Investors will soon have another exploration and production company to choose from when deciding where to invest in the energy sector, as Matador Resources (Nasdaq:MTDR) has recently filed for an initial public offering.
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Matador Resources has approximately 210,000 net acres under lease, and reported average daily production of 49.1 million cubic feet of natural gas equivalents as of May 2011. The company estimates that it has 154.8 Bcfe of proved reserves at the end of the first quarter of 2011.
Matador Resources is active mostly in East Texas and Northern Louisiana, where the company is developing both the Haynesville Shale and Cotton Valley formations. The company is also ramping up the development of the Eagle Ford Shale in South Texas.
Matador Resources also has prospective oil and gas acreage in Utah, Wyoming, Utah and the Permian Basin and hopes to find new sources of oil and gas here.
Matador Resources has 15,000 net acres prospective for the Haynesville Shale and estimates that 90% of its acreage is held by production. This means that Matador Resources is not under any short-term pressure to drill. The company also has exposure to the Cotton Valley, Travis Peak and Bossier Shale plays on its leasehold. The majority of the company's production and proved reserves are from the Haynesville Shale.
Eagle Ford Shale
Matador Resources has 29,000 net acres spread across several counties in South Texas that is prospective for the Eagle Ford Shale. The company estimates that 85% of its leasehold is in the oil and liquids part of the play and 80% is either held by production or leased through 2013. Some of the acreage also has exposure to other plays including the Austin Chalk and Buda Lime formations.
Meade Peak Shale
Matador Resources is also evaluating the Meade Peak natural gas shale on its acreage in Wyoming. The company started drilling a well in February 2011 and plans to finish up in September 2011 once environmental restrictions are lifted.
The Meade Peak formation has been the source rock for many of the conventional oil and gas reservoirs in the area and Matador Resources is attempting to see if oil and gas can be produced from the formation itself.
Matador Resources has approximately 136,000 net acres under lease here and is partnering with a private oil and gas company to explore and develop this formation.
One interesting item regarding the Meade Peak Shale is that an affiliate of Alliance Bernstein Holding L.P. (NYSE:AB) is paying for the cost of the first well, and after an examination of data from this well, has the option of buying up to a 50% interest in all the leases in the prospect.
Matador Resources plans to increase its capital budget in 2012 to explore and develop its oil and gas properties. The company plans to spend $231 million in 2012, up from $149 million in 2011. The majority of this capital will be spent in the Eagle Ford Shale area.
Matador Resources has acted as the operator on 49% of its wells and has also partnered with some of the largest and most experienced operators in the business, including EOG Resources (NYSE:EOG), Royal Dutch Shell (NYSE:RDS) and Chesapeake Energy (NYSE:CHK).
The Bottom Line
The market loves the energy sector and has an almost insatiable demand for investment opportunities in this area. This provides easy access to the capital markets for a number of fast-growing private operators. (For additional reading, take a look at What Determines Oil Prices?)
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