Matador (MTDR) To Trim Drilling Program As Oil Price Plunges
Zacks Investment Research | Mar 11, 2020 09:16PM ET
Matador Resources Company (NYSE:MTDR) has provided a glimpse of its 2020 operational update. Notably, the explorer’s updated program was a response to plummeting oil prices.
Crude oil is trading in the bearish territory as the novel coronavirus outbreak has been affecting global energy demand. Thus, to combat plunging oil prices, the explorer is planning to significantly lower drilling activities.
By the first half of this year, the company intends to reduce its drilling program to three rigs from six. By the end of March, Matador is likely to release one of its six operated rigs. Of the remaining five rigs, the company will release two more by the end of the June-quarter of 2020. Thus, the upstream energy firm will be operating only three rigs through the second half of 2020.
Apart from reducing drilling activities, Matador is considering trimming its operating costs that will include lease operating (LOE) and general and administrative (G&A) expenses. Moreover, to protect its balance sheet, the company has decided to continue to divest part of its non-core properties. The assets to be divested might comprise leasehold and mineral interests in Haynesville shale and South Texas.
It is to be noted that all 11 lenders in the commercial banking group of Matador have unanimously affirmed the company’s borrowing base at $900 million. The upstream firm has also chosen to boost its elected borrowing commitment to $700 million from $500 million. Importantly, Matador believes that the borrowing base and elected commitment reflect ample liquidity to weather the challenging business environment.
Moreover, to protect the company’s financials as a measure to combat weak oil prices, Joseph Wm. Foran, Matador's Chairman and CEO, has voluntarily decided to slash his base salary by 25%. While the board members of the company will not mind a 25% cut in compensation, the vice presidents and executive officers have decided to cut base salaries in the range of 10% to 20%.
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