One of the Permian Basin operators says it too is cutting capital expenditures and drilling activity because of the plunging oil prices. Word came from Matador Resources Company which indicated its drilling efforts will be cut in half for the rest of 2020. Executives are also taking cuts in pay.
The company said it will slash its drilling program from six rigs to three before June 30. It will release of one of its six operated rigs by the end of March and will release two more before the end of the second quarter of 2020. Only three rigs will be operated for the remainder of the year.
Matador leadership also indicated it will pursue divestitures of some of its non-core assets including possible sales of leasehold and mineral interests in South Texas and the Haynesville shale of East Texas. It might even sell some of its assets in the Delaware Basin of West Texas and southeast New Mexico.
Matador anticipates suspending its development activities in the Wolf asset area in Loving County, Texas by the end of the first quarter of 2020. The Company is currently evaluating multiple options to optimize its drilling and completions activities beyond the first quarter of 2020, but as it reduces its operated rig count from six to three rigs, Matador expects to keep at least two of these rigs operating full time in the Stateline asset area in Eddy County, New Mexico.
Matador said it is also evaluating other options for increasing its cash flow and for further reducing its operating expenses and capital spending, if necessary, in the second half of 2020. Matador currently anticipates minimal changes to the planned 2020 capital expenditures for its San Mateo midstream affiliate.
Joseph Wm. Foran, Matador’s Chairman and CEO, commented, “As we navigate this abrupt change in oil prices, our first priority is to protect our balance sheet and to position ourselves for the long run. Due to the quality and flexibility of our lease positions, we believe these selective actions to reduce spending should permit us to strengthen our balance sheet and create further value for our shareholders throughout 2020. While we believe these are the appropriate steps to take at this time, we stand prepared to take additional actions, if necessary, to conserve cash and reduce spending.”
As part of the company efforts to save money, Foran volunteered to take a 25% cut in his base salary and board members agreed to reduce their compensation by 25%. Executive officers and Vice Presidents are also taking pay cuts.
Source: Matador Resources