Market Overview

Matador Resources Company Reports Fourth Quarter and Full Year 2017 Results and Provides Operational Update and 2018 Guidance

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Matador Resources Company (NYSE:MTDR) ("Matador" or the "Company")
today reported financial and operating results for the three months and
year ended December 31, 2017. The release is divided into two
parts—first, a "Summary and Highlights" section that summarizes key
production and financial results for the fourth quarter and year ended
December 31, 2017, proved reserves at December 31, 2017, significant
well results in the fourth quarter of 2017 and early first quarter of
2018 and Matador's 2018 guidance estimates and second, a "Detailed
Financial Results and Operations Update" section providing a more
complete discussion of the Company's fourth quarter and full year 2017
financial and operational results.

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

Part I - Summary and Highlights

Fourth Quarter 2017 Highlights

Sequential Results

  • Matador's net income (GAAP basis) increased 155% sequentially
    from $15.0 million, or earnings of $0.15 per diluted common share, in
    the third quarter of 2017, to net income (GAAP basis) of $38.3
    million, or earnings of $0.35 per diluted common share
    , in the
    fourth quarter of 2017. This sequential increase in net income was
    primarily attributable to a significant increase in oil and natural
    gas revenues resulting from both increased oil and natural gas
    production and increased commodity price realizations in the fourth
    quarter of 2017, as compared to the third quarter of 2017. A portion
    of the sequential increase in net income was also attributable to an
    income tax benefit of $8.2 million, or approximately $0.08 per diluted
    common share, reflecting both actual and anticipated refunds of
    federal alternative minimum tax ("AMT") paid in prior periods as a
    result of the recent enactment of the Tax Cuts and Jobs Act.
  • Matador's adjusted net income (a non-GAAP financial measure) increased
    53%
    sequentially from $17.8 million, or adjusted earnings of $0.18
    per diluted common share, in the third quarter of 2017, to adjusted
    net income (non-GAAP) of $27.2 million, or adjusted earnings of
    $0.25 per diluted common share
    , in the fourth quarter of 2017.
    This sequential increase in adjusted net income was primarily
    attributable to a significant increase in oil and natural gas revenues
    resulting from both increased oil and natural gas production and
    increased commodity price realizations in the fourth quarter of 2017,
    as compared to the third quarter of 2017. Adjusted net income for the
    fourth quarter of 2017 did not include
    the federal AMT benefit of $8.2 million and was estimated using a
    federal statutory tax rate of 35%.
  • Adjusted earnings before interest expense, income taxes, depletion,
    depreciation and amortization and certain other items ("Adjusted
    EBITDA," a non-GAAP financial measure) increased 28%
    sequentially from $84.8 million in the third quarter of 2017 to $108.6
    million
    in the fourth quarter of 2017. The fourth quarter of 2017
    marked the first time that Matador's Adjusted EBITDA exceeded $100
    million in a quarter in the Company's history.
  • Average daily oil production increased 5% sequentially from
    approximately 23,500 barrels per day in the third quarter of 2017 to
    approximately 24,700 barrels per day in the fourth quarter of 2017.
    This 5% average daily oil production growth exceeded the Company's
    expectations that oil production would be essentially flat in the
    fourth quarter, as compared to the third quarter of 2017. Matador's
    fourth quarter 2017 average daily oil production was the best
    quarterly result in the Company's history.
  • Average daily natural gas production increased 3% sequentially
    from approximately 110.5 million cubic feet per day in the third
    quarter of 2017 to approximately 114.3 million cubic feet per day
    in the fourth quarter of 2017. This 3% average daily natural gas
    production growth also exceeded the Company's expectations of a small
    sequential decline in natural gas production in the fourth quarter of
    2017. Matador's fourth quarter 2017 average
    daily natural gas production was the best quarterly result in the
    Company's history.
  • Average daily oil equivalent production increased 4%
    sequentially from approximately 42,000 barrels of oil equivalent
    ("BOE") per day (56% oil) in the third quarter of 2017 to
    approximately 43,700 BOE per day (56% oil) in the fourth
    quarter of 2017. Matador's fourth 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 increased 14%
    sequentially from 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 to approximately 34,900
    BOE per day
    (consisting of 21,000 barrels of oil per day and 83.1
    million cubic feet of natural gas per day) in the fourth quarter of
    2017. The Delaware Basin contributed 85% of Matador's daily oil
    production, 73% of its daily natural gas production and 80% of its
    daily oil equivalent production in the fourth 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 third-party non-controlling interests,
including in Matador's midstream affiliate, San Mateo Midstream, LLC
("San Mateo" or the "Joint Venture").
For a definition of
adjusted net income, adjusted earnings per share and Adjusted EBITDA and
reconciliations of such non-GAAP financial metrics to their comparable
GAAP metrics, please see "Supplemental Non-GAAP Financial Measures"
below.

Year-Over-Year Results

  • Matador's net income (GAAP basis) decreased 63% from $104.2
    million, or earnings of $1.09 per diluted common share, in the fourth
    quarter of 2016 to net income (GAAP basis) of $38.3 million, or
    earnings of $0.35
    per diluted common share, in the fourth
    quarter of 2017. Matador's net income in the fourth quarter of 2016
    was significantly impacted by the recognition of the remaining gain of
    $104.1 million resulting from the October 2015 sale of its natural gas
    processing plant in Loving County, Texas.
  • Matador's adjusted net income (a non-GAAP financial measure) increased
    278%
    from adjusted net income (non-GAAP) of $7.2 million, or
    adjusted earnings of $0.08 per diluted common share, in the fourth
    quarter of 2016 to adjusted net income (non-GAAP) of $27.2 million,
    or adjusted earnings of $0.25 per diluted common share
    , in the
    fourth quarter of 2017.
  • Matador's Adjusted EBITDA (a non-GAAP financial measure) increased
    99%
    year-over-year from $54.5 million in the fourth quarter of
    2016 to $108.6 million in the fourth quarter of 2017.
  • Year-over-year, from the fourth quarter of 2016 to the fourth quarter
    of 2017:
    • Average daily oil production increased 57% from
      approximately 15,700 barrels per day to approximately 24,700
      barrels per day
      ;
    • Average daily natural gas production increased 34% from
      approximately 85.5 million cubic feet per day to approximately 114.3
      million cubic feet per day
      ;
    • Average daily oil equivalent production increased 46% from
      approximately 30,000 BOE per day to approximately 43,700 BOE
      per day
      ; and
    • In the Delaware Basin, average daily oil equivalent production increased
      69%
      from approximately 20,700 BOE per day (consisting of
      12,800 barrels of oil per day and 47.0 million cubic feet of
      natural gas per day) to approximately 34,900 BOE per day
      (consisting of 21,000 barrels of oil per day and 83.1 million
      cubic feet of natural gas per day).

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

    Three Months Ended
December 31,     September 30,     December 31,
2017 2017 2016
Net Production Volumes:(1)
Oil (MBbl)(2) 2,269 2,166 1,446
Natural gas (Bcf)(3) 10.5 10.2 7.9
Total oil equivalent (MBOE)(4) 4,022 3,860 2,757
Average Daily Production Volumes:(1)
Oil (Bbl/d) 24,665 23,538 15,720
Natural gas (MMcf/d)(5) 114.3 110.5 85.5
Total oil equivalent (BOE/d)(6) 43,718 41,954 29,965
Average Sales Prices:
Oil, without realized derivatives (per Bbl) $ 53.66 $ 46.25 $ 47.34
Oil, with realized derivatives (per Bbl) $ 52.30 $ 46.47 $ 46.65
Natural gas, without realized derivatives (per Mcf) $ 4.12 $ 3.42 $ 3.35
Natural gas, with realized derivatives (per Mcf) $ 4.12 $ 3.42 $ 3.34
Revenues (millions):
Oil and natural gas revenues $ 165.1 $ 134.9 $ 94.8
Third-party midstream services revenues $ 3.3 $ 3.2 $ 2.3
Realized (loss) gain on derivatives $ (3.1 ) $ 0.5 $ (1.1 )
Operating Expenses (per BOE):
Production taxes, transportation and processing $ 4.46 $ 4.06 $ 4.43
Lease operating $ 4.68 $ 4.32 $ 5.41
Plant and other midstream services operating $ 1.16 $ 0.80 $ 0.67
Depletion, depreciation and amortization $ 13.53 $ 12.38 $ 11.56
General and administrative(7) $ 4.06   $ 4.19 $ 5.65  
Total(8) $ 27.89   $ 25.75 $ 27.72  
Net income (millions)(9) $ 38.3 $ 15.0 $ 104.2
Earnings per common share (diluted)(9) $ 0.35 $ 0.15 $ 1.09
Adjusted net income (millions)(9)(10) $ 27.2 $ 17.8 $ 7.2
Adjusted earnings per common share (diluted)(9)(11) $ 0.25 $ 0.18 $ 0.08
Adjusted EBITDA (millions)(9)(12) $ 108.6 $ 84.8 $ 54.5

(1) Production volumes and proved reserves reported in two streams: oil
and natural gas, including both dry and liquids-rich natural gas.

(2) One thousand barrels of oil.

(3) One billion cubic feet of natural gas.

(4) One thousand barrels of oil equivalent, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural gas.

(5) Millions of cubic feet of natural gas per day.

(6) Barrels of oil equivalent per day, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural gas.

(7) Includes approximately $1.04, $0.34 and $1.23 per BOE of non-cash,
stock-based compensation expense in the fourth quarter of 2017, the
third quarter of 2017 and the fourth 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 after giving
effect to amounts attributable to third-party non-controlling interests.

(10) Adjusted net income is a non-GAAP financial measure. For a
definition of adjusted net income and a reconciliation of adjusted net
income (non-GAAP) to net income (GAAP), please see "Supplemental
Non-GAAP Financial Measures."

(11) Adjusted earnings per common share is a non-GAAP financial measure.
For a definition of adjusted earnings per common share and a
reconciliation of adjusted earnings per common share (non-GAAP) to
earnings per common 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 (GAAP) and net cash provided by operating activities (GAAP),
please see "Supplemental Non-GAAP Financial Measures."

Acreage Acquisitions

  • During the fourth quarter of 2017, through multiple transactions,
    Matador acquired approximately 6,900 net acres in the Delaware Basin,
    mostly in and around its existing acreage positions. During 2017,
    Matador acquired, through multiple transactions, approximately 25,100
    net acres in the Delaware Basin, including a small amount of
    associated production, for a total acquisition cost of approximately
    $238 million. Excluding the estimated value of the production
    acquired, this acreage was added for a weighted average cost of
    between approximately $7,000 and $8,000 per net acre.

Significant Well Results

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

Antelope Ridge Asset Area

  • The Florence State 23-23S-34E AR #202H well, an upper Wolfcamp A
    completion and Matador's first well drilled in its Antelope Ridge
    asset area in southern Lea County, New Mexico, flowed 1,947 BOE per
    day (81% oil) during a 24-hour initial potential test. The Company is
    very pleased with this initial test result, which demonstrates the
    significant potential of its Antelope Ridge asset area.

Rustler Breaks Asset Area

  • The Charlie Sweeney Fed Com #204H well, a Wolfcamp A-Lower completion
    in the Rustler Breaks asset area, flowed 1,188 BOE per day (75% oil)
    during a 24-hour initial potential test. This well was the Company's
    second positive test of the Wolfcamp A-Lower interval and further
    confirms the potential of the Wolfcamp A-Lower interval as another
    completion target in the Rustler Breaks asset area.

Wolf and Jackson Trust Asset Areas

  • The Toot D 17-TTT-C24 NL #211H well, a Wolfcamp A-Lower completion in
    the Jackson Trust asset area, flowed 1,692 BOE per day (81% oil)
    during a 24-hour initial potential test. This well is another positive
    test of the Wolfcamp A-Lower interval in the Jackson Trust asset area
    and is an opposing lateral to the Totum E 18-TTT-C24 NL #211H well. At
    February 21, 2018, the Totum #211H well continued to track well above
    Matador's 750,000 BOE type curve for the Wolfcamp A-Lower interval in
    the Jackson Trust asset area and appeared to be on track for an
    ultimate recovery of just over 1.0 million BOE.

