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Matador Resources Company Reports Third Quarter 2017 Results, Provides Operational Update and Increases 2017 Guidance Estimates

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Matador Resources Company (NYSE:MTDR) ("Matador" or the "Company")
today reported financial and operating results for the third quarter of
2017. This release is divided into two parts—first, a "Summary and
Highlights" section that summarizes key production and financial results
for the three months ended September 30, 2017, and second, a section
providing additional details related to the Company's third quarter 2017
results and a detailed operations update.

Part I - Summary and Highlights

Third Quarter 2017 Highlights

Sequential Results

  • Average daily oil production increased 21% sequentially from
    approximately 19,400 barrels per day in the second quarter of 2017 to
    approximately 23,500 barrels per day in the third quarter of 2017.
    This 21% average daily oil production growth significantly exceeded
    the Company's previous guidance expectations of 5 to 7% sequential oil
    production growth in the third quarter of 2017. Matador's
    third quarter 2017 average daily oil production was the best quarterly
    result in the Company's history.
  • Average daily natural gas production increased 5% sequentially from
    approximately 105.0 million cubic feet per day in the second quarter
    of 2017 to approximately 110.5 million cubic feet per day in the third
    quarter of 2017. This 5% average daily natural gas production growth
    also exceeded the Company's previous guidance expectations of 2 to 4%
    sequential natural gas production growth in the third quarter of 2017. Matador's
    third quarter 2017 average daily natural gas production was the best
    quarterly result in the Company's history.
  • Average daily oil equivalent production increased 14% sequentially
    from approximately 36,900 barrels of oil equivalent ("BOE") per day
    (53% oil) in the second quarter of 2017 to approximately 42,000 BOE
    per day (56% oil) in the third quarter of 2017. This 14% average daily
    oil equivalent production growth significantly exceeded the Company's
    previous guidance expectations of 4 to 6% sequential oil equivalent
    production growth in the third quarter of 2017. Matador's percentage
    of oil production increased sequentially from 53% in the second
    quarter of 2017 to 56% in the third quarter of 2017. Matador's
    third quarter 2017 average daily oil equivalent production (BOE basis)
    was the best quarterly result in the Company's history.
  • Delaware Basin average daily oil equivalent production exceeded 30,000
    BOE per day for the first time in the Company's history during the
    third quarter of 2017. Delaware Basin average daily oil equivalent
    production increased 11% sequentially from approximately 27,600 BOE
    per day (consisting of 16,600 barrels of oil per day and 65.9 million
    cubic feet of natural gas per day) in the second quarter of 2017 to
    approximately 30,700 BOE per day (consisting of 18,700 barrels of oil
    per day and 72.1 million cubic feet of natural gas per day) in the
    third quarter of 2017. The Delaware Basin contributed 79% of Matador's
    daily oil production, 65% of daily natural gas production and 73% of
    daily oil equivalent production in the third quarter of 2017.
  • Matador's net income (GAAP basis) decreased 47% sequentially from
    $28.5 million, or earnings of $0.28 per diluted common share, in the
    second quarter of 2017, to net income (GAAP basis) of $15.0
    million, or earnings of $0.15 per diluted common share
    , in the
    third quarter of 2017. This sequential decrease in net income was
    primarily attributable to changes in certain non-cash items, including
    an unrealized loss on derivatives in the third quarter of 2017 of
    approximately $12.4 million, as compared to an unrealized gain on
    derivatives of approximately $13.2 million in the second quarter of
    2017, primarily due to an increase in oil prices during the third
    quarter.
  • Matador's adjusted net income (a non-GAAP financial measure) increased
    63% sequentially from $10.9 million, or adjusted earnings of $0.11 per
    diluted common share, in the second quarter of 2017, to adjusted net
    income (non-GAAP) of $17.8 million, or adjusted earnings of $0.18
    per diluted common share
    , in the third quarter of 2017. This
    sequential increase in adjusted net income was primarily attributable
    to increased oil and natural gas production in the third quarter of
    2017, as compared to the second quarter of 2017.
  • Adjusted earnings before interest expense, income taxes, depletion,
    depreciation and amortization and certain other items ("Adjusted
    EBITDA," a non-GAAP financial measure) increased 17% sequentially from
    $72.7 million in the second quarter of 2017 to $84.8 million in
    the third quarter of 2017.

Note: All references to net income, adjusted net income and
Adjusted EBITDA reported throughout this earnings release are those
values attributable to Matador Resources Company shareholders after
giving effect to any net income, net loss or Adjusted EBITDA
attributable to its third-party non-controlling interest in Matador's
midstream affiliate, San Mateo Midstream, LLC ("San Mateo").

Year-Over-Year Results

  • Matador's net income (GAAP basis) increased 26% from $11.9 million, or
    earnings of $0.13 per diluted common share, in the third quarter of
    2016 to net income (GAAP basis) of $15.0 million, or earnings of $0.15
    per diluted common share, in the third quarter of 2017.
  • Matador's adjusted net income (a non-GAAP financial measure) increased
    231% from adjusted net income (non-GAAP) of $5.4 million, or adjusted
    earnings of $0.06 per diluted common share, in the third quarter of
    2016 to adjusted net income (non-GAAP) of $17.8 million, or adjusted
    earnings of $0.18 per diluted common share, in the third quarter of
    2017.
  • Matador's Adjusted EBITDA (a non-GAAP financial measure) increased 80%
    year-over-year from $47.3 million in the third quarter of 2016 to
    $84.8 million in the third quarter of 2017.
  • Year-over-year, from the third quarter of 2016 to the third quarter of
    2017:
    • Average daily oil production increased 57% from approximately
      15,000 barrels per day to approximately 23,500 barrels per day;
    • Average daily natural gas production increased 28% from
      approximately 86.5 million cubic feet per day to approximately
      110.5 million cubic feet per day; and
    • Average daily oil equivalent production increased 43% from
      approximately 29,400 BOE per day to approximately 42,000 BOE per
      day. In the Delaware Basin, average daily oil equivalent
      production increased 66% from approximately 18,500 BOE per day
      (consisting of 11,800 barrels of oil per day and 40.5 million
      cubic feet of natural gas per day) to approximately 30,700 BOE per
      day (consisting of 18,700 barrels of oil per day and 72.1 million
      cubic feet of natural gas per day).

Lease Operating Expenses

  • Lease operating expenses on a unit-of-production basis decreased 9%
    sequentially from $4.77 per BOE in the second quarter of 2017 to $4.32
    per BOE in the third quarter of 2017, and decreased 20% year-over-year
    from $5.40 per BOE in the third quarter of last year. Lease operating
    expenses of $4.32 per BOE in the third quarter of 2017 were the lowest
    lease operating expenses on a unit-of-production basis that Matador
    has achieved since becoming a public company in February 2012.

Proved Reserves at September 30, 2017

  • Oil, natural gas and total proved reserves at
    September 30, 2017 were each all-time highs for Matador.
    Matador's
    total proved oil and natural gas reserves increased 38% in the
    first nine months of 2017 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 145.9 million BOE (consisting of 83.0
    million barrels of oil and 377.1 billion cubic feet of natural gas) at
    September 30, 2017. At September 30, 2017, approximately 57% of
    Matador's total proved oil and natural gas reserves were oil and
    approximately 41% were proved developed reserves. At September 30,
    2017, the Delaware Basin accounted for approximately 84% of the
    Company's total proved oil and natural gas reserves.

Acreage Acquisitions

  • During the third quarter of 2017 and through November 6, 2017, Matador
    acquired approximately 9,700 net acres in the Delaware Basin, mostly
    in and around its existing acreage positions. At November 6, 2017,
    Matador had closed all but one of the transactions that were pending
    at the time of its October 2017 equity offering, with the last
    transaction expected to close this month. From January 1 through
    November 6, 2017, Matador acquired approximately 25,000 net acres in
    the Delaware Basin, including a small volume of associated production,
    for a total acquisition cost of approximately $224 million. Excluding
    the value of the production acquired, this acreage was added for a
    weighted average cost of between $7,000 and $8,000 per net acre.

Significant Well Results

Significant well results included in this earnings release include the
following:

Rustler Breaks Asset Area

  • The Joe Coleman 13-23S-27E RB #208H, Tom Walters 12-23S-27E RB #208H
    and Michael Collins 11-23S-27E RB #208H wells, all Wolfcamp A-XY
    completions in the northwestern portion of the Rustler Breaks asset
    area in Eddy County, New Mexico, flowed 1,779 BOE per day (75% oil),
    1,498 BOE per day (75% oil) and 1,534 BOE per day (76% oil),
    respectively, during 24-hour initial potential tests. These wells,
    along with other wells drilled and completed earlier in the year,
    continue to confirm the prospectivity of the Wolfcamp A-XY across the
    Rustler Breaks asset area.
  • The Anne Com 15-24S-28E RB #201H well, a Wolfcamp A-XY completion in
    the southeastern portion of the Rustler Breaks asset area, flowed
    1,730 BOE per day (77% oil) during a 24-hour initial potential test.

Arrowhead and Ranger Asset Area

  • The Stebbins 20 Federal #133H well, Matador's first operated Third
    Bone Spring completion in its Arrowhead asset area in Eddy County, New
    Mexico, tested 1,202 BOE per day (70% oil) during a 24-hour initial
    potential test. This well marked another strong result for the
    Stebbins area following the Stebbins 20 Federal #123H well, Matador's
    first operated Second Bone Spring completion in the Arrowhead asset
    area, which tested 1,010 BOE per day (82% oil) during a 24-hour
    initial potential test as reported last quarter.
  • The Airstrip 31-18S-35E RN State Com #132H well, a Third Bone Spring
    completion in the Ranger asset area in Lea County, New Mexico, tested
    1,263 BOE per day (93% oil) during a 24-hour initial potential test.

Wolf Asset Area

  • The Barnett 90-TTT-B01 WF #224H well, Matador's first Wolfcamp B test
    in the Wolf asset area, flowed 1,803 BOE per day (28% oil) during a
    24-hour initial potential test. This Wolfcamp B test performed
    similarly to tests of the Wolfcamp B-Blair in the Rustler Breaks asset
    area and validates the Wolfcamp B as another viable completion target
    in the Wolf asset area.

Borrowing Base Increase

  • On October 25, 2017, Matador's lenders unanimously approved an
    increase in the borrowing base under the Company's revolving credit
    facility from $450 million to $525 million based on the lenders'
    review of the Company's proved oil and natural gas reserves at June
    30, 2017. Matador chose to keep its "elected borrowing commitment"
    under the revolving credit facility at $400 million. At November 6,
    2017, the Company continued to have no outstanding borrowings under
    its credit facility.

