x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | 27-4662601 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5400 LBJ Freeway, Suite 1500 Dallas, Texas | 75240 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page | |
September 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash | $ | 20,178 | $ | 212,884 | |||
Restricted cash | 10,744 | 1,258 | |||||
Accounts receivable | |||||||
Oil and natural gas revenues | 49,885 | 34,154 | |||||
Joint interest billings | 53,721 | 19,347 | |||||
Other | 5,406 | 5,167 | |||||
Derivative instruments | 60 | — | |||||
Lease and well equipment inventory | 4,801 | 3,045 | |||||
Prepaid expenses and other assets | 5,550 | 3,327 | |||||
Total current assets | 150,345 | 279,182 | |||||
Property and equipment, at cost | |||||||
Oil and natural gas properties, full-cost method | |||||||
Evaluated | 2,842,810 | 2,408,305 | |||||
Unproved and unevaluated | 600,803 | 479,736 | |||||
Other property and equipment | 240,924 | 160,795 | |||||
Less accumulated depletion, depreciation and amortization | (1,987,370 | ) | (1,864,311 | ) | |||
Net property and equipment | 1,697,167 | 1,184,525 | |||||
Other assets | |||||||
Derivative instruments | 285 | — | |||||
Other assets | 740 | 958 | |||||
Total other assets | 1,025 | 958 | |||||
Total assets | $ | 1,848,537 | $ | 1,464,665 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 13,839 | $ | 4,674 | |||
Accrued liabilities | 158,345 | 101,460 | |||||
Royalties payable | 53,639 | 23,988 | |||||
Amounts due to affiliates | 12,749 | 8,651 | |||||
Derivative instruments | 3,641 | 24,203 | |||||
Advances from joint interest owners | 4,346 | 1,700 | |||||
Amounts due to joint ventures | 4,873 | 4,251 | |||||
Other current liabilities | 663 | 578 | |||||
Total current liabilities | 252,095 | 169,505 | |||||
Long-term liabilities | |||||||
Senior unsecured notes payable | 574,027 | 573,924 | |||||
Asset retirement obligations | 23,305 | 19,725 | |||||
Derivative instruments | 209 | 751 | |||||
Amounts due to joint ventures | — | 1,771 | |||||
Other long-term liabilities | 6,104 | 7,544 | |||||
Total long-term liabilities | 603,645 | 603,715 | |||||
Commitments and contingencies (Note 11) | |||||||
Shareholders’ equity | |||||||
Common stock - $0.01 par value, 160,000,000 and 120,000,000 shares authorized; 100,566,054 and 99,518,764 shares issued; and 100,439,595 and 99,511,931 shares outstanding, respectively | 1,006 | 995 | |||||
Additional paid-in capital | 1,455,605 | 1,325,481 | |||||
Accumulated deficit | (548,819 | ) | (636,351 | ) | |||
Treasury stock, at cost, 126,459 and 6,833 shares, respectively | (1,589 | ) | — | ||||
Total Matador Resources Company shareholders’ equity | 906,203 | 690,125 | |||||
Non-controlling interest in subsidiaries | 86,594 | 1,320 | |||||
Total shareholders’ equity | 992,797 | 691,445 | |||||
Total liabilities and shareholders’ equity | $ | 1,848,537 | $ | 1,464,665 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Oil and natural gas revenues | $ | 134,948 | $ | 83,079 | $ | 363,559 | $ | 196,341 | |||||||
Third-party midstream services revenues | 3,218 | 1,566 | 6,871 | 2,956 | |||||||||||
Realized gain (loss) on derivatives | 485 | 885 | (1,176 | ) | 10,413 | ||||||||||
Unrealized (loss) gain on derivatives | (12,372 | ) | 3,203 | 21,449 | (30,261 | ) | |||||||||
Total revenues | 126,279 | 88,733 | 390,703 | 179,449 | |||||||||||
Expenses | |||||||||||||||
Production taxes, transportation and processing | 15,666 | 12,388 | 40,348 | 30,846 | |||||||||||
Lease operating | 16,689 | 14,605 | 48,486 | 41,300 | |||||||||||
Plant and other midstream services operating | 3,096 | 1,449 | 8,379 | 3,537 | |||||||||||
Depletion, depreciation and amortization | 47,800 | 30,015 | 123,066 | 90,185 | |||||||||||
Accretion of asset retirement obligations | 323 | 276 | 937 | 828 | |||||||||||
Full-cost ceiling impairment | — | — | — | 158,633 | |||||||||||
General and administrative | 16,156 | 13,146 | 49,671 | 39,506 | |||||||||||
Total expenses | 99,730 | 71,879 | 270,887 | 364,835 | |||||||||||
Operating income (loss) | 26,549 | 16,854 | 119,816 | (185,386 | ) | ||||||||||
Other income (expense) | |||||||||||||||
Net gain on asset sales and inventory impairment | 16 | 1,073 | 23 | 3,140 | |||||||||||
Interest expense | (8,550 | ) | (6,880 | ) | (26,229 | ) | (20,244 | ) | |||||||
Other (expense) income | (36 | ) | (141 | ) | 1,956 | (17 | ) | ||||||||
Total other expense | (8,570 | ) | (5,948 | ) | (24,250 | ) | (17,121 | ) | |||||||
Income (loss) before income taxes | 17,979 | 10,906 | 95,566 | (202,507 | ) | ||||||||||
Income tax (benefit) provision | |||||||||||||||
Current | — | (1,141 | ) | — | (1,141 | ) | |||||||||
Total income tax benefit | — | (1,141 | ) | — | (1,141 | ) | |||||||||
Net income (loss) | 17,979 | 12,047 | 95,566 | (201,366 | ) | ||||||||||
Net income attributable to non-controlling interest in subsidiaries | (2,940 | ) | (116 | ) | (8,034 | ) | (209 | ) | |||||||
Net income (loss) attributable to Matador Resources Company shareholders | $ | 15,039 | $ | 11,931 | $ | 87,532 | $ | (201,575 | ) | ||||||
Earnings (loss) per common share | |||||||||||||||
Basic | $ | 0.15 | $ | 0.13 | $ | 0.87 | $ | (2.24 | ) | ||||||
Diluted | $ | 0.15 | $ | 0.13 | $ | 0.87 | $ | (2.24 | ) | ||||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 100,365 | 93,384 | 100,141 | 90,016 | |||||||||||
Diluted | 100,504 | 93,724 | 100,580 | 90,016 |
Total shareholders’ equity attributable to Matador Resources Company | |||||||||||||||||||||||||||||||||
Non-controlling interest in subsidiaries | Total shareholders’ equity | ||||||||||||||||||||||||||||||||
Common Stock | Additional paid-in capital | Accumulated deficit | Treasury Stock | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
Balance at January 1, 2017 | 99,519 | $ | 995 | $ | 1,325,481 | $ | (636,351 | ) | 6 | $ | — | $ | 690,125 | $ | 1,320 | $ | 691,445 | ||||||||||||||||
Issuance of common stock pursuant to employee stock compensation plan | 527 | 5 | (5 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Common stock issued to Board members and advisors | 72 | 1 | (1 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Stock-based compensation expense related to equity-based awards including amounts capitalized | — | — | 14,669 | — | — | — | 14,669 | — | 14,669 | ||||||||||||||||||||||||
Stock options exercised, net of options forfeited in net share settlements | 448 | 5 | 89 | — | — | — | 94 | — | 94 | ||||||||||||||||||||||||
Restricted stock forfeited | — | — | — | — | 120 | (1,589 | ) | (1,589 | ) | — | (1,589 | ) | |||||||||||||||||||||
Purchase of non-controlling interest of less-than-wholly-owned subsidiary | — | — | (1,250 | ) | — | — | — | (1,250 | ) | (1,403 | ) | (2,653 | ) | ||||||||||||||||||||
Contributions related to formation of Joint Venture (see Note 3) | — | — | 116,622 | — | — | — | 116,622 | 54,878 | 171,500 | ||||||||||||||||||||||||
Contributions from non-controlling interest owners of less-than-wholly-owned subsidiaries | — | — | — | — | — | — | — | 29,400 | 29,400 | ||||||||||||||||||||||||
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries | — | — | — | — | — | — | — | (5,635 | ) | (5,635 | ) | ||||||||||||||||||||||
Current period net income | — | — | — | 87,532 | — | — | 87,532 | 8,034 | 95,566 | ||||||||||||||||||||||||
Balance at September 30, 2017 | 100,566 | $ | 1,006 | $ | 1,455,605 | $ | (548,819 | ) | 126 | $ | (1,589 | ) | $ | 906,203 | $ | 86,594 | $ | 992,797 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Operating activities | |||||||
Net income (loss) | $ | 95,566 | $ | (201,366 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | |||||||
Unrealized (gain) loss on derivatives | (21,449 | ) | 30,261 | ||||
Depletion, depreciation and amortization | 123,066 | 90,185 | |||||
Accretion of asset retirement obligations | 937 | 828 | |||||
Full-cost ceiling impairment | — | 158,633 | |||||
Stock-based compensation expense | 12,488 | 9,138 | |||||
Amortization of debt issuance cost | 103 | 899 | |||||
Net gain on asset sales and inventory impairment | (23 | ) | (3,140 | ) | |||
Changes in operating assets and liabilities | |||||||
Accounts receivable | (50,343 | ) | (7,782 | ) | |||
Lease and well equipment inventory | (1,666 | ) | (669 | ) | |||
Prepaid expenses | (2,224 | ) | (74 | ) | |||
Other assets | 217 | 480 | |||||
Accounts payable, accrued liabilities and other current liabilities | 35,068 | 9,710 | |||||
Royalties payable | 29,651 | 5,225 | |||||
Advances from joint interest owners | 2,646 | 3,147 | |||||
Income taxes payable | — | (2,848 | ) | ||||
Other long-term liabilities | (1,521 | ) | 3,835 | ||||
Net cash provided by operating activities | 222,516 | 96,462 | |||||
Investing activities | |||||||
Oil and natural gas properties capital expenditures | (517,270 | ) | (288,175 | ) | |||
Expenditures for other property and equipment | (80,560 | ) | (57,148 | ) | |||
Proceeds from sale of assets | 977 | 5,173 | |||||
Restricted cash | — | 43,098 | |||||
Restricted cash in less-than-wholly-owned subsidiaries | (9,486 | ) | (544 | ) | |||
Net cash used in investing activities | (606,339 | ) | (297,596 | ) | |||
Financing activities | |||||||
Borrowings under Credit Agreement | — | 65,000 | |||||
Proceeds from issuance of common stock | — | 142,350 | |||||
Cost to issue equity | — | (830 | ) | ||||
Proceeds from stock options exercised | 2,920 | — | |||||
Contributions related to formation of Joint Venture | 171,500 | — | |||||
Contributions from non-controlling interest owners of less-than-wholly-owned subsidiaries | 29,400 | — | |||||
Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries | (5,635 | ) | — | ||||
Taxes paid related to net share settlement of stock-based compensation | (4,415 | ) | (1,552 | ) | |||
Purchase of non-controlling interest of less-than-wholly-owned subsidiary | (2,653 | ) | — | ||||
Net cash provided by financing activities | 191,117 | 204,968 | |||||
(Decrease) increase in cash | (192,706 | ) | 3,834 | ||||
Cash at beginning of period | 212,884 | 16,732 | |||||
Cash at end of period | $ | 20,178 | $ | 20,566 | |||
Supplemental disclosures of cash flow information (Note 12) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average common shares outstanding | |||||||||||
