Good morning, ladies and gentlemen. Welcome to the Fourth Quarter and Full Year 2023 Matador Resources Company Earnings Conference Call. My name is Tanya, and I'll be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the company’s remarks. As a reminder, this conference is being recorded. For replay purposes, and the replay will be available on the company's website for 1 year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Vice President, Investor Relations for Matador. Mr. Schmitz, may begin.

Thank you, Tanya, and good morning, everyone, and thank you for joining us for Matador's fourth quarter and full year 2023 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. In addition to our earnings press release issued yesterday, I would like to remind everybody that you can find a slide presentation in connection with the fourth quarter and full year 2023 earnings release under the Investor Relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our Founder, Chairman and CEO. Joe?

Thank you, Mac, and thank you all for taking the time to listen in. This has been -- last year was a very important year for us. And this year has taken on growing importance, too. The first thing that I'd like to mention is simply that it's been a remarkable year in that production is up, revenues are up lease acreage is up 18%, inventory, of course, is up and our dividends are up. While costs are down, including LOE is down, drilling costs are down, G&A is down and the debt is down. So that's the big picture now, but we're trying to improve around all the edges on that. But that's the basic story, things are headed in the right avenue. The second thing, I'd just like to point out that we've sort the advanced acreage and acquisition. That's the largest to date and it's integrated very well. We always shout out to the professionalism. The Matador people were very professional in the hand off. It went very smoothly and we're delighted by how efficient and how the production and the rock have exceeded expectations. So thanks to them. We're trying to put those assets to full work, and we'll be getting a report on that. And those were two of the main points that I wanted to get across to start the conversation, and now we're ready for your questions.

[Operator Instructions]. First question is from Scott Hanold of RBC Capital Markets.

Up in the northern part of the Delaware, I mean, midstream constraint has been an industry issue. You guys alluded to some third-party tightness. Can you give a little more color on what that is and how much it impacts you in your solutions going forward?

Well, Scott, that's a really good question, and I'll start it off and others around the table can fill in. But constraints is probably not the best word for it. It's more about maintenance that the older systems they're going to have a leak here or there. There's going to be some part of the equipment that needs to be attended to. And they have every reason to get it repaired as quickly as they can because they're not receiving revenues while it's down for maintenance. And of course, we're eager for them to get it repaired as quickly, but that's just part of the business and operations that they're going to have a few more. But we appreciate the way they've gotten after it. We appreciate their communications. We've been fortunate on our part of our midstream system. We have not been down. But of course, we -- our equipment is out of the later vintage. So everybody is working on the problem. And it didn't matter of well productivity. It's just these things go down, they need to be attended to. And -- but we have fairly limited exposure there. But it has had the effect of about 5,500 barrels a day for this month. When you put that in perspective of the whole year, this is one quarter that we're experiencing it. And if you put in the whole year, you're talking about maybe 1% of our expected annual production, and we think we'll make that up in the quarters to come fairly easily. We haven't taken into account any acquisitions in our projected production or very little. So you have that upside and you have the other efficiencies that our production group seems to come up with each year.

Scott, this is Glenn. I'll just pile on to what Joe was saying in just the temporary nature of these this reduction in production for Q1. We do feel very confident that the issues will be resolved by the end of this quarter, and we'll be -- set ourselves up very nicely for the rest of the year. I do want to highlight that the connectors between the Pronto system and the advanced properties is very well underway. We have the permits in the right of way and the construction is very well underway there and same on the Pronto to the San Mateo Connector. And we did highlight in the release, but just to say that the uptime that we experience with San Mateo and Pronto is -- we feel second to none and that communication that goes on between the teams is daily, and we have a lot of visibility into the operations, both on the maintenance side and what our development plans are. And those 2, really 3 businesses do go very well hand-in-hand with each other.

And as my follow-up question, you've had the advanced wells online for probably getting close to 6 months now. Can you give us a sense of how those wells are performing relative to your expectation? And with the next batch of advanced wells, which I think are the Dagger wells, remind us like any differences we should expect there? And if you had any color on the timing within the second quarter, you do expect to bring those on.

