Business Combination

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

BUSINESS COMBINATION

BUSINESS COMBINATION

On February 27, 2015, the Company completed a business combination with Harvey E. Yates Company (“HEYCO”), a subsidiary of HEYCO Energy Group, Inc., through which it obtained certain oil and natural gas producing properties and undeveloped acreage located in Lea and Eddy Counties, New Mexico, consisting of approximately 58,600 gross (18,200 net) acres strategically located between Matador’s existing acreage in its Ranger and Rustler Breaks prospect areas through a merger of HEYCO with and into a wholly-owned subsidiary of Matador (the “HEYCO Merger”). HEYCO, headquartered in Roswell, New Mexico, was privately-owned prior to the transaction. As consideration for the business combination, Matador paid approximately $33.6 million in cash and assumed debt obligations and issued 3,300,000 shares of Matador common stock and 150,000 shares of a new series of Matador Series A Convertible Preferred Stock (“Series A Preferred Stock”) to HEYCO Energy Group, Inc. (convertible into ten shares of common stock for each one share of Series A Preferred Stock upon the effectiveness of an amendment to the Company’s Amended and Restated Certificate of Formation to increase the number of authorized shares of common stock; the Series A Preferred Stock converted to common stock on April 6, 2015). Matador paid an additional $3.0 million for customary purchase price adjustments, including adjusting for production, revenues and operating and capital expenditures from September 1, 2014 to closing. As a result of the HEYCO Merger, Matador incurred deferred tax liabilities of approximately $76.0 million and assumed other liabilities of approximately $4.6 million. The HEYCO Merger was accounted for using the acquisition method under ASC Topic 805, “Business Combinations,” which requires the assets acquired and liabilities assumed to be recorded at fair value as of the respective acquisition date. During the three months ended March 31, 2015, the Company incurred approximately $2.2 million of transaction costs associated with the HEYCO Merger. These costs are recorded in general and administrative expenses for the three months ended March 31, 2015. The majority of the assets acquired in the HEYCO Merger were in the form of non-producing acreage. The producing wells acquired in the HEYCO Merger did not have a material impact on our revenues or results of operations. Therefore, pro forma financial information for the HEYCO Merger is not presented as the effects are not material to the Company’s consolidated results. Included in the Statement of Operations for the three months ended March 31, 2015 is revenue attributable to the operations acquired in the HEYCO Merger of approximately $0.7 million.

The preliminary allocation of the consideration given related to this business combination, which is subject to change, was as follows.

Consideration given
Cash	$	24,648
Preferred shares issued	32,490
Common shares issued	71,478
Total consideration given	$	128,616
Allocation of purchase price
Cash acquired	$	620
Accounts receivable	3,536
Inventory	180
Other current assets	106
Oil and natural gas properties
Evaluated oil and natural gas properties	22,044
Unproved oil and unevaluated natural gas properties	194,686
Accounts payable	(2,551		)
Accrued liabilities	(11		)
Current note payable	(11,982		)
Asset retirement obligations	(2,046		)
Deferred tax liabilities incurred	(75,966		)
Net assets acquired	$	128,616