Basic | 100,365 | 93,384 | 100,141 | 90,016 | |||||||
Dilutive effect of options and restricted stock units | 139 | 340 | 439 | — | |||||||
Diluted weighted average common shares outstanding | 100,504 | 93,724 | 100,580 | 90,016 |
Beginning asset retirement obligations | $ | 20,640 | |
Liabilities incurred during period | 1,901 | ||
Liabilities settled during period | (349 | ) | |
Revisions in estimated cash flows | 794 | ||
Accretion expense | 937 | ||
Ending asset retirement obligations | 23,923 | ||
Less: current asset retirement obligations(1) | (618 | ) | |
Long-term asset retirement obligations | $ | 23,305 |
(1) | Included in accrued liabilities in the Company’s interim unaudited condensed consolidated balance sheet at September 30, 2017. |
Condensed Consolidating Balance Sheet September 30, 2017 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Intercompany receivable | $ | 392,082 | $ | — | $ | 2,028 | $ | (394,110 | ) | $ | — | |||||||||
Third-party current assets | 635 | 11,676 | 138,034 | — | 150,345 | |||||||||||||||
Net property and equipment | — | 185,464 | 1,511,703 | — | 1,697,167 | |||||||||||||||
Investment in subsidiaries | 1,107,280 | — | 90,993 | (1,198,273 | ) | — | ||||||||||||||
Third-party long-term assets | — | — | 1,025 | — | 1,025 | |||||||||||||||
Total assets | $ | 1,499,997 | $ | 197,140 | $ | 1,743,783 | $ | (1,592,383 | ) | $ | 1,848,537 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Intercompany payable | $ | 1,314 | $ | 714 | $ | 392,082 | $ | (394,110 | ) | $ | — | |||||||||
Third-party current liabilities | 18,453 | 18,191 | 215,451 | — | 252,095 | |||||||||||||||
Senior unsecured notes payable | 574,027 | — | — | — | 574,027 | |||||||||||||||
Other third-party long-term liabilities | — | 648 | 28,970 | — | 29,618 | |||||||||||||||
Total equity attributable to Matador Resources Company | 906,203 | 90,993 | 1,107,280 | (1,198,273 | ) | 906,203 | ||||||||||||||
Non-controlling interest in subsidiaries | — | 86,594 | — | — | 86,594 | |||||||||||||||
Total liabilities and equity | $ | 1,499,997 | $ | 197,140 | $ | 1,743,783 | $ | (1,592,383 | ) | $ | 1,848,537 |
Condensed Consolidating Balance Sheet December 31, 2016 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Intercompany receivable | $ | 316,791 | $ | 3,571 | $ | 12,091 | $ | (332,453 | ) | $ | — | |||||||||
Third-party current assets | 101,102 | 4,242 | 173,838 | — | 279,182 | |||||||||||||||
Net property and equipment | 33 | 113,107 | 1,071,385 | — | 1,184,525 | |||||||||||||||
Investment in subsidiaries | 856,762 | — | 90,275 | (947,037 | ) | — | ||||||||||||||
Third-party long-term assets | — | — | 958 | — | 958 | |||||||||||||||
Total assets | $ | 1,274,688 | $ | 120,920 | $ | 1,348,547 | $ | (1,279,490 | ) | $ | 1,464,665 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Intercompany payable | $ | — | $ | 12,091 | $ | 320,362 | $ | (332,453 | ) | $ | — | |||||||||
Third-party current liabilities | 9,265 | 16,632 | 143,608 | — | 169,505 | |||||||||||||||
Senior unsecured notes payable | 573,924 | — | — | — | 573,924 | |||||||||||||||
Other third-party long-term liabilities | 1,374 | 602 | 27,815 | — | 29,791 | |||||||||||||||
Total equity attributable to Matador Resources Company | 690,125 | 90,275 | 856,762 | (947,037 | ) | 690,125 | ||||||||||||||
Non-controlling interest in subsidiaries | — | 1,320 | — | — | 1,320 | |||||||||||||||
Total liabilities and equity | $ | 1,274,688 | $ | 120,920 | $ | 1,348,547 | $ | (1,279,490 | ) | $ | 1,464,665 |
Condensed Consolidating Statement of Operations For the Three Months Ended September 30, 2017 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Total revenues | $ | — | $ | 11,242 | $ | 122,675 | $ | (7,638 | ) | $ | 126,279 | |||||||||
Total expenses | 1,175 | 5,253 | 100,940 | (7,638 | ) | 99,730 | ||||||||||||||
Operating (loss) income | (1,175 | ) | 5,989 | 21,735 | — | 26,549 | ||||||||||||||
Net gain on asset sales and inventory impairment | — | — | 16 | — | 16 | |||||||||||||||
Interest expense | (8,550 | ) | — | — | — | (8,550 | ) | |||||||||||||
Other income | 27 | 11 | (74 | ) | — | (36 | ) | |||||||||||||
Earnings in subsidiaries | 24,674 | — | 2,997 | (27,671 | ) | — | ||||||||||||||
Income before income taxes | 14,976 | 6,000 | 24,674 | (27,671 | ) | 17,979 | ||||||||||||||
Total income tax (benefit) provision | (63 | ) | 63 | — | — | — | ||||||||||||||
Net income attributable to non-controlling interest in subsidiaries | — | (2,940 | ) | — | — | (2,940 | ) | |||||||||||||
Net income attributable to Matador Resources Company shareholders | $ | 15,039 | $ | 2,997 | $ | 24,674 | $ | (27,671 | ) | $ | 15,039 |
Condensed Consolidating Statement of Operations For the Three Months Ended September 30, 2016 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Total revenues | $ | — | $ | 4,993 | $ | 86,965 | $ | (3,225 | ) | $ | 88,733 | |||||||||
Total expenses | 1,018 | 2,043 | 72,043 | (3,225 | ) | 71,879 | ||||||||||||||
Operating (loss) income | (1,018 | ) | 2,950 | 14,922 | — | 16,854 | ||||||||||||||
Net gain on asset sales and inventory impairment | — | — | 1,073 | — | 1,073 | |||||||||||||||
Interest expense | (6,880 | ) | — | — | — | (6,880 | ) | |||||||||||||
Other expense | — | — | (141 | ) | — | (141 | ) | |||||||||||||
Income earnings in subsidiaries | 19,800 | — | 2,805 | (22,605 | ) | — | ||||||||||||||
Income before income taxes | 11,902 | 2,950 | 18,659 | (22,605 | ) | 10,906 | ||||||||||||||
Total income tax (benefit) provision | (29 | ) | 29 | (1,141 | ) | — | (1,141 | ) | ||||||||||||
Net income attributable to non-controlling interest in subsidiaries | — | (116 | ) | — | — | (116 | ) | |||||||||||||
Net income attributable to Matador Resources Company shareholders | $ | 11,931 | $ | 2,805 | $ | 19,800 | $ | (22,605 | ) | $ | 11,931 |
Condensed Consolidating Statement of Operations For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Total revenues | $ | — | $ | 32,179 | $ | 382,520 | $ | (23,996 | ) | $ | 390,703 | |||||||||
Total expenses | 4,021 | 13,935 | 276,927 | (23,996 | ) | 270,887 | ||||||||||||||
Operating (loss) income | (4,021 | ) | 18,244 | 105,593 | — | 119,816 | ||||||||||||||
Net gain on asset sales and inventory impairment | — | — | 23 | — | 23 | |||||||||||||||
Interest expense | (26,229 | ) | — | — | — | (26,229 | ) | |||||||||||||
Other income | 27 | 37 | 1,892 | — | 1,956 | |||||||||||||||
Earnings in subsidiaries | 117,574 | — | 10,066 | (127,640 | ) | — | ||||||||||||||
Income before income taxes | 87,351 | 18,281 | 117,574 | (127,640 | ) | 95,566 | ||||||||||||||
Total income tax (benefit) provision | (181 | ) | 181 | — | — | — | ||||||||||||||
Net income attributable to non-controlling interest in subsidiaries | — | (8,034 | ) | — | — | (8,034 | ) | |||||||||||||
Net income attributable to Matador Resources Company shareholders | $ | 87,532 | $ | 10,066 | $ | 117,574 | $ | (127,640 | ) | $ | 87,532 |
Condensed Consolidating Statement of Operations For the Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Total revenues | $ | — | $ | 9,520 | $ | 175,789 | $ | (5,860 | ) | $ | 179,449 | |||||||||
Total expenses | 3,985 | 4,420 | 362,290 | (5,860 | ) | 364,835 | ||||||||||||||
Operating (loss) income | (3,985 | ) | 5,100 | (186,501 | ) | — | (185,386 | ) | ||||||||||||
Net gain on asset sales and inventory impairment | — | — | 3,140 | — | 3,140 | |||||||||||||||
Interest expense | (20,244 | ) | — | — | — | (20,244 | ) | |||||||||||||
Other expense | — | — | (17 | ) | — | (17 | ) | |||||||||||||
(Loss) earnings in subsidiaries | (177,400 | ) | — | 4,837 | 172,563 | — | ||||||||||||||
(Loss) income before income taxes | (201,629 | ) | 5,100 | (178,541 | ) | 172,563 | (202,507 | ) | ||||||||||||
Total income tax (benefit) provision | (54 | ) | 54 | (1,141 | ) | — | (1,141 | ) | ||||||||||||
Net income attributable to non-controlling interest in subsidiaries | — | (209 | ) | — | — | (209 | ) | |||||||||||||
Net (loss) income attributable to Matador Resources Company shareholders | $ | (201,575 | ) | $ | 4,837 | $ | (177,400 | ) | $ | 172,563 | $ | (201,575 | ) |
Condensed Consolidating Statement of Cash Flows For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (99,546 | ) | $ | 24,075 | $ | 297,987 | $ | — | $ | 222,516 | |||||||||
Net cash provided by (used in) investing activities | 33 | (85,114 | ) | (387,378 | ) | (133,880 | ) | (606,339 | ) | |||||||||||
Net cash provided by (used in) financing activities | — | 58,732 | (1,495 | ) | 133,880 | 191,117 | ||||||||||||||
(Decrease) increase in cash | (99,513 | ) | (2,307 | ) | (90,886 | ) | — | (192,706 | ) | |||||||||||
Cash at beginning of period | 99,795 | 2,307 | 110,782 | — | 212,884 | |||||||||||||||
Cash at end of period | $ | 282 | $ | — | $ | 19,896 | $ | — | $ | 20,178 |
Condensed Consolidating Statement of Cash Flows For the Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Matador | Non-Guarantor Subsidiaries | Guarantor Subsidiaries | Eliminating Entries | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (28,752 | ) | $ | (2,726 | ) | $ | 127,940 | $ | — | $ | 96,462 | ||||||||
Net cash used in investing activities | (112,720 | ) | (51,904 | ) | (300,201 | ) | 167,229 | (297,596 | ) | |||||||||||
Net cash provided by financing activities | 141,520 | 54,510 | 176,167 | (167,229 | ) | 204,968 | ||||||||||||||
Increase (decrease) in cash | 48 | (120 | ) | 3,906 | — | 3,834 | ||||||||||||||
Cash at beginning of period | 80 | 186 | 16,466 | — | 16,732 | |||||||||||||||
Cash at end of period | $ | 128 | $ | 66 | $ | 20,372 | $ | — | $ | 20,566 |
Commodity | Calculation Period | Notional Quantity (Bbl or MMBtu) | Weighted Average Price Floor ($/Bbl or $/MMBtu) | Weighted Average Price Ceiling ($/Bbl or $/MMBtu) | Fair Value of Asset (Liability) (thousands) | |||||||||||
Oil | 10/01/2017 - 12/31/2017 | 1,230,000 | $ | 45.17 | $ | 55.75 | $ | (1,452 | ) | |||||||
Oil | 01/01/2018 - 12/31/2018 | 2,880,000 | $ | 44.27 | $ | 60.29 | 670 | |||||||||
Natural Gas | 10/01/2017 - 12/31/2017 | 6,270,000 | $ | 2.51 | $ | 3.60 | (129 | ) | ||||||||
Natural Gas | 01/01/2018 - 12/31/2018 | 16,800,000 | $ | 2.58 | $ | 3.67 | (249 | ) | ||||||||
Total open costless collar contracts | $ | (1,160 | ) |
