Matador Resources plans to drop three operated rigs before June

Matador Resources Co., Dallas, will reduce its 2020 operated drilling program, pursue divestitures, and reduce management compensation in response to the recent decline in oil prices.

The company will move to three operated rigs in the Delaware Basin from six before June 30. One of the six operated rigs is expected to be released by the end of March.

Matador anticipates suspending its development activities in the Wolf asset area in Loving County, Tex. by the end of this year’s first quarter. Two rigs are expected to operate full time in the Stateline asset area in Eddy County, NM. Minimal changes to the planned 2020 capital expenditures of $80-105 million for its San Mateo midstream affiliate are anticipated.

Meantime, the company plans to reduce its unit operating costs, particularly targeting lease operating and general and administrative expenses and to pursue divestitures of portions of its non-core assets. Possible sales include leasehold and mineral interests in South Texas and in the Haynesville shale, as well as a possible joint venture or divestiture involving mineral interests in the Delaware Basin.

Joseph Wm. Foran, Matador's chairman and chief executive officer agreed to reduce his base salary by 25%, while the board members have agreed to reduce their compensation by 25%. Executive officers and vice-presidents agreed to reduce their base salaries by 20% and 10%, respectively. The company’s borrowing base was affirmed at $900 million on Feb. 27.

More specific details about operational plan and rig activity changes, as well as an update of 2020 market guidance, is expected in the coming weeks. Previouly, the company reported 2020 drilling and completion spend guidance of $690-750 million with an anticipated 101 gross (83.2 net) operated wells in progress at varying times during the year.