Arrowhead and Ranger Asset Areas

  • The Stebbins 19 Federal Com #123H and the Stebbins 20 Federal #124H
    wells, both Second Bone Spring completions in the Arrowhead asset area
    in Eddy County, New Mexico, tested 1,012 BOE per day (90% oil) and 845
    BOE per day (90% oil), respectively, during 24-hour initial potential
    tests. These wells were the second and third positive tests of the
    Second Bone Spring interval on the Company's Stebbins leasehold in the
    southwestern portion of its Arrowhead asset area.

Proved Reserves at December 31, 2017

  • Matador's total proved oil and natural gas reserves increased 44%
    year-over-year 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 152.8 million BOE (consisting of 86.7
    million barrels of oil and 396.2 billion cubic feet of natural gas) at
    December 31, 2017. Oil, natural gas and total proved reserves at
    December 31, 2017 were each all-time highs for Matador. At December
    31, 2017, the Delaware Basin accounted for approximately 84% of the
    Company's total proved oil and natural gas reserves
    , as compared
    to approximately 75% at December 31, 2016.
  • Matador's proved oil reserves increased 52% year-over-year from
    57.0 million barrels at December 31, 2016 to 86.7 million barrels at
    December 31, 2017.
  • Approximately 57% of Matador's total proved oil and natural gas
    reserves were oil at December 31, 2017, as compared to 54% at December
    31, 2016.
  • Approximately 45% of the Company's total proved oil and natural gas
    reserves were proved developed at December 31, 2017, as compared to
    41% at December 31, 2016.

Full Year 2017 Highlights - Year Ended December 31, 2017

  • Matador's net income (GAAP basis) increased to $125.9 million, or
    $1.23 per diluted common share,
    for the year ended December 31,
    2017, as compared to a net loss of $97.4 million, or $1.07 per diluted
    common share, for the year ended December 31, 2016.
  • Matador's adjusted net income (a non-GAAP financial measure) increased
    to $73.4 million, or $0.72 per diluted common share, for the
    year ended December 31, 2017, as compared to an adjusted net loss of
    $2.8 million, or $0.03 per diluted common share, for the year ended
    December 31, 2016.
  • Matador's Adjusted EBITDA (a non-GAAP financial measure) increased
    113% from $157.9 million for the year ended December 31, 2016 to $336.1
    million
    for the year ended December 31, 2017.
  • For the year ended December 31, 2017, as compared to the year ended
    December 31, 2016:
    • Oil production increased 54% from 5.1 million barrels (average
      daily oil production of 13,900 barrels per day) in 2016 to 7.9
      million barrels (average daily oil production of 21,500 barrels
      per day)
      in 2017. Matador's 2017 oil
      production was the best annual result in the Company's history.
    • Natural gas production increased 25% from 30.5 billion cubic feet
      (average daily natural gas production of 83.3 million cubic feet
      per day) in 2016 to 38.2 billion cubic feet (average daily
      natural gas production of 104.6 million cubic feet per day)
      in
      2017. Matador's 2017 natural gas
      production was the best annual result in the Company's history.
    • Average daily oil equivalent production increased 40% from 10.2
      million BOE (average daily oil equivalent production of 27,800 BOE
      per day) in 2016 to 14.2 million BOE (average daily oil
      equivalent production of 38,900 BOE per day)
      in 2017.
    • In the Delaware Basin, total oil equivalent production increased
      84%
      from 5.8 million BOE (average daily oil equivalent
      production of 15,900 BOE per day) in 2016 to 10.8 million BOE
      (average daily oil equivalent production of 29,500 BOE per day)

      in 2017. The Delaware Basin comprised 76% of Matador's total oil
      equivalent production in 2017, as compared to 57% in 2016.
  • Matador's Net Debt to Adjusted EBITDA ratio declined from 2.3x at
    December 31, 2016 to 1.4x at December 31, 2017. For purposes of this
    computation, Net Debt is defined as debt outstanding under Matador's
    senior notes less available cash, including Matador's proportionate
    share of any restricted cash.

Comparisons of selected financial and operating items for the years
ended December 31, 2017, 2016 and 2015 are shown in the following table:

    Year Ended
December 31,     December 31,     December 31,
  2017     2016     2015  
Net Production Volumes:(1)
Oil (MBbl)(2) 7,851 5,096 4,492
Natural gas (Bcf)(3) 38.2 30.5 27.7
Total oil equivalent (MBOE)(4) 14,212 10,180 9,109
Average Daily Production Volumes:(1)
Oil (Bbl/d) 21,510 13,924 12,306
Natural gas (MMcf/d)(5) 104.6 83.3 75.9
Total oil equivalent (BOE/d)(6) 38,936 27,813 24,955
Average Sales Prices:
Oil, without realized derivatives (per Bbl) $ 49.28 $ 41.19 $ 45.27
Oil, with realized derivatives (per Bbl) $ 48.81 $ 42.34 $ 59.13
Natural gas, without realized derivatives (per Mcf) $ 3.72 $ 2.66 $ 2.71
Natural gas, with realized derivatives (per Mcf) $ 3.70 $ 2.78 $ 3.24
Revenues (millions):
Oil and natural gas revenues $ 528.7 $ 291.2 $ 278.3
Third-party midstream services revenues $ 10.2 $ 5.2 $ 1.9
Realized (loss) gain on derivatives $ (4.3 ) $ 9.3 $ 77.1
Operating Expenses (per BOE):
Production taxes, transportation and processing $ 4.10 $ 4.23 $ 3.91
Lease operating $ 4.74 $ 5.52 $ 6.01
Plant and other midstream services operating $ 0.92 $ 0.53 $ 0.38
Depletion, depreciation and amortization $ 12.49 $ 11.99 $ 19.63
General and administrative(7) $ 4.65   $ 5.41   $ 5.50  
Total(8) $ 26.90   $ 27.68   $ 35.43  
Net income (loss) (millions)(9) $ 125.9 $ (97.4 ) $ (679.8 )
Earnings (loss) per common share (diluted)(9) $ 1.23 $ (1.07 ) $ (8.34 )
Adjusted net income (loss) (millions)(9)(10) $ 73.4 $ (2.8 ) $ 9.8
Adjusted earnings (loss) per common share (diluted)(9)(11) $ 0.72 $ (0.03 ) $ 0.12
Adjusted EBITDA (millions)(9)(12) $ 336.1 $ 157.9 $ 223.1

(1) Production volumes and proved reserves reported in two streams: oil
and natural gas, including both dry and liquids-rich natural gas.

(2) One thousand barrels of oil.

(3) One billion cubic feet of natural gas.

(4) One thousand barrels of oil equivalent, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural gas.

(5) Millions of cubic feet of natural gas per day.

(6) Barrels of oil equivalent per day, estimated using a conversion
ratio of one barrel of oil per six thousand cubic feet of natural gas.

(7) Includes approximately $1.17, $1.23 and $1.04 per BOE of non-cash,
stock-based compensation expense for the years ended December 31, 2017,
2016 and 2015, 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 after giving
effect to amounts attributable to third-party non-controlling interests.

(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 common share is a non-GAAP financial
measure. For a definition of adjusted earnings (loss) per common share
and a reconciliation of adjusted earnings (loss) per common share
(non-GAAP) to earnings (loss) per common 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."

Midstream and Marketing Highlights

  • On January 22, 2018, Matador announced a strategic relationship
    between a subsidiary of the Company's 51%-owned midstream joint
    venture, San Mateo, and a subsidiary of Plains All American Pipeline,
    L.P. (NYSE:PAA) ("Plains") to gather and transport crude oil for
    Matador and third-party customers in and around the Rustler Breaks
    asset area. Subsidiaries of San Mateo and Plains have agreed to work
    together through a joint tariff arrangement and related transactions
    to offer third-party producers located within a joint development area
    of approximately 400,000 acres in Eddy County, New Mexico crude oil
    transportation services from the wellhead to Midland, Texas with
    access to other end markets, such as Cushing and the Gulf Coast.
    Please see Matador's January 22, 2018 press release for additional
    details regarding this strategic relationship.
  • In addition to the Plains relationship, Matador is also pleased to
    announce that it has entered into agreements with other parties to
    secure takeaway capacity for its natural gas and natural gas liquids
    ("NGLs") processed at San Mateo's Black River cryogenic natural gas
    processing plant in the Rustler Breaks asset area (the "Black River
    Processing Plant"). Matador has secured firm residue natural gas
    takeaway capacity from El Paso Natural Gas Company, L.L.C. and is
    evaluating additional options to ensure transportation for the full
    capacity of the plant out of the Delaware Basin. A recent transaction
    with BP Energy Company is also expected to provide full plant capacity
    pipeline transportation to the Gulf Coast for NGL volumes delivered
    from the Black River Processing Plant, which should eliminate the need
    to truck NGLs from the Black River Processing Plant. This pipeline
    interconnect is expected to be completed and operational later in the
    first quarter of 2018.

2018 Guidance Estimates

  • Matador today announced its full year 2018 guidance estimates. These
    guidance estimates assume six drilling rigs operating in the Delaware
    Basin throughout 2018. The Company expects to operate three rigs in
    the Rustler Breaks asset area, one rig in the Antelope Ridge asset
    area, one rig in the Wolf and Jackson Trust asset areas and one rig in
    the Arrowhead, Ranger and Twin Lakes asset areas throughout
    substantially all of 2018. One of the three rigs operating in the
    Rustler Breaks asset area is also expected to drill at least two salt
    water disposal wells for San Mateo in that area in the first half of
    2018. As a result, the Company expects that this rig will spend only
    approximately three-quarters of the year drilling oil and natural gas
    wells.
  • In 2018, Matador expects to continue to focus its capital expenditures
    on the Delaware Basin. Matador has allocated substantially all of its
    estimated 2018 capital expenditures to the Delaware Basin, with the
    exception of amounts allocated to limited operations in the Eagle Ford
    and Haynesville shales to maintain and extend leases and to
    participate in those non-operated well opportunities where economic
    returns are expected to be comparable to Matador's Delaware Basin
    wells.
  • Full year 2018 guidance estimates are as follows:

(1) Oil production of 9.7 to 10.1 million barrels, an increase of 26% to
the midpoint of 2018 guidance of 9.9 million barrels, as compared to 7.9
million barrels actually produced in 2017;

(2) Natural gas production of 41.0 to 43.0 billion cubic feet, an
increase of 10% to the midpoint of 2018 guidance of 42.0 billion cubic
feet, as compared to 38.2 billion cubic feet actually produced in 2017;

(3) Total oil equivalent production of 16.5 to 17.3 million BOE, an
increase of 19% to the midpoint of 2018 guidance of 16.9 million BOE, as
compared to 14.2 million BOE actually produced in 2017;

(4) Drilling and completions capital expenditures (including equipping
wells for production) of $530 to $570 million, including estimated
capital expenditures associated with non-operated well opportunities;

(5) Midstream capital expenditures of $70 to $90 million, which reflects
Matador's 51% share of San Mateo's estimated 2018 capital expenditure
budget, which will be primarily directed to (i) completing the expansion
of the Black River Processing Plant, (ii) building out oil gathering and
transportation lines throughout the Rustler Breaks and Wolf asset areas,
(iii) drilling, completing and equipping at least two additional
commercial salt water disposal wells in the Rustler Breaks asset area,
(iv) building out oil, natural gas and salt water gathering and
transportation lines to additional Matador locations and third-party
customers, as needed, and (v) other opportunities that may arise in
2018; and

(6) Adjusted EBITDA, a non-GAAP financial measure, of $425 to $455
million, an increase of 31% to the midpoint of 2018 guidance of $440
million, as compared to Adjusted EBITDA of $336.1 million in 2017.
Adjusted EBITDA guidance is based on estimated average realized prices
of $55.71 per barrel for oil (using the forward strip for oil prices as
of mid-February 2018, which yields an average West Texas Intermediate
oil price of $58.21 per barrel, less $2.50 per barrel of estimated price
differentials) and $2.98 per thousand cubic feet for natural gas (using
the forward strip for natural gas prices as of mid-February 2018, which
yields an average NYMEX Henry Hub natural gas price of $2.73 per
thousand cubic feet, plus $0.25 per thousand cubic feet, assuming
uplifts from natural gas processing are slightly above regional price
differentials during the year).

