Matador Resources Co

Previous wording

In this Quarterly Report on Form 10-Q (this “Quarterly Report”), (i) references to “we,” “our” or the “Company” refer to Matador Resources Company and its subsidiaries as a whole (unless the context indicates otherwise), (ii) references to “Matador” refer solely to Matador Resources Company, (iii) references to “San Mateo” refer to San Mateo Midstream, LLC, collectively with its subsidiaries, (iv) references to “Pronto” refer to Pronto Midstream, LLC together with its subsidiary, (v) references to “Advance” refer to Advance Energy Partners Holdings, LLC and (vi) references to the “Advance Acquisition” refer to the acquisition of Advance from affiliates of EnCap Investments L.P., including certain oil and natural gas producing properties, undeveloped acreage and midstream assets located primarily in Lea County, New Mexico and Ward County, Texas, that was completed by a subsidiary of the Company on April 12, 2023, and the acquisition of additional interests from affiliates of EnCap Investments L.P., including overriding royalty interests and royalty interests in certain oil and natural gas properties located primarily in Lea County, New Mexico on December 1, 2023. For certain oil and natural gas terms used in this Quarterly Report, please see the “Glossary of Oil and Natural Gas Terms” included with the Annual Report.

Current wording

In this Quarterly Report on Form 10-Q (this “Quarterly Report”), (i) references to “we,” “our” or the “Company” refer to Matador Resources Company and its subsidiaries as a whole (unless the context indicates otherwise), (ii) references to “Matador” refer solely to Matador Resources Company, (iii) references to “San Mateo” refer to San Mateo Midstream, LLC, collectively with its subsidiaries, (iv) references to “Pronto” refer to Pronto Midstream, LLC together with its subsidiary, (v) references to “Advance” refer to Advance Energy Partners Holdings, LLC, (vi) references to the “Advance Acquisition” refer to the acquisition of Advance from affiliates of EnCap Investments L.P., including certain oil and natural gas producing properties, undeveloped acreage and midstream assets located primarily in Lea County, New Mexico and Ward County, Texas, that was completed by a subsidiary of the Company on April 12, 2023, and the acquisition of additional interests from affiliates of EnCap Investments L.P., including overriding royalty interests and royalty interests in certain oil and natural gas properties located primarily in Lea County, New Mexico on December 1, 2023, (vii) references to “Ameredev” refer to Ameredev Stateline II, LLC, (viii) references to “Piñon” refer to Piñon Midstream, LLC, which has midstream assets in southern Lea County, New Mexico, and (ix) references to the “Ameredev Acquisition” refer to the acquisition of Ameredev from affiliates of EnCap Investments L.P., including (a) certain oil and natural gas producing properties and undeveloped acreage located in Lea County, New Mexico and Loving and Winkler Counties, Texas, and (b) an approximate 19% stake in the parent company of Piñon, which was completed by a subsidiary of the Company on September 18, 2024. For certain oil and natural gas terms used in this Quarterly Report, please see the “Glossary of Oil and Natural Gas Terms” included with the Annual Report.

Previous wording

By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include those described in the “Risk Factors” section of the Annual Report, as well as the following factors, among others: general economic conditions; our ability to execute our business plan, including whether our drilling program is successful; changes in oil, natural gas and natural gas liquids (“NGL”) prices and the demand for oil, natural gas and NGLs; our ability to replace reserves and efficiently develop current reserves; the operating results of our midstream business’s oil, natural gas and water gathering and transportation systems, pipelines and facilities, the acquiring of third-party business and the drilling of any additional salt water disposal wells; costs of operations; delays and other difficulties related to producing oil, natural gas and NGLs; delays and other difficulties related to regulatory and governmental approvals and restrictions; impact on our operations due to seismic events; availability of sufficient capital to execute our business plan, including from future cash flows, available borrowing capacity under our revolving credit facilities and otherwise; our ability to make acquisitions on economically acceptable terms; our ability to integrate acquisitions, including the Ameredev Acquisition (as defined below); the operating results of and availability of any potential distributions from our joint ventures; weather and environmental conditions; our ability to consummate the Ameredev Acquisition in the anticipated timeframe or at all; risks related to the satisfaction or waiver of the conditions to closing the Ameredev Acquisition in the anticipated timeframe or at all; risks related to obtaining the requisite regulatory approvals for the Ameredev Acquisition; disruption from our acquisitions, including the Ameredev Acquisition, making it more difficult to maintain business and operational relationships; significant transaction costs associated with our acquisitions, including the Ameredev Acquisition; the risk of litigation and/or regulatory actions related to our acquisitions, including the Ameredev Acquisition; and the other factors discussed below and elsewhere in this Quarterly Report and in other documents that we file with or furnish to the SEC, all of which are difficult to predict. Forward-looking statements may include statements about:

Current wording

By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include those described in the “Risk Factors” section of the Annual Report, as well as the following factors, among others: general economic conditions; our ability to execute our business plan, including whether our drilling program is successful; changes in oil, natural gas and natural gas liquids (“NGL”) prices and the demand for oil, natural gas and NGLs; our ability to replace reserves and efficiently develop current reserves; the operating results of our midstream business’s oil, natural gas and water gathering and transportation systems, pipelines and facilities, the acquiring of third-party business and the drilling of any additional salt water disposal wells; costs of operations; delays and other difficulties related to producing oil, natural gas and NGLs; delays and other difficulties related to regulatory and governmental approvals and restrictions; impact on our operations due to seismic events; availability of sufficient capital to execute our business plan, including from future cash flows, available borrowing capacity under our revolving credit facilities and otherwise; our ability to make acquisitions on economically acceptable terms; our ability to integrate acquisitions, including the Ameredev Acquisition; the operating results of and availability of any potential distributions from our joint ventures; weather and environmental conditions; disruption from our acquisitions, including the Ameredev Acquisition, making it more difficult to maintain business and operational relationships; significant transaction costs associated with our acquisitions, including the Ameredev Acquisition; the risk of litigation and/or regulatory actions related to our acquisitions, including the Ameredev Acquisition; and the other factors discussed below and elsewhere in this Quarterly Report and in other documents that we file with or furnish to the SEC, all of which are difficult to predict. Forward-looking statements may include statements about:

Previous wording

For the three months ended June 30, 2024, our total oil equivalent production was 14.6 million BOE, and our average daily oil equivalent production was 160,305 BOE per day, of which 95,488 Bbl per day, or 60%, was oil and 388.9 MMcf per day, or 40%, was natural gas. Our average daily oil production of 95,488 Bbl per day for the three months ended June 30, 2024 increased 25% year-over-year from 76,345 Bbl per day for the three months ended June 30, 2023. Our average daily natural gas production of 388.9 MMcf per day for the three months ended June 30, 2024 increased 19% year-over-year from 326.0 MMcf per day for the three months ended June 30, 2023.

