Matador Resources Q3 2026 Earnings Call Transcript

Matador Resources (NYSE:MTDR) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Matador Resources Company reported a 10% increase in production to over 230,000 barrels, with reserves growing to over 700 million barrels. This allowed for a dividend increase from $1.50 to $1.75, marking the eighth increase in five years.

The company successfully transitioned gas sales from Waha to Hugh Brinson, generating $162 million in cash flow in Q3 2026 compared to a negative $38 million in Q2 2026, resulting in a $200 million positive swing.

Strategic acquisitions of Cardinal, Paloma and Ridgerunner have been integrated, contributing to operational efficiency and setting the stage for drilling new wells. Matador plans to drill up to 25 wells on Paloma acreage and 10 to 12 wells on federal leases in the coming year.

Matador has paid down $150 million of its $500-$600 million debt and aims to continue debt reduction through 2026 and 2027.

The Woodford discovery has exceeded initial expectations, producing over 140,000 barrels in five months and suggesting strong potential for future wells.

Management emphasized the importance of its midstream operations, noting that the San Mateo system, bolstered by the Cardinal acquisition, is undervalued by the market but crucial for maintaining flow assurance and future growth.

The company is focusing on capital efficiency, citing a reduction in drilling and completion costs and improvements in well productivity.

The future outlook includes potential growth in reserves, continued efficiency improvements, strategic utilization of federal leases and further exploration and development activities, particularly in the Woodford area.

Full Transcript

Sarah Gallant (Operator)

Good morning, ladies and gentlemen. Welcome to the third quarter 2026 Matador Resources Company earnings conference call. My name is Sarah Gallant, and I’ll be serving as the operator for today’s call. At this time, all participants are in a listen-only mode. We’ll facilitate a question-and-answer session at the end of the Company’s remarks. As a reminder, this conference is being recorded for replay purposes. The replay will be available on the Company’s website for one year, as discussed in the Company’s earnings press release that was issued yesterday.

I will now turn the call over to Mac Schmitz, Senior Vice President of Investor Relations for Matador. Mr. Schmitz, you may proceed.

Mac Schmitz (Senior Vice President of Investor Relations)

Thank you, Sarah. Good morning, everyone, and thank you for joining us for Matador’s third quarter 2026 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the Company’s financial performance. Reconciliations of such non-GAAP financial measures with comparable financial measures calculated in accordance with GAAP are contained at the end of the Company’s earnings press release.

As a reminder, certain statements included in this morning’s presentation may be forward-looking and reflect the Company’s current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially are contained in the Company’s earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. In addition to the earnings press release issued yesterday, I would like to remind everyone that you can find a slide presentation in connection with our third quarter 2026 earnings release under the Investor Relations tab on Matador’s corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our founder, chairman and CEO. Joe.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Thank you, Mac, and it’s a pleasure to visit with y’all today. And I want to begin first by thanking each of you who wrote a note. We thought the notes were more thoughtful and thorough as well as any that we’ve had in the last couple of years, and we really appreciate that and want to reiterate to you: we’d very much like to have each of you come visit us sometime, have lunch or breakfast with us, see our facility and what we think makes a difference in our Mass Comm room.

It goes 24/7 and some other differences, and I think it gives you a more complete picture of the future we have, as well as meet in person some of the people that visit with you in between these analyst calls. Second is that we’ve had a lot of changes here for the better this year. Some opportunities came up and we were able to take advantage of them with the support of our banks and our shareholder groups, and want to thank them for helping to lean in and let us execute on these. And since then, the paydown that we promised — yes, we borrowed a lot of money, but we said we would make extra effort to pay it down — and we first did $100 million a month or so ago and just recently we did another $50 million.

So on the money that we borrowed, I think it’s $500 to $600 million, we’ve now paid down $150 million and hope to make further paydowns here in 2026, but certainly take care of it in 2027. Finally, shout out to the teams is that they put in a little extra work effort, and that was our challenge to them as we were acquiring Cardinal, Paloma and Ridgerunner. We said we’re going to ask y’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.

I look forward to taking your questions. As you think of what questions you may want to ask us, I’d like to just say a few current remarks. We emphasize that our production has grown 10% to over 230,000 barrels from December 31st, 2025. Reserves of 667 — now showing you the difference is that we’ve now increased that to over 700 million. So we continue to have growth in our reserve base, substantial growth, which allowed us to increase the dividend the eighth time in five years, from $1.50 to $1.75 — a 17% increase.

