Matador Resources would look to drill its 17,300 net Haynesville and Cotton Valley acres in prime northwestern Louisiana leasehold when natural gas prices firm up, its CFO told investors Oct. 23.
The Permian Basin-focused E&P’s gas-to-oil ratio is estimated by securities analysts at roughly 62% oil.
But it’s “probably closer to 60%” when factoring for the Haynesville property, Brian Willey, CFO, said during an earnings call.
“I think there's been a lot of talk about gas recently—whether it's through AI [data center power demand] or the new LNG [export] terminals,” he said.
“I just want to remind everybody that we have a significant gas bank that's in the Cotton Valley” and Haynesville Shale.
Matador’s reserves there are between 200 Bcf and 300 Bcf, including probable and possible. Proved reserves are 24.6 Bcf.
All of the leasehold is HBP, according to the company’s Securities and Exchange Commission (SEC) filings.
“We don't have those on our reserves report yet because we don't have a plan to drill those in the next five years,” Willey added.
“But if gas prices were to stabilize higher then we could, if we wanted to, quickly pivot over there.”
When including its leasehold’s associated gas in South Texas and in the Permian’s Delaware Basin, where it holds some 196,000 net acres, “we have over 1.4 Tcf right now in gas reserves,” Willey said.
“So we can increase those and become gassier if that's what's needed.”
Haynesville, Eagle Ford divestitures possible
At year-end 2023, Matador had 18.1 net producing wells on 8,900 net (16,200 gross) Haynesville acres, which produce an average of 22.6 MMcf/d, according to its 10-K filing with the SEC.
In the overlying Cotton Valley and other, shallower zones, it had 39 net producing wells on 15,700 gross acres (14,800 net) that overlap its Haynesville position in some areas, making 1.6 MMcf/d.
It operates nearly all of its Cotton Valley leasehold, according to the 10-K.
In the Haynesville, it operates 8% of the 4,700 net (11,600 gross) acres that are in the core of the play. In the balance of its leasehold with Haynesville rights, it is the operator.
In a July quarterly filing, Matador reported, “We may divest portions of our non-core assets, particularly in the Eagle Ford shale in South Texas and the Haynesville shale in Northwest Louisiana … as value-creating opportunities arise.”
Of its first-half 2024 natural gas production, some 6% was from the Haynesville and Eagle Ford.
Operations in northwestern Louisiana in 2023 consisted of non-op participation in 0.4 net wells among 22 gross, according to the annual report.
In the Eagle Ford in South Texas, its operated position produced fewer than 1,000 bbl/d, along with roughly 2 MMcf/d, in July from Atascosa, Karnes and La Salle counties, according to Texas Railroad Commission data.
In 2023, its South Texas operations consisted of bringing online 0.4 net (one gross) non-op well, according to the 10-K.
‘Best rock’
The Haynesville commentary arose when a securities analyst asked in the investor call about “the appetite out there from buyers and sellers” in general and not in any particular region.
Joe Foran, Matador chairman and CEO, said fellow Permian producers’ portfolio high-grading is under way after closing deals in the past months.
“We like to try to be that company they turn to when they need a quick answer or help [when] they have more interest than they really want and want to lay some off,” Foran said.
Matador bought 45,000 net Delaware acres from Ameredev II this year for $1.8 billion and 18,500 net acres from Advance Energy Partners in 2023 for $1.6 billion.
“If you do a deal and it ends on a happy note like Advance and Ameredev, we hope that leads to other deals,” Foran said.
Van Singleton, president of land, A&D and planning, added that Matador is focusing on acquisitions that come with “the best rock” and “making sure that whatever deals we're looking at fit really well into what our operational plans are.”
Matador will “continue to keep our pipeline of opportunities full and then make the decision at the time that's appropriate whether or not it's something right for us,” Singleton said.