Current wording

For the three months ended September 30, 2024, our total oil equivalent production was 15.8 million BOE, and our average daily oil equivalent production was 171,480 BOE per day, of which 100,315 Bbl per day, or 59%, was oil and 427.0 MMcf per day, or 41%, was natural gas. Our average daily oil production of 100,315 Bbl per day for the three months ended September 30, 2024 increased 29% year-over-year from 77,529 Bbl per day for the three months ended September 30, 2023. Our average daily natural gas production of 427.0 MMcf per day for the three months ended September 30, 2024 increased 24% year-over-year from 345.4 MMcf per day for the three months ended September 30, 2023.

Previous wording

For the second quarter of 2024, we reported net income attributable to Matador shareholders of $228.8 million, or $1.83 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of $164.7 million, or $1.37 per diluted common share, for the second quarter of 2023. For the second quarter of 2024, our Adjusted EBITDA, a non-GAAP financial measure, was $578.1 million, as compared to Adjusted EBITDA of $423.3 million during the second quarter of 2023.

Current wording

For the third quarter of 2024, we reported net income attributable to Matador shareholders of $248.3 million, or $1.99 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of $263.7 million, or $2.20 per diluted common share, for the third quarter of 2023. For the third quarter of 2024, our Adjusted EBITDA, a non-GAAP financial measure, was $574.5 million, as compared to Adjusted EBITDA of $508.3 million during the third quarter of 2023.

Previous wording

For the six months ended June 30, 2024, we reported net income attributable to Matador shareholders of $422.5 million, or $3.45 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of $327.8 million, or $2.73 per diluted common share, for the six months ended June 30, 2023. For the six months ended June 30, 2024, our Adjusted EBITDA, a non-GAAP financial measure, was $1.08 billion, as compared to Adjusted EBITDA of $788.5 million during the six months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, we reported net income attributable to Matador shareholders of $670.8 million, or $5.44 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of $591.5 million, or $4.93 per diluted common share, for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our Adjusted EBITDA, a non-GAAP financial measure, was $1.66 billion, as compared to Adjusted EBITDA of $1.30 billion during the nine months ended September 30, 2023.

Previous wording

For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income and net cash provided by operating activities, see “—Liquidity and Capital Resources—Non-GAAP Financial Measures.” For more information regarding our financial results for the three and six months ended June 30, 2024, see “—Results of Operations” below.

Current wording

For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income and net cash provided by operating activities, see “—Liquidity and Capital Resources—Non-GAAP Financial Measures.” For more information regarding our financial results for the three and nine months ended September 30, 2024, see “—Results of Operations” below.

Previous wording

We began 2024 operating seven drilling rigs in the Delaware Basin. We added an eighth operated drilling rig in the first quarter of 2024 and a ninth operated drilling rig late in the second quarter of 2024. Prior to the closing of the Ameredev Acquisition, we expect Ameredev to operate one drilling rig and to continue operations on 13 drilled but uncompleted (“DUC”) wells. Upon the consummation of the Ameredev Acquisition, which we anticipate to occur late in the third quarter of 2024, subject to customary closing conditions, including regulatory approval, we expect to continue operating a total of nine drilling rigs for the immediate future on the combined Matador and Ameredev properties covering approximately 192,000 net acres. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors.

Current wording

We began 2024 operating seven drilling rigs in the Delaware Basin. We added an eighth operated drilling rig in the first quarter of 2024 and a ninth operated drilling rig late in the second quarter of 2024. Prior to the closing of the Ameredev Acquisition, Ameredev was operating one drilling rig, and upon the consummation of the Ameredev Acquisition, we continued operating a total of nine drilling rigs for the combined Matador and Ameredev properties covering approximately 196,200 net acres. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors.

Previous wording

Our average daily oil equivalent production in the Delaware Basin for the second quarter of 2024 was 156,100 BOE per day, consisting of 94,700 Bbl of oil per day and 368.3 MMcf of natural gas per day, a 25% increase from 125,000 BOE per day, consisting of 75,600 Bbl of oil per day and 296.1 MMcf of natural gas per day, in the second quarter of 2023. These increases were primarily attributable to the Advance Acquisition and the increased number of wells being operated by us and other operators (where we own a working interest). The Delaware Basin contributed approximately 99% of our daily oil production and approximately 95% of our daily natural gas production in the second quarter of 2024, as compared to approximately 99% of our daily oil production and approximately 91% of our daily natural gas production in the second quarter of 2023.

Current wording

Our average daily oil equivalent production in the Delaware Basin for the third quarter of 2024 was 167,000 BOE per day, consisting of 99,600 Bbl of oil per day and 404.0 MMcf of natural gas per day, a 28% increase from 130,400 BOE per day, consisting of 76,800 Bbl of oil per day and 321.6 MMcf of natural gas per day, in the third quarter of 2023. These increases were primarily attributable to the increased number of wells being operated by us and by other operators where we own a working interest. The Delaware Basin contributed approximately 99% of our daily oil production and approximately 95% of our daily natural gas production in the third quarter of 2024, as compared to approximately 99% of our daily oil production and approximately 93% of our daily natural gas production in the third quarter of 2023.

Previous wording

At June 30, 2024, Pronto’s midstream system included a cryogenic natural gas processing plant with a designed inlet processing capacity of 60 MMcf per day (the “Marlan Processing Plant”), four compressor stations and approximately 110 miles of natural gas gathering pipelines in Eddy and Lea Counties, New Mexico, spanning from the northeastern portion of the Arrowhead asset area into the Ranger asset area. Pronto has begun construction on an additional natural gas processing plant with a designed inlet processing capacity of 200 MMcf per day, including a nitrogen rejection unit and additional related facilities, to expand the Marlan Processing Plant.

Current wording

At September 30, 2024, Pronto’s midstream system included a cryogenic natural gas processing plant with a designed inlet processing capacity of 60 MMcf per day (the “Marlan Processing Plant”), four compressor stations and approximately 115 miles of natural gas gathering pipelines in Eddy and Lea Counties, New Mexico, spanning from the northeastern portion of the Arrowhead asset area into the Ranger asset area. Pronto has begun construction on an additional natural gas processing plant with a designed inlet processing capacity of 200 MMcf per day, including a nitrogen rejection unit and additional related facilities, to expand the Marlan Processing Plant.

Previous wording

At July 23, 2024, our estimated drilling, completing and equipping (“D/C/E”) capital expenditures for 2024 remained $1.10 to $1.30 billion, which does not include any D/C/E capital expenditures on acreage to be acquired in the Ameredev Acquisition. At July 23, 2024, our estimated midstream capital expenditures for 2024 remained $200.0 to $250.0 million, which includes our proportionate share of San Mateo’s estimated 2024 capital expenditures as well as the estimated 2024 capital expenditures for other wholly-owned midstream projects, including projects completed by Pronto. The midstream capital expenditures do not include any capital expenditures associated with the approximate 19% stake in Piñon to be acquired in the Ameredev Acquisition. The midstream capital expenditure budget includes 100% of the costs associated with the Marlan Processing Plant expansion, although at July 23, 2024 we were continuing to evaluate potential partners in Pronto that would share in these capital expenditures and strategic opportunities.

