$95K/NMA in Delaware Basin

Texas Mineral Rights Reeves County, TX
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Bloomberg reports Matador Resources paid record $95,001 per acre

Bloomberg reported last week that Dallas-based Matador Resources was the anonymous company that bid a record $95,001 per acre for drilling rights on a portion of land offered in U.S. Bureau of Land Management’s oil and gas lease sale Sept. 5-6 in New Mexico. David Lancaster, CFO, told Bloomberg that the record lease was part of $387 million Matador spent on 8,400 net acres in Eddy and Lea counties ($46,000 per net acre). Santa Fe’s Federal Abstract Co. bid on behalf of anonymous investors. “We feel it’s some of the best acreage in New Mexico,” Lancaster said. The leases are 10-year terms and 12.5 percent royalty.

Matt Hairford, president, said the purchases will not affect Matador’s 2018 capital budget because they won’t be drilled until late 2019. The acquisitions will allow Matador to drill longer laterals of two miles or more. The undeveloped acreage includes 2,800 gross/net acres in Stateline, 4,800 gross/net acres in Antelope Ridge, 400 gross/net acres in Arrowhead and 400 gross/net acres in Twin Lakes. Matador now has about 217,400 gross acres (123,800 net) in the Delaware Basin. Matador added, “Most of the acreage is prospective for multiple geologic targets in areas where operators have already achieved strong well results.” /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

The Delaware extends up into New Mexico but the highest natural gas liquids production is in the Delaware south…from Toyah in Reeves county through Van Horn in Culberson county and to the Orogrande basin at Sierra Blanca in Hudspeth county.

, Reeves county, Tx.

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10 year term and 12.5% royalty

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Staring at an interest accrual of ~$20 million per year (assuming a conservative estimate of 5% interest), can they really afford to wait 10 years to drill? On the flip slide, Matador is going to have to spend the first year jumping through the hoops of NEPA and FPLMA before obtaining a permit to drill. After that, it will take about a year and a half to drill and reach payback on the first well(s). Thus, if everything goes according to plan, in two and a half years they can start paying down the leasehold costs ($387 mm plus interest accrued). From my perspective, this damn sure better be some of the best acreage in the Permian.

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Whats Matadors Ph. number I think we would sell half of our 1% on 186 nma in lea co. for 3 million thats little less than 18,000 . Thats ORRI