Finally, there’s a lot of news to tell you, but we’re trying to live it. A lot of good news, but perhaps the most important, impactful is we are now moved away from Waha to selling our gas with the Hugh Brinson. And so last month we were having to pay at Waha $0.79 for them to take our gas so we could keep our oil production going, and this month we were getting paid $2.99 for our gas, which has made $162 million in cash flow compared to negative $38 million in the second quarter of 2026.

So big swing there of over $200 million. And thanks, ET, for finishing the Hugh Brinson, and we look forward to working further with them. In the meantime, we’re happy to have your questions about our strategic acquisitions. We’re currently drilling three Corby wells on the adjacent federal acreage. This is important because we got permits, we got the let, and we got them going in a matter of months. So, turned on, that may be one of the best wells that we will have drilled in Matador’s history. So really have our fingers crossed there — very hopeful — teams are excited. We’ll see what happens, and I know we’ll talk about that in the future.

The Woodford discovery continues to outperform our initial expectations. It’s now produced over 140,000 barrels in just over five months. Our high end of the range originally was 100,000 barrels in 100 days. We’ve outperformed that, so kudos to the team — everybody working on that. So then people have said, what are you going to do with your Paloma? Again, Paloma has a good eye for good acreage, and we were very excited to do the deal with them and get to know them better and see if we can’t find more to do. So as analysts, you can expect up to 25 wells on acreage associated with Paloma over the next year and 10 to 12 additional wells on associated federal lease sale acreage. And the great advantage of the federal lease is it’s an eighth lease, so you have a higher net revenue, and one well holds the whole acreage.

And even if you don’t drill, you have 10 years to get your first well drilled. But we will drill all the federal acreage faster than that. It’s exciting acreage and we think best part of the basin. The Cardinal acquisition has now been integrated, bringing nine new third-party customers to the San Mateo system. It’s been in good shape, and again, Paloma did a good job with that — the development of the Cardinal business plan — and that fits in. And now we have — if you look at the maps, you’ll see that we’re all around the basin. We’re adding a few connectors to it to make it that much more efficient. And I think in the coming time you’ll hear what the material contributions that the Cardinal system has had going in now into the Matador San Mateo system.

So all in all, always like to be careful and say that’s a lot of good news all at once, and everything is looking pretty good for us. We’re excited about the coming year. We’ll have more on that when we report on the fourth quarter, but I think what you’ll see is continuing good performance and continuing improvement in our efficiencies.

Mac Schmitz (Senior Vice President of Investor Relations)

That’s great, Sarah. We’d like to turn it over to Q&A.

Sarah Gallant (Operator)

Thank you, Mac. And Joe, as a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Due to time constraints, we ask that you limit yourself to one question. Again, please limit yourself to one question until all have had a chance to ask a question, after which we would welcome additional follow-up questions you may have. Our first question comes from the line of Gabriel Dowd with Truist.

Gabriel Dowd (Analyst at Truist)

Thanks, Operator. Morning. Thanks, Operator. Morning. Joe and team, appreciate the time. Joe, was hoping we can maybe unpack the comment you made in the release around mid single-digit growth for ’27 on current commodity prices and service pricing. So I guess the question is, is that implying you could essentially deliver that growth from a flat budget relative to 2026? So maybe just talk a little bit about the moving pieces within the capital budget. You have obviously inflationary pressures.

You just announced the Marlin expansion on Monday, which could require some capital. So we’d love to get maybe some more commentary on that. Thanks, Joe.

Chris Calvert (Executive Vice President and Chief Financial Officer)

Hey, Gabe, it is Chris Calvert, EVP, CFO. Great question. You know, I think I would like to point first to highlight four things to kind of set up that question. First, as we look at 2027, the first thing — you know, we have great properties that we can go out — that are included in some of these acquisitions, obviously — but then just great legacy properties that we can go out and develop. We have an ability to execute in a very capital-efficient way.

Joe already spoke to the benefits of the Hugh Brinson before. We also have the people to prosecute the plan that we set forward. And so I think as we look at 2027 we do see ourselves as being a potential relative grower, 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. And so I think the commentary around capex — there are a lot of moving parts, Gabe. You know, I think obviously we’ve seen oil price change drastically in the last 48 hours.

