Matador Resources sells oil and natural gas and operates pipelines and processing plants that also serve other producers. Higher oil prices strengthened its second-quarter 2026 earnings, but first-half investment spending of $2.06 billion exceeded operating cash flow of $1.41 billion. Borrowing filled the gap, and acquisitions completed after June added both future production opportunities and nearer-term funding demands.
Analysis period: April–June 2026, with January–June comparisons. Research cutoff: October 18, 2026, New York time. Material acquisition updates are verified through October 8; later operating results are not assumed.
Source: Matador’s second-quarter 2026 Form 10-Q, statements of operations and cash flows, pp. 4 and 7, and Note 13, pp. 23–24. Subsequent acquisition sources appear in Section 4.
1. Higher oil prices drove the profit rebound more than production growth
The second-quarter improvement was substantial, but it did not erase the first half’s decline in reported profit. Profit attributable to Matador shareholders rose 160.0% in the quarter, while the six-month result remained 9.1% below the previous year.
| Reported consolidated results, US$ million except percentages and per-share amounts | Second quarter 2025 | Second quarter 2026 | First half 2025 | First half 2026 |
|---|---|---|---|---|
| Revenue, including derivative gains and losses | 895.3 | 1,186.4 | 1,909.3 | 1,858.0 |
| Operating profit | 288.7 | 577.3 | 677.8 | 624.1 |
| Operating margin, calculated | 32.2% | 48.7% | 35.5% | 33.6% |
| Consolidated net income | 182.4 | 413.7 | 444.6 | 397.8 |
| Net income attributable to Matador shareholders | 150.2 | 390.7 | 390.3 | 354.8 |
| Diluted earnings per share, US$ | 1.21 | 3.15 | 3.12 | 2.86 |
Source: 2026 Form 10-Q, p. 4. Operating margin is the share of reported revenue left after operating costs, before interest and income taxes; it is calculated as operating profit divided by revenue. Consolidated net income includes earnings belonging to outside owners of subsidiaries; the next row removes their share.
Matador produced 126,106 barrels of oil a day, up from 122,875 a year earlier. That 2.6% increase helped, but the much larger change was in price: oil sold for an average of $98.16 a barrel before hedging, compared with $64.34. Oil revenue consequently increased by $407.0 million. All of the quarter’s oil production came from the Delaware Basin in southeastern New Mexico and West Texas.
Hedging reduced the benefit of those higher prices. These contracts exchange some exposure to market prices for more predictable receipts. Matador recorded $171.8 million of realized oil-derivative losses in the quarter, reducing its oil price after those settlements to $83.19 a barrel. Natural-gas hedges provided $99.3 million of gains, leaving a combined realized derivative loss of $72.5 million.
A separate accounting movement enlarged the reported rebound. Changes in the estimated value of unsettled hedges added $85.5 million to second-quarter income, compared with a $37.3 million loss a year earlier. That $122.8 million improvement did not represent cash collected from customers.
Across the entire first half, the same valuation category instead produced a $170.0 million loss, helping explain why the quarterly and cumulative earnings trends differed. At June 30, open derivatives were a net liability of $136.0 million, compared with a $34.1 million asset in December. Their eventual settlement cost depends on prices and contract terms.
Source: 2026 Form 10-Q, Note 8, pp. 15–17, and MD&A, pp. 27–33. Realized settlements and changes in unsettled contract values are separate items.
Management’s adjusted second-quarter net income increased 70.0% to $324.6 million. Its calculation removes unsettled hedge valuations and selected other items and uses a 21% tax rate. It retains realized hedge results and the unusual gas-purchasing benefit discussed below. The calculation notes give the full comparison.
Source: Matador’s August 5, 2026 results release, “Adjusted Net Income and Adjusted Earnings Per Diluted Common Share.”
Costs provide a more restrained picture of operating progress. The cost of running producing wells fell slightly per unit, to $5.45 per barrel of oil equivalent from $5.53. This unit combines oil and gas by energy content, not by selling price. Meanwhile, higher oil revenue increased production-related taxes, and more pipeline connections and processing activity raised midstream operating costs. General and administrative expense rose to $41.3 million from $32.2 million, partly because of additional employees, compensation, insurance and acquisition work.
