E&P Matador Resources has priced an underwritten public offering of common stock with estimated gross proceeds of approximately $347.3 million, likely earmarked for transactions.
A TPH&Co. analyst said the proceeds from the offering, announced March 25, will fund a slate of acquisitions by Matador, including some expected to close in the first half of the year.
Since Dec. 1, 2023, Matador has completed several acquisitions of producing oil and natural gas properties, undeveloped acreage and royalty interests in Eddy and Lea counties, New Mexico, and Ward County, Texas, the company said in a March 25 regulatory filing. Matador’s operations in those counties are focused on the Delaware Basin.
Matador’s acquisitions were valued at approximately $281 million. That includes 2024 purchases from a Matador subsidiary totaling approximately $155.1 million between Jan. 1 and Feb. 20, Matador said in its annual report released in February.
“Additionally, the company has entered into agreements to acquire certain other assets (producing and undeveloped), with most expected to close in H1’24,” TPH&Co. analyst Oliver Huang said in a March 26 report. “We’ll be most interested [in] any incremental details that can be offered surrounding these transactions, what magnitude of production may have been associated with these transactions, how much of this has been embedded into the existing FY’24 outlook, and the best way to think about the ongoing land budget given the increased run-rate of spend that we’ve seen in recent quarters.”
In its offering, Matador will sell 5.25 million shares, approximately 4% of Matador’s market capitalization at a price that “implies a ~3.5% discount” to the company’s March 25 close share price of $68.55, Huang said.
J.P. Morgan and BofA Securities are acting as the underwriters for the stock offering. Matador said the underwriters may offer the shares of common stock from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.
On March 26, Matador also announced it commenced a cash tend to purchase approximately $699.2 million outstanding aggregate principal amount of its 5.875% senior notes due 2026.
Under the terms of the offer, holders of the 2026 notes that are validly tendered and accepted will receive total cash consideration of $1,000.75 per $1,000 principal amount of 2026 notes, plus an amount equal to any accrued and unpaid interest up to, but not including, the settlement date, which is expected to be April 2. The tender offer expires at 5 p.m. EST on April 1.