Good morning, ladies and gentlemen. Welcome to the Fourth Quarter and Full Year 2021 Matador Resources Company Earnings Conference Call. My name is Kirby, 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 through March 30, 2022, as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Capital Markets Coordinator for Matador. Mr. Schmitz, you may proceed. Thank you, Kirby. Good morning, everybody, and thank you for joining us for Matador's fourth quarter and full year 2021 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 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 quarterly report on Form 10-Q. Finally, in addition to our earnings press release, I would like to remind everyone that you can find a slide presentation in connection with our fourth quarter and full year 2021 earnings release under the Investor Relations tab on our website. With that, I would now like to turn the call over to Mr. Joe Foran, our Chairman and CEO. Joe? Thank you, Mac, and thank all of you for listening in on this call and taking the time. I'd like to simply begin by noting this is our, actually our 10-year anniversary from going public in February of 2012. This is a good high-water mark for us for this time. Last year, we considered the best year we ever had in all areas, and in particular, just execution and the teamwork that we had between our various disciplines. I want to thank the staff, both in the office and in the field for this good performance, and say, you know, we certainly understand that it was a record-setting year and that past performances are no guarantee of future performances, but it's, we feel it's not a bad indicator to have. We like our chances going forward, and we think the outlook is the best that it's ever been, and hope that you'll see in the documents that we're sharing with you how far that we've come in the last 10 years. As a measure, you see in here the production records, the reserve numbers, you know, the free cash flow, all records being. But I'd also, you know, just like to note that if you bought on the IPO, you're up basically 4x. We came public at $12, and we're approaching $48 now. If you happen to be an original shareholder in this Matador, you were at $3, so you're up a little over 15x in that period. As I said, I know that past performance is no guarantor of future, but we like our chances, and we'd rather be having that kind of progress than the other way around. As I said, with March Madness coming up, just because Duke and Kentucky and those are not guaranteed anything, it's certainly the way to pick your bracket with teams that have been there and have showed some progress. Again, I commend the teams and the staff for their operational and financial progress. We're looking at more free cash flow and more EBITDA than we ever have. Some of the slides to my remark note that, and the picture sometimes tells a thousand more words. The forward look is very promising. The BLM acreage that we bought has really come through, and I know at the time there were some question marks about were we paying too much for it. As I think you'll see that it made a complete change for us in our capital efficiency, and that we went from drilling 1% of our wells longer than 1 mi to where we drilled 98%-99% of our wells that were 1.5 mi or longer. Some this year have been as long as 2.3 mi. We're handling that change and that made such a difference in our overall capital efficiency. A lot of shales don't pay out but two-to-one, three-to-one. In many of the wells that we drilled this year, they'll be payouts as big as six-to-one. Glad that worked out. Glad everything has progressed with the team continuing to get better and our young people gaining skills and experience in this. The innovations that they brought here have been very helpful. The execution, the commitment to get to the field to make things happen better have all come together, to make this year possible. I know we can't look back. We're gonna discuss the fourth quarter, which was best quarter ever. After this call, it'll be forgotten, and we need to look forward to what's gonna happen in the second, third, and fourth quarters of this year. Very confident that they'll turn in another first-rate performance. We appreciate your interest and are now ready to get to your questions. Kirby? Ladies and gentlemen, as a reminder, to ask a question, you will need to press star one on your telephone, and to withdraw your question, you may press the pound key. Due to time constraints, we ask that you please limit yourself to one question and one follow-up. Again, we ask that you please limit yourself to one question and a follow-up until all have had a chance to ask a question. After which, we would welcome additional questions from you. First question comes from the line of Neal Dingmann from Truist Securities. Neil, your line is now open. Joe, congrats on a nice quarter. Joe, my first question centers on sort of the financial upside we're continuing to see from you all. Specifically, maybe for you or Dave or the guys, it seems to me a lot of investors are just looking for primarily cash flow growth. But I'm just wondering, you know, I guess it's another way to tackle sort of shareholder return, how do you all see the best way to achieve the shareholder growth? Is it some production growth? Is it buy back shares? All the above? Or, you know, when you all think about cash flow growth, what's the best way to deliver that? Yeah, good morning, Neal. This is David. You know, thanks for the question. I think that, Neal, we've been pretty consistent in our response there. You know, certainly over the course of the past year, true to what we said we would do, we focused, you know, very laser-like on paying down debt and on initiating a dividend and beginning to return capital to shareholders. We were pleased. I know Joe and the Board were very pleased to double the dividend in December of last year. You know, we've stayed consistent to that here in the first quarter. I'm sure that they will, you know, they will look through the course of this year, to an appropriate point where they may choose to raise the dividend again. We certainly are gonna stay focused on getting the rest of the debt paid off. You know, we ended the year with about $100 million in borrowings outstanding on the RBL. We're gonna pay down another $25 million here in the next few days, and so that'll leave us about $75 million to go. I think we'll get you know in short order the rest of that you know paid down, and then we'll have our bank facility paid down. We've talked about the potential later on in the year of perhaps looking at doing some kind of a bond restructuring and maybe paying down a little bit of the bonds, maybe putting a couple of towers in place. We'll see how that goes. I think that would be in the latter part of the year if we did something like that. You know, certainly we've talked about continuing to look at bolt-on opportunities and, you know, acquisitions of the sort that we have done in the last six months and may continue to do again, but only if we find, you know, what we think are the right things. I think that, you know, the company continues to evaluate, you know, the other vehicles for shareholder return, be