Commodity | Calculation Period | Notional Quantity (Bbl or Gal) | Fixed Price ($/Bbl or $/Gal) | Fair Value of Asset (Liability) (thousands) | ||||||||
Oil Basis Swaps | 01/01/2018 - 12/31/2018 | 5,220,000 | $ | (1.02 | ) | $ | (2,337 | ) | ||||
NGL | 10/01/2017 - 12/31/2017 | 900,000 | $ | 0.89 | (8 | ) | ||||||
Total open swap contracts | $ | (2,345 | ) | |||||||||
Total open derivative financial instruments | $ | (3,505 | ) |
Derivative Instruments | Gross amounts recognized | Gross amounts netted in the condensed consolidated balance sheets | Net amounts presented in the condensed consolidated balance sheets | ||||||||
September 30, 2017 | |||||||||||
Current assets | $ | 89,456 | $ | (89,396 | ) | $ | 60 | ||||
Other assets | 29,939 | (29,654 | ) | 285 | |||||||
Current liabilities | (93,037 | ) | 89,396 | (3,641 | ) | ||||||
Other liabilities | (29,863 | ) | 29,654 | (209 | ) | ||||||
Total | $ | (3,505 | ) | $ | — | $ | (3,505 | ) | |||
December 31, 2016 | |||||||||||
Current liabilities | $ | (24,203 | ) | $ | — | $ | (24,203 | ) | |||
Other liabilities | (751 | ) | — | (751 | ) | ||||||
Total | $ | (24,954 | ) | $ | — | $ | (24,954 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Type of Instrument | Location in Condensed Consolidated Statement of Operations | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Derivative Instrument | |||||||||||||||||
Oil | Revenues: Realized gain (loss) on derivatives | $ | 485 | $ | 837 | $ | (568 | ) | $ | 6,861 | |||||||
Natural Gas | Revenues: Realized gain (loss) on derivatives | — | 48 | (608 | ) | 3,552 | |||||||||||
Realized gain (loss) on derivatives | 485 | 885 | (1,176 | ) | 10,413 | ||||||||||||
Oil | Revenues: Unrealized (loss) gain on derivatives | (12,479 | ) | 2,007 | 15,949 | (24,967 | ) | ||||||||||
Natural Gas | Revenues: Unrealized gain (loss) on derivatives | 115 | 1,196 | 5,508 | (5,294 | ) | |||||||||||
NGL | Revenues: Unrealized loss on derivatives | (8 | ) | — | (8 | ) | — | ||||||||||
Unrealized (loss) gain on derivatives | (12,372 | ) | 3,203 | 21,449 | (30,261 | ) | |||||||||||
Total | $ | (11,887 | ) | $ | 4,088 | $ | 20,273 | $ | (19,848 | ) |
Level 1 | Unadjusted quoted prices for identical, unrestricted assets or liabilities in active markets. |
Level 2 | Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that are valued with industry standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) time value of money and (iii) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument and can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace. |
Level 3 | Unobservable inputs that are not corroborated by market data that reflect a company’s own market assumptions. |
Fair Value Measurements at September 30, 2017 using | |||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets (Liabilities) | |||||||||||||||
Oil, natural gas and NGL derivatives | $ | — | $ | 345 | $ | — | $ | 345 | |||||||
Oil, natural gas and NGL derivatives | — | (3,850 | ) | — | (3,850 | ) | |||||||||
Total | $ | — | $ | (3,505 | ) | $ | — | $ | (3,505 | ) |
Fair Value Measurements at December 31, 2016 using | |||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Liabilities | |||||||||||||||
Oil and natural gas derivatives | $ | — | $ | (24,954 | ) | $ | — | $ | (24,954 | ) | |||||
Total | $ | — | $ | (24,954 | ) | $ | — | $ | (24,954 | ) |
September 30, 2017 | December 31, 2016 | ||||||
Accrued evaluated and unproved and unevaluated property costs | $ | 90,789 | $ | 54,273 | |||
Accrued support equipment and facilities costs | 15,401 | 15,139 | |||||
Accrued lease operating expenses | 14,217 | 16,009 | |||||
Accrued interest on debt | 18,228 | 6,541 | |||||
Accrued asset retirement obligations | 618 | 915 | |||||
Accrued partners’ share of joint interest charges | 18,018 | 5,572 | |||||
Other | 1,074 | 3,011 | |||||
Total accrued liabilities | $ | 158,345 | $ | 101,460 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash paid for interest expense, net of amounts capitalized | $ | 14,542 | $ | 13,370 | |||
Increase in asset retirement obligations related to mineral properties | $ | 2,484 | $ | 2,588 | |||
(Decrease) increase in asset retirement obligations related to support equipment and facilities | $ | (138 | ) | $ | 644 | ||
Increase (decrease) in liabilities for oil and natural gas properties capital expenditures | $ | 35,940 | $ | (7,849 | ) | ||
Decrease in liabilities for support equipment and facilities | $ | (247 | ) | $ | (2,687 | ) | |
Stock-based compensation expense recognized as liability | $ | 150 | $ | 457 | |||
Decrease in liabilities for accrued cost to issue equity | $ | (343 | ) | $ | — | ||
Transfer of inventory from oil and natural gas properties | $ | 74 | $ | 655 |
Exploration and Production | Consolidations and Eliminations | Consolidated Company | |||||||||||||||||
Midstream | Corporate | ||||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||
Oil and natural gas revenues | $ | 134,488 | $ | 460 | $ | — | $ | — | $ | 134,948 | |||||||||
Midstream services revenues | — | 11,261 | — | (8,043 | ) | 3,218 | |||||||||||||
Realized gain on derivatives | 485 | — | — | — | 485 | ||||||||||||||
Unrealized loss on derivatives | (12,372 | ) | — | — | — | (12,372 | ) | ||||||||||||
Expenses(1) | 86,728 | 5,598 | 15,447 | (8,043 | ) | 99,730 | |||||||||||||
Operating income (loss)(2) | $ | 35,873 | $ | 6,123 | $ | (15,447 | ) | $ | — | $ | 26,549 | ||||||||
Total assets | $ | 1,590,677 | $ | 222,274 | $ | 35,586 | $ | — | $ | 1,848,537 | |||||||||
Capital expenditures(3) | $ | 180,686 | $ | 35,008 | $ | 1,494 | $ | — | $ | 217,188 |
(1) | Includes depletion, depreciation and amortization expenses of $46.1 million and $1.3 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $0.4 million. |
(2) | Includes $2.9 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment. |
(3) | Includes $17.2 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment. |
Exploration and Production | Consolidations and Eliminations | Consolidated Company | |||||||||||||||||
Midstream | Corporate | ||||||||||||||||||
Three Months Ended September 30, 2016 | |||||||||||||||||||
Oil and natural gas revenues | $ | 82,794 | $ | 285 | $ | — | $ | — | $ | 83,079 | |||||||||
Midstream services revenues | — | 5,609 | — | (4,043 | ) | 1,566 | |||||||||||||
Realized gain on derivatives | 885 | — | — | — | 885 | ||||||||||||||
Unrealized gain on derivatives | 3,203 | — | — | — | 3,203 | ||||||||||||||
Expenses(1) | 60,222 | 2,277 | 13,423 | (4,043 | ) | 71,879 | |||||||||||||
Operating income (loss)(2) | $ | 26,660 | $ | 3,617 | $ | (13,423 | ) | $ | — | $ | 16,854 | ||||||||
Total assets | $ | 1,020,648 | $ | 124,153 | $ | 32,892 | $ | — | $ | 1,177,693 | |||||||||
Capital expenditures | $ | 116,279 | $ | 17,370 | $ | 1,903 | $ | — | $ | 135,552 |
(1) | Includes depletion, depreciation and amortization expenses of $28.9 million and $0.8 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $0.3 million. |
(2) | Includes $116,000 in net income attributable to non-controlling interest in subsidiaries related to the midstream segment. |
Exploration and Production | Consolidations and Eliminations | Consolidated Company | |||||||||||||||||
Midstream | Corporate | ||||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||
Oil and natural gas revenues | $ | 362,040 | $ | 1,519 | $ | — | $ | — | $ | 363,559 | |||||||||
Midstream services revenues | — | 32,244 | — | (25,373 | ) | 6,871 | |||||||||||||
Realized loss on derivatives | (1,176 | ) | — | — | — | (1,176 | ) | ||||||||||||
Unrealized gain on derivatives | 21,449 | — | — | — | 21,449 | ||||||||||||||
Expenses(1) | 233,145 | 16,060 | 47,055 | (25,373 | ) | 270,887 | |||||||||||||
Operating income (loss)(2) | $ | 149,168 | $ | 17,703 | $ | (47,055 | ) | $ | — | $ | 119,816 | ||||||||
Total assets | $ | 1,590,677 | $ | 222,274 | $ | 35,586 | $ | — | $ | 1,848,537 | |||||||||
Capital expenditures(3) | $ | 554,642 | $ | 75,235 | $ | 4,710 | $ | — | $ | 634,587 |
(1) | Includes depletion, depreciation and amortization expenses of $118.2 million and $3.8 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $1.1 million. |
(2) | Includes $8.0 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment. |
(3) | Includes $35.8 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment. |
Exploration and Production | Consolidations and Eliminations | Consolidated Company | |||||||||||||||||
Midstream | Corporate | ||||||||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||
Oil and natural gas revenues | $ | 195,467 | $ | 874 | $ | — | $ | — | $ | 196,341 | |||||||||
Midstream services revenues | — | 11,168 | — | (8,212 | ) | 2,956 | |||||||||||||
Realized gain on derivatives | 10,413 | — | — | — | 10,413 | ||||||||||||||
Unrealized loss on derivatives | (30,261 | ) | — | — | — | (30,261 | ) | ||||||||||||
Expenses(1) | 327,585 | 5,373 | 40,089 | (8,212 | ) | 364,835 | |||||||||||||
Operating (loss) income(2) | $ | (151,966 | ) | $ | 6,669 | $ | (40,089 | ) | $ | — | $ | (185,386 | ) | ||||||
Total assets | $ | 1,020,648 | $ | 124,153 | $ | 32,892 | $ | — | $ | 1,177,693 | |||||||||
Capital expenditures | $ | 278,396 | $ | 49,620 | $ | 5,485 | $ | — | $ | 333,501 |
(1) | Includes depletion, depreciation and amortization expenses of $87.9 million and $1.7 million for the exploration and production and midstream segments, respectively, and full-cost ceiling impairment expenses of $158.6 million for the exploration and production segment. Also includes corporate depletion, depreciation and amortization expenses of $0.6 million. |
(2) | Includes $209,000 in net income attributable to non-controlling interest in subsidiaries related to the midstream segment. |
• | our business strategy; |
• | our reserves; |
• | our technology; |
• | our cash flows and liquidity; |
• | our financial strategy, budget, projections and operating results; |
• | our oil and natural gas realized prices; |
• | the timing and amount of future production of oil and natural gas; |
• | the availability of drilling and production equipment; |
• | the availability of oil field labor; |
• | the amount, nature and timing of capital expenditures, including future exploration and development costs; |
• | the availability and terms of capital; |
• | our drilling of wells; |
