Business Context and Reporting Period
Company: Matador Resources Company (MTDR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Matador is an independent energy company focused on the exploration, development, and production of oil and natural gas in the United States, primarily within the Wolfcamp and Bone Spring plays of the Delaware Basin (Southeast New Mexico and West Texas). The company also operates midstream assets through its joint venture, San Mateo Midstream, LLC (51% owned by Matador), providing gathering, processing, and disposal services.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenues | $3.70 billion | $3.50 billion | +5.7% |
| Oil & Natural Gas Revenues | $3.24 billion | $3.14 billion | +3.0% |
| Net Income (Attributable to Matador) | $759.2 million | $885.3 million | -14.2% |
| Diluted EPS | $6.09 | $7.14 | -14.7% |
| Adjusted EBITDA (Attributable to Matador) | $2.29 billion | $2.30 billion | -0.2% |
| Operating Cash Flow | $2.43 billion | $2.25 billion | +8.0% |
| Capital Expenditures (D/C/E) | $1.53 billion | $1.22 billion | +25.4% |
| Debt Outstanding (Total) | $3.40 billion | $3.33 billion | +2.1% |
| Proved Reserves (Total BOE) | 667.0 million | 611.5 million | +9.1% |
Material Changes vs. Prior Period
- Production Growth: Average daily oil equivalent production increased 21% to 207,070 BOE/d, driven by a 20% increase in oil production (119,723 Bbl/d) and a 23% increase in natural gas production (524.1 MMcf/d). This growth offset the divestiture of Eagle Ford assets in Q1 2025.
- Price Realization: Despite volume growth, realized prices declined. The weighted average oil price fell 14% to $64.99/Bbl, and the natural gas price fell 13% to $2.08/Mcf compared to 2024.
- Reserve Value: While physical reserves increased by 9%, the Standardized Measure of discounted future net cash flows decreased 5% to $6.99 billion, and PV-10 decreased 11% to $8.24 billion, primarily due to lower oil price assumptions used in the year-end calculation.
- Midstream Expansion: San Mateo expanded the Marlan Processing Plant, increasing total cryogenic processing capacity by 38% to 720 MMcf/d.
- Shareholder Returns: The quarterly cash dividend was increased from $0.25 to $0.375 per share. The company also initiated a $400 million share repurchase program, buying back 1.35 million shares in 2025.
Guidance, Outlook, and Risks
2026 Capital Budget
Matador estimates 2026 capital expenditures of $1.35 to $1.44 billion for drilling, completion, and equipping (D/C/E) and $100.0 to $110.0 million for midstream. The company expects to fund these expenditures through operating cash flows, cash on hand, and performance incentives from its joint venture partner, Five Point.
Management Commentary
Management highlighted record production levels and successful integration of the Ameredev Acquisition. The company secured firm transportation on the Hugh Brinson Pipeline (expected Q4 2026) to move 500,000 MMBtu/d of natural gas to higher-priced Gulf Coast markets. The company generated free cash flow in all four quarters of 2025.
Risks and Contingencies
- Commodity Price Volatility: Success is heavily dependent on oil and natural gas prices. The company uses costless collars and swaps to hedge a portion of production.
- Regulatory Environment: Approximately 33% of leasehold acreage in the Delaware Basin is on federal lands, subject to BLM permitting and potential regulatory changes regarding emissions and hydraulic fracturing.
- Operational Hazards: Risks include pipeline capacity constraints, induced seismicity affecting water disposal, and weather-related disruptions.
- Debt Covenants: The company maintains a debt-to-EBITDA ratio of 3.50 or less under its Credit Agreement. As of December 31, 2025, the company was in compliance.
Investor Verification Checklist
- Reserve Revisions: Verify the impact of the 22.8 million BOE removal of proved undeveloped reserves (PUDs) not expected to be developed within five years.
- Price Differentials: Monitor the Waha-Henry Hub natural gas basis differential, which widened to approximately ($5.11)/MMBtu in early 2026, impacting realized gas prices.
- Debt Capacity: Confirm the borrowing base redetermination schedule (May 1 and November 1) and the impact of commodity prices on the $3.25 billion borrowing base.
- Midstream Joint Venture: Review San Mateo's debt-to-EBITDA ratio (covenant limit 5.00) and its ability to distribute cash to Matador.
- Regulatory Compliance: Assess the status of BLM lease sales and NEPA reviews for federal acreage, which could delay drilling permits.