Equity Offering

  • On October 10, 2017, Matador completed a public offering of 8.0
    million shares of its common stock, receiving proceeds of
    approximately $208.7 million (before expenses). A portion of the
    proceeds from this offering were and are being used to acquire
    approximately 6,600 net acres of additional leasehold and minerals in
    the Delaware Basin at a total acquisition cost of approximately $38
    million and to fund certain midstream initiatives and opportunities,
    including the acceleration of the drilling of commercial salt water
    disposal wells in the Rustler Breaks asset area on behalf of San
    Mateo. The remaining proceeds will be used for other midstream
    development, acreage acquisitions and general corporate purposes,
    including to fund a portion of the Company's current and future
    capital expenditures.

2017 Updated Guidance Estimates, Including
Increased Production Estimates

  • On November 6, 2017, Matador provided updated 2017 guidance estimates,
    including increased production estimates. These updated guidance
    estimates assumed five operated drilling rigs drilling oil and natural
    gas wells in the Delaware Basin throughout the fourth quarter of 2017,
    with a sixth operated rig drilling commercial salt water disposal
    wells in the Rustler Breaks asset area and one oil and natural gas
    test well in the Antelope Ridge asset area in the fourth quarter of
    2017. Matador expects to focus its capital expenditures in the
    Delaware Basin for the rest of 2017, with the exception of small
    amounts of capital to maintain or extend leases or to participate in
    non-operated well opportunities that may become available in the Eagle
    Ford and Haynesville shales.

Updated full-year 2017 guidance estimates, as of November 6, 2017, are
as follows.

  1. An increase in oil production to 7.7 to 7.75 million barrels, the
    Company's third increase in its oil production guidance this year.
    Matador's full-year 2017 oil production estimate of 7.725 million
    barrels at the midpoint of updated 2017 guidance represents an
    increase of 10% from 7.05 million barrels at the midpoint of guidance
    on March 23, 2017 (the Company's Analyst Day), and an increase of 7%
    from 7.2 million barrels at the midpoint of guidance on August 2,
    2017. This updated oil production guidance of 7.7 to 7.75 million
    barrels also represents an increase of 52% at the midpoint of
    guidance, as compared to 5.1 million barrels produced in 2016.
  2. An increase in natural gas production to 37.0 to 37.5 billion cubic
    feet, the Company's second increase in its natural gas production
    guidance this year. Matador's full-year 2017 natural gas production
    estimate of 37.25 billion cubic feet at the midpoint of updated 2017
    guidance represents an increase of 10% from 34.0 billion cubic feet at
    the midpoint of guidance on March 23, 2017, and an increase of 3% from
    36.0 billion cubic feet at the midpoint of guidance on August 2, 2017.
    This updated natural gas production guidance of 37.0 to 37.5 billion
    cubic feet also represents an increase of 22% at the midpoint of
    guidance, as compared to 30.5 billion cubic feet produced in 2016.
  3. An increase in total oil equivalent production to 13.9 to 14.0 million
    BOE, the Company's third increase in its oil equivalent production
    guidance this year. Matador's full-year 2017 oil equivalent production
    estimate of 13.95 million BOE at the midpoint of updated 2017 guidance
    represents an increase of 10% from 12.7 million BOE at the midpoint of
    guidance on March 23, 2017, and an increase of 6% from 13.2 million
    BOE at the midpoint of guidance on August 2, 2017. This updated oil
    equivalent production guidance of 13.9 to 14.0 million BOE also
    represents an increase of 37% at the midpoint of guidance, as compared
    to 10.2 million BOE produced in 2016.
  4. An increase in Adjusted EBITDA (a non-GAAP financial measure) to $300
    to $310 million. Matador's full-year 2017 Adjusted EBITDA estimate of
    $305 million at the midpoint of updated 2017 guidance represents an
    increase of 15% from $265 million at the midpoint of guidance on March
    23, 2017, and an increase of 13% from $270 million at the midpoint of
    guidance on August 2, 2017. This Adjusted EBITDA of $300 to $310
    million at the midpoint of updated 2017 guidance also represents an
    increase of 93%, as compared to 2016 Adjusted EBITDA of $157.9
    million. Updated Adjusted EBITDA guidance is based on estimated
    average realized prices for the fourth quarter of 2017 of $50.50 per
    barrel for oil (West Texas Intermediate average oil price of $53.00
    per barrel per oil, less $2.50 per barrel of estimated price
    differentials, using the forward strip for oil prices as of late
    October 2017, and including year-to-date results) and $2.87 per
    thousand cubic feet for natural gas (NYMEX Henry Hub average natural
    gas price using the forward strip for natural gas as of late October
    2017 and assuming regional price differentials and uplifts from
    natural gas processing roughly offset, and including year-to-date
    results). These 2017 estimates reflect Matador's 51% ownership in San
    Mateo.
  5. Drilling and completions capital expenditures (including equipping
    wells for production) of $440 to $465 million, an increase of 10% at
    the midpoint from $400 to $420 million at March 23, 2017, including
    capital expenditures associated with non-operated well opportunities.
    The increase in drilling and completion capital expenditures is
    primarily attributable to a number of factors, including, among
    others, (1) one gross, but 2.7 net, additional operated wells drilled
    and completed in the Delaware Basin through the third quarter of 2017
    than originally anticipated, along with an accelerated pace of
    drilling activity in the fourth quarter of 2017, primarily in the
    Rustler Breaks asset area, (2) increased working interests acquired on
    certain operated wells through purchase, non-consent by third parties
    or forced pooling of interests, (3) certain modifications to the
    Company's 2017 drill schedule, primarily in the Wolf asset area,
    resulting in the drilling of several additional wells with longer
    laterals (6,000 to 8,000 feet) in the fourth quarter of 2017 than
    originally planned, (4) the use of a sixth drilling rig, which was
    contracted to drill commercial salt water disposal wells, to drill one
    additional Rustler Breaks well in July 2017 and the Company's upcoming
    first test well in the Antelope Ridge asset area during the fourth
    quarter of 2017, (5) changes in fracture treatment designs resulting
    in closer perforation cluster spacing, more proppant and additional
    fracture stages in more wells than originally planned for 2017 and (6)
    the Company's participation in an estimated 2.2 net additional
    non-operated well opportunities in 2017 than originally anticipated,
    including non-operated wells in the Rustler Breaks, Ranger, Arrowhead
    and Twin Lakes asset areas. Matador anticipates this projected
    increase in estimated drilling and completion capital expenditures
    will largely be funded by the Company's anticipated increased cash
    flows as noted by the increase in the Company's Adjusted EBITDA
    guidance for full-year 2017 as described above.
  6. Midstream capital expenditures of $66 to $74 million, an increase of
    17% at the midpoint from $56 to $64 million as provided on March 23,
    2017. Midstream capital expenditures of $66 to $74 million primarily
    represent Matador's 51% share of an updated 2017 capital expenditure
    budget of $125 to $140 million for San Mateo. This increase in
    midstream capital expenditures of approximately $10 million net to
    Matador results from San Mateo's decision to continue drilling at
    least five commercial salt water disposal wells opportunistically in
    the Rustler Breaks asset area by mid-2018 to provide additional
    capacity for both Matador's and other third party customers' salt
    water disposal needs. Matador expects this projected increase in
    estimated midstream capital expenditures to be funded by the
    approximately $15 million in San Mateo first year performance
    incentives the Company expects to receive in the first quarter of 2018.

Fourth Quarter 2017 Production Estimates

Matador's sequential production growth—particularly its oil production
growth—was much higher than projected in the third quarter of 2017 due
to several factors, including (1) a number of new wells in the Company's
Rustler Breaks, Arrowhead and Ranger asset areas that exceeded
expectations for both oil and natural gas production, (2) better than
projected initial oil and natural gas production from several
non-operated wells in which the Company participated in the Delaware
Basin, (3) better than expected production response to the installation
of gas lift on the previously drilled Mallon wells in the Ranger asset
area and (4) strong initial well performance from the five Eagle Ford
wells the Company drilled and placed on production late in the second
quarter and early in the third quarter of 2017. As noted above, the
Company's oil production grew 21%, or just over 4,000 barrels of oil per
day, in the third quarter alone. This significant oil production growth
substantially exceeded the Company's expectations for both the third
quarter and the fourth quarter. In fact, in its oil production guidance
provided on August 2, 2017, the Company was estimating that oil
production of approximately 22,000 barrels of oil per day would not be
achieved until the fourth quarter of 2017. Matador was pleased to reach,
sustain and exceed that target earlier than expected.

Given the particularly strong oil production growth in the third quarter
and the timing of certain completions, Matador now anticipates that its
oil production will be essentially flat in the fourth quarter, as
compared to the third quarter of 2017, and this is reflected in its
updated full-year guidance estimates at November 6, 2017.

As noted in its August 2, 2017 earnings release, Matador's natural gas
production was expected to peak in the third quarter of 2017, as initial
production from the Haynesville shale wells completed earlier in the
year and the flush production from the associated offset wells began to
decline in the second half of 2017. Matador still anticipates a small
decline of 3 to 5% in its natural gas production during the fourth
quarter of 2017 (with natural gas production more in line with the
second quarter of 2017). This is also reflected in Matador's updated
full-year guidance estimates at November 6, 2017.

Matador currently anticipates providing its 2018 capital expenditures
program and production guidance in association with its year-end 2017
earnings release in late February 2018. Matador expects that its capital
expenditure program for 2018 will reflect the Company operating either
five or six drilling rigs. Matador's decision to operate five or six
drilling rigs in 2018 will depend primarily on oil and natural gas
prices, Matador's oil and natural gas hedging portfolio and other
economic factors, but will include considerations for opportunistic
midstream development and acreage acquisitions. Matador has the
operational flexibility to reduce its operated rig program by half in 60
to 90 days should the need arise but at this time, believes that a five
to six rig program is optimal for 2018.