Current wording

On October 22, 2024, we increased our estimated drilling, completing and equipping (“D/C/E”) capital expenditures for 2024 to a range of $1.15 to $1.35 billion from a range of $1.10 to $1.30 billion, which includes our expected D/C/E capital expenditures on acreage acquired in the Ameredev Acquisition. At October 22, 2024, our estimated midstream capital expenditures for 2024 remained $200.0 to $250.0 million, which includes our proportionate share of San Mateo’s estimated 2024 capital expenditures as well as the estimated 2024 capital expenditures for other wholly-owned midstream projects, including projects completed by Pronto. The midstream capital expenditure budget includes 100% of the costs associated with the Marlan Processing Plant expansion, although, at October 22, 2024, we were continuing to evaluate potential partners in Pronto that would share in these capital expenditures and strategic opportunities. The midstream capital expenditure budget excludes the acquisition cost of Ameredev’s midstream assets

Previous wording

In February and April 2024, Matador’s Board of Directors (the “Board”) declared quarterly cash dividends of $0.20 per share of common stock. On July 18, 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on September 5, 2024 to shareholders of record as of August 15, 2024.

Current wording

Matador’s Board of Directors (the “Board”) declared quarterly cash dividends of $0.20 per share of common stock in each of the first, second and third quarters of 2024. On October 16, 2024, the Board amended our dividend policy to increase the quarterly dividend to $0.25 per share of common stock for future dividend payments and also declared a quarterly cash dividend of $0.25 per share of common stock payable on December 6, 2024 to shareholders of record as of November 15, 2024.

Previous wording

On March 22, 2024, we and our lenders entered into an amendment to the Fourth Amended and Restated Credit Agreement, which amended our Credit Agreement to, among other things: (i) reaffirm the borrowing base at $2.50 billion, (ii) increase the elected borrowing commitments from $1.325 billion to $1.50 billion, (iii) increase the maximum facility amount from $2.00 billion to $3.50 billion, (iv) extend the maturity date from October 31, 2026 to March 22, 2029, (v) appoint PNC Bank, National Association as administrative agent thereunder and (vi) add five new banks to the lending group. This March 2024 reaffirmation of the borrowing base constituted the regularly scheduled May 1 redetermination.

Current wording

(ii) increase the elected borrowing commitments from $1.325 billion to $1.50 billion, (iii) increase the maximum facility amount from $2.00 billion to $3.50 billion, (iv) extend the maturity date from October 31, 2026 to March 22, 2029, (v) appoint PNC Bank, National Association as administrative agent thereunder and (vi) add five new banks to the lending group. This March 2024 reaffirmation of the borrowing base constituted the regularly scheduled May 1 redetermination.

Previous wording

At June 30, 2024, we had (i) $95.0 million in borrowings outstanding under our Credit Agreement, (ii) approximately $52.8 million in outstanding letters of credit issued pursuant to the Credit Agreement, (iii) $500.0 million of outstanding 6.875% senior notes due 2028 (the “2028 Notes”) and (iv) $900.0 million of outstanding 2032 Notes. Between June 30, 2024 and July 23, 2024, we repaid all $95.0 million of borrowings outstanding under our Credit Agreement.

Current wording

(ii) approximately $52.9 million in outstanding letters of credit issued pursuant to the Credit Agreement, (iii) $500.0 million of outstanding 6.875% senior notes due 2028 (the “2028 Notes”), (iv) $900.0 million of outstanding 2032 Notes and (v) $750.0 million of outstanding 2033 Notes. Between September 30, 2024 and October 22, 2024, we repaid $65.0 million of borrowings under the Credit Agreement.

Previous wording

At June 30, 2024, San Mateo had $512.0 million in borrowings outstanding under San Mateo’s revolving credit facility (the “San Mateo Credit Facility”) and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between June 30, 2024 and July 23, 2024, San Mateo repaid $26.0 million of borrowings under the San Mateo Credit Facility.

Current wording

At September 30, 2024, San Mateo had $526.0 million in borrowings outstanding under San Mateo’s revolving credit facility (the “San Mateo Credit Facility”) and approximately $9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. Between September 30, 2024 and October 22, 2024, San Mateo repaid $32.0 million of borrowings under the San Mateo Credit Facility.

Previous wording

Oil and natural gas revenues. Our oil and natural gas revenues increased $188.4 million, or 32%, to $776.3 million for the three months ended June 30, 2024, as compared to $587.9 million for the three months ended June 30, 2023. Our oil revenues increased $195.2 million, or 38%, to $705.6 million for the three months ended June 30, 2024, as compared to $510.4 million for the three months ended June 30, 2023. The increase in oil revenues resulted from a 25% increase in our oil production to 8.7 million Bbl for the three months ended June 30, 2024, as compared to 6.9 million Bbl for the three months ended June 30, 2023, and an 11% increase in the weighted average oil price realized for the three months ended June 30, 2024 to $81.20 per Bbl, as compared to $73.46 per Bbl for the three months ended June 30, 2023. Our natural gas revenues decreased $6.8 million, or 9%, to $70.7 million for the three months ended June 30, 2024, as compared to $77.6 million for the three months ended June 30, 2023. The decrease in natural gas revenues resulted from a 23% decrease in the weighted average natural gas price realized for the three months ended June 30, 2024 to $2.00 per Mcf, as compared to a weighted average natural gas price of $2.61 per Mcf realized for the three months ended June 30, 2023, which was partially offset by a 20% increase in our natural gas production to 35.4 Bcf for the three months ended June 30, 2024, as compared to 29.7 Bcf for the three months ended June 30, 2023.

Current wording

Oil and natural gas revenues. Our oil and natural gas revenues increased $68.6 million, or 10%, to $770.2 million for the three months ended September 30, 2024, as compared to $701.5 million for the three months ended September 30, 2023. Our oil revenues increased $110.0 million, or 19%, to $698.4 million for the three months ended September 30, 2024, as compared to $588.4 million for the three months ended September 30, 2023. The increase in oil revenues resulted from a 29% increase in our oil production to 9.2 million Bbl for the three months ended September 30, 2024, as compared to 7.1 million Bbl for the three months ended September 30, 2023, which was partially offset by an 8% decrease in the weighted average oil price realized for the three months ended September 30, 2024 to $75.67 per Bbl, as compared to $82.49 per Bbl for the three months ended September 30, 2023. Our natural gas revenues decreased $41.4 million, or 37%, to $71.8 million for the three months ended September 30, 2024, as compared to $113.2 million for the three months ended September 30, 2023. The decrease in natural gas revenues resulted from a 49% decrease in the weighted average natural gas price realized for the three months ended September 30, 2024 to $1.83 per Mcf, as compared to a weighted average natural gas price of $3.56 per Mcf realized for the three months ended September 30, 2023, which was partially offset by a 24% increase in our natural gas production to 39.3 Bcf for the three months ended September 30, 2024, as compared to 31.8 Bcf for the three months ended September 30, 2023.

