Matador Resources Company (MTDR) Earnings Call Transcript & Summary

Okay. I understand I'm going live now. It's dangerous. But we're gone live, and I can see that if we'll go to the -- I'm going to see if I'm working this right, there's our directors, and we'll recognize the Matador team and we have a few special guests here including our auditor, Chris Stakem of KPMG and I want people to know for your routine correspondence send messages to investors at matadorresources.com. We will certainly try to get back with you as quickly as possible. We like hearing your comments and your suggestions. And for press releases and investor presentations, these charts in the slides that we're showing you, we try to post, so you have a lot of the same information the directors and the shareholders have and the staff members. So we're commencing the meeting, the Annual Meeting of Matador, and they're allowing me -- or I thought I had slides for my remarks. Have you got those slotted? Okay. Yes, back, one of the things I wanted to do was for all of us to realize that we've now been public 10 years. We went public February of 2012. So it's 10 years. And during that time, we are now ranked in the top 10 producers in New Mexico in the top 20 in the country. And I think it's actually about 16th or 17th in company in size. So the credit is really due to the way the staff has worked and the Board, and I'll get into that Boros as this talk goes along. The same thing is about this being a collective effort with everybody pushing on the rock. Matador in one form or another has been out there for 40 years. First Matador began in 1983, sold in 2003 on a Friday, and we started Matador 2 on the following Monday. We didn't want to waste any time during that season of opportunity. So we began with $270,000, 17 individuals put up the -- with me, the $270,000 -- some originals are here today and some children or grandchildren of those original investors are here today. And it sold -- we went from $270,000 to $388 million, then started Matador 2 with original capital of $6 million. And today, we're $7.9 billion. And actually, we were up early this morning, so we could truthfully say at the beginning of the meeting, we were at $8 billion. And if we go down there from there, you can just blame me. Pull me off the podium and let someone else talk. So here's the performance since going public, the green line represents oil -- oil prices, and the XOP is a combination of all the various oil and gas companies on a collective basis. And you can follow through there, it's been fairly stable. Matador has had its ups and it's down, but you can see how much we outperformed the market. And you'd say, if you look down there, just pointing out a couple of key dates, let me have the first one, the COVID -- and Saudi/Russian oil price began there in that middle of that dramatic drop. And then at the staff took pay cuts, we were the first -- one of the first oil companies or any size company that took a salary cuts. And then to show you the kind of board members you have. Without asking -- they all volunteer to take cuts. They said, if I was still going to take them, they were going to take them. And then the staff took them, and we were among the last to reinstate those wage cut. So again, everybody participated, believed in the company, one to push it forward and that things will be set right later. The next one was on the way up. We realized we had the financial strength to start paying a fixed dividend and start out. I know it seems small today, but is a big test then, $0.025 per quarter $0.10 for the year. Now I'm really pleased we doubled that within less than a year to $0.05 a share per quarter. And then today, I'm pleased to be able to say that we have doubled the dividend again to $0.40 a share per annum. So how about a little applause. Right. And as Mac shows you the timing of that, first quarter of 2021, we paid the fixed dividend of $0.10 a share. We -- then we doubled it to $0.20 per share per annum. And then today, we were pleased to raise that to $0.40. I really wanted to make that announcement earlier, but I thought I'd want to leave a little drama for the room that it's coming and more is planned down the road. We just don't want to have to back up. We want to be sure once we declare it, we can keep it there and sustain it. So very pleased with this and if things continue, more is yet to come that -- going to have back -- there you go. And I have a shareholder in Florida who was with Merrill Lynch, and he's been a very good adviser through the years, and he says he's always helpful to him to know what oil and gas did he have behind each of his shares. And so we've done this through the years. We've all seen it where you have the split of our reserves between oil and gas. And so collectively, you have 2.7 barrels of oil or gas equivalent per share. And if you just take the old portion of that, which is almost 60% multiply that out, that's better than 1 barrel and 1 barrel today is selling just the oil portion over $100 a barrel. So plenty of good assets behind it. And at the same time, we've driven our debt down to where we fully paid off all the commercial loan, and I'll show you that in just a moment. Well, there it is. And on this, what you can see is the pivotal event in Matador was when we bought those Bureau of Land Management leases back in September a few years ago. And we believe very strongly at the time that, that was some of the best rock quality in the country. And we paid a lot of money for it. It was an eBay type auction. And if you bought on eBay, you know that whatever your bid is, somebody is $1 behind you and that if they're bidding, if they go over $1, you got to come back in there. So we were criticized paying too much. But remember, some other oil company was $1 behind us on each of those leases. But that allowed us to change our capital efficiency and move from 98%, 1-mile laterals to 98% 2-mile laterals. And so with 2-mile laterals, you eliminate that second wellbore that goes from service down to 10,000 feet, which is an enormous savings. And actually, the 2-mile laterals have a more general decline. It's just better efficiencies that you get on all of your services and you're able to perforate and frac more country because you don't have to stop 660 feet from the lease line. You got to go ahead and perforate and produce from those zones too. So what you'll see is on our costs and on our reserves, a big jump as a result of this increased capital efficiency. And this slide that I'm currently showing you really makes you feel good because during that