Sure, Scott. This is Tom Elsener. The first part of your question regarding the 21 Margarita wells we brought online back in August of 2023. We've been very pleased with those results, just as we've always said, those wells would come online with very high oil cuts, and I think we've certainly gotten that at average oil cuts of over 84%. They've gone very smoothly into integrating with the production facilities teams. And those wells are off to a great start. The next wells we've got the Dagger Lake South wells, as we said in the slide deck on Page 11, those wells are very close to the Margarita wells with very similar rock quality, going to have very high oil cuts just like the margaritas. And those wells will come online in the second quarter of 2024, similar to how we brought the Margaritas online in a staggered fashion. It still is a very big project for us. Those wells are 1.5-mile laterals as opposed to the 2.25 long Margaritas but still at a very high working interest. I believe it's 21% growth in about 19 net wells and we're feeling very strong about those results, and I can't wait to get them online soon.

And our next question will be coming from Neal Dingmann of Truist. Neal, your line is open.

My question is around your regional focus. I'm just wondering could you specifically talk about -- it seemed like that Northern area, you had very strong activity. I'm just wondering in that -- is that going to be the focus of this area? And could you talk about how this great area sort of compares to that very, very strong Roddy Robson Stateline.

Neal, if you could repeat your question, you cut out in the middle of it. So if you restate the question, I feel better than trying to guess.

Okay. Joe, what I'm getting at is, specifically, you suggested '24 oil production is growing faster boosted, I think, by that Northern Lea County activity. And I'm just wondering, can I assume that post the natural gas connection that much of the visors activity will be in that Northern Lea area? I'm just wondering how do you all think this Northern Lea area compares to that very strong state line of Rodney Robinson?

Neal, this is Tom. I'll take the first part of that and then Ned or Glen may want to chime in as well. But as we've kind of talked for quite some time, the bulk of this kind of advanced acreage that's in the kind of like Lea County area is sandwiched between the Rodney Robinson acreage to the South and some of the Mallon acreage to the North and East. We've been very pleased with the results, not just from those two tracks, but also some of the other properties that we have been drilling in that same area. The oil cut on all of those are very high. They're not exactly the same amongst all areas, but very strong oil cut, and we expect to continue to focus there. I will highlight that this is one of the areas where we've been very happy with the Third Bone Spring Carbonate interval, where we highlighted that one of our Third Bone Spring Carbonate well had IP-ed at approximately 2,600 BoE per day, and I believe at about 86% oil. That's the zone that we added to our inventory over the last year. And also, we've also added the Second Bone Spring Carbonate to our inventory this year based on the strength of several wells drilled in and around that area. I believe we have about 19 wells that we have an interest in that helped kind of donate that zone for us. But we've always been proud of that range area and also kind of the Antelope Bridge area. But I would hit that all of our assets are contributing all around the basin. And even we brought online 17 wells in the Arrowhead asset area in the last quarter that we're very proud of and we're also connected to the San Mateo system and also located generally speaking, where that Pronto, the San Mateo connector line is. Hopefully, that helps.

I think, Neil, a good point at this time since come up as we got some questions last night from people asking about the connector lines would they be on or not. And I want to just say again, for the record that we have a very high confidence level that they'll be on in the next quarter. Glenn, do you want to elaborate?

Yes. Just as said, and Joe said, I mean, we're very confident that those will be complete by the end of the first quarter and we'll be ready to go there. And another advantage to that system is just by tying those two together is really taking advantage of all 520 million cubic feet a day of processing and gathering. So we're excited it's getting put in the ground right now and excited to put them in service.

Well, all the permits are taken, all the surface use agreements are done, all the paperwork's done. They're out there working on it, two crews. So we're in control of our fate. It's just continue -- they've already done a substantial amount of the work. So again, we have a high degree. It will be finished in the same way with the other connector that's coming together nicely. And again, we'll have -- if we need to, to bring to expedite matters. We'll have a couple of extra crews. So they won't be waiting on us.