Previous wording

Third-party midstream services revenues. Our third-party midstream services revenues increased $2.6 million, or 9%, to $32.7 million for the three months ended June 30, 2024, as compared to $30.1 million for the three months ended June 30, 2023. Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in our operated wells. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to $13.4 million for the three months ended June 30, 2024, as compared to $10.3 million for the three months ended June 30, 2023, which was partially offset by a decrease in our third-party natural gas gathering and processing revenues to $15.9 million for the three months ended June 30, 2024, as compared to $17.1 million for the three months ended June 30, 2023.

Current wording

Third-party midstream services revenues. Our third-party midstream services revenues increased $8.4 million, or 28%, to $38.3 million for the three months ended September 30, 2024, as compared to $29.9 million for the three months ended September 30, 2023. Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in our operated wells. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to $15.4 million for the three months ended September 30, 2024, as compared to $10.5 million for the three months ended September 30, 2023, and an increase in our third-party natural gas gathering and processing revenues to $18.8 million for the three months ended September 30, 2024, as compared to $16.7 million for the three months ended September 30, 2023.

Previous wording

Sales of purchased natural gas. Our sales of purchased natural gas increased $14.4 million, or 45%, to $46.3 million for the three months ended June 30, 2024, as compared to $31.9 million for the three months ended June 30, 2023. This increase was primarily the result of a 63% increase in natural gas volumes sold, which was partially offset by an 11% decrease in natural gas price realized. Sales of purchased natural gas reflect those natural gas purchase transactions that we periodically enter into with third parties whereby we purchase natural gas and (i) subsequently sell the natural gas to other purchasers or (ii) process the natural gas at either Pronto’s or San Mateo’s cryogenic natural gas processing plant and subsequently sell the residue natural gas and NGLs to other purchasers. These revenues, and the expenses related to these transactions included in “Purchased natural gas,” are presented on a gross basis in our interim unaudited condensed consolidated statements of income.

Current wording

Sales of purchased natural gas. Our sales of purchased natural gas increased $11.3 million, or 28%, to $51.7 million for the three months ended September 30, 2024, as compared to $40.3 million for the three months ended September 30, 2023. This increase was primarily the result of an 83% increase in natural gas volumes sold, which was partially offset by a 30% decrease in natural gas price realized. Sales of purchased natural gas reflect those natural gas purchase transactions that we periodically enter into with third parties whereby we purchase natural gas and (i) subsequently sell the natural gas to other purchasers or (ii) process the natural gas at either Pronto’s or San Mateo’s cryogenic natural gas processing plant and subsequently sell the residue natural gas and NGLs to other purchasers. These revenues, and the expenses related to these transactions included in “Purchased natural gas,” are presented on a gross basis in our interim unaudited condensed consolidated statements of income.

Previous wording

Realized gain (loss) on derivatives. Our realized gain on derivatives was $3.8 million for the three months ended June 30, 2024, as compared to a realized loss of $3.1 million for the three months ended June 30, 2023. We realized a net gain of $3.8 million related to our natural gas basis differential swap contracts for the three months ended June 30, 2024, resulting primarily from natural gas basis differentials that were below the fixed prices of certain of our natural gas basis differential swap contracts. For the three months ended June 30, 2023, we realized a net loss of $3.1 million related to our natural gas basis differential swap contracts, resulting primarily from natural gas basis differentials that were above the fixed prices of certain of our natural gas basis differential swap contracts. We realized an average gain on our natural gas derivatives of approximately $0.11 per Mcf produced during the three months ended June 30, 2024, as compared to an average loss of approximately $0.10 per Mcf produced during the three months ended June 30, 2023.

Current wording

Realized gain (loss) on derivatives. Our realized gain on derivatives was $4.5 million for the three months ended September 30, 2024, as compared to a realized loss of $7.0 million for the three months ended September 30, 2023. We realized a net gain of $4.5 million related to our natural gas basis differential swap contracts for the three months ended September 30, 2024, resulting primarily from natural gas basis differentials that were below the fixed prices of certain of our natural gas basis differential swap contracts. For the three months ended September 30, 2023, we realized a net loss of $7.0 million related to our natural gas basis differential swap contracts, resulting primarily from natural gas basis differentials that were above the fixed prices of certain of our natural gas basis differential swap contracts. We realized an average gain on our natural gas derivatives of approximately $0.11 per Mcf produced during the three months ended September 30, 2024, as compared to an average loss of approximately $0.22 per Mcf produced during the three months ended September 30, 2023.

Previous wording

Unrealized loss on derivatives. During the three months ended June 30, 2024, the aggregate net fair value of our open oil costless collar and natural gas basis differential swap contracts changed to a net liability of $7.1 million from a net asset of $4.7 million at March 31, 2024, resulting in an unrealized loss on derivatives of $11.8 million for the three months ended June 30, 2024. During the three months ended June 30, 2023, the aggregate net fair value of our open natural gas basis differential swap contracts changed to a net liability of $11.8 million from a net liability of $3.1 million at March 31, 2023, resulting in an unrealized loss on derivatives of $8.7 million for the three months ended June 30, 2023.

Current wording

Unrealized gain (loss) on derivatives. During the three months ended September 30, 2024, the aggregate net fair value of our open oil costless collar and natural gas basis differential swap contracts changed to a net asset of $28.0 million from a net liability of $7.1 million at June 30, 2024, resulting in an unrealized gain on derivatives of $35.1 million for the three months ended September 30, 2024. During the three months ended September 30, 2023, the aggregate net fair value of our open natural gas basis differential swap contracts changed to a net liability of $4.3 million from a net liability of $11.8 million at June 30, 2023, resulting in an unrealized gain on derivatives of $7.5 million for the three months ended September 30, 2023.

Previous wording

Oil and natural gas revenues. Our oil and natural gas revenues increased $389.0 million, or 36%, to $1.48 billion for the six months ended June 30, 2024, as compared to $1.09 billion for the six months ended June 30, 2023. Our oil revenues increased $391.9 million, or 43%, to $1.30 billion for the six months ended June 30, 2024, as compared to $912.1 million for the six months ended June 30, 2023. This increase in oil revenues resulted from a 34% increase in our oil production to 16.4 million Bbl for the six months ended June 30, 2024, as compared to 12.3 million Bbl for the six months ended June 30, 2023 and a 7% increase in the weighted average oil price realized for the six months ended June 30, 2024 to $79.50 per Bbl, as compared to $74.45 per Bbl for the six months ended June 30, 2023. Our natural gas revenues decreased by $2.9 million, or 2%, to $175.8 million for the six months ended June 30, 2024, as compared to $178.7 million for the six months ended June 30, 2023. The decrease in natural gas revenues resulted from a 23% decrease in the weighted average natural gas price realized for the six months ended June 30, 2024 to $2.48 per Mcf, as compared to a weighted average natural gas price of $3.22 per Mcf for the six months ended June 30, 2023, which was partially offset by a 28% increase in our natural gas production to 70.9 Bcf for the six months ended June 30, 2024, as compared to 55.4 Bcf for the six months ended June 30, 2023.

