Matador Resources Company Prices Upsized Offering of $900 Million of Senior Notes Due 2032

Rhea-AI Summary

Matador Resources Company (MTDR) announced a private offering of $900 million of 6.500% senior unsecured notes due 2032, increasing from the initial $800 million. The offering is expected to close on April 2, 2024. The net proceeds will be used for repurchasing outstanding senior notes, general corporate purposes, potential acquisitions, and repayment of borrowings. The New Notes and related guarantees have not been registered under the Securities Act of 1933.

Insights

Financial Analyst

The pricing of Matador Resources Company's $900 million senior unsecured notes is a significant financial move, reflecting the company's capital raising strategy. The increment from the initially planned $800 million to $900 million suggests strong investor demand or a greater need for capital than initially anticipated. This could indicate that Matador is aggressively looking to fund acquisitions or reduce debt costs by repurchasing higher-interest notes ahead of maturity.

From an investment perspective, the increase in offering size and the use of proceeds to repurchase existing debt and for general corporate purposes, including potential acquisitions, could signal a strategic shift or expansion. This may affect the stock's volatility in the short term as the market digests the implications of the increased debt load and potential for growth through acquisitions. Over the long term, if the acquisitions or debt restructuring improve Matador's financial position or market share, it could lead to a reevaluation of the company's valuation by investors.

Debt Market Analyst

Matador's choice to issue senior unsecured notes at a 6.500% interest rate, despite the existing 5.875% notes, reflects current market conditions and the company's creditworthiness. The interest rate differential suggests a market perception of increased risk or an overall rise in interest rates since the issuance of the 2026 Notes. It's important to note that senior unsecured notes are ranked higher in repayment hierarchy than subordinated debt, but they do not have the security of collateral, which may affect their attractiveness to risk-averse investors.

The tender offer to repurchase the 2026 Notes before maturity could be seen as a move to manage the company's debt profile, potentially reducing future interest expenses. However, investors should also consider the implications of the new notes' maturity in 2032, which extends the company's debt obligations further into the future. This could impact the company's cash flow and financial flexibility, particularly if the energy market faces volatility.

Energy Sector Analyst

Matador Resources operates in the energy sector, which is known for its capital-intensive nature and sensitivity to commodity prices. The decision to raise capital through the debt market is not uncommon in this industry, especially for funding acquisitions or capital expenditures. The use of proceeds for general corporate purposes suggests that Matador may be positioning itself to take advantage of opportunities in the market, such as acquiring assets at competitive prices or investing in new technologies.

Investors should consider the underlying commodity price environment when evaluating Matador's financial strategy. If the company can secure assets that enhance its production capabilities or reserves at a time when oil and gas prices are favorable, this could strengthen its market position. However, the cyclical nature of the energy market means that these investments come with inherent risks and the additional debt could strain the company's balance sheet if the market turns.

DALLAS--(BUSINESS WIRE)-- Matador Resources Company (NYSE: MTDR) (“Matador”) today announced that it has priced a private offering of $900 million of 6.500% senior unsecured notes due 2032 (the “New Notes”) at a price of 100% of their face value. Matador increased the size of the offering to $900 million from the previously announced $800 million. The offering is expected to close on April 2, 2024, subject to customary closing conditions.

Matador intends to use the net proceeds from the offering (i) to repurchase any and all of the approximately $699.2 million outstanding aggregate principal amount of its 5.875% senior notes due 2026 (the “2026 Notes”) through a cash tender offer (the “Tender Offer”), and to pay related premiums, fees and expenses in connection with the Tender Offer, and (ii) for general corporate purposes, which may include the funding of acquisitions and the repayment of borrowings outstanding under Matador’s revolving credit facility. To the extent any 2026 Notes remain outstanding after the consummation of the Tender Offer, Matador intends to satisfy and discharge any remaining 2026 Notes in accordance with the terms of the indenture governing the 2026 Notes. The Tender Offer is being made solely pursuant to the terms of an offer to purchase and related notice of guaranteed delivery, each dated as of March 26, 2024.

The New Notes and related guarantees have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the applicable securities laws of any state or other jurisdiction and may not be offered, transferred or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and the applicable securities laws of any state or other jurisdiction. The New Notes may be resold by the initial purchasers to persons they reasonably believe to be “qualified institutional buyers” pursuant to Rule 144A and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. This press release is being issued pursuant to Rule 135c under the Securities Act, does not constitute a notice of redemption or satisfaction and discharge under the indenture governing the 2026 Notes and is neither an offer to sell nor a solicitation of an offer to buy any security, including the New Notes, nor a solicitation for an offer to purchase any securities, including the New Notes or the 2026 Notes, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Matador Resources Company
Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, Matador conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.

Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, future liquidity, the payment of dividends, results in certain basins, objectives, project timing, expectations and intentions, regulatory and governmental actions and other statements that are not historical facts. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, risks and uncertainties related to the capital markets generally, whether the Company will offer the New Notes or consummate the offering, the anticipated terms of the New Notes and the anticipated use of proceeds, including the repurchase of the 2026 Notes, as well as the following risks related to financial and operational performance: general economic conditions; the Company’s ability to execute its business plan, including whether its drilling program is successful; changes in oil, natural gas and natural gas liquids prices and the demand for oil, natural gas and natural gas liquids; its ability to replace reserves and efficiently develop current reserves; the operating results of the Company’s midstream oil, natural gas and water gathering and transportation systems, pipelines and facilities, the acquiring of third-party business and the drilling of any additional salt water disposal wells; costs of operations; delays and other difficulties related to producing oil, natural gas and natural gas liquids; delays and other difficulties related to regulatory and governmental approvals and restrictions; impact on the Company’s operations due to seismic events; its ability to make acquisitions on economically acceptable terms; its ability to integrate acquisitions; disruption from the Company’s acquisitions making it more difficult to maintain business and operational relationships; significant transaction costs associated with the Company’s acquisitions; the risk of litigation and/or regulatory actions related to the Company’s acquisitions; availability of sufficient capital to execute its business plan, including from future cash flows, available borrowing capacity under its revolving credit facilities and otherwise; the operating results of and the availability of any potential distributions from our joint ventures; weather and environmental conditions; and the other factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240326913263/en/

Mac Schmitz

Vice President – Investor Relations

investors@matadorresources.com

(972) 371-5225

Source: Matador Resources Company

FAQ

What is the purpose of the $900 million private offering announced by Matador Resources Company (MTDR)?

The purpose is to repurchase outstanding senior notes, general corporate purposes, potential acquisitions, and repayment of borrowings.

When is the expected closing date of the private offering by Matador Resources Company (MTDR)?

The offering is expected to close on April 2, 2024.

Have the New Notes and related guarantees been registered under the Securities Act of 1933?

No, the New Notes and related guarantees have not been registered under the Securities Act of 1933.

What is the interest rate on the senior unsecured notes due 2032 offered by Matador Resources Company (MTDR)?

The interest rate is 6.500%.

What was the initial size of the private offering announced by Matador Resources Company (MTDR)?

The initial size of the offering was $800 million.