Matador Resources Company bolstered its asset base in the Delaware Basin after acquiring 5,154 net undeveloped acres during a federal sale of oil and gas leases managed by the U.S. Bureau of Land Management, known as BLM.
The deal, valued at approximately $1.143 billion, allows the company to increase its drilling inventory in southeastern New Mexico, one of the most active areas for unconventional oil and gas in the United States.
According to the company, the new leases are located in areas of high geological quality and are adjacent to units that the company already operates.
Expansion in the core of the Delaware Basin
According to Matador Resources, the acquired acres are located in the “core of the core” of the Delaware Basin, within the Permian Province. The land encompasses nine or more prospective formations, expanding development options in areas such as Wolfcamp and Bone Spring, two key formations for oil and natural gas production in New Mexico and West Texas.
Furthermore, the proximity to assets already operated by the company could improve drilling and completion efficiency. Matador indicated that the adjacent areas allow for extended reach laterals of three miles or more, along with U-turn well designs, multipad developments, and multi-well completions.
With this acquisition, Matador Resources expects to add more than 141 net operated locations, normalized to two-mile laterals. The company also anticipates reducing costs per completed lateral foot in established areas, with averages between 10% and 20% below its updated corporate average.
Furthermore, the new leases feature a net interest rate of 87.5% and a 10-year term for all depths. These terms encourage long-term planning, especially in a region where operators are looking to increase reserves, extend inventory life, and maintain capital discipline.
San Mateo gains importance in the midstream strategy
The transaction also has a direct impact on San Mateo, the midstream platform linked to Matador. Several of the acquired sections are located near the existing infrastructure for the collection, processing, transport, and handling of produced water, which could increase future volumes and strengthen midstream revenue streams.
The company plans to finance the purchase with available cash and its existing credit facility. Matador noted that it has already fully repaid its reserve-based loan facility, known as RBL, which provides it with the financial flexibility to complete the acquisition.
Furthermore, under its current operating plan, the company anticipates that adjusted free cash flow for 2026 will approach $1.2 billion, assuming oil and natural gas prices observed at the beginning of May 2026. With this cash generation, Matador expects to substantially reduce the debt associated with the operation before the end of 2026 and fully repay the RBL during the first half of 2027.
Matador founder, president, and CEO Joseph Wm. Foran linked the acquisition to the company’s prior experience with federal assets in the Delaware Basin. The company cited its 2018 acquisitions of State Line and Rodney Robinson as precedents for value creation.
According to Matador, those projects have already recouped the capital invested in leases, drilling, and completions, in addition to generating an extra $1.9 billion in returns. With the new acreage, the company aims to apply a similar formula: proximity to infrastructure, a larger inventory of high-quality drill core, and phased development supported by its geology, reservoir, midstream, and operations teams.
Source: Matador Resources Company
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