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

    Three Months Ended
September 30, 2017     June 30, 2017     September 30, 2016
Net Production Volumes:(1)
Oil (MBbl)(2) 2,166 1,767 1,376
Natural gas (Bcf)(3) 10.2 9.6 8.0
Total oil equivalent (MBOE)(4) 3,860 3,360 2,703
Average Daily Production Volumes:(1)
Oil (Bbl/d) 23,538 19,423 14,960
Natural gas (MMcf/d)(5) 110.5 105.0 86.5
Total oil equivalent (BOE/d)(6) 41,954 36,922 29,381
Average Sales Prices:
Oil, without realized derivatives (per Bbl) $ 46.25 $ 46.01 $ 42.57
Oil, with realized derivatives (per Bbl) $ 46.47 $ 46.34 $ 43.18
Natural gas, without realized derivatives (per Mcf) $ 3.42 $ 3.40 $ 3.08
Natural gas, with realized derivatives (per Mcf) $ 3.42 $ 3.39 $ 3.08
Revenues (millions):
Oil and natural gas revenues $ 134.9 $ 113.8 $ 83.1
Third-party midstream services revenues $ 3.2 $ 2.1 $ 1.6
Realized gain on derivatives $ 0.5 $ 0.6 $ 0.9
Operating Expenses (per BOE):
Production taxes, transportation and processing $ 4.06 $ 3.83 $ 4.58
Lease operating $ 4.32 $ 4.77 $ 5.40
Plant and other midstream services operating $ 0.80 $ 0.88 $ 0.54
Depletion, depreciation and amortization $ 12.38 $ 12.28 $ 11.10
General and administrative(7) $ 4.19 $ 5.11 $ 4.86
Total(8) $ 25.75 $ 26.87 $ 26.48
Net income (millions)(9) $ 15.0 $ 28.5 $ 11.9
Earnings per common share (diluted)(9) $ 0.15 $ 0.28 $ 0.13
Adjusted net income (millions)(9)(10) $ 17.8 $ 10.9 $ 5.4
Adjusted earnings per common share (diluted)(9)(11) $ 0.18 $ 0.11 $ 0.06
Adjusted EBITDA (millions)(9)(12)     $ 84.8     $ 72.7     $ 47.3
(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 $0.34, $2.09 and $1.33 per BOE of non-cash,
stock-based compensation expense in the third quarter of 2017, the
second quarter of 2017 and the third 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."
 

A short presentation summarizing the highlights of Matador's third
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 Matador
staff continued to deliver both strong execution and better than
expected operational and financial results for its shareholders in the
third quarter of 2017. The Board and I wish to thank them for their hard
work, planning and extra effort on behalf of all Matador shareholders.
Simply put, this quarter was the best quarter in the Company's history
and provides a solid platform for future growth in Matador's per share
value.

"Obviously, we continue to be very pleased with the record production
and reserves growth we are achieving across the northern Delaware Basin.
Our Delaware Basin average daily oil equivalent production increased 11%
sequentially from the second quarter of 2017, and increased 66%
year-over-year from the third quarter of 2016. In the third quarter of
2017, our Delaware Basin average daily oil equivalent production was
30,700 BOE per day, topping 30,000 BOE per day in the Delaware for the
first time.

"In addition, our total company-wide proved reserves increased 38% in
the first nine months of 2017 from 105.8 million BOE at December 31,
2016 to a record level of 145.9 million BOE at September 30, 2017. This
increase in total proved reserves reflects not only the success of our
drilling and completions operations, but also our success in acquiring
additional acreage in and around areas actively being drilled in the
Delaware Basin. Detailed information is contained herein on various
successful wells we have recently drilled and completed—both exploratory
and development—in the northern Delaware Basin. Significant reductions
in per unit lease operating expenses and general and administrative
expenses also contributed to increases in cash flows and proved reserves
values.

"As in previous quarters, we continued to strategically add to and
improve our acreage position in the Delaware Basin at attractive prices
for a weighted average cost of approximately $7,000 to $8,000 per acre
during the third quarter and into the fourth quarter of 2017. This
additional acreage was acquired primarily in and near our existing asset
areas in the Delaware Basin in Lea and Eddy Counties, New Mexico and
Loving County, Texas. At November 6, 2017, we are pleased to report that
our acreage position in the Delaware Basin has grown to approximately
201,000 gross (116,000 net) acres. We are very proud of our land and
legal staff for all of its hard work and diligence in assembling this
excellent acreage position for Matador—quite an accomplishment when you
consider we had only about 7,500 gross and net acres in the basin when
we went public just over five years ago. This land position has been and
will continue to be the fuel for Matador's growth and success in the
coming years. Our midstream operations also continue to exceed
expectations, and early in the fourth quarter of 2017, San Mateo reached
a new milestone for salt water disposal operations, disposing of more
than 100,000 barrels of water per day combined at its Wolf and Rustler
Breaks commercial facilities.

"In early October, we completed an offering of 8.0 million shares of our
common stock, resulting in gross proceeds of approximately $209 million,
a portion of which we used to fund a set of unique land and midstream
opportunities that might not be available in two to three years—or even
next year. In late October, we were pleased that Matador's lenders
raised the borrowing base under our revolving credit facility from $450
million to $525 million based on their review of our proved oil and
natural gas reserves at June 30, 2017. We chose to keep our elected
borrowing commitment at $400 million, and we had no borrowings
outstanding under our credit facility at November 6, 2017. The cash from
the equity offering, along with our cash on hand at the end of the third
quarter, our anticipated future cash flows and the increased
availability under our credit facility puts Matador in a very strong and
very well-funded capital position to execute our drilling and midstream
programs throughout the remainder of 2017 and into 2018 and to be
opportunistic for value-adding acreage acquisitions at favorable prices.
I would also like to offer a special thank you to our shareholders—new
and old—for helping with the offering and for their continued support
and interest.

"Matador currently expects to continue operating five state-of-the-art
rigs drilling oil and natural gas wells in the Delaware Basin throughout
the remainder of 2017, although we have considerable operational
flexibility to modify our drilling program—up or down—based upon
fluctuations in commodity prices and other factors. We also expect to
continue drilling at least five commercial salt water disposal wells by
mid-2018 in the Rustler Breaks asset area on behalf of our midstream
affiliate, San Mateo, with a sixth operated modern rig. After drilling
these commercial salt water disposal wells, we will determine whether to
release that rig or to use it to drill additional oil and natural gas
wells for the remainder of 2018. Matador looks forward to finishing 2017
on a strong note in the fourth quarter and to another year of strong
execution and results in 2018."

Part II - Detailed Financial Results and
Operations Update

Operating and Financial Results - Third Quarter 2017

Production and Revenues

Average daily oil equivalent production increased 14% sequentially from
36,922 BOE per day (53% oil) in the second quarter of 2017 to 41,954 BOE
per day (56% oil) in the third quarter of 2017, and increased 43%
year-over-year from 29,381 BOE per day (51% oil) in the third quarter of
2016. Matador's increased oil equivalent production, and particularly
its oil production, in the third quarter of 2017, exceeded the Company's
previous guidance expectations due to several factors, including (1)
several new wells in the Company's Rustler Breaks, Arrowhead and Ranger
asset areas that exceeded the Company's expectations for both oil and
natural gas production, (2) better than projected initial oil and
natural gas production from several non-operated wells in which the
Company participated in the Delaware Basin, (3) a better than expected
production response to the installation of gas lift in the previously
drilled Mallon wells in the Ranger asset area and (4) strong initial
well performance from the five operated Eagle Ford wells the Company
drilled and placed on production late in the second quarter and early in
the third quarter of 2017. Average daily oil equivalent production
growth of 14% significantly exceeded the Company's previous guidance
expectations of 4 to 6% sequential oil equivalent production growth in
the third quarter of 2017. Matador's third
quarter 2017 average daily oil equivalent production was the best
quarterly result in the Company's history.

Average daily oil production increased 21% sequentially from 19,423
barrels per day in the second quarter of 2017 to 23,538 barrels per day
in the third quarter of 2017, and increased 57% year-over-year from
14,960 barrels per day in the third quarter of 2016. Average daily oil
production growth of 21% significantly exceeded the Company's previous
guidance expectations of 5 to 7% sequential oil production growth in the
third quarter of 2017. Matador's third quarter
2017 average daily oil production was the best quarterly result in the
Company's history.

Average daily natural gas production increased 5% sequentially from
105.0 million cubic feet per day in the second quarter of 2017 to 110.5
million cubic feet per day in the third quarter of 2017, and increased
28% year-over-year from 86.5 million cubic feet per day in the third
quarter of 2016. Average daily natural gas production growth of 5% also
exceeded the Company's previous guidance expectations of 2 to 4%
sequential natural gas production growth in the third quarter of 2017. Matador's
third 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
30,707 BOE per day (73% of total oil equivalent production) in the third
quarter of 2017, consisting of 18,689 barrels of oil per day (79% of
total oil production) and 72.1 million cubic feet of natural gas per day
(65% of total natural gas production). The Company's Delaware Basin
average daily oil equivalent production exceeded 30,000 BOE per day for
the first time in the Company's history during the third quarter of
2017. Matador's Delaware Basin oil equivalent production increased 11%
sequentially, as compared to 27,622 BOE per day in the second quarter of
2017, and increased 66% year-over-year, as compared to 18,498 BOE per
day in the third quarter of 2016.

Oil and natural gas revenues increased 19% sequentially from $113.8
million in the second quarter of 2017 to $134.9 million in the third
quarter of 2017, and increased 62% year-over-year from $83.1 million in
the third quarter of 2016. The increase in oil and natural gas
production noted above was primarily responsible for the increase in oil
and natural gas revenues, as realized oil and natural gas prices
remained mostly unchanged between the second and third quarters of 2017.
Realized oil prices increased 1% from $46.01 per barrel in the second
quarter of 2017 to $46.25 per barrel in the third quarter of 2017, and
increased 9% year-over-year from $42.57 per barrel in the third quarter
of 2016. Realized natural gas prices remained flat at $3.42 per thousand
cubic feet in the third quarter of 2017, as compared to $3.40 per
thousand cubic feet in the second quarter of 2017, but increased 11%
year-over-year from $3.08 per thousand cubic feet in the third quarter
of 2016. Realized oil prices remained relatively unchanged in the third
quarter, as compared to the second quarter of 2017, as a result of
little change in West Texas Intermediate oil prices, as well as similar
oil price differentials, which were $1.95 per barrel in the third
quarter, as compared to $2.13 per barrel in the second quarter of 2017.
Realized natural gas prices were unchanged in the third quarter of 2017
as a result of somewhat higher natural gas liquids ("NGL") prices
offsetting somewhat lower Henry Hub natural gas prices during the third
quarter, as compared to the second quarter of 2017. Including its NGL
revenues in the realized average natural gas price, Matador reported an
uplift of $0.47 per thousand cubic feet above the NYMEX Henry Hub
average natural gas prices in the third quarter of 2017, as compared to
$0.32 per thousand cubic feet in the second quarter of 2017.

Third-party midstream services revenues increased 53% sequentially from
$2.1 million in the second quarter of 2017 to $3.2 million in the third
quarter of 2017, and doubled year-over-year from $1.6 million in the
third quarter of 2016. The sequential and year-over-year increases
primarily reflect increased third-party natural gas processing and
transportation revenues, as well as increased salt water disposal
revenues in the third quarter of 2017, as compared to the second quarter
of 2017 and the third quarter of 2016. 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.

