Matador Resources (MTDR) risk factors, FY2024 10-K

Risks Related to our Financial Condition

1. 01Our success is dependent on the prices of oil, natural gas and NGLs. Low oil, natural gas and NGL prices and the continued volatility in these prices may adversely affect our financial condition and our ability to meet our capital expenditure requirements and financial obligations
2. 02pursuant to long-term fixed price contracts. Further, oil, natural gas and NGL prices do not necessarily fluctuate in direct relation to each other
3. 03We cannot predict the impact of the ongoing military conflicts between Russia and Ukraine and in the Middle East and the related humanitarian crises on the global economy, energy markets, geopolitical stability and our business
4. 04Our exploration, development, exploitation and midstream projects require substantial capital expenditures that may exceed our cash flows from operations and potential borrowings, and we may be unable to obtain needed capital on satisfactory terms, which could adversely affect our future growth
5. 05Our oil and natural gas reserves are estimated and may not reflect the actual volumes of oil and natural gas we will recover, and significant inaccuracies in these reserves estimates or underlying assumptions will materially affect the quantities and present value of our reserves
6. 06The calculated present value of future net revenues from our proved oil and natural gas reserves will not necessarily be the same as the current market value of our estimated oil and natural gas reserves
7. 07Approximately 41% of our total proved reserves at December 31, 2024 consisted of undeveloped and developed non-producing reserves, and those reserves may not ultimately be developed or produced
8. 08Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our business, financial condition, results of operations and cash flows
9. 09We may be required to write down the carrying value of our proved properties under accounting rules, and these write-downs could adversely affect our financial condition
10. 10Hedging transactions, or the lack thereof, may limit our potential gains and could result in financial losses
11. 11A change in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we receive for our production could adversely affect our business, financial condition, results of operations and cash flows
12. 12A component of our growth may come through acquisitions, and our failure to identify, complete or integrate future acquisitions successfully could reduce our earnings and hamper our growth
13. 13We may purchase oil and natural gas properties or midstream assets with liabilities or risks that we did not know about or that we did not assess correctly, and, as a result, we could be subject to liabilities that could adversely affect our results of operations
14. 14We may incur losses or costs as a result of title deficiencies in the properties in which we invest
15. 15Our ability to complete dispositions of assets, or interests in assets, may be subject to factors beyond our control, and in certain cases we may be required to retain liabilities for certain matters

Risks Related to our Liquidity

1. 16We may not be able to generate sufficient cash to fund our capital expenditures, service all of our indebtedness and pay dividends to our shareholders, and we may be forced to take other actions to satisfy our obligations under applicable debt instruments, which may not be successful
2. 17We may incur additional indebtedness, which could reduce our financial flexibility, increase interest expense and adversely impact our operations and our unit costs
3. 18San Mateo’s compliance with the covenants noted below). The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in the commitments of the lenders to up to $1.05 billion
4. 19The borrowing base under our Credit Agreement is subject to periodic redetermination
5. 20We are subject to interest rate risk under our Credit Agreement and the San Mateo Credit Facility
6. 21The terms of the agreements governing our outstanding indebtedness may restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions
7. 22Our credit rating may be downgraded, which could reduce our financial flexibility, increase interest expense and adversely impact our operations
8. 23The payment of dividends will be at the discretion of our Board of Directors and subject to numerous factors, and we do not presently intend to repurchase any shares of our common stock

Risks Related to our Operations

1. 24Drilling for and producing oil, natural gas and NGLs is highly speculative and involves a high degree of operational and financial risk, with many uncertainties that could adversely affect our business
2. 25Our operations are subject to operational hazards and risks, which could result in significant damages and the loss of revenue
3. 26Insurance against all operational risks is not available to us
4. 27Because our reserves and production are concentrated in a few core areas, problems with production in and markets for a particular area could have a material impact on our business
5. 28There is no guarantee that we will be successful in optimizing our spacing, drilling and completions techniques in order to maximize our rate of return, cash flow from operations and shareholder value
6. 29Certain of our properties are in areas that may have been partially depleted or drained by offset wells, and certain of our wells may be adversely affected by actions other operators may take when drilling, completing or operating wells that they own
7. 30Multi-well pad drilling may result in volatility in our operating results
8. 31Construction of midstream projects subjects us to risks of construction delays, cost over-runs, limitations on our growth and negative effects on our financial condition, results of operations, cash flows and liquidity
9. 32Our identified drilling locations are scheduled over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling
10. 33Certain of our unproved and unevaluated acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage
11. 34The 2-D and 3-D seismic data and other advanced technologies we use cannot eliminate exploration risk, which could limit our ability to replace and grow our reserves and materially and adversely affect our results of operations and cash flows

