Rig Count | Capital Markets | Capital Expenditure | Capex Decrease

Matador Leads by Example; Execs Take Pay Cut, Capex / Rigs Lowered; + Liquidity

Share Print Bookmark    |    Wednesday,March 11,2020

Matador Resources Co. is adjusting its 2020 capital plan including being one of the few E&Ps to issue meaningful executive level pay cuts and compensation as part of its strategy.

Shale Experts CEO Rons Dixon commented on Matador's move: "It is really nice for a change to see executives lead by example.  That is exactly what the folks at Matador is doing, I applaud them for this." 

The CEO Joseph Foran said he would cut his base salary by 25%, and the board members will reduce compensation by 25%.  Other executives will see a 20% cut in salaries and VPs will lower their salaries by 10%.

Updated 2020 Operational Plan

• Old Development Program = 6 Rigs
• New Development Program = 3 Rigs (June 30, 2020)

• Possible Sale of Minerals in Haynesville / Delaware Basin: Continue to pursue divestitures of portions of its non-core assets, including possible sales of leasehold and mineral interests in South Texas and in the Haynesville shale as well as a possible joint venture or divestiture involving its mineral interests in the Delaware Basin.

Matador anticipates suspending its development activities in the Wolf asset area in Loving County, Texas by the end of the first quarter of 2020. The Company is currently evaluating multiple options to optimize its drilling and completions activities beyond the first quarter of 2020, but as it reduces its operated rig count from six to three rigs, Matador expects to keep at least two of these rigs operating full time in the Stateline asset area in Eddy County, New Mexico. Matador is also evaluating other options for increasing its cash flow and for further reducing its operating expenses and capital spending, if necessary, in the second half of 2020. Matador currently anticipates minimal changes to the planned 2020 capital expenditures for its San Mateo midstream affiliate.

Joseph Wm. Foran, Matador's Chairman and CEO, commented, "As we navigate this abrupt change in oil prices, our first priority is to protect our balance sheet and to position ourselves for the long run. Due to the quality and flexibility of our lease positions, we believe these selective actions to reduce spending should permit us to strengthen our balance sheet and create further value for our shareholders throughout 2020. While we believe these are the appropriate steps to take at this time, we stand prepared to take additional actions, if necessary, to conserve cash and reduce spending.

The Board, the senior officers and I are large shareholders and recent buyers of Matador stock. Our aim is to generate profitable growth at a measured pace. Towards that end, I have voluntarily agreed to reduce my base salary by 25%, the Board members have agreed to reduce their compensation by 25% and the executive officers and Vice Presidents have agreed to reduce their base salaries by 20% and 10%, respectively. I am also pleased to report that over 140 individuals - nearly 50% of Matador's workforce - have purchased stock in the most recent trading period."

Spring 2020 Borrowing Base Increased

Matador saw its borrowing base affirmed at $900 million.

The $900 million borrowing base and $700 million elected commitment should provide Matador with more-than-sufficient liquidity for conducting its current and anticipated future operations in 2020. Under its credit facility, the only financial covenant Matador is required to maintain is a Net Debt (as defined in the credit facility) to Adjusted EBITDA ratio of 4.0x or less. At December 31, 2019, this ratio was 2.2x.