Matador Resources Company announced two catalysts for 2026: a definitive agreement to acquire Paloma Permian LLC, a portfolio company of EnCap Investments, for a cash payment of $1.275 billion, along with successful test results from its first exploratory well in the Woodford formation in southeast Lea County, New Mexico. The Paloma acquisition, expected to close in the fourth quarter of 2026, includes 16,235 net undeveloped acres in Eddy and Lea Counties, New Mexico, and third quarter estimated production of approximately 11,100 barrels of oil equivalent per day, 57 percent of it oil.
Separately, Matador agreed to acquire primarily undeveloped acreage in the Woodford formation from Ridge Runner Resources II, another EnCap portfolio company. Combined with prior acreage additions and the company’s ongoing acquisition strategy, the Ridge Runner deal brings Matador’s Woodford position to approximately 50,000 contiguous net acres, primarily located in its Antelope Ridge asset area in Lea County and in West Texas, acquired at an average cost of $4,000 per acre. Together, the Paloma and Ridge Runner acquisitions will bring Matador’s total Delaware Basin acreage to approximately 240,000 net acres.
Matador’s confidence in the Woodford play was reinforced by results from its Rae’s Creek exploratory well, which recorded initial production rates exceeding 2,200 barrels of oil equivalent per day, 72 percent oil, during a 24-hour test on June 29, 2026. The well is producing approximately 20 percent better than the average of other Woodford formation wells in Texas on a 60-day cumulative oil production basis. The Paloma acquisition is expected to add more than 156 net drilling locations, primarily in the Bone Spring and Wolfcamp formations, along with $816 million in PV-10 value as of May 31, 2026, and 55 million barrels of oil equivalent in total proved reserves. The Ridge Runner acquisition adds more than 150 net operated Woodford locations, acquired at approximately $1.3 million per net location.
Both acquisitions are expected to be funded through cash on hand and borrowings under Matador’s reserve-based lending credit facility, which was fully repaid in May 2026. The company said it anticipates generating approximately $1 billion in adjusted free cash flow for full-year 2026 and expects additional production from the acquired properties to help return its corporate leverage ratio closer to 1.0 times within 12 to 18 months of closing. Baker Botts L.L.P. served as legal advisor to Matador, while Vinson & Elkins LLP served as legal advisor and RBC Richardson Barr served as financial advisor to Paloma, Ridge Runner, and EnCap.
KEY QUOTES:
“Matador is excited to announce this catalyst and the expansion of our Delaware Basin asset base with these assets from Paloma, a successful and respected exploration firm in the Permian Basin and other oil and gas areas. Similar to Matador’s previous transactions with EnCap, and its portfolio companies, we anticipate this acquisition will be integrated efficiently into Matador’s operating plan, contribute to Matador’s cash flow generation and deliver significant efficiency gains, increases in oil and natural gas production, and reserve growth.”
“We are also excited to announce the expansion of our acreage position in the emerging Woodford play of the Delaware Basin and the results of our Rae’s Creek Woodford well. We anticipate our drilling and completions teams will work quickly to integrate efficiencies across this development area to reduce well costs between 30 to 40% in the next 12 to 18 months, similar to the incremental improvements we made at both our Stateline and Rodney Robinson assets acquired in 2018.”
Joseph Wm. Foran, Founder, Chairman and CEO, Matador Resources Company