time, we were steadily reducing the bank debt that we have and now it's all gone, except for a couple of letters of credit. And so no actual money is borrowed. And I give a lot of credit again to the financial staff and the operating staff to achieve this working together to make sure we could safely do this. At the same time, because of that capital efficiency, because of their finding better and better rock out there that we've increased the borrowing base even in periods of low pricing to where we have over now $2 billion in dry powder with nothing borrowed on it. So if we want to do something, we can, but I can assure you that we feel we've reached a new inflection point where the objective is to keep the debt down low and have the financial discipline not to do that, unless President Biden puts more federal leases up right in front of our areas where we think it's most prospective. So unless you see something like that, you're going to continue to see this capital discipline, but we'll be ready as we were last night, when we acquired the Summit pipeline system as outlined, 43 miles of pipe, some compressor stations, some processing stations and the world has turned, the oil and gas well has changed. Out there in New Mexico, where capacity for pipelines is very limited. If you're an oil and gas company, and you don't have pipeline and firm transportation out of the basin, you may be shut in and unable to reduce. You can't flare anymore. So this assures us that we'll have a market -- and our gas will get out of the basin, and we'll also have opportunities for NGLs, increased NGL production and the oil for environmental reasons, you're not having those trucks on the road, which represent safety hazards. It's just a better way to do business and makes us that much more capital efficient. I see that we have a lot more to say today. But if you'll back up on San Mateo just to show them. And our pipeline is making money, and we have a slide to -- out there you go. And you can see what I'm saying. It's steadily growing the pipeline business. So we're adding value every year with it as well as gaining that additional capital efficiency. So I'd like to give a big hand to all the staff because it's been a total team effort. The San Mateo staff or its hand in hand with the operational group, the operational group works with the financial. Everybody is working together, as Billy, our President, likes to say, better together. Now who is getting this down? If you'll go back to the Board, just I'm going to introduce the various board members. But after the Board, it's the staff, and I'd first like to recognize all the Executive Vice Presidents just so you know who they are and have a chance to speak to them if you wish. So with the Executive Vice Presidents, please stand. Tom, if you would, you all stay standing. Want to put you on the docket there. Now all the Senior Vice Presidents, please stand. Now all of the Vice Presidents, please stand. Well, I think you can go ahead and sit down. I think you can see the depth that's coming up, those of you who have been coming to these meetings for years. It's been a steady improvement in the caliber of people and the character and their ability and their professionalism. So it's just been a remarkable improvement at our award has been very professional. Our Board members, if you'll please stand. This is a very professional group and they really go the extra mile. And again, the leadership they showed during the pandemic and the Russian/Saudi war, you can see you're making a difference. It's hard to believe for me even this morning, that 2 years ago, in March of 2020, we were at $1.11. Now during that time, we had no financial problems. Our banks were -- extend us all the credit that we wanted more if we really pushed it, and we were making the best wells that we had ever made, but the market just fell out of reason -- it was a great buying opportunity. Many of our staff did. We had about 250 people and around 200 of our people who were delinking this bought stock from the company. So a great show of support, great show from our shareholders. And all that did bought at $1.11 or in that vicinity. I think you're pretty happy today. Except some of my friends in Amarilla, they said I didn't press them hard enough. Well, I didn't I wrestle them to the ground and take your billfold from them. So it's a -- that's just the things that happen over 40 years Well, what I'm most impressed about when I showed you that time line of Matador for the past 40 years since inception in '83, we've averaged about a 20% right of return per year. That's 40 years. And so if you're an original shareholder back in first Matador, it was an 18:1 payout and now we're -- if you're an original shareholder in this Matador with the splits, you were at about 23:1. So -- and again, I didn't do it. It was a team effort of shareholders and Board, investors and the staff, and I want to say what Billy says, we're just better together. So Billy, would you stand up and take credit for that same, please. And the deal-making that went down all that time, Van, would you stand up and take, right. Both are presidents. Now with that, let me turn the meeting into the formal part, and we'll commence. So let me say my official. Good morning, and welcome to the 2022 Annual Meeting of Shareholders of Matador Resources and to say that is now called to order. I'm Joe Foran, Founder, Chairman of the Board of Directors and Chief Executive Officer, and I would like to welcome all the shareholders, guests, employees and friends who are in attendance today. I would also like to welcome those listening in via our live webcast. Before we get to the items to be considered and acted upon this meeting, I would like to just acknowledge the opening that I had a few minutes ago. We're celebrating our 10th year as a public company. When we went public, Matador shares price was $12. And today, it's approaching $70. In addition, we were making about 500 barrels of oil a day and today, we're making upwards of 60,000 and 100,000 BOEs and can celebrate all that value growth. We have a saying that Matt Hairford originated that we don't grow for growth sake, we try to grow -- make profitable growth at a measured pace. So Matt, thank you. I hope you'll come back to give us more good phrases, pithy statements. And as we get into the formal portion. As I said, I'll act as Chairman and Craig Adams, will you work our Chief Legal Counsel, Top Chief Operating Officer; Chief of Staff and Corporate Secretary as well as many other duties will act as secretary of this meeting. Would you do so?

