Matador Resources, a US independent producer focused on unconventional development, is planning to sell portions of its non-core acreage in South Texas and in Louisiana’s Haynesville play. The company is intending to focus more heavily on operations in the Permian’s Delaware sub-basin.
In a news release, Matador said that volatile oil prices had prompted it to scale back its drilling activity in South Texas’ Eagle Ford shale and look at selling other non-core assets. The company said it would release its South Texas rig upon the completion of its drilling programme in the region this month.
This comes after Matador started a short-term drilling programme in October 2018 – when the oil price environment was more favourable – in South Texas. Under the programme, the company aimed to drill up to 10 wells, primarily in the Eagle Ford, to conduct at least one test of the Austin Chalk formation and to validate and hold by production almost all of its remaining undeveloped Eagle Ford acreage. By January 30, 2019, Matador said it had completed drilling operations on seven of these new drilled wells, including six Eagle Ford wells and one Austin Chalk well. The company added that it aimed to drill two additional Eagle Ford wells prior to concluding its South Texas drilling programme. Once the rig is released, there are no plans to move it to the Delaware Basin, Matador noted.
One of the Eagle Ford shale wells in the current programme was completed and brought online during the fourth quarter of 2018. The remaining eight wells are expected to be completed and brought to production late in the first quarter or early in the second quarter of 2019.
“During 2019, we plan to continue our focus of executing on the highest rate of return opportunities across our Delaware properties and midstream operations, which served us well in 2018,” commented Matador’s chairman and CEO, Joseph Foran. “Matador plans to reduce activity and has built considerable flexibility into its operated drilling programme, with several rigs on short-term contracts for six months or less, enabling us to further reduce our drilling activity quickly in 2019 should economic circumstances dictate,” he added.
“Matador has often made some of its most significant strides during uncertain times by protecting its balance sheet and continuing to seek operational progress at a measured, profitable pace, and we anticipate that 2019 will be no different,” Foran said.
In September, Matador acquired a further 8,400 net acres (34 square km) of “high-value” property in the Delaware Basin, taking its total footprint in the basin to 123,800 net acres (501 square km). Currently, it also holds 27,800 net acres (113 square km) in the Eagle Ford shale in South Texas and 23,300 net acres (94 square km) in Northwest Louisiana, 12,500 acres (51 square km) of which are located in the Haynesville shale.
In the fourth quarter of 2018, Matador operated six rigs in the Delaware Basin, and it expects to maintain this number over the course of 2019 “assuming no significant change to oil and natural gas prices”.
Matador’s latest news release did not contain further details of its sell-off targets or a timeline.