First Quarter 2018 Production Estimates

  • Given the particularly strong oil production growth exhibited in the
    Company's asset areas, particularly in the Delaware Basin, in the
    third and fourth quarters of 2017, as well as the timing of certain
    multi-well pad completions and additional wells being shut-in as
    offsetting wells are completed in the first quarter of 2018, Matador
    anticipates that its oil production in the first quarter of 2018 will
    be relatively flat as compared to the fourth quarter of 2017, before
    growing again in the subsequent quarters of 2018. For instance,
    Matador estimates fourth quarter 2018 average daily oil production
    between 28,500 and 29,500 barrels of oil per day, an increase of 18%
    from its fourth quarter 2017 average daily oil production of 24,700
    barrels of oil per day.
  • Matador's natural gas production also grew more than initially
    anticipated in the fourth quarter of 2017, as the growth in associated
    natural gas production attributable to new wells in the Delaware Basin
    more than offset declining production volumes in the Haynesville and
    Eagle Ford operating areas. This result was largely due to several new
    Wolfcamp B-Blair wells being placed on production in the fourth
    quarter of 2017 in the Rustler Breaks asset area, as well as
    better-than-expected natural gas production from the Haynesville
    shale. As more Wolfcamp A-XY completions (which produce a higher
    percentage of oil than Wolfcamp B-Blair completions) are scheduled for
    the Rustler Breaks asset area in the first quarter of 2018 and natural
    gas production from the Haynesville continues to decline, Matador
    anticipates a small decline of 3 to 5% in its natural gas production
    in the first quarter of 2018, as compared to the fourth quarter of
    2017. Matador's natural gas production is expected to grow by
    approximately 10% during 2018 as compared to 2017, but the cadence of
    its natural gas production growth is anticipated to be a bit more
    uneven in 2018 than in prior years, as no significant Haynesville
    shale natural gas volumes are expected to be added in 2018.

Matador will provide additional details on its estimated 2018 production
growth and capital spending plans during its upcoming Analyst Day on
Tuesday, March 6, 2018 in Dallas, Texas.

Management Comments

Joseph Wm. Foran, Matador's Chairman and CEO, commented, "While 2017 was
Matador's best year ever, we are excited about our outlook for further
improvement in 2018. The Board and I salute the staff for their
record-setting achievements in 2017 and for setting us up for 2018, and
we wish to thank them again for their hard work, planning and extra
effort on behalf of all Matador shareholders and interest owners. We are
now excited to turn the page and meet the challenges and opportunities
of 2018 in our continuing effort to build and profitably grow the value
of each Matador share.

"We were also recently pleased to announce one of these significant
value-added opportunities for 2018—the strategic relationship we formed
in January between various subsidiaries of San Mateo and Plains All
American Pipeline, L.P. to gather and transport crude oil for Matador
and third-party customers in and around our Rustler Breaks asset area in
Eddy County, New Mexico for delivery to Plains' extensive interstate
midstream transportation system. Not only does this relationship open up
additional market opportunities for San Mateo and Matador through
Plains' midstream asset footprint and San Mateo's localized pipeline
systems, it also further demonstrates San Mateo's ability to generate
value for San Mateo, Matador and third-party customers by providing
services across all three production streams—oil, natural gas and water.

"Matador ended 2017 with record production and reserves fueled by the
success we continue to achieve across the northern Delaware Basin.
Matador's oil, natural gas and total oil equivalent production in 2017
were all record annual results for the Company and exceeded the high end
of our final 2017 production guidance. We believe our Delaware Basin
production growth was particularly impressive in 2017. Our Delaware
Basin average daily oil equivalent production increased 84% from 15,900
BOE per day in 2016 to 29,500 BOE per day in 2017, and in the fourth
quarter of 2017, our Delaware Basin average oil equivalent production
reached almost 35,000 BOE per day, up 14% sequentially from the third
quarter.

"In addition, our total company-wide proved oil and natural gas reserves
grew 44% year-over-year from 105.8 million BOE at December 31, 2016 to a
Matador-best of 152.8 million BOE at December 31, 2017. Our total proved
oil reserves of 86.7 million barrels comprised 57% of our total proved
reserves at year-end 2017. We replaced 4.3 times our 2017 production of
14.2 million BOE, consistent with our average reserves replacement over
the past five years. Our proved oil and natural gas reserves in the
Delaware Basin grew at an even faster pace, increasing 62% from 79.4
million BOE at December 31, 2016 to 129.0 million BOE at December 31,
2017. Matador's Delaware Basin proved reserves comprised 84% of our
total proved reserves at year-end 2017.

"As described further in this earnings release, Matador plans to operate
six state-of-the-art rigs drilling primarily oil and natural gas wells
in the Delaware Basin throughout 2018, although we plan to use the sixth
rig to drill at least two additional salt water disposal wells for San
Mateo in the Rustler Breaks asset area. We continue to maintain
considerable flexibility to modify our drilling program—up or down—based
on expected rates of return, special opportunities, commodity prices and
other relevant criteria, but given current commodity prices and the
opportunities we see ahead, we believe this six-rig program is the most
appropriate for Matador in 2018. At current commodity prices and
anticipated costs, we expect to outspend our cash flows in 2018, but we
believe that Matador is creating significant shareholder value through
the high rate of return wells we are drilling, as well as through
opportunistic investments in midstream assets and in the leasehold and
mineral positions we are acquiring—particularly in the Delaware
Basin—that are available now, but are unlikely to be available in the
future. Our balance sheet remains strong, and we are well funded to
execute our capital investment plan for 2018. As a result, we believe
that it is important for us to continue to capture these value-creating
opportunities as they become available to us for the current and future
benefit of our shareholders. Our planned capital investments and the
continued execution of our plans should lead to another strong year of
results for Matador in 2018."

Part II - Detailed Financial Results and
Operations Update

Operating and Financial Results - Fourth Quarter and Year Ended
December 31, 2017

Production and Revenues

Fourth Quarter 2017

Average daily oil equivalent production increased 4% sequentially from
41,954 BOE per day (56% oil) in the third quarter of 2017 to 43,718 BOE
per day (56% oil) in the fourth quarter of 2017, and increased 46%
year-over-year from 29,965 BOE per day (52% oil) in the fourth quarter
of 2016. Matador's fourth quarter 2017 total oil
equivalent production of approximately 4.0 million BOE was the best
quarterly result in the Company's history.

Average daily oil production increased 5% sequentially from 23,538
barrels per day in the third quarter of 2017 to 24,665 barrels per day
in the fourth quarter of 2017, and increased 57% year-over-year from
15,720 barrels per day in the fourth quarter of 2016. Matador's
fourth quarter 2017 oil production of almost 2.3 million barrels was the
best quarterly result in the Company's history.

Average daily natural gas production increased 3% sequentially from
110.5 million cubic feet per day in the third quarter of 2017 to 114.3
million cubic feet per day in the fourth quarter of 2017, and increased
34% year-over-year from 85.5 million cubic feet per day in the fourth
quarter of 2016. Matador's fourth quarter 2017
natural gas production of approximately 10.5 billion cubic feet was the
best quarterly result in the Company's history.

Matador's Delaware Basin average oil equivalent production was 34,859
BOE per day (80% of total oil equivalent production) in the fourth
quarter of 2017, consisting of 21,006 barrels of oil per day (85% of
total oil production) and 83.1 million cubic feet of natural gas per day
(73% of total natural gas production). Matador's Delaware Basin oil
equivalent production increased 14% sequentially, as compared to 30,707
BOE per day in the third quarter of 2017, and increased 69%
year-over-year, as compared to 20,670 BOE per day in the fourth quarter
of 2016.

Oil and natural gas revenues increased 22% sequentially from $134.9
million in the third quarter of 2017 to $165.1 million in the fourth
quarter of 2017, and increased 74% year-over-year from $94.8 million in
the fourth quarter of 2016. The increase in oil and natural gas revenues
was attributable to both higher oil and natural gas production and
higher realized oil and natural gas prices in the fourth quarter of
2017, as compared to the third quarter of 2017 and the fourth quarter of
2016. Oil revenues increased 22% sequentially from $100.2 million in the
third quarter of 2017 to $121.8 million in the fourth quarter of 2017,
and increased 78% year-over-year from $68.5 million in the fourth
quarter of 2016. Natural gas revenues increased 25% sequentially from
$34.8 million in the third quarter of 2017 to $43.4 million in the
fourth quarter of 2017, and increased 65% year-over-year from $26.3
million in the fourth quarter of 2016. Weighted average realized oil
prices increased 16% sequentially from $46.25 per barrel realized in the
third quarter of 2017 to $53.66 per barrel realized in the fourth
quarter of 2017, and increased 13% year-over-year from $47.34 per barrel
realized in the fourth quarter of 2016. Average oil price differentials
improved from -$1.95 per barrel in the third quarter to -$1.65 per
barrel in the fourth quarter of 2017. Weighted average realized natural
gas prices increased 20% sequentially from $3.42 per thousand cubic feet
in the third quarter of 2017 to $4.12 per thousand cubic feet in the
fourth quarter of 2017, and increased 23% year-over-year from $3.35 per
thousand cubic feet realized in the fourth quarter of 2016. Matador
realized an uplift of $1.20 per thousand cubic feet above the NYMEX
Henry Hub natural gas prices in the fourth quarter of 2017, as compared
to $0.47 per thousand cubic feet in the third quarter of 2017. As
Matador is a two-stream reporter, this increased uplift in the realized
weighted average natural gas price primarily reflects the improvement in
prices realized for the Company's natural gas liquids in the fourth
quarter of 2017.

Total realized revenues, including realized hedging gains and losses and
third-party midstream services revenues, increased 19% sequentially from
$138.6 million in the third quarter of 2017 to $165.3 million in the
fourth quarter of 2017, and increased 72% year-over-year from $95.9
million in the fourth quarter of 2016. Third-party midstream services
revenues increased 3% sequentially from $3.2 million in the third
quarter of 2017 to $3.3 million in the fourth quarter of 2017, and
increased 47% year-over-year from $2.3 million in the fourth quarter of
2016. Realized hedging losses were $3.1 million in the fourth quarter of
2017, as compared to realized hedging gains of $0.5 million in the third
quarter of 2017 and realized hedging losses of $1.1 million in the
fourth quarter of 2016.

Year Ended December 31, 2017

Average daily oil equivalent production increased 40% from 27,813 BOE
per day (50% oil) for the year ended December 31, 2016 to 38,936 BOE per
day (55% oil) for the year ended December 31, 2017. Of particular note,
the oil component of Matador's total oil equivalent production increased
from 50% to 55% during 2017. Matador's 2017 total
oil equivalent production of approximately 14.2 million BOE was the best
annual result in the Company's history and was above the high end of the
Company's 2017 oil equivalent production guidance.

Average daily oil production increased 54% from 13,924 barrels per day
for the year ended December 31, 2016 to 21,510 barrels per day for the
year ended December 31, 2017. Matador's 2017 total
oil production of approximately 7.9 million barrels was the best annual
result in the Company's history and was above the high end of the
Company's 2017 oil production guidance.

Average daily natural gas production increased 25% from 83.3 million
cubic feet per day for the year ended December 31, 2016 to 104.6 million
cubic feet per day for the year ended December 31, 2017. Matador's
2017 total natural gas production of approximately 38.2 billion cubic
feet was the best annual result in the Company's history and was above
the high end of the Company's 2017 natural gas production guidance.

Matador's Delaware Basin average oil equivalent production was 29,463
BOE per day (76% of total oil equivalent production) for the year ended
December 31, 2017, consisting of 18,023 barrels of oil per day (84% of
total oil production) and 68.6 million cubic feet of natural gas per day
(66% of total natural gas production). Matador's Delaware Basin average
oil equivalent production increased approximately 84%, as compared to
15,941 BOE per day (57% of total oil equivalent production) for the year
ended December 31, 2016, consisting of 10,395 barrels of oil per day
(75% of total oil production) and 33.3 million cubic feet of natural gas
per day (40% of total natural gas production).