Yes, sir.

All right. First, now I would like to introduce the members of the Board of Directors in attendance today. It is a superb group that is professional, strategic, knowledgeable works well with each other and the staff and has great personal integrity. Obviously, I like and value them very much, both personally and professionally. So beginning with Tim Parker, our lead independent Director, Tim and -- and Tim is the guy who is vital to our going public 10 years ago. And I think that rates a round of applause. Next, I'd like to recognize Gaines Baty, our Deputy Lead Independent Director, and Gaines has been instrumental of all the hires when you saw all those people standing up all the staff members and the officers of the company, most of them were tested and interviewed by Gaines prior to coming on board with us. So the quality of the staff is a direct result of his work and advice. Thank you, Gaines. Ray Baribault. And Ray's also played a very vital role as Head of our prospect and operations and engineering committees. And Ray is a -- as a petroleum engineer that worked at Exxon and then Netherland and Sewell and then formed his own companies in years -- in recent years. And Ray has been vital and has been a real person that has been a quality assurance person on our reserves and our drilling and the other operational activities, and we appreciate you so much, too. Now over the years, for 40 years, we've had audited services. And 2 things when you have your friends and family involved as we have here and the -- we didn't come up through private equity, we came up through friends and family. You want to be sure that numbers are always right and there's no surprises. And continuing that tradition, we've asked Bill to come on board who is formally -- formally Head of the Energy Practice at PwC and has audited Exxon and Conoco and a number of other very large institutions and has added additional professionalism and authenticity and sophistication to our financial instruments and heads the Audit Committee and the risk assessment committees and has done just a brilliant job, and we just appreciate you so much, Bill. Monika Ehrman. Monika, we -- I came to ask her to serve on the Board. She is a petroleum engineer. She's worked for Pioneer as a VP, but went back to law school and now has been a professor at Oklahoma University and is now the visiting oil and gas professor at SMU and I heard her speak at continuing legal education, and I was so impressed we looked her up, and we're delighted to see that -- she was living in Dallas that would enhance that and that accessible. And we asked her to come on the board. And again, she's pitched in and all the different tasks and has added to the discussions. Thank you, Monika. Julie Forrester Rogers. Julie has been acting [indiscernible] law school and Provost and a tenured professor. She's from Amarola, brilliant student at Texas Electrical Engineering and it's come on the board and fulfilled a lot of different roles and taken on the difficult task of the head of the governance announced the ESG governance committee and making sure that, again, matters are handled on just the basis with the most integrity. So thank you, Julie. And then Boe Howard. Boe, we've had a long history with and Bo come on the board as trading oil and gas has become more prominent in our business. Bo has that experience in marketing as well as now in so many of us and is truly a great team player. So thank you, Bo, for being on the Board. Finally, I want to recognize Ken Stewart. Ken is formerly was Head of Norton Rose Fulbright [indiscernible]. Okay. Fulbright & Jaworski. And you figure a guy who had handled 6,000 lawyers would be somebody who could -- was a really good administrator. In addition, Ken has been a shareholder since the early '90s. And so he's the Director that has the most history with Matador. And again, we're delighted somebody who's always ready to help and work with the others and building consensus and thank you, Ken. And I want also to thank the shareholders who served on the Shareholder Advisory Committee for Board nominations with directors Monika, Tim and Ken. Other members of that committee were Craig Burkert, Rick Finla, Scott King, George Yates, Barry Banker, Joe Coleman, Kevin Grevey, and Bobby Pickard. Craig Berry, Kevin Grevey, Bobby Pickard, have all been with Matador since inception, and were in the original shareholder group. Now I've recognized the senior officers and the Vice Presidents and a few special guests that my good friend and longtime shareholder, George Yates, who's again, we put our 2 companies together. We've tried to put our minds together, and we've worked together for a long time and we are delighted to have him. And a few others, Chris, we recognize you. If you please stand, let them know. So if you have questions about the audit, that's the guy you go to. Right. Recognize the Biggers family, Steve and Ted and Lynn, would you all please stand? Also I want to recognize Janie Conner. Now she's going to be embarrassed, but she's one of the key people as we were getting started and we had a sane of 10 times in 10 years, and they echoed that thought and Kay has gone now, but he was my doctor and so when your doctor joins you, you kind of feel like you're headed maybe in the right direction. If not, that the next visit to the doctor may not be so helpful, but she's been -- Jane, you've been a special friend and we're so glad to have you here today. And we've got many others that have contributed over time. Paul Harvey as part of the original shareholder group, Paul, will you stand. The Harvey clan has helped in every which way, Glenn Stetson, who's done a great job in production came through the channels of Paul Harveys and next to him Greg McMichael from Denver, who is the analyst that certainly got us going and lifted our -- the sophistication of our shareholder letters, our analysis of cost and other things important to the market. Greg, would you please stand. And the totally embarrassed some people, a good friend that's developed over the years is Randy Allen and sit next to him is Paul Flowers. Paul was my first friend. I met outside of law school. We were handball partners. And of course, Randy's Coach is the winningest coach in Texas today. So both of you, will you please stand. Part of our business is competition, and we like to be competitive, and I ensure you those 2 shareholders are competitive. But anyway, it's great to be with you. I can go around the room. I used to be able to get to do that, but our shareholders have grown to the point of being public that I can no longer do that. I would also like to make one more administrative comment. If any of you in attendance are listening in are not receiving correspondence from us in the mail, a routine investor alerts via our website, please check with Amanda Crawford, kind of our chief of staff around the office after the meeting or e-mail investors at matadorresources.com. Note that our press releases and investor presentations are also available on the website, www.matadorresources.com. Now this meeting is being held pursuant to the notice that we mailed to each shareholder of record as of April 28, 2022, which is the record date for this meeting. The Secretary has made available a complete list of shareholders of the company entitled to vote at this meeting alphabetically arranged and certified as of the close of business on the record date. Further, the Secretary, Craig Adams, Craig, you want to stand, so they just know who you are, has provided a notice, proxy statement and proxy and an affidavit that such notice, proxy statement and proxy, together with the 2021 annual report of the company were mailed to the shareholders of record as of the record date. These documents will be filed with the minutes of this meeting. Now for a declaration of quorum. We have proposed Brian Willey, Brian if you'll stand, President of Sam Atal and Senior Vice President and President and General Counsel of our Midstream business has been appointed to act as is -- we propose to appoint him to act as Inspector of Elections at this meeting. As inspector of elections, Brian will ascertain the number of shares of common stock outstanding and the voting power of each, determine the shares of common stock represented at the meeting and the validity of proxies and ballots, count all votes and ballots and certify and declare his determination the number of shares of common stock represented at this meeting and count all votes and ballots. All holders of record of common stock at the close of business on the record date are entitled to vote at this meeting either in person or proxy. Do you accept these duties, Brian?

Yes, Joe. Thank you.

All right. If so, will you give the attendance report?

Yes. Thank you, Joe. As Inspector of Elections, I report that there are present at this meeting in person or represented by proxy, the holders of approximately 106,401,509 shares of common stock of the company, out of a total of 118,129,981 shares of common stock outstanding and entitled to vote as of the record date. Thus, the holders of approximately 90% of the aggregate outstanding shares of common stock entitled to vote our President in person or represented by proxy at this meeting. Each share of common stock outstanding on the record date is entitled to 1 vote.

On the basis of this report of the Inspector of Elections, I declare that a quorum is present for the purpose of conducting business at this meeting, and this meeting is legally convened and ready to transact business. A certified report the Inspector of Elections will be attached to the -- as an exhibit to the minutes of this meeting. Now as stated in the notice, 5 matters will be considered and acted upon this morning. To expedite the actions, all matters of business as reflected in the notice will be presented first, and then a ballot will be taken afterwards for voting on each matter. The 5 orders of business at today's meeting are as follows: the election of 2 directors, the approval of the first amendment to the Matador Resources 2019 long-term incentive plan, the approval of the Matador Resources 2022 stock purchase plan, the approval of a nonbinding vote to approve the 2021 compensation program of named executive officers, also known as say on pay and the ratification of the appointment of KPMG as the company's independent registered public accounting firm for the year ended December 31, 2022. And Speaking on behalf of the entire Board of Directors, we recommend that you vote for the election of both director nominees and for the additional 4 proposals being considered at today's meeting. I now would like to ask Ken Stewart, the Chair of our Nominating Committee to introduce the director nominees for this meeting.