You’re going to have oilfield service that is somewhat following activity that could be based off of that oil price change. And so I think it’s a little early to comment on what we think a capital program could look like in 2027. However, when we think about the potential program in 2027, we think we can achieve a lot of our objectives — specifically debt repayment and production growth — and prosecute it in a very efficient way.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Thank you, Chris. And I would just add that if oil prices go down, the vendor prices tend to go down with it, and they just adjust. And we have been — Glenn Stetson has done a great job on these, working with the completion team and driving down the cost of completion. So we’re now on the rig three days less on average. So there’s savings there. Those are big savings. And what else do you want to say?

Sarah Gallant (Operator)

Thank you for your question, Gabe. Next we have Neil Dingman from William Blair. Neil, your line is open.

Neil Dingman (Analyst at William Blair)

Morning, Joe and team. And nice update yesterday, Joe, on all the San Mateo and natural gas comments. Joe, my first question is on San Mateo specifically for you, the team. The asset certainly has notable value, obviously given the $400 million EBITDA you all are suggesting. However, I would argue that it doesn’t seem like the value is being properly recognized in your stock price. I’m just wondering how soon might you all consider some sort of monetization event or something to help better realize the value in this large asset?

Joe Foran (Founder, Chairman and Chief Executive Officer)

That’s a great question, Neil. We discuss this every day—what can we do better, how do we add value without spending a lot of money? I think the midstream is undervalued right now in the market. We got into the business to be sure of flow assurance out of the basin, as with the increase in drilling activity in New Mexico, particularly in the potash area, you’re going to have a lot more gas coming to market. If you don’t have your own midstream system, you may find that you’re shut in.

We wanted to realize that if you’re going to make a lot of gas, you better have a system you control to get your gas to market. It’s a lesson we learned when we first went public years ago, and we’ve tried to maintain that—being sure that we had a means of getting to market, particularly as our gas volumes kept growing. As far as increasing the value of it, we’re open to ideas at any time. One commonly is about going public, and we’ve had a good experience being public. Matador Resources went public at $12 a share and, well, until yesterday we were $60 a share. But it will bounce back; it always does. It hasn’t really lost value—it’s just the times, and you have to adjust to it. So that’s been a good experience, even if we’re 50 instead of 60. I think the midstream could render that type of growth too, but you have to wait until the market is right.

If you remember at Matador Resources, we were supposed to go public and we were all set to go and got approval on September 10th of all days—and we know what happened on September 11th. We don’t want to rush into anything, but we’re planning to tap into that value. We want to do it without losing the option and the ability to control our future with the flow assurance, because it is a meaningful amount of money. That’s also helped enable us to raise the dividend eight times in five years.

So it’s paying off. We feel we’re building a better system, building up our customer base, and this last deal that we announced with a prominent company pretty much fills up the line. We’re very excited about working with them because that could be another value add to the midstream system. We’re open to any and all ideas, but trying to get it to where it’s big enough. What we’ve learned from the market: you want to be big enough that you’re not an afterthought, but a company actively being traded that people want to meet with and work with you.

We feel we’re building that. It’s helped us to build better relations with a number of the major companies out there—you know, we offload to them, they offload to us—and you’re just building relationships and efficiencies. Lynn, did I leave some…

Lynn

That’s right—just what Joe said. I think we’ve shown a track record of adding value to those midstream assets, and that has helped the upstream business, just as Joe said, both Matador Resources and the customers that are on that system. When we started this year, I don’t think the Cardinal acquisition was really part of the picture, but that opportunity came along, and I’m very glad that we got that closed in the quarter and took over on August 1st. That integration has gone really well. Just as Joe said, we connected the two systems this quarter—the San Mateo and the legacy Cardinal system—and look forward to further connections in 2027 that will add to the reliability of San Mateo and its customers on the system.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Anton is head of our Gas Marketing team. Anton, do you add anything to that? Has that made you more efficient? Has that?

Anton

Joe, I agree with you completely because it’s helped us with our surety of flow and knowing where our gas is going. It’s connected to Hugh Brinson—that we know that we have all these gas plants in the future and we have takeaway going from our gas plant in-basin to Hugh Brinson and then Hugh Brinson all the way to the Gulf Coast. This is where we’re adding a lot of value to the natural gas on the residue side. And also the NGLs have added a lot of value to our gas, and that’s where our gas plants—where we get the better T&F. By owning our own plants, we get better transportation and fractionation, or better natural gas liquids price, because we own our own plants. I hope that answers your question some, but don’t hesitate to follow up and call us. We’ll be around. And Neil, we really appreciate your interest over time. It’s getting to be that we’ve worked together for a long, long time, and I hope you feel that we’ve always done what we said we’d do.

