Matador Resources to acquire significant assets from Ameredev in $1.9bn deal

Matador Resources Company (NYSE: MTDR) has announced a definitive agreement through its wholly-owned subsidiary to acquire significant oil and natural gas properties from a subsidiary of Ameredev II Parent, LLC. This acquisition, valued at $1.905 billion in cash, includes producing properties and undeveloped acreage across New Mexico and Texas, enhancing Matador’s footprint in the lucrative Delaware Basin.

Expansion of Matador’s Operations and Midstream Stake

The acquisition encompasses approximately 33,500 net acres primarily in Lea County, New Mexico, and Loving and Winkler Counties, Texas—areas known for their rich oil potential. Additionally, Matador will acquire a 19% stake in Piñon Midstream, LLC, expanding its capabilities in midstream operations within the region. This strategic move is expected to significantly bolster Matador’s production capacity and reserve base, positioning the company as a top producer in the Delaware Basin.

Matador Resources Company to acquire Ameredev assets for $1.905 billion, boosting its production and midstream operations in the Delaware Basin.

Strategic Implications and Financial Outlook

With this acquisition, Matador’s total net acres in the Delaware Basin will increase to over 190,000, supporting an estimated production of over 180,000 barrels of oil equivalent per day. The transaction is projected to add 118 million barrels of oil equivalent (BOE) to Matador’s reserves, a 26% increase from its 2023 year-end figures. The company anticipates the acquisition will generate an adjusted EBITDA of approximately $425 to $475 million in the following year, reflecting a favorable purchase price multiple of 4.2x for the upstream assets.

Leadership and Financial Backing

Joseph Wm. Foran, Founder, Chairman, and CEO of Matador, expressed enthusiasm about the acquisition, noting its alignment with Matador’s long-term strategy and its financial and operational benefits. “This acquisition positions Matador for continued success and growth as one of the top ten producers in the Delaware Basin,” said Foran. To support the transaction, Matador has secured enhanced financial commitments from PNC Bank, including a 50% increase in the elected commitment under its credit facility to $2.25 billion and an additional $250 million Term Loan A.

Closing Conditions and Anticipated Benefits

The transaction is subject to customary closing conditions and is slated for completion in the third quarter of 2024. Matador anticipates that the integrated operations will not only enhance its production capabilities but also provide substantial operational efficiencies and cost savings. The deal is seen as a strategic fit within Matador’s portfolio, complementing its existing operations and offering significant potential for future growth.