Matador Resources (NYSE: MTDR) reported second-quarter 2026 average production of 215,631 BOE per day, up 3% year over year, and net cash from operating activities of $937.1 million. Record oil production, new-well outperformance and $303.2 million of adjusted free cash flow outweighed the operational impact of negative Waha gas prices and third-party maintenance.
Core earnings data
Production exceeded the company’s quarterly guidance despite approximately 9,900 BOE per day of shut-ins. The main operating driver was better output from wells placed into production during the first half, including 13 wells on the Guss pad with Matador’s first 3.4-mile laterals.
Cash generation also accelerated from the first quarter, giving the company additional capacity to repay acquisition-related borrowings while continuing its drilling and midstream investments.
| Metric | Q2 2026 | Reported comparison |
|---|---|---|
| Total production | 215,631 BOE/d | 209,013 BOE/d in Q2 2025; up 3% |
| Oil production | 126,106 bbl/d | Up 3% year over year; quarterly record |
| Natural gas production | 537.1 MMcf/d | Up 4% year over year |
| Net cash from operating activities | $937.1 million | Q2 actual |
| Adjusted free cash flow | $303.2 million | $113.3 million in Q1 2026; nearly tripled sequentially |
| Operating expenses | $32.90 per BOE | Near the high end of the prior $31-$33 guidance range |
| Total capital expenditures | $436.1 million | Near the low end of the $430-$460 million quarterly range |
Adjusted free cash flow is a non-GAAP measure attributable to Matador shareholders after accounting for third-party non-controlling interests.
Business and segment performance
Upstream production overcame gas-market disruptions
Matador placed 23.7 net operated wells into production during the quarter. Better-than-expected performance from new wells helped total output exceed the midpoint of quarterly guidance by 3%, even as weak Waha pricing and scheduled third-party treatment-plant maintenance reduced production by approximately 9,900 BOE per day.
Commodity realizations moved in opposite directions. Realized oil prices increased 53% year over year to $98.16 per barrel, while realized natural gas prices fell from $2.05 per Mcf to negative $0.79 per Mcf. The negative gas realization explains the company’s decision to shut in some volumes despite the broader production growth.
Matador’s proved oil and gas reserves increased 5% from 667 million BOE at the end of 2025 to a record 703 million BOE as of June 30, 2026.
Midstream gas volumes grew while oil and water volumes declined
San Mateo and Matador’s wholly owned midstream assets generated combined quarterly net income of $57.9 million and adjusted EBITDA of $89.9 million. San Mateo distributed $30.1 million to Matador during the quarter.
Natural gas gathering throughput increased 18% year over year to 577 MMcf per day, while processing throughput rose 14% to 552 MMcf per day. In contrast, oil gathering and transportation volumes declined 17% to 41,600 barrels per day, and produced-water handling volumes fell 17% to 343,400 barrels per day.
After the quarter, San Mateo completed the Cardinal Midstream acquisition on July 31. The acquired assets include approximately 320 MMcf per day of designed gas-processing capacity and about 145 miles of gathering pipelines, expanding both third-party volumes and Matador’s flow assurance.
Profitability, cash flow and the balance sheet
Operating expenses reached $32.90 per BOE largely because non-cash DD&A expense was $16.06 per BOE, above the expected $15.65. Matador attributed the increase primarily to proved undeveloped reserves booked following the May federal lease sale. Lease operating expense was more favorable at $5.45 per BOE versus the expected $5.60, supported by lower repair and maintenance costs.
The quarter’s $303.2 million of adjusted free cash flow allowed Matador to repay more than $200 million of borrowings associated with the federal lease sale. The company also reported that its reserve-based lending balance was fully repaid in May, while the elected commitment was subsequently increased by $500 million to $2.75 billion.
Matador repurchased 225,000 shares for $11 million during the quarter at an average price of approximately $49.59 per share. Its announced acquisitions are expected to be financed with cash on hand and borrowings under the existing credit facility, with free cash flow prioritized for subsequent debt reduction.
Earnings guidance
Matador raised its full-year production outlook after the second-quarter outperformance, improved expectations for organic production in the second half and the planned Paloma and Ridge Runner acquisitions. The midpoint of total production guidance increased 4% from 213,250 to 221,000 BOE per day.