Oil and natural gas revenues increased 82% from $291.2 million for the
year ended December 31, 2016 to $528.7 million for the year ended
December 31, 2017. The increase in oil and natural gas revenues was
attributable to both higher oil and natural gas production and higher
realized oil and natural gas prices in 2017 as compared to 2016. Oil
revenues increased 84% from $209.9 million for the year ended December
31, 2016 to $386.9 million for the year ended December 31, 2017. Natural
gas revenues increased 75% from $81.2 million for the year ended
December 31, 2016 to $141.8 million for the year ended December 31,
2017. Weighted average realized oil prices increased 20% from $41.19 per
barrel realized for the year ended December 31, 2016 to $49.28 per
barrel realized for the year ended December 31, 2017. Average oil price
differentials improved to -$1.52 per barrel in 2017, as compared to
-$2.21 per barrel in 2016. Weighted average realized natural gas prices
increased 40% from $2.66 per thousand cubic feet for the year ended
December 31, 2016 to $3.72 per thousand cubic feet for the year ended
December 31, 2017. Matador realized an uplift of $0.70 per thousand
cubic feet above the average NYMEX Henry Hub natural gas price in 2017,
as compared to an uplift of $0.11 per thousand cubic feet in 2016. As
Matador is a two-stream reporter, this increased uplift in the realized
weighted average natural gas price primarily reflects the improvement in
prices realized for the Company's natural gas liquids during 2017.

Total realized revenues, including realized hedging gains and
third-party midstream services revenues, increased 75% from $305.7
million for the year ended December 31, 2016 to $534.6 million for the
year ended December 31, 2017. Third-party midstream services revenues
almost doubled from $5.2 million for the year ended December 31, 2016 to
$10.2 million for the year ended December 31, 2017. Realized hedging
losses were $4.3 million for the year ended December 31, 2017, as
compared to realized hedging gains of $9.3 million for the year ended
December 31, 2016.

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

For the fourth quarter of 2017, Matador reported net income of
approximately $38.3 million and earnings of $0.35 per diluted common
share on a GAAP basis, an increase of 155%, as compared to net income of
approximately $15.0 million, or $0.15 per diluted common share, in the
third quarter of 2017, and a decrease of 63%, as compared to net income
of approximately $104.2 million and earnings of $1.09 per diluted common
share in the fourth quarter of 2016. Matador's net income in the fourth
quarter of 2016 was significantly impacted by the recognition of the
remaining gain of $104.1 million resulting from the October 2015 sale of
its natural gas processing plant in Loving County, Texas. Portions of
the fourth quarter 2017 net income (GAAP basis) were attributable to
non-cash items, primarily unrealized hedging losses, and excluding those
items from net income resulted in adjusted net income (non-GAAP) of
approximately $27.2 million and adjusted earnings of $0.25 per diluted
common share. Adjusted net income for the fourth quarter of 2017 did
not include
the federal AMT benefit of $8.2 million and was
estimated using a federal statutory tax rate of 35%.

Matador's net income for the fourth quarter of 2017 was favorably
impacted by (1) higher oil and natural gas production and higher
realized oil and natural gas prices, as compared to the third quarter of
2017 and (2) an estimated federal AMT refund of $8.2 million resulting
from the recent enactment of the Tax Cuts and Jobs Act. Matador's net
income for the fourth quarter of 2017 was unfavorably impacted by (1) a
realized loss on derivatives of $3.1 million and (2) a non-cash,
unrealized loss on derivatives of $11.7 million.

For the year ended December 31, 2017, Matador reported net income of
approximately $125.9 million and earnings of $1.23 per diluted common
share on a GAAP basis, as compared to a net loss of approximately $97.4
million and a loss of $1.07 per diluted common share for the year ended
December 31, 2016. Portions of the full year 2017 net income (GAAP
basis) were attributable to non-cash items, and excluding those items
from net income resulted in adjusted net income (non-GAAP) of
approximately $73.4 million and adjusted earnings of $0.72 per diluted
common share.

Matador's net income for the year ended December 31, 2017 was favorably
impacted by (1) higher oil and natural gas production and higher
realized oil and natural gas prices, as compared to the year ended
December 31, 2016, (2) an increase of approximately $5.0 million in
third-party midstream services revenues, (3) a non-cash, unrealized gain
on derivatives of $9.7 million, (4) an estimated federal AMT refund of
$8.2 million resulting from the recent enactment of the Tax Cuts and
Jobs Act and (5) no full-cost ceiling impairment throughout the year
ended December 31, 2017. Matador's net income for the year ended
December 31, 2017 was unfavorably impacted by a realized loss on
derivatives of $4.3 million.

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

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP financial measure, increased 28%
sequentially from $84.8 million in the third quarter of 2017 to $108.6
million in the fourth quarter of 2017, and increased 99% year-over-year
from $54.5 million in the fourth quarter of 2016. The sequential
increase in Adjusted EBITDA was primarily attributable to the increase
in oil and natural gas production and the increase in oil and natural
gas prices realized during the fourth quarter of 2017, as compared to
the third quarter of 2017. The year-over-year increase in Adjusted
EBITDA was also primarily attributable to the significant increases in
both oil and natural gas production and oil and natural gas prices
realized in the fourth quarter of 2017, as compared to the fourth
quarter of 2016.

Adjusted EBITDA, a non-GAAP financial measure, increased 113% from
$157.9 million for the year ended December 31, 2016 to $336.1 million
for the year ended December 31, 2017. This increase was primarily
attributable to the significant increases in both oil and natural gas
production and oil and natural gas prices realized for the year ended
December 31, 2017, as compared to the year ended December 31, 2016, but
was partially offset by a decrease of $13.6 million in realized hedging
gains between the comparable periods.

For a definition of Adjusted EBITDA and a reconciliation of Adjusted
EBITDA (non-GAAP) to net income (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 10% sequentially from $4.06 per BOE
in the third quarter of 2017 to $4.46 per BOE in the fourth quarter of
2017, and increased 1% year-over-year from $4.43 per BOE in the fourth
quarter of 2016. This increase in production taxes, transportation and
processing expenses during the fourth quarter of 2017 was primarily
attributable to higher oil and natural gas revenues, which resulted in
higher production taxes.

Production taxes, transportation and processing expenses on a
unit-of-production basis decreased 3% from $4.23 per BOE for the year
ended December 31, 2016 to $4.10 per BOE for the year ended December 31,
2017. This decrease in production taxes, transportation and processing
expenses on a unit-of-production basis was primarily attributable to the
40% increase in total oil equivalent production in 2017, as well as the
decreased transportation and processing charges resulting from a full
year of operations for the Black River Processing Plant, both of which
offset a significant increase in production taxes resulting from higher
oil and natural gas revenues in 2017.

Lease operating expenses (LOE)

Lease operating expenses on a unit-of-production basis increased 8%
sequentially from $4.32 per BOE in the third quarter of 2017 to $4.68
per BOE in the fourth quarter of 2017, but decreased 13% year-over-year
from $5.41 per BOE in the fourth quarter of 2016. The sequential
increase in lease operating expenses on a unit-of-production basis was
primarily attributable to increased workover, repair and maintenance
costs in the fourth quarter of 2017, as compared to the prior quarter.
The lease operating expense of $4.68 per BOE in the fourth quarter of
2017 was just below the average of $4.74 per BOE for full year 2017 and
was also below the Company's year-end 2017 target of reducing lease
operating expenses to below $5.00 per BOE.

Lease operating expenses decreased 14% on a unit-of-production basis
from $5.52 per BOE for the year ended December 31, 2016 to $4.74 per BOE
for the year ended December 31, 2017. The decreases in lease operating
expenses on a unit-of-production basis were primarily attributable to
several key factors, including (1) increased efficiencies as more salt
water was gathered by pipeline to San Mateo's disposal facilities in the
Delaware Basin, (2) decreased workover expenses, (3) decreased salt
water disposal and chemical costs associated with the Company's Eagle
Ford operations and (4) a 40% increase in total oil equivalent
production in 2017, as compared to 2016.

Depletion, Depreciation and Amortization (DD&A)

Depletion, depreciation and amortization expenses on a
unit-of-production basis increased 9% sequentially from $12.38 per BOE
in the third quarter of 2017 to $13.53 per BOE in the fourth quarter of
2017, and increased 17% year-over-year from $11.56 per BOE in the fourth
quarter of 2016. Depletion, depreciation and amortization expenses on a
unit-of-production basis increased 4% from $11.99 per BOE for the year
ended December 31, 2016 to $12.49 per BOE for the year ended December
31, 2017. These increases were attributable, in part, to increased
depreciation expenses associated with new midstream assets constructed
and placed into service in 2017, as well as higher estimated future
development costs associated with proved undeveloped oil and natural gas
reserves at December 31, 2017, both of which were offset by the increase
in the Company's total proved oil and natural gas reserves between the
respective periods.

General and administrative (G&A)

General and administrative expenses on a unit-of-production basis
decreased 3% from $4.19 per BOE in the third quarter of 2017 to $4.06
per BOE in the fourth quarter of 2017, and decreased 28% year-over-year
from $5.65 per BOE in the fourth quarter of 2016. The
fourth quarter 2017 general and administrative expense of $4.06 per BOE
was Matador's lowest general and administrative expense on a
unit-of-production basis since becoming a public company in February
2012.

General and administrative expenses on a unit-of-production basis
decreased 14% from $5.41 per BOE for the year ended December 31, 2016 to
$4.65 per BOE for the year ended December 31, 2017.

Proved Reserves, Standardized Measure and PV-10

The following table summarizes Matador's estimated total proved oil and
natural gas reserves at December 31, 2017, 2016 and 2015.

           
At December 31,
  2017     2016     2015  
Estimated proved reserves:(1)(2)
Oil (MBbl)(3) 86,743 56,977 45,644
Natural Gas (Bcf)(4)   396.2     292.6     236.9  
Total (MBOE)(5)   152,771     105,752     85,127  
Estimated proved developed reserves:
Oil (MBbl)(3) 36,966 22,604 17,129
Natural Gas (Bcf)(4)   190.1     126.8     101.4  
Total (MBOE)(5)   68,651     43,731     34,037  
Percent developed 44.9 % 41.4 % 40.0 %
Estimated proved undeveloped reserves:
Oil (MBbl)(3) 49,777 34,373 28,515
Natural Gas (Bcf)(4)   206.1     165.9     135.5  
Total (MBOE)(5)   84,120     62,021     51,090  
Standardized Measure (in millions) $ 1,258.6 $ 575.0 $ 529.2
PV-10(6) (in millions) $ 1,333.4 $ 581.5 $ 541.6
 

(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
January through December 2017 were $47.79 per Bbl for oil and $2.98 per
MMBtu for natural gas, for the period from January through December 2016
were $39.25 per Bbl for oil and $2.48 per MMBtu for natural gas and for
the period from January through December 2015 were $46.79 per Bbl for
oil and $2.59 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 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."

Matador's estimated total proved oil and
natural gas reserves were 152.8 million BOE at December 31, 2017, an
all-time high
, consisting of 86.7 million barrels of oil and
396.2 billion cubic feet of natural gas (both also all-time highs), with
a Standardized Measure of $1.26 billion and a PV-10, a non-GAAP
financial measure, of $1.33 billion. Estimated total proved oil and
natural gas reserves increased 44% 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, a non-GAAP financial measure, of $581.5 million. The 119%
increase in Standardized Measure and the 129% increase in PV-10 at
December 31, 2017, as compared to December 31, 2016, were attributable
to both the increase in total proved reserves and the increase in oil
and natural gas prices used to determine Standardized Measure and PV-10.
At December 31, 2017, the 12-month arithmetic averages of oil and
natural gas prices used to estimate proved reserves were $47.79 per
barrel and $2.98 per MMBtu, respectively, as compared to $39.25 per
barrel and $2.48 per MMBtu, respectively, at December 31, 2016. Total
proved reserves of 152.8 million BOE at December 31, 2017 represent a
79% increase, as compared to 85.1 million BOE at December 31, 2015. At
December 31, 2017, Matador's proved oil and natural gas reserves were
45% proved developed reserves, as compared to 41% and 40% at
December 31, 2016 and 2015, respectively.

