10-K: Matador Resources Reports Record Production, Lower Profit in 2025

Matador Resources Company achieved record oil and natural gas production in 2025, alongside strategic midstream expansions and capital returns, despite lower commodity prices impacting net income and reserve valuations.

Summary

• Matador Resources Company (MTDR) achieved record oil, natural gas, and average daily oil equivalent production for the year ended December 31, 2025.
• Oil production increased 20% to 43.7 million Bbl in 2025, up from 36.5 million Bbl in 2024.
• Natural gas production rose 23% to 191.3 Bcf in 2025, from 155.8 Bcf in 2024.
• Average daily oil equivalent production was 207,070 BOE per day in 2025, a 21% increase from 170,751 BOE per day in 2024.
• Estimated total proved oil and natural gas reserves increased 9% to 667.0 million BOE at December 31, 2025, from 611.5 million BOE at December 31, 2024.
• Net income attributable to Matador shareholders was $759.2 million ($6.09 per diluted common share) in 2025, down from $885.3 million ($7.14 per diluted common share) in 2024.
• Adjusted EBITDA for 2025 was $2.29 billion, a slight decrease from $2.30 billion in 2024.
• The Standardized Measure of total proved reserves decreased 5% to $6.99 billion, and PV-10 decreased 11% to $8.24 billion, primarily due to lower unweighted average oil and natural gas prices used for estimation.
• D/C/E capital expenditures for 2025 were $1.53 billion, within the estimated range of $1.47 to $1.55 billion.
• San Mateo Midstream, a 51% owned joint venture, expanded its Marlan Processing Plant, increasing total natural gas cryogenic processing capacity by 38% to 720 MMcf per day.
• The company secured firm transportation on Energy Transfer's Hugh Brinson Pipeline, expected online in Q4 2026, to move 500,000 MMBtu per day of natural gas from the Permian Basin to East Texas and Gulf Coast markets.
• A share repurchase program of up to $400.0 million was implemented in April 2025, with $55.8 million used to repurchase 1,351,328 shares in 2025.
• The quarterly cash dividend was increased twice in 2025, from $0.25 to $0.3125, and then to $0.375 per share of common stock.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive report. While profitability metrics (net income, Adjusted EBITDA) and reserve valuations (Standardized Measure, PV-10) were negatively impacted by lower commodity prices, the company demonstrated strong operational execution with record production and significant reserve growth. Strategic midstream investments and a commitment to shareholder returns are also positive indicators.

Positives

• Achieved record oil, natural gas, and average daily oil equivalent production in 2025, with oil production up 20% and natural gas production up 23% year-over-year.
• Increased estimated total proved oil and natural gas reserves by 9% to 667.0 million BOE at year-end 2025.
• Generated free cash flow in all four quarters of 2025, demonstrating strong operational cash generation.
• Increased quarterly cash dividend twice in 2025, from $0.25 to $0.375 per share, indicating a commitment to returning capital to shareholders.
• Implemented a $400.0 million share repurchase program in April 2025, repurchasing $55.8 million in shares during the year.
• Received $136.7 million in cash distributions from San Mateo and $13.0 million in performance incentives from Five Point.
• San Mateo Midstream expanded its Marlan Processing Plant, increasing natural gas cryogenic processing capacity by 38% to 720 MMcf per day.
• Secured firm transportation on Energy Transfer's Hugh Brinson Pipeline for 500,000 MMBtu per day of natural gas, aiming for higher pricing and demand markets.
• Achieved an upgrade to its long-term issuer default rating by Fitch Ratings from BBto BB.
• Maintained D/C/E capital expenditures within the estimated range for 2025, indicating effective capital management.

Negatives

• Net income attributable to Matador shareholders decreased to $759.2 million in 2025 from $885.3 million in 2024.
• Adjusted EBITDA slightly decreased to $2.29 billion in 2025 from $2.30 billion in 2024.
• Standardized Measure of total proved reserves decreased 5% to $6.99 billion, and PV-10 decreased 11% to $8.24 billion, primarily due to lower commodity prices used in reserve estimation.
• Weighted average oil price realized decreased 14% to $64.99 per Bbl in 2025 from $75.89 per Bbl in 2024.
• Weighted average natural gas price realized decreased 13% to $2.08 per Mcf in 2025 from $2.38 per Mcf in 2024.
• Realized net downward revisions of prior estimates of proved reserves of approximately 7.2 million BOE in 2025, including the removal of 22.8 million BOE in proved undeveloped reserves due to changes in development plans.
• Lease operating expenses increased 28% to $415.8 million in 2025, and 6% on a unit-of-production basis to $5.50 per BOE.
• Midstream operating expenses increased 24% to $208.1 million in 2025 due to plant expansion and increased throughput volumes.
• Interest expense increased to $208.5 million in 2025, primarily due to increased senior notes outstanding from the Ameredev Acquisition.