These increases matter because the quarter’s margin expansion largely reflects favorable oil prices, hedge accounting and gas-purchasing economics. It was not a broad reduction in every cost of producing and delivering energy.
Source: 2026 Form 10-Q, MD&A expense discussion, pp. 30–31.
2. Better gas transportation addresses a real operating weakness
Matador’s own gas had a negative average selling price before hedges, while its gas-purchasing business benefited. The company’s average gas price before hedges fell from $2.05 per thousand cubic feet to negative $0.79. Its reported natural-gas revenue was therefore negative $38.8 million, despite higher production. Those figures include revenue from natural-gas liquids, which Matador reports together with gas.
The reason is regional. Oil wells also produce gas, and that gas must be gathered, processed and transported. When too much gas reaches the Waha trading hub and pipelines cannot carry it away, sellers can have to pay someone to take it. The Dallas Federal Reserve’s August 2026 analysis described that combination of rising associated gas supply and constrained pipeline capacity. Matador’s filing recorded a first-half Waha discount to Henry Hub averaging $6.03 per million British thermal units, a measure of gas energy.
Sources: 2026 Form 10-Q, Note 2, p. 9, and MD&A, pp. 28 and 41–42; Dallas Fed, Energy Indicators, August 20, 2026, “Crude and natural gas prices diverge.”
Matador also buys other producers’ gas for resale or processing. In this business, negative purchase prices can be helpful: suppliers effectively pay the buyer to take gas. Second-quarter purchased-gas expense was negative $38.9 million, while resale revenue was $41.2 million. Subtracting purchase cost from resale revenue gives $80.2 million, compared with $32.0 million a year earlier. This is a calculated spread before processing, transportation, depreciation and other costs, not the profit of the whole midstream business.
That distinction is decisive. Midstream segment operating profit actually fell to $71.3 million from $81.8 million. Higher pipeline and plant operating expenses and depreciation weighed on the segment. Its $146.3 million of service revenue included $101.7 million charged within the Matador group; those internal charges disappear from consolidated revenue. The group cannot create additional external sales merely by paying its own processing subsidiary.
Source: 2026 Form 10-Q, p. 4, Note 12, pp. 21–22, and MD&A, pp. 29–31. The purchased-gas calculation uses consolidated revenue and expense and should not be equated with stand-alone midstream segment profit.
Management’s response is to secure access to buyers beyond Waha. Matador reserved transportation for 500,000 million British thermal units of gas a day on Energy Transfer’s Hugh Brinson pipeline. In June it also signed gas-supply and natural-gas-liquids agreements with Energy Transfer affiliates, intended to improve the price left after delivery costs and bridge the period before its pipeline transportation arrangement became effective.
Energy Transfer independently reported on August 4 that Hugh Brinson was in commercial service, with full initial capacity of 1.5 billion cubic feet a day expected by September 1. That confirms progress on the route. It does not establish that all of Matador’s reserved capacity was used or that the expected September milestone was subsequently achieved.
Sources: Matador’s natural-gas marketing update, June 4, 2026; Energy Transfer’s second-quarter release, August 4, 2026, p. 1, “Strategic Highlights”; 2026 Form 10-Q, p. 42.
The business opportunity is large enough to matter without assuming a specific future gas price. At full use of the reserved daily capacity for a year, each additional $0.50 per million British thermal units would produce about $91.3 million of gross receipts. This is an illustrative calculation before delivery fees, hedges and ownership differences. Better market access should help Matador sell its own gas, although a recovery in Waha prices could reduce the exceptional benefit from buying other producers’ gas cheaply.
Access to buyers also matters because sales are concentrated. In 2025, Plains Marketing, Exxon Mobil and Enterprise Products Partners bought 72% of Matador’s oil, gas and liquids revenue, down from 79% in 2024. Matador believes replacement buyers are available. Its practical competitive strength is therefore the ability to develop wells efficiently and reach multiple outlets, rather than control commodity prices.