Total realized revenues, including realized hedging gains and losses and
third-party midstream services revenues, increased 19% sequentially from
$116.4 million in the second quarter of 2017 to $138.7 million in the
third quarter of 2017, and increased 62% year-over-year from $85.5
million in the third quarter of 2016. Realized hedging gains from oil
and natural gas hedges were $0.5 million in the third quarter of 2017,
as compared to realized hedging gains of $0.6 million in the second
quarter of 2017 and $0.9 million in the third quarter of 2016.

Net Income and Earnings Per Share

For the third quarter of 2017, Matador reported net income of
approximately $15.0 million, or earnings of $0.15 per diluted common
share on a GAAP basis, as compared to net income of approximately $28.5
million, or earnings of $0.28 per diluted common share on a GAAP basis,
in the second quarter of 2017, and as compared to net income of $11.9
million, or earnings of $0.13 per diluted common share on a GAAP basis,
in the third quarter of 2016. The sequential decrease in net income
(GAAP basis) in the third quarter of 2017 was primarily attributable to
changes in certain non-cash items, including particularly an unrealized
loss on derivatives of $12.4 million in the third quarter of 2017, as
compared to an unrealized gain on derivatives of $13.2 million in the
second quarter of 2017.

Excluding certain non-cash and non-recurring items, including the
unrealized loss on derivatives, from net income resulted in adjusted net
income (a non-GAAP financial measure) of approximately $17.8 million, or
adjusted earnings of $0.18 per diluted common share, in the third
quarter of 2017, as compared to adjusted net income of approximately
$10.9 million, or adjusted earnings of $0.11 per diluted common share,
in the second quarter of 2017, and adjusted net income of $5.4 million,
or adjusted earnings of $0.06 per diluted common share, in the third
quarter of 2016.

Matador's net income (GAAP basis) for the third quarter of 2017 was
favorably impacted by (1) record oil and natural gas production, (2) a
realized gain on derivatives of $0.5 million, (3) no full-cost ceiling
impairment in the quarter and (4) no income tax expense. Matador's net
income for the third quarter of 2017 was unfavorably impacted by (1) an
unrealized loss on derivatives and (2) increased non-cash depletion,
depreciation and amortization expenses.

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, a non-GAAP financial measure, increased 17%
sequentially from $72.7 million in the second quarter of 2017 to $84.8
million in the third quarter of 2017, and increased 80% year-over-year
from $47.3 million in the third quarter of 2016. The sequential increase
in Adjusted EBITDA was primarily attributable to the increases in both
oil and natural gas production. The year-over-year increase in Adjusted
EBITDA was primarily attributable to both the increases in oil and
natural gas production and the increases in realized oil and natural gas
prices between the third quarters of 2016 and 2017.

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 increased 6% sequentially from $3.83 per BOE in
the second quarter of 2017 to $4.06 per BOE in the third quarter of
2017, but decreased 11% year-over-year from $4.58 per BOE in the third
quarter of 2016. Production taxes increased during the third quarter of
2017 as a result of the 19% increase in oil and natural gas revenues in
the third quarter, as compared to the second quarter of 2017. Production
taxes also increased primarily as a result of the 62% year-over-year
increase in oil and natural gas revenues. However, Matador realized a
decrease in transportation and processing expenses year-over-year
primarily as a result of the start-up in late August 2016 of the
cryogenic natural gas processing plant in the Rustler Breaks asset area
(the "Black River Processing Plant"). On a unit-of-production basis,
these third quarter 2017 expenses also benefited from significantly
higher daily oil equivalent production of 14% and 43%, respectively, as
compared to the second quarter of 2017 and the third quarter of 2016.

Lease operating expenses ("LOE")

Lease operating expenses on a unit-of-production basis decreased 9%
sequentially from $4.77 per BOE in the second quarter of 2017 to $4.32
per BOE in the third quarter of 2017, and decreased 20% year-over-year
from $5.40 per BOE in the third quarter of 2016. The sequential decrease
in lease operating expenses on a unit-of-production basis was primarily
attributable to higher daily oil equivalent production in the third
quarter of 2017, as compared to the second quarter of 2017, but also
resulted from lower contract labor and workover expenses in the third
quarter of 2017, as well as continued improvement in many other areas,
including operational efficiencies. Lease operating expenses of $4.32
per BOE in the third quarter of 2017 were the lowest quarterly lease
operating expenses on a unit-of-production basis that the Company has
achieved since becoming a public company in February 2012.

Plant and other midstream services operating
expenses

Plant and other midstream services operating expenses decreased 9%
sequentially from $0.88 per BOE in the second quarter of 2017 to $0.80
per BOE in the third quarter of 2017, but increased 48% year-over-year
from $0.54 per BOE in the third quarter of 2016. The increase in plant
and other midstream services operating expenses on a year-over-year
basis is attributable primarily to the overall increase in the scope of
San Mateo's midstream operations in the Delaware Basin since the third
quarter of 2016. Plant and other midstream services operating expenses
of $0.80 per BOE were somewhat below the Company's expectation of $0.90
per BOE for full-year 2017; year-to-date, these expenses have averaged
$0.82 per BOE.

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

Depletion, depreciation and amortization expenses on a
unit-of-production basis increased 1% sequentially from $12.28 per BOE
in the second quarter of 2017 to $12.38 per BOE in the third quarter of
2017, and increased 12% from $11.10 per BOE in the third quarter of
2016. The increase in DD&A expenses on a year-over-year basis resulted
from increased drilling and completion costs, primarily stimulation
treatment costs (resulting from larger fracture treatments using more
stages and more proppant, in addition to service cost increases),
associated with the Company's 2017 Delaware Basin drilling program. For
the nine months ended September 30, 2017, DD&A expenses on a
unit-of-production basis of $12.08 per BOE remained below the Company's
full-year DD&A projection of $12.75 per BOE. The Company anticipates a
small increase in DD&A expenses on a unit-of-production basis in the
fourth quarter of 2017.

General and administrative ("G&A")

General and administrative expenses on a unit-of-production basis
decreased 18% from $5.11 per BOE in the second quarter of 2017 to $4.19
per BOE in the third quarter of 2017. During the second quarter of 2017,
general and administrative expenses included a one-time, non-recurring
charge of approximately $1.5 million, which was attributable to a change
in the vesting schedule applicable to equity awards granted to the
Company's directors. Year-over-year general and administrative expenses
decreased 14% on a unit-of-production basis from $4.86 per BOE in the
third quarter of 2016. General and administrative expenses of $4.19 per
BOE for the third quarter of 2017 also approached the lowest quarterly
G&A expenses on a unit-of-production basis that Matador has achieved
since becoming a public company in February 2012.

Proved Reserves, Standardized Measure and PV-10

The following table summarizes Matador's estimated total proved oil and
natural gas reserves at September 30, 2017, December 31, 2016 and
September 30, 2016.

    September 30,
2017
    December 31,
2016
    September 30,
2016
Estimated proved reserves:(1)(2)
Oil (MBbl)(3) 83,014 56,977 55,031
Natural Gas (Bcf)(4)   377.1     292.6     279.4  
Total (MBOE)(5)   145,860     105,752     101,604  
Estimated proved developed reserves:
Oil (MBbl)(3) 31,961 22,604 21,204
Natural Gas (Bcf)(4)   164.4     126.8     118.8  
Total (MBOE)(5)   59,357     43,731     41,012  
Percent developed 40.7 % 41.4 % 40.4 %
Estimated proved undeveloped reserves:
Oil (MBbl)(3) 51,053 34,373 33,827
Natural Gas (Bcf)(4)   212.7     165.9     160.6  
Total (MBOE)(5)   86,503     62,021     60,592  
Standardized Measure (in millions) $ 1,096.2 $ 575.0 $ 516.8
PV-10(6) (in millions)     $ 1,225.9       $ 581.5       $ 524.7  
(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
October 2016 through September 2017 were $46.27 per Bbl for oil and
$3.00 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 October 2015 through
September 2016 were $38.17 per Bbl for oil and $2.28 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 145.9 million BOE at September 30, 2017, an
all-time high,
consisting of 83.0 million barrels of oil and
377.1 billion cubic feet of natural gas (both also all-time highs), with
a Standardized Measure of $1.1 billion (GAAP basis) and a PV-10, a
non-GAAP financial measure, of $1.2 billion, an increase of 38% from
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 91% increase in
Standardized Measure and 111% increase in PV-10 at September 30, 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 September 30, 2017,
the 12-month arithmetic averages of oil and natural gas prices used to
estimate proved reserves were $46.27 per barrel and $3.00 per MMBtu,
respectively, as compared to $39.25 per barrel and $2.48 per MMBtu,
respectively, at December 31, 2016.

Proved oil reserves increased 46% from 57.0 million barrels at
December 31, 2016 to 83.0 million barrels at September 30, 2017, and
increased 51% from 55.0 million barrels at September 30, 2016. At
September 30, 2017, approximately 57% of the Company's total proved
reserves were oil and 43% were natural gas. Approximately 41% of the
Company's total proved reserves were proved developed reserves at
September 30, 2017, as compared to 41% at December 31, 2016 and 40% at
September 30, 2016. In addition, at September 30, 2017, approximately
84% of Matador's proved oil and natural gas reserves were attributable
to the Delaware Basin, as compared to 75% at December 31, 2016 and 73%
at September 30, 2016.

The reserves estimates at all dates presented in the table above were
prepared by the Company's internal engineering staff and those estimates
at December 31 and September 30, 2016 were also audited by an
independent reservoir engineering firm, Netherland, Sewell & Associates,
Inc. 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

Drilling and Completion Activities

During the third quarter of 2017, Matador continued to focus on the
exploration, delineation and development of the Company's 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, 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 still expects to
direct over 90% of its estimated 2017 capital expenditures to drilling
and completion and midstream operations in the Delaware Basin.

During the third quarter of 2017, Matador took delivery of a sixth
drilling rig for the purpose of drilling a second commercial salt water
disposal well in the Rustler Breaks asset area for its midstream
affiliate, San Mateo. The salt water disposal well was not ready to spud
until early August 2017 and, in the interim, Matador used this rig to
drill one additional oil and natural gas well in its Rustler Breaks
asset area. Subsequent to drilling this second salt water disposal well,
San Mateo elected to commission the drilling and completion of three
additional commercial salt water disposal wells and the construction of
associated commercial salt water disposal facilities in the Rustler
Breaks asset area, resulting in five commercial salt water disposal
wells in the Rustler Breaks asset area by mid-2018.