Sarah Gallant (Operator)

Thank you, Neil. Our next question is from Tim Rejvan with KeyBanc Capital Markets. Tim, your line is open.

Tim Rejvan (Analyst at KeyBanc Capital Markets)

Good morning, folks. Thank you for taking our question. I want to follow up on Neil’s question on San Mateo with a little different angle here. Very strong EBITDA number that you put up in the third quarter. I know two months of Cardinal had a little bit of impact to that, but you seem to be at about a $100 million run rate as we look to 4Q and beyond without any drop-down from Matador Resources into San Mateo. So can you help us maybe understand the EBITDA growth outlook?

I know you put guideposts out before, but a lot of this growth seems locked in with these recent third-party agreements and then the work underway at Cardinal. So can you talk more about organic growth that we can see from San Mateo?

Chris Calvert (Executive Vice President and Chief Financial Officer)

Hey Tim, great question. This is Chris Calvert, Executive Vice President and Chief Financial Officer. Again, we appreciate the fact that you recognize the catalysts for growth within the San Mateo business. I think in previous disclosures we have talked about the integration of Cardinal contributing potentially $100 million in EBITDA in 2028. When we see the San Mateo business—and kind of piggybacking to Neil’s question a little bit—we’ve gotten this question a lot about the monetization of San Mateo.

I think we’ve always said patience; we want to do the right deal, not just any deal. If you look back at 2025, EBITDA for the combined entities was around $325 million. We are up 17%, projecting to be up 17% in 2026. I think that patience will be rewarded in the fact that San Mateo EBITDA has not only grown, but we feel within the Cardinal acquisition, the recent agreements that have been announced, and the third plant expansion that will be built at Marlin, we have pretty clear line of sight that we’ve disclosed EBITDA growth around going into the future.

Sarah Gallant (Operator)

Thank you, Tim. Our next question is from John Freeman with Raymond James.

John Freeman (Analyst at Raymond James)

Thanks, guys. Just following up on Gabe’s earlier question. Obviously, the Marlin expansion looks like another really nice project for y’all. Just to help us be at least in the right zip code on the midstream capital next year, can you give us sort of a ballpark cost of that project so we can get some idea of how that looks over ’27 and ’28 for midstream related to that?

Joe Foran (Founder, Chairman and Chief Executive Officer)

Yeah, John, thank you. One thing I want to emphasize—we get a lot of these questions on the midstream, and the way we look at the midstream is really that if you’re going to be, say, a cotton farmer in Gaines County, Texas, you need to be sure to own part of the cotton shed. If you don’t own part of the cotton gin, you may have trouble getting your cotton processed, and then when you do get it out, the market has already fallen some. What we wanted to have was that flow assurance that we could get it to market as fast as is commercially reasonable and get it processed by the best people and moved on.

We wanted that flow assurance. It’s been a lucky break for us that not only have we been able to maintain flow assurance, but we have the other thing that it’s generated—a lot of profits and a lot of optionality. We know it’s a valuable asset, and we plan to bring it public at what we consider the optimal time, with further growth ahead of us. I’m going to turn it back to Chris for the detail to the rest of your question. But it’s like our, you know, that we handle a lot of our water, we handle a lot of these other side deals, and we feel we save a lot of money and make money for Matador Resources. So again, this is one of those questions that, John, when it works out for you sometime, please come up and have lunch or breakfast with us and meet with our young people and see how we’re all set up.

We’ve replicated what the plants look like. I think you can see it didn’t require it to succeed in the business, but it sure is helpful to have a processing plant that can take your gas, process it, and move it to market, as well as get more NGLs out of it. But again, we’re open to ideas. If someone’s got a better idea of what we could do with it, come see us. Chris?

Chris Calvert (Executive Vice President and Chief Financial Officer)

Yeah. Hi, John, it’s Chris Calvert again. You know, the way we look at this buildout, it will be a multiyear buildout, you know, capital going out over time. And so we indicated it would be around $25 million in this quarter and then spread out over the completion of the project. Excuse me. And so as we get to February, we’ll provide more color on the cadence of that capital investment. But we just want to remind people it will be a multiyear investment, multiyear project.

Sarah Gallant (Operator)

Thank you for your question. Our next question will come from Erin Jayarum with JP Morgan Securities. Erin, your line is open.

