Matador Resources Targets 5%-Plus Output Growth in 2027

Matador Resources Co. produced an average of 230,470 boe/d in the third quarter, up 10% year over year, and executives at the Dallas-based operator now say 2027 output could grow by mid-single digits or better.

Chairman and Chief Executive Officer Joe Foran delivered the early forecast on the company's third-quarter earnings call, capping a quarter in which production rose 7% from the second quarter and beat internal expectations. The Delaware basin operator turned 36 gross wells (31 net) to sales during the period. Oil production climbed 10% year over year to 132,019 b/d.

Where will the growth come from?

The 2027 outlook rests heavily on assets in Eddy and Lea counties, New Mexico, recently acquired from EnCap. Foran and his team plan to drill up to 25 wells there by the end of next year.

To that inventory, Matador could add:

• Another 10-12 wells on federal lands leased earlier this year from the Bureau of Land Management
• Up to 15 wells in the Woodford formation

"A shout out to the teams," Foran said on the call, referring to recent acquisitions that included a deal by 51%-owned San Mateo Midstream LLC for Cardinal Midstream Partners. "We said, 'We're going to ask you all to put in a little extra time and effort to make sure this works out. And they have. And I think you'll see the effect in our results for this quarter, but even more so in the upcoming fourth quarter."

Executive Vice President Tom Elsener said wells near the BLM-leased property were key contributors to Matador's third-quarter outperformance. That result has executives pushing further into federal acreage. Two of the net 21-23 wells the company expects to turn to sales in the fourth quarter sit on federal land.

How much will the plan cost?

Capital guidance tells the story of a company stretching a larger budget. Chief Financial Officer Chris Calvert told analysts that 2026 total capital expenditure guidance now stands at roughly $1.7 billion, up from a midpoint of $1.675 billion three months ago.

Calvert framed the increase as a hedge, not a commitment. He said Matador holds the option to deploy capital into either the newly acquired EnCap assets or its legacy properties, whichever offers better returns.

"We do see ourselves as being a potential relative grower," Calvert said. "And we think we could prosecute a plan that not only allows us to be a relative grower but we could still achieve debt repayments. We could still grow our reserve base and then we could still potentially grow our acreage position through our brick-by-brick program."

The message: growth, deleveraging and acreage additions are not mutually exclusive under the current plan.

What did the quarter earn?

Third-quarter revenue reached $1.16 billion. Net income came in at $195 million, down slightly from the year-ago period, dragged lower by more than $227 million in losses on derivatives (financial contracts used to hedge commodity price exposure).

Operating profits moved in the opposite direction, rising to $354 million from $306 million a year earlier, indicating the underlying business strengthened even as hedging positions worked against the company.

How did the market respond?

Shares of Matador (NYSE: MTDR) fell about 7% to $50.37 on Nov. 4, the day oil prices dropped just as steeply following the midterm election results. The stock is down roughly 20% over the past six months, cutting the company's market capitalization to about $6.2 billion.

The equity reaction tracked the commodity move rather than the operational beat. Production exceeded expectations, operating income rose, and management raised its growth ambitions for 2027, yet the share price followed crude lower.

The watch item: fourth-quarter results, where Foran says the acquisition integration effort will show its full effect, alongside the pace of drilling on the EnCap acreage in Eddy and Lea counties.