrative(7) $ 5.50   $ 5.65   $ 6.07  
Total(8) $ 27.03   $ 27.72   $ 30.20  
Net income (loss) (millions)(9) $ 44.0 $ 104.2 (13) $ (107.7 )
Earnings (loss) per common share (diluted)(9) $ 0.44 $ 1.09 $ (1.26 )
Adjusted net income (loss) (millions)(9)(10) $ 17.4 $ 7.2 $ (13.9 )
Adjusted earnings (loss) per common share (diluted)(9)(11) $ 0.17 $ 0.08 $ (0.16 )
Adjusted EBITDA (millions)(9)(12) $ 70.0 $ 54.5 $ 17.2
 
(1) Production volumes and proved reserves reported in two streams: oil
and natural gas, including both dry and liquids-rich natural gas.
(2) One thousand barrels of oil.
(3) One billion cubic feet of natural gas.
(4) One thousand barrels of oil equivalent, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural
gas.
(5) Millions of cubic feet of natural gas per day.
(6) Barrels of oil equivalent per day, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural
gas.
(7) Includes approximately $1.40, $1.23 and $1.03 per BOE of non-cash,
stock-based compensation expense in the first quarter of 2017,
fourth quarter of 2016 and the first quarter of 2016, respectively.
(8) Total does not include the impact of full-cost ceiling impairment
charges or immaterial accretion expenses.
(9) Attributable to Matador Resources Company shareholders.
(10) Adjusted net income (loss) is a non-GAAP financial measure. For a
definition of adjusted net income (loss) and a reconciliation of
adjusted net income (loss) (non-GAAP) to net income (loss) (GAAP),
please see "Supplemental Non-GAAP Financial Measures."
(11) Adjusted earnings (loss) per share is a non-GAAP financial measure.
For a definition of adjusted earnings (loss) per share and a
reconciliation of adjusted earnings (loss) per share (non-GAAP) to
earnings (loss) per share (GAAP), please see "Supplemental Non-GAAP
Financial Measures."
(12) Adjusted EBITDA is a non-GAAP financial measure. For a definition of
Adjusted EBITDA and a reconciliation of Adjusted EBITDA (non-GAAP)
to net income (loss) (GAAP) and net cash provided by operating
activities (GAAP), please see "Supplemental Non-GAAP Financial
Measures."
(13) During the fourth quarter of 2016, the Company recognized the
remaining deferred gain of $104.1 million from the October 2015 sale
of its natural gas processing plant in Loving County, Texas.
(14) Reclassified from other income due to the midstream segment becoming
a reportable segment in the third quarter of 2016.
(15) $0.47 per BOE reclassified to plant and other midstream services
operating expenses due to the midstream segment becoming a
reportable segment in the third quarter of 2016.
 

A short presentation summarizing the highlights of Matador's first
quarter 2017 earnings release is also included on the Company's website
at
www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab.

Management Comments

Joseph Wm. Foran, Matador's Chairman and CEO, commented, "The Board, the
staff and I are very pleased to report better than expected operating
and financial results. For the first quarter of 2017, Matador's average
daily oil and natural gas production and proved reserves were all at
record highs. We have cash in the bank and our bonds are trading above
par. Our first quarter results confirm the Company's commitment to
delivering consistent growth in shareholder value, highlighted by a
significant increase in our proved reserves, as well as the continued
strength of our balance sheet and our available borrowing capacity.

"The northern Delaware Basin has continued to deliver exceptional
results for Matador and continues to be the main focus of our
exploration and production activities. Our Delaware Basin average daily
oil equivalent production increased 19% sequentially from the fourth
quarter of 2016 and 2.5-fold from the first quarter of 2016. We
attribute this strong production growth to the quality well results
achieved throughout our northern Delaware Basin acreage position and to
the continued improvements in land acquisition, geologic understanding,
oil and natural gas equipment, technology and facilities, and
stimulation and production practices by our technical teams in each of
our asset areas.

"Adding to the ways Matador strives to create value for its
shareholders, we are also excited about the formation during the first
quarter of 2017 of a strategic joint venture to enhance and complement
our Delaware Basin midstream assets, San Mateo Midstream, LLC. As
anticipated, the joint venture is off to a solid start and has initiated
construction on an additional 200 million cubic feet per day of
incremental natural gas processing capacity in the Rustler Breaks asset
area. San Mateo is also moving forward with its plans to build out oil,
natural gas and salt water gathering capacity throughout the Wolf and
Rustler Breaks asset areas, as well as drilling at least one additional
salt water disposal well at Rustler Breaks in 2017. We look forward to
the additional value creation that these midstream initiatives should
provide for Matador and its shareholders.

"We continued to strategically add to and improve our acreage position
in the Delaware Basin at attractive prices during the first quarter of
2017 as well. This additional acreage was acquired primarily in our
Rustler Breaks and Antelope Ridge asset areas in Lea and Eddy Counties,
New Mexico. Antelope Ridge is a new asset area for Matador in southern
Lea County, where other operators are drilling some excellent wells in
the Delaware, Avalon, Bone Spring and Wolfcamp intervals. We look
forward to beginning to test our acreage there as early as the latter
part of this year.

"Matador ended the first quarter with approximately $210 million in cash
on hand and no borrowings under our credit facility, which, along with
our anticipated cash flows, puts Matador in a very strong and
well-funded financial and capital position to execute our drilling and
midstream programs throughout the remainder of 2017. In addition, this
past week, we were pleased to have our lenders increase the borrowing
base under our credit facility from $400 million to $450 million.
Although we chose to keep the ‘elected borrowing commitment' at $400
million at this time, it is gratifying to us that our bank group
continues to recognize the quality of our ever-growing Delaware Basin
reserves base and to provide us with strong support for our growth
plans. We also greatly appreciate the support of our vendors across the
industry who work with us every day, in good times and tough times, to
help us deliver ‘better wells for less money.'

"It was nice to visit with many of you recently at our Analyst Day on
March 23 and during our recent travels to meet with shareholders. We
look forward to providing you with additional details on our latest
results and plans going forward at our upcoming Annual Meeting of
Shareholders to be held here in Dallas on June 1. We hope you will plan
to join us then."

Part II

Operating and Financial Results — First Quarter 2017

Production and Revenues

Average daily oil equivalent production increased 10% sequentially from
29,965 BOE per day (52% oil) in the fourth quarter of 2016 to 32,999 BOE
per day (56% oil) in the first quarter of 2017, and increased 38%
year-over-year from 23,846 BOE per day (48% oil) in the first quarter of
2016. Matador's first quarter 2017 average
daily oil equivalent production was the best quarterly result in the
Company's history.

Average daily oil production increased 17% sequentially from 15,720
barrels per day in the fourth quarter of 2016 to 18,323 barrels per day
in the first quarter of 2017, and increased 60% year-over-year from
11,473 barrels per day in the first quarter of 2016. Matador's
first quarter 2017 average daily oil production was the best quarterly
result in the Company's history.

Average daily natural gas production increased 3% sequentially from 85.5
million cubic feet per day in the fourth quarter of 2016 to 88.1 million
cubic feet per day in the first quarter of 2017, and increased 19%
year-over-year from 74.2 million cubic feet per day in the first quarter
of 2016. Matador's first quarter 2017 average
daily natural gas production was the best quarterly result in the
Company's history.

Matador's Delaware Basin average daily oil equivalent production was
24,535 BOE per day (74% of total oil equivalent production) in the first
quarter of 2017, consisting of 15,685 barrels of oil per day (86% of
total oil production) and 53.1 million cubic feet of natural gas per day
(60% of total natural gas production). Matador's Delaware Basin oil
equivalent production increased 19% sequentially, as compared to 20,670
BOE per day in the fourth quarter of 2016, and increased 146% (2.5-fold)
year-over-year, as compared to 9,958 BOE per day in the first quarter of
2016.

Oil and natural gas revenues increased 21% sequentially from $94.8
million in the fourth quarter of 2016 to $114.8 million in the first
quarter of 2017, and increased 161% year-over-year from $43.9 million in
the first quarter of 2016. The increase in oil and natural gas revenues
was attributable not only to the increased oil and natural production
noted above, but also to improved commodity prices. Realized oil prices
increased 7% from $47.34 per barrel in the fourth quarter of 2016 to
$50.72 per barrel in the first quarter of 2017, and increased 76% from
$28.89 per barrel in the first quarter of 2016. Realized natural gas
prices increased 18% from $3.35 per thousand cubic feet in the fourth
quarter of 2016 to $3.94 per thousand cubic feet in the first quarter of
2017, and increased 93% from $2.04 per thousand cubic feet in the first
quarter of 2016.