Arun Jayaram (Analyst at JP Morgan Securities)

Yeah. Arun Jayaram with JP Morgan. I was wondering if you could comment on how you think about year-over-year capital efficiency upstream as you feather in up to 15 Woodford wells and maybe 35 to 40 wells from a mix of Paloma and the federal lease sale.

Joe Foran (Founder, Chairman and Chief Executive Officer)

I’m not sure I understand your question. Can you kind of rephrase it for either Glenn or me?

Arun Jayaram (Analyst at JP Morgan Securities)

Yeah, just wanted to comment on how you think about year-over-year changes in capital efficiency, which would include obviously well productivity. And capex is one is another important part of that. As you think about feathering in the Woodford and 35 to 40 wells from the mix of the federal lease sale and Paloma. Hope that makes sense.

Glenn Stetson (Chief Operating Officer)

Hey, Ryan. Yeah, thanks for the question. This is Glenn Stetson. I’ll start, and maybe Tom can add some color on the Woodford. But I think as we look at some of the wells that we completed in the quarter that were adjacent to the Paloma properties and the BLM properties, and as Joe mentioned, we actually have three wells that we’re going to turn on this quarter that are also adjacent to those BLM properties, we have achieved D&C cost per foot in the $640 zip code.

And I think that that is a testament to the efficiencies that not only that we projected, but we’ve actually been able to execute on. And it was some of the things that I had listed in the previous question about the use of treated produced water and field gas. I do think that as we continue to drill, you know, longer laterals and really focus on cycle times, we have a slide in the deck that refers to the lateral footage per rig gains that we’ve made in just a year, with seeing a 30% improvement in that category, but we’re not done yet. I think that there are still records to be made. And Joe also mentioned in his opening remarks about our MaxCom room; this is where drilling engineers and our geoscience team with geosteerers are bringing in live feed data from the rigs, and they continue to show that in our known targets we see continuous improvement in cycle times and our ability to drill wells faster.

And that is in, again, the known targets, but then also some of the exploration efforts. Our one Woodford well was a single-well test and we did a lot of geoscience work on that well. It was a longer well and so I think that there are plenty of improvements that we can make as we drill more and more of those Woodford wells.

Tom Olsen (Executive Vice President, Reservoir Engineering)

Hey, Arun, it’s Tom Olsen, our EVP for Reservoir Engineering. I would just tack on that back in August we mentioned some of our really big improvements in our productivity, capital efficiency. We mentioned that our 12-month cumulative oil production will be 20 to 30% higher than it’s been in previous years. A lot of that’s driven by the really high-value targets on the BLM acreage and on the Paloma properties. But I would also mention that we mentioned the over 800,000-barrel oil EUR on our first Woodford well and we stand by that.

We expect it to do even better than that. It has trended even stronger. So I think we are seeing a lot of great improvements on our EUR per foot and our six-month cumulative production metrics. But also just kind of to put a number on some of the immediate offset well cost, we achieved $640 per foot on some of the properties just immediately adjacent to some of the new BLM and Paloma properties. So, as Glenn mentioned, on the capital side we’re doing a lot of incredible things and we’re also seeing it on the productivity side as well.

Sarah Gallant (Operator)

Thank you for your— Oh, go ahead, Joe.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Just say, remember that you got to spend some money to make some money. And so the capital, you know, we don’t want to put capital out there it takes us 10 to 20 years to recover. What we’re doing is, in effect, is doing some short-term financing of our own projects. And it’s working out really well. And you can see the difference in Matador today versus 10 years ago. And we were going public and we didn’t have a system then. And each meeting we went to during the public roadshow, we got asked, well, how are you getting your gas out to the market?

We weren’t having trouble, but the fact we were getting that question in every meeting meant others were. We looked into it and we thought we had the pieces to make a midstream team and we did. And to our operating group, they tell you that our life has been a lot simpler since then, having that sort of control over the future and being ready. And it’s helped us offload and build relations with other midstream companies. And that’s the way we look at it. It’s just something, if you want to be one of the most efficient companies, you’re going to need your own midstream system or have built a real close relationship with somebody who does. So that’s where we’re coming from. And so far it’s been money well spent and helped make us overall more efficient and more productive. So I wouldn’t want to have to do it on every well we drill. But the fact that we can do it helps us negotiate, be better negotiators with other midstream companies.

And we all somewhat work together because we need each other, if systems go down or they need to do service work of some sort. So that’s been one of the unexpected pleasures of having the midstream and having this so-called cotton gin because we’re cotton farmers in this area and we all need that outside help.