[Indiscernible] Go ahead.

At this point, it's on us, and we're very good at building pipeline so.

That's fantastic detail. And guys, my second question is land acquisition. Specifically, you all continue to be highly successful just bolting on assets like the -- I think you mentioned about the -- besides the assets that added about a thousand BoE per day that came with the latest additions? I'm just wondering, will this continue to be a priority going forward and do you see these opportunities?

Yes. Neal, thank you for asking that question is, yes, the answer is yes. Last year, of course, Advance was our biggest deal ever and has drawn a lot of attention but our land group, our business development group did another 200 transactions. Most of them are -- some of them were very, very small. Some of them were a little larger. But they're out there, our land men, in particular out there all the time making deals, what the deals last couple of years have grown increasingly. It's just a rationalization of assets between companies. We -- you trade out of your non-op for somebody else's non-occupant that you operate. And so things like that are a little orphans out by themselves. So I think those will come along. Companies are being very cooperative with each other. And these are small transactions that don't have that kind of by themselves a big material impact. But in the aggregate, they add up and they make your operations that much more efficient. So there's a real rationale to do that. And then at the same time, some of the bigger outfits are wanting to concentrate their assets in one area or another. So those opportunities come up. And then you have private equity has always got a few things coming out. So I think it will continue and Van's group may want to say a word, but he has them out there on the road a lot. And -- and they've -- they're building relationships and just trying to do things that make sense for both sides.

Yes. This is Ben. I'll echo what Joe just said and add a little bit that we try to make these win-win deals for both sides. I think we've got a long track record of our brick-by-brick approach. I think you can expect to see that to continue. We're off to a great start so far this year and have a pretty favorable outlook for the rest of the year. But also want to give a shout out to our counterparts that we do these deals too. It takes both sides to make it a win-win. And as Joe mentioned earlier, the professionalism that we saw on the other side for the advanced deal, I think we see that on the smaller deals, too. And relationships, as you know, are important to us, and we want to be able to say that we did what we said we're going to do. And I think you could just, as I said, expect to see more of the same going forward. That's our bread and butter. And we're constantly evaluating different deals and trying to keep our pipeline full.

Well, that's been the other key Neal is at Van and his group, hadn't done one deal and then just stopped to let the pipeline run dry. They just managed to keep deals floating on the pipeline, some of fall out for one reason or another. But by keeping deals in the pipeline all the time, there's that brick-by-brick approach. It happens each month. And it's been effective, and we like our chances. We like our ability of our land men to build those relationships and make those deals.

Our next question will be coming from Tim Rezvan of KeyBanc Capital Markets. Your line is open.

I wanted to circle back on the 21 Dagger Lake wells. You provided some comments on them earlier. They clearly look like they're going to underpin what's going to be a pretty big steep production ramp in the back half of the year. So they're obviously pivotal to the guide you have out there. Can you give us a specificity on exactly what's happening there? Have you started completions? Or what is sort of the schedule over the next couple of months to get those online with expectations.

Tim, this is Chris Calvert, EVP Co-COO. It's a great question. If you look at Slide 11 in our deck, we have a pretty good summary slide on the advanced integration. But as far as timing on these 21 Dagger Lake South wells, everything is going as planned. It's a very similar story to the to the Pronto connector down to some of this acreage. It's kind of business as usual on the operations fronts. We messaged that we are pilot testing -- or excuse me, our Trimul-Frac, that's actually going on this Dagger Lake South project. And so we're very excited about Trimul-Frac in and of itself, but just more specific to your question, operations are moving forward as planned. And we're pushing forward for that kind of Q2 turn-in line date but everything operationally seems to be going according to plan.

And Tim, this is Glenn Stetson. I just wanted to highlight that when we bought the advanced properties, they had built out a water gathering system and they had to dispose a well there too. And so we'll be tying into that on the water side. And then on the gas side, as I mentioned, that gas is planned to go to Pronto with the connector. So we're all set up there from a takeaway standpoint.