Current wording

Oil and natural gas revenues. Our oil and natural gas revenues increased $457.6 million, or 26%, to $2.25 billion for the nine months ended September 30, 2024, as compared to $1.79 billion for the nine months ended September 30, 2023. Our oil revenues increased $501.9 million, or 33%, to $2.00 billion for the nine months ended September 30, 2024, as compared to $1.50 billion for the nine months ended September 30, 2023. This increase in oil revenues resulted from a 32% increase in our oil production to 25.6 million Bbl for the nine months ended September 30, 2024, as compared to 19.4 million Bbl for the nine months ended September 30, 2023 and a 1% increase in the weighted average oil price realized for the nine months ended September 30, 2024 to $78.12 per Bbl, as compared to $77.41 per Bbl for the nine months ended September 30, 2023. Our natural gas revenues decreased by $44.3 million, or 15%, to $247.5 million for the nine months ended September 30, 2024, as compared to $291.8 million for the nine months ended September 30, 2023. The decrease in natural gas revenues resulted from a 33% decrease in the weighted average natural gas price realized for the nine months ended September 30, 2024 to $2.25 per Mcf, as compared to a weighted average natural gas price of $3.35 per Mcf for the nine months ended September 30, 2023, which was partially offset by a 26% increase in our natural gas production to 110.2 Bcf for the nine months ended September 30, 2024, as compared to 87.2 Bcf for the nine months ended September 30, 2023.

Previous wording

Third-party midstream services revenues. Our third-party midstream services revenues increased $8.4 million, or 15%, to $65.0 million for the six months ended June 30, 2024, as compared to $56.6 million for the six months ended June 30, 2023. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to $27.5 million for the six months ended June 30, 2024, as compared to $20.9 million for the six months ended June 30, 2023, and an increase in our oil transportation revenues to $6.5 million for the six months ended June 30, 2024, as compared to $5.0 million for the six months ended June 30, 2023.

Current wording

Third-party midstream services revenues. Our third-party midstream services revenues increased $16.8 million, or 19%, to $103.3 million for the nine months ended September 30, 2024, as compared to $86.5 million for the nine months ended September 30, 2023. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to $42.9 million for the nine months ended September 30, 2024, as compared to $31.4 million for the nine months ended September 30, 2023, and an increase in our oil transportation revenues to $10.6 million for the nine months ended September 30, 2024, as compared to $7.7 million for the nine months ended September 30, 2023.

Previous wording

Sales of purchased natural gas. Our sales of purchased natural gas increased $29.6 million, or 45%, to $95.7 million for the six months ended June 30, 2024, as compared to $66.2 million for the six months ended June 30, 2023. This increase was the result of a 48% increase in natural gas volumes sold, which was partially offset by a 2% decrease in natural gas price realized.

Current wording

Sales of purchased natural gas. Our sales of purchased natural gas increased $40.9 million, or 38%, to $147.4 million for the nine months ended September 30, 2024, as compared to $106.5 million for the nine months ended September 30, 2023. This increase was the result of a 59% increase in natural gas volumes sold, which was partially offset by a 13% decrease in natural gas price realized.

Previous wording

Realized gain (loss) on derivatives. Our realized gain on derivatives was $4.0 million for the six months ended June 30, 2024, as compared to a realized gain of $0.5 million for the six months ended June 30, 2023. We realized a net gain of $4.0 million related to our natural gas basis differential swap contracts for the six months ended June 30, 2024, resulting primarily from natural gas basis differentials that were below the fixed prices of our natural gas basis differential swap contracts. For the six months ended June 30, 2023, we realized a net gain of $0.5 million related to our natural gas costless collar and natural gas basis differential swap contracts, resulting primarily from natural gas prices that were below the floor prices of certain of our natural gas costless collar contracts, offset by natural gas prices that were above the fixed prices of our natural gas basis differential swap contracts. We realized an average gain on our natural gas derivatives of approximately $0.06 per Mcf produced during the six months ended June 30, 2024, as compared to an average gain of approximately $0.01 per Mcf produced during the six months ended June 30, 2023.

Current wording

Realized gain (loss) on derivatives. Our realized gain on derivatives was $8.6 million for the nine months ended September 30, 2024, as compared to a realized loss of $6.5 million for the nine months ended September 30, 2023. We realized a net gain of $8.6 million related to our natural gas basis differential swap contracts for the nine months ended September 30, 2024, resulting primarily from natural gas basis differentials that were below the fixed prices of our natural gas basis differential swap contracts. For the nine months ended September 30, 2023, we realized a net loss of $6.5 million related to our natural gas costless collar and natural gas basis differential swap contracts, resulting primarily from natural gas prices that were above the fixed prices of our natural gas basis differential swap contracts, offset by natural gas prices that were below the floor prices of certain of our natural gas costless collar contracts. We realized an average gain on our natural gas derivatives of approximately $0.07 per Mcf produced during the nine months ended September 30, 2024, as compared to an average loss of approximately $0.08 per Mcf produced during the nine months ended September 30, 2023.

Previous wording

Unrealized loss on derivatives. During the six months ended June 30, 2024, the aggregate net fair value of our open oil costless collar and natural gas basis differential swap contracts changed to a net liability of $7.1 million from a net asset of $2.7 million at December 31, 2023, resulting in an unrealized loss on derivatives of $9.8 million for the six months ended June 30, 2024. During the six months ended June 30, 2023, the aggregate net fair value of our open natural gas costless collar and natural gas basis differential swap contracts changed to a net liability of $11.8 million from a net asset of $3.9 million at December 31, 2022, resulting in an unrealized loss on derivatives of $15.7 million for the six months ended June 30, 2023.

Current wording

Unrealized gain (loss) on derivatives. During the nine months ended September 30, 2024, the aggregate net fair value of our open oil costless collar and natural gas basis differential swap contracts changed to a net asset of $28.0 million from a net asset of $2.7 million at December 31, 2023, resulting in an unrealized gain on derivatives of $25.4 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the aggregate net fair value of our open natural gas costless collar and natural gas basis differential swap contracts changed to a net liability of $4.3 million from a net asset of $3.9 million at December 31, 2022, resulting in an unrealized loss on derivatives of $8.2 million for the nine months ended September 30, 2023.

Previous wording

Production taxes, transportation and processing. Our production taxes and transportation and processing expenses increased $14.8 million, or 24%, to $76.8 million for the three months ended June 30, 2024, as compared to $62.0 million for the three months ended June 30, 2023. The increase was primarily attributable to a $13.9 million increase in production taxes to $60.1 million for the three months ended June 30, 2024, as compared to $46.2 million for the three months ended June 30, 2023, primarily due to the increase in oil and natural gas revenues between the two periods. On a unit-of-production basis, our production taxes and transportation and processing expenses increased 1% to $5.27 per BOE for the three months ended June 30, 2024, as compared to $5.21 per BOE for the three months ended June 30, 2023.