Sarah Gallant (Operator)

Thank you. Our next question comes from the line of Scott Hanold with RBC. Scott, your line is open.

Scott Hanold (Analyst at RBC Capital Markets)

Yeah, thanks. Good morning. I was wondering if I could touch base maybe a little bit on some of that new federal acreage. I think you talked about maybe drilling a dozen wells on the new land. I know you’ve got, I think you’ve identified, what, 140-some locations utilizing two-mile laterals. But can you give us a sense of how you think about development of that land over the next, say, one to two years? And, you know, I think you did hint toward, you know, potentially improved efficiency.

I think you all kind of mentioned like that $650 D&C cost on some recent wells in the area. But I’d be interested to know, like, how you think about developing the package sizes, the lateral length, and how do you want to scale that asset up over the next couple of years.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Well, I have one— Scott, I’m going to have— Good question. I’m going to have one of the other guys speak. But remember you were around when we bought the other federal leases back in 2018, and everybody thought we paid too much and did that. But look what that did. We’ve made over $2 billion for the wells that we drilled over there, net profits. And that’s helped make Matador and put Matador in the position where they could be aggressive about bidding on these federal leases.

And we’re really excited and we’re not waiting around years. As I said, we’re out there right now making plans and preparations to drill a number of these federal wells in different areas to prove them up. But it’s déjà vu all over again. And if you remember, Matador’s price got knocked down right after disclosure that we bought those federal leases in 2018. Well, these leases are going to be just as good, if not better, because they’re going to be longer laterals.

You’ve got a midstream system and there’s been a lot of the work done on them. We know these formations and we have experience. So we’re really excited. That all seems to be coming together.

Brian Ehrman (President)

Yeah, thanks, Joe. This is Brian Ehrman, president. Just to add on to what Joe was saying, obviously we’re really excited, as you noted, Scott, about the federal acreage. And I think one of the advantages of getting the track that we targeted, we really hit the ground running on the permitting side. And so we’ve disclosed that we’re submitting permits actively. We have 48 actually submitted to date, and we expect to have a few more submitted by the end of this week.

And so that’s what’s given us confidence in that 12-well number that you mentioned, Scott, and I think we talked a lot and you mentioned it about the efficiencies in this area and expected EUR uplifts—15 to 20% lower on a D&C cost per foot basis compared to the corporate average and 15 to 20% higher on the EURs. So that’s all to say that we’re actively working to get those properties ready and are excited about hitting the ground running, hopefully as early as Q1 of 2027.

But I’ll let Tom talk about the kind of the package sizes and things on the part of your question.

Tom Olsen (Executive Vice President, Reservoir Engineering)

Hey, Scott, it’s Tom Olsen again. Clearly we’re very excited about these new BLM properties. The final details would be a little bit easier to discuss once we get to February. But we’re currently moving very quickly on these new federal properties. Our teams have conducted many of the onsite reviews and we’re drilling immediately adjacent to it. One thing that’s very important to us clearly is, from the midstream perspective, that we want to make sure that we synchronize the timing of our development with the midstream solutions.

The oil takeaway, water takeaway, gas takeaway is something that we put a lot of value in and is key to kind of development of these assets and getting that cost per foot down as low as possible. We do have a wealth of opportunities in 2027, as mentioned with the number of properties on Paloma and also in the Woodford. And so we’re still refining the exact kind of quarterly cadence and timing, but it’s something we’re very proud of. These BLM properties offer nine, 10 zones or more in many cases. And so we’re looking to optimize how we put together the batches of the wells and stack them together. But it’s something that we’ve done a very good job in many of the wells that were key to the drivers of outperformance in our third quarter here.

We’re very, very close to some of these new BLM-owned properties. And so we see a lot of opportunity and a lot of success going forward and we’ll get more into the details in February.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Again, I’d say come see us and you might get an early preview of some of what we’re doing and get a better feel that there’s planning going into this. We’re experienced and we believe we have executed well on our other acquisitions and other buys at these lease sales, and we think this is our best opportunity yet. And we look forward to the next quarter when we visit and report further progress also. And further progress not just on operations, but also on the debt side, which I know concerns a lot, but we’re moving in the right directions.

Go ahead, Anton.