Thank you, Joe. As I think most of you know, our directors serve staggered 3-year terms and are divided into the 3 classes, Class I, II and III. At this meeting, we'll be electing Class II directors to serve a 3-year term, and I want to introduce to you the nominees to be reelected for that class at this meeting. Gaines Baty and Gaines Bo Howard. Gaines Baty was appointed to the Board in 2016, and he serves as Deputy Lead Director and is Chair of the Board's Strategic Planning and Compensation Committee. After leaving IBM, Gaines founded his own leading executive search firm in 1982. In his 30 years of experience and expertise in executive leadership and development provide our Board with an important and unique perspective on these matters. We assist the Board and the company with recruitment, board administration, compensation and growth strategies and has done so since the early '90s. Joining the Board in 2021, Bo Howard has already made significant contributions, including serving as Co-Chair of the Board's Marketing and Midstream Committee. He serves as trustee for various trusts for 20 years and managed a variety of assets, including oil and gas properties. And prior to serving as a trustee, Bo was Vice President of Textron and responsible for marketing all crude and condensate and also previously served on the NYMEX crude oil Advisory Committee. He brings significant marketing and midstream experience to the Board and has provided valuable insight, particularly with respect to marketing activities and operations of San Mateo, which is Matador's midstream joint venture. So more information with respect to both of these candidates is included in the proxy statement, and the Board recommends that you vote for both nominees. But now I'd like to turn this over to Gaines, Chair of the Strategic Planning Committee to talk about the other 3 proposals.

Thank you, Ken. Good morning, everybody. Good to see everybody here. We really appreciate your support. I'm going to talk about 3 things. First of all, is the approval, the business approval of the first amendment of the Matador Resources Company 2019 long-term incentive plan. The amendment would add an additional 3,725,000 shares of common stock for issuance under our long-term incentive plan. Long-term incentive plan is critical to the success of our business because it allows us to continue to attract, motivate and reward the services of key employees, contractors and nonemployees, directors, et cetera. We estimate that this amendment would provide sufficient shares the long-term incentive plan for at least the next 3 years. More information regarding this amendment is included in the proxy statement. The Board of Directors recommends that you vote for the first amendment to the Matador Resources Company 2019 long-term incentive plan. The third order of business is the approval of the Matador Resources Company 2022 employee stock purchase plan or ESPP. Matador encourages its employees to own Matador stock and is proud of the fact that over 200 employees have purchased stock since the beginning of 2020, which is the time of the decline of oil prices in the COVID and the actions of OPEC+. In addition, our directors and executive offers on approximately 5.6% of the outstanding shares, retired staff owns another big tranche of stock. Purpose of the ESPP is to encourage and enable our employees to continue to acquire and increase their membership or their ownership in the company. to retain their services and share in the value generation value growth of the company. A maximum of 4 million shares of common stock may be purchased by our employees under the ESPP and is limited by regulations to 25,000 per year. More information regarding this ESPP plan is included in the proxy statement. The Board of Directors recommends that you vote for the Matador Resources 2022 employee stock purchase plan. The fourth order of business is a nonbinding advisory vote for the 2021 compensation plan of our named executive officers, also known as Say-on-Pay set forth in the proxy statement. As we've discussed previously, during the unprecedented challenges of 2020, our named executive officers were among the first in the industry to take pay cuts and the last to reinstate those -- to reinstate those salaries. In addition, our named executive officers were granted long-term equity awards with significantly lower grant date fair values. And even though each of the independent Board approved metrics under our annual cash incentive plan were met and exceeded the company's named executive officers volunteered to forego receiving 2020 annual cash bonuses as well. It was a big give there. Our compensation program is designed to reward in both the short- and long-term performance that contributes to the implementation of our business strategies, maintenance of our culture, values and achievement of our objectives. In addition, we reward qualities that we believe help advance our business strategies. We believe the 2021 compensation program accomplishes these objectives. More information is available on the compensation plan is named is available in the proxy statement. Board of Directors has recommended that you vote for the non-binding resolution approving 2021 compensation of our named executive officers. More information regarding the compensation of named executive officers is included in the proxy statement. The Board of Directors has recommended that you vote for this and non-bonding resolution approving the 2021 compensation of executive officers. Now I'd like to ask Bill Byerley, our Chair of the Audit Committee to discuss the fifth order of business.

Thank you, Gaines, and good morning. The fifth proposal for us today is the ratification of the appointment of KPMG as the company's independent registered public accounting firm. KPMG served as Matador's independent registered public accounting firm for the fiscal year ended December 31, 2021, and it served as the company's auditors since 2014. The Audit Committee of the Board of Directors has appointed KPMG as Matador's independent registered public accounting firm for the fiscal year ending December 31, 2022. In turn, the Board of Directors has directed that such appointment be submitted to the shareholders for ratification at this meeting. Further information about the services provided by KPMG is set forth in the proxy statement. The Board recommends that you vote for the ratification of KPMG as the company's independent registered public accounting firm for the year ending December 31, 2022. I'll now turn the meeting back over to Joe Foran. Joe?

Thank you, Bill. On behalf of everyone on the Board and the Matador staff, we thank you for the rigor and expertise that you bring to the Audit Committee. And Ken and Gaines, we greatly appreciate all your hard work and expertise in your Board and committee assignments as well. We will now distribute balance to any shareholders present who wish to vote in person today. To avoid confusion in counting the votes, the ballots will -- should be cast at this time only if you have not previously given a proxy, if you have revoked a proxy previously given by you or if you're now revoking a proxy previously given by you. If your stock is held in a brokerage account in order to vote at this time, you must first provide us with a legal proxy that would have been given to you by your broker, granting you the right to vote that stock. If under these circumstances, you now desire a ballot, please raise your hand, and we will provide you with one. Seeing none, we will move to final vote. Mr. Inspector, are you ready to report the results of voting? [Voting]

Yes, sir. I am pleased to report that each of the nominees for director has been elected to the Board as each nominee has received a majority of the votes cast by shareholders present in person or represented by proxy at this meeting and entitled to vote on the election of directors. And I'm happy to report that each of them received more than 90% of the vote.