Risks Related to Third Parties

1. 35Financial difficulties encountered by our oil, natural gas and NGL purchasers, third-party operators, third-party customers or other third parties could decrease our cash flows from operations and adversely affect the exploration and development of our prospects and assets
2. 36The marketability of our production is dependent upon oil, natural gas and NGL gathering, processing and transportation facilities, and the unavailability of satisfactory oil, natural gas and NGL gathering, processing and transportation arrangements could have a material adverse effect on our revenue
3. 37We conduct a portion of our operations through joint ventures, which subjects us to additional risks that could have a material adverse effect on the success of these operations, our financial position, results of operations or cash flows
4. 38We have entered into certain long-term contracts that require us to pay fees to our service providers based on minimum volumes regardless of actual volume throughput and that may limit our ability to use other service providers
5. 39We do not own all of the land on which our midstream assets are located, which could disrupt our operations
6. 40Competition in the oil and natural gas industry is intense, making it more difficult for us to acquire properties, market oil and natural gas, provide midstream services and secure trained personnel, and our competitors may use superior technology and data resources that we may be unable to afford
7. 41Strategic relationships upon which we may rely are subject to change, which may diminish our ability to conduct our operations
8. 42We have limited control over activities on properties we do not operate

Risks Related to Laws and Regulations

1. 43Approximately 33% of our leasehold and mineral acres in the Delaware Basin is located on federal lands, which are subject to administrative permitting requirements and potential federal legislation, regulation and orders that may limit or restrict oil and natural gas operations on federal lands
2. 44We are subject to government regulation and liability, including complex environmental laws, which could require significant expenditures
3. 45Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays
4. 46New climate disclosure rules adopted by the SEC or states in which we have operations or do business could increase our costs of compliance and adversely impact our business
5. 47rules, and at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the SEC Climate Disclosure Rules. In addition, in the absence of federal action, states may propose and adopt climate disclosure requirements
6. 48New regulations on all emissions from our operations could cause us to incur significant costs
7. 49We may incur significant costs and liabilities resulting from compliance with pipeline safety regulations
8. 50such requirements, but they could be significant. Moreover, violations of pipeline safety regulations can result in the imposition of significant penalties
9. 51A change in the jurisdictional characterization of some of our assets by FERC or a change in policy by FERC may result in increased regulation of our assets, which may cause our revenues to decline and operating expenses to increase
10. 52The rates of our regulated assets are subject to review and reporting by federal regulators, which could adversely affect our revenues
11. 53Should we fail to comply with all applicable FERC-administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines
12. 54Derivatives legislation adopted by Congress could have an adverse impact on our ability to hedge risks associated with our business
13. 55Changes in U.S. foreign trade policies, including the imposition of additional tariffs and other trade barriers, and efforts to withdraw from or materially modify international trade agreements, may materially and adversely affect our business, operations and financial condition

Risks Related to Our Common Stock

1. 56The price of our common stock has fluctuated substantially and may fluctuate substantially in the future
2. 57Attention to ESG and conservation matters and a negative shift in market perception towards the oil and natural gas industry could adversely affect demand for oil and natural gas and our stock price
3. 58impacting our future financial results. Furthermore, if we are unable to achieve the desired level of capital efficiency or free cash flow within the timeframe expected by the market, our stock price may be adversely affected
4. 59Future sales of shares of our common stock by existing shareholders and future offerings of our common stock by us could depress the price of our common stock
5. 60Our directors and executive officers own a significant percentage of our equity, which could give them influence in corporate transactions and other matters, and their interests could differ from other shareholders
6. 61Our Board can authorize the issuance of preferred stock, which could diminish the rights of holders of our common stock and make a change of control of the Company more difficult even if it might benefit our shareholders
7. 62We may have difficulty managing growth in our business, which could have a material adverse effect on our business, financial condition, results of operations and cash flows and our ability to execute our business plan in a timely fashion
8. 63Our success depends, to a large extent, on our ability to retain our key personnel, including our chairman and chief executive officer, management and technical team and the members of our Board, and the loss of any key personnel or Board member could disrupt our business operations
9. 64A cyber incident could occur and result in information theft, data corruption, operational disruption or financial loss
10. 65Provisions of our certificate of formation, bylaws and Texas law may have anti-takeover effects that could prevent a change in control even if it might be beneficial to our shareholders
11. 66We operate in a litigious environment and may be involved in legal proceedings that could have a material adverse effect on our results of operations and financial condition