Accounting for total oil equivalent production of 14.2 million BOE,
Matador's proved reserves grew by 61.2 million BOE in 2017, or
approximately 4.3 times its 2017 annual production. The Company's proved
reserves to production ratio at December 31, 2017 was 10.8x, an increase
of 4% from 10.4x at December 31, 2016.

Proved oil reserves increased 52% to 86.7 million barrels at
December 31, 2017, as compared to 57.0 million barrels at December 31,
2016, and increased 90%, as compared to 45.6 million barrels at
December 31, 2015. Accounting for Matador's 2017 oil production of
approximately 7.9 million barrels, Matador increased its proved oil
reserves by 37.6 million barrels in 2017, or approximately 4.8 times its
2017 annual oil production. The increase in year-over-year proved oil
reserves resulted from Matador's ongoing delineation and development
operations in the Delaware Basin. Proved oil reserves comprised 57% of
the Company's total proved reserves at December 31, 2017, as compared to
54% at each of December 31, 2016 and 2015.

Proved natural gas reserves increased 35% to 396.2 billion cubic feet at
December 31, 2017, as compared to 292.6 billion cubic feet at
December 31, 2016. The increase in year-over-year natural gas reserves
resulted from the Company's ongoing delineation and development
operations in the Delaware Basin. Proved natural gas reserves comprised
43% of the Company's total proved reserves at December 31, 2017, as
compared to 46% at each of December 31, 2016 and 2015.

Matador's proved oil and natural gas reserves attributable to the
Delaware Basin increased 62% from 79.4 million BOE at December 31, 2016
to 129.0 million BOE at December 31, 2017. Matador's Delaware Basin
proved oil and natural gas reserves increased 65% and 58%, respectively,
from 46.9 million barrels and 195.1 billion cubic feet at December 31,
2016 to 77.5 million barrels and 308.9 billion cubic feet at
December 31, 2017. Matador's Delaware Basin proved reserves comprised
84% of the Company's total proved oil and natural gas reserves at
December 31, 2017, including 89% of its proved oil reserves and 78% of
its proved natural gas reserves.

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

Operations Update

Drilling and Completions Activities

During the fourth 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, operating this
rig in its Rustler Breaks asset area. During the third quarter of 2017,
Matador took delivery of a sixth drilling rig for the initial purpose of
drilling two commercial salt water disposal wells in the Rustler Breaks
asset area for its midstream joint venture, San Mateo. Between August
and October 2017, Matador used this rig to drill the two salt water
disposal wells, both of which have been completed and are now fully
operational.

San Mateo has elected to commission the drilling and completion of two
additional salt water disposal wells and the construction of associated
commercial salt water disposal facilities in the Rustler Breaks asset
area, which, when completed, will result in a total of five commercial
salt water disposal wells in the Rustler Breaks asset area by mid-2018.
As noted in its November 6, 2017 earnings release, Matador anticipated
spudding a fourth salt water disposal well at Rustler Breaks prior to
the end of 2017, but due to a delay in securing the water injection
permit for this well, Matador elected to move the sixth rig to the
Antelope Ridge asset area to begin drilling the Company's first oil and
natural gas wells in that area. Matador drilled two oil and natural gas
wells in its Antelope Ridge asset area during the fourth quarter of 2017
and drilled a third well at Antelope Ridge in early 2018. Two of these
wells were completed in early 2018.

As described in its 2018 guidance estimates presented earlier in this
earnings release, Matador now expects to operate six drilling rigs in
the Delaware Basin throughout 2018, including three rigs in the Rustler
Breaks asset area, one rig in the Wolf and Jackson Trust asset areas,
one rig in the Arrowhead, Ranger and Twin Lakes asset areas and one rig
in the Antelope Ridge asset area. One of the three rigs operating in the
Rustler Breaks asset area is also expected to drill at least two salt
water disposal wells in that area during the first half of 2018. As a
result, the Company expects that this rig will spend only approximately
three-quarters of the year drilling oil and natural gas wells. Matador
expects to direct substantially all of its 2018 capital expenditures to
drilling and completion and midstream operations in the Delaware Basin.

Matador has continued to build significant optionality into its drilling
program. Three of its rigs continue to operate on longer-term contracts
with remaining average terms between 12 and 18 months. The other three
rigs are on short-term contracts with remaining obligations ranging from
one 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.

Fourth Quarter 2017

During the fourth quarter of 2017, Matador completed and turned to sales
a total of 30 gross (14.1 net) horizontal wells in its various operating
areas, including 17 gross (13.2 net) operated wells and 13 gross (0.9
net) non-operated wells, as summarized in the table below. Essentially
all of the Company's operated and non-operated drilling and completions
activity in the fourth quarter of 2017 was undertaken in the Delaware
Basin.

    Operated     Non-Operated     Total
Operating Area Gross     Net Gross     Net Gross     Net
Delaware Basin 17 13.2 8 0.8 25 14.0
Haynesville Shale     0     0.0     5     0.1     5     0.1
Total     17     13.2     13     0.9     30     14.1
 

As noted in the table above, during the fourth quarter of 2017, Matador
completed and turned to sales 25 gross (14.0 net) horizontal wells in
its various asset areas in the Delaware Basin, including 17 gross (13.2
net) operated and eight gross (0.8 net) non-operated wells, as
summarized in the table below.

    Operated     Non-Operated     Total
Asset Area Gross     Net Gross     Net Gross     Net
Rustler Breaks 8 6.2 7 0.3 15 6.5
Arrowhead 3 2.0 0 0.0 3 2.0
Ranger 2 1.8 1 0.5 3 2.3
Wolf/Jackson Trust     4     3.2     0     0.0     4     3.2
Total     17     13.2     8     0.8     25     14.0
 

Full Year 2017

During the year ended December 31, 2017, Matador completed and turned to
sales a total of 105 gross (66.0 net) horizontal wells in its various
operating areas, including 70 gross (61.1 net) operated wells and 35
gross (4.9 net) non-operated wells, as summarized in the table below.

    Operated     Non-Operated     Total
Operating Area Gross     Net Gross     Net Gross     Net
Delaware Basin 65 56.1 21 3.5 86 59.6
Eagle Ford Shale 5 5.0 3 0.8 8 5.8
Haynesville Shale     0     0.0     11     0.6     11     0.6
Total     70     61.1     35     4.9     105     66.0
 

Overall, Matador completed and turned to sales six gross (3.7 net) more
wells in 2017 than the Company initially forecasted. The Company also
had a number of both operated and non-operated wells in progress,
particularly in the Delaware Basin, at year-end 2017.

As noted in the table above, during the year ended December 31, 2017,
Matador completed and turned to sales 86 gross (59.6 net) horizontal
wells in its various asset areas in the Delaware Basin, including 65
gross (56.1 net) operated and 21 gross (3.5 net) non-operated wells, as
summarized in the table below.

    Operated     Non-Operated     Total
Asset Area Gross     Net Gross     Net Gross     Net
Rustler Breaks 37 32.4 16 2.1 53 34.5
Arrowhead 7 5.0 1 0.1 8 5.1
Ranger 7 6.7 2 0.6 9 7.3
Wolf/Jackson Trust 13 11.0 0 0.0 13 11.0
Twin Lakes 1 1.0 0 0.0 1 1.0
Antelope Ridge     0     0.0     2     0.7     2     0.7
Total     65     56.1     21     3.5     86     59.6
 
 

Delaware Basin - Southeast New Mexico and West Texas

Antelope Ridge Asset Area - Lea County, New Mexico

Matador drilled its first two operated wells in the Antelope Ridge asset
area during the fourth quarter of 2017—the Florence State 23-23S-34E AR
#202H (Florence #202H) and the Leo Thorsness 13-24S-33E AR #211H (Leo
Thorsness #211H) wells. Neither of these wells were completed in 2017,
but the Florence #202H well was completed in the uppermost portion of
the Wolfcamp A formation in early 2018. Matador is pleased today to
announce the 24-hour initial potential test result from this well as
summarized in the table below.

        Initial Potential
Oil     Gas     BOE     % Oil     FCP(1)     Choke
Well Interval (Bbl/d) (Mcf/d) (BOE/d) (psi) (inch)
Florence State 23-23S-34E AR #202H Wolfcamp A 1,585 2,217 1,947 81 % 1,700 32/64
 
(1) Flowing casing pressure.
 

Matador is very pleased with the initial performance of the Florence
#202H well and believes it confirms the prospectivity of the Antelope
Ridge asset area. Matador has also recently drilled and completed its
third operated well in this asset area—the Marlan Downey State 9-23S-35E
AR #111H well, a First Bone Spring test. This well has just begun
flowing back following completion. Completion operations have also just
been concluded on the Leo Thorsness #211H well, a Wolfcamp A-Lower test,
and Matador anticipates releasing the initial test results from these
next two wells as part of its first quarter 2018 earnings release. The
Company intends to continue the delineation of its acreage position in
the Antelope Ridge asset area, where other operators in the area have
successfully tested the Brushy Canyon, First, Second and Third Bone
Spring and Upper Wolfcamp intervals.

Rustler Breaks Asset Area - Eddy County, New Mexico

Matador operated three drilling rigs in its Rustler Breaks asset area
throughout the fourth quarter of 2017. During the fourth quarter, the
Company completed and turned to sales 15 gross (6.5 net) horizontal
wells in the area, including eight gross (6.2 net) operated wells and
seven gross (0.3 net) non-operated wells. The eight operated wells
included two Wolfcamp A-XY completions, one Wolfcamp A-Lower completion
and five Wolfcamp B-Blair completions. The eight operated wells had
completed lateral lengths between 4,300 and 4,500 feet. The 24-hour
initial potential test results from all eight 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)
Anne Com 15-24S-28E RB #202H Wolfcamp A-XY 1,062 1,994 1,394 76 % 2,150 30/64
Anne Com 15-24S-28E RB #222H Wolfcamp B-Blair 729 6,203 1,763 41 % 3,020 34/64
Charlie Sweeney Fed Com #208H Wolfcamp A-XY 1,218 2,046 1,559 78 % 1,650 32/64
Charlie Sweeney Fed Com #204H Wolfcamp A-Lower 897 1,748 1,188 75 % 1,663 32/64
Charlie Sweeney Fed Com #228H Wolfcamp B-Blair 577 7,797 1,877 31 % 2,572 36/64
Forehand Ranch 35 Fed Com #1H Wolfcamp B-Blair 597 5,601 1,530 39 % 2,450 34/64
Tom Matthews 10-24S-28E RB #223H Wolfcamp B-Blair 704 9,417 2,273 31 % 2,900 36/64
Zach McCormick Fed Com #226H Wolfcamp B-Blair 846 7,126 2,033 42 % 2,900 34/64
 
(1) Flowing casing pressure.
 

Matador turned fewer wells to sales in the Rustler Breaks asset area in
the fourth quarter as compared to the third quarter of 2017, primarily
due to timing of operations. Matador was finishing up completion
operations on a three-well pad on its Garrett leasehold in Rustler
Breaks at year-end 2017. These wells were completed and turned to sales
in early January 2018. Likewise, drilling operations were being
concluded on a two-well pad on the Company's Michael Collins leasehold
at year-end 2017, and these wells are being completed in the first
quarter of 2018.

Overall, in the fourth quarter of 2017, the well results achieved in the
Rustler Breaks asset area continued to be both strong and consistent
across both the Wolfcamp A-XY and Wolfcamp B-Blair completions. As noted
in the table above, the two wells completed in the Wolfcamp A-XY
interval during the fourth quarter of 2017 tested at 1,394 and 1,559 BOE
per day with oil cuts of 76% and 78%, respectively, which is comparable
to the test results from other Wolfcamp A-XY completions in the Rustler
Breaks asset area in prior reporting periods. Likewise, the Wolfcamp
B-Blair completions tested between 1,530 and 2,273 BOE per day at oil
cuts ranging from 31% to 42%, which is consistent with the previous
Wolfcamp B-Blair results.