And then I know you staggered those TILs, do you have any timing you can provide on when that will happen. Like in April or June? Just trying to understand.

Yes, Tim, this is Tom again. Very similar to how we did things on the Margarita side. We'll probably have a little bit of a compressed ramp-up compared to Margarita, since many of these facilities are a little bit further along in the integration process. But probably mid- to late Q2 is probably my guess. And these forecasts, they do tend to change, but I agree with Chris, things are going very well, and we have great confidence in the second quarter.

Our next question will be coming from Leo Mariani.

So just kind of wanted to kind of get a little bit more color on the midstream. I think you guys obviously seem very confident the issues will sort of be behind you at the end of the first quarter here. So once everything is kind of connected in terms of advanced to Pronto and Pronto to San Mateo, do you feel like this gives you a lot more redundancies in the system, you're not as dependent upon third parties. And then could you also just address kind of where you stand on potential partner conversations for the new $200 million to your plan.

Leo, I'll start. This is Glenn. The short answer is yes. So the Pronto to San Mateo Connector will be set up such that those two systems can flow one way or the other. And so today, it looks like it's more Pronto to San Mateo, but once the second plant, the $200 million a day plant expansion that we're -- that is underway today on the Pronto system that will expand the capacity of the system as a whole and gas can swing back and forth between those two systems and provide more flexibility and more flow assurance for times where there's either preventative maintenance going on or whatever the situation might be. And that second plant is scheduled for the second half of -- or excuse me, the first half of 2025. And our BD teams are -- we're going to fill a lot of that plant expansion up with Matador's equity volumes, but certainly, there'll be extra capacity there. And our teams are actively working on what opportunities there are for third-party for third-party volumes that will deliver to that system, and we feel like there is a lot of opportunity given the nature of what exists today in that northern part of the basin.

And just any color on kind of where you stand with partner discussions, potential partners for that new $200 million in plant?

Yes. Leo, I'll take that question is that look, we are in a position. We have plenty of money on our RBL to fund it. We paid down our RBL over $200 million for what we borrowed on the Advantage acquisition. So that's the use of that is that it's there. We have over $1 billion on our RBL. We have good standing. So it's not a problem. Our criteria is not because we need some partner we're interested in somebody that helps bring something extra to the table that in some way that enhances the value or the efficiency of the system and the plant, so -- or gives drilling incentives like what we have with San Mateo. So is out there. If we can find a partner who can enhance it, we're interested in talking, but we're not just trying to get financing. And that doesn't have a lot of appeal because we already have that in place with our RBL.

And our next question will be coming from Zach Parham of JPM. Your line is open.

I guess first just on your cash taxes, the guidance at 5% to 10% of pretax income was a bit better than we were modeling as we had assumed you'd be subject to the AMT. Can you give us some color on how you're able to still defer a majority of your taxes in 2024? And any thoughts on how cash taxes will trend in 2025 in future years.

Sure. This is Rob Macalik. I'm the Chief Accounting Officer. We continue to work really hard, both internally and with our external tax providers and we try and take every deduction in tax credit that we're allowed to take under law. In 2023, as you noted, we were down about 1% on our current tax rate. We knew that, that was going to go up for 2024. I think it is a little bit better than even what we were anticipating just as we continue to work through the kind of vague guidance that's out there, but we feel very confident in our current estimation that we won't be subject to the KMP, that alternative minimum tax that you referenced for 2024. We continue to evaluate that and look through just there are so many factors that can go into whether we'll be subject to that in 2025, and we'll continue to monitor that. But at the moment, like you said, we feel very good about the 5% to 10% of our pretax income would be cash taxes. But like I said, we'll continue to work and drive that down as much as we can.

And then one just quick follow-up. On the cash flow statement, there's a $68 million payment to advance this quarter. Can you detail what exactly that was and if there are any future expected payments in regards to that deal?