• | our ability to negotiate and consummate acquisition and divestiture opportunities; |
• | government regulation and taxation of the oil and natural gas industry; |
• | our marketing of oil and natural gas; |
• | our exploitation projects or property acquisitions; |
• | the integration of acquisitions with our business; |
• | our ability and the ability of our midstream joint venture to construct and operate midstream facilities, including the expansion of our Black River cryogenic natural gas processing plant and the drilling of additional salt water disposal wells; |
• | the ability of our midstream joint venture to attract third-party volumes; |
• | our costs of exploiting and developing our properties and conducting other operations; |
• | general economic conditions; |
• | competition in the oil and natural gas industry, including in both the exploration and production and midstream segments; |
• | the effectiveness of our risk management and hedging activities; |
• | environmental liabilities; |
• | counterparty credit risk; |
• | developments in oil-producing and natural gas-producing countries; |
• | our future operating results; |
• | estimated future reserves and the present value thereof; and |
• | our plans, objectives, expectations and intentions contained in this Quarterly Report or in our other filings with the SEC that are not historical. |
September 30, 2017 | December 31, 2016 | September 30, 2016 | |||||||||
Estimated Proved Reserves Data: (1) (2) | |||||||||||
Estimated proved reserves: | |||||||||||
Oil (MBbl)(3) | 83,014 | 56,977 | 55,031 | ||||||||
Natural Gas (Bcf)(4) | 377.1 | 292.6 | 279.4 | ||||||||
Total (MBOE)(5) | 145,860 | 105,752 | 101,604 | ||||||||
Estimated proved developed reserves: | |||||||||||
Oil (MBbl)(3) | 31,961 | 22,604 | 21,204 | ||||||||
Natural Gas (Bcf)(4) | 164.4 | 126.8 | 118.8 | ||||||||
Total (MBOE)(5) | 59,357 | 43,731 | 41,012 | ||||||||
Percent developed | 40.7 | % | 41.4 | % | 40.4 | % | |||||
Estimated proved undeveloped reserves: | |||||||||||
Oil (MBbl)(3) | 51,053 | 34,373 | 33,827 | ||||||||
Natural Gas (Bcf)(4) | 212.7 | 165.9 | 160.6 | ||||||||
Total (MBOE)(5) | 86,503 | 62,021 | 60,592 | ||||||||
Standardized Measure(6) (in millions) | $ | 1,096.2 | $ | 575.0 | $ | 516.8 | |||||
PV-10(7) (in millions) | $ | 1,225.9 | $ | 581.5 | $ | 524.7 |
(1) | Numbers in table may not total due to rounding. |
(2) | Our estimated proved reserves, Standardized Measure and PV-10 were determined using index prices for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the life of the properties. The unweighted arithmetic averages of the first-day-of-the-month prices for the period from October 2016 through September 2017 were $46.27 per Bbl for oil and $3.00 per MMBtu for natural gas, for the period from January 2016 through December 2016 were $39.25 per Bbl for oil and $2.48 per MMBtu for natural gas and for the period from October 2015 through September 2016 were $38.17 per Bbl for oil and $2.28 per MMBtu for natural gas. These prices were adjusted by property for quality, energy content, regional price differentials, transportation fees, marketing deductions and other factors affecting the price received at the wellhead. We report our proved |
(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 Bbl of oil per six Mcf of natural gas. |
(6) | Standardized Measure represents the present value of estimated future net cash flows from proved reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect the timing of future cash flows. Standardized Measure is not an estimate of the fair market value of our properties. |
(7) | 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 our properties. We 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. Our PV-10 at September 30, 2017, December 31, 2016 and September 30, 2016 may be reconciled to the Standardized Measure of discounted future net cash flows at such dates by reducing our PV-10 by the discounted future income taxes associated with such reserves. The discounted future income taxes at September 30, 2017, December 31, 2016 and September 30, 2016 were $129.7 million, $6.5 million and $7.9 million, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating Data: | |||||||||||||||
Revenues (in thousands):(1) | |||||||||||||||
Oil | $ | 100,150 | $ | 58,589 | $ | 265,107 | $ | 141,437 | |||||||
Natural gas | 34,798 | 24,490 | 98,452 | 54,904 | |||||||||||
Total oil and natural gas revenues | 134,948 | 83,079 | 363,559 | 196,341 | |||||||||||
Third-party midstream services revenues | 3,218 | 1,566 | 6,871 | 2,956 | |||||||||||
Realized gain (loss) on derivatives | 485 | 885 | (1,176 | ) | 10,413 | ||||||||||
Unrealized (loss) gain on derivatives | (12,372 | ) | 3,203 | 21,449 | (30,261 | ) | |||||||||
Total revenues | $ | 126,279 | $ | 88,733 | $ | 390,703 | $ | 179,449 | |||||||
Net Production Volumes:(1) | |||||||||||||||
Oil (MBbl)(2) | 2,166 | 1,376 | 5,582 | 3,650 | |||||||||||
Natural gas (Bcf)(3) | 10.2 | 8.0 | 27.6 | 22.6 | |||||||||||
Total oil equivalent (MBOE)(4) | 3,860 | 2,703 | 10,190 | 7,423 | |||||||||||
Average daily production (BOE/d)(5) | 41,954 | 29,381 | 37,325 | 27,091 | |||||||||||
Average Sales Prices: | |||||||||||||||
Oil, without realized derivatives (per Bbl) | $ | 46.25 | $ | 42.57 | $ | 47.49 | $ | 38.75 | |||||||
Oil, with realized derivatives (per Bbl) | $ | 46.47 | $ | 43.18 | $ | 47.39 | $ | 40.63 | |||||||
Natural gas, without realized derivatives (per Mcf) | $ | 3.42 | $ | 3.08 | $ | 3.56 | $ | 2.43 | |||||||
Natural gas, with realized derivatives (per Mcf) | $ | 3.42 | $ | 3.08 | $ | 3.54 | $ | 2.58 |
(1) | We report our production volumes in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Revenues associated with natural gas liquids are included with our natural gas revenues. |
(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 Bbl of oil per six Mcf of natural gas. |
(5) | Barrels of oil equivalent per day, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands, except expenses per BOE) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Expenses: | |||||||||||||||
Production taxes, transportation and processing | $ | 15,666 | $ | 12,388 | $ | 40,348 | $ | 30,846 | |||||||
Lease operating | 16,689 | 14,605 | 48,486 | 41,300 | |||||||||||
Plant and other midstream services operating | 3,096 | 1,449 | 8,379 | 3,537 | |||||||||||
Depletion, depreciation and amortization | 47,800 | 30,015 | 123,066 | 90,185 | |||||||||||
Accretion of asset retirement obligations | 323 | 276 | 937 | 828 | |||||||||||
Full-cost ceiling impairment | — | — | — | 158,633 | |||||||||||
General and administrative | 16,156 | 13,146 | 49,671 | 39,506 | |||||||||||
Total expenses | $ | 99,730 | $ | 71,879 | $ | 270,887 | $ | 364,835 | |||||||
Operating income (loss) | $ | 26,549 | $ | 16,854 | $ | 119,816 | $ | (185,386 | ) | ||||||
Other income (expense): | |||||||||||||||
Net gain on asset sales and inventory impairment | $ | 16 | $ | 1,073 | $ | 23 | $ | 3,140 | |||||||
Interest expense | (8,550 | ) | (6,880 | ) | (26,229 | ) | (20,244 | ) | |||||||
Other (expense) income | (36 | ) | (141 | ) | 1,956 | (17 | ) | ||||||||
Total other expense | $ | (8,570 | ) | $ | (5,948 | ) | $ | (24,250 | ) | $ | (17,121 | ) | |||
Income (loss) before income taxes | $ | 17,979 | $ | 10,906 | $ | 95,566 | $ | (202,507 | ) | ||||||
Total income tax benefit | — | (1,141 | ) | — | (1,141 | ) | |||||||||
Net income attributable to non-controlling interest in subsidiaries | (2,940 | ) | (116 | ) | (8,034 | ) | (209 | ) | |||||||
Net income (loss) attributable to Matador Resources Company shareholders | $ | 15,039 | $ | 11,931 | $ | 87,532 | $ | (201,575 | ) | ||||||
Expenses per BOE: | |||||||||||||||
Production taxes, transportation and processing | $ | 4.06 | $ | 4.58 | $ | 3.96 | $ | 4.16 | |||||||
Lease operating | $ | 4.32 | $ | 5.40 | $ | 4.76 | $ | 5.56 | |||||||
Plant and other midstream services operating | $ | 0.80 | $ | 0.54 | $ | 0.82 | $ | 0.48 | |||||||
Depletion, depreciation and amortization | $ | 12.38 | $ | 11.10 | $ | 12.08 | $ | 12.15 | |||||||
General and administrative | $ | 4.19 | $ | 4.86 | $ | 4.87 | $ | 5.32 |
Nine Months Ended September 30, | |||||||
(In thousands) | 2017 | 2016 | |||||
Net cash provided by operating activities | $ | 222,516 | $ | 96,462 | |||
Net cash used in investing activities | (606,339 | ) | (297,596 | ) | |||
Net cash provided by financing activities | 191,117 | 204,968 | |||||
Net change in cash | $ | (192,706 | ) | $ | 3,834 | ||
Adjusted EBITDA(1) attributable to Matador Resources Company shareholders | $ | 227,444 | $ | 103,406 |
(1) | Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see “— Non-GAAP Financial Measures” below. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Unaudited Adjusted EBITDA Reconciliation to Net Income (Loss): | |||||||||||||||
Net income (loss) attributable to Matador Resources Company shareholders | $ | 15,039 | $ | 11,931 | $ | 87,532 | $ | (201,575 | ) | ||||||
Net income attributable to non-controlling interest in subsidiaries | 2,940 | 116 | 8,034 | 209 | |||||||||||
Net income (loss) | 17,979 | 12,047 | 95,566 | (201,366 | ) | ||||||||||
Interest expense | 8,550 | 6,880 | 26,229 | 20,244 | |||||||||||
Total income tax provision (benefit) | — | (1,141 | ) | — | (1,141 | ) | |||||||||
Depletion, depreciation and amortization | 47,800 | 30,015 | 123,066 | 90,185 | |||||||||||
Accretion of asset retirement obligations | 323 | 276 | 937 | 828 | |||||||||||
Full-cost ceiling impairment | — | — | — | 158,633 | |||||||||||
Unrealized loss (gain) on derivatives | 12,372 | (3,203 | ) | (21,449 | ) | 30,261 | |||||||||
Stock-based compensation expense | 1,296 | 3,584 | 12,488 | 9,138 | |||||||||||
Net gain on asset sales and inventory impairment | (16 | ) | (1,073 | ) | (23 | ) | (3,140 | ) | |||||||
Consolidated Adjusted EBITDA | 88,304 | 47,385 | 236,814 | 103,642 | |||||||||||
Adjusted EBITDA attributable to non-controlling interest in subsidiaries | (3,471 | ) | (125 | ) | (9,370 | ) | (236 | ) | |||||||
Adjusted EBITDA attributable to Matador Resources Company shareholders | $ | 84,833 | $ | 47,260 | $ | 227,444 | $ | 103,406 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Unaudited Adjusted EBITDA Reconciliation to Net Cash Provided by Operating Activities: | |||||||||||||||