Current wording

Production taxes, transportation and processing. Our production taxes and transportation and processing expenses increased $1.0 million, or 1%, to $72.7 million for the three months ended September 30, 2024, as compared to $71.7 million for the three months ended September 30, 2023. The increase was primarily attributable to a $5.4 million increase in production taxes to $60.2 million for the three months ended September 30, 2024, as compared to $54.8 million for the three months ended September 30, 2023, which was partially offset by a $4.3 million decrease in transportation and processing expenses to $12.6 million for the three months ended September 30, 2024, as compared to $16.9 million for the three months ended September 30, 2023. This increase in production taxes is primarily due to the increase in oil and natural gas revenues between the two periods. On a unit-of-production basis, our production taxes and transportation and processing expenses decreased 20% to $4.61 per BOE for the three months ended September 30, 2024, as compared to $5.77 per BOE for the three months ended September 30, 2023, primarily due to a favorable one-time transportation fee adjustment with a third-party vendor during the third quarter of 2024.

Previous wording

Lease operating. Our lease operating expenses increased $18.0 million, or 29%, to $79.0 million for the three months ended June 30, 2024, as compared to $61.0 million for the three months ended June 30, 2023. Our lease operating expenses on a unit-of-production basis increased 6% to $5.42 per BOE for the three months ended June 30, 2024, as compared to $5.13 per BOE for the three months ended June 30, 2023. These increases were primarily attributable to the increased number of wells being operated by us and other operators (where we own a working interest) and to operating cost inflation for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

Lease operating. Our lease operating expenses increased $20.4 million, or 31%, to $86.8 million for the three months ended September 30, 2024, as compared to $66.4 million for the three months ended September 30, 2023. Our lease operating expenses on a unit-of-production basis increased 3% to $5.50 per BOE for the three months ended September 30, 2024, as compared to $5.34 per BOE for the three months ended September 30, 2023. These increases were primarily attributable to the increased number of wells being operated by us and other operators (where we own a working interest) and to operating cost inflation for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

Plant and other midstream services operating. Our plant and other midstream services operating expenses increased $6.6 million, or 22%, to $37.3 million for the three months ended June 30, 2024, as compared to $30.7 million for the three months ended June 30, 2023. This increase was primarily attributable to increased throughput volumes from Matador and other San Mateo and Pronto customers, which resulted in (i) increased expenses associated with our expanded pipeline operations of $13.4 million for the three months ended June 30, 2024, as compared to $10.1 million for the three months ended June 30, 2023, and (ii) increased expenses associated with our commercial produced water disposal operations of $16.6 million for the three months ended June 30, 2024, as compared to $13.1 million for the three months ended June 30, 2023.

Current wording

Plant and other midstream services operating. Our plant and other midstream services operating expenses increased $12.9 million, or 42%, to $43.7 million for the three months ended September 30, 2024, as compared to $30.8 million for the three months ended September 30, 2023. This increase was primarily attributable to increased throughput volumes from Matador and other San Mateo and Pronto customers, which resulted in (i) increased expenses associated with our expanded pipeline operations of $16.5 million for the three months ended September 30, 2024, as compared to $9.9 million for the three months ended September 30, 2023, and (ii) increased expenses associated with our commercial produced water disposal operations of $16.7 million for the three months ended September 30, 2024, as compared to $12.5 million for the three months ended September 30, 2023.

Previous wording

Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased $48.4 million, or 27%, to $225.9 million for the three months ended June 30, 2024, as compared to $177.5 million for the three months ended June 30, 2023, primarily as a result of the Advance Acquisition and a 23% increase in our total oil equivalent production for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. On a unit-of-production basis, our depletion, depreciation and amortization expenses increased 4% to $15.49 per BOE for the three months ended June 30, 2024, as compared to $14.93 per BOE for the three months ended June 30, 2023, primarily as a result of the Advance Acquisition.

Current wording

Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased $50.0 million, or 26%, to $242.8 million for the three months ended September 30, 2024, as compared to $192.8 million for the three months ended September 30, 2023, primarily as a result of a 27% increase in our total oil equivalent production for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. On a unit-of-production basis, our depletion, depreciation and amortization expenses decreased 1% to $15.39 per BOE for the three months ended September 30, 2024, as compared to $15.51 per BOE for the three months ended September 30, 2023.

Previous wording

General and administrative. Our general and administrative expenses increased $1.2 million, or 4%, to $27.9 million for the three months ended June 30, 2024, as compared to $26.7 million for the three months ended June 30, 2023. Our general and administrative expenses decreased by 15% on a unit-of-production basis to $1.91 per BOE for the three months ended June 30, 2024, as compared to $2.25 per BOE for the three months ended June 30, 2023, primarily as a result of a 23% increase in our total oil equivalent production between the two periods.

Current wording

General and administrative. Our general and administrative expenses decreased $2.9 million, or 9%, to $28.8 million for the three months ended September 30, 2024, as compared to $31.7 million for the three months ended September 30, 2023. Our general and administrative expenses decreased by 29% on a unit-of-production basis to $1.82 per BOE for the three months ended September 30, 2024, as compared to $2.55 per BOE for the three months ended September 30, 2023, primarily as a result of a 27% increase in our total oil equivalent production between the two periods.

Previous wording

Interest expense. For the three months ended June 30, 2024, we incurred total interest expense of $45.3 million. We capitalized $9.3 million of our interest expense on certain qualifying projects for the three months ended June 30, 2024 and expensed the remaining $36.0 million to operations. For the three months ended June 30, 2023, we incurred total interest expense of $39.5 million. We capitalized $5.3 million of our interest expense on certain qualifying projects for the three months ended June 30, 2023 and expensed the remaining $34.2 million to operations. The increase in interest expense for the three months ended June 30, 2024 was primarily attributable to an increase in our average debt outstanding between the two periods. In April 2024, we completed the 2026 Notes Tender Offer, the 2026 Notes Redemption and the 2032 Notes Offering, resulting in a net increase in our total senior notes outstanding to $1.40 billion at June 30, 2024 as compared to $1.20 billion at June 30, 2023. In connection with the 2026 Notes Tender Offer and 2026 Notes Redemption, we also incurred a loss of approximately $3.0 million included in interest expense for the three months ended June 30, 2024.

Current wording

Interest expense. For the three months ended September 30, 2024, we incurred total interest expense of $44.4 million. We capitalized $8.2 million of our interest expense on certain qualifying projects for the three months ended September 30, 2024 and expensed the remaining $36.2 million to operations. For the three months ended September 30, 2023, we incurred total interest expense of $42.8 million. We capitalized $7.4 million of our interest expense on certain qualifying projects for the three months ended September 30, 2023 and expensed the remaining $35.4 million to operations. The increase in interest expense for the three months ended September 30, 2024 was primarily attributable to an increase in our average debt outstanding between the two periods. In April 2024, we completed the 2026 Notes Tender Offer, the 2026 Notes Redemption and the 2032 Notes Offering and in September 2024 we completed the 2033 Notes Offering, resulting in a net increase in our total senior notes outstanding to $2.15 billion at September 30, 2024 as compared to $1.20 billion at September 30, 2023.