Sure, Zach. This is Van. That was actually a tack-on deal for some additional interest in the basin that was very complementary to what we had closed on last year. And so Brian, I don't know if you want to expand on that, but it was just more additional acreage from the same deal, which I think goes towards what we said earlier that these relationships are important. They had this interest that they wanted to move out and called us, and we were able to make a deal.

Yes, Van, this is Brian. I think that's exactly right. And so on the cash flow statement, it's focused advanced because it's really -- for accounting rules, they treated as almost a continuation of the business combination we did before. But it's a great deal, continue to add interest in some of the similar acres that we bought. And we're really excited about -- we already talked about the wells coming online this year as we expect to come on additional wells on the 21 Margarita wells that came on last year. So great acreage, and we really enjoy working with the merited folks and being able to continue to complete these transactions.

Maybe if I could squeeze one more in. Can you detail any production that came with those acquisitions?

Yes. This is Brian. So I think really one thousand BoE per day that we mentioned in the release, that really is due to that advanced acquisition, the additional advanced acreage and the interest that we got. And so I think that's a good feel for us. And I think if we look at going forward, it's 80% oil, 77% oil is what we got. And so it's really, really good acreage. And so good interest. So that's really for that specific deal. I think we mentioned earlier, we do blocking and tackling deals all the time. And our land group does a very good job at that, and they continue to add interest and add production that way. And so as we grow throughout this year, part of that growth, of course, is always that we we'll do deals. We think that the land group has done a great job the last few years doing 200 deals a year and expect they'll continue to do that this year.

We appreciated also that in [Indiscernible] worked with us on that transaction. They were primarily some minerals and some overrides and it was a good fit for us. And so we appreciate the follow-up and that we got that. It isn't huge. But if we do nothing like this, they'll have a favorable impact.

Our next question will be coming from Oliver Huang of TPH & Company. Your line is open, Oliver.

Just on the operational side, I think you all highlighted about 60% of completions this year are going to be using Simul- or Trimul-Frac ops. Just how much of the expected cost benefit and also the efficiency benefit from a cycle time perspective have kind of been underwritten into your 2024 outlook as it sits today?

Yes, Oliver, this is Chris Calvert. That's a great question. You're referring to Slide 15 in the deck where we're talking about our completed lateral footage efficiencies. And really, that has kind of been the main focus of our operational teams is how do we put forward those capital efficiencies that really help insulate from any sort of OFS inflation or deflation. And so when we look at the cost savings associated with Simul-Frac and/or Trimul-Frac, a lot of those savings are baked into our capital budgets. We pilot-tested Simul-Frac in 2021. So I think now that it has become such a large percentage of our portfolio, we do calculate that and factor that into our budget, forward-looking budget. Trimul-Frac from an efficiency standpoint, we still -- like I said, we're in process of doing that right now. And so as far as the efficiencies of what we will gain. I think we'll be talking about that more on the call in April. But we're excited about Trimul-Frac. We saw about a 20% to 30% improvement in capital efficiencies from the completion standpoint when we move to Simul-Frac. And so we're expecting some similar numbers, a significant improvement from an operational efficiency standpoint by incorporating Trimul-Frac into the operational portfolio.

Chris, why you're on that area, I was going to ask Tom to talk about the U-Turn wells and the capital savings there. The same thing, and you look at Slide M on Page 16.

Sure. Thanks, Joe. Albert, this is Tom Elsener. Yes, looking at Slide on the U-Turn wells. As we've kind of talked about before, we drilled our first 2 U-turn or first 2 wells as we've called them before done on our Wolf property in Texas. And we've had very successful production results from those wells that even though they're U-Turn wells, they performed just like a straight 2-mile-long lateral, very high pressures and IP rates of between 2,100 and 2,400 BoE per day. You wouldn't know the difference if it was a U-Turn or 2-mile lateral from the production results. We monitor those wells for several months now. And combined with the great cost savings that the team seemed to execute down there, we're ready to kind of do a few more of those. And I think we've highlighted that there may be up to 20 or so U-Turn wells that we may mix into the drill schedule kind of over the next kind of 2 years. We had some really nice rock that we would like to put into the program, just want to drill more of U-Turn. And so I think we're very excited for those. And that I think they'll be very successful. We still are kind of in the learning phase. We're going to learn about some different targets in different areas. So we still -- I still think we're kind of in the walking mode. We're not quite in the running mode yet. But I think we're very optimistic about it.