Again -- yes the director.

Yes. I'm happy to report that each of them received over 90% of the vote. Congratulations. I am also pleased to report that each of the other proposals, the amendment to the Matador Resources Company 2019 Long-Term Incentive Plan, the Matador Resources Company 2022 Employee Stock Purchase Plan, the nonbinding resolution approving the 2021 compensation of our named executive officers and the ratification of the appointment of KPMG LLP as a company's independent registered public accounting firm for the year ending December 31, 2022, has received a favorable vote of the majority of shares present in person or represented by proxy at this meeting and entitled to vote on such matter. In fact, Joe, I'm happy to report that each of the proposals received a supermajority of more than 90% of the vote. Therefore, each of the director nominees and the proposals voted upon today, as described in the proxy statement, has consistent with the recommendation of the Board been approved by the shareholders and will be recorded as such in the minutes of this meeting. We remind our shareholders and other stakeholders the specific information regarding the number of votes cast for or against each proposal will be included in our current report on Form 8-K that will be filed with the Securities and Exchange Commission in the days following this meeting.

Thank you, Brian, and personal remarks that I wish to say I'm often asked the question, what do you think is like to be public? And I tell people there is more demand on you. It can be a bigger hassle at times. But the best thing about it is that you're able to attract better people, that people like to know exactly where they stand on their ownership. They like knowing how the additional transparency in the company, and it's made a big difference. And these proposals that you approve today make it so much easier for us to attract really quality people and people who -- if they're in a private company, they're not likely don't any stock, but this makes it possible for every person on the staff to buy stock and to participate in the equity and the value growth of the company. And just on behalf of the staff and the Board, we thank you, I thank you. The Board, thank you and the staff thanks you very much. We'll continue to try to attract the best of the best and it's really getting increasingly that way of people sending us resumes and want to come to work for us. Billy has been instrumental in that. And we tell people, if they come to Matador, they're going to work harder, but they're going to learn more. And that seems to attract the caliber of people that we want to have who are trying to get better every day and help their team. get better every day. So again, thanks to all of you, and thank you for this show of support. So any questions? If not, I will say declare that there's no further business before the meeting. The formal portion of the 2022 Annual Meeting is now adjourned. Tim, I would like to introduce our lead independent Director, Tim Parker. Tim was appointed to the Board in 2018, serves as lead independent director and as Chair of the Board's Capital Markets and Finance, having headed up the energy practice and the Energy section at T. Rowe Price for a number of years. He retired from T. Rowe, is the portfolio manager and analysts natural resources, for T. Rowe Price and having joined T. Rowe Price in 2001. He managed the new era fund from 2010 to 2013 and manage the energy and natural resource portions of Troll prices, small-cap value, small-cap stock and new horizon funds from 2013 to 2017. Prior to joining T. Rowe Price, Mr. Parker was an investment banking analyst at Robert W. Baird. and Company Inc. He holds a Bachelors Science degree in Commerce from the University of Virginia and an MBA degree from the Darden School of graduate business at the University of Virginia. His experience with large institutional shareholder, his extensive familiarity with the capital markets, his knowledge of Matador from inception to present provide the company with valuable insight. Tim?

Good morning. I'll be brief because Joe told me to be brief. So I have 3 things that I want to talk about. And one is a little bit on the board and corporate governance because this is what we do. We try to work together as a team. We want to be a resource for everyone. We take it very seriously. All the committees matter. We all serve on the committees. We cross or own committees. We talk to each other. And we have a great staff that we work with, and we're blessed by that. And so I want to let you know that we're trying to be in your best interest to work for you for the best outcome for this company. The second thing I want to talk about is we're a more resilient, stronger company today than we've been in previous years, and a big part of that is the balance sheet. As Joe showed this slide earlier, we've paid off the line of credit. We still have the bonds outstanding, but every year, the call premium gets cheaper. So don't be surprised if we retire some bonds as well. This fortress balance sheet means when the inevitable downturn occurs because I don't know when piece breaks out but one day oil will be lower and so will gas. We'll be ready. Our balance sheet can handle it, and it won't just be the balance sheet, we also hedge. We stagger our rig contracts. We've done this before but we're going to be doing it from a stronger position. So my second message would be you're in good hands from the financial strength and propensity for taking care of operations during a downturn, whenever that downturn comes. And then the last thing I want to talk about -- Joe has already talked about it. There are a lot of Matador people in the audience. And while it's a great senior staff for sure that we all know, it's the rank and file that have us here producing over 100,000 barrels a day of oil equivalent. And I just want to give my personal thanks and the thanks of the Board for keeping the trains running on time. So if everybody want to join me in giving them another round of pause, I'd appreciate it. Thank you.