Risks

• Success is dependent on volatile oil, natural gas, and NGL prices, which may adversely affect financial condition and capital expenditure requirements.
• Higher than expected inflationary pressures may impact the ability to procure services, materials, and equipment cost-effectively, or at all.
• Armed conflicts (e.g., Russia-Ukraine, Middle East) and related humanitarian crises could impact the global economy, energy markets, and business.
• Business requires substantial capital expenditures that may exceed cash flows from operations and potential borrowings, potentially limiting future growth.
• Oil and natural gas reserves are estimated, and significant inaccuracies could materially affect quantities and present value.
• Approximately 39% of total proved reserves at December 31, 2025, consisted of undeveloped and developed non-producing reserves, which may not ultimately be developed or produced.
• Failure to replace oil and natural gas reserves will lead to declines in reserves and production.
• May be required to write down the carrying value of proved properties under full-cost accounting rules if commodity prices are low or declining.
• Hedging transactions may limit potential gains and could result in financial losses.
• Changes in price differentials between benchmark prices and wellhead prices could adversely affect business.
• Failure to identify, complete, or integrate future acquisitions successfully could reduce earnings and hamper growth.
• May purchase properties or midstream assets with unknown liabilities or incorrectly assessed risks.
• May incur losses or costs due to title deficiencies in properties.
• Ability to complete asset dispositions may be subject to factors beyond control, and liabilities may be retained.
• Borrowing base under the Credit Agreement is subject to periodic redetermination, potentially requiring additional collateral or repayment.
• Subject to interest rate risk under Credit Agreement and San Mateo Credit Facility due to floating rates.
• Terms of agreements governing outstanding indebtedness may restrict current and future operations.
• Credit rating may be downgraded, reducing financial flexibility and increasing interest expense.
• Drilling and producing oil, natural gas, and NGLs is highly speculative and involves high operational and financial risk.
• Operations are subject to operational hazards and risks, and insurance against all such risks is not available.
• Reserves and production are concentrated in a few core areas (Delaware Basin), making the business disproportionately exposed to localized issues.
• No guarantee of success in optimizing spacing, drilling, and completions techniques to maximize returns.
• Properties may be partially depleted or drained by offset wells, and operations may be affected by actions of other operators.
• Multi-well pad drilling may result in volatility in operating results and delays in production commencement.
• Unavailability or high cost of drilling rigs, completion equipment, services, supplies, and personnel could adversely affect execution of plans.
• Inability to acquire adequate water supplies or dispose of water at reasonable cost could impair commercial production.
• Midstream projects are subject to risks of construction delays and cost over-runs.
• Identified drilling locations are scheduled over several years, susceptible to uncertainties and lease expirations.
• Seismic data and other technologies cannot eliminate exploration risk.
• Financial difficulties of purchasers, operators, or other third parties could decrease cash flows.
• Marketability of production depends on gathering, processing, and transportation facilities, and their unavailability could materially affect revenue.
• Conducting operations through joint ventures (e.g., San Mateo) subjects the company to additional risks.
• San Mateo's long-term success depends on obtaining new sources of products, which is beyond its control.
• Long-term contracts may require minimum volume payments regardless of actual throughput and limit use of other service providers.
• Does not own all land for midstream assets, risking disruptions if rights-of-way or leases lapse.
• Intense competition in the oil and natural gas industry makes it difficult to acquire properties, market products, provide midstream services, and secure personnel.
• Strategic relationships are subject to change, potentially diminishing ability to conduct operations.
• Limited control over activities on non-operated properties.
• Approximately 33% of Delaware Basin leasehold is on federal lands, subject to administrative permitting and potential federal legislation/regulation.
• Subject to complex government regulation and liability, including environmental laws, which could require significant expenditures.
• Subject to federal, state, and local taxes, and potential new taxes or elimination/reduction of deductions.
• Legislation/regulatory initiatives relating to hydraulic fracturing, induced seismicity, emissions, and climate change could increase costs and reduce demand.
• New climate disclosure rules could increase compliance costs and litigation risks.
• May incur significant costs and liabilities from compliance with pipeline safety regulations.
• Change in jurisdictional characterization of assets by FERC or change in policy may increase regulation.
• Rates of regulated assets are subject to review and reporting by federal regulators, potentially affecting revenues.
• Failure to comply with FERC-administered statutes, rules, regulations, and orders could result in substantial penalties.
• Derivatives legislation could limit ability to hedge risks.
• Changes in U.S. foreign trade policies (tariffs, trade barriers) may adversely affect business.
• Stock price has fluctuated substantially and may continue to do so.
• Attention to ESG and conservation matters and negative market perception towards the oil and natural gas industry could adversely affect demand and stock price.
• Future sales and offerings of common stock could depress the price.
• Directors and executive officers own a significant percentage of equity, influencing corporate transactions.
• Issuance of preferred stock could diminish rights of common stockholders and make change of control more difficult.
• May have difficulty managing business growth.
• Loss of key personnel or Board members could disrupt business operations.
• A cyber incident could occur, resulting in information theft, data corruption, operational disruption, or financial loss.
• Governing documents and Texas law may have anti-takeover effects.
• Operates in a litigious environment and may be involved in legal proceedings.