Billy, your group and you've had a lot of innovations for managed pressure drilling to the rig design. Do you want to say anything else you're working on?

Yes, sir. I mean that was a good project, and we have Patterson rigs out there on it and had some good engineers and did a really good job there, getting those wells drilled and completed, and it was a great operation, just while we're at it, go ahead and give a little shout out Patterson and everything they've done through the last couple of decades. They didn't just build a rig and leave it there. They've continued to add with their technology and their operating systems and techniques and this is another one they were out there with us, had extra people out there to make sure it's a good successful operation. And also there frac side next year and all we've worked with them. They do a great job for us. I like to mention Halliburton, Schlumberger and others that work with us and help us stay on top of our game. But really have done a lot of good with Patterson from the U-Turn wells, especially was a highlight. But also now we picked up the larger rig, 2,000-horsepower rig, and we're looking to do great things with that as well. We're just getting started with it and got our -- got the rig out there put together, got our surface hole and the media and fixing to get to the game time, show time with getting after the production hole, and we're expecting to set some new records there. And while we're talking about record at Maxcom group, where our geologists and engineers work together. They've been doing a great job there and coming up on our Board week, a week or so ago, we had 262 records there since we started Maxcom and we already upped that 3 more to 265. So they just continuously get better and better, and that's worked out to be just a great operation for us there. And all of our hands coming in. We try to work all of our new people, engineers and geologists spend a little time in there and get to know each other and it makes us a lot better on both sides of the operations. And we talk about the records and the money we're saving, drilling faster, but -- and staying in zone, and that staying in zone is a big part. We don't talk about a lot. We talk about all the money, $40 million we saved with all the records in the time. But also, when you drill a 10,000-foot lateral and you stay in zone, 99% to 100% of the time, and you get an extra 10 barrels of oil per foot, you get an extra 10,000 barrels of oil. I mean that's a lot of money right there. So all around just a great, efficient program and drilling and completion both have been doing a great job. Chris, do you want to add something.

Yes. Oliver, I'll just kind of close the loop. I think what it really comes down to operationally for us is we looked for technological improvements so we can continue to push every single year. And those come through relationships such as Patterson Nextier and other vendors to help us drill and complete wells faster but then also just engineering and people efficiencies that we find here in the office. And that's -- you look at something like Trimul-Frac or Simul-Frac, and that's really just kind of reimagining a process. It's been around for a long time, and that comes from the people side. There's not a lot of new technology that goes into a Simul-Frac or a Trimul-Frac. It's just reimagining a process of how to make it better and more of a win-win situation for us and our partners, which in this case would be Patterson Nextier, Halliburton. So I think it's a really good combination approach of how we look to maintain and maximize our capital efficiencies from the operations standpoint.

Speaking of the efficiencies, we -- while we're giving shout-outs need to do some for Forrester Smith, who is out there all the time, pipe is there. We don't have to wait on it. I appreciate him and

Yes, correct, Joe. There's a lot of people. The list is numerous. But I think when we talk about anything that we're looking at as far as just timing and TILs and things like that, if you don't have pipe ready on location when you're ready to case a well, you're going to be held up and our service provider has been really our casing provider for decades. And so I think you have relationships that go back that help weather the bad times and flourish in the good times. And so I think whether it's Halliburton, Patterson Nextier, the casing companies, it is something that we value at a tremendous level, and we continue to kind of push forward to make a win-win situations for both the vendor partnerships and Matador itself.

And for my follow-up, I know that you all have had extensive results and data kind of across the stack, but the increase of capital for wells targeting the First Bone Spring Carbonate for the 2024 program, so any color with respect to just kind of the thought process behind that decision? And maybe if there's any sort of commentary on expectations for those wells and also assumptions embedded for year-over-year well productivity trends for the program as a whole.