Net cash provided by operating activities | $ | 101,274 | $ | 46,862 | $ | 222,516 | $ | 96,462 | |||||||
Net change in operating assets and liabilities | (21,481 | ) | (4,909 | ) | (11,828 | ) | (11,024 | ) | |||||||
Interest expense, net of non-cash portion | 8,511 | 6,573 | 26,126 | 19,345 | |||||||||||
Current income tax provision (benefit) | — | (1,141 | ) | — | (1,141 | ) | |||||||||
Adjusted EBITDA attributable to non-controlling interest in subsidiaries | (3,471 | ) | (125 | ) | (9,370 | ) | (236 | ) | |||||||
Adjusted EBITDA attributable to Matador Resources Company shareholders | $ | 84,833 | $ | 47,260 | $ | 227,444 | $ | 103,406 |
Payments Due by Period | |||||||||||||||||||
(In thousands) | Total | Less Than 1 Year | 1 - 3 Years | 3 - 5 Years | More Than 5 Years | ||||||||||||||
Contractual Obligations: | |||||||||||||||||||
Revolving credit borrowings, including letters of credit(1) | $ | 821 | $ | — | $ | — | $ | 821 | $ | — | |||||||||
Senior unsecured notes(2) | 575,000 | — | — | — | 575,000 | ||||||||||||||
Office leases | 23,245 | 2,498 | 5,087 | 5,377 | 10,283 | ||||||||||||||
Non-operated drilling commitments(3) | 28,500 | 28,500 | — | — | — | ||||||||||||||
Drilling rig contracts(4) | 36,117 | 24,253 | 11,864 | — | — | ||||||||||||||
Asset retirement obligations | 23,923 | 618 | 578 | 3,781 | 18,946 | ||||||||||||||
Gas processing agreements with non-affiliates(5) | 11,420 | 11,420 | — | — | — | ||||||||||||||
Gathering, processing and disposal agreements with San Mateo(6) | 245,645 | — | 25,343 | 69,994 | 150,308 | ||||||||||||||
Natural gas plant engineering, procurement, construction and installation contract(7) | 24,689 | 24,689 | — | — | — | ||||||||||||||
Total contractual cash obligations | $ | 969,360 | $ | 91,978 | $ | 42,872 | $ | 79,973 | $ | 754,537 |
(1) | At September 30, 2017, we had no borrowings outstanding under our Credit Agreement and approximately $0.8 million in outstanding letters of credit issued pursuant to the Credit Agreement. The Credit Agreement matures in October 2020. |
(2) | The amounts included in the table above represent principal maturities only. |
(3) | At September 30, 2017, we had outstanding commitments to participate in the drilling and completion of various non-operated wells. Our working interests in these wells are typically small, and certain of these wells were in progress at September 30, 2017. If all of these wells are drilled and completed, we will have minimum outstanding aggregate commitments for our participation in these wells of approximately $28.5 million at September 30, 2017, which we expect to incur within the next year. |
(4) | We do not own or operate our own drilling rigs, but instead enter into contracts with third parties for such drilling rigs. See Note 11 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for more information regarding our contractual commitments. |
(5) | Effective October 1, 2015, we entered into a 15-year fixed-fee natural gas gathering and processing agreement for a significant portion of our operated natural gas production in Loving County, Texas. See Note 11 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for more information regarding our contractual commitments. |
(6) | Effective February 1, 2017, we dedicated our current and future leasehold interests in the Rustler Breaks and Wolf asset areas pursuant to 15-year, fixed-fee natural gas, oil and salt water gathering agreements and salt water disposal agreements. In addition, effective February 1, 2017, we dedicated our current and future leasehold interests in the Rustler Breaks asset area pursuant to a 15-year, fixed-fee natural gas processing agreement. See Note 11 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for more information regarding our contractual commitments. |
(7) | Beginning in May 2017, a subsidiary of San Mateo entered into certain agreements with third parties for the engineering, procurement, construction and installation of an expansion of the Black River Processing Plant, including required compression. See Note 11 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for more information regarding our contractual commitments. |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs | |||||||||
July 1, 2017 to July 31, 2017 | 1,328 | $ | 22.70 | — | — | ||||||||
August 1, 2017 to August 31, 2017 | 34,748 | 23.32 | — | — | |||||||||
September 1, 2017 to September 30, 2017 | 181 | 26.11 | — | — | |||||||||
Total | 36,257 | $ | 23.31 | — | — |
MATADOR RESOURCES COMPANY | |||
Date: November 9, 2017 | By: | /s/ Joseph Wm. Foran | |
Joseph Wm. Foran | |||
Chairman and Chief Executive Officer |
Date: November 9, 2017 | By: | /s/ David E. Lancaster | |
David E. Lancaster | |||
Executive Vice President and Chief Financial Officer |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101 | The following financial information from Matador Resources Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets - Unaudited, (ii) the Condensed Consolidated Statements of Operations - Unaudited, (iii) the Condensed Consolidated Statement of Changes in Shareholders’ Equity - Unaudited, (iv) the Condensed Consolidated Statements of Cash Flows - Unaudited and (v) the Notes to Condensed Consolidated Financial Statements - Unaudited (submitted electronically herewith). |
1. | Section 15.6 of the Plan is deleted in its entirety and replaced with the following: |
2. | Section 15.7 of the Plan is deleted in its entirety and replaced with the following: |
MATADOR RESOURCES COMPANY, a Texas corporation | ||
By: | /s/ Joseph Wm. Foran | |
Name: | Joseph Wm. Foran | |
Title: | Chairman and CEO |
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November 9, 2017 | /s/ Joseph Wm. Foran | |
Joseph Wm. Foran | ||
Chairman and Chief Executive Officer (Principal Executive Officer) |
November 9, 2017 | /s/ David E. Lancaster | |
David E. Lancaster Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
November 9, 2017 | /s/ Joseph Wm. Foran | |
Joseph Wm. Foran | ||
Chairman and Chief Executive Officer (Principal Executive Officer) |
November 9, 2017 | /s/ David E. Lancaster | |
David E. Lancaster | ||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2017 |
Nov. 06, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Matador Resources Co | |
Entity Central Index Key | 0001520006 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 108,447,030 |
Condensed Consolidated Balance Sheets (Parenthetical) - Unaudited - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 160,000,000 | 120,000,000 |
Common stock, shares issued | 100,566,054 | 99,518,764 |
Common stock, shares outstanding | 100,439,595 | 99,511,931 |
Treasury stock, shares | 126,459 | 6,833 |
Condensed Consolidated Statements of Operations - Unaudited - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues | ||||
Oil and natural gas revenues | $ 134,948 | $ 83,079 | $ 363,559 | $ 196,341 |
Third-party midstream services revenues | 3,218 | 1,566 | 6,871 | 2,956 |
Realized gain (loss) on derivatives | 485 | 885 | (1,176) | 10,413 |
Unrealized (loss) gain on derivatives | (12,372) | 3,203 | 21,449 | (30,261) |
Total revenues | 126,279 | 88,733 | 390,703 | 179,449 |
Expenses | ||||
Production taxes, transportation and processing | 15,666 | 12,388 | 40,348 | 30,846 |
Lease operating | 16,689 | 14,605 | 48,486 | 41,300 |
Plant and other midstream services operating | 3,096 | 1,449 | 8,379 | 3,537 |
Depletion, depreciation and amortization | 47,800 | 30,015 | 123,066 | 90,185 |
Accretion of asset retirement obligations | 323 | 276 | 937 | 828 |
Full-cost ceiling impairment | 0 | 0 | 0 | 158,633 |
General and administrative | 16,156 | 13,146 | 49,671 | 39,506 |
Total expenses | 99,730 | 71,879 | 270,887 | 364,835 |
Operating income (loss) | 26,549 | 16,854 | 119,816 | (185,386) |
Other income (expense) | ||||
Net gain on asset sales and inventory impairment | 16 | 1,073 | 23 | 3,140 |
Interest expense | (8,550) | (6,880) | (26,229) | (20,244) |
Other (expense) income | (36) | (141) | 1,956 | (17) |
Total other expense | (8,570) | (5,948) | (24,250) | (17,121) |
Income (loss) before income taxes | 17,979 | 10,906 | 95,566 | (202,507) |
Current | 0 | (1,141) | (1,141) | |
Total income tax benefit | 0 | (1,141) | 0 | (1,141) |
Net income (loss) | 17,979 | 12,047 | 95,566 | (201,366) |
Net income attributable to non-controlling interest in subsidiaries | (2,940) | (116) | (8,034) | (209) |
Net income (loss) attributable to Matador Resources Company shareholders | $ 15,039 | $ 11,931 | $ 87,532 | $ (201,575) |
Earnings (loss) per common share | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.13 | $ 0.87 | $ (2.24) |
Diluted (in dollars per share) | $ 0.15 | $ 0.13 | $ 0.87 | $ (2.24) |
Weighted average common shares outstanding | ||||
Basic (shares) | 100,365 | 93,384 | 100,141 | 90,016 |
Diluted (shares) | 100,504 | 93,724 | 100,580 | 90,016 |