The higher outlook comes with additional spending. Planned well activity, non-operated development and midstream integration raised the capital budget, although the expected 2026 cost per completed lateral foot remains unchanged at $785-$805.
| Metric | Latest 2026 guidance | Previous guidance | Change |
|---|---|---|---|
| Oil production | 127,500-129,000 bbl/d | 123,000-125,000 bbl/d | Increased |
| Natural gas production | 546-567 MMcf/d | 525-545 MMcf/d | Increased |
| Total production | 218,500-223,500 BOE/d | 210,500-216,000 BOE/d | Increased |
| Operating expenses | $32-$34 per BOE | $31-$33 per BOE | Increased |
| D/C/E capital expenditures | $1.48-$1.56 billion | $1.35-$1.44 billion | Increased |
| Midstream capital expenditures | $145-$165 million | $100-$110 million | Increased |
| Total capital expenditures | $1.625-$1.725 billion | $1.45-$1.55 billion | Increased |
The new guidance includes expected production from Paloma and Ridge Runner, which are scheduled to close in the fourth quarter subject to customary conditions. Excluding these acquisitions, Matador expects organic oil production to increase 6% year over year, compared with its original 3% growth expectation.
For the third quarter, Matador expects total production of 222,000-226,000 BOE per day, including oil production of 128,500-130,500 barrels per day. The forecast excludes Paloma and Ridge Runner volumes. Third-quarter capital expenditures are projected at $410-$440 million.
Management also estimates approximately $900 million of adjusted free cash flow for full-year 2026 based on late-July strip pricing. Its goal of reaching or approaching 1.0 times leverage by the end of 2027 remains dependent primarily on free cash flow and commodity prices.
Management outlook
Management expects future wells on the federal lease and Paloma assets to cost 15%-20% less per completed lateral foot than Matador’s current average. It also projects that their average 12-month cumulative oil production will be 20%-30% higher than that of wells placed into production in previous years. These figures remain forward-looking expectations rather than realized results.
For natural gas, Matador expects transportation on Energy Transfer’s Hugh Brinson pipeline to begin by the end of the third quarter, earlier than previously anticipated. The company has secured 500,000 MMBtu per day of firm transportation and estimates that each $0.50 per MMBtu improvement in its average realized gas price could add approximately $90 million in annual revenue.
Recent insider transactions
The earnings release said Matador’s directors and executive officers purchased approximately 13,000 shares during the second quarter. The latest individual purchase records supplied include the following transactions; they are presented without drawing conclusions about insiders’ views of the company’s valuation or outlook.
| Date | Insider | Position | Transaction | Price | Reported value |
|---|---|---|---|---|---|
| Jun. 15, 2026 | Robert Gaines Baty | Director | Purchase | $51.44 | $25,720 |
| Jun. 9, 2026 | Glenn W. Stetson | Chief Operating Officer | Purchase | $53.41 | $26,705 |
| Jun. 9, 2026 | Joseph Wm. Foran | Chief Executive Officer | Purchase | $53.07 | $106,140 |
| Jun. 8, 2026 | Monika U. Ehrman | Director | Purchase | $55.28 | $20,011 |
| Jun. 4, 2026 | Joseph Wm. Foran | Chief Executive Officer | Purchase | $56.25 | $112,500 |
Risks investors should monitor
- Natural gas pricing and infrastructure constraints: Matador realized negative $0.79 per Mcf gas pricing and shut in volumes because of weak Waha prices and third-party maintenance. Delays in improved takeaway capacity could continue to affect production and revenue realization.
- Acquisition execution: The production guidance includes contributions from Paloma and Ridge Runner, but both transactions remain subject to closing conditions. Delays or integration problems would affect the expected fourth-quarter production contribution and capital program.
- Higher operating and capital costs: Full-year operating expense and capital expenditure guidance both increased. Additional DD&A, Cardinal-related midstream expenses and accelerated drilling could weigh on reported profitability or free cash flow.
- Commodity-price dependence and leverage: The approximately $900 million adjusted free cash flow estimate and the end-2027 leverage target depend on commodity prices. Lower oil or gas realizations could slow debt repayment after acquisition-related borrowing.
- Unproven acquisition assumptions: Expected cost reductions and productivity gains for the newly acquired inventory have not yet been demonstrated across a full development program.
Summary
Matador’s second quarter was defined by record oil output, better new-well performance and substantially higher sequential adjusted free cash flow despite negative regional gas prices. The company raised production guidance and expanded its drilling and midstream budget as it adds inventory through acquisitions. Execution on those acquisitions, improved gas realizations, capital discipline and progress toward the leverage target are the main items to monitor through the second half of 2026.
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