At November 6, 2017, the second commercial salt water disposal well in
the Rustler Breaks asset area had been completed and had just begun
disposing of water, with an anticipated disposal capacity of
approximately 30,000 barrels of water per day. A third commercial salt
water disposal well at Rustler Breaks had finished drilling and was
expected to be completed in the fourth quarter. The fourth planned
commercial salt water disposal well is expected to begin drilling before
the end of the year. In the interim, in view of the potential for the
Antelope Ridge asset area, Matador expects to temporarily move this
sixth rig to that area to spud its first oil and natural gas well there
before the middle of November. Should San Mateo experience any land or
regulatory delays in permitting or drilling the fourth or fifth
commercial salt water disposal wells, however, Matador would likely
elect to use this sixth rig on a temporary basis to drill additional oil
and natural gas wells in either the Rustler Breaks or Antelope Ridge
asset areas. Matador will determine whether to continue operating this
sixth rig for its oil and natural gas well drilling program later in the
first quarter or early second quarter of 2018, after the last of the
five planned commercial salt water disposal wells has been drilled.
Matador currently expects to provide its 2018 capital expenditures
program and production guidance in association with its year-end 2017
earnings release in late February 2018.

Matador finished drilling its five-well program in the Eagle Ford shale
in South Texas during the second quarter of 2017. Two of these wells,
the Falls City #1H and #2H wells, were completed and turned to sales in
mid-June 2017. The other three wells, the Martin Ranch C #11H well and
the Martin MAK D #49H and D #50H wells, were completed and turned to
sales in early July 2017, with all five wells on production for
essentially the entire third quarter. These five Eagle Ford wells tested
between approximately 1,100 and 1,700 BOE per day at oil cuts between 91
and 94%, as reported in the Company's August 2, 2017 earnings release.
Matador has no additional operated drilling activities planned in the
Eagle Ford shale for the remainder of 2017.

Matador has built significant optionality into its drilling program.
Three of its rigs are on longer-term contracts, although with average
remaining terms of only between 12 and 18 months. The other three rigs,
including the sixth rig being used for drilling the salt water disposal
wells at Rustler Breaks, are all on short-term contracts with
obligations ranging from two months to six months. This affords Matador
the ability to easily and quickly modify its drilling program as
management may determine necessary based on changing commodity prices
and other factors.

During the third quarter of 2017, Matador completed and turned to sales
a total of 30 gross (20.9 net) horizontal wells in its various operating
areas, including 22 gross (19.0 net) operated wells and eight gross (1.9
net) non-operated wells, as summarized in the table below.

    Operated       Non-Operated       Total
Operating Area Gross     Net Gross     Net Gross     Net
Delaware Basin 19 16.0 7 1.9 26 17.9
Eagle Ford Shale 3 3.0 0 0.0 3 3.0
Haynesville Shale     0     0.0       1     0.0       1     0.0
Total     22     19.0       8     1.9       30     20.9
 

As noted in the table above, during the third quarter of 2017, Matador
completed and turned to sales 26 gross (17.9 net) horizontal wells in
its various asset areas in the Delaware Basin, including 19 gross (16.0
net) operated and seven gross (1.9 net) non-operated wells, as
summarized in the table below.

    Operated       Non-Operated       Total
Operating Area Gross     Net Gross     Net Gross     Net
Rustler Breaks 13 10.8 4 1.1 17 11.9
Arrowhead 3 2.2 1 0.1 4 2.3
Ranger 1 1.0 0 0.0 1 1.0
Wolf 2 2.0 0 0.0 2 2.0
Antelope Ridge     0     0.0       2     0.7       2     0.7
Total     19     16.0       7     1.9       26     17.9
 

As of the end of the third quarter, Matador was somewhat ahead of the
pace of its projected 2017 operated drilling and completions program as
outlined in its March 23, 2017 Analyst Day presentation. At September
30, 2017, Matador had turned to sales 48 gross (41.6 net) operated
wells, as compared to initial estimates of 47 gross (38.7 net) wells.
Thus, at September 30, 2017, the Company was ahead of its anticipated
schedule by one gross well, but as a result of slight modifications to
the drill schedule and the acquisition of additional working interests
in those wells drilled during 2017 (through purchase, non-consent of
other parties or forced pooling of certain interests), Matador had
turned to sales an additional 2.9 net operated wells.

Prior to September 30, 2017, Matador had completed and turned to sales
the eight gross (5.8 net) operated and non-operated wells anticipated
for 2017 in the Eagle Ford shale, as well as the six gross (0.6 net)
non-operated wells anticipated for 2017 in the Haynesville shale. While
the Company may participate in additional non-operated well
opportunities in both of these areas during the remainder of 2017, any
additional capital expenditures are anticipated to be minimal.

Delaware Basin - Southeast New Mexico and West Texas

Rustler Breaks Asset Area – Eddy County, New Mexico

Matador operated three drilling rigs in its Rustler Breaks asset area
throughout the third quarter of 2017. In addition, the Company
temporarily operated a fourth drilling rig at Rustler Breaks beginning
in July 2017 to drill a Second Bone Spring test prior to beginning
drilling operations on the second and third commercial salt water
disposal wells being drilled on behalf of San Mateo in the Rustler
Breaks asset area. During the third quarter of 2017, the Company
completed and turned to sales 17 gross (11.9 net) horizontal wells in
this area, including 13 gross (10.8 net) operated wells and four gross
(1.1 net) non-operated wells. The 13 operated wells included 10 Wolfcamp
A-XY completions, two Wolfcamp B-Blair completions and one Second Bone
Spring completion. The 13 operated wells had an average completed
lateral length between 4,400 and 4,500 feet. The 24-hour initial
potential test results from all 13 operated 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)
Dr. Scrivner Federal 01-24S-28E RB #124H Second Bone Spring 696 1,243 903 77% 850 38/64"
B. Banker 33-23S-28E RB #201H Wolfcamp A-XY 927 1,652 1,202 77% 1,900 34/64"
Tiger 14-24S-28E RB #202H Wolfcamp A-XY 1,026 2,155 1,385 74% 2,200 30/64"
Jim Tom Lontos 30-23S-28E RB #206H Wolfcamp A-XY 1,016 2,142 1,373 74% 1,780 34/64"
Charlie Sweeney State Com 31-23S-28E RB #202H Wolfcamp A-XY 898 1,836 1,204 75% 1,620 32/64"
Joe Coleman 13-23S-27E RB #208H Wolfcamp A-XY 1,339 2,637 1,779 75% 2,300 28/64"
Kathy Coleman 14-23S-27E RB #208H Wolfcamp A-XY 859 1,648 1,134 76% 1,700 30/64"
Tom Walters 12-23S-27E RB #208H Wolfcamp A-XY 1,121 2,263 1,498 75% 1,575 34/64"
Michael Collins 11-23S-27E RB #208H Wolfcamp A-XY 1,162 2,234 1,534 76% 1,540 34/64"
Anne Com 15-24S-28E RB #201H Wolfcamp A-XY 1,338 2,349 1,730 77% 2,150 32/64"
Tiger 14-24S-28E RB #201H Wolfcamp A-XY 1,064 2,337 1,454 73% 2,125 34/64"
Tiger 14-24S-28E RB #221H Wolfcamp B-Blair 572 4,471 1,317 43% 3,325 28/64"
Tiger 14-24S-28E RB #222H Wolfcamp B-Blair 632 6,210 1,667 38% 3,550 30/64"
 

(1) Flowing casing pressure.

 

Overall, the well results achieved in the Rustler Breaks asset area in
the third quarter of 2017 continued to be both strong and consistent in
both the Wolfcamp A-XY and Wolfcamp B-Blair completions. Further, the
Dr. Scrivner Federal 01-24S-28E RB #124H (Dr. Scrivner #124H) well was
the best Second Bone Spring test drilled by Matador to date in the
Rustler Breaks asset area. Although the focus of its drilling and
completion activities is expected to be in the Wolfcamp A-XY and
Wolfcamp B intervals for the remainder of 2017 and 2018, the Company
does expect to conduct additional tests in the Second Bone Spring and
Wolfcamp A-Lower intervals, as well as perhaps one or two yet untested
targets, as part of its 2018 drilling program.

As noted in the table above, the wells completed in the Wolfcamp A-XY
interval during the third quarter of 2017 tested between 1,100 and 1,800
BOE per day at oil cuts ranging from 73 to 77%. These test results are
comparable to those from other Wolfcamp A-XY completions in the Rustler
Breaks asset area reported in prior periods. Of particular note in the
third quarter were the results from the Joe Coleman 13-23S-27E RB #208H
(Joe Coleman #208H), Tom Walters 12-23S-27E RB #208H (Tom Walters #208H)
and Michael Collins 11-23S-27E RB #208H (Michael Collins #208H) wells,
which were all Wolfcamp A-XY completions in the northwestern portion of
the Rustler Breaks asset area. As shown in the table above, these three
wells tested 1,779 BOE per day, 1,498 BOE per day and 1,534 BOE per day,
respectively, at oil cuts of approximately 75%. The results of each of
these wells were among the best wells drilled by the Company in the
Rustler Breaks asset area and provide further confirmation of the
potential for the Wolfcamp A-XY interval throughout the Rustler Breaks
asset area.

One of the key achievements of Matador's drilling and completions
program in the Rustler Breaks asset area in 2017 has been the success of
those wells drilled in the more northwestern portion of the acreage
position. Early performance from the Joe Coleman #208H, Tom Walters
#208H and Michael Collins #208H wells is comparable to wells drilled in
this portion of the Rustler Breaks asset area earlier in 2017. Among
those wells previously drilled, as examples, the Joe Coleman 13-23S-27E
RB #206H (Joe Coleman #206H) and the Tom Walters 12-23S-27E RB #203H
(Tom Walters #203H) wells have been discussed in the Company's prior
earnings releases. As of late October 2017, in just less than five
months of production, the Joe Coleman #206H well had produced
approximately 175,000 BOE (73% oil), and the well continues to track 20%
above the Company's 900,000 BOE Wolfcamp A-XY type curve for the Rustler
Breaks asset area. As of late October 2017, in just less than nine
months of production, the Tom Walters #203H well had produced
approximately 220,000 BOE (73% oil) and is also tracking above the
Company's 900,000 BOE type curve for this area. Matador continues to
attribute the strong results from many of its recent Wolfcamp A-XY wells
to the larger fracture treatments, consisting of approximately 40
barrels of fluid and 3,000 pounds of primarily 30/50 mesh sand per
completed lateral foot, including the use of diverting agents, that it
has pumped consistently in the Wolfcamp A-XY completions in the Rustler
Breaks asset area since mid-2016.