Nature of Operations |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Matador Resources Company, a Texas corporation (“Matador” and, collectively with its subsidiaries, the “Company”), 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. The Company’s 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. The Company 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, the Company conducts midstream operations, primarily through its midstream joint venture, San Mateo Midstream, LLC (“San Mateo” or the “Joint Venture”), in support of the Company’s exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) but do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”) filed with the SEC. The Company consolidates certain subsidiaries and joint ventures that are less than wholly owned and are not involved in oil and natural gas exploration, including San Mateo, and the net income and equity attributable to the non-controlling interest in these subsidiaries have been reported separately as required by Accounting Standards Codification 810. The Company proportionately consolidates certain joint ventures that are less than wholly owned and are involved in oil and natural gas exploration. All intercompany accounts and transactions have been eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all adjustments, consisting only of normal, recurring adjustments, which are necessary for a fair presentation of the Company’s interim unaudited condensed consolidated financial statements as of September 30, 2017. Amounts as of December 31, 2016 are derived from the Company’s audited consolidated financial statements included in the Annual Report. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s interim unaudited condensed consolidated financial statements are based on a number of significant estimates, including accruals for oil and natural gas revenues, accrued assets and liabilities primarily related to oil and natural gas operations, stock-based compensation, valuation of derivative instruments and oil and natural gas reserves. The estimates of oil and natural gas reserves quantities and future net cash flows are the basis for the calculations of depletion and impairment of oil and natural gas properties, as well as estimates of asset retirement obligations and certain tax accruals. While the Company believes its estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates. Property and Equipment The Company uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method, the Company is required to perform a ceiling test each quarter that determines a limit, or ceiling, on the capitalized costs of oil and natural gas properties based primarily on the after-tax estimated future net cash flows from oil and natural gas properties using a 10% discount rate and the arithmetic average of first-day-of-the-month oil and natural gas prices for the prior 12-month period. For the three and nine months ended September 30, 2017, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary. For the three months ended September 30, 2016, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary. However, due primarily to declines in oil and natural gas prices in early 2016, the capitalized costs of oil and natural gas properties exceeded the cost center ceiling for the nine months ended September 30, 2016, and as a result, the Company recorded impairment charges to its net capitalized costs of $158.6 million in its interim unaudited condensed consolidated statement of operations. The Company capitalized approximately $6.1 million and $4.3 million of its general and administrative costs for the three months ended September 30, 2017 and 2016, respectively, and approximately $2.1 million and $0.7 million of its interest expense for the three months ended September 30, 2017 and 2016, respectively. The Company capitalized approximately $16.9 million and $10.3 million of its general and administrative costs for the nine months ended September 30, 2017 and 2016, respectively, and approximately $5.2 million and $2.9 million of its interest expense for the nine months ended September 30, 2017 and 2016, respectively. Earnings (Loss) Per Common Share The Company reports basic earnings (loss) attributable to Matador Resources Company shareholders per common share, which excludes the effect of potentially dilutive securities, and diluted earnings (loss) attributable to Matador Resources Company shareholders per common share, which includes the effect of all potentially dilutive securities unless their impact is anti-dilutive. The following table sets forth the computation of diluted weighted average common shares outstanding for the three and nine months ended September 30, 2017 and 2016 (in thousands).
A total of 2.9 million options to purchase shares of the Company’s common stock and 0.1 million restricted stock units were excluded from the diluted weighted average common shares outstanding for the nine months ended September 30, 2016 because their effects were anti-dilutive. Additionally, 1.0 million restricted shares, which are participating securities, were excluded from the calculations above for the nine months ended September 30, 2016, as the security holders do not have the obligation to share in the losses of the Company. Recent Accounting Pronouncements Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which specifies how and when to recognize revenue. This standard requires expanded disclosures surrounding revenue recognition and is intended to improve, and converge with international standards, the financial reporting requirements for revenue from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. Early adoption is permitted for fiscal years beginning after December 15, 2016. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. Entities have the option of using either a full retrospective or modified approach to adopt the new standards. In December 2016, the FASB issued ASU 2016-20, which clarifies disclosure requirements in ASU 2014-09. The Company expects to adopt the new guidance effective January 1, 2018 using the modified approach. The Company has reviewed the new guidance, including (i) identification of revenue streams and (ii) review of contracts and procedures currently in place, and is finalizing its evaluation of the impact, if any, on its consolidated financial statements. Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. This ASU will become effective for fiscal years beginning after December 15, 2018 with early adoption permitted. Entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements. Statement of Cash Flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which specifies that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This ASU will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The update should be applied using a retrospective transition method to each period presented. The Company believes that the impact of the adoption of this ASU will change the presentation of its beginning and ending cash balances on its Consolidated Statements of Cash Flows and eliminate the presentation of changes in restricted cash balances from investing activities on its Consolidated Statements of Cash Flows. Clarifying the Definition of a Business. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which specifies the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business. This ASU will become effective for fiscal years beginning after December 15, 2017 with early adoption permitted. Entities are required to apply guidance prospectively upon adoption. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements. |
Business Combination |
9 Months Ended |
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Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
BUSINESS COMBINATION | BUSINESS COMBINATION Joint Venture On February 17, 2017, the Company contributed substantially all of its midstream assets located in the Rustler Breaks (Eddy County, New Mexico) and Wolf (Loving County, Texas) asset areas in the Delaware Basin to San Mateo, a joint venture with a subsidiary of Five Point Capital Partners LLC (“Five Point”). The midstream assets contributed to San Mateo include (i) the Black River cryogenic natural gas processing plant in the Rustler Breaks asset area (the “Black River Processing Plant”); (ii) one salt water disposal well and a related commercial salt water disposal facility in the Rustler Breaks asset area; (iii) three salt water disposal wells and related commercial salt water disposal facilities in the Wolf asset area; and (iv) substantially all related oil, natural gas and water gathering systems and pipelines in both the Rustler Breaks and Wolf asset areas (collectively, the “Delaware Midstream Assets”). The Company continues to operate the Delaware Midstream Assets. The Company retained its ownership in certain midstream assets in South Texas and Northwest Louisiana, which are not part of the Joint Venture. The Company and Five Point own 51% and 49% of the Joint Venture, respectively. Five Point provided initial cash consideration of $176.4 million to the Joint Venture in exchange for its 49% interest. Approximately $171.5 million of this cash contribution by Five Point was distributed by the Joint Venture to the Company as a special distribution. The Company may earn an additional $73.5 million in performance incentives over the next five years. The Company contributed the Delaware Midstream Assets and $5.1 million in cash to the Joint Venture in exchange for its 51% interest. The parties to the Joint Venture have also committed to spend up to an additional $140.0 million in the aggregate to expand the Joint Venture’s midstream operations and asset base. The Joint Venture is consolidated in the Company’s interim unaudited condensed consolidated financial statements with Five Point’s interest in the Joint Venture being accounted for as a non-controlling interest. In connection with the Joint Venture, the Company dedicated its current and future leasehold interests in the Rustler Breaks and Wolf asset areas pursuant to 15-year, fixed-fee natural gas, oil and salt water gathering agreements and salt water disposal agreements, effective as of February 1, 2017. In addition, the Company dedicated its current and future leasehold interests in the Rustler Breaks asset area pursuant to a 15-year, fixed fee natural gas processing agreement (see Note 11). |
Equity (Notes) |
9 Months Ended |
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Sep. 30, 2017 | |
Equity [Abstract] | |
EQUITY | NOTE 4 - EQUITY On October 10, 2017, the Company completed a public offering of 8.0 million shares of its common stock, receiving proceeds of approximately $208.7 million (before expenses). A portion of the proceeds from this offering were and are being used to acquire approximately 6,600 net acres of additional leasehold and minerals in the Delaware Basin at a total acquisition cost of approximately $38 million and to fund certain midstream initiatives and opportunities, including the acceleration of the drilling of commercial salt water disposal wells in the Rustler Breaks asset area on behalf of San Mateo. The remaining proceeds will be used for other midstream development, acreage acquisitions and general corporate purposes, including to fund a portion of the Company’s current and future capital expenditures. |
Asset Retirement Obligations |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS | The following table summarizes the changes in the Company’s asset retirement obligations for the nine months ended September 30, 2017 (in thousands).