Of particular note in the fourth quarter were the results from the
Charlie Sweeney Fed Com #204H (Sweeney #204H) well. The Sweeney #204H
well was Matador's second test of the Wolfcamp A-Lower interval in the
Rustler Breaks asset area. The Wolfcamp A-Lower interval is the more
organically rich portion of the Wolfcamp A formation, several hundred
feet below the Wolfcamp A-XY completion target. This interval was tested
successfully in the Rustler Breaks asset area with the Guitar 10-24S-28E
RB #205H (Guitar #205H) well completed in the second quarter of 2017.
The test results from the Sweeney #204H well were almost identical to
those of the Guitar #205H well, which tested 1,155 BOE per day,
consisting of 870 barrels of oil per day and 1.7 million cubic feet of
natural gas per day, at 1,587 psi flowing casing pressure on a
32/64-inch choke. Matador is pleased with the results from both wells
and believes that the results from the Sweeney #204H well further
confirm the prospectivity of the Wolfcamp A-Lower target in the Rustler
Breaks asset area. The Company plans additional Wolfcamp A-Lower tests
at Rustler Breaks as part of its 2018 drilling and completion program.

In addition, during the fourth quarter of 2017, Matador participated in
two non-operated wells in its Rustler Breaks asset area that tested the
Break Sand, a sandstone interval that comes and goes within the
carbonate interval located in the upper portion of the Third Bone Spring
formation. Matador is pleased to report that these two non-operated
Break Sand wells both exhibited encouraging initial results, testing
2,140 BOE per day (80% oil) and 2,295 BOE per day (77% oil),
respectively, on 24-hour initial potential tests. Both wells had
completed lateral lengths of just under two miles. Although this
interval is not present everywhere on Matador's Rustler Breaks
leasehold, it is a target that the Company had previously identified for
future testing. Matador will continue to monitor the early performance
of these two Break Sand wells closely and is considering an operated
test of the Break Sand in the Rustler Breaks asset area as part of its
2018 drilling and completion program.

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

Matador operated one drilling rig in its Arrowhead and Ranger asset
areas during the fourth quarter of 2017. During this period, the Company
completed and turned to sales six gross (4.3 net) horizontal wells,
including five gross (3.8 net) operated wells and one gross (0.5 net)
non-operated well. The five operated wells included four Second Bone
Spring completions and one Third Bone Spring completion, and all had
lateral lengths between 4,200 and 4,500 feet. The 24-hour initial
potential test results from all five 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)
Stebbins 20 Federal #124H Second Bone Spring 756 532 845 90 % On ESP N/A
Stebbins 19 Federal Com #123H Second Bone Spring 909 616 1,012 90 % On ESP N/A
Stebbins 20 Federal #134H Third Bone Spring 647 1,254 856 76 % On ESP N/A
Ranger 33 State Com #123H Second Bone Spring 631 349 689 92 % 170 60/64
Federal 30 #123H Second Bone Spring 598 353 657 91 % 210 56/64
 
(1) Flowing casing pressure.
 

During the fourth quarter of 2017, Matador completed three additional
wells in its Stebbins leasehold in the Arrowhead asset area, including
two Second Bone Spring completions and one Third Bone Spring completion.
Matador continues to be very pleased with the early results from its
Stebbins acreage position. The first well on the Stebbins block, the
Stebbins 20 Federal #123H (Stebbins 20 #123H) well, has produced just
over 200,000 BOE in approximately nine months of production and
continues to track well ahead of Matador's 700,000 BOE Second Bone
Spring type curve for the Arrowhead and Ranger asset areas. Early
performance from the Stebbins 19 Federal Com #123H and the Stebbins 20
Federal #124H wells is similar to that of the Stebbins 20 #123H well.
Matador was also very pleased with the initial test results and early
performance of the Stebbins 20 Federal #134H well, the Third Bone Spring
completion, which has exhibited a very flat production profile since
shortly after the installation of an electrical submersible pump (ESP)
in the well.

The contiguous nature of the Stebbins leasehold has already lent itself
to several operational efficiencies, including batch drilling and
completion operations, as well as centralized facilities, all of which
contribute to lower project costs. In addition, drilling times for the
Stebbins wells have improved by as much as 4.1 days since development
began on this acreage in mid-2017. Further improvements and operational
efficiencies are anticipated as Matador gains more experience working in
this asset area. In addition, Matador expects to be able to drill 1.5
and 2-mile laterals as part of its future development of the Stebbins
leasehold. Matador is also considering testing the Wolfcamp A-XY
interval in the Stebbins area as part of its 2018 drilling program.

Of note in the Ranger asset area, Matador completed the Ranger 33 State
Com #123H (Ranger 33 #123H) well in the Second Bone Spring formation.
This well was an offset to one of the Company's original wells in the
Ranger asset area, the Ranger 33 State Com #1H (Ranger 33 #1H) well. The
Ranger 33 #1H well has produced 310,000 BOE (91% oil) in approximately
four years of production, and at February 21, 2018, the well continued
to track just below Matador's 700,000 BOE type curve for the Second Bone
Spring in the Arrowhead and Ranger asset areas. The Ranger 33 #123H well
was recently placed on gas lift and has exhibited early performance
similar to the Ranger 33 #1H well.

Matador is also pleased to announce that its three Mallon wells, the
Mallon 27 Federal Com #1H, #2H and #3H wells, each of which was drilled
and completed in the Third Bone Spring, have produced almost 1.3 million
BOE (90% oil) in the aggregate, including over 1.1 million barrels of
oil in just over one year of production. From the Company's review of
publicly available data from Third Bone Spring completions in New
Mexico, Matador believes that its three Mallon wells, based on the first
year of oil production from each well, are three of the five best
performing Third Bone Spring completions in New Mexico, with the Mallon
27 Federal Com #1H well appearing to be the top performing Third Bone
Spring well. In addition, Matador believes that its Mallon wells are
among the top 15 best performing Bone Spring wells in New Mexico,
including wells completed in the First, Second and Third Bone Spring.

Wolf and Jackson Trust Asset Areas - Loving
County, Texas

Matador operated one drilling rig in its Wolf and Jackson Trust asset
areas during the fourth quarter of 2017. During the fourth quarter, the
Company completed and turned to sales four gross (3.2 net) operated
horizontal wells in these areas, including three wells completed in the
Wolfcamp A-XY and one well completed in the Wolfcamp A-Lower. The
24-hour initial potential test results from each of these four wells are
summarized in the table below.

        Initial Potential
Oil     Gas     BOE     % Oil     FCP(1)     Choke
Well Interval (Bbl/d) (Mcf/d) (BOE/d) (psi) (inch)
Kerr 83-TTT-B33 WF #201H Wolfcamp A-XY 676 2,372 1,071 63 % 1,850 40/64
Kerr 83-TTT-B33 WF #202H Wolfcamp A-XY 695 2,852 1,170 59 % 1,725 40/64
Larson 04-TTT-B02 WF #201H Wolfcamp A-XY 801 3,000 1,301 62 % 2,376 40/64
Toot D 17-TTT-C24 NL #211H Wolfcamp A-Lower 1,377 1,887 1,692 81 % 2,451 30/64
 
(1) Flowing casing pressure.
 

The three wells completed in the Wolf asset area in the Wolfcamp A-XY
interval, the Kerr 83-TTT-B33 WF #201H (Kerr #201H) well, the Kerr
83-TTT-B33 WF #202H (Kerr #202H) well and the Larson 04-TTT-B02 WF #201H
(Larson #201H) well, had lateral lengths of 7,662 feet, 6,311 feet and
7,139 feet, respectively. The Kerr #201H well was the longest completed
lateral for any well in the Company's Wolf asset area to date. Matador
expects to drill and complete several additional longer laterals in the
Wolf asset area in 2018.

Matador has observed that the 24-hour initial potential test rates from
its longer laterals in the Wolf asset area are typically similar to
those wells with completed lateral lengths of less than one mile.
Matador believes this is due to the large volumes of fracturing fluid
used to stimulate these longer lateral wells, the formation water
produced and the Company's practice of reservoir pressure maintenance
during a more restricted flowback period in its Delaware Basin wells.
More importantly, however, the longer laterals tend to exhibit much
flatter production declines. The Company believes that the initial test
results likely do not reflect flow contributions from the entire
completed lateral, and that as those intervals closer to the toe of the
lateral begin to clean up and contribute to flow with time, the
production from these wells should exhibit shallower decline rates.

Two examples of this behavior are the Billy Burt 90-TTT-B33 WF #201H
(Billy Burt #201H) and Billy Burt 90-TTT-B33 WF #202H (Billy Burt #202H)
wells, drilled and completed about 3.5 years ago in the Wolfcamp A-XY
with completed lateral lengths of 6,776 feet and 5,879 feet,
respectively. Both of these wells exhibited similar 24-hour initial
potential test rates as the three wells completed in the fourth quarter
of 2017. The Billy Burt wells are among the best performers in the Wolf
asset area, and at February 21, 2018, both wells continued to track
above Matador's 1.0 million BOE type curve for the Wolfcamp A-XY
interval in the Wolf asset area. Early performance from the Kerr #201H,
Kerr #202H and Larson #201H wells is similar to that observed in the
Billy Burt wells.

In the Jackson Trust area, the Toot D17-TTT-C24 NL #211H (Toot #211H)
marked another positive test of the Wolfcamp A-Lower interval. This well
was an opposing lateral to the Totum E 18-TTT-C24 NL #211H (Totum #211H)
well, which was completed and turned to sales in early 2017. The Toot
#211H well was completed using a similar stimulation design for the
Wolfcamp A-Lower interval as was pumped in the Totum #211H well. The
Toot #211H well was stimulated with 39 fracture stages, including
approximately 47 barrels of slickwater and 1,900 pounds of primarily
40/70 mesh white sand per completed lateral foot.

The Totum #211H well continues to be Matador's best performing Wolfcamp
A-Lower well in the Delaware Basin. After almost one year of production,
the Totum #211H well had produced approximately 300,000 BOE (77% oil).
At February 21, 2018, the Totum #211H well continued to track well above
Matador's 750,000 BOE type curve for the Wolfcamp A-Lower interval in
the Jackson Trust asset area and appeared to be on track for an ultimate
recovery of just over 1.0 million BOE.

Twin Lakes Asset Area - Lea County, New Mexico

Matador conducted no operated activities in its Twin Lakes asset area
during the fourth quarter of 2017. The Company is participating in one
non-operated well being drilled by an affiliate of Cimarex Energy Co. in
the western portion of its acreage position, and this well is currently
being completed. Matador plans to drill and complete its second Wolfcamp
D test at Twin Lakes in the western portion of its acreage position
during the first half of 2018. Matador remains encouraged by the
potential for the Wolfcamp D, as well as other potential completion
targets, in the Twin Lakes asset area and looks forward to continuing
its exploration and delineation activities in this asset area in 2018.

Midstream Update

During the fourth 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 of
capacity to the existing 60 million cubic feet per day of cryogenic
natural gas processing capacity. At February 21, 2018, the expansion
project was nearing an on-time, on-budget completion and is expected to
become operational in the first quarter.

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. Later in the fourth quarter, a third commercial salt water
disposal well in the Rustler Breaks asset area was drilled and
completed, and this well began disposing of water early in the first
quarter of 2018. At February 21, 2018, San Mateo had three operational
commercial salt water disposal wells in the Rustler Breaks asset area
with a total disposal capacity of approximately 90,000 barrels of water
per day. San Mateo plans to add to that disposal capacity in the
near-term by upgrading two of the existing wells by installing larger
tubing and drilling and completing at least two additional salt water
disposal wells and constructing the associated commercial salt water
disposal facilities in the Rustler Breaks asset area, bringing San
Mateo's commercial salt water disposal well count to a total of five by
mid-year 2018. At February 21, 2018, San Mateo's salt water disposal
wells had a total disposal capacity of approximately 160,000 barrels of
water per day combined at both its Wolf and Rustler Breaks water
disposal facilities.