At November 6, 2017, Matador planned to operate three drilling rigs at
Rustler Breaks throughout the remainder of 2017. Matador's drilling
success at Rustler Breaks has resulted in gross natural gas volumes that
have significantly exceeded the 60 million cubic feet per day
"nameplate" capacity of the Black River Processing Plant operated by San
Mateo. San Mateo's expansion of the Black River Processing Plant to
provide an incremental 200 million cubic feet per day of natural gas
processing capacity is expected to be operational in the first quarter
of 2018. In the meantime, Matador is using third-party options for its
excess natural gas processing needs.

Ranger and Arrowhead Asset Areas – Lea County, New
Mexico and Eddy County, New Mexico

Matador operated one drilling rig in its Ranger and Arrowhead asset
areas during the third quarter of 2017. During this period, the Company
completed and turned to sales five gross (3.3 net) horizontal wells in
these areas, including four gross (3.2 net) operated wells and one gross
(0.1 net) non-operated well. The four operated wells included two Second
Bone Spring completions and two Third Bone Spring completions, and all
had completed lateral lengths between 4,200 and 4,400 feet. The 24-hour
initial potential test results from all four operated 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)
Heyco State #121H Second Bone Spring 437 569 532 82% On ESP N/A
Heyco State #122H Second Bone Spring 696 679 809 86% On ESP N/A
Stebbins 20 Federal #133H Third Bone Spring 845 2,143 1,202 70% On ESP N/A
Airstrip 31-18S-35E RN State Com #132H Third Bone Spring 1,172 548 1,263 93% On ESP N/A
 
(1) Flowing casing pressure.
 

The Stebbins 20 Federal #133H (Stebbins 20 #133H) well and both the
Heyco State #121H and #122H wells were in the Arrowhead asset area,
while the Airstrip 31-18S-35E RN State Com #132H (Airstrip #132H) well
was located in the eastern portion of the Ranger asset area.

The Stebbins 20 #133H well was Matador's first Third Bone Spring
completion in the Arrowhead asset area. This well was drilled from the
same pad as the Stebbins 20 Federal #123H (Stebbins 20 #123H) well, a
Second Bone Spring completion, which tested 1,010 BOE per day (82% oil)
as reported in the Company's second quarter 2017 earnings release. The
Stebbins 20 #133H well had a completed lateral length of approximately
4,300 feet and was completed with 17 fracture stages carrying a total of
approximately 160,000 barrels of fracturing fluid and approximately 12.7
million pounds of primarily 20/40 mesh sand (or about 3,000 pounds of
sand per completed lateral foot).

Matador has been pleased with the early performance of the Stebbins 20
#123H and Stebbins 20 #133H wells. The Stebbins 20 #123H well continues
to be particularly strong and has shown minimal decline, producing
approximately 141,000 BOE in its first five months of production. The
Stebbins 20 #123H well is tracking approximately 30% ahead of Matador's
700,000 BOE Second Bone Spring type curve for the Ranger and Arrowhead
asset areas. The Stebbins 20 #133H well has exhibited a more typical
decline, having produced approximately 50,000 BOE (66% oil) in about 2.5
months of production. The Stebbins 20 #133H well is tracking just ahead
of Matador's 500,000 BOE Third Bone Spring type curve for the Ranger and
Arrowhead asset areas.

Given these early results, Matador has three additional Bone Spring
tests in progress on the Stebbins acreage at November 6, 2017. Matador
anticipates drilling several additional wells, including both Second and
Third Bone Spring targets, on this acreage during 2018. The Company
currently has 11 federal permits for drilling additional wells on this
acreage block over the next few years, and this acreage block lends
itself to laterals longer than one mile.

In the Ranger asset area, the results of the Airstrip 31-18S-35E RN
State Com #132H (Airstrip #132H) well, which tested 1,263 BOE per day
(93% oil) exceeded Matador's expectations. The Airstrip #132H well had a
completed lateral length of approximately 4,300 feet and was completed
with 18 fracture stages carrying a total of approximately 170,000
barrels of fracturing fluid and approximately 12.4 million pounds of
primarily 20/40 mesh sand (or about 2,800 pounds of sand per completed
lateral foot). Following ESP installation, the Airstrip #132H well has
produced approximately 40,000 BOE (92% oil) in its first 1.5 months of
production, and its early performance is tracking Matador's 700,000 BOE
Third Bone Spring type curve for the Ranger and Arrowhead asset areas.

Another significant event that occurred in the Ranger asset area during
the third quarter of 2017 was the installation of gas lift on the three
Mallon wells, the Mallon 27 Federal Com #1H, #2H and #3H (Mallon #1H,
#2H and #3H) wells, each of which was drilled and completed in the Third
Bone Spring and turned to sales in the fourth quarter of 2016. As
reported previously, each of these wells tested between 2,400 and 2,800
BOE per day (91% oil) and continued to be excellent wells throughout
their first ten to eleven months of production. Unlike most Third Bone
Spring wells completed in the Ranger and Arrowhead asset areas, these
wells were tested while flowing up casing, and the wells continued to
flow up casing until the recent installation of gas lift on each well.

Each of the Mallon wells exhibited a strong production response to the
installation of gas lift. Daily production rates from the Mallon #1H
well, which had declined to 600 to 700 barrels of oil per day, increased
to an average of over 1,300 barrels of oil per day in the first 30 days
following gas lift installation. Daily production rates from the Mallon
#2H well, which had declined to 400 to 500 barrels of oil per day,
increased to an average of almost 1,500 barrels of oil per day in the
first 30 days following gas lift installation. Daily production rates
from the Mallon #3H well, which had declined to 400 to 500 barrels of
oil per day, increased to an average of approximately 900 barrels of oil
per day in the first 30 days following gas lift installation. Natural
gas production from these wells responded in a similar fashion.
Production declines have resumed on these wells at a similar rate to
what was observed prior to the installation of gas lift, but from much
higher daily production rates, resulting in significant incremental
production from these wells in the third quarter of 2017 compared to the
Company's estimates for the third quarter. The installation of gas lift
on these three wells contributed substantially to the 21% sequential
increase in Matador's third quarter average daily oil production, as
compared to the second quarter of 2017.

Since being turned to sales late in the fourth quarter of 2016, the
three Mallon wells have produced over 1 million BOE. The Mallon #1H well
produced approximately 390,000 BOE (90% oil) in its first eleven months
of production, the Mallon #2H well produced approximately 350,000 BOE
(90% oil) in its first ten months of production and the Mallon #3H well
produced approximately 310,000 BOE (91% oil) in its first ten months of
production.

At November 6, 2017, Matador planned to operate one drilling rig in its
Ranger and Arrowhead asset areas throughout the remainder of 2017 and
into 2018.

Wolf and Jackson Trust Asset Areas – Loving
County, Texas

Matador operated one drilling rig in its Wolf and Jackson Trust asset
areas during the third quarter of 2017. During the third quarter of
2017, the Company completed and turned to sales two gross (2.0 net)
operated horizontal wells in the Wolf asset area, including its first
tests of both the Avalon and Wolfcamp B intervals in the Wolf asset
area. The test results from both of these 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)
Barnett 90-TTT-B01 WF #104H Avalon 60 197 93 65% 466 64/64"
Barnett 90-TTT-B01 WF #224H Wolfcamp B 502 7,807 1,803 28% 4,125 38/64"
 
(1) Flowing casing pressure.
 

The Barnett 90-TTT-B01 WF #224H (Barnett #224H) well was Matador's first
test of the Wolfcamp B interval in the Wolf asset area. The Barnett
#224H well had a completed lateral length of approximately 4,800 feet
and was completed with 31 fracture stages carrying a total of
approximately 221,000 barrels of fracturing fluid and approximately 13.9
million pounds of 30/50 and 40/70 mesh sand (or approximately 2,900
pounds of sand per foot of completed lateral). As noted in the table
above, the Barnett #224H well tested 1,803 BOE per day (28% oil) at
4,125 psi during a 24-hour initial potential test. This well exhibited
the highest flowing casing pressure on any well yet completed by the
Company in the Wolf asset area, and the Company believes it was capable
of flowing at much higher oil and natural gas rates on a larger choke
size. The initial test results and early performance from the Barnett
#224H well exceeded Matador's expectations and are similar to those from
the Wolfcamp B-Blair interval in the Rustler Breaks asset area. The
Barnett #224H well was turned to sales at a reduced flow rate on a
smaller choke and has exhibited minimal decline in its first two months
of production. Matador is pleased with the results of this initial test
of the Wolfcamp B interval, which validates the Wolfcamp B as another
viable completion target in the Wolf asset area. The Company anticipates
drilling additional Wolfcamp B tests on other portions of its Wolf asset
area during 2018.

The Barnett 90-TTT-B01 WF #104H (Barnett #104H) well was Matador's first
test of the Avalon interval in the Wolf asset area. The Barnett #104H
well had a completed lateral length of approximately 4,800 feet and was
completed with 31 fracture stages carrying a total of approximately
215,000 barrels of fracturing fluid and approximately 8.7 million pounds
of 30/50 and 40/70 mesh sand (or approximately 1,800 pounds of sand per
foot of completed lateral). As noted in the table above, this well
continues to clean up following completion and has tested approximately
60 barrels of oil per day and 200 thousand cubic feet of natural gas per
day to date. The Avalon interval is also producing significant volumes
of water, in excess of 4,000 barrels of water per day, and Matador has
recently replaced the initial ESP installed in this well with a larger
capacity ESP to assist with its flowback and clean up following
completion.

Following the drilling and completion of the Barnett #104H and #224H
wells, Matador began drilling a two-well pad on its Kerr leasehold in
the northern portion of the Wolf asset area. Both of the Kerr wells will
be Wolfcamp A-XY tests with completed lateral lengths of approximately
6,300 feet and 7,700 feet. At November 6, 2017, the Kerr wells were
undergoing completion operations, and Matador was drilling the first
well on its Larson leasehold in the Wolf asset area. Matador anticipates
that this Larson well will have a completed lateral length of
approximately 7,400 feet.

At November 6, 2017, Matador planned to operate one drilling rig in its
Wolf and Jackson Trust asset areas throughout the remainder of 2017 and
into 2018. The majority of the wells planned in the Wolf asset area for
the remainder of 2017 and 2018 are anticipated to be Wolfcamp A-X or A-Y
completions with longer completed lateral lengths between 6,000 and
8,000 feet.