Thank you, Tim, for your insights. And I really didn't tell him to limit his time as much just try to make it meaty because there's a lot of good news in the pipeline and a lot of good news to share. It's just like this midstream purchase that we made yesterday. The team put the deal together in a matter of 36 to 46 days, depending on how you count them and that's phenomenal speed. And we were able to do that because we didn't have to borrow money from the bank. We had it ready to go. That was one reason we were attractive. And I think the business has changed, we always say the business is changing. And one way is changing out there in the Delaware. That is the most active region in the country. It's the most probably the most quality. It's the best region, and there's a lot of people trying to drill and produce wells. And there's a limited capacity to get it pipelines earn everywhere, ubiquitous like, say, highways or county roads. It's -- and with the environmental requirements, if you don't have yourself connected to a pipeline, you basically can't produce the well. If you're dependent on others to hook you up, you have native control, and they may say October 1, but they won't be there for until February 1. So but now we have a midstream group that when our production people are ready to turn on a well. They're there with that pipe. So picking up that additional 43 miles of pipeline are a big deal. And it wouldn't have happened without the Board, the staff and all working to field people to make it happen. Things are changing. And it's just -- we're reaching new levels of sophistication all the time. If you come to visit Matador, we'll almost surely take you down to what we call the Maxcom room. In the Maxcom room, there are people working 24/7 to keep an eye on the drilling. It's on the screen and they're watching in real time their footage. And as a result of that, the staff has built up, it's 170 now or if you added a couple of records this morning, Josh. [indiscernible] and saved over $25 million. And that if you don't have one, it keeps not only that, it's more than $25 million because they're keeping that well going horizontal 2 miles or 2.5 miles in the zone and they're not getting out of zone. So that's that much more productive footage that we can claim. And so these things are -- as I said, the directors take this very seriously. When one of these activities falls in their area, Tim has certainly done that with improved sophistication and analysis on our financials working with First David and now Michael Frenzel. And I'm pleased in that same vein to introduce you to Ray Bear bolt again. Ray helped found NP Resources, which also operates in the North Dakota, Williston Basin and serves as Executive Vice President, Engineering helping oversee the sale of its assets in late 2021. In addition, he has co-founded and serves as President and Chief Executive Officer of IPR Energy Partners, a Plano, Texas-based oil and natural gas production operator with current operations in the Fort Worth Basin. He previously served as Vice President, Supervisor, and Petroleum Engineering Consultant with Netherland and Sewell here in Dallas from 1990 to 2002. He received his Bachelor of Science degree in Petroleum Engineering from Louisiana State in 1985 is a licensed professional engineer in the state of Texas, provides valuable insight to our Board and our drilling completions and reservoir engineering systems as well as growth strategies, midstream operations and administration and is a great friend to all of us. Also noting, Ray is the 7th son -- is that sibling of family of 7. So we consider it a good luck charm as well. Ray?

As engineer, I'm going to take a little bit more time than Tim did. So bear with me. But thank you, Joe, and thanks for the opportunity to speak to you this morning on the pulse of the company, which is its daily operations. Whenever you notice the Matador moniker, don't think of it as just an energy company. I see it as a high energy company. meaning the employees and people that stand behind the brand are as committed a team in this industry to creating value responsibly and safely as I and my board colleagues have been associated with in all our careers. With that, I'll jump into 1 of 2 slides that I brought with me today. And I'd like to present some of the high points on the 2022 operations to date and also to spotlight some of the unique examples of field efficiencies and the new technology and developments that the company is capitalizing on. On this first screen, the left-hand side of the slide is a familiar map to everyone, shows the company's lease Delaware acreage and assets in the basin. Each red block consider each one of those tracks as a building block to Matador's growing value and reserve base. So quite comprehensive position in the basin covering quite a lot of different unique areas of the basin from the south end in Loving County into the North End and Arrowhead, Ranger and Twin Lakes. So each track -- each of these red tracks represents an opportunity across the spectrum to the engineering, geological, geophysical, land, regulatory, legal and field operations groups for all of those folks to come together to execute on precision drilling, completion and production operations for that specific asset development within each track. Quite a momentous task at hand. And I can't leave out the accounting team to keep track of how well these groups are doing and the efficiencies and capital spending and operating costs that they're executing on. With 6 rigs operating and through May of this year, 31 new wells have been brought on in the Stateline Rustler Breaks and Rodney Robinson area of Antelope Ridge. So going forward, another 37 wells will be brought on focusing development in the Antelope Ridge and Ranger areas for the rest of this year. Those 31 new wells and the existing wells through May to date have helped to build production for Matador to a net 100,000 barrel a day equivalent level. That's -- I've been here 8 years and Joe, a lot longer in staff, some of the staff quite a lot longer. So that's a handsome milestone. Something to be proud of, but not to stop at. And this team is going to keep moving forward and keep building production as Matt says responsibly in our measured pace. So for the remainder of -- again of 2022 and for most of 2022, approximately 90% of the wells have 2-mile lateral lengths. These extended lateral lengths have pushed the benchmark for initial production rates, well past the 1,000 barrel a day equivalent mark. And for certain targeted zones that we're benefiting from in the Stateline area on the Voni lease, it's hard to see here, but 2.5 mile laterals in that western track at Stateline, the Voni lease they're approaching 3,000 BOE per day initial rates. That's a big impact on reserve growth and reserve improvement. And as Joe said, keeping those declines manageable and continuing the profit margins that we're seeing. So I'll highlight on the next slide coming up. A little bit more about the Voni lease on the state line track that a really unique development program that's taking place there. And as Joe mentioned, the Maxcom team is a highly dedicated and driven group of engineers and geologists 24/7, working with the asset teams and they're providing drilling and geo-steering guidance on every lateral drilled. This is leading to continuous ever-improving drilling records and impressive records they are and generating millions of dollars of savings, as Josh mentioned, day in and day out, year in and year out, since it's been implemented. And this -- the techniques employed and the technical skills that they're taking advantage of is keeping our laterals in zone for on average, at least 96% of the time. So that's going to generate optimum target for completions and for improving well reserves and development. Mac, the second slide that I have touches on one particular component of the well completion operations that staff is continuing to prove on and that's generating further savings. It's what we call Simul-Frac. First Simul-Frac job, Matador pumped was in early 2021. And the left-hand side, of this slide is showing a rendering of wells from the surface pad drilling vertically down approximately 2 miles and vertically out. On this Voni Pad, that would be 2.5 miles. So this pad rendering that I'm showing here are these 2 pads sitting at the north end of the Voni lease, again, drilling down and then drilling out this way southerly towards the state line. Simul-Frac is an operation that simultaneously completes frac stages in concert in 2 adjacent wells on the same pad. And since the inception in '20 and early '21, 23 wells were utilizing this technology in 2021, 36 will be frac simultaneously using Simul-Frac ops in '22. One more, I think, ingenious take on Simul-Frac is not just to Simul-Frac on multiple wells on a given pad, like you see here. This would be the Eastern pad on the Voni lease. This would be a western pad. And these wells, again, are developing the eastern side of the drilling spacing unit and these on the western side of the drilling spacing unit. But remote Simul-Frac, as this aerial footage is showing late last year, was the initial voyage into this operation. So the frac equipment you're seeing is deployed on the East side. Instead of having to sequentially mobilize all the frac fleet equipment over to the West Side pad, a high-pressure line is connected between the 2 pads, and frac fluids are pumped in concert down wells on this pad and then alternatively 2 wells on this pad. And that's -- as this slide shows, on this operation is save 20 days of completion time, which drives the bottom line and contributes to the efficiencies of the capital spend. Quite a unique experience and very meticulous operation. And as Tim said, keeping the train on station on time is a very big task here and Matador is successfully doing it. So remote Simul-Frac won't be done on every well, but where there are dual pads being developed on a DSU. This will be a future operation that we'll see more of. Other opportunistic improvements that are being used by staff to capitalize on next-generation technical advancements include what we call dual fuel completion operations. So this operation here would be fueled by diesel going forward, where we have producing pads with use of the natural gas produced off that pad, introducing natural gas as a fuel burn displacing upwards of half of the diesel fuel requirements on a frac spread is where not only Matador is going, but where industry is going. So Matador is a leader on moving towards utilizing natural gas as a clean burning fuel for frac operations. On the drilling side, optimizing casing string designs is something that is being done, reducing what used to take 5 strings of casing to prosecute a well from surface to bottom hole approximately 24,000 feet of measured drilling depth. So reducing casing strings from 5 and in some instances, down to even 3 strings is a direct savings to the bottom line, especially with pipe costs today as they are. Not only casing string design but drilling efficiencies with bit technologies is getting these wells to bottom as much as twice as fast as even a few years ago. Again, driving the bottom line. Optimize once a well is fracked and put online. If they're not benefiting from natural flow, artificial lift installations are the next generation of operation methods to improve wells production and reserve capture and the company is continually optimizing artificial lift efficiencies across all asset areas. So applying longer lateral development has been done here in Voni. This is the current company record on the Bonnie pad, approximately 20,000, 24,000 total measured depth. The next task at hand is drilling -- drilling a batch of 2.7 mile laterals on the loving asset. Mac, if you could go back to the other first slide. So here we are at Voni. So down on the Wolf asset area. I'll point out that it's fitting to note that 8 years ago, Matador was drilling its first 1-mile lateral here on this acreage. And here we are taking advantage of all the technology improvements in the last 10 years, 8 years and prosecuting 2.7-mile laterals. Quite an improvement, and this is where this industry has gone and it's not going to stop where it is now. We're continuously improving and the staff has taken every advantage where it makes sense safely and securely to deploy these new technologies. I have to brag at that first 1-mile lateral well has produced over 0.5 million barrels and headed towards 0.75 million barrels of reserves. The new 2.7 mile laterals are going to be double that, if not more. I'd be remiss not to include the benefits that the company's midstream assets and operations afford it. As mentioned by Joe earlier today on the discussion of the acquisition of the Summit plant that being in our -- kind of in our Ranger area. Existing Black River plant operations in the Rustler area has benefited not just Rustler but also developments in the Arrowhead area. So a 60 million a day cryo plant with expansion capacity in Ranger is very exciting news for the company and for future growth that's planned in that area. So the midstream adds significant [indiscernible] San Mateo Midstream adds significant long-term value to Matador's leasehold fill, not just in the first year, but over the life of the wells. It provides an oil gathering, gas gathering and processing and produced water gathering and water disposal operations. Matador's concentration on 3 pipe solutions for oil, gas and water. It reduces surface footprints. It reduces carbon emissions and improves -- reduces environmental impacts while at the same time, increases operation and reliability as the staff and the company experienced last year during the freeze. It maximizes capital efficiencies and economic returns and this has been an effective model for multi-well pad development for Matador, and they strive to use this model across all asset areas. And a perfect example is what's to come here in Ranger with the new midstream operations there. A final note to end on, through my years of service on the board, the core values of the staff are fulsome and robust. They -- each staff member views everyday challenges as opportunities for profitable growth. contribute to the bottom line. Here in the office across all disciplines for Matador and in the field operations, the comradery and team approach is working very well. Thanks for your time today, and I appreciate the opportunity to speak to you.

This concludes most of the meeting. In final points I'd like to recognize 2 individuals who have been critical in the building of Matador over the last 20 years, Matt Hairford and David Lancaster. Both of these are good friends of mine. And I think we've developed some -- had some wonderful times together, and we're proud of what we've -- the way we worked as a team during all those years. They've recently retired as officers, but they're still friends of the company. happy to help where they can, and they plan to remain involved with the company as special advisers to the Board and the executive committee. Again, Matt and I have a special connection because our families have farmed together in the Oklahoma Pan hell for over 100 years. And that's special. And of course, David is from Amarilla, which is a nice connection even if he was the valedictorian of the other high school. And it just shows that you can be friends, and we thought we made a good group together. We missed them. And -- but want to give both of them a chance to say a few words. They've asked for little time to come up here and say some. I did not get to preview their remarks.

Okay. All right. So I'll start over. Good morning, everyone. As I was sitting over here, I know I'm going to be called on to say a few words, and I'm trying to figure out what it is I really want to say. It's very simple. It's thank you. I mean thank you to Joe for the remarkable opportunity, the leadership, the intuition, the guidance for all the help through all the years. It's for the Board for the same thing. It's for the staff, it's for the shareholders. It's for everyone. And maybe most importantly, for Cricket, pursue [indiscernible] for the families. We couldn't do what we've been doing for the last 18 years without that support. So thank you for all that. So Joe, 18 years ago, a little over 18 years ago, I flew down to visit with Joe. We had talked, and it wasn't really -- I didn't think it was much of an interview, but I came down and it was. And so I spent all day visiting there were probably 15, maybe 20 people in the company, and I spent all day visiting with every single person in the company. And we've told this story before. Some of you probably heard it, but I get to the airport. I'm kind of late from my plane. I get to the airport. I'm on the jetway and I've got to call Cricket and I've got to tell her I'm on my way home and so pick up the phone, a dial, she says, "Hello, Cricket how is your day" and she goes, "we're moving are." And I said, "Yes, I think so." And that's a true story. And so the reason for that, it didn't have anything to do with that we were unhappy where we were. It didn't have anything to do with moving to Dallas. It didn't really have anything to do with the assets that the company had other than the people visit with Joe and David and Kathy is out here and Mike Earnest, a number of other people that were here at the company, this was a quality group of people. These were people I wanted to work with. It really didn't have anything to do with anything other than that. And so I think this company is unique in that we've been able to maintain that. We've been able to focus on hiring the right kind of people and putting them in the right kind of positions to have the terrific success that we've had. And so I think that makes it unique, and I may steal on David sayings here. We would often say, we've said to the market, we've said it internally in thousand times, this company punches well above its weight. I would take this group and I've said this 100 times too, this group of 250 or 300 people and put them against any group in the oil and gas business, and we win that contest. And so I just -- again, I just want to thank everyone for allowing me to be a part of that. And when Joe and I were talking about this retirement deal, the thing that was music to my ears is when Joe says, "well, would you like to be remain involved with the company." I'm like, yes. Yes, I really do. So I'm really looking forward to staying involved and I can't wait to see what this company does in the upcoming years. So thank you. By the way, glad to do the Lewis & Clark thing again this year.

Yes, I was going to say -- it wouldn't have felt normal if we weren't standing up here together. So well, so good morning to everybody. I just want to start off by saying, wow, isn't it a great day to be a Matador shareholder. So I absolutely think it is so. When you started the last one on the docket, most everybody said, all the things you thought were going to be smart of you to say. So I'll just speak a little bit from my heart. First of all, I just think this company is in the best shape that it's ever been. I mean Tim told you how good a shape it's in financially. Ray tells you how good a shape it's in technically. We have a great team. And I think one thing that Matt and I are both confident of is that as we kind of move into the next phase of our life. There's such a great team of people here at Matador that are going to take this company to the next level. And we're very excited to be involved with it, and we're very excited to watch it happen. So very proud of all that. I, too, want to say thank you to all the shareholders. When people ask me how it was going to feel to retire I told them I wasn't sure. I wasn't sure exactly how it was going to feel to give up my title as the Chief Financial Officer at Matador, but that even when I did, that I knew I was going to retain the most coveted title in Matador, and that was shareholder. And Sue and I are very, very happy to continue to be and will continue to be shareholders in this company right alongside it. And we've always been honored to do that. It has been the great honor and privilege of my life to serve as the CFO of Matador, and we look forward to continue to being involved with the company. To the Board, my goodness, you all are the best, and it's certainly been my honor to serve you as well. I look forward now to continuing to work alongside you as an adviser and already started doing that a little bit. It's a lot of fun. I like it. So -- but I really appreciate all you've done. And if you don't mind, I'm going to call to mind 3 former members of your ranks Marlin, Jack Sleeper, Steve Holbach, all of whom you've heard talk from this podium before and who were really guiding lights for Matador, and we all love them. They're not with us anymore, but I know they're looking down today and just smiling on us greatly. So thank you for letting the acknowledge them. Joe, to this day, I have no idea why you decided to hire me for this job. You hired me over breakfast. I didn't even know you were trying to. I think you took an enormous chance on done petroleum engineer to be your CFO, but you did, I think it worked out okay. And I really -- I couldn't thank you enough and I agree with Matt, thank you for all your vision for your leadership, for the way that you directed this company and for all that you taught me about the oil and gas business, I really appreciate it. To Nancy, my goodness, thank you for all that you do for Matador. You are an awesome first lady of this company. I think you know we all endure you, and we just thank you for everything that you do for us every day. To all the staff, my teammates at Matador. I wish I had enough time to go around the room and talk about every one of you, and you know I could do it. So -- but I don't -- so I just want to say thank you for all your support of me of all you've done, all we've done together. I think better together is right. I think you know how much I love you. I think you know how proud I am of you, and I hope you know how confident that I am that you're going to take us all to the new heights or the theme of today's annual meeting. And finally, I want to say a special thank you, and I'll get through this, I promise to the lady in yellow right up here in front, who we all affectionately know at Matador is Ms. Sue. And that's, of course, my wife Sue. I don't think anybody has been -- could have provided more love and support over the years, and nobody could have sacrificed more that I know you have to allow me to have this time at Matador. You have the most positive attitude, the kind of spirit and I admire the elegance with which you face all the physical challenges that have been thrown in your way, and I couldn't have asked for a better partner in my life, and I look forward to spending the rest of my life and more of my time with you. And thank you so very much. So that's all I have to say. I love this company. Thank you very much.

Well, that gives us a high note to close the bond as well as some people to emulate and trying to build this for the shareholders, and they took their role very seriously and that we were all working for the shareholders, and I wanted to put them first. I'd also like to recognize my wife, Nancy. Nancy, if you'll just please stand, my co-founder in Matador and all you shareholders out there. You all have been great friends of the years. We're not through yet. We like our chances moving forward. And we can't see anything stopping us. We think we've got it all together, and we really hit a new inflection point as we have drilled these longer laterals, got added to the staff. They've all helped financially, we've reduced debt. And I think for the next 3 to 5 years, going to be some of our best years yet. And appreciate the interest you all take not just as shareholders but as friends. And I think you can say that we've got some wonderful friends in here, but we've got a job to do and that's to keep Matador growing. And we've come a long way together on this journey. But we still nicely enough, have even more and better to do. So my phone is always open to you, if you want to call. My e-mail is open, I'm not as good on my tech side of operating the computer as I am the phone. But e-mail me, call me, do whatever we want to be responsive to you and appreciate so much what you all have done and what all we've accomplished together, providing jobs and increasing people's values and providing employment. I think we've been good citizens, still have a lot to do, but sure look forward to doing it with all of you. So with that, I'd entertain a motion to adjourn, if somebody would make that motion. So moved up here. Second, now shareholders can move in second too, I don't want to probe anybody of that opportunity. But motion has been made and seconded. Hearing notice further discussion. We'll move to immediate vote. All those in favor can signify by standing, and thank you again for coming today.