Source: Matador’s 2025 Form 10-K, “Marketing and Customers,” pp. 21–22, and Note 2, “Accounts Receivable,” pp. F-9–F-10. The transportation sensitivity is calculated from the capacity disclosed in the 2026 Form 10-Q, p. 42.
3. Operations funded development, but acquisitions required outside money
Cash generation covered the ongoing drilling and infrastructure program, but acquisition payments more than consumed the remainder. First-half operating cash flow increased 14.5%. Cash spending on drilling was almost unchanged, while midstream construction spending declined sharply. This left more cash before acquisitions, dividends and other financing uses.
| Consolidated cash allocation, US$ million | First half 2025 | First half 2026 |
|---|---|---|
| Cash generated by operations | 1,228.9 | 1,407.7 |
| Drilling, completion and equipment cash spending | 745.5 | 745.3 |
| Midstream construction and other equipment cash spending | 161.6 | 40.8 |
| Cash remaining after those expenditures, calculated | 321.8 | 621.5 |
| Property acquisitions and acquisition deposits | 125.1 | 1,272.6 |
| Asset and investment sale proceeds | 25.5 | 0.9 |
| Cash remaining after all investing activities, calculated | 222.2 | -650.2 |
| Cash dividends paid | 78.2 | 93.3 |
| Cash paid for share repurchases | 44.2 | 12.1 |
| Distributions paid to outside owners of subsidiaries | 62.2 | 59.3 |
Source: 2026 Form 10-Q, cash-flow statement, p. 7, and MD&A, pp. 36–37. Spending rows are positive uses of cash. “Cash remaining after those expenditures” is this report’s non-GAAP free-cash-flow calculation, using all consolidated cash drilling, midstream and other property/equipment spending. It excludes acquisitions and includes 100% of consolidated San Mateo cash flows. It is not Matador’s differently defined adjusted free cash flow.
Part of the cash improvement came from the timing of collections and payments. Customer and partner receivables, prepayments and related current assets used $148.6 million of cash. In everyday terms, cash was tied up in bills awaiting payment and amounts paid ahead. In the other direction, operating payables and related liabilities supplied $174.3 million, and royalties awaiting payment supplied another $48.7 million. Together with other changes, these timing items added $80.9 million to operating cash, compared with $53.8 million a year earlier.
The profit-to-cash bridge also adds back expenses that did not require current cash payments, notably depreciation and depletion, unsettled hedge losses and deferred taxes. Depletion spreads the cost of oil and gas properties over production. Adding it back explains cash flow; it does not remove the need to keep investing in future wells.
Tax timing supplied additional breathing room. Matador received net tax refunds of $26.8 million in the first half, compared with payments of $50.5 million a year earlier. The filing links its much smaller current tax provision to the 2025 tax legislation. That law allows faster deductions for qualifying investment, while accounting expense can arise over a longer period. Most of the first-half income-tax provision was therefore deferred. The refunds are already reflected in operating cash flow and are not an additional amount to add to it.
Sources: 2026 Form 10-Q, pp. 7 and 36 and Note 6, pp. 13–14; 2025 Form 10-K, Note 8, “Income Taxes,” pp. F-25–F-29. The full cash bridge appears in the calculation notes.
The funding outcome is clear. Operating cash less net investing outflows left a $650.2 million deficit before dividends and other financing movements. Net financing inflows of $661.7 million covered that deficit and increased cash plus restricted cash by $11.4 million. Stronger operations supported expansion, but borrowing remained essential to its scale.
Source: 2026 Form 10-Q, p. 7.
4. The acquisitions buy future drilling opportunities as well as current output
Much of the capital is being committed before the new acreage produces its full benefit. Management’s purpose is to extend the drilling program, assemble neighboring acreage and connect more production to its infrastructure. Whether this improves the business depends on the cost and output of the wells subsequently drilled, not simply the number of acres purchased.