Anton

Joe, I wanted to add the cooperation with these larger batches that Tom talked about, the great efficiency from these large batches. We work with San Mateo hand in hand, and San Mateo is enabled to provide the takeaway on that. And so the seamlessness of our planning with our drill bit — San Mateo knows where the drill bit is. San Mateo can get ahead of that with plants, compression, takeaway. So that works great having them in the building. San Mateo has been providing great takeaway for us and redundancy with work with the other midstreams where San Mateo is connected to those guys.

If San Mateo has an issue, we can offload to other midstreams. So it’s provided a lot of surety of flow. San Mateo and the Delaware acreage with the large batches, I think, works well having San Mateo there for takeaways. Y’all have done a real good job of being there with the pipe when the well is completed and ready to go. It’s not easy, but to keep up with our drill bit, we’re working hard on that.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Well, y’all have done a real good job.

Sarah Gallant (Operator)

Thank you for your question, Scott. Our next question will come from the line of Derek Whitfield with Texas Capital. Derek, your line is open.

Derek Whitfield (Analyst at Texas Capital)

Thank you. Good morning and congrats on the quarter and all the positive updates.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Thanks, Derek.

Derek Whitfield (Analyst at Texas Capital)

Wanted to focus on the Woodford with my question. It’s clear through your updates that you guys are excited about the interval and what you’ve acquired. With the benefit of another quarter of data and industry results, could you offer some perspective on what you’re seeing in the data, how large the oil-focused runway could be for you, and where do you think you could drive cost over time?

Joe Foran (Founder, Chairman and Chief Executive Officer)

Well, I think I’d like to be able to give that to you now, but let’s have a few more wells and we can provide you that data, or it’ll be in the public records. But we’re excited. You know, the one data point that we have is that Woodford well that we drilled made over 100,000 barrels in 100 days. So at least on one data point, it looks pretty good. But we have a lot of other wells that we’re drilling that we think are going to render also really good results.

Lynn, I think, what, 110, 112 wells you expect to drill this year?

Lynn

Yes, net. That’s exactly right.

Glenn Stetson (Chief Operating Officer)

And so, yeah, just as Joe said. Derek, this is Glenn Stetson again. I mentioned it before, but we have the one well, but very confident in our team’s ability to get out here. And as we drill more Woodford wells, we learned a lot drilling that first well and we’re going to take those learnings and apply them to the next wells, along with some of these, again, efficiencies that we’ve talked about. Looking at drilling longer laterals, looking at drilling multiple wells at the same time to achieve some of those batch savings.

And so, again, very confident in our team’s ability to come out here, and as we repeat drilling Woodford wells, we’ll absolutely be able to capture those efficiencies and reduce our costs on a go-forward basis.

Joe Foran (Founder, Chairman and Chief Executive Officer)

And Derek, not to be a broken record, but we again invite you to come out, have lunch, breakfast, see the CR war room, see our Maxcom room and meet the people behind us and ask them your questions, and hopefully you’ll feel comfortable with their answers because we think we have a great opportunity, but it still takes great execution and we’re working on that. And Glenn’s been real good about getting better each time he drills a well into a different formation.

And we’re glad that Anton is looking for the wells to come on because he’s got places to go with the product, the oil, the gas and the like. So great question and look forward to further updates. But if you want to come out here, we’d love to see you.

Sarah Gallant (Operator)

Thank you, Derek. Our last question for today’s call is from the line of Noah Hungness with Wells Fargo. Noah, your line is open.

Noah Hungness (Analyst at Wells Fargo)

Morning. For my question, I was hoping to kind of go back to the Woodford, and not necessarily the Woodford bench, but more when you guys went and looked and did this deal, you acquired a bunch of locations for very cheap. And it seems like the first well is very strong, and I understand it’s only one well, but with the success that you have had with this well and the entry price that you got it for, does this at all kind of change how you guys think about M&A and maybe thinking about acquiring acreage in other developing or less proven parts of the Delaware where you guys can really leverage your geologic expertise?

Joe Foran (Founder, Chairman and Chief Executive Officer)

Yeah, you know, that’s a fair question. And we don’t want to — I mean, take like a football team, they want to advance the ball by running, they want to advance the ball by passing. They want to gain yards however they can. And we do, too. We don’t want to be saying we’re only going to drill wells or we’re only going to do acquisitions. We just take what the environment gives us. And other companies — we’re not trying to grow simply one way, but always we like the diversified approach that we have where we drill wells, that we put together — you know, we have the midstream and we have this brick-by-brick strategy of buying smaller amounts, but in good areas, and trying to build a position from being there as well. So whatever helps contribute to building a good company is what we try to do, and that’s the challenge for everybody in the room, is help find additional ways to be more efficient and to go with the times.

