Matador Q3 Free Cash Flow Reaches $288 Million as Gas Prices Recover

Matador Resources Company (NYSE: MTDR) generated $288 million of adjusted free cash flow in the third quarter of 2026 as higher production, a sharp recovery in realized natural gas prices and lower capital spending strengthened its capacity to reduce debt. The company also increased its annualized dividend by 17% and expects recently completed acquisitions to support sequential production growth in the fourth quarter.

Average production reached 230,470 barrels of oil equivalent per day, up 10% from the third quarter of 2025. Oil and natural gas revenue totaled $1.22 billion and $162 million, respectively, both company records. Net income attributable to Matador shareholders was $172.1 million, compared with $176.4 million a year earlier, while adjusted EBITDA attributable to shareholders rose to $738.3 million from $566.5 million.

Net cash provided by operating activities was $594.4 million. Adjusted free cash flow increased to $287.6 million from $93.4 million in the prior-year quarter, bringing the year-to-date total above $700 million. Adjusted EBITDA and adjusted free cash flow are non-GAAP measures.

Gas realizations recover as Hugh Brinson enters service

Matador’s realized natural gas price improved to $2.99 per thousand cubic feet from negative $0.79 in the second quarter. Quarterly natural gas revenue consequently rose to $162 million from negative $39 million, an uplift of about $200 million. Natural gas production also increased about 10% sequentially to 590 million cubic feet per day.

The company began moving gas through the Hugh Brinson pipeline on Sept. 1, and the pipeline was fully in service during September. Matador has secured 500,000 MMBtu per day of firm capacity on the system without providing capital for its construction.

Capital discipline also supported cash generation. Third-quarter capital expenditures were $381 million, down $91 million, or 19%, from a year earlier. Drilling and completion costs averaged $804 per completed lateral foot, 6% below the third quarter of 2025.

Matador said operating improvements offset inflationary pressure on its 2026 drilling and completion program, producing about $66 million of capital savings for footage turned to sales. Annual footage drilled per rig is projected to increase 31% from 2025, allowing eight rigs to deliver the amount of work that would have required 10.5 rigs last year. The company also reported about $15 million of operating-expense savings through improved efficiencies.

Debt reduction and dividend increase

Matador repaid $150 million of debt in October and expects total fourth-quarter repayments of $350 million to $400 million. Based on late-October commodity prices, management is targeting a leverage ratio of about 1.5 times by year-end, compared with 1.9 times immediately after the Paloma and Ridge Runner acquisition closings.

The quarterly dividend was increased to $0.4375 per share, equivalent to $1.75 annually. That represents a 17% increase from the previous annualized rate.

The company estimated total proved reserves of 771 million BOE as of Sept. 30 on a pro forma basis for Paloma and Ridge Runner, up 16% from year-end 2025. The estimate is unaudited and based on internal management calculations using third-quarter SEC pricing. About 766 million BOE of the total was associated with the Delaware Basin.

Paloma, which closed Oct. 1, added approximately 16,500 net Delaware Basin acres and 156 net locations. The acquired assets produced about 12,200 BOE per day during the third quarter, with oil accounting for 55% of output. Ridge Runner closed Oct. 8 and added 13,600 net Woodford acres as part of a 50,000-net-acre position, along with 150 net locations. Matador expects to drill up to 25 wells associated with Paloma and as many as 15 Woodford wells by the end of 2027.

Midstream earnings reach a record

San Mateo Midstream reported net income of $46.9 million and record adjusted EBITDA of $94 million, up 27% from the year-earlier quarter. Combined adjusted EBITDA from San Mateo and Matador’s wholly owned midstream assets was $101.4 million.

Following the Cardinal acquisition, San Mateo has more than 1 billion cubic feet per day of natural gas processing capacity, 24 third-party customers and about 830 miles of three-stream pipelines. Matador’s combined wholly owned and San Mateo midstream network spans approximately 1,110 miles.

San Mateo also entered into a new long-term, fixed-fee gathering and processing agreement with a large Delaware Basin producer and extended an existing agreement with the same customer. The new contract supports construction of the planned 300 million-cubic-foot-per-day Marlan processing plant and a field treating facility. Matador projects 2026 combined midstream adjusted EBITDA of $385 million to $395 million, including a $25 million contribution from Cardinal between August and December.

Fourth-quarter outlook

Matador expects fourth-quarter production of 238,000 to 242,000 BOE per day, including oil output of 136,000 to 138,000 barrels per day. Management anticipates sequential growth of 4% in total production, primarily reflecting the Paloma and Ridge Runner acquisitions, and 3% in oil production.

Full-year production guidance is 223,000 to 224,000 BOE per day, with oil production of 128,750 to 129,250 barrels per day. The company expects 2026 oil production to rise 7% year over year, or 6% excluding Paloma and Ridge Runner.

Full-year capital expenditures are projected at $1.67 billion to $1.73 billion, including $1.50 billion to $1.54 billion for drilling, completion and equipping and $170 million to $190 million for midstream projects. Matador expects to turn 21 to 23 net operated wells to sales in the fourth quarter and 112.6 net operated wells for the full year.

Results and guidance remain exposed to commodity-price volatility, operational and inflationary pressures, regulatory changes, financing conditions and the company’s ability to integrate acquisitions and realize their expected benefits. Matador also identified construction and permitting delays, midstream performance, tariffs, trade tensions, weather, seismic activity and cybersecurity as potential risks.