Sure. Oliver, this is Tom Elsener. Yes, we really like the First Bone Spring and the reason we're investing money in that specific interval is simply because the well results have been have been very solid even going back to many years ago with our kind of first tested the first ones bring at Marlin Downey in Eastern Antelope Ridge, we continue to delineate that zone kind of all -- kind of throughout the Northern Delaware Basin and feel very confident in those targets. Kind of going to your kind of well productivity question, yes, we put out Slide number 6 or Slide C showing our average EOR over the last 4 years been a very, very successful program, and we could expect that to continue. There's a variety of different performances in all different asset areas, but we continue to focus on investing the company's resources into the northern kind of the oilier portion, and you see that in the oil awards that we've generated in the First Bone Spring was certainly part of that.

Our next question will be coming from John Freeman of Raymond James. Your line is open.

On the Marlin processing plant, you laid out the return and the payback period that's expected. Can you also speak to how you all envision the volume split on that plant between Matador and third parties once it's up and running next year?

Yes, John, this is Brian. I'm happy to take a shot at that, and then Glenn can clean up anything after. But really, I think right now at San Mateo, we're 70%, 80% Matador. I think as you move over to Pronto, it's almost the opposite right now. But I think going forward, you'll end up more with the new plant, almost 50-50 split with the new plant. So all in, we'll probably end up being 60% Matador, 65% Matador and the other third party. And we look forward to those third-party opportunities. We think there are a lot of them up in that area. And so a lot of good partnerships and a lot of repeat customers. And so as we build the plan, we think there's a lot of real opportunity there.

And then my follow-up, and it kind of dovetails you just mentioned, Brian, which is you all talked about kind of the need in this area for more processing for -- it seems like for probably about a year. And so I guess once we think about the Marlin plant coming -- the expansion lease being completed next year, is there another area across all acreage footprint that you've already sort of identified is like another area that, at some point, you all would like to expand processing capability?

That's still in the thinking stage and give us a little time to firm up our ideas and plans, and we'll be happy to share them with you. And -- but it's a little too tenant to go out there and then be -- why did we do exactly what that is. We've -- we're in the planning stage, and there's a lot of factors. And when we come out, we'll have all that detail for you, but it certainly is a matter that's on our mind we think a good opportunity to go along with our other opportunities. But we've got to prioritize because we have some great drilling opportunities and great third party and reconciling those is part of the process, the guys around this table or we're all thinking about with each other.

Our next question will be coming from Philips Johnston of Capital One Securities.

Most of my questions have been answered, but maybe just a clarification on the additional advanced property acquisition in Q4. You mentioned about 1,000 a day BoE back to Q4. Just in terms of timing of when that closed, was that a full quarter's impact or a partial quarter's impact, meaning that the current run rate impact is somewhere north of that number.

Yes, this is Brian. I'm happy to answer that. It really -- we're referring to the 1,000, we're really referring to the full quarter impact. On a go-forward basis, I think that deal will continue to have really good returns for us going forward into 2024. I mean I think, again, as I said, the land guys have done just a fantastic job. I think if you look at Page 12 of our deck, you'll see in 2012, we had 7,580 acres, and now we're over 152,000 net acres. And so they continue to build that brick-by-brick acquisition and add to our production, add to our reserves and do a fantastic job.

And just to clarify what's embedded in your production guidance, does the fourth quarter '24 exit rate guidance assume any incremental volumes from these types of future small-scale acquisitions like the ones you've been doing? Or is it sort of organic from where we see today?

Yes. I think going forward this year, really, it's more acquisitions that we know that are close to being closed or being closed, we take those into account. But other than that, it's in large major, it's organic growth. And so I think that we do these brick-by-brick acquisitions. There's always some of that. And we know there will be some of that. So we take some of that into account. But really, it's more on just a straight organic growth for the year as we look at the exit rates 2024.

And the final question will be from Kevin MacCurdy of Pickering Energy Partners. Kevin, your line is open.