Antelope Ridge – Lea County, New Mexico

Matador expects to spud its first operated well in the Antelope Ridge
asset area in mid-November 2017. The Company is excited to begin the
delineation of its acreage position in Antelope Ridge, where other
operators in the area have successfully tested the Brushy Canyon, First,
Second and Third Bone Spring and Upper Wolfcamp intervals. Matador's
first test is planned to be in the Upper Wolfcamp formation. This first
test well is anticipated to be drilled during the latter part of the
fourth quarter of 2017, but is not scheduled for completion until early
2018.

Midstream Update

During the third quarter of 2017, Matador's midstream joint venture, San
Mateo, continued working on the expansion of the Black River Processing
Plant to add an incremental 200 million cubic feet per day to the
existing 60 million cubic feet per day of cryogenic natural gas
processing capacity. At November 6, 2017, the expansion project was
proceeding on schedule, and the incremental natural gas processing
capacity is expected to become operational in the first quarter of 2018.
Matador is eagerly anticipating the expansion becoming operational as
the existing plant is full with Matador operated natural gas, even
though San Mateo is currently able to process, through certain
acceptable variations in plant operations, approximately 65 million
cubic feet of natural gas per day.

In October 2017, San Mateo's second commercial salt water disposal well
in the Rustler Breaks asset area was completed and began disposing of
water. With this second well online, San Mateo has an anticipated water
disposal capacity of over 50,000 barrels of water per day in the Rustler
Breaks asset area. San Mateo plans to add to that disposal capacity in
the near-term, as it plans to drill and complete three additional
commercial salt water disposal wells and construct the associated
commercial salt water disposal facilities in the Rustler Breaks asset
area, bringing San Mateo's commercial salt water disposal well count in
the Rustler Breaks asset area to five by mid-2018. At November 6, 2017,
the third commercial salt water disposal well at Rustler Breaks had
finished drilling and was expected to be completed in the fourth
quarter. Early in the fourth quarter of 2017, San Mateo reached a new
milestone for its salt water disposal operations, disposing of more than
100,000 barrels of water per day combined at both its Wolf and Rustler
Breaks commercial facilities.

In addition to the expansion of the Black River Processing Plant and the
additional commercial salt water disposal wells, associated facilities
and third-party connections at Rustler Breaks, San Mateo has several
other midstream initiatives in the Delaware Basin that are either in
progress or that it expects to begin by the end of the first quarter of
2018. These initiatives include additional buildout of San Mateo's
gathering systems in the Wolf and Rustler Breaks asset areas, primarily
consisting of expansion of the oil gathering system in the Wolf asset
area and the buildout of an oil gathering system in the Rustler Breaks
asset area.

Matador incurred approximately $18 million in capital expenditures
related to its midstream initiatives during the third quarter of 2017
and had incurred approximately $40 million in capital expenditures
primarily attributable to its 51% interest in San Mateo year-to-date
through September 30, 2017.

Delaware Basin Acreage Update

At November 6, 2017, Matador held approximately 201,000 gross (115,700
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 November 6, 2017 (approximate):
           

Asset Area

Gross Acres Net Acres
Ranger (Lea County, NM) 30,100 16,500
Arrowhead (Eddy County, NM) 57,200 23,500
Rustler Breaks (Eddy County, NM) 40,300 21,400
Antelope Ridge (Lea County, NM) 12,100 8,900
Wolf and Jackson Trust (Loving County, TX) 13,600 9,300
Twin Lakes (Lea County, NM) 46,300 34,900
Other 1,500 1,200
Total 201,100 115,700
 

During the third quarter of 2017 and through November 6, 2017, Matador
acquired approximately 9,700 net acres in the Delaware Basin, mostly in
and around its existing acreage positions, including new leasing
activities and acquisitions of small interests from mineral and working
interest owners in Matador's operated wells. Matador closed over 30 such
transactions in the period from July 1 through November 6, 2017. At
November 6, 2017, Matador had closed all but one of the transactions
that were pending at the time of its October 2017 equity offering, with
the last transaction expected to close this month.

From January 1 through November 6, 2017, Matador acquired approximately
25,000 net acres in the Delaware Basin, including a small volume of
associated production, for a total acquisition cost of approximately
$224 million. Excluding the value of the production acquired, this
acreage was added for a weighted average cost of between $7,000 and
$8,000 per net acre.

Capital Spending Update

On November 6, 2017, Matador revised its capital spending estimates for
full-year 2017. The Company now anticipates that it will incur capital
expenditures of (1) $440 to $465 million for drilling, completing and
equipping operated and non-operated wells in 2017, primarily in the
Delaware Basin and (2) $66 to $74 million for its share of various
midstream projects undertaken by San Mateo, primarily representing 51%
of an updated 2017 joint venture capital expenditure budget of $125 to
$140 million.

The increase in estimated drilling and completions capital expenditures
is primarily attributable to a variety of factors, including, among
others:

  1. one gross, but 2.7 net, additional operated wells drilled and
    completed in the Delaware Basin through the third quarter of 2017 than
    originally anticipated, along with an accelerated pace of drilling
    activity in the fourth quarter of 2017, primarily in the Rustler
    Breaks asset area;
  2. increased working interests acquired on certain operated wells through
    purchase, non-consent by third parties or forced pooling of interests;
  3. certain modifications to the Company's 2017 drill schedule, primarily
    in the Wolf asset area, resulting in the drilling of several
    additional longer lateral wells (6,000 to 8,000 feet) in the fourth
    quarter of 2017 than originally planned;
  4. the use of the sixth drilling rig, which was contracted to drill
    commercial salt water disposal wells, to drill one additional Rustler
    Breaks well in July 2017 and to drill the Company's upcoming first
    test well in the Antelope Ridge asset area during the fourth quarter
    of 2017;
  5. changes in fracture treatment designs resulting in closer perforation
    cluster spacing, more proppant and additional fracture stages pumped
    in more wells than originally planned for 2017; and
  6. the Company's participation in an estimated 2.2 net additional
    non-operated well opportunities in 2017 than originally planned,
    including non-operated wells in the Rustler Breaks, Ranger, Arrowhead
    and Twin Lakes asset areas.

Matador anticipates that the projected increase in its estimated
drilling and completion capital expenditures will be largely funded
through the anticipated increase in the Company's cash flows as
reflected in the increase in the Company's Adjusted EBITDA guidance for
full-year 2017.

The increase of approximately $10 million in midstream capital
expenditures net to Matador primarily results from San Mateo's decision
to continue drilling at least five commercial salt water disposal wells
in the Rustler Breaks asset area by mid-2018 to provide additional
capacity for both Matador's and other third party customers' salt water
disposal needs. Matador expects the projected increase in estimated
midstream capital expenditures to be funded by the approximately $15
million in San Mateo first year performance incentives the Company
expects to receive in the first quarter of 2018.

During the third quarter of 2017, Matador's total capital spending for
drilling and completion and midstream operations was approximately $154
million, including approximately $136 million for drilling and
completion operations and approximately $18 million for midstream
operations. As of September 30, 2017, Matador had incurred approximately
$355 million for drilling and completion operations and approximately
$40 million for midstream operations since January 1, 2017.

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 September 30, 2017, the borrowing base under Matador's revolving
credit facility was $450 million based on the lenders' review of the
Company's proved oil and natural gas reserves at December 31, 2016, with
the Company maintaining its "elected borrowing commitment" at $400
million. At September 30, 2017, Matador had cash on hand totaling
approximately $20 million, not including approximately $11 million of
restricted cash (most of which is 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 November
6, 2017, the Company continued to have no outstanding borrowings under
its credit facility and had approximately $2.1 million in outstanding
letters of credit.

On October 10, 2017, Matador completed a public offering of 8.0 million
shares of its common stock, receiving proceeds of approximately $208.7
million (before expenses). A portion of the proceeds from this offering
were and are being used to acquire approximately 6,600 net acres of
additional leasehold and minerals in the Delaware Basin at a total
acquisition cost of approximately $38 million and to fund certain
midstream initiatives and opportunities, including the acceleration of
the drilling of commercial salt water disposal wells in the Rustler
Breaks asset area on behalf of San Mateo. The remaining proceeds will be
used for other midstream development and general corporate purposes,
including to fund a portion of the Company's current and future capital
expenditures. After giving effect to the equity offering, Matador's pro
forma ratio of net debt to Adjusted EBITDA was approximately 1.2 at
September 30, 2017.

On October 25, 2017, Matador's lenders unanimously increased the
borrowing base under the Company's revolving credit facility to $525
million based on their review of the Company's proved oil and natural
gas reserves at June 30, 2017. Matador chose to keep its "elected
borrowing commitment" at $400 million.

As a result of the recent equity offering and the increase in its
borrowing base, at November 6, 2017, Matador remained in a strong
financial position and is well funded to execute the remainder of its
2017 drilling program and midstream operations, as well as its
anticipated drilling program and midstream operations into 2018. Matador
intends to fund these capital requirements 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 November 6, 2017, Matador had the following hedges in place, in the
form of costless collars and swaps, for the remainder of 2017.

  • Approximately 0.8 million barrels of oil at a West Texas Intermediate
    ("WTI") weighted average floor price of $45 per barrel and a WTI
    weighted average ceiling price of $56 per barrel.
  • Approximately 4.2 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.
  • Approximately 0.9 million gallons of natural gas liquids at a weighted
    average price of $0.89 per gallon.

Matador estimates that it now has approximately 55% of its anticipated
oil production and approximately 65% of its anticipated natural gas
production hedged for the remainder of 2017 based on the midpoint of its
updated production guidance.

At November 6, 2017, Matador had the following hedges in place, in the
form of costless collars and swaps, for 2018.

  • Approximately 2.9 million barrels of oil at a WTI weighted average
    floor price of $44 per barrel and a WTI weighted average ceiling price
    of $60 per barrel.
  • Approximately 0.7 million barrels of oil at a Louisiana Light Sweet
    ("LLS") weighted average floor price of $45 per barrel and a LLS
    weighted average ceiling price of $63 per barrel.
  • Approximately 5.2 million barrels of oil at a weighted average
    Midland-Cushing basis differential of -$1.05 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.