Previous wording

Income tax provision (benefit). We recorded a current income tax provision of $30.1 million and a deferred income tax provision of $47.9 million for the three months ended June 30, 2024. We recorded a current income tax benefit of $4.9 million and a deferred income tax provision of $62.2 million for the three months ended June 30, 2023. Our effective income tax rate of 25% and 26% for the three months ended June 30, 2024 and 2023, respectively, differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico.

Current wording

Income tax provision (benefit). We recorded a current income tax benefit of $21.1 million and a deferred income tax provision of $106.4 million for the three months ended September 30, 2024. We recorded a current income tax provision of $9.0 million and a deferred income tax provision of $5.6 million for the three months ended September 30, 2023. Our effective income tax rate of 26% for the three months ended September 30, 2024 differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico. Our effective income tax rate of 5% for the three months ended September 30, 2023 differed from the U.S. federal statutory rate due primarily to recognizing research and experimental expenditure tax credits of $65.1 million in the third quarter of 2023, which were partially offset by permanent differences between book and taxable income and state taxes, primarily in New Mexico.

Previous wording

Production taxes, transportation and processing. Our production taxes, transportation and processing expenses increased $29.5 million, or 25%, to $147.0 million for the six months ended June 30, 2024, as compared to $117.5 million for the six months ended June 30, 2023. This increase was primarily attributable to a $27.8 million increase in production taxes to $114.1 million for the six months ended June 30, 2024, as compared to $86.3 million for the six months ended June 30, 2023, primarily due to the increase in oil and natural gas revenues between the two periods. On a unit-of-production basis, our production taxes, transportation and processing expenses decreased 5% to $5.21 per BOE for the six months ended June 30, 2024, as compared to $5.47 per BOE for the six months ended June 30, 2023. This decrease was primarily attributable to a decrease in the transportation and processing expense per BOE that resulted from the mix of revenue contracts, including from San Mateo and Pronto, between the two periods.

Current wording

Production taxes, transportation and processing. Our production taxes, transportation and processing expenses increased $30.5 million, or 16%, to $219.7 million for the nine months ended September 30, 2024, as compared to $189.2 million for the nine months ended September 30, 2023. This increase was primarily attributable to a $33.1 million increase in production taxes to $174.3 million for the nine months ended September 30, 2024, as compared to $141.2 million for the nine months ended September 30, 2023, primarily due to the increase in oil and natural gas revenues between the two periods. On a unit-of-production basis, our production taxes, transportation and processing expenses decreased 11% to $4.99 per BOE for the nine months ended September 30, 2024, as compared to $5.58 per BOE for the nine months ended September 30, 2023. This decrease was primarily attributable to a decrease in the transportation and processing expense per BOE that resulted from the mix of revenue contracts, including from San Mateo and Pronto, between the two periods.

Previous wording

Lease operating expenses. Our lease operating expenses increased $49.9 million, or 47%, to $155.3 million for the six months ended June 30, 2024, as compared to $105.5 million for the six months ended June 30, 2023. Our lease operating expenses per unit of production increased 12% to $5.50 per BOE for the six months ended June 30, 2024, as compared to $4.91 per BOE for the six months ended June 30, 2023. These increases were primarily attributable to the increased number of wells being operated by us, including 127 wells from the Advance Acquisition, and operated by other operators (where we own a working interest) and to operating cost inflation for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Current wording

Lease operating expenses. Our lease operating expenses increased $70.3 million, or 41%, to $242.1 million for the nine months ended September 30, 2024, as compared to $171.8 million for the nine months ended September 30, 2023. Our lease operating expenses per unit of production increased 8% to $5.50 per BOE for the nine months ended September 30, 2024, as compared to $5.07 per BOE for the nine months ended September 30, 2023. These increases were primarily attributable to the increased number of wells being operated by us, including 127 wells from the Advance Acquisition, and operated by other operators (where we own a working interest) and to operating cost inflation for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous wording

Plant and other midstream services operating. Our plant and other midstream services operating expenses increased $15.2 million, or 25%, to $76.9 million for the six months ended June 30, 2024, as compared to $61.7 million for the six months ended June 30, 2023. This increase was primarily attributable to increased throughput volumes from Matador and other San Mateo and Pronto customers, which resulted in (i) increased expenses associated with our expanded pipeline operations of $29.6 million for the three months ended June 30, 2024, as compared to $20.2 million for the three months ended June 30, 2023, and (ii) increased expenses associated with our commercial produced water disposal operations of $31.0 million for the three months ended June 30, 2024, as compared to $25.9 million for the three months ended June 30, 2023.

Current wording

Plant and other midstream services operating. Our plant and other midstream services operating expenses increased $28.1 million, or 30%, to $120.6 million for the nine months ended September 30, 2024, as compared to $92.5 million for the nine months ended September 30, 2023. This increase was primarily attributable to increased throughput volumes from Matador and other San Mateo and Pronto customers, which resulted in (i) increased expenses associated with our expanded pipeline operations of $46.1 million for the three months ended September 30, 2024, as compared to $30.0 million for the three months ended September 30, 2023, and (ii) increased expenses associated with our commercial produced water disposal operations of $47.7 million for the three months ended September 30, 2024, as compared to $38.4 million for the three months ended September 30, 2023.

Previous wording

Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased $134.4 million, or 44%, to $438.2 million for the six months ended June 30, 2024, as compared to $303.8 million for the six months ended June 30, 2023, primarily as a result of the Advance Acquisition and a 31% increase in our total oil equivalent production for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. On a unit-of-production basis, our depletion, depreciation and amortization expenses increased 10% to $15.53 per BOE for the six months ended June 30, 2024, as compared to $14.14 per BOE for the six months ended June 30, 2023, primarily as a result of the Advance Acquisition.

Current wording

Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased $184.4 million, or 37%, to $681.1 million for the nine months ended September 30, 2024, as compared to $496.6 million for the nine months ended September 30, 2023, primarily as a result of the Advance Acquisition and the approximate 30% increase in our total oil equivalent production for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. On a unit-of-production basis, our depletion, depreciation and amortization expenses increased 6% to $15.48 per BOE for the nine months ended September 30, 2024, as compared to $14.64 per BOE for the nine months ended September 30, 2023, primarily as a result of the Advance Acquisition.

Previous wording

General and administrative. Our general and administrative expenses increased $8.4 million, or 17%, to $57.6 million for the six months ended June 30, 2024, as compared to $49.1 million for the six months ended June 30, 2023, primarily as a result of increased payroll for our existing employees as well as with additional employees joining Matador to support our increased land, geoscience, drilling, completion, production, midstream and administration functions as a result of our continued growth. Our general and administrative expenses decreased by 11% on a unit-of-production basis to $2.04 per BOE for the six months ended June 30, 2024, as compared to $2.29 per BOE for the six months ended June 30, 2023, primarily as a result of the 31% increase in our total oil equivalent production between the two periods.