On January 22, 2018, Matador announced a strategic relationship between
a subsidiary of San Mateo and a subsidiary of Plains to gather and
transport crude oil for Matador and third-party customers in and around
the Rustler Breaks asset area in Eddy County, New Mexico. Subsidiaries
of San Mateo and Plains have agreed to work together through a joint
tariff arrangement and related transactions to offer third-party
producers located within a joint development area of approximately
400,000 acres in Eddy County, New Mexico (the "Joint Development Area")
crude oil transportation services from the wellhead to Midland, Texas
with access to other end markets, such as Cushing and the Gulf Coast. In
addition, another subsidiary of Plains has agreed to purchase Matador's
oil production in the Rustler Breaks asset area and in the Wolf asset
area in Loving County, Texas.

In order to transport crude oil from the Joint Development Area to
Midland or other end markets, Plains intends to construct a mainline
extension from its current long-haul pipeline system located in
Culberson County, Texas to a central delivery point on San Mateo's crude
oil pipeline system, which is currently under construction throughout
the Rustler Breaks asset area. Matador expects construction will be
completed in the second quarter or early in the third quarter of 2018.
In addition, San Mateo will be able to accept crude oil onto its system
from trucks near the city of Loving, New Mexico. This crude oil trucking
station should provide producers in the area whose oil is not yet
connected to pipe at the wellhead a favorable option to transport oil to
Midland and other end markets. San Mateo expects to benefit from
Matador's activities in this area and from Plains' extensive midstream
asset footprint, long-term customer relationships and outstanding
reputation for oil gathering and transportation services to open up
additional market opportunities, while also capitalizing on San Mateo's
own ability to offer services across all three production streams—oil
transportation and gathering, natural gas gathering and processing and
salt water gathering and disposal.

In addition, when San Mateo was formed in February 2017, Matador
received $171.5 million in connection with the formation of San Mateo
and was eligible to earn up to an additional $73.5 million in
performance incentives over the subsequent five years. Matador is
pleased to announce today that it has earned the first year of
performance incentives in full and expects to receive a payment of $14.7
million from a subsidiary of Five Point Capital Partners LLC ("Five
Point"), Matador's partner in San Mateo, in the first quarter of 2018.
For accounting purposes, this payment of $14.7 million is considered to
be part of the total original consideration received by Matador when
forming the Joint Venture with Five Point, and as a result, it will not
be included in net income, adjusted net income or Adjusted EBITDA in the
first quarter of 2018. This payment of $14.7 million is in addition to
the $171.5 million Matador received in connection with the formation of
San Mateo.

Delaware Basin Acreage Update

At December 31, 2017, Matador held approximately 199,600 gross (114,000
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 December 31, 2017
(approximate):
   
       

Asset Area

Gross Acres Net Acres
Ranger (Lea County, NM) 28,800 15,500
Arrowhead (Eddy County, NM) 56,600 23,400
Rustler Breaks (Eddy County, NM) 41,000 21,200
Antelope Ridge (Lea County, NM) 12,000 8,900
Wolf and Jackson Trust (Loving County, TX) 13,600 9,400
Twin Lakes (Lea County, NM) 46,100 34,400
Other 1,500 1,200
Total 199,600 114,000
 

During the fourth quarter of 2017, Matador acquired approximately 6,900
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, most of which had been acquired by, and was included in,
its November 6, 2017 earnings release. These year-end 2017 acreage
estimates also account for a small amount of acreage expirations during
the fourth quarter, primarily in the far northwest Twin Lakes and Ranger
asset areas. Portions of this acreage were leased from the State of New
Mexico and were not available to be extended and in other instances, the
Company chose not to extend the leases.

For the full year 2017, Matador acquired approximately 25,100 net acres
in the Delaware Basin, including a small volume of associated
production, for a total acquisition cost of approximately $238 million.
Excluding the value of the production acquired, this acreage was added
for a weighted average cost of between approximately $7,000 and $8,000
per net acre.

2018 Capital Spending

As provided in its 2018 guidance estimates announced today, Matador
estimates that it will incur capital expenditures of (1) $530 to $570
million for drilling, completing and equipping operated and non-operated
wells almost entirely in the Delaware Basin and (2) $70 to $90 million
for its share of various midstream projects to be undertaken by San
Mateo, reflecting Matador's 51% share of San Mateo's estimated 2018
capital expenditures. Matador expects to operate six drilling rigs
throughout 2018, with the sixth rig being used periodically to drill at
least two additional salt water disposal wells in the Rustler Breaks
asset area for San Mateo. The Company's estimated 2018 capital
expenditures for drilling, completing and equipping its wells account
for a 10% increase in expected well costs attributable to higher
anticipated oilfield service costs in 2018 as compared to 2017.
Matador's 2018 capital investment plan contemplates an increase in batch
drilling and completion operations as compared to 2017, as well as the
drilling of several longer lateral wells, particularly in the Wolf asset
area, in 2018. Matador's 2018 capital investment plan also accounts for
the Company's participation in an increased number of non-operated
wells, particularly in the Delaware Basin.

Matador has allocated substantially all of its 2018 estimated capital
expenditures to the Delaware Basin, with the exception of small amounts
allocated to limited operations in the Eagle Ford and Haynesville shales
to maintain and extend leases and to participate in those non-operated
well opportunities where economic returns are expected to be comparable
to Matador's Delaware Basin wells. The Company's 2018 estimated capital
expenditures assume no operated drilling and completion activities in
either the Eagle Ford or Haynesville shales. Accordingly, Matador
projects that it will complete and turn to sales 128 gross (68.0 net)
wells in 2018, including 80 gross (62.9 net) operated wells and 48 gross
(5.1 net) non-operated wells, almost all in the Delaware Basin. The
Company expects to have operations in progress on as many as 158 gross
(83.1 net) wells during 2018. Matador will provide a more complete
discussion of its 2018 capital investment plan during its upcoming 2018
Analyst Day on Tuesday, March 6, 2018 in Dallas, Texas.

Matador intends to continue acquiring leasehold and mineral interests
throughout its asset base, and particularly in the Delaware Basin,
during 2018. As in 2017, these expenditures are opportunity-specific,
and per-acre prices can vary significantly based on the prospect. As a
result, it is difficult for the Company to estimate these particular
2018 capital expenditures with any degree of certainty; therefore,
Matador has not provided estimated capital expenditures related to
acreage and mineral acquisitions in 2018. Matador expects to provide
periodic updates regarding completed leasehold and mineral acquisitions
in 2018, just as the Company did in 2017.

Liquidity Update

At December 31, 2017, the borrowing base under Matador's revolving
credit facility was $525 million based on the lenders' review of the
Company's proved oil and natural gas reserves at June 30, 2017, with the
Company maintaining its "elected borrowing commitment" at $400 million.
At December 31, 2017, Matador had cash on hand totaling approximately
$97 million, not including approximately $6 million of restricted cash
(most of which is associated with San Mateo), no outstanding borrowings
under the Company's revolving credit facility and approximately $2.1
million in outstanding letters of credit. At February 21, 2018, the
Company continued to have no outstanding borrowings under its credit
facility and approximately $2.1 million in outstanding letters of
credit. Matador's net debt to Adjusted EBITDA ratio was approximately
1.4x at December 31, 2017.

In October 2017, Matador completed a public offering of 8.0 million
shares of its common stock, receiving proceeds of $208.7 million (before
expenses). A portion of the proceeds of this offering were 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. The remaining proceeds have been and are expected to be
used for other midstream development, leasehold and mineral acquisition
and general corporate purposes, including to fund a portion of the
Company's current and future capital expenditures.

At February 21, 2018, Matador remained in a strong financial position
and is well funded to execute its 2018 anticipated drilling program and
midstream operations. Matador intends to fund its 2018 capital
requirements primarily using cash on hand and anticipated cash flows
from operations, but also expects to call upon its fully undrawn line of
credit as additional capital is needed. Currently, Matador does not have
a separate line of credit for its midstream operations, but the Company
is considering securing a midstream line of credit during 2018.

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 February 21, 2018, Matador had the following hedges in place, in the
form of swaps and costless collars, for the remainder of 2018.

  • Approximately 2.6 million barrels of oil (WTI) at a weighted average
    floor price of $44 per barrel and a weighted average ceiling price of
    approximately $60 per barrel.
  • Approximately 1.8 million barrels of oil (WTI) at a weighted average
    floor price of $50 per barrel and call spread/ceiling prices of $64
    per barrel (short call) and $67 per barrel (long call), respectively.
  • Approximately 0.7 million barrels of oil (LLS) at a weighted average
    floor price of $45 per barrel and a weighted average ceiling price of
    approximately $63 per barrel.
  • Approximately 4.8 million barrels of oil (Midland-Cushing Oil Basin
    Differential) at a weighted average price of -$1.02 per barrel.
  • Approximately 15.4 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.

Matador estimates that it has approximately 55% of its anticipated oil
production and approximately 40% of its anticipated natural gas
production hedged for the remainder of 2018 based on the midpoint of its
production guidance as provided in this earnings release.

Conference Call Information

The Company will host a live conference call on Thursday, February 22,
2018, at 9:00 a.m. Central Time to discuss its fourth quarter and full
year 2017 financial and operational results. To access the live
conference call, domestic participants should dial (855) 875-8781 and
international participants should dial (720) 634-2925. The participant
passcode is 1661358. The live 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 also be available on the Company's website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab through
March 30, 2018.

2018 Analyst Day

As previously announced, Matador will hold its 2018 Analyst Day on
Tuesday, March 6, 2018 beginning at 9:00 a.m. Central Time in the San
Antonio Ballroom located on the fourth floor of The Westin Galleria
Dallas hotel, 13340 Dallas Parkway, Dallas, Texas 75240. During its
Analyst Day presentation, Matador plans to provide additional details
regarding its 2018 operational plans, capital budget and forecasts and
to provide an update on its ongoing operations and continued
improvements in drilling, completion and production techniques, as well
as its current understanding of and outlook for each of its primary
asset areas in the Delaware Basin. The presentation will conclude with a
question and answer session for those in attendance. A continental
breakfast will be provided beginning at 8:00 a.m. Central Time;
following the presentation, lunch will also be provided.

The Company has limited space to attend this event in Dallas and
reservations will be required. All inquiries to attend in person should
be directed to Mac Schmitz at mschmitz@matadorresources.com.
Individuals who are unable to attend in person can participate in the
live conference call or virtual webcast of the event, details of which
were provided in the Company's February 14, 2018 announcement and are
also available on the Company's website at www.matadorresources.com
on the Presentations & Webcasts page under the Investors tab.

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, oil transportation services, natural
gas, oil and salt water gathering services and salt water disposal
services to third parties.