Future Outlook

Matador Resources Company expects its Delaware Basin assets to be the primary focus of operations and capital expenditures in 2026, with an estimated D/C/E capital expenditure budget of $1.35 to $1.44 billion and midstream capital expenditures of $100.0 to $110.0 million. The company anticipates funding these expenditures through cash on hand, operating cash flows, and performance incentives from San Mateo, with flexibility to adjust spending based on commodity prices and other factors. Matador also intends to continue evaluating opportunistic acquisitions and divestitures.

Management Comments

• "Our goal is to increase shareholder value by building oil and natural gas reserves, production and cash flows and providing midstream services at an attractive rate of return on invested capital."
• "The successful execution of our business strategies led to increases in our oil and natural gas production and proved oil and natural gas reserves in 2025."
• "We improved the capital efficiency of our drilling and completion operations and achieved several key operational milestones throughout the year."
• "We also secured firm transportation on Energy Transfer’s Hugh Brinson Pipeline, which is expected to come online in the fourth quarter of 2026, to move 500,000 MMBtu per day of natural gas production out of the Permian Basin to East Texas and markets along the Gulf Coast where demand and pricing have historically been significantly higher than at the Waha Hub."
• "We achieved several key capital resources objectives during the year, including generating free cash flow, paying down a portion of the borrowings that funded the Ameredev Acquisition, increasing our quarterly cash dividend and earning performance incentives from Five Point Infrastructure, LLC."
• "San Mateo also achieved important milestones in 2025, including the construction of an additional natural gas processing plant with a designed inlet capacity of 200 MMcf per day... increasing San Mateo’s total natural gas cryogenic processing capacity 38% to 720 MMcf per day."
• "We expect the Delaware Basin will continue to be our primary area of focus in 2026."
• "We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors."

Industry Context

StockSavvy.ai notes that Matador Resources Company's strong operational performance in 2025, particularly in the Delaware Basin, contrasts with the broader industry's challenges in maintaining profitability amidst fluctuating commodity prices. While many E&P companies faced pressure from lower oil and natural gas prices, Matador's significant production and reserve growth, coupled with strategic midstream infrastructure expansion, positions it favorably for future market upturns. The move to secure firm transportation on the Hugh Brinson Pipeline is a proactive step to mitigate Permian Basin natural gas price differentials, a common issue for producers in the region. The company's focus on capital efficiency and shareholder returns (dividends, share repurchases) aligns with a growing trend among energy companies to prioritize financial discipline over aggressive growth, especially in a volatile market.

Comparison to Industry Standards

• Matador's 20% increase in oil production and 23% increase in natural gas production in 2025 significantly outpaced many peers who focused more on capital discipline and maintenance production rather than growth, demonstrating strong operational execution in the Delaware Basin.
• The 9% increase in total proved reserves to 667.0 million BOE is a robust organic growth rate, particularly when compared to some larger integrated oil companies that have struggled to replace reserves organically.
• The 38% expansion of San Mateo's natural gas processing capacity to 720 MMcf per day is a substantial infrastructure investment, comparable to midstream expansions by companies like Energy Transfer or Enterprise Products Partners in key basins, aiming to capture growing regional production and improve market access.
• The securing of 500,000 MMBtu/day firm transportation on Energy Transfer's Hugh Brinson Pipeline is a strategic move to access higher-priced Gulf Coast markets, similar to actions taken by other Permian producers like Pioneer Natural Resources or Occidental Petroleum to de-risk basis differentials.
• The decrease in Standardized Measure and PV-10, despite reserve growth, reflects the broader industry impact of lower 12-month average commodity prices (WTI oil down 14%, Henry Hub natural gas down 19% for reserve estimation purposes) on asset valuations, a trend observed across the E&P sector.
• Matador's generation of free cash flow in all four quarters of 2025, coupled with increased dividends and share repurchases, aligns with the capital return strategies adopted by leading E&P companies such as EOG Resources and ConocoPhillips, who prioritize shareholder value in a mature shale environment.