Current wording

General and administrative. Our general and administrative expenses increased $5.5 million, or 7%, to $86.4 million for the nine months ended September 30, 2024, as compared to $80.9 million for the nine months ended September 30, 2023, primarily as a result of increased payroll for our existing employees as well as with additional employees joining Matador to support our increased land, geoscience, drilling, completion, production, midstream and administration functions as a result of our continued growth. Our general and administrative expenses decreased by 18% on a unit-of-production basis to $1.96 per BOE for the nine months ended September 30, 2024, as compared to $2.38 per BOE for the nine months ended September 30, 2023, primarily as a result of the approximate 30% increase in our total oil equivalent production between the two periods.

Previous wording

Interest expense. For the six months ended June 30, 2024, we incurred total interest expense of approximately $90.7 million. We capitalized approximately $15.2 million of our interest expense on certain qualifying projects for the six months ended June 30, 2024 and expensed the remaining $75.5 million to operations. For the six months ended June 30, 2023, we incurred total interest expense of approximately $59.1 million. We capitalized approximately $8.7 million of our interest expense on certain qualifying projects for the six months ended June 30, 2023 and expensed the remaining $50.4 million to operations. The increase in interest expense for the six months ended June 30, 2024 was primarily attributable to an increase in our average debt outstanding between the two periods. In April 2024, we completed the 2026 Notes Tender Offer, the 2026 Notes Redemption and the 2032 Notes Offering, resulting in a net increase in our total senior notes outstanding to $1.40 billion at June 30, 2024 as compared to $1.20 billion at June 30, 2023. In connection with the 2026 Notes Tender Offer, 2026 Notes Redemption and the amendment of our Credit Agreement in March 2024, we also incurred a loss of approximately $5.6 million included in interest expense for the six months ended June 30, 2024.

Current wording

Interest expense. For the nine months ended September 30, 2024, we incurred total interest expense of approximately $135.1 million. We capitalized approximately $23.4 million of our interest expense on certain qualifying projects for the nine months ended September 30, 2024 and expensed the remaining $111.7 million to operations. For the nine months ended September 30, 2023, we incurred total interest expense of approximately $101.9 million. We capitalized approximately $16.1 million of our interest expense on certain qualifying projects for the nine months ended September 30, 2023 and expensed the remaining $85.8 million to operations. The increase in interest expense for the nine months ended September 30, 2024 was primarily attributable to an increase in our average debt outstanding between the two periods. In April 2024, we completed the 2026 Notes Tender Offer, the 2026 Notes Redemption and the 2032 Notes Offering and in September 2024 we completed the 2033 Notes Offering, resulting in a net increase in our total senior notes outstanding to $2.15 billion at September 30, 2024 as compared to $1.20 billion at September 30, 2023. In connection with the 2026 Notes Tender Offer, 2026 Notes Redemption and the amendment of our Credit Agreement in March 2024, we also incurred a loss of approximately $5.6 million included in interest expense for the nine months ended September 30, 2024.

Previous wording

Income tax provision. We recorded a current income tax provision of $47.4 million and a deferred income tax provision of $97.4 million for the six months ended June 30, 2024. We recorded no current income tax provision and a deferred income tax provision of $114.0 million for the six months ended June 30, 2023. Our effective income tax rate of 26% for each of the six months ended June 30, 2024 and 2023 differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico.

Current wording

Income tax provision (benefit). We recorded a current income tax provision of $26.3 million and a deferred income tax provision of $203.8 million for the nine months ended September 30, 2024. We recorded a current income tax provision of $9.0 million and a deferred income tax provision of $119.6 million for the nine months ended September 30, 2023. Our effective income tax rate of 26% for the nine months ended September 30, 2024 differed from the U.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily in New Mexico. Our effective income tax rate of 18% for the nine months ended September 30, 2023 differed from the U.S. federal statutory rate due primarily to recognizing research and experimental expenditure tax credits of $65.1 million in the third quarter of 2023, which were partially offset by permanent differences between book and taxable income and state taxes, primarily in New Mexico.

Previous wording

Our primary use of capital has been, and we expect will continue to be during the remainder of 2024 and for the foreseeable future, for the acquisition, exploration and development of oil and natural gas properties and for midstream investments. In June 2024, we announced the Ameredev Acquisition. We intend to fund the Ameredev Acquisition with a combination of cash on hand, free cash flow prior to closing and borrowings under our Credit Agreement, under which we have received an additional commitment of up to $1.00 billion in connection with this transaction. Excluding the Ameredev Acquisition and any future significant acquisitions, we expect to fund our 2024 capital expenditures through a combination of cash on hand, operating cash flows and performance incentives paid to us by Five Point Energy, LLC or its affiliates. If capital expenditures were to exceed our operating cash flows during the remainder of 2024, we expect to fund any such excess capital expenditures, including for significant acquisitions, through borrowings under the Credit Agreement or the San Mateo Credit Facility (assuming availability under such facilities) or through other capital sources, including borrowings under expanded or additional credit arrangements, the sale or joint venture of midstream assets, oil and natural gas producing assets, leasehold interests or mineral interests and potential issuances of equity, debt or convertible securities, none of which may be available on satisfactory terms or at all. Our future success in growing proved reserves and production will be highly dependent on our ability to generate operating cash flows and access outside sources of capital.

Current wording

Our primary use of capital has been, and we expect will continue to be during the remainder of 2024 and for the foreseeable future, for the acquisition, exploration and development of oil and natural gas properties and for midstream investments. On September 18, 2024, we closed the Ameredev Acquisition that was funded through a combination of cash on hand and borrowings under our Credit Agreement. On August 21, 2024, Piñon announced that it expects to be acquired by an affiliate of Enterprise Products Partners L.P. in the fourth quarter of 2024, subject to customary regulatory approvals. We currently expect to receive between $110.0 million and $120.0 million from the sale of Piñon and we expect to use these proceeds to reduce borrowings under our Credit Agreement. Excluding the Ameredev Acquisition and any future significant acquisitions, we expect to fund our 2024 capital expenditures through a combination of cash on hand, operating cash flows and performance incentives paid to us by Five Point Energy, LLC or its affiliates. If capital expenditures were to exceed our operating cash flows during the remainder of 2024, we expect to fund any such excess capital expenditures, including for significant acquisitions, through borrowings under the Credit Agreement or the San Mateo Credit Facility (assuming availability under such facilities) or through other capital sources, including borrowings under expanded or additional credit arrangements, the sale or joint venture of midstream assets, oil and natural gas producing assets, leasehold interests or mineral interests and potential issuances of equity, debt or convertible securities, none of which may be available on satisfactory terms or at all. Our future success in growing proved reserves and production will be highly dependent on our ability to generate operating cash flows and access outside sources of capital.

Previous wording

In February and April 2024, our Board declared quarterly cash dividends of $0.20 per share of common stock. On July 18, 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on September 5, 2024 to shareholders of record as of August 15, 2024.

Current wording

The Board declared quarterly cash dividends of $0.20 per share of common stock in each of the first, second and third quarters of 2024. On October 16, 2024, the Board amended our dividend policy to increase the quarterly dividend to $0.25 per share of common stock for future dividend payments and also declared a quarterly cash dividend of $0.25 per share of common stock payable on December 6, 2024 to shareholders of record as of November 15, 2024.