The largest first-half transaction was the May purchase of 5,154 net undeveloped acres in a federal lease sale for $1.160 billion. The accounting allocation put $912.1 million into unproved and unevaluated properties and $248.1 million into evaluated properties. Evaluated acreage can include proved locations that still need wells; it should not be read as entirely producing acreage.
| Consolidated balance-sheet measures, US$ million | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Net property and equipment | 10,731.3 | 12,263.3 |
| Unproved and unevaluated oil and gas properties, before depletion | 1,823.5 | 2,703.2 |
| Customer, partner and other receivables | 529.8 | 671.1 |
| Accounts payable and accrued liabilities | 540.6 | 836.8 |
| Deferred income-tax liability | 1,015.9 | 1,124.9 |
| Total assets | 11,710.6 | 13,494.6 |
Source: 2026 Form 10-Q, balance sheet, p. 3, and Note 3, p. 10. Unproved properties are included within property and equipment, not added to it.
The $1.53 billion rise in net property and equipment reflects a larger amount invested in wells, land and infrastructure after deducting depletion and depreciation. Matador uses full-cost accounting, which accumulates qualifying oil-and-gas costs in a pool. First-half capitalized overhead of $40.3 million and capitalized interest of $11.6 million also entered assets rather than immediately reducing profit. No ceiling-test impairment was recorded. The test compares the asset pool with an estimate of future recoverable value using prescribed historical commodity prices, so it does not establish the profitability of every new drilling location.
Bills rose alongside the asset base. Oil-and-gas receivables increased $122.1 million, and joint-operation billings to partners increased $45.3 million. On the payment side, accrued oil-and-gas property costs and midstream construction costs together increased $135.5 million. Those are investment bills still to be paid. Equipment inventory rose more modestly, from $43.8 million to $50.2 million; it consists of supplies for future well or midstream use, rather than unsold oil accumulating in storage.
Sources: 2026 Form 10-Q, pp. 3 and 9 and Note 11, p. 20; 2025 Form 10-K, Note 2, “Lease and Well Equipment Inventory” and “Property and Equipment.”
The next major land purchase is now completed. Paloma closed on October 1 for approximately $1.255 billion in cash, subject to post-closing adjustments, versus the $1.275 billion initial agreement. It brought about 16,500 net acres, mostly undeveloped, and more than 156 net drilling locations counted on the basis of two-mile horizontal wells. Matador plans to begin drilling up to 25 wells associated with that acreage by the end of 2027. Management also reported that acquired production since June 1 had exceeded its acquisition assumptions by about 10%. That is encouraging early operating evidence, while the larger undeveloped portion still requires spending.
Sources: October 5, 2026 Form 8-K, Item 2.01; Paloma closing announcement, October 1, 2026, acquisition highlights and management comments.
Ridge Runner closed by the October 8 announcement. Together with earlier purchases, it establishes roughly 50,000 net Woodford acres. Management reported more than 100,000 barrels of oil from its Rae’s Creek well over its first 100 producing days. It plans a second Woodford well in the fourth quarter and up to 15 wells by the end of 2027. Longer horizontal wells and drilling several wells together underpin its targeted 30%–40% cost reduction. One well provides useful evidence, but the planned wider drilling program must establish how repeatable those results are.
Source: Ridge Runner closing and operating update, October 8, 2026, acquisition highlights and Woodford development plans. The release does not separately disclose Ridge Runner’s purchase price; the average cost of the combined Woodford acreage is not used as that transaction’s price.
San Mateo’s July 31 Cardinal purchase adds a different kind of asset: operating infrastructure and customer relationships. The $752 million transaction adds a processing complex designed for 320 million cubic feet a day and approximately 145 miles of gathering pipelines. Nine customers were new to San Mateo. Connections between plants should provide more options when equipment is unavailable and support sales to outside producers. But extra capacity must attract enough gas to cover operating and financing costs; the existing midstream profit decline shows why capacity alone is not the outcome to judge.
Sources: 2026 Form 10-Q, Note 13, p. 24; Cardinal acquisition announcement, June 29, 2026, “Cardinal Acquisition Highlights.”
