Matador Resources Company (MTDR) M&A Announcement summary

Deal rationale and strategic fit

• Strategic bolt-on acquisition in the Delaware Basin expands footprint by 33,500 contiguous net acres, 82% held by production, and enhances operational fit and inventory quality.

• Adds high-quality inventory in primary development zones, increasing peer-leading well productivity and reserves, and includes a 19% stake in Piñon Midstream for additional midstream opportunities.

• The deal is seen as a fair price for a strong asset, not a distressed sale, and is expected to elevate scale and market position.

• Builds on a successful prior relationship with EnCap, following a similar deal in 2023.

Financial terms and conditions

• All-cash transaction valued at $1.905 billion, funded through recent equity and bond offerings, a $2.25 billion credit facility, $1.5 billion RBL, and a $250 million term loan.

• Attractive valuation at 4.2x forward 1-year adjusted EBITDA, with no equity issued to avoid stock overhang.

• Subject to customary purchase price adjustments for production, revenues, and expenditures from June 1, 2024, to closing, expected late Q3 2024.

• Pro forma leverage expected to be 1.3x at closing, returning below 1.0x by mid-2025, with opportunistic hedging to protect transaction economics.

Synergies and expected cost savings

• Acquisition is accretive to all key financial and valuation metrics, with production boosted by 26% and strong existing cash flow and reserves.

• Operational synergies from integrating adjacent assets, leveraging management and field staff, and infrastructure investments.

• Cost savings expected from drilling efficiencies, longer laterals, multi-well pads, and shared facilities.

• Enhanced operational efficiency and free cash flow from expanded acreage and production.