Management Changes

Corporate Governance

Legal Proceedings

• The company is a party to several legal proceedings in the ordinary course of business, but management believes it is remote that these will have a material adverse impact on financial condition, results of operations, or cash flows.
• Lease Sale Litigation: Environmental groups filed multiple lawsuits challenging BLM lease sales in New Mexico, including those where Matador purchased leases. These were dismissed in 2021 and 2022. BLM issued a Supplemental NEPA Analysis in September 2025 proposing to uphold previously issued leases, but the outcome of NEPA review and future litigation is uncertain.
• Chaco region drilling permits: Tenth Circuit Court of Appeals ruled in February 2023 that certain BLM drilling permits in the Chaco region of New Mexico were issued without adequate NEPA review, leading BLM to conduct additional analysis. The ultimate impact is uncertain.
• Waste Rule Litigation: Enforcement of the BLM's 2024 rule to reduce natural gas waste was enjoined in Texas, North Dakota, Montana, Wyoming, and Utah. The appeal is in abeyance, and BLM announced a delay in enforcement of certain provisions until December 2025. The ultimate outcome is uncertain.

Related Party Transactions

• San Mateo Midstream, LLC is a strategic joint venture owned 51% by Matador and 49% by Five Point Infrastructure, LLC. Matador received $136.7 million in cash distributions from San Mateo and $13.0 million in performance incentives directly from Five Point in 2025.
• Matador dedicated current and future leasehold interests in various asset areas to San Mateo under 15-year, fixed-fee agreements for oil transportation, natural gas gathering/processing, and produced water services.
• San Mateo entered into agreements with Northwind Midstream Partners LLC (previously an affiliate of Five Point) for treating sour gas.

Stakeholder Impact

• **Shareholders**: Increased quarterly dividends and a share repurchase program demonstrate a commitment to returning capital, potentially enhancing shareholder value. However, lower net income and reserve valuations due to commodity prices could temper enthusiasm.
• **Employees**: Continued investment in professional development (26,800 hours of continuing education in 2025) and a comprehensive compensation package aim to attract and retain talent. Growth in operations also supports employment.
• **Customers (Midstream)**: Expansion of the Marlan Processing Plant and securing firm transportation on the Hugh Brinson Pipeline provide enhanced services and flow assurance, particularly for natural gas producers in the Permian Basin.
• **Local Communities/Environment**: Sustainability practices, including decreased greenhouse gas emissions intensity (65% reduction since 2019), methane emissions intensity (88% reduction since 2019), and flaring intensity (84% reduction since 2019), along with significant use of non-fresh and recycled water, demonstrate environmental stewardship. Pipeline transportation of oil and produced water reduces truck traffic and associated impacts.

Next Steps

• Continue delineation and development of Delaware Basin assets, focusing on longer horizontal wells in 2026.
• Fund 2026 capital expenditures through cash on hand, operating cash flows, and performance incentives from San Mateo.
• Evaluate opportunistic acquisitions of producing properties, acreage, mineral interests, and midstream assets, principally in the Delaware Basin.
• Consider divesting non-core assets and monetizing other assets (midstream, mineral/royalty interests) as value-creating opportunities arise.
• Monitor and adjust capital expenditures based on market conditions, drilling results, and other factors.
• Hugh Brinson Pipeline expected to come online in Q4 2026 to improve natural gas takeaway and pricing.

Key Dates

Recommendation

Matador Resources Company demonstrated strong operational performance in 2025 with record production and significant reserve growth, alongside strategic midstream expansions and a commitment to shareholder returns through increased dividends and share repurchases. However, the decline in net income and Adjusted EBITDA, coupled with a reduction in the Standardized Measure and PV-10 of reserves due to lower commodity prices, presents a mixed financial picture. While the company is executing well on its operational strategy and managing capital effectively, the external macroeconomic factors of commodity price volatility and inflationary pressures remain significant headwinds. The stock is likely to trade within a range, reflecting both the company's solid execution and the broader market's uncertainty regarding energy prices. A 'hold' recommendation is appropriate as investors await clearer trends in commodity markets and further evidence of sustained profitability improvements.

Keywords

Oil and Gas Exploration, Delaware Basin, Wolfcamp, Bone Spring, Midstream Operations, Natural Gas Processing, Oil Production, Natural Gas Production, Proved Reserves, Hydraulic Fracturing, SEC Filing, Energy Transfer, Hugh Brinson Pipeline, San Mateo Midstream, Capital Expenditures, Share Repurchase, Dividends, ESG, Permian Basin, Haynesville Shale