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT At September 30, 2017, the Company had $575.0 million of outstanding 6.875% senior notes due 2023, no borrowings outstanding under the Company’s revolving credit agreement (the “Credit Agreement”) and approximately $0.8 million in outstanding letters of credit issued pursuant to the Credit Agreement. At November 6, 2017, the Company had $575.0 million of outstanding 6.875% senior notes due 2023, no borrowings outstanding under the Credit Agreement and approximately $2.1 million in outstanding letters of credit issued pursuant to the Credit Agreement. Credit Agreement The borrowing base under the Credit Agreement is determined semi-annually as of May 1 and November 1 by the lenders based primarily on the estimated value of the Company’s proved oil and natural gas reserves at December 31 and June 30 of each year, respectively. Both the Company and the lenders may request an unscheduled redetermination of the borrowing base once each between scheduled redetermination dates. Early in the fourth quarter of 2017, the lenders completed their review of the Company’s proved oil and natural gas reserves at June 30, 2017, and as a result, on October 25, 2017, the borrowing base was increased to $525.0 million and the maximum facility amount remained at $500.0 million. This October 2017 redetermination constituted the regularly scheduled November 1 redetermination. The Company elected to keep the borrowing commitment at $400.0 million. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected commitment. The Credit Agreement matures on October 16, 2020. In the event of an increase in the elected commitment, the Company is required to pay a fee to the lenders equal to a percentage of the amount of the increase, which is determined based on market conditions at the time of the increase. Total deferred loan costs were $1.1 million at September 30, 2017, and these costs are being amortized over the term of the Credit Agreement, which approximates amortization of these costs using the effective interest method. If, upon a redetermination of the borrowing base, the borrowing base were to be less than the outstanding borrowings under the Credit Agreement at any time, the Company would be required to provide additional collateral satisfactory in nature and value to the lenders to increase the borrowing base to an amount sufficient to cover such excess or to repay the deficit in equal installments over a period of six months. The Company believes that it was in compliance with the terms of the Credit Agreement at September 30, 2017. Senior Unsecured Notes On April 14, 2015 and December 9, 2016, the Company issued $400.0 million and $175.0 million, respectively, of 6.875% senior notes due 2023 (collectively, the “Notes”). The Notes mature on April 15, 2023, and interest is payable semi-annually in arrears on April 15 and October 15 of each year. On May 24, 2017, pursuant to a registered exchange offer, the Company exchanged all of the $175.0 million of Notes issued on December 9, 2016, which were privately placed, for a like principal amount of 6.875% senior notes due 2023 that have been registered under the Securities Act of 1933, as amended. The terms of such registered Notes are substantially the same as the terms of the original Notes except that the transfer restrictions, registration rights and provisions for additional interest relating to the original Notes do not apply to the registered Notes. On February 17, 2017, in connection with the formation of San Mateo (see Note 3), Matador entered into a Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”), which supplements the indenture governing the Notes. Pursuant to the Fourth Supplemental Indenture, (i) Longwood Midstream Holdings, LLC, the holder of Matador’s 51% equity interest in San Mateo, was designated as a guarantor of the Notes and (ii) DLK Black River Midstream, LLC and Black River Water Management Company, LLC, each subsidiaries of San Mateo, were released as parties to, and as guarantors of, the Notes. The guarantors of the Notes, following the effectiveness of the Fourth Supplemental Indenture, are referred to herein as the “Guarantor Subsidiaries.” San Mateo and its subsidiaries (the “Non-Guarantor Subsidiaries”) are not guarantors of the Notes, although they remain restricted subsidiaries under the indenture governing the Notes. The following presents condensed consolidating financial information of the issuer (Matador), the Non-Guarantor Subsidiaries, the Guarantor Subsidiaries and all entities on a consolidated basis (in thousands). Elimination entries are necessary to combine the entities. This financial information is presented in accordance with the requirements of Rule 3-10 of Regulation S-X. The following financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantor Subsidiaries operated as independent entities.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s deferred tax assets exceeded its deferred tax liabilities at September 30, 2017 due to the deferred tax assets generated by the full-cost ceiling impairment charges recorded in prior periods. The Company established a valuation allowance against most of the deferred tax assets beginning in the third quarter of 2015 and retained a full valuation allowance at September 30, 2017 due to uncertainties regarding the future realization of its deferred tax assets. The valuation allowance will continue to be recognized until the realization of future deferred tax benefits are more likely than not to be utilized. |
Stock-Based Compensation |
9 Months Ended |
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Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | In February 2017, the Company granted awards of 228,174 shares of restricted stock and options to purchase 590,128 shares of the Company’s common stock at an exercise price of $27.26 per share to certain of its employees. The fair value of these awards was approximately $12.4 million. All of these awards vest ratably over three years. In February 2017, the Company also granted awards of 174,561 shares of restricted stock and options to purchase 444,491 shares of the Company’s common stock at an exercise price of $26.86 per share to certain of its employees. The fair value of these awards was approximately $9.3 million. All of these awards vest ratably over three years. In June 2017, the Company granted an employee an award of 87,757 shares of common stock that vested immediately on the grant date. The fair value of this award was approximately $2.1 million. In June 2017, the Company also accelerated the expense for 97,797 restricted stock units issued to directors and outstanding prior to June 2017, resulting from a change in the vesting schedule applicable to equity awards granted to the Company’s directors. The total expense associated with these restricted stock units recognized in the three months ended June 30, 2017 was approximately $1.5 million. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | At September 30, 2017, the Company had various costless collar and swap contracts open and in place to mitigate its exposure to oil and natural gas price volatility, each with a specific term (calculation period), notional quantity (volume hedged), price floor and ceiling for the costless collars and fixed price for the swaps. Each contract is set to expire at varying times during 2017 and 2018. The following is a summary of the Company’s open costless collar contracts for oil and natural gas and open swap contracts for oil and Natural Gas Liquids (“NGL”) at September 30, 2017.
These derivative financial instruments are subject to master netting arrangements, and all but one counterparty allow for cross-commodity master netting provided the settlement dates for the commodities are the same. The Company does not present different types of commodities with the same counterparty on a net basis in its interim unaudited condensed consolidated balance sheets. The following table presents the gross asset and liability fair values of the Company’s commodity price derivative financial instruments and the location of these balances in the interim unaudited condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 (in thousands).
The following table summarizes the location and aggregate fair value of all derivative financial instruments recorded in the interim unaudited condensed consolidated statements of operations for the periods presented (in thousands). These derivative financial instruments are not designated as hedging instruments.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements are classified and disclosed in one of the following categories.
Financial and non-financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following tables summarize the valuation of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis in accordance with the classifications provided above as of September 30, 2017 and December 31, 2016 (in thousands).
Additional disclosures related to derivative financial instruments are provided in Note 9. Other Fair Value Measurements At September 30, 2017 and December 31, 2016, the carrying values reported on the interim unaudited condensed consolidated balance sheets for accounts receivable, prepaid expenses and other assets, accounts payable, accrued liabilities, royalties payable, amounts due to affiliates, advances from joint interest owners, amounts due to joint ventures and other current liabilities approximated their fair values due to their short-term maturities. At September 30, 2017 and December 31, 2016, the fair value of the Notes was $610.2 million and $605.2 million, respectively, based on quoted market prices, which represent Level 1 inputs in the fair value hierarchy. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Processing, Transportation and Salt Water Disposal Commitments Eagle Ford Effective September 1, 2012, the Company entered into a firm five-year natural gas processing and transportation agreement whereby the Company committed to transport the anticipated natural gas production from a significant portion of its Eagle Ford acreage in South Texas through the counterparty’s system for processing at the counterparty’s facilities. The agreement also included firm transportation of the natural gas liquids extracted at the counterparty’s processing plant downstream for fractionation. After processing, the residue natural gas was purchased by the counterparty at the tailgate of its processing plant and further transported under its natural gas transportation agreements. The arrangement contained fixed processing and liquids transportation and fractionation fees, and the revenue the Company received varied with the quality of natural gas transported to the processing facilities and the contract period. Under this agreement, if the Company did not meet 80% of the maximum thermal quantity transportation and processing commitments in a contract year, it would be required to pay a deficiency fee per MMBtu of natural gas deficiency. Any quantity in excess of the maximum MMBtu delivered in a contract year could be carried over to the next contract year for purposes of calculating the natural gas deficiency. During certain prior periods, the Company had an immaterial natural gas deficiency, and the counterparty to this agreement waived the deficiency fee. The Company paid $0.4 million and $0.7 million in processing and transportation fees under this agreement during the three months ended September 30, 2017 and 2016, respectively, and $1.4 million and $2.4 million in processing and transportation fees under this agreement during the nine months ended September 30, 2017 and 2016, respectively. This agreement terminated August 31, 2017. As of September 30, 2017, there was no future undiscounted minimum payment under this agreement. Delaware Basin — Loving County, Texas Natural Gas Processing In late 2015, the Company entered into a 15-year, fixed-fee natural gas gathering and processing agreement whereby the Company committed to deliver the anticipated natural gas production from a significant portion of its Loving County, Texas acreage in West Texas through the counterparty’s gathering system for processing at the counterparty’s facilities. Under this agreement, if the Company does not meet the volume commitment for transportation and processing at the facilities in a contract year, it will be required to pay a deficiency fee per MMBtu of natural gas deficiency. At the end of each year of the agreement, the Company can elect to have the previous year’s actual transportation and processing volumes be the new minimum commitment for each of the remaining years of the contract. As such, the Company has the ability to unilaterally reduce the gathering and processing commitment if the Company’s production in the Loving County area is less than the Company’s currently projected production. If the Company ceased operations in this area at September 30, 2017, the total deficiency fee required to be paid would be approximately $11.4 million. In addition, if the Company elects to reduce the gathering and processing commitment in any year, the Company has the ability to elect to increase the committed volumes in any future year to the originally agreed gathering and processing commitment. Any quantity in excess of the volume commitment delivered in a contract year can be carried over to the next contract year for purposes of calculating the natural gas deficiency. The Company paid approximately $4.0 million and $2.4 million in natural gas processing and gathering fees under this agreement during the three months ended September 30, 2017 and 2016, respectively, and $10.8 million and $7.1 million in natural gas processing and gathering fees under this agreement during the nine months ended September 30, 2017 and 2016, respectively. The Company can elect to either sell the residue gas to the counterparty at the tailgate of its processing plants or have the counterparty deliver to the Company the residue gas in-kind to be sold to third parties downstream of the plants. Delaware Basin — San Mateo In connection with the Joint Venture, effective as of February 1, 2017, the Company dedicated its current and future leasehold interests in the Rustler Breaks and Wolf asset areas pursuant to 15-year, fixed-fee natural gas, oil and salt water gathering agreements and salt water disposal agreements. In addition, the Company dedicated its current and future leasehold interests in the Rustler Breaks asset area pursuant to a 15-year, fixed-fee natural gas processing agreement (collectively with the gathering and salt water disposal agreements, the “Operational Agreements”). The Joint Venture provides the Company with firm service under each of the Operational Agreements in exchange for certain minimum volume commitments. The minimum contractual obligation under the Operational Agreements at September 30, 2017 was approximately $245.6 million. Beginning in May 2017, a subsidiary of San Mateo entered into certain agreements with third parties for the engineering, procurement, construction and installation of an expansion of the Black River Processing Plant, including required compression. The expansion is expected to be placed into service in 2018. San Mateo’s total commitments under these agreements are $57.0 million. The subsidiary of San Mateo paid approximately $22.4 million and $32.3 million under these agreements during the three and nine months ended September 30, 2017, respectively. As of September 30, 2017, the remaining obligations under these agreements were $24.7 million, which are expected to be incurred within the next year. Other Commitments The Company does not own or operate its own drilling rigs, but instead enters into contracts with third parties for such drilling rigs. These contracts establish daily rates for the drilling rigs and the term of the Company’s commitment for the drilling services to be provided. The Company would incur a termination obligation if the Company elected to terminate a contract and if the drilling contractor were unable to secure replacement work for the contracted drilling rigs or if the drilling contractor were unable to secure replacement work for the contracted drilling rigs at the same daily rates being charged to the Company prior to the end of their respective contract terms. The Company’s undiscounted minimum outstanding aggregate termination obligations under its drilling rig contracts were approximately $36.1 million at September 30, 2017. At September 30, 2017, the Company had outstanding commitments to participate in the drilling and completion of various non-operated wells. If all of these wells are drilled and completed as proposed, the Company’s minimum outstanding aggregate commitments for its participation in these non-operated wells were approximately $28.5 million at September 30, 2017. The Company expects these costs to be incurred within the next year. Legal Proceedings The Company is a party to several lawsuits encountered in the ordinary course of its business. While the ultimate outcome and impact to the Company cannot be predicted with certainty, in the opinion of management, it is remote that these lawsuits will have a material adverse impact on the Company’s financial condition, results of operations or cash flows. |
Supplemental Disclosures |
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Supplemental Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL DISCLOSURES | Accrued Liabilities The following table summarizes the Company’s current accrued liabilities at September 30, 2017 and December 31, 2016 (in thousands).
Supplemental Cash Flow Information The following table provides supplemental disclosures of cash flow information for the nine months ended September 30, 2017 and 2016 (in thousands).