I appreciate all the details on the first quarter turn lines and CapEx. You guided exit rate for 4Q oil was better than we expected. Can you kind of help us bridge that gap on how you hit that exit rate, any more color you can provide on the CapEx or the turn-in-line cadence throughout the year? I mean, you mentioned the 21 wells that come on in the second quarter. Is there another slug of wells? Or is that really what's going to drive the production higher?

Yes. This is Brian. Kevin, thanks for the question. I think going through the year, we talked about those 21 wells will come on in the second quarter, and those really do help drive production higher. In addition, this year, in total, we expect to turn to sales 94 net wells. And so those are spread out as well kind of throughout the second, third quarter as we go forward into the fourth quarter. And so it's really a mix there. It's kind of split between the two quarters from third quarter and second quarter with but more weighted towards the second quarter just because those 21 wells will come online. And so that sets us up for that great fourth quarter that we've talked about. I think we're really excited about that exit rate and how it sets us up for next year.

And as my follow-up, you mentioned that you made some payments on the Marlin plant expansion in 4Q, how much of the 2024 midstream budget is allocated to the processing plant expansion? I think in the past, you've said that, that plant could cost $200 million overall.

This is -- Kevin, this is Glenn. So for 2024, approximately $90 million to $100 million is associated with the actual Marlin 2 plant. And then there's obviously CapEx that we've attributed to the build-out between the connectors that we're talking about there and the addition of compressor stations and then building out to some of the -- our properties on the Ranger North -- the Northern part of Ranger.

Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd now like to turn the call back to management for any closing remarks.

Yes. I do have a few closing remarks. The first is just to refer you to Slide 3, which summarizes our company highlights for last year. At this time last year, I was saying that we were beginning the year at about 100,000 barrels BoE per day and that I thought with the advance and our other drilling programs, we would boost that during the year and come up by 50%. And sure enough, we did. Our exit rate was 145,000 barrels. So great work by the team. Second -- and Slide 8 just shows that and also emphasize that our alignment of interest that the management group itself has about 6% of Matador, and we have over 90% participation in our employee stock purchase program. So everybody in this room and throughout the company, it's just like you, that we've got chips on the table. I'd also like to give a shout out to our measurement room. It runs 24/7 like our Maxcom and keeps an eye to be sure we're getting paid for each barrel of oil and MCF. And over the years, time period, they've added tens of millions of dollars. I think $32 million was the number we discussed at our Board meeting. So it's great work by the in tracking that and checking each barrel of oil at each invoice. Some of that's tedious work, but they've stuck to it and it's paid off. I'd also -- just you all have asked a lot of really good questions, but I just want to be some things that emphasize the reserve growth from $360 million to $460 million. And if price of oil hadn't slipped, there'd be more oil than that. Some of those, as you would probably be approaching $500 million. And then the growth…

You are Joe, yes.

They gave me a hard time on my -- some of my pronunciation, but that's been a big add. And you can see the outperformance that we've had over the years on Slide O compared to S&P 500 oil price ex LP. And I think that's a lot of what we have to offer a consistent performance with a strong balance sheet with our leverage ratio less than 1, and we intend to continue to keep an eye on the balance sheet because we're shareholders, too, and look for ways to boost the dividend. So I do want you also to know that, look, we are available to you. If you've got questions, you need answers. Mac is really good. Welcome to your questions. Brian will take them. If you come visit us, we'll have -- we'll buy you lunch or breakfast and we'll have a more extensive. So we want to be open because we're proud of what we're getting done and it's kind of the old-fashioned pick and shovel bases and little by little. And we think our people on staff are working trying to get better every day. It's corny to say that, get better every day and help the team get better. But that's what we aim for. And I think you can see it's from where we were a year ago to where we are today and the outlook going forward, we're still making very steady progress up and to the right. So with that, I'm going to sign off, but now our phone lines are open. If you need further follow-up and information, and thank you for taking the time that you have talked to us as well as study.

Ladies and gentlemen, thank you for your participation today. This concludes today's program.