Third-party midstream services revenues decreased 31% sequentially from
$2.3 million in the fourth quarter of 2016 to $1.6 million in the first
quarter of 2017, but increased 229% year-over-year from $0.5 million in
the first quarter of 2016. The sequential decrease primarily reflects
increased usage of the Company's salt water disposal capacity by Matador
(revenues eliminated in consolidation) and less usage by third parties
in the first quarter of 2017, as compared to the fourth quarter of 2016.
The year-over-year increase is primarily attributable to a significant
increase in third-party salt water being disposed of at Matador's
commercial facilities in the Wolf and Rustler Breaks asset areas and to
the Black River processing plant in the Rustler Breaks asset area
becoming operational in late August 2016. During the first quarter of
2016, Matador was still in the process of installing facilities on its
second salt water disposal well operating in its Wolf asset area and had
no salt water disposal wells operating in its Rustler Breaks asset area
and no midstream services revenues attributable to natural gas
processing plant operations. Third-party midstream services revenues are
those revenues from midstream operations related to third parties,
including working interest owners in Matador-operated wells; all
revenues from Matador-owned production are eliminated in consolidation.
Overall, including those midstream revenues attributable to Matador's
operations, total midstream services revenues increased 23% sequentially
from the fourth quarter of 2016 and increased 360% from the first
quarter of 2016.

Total realized revenues, including realized hedging gains and
third-party midstream services revenues, increased 19% sequentially from
$95.9 million in the fourth quarter of 2016 to $114.2 million in the
first quarter of 2017, and increased 122% year-over-year from $51.5
million in the first quarter of 2016. Realized hedging losses from oil
and natural gas hedges were $2.2 million in the first quarter of 2017,
as compared to realized hedging losses of $1.1 million in the fourth
quarter of 2016 and realized hedging gains of $7.1 million in the first
quarter of 2016.

Net Income (Loss) and Earnings (Loss) Per Share

For the first quarter of 2017, Matador reported net income attributable
to Matador Resources Company shareholders of approximately $44.0
million, or earnings of $0.44 per diluted common share on a GAAP basis,
a decrease of 58% sequentially, as compared to net income attributable
to Matador Resources Company shareholders of approximately $104.2
million, or earnings of $1.09 per diluted common share, in the fourth
quarter of 2016, and as compared to a net loss attributable to Matador
Resources Company shareholders of $107.7 million, or a loss of $1.26 per
diluted common share, in the first quarter of 2016. During the fourth
quarter of 2016, the Company recognized the remaining deferred gain of
$104.1 million from the October 2015 sale of its natural gas processing
plant and associated trunkline in Loving County, Texas. Portions of the
first quarter 2017 net income attributable to Matador Resources Company
shareholders (GAAP basis) were attributable to non-cash or non-recurring
items, and excluding those items from the net income resulted in
adjusted net income attributable to Matador Resources Company
shareholders, a non-GAAP financial measure, of approximately $17.4
million, or adjusted earnings of $0.17 per diluted common share.

Matador's net income for the first quarter of 2017 was favorably
impacted by (1) increased oil and natural gas production, (2) higher
realized oil and natural gas prices, (3) a non-cash, unrealized gain on
derivatives of $20.6 million, (4) no full-cost ceiling impairment in the
quarter and (5) no income tax expense. Matador's net income for the
first quarter of 2017 was unfavorably impacted by (1) a realized loss on
derivatives of $2.2 million and (2) one-time, non-recurring general and
administrative expenses of $3.5 million attributable to the formation of
San Mateo.

For a reconciliation of adjusted net income (non-GAAP) and adjusted
earnings (loss) per diluted common share (non-GAAP) to net income (loss)
(GAAP) and earnings (loss) per diluted common share (GAAP), please see
"Supplemental Non-GAAP Financial Measures" below.

Adjusted EBITDA

Adjusted EBITDA attributable to Matador Resources Company shareholders,
a non-GAAP financial measure, increased 28% sequentially from $54.5
million in the fourth quarter of 2016 to $70.0 million in the first
quarter of 2017, and increased 307% year-over-year from $17.2 million in
the first quarter of 2016. The sequential and year-over-year increases
in Adjusted EBITDA were primarily attributable to the increases in both
oil and natural gas production and in realized oil and natural gas
prices during the first quarter of 2017, as compared to the fourth
quarter of 2016 and the first quarter of 2016.

For a definition of Adjusted EBITDA and a reconciliation of Adjusted
EBITDA (non-GAAP) to net income (loss) (GAAP) and net cash provided by
operating activities (GAAP), please see "Supplemental Non-GAAP Financial
Measures" below.

Operating Expenses

Production taxes, transportation and processing

Production taxes, transportation and processing expenses on a
unit-of-production basis decreased 10% sequentially from $4.43 per BOE
in the fourth quarter of 2016 to $3.98 per BOE in the first quarter of
2017, and increased 9% year-over-year from $3.64 per BOE in the first
quarter of 2016. Production taxes increased during the first quarter of
2017 primarily as a result of higher oil and natural gas revenues, as
compared to the fourth quarter of 2016 and especially to the first
quarter of 2016. The increase in production taxes was offset by a
decrease in transportation and processing expenses year-over-year,
primarily as a result of the start-up in late August 2016 of the Black
River cryogenic natural gas processing plant in the Rustler Breaks asset
area. On a unit-of-production basis, these first quarter 2017 expenses
also benefited from significantly higher daily oil equivalent production
of 10% and 38%, respectively, as compared to the fourth quarter of 2016
and the first quarter of 2016.

Lease operating expenses ("LOE")

Importantly, lease operating expenses on a unit-of-production basis
decreased 2% sequentially from $5.41 per BOE in the fourth quarter of
2016 to $5.31 in the first quarter of 2017, and decreased 21%
year-over-year from $6.69 per BOE in the first quarter of 2016. The
year-over-year decrease in lease operating expenses on a
unit-of-production basis was primarily attributable to several key
factors, including (1) decreased field supervisory costs as a number of
third-party contractors became full-time employees during the second
quarter of 2016, (2) decreased costs associated with the Company's Eagle
Ford operations, including workover, salt water disposal and chemical
costs, (3) additional salt water disposal and gathering capacity added
in both the Wolf and Rustler Breaks asset areas and (4) higher total oil
equivalent production as compared to the prior periods.

Plant and other midstream services operating
expenses

Matador's plant and other midstream services operating expenses on a
unit-of-production basis increased 18% sequentially from $0.67 per BOE
in the fourth quarter of 2016 to $0.79 per BOE in the first quarter of
2017, and increased 68% year-over-year from $0.47 per BOE in the first
quarter of 2016. The increase in plant and other midstream services
operating expenses is attributable to additional salt water disposal
wells placed in service in the Wolf and Rustler Breaks asset areas
during the first quarter of 2017, as well as to the overall increase in
the scope of the Company's midstream operations in the Delaware Basin
since the first quarter of 2016.

Depletion, depreciation and amortization ("DD&A")

Also notable was the decrease in depletion, depreciation and
amortization expenses on a unit-of-production basis. These expenses
decreased 1% sequentially from $11.56 per BOE in the fourth quarter of
2016 to $11.45 per BOE in the first quarter of 2017, and decreased 14%
year-over-year from $13.33 per BOE in the first quarter of 2016. The
decrease in DD&A expenses resulted both from the increases in Matador's
total proved reserves between the respective periods, as well as both
improved development costs associated with wells being drilled in the
Delaware Basin on a unit-of-production basis and the decreases in
unamortized property costs resulting from full-cost ceiling impairments
in prior periods, including the first quarter of 2016.

Full-cost ceiling impairment

Matador recorded no full-cost ceiling impairment for the first quarter
of 2017, as reflected on the Company's interim unaudited condensed
consolidated statement of operations for the three months ended
March 31, 2017.

General and administrative ("G&A")

General and administrative expenses on a unit-of-production basis
decreased 3% sequentially from $5.65 per BOE in the fourth quarter of
2016 to $5.50 per BOE in the first quarter of 2017, and decreased 9%
year-over-year from $6.07 per BOE in the first quarter of 2016,
primarily due to the increase in total oil equivalent production, and
despite approximately $3.5 million of one-time, non-recurring charges
attributable to the formation of San Mateo. Excluding
the $3.5 million in non-recurring charges, general and administrative
expenses were $4.34 per BOE for the first quarter of 2017.

General and administrative expenses for the first quarter of 2017 also
included non-cash, stock compensation expense of $1.40 per BOE, as
compared to $1.23 per BOE in the fourth quarter of 2016 and $1.03 per
BOE in the first quarter of 2016.

Proved Reserves, Standardized Measure and PV-10

The following table summarizes Matador's estimated total proved oil and
natural gas reserves at March 31, 2017, December 31, 2016 and March 31,
2016.

           

March 31,
2017

December 31,
2016
March 31,
2016
Estimated proved reserves:(1)(2)
Oil (MBbl)(3) 62,922 56,977 50,718
Natural Gas (Bcf)(4)   325.3     292.6     236.7  
Total (MBOE)(5)   117,134     105,752     90,168  
Estimated proved developed reserves:
Oil (MBbl)(3) 26,243 22,604 16,818
Natural Gas (Bcf)(4)   145.4     126.8     96.9  
Total (MBOE)(5)   50,478     43,731     32,968  

Percent developed

43.1 % 41.4 % 36.6 %
Estimated proved undeveloped reserves:
Oil (MBbl)(3) 36,679 34,373 33,900
Natural Gas (Bcf)(4)   179.9     165.9     139.8  
Total (MBOE)(5)   66,656     62,021     57,200  
Standardized Measure (in millions) $ 810.2 $ 575.0 $ 495.6
PV-10(6) (in millions) $ 857.2 $ 581.5 $ 501.9
 
(1) Numbers in table may not total due to rounding.
(2) Matador's estimated proved reserves, Standardized Measure and PV-10
were determined using index prices for oil and natural gas, without
giving effect to derivative transactions, and were held constant
throughout the life of the properties. The unweighted arithmetic
averages of the first-day-of-the-month prices for the period from
April 2016 through March 2017 were $44.10 per Bbl for oil and $2.73
per MMBtu for natural gas, for the period from January 2016 through
December 2016 were $39.25 per Bbl for oil and $2.48 per MMBtu for
natural gas and for the period from April 2015 through March 2016
were $42.77 per Bbl for oil and $2.40 per MMBtu for natural gas.
These prices were adjusted by property for quality, energy content,
regional price differentials, transportation fees, marketing
deductions and other factors affecting the price received at the
wellhead. Matador reports its proved reserves in two streams, oil
and natural gas, and the economic value of the natural gas liquids
associated with the natural gas is included in the estimated
wellhead natural gas price on those properties where the natural gas
liquids are extracted and sold.
(3) One thousand barrels of oil.
(4) One billion cubic feet of natural gas.
(5) One thousand barrels of oil equivalent, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural
gas.
(6) PV-10 is a non-GAAP financial measure. For a reconciliation of PV-10
(non-GAAP) to Standardized Measure (GAAP), please see "Supplemental
Non-GAAP Financial Measures" below.
 

Matador's estimated total proved oil and
natural gas reserves were 117.1 million BOE at March 31, 2017, an
all-time high,
consisting of 62.9 million barrels of oil and
325.3 billion cubic feet of natural gas (both also all-time highs), with
a Standardized Measure of $810.2 million (GAAP basis) and a PV-10, a
non-GAAP financial measure, of $857.2 million, an increase of 11%, as
compared to estimated total proved oil and natural gas reserves of 105.8
million BOE at December 31, 2016, consisting of 57.0 million barrels of
oil and 292.6 billion cubic feet of natural gas, with a Standardized
Measure of $575.0 million and a PV-10 of $581.5 million. The 41%
increase in Standardized Measure and 47% increase in PV-10 at March 31,
2017, as compared to December 31, 2016, were attributable both to the
increase in total proved reserves and the increase in oil and natural
gas prices used to determine Standardized Measure and PV-10. At March
31, 2017, the 12-month arithmetic averages of oil and natural gas prices
used to estimate proved reserves were $44.10 per barrel and $2.73 per
MMBtu, respectively, as compared to $39.25 per barrel and $2.48 per
MMBtu, respectively, at December 31, 2016.

Proved oil reserves increased 10% from 57.0 million barrels at
December 31, 2016 to 62.9 million barrels at March 31, 2017, and
increased 24% from 50.7 million barrels at March 31, 2016. At March 31,
2017, approximately 54% of the Company's total proved reserves were oil
and 46% were natural gas. Approximately 43% of the Company's total
proved reserves were proved developed reserves at March 31, 2017, as
compared to 37% at March 31, 2016.

The reserves estimates at all dates presented in the table above were
prepared by the Company's internal engineering staff. These reserves
estimates were prepared in accordance with the SEC's rules for oil and
natural gas reserves reporting and do not include any unproved reserves
classified as probable or possible that might exist on Matador's
properties.

For a reconciliation of PV-10 (non-GAAP) to Standardized Measure
(GAAP), please see "Supplemental Non-GAAP Financial Measures" below.

Operations Update

During the first quarter of 2017, Matador continued focusing its efforts
on the exploration, delineation and development of its Delaware Basin
acreage in Loving County, Texas and Lea and Eddy Counties, New Mexico.
Matador began 2017 operating four drilling rigs in the Delaware Basin
and continued to do so throughout the first quarter. In late April 2017,
Matador added a fifth drilling rig in the Delaware Basin and expects to
operate five rigs in the Delaware Basin throughout the remainder of 2017.

Matador also began drilling a five-well program in the Eagle Ford shale
in South Texas during the first quarter of 2017. Three of these wells,
on the Company's Martin Ranch leasehold in La Salle County, have been
drilled and are awaiting completion. At May 3, 2017, the fourth and
fifth wells, the Falls City #1H and #2H wells, are being batch drilled
from a single pad. Matador anticipates that drilling operations will be
completed on the Falls City wells by the middle of May, and this rig
will be released at that time. Matador expects these five Eagle Ford
shale wells to be completed and placed on production late in the second
quarter or early in the third quarter of 2017. Matador appreciates the
close coordination provided by Patterson-UTI Drilling Company with
regard to these wells. Patterson-UTI mobilized a rig out of its yard in
South Texas ready to drill, enabling Matador to drill the three Martin
Ranch wells very efficiently, including a record drilling time for an
Eagle Ford well on the Martin Ranch leasehold.

Delaware Basin - Southeast New Mexico and West Texas

At May 3, 2017, Matador is operating five drilling rigs in the Delaware
Basin, including three rigs in its Rustler Breaks asset area, one rig in
its Wolf and Jackson Trust asset areas and one rig in its
Ranger/Arrowhead and Twin Lakes asset areas. Matador intends to operate
five drilling rigs in these asset areas throughout the remainder of
2017, although one rig may move to the Company's new Antelope Ridge
asset area in southern Lea County, New Mexico in the third or fourth
quarter of 2017. Matador expects to direct 93% of its estimated 2017
capital expenditures to drilling and completion and midstream operations
in the Delaware Basin.

During the first quarter of 2017, Matador completed and placed on
production a total of 14 gross (12.5 net) horizontal wells in the
Delaware Basin, including 13 gross (12.4 net) operated wells and one
gross (0.1 net) non-operated well. Of the operated wells, Matador
completed and placed on production two gross (1.5 net) wells in its Wolf
and Jackson Trust asset areas, eight gross (7.0 net) wells in its
Rustler Breaks asset area and four gross (3.9 net) wells in its Ranger
asset area.

At May 3, 2017, Matador remains on track with its projected 2017
drilling and completions program and estimates that it will complete and
place on production 88 gross (55.8 net) wells in the Delaware Basin,
including 66 gross (52.6 net) operated wells and 22 gross (3.2 net)
non-operated wells, all of which are expected to be horizontal wells.

Matador continues to apply new technologies and innovative drilling and
completion techniques to its Delaware Basin operations in an effort to
both reduce costs and improve well performance. On the drilling side,
Matador began using Schlumberger's Axeblade* and Stinger* hybrid
drilling bits (*marks of Schlumberger) in its vertical sections and
horizontal laterals, leading to further improved rates of penetration
and reduced drilling times. In late April 2017, Matador took delivery of
a next-generation Patterson-UTI drilling rig with a new top drive
capable of 50% higher torque and a third mud pump, in addition to all
the features of the three previous rigs custom built for Matador.
Matador expects to initially operate this rig in its Rustler Breaks
asset area, and the Company anticipates additional improvements in
drilling productivity using this next-generation rig, as well as
continuing to optimize drilling practices on the other high technology
rigs the Company is using in the Delaware Basin.

In the area of well completions, Matador continues to improve the
efficiency of its stimulation operations and to increase the number of
fracturing stages it can successfully pump per day. One way the Company
is achieving these results is by completing wells in pairs on its
multi-well pads using simultaneous operations, allowing the wireline
operations on the first well to be conducted simultaneously with the
fracturing operations on the second well. By alternating these
operations simultaneously, Matador believes it could save up to $150,000
per well in stimulation costs. During the first quarter of 2017,
approximately 40% of Matador's stimulation operations were conducted
using these simultaneous operations, and the Company estimates that it
saved approximately $750,000 in stimulation costs using this approach,
which saves money while maintaining the effectiveness and quality of the
fracture treatment.

Finally, Matador is also working to reduce costs and increase
efficiencies associated with the initial equipping of its wells for
production. The Company has begun implementing expandable facility
designs in conjunction with its multi-well pad drilling program and
believes it can realize cost savings in excess of $300,000 per
additional well. This innovative design also promotes optimized
compression and centralized salt water disposal infrastructure, leading
to increased natural gas sales and reduced LOE. In addition, on recent
wells, Matador has tested having production equipment pre-fabricated and
skid-mounted offsite to reduce the initial facility install times by up
to 50%. As a result, new wells are being produced through permanent
Matador facilities sooner following the wells' initial flowback and
testing periods, allowing for natural gas production to be turned to
sales more quickly.

Rustler Breaks Asset Area - Eddy County, New Mexico

Matador operated two drilling rigs in its Rustler Breaks asset area
during the first quarter of 2017, and the Company completed and placed
on production eight gross (7.0 net) horizontal wells in this area,
including seven gross (6.9 net) operated wells and one gross (0.1 net)
non-operated wells. The seven operated wells included one Second Bone
Spring completion, two Wolfcamp A-XY completions, one Wolfcamp B-Middle
completion and three Wolfcamp B-Blair completions. Matador previously
announced the 24-hour initial potential test results from several of
these wells, but for completeness, the test results from all seven wells
are summarized in the table below.

       

Initial Potential

Oil

   

Gas

   

BOE

   

% Oil

   

FCP(1)

   

Choke

Well

Interval

(Bbl/d)

(Mcf/d) (BOE/d) (psi) (inch)
Paul 25-24S-28E RB #121H Second Bone Spring 779 904 930 84 % 900 32/64"
Tom Walters 12-23S-27E RB #203H Wolfcamp A-XY 1,145 2,454 1,554 74 % 1,889 34/64"
Rustler Breaks 12-24S-27E #204H Wolfcamp A-XY 908 1,522 1,162 78 % 1,664 34/64"
Jim Tom Lontos 30-23S-28E RB #221H Wolfcamp B-Middle 354 4,555 1,113 32 % 2,410 36/64"
Brantley State 13-24S-27E RB #221H Wolfcamp B-Blair 494 4,468 1,239 40 % 2,948 36/64"
Jimmy Kone 05-24S-28E RB #223H Wolfcamp B-Blair 582 8,704 2,033 29 % 2,900 34/64"
Jimmy Kone 05-24S-28E RB #226H Wolfcamp B-Blair 561 10,143 2,252 25 % 3,250 34/64"
 
(1) Flowing casing pressure.
 

Overall, the well results achieved in the Rustler Breaks asset area in
the first quarter of 2017 met or exceeded the Company's expectations. Of
particular note in the first quarter were the results from the Paul
25-24S-28E RB #121H (Paul #121H) well, a Second Bone Spring completion,
and the Tom Walters 12-23S-27E RB #203H (Tom Walters #203H) well, a
Wolfcamp A-XY completion.

The Paul #121H well was the first Second Bone Spring well drilled by
Matador in the Rustler Breaks asset area since Matador's initial tests
of that formation in 2015, and both its 24-hour initial potential test
and its early performance exceed the results of the Company's previous
two Second Bone Spring wells drilled in this area. The Paul #121H well
had a completed lateral length of approximately 4,600 feet and was
stimulated with 23 stages, pumping 40 barrels of fluid and approximately
3,000 pounds of primarily 30/50 white sand per completed lateral foot.
As of late April 2017, the Paul #121H well had produced approximately
45,000 BOE (83% oil) in two months, a 50% improvement in early well
performance as compared to earlier Second Bone Spring completions.
Matador attributes this improved well performance to the larger
stimulation treatment pumped in the Paul #121H well, as the two previous
Second Bone Spring completions were stimulated using only 20 barrels of
fluid and approximately 1,300 pounds of primarily 30/50 white sand per
completed lateral foot. As also observed in the Wolf and Ranger asset
areas, it appears that the Second Bone Spring formation at Rustler
Breaks responds well to the larger stimulation treatment. It is also
important to note that Matador drilled, completed and equipped the Paul
#121H well for approximately $4.8 million, which, along with the
improved well performance and higher oil cut, should result in strong
economic returns for similar Second Bone Spring completions in this
area. Matador expects to drill and complete at least one additional
operated Second Bone Spring test in the Rustler Breaks asset area during
2017.

As Matador reported in its February 22, 2017 earnings release, the Tom
Walters #203H well is located in the northwestern portion of the Rustler
Breaks asset area, and the Company believes that the early performance
of this well confirms the potential of the Wolfcamp A-XY interval
throughout its Rustler Breaks acreage position. Since its completion in
mid-January 2017, this well has continued to exhibit strong production
performance. As of late April 2017, the Tom Walters #203H well had
produced approximately 120,000 BOE (75% oil) in just over three months,
and the well continues to track the performance of Matador's best
Wolfcamp A-XY well in the Rustler Breaks asset area, the Paul 25-24S-28E
RB #221H (Paul #221H) well. As of late April 2017, the Paul #221H well
had produced approximately 280,000 BOE (72% oil) in just over 11 months
and continues to track 15 to 20% above Matador's 900,000 BOE type curve
for the Rustler Breaks asset area.

Matador began operating a third drilling rig in the Rustler Breaks asset
area in late April 2017 and continues to do so at May 3, 2017. Matador
plans to operate three drilling rigs at Rustler Breaks throughout the
remainder of 2017, although it may elect to move one of these rigs to
its Antelope Ridge asset area late in the third quarter or early in the
fourth quarter to begin testing recently acquired acreage in that area.

Wolf and Jackson Trust Asset Areas - Loving
County, Texas

Matador operated one drilling rig in its Wolf and Jackson Trust asset
areas during the first quarter of 2017. During the first quarter,
Matador completed and placed on production two gross (1.5 net) operated
horizontal wells in its Wolf and Jackson Trust asset areas. One of these
wells, the Totum E 18-TTT-C24 NL #211H (Totum #211H) well, was a
Wolfcamp A-Lower completion and the other, the Barnett 90-TTT-B01 WF
#124H (Barnett #124H) well, was a Second Bone Spring completion. Matador
previously announced the 24-hour initial potential test results from
both wells, but for completeness, the test results are summarized in the
table below.

       

Initial Potential

Oil

   

Gas

   

BOE

   

% Oil

   

FCP(1)

   

Choke

Well

Interval

(Bbl/d) (Mcf/d) (BOE/d) (psi) (inch)
Barnett 90-TTT-B01 WF #124H Second Bone Spring 733 2,122 1,087 67 % 1,375 38/64"
Totum E 18-TTT-C24 NL #211H Wolfcamp A-Lower 1,610 3,824 2,247 72 % 3,564 28/64"
 
(1) Flowing casing pressure.
 

In addition, during the first quarter of 2017, Matador drilled three
gross (2.0 net) operated horizontal wells from a single pad in the
southern portion of its Wolf asset area. These wells are currently
flowing back following completion and include one gross (0.8 net) well
in the Wolfcamp A-XY and two gross (1.2 net) wells in the Second Bone
Spring. Matador has also drilled two gross (1.7 net) additional Second
Bone Spring wells in the Wolf asset area early in the second quarter,
and these wells are awaiting completion.

The early performance of the Totum #211H well has continued to exceed
expectations. As of late April 2017, the Totum #211H well had produced
approximately 110,000 BOE (78% oil) in just over 2.5 months of
production and was tracking about 75% above Matador's 700,000 BOE
Wolfcamp A-Lower type curve for the Wolf and Jackson trust asset areas.
Matador plans to drill three additional Wolfcamp A-Lower wells in its
Jackson Trust asset area during 2017.

At May 3, 2017, Matador is operating one drilling rig in its Wolf and
Jackson Trust asset areas, and the Company plans to operate one drilling
rig in these areas throughout 2017. This rig has just begun drilling two
new wells, the Barnett 90-TTT-B01 #224H and the Barnett 90-TTT-B01 #104H
wells, which are planned to be the Company's first tests of the Wolfcamp
B and Avalon formations, respectively, in the Wolf asset area. Matador
expects to complete these wells in mid-June and anticipates reporting
results from these wells, in addition to several other recently drilled
wells in the Wolf asset area, as part of its second quarter 2017
earnings release in early August.

Ranger Asset Area - Lea County, New Mexico and
Arrowhead Asset Area - Eddy County, New Mexico

Matador operated one drilling rig in its Ranger asset area during the
first quarter of 2017, and the Company completed and placed on
production four gross (3.9 net) operated horizontal wells in this area.
The four operated wells included two Second Bone Spring completions, one
Third Bone Spring completion and one Wolfcamp A-Lower completion.
Matador previously announced the 24-hour initial potential test results
from two of these wells, but for completeness, the test results from all
four wells are summarized in the table below.

       

Initial Potential

Oil

   

Gas

   

BOE

   

% Oil

   

FCP(1)

   

Choke

Well

Interval

(Bbl/d) (Mcf/d) (BOE/d) (psi) (inch)
Eland 32-18S-33E RN State Com #123H Second Bone Spring 579 291 628 92 % On ESP N/A
Eland 32-18S-33E RN State Com #124H Second Bone Spring 618 364 679 91 % On ESP N/A
Cimarron 16-19S-34E RN State Com #133H Third Bone Spring 846 449 920 92 % On ESP N/A
Airstrip 31-18S-35E RN State Com #201H Wolfcamp A-Lower 889 223 926 97 % On ESP N/A
 
(1) Flowing casing pressure.
 

The two Eland wells are both Second Bone Spring wells completed in late
March 2017. Both have completed lateral lengths of about 4,600 feet, and
each well was stimulated with 19 stages pumping about 40 barrels of
fluid per completed lateral foot. Matador stimulated the Eland #123H
well with approximately 2,000 pounds of primarily 20/40 white sand per
completed lateral foot, but stimulated the Eland #124H well with
approximately 3,000 pounds of primarily 20/40 white sand per completed
lateral foot, in order to determine the impact of using higher sand
concentrations in the Second Bone Spring in this area. While it is still
too early to draw any definitive conclusions as to the need for higher
sand concentrations, it is noteworthy that the Eland #124H well has
shown essentially no decline in its first month of production, while the
Eland #123H well has begun to decline. Matador expects to test the
higher sand concentrations (up to 3,000 pounds per foot) in future
Second and Third Bone Spring completions, as well as closer perforation
cluster spacings, as it continues to delineate its acreage throughout
the Ranger and Arrowhead asset areas.

The Cimarron 16-19S-34E RN State Com #133H (Cimarron #133H) well was
completed in the Third Bone Spring and offsets the Cimarron 16-29S-34E
RN State Com #134H (Cimarron #134H) well drilled and completed in the
Third Bone Spring in 2015. The Cimarron #133H well was drilled from spud
to total depth in 14.5 days, which was Matador's best drilling time to
date for a Bone Spring well in the Ranger asset area. The Cimarron #133H
well had an approximately 4,400-foot completed lateral length and was
stimulated with 18 stages, pumping 40 barrels of fluid and approximately
2,000 pounds of primarily 20/40 white sand per completed lateral foot.
Early performance from the Cimarron #133H well has been very similar to
that of the Cimarron #134H well. As of late April 2017, the Cimarron
#134H well had produced approximately 200,000 BOE (93% oil) in almost 21
months and is projected to have an estimated ultimate recovery between
500,000 and 600,000 BOE (93% oil).

In addition to these most recent completions, the Mallon wells, three
Third Bone Spring completions in the Ranger asset area in the fourth
quarter of 2016, continued to perform very well during their first few
months of production. Following their 24-hour initial potential tests on
32/64-inch and 34/64-inch chokes, these wells were turned into Matador's
production facilities and have produced mostly on smaller 22/64-inch to
24/64-inch chokes since that time to manage the flowing bottomhole
pressure and to extend the productive life of these wells. As of late
April 2017, all three wells were still producing at flowing casing
pressures between 750 and 1,000 psi. The Mallon #1H well has produced
approximately 200,000 BOE (90% oil), the Mallon #2H well has produced
approximately 165,000 BOE (91% oil) and the Mallon #3H well has produced
approximately 170,000 BOE (91% oil) in their first 4.5 months of
production. Each of these wells is significantly outperforming Matador's
700,000 BOE Third Bone Spring type curve for the Ranger and Arrowhead
asset areas. As of late April 2017, the Mallon #1H well performance is
almost double that of the 700,000 BOE type curve, while the Mallon #2H
and #3H wells are tracking about 70% above this type curve.

At May 3, 2017, Matador is operating one rig in its Ranger and Arrowhead
asset areas, and the Company plans to operate one rig in these areas and
the Twin Lakes asset area throughout 2017. Matador recently drilled its
first operated horizontal well in the Arrowhead asset area, the Stebbins
20 Federal #123H well, a Second Bone Spring test, and is currently
drilling two additional Second Bone Spring tests in the Arrowhead asset
area. The Company expects to report initial results from these first
wells in the Arrowhead asset area as part of its second quarter 2017
earnings release in early August.

Twin Lakes Asset Area - Lea County, New Mexico

In late March 2017, Matador began drilling the D. Culbertson State #234H
well, the Company's first horizontal test of the Wolfcamp D formation in
the Twin Lakes asset area. At May 3, 2017, the well has been drilled but
not yet completed. The well was drilled entirely within the 25-foot
target window selected by the Company's technical team, and Matador was
encouraged by the faster-than-anticipated drilling time and by the
hydrocarbon shows observed while drilling the Wolfcamp D formation.
Matador expects to complete the well in late May or early June and
anticipates reporting initial results from this well as part of its
second quarter 2017 earnings release in early August.

Midstream Update

On February 17, 2017, Matador announced the formation of San Mateo
Midstream, LLC ("San Mateo" or the "Joint Venture"), a strategic joint
venture with a subsidiary of Five Point Capital Partners, LLC ("Five
Point"). The midstream assets contributed to San Mateo include (1) the
Black River cryogenic natural gas processing plant in the Rustler Breaks
asset area (the "Black River Processing Plant"); (2) one salt water
disposal well and a related commercial salt water disposal facility in
the Rustler Breaks asset area; (3) three salt water disposal wells and
related commercial salt water disposal facilities in the Wolf asset
area; and (4) substantially all related oil, natural gas and water
gathering systems and pipelines in both the Rustler Breaks and Wolf
asset areas (collectively, the "Delaware Midstream Assets"). Matador
received $171.5 million in connection with the formation of San Mateo
and may earn up to an additional $73.5 million in performance incentives
over the next five years. Matador continues to operate the Delaware
Midstream Assets and retains operational control of the Joint Venture.
The Company and Five Point own 51% and 49% of the Joint Venture,
respectively. San Mateo will continue to provide firm capacity service
to Matador at market rates, while also being a midstream service
provider to third parties in and around the Wolf and Rustler Breaks
asset areas.

Subsequent to the formation of the Joint Venture, San Mateo has
initiated the expansion of the Black River Processing Plant to add 200
million cubic feet per day of cryogenic, natural gas processing
capacity. This incremental natural gas processing capacity is expected
to come online in the first quarter of 2018. In addition, at May 3,
2017, San Mateo is moving forward with its plans to drill additional
salt water disposal wells in the Rustler Breaks asset area and to build
out additional oil, natural gas and salt water gathering systems in the
Wolf and Rustler Breaks asset areas. Matador incurred approximately $10
million in capital expenditures related to these projects during the
first quarter of 2017.

Delaware Basin Acreage Update

At May 3, 2017, Matador held 178,600 gross (102,300 net) acres in the
Permian Basin, primarily in the Delaware Basin in Lea and Eddy Counties,
New Mexico and Loving County, Texas, as shown in the table below.

   
Matador's Permian Basin Acreage at May 3, 2017 (approximate):
       

Asset Area

Gross Acres Net Acres
Ranger (Lea County, NM) 26,400 16,600
Arrowhead (Eddy County, NM) 50,900 18,700
Rustler Breaks (Eddy County, NM) 31,900 18,100
Antelope Ridge (Lea County, NM) 11,600 8,600
Wolf and Jackson Trust (Loving County, TX) 13,500 8,400
Twin Lakes (Lea County, NM) 42,900 30,800
Other 1,400 1,100
Total 178,600 102,300
 

From January 1 through May 3, 2017, Matador acquired approximately
15,900 gross (9,500 net) acres and approximately 1,000 BOE per day of
related production from various lessors and other operators, mostly in
and around its existing acreage in the Delaware Basin. Some of this
acreage, and a portion of the production, includes properties identified
at the time of Matador's December 2016 equity and debt offerings. These
transactions were pending at the time of those offerings and closed
subsequent to December 31, 2016. Matador has incurred capital
expenditures of approximately $121 million since January 1, 2017 to
acquire these leasehold interests and the related production. Matador
also continues to improve and block up its acreage position in its
various asset areas by conducting mutually beneficial acreage trades
with other operators working in these areas.

Capital Spending Update

As provided in its 2017 guidance estimates, as updated during its
Analyst Day presentation on March 23, 2017, Matador anticipates that it
will incur capital expenditures of (1) $400 to $420 million for
drilling, completing and equipping operated and non-operated wells in
2017, primarily in the Delaware Basin and (2) $56 to $64 million for its
share of various midstream projects undertaken by San Mateo,
representing 51% of an estimated 2017 joint venture capital expenditure
budget of $110 to $125 million. The Company's estimated 2017 capital
expenditures for drilling, completing and equipping its wells account
for a 10 to 15% increase in expected well costs attributable to higher
anticipated oilfield service costs and in particular, stimulation costs,
in 2017 as compared to 2016. Matador has allocated substantially all of
its estimated 2017 capital expenditures to the Delaware Basin, with the
exception of amounts allocated to limited operations in the Eagle Ford
(including the five wells being drilled and completed in 2017) and
Haynesville shales to maintain and extend leases and to participate in
those non-operated well opportunities where, in both cases, economic
returns are expected to be comparable to Matador's Delaware Basin wells.

During the first quarter of 2017, Matador's capital spending in these
categories was approximately $93 million, including approximately $83
million for drilling and completion operations and approximately $10
million for midstream operations. Capital spending for drilling,
completing and equipping wells of $83 million was less than projected
for the quarter as a result of the timing of completion operations, with
certain wells scheduled to be completed late in the first quarter
actually being completed early in the second quarter. The midstream
expenditures were somewhat higher than anticipated in the first quarter,
but this is again a result of timing, with certain 2017 proposed
midstream initiatives getting underway earlier than originally
anticipated.

Matador intends to continue acquiring acreage and mineral interests,
principally in the Delaware Basin, throughout 2017. These expenditures
are opportunity specific and per-acre prices can vary significantly
based on the opportunity. As a result, it is difficult to estimate these
2017 capital expenditures with any degree of certainty; therefore,
Matador has not provided estimated capital expenditures related to
acreage and mineral acquisitions for 2017. Matador will provide periodic
updates regarding completed acquisitions, as it has done in the Delaware
Basin Acreage Update in this earnings release.

Liquidity Update

At March 31, 2017, the borrowing base under Matador's revolving credit
facility was $400 million based on the lenders' review of the Company's
proved oil and natural gas reserves at June 30, 2016. At that date,
Matador had cash on hand totaling approximately $210 million, not
including the Company's 51% interest in approximately $15 million of
restricted cash associated with San Mateo, no outstanding borrowings
under the Company's revolving credit facility and approximately $0.8
million in outstanding letters of credit. At May 3, 2017, the Company
continues to have no outstanding borrowings under its credit facility,
other than approximately $0.8 million in outstanding letters of credit.

On April 28, 2017, Matador's lenders unanimously increased the borrowing
base under the Company's revolving credit facility to $450 million based
on their review of the Company's proved oil and natural gas reserves at
December 31, 2016. Given the Company's current cash position, Matador
chose to keep its "elected borrowing commitment" at $400 million. At May
3, 2017, Matador remains in a strong financial position and is
well-funded to execute the remainder of its 2017 drilling program and
midstream operations, primarily using cash on hand and anticipated cash
flows from operations, but can call upon its fully undrawn line of
credit should additional capital be needed. Currently, Matador does not
have a separate line of credit for its midstream operations.

Hedging Positions

From time to time, Matador uses derivative financial instruments to
mitigate its exposure to commodity price risk associated with oil,
natural gas and natural gas liquids prices and to protect its cash flows
and borrowing capacity.

At May 3, 2017, Matador has the following hedges in place, in the form
of costless collars, for the remainder of 2017.

  • Approximately 3.3 million barrels of oil at a weighted average floor
    price of $45 per barrel and a weighted average ceiling price of $56
    per barrel.
  • Approximately 16.7 billion cubic feet of natural gas at a weighted
    average floor price of $2.51 per MMBtu and a weighted average ceiling
    price of $3.60 per MMBtu.

Matador estimates that it now has approximately 65% of its anticipated
oil production and approximately 70% of its anticipated natural gas
production hedged for the remainder of 2017 based on the midpoint of its
production guidance.

At May 3, 2017, Matador has the following hedges in place, in the form
of costless collars, for 2018.

  • Approximately 1.9 million barrels of oil at a weighted average floor
    price of $44 per barrel and a weighted average ceiling price of $63
    per barrel.
  • Approximately 16.8 billion cubic feet of natural gas at a weighted
    average floor price of $2.58 per MMBtu and a weighted average ceiling
    price of $3.67 per MMBtu.

2017 Guidance Affirmation

At May 3, 2017, Matador affirms its 2017 guidance as updated on March
23, 2017.

Key elements of the Company's 2017 guidance are as follows:

      (1)   Oil production of 6.9 to 7.2 million barrels, an increase of 38% at
the midpoint of 2017 guidance, as compared to 5.1 million barrels
produced in 2016;
 
(2) Natural gas production of 33.0 to 35.0 billion cubic feet, an
increase of 11% at the midpoint of 2017 guidance, as compared to
30.5 billion cubic feet produced in 2016;
 
(3) Total oil equivalent production of 12.4 to 13.0 million BOE, an
increase of 25% at the midpoint of 2017 guidance, as compared to
10.2 million BOE produced in 2016;
 
(4) Drilling and completions capital expenditures (including equipping
wells for production) of $400 to $420 million, including estimated
capital expenditures associated with non-operated well opportunities;
 
(5) Midstream capital expenditures of $56 to $64 million, which
represents Matador's 51% share of an estimated capital expenditure
budget of $110 to $125 million for San Mateo; and
 
(6) Adjusted EBITDA, a non-GAAP financial measure, of $255 to $275
million, an increase of 68% at the midpoint of 2017 guidance, as
compared to 2016 Adjusted EBITDA of $157.9 million. Adjusted EBITDA
guidance was based on estimated average realized prices of $51.72
per barrel for oil (West Texas Intermediate average oil price of
$54.22 per barrel for oil, less $2.50 per barrel of estimated price
differentials, using the forward strip for oil prices as of late
February 2017) and $3.11 per thousand cubic feet for natural gas
(NYMEX Henry Hub average natural gas price using the forward strip
for natural gas prices as of late February 2017 and assuming
regional price differentials and uplifts from natural gas processing
roughly offset). These 2017 estimates reflect Matador's reduced
ownership in its Delaware Basin midstream assets from 100% to 51%
upon the formation of San Mateo, as announced on February 17, 2017.
In addition, at these oil and natural gas prices, Matador estimates
a realized loss on derivatives of about $11 million in 2017.
 

Second Quarter 2017 Production Growth Estimates

As noted in both Matador's February 22, 2017 earnings release and its
Analyst Day presentation on March 23, 2017, the Company has planned for
more multi-well pad drilling on its Delaware Basin acreage in 2017 than
in previous years, which will likely cause the cadence of its production
growth to be somewhat uneven from quarter to quarter. As a result,
Matador projects that its sequential production growth will be the
highest in the first and third quarters of 2017. In addition, third
quarter production growth should also benefit from initial production
attributable to Matador's five-well drilling program in the Eagle Ford
shale, as those wells are expected to be placed on production late in
the second quarter or early in the third quarter of 2017. For the year
as a whole, Matador continues to project that, at the midpoint of 2017
guidance, its oil production will increase by approximately 36% and its
natural gas production will increase approximately 11%, respectively,
from the fourth quarter of 2016 to the fourth quarter of 2017.

As to the second quarter of 2017 specifically,
Matador estimates that its oil production will increase by 2 to 4% and
that its natural gas production will increase by 6 to 8%, resulting in
total oil equivalent production growth of 3 to 5% from the first quarter
of 2017.
Natural gas production in the second quarter is expected
to benefit from initial production associated with three recently
completed non-operated wells in the Haynesville shale in the Company's
Elm Grove asset area, which were placed on production by an affiliate of
Chesapeake Energy Corporation early in the second quarter.

Conference Call Information

The Company will host a live conference call on Thursday, May 4, 2017,
at 9:00 a.m. Central Time to review its first quarter 2017 financial
results and operational highlights. To access the conference call,
domestic participants should dial (855) 875-8781 and international
participants should dial (720) 634-2925. The conference ID and passcode
is 11238591. The conference call will also be available through the
Company's website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab. The replay
for the event will be available on the Company's website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab through
June 1, 2017.

About Matador Resources Company

Matador 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. Its 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.
Matador also operates in the Eagle Ford shale play in South Texas and
the Haynesville shale and Cotton Valley plays in Northwest Louisiana and
East Texas. Additionally, Matador conducts midstream operations,
primarily through its midstream joint venture, San Mateo Midstream, LLC,
in support of its exploration, development and production operations and
provides natural gas processing, natural gas, oil and salt water
gathering services and salt water disposal services to third parties on
a limited basis.

For more information, visit Matador Resources Company at www.matadorresources.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
"Forward-looking statements" are statements related to future, not past,
events. Forward-looking statements are based on current expectations and
include any statement that does not directly relate to a current or
historical fact. In this context, forward-looking statements often
address expected future business and financial performance, and often
contain words such as "could," "believe," "would," "anticipate,"
"intend," "estimate," "expect," "may," "should," "continue," "plan,"
"predict," "potential," "project," "hypothetical," "forecasted" and
similar expressions that are intended to identify forward-looking
statements, although not all forward-looking statements contain such
identifying words. Actual results and future events could differ
materially from those anticipated in such statements, and such
forward-looking statements may not prove to be accurate. These
forward-looking statements involve certain risks and uncertainties,
including, but not limited to, the following risks related to financial
and operational performance: general economic conditions; the Company's
ability to execute its business plan, including whether its drilling
program is successful; the ability of the Company's midstream joint
venture to expand the Black River cryogenic processing plant, the timing
of such expansion and the operating results thereof; the timing and
operating results of the buildout by the Company's midstream joint
venture of oil, natural gas and water gathering systems and the drilling
of any additional salt water disposal wells; changes in oil, natural gas
and natural gas liquids prices and the demand for oil, natural gas and
natural gas liquids; its ability to replace reserves and efficiently
develop current reserves; costs of operations; delays and other
difficulties related to producing oil, natural gas and natural gas
liquids; its ability to make acquisitions on economically acceptable
terms; its ability to integrate acquisitions; availability of sufficient
capital to execute its business plan, including from future cash flows,
increases in its borrowing base and otherwise; weather and environmental
conditions; and other important factors which could cause actual results
to differ materially from those anticipated or implied in the
forward-looking statements. For further discussions of risks and
uncertainties, you should refer to Matador's filings with the Securities
and Exchange Commission ("SEC"), including the "Risk Factors" section of
Matador's most recent Annual Report on Form 10-K and any subsequent
Quarterly Reports on Form 10-Q. Matador undertakes no obligation and
does not intend to update these forward-looking statements to reflect
events or circumstances occurring after the date of this press release,
except as required by law, including the securities laws of the United
States and the rules and regulations of the SEC. You are cautioned not
to place undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary statement.

   
Matador Resources Company and Subsidiaries
 
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
 
(In thousands, except par value and share data)

March 31,
2017

December 31,
2016
  ASSETS
Current assets
Cash $ 209,705 $ 212,884
Restricted cash 14,604 1,258
Accounts receivable
Oil and natural gas revenues 40,423 34,154
Joint interest billings 27,945 19,347
Other 7,077 5,167
Derivative instruments 1,715
Lease and well equipment inventory 2,929 3,045
Prepaid expenses and other assets   5,578     3,327  
Total current assets 309,976 279,182
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated 2,531,559 2,408,305
Unproved and unevaluated 564,813 479,736
Other property and equipment 175,139 160,795
Less accumulated depletion, depreciation and amortization   (1,898,296 )   (1,864,311 )
Net property and equipment 1,373,215 1,184,525
Other assets
Derivative instruments 2,283
Other assets   919     958  
Total other assets   3,202     958  
Total assets $ 1,686,393   $ 1,464,665  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,266 $ 4,674
Accrued liabilities 111,492 101,460
Royalties payable 30,972 23,988
Amounts due to affiliates 2,515 8,651
Derivative instruments 8,321 24,203
Advances from joint interest owners 2,956 1,700
Amounts due to joint ventures 5,162 4,251
Other current liabilities   621     578  
Total current liabilities 167,305 169,505
Long-term liabilities
Senior unsecured notes payable 573,968 573,924
Asset retirement obligations 21,482 19,725
Derivative instruments 751
Amounts due to joint ventures 860 1,771
Other long-term liabilities   7,282     7,544  
Total long-term liabilities 603,592 603,715
Shareholders' equity
Common stock - $0.01 par value, 120,000,000 shares authorized;
100,203,648 and 99,518,764 shares issued; and 100,135,608 and
99,511,931 shares outstanding, respectively
1,002 995
Additional paid-in capital 1,444,263 1,325,481
Accumulated deficit (592,367 ) (636,351 )
Treasury stock, at cost, 68,040 and 6,833 shares, respectively   (633 )    
Total Matador Resources Company shareholders' equity 852,265 690,125
Non-controlling interest in subsidiaries   63,231     1,320  
Total shareholders' equity   915,496     691,445  
Total liabilities and shareholders' equity $ 1,686,393   $ 1,464,665  
 
Matador Resources Company and Subsidiaries
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 
(In thousands, except per share data) Three Months Ended
March 31,
    2017       2016  
Revenues
Oil and natural gas revenues $ 114,847 $ 43,926
Third-party midstream services revenues 1,555 473
Realized (loss) gain on derivatives (2,219 ) 7,063
Unrealized gain (loss) on derivatives   20,631     (6,839 )
Total revenues 134,814 44,623
Expenses
Production taxes, transportation and processing 11,807 7,902
Lease operating 15,758 14,511
Plant and other midstream services operating 2,341 1,027
Depletion, depreciation and amortization 33,992 28,923
Accretion of asset retirement obligations 300 264
Full-cost ceiling impairment 80,462
General and administrative   16,338     13,163  
Total expenses   80,536     146,252  
Operating income (loss) 54,278 (101,629 )
Other income (expense)
Net gain on asset sales and inventory impairment 7 1,065
Interest expense (8,455 ) (7,197 )
Other income   70     94  
Total other expense   (8,378 )   (6,038 )
Net income (loss) 45,900 (107,667 )
Net (income) loss attributable to non-controlling interest in
subsidiaries
  (1,916 )   13  
Net income (loss) attributable to Matador Resources Company
shareholders
$ 43,984   $ (107,654 )
Earnings (loss) per common share
Basic $ 0.44   $ (1.26 )
Diluted $ 0.44   $ (1.26 )
Weighted average common shares outstanding
Basic   99,799     85,305  
Diluted   100,298     85,305  
 
Matador Resources Company and Subsidiaries
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
 
(In thousands) Three Months Ended
March 31,
    2017       2016  
Operating activities
Net income (loss) $ 45,900 $ (107,667 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Unrealized (gain) loss on derivatives (20,631 ) 6,839
Depletion, depreciation and amortization 33,992 28,923
Accretion of asset retirement obligations 300 264
Full-cost ceiling impairment 80,462
Stock-based compensation expense 4,166 2,243
Amortization of debt issuance cost 44 300
Net gain on asset sales and inventory impairment (7 ) (1,065 )
Changes in operating assets and liabilities
Accounts receivable (16,777 ) 7,307
Lease and well equipment inventory 147 150
Prepaid expenses (2,251 ) (47 )
Other assets 39 97
Accounts payable, accrued liabilities and other current liabilities 8,256 2,591
Royalties payable 6,984 (3,975 )
Advances from joint interest owners 1,255 2,524
Income taxes payable (2,463 )
Other long-term liabilities   (108 )   1,875  
Net cash provided by operating activities 61,309 18,358
Investing activities
Oil and natural gas properties capital expenditures (204,457 ) (74,370 )
Expenditures for other property and equipment (20,867 ) (27,409 )
Proceeds from sale of assets 350
Restricted cash 43,337
Restricted cash in less-than-wholly-owned subsidiaries   (13,346 )   510  
Net cash used in investing activities (238,320 ) (57,932 )
Financing activities
Proceeds from issuance of common stock 142,350
Cost to issue equity (614 )
Proceeds from stock options exercised 1,981

Contributions related to formation of Joint Venture

171,500

Contributions from non-controlling interest owners of
less-than-wholly-owned subsidiaries

4,900
Taxes paid related to net share settlement of stock-based
compensation
(1,896 ) (565 )
Purchase of non-controlling interest of less-than-wholly-owned
subsidiary
  (2,653 )    
Net cash provided by financing activities   173,832     141,171  
(Decrease) increase in cash (3,179 ) 101,597
Cash at beginning of period   212,884     16,732  
Cash at end of period $ 209,705   $ 118,329  
 

Supplemental Non-GAAP Financial Measures

Adjusted EBITDA

This press release includes the non-GAAP financial measure of Adjusted
EBITDA. Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of the Company's
consolidated financial statements, such as industry analysts, investors,
lenders and rating agencies. "GAAP" means Generally Accepted Accounting
Principles in the United States of America. The Company believes
Adjusted EBITDA helps it evaluate its operating performance and compare
its results of operations from period to period without regard to its
financing methods or capital structure. The Company defines Adjusted
EBITDA as earnings before interest expense, income taxes, depletion,
depreciation and amortization, accretion of asset retirement
obligations, property impairments, unrealized derivative gains and
losses, certain other non-cash items and non-cash stock-based
compensation expense, and net gain or loss on asset sales and inventory
impairment. Adjusted EBITDA is not a measure of net income (loss) or net
cash provided by operating activities as determined by GAAP.

Adjusted EBITDA should not be considered an alternative to, or more
meaningful than, net income (loss) or net cash provided by operating
activities as determined in accordance with GAAP or as an indicator of
the Company's operating performance or liquidity. Certain items excluded
from Adjusted EBITDA are significant components of understanding and
assessing a company's financial performance, such as a company's cost of
capital and tax structure. Adjusted EBITDA may not be comparable to
similarly titled measures of another company because all companies may
not calculate Adjusted EBITDA in the same manner. The following table
presents the calculation of Adjusted EBITDA and the reconciliation of
Adjusted EBITDA to the GAAP financial measures of net income (loss) and
net cash provided by operating activities, respectively, that are of a
historical nature. Where references are pro forma, forward-looking,
preliminary or prospective in nature, and not based on historical fact,
the table does not provide a reconciliation. The Company could not
provide such reconciliation without undue hardship because the
forward-looking Adjusted EBITDA numbers included in this press release
are estimations, approximations and/or ranges. In addition, it would be
difficult for the Company to present a detailed reconciliation on
account of many unknown variables for the reconciling items, including
future income taxes, full-cost ceiling impairments, unrealized gains or
losses on derivatives and gains or losses on asset sales and inventory
impairments. For the same reasons, we are unable to address the probable
significance of the unavailable information, which could be material to
future results.

  Three Months Ended   Year Ended
(In thousands) March 31, 2017   December 31, 2016   March 31, 2016 December 31, 2016
Unaudited Adjusted EBITDA Reconciliation to Net Income (Loss):

Net income (loss) attributable to Matador Resources Company
shareholders

$ 43,984 $ 104,154 $ (107,654 ) $ (97,421 )
Net income (loss) attributable to non-controlling interest in
subsidiaries
  1,916     155     (13 )   364  
Net income (loss) 45,900 104,309 (107,667 ) (97,057 )
Interest expense 8,455 7,955 7,197 28,199
Total income tax provision (benefit) 105 (1,036 )
Depletion, depreciation and amortization 33,992 31,863 28,923 122,048
Accretion of asset retirement obligations 300 354 264 1,182
Full-cost ceiling impairment 80,462 158,633
Unrealized (gain) loss on derivatives (20,631 ) 10,977 6,839 41,238
Stock-based compensation expense 4,166 3,224 2,243 12,362
Net gain on asset sales and inventory impairment   (7 )   (104,137 )   (1,065 )   (107,277 )
Consolidated Adjusted EBITDA 72,175 54,650 17,196 158,292
Adjusted EBITDA attributable to non-controlling interest in
subsidiaries
  (2,216 )   (164 )   4     (400 )

Adjusted EBITDA attributable to Matador Resources Company
shareholders

$ 69,959   $ 54,486   $ 17,200   $ 157,892  
 
 
Three Months Ended Year Ended
(In thousands) March 31, 2017 December 31, 2016 March 31, 2016 December 31, 2016
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by
Operating Activities:
Net cash provided by operating activities $ 61,309 $ 37,624 $ 18,358 $ 134,086
Net change in operating assets and liabilities 2,455 9,215 (8,059 ) (1,809 )
Interest expense, net of non-cash portion 8,411 7,706 6,897 27,051
Current income tax provision (benefit) 105 (1,036 )
Adjusted EBITDA attributable to non-controlling interest in
subsidiaries
  (2,216 )   (164 )   4     (400 )

Adjusted EBITDA attributable to Matador Resources Company
shareholders

$ 69,959   $ 54,486   $ 17,200   $ 157,892  
 

Adjusted Net Income (Loss) and Adjusted Earnings
(Loss) Per Diluted Common Share

This press release includes the non-GAAP financial measures of adjusted
net income (loss) and adjusted earnings (loss) per diluted common share.
These non-GAAP items are measured as net income (loss) attributable to
Matador Resources Company shareholders, adjusted for dollar and per
share impact of certain items, including unrealized gains or losses on
derivatives, the impact of full cost-ceiling impairment charges, if any,
and non-recurring transaction costs for certain acquisitions along with
the related tax effect for all periods. This non-GAAP financial
information is provided as additional information for investors and is
not in accordance with, or an alternative to, GAAP financial measures.
Additionally, these non-GAAP financial measures may be different than
similar measures used by other companies. The Company believes the
presentation of adjusted net income (loss) and adjusted earnings (loss)
per diluted common share provides useful information to investors, as it
provides them an additional relevant comparison of the Company's
performance across periods and to the performance of the Company's
peers. In addition, these non-GAAP financial measures reflect
adjustments for items of income and expense that are often excluded by
industry analysts and other users of the Company's financial statements
in evaluating the Company's performance. The table below reconciles
adjusted net income (loss) and adjusted earnings (loss) per diluted
common share to their most directly comparable GAAP measure of net
income (loss) attributable to Matador Resources Company shareholders.

 
Three Months Ended

March 31,
2017

 

December 31,
2016

 

March 31,
2016

(In thousands, except per share data)
Unaudited Adjusted Net Income (Loss) and Adjusted Earnings (Loss)
Per Share Reconciliation to Net Income (Loss):
Net income (loss) attributable to Matador Resources Company
shareholders
$ 43,984 $ 104,154 $ (107,654 )
Total income tax provision       105      
Income (loss) attributable to Matador Resources Company shareholders
before taxes
43,984 104,259 (107,654 )
Less non-recurring and unrealized charges to income (loss) before
taxes:
Full-cost ceiling impairment 80,462
Unrealized (gain) loss on derivatives (20,631 ) 10,977 6,839
Net gain on asset sales and inventory impairment (7 ) (104,137 ) (1,065 )
Non-recurring transaction costs associated with the formation of San
Mateo Joint Venture
  3,458          
Adjusted income (loss) attributable to Matador Resources Company
shareholders before taxes
26,804 11,099 (21,418 )
Income tax provision (benefit) (1)   9,381     3,885     (7,496 )
Adjusted net income (loss) attributable to Matador Resources Company
shareholders (non-GAAP)
$ 17,423   $ 7,214   $ (13,922 )
 
Basic weighted average shares outstanding, without participating
securities
98,603 93,928 85,305
Dilutive effect of participating securities   1,196     1,043      
Weighted average shares outstanding, including participating
securities - basic
99,799 94,971 85,305
Dilutive effect of options, restricted stock units and preferred
shares
  499     691      
Weighted average common shares outstanding - diluted   100,298     95,662     85,305  
Adjusted earnings (loss) per share attributable to Matador Resources
Company shareholders (non-GAAP)
Basic $ 0.17   $ 0.08   $ (0.16 )
Diluted $ 0.17   $ 0.08   $ (0.16 )
 
(1) Estimated using federal statutory tax rate of 35%, which differs
from the actual effective tax rate due to a full valuation allowance
recognized against the deferred tax benefit.
 

PV-10

PV-10 is a non-GAAP financial measure and generally differs from
Standardized Measure, the most directly comparable GAAP financial
measure, because it does not include the effects of income taxes on
future net revenues. PV-10 is not an estimate of the fair market value
of the Company's properties. Matador and others in the industry use
PV-10 as a measure to compare the relative size and value of proved
reserves held by companies and of the potential return on investment
related to the companies' properties without regard to the specific tax
characteristics of such entities. PV-10 may be reconciled to the
Standardized Measure of discounted future net cash flows at such dates
by adding the discounted future income taxes associated with such
reserves to the Standardized Measure.

     
(in millions)

At
March 31, 2017

At
December 31, 2016

At
March 31, 2016

Standardized Measure $ 810.2 $ 575.0 $ 495.6
Discounted future income taxes   47.0   6.5   6.3
PV-10 $ 857.2 $ 581.5 $ 501.9

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