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | The Company operates in two business segments: (i) exploration and production and (ii) midstream. The exploration and production segment is engaged in the acquisition, exploration and development of oil and natural gas properties and is currently 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. The Company 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. The midstream segment conducts midstream operations in support of the Company’s exploration, development and production operations and provides natural gas processing, natural gas, oil and salt water gathering services and salt water disposal services to third parties on a limited basis. As of February 17, 2017, substantially all of the Company’s midstream operations in the Rustler Breaks and Wolf asset areas in the Delaware Basin are conducted through San Mateo (see Note 3). The following tables present selected financial information for the periods presented regarding the Company’s business segments on a stand-alone basis, corporate expenses that are not allocated to a segment and the consolidation and elimination entries necessary to arrive at the financial information for the Company on a consolidated basis (in thousands). On a consolidated basis, midstream services revenues consist primarily of those revenues from midstream operations related to third parties, including working interest owners in the Company’s operated wells. All midstream services revenues associated with Company-owned production are eliminated in consolidation. In evaluating the operating results of the exploration and production and midstream segments, the Company does not allocate certain expenses to the individual segments, including general and administrative expenses. Such expenses are reflected in the column labeled “Corporate.”
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Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates | Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) but do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”) filed with the SEC. The Company consolidates certain subsidiaries and joint ventures that are less than wholly owned and are not involved in oil and natural gas exploration, including San Mateo, and the net income and equity attributable to the non-controlling interest in these subsidiaries have been reported separately as required by Accounting Standards Codification 810. The Company proportionately consolidates certain joint ventures that are less than wholly owned and are involved in oil and natural gas exploration. All intercompany accounts and transactions have been eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all adjustments, consisting only of normal, recurring adjustments, which are necessary for a fair presentation of the Company’s interim unaudited condensed consolidated financial statements as of September 30, 2017. Amounts as of December 31, 2016 are derived from the Company’s audited consolidated financial statements included in the Annual Report. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s interim unaudited condensed consolidated financial statements are based on a number of significant estimates, including accruals for oil and natural gas revenues, accrued assets and liabilities primarily related to oil and natural gas operations, stock-based compensation, valuation of derivative instruments and oil and natural gas reserves. The estimates of oil and natural gas reserves quantities and future net cash flows are the basis for the calculations of depletion and impairment of oil and natural gas properties, as well as estimates of asset retirement obligations and certain tax accruals. While the Company believes its estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which specifies how and when to recognize revenue. This standard requires expanded disclosures surrounding revenue recognition and is intended to improve, and converge with international standards, the financial reporting requirements for revenue from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for one year to fiscal years beginning after December 15, 2017. Early adoption is permitted for fiscal years beginning after December 15, 2016. In May 2016, the FASB issued ASU 2016-11, which rescinds guidance from the SEC on accounting for gas balancing arrangements and will eliminate the use of the entitlements method. Entities have the option of using either a full retrospective or modified approach to adopt the new standards. In December 2016, the FASB issued ASU 2016-20, which clarifies disclosure requirements in ASU 2014-09. The Company expects to adopt the new guidance effective January 1, 2018 using the modified approach. The Company has reviewed the new guidance, including (i) identification of revenue streams and (ii) review of contracts and procedures currently in place, and is finalizing its evaluation of the impact, if any, on its consolidated financial statements. Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. This ASU will become effective for fiscal years beginning after December 15, 2018 with early adoption permitted. Entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements. Statement of Cash Flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), which specifies that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This ASU will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The update should be applied using a retrospective transition method to each period presented. The Company believes that the impact of the adoption of this ASU will change the presentation of its beginning and ending cash balances on its Consolidated Statements of Cash Flows and eliminate the presentation of changes in restricted cash balances from investing activities on its Consolidated Statements of Cash Flows. Clarifying the Definition of a Business. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which specifies the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business. This ASU will become effective for fiscal years beginning after December 15, 2017 with early adoption permitted. Entities are required to apply guidance prospectively upon adoption. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements. |
Property and Equipment | Property and Equipment The Company uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method, the Company is required to perform a ceiling test each quarter that determines a limit, or ceiling, on the capitalized costs of oil and natural gas properties based primarily on the after-tax estimated future net cash flows from oil and natural gas properties using a 10% discount rate and the arithmetic average of first-day-of-the-month oil and natural gas prices for the prior 12-month period. For the three and nine months ended September 30, 2017, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary. For the three months ended September 30, 2016, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary. However, due primarily to declines in oil and natural gas prices in early 2016, the capitalized costs of oil and natural gas properties exceeded the cost center ceiling for the nine months ended September 30, 2016, and as a result, the Company recorded impairment charges to its net capitalized costs of $158.6 million in its interim unaudited condensed consolidated statement of operations. |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share The Company reports basic earnings (loss) attributable to Matador Resources Company shareholders per common share, which excludes the effect of potentially dilutive securities, and diluted earnings (loss) attributable to Matador Resources Company shareholders per common share, which includes the effect of all potentially dilutive securities unless their impact is anti-dilutive. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliations of basic and diluted distributed and undistributed earnings (loss) per common share | The following table sets forth the computation of diluted weighted average common shares outstanding for the three and nine months ended September 30, 2017 and 2016 (in thousands).
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Asset Retirement Obligations (Tables) |
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Schedule of changes in Company's asset retirement obligations | The following table summarizes the changes in the Company’s asset retirement obligations for the nine months ended September 30, 2017 (in thousands).
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Debt (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheet | The following presents condensed consolidating financial information of the issuer (Matador), the Non-Guarantor Subsidiaries, the Guarantor Subsidiaries and all entities on a consolidated basis (in thousands). Elimination entries are necessary to combine the entities. This financial information is presented in accordance with the requirements of Rule 3-10 of Regulation S-X. The following financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantor Subsidiaries operated as independent entities.
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Condensed Income Statement |
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Condensed Cash Flow Statement |
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Open Option Contracts Written [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of gross asset balances of derivative instruments | The following table presents the gross asset and liability fair values of the Company’s commodity price derivative financial instruments and the location of these balances in the interim unaudited condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 (in thousands).
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Summary of location and aggregate fair value of all derivative financial instruments recorded in the consolidated statements of operations | The following table summarizes the location and aggregate fair value of all derivative financial instruments recorded in the interim unaudited condensed consolidated statements of operations for the periods presented (in thousands). These derivative financial instruments are not designated as hedging instruments.
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Open costless collar contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Open Option Contracts Written [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of contracts for oil and natural gas | The following is a summary of the Company’s open costless collar contracts for oil and natural gas and open swap contracts for oil and Natural Gas Liquids (“NGL”) at September 30, 2017.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the valuation of the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis | The following tables summarize the valuation of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis in accordance with the classifications provided above as of September 30, 2017 and December 31, 2016 (in thousands).
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Supplemental Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of current accrued liabilities | The following table summarizes the Company’s current accrued liabilities at September 30, 2017 and December 31, 2016 (in thousands).
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Supplemental disclosures of cash flow information | The following table provides supplemental disclosures of cash flow information for the nine months ended September 30, 2017 and 2016 (in thousands).
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected financial information for segments | The following tables present selected financial information for the periods presented regarding the Company’s business segments on a stand-alone basis, corporate expenses that are not allocated to a segment and the consolidation and elimination entries necessary to arrive at the financial information for the Company on a consolidated basis (in thousands). On a consolidated basis, midstream services revenues consist primarily of those revenues from midstream operations related to third parties, including working interest owners in the Company’s operated wells. All midstream services revenues associated with Company-owned production are eliminated in consolidation. In evaluating the operating results of the exploration and production and midstream segments, the Company does not allocate certain expenses to the individual segments, including general and administrative expenses. Such expenses are reflected in the column labeled “Corporate.”
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|
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Accounting Policies [Abstract] | ||||
Discount rate, present value of future revenue | 10.00% | |||
Impairment charges | $ 0 | $ 0 | $ 0 | $ 158,633 |
Capitalized general and administrative costs | 6,100 | 4,300 | 16,900 | 10,300 |
Interest costs capitalized | $ 2,100 | $ 700 | $ 5,200 | $ 2,900 |
Equity (Details) - Subsequent Event [Member] shares in Millions, $ in Millions |
Oct. 10, 2017
USD ($)
a
shares
|
---|---|
Class of Stock [Line Items] | |
Net acres acquired | a | 6,600 |
Total acquisition cost | $ 38.0 |
Public Offering [Member] | |
Class of Stock [Line Items] | |
Sale of stock, consideration received | $ 208.7 |
Public Offering [Member] | Common Stock [Member] | |
Class of Stock [Line Items] | |
Sale of stock, shares of common stock issued (in shares) | shares | 8.0 |
Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|||
Changes in the Company's asset retirement obligations | |||||||
Beginning asset retirement obligations | $ 20,640 | ||||||
Liabilities incurred during period | 1,901 | ||||||
Liabilities settled during period | (349) | ||||||
Revisions in estimated cash flows | 794 | ||||||
Accretion expense | $ 323 | $ 276 | 937 | $ 828 | |||
Ending asset retirement obligations | 23,923 | 23,923 | |||||
Less: current asset retirement obligations | [1] | (618) | (618) | ||||
Long-term asset retirement obligations | $ 23,305 | $ 23,305 | $ 19,725 | ||||
|
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | |||
---|---|---|---|---|
Jun. 01, 2017 |
Feb. 16, 2017 |
Feb. 15, 2017 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted in period | 444,491 | 590,128 | ||
Share Price | $ 27.26 | |||
Fair value | $ 9.3 | $ 12.4 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted in period | 174,561 | 228,174 | ||
Share Price | $ 26.86 | |||
Vesting period of shares | 3 years | 3 years | ||
Accelerated vesting (in shares) | 97,797 | |||
Accelerated vesting compensation expense | $ 1.5 | |||
Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted in period | 87,757 | |||
Fair value | $ 2.1 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets (Liabilities) | ||
Total | $ (3,505) | $ (24,954) |
Fair value on a recurring basis | ||
Assets (Liabilities) | ||
Derivative Asset | 345 | (24,954) |
Derivative Liability | (3,850) | |
Total | (3,505) | (24,954) |
Fair value on a recurring basis | Level 1 | ||
Assets (Liabilities) | ||
Derivative Asset | 0 | 0 |
Derivative Liability | 0 | |
Fair value on a recurring basis | Level 2 | ||
Assets (Liabilities) | ||
Derivative Asset | 345 | (24,954) |
Derivative Liability | (3,850) | |
Total | (3,505) | (24,954) |
Fair value on a recurring basis | Level 3 | ||
Assets (Liabilities) | ||
Derivative Asset | 0 | $ 0 |
Derivative Liability | $ 0 |
Fair Value Measurements (Details 1) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Senior Notes Due 2023 | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of notes | $ 610.2 | $ 605.2 |
Supplemental Disclosures (Details 1) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Supplemental disclosures of cash flow information | ||
Increase in asset retirement obligations related to mineral properties | $ 2,484 | $ 2,588 |
(Decrease) increase in asset retirement obligations related to support equipment and facilities | (138) | 644 |
Increase (decrease) in liabilities for oil and natural gas properties capital expenditures | 35,940 | (7,849) |
Decrease in liabilities for support equipment and facilities | (247) | (2,687) |
Stock-based compensation expense recognized as liability | 150 | 457 |
Decrease in liabilities for accrued cost to issue equity | (343) | 0 |
Transfer of inventory from oil and natural gas properties | $ 74 | $ 655 |
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