Conference Call Information

The Company will host a live conference call on Tuesday, November 7,
2017, at 9:00 a.m. Central Time to review its third 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 5896337. 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
November 30, 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. Such forward-looking statements include, but are not
limited to, statements about guidance, projected or forecasted financial
and operating results, results in certain basins, objectives, project
timing, expectations and intentions and other statements that are not
historical facts. 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
 
    September 30,     December 31,

(In thousands, except par value and share data)

  2017     2016  
ASSETS
Current assets
Cash $ 20,178 $ 212,884
Restricted cash 10,744 1,258
Accounts receivable
Oil and natural gas revenues 49,885 34,154
Joint interest billings 53,721 19,347
Other 5,406 5,167
Derivative instruments 60
Lease and well equipment inventory 4,801 3,045
Prepaid expenses and other assets   5,550     3,327  
Total current assets 150,345 279,182
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated 2,842,810 2,408,305
Unproved and unevaluated 600,803 479,736
Other property and equipment 240,924 160,795
Less accumulated depletion, depreciation and amortization   (1,987,370 )   (1,864,311 )

Net property and equipment

1,697,167 1,184,525
Other assets
Derivative instruments 285
Other assets   740     958  
Total other assets   1,025     958  
Total assets $ 1,848,537   $ 1,464,665  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 13,839 $ 4,674
Accrued liabilities 158,345 101,460
Royalties payable 53,639 23,988
Amounts due to affiliates 12,749 8,651
Derivative instruments 3,641 24,203
Advances from joint interest owners 4,346 1,700
Amounts due to joint ventures 4,873 4,251
Other current liabilities   663     578  
Total current liabilities 252,095 169,505
Long-term liabilities
Senior unsecured notes payable 574,027 573,924
Asset retirement obligations 23,305 19,725
Derivative instruments 209 751
Amounts due to joint ventures 1,771
Other long-term liabilities   6,104     7,544  
Total long-term liabilities 603,645 603,715
Shareholders' equity
Common stock - $0.01 par value, 160,000,000 and 120,000,000 shares
authorized; 100,566,054 and 99,518,764 shares issued; and
100,439,595 and 99,511,931 shares outstanding, respectively
1,006 995
Additional paid-in capital 1,455,605 1,325,481
Accumulated deficit (548,819 ) (636,351 )
Treasury stock, at cost, 126,459 and 6,833 shares, respectively   (1,589 )    
Total Matador Resources Company shareholders' equity 906,203 690,125
Non-controlling interest in subsidiaries   86,594     1,320  
Total shareholders' equity   992,797     691,445  
Total liabilities and shareholders' equity $ 1,848,537   $ 1,464,665  
 
 
Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 
    Three Months Ended     Nine Months Ended

(In thousands, except per share data)

September 30, September 30,
  2017         2016     2017         2016  
Revenues
Oil and natural gas revenues $ 134,948 $ 83,079 $ 363,559 $ 196,341
Third-party midstream services revenues 3,218 1,566 6,871 2,956
Realized gain (loss) on derivatives 485 885 (1,176 ) 10,413
Unrealized (loss) gain on derivatives   (12,372 )   3,203     21,449     (30,261 )
Total revenues 126,279 88,733 390,703 179,449
Expenses
Production taxes, transportation and processing 15,666 12,388 40,348 30,846
Lease operating 16,689 14,605 48,486 41,300
Plant and other midstream services operating 3,096 1,449 8,379 3,537
Depletion, depreciation and amortization 47,800 30,015 123,066 90,185
Accretion of asset retirement obligations 323 276 937 828
Full-cost ceiling impairment 158,633
General and administrative   16,156     13,146     49,671     39,506  
Total expenses   99,730     71,879     270,887     364,835  
Operating income (loss) 26,549 16,854 119,816 (185,386 )
Other income (expense)
Net gain on asset sales and inventory impairment 16 1,073 23 3,140
Interest expense (8,550 ) (6,880 ) (26,229 ) (20,244 )
Other (expense) income   (36 )   (141 )   1,956     (17 )
Total other expense   (8,570 )   (5,948 )   (24,250 )   (17,121 )
Income (loss) before income taxes 17,979 10,906 95,566 (202,507 )
Income tax (benefit) provision
Current       (1,141 )       (1,141 )
Total income tax benefit       (1,141 )       (1,141 )
Net income (loss) 17,979 12,047 95,566 (201,366 )
Net income attributable to non-controlling interest in subsidiaries   (2,940 )   (116 )   (8,034 )   (209 )
Net income (loss) attributable to Matador Resources Company
shareholders
$ 15,039   $ 11,931   $ 87,532   $ (201,575 )
Earnings (loss) per common share
Basic $ 0.15   $ 0.13   $ 0.87   $ (2.24 )
Diluted $ 0.15   $ 0.13   $ 0.87   $ (2.24 )
Weighted average common shares outstanding
Basic   100,365    

93,384

    100,141     90,016  
Diluted   100,504    

93,724

    100,580     90,016  
 
 
Matador Resources Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
 
    Nine Months Ended

(In thousands)

September 30,
  2017         2016  
Operating activities
Net income (loss) $ 95,566 $ (201,366 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Unrealized (gain) loss on derivatives (21,449 ) 30,261
Depletion, depreciation and amortization 123,066 90,185
Accretion of asset retirement obligations 937 828
Full-cost ceiling impairment 158,633
Stock-based compensation expense 12,488 9,138
Amortization of debt issuance cost 103 899
Net gain on asset sales and inventory impairment (23 ) (3,140 )
Changes in operating assets and liabilities
Accounts receivable (50,343 ) (7,782 )
Lease and well equipment inventory (1,666 ) (669 )
Prepaid expenses (2,224 ) (74 )
Other assets 217 480
Accounts payable, accrued liabilities and other current liabilities 35,068 9,710
Royalties payable 29,651 5,225
Advances from joint interest owners 2,646 3,147
Income taxes payable (2,848 )
Other long-term liabilities   (1,521 )   3,835  
Net cash provided by operating activities 222,516 96,462
Investing activities
Oil and natural gas properties capital expenditures (517,270 ) (288,175 )
Expenditures for other property and equipment (80,560 ) (57,148 )
Proceeds from sale of assets 977 5,173
Restricted cash 43,098
Restricted cash in less-than-wholly-owned subsidiaries   (9,486 )   (544 )
Net cash used in investing activities (606,339 ) (297,596 )
Financing activities
Borrowings under Credit Agreement 65,000
Proceeds from issuance of common stock 142,350
Cost to issue equity (830 )
Proceeds from stock options exercised 2,920
Contributions related to formation of Joint Venture 171,500
Contributions from non-controlling interest owners of
less-than-wholly-owned subsidiaries
29,400
Distributions to non-controlling interest owners of
less-than-wholly-owned subsidiaries
(5,635 )
Taxes paid related to net share settlement of stock-based
compensation
(4,415 ) (1,552 )
Purchase of non-controlling interest of less-than-wholly-owned
subsidiary
  (2,653 )    
Net cash provided by financing activities   191,117     204,968  
(Decrease) increase in cash (192,706 ) 3,834
Cash at beginning of period   212,884     16,732  
Cash at end of period $ 20,178   $ 20,566  
 
 

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) September 30, 2017     June 30, 2017     September 30, 2016 December 31, 2016
Unaudited Adjusted EBITDA Reconciliation to Net Income (Loss):
Net income (loss) attributable to Matador Resources Company
shareholders
$ 15,039 $ 28,509 $ 11,931 $ (97,421 )
Net income attributable to non-controlling interest in subsidiaries   2,940     3,178     116     364  
Net income (loss) 17,979 31,687 12,047 (97,057 )
Interest expense 8,550 9,224 6,880 28,199
Total income tax provision (benefit) (1,141 ) (1,036 )
Depletion, depreciation and amortization 47,800 41,274 30,015 122,048
Accretion of asset retirement obligations 323 314 276 1,182
Full-cost ceiling impairment 158,633
Unrealized loss (gain) on derivatives 12,372 (13,190 ) (3,203 ) 41,238
Stock-based compensation expense 1,296 7,026 3,584 12,362
Net gain on asset sales and inventory impairment   (16 )       (1,073 )   (107,277 )
Consolidated Adjusted EBITDA 88,304 76,335 47,385 158,292
Adjusted EBITDA attributable to non-controlling interest in
subsidiaries
  (3,471 )   (3,683 )   (125 )   (400 )
Adjusted EBITDA attributable to Matador Resources Company
shareholders
$ 84,833   $ 72,652   $ 47,260   $ 157,892  
       
 
Three Months Ended Year Ended
(In thousands) September 30, 2017     June 30, 2017     September 30, 2016 December 31, 2016
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by
Operating Activities:
Net cash provided by operating activities $ 101,274 $ 59,933 $ 46,862 $ 134,086
Net change in operating assets and liabilities (21,481 ) 7,198 (4,909 ) (1,809 )
Interest expense, net of non-cash portion 8,511 9,204 6,573 27,051
Current income tax provision (benefit) (1,141 ) (1,036 )
Adjusted EBITDA attributable to non-controlling interest in
subsidiaries
  (3,471 )   (3,683 )   (125 )   (400 )
Adjusted EBITDA attributable to Matador Resources Company
shareholders
$ 84,833   $ 72,652   $ 47,260   $ 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 or other
non-recurring expense items, 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
September 30, 2017     June 30, 2017     September 30, 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
$ 15,039 $ 28,509 $ 11,931
Total income tax provision           (1,141 )
Income (loss) attributable to Matador Resources Company shareholders
before taxes
15,039 28,509 10,790
Less non-recurring and unrealized charges to income (loss) before
taxes:
Unrealized loss (gain) on derivatives 12,372 (13,190 ) (3,203 )
Net gain on asset sales and inventory impairment (16 ) (1,073 )
Non-recurring expenses related to stock-based compensation (1)       1,515      
Adjusted income (loss) attributable to Matador Resources Company
shareholders before taxes
27,395 16,834 6,514
Income tax provision (benefit) (2)   9,588     5,892     1,139  
Adjusted net income (loss) attributable to Matador Resources Company
shareholders (non-GAAP)
$ 17,807   $ 10,942   $ 5,375  
 
Basic weighted average shares outstanding, without participating
securities
99,255 98,994

92,397

Dilutive effect of participating securities   1,110     1,217    

987

 
Weighted average shares outstanding, including participating
securities - basic
100,365 100,211

93,384

Dilutive effect of options and restricted stock units   139     16     340  
Weighted average common shares outstanding - diluted   100,504     100,227    

93,724

 
Adjusted earnings (loss) per share attributable to Matador Resources
Company shareholders (non-GAAP)
Basic $ 0.18   $ 0.11   $ 0.06  
Diluted $ 0.18   $ 0.11   $ 0.06  

 

(1) Non-recurring, non-cash expense attributable to a change in the
vesting schedule applicable to equity awards granted to the
Company's directors.
 
(2) 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, and includes an income
tax refund of approximately $1.1 million in the third quarter of
2016.
 
 

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 At At
September 30, 2017 December 31, 2016 September 30, 2016
Standardized Measure $ 1,096.2 $ 575.0 $ 516.8
Discounted future income taxes   129.7   6.5   7.9
PV-10 $ 1,225.9 $ 581.5 $ 524.7
 

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