You’ve been the head of that project, Brian. So tell us what you think.

Brian Ehrman (President)

No, I agree with what — this is Brian Ehrman again — agree with what Joe’s saying. I mean, exploration has always been a part of our program. We’ve always had some portion of our program that was devoted to that, and I expect that will continue. I think the Woodford is a great success story of that. I commend our technical team for identifying this play and being at the forefront of it. We were the first — we drilled the first successful Woodford horizontal well in New Mexico.

Obviously there were some in Texas, but I commend our team for being at the tip of the spear on identifying this and our land team for putting together this position that you talked about as we were drilling this well, putting together a really sizable position at an attractive cost that’s going to generate what we think are going to be really attractive full-cycle returns. So I think this was a total team effort from all of our groups. But it’ll be something that, from an exploration standpoint, it’s something that we’re always looking at going forward.

Andrew Parker (Executive Vice President of Geosciences)

Hey, this is Andrew Parker. I’m the EVP of Geoscience. I just want to add to Brian’s answer. We were in a unique position for pushing this Woodford play north into New Mexico because of the data that management has supported us acquiring here. The team really leveraged our 3D seismic data in a way that honed us in on this fairway in a way that other operators weren’t comfortable doing. So really proud of the team there. And also, that data leverage is also what allowed us to execute so well on our first well, and we’re going to continue to refine that process and do better and better going forward.

Sarah Gallant (Operator)

Thank you, Noah. This ends the Q and A portion of today’s conference call. I’d now like to turn the call over to management for any final remarks.

Joe Foran (Founder, Chairman and Chief Executive Officer)

Well, thank you very much. I’d just like to thank everybody on the call. I thought all the questions were very good. We enjoyed the discussion. We think we always learn from having these discussions and it makes us think about our own plan and how we might improve it. Andrew, I appreciate you stepping in and saying this wasn’t a kind of throw the dart at the board and see what we might do next, but this is something that you all worked on and taking your time and you got it right.

And it’s the same way — a lot of the federal leases, we paid a lot of money for it. I would have liked to have paid less, but that’s what it took to get the leases. We’ve got the locations. Our federal team has done a great job of getting permits and so that we’re ready to go and it’s not sitting on the shelf. But all of these are under active plans to see how fast we can drill them. But first we want to make sure the geological work has been done to support the effort.

There’s been — hopefully you can, as you listen, that there’s been great teamwork and coordination between our professional staff and our operating, and we think we’ve made a lot of progress this year and this is going to turn out to be one of our better years. But we’re also very excited about what may happen for next year. So we’re ready to buy properties, we’re ready to farm out properties, we’re ready to do joint ventures with people, we’re ready to help with their midstream business.

We’re just here like anybody else that we want to build relationships and yet increase revenues and lower the cost. And I think that we’re making progress on all those grounds and that’s reflected in the reduction of CapEx. We’re drilling these wells at 15% or less per foot than we were doing, plus we’re out there actively chasing minerals and leases. And again, very, very pleased with Glenn drilling these wells faster, two or three days faster. So you make money all the different ways and want to thank all of you.

I thought the questions were really good. We’d like to continue the conversations and know that everybody here is working extra and in the last, say, 2/4 there’s been a little bit of extra effort put on by everybody, and hopefully the results for this quarter reflect that increased effort and efficiency. Really proud of the team and their work, and Anton has brought a lot of expertise for us on the gas marketing bit and on the midstream, and I think you’ll see further progress in that area.

Very proud of our geological team for identifying the Woodford and the different zones that we think will be prospective in the federal lease area — we’re going to be talking about in, you know, in some in 2027 what we’re getting, and the increase in reserves is very significant that we’ve had over this past year. So I look forward to when the reserve engineers from Netherland, Sewell come in and weigh and see how much they’ve grown from the past.

Don’t have to take our word for it. You look on the end-of-year financial reports and see the growth for yourself. So it’s a good direction. And you know that we started this business, remember, in 1983 out of a windowless office and with 270,000. And now I think the value of our reserves is approaching 10 billion, 10 billion or more. So long consistency of 40 years. But it’s a great team we have now and I’m really enjoying working with these young fellows.

Sarah Gallant (Operator)

We appreciate your participation in today’s call. This concludes our program and you may now disconnect. Thank you.

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