they increases to the base dividend or some sort of a special dividend, if that should be appropriate later on in the year. I think that, for the moment, we feel like the best thing is for us to just kinda maintain our optionality and flexibility. Certainly, if things go the way that we anticipate that they will this year, you're quite correct. We'll have a significant amount of free cash flow with which we can work. Joe, I don't know if you have anything you'd like to add to that, but that's, I think, how we see it. Well, I agree with everything that you've said. The one thing I would add is the operational group has made a concerted effort to try to find ways to drill better wells for less money. That seems quaint, but it's the truth with some of the innovations that they've done in frac design, the administration of the fracs, the marketing of the oil and gas product, working with our key vendors to find better ways to do it. As an example, when you cut down the number of days on a well, those are very sustainable achievements that lead to more cash flow that aren't tied to commodity prices. I think they've been resourceful in getting this done. The oil and gas business is like making the train run on time. We can't do it all from here, but just appreciate the gains and experience and expertise our operating staff have in bringing about these better wells and working with our vendors to find more efficient ways to develop these properties. Neal, maybe I would just also add that I think the company has had a very good track record over the years of being Good allocators of capital and good stewards, you know, of the capital. I think our shareholders can count on us to continue to do that going forward. No, absolutely, David. I wanna say before I give my next question, just congrats to you and Matt. Obviously been great work with y'all. Just secondly, Joe, maybe for you or Matt, seems to me the market's still not giving you, for whatever reason, appropriate value on San Mateo. You guys have done just a tremendous job building that up. A lot of cash flow there, great assets there. I'm just wondering on a go forward, you know, is there anything else you can do you think to have the market better recognize that? Or, maybe just any comments you have on San Mateo. Well, Matt, I'll go first and you can clean up. One of the other things that's really missing is the operational enhancements that San Mateo brings to us, that they're able to get there when we're ready to turn these wells on, so we're not waiting to turn on the lines and missing days of production. Second, in this day of ESG, the environmental advantages that they bring, that they're there to hook up so you don't have trucks on the highway hauling the oil or the water or the emissions problems, and that really improves our environmental profile. Then the options that having that, the three pipe system on where you market your product, also gives us an advantage. Matt, I commend Matt and Matt Spicer and James Meyer, you know, the whole group over there have done a fantastic job, Gregg Krug, in working through this midstream and our partner, Five Point. Again, another good team effort where people working together make better things happen. Matt? Yeah. Joe, I think you said it well. I'll just add to that, Neil. I think for San Mateo, there's a couple of points here, and Joe hit on one that's very important, is how these two business lines work together. You know, if you've got an E&P company that doesn't have a midstream company that's serving their needs, that's a problem, and vice versa. It's still, and we've said this in other calls, it's still really nice to walk down the hall and say, we've got four wells at such and such asset that we want hooked up on whatever date and that happens. So there's just a tremendous amount of value there. I think what's happened over the course of time, Neil, we're coming to the point now where, you know, it's. We've got 500,000, close to 500,000 Bcf processing capacity. Our water volumes are up to where we could handle at least 370,000. The oil system is on that same acreage. We're at a point now where for us to go out and spend additional capital, we can make sure that we can get a return on that investment prior to doing it. We've, you know, never been the build them and they will come company. Any of the capital expenditures that we have going forward will be certainly based on either minimum volume commitment or an acreage dedication. The other thing I wanted to say was, you know, Matt and Tom and the business development team have done a really nice job going out and securing either minimum volume commitments to assure that we're gonna get a rate of return or an acreage dedication. Now as the rig count is back up over 600, those acreage dedications become even more valuable because other operators come back to drill additional wells on the assets that they have dedicated. Those are volumes to San Mateo. I think the business is in a really good spot right now. Well said, Matt, Joe. Thanks again, guys. Thanks, Neal. Thanks, Neal. Next question comes from the line of Scott Hanold of RBC Capital Markets. Scott, your line is now open. Thanks. Good morning. You know, David, Matt, you know, on this, I guess, 10th anniversary of going public, I mean, I'm gonna congratulate you guys on your, you know, what you've done for the company and, you know, hopefully you'll enjoy your retirement if Joe doesn't pull you back enough, right? Congrats. Thanks. Thanks, Scott. Yeah. Scott, I've got an ankle bracelet on each of them. We're not going very far. Not far enough there. I guess it's good to hear it in some respects. Yeah, I'm gonna push a little bit more on you know, the free cash flow, use of the free cash flow because, you know, based on our numbers, the quantum of free cash flow is gonna be quite extraordinary this year for you all. You know, this year and potentially next year. I know you all have not necessarily, you know, specifically done what everybody else is, you know, have done, you know, just to be like everyone else. You've looked at things like, you know, moderated growth if it gives better returns, you know, bolt-on acquisitions if it makes sense. I mean, you know, we think you're gonna have, you know, somewhere in excess of $1 billion this year of free cash flow. Like, if that quantum of free cash flow actually, you know, occurs, can you give us your thoughts around like, you know, how you think about your pecking order between, you know, variable dividends, buybacks, you know, fixed dividend increases and potentially, you know, growth and bolt-on acquisitions? Just, I mean, there's a lot of things there, but, you know, the quantum could be quite large, and we know that you all, you know, do things, you know, to find what's best for shareholders. Thank you, Scott. I'll try and both Matt and David being large shareholders that'll be listening in on these calls next year, they can let us know what their thoughts are too. The main one is I think it's unquestionable, we're aligned with all the shareholders. You know, I'm the largest individual shareholder. David and Matt are very large shareholders. The staff are large shareholders. Virtually everybody who works for Matