Matador Resources Expands Permian Holdings with $1.275B Acquisition

Matador Resources Company is significantly expanding its Delaware Basin presence, announcing a substantial $1.275 billion acquisition of Paloma Permian LLC, a portfolio company backed by private equity giant EnCap Investments. This strategic move, anticipated to finalize in the fourth quarter of 2026, encompasses over 16,000 net undeveloped acres across Eddy and Lea Counties, New Mexico, and adds approximately 11,100 barrels of oil equivalent per day (57% oil) to Matador's production base.

In parallel, Matador has solidified its position in the emerging Woodford formation through a separate agreement to acquire acreage from Ridge Runner Resources II, another EnCap Investments entity. This transaction, combined with previous land acquisitions and ongoing strategic purchases, elevates Matador's contiguous Woodford acreage to roughly 50,000 net acres. The company acquired this acreage at an average cost of $4,000 per acre, further enhancing its operational efficiency and development potential in key areas like Lea County and West Texas.

The combined acquisitions are set to propel Matador's total Delaware Basin acreage to approximately 240,000 net acres. The Paloma acquisition alone is projected to unlock more than 156 net drilling locations, primarily targeting the prolific Bone Spring and Wolfcamp formations. This deal also brings an estimated $816 million in PV-10 value and 55 million barrels of oil equivalent in proved reserves, underscoring the significant resource potential Matador is integrating into its portfolio.

Matador's confidence in its operational capabilities and the underlying geology is further bolstered by encouraging exploration results from its initial Woodford well. The Rae’s Creek exploratory well in southeast Lea County, New Mexico, achieved impressive initial production rates exceeding 2,200 barrels of oil equivalent per day (72% oil) during a 24-hour test. This performance outpaces the average Woodford wells in Texas by approximately 20% on a 60-day cumulative oil production basis, validating Matador's strategic expansion into this play.

Financing for these significant transactions will be managed through existing cash reserves and borrowings under Matador's revolving credit facility, which was recently retired. The company projects generating around $1 billion in adjusted free cash flow for 2026. Management anticipates that the increased production from the acquired assets will help reduce the company's corporate leverage ratio to approximately 1.0 times within 12 to 18 months post-closing, demonstrating a clear path to deleveraging and enhanced financial flexibility.

This aggressive expansion highlights Matador's commitment to consolidating its position in premier U.S. oil plays. The Delaware Basin continues to be a focal point for exploration and production companies, driven by its rich resource base and advancements in drilling and completion technologies. Matador's strategic acquisitions, coupled with successful exploration outcomes, position the company for sustained growth and value creation in a competitive energy market.