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 and transportation
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; delays and other difficulties
related to regulatory and governmental approvals and restrictions; 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
 
CONSOLIDATED BALANCE SHEETS - UNAUDITED
 
(In thousands, except par value and share data) December 31,
2017     2016
ASSETS
Current assets
Cash $ 96,505 $ 212,884
Restricted cash 5,977 1,258
Accounts receivable
Oil and natural gas revenues 65,962 34,154
Joint interest billings 67,225 19,347
Other 8,031 5,167
Derivative instruments 1,190
Lease and well equipment inventory 5,993 3,045
Prepaid expenses and other assets   6,287     3,327  
Total current assets 257,170 279,182
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated 3,004,770 2,408,305
Unproved and unevaluated 637,396 479,736
Midstream and other property and equipment 281,096 160,795
Less accumulated depletion, depreciation and amortization   (2,041,806 )   (1,864,311 )

Net property and equipment

1,881,456 1,184,525
Other assets   7,064     958  
Total assets $ 2,145,690   $ 1,464,665  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 11,757 $ 4,674
Accrued liabilities 174,348 101,460
Royalties payable 61,358 23,988
Amounts due to affiliates 10,302 8,651
Derivative instruments 16,429 24,203
Advances from joint interest owners 2,789 1,700
Amounts due to joint ventures 4,873 4,251
Other current liabilities   750     578  
Total current liabilities 282,606 169,505
Long-term liabilities
Senior unsecured notes payable 574,073 573,924
Asset retirement obligations 25,080 19,725
Derivative instruments 751
Amounts due to joint ventures 1,771
Other long-term liabilities   6,385     7,544  
Total long-term liabilities 605,538 603,715
Shareholders' equity
Common stock — $0.01 par value, 160,000,000 and 120,000,000 shares
authorized; 108,513,597 and 99,518,764 shares issued; and
108,510,160 and 99,511,931 shares outstanding, respectively
1,085 995
Additional paid-in capital 1,666,024 1,325,481
Accumulated deficit (510,484 ) (636,351 )
Treasury stock, at cost, 3,437 and 6,833 shares, respectively   (69 )    
Total Matador Resources Company shareholders' equity 1,156,556 690,125
Non-controlling interest in subsidiaries   100,990     1,320  
Total shareholders' equity   1,257,546     691,445  
Total liabilities and shareholders' equity $ 2,145,690   $ 1,464,665  
 
     
Matador Resources Company and Subsidiaries
 
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
 
(In thousands, except per share data) For the Years Ended December 31,
2017     2016     2015
Revenues
Oil and natural gas revenues $ 528,684 $ 291,156 $ 278,340
Third-party midstream services revenues 10,198 5,218 1,864
Realized (loss) gain on derivatives (4,321 ) 9,286 77,094
Unrealized gain (loss) on derivatives   9,715     (41,238 )   (39,265 )
Total revenues 544,276 264,422 318,033
Expenses
Production taxes, transportation and processing 58,275 43,046 35,650
Lease operating 67,313 56,202 54,704
Plant and other midstream services operating 13,039 5,389 3,489
Depletion, depreciation and amortization 177,502 122,048 178,847
Accretion of asset retirement obligations 1,290 1,182 734
Full-cost ceiling impairment 158,633 801,166
General and administrative   66,016     55,089     50,105  
Total expenses   383,435     441,589     1,124,695  
Operating income (loss) 160,841 (177,167 ) (806,662 )
Other income (expense)
Net gain on asset sales and inventory impairment 23 107,277 908
Interest expense (34,565 ) (28,199 ) (21,754 )
Other income (expense)   3,551     (4 )   616  
Total other (expense) income   (30,991 )   79,074     (20,230 )
Income (loss) before income taxes 129,850 (98,093 ) (826,892 )
Income tax (benefit) provision
Current (8,157 ) (1,036 ) 2,959
Deferred           (150,327 )
Total income tax benefit   (8,157 )   (1,036 )   (147,368 )
Net income (loss) 138,007 (97,057 ) (679,524 )
Net income attributable to non-controlling interest in subsidiaries   (12,140 )   (364 )   (261 )
Net income (loss) attributable to Matador Resources Company
shareholders
$ 125,867   $ (97,421 ) $ (679,785 )
Earnings (loss) per common share
Basic $ 1.23   $ (1.07 ) $ (8.34 )
Diluted $ 1.23   $ (1.07 ) $ (8.34 )
Weighted average common shares outstanding
Basic   102,029     91,273     81,537  
Diluted   102,543     91,273     81,537  
 
     
Matador Resources Company and Subsidiaries
 
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
 
(In thousands) For the Years Ended December 31,
2017     2016     2015
Operating activities
Net income (loss) $ 138,007 $ (97,057 ) $ (679,524 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Unrealized (gain) loss on derivatives (9,715 ) 41,238 39,265
Depletion, depreciation and amortization 177,502 122,048 178,847
Accretion of asset retirement obligations 1,290 1,182 734
Full-cost ceiling impairment 158,633 801,166
Stock-based compensation expense 16,654 12,362 9,450
Deferred income tax benefit (150,327 )
Amortization of debt issuance cost 468 1,148 852
Net gain on asset sales and inventory impairment (23 ) (107,277 ) (908 )
Changes in operating assets and liabilities
Accounts receivable (82,549 ) (14,259 ) 3,633
Lease and well equipment inventory (3,623 ) (700 ) (180 )
Prepaid expenses and other assets (2,960 ) (124 ) (544 )
Other assets (6,425 ) 490 (552 )
Accounts payable, accrued liabilities and other current liabilities 33,559 6,611 1,375
Royalties payable 37,370 7,495 1,654
Advances from joint interest owners 1,089 1,000 700
Income taxes payable (2,848 ) 2,405
Other long-term liabilities   (1,519 )   4,144     489  
Net cash provided by operating activities 299,125 134,086 208,535
Investing activities
Oil and natural gas properties capital expenditures (699,445 ) (379,067 ) (432,715 )
Expenditures for midstream and other property and equipment (120,816 ) (74,845 ) (64,499 )
Proceeds from sale of assets 977 5,173 139,836
Business combination, net of cash acquired (24,028 )
Restricted cash 43,098 (43,098 )
Restricted cash in less-than-wholly-owned subsidiaries   (4,719 )   1     (650 )
Net cash used in investing activities (824,003 ) (405,640 ) (425,154 )
Financing activities
Repayments of borrowings (120,000 ) (476,982 )
Borrowings under Credit Agreement 120,000 125,000
Proceeds from issuance of common stock 208,720 288,510 188,720
Proceeds from issuance of senior unsecured notes 184,625 400,000
Cost to issue equity (280 ) (847 ) (1,158 )
Cost to issue senior unsecured notes (2,734 ) (9,598 )
Proceeds from stock options exercised 2,920 100 10
Capital commitments from non-controlling interest owners of
less-than-wholly-owned subsidiaries
562
Contributions related to formation of Joint Venture 171,500
Contributions from non-controlling interest owners of
less-than-wholly-owned subsidiaries
44,100
Distributions to non-controlling interest owners of
less-than-wholly-owned subsidiaries
(10,045 )
Taxes paid related to net share settlement of stock-based
compensation
(5,763 ) (1,948 ) (1,610 )
Purchase of non-controlling interest of less-than-wholly-owned
subsidiary
  (2,653 )        
Net cash provided by financing activities   408,499     467,706     224,944  
(Decrease) increase in cash (116,379 ) 196,152 8,325
Cash at beginning of year   212,884     16,732     8,407  
Cash at end of year $ 96,505   $ 212,884   $ 16,732  
 

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 such Adjusted
EBITDA numbers 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.

           
Year Ended December 31, Three Months Ended
(In thousands) 2017     2016     2015 December 31,
2017
    September 30,
2017
    December 31,
2016
Unaudited Adjusted EBITDA Reconciliation to Net Income (Loss):
Net income (loss) attributable to Matador Resources Company
Shareholders
$ 125,867 $ (97,421 ) $ (679,785 ) $ 38,335 $ 15,039 $ 104,154
Net income attributable to non-controlling interest in subsidiaries   12,140     364     261     4,106     2,940     155  
Net income (loss) 138,007 (97,057 ) (679,524 ) 42,441 17,979 104,309
Interest expense 34,565 28,199 21,754 8,336 8,550 7,955
Total income tax (benefit) provision (8,157 ) (1,036 ) (147,368 ) (8,157 ) 105
Depletion, depreciation and amortization 177,502 122,048 178,847 54,436 47,800 31,863
Accretion of asset retirement obligations 1,290 1,182 734 353 323 354
Full-cost ceiling impairment 158,633 801,166
Unrealized (gain) loss on derivatives (9,715 ) 41,238 39,265 11,734 12,372 10,977
Stock-based compensation expense 16,654 12,362 9,450 4,166 1,296 3,224
Net loss on asset sales and inventory impairment   (23 )   (107,277 )   (908 )       (16 )   (104,137 )
Consolidated Adjusted EBITDA 350,123 158,292 223,416 113,309 88,304 54,650
Adjusted EBITDA attributable to non-controlling interest subsidiaries   (14,060 )   (400 )   (278 )   (4,690 )   (3,471 )   (164 )
Adjusted EBITDA attributable to Matador Resources Company
shareholders
$ 336,063   $ 157,892   $ 223,138   $ 108,619   $ 84,833   $ 54,486  
 
Year Ended December 31, Three Months Ended
(In thousands) 2017 2016 2015 December 31,
2017
September 30,
2017
December 31,
2016
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by
Operating Activities:
Net cash provided by operating activities $ 299,125 $ 134,086 $ 208,535 $ 76,609 $ 101,274 $ 37,624
Net change in operating assets and liabilities 25,058 (1,809 ) (8,980 ) 36,886 (21,481 ) 9,215
Interest expense, net of non-cash portion 34,097 27,051 20,902 7,971 8,511 7,706
Current income tax (benefit) provision (8,157 ) (1,036 ) 2,959 (8,157 ) 105
Adjusted EBITDA attributable to non-controlling interest subsidiaries   (14,060 )   (400 )   (278 )   (4,690 )   (3,471 )   (164 )
Adjusted EBITDA attributable to Matador Resources Company
shareholders
$ 336,063   $ 157,892   $ 223,138   $ 108,619   $ 84,833   $ 54,486  
 

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 gains or losses or transaction costs for certain
acquisitions and divestitures or other non-recurring expense items,
along with the related tax effects 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
securities 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 Year Ended
December 31, 2017        

September 30, 2017
        December 31, 2016

December 31, 2017

        December 31, 2016        

December 31, 2015

(In thousands, except per share data)
Unaudited Adjusted Net Income (Loss) and Adjusted Earnings (Loss)
Per Common Share Reconciliation to Net Income (Loss):
Net income (loss) (1) $ 38,335 $ 15,039 $ 104,154 $ 125,867 $ (97,421 ) $ (679,785 )
Total income tax (benefit) provision   (8,157 )       105     (8,157 )   (1,036 )   (147,368 )

Income (loss) before taxes (1)

30,178 15,039 104,259 117,710 (98,457 ) (827,153 )
Less non-recurring and unrealized charges to income (loss) before
taxes:
Full-cost ceiling impairment 158,633 801,166
Unrealized loss (gain) on derivatives 11,734 12,372 10,977 (9,715 ) 41,238 39,265
Net gain on asset sales and inventory impairment (16 ) (104,137 ) (23 ) (107,277 ) (908 )
Non-recurring expenses related to stock-based compensation 1,515
Non-recurring transaction costs associated with the formation of San
Mateo
3,458
Non-recurring transaction costs associated with the HEYCO merger                       2,510  
Adjusted income (loss) before taxes (1) 41,912 27,395 11,099 112,945 (5,863 ) 14,880
Income tax expense (benefit)   14,669  

(2)

  9,588  

(2)

  3,885  

(2)

  39,531  

(2)

  (3,088 )

(3)

  5,119  

(4)

Adjusted net income (loss) (non-GAAP) (1) $ 27,243   $ 17,807   $ 7,214   $ 73,414   $ (2,775 ) $ 9,761  
 
Basic weighted average shares outstanding, without participating
securities
106,586 99,255 93,928 100,860 91,273 81,537
Dilutive effect of participating securities   1,107     1,110     1,043     1,169         769  
Weighted average shares outstanding, including participating
securities - basic
107,693 100,365 94,971 102,029 91,273 82,306
Dilutive effect of options, restricted stock units and preferred
shares
  492     139     691     514         544  
Weighted average common shares outstanding - diluted   108,185     100,504     95,662     102,543     91,273     82,850  
Adjusted earnings (loss) per common share (non-GAAP) (1)
Basic $ 0.25   $ 0.18   $ 0.08   $ 0.72   $ (0.03 ) $ 0.12  
Diluted $ 0.25   $ 0.18   $ 0.08   $ 0.72   $ (0.03 ) $ 0.12  
______________________
(1)  

Attributable to Matador Resources Company shareholders after
giving effect to amounts attributable to third-party
non-controlling interests.

(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.
(3) 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, including a 2016 income
tax refund of approximately $1.1 million.
(4) Estimated using actual tax rate for the period.
 

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 December 31,
2017
At December 31,
2016
At December 31,
2015
Standardized Measure $1,258.6 $575.0 $529.2
Discounted future income taxes 74.8 6.5 12.4
PV-10 $1,333.4 $581.5 $541.6

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