Matador Resources Company has announced the closing of the previously announced acquisition of Paloma Permian LLC, a portfolio company of EnCap Investments L.P., for cash consideration of $1.255 billion, which amount is subject to customary post-closing adjustments (the 'Paloma Acquisition'). Highlights of the Paloma Acquisition include:
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- Adds over 156 net locations (normalized to two-mile laterals) across nine or more potential targeted benches;
- 59 approved drilling permits on Paloma acreage;
- Matador expects to commence drilling operations on up to 25 wells associated with Paloma acreage by year-end 2027; and
- Adds approximately 16,500 net primarily undeveloped acres in Eddy and Lea Counties, New Mexico, the majority of which is held by production.
Joseph Wm. Foran, Matador’s Founder, Chairman and CEO, commented, 'On behalf of the Board and executive committee, I would like to acknowledge the extra effort and assistance of everyone at Paloma, EnCap and Matador to close this important transaction as agreed. We believe the Paloma assets hold some of the highest hydrocarbon resources per acre in the Lower 48. This acreage also provides Matador with great value creation opportunities for upstream capital efficiencies, for its wholly-owned midstream system and for its 51%-owned San Mateo Midstream system.
'While most of the acquisition’s current value stems from its undeveloped drilling locations, we are encouraged by the continued strong performance of the acquired producing wells. Largely attributable to Paloma’s newest wells in Eddy County, New Mexico, since June 1, 2026, production associated with the acquisition has outperformed Matador’s underwriting estimates by approximately 10%.
'With the addition of the Paloma Acquisition closed today, and the expected acreage additions from the recently announced Ridge Runner Resources II, LLC (“Ridge Runner”) acquisition (expected to close later this month), Matador will have approximately 240,000 net acres in the core of the Delaware Basin in the fourth quarter of 2026. Together with the May 2026 Federal lease sale, these acquisitions increase Matador’s net acreage position by almost 20% above its October 2025 position of 203,000 net acres.'
Mr. Foran continued, 'We are excited about Matador’s positive outlook for the remainder of 2026 and as we look ahead to 2027. We look forward to further discussion of the Paloma assets, including our plans for the fourth quarter of 2026, in our third quarter 2026 earnings release and conference call in early November. We especially want to express our respect and appreciation for Paloma’s and EnCap’s professionalism and cooperation during the transition process from Paloma’s management team and field and office staff.
'Similar to previous successful transactions between Matador and EnCap, and its portfolio companies, we anticipate this acquisition will be integrated efficiently into Matador’s operating plans and contribute to Matador’s free cash flow generation and to its planned debt repayments. In that regard, Matador expects to pay down its reserves-based lending credit facility led by PNC Bank by approximately $350-400 million following the closings in the fourth quarter, depending on commodity prices.'
Advisors
Baker Botts L.L.P. served as legal advisor to Matador for the Paloma Acquisition. Vinson & Elkins LLP served as legal advisor and RBC Richardson Barr served as financial advisor to Paloma and EnCap.
Source: Matador Resources Company