Development spending is increasing as well as acquisition spending. In August, Matador raised its 2026 drilling and equipment budget to $1.48–$1.56 billion and its share of midstream spending to $145–$165 million. Those budgets exclude acquisition purchase prices. The total midpoint rose 11.7%, to $1.675 billion. Its production-guidance midpoint rose 3.6%, from 213,250 to 221,000 barrels of oil equivalent a day, including expected acquired production. The higher budget pays for additional activity and integration work, while some production benefits arrive later. That makes the coming wells’ costs and output more important than the acreage total alone.
Sources: 2026 Form 10-Q, pp. 27 and 35–36; August 5 results release, “Full-Year 2026 Guidance Update.”
5. Available bank credit helps, but Cardinal brings a 2027 repayment deadline
The main funding pressure has shifted from financing routine development to financing and integrating acquisitions. At June 30, consolidated debt principal was $4.250 billion, up $819 million since December. This excludes lease obligations and the separate sale-leaseback financing arrangement. Most of the increase came from additional borrowing on reusable bank credit lines and issuing more bond principal than Matador retired.
| Financing obligation, US$ million | Principal at June 30, 2026 | Contractual maturity |
|---|---|---|
| Matador reserves-based revolving credit facility | 939.0 | March 22, 2029 |
| San Mateo revolving credit facility | 911.0 | November 26, 2029 |
| Matador 6.50% senior notes | 900.0 | 2032 |
| Matador 6.25% senior notes | 750.0 | 2033 |
| Matador 6.00% senior notes | 750.0 | April 15, 2034 |
| Total June debt principal | 4,250.0 | Various |
Source: 2026 Form 10-Q, Note 5, pp. 11–13. The balance sheet records $4,216.4 million after deducting $33.6 million of borrowing fees and discounts being recognized over the debt’s life. The table excludes the subsequent Cardinal term loan.
The March refinancing removed $500 million of 2028 notes and issued $750 million of 2034 notes. It extended maturity and lowered the coupon on the refinanced portion, while adding $250 million of principal. The transaction caused a $15.6 million pretax extinguishment loss, comprising a $9.7 million cash premium and $5.9 million of previously deferred issuance costs written off. It was therefore both a maturity extension and a source of additional funding.
The June schedule concentrates $1.85 billion of revolver principal in 2029. The three outstanding bond issues require $150.4 million of annual coupon interest in total. Separately, the filing estimated about $108.0 million of annual interest on the two June revolver balances if balances and rates stayed unchanged. First-half reported interest expense already rose to $112.3 million from $102.8 million as average borrowings increased. Subsequent acquisition borrowing adds to the financing burden beyond that June snapshot.
Source: 2026 Form 10-Q, Note 5, pp. 11–13, and “Obligations and Commitments,” p. 40. Bond coupons are calculated from principal and contractual rates; the revolver interest estimates are the company’s disclosed figures.
Matador had only $26.3 million of unrestricted cash at June 30. Another $64.6 million was restricted, primarily within San Mateo and other partly owned subsidiaries, for their own operations and capital spending. The more important liquidity source was unused bank credit: $1.757 billion under Matador’s facility and $173.6 million under San Mateo’s, after letters of credit. These are separate facilities, and San Mateo’s borrowing is not guaranteed by Matador or its other subsidiaries.
The facilities have conditions. Matador must keep debt net of eligible unrestricted cash (with the cash deduction capped at $275 million, the greater of $150 million and 10% of $2.75 billion) within 3.5 times a lender-defined earnings measure, which adds back interest, taxes and specified noncash costs. It must also meet a test of short-term resources that includes unused credit availability. San Mateo has separate debt and interest-coverage tests, and restrictions can block distributions if its leverage rises or liquidity falls too far. Both reported compliance at June 30. The balance sheet shows only $0.65 of current assets for each dollar of current liabilities, but that simple comparison omits the available credit counted in the lending test. Matador’s borrowing base is also reassessed against reserve values twice a year, making available credit sensitive to commodity prices and reserve estimates.
Sources: 2026 Form 10-Q, Note 5, pp. 11–12, and liquidity table, p. 34; 2025 Form 10-K, Note 2, “Restricted Cash.”
Cardinal introduces the nearer deadline: San Mateo borrowed $650 million under a new term loan due July 30, 2027. Matador and Five Point also contributed $51 million and $49 million, respectively. Matador’s contribution moves cash within the consolidated group; Five Point’s contribution is outside funding. San Mateo must repay or refinance the term loan, and its separate legal structure does not remove the loan from Matador’s consolidated accounts.
In October, management expected approximately $350–$400 million of Matador revolver repayment following the fourth-quarter closings, depending on commodity prices. That is a planned reduction after financing acquisitions, not a disclosed October debt balance, and it is not a commitment to repay San Mateo’s separate term loan. The operating test is whether acquired cash flow and better gas pricing can support that plan while development continues.
Sources: 2026 Form 10-Q, Note 13, p. 24; Paloma closing announcement, October 1, final management paragraph; October 8 update, debt-repayment outlook.
Contractual operating commitments also limit flexibility. Matador disclosed $2.369 billion of third-party transportation, processing and disposal commitments, including $242.4 million in the following year. These agreements secure access to essential services, but minimum-volume terms can require payments when production falls short. The $2.369 billion is not current bank debt or an amount already due for deficient volumes. A separate $646.2 million of commitments to consolidated San Mateo must not be added as though it were another external creditor obligation.
Office lease payments total $103.2 million, with $5.8 million due within a year, and drilling-rig commitments add $25.1 million within a year. The latest full lease note, dated December 31, 2025, recorded $144.3 million of operating lease liabilities and $2.3 million of finance lease liabilities. These measures overlap with some contractual payments and should not be summed. First-half sale-leaseback financing supplied another $24.0 million of cash, with $0.3 million repaid.
Environmental obligations remain relevant to an infrastructure-heavy business. The filing estimated a settlement above $0.3 million and below $1.0 million for alleged excess air emissions at San Mateo’s Black River plant. Separately, recorded obligations to retire wells and facilities totaled $159.1 million. The immediate disclosed legal exposure is modest beside the acquisitions, while reliable operation, permits and eventual site closure remain real costs of expansion.
Sources: 2026 Form 10-Q, p. 7, Notes 4 and 10, pp. 10 and 19, contractual obligations, p. 40, and Legal Proceedings, p. 45; 2025 Form 10-K, Note 4, pp. F-16–F-18.
6. Retained profit strengthened equity, while buybacks had little effect on earnings per share
The earnings rebound came overwhelmingly from profit, not a smaller share count. Second-quarter diluted average shares fell only 0.24%, to 124.156 million. Holding profit constant, that reduction added less than one cent to quarterly earnings per share. It explains very little of the rise from $1.21 to $3.15.
Matador paid $93.3 million of first-half dividends and $12.1 million in cash for repurchases. Repurchase cash was much lower than the previous year’s $44.2 million, even as dividends increased. This left more cash within the business relative to repeating the previous buyback pace, although acquisition spending was much larger than either distribution.
Issued shares increased by 101,692 during the half, while shares held by the company itself, called treasury shares, increased by 365,716. As a result, outstanding shares fell by 264,024. Treasury shares include market repurchases and shares retained through employee award settlements; they were not reported as retired. The cash-allocation table uses the cash-flow statement’s reported repurchase payment. The equity reconciliation follows the separate amounts in the equity statement.
Source: 2026 Form 10-Q, pp. 3–7, Note 7, pp. 14–15, and repurchase disclosures, p. 46.
Matador shareholders’ equity rose by $270.5 million to $5.929 billion. Retained profit after dividends supplied most of the increase. Equity-settled compensation, including capitalized amounts, added $16.4 million, while performance incentives from Five Point added $11.9 million after tax. The latter were recorded directly in owners’ capital, called paid-in capital, and as financing cash receipts rather than operating revenue. Total consolidated equity also includes $322.3 million belonging to outside subsidiary owners.
Some employee awards require cash instead of new shares. Their values are remeasured, which can increase compensation expense and future payments even when the share count falls. Retained profit strengthened the capital supporting the expanded business, while these awards remain another claim on its future cash.
Source: 2026 Form 10-Q, equity statement, p. 5, Note 7, pp. 14–15, and compensation discussion, pp. 31 and 34.
7. The business test is turning the expanded asset base into debt repayment
Matador has a credible operating reason for expanding, but the financing timetable is ahead of much of the development payoff. Neighboring acreage can support longer wells and coordinated drilling. More processing connections and transportation outlets can help keep production moving and improve gas receipts. The completed transactions make these practical operating opportunities, and Paloma’s early production and the first Woodford well provide initial supporting evidence.
The strongest counterweight is the funding sequence. Land and infrastructure have been paid for before much of their development benefit arrives. Second-quarter profit depended heavily on commodity prices, and neither higher customer billings nor a favorable hedge revaluation automatically supplies cash for the next acquisition. Cardinal’s July 2027 loan maturity adds a concrete deadline.
The overall business assessment is therefore positive on the expanded operating options and more demanding on cash execution. Evidence of repeatable new-well performance, better gas receipts after transportation costs, and actual debt reduction while funding development would strengthen it. Lower oil receipts, disappointing acquired-well performance or refinancing that leaves San Mateo with a costly near-term burden would weaken it. The next meaningful result is cash generated from the larger system after its operating and development needs are paid.
Sources: 2026 Form 10-Q, Notes 5 and 13 and MD&A, pp. 35–42; October 1 Paloma update; October 8 Woodford update. The assessment connects the disclosed operating plans and financing obligations.
Reporting basis:
Matador Resources Company, CIK 0001520006; Form 10-Q for the quarter ended June 30, 2026; filed August 7, 2026; accession 0001520006-26-000041. The fiscal year ends December 31. The supplied complete filing text is the principal source. Financial statements are unaudited consolidated US GAAP accounts, compared with the same 2025 quarter or six-month period as labelled. Balance-sheet comparisons use December 31, 2025. San Mateo is consolidated in full, with the outside owners’ share separately identified; Matador owns 51%. Internal transactions are eliminated.
The research cutoff is October 18, 2026. Company transaction evidence extends through October 8, and the industry and pipeline evidence used is dated August 20 and August 4, respectively. June debt and cash are not presented as October balances. No later quarterly financial results are incorporated. SEC company facts were checked using the selected accession, US-dollar units and actual period start/end dates; parent-attributable net income was distinguished from consolidated net income. Figures are rounded for presentation, with calculations performed on the filing’s amounts in thousands of dollars.
Sources: SEC filing index; SEC company financial facts; 2026 Form 10-Q, cover and Note 2.
Calculation notes:
A. Removing specified earnings items. This is management’s after-tax measure attributable to Matador shareholders. Tax is reversed first, then recalculated on adjusted pretax profit.
| Earnings bridge, US$ million | Second quarter 2025 | Second quarter 2026 |
|---|---|---|
| Reported net income attributable to Matador | 150.225 | 390.652 |
| Add recorded income-tax provision | 56.462 | 106.837 |
| Remove unrealized hedge gain / add unrealized hedge loss | 37.313 | -85.457 |
| Other net adjustment | -2.300 | -1.089 |
| Subtract management’s adjusted tax expense | -50.757 | -86.298 |
| Adjusted net income, non-GAAP | 190.943 | 324.645 |
The other adjustment is management’s net “other non-recurring income” category. The rows reconcile exactly.
Source: August 5 results release, adjusted-net-income reconciliation and tax footnote.
B. Following profit into cash. The following bridge starts with consolidated profit, including the outside owners’ share, because operating cash flow has that same scope.
| Profit-to-operating-cash bridge, US$ million | First half 2025 | First half 2026 |
|---|---|---|
| Consolidated net income | 444.606 | 397.834 |
| Depreciation, depletion and amortization | 584.493 | 607.848 |
| Unrealized derivative losses | 32.242 | 170.017 |
| Deferred income-tax expense | 93.313 | 105.927 |
| Other reconciliation adjustments | 20.407 | 45.193 |
| Collection, prepayment and payment-timing changes | 53.845 | 80.855 |
| Operating cash flow | 1,228.906 | 1,407.674 |
Other adjustments comprise retirement-obligation accretion, equity compensation expensed, debt-cost amortization, the debt-extinguishment loss where applicable, and other noncash changes. These are the cash-flow statement’s categories; the extinguishment loss includes a cash premium whose payment is classified in financing activities.
For first-half 2026, cash capital spending is $745.343 million for drilling and equipment + $38.697 million for midstream construction + $2.088 million for other equipment = $786.128 million. Operating cash of $1,407.674 million less that spending leaves $621.546 million. Acquisition cash and deposits total $1,272.638 million. Adding asset-sale receipts of $0.858 million produces the $650.234 million deficit after investing. No maintenance-versus-growth split is inferred from depreciation.
The cash balance reconciles as $79.477 million opening cash and restricted cash + $1,407.674 million operating inflow − $2,057.908 million investing outflow + $661.672 million financing inflow = $90.915 million closing cash and restricted cash. Closing cash comprises $26.318 million unrestricted and $64.597 million restricted.
Source: 2026 Form 10-Q, p. 7 and Note 11, p. 20.
C. Checking equity and the balance sheet. The following table follows the amounts belonging to Matador shareholders. Positive entries add equity; negative entries reduce it.
| Equity reconciliation, US$ million | First half 2026 |
|---|---|
| Opening equity attributable to Matador | 5,658.141 |
| Net income attributable to Matador | 354.780 |
| Dividends declared | -93.258 |
| Equity compensation, including capitalized amounts | 16.446 |
| Five Point incentives after tax | 11.929 |
| Net award and share-plan settlement entries | -7.756 |
| Share-repurchase entries in equity | -11.659 |
| Closing equity attributable to Matador | 5,928.623 |
Retained earnings equal the opening $3,153.112 million plus parent profit and less dividends, ending at $3,414.634 million. Paid-in capital ends at $2,537.746 million: the opening $2,509.118 million plus equity compensation, after-tax incentives and $0.253 million of net award/plan entries.
Treasury stock increased by $19.669 million at cost: $11.659 million of repurchase entries and $8.010 million of award-related entries. Common-stock capital increased by $0.001 million. Combining that increase, the $0.253 million award/plan addition to paid-in capital and the $8.010 million treasury deduction gives the table’s $7.756 million net settlement deduction. No separate accumulated other comprehensive income balance is presented; hedge valuations run through earnings.
Outside owners’ equity equals $338.511 million at the start plus $43.054 million of earnings less $59.290 million of distributions, ending at $322.275 million. The balance-sheet check below includes both ownership groups.
| Balance-sheet identity, US$ million | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Current liabilities | 1,031.509 | 1,549.113 |
| Long-term liabilities | 4,682.408 | 5,694.555 |
| Total equity, including outside subsidiary owners | 5,996.652 | 6,250.898 |
| Liabilities plus equity, equal to total assets | 11,710.569 | 13,494.566 |
Source: 2026 Form 10-Q, pp. 3 and 5–7 and Note 7.
D. Additional measurement boundaries. Quarterly operating margins are calculated from $577.322 million / $1,186.392 million for 2026 and $288.664 million / $895.312 million for 2025. First-half margins use $624.143 million / $1,858.029 million and $677.815 million / $1,909.270 million. Reported revenue includes derivative results, so these margins are not purely customer-sales margins. The gas-purchasing spread subtracts reported purchase expense from resale revenue; it does not subtract all operating costs. The illustrative gas-receipt sensitivity is 500,000 energy units a day × 365 days × $0.50 per unit = $91.25 million annually, conditional on full use throughout the year.
At December 31, 2025, Matador had $37.8 million of research-related tax benefits that its accounts did not recognize because the tax treatment remained uncertain. It recorded $31.5 million in other long-term liabilities. These amounts concern existing tax positions, rather than a new charge for the 2026 quarter. The 10-Q’s ordinary-course litigation discussion gives no additional quantified material loss range beyond the environmental matter described above.
Sources: 2026 Form 10-Q, p. 4, Note 10 and p. 42; 2025 Form 10-K, Note 8, pp. F-28–F-29.
This analysis is for information and education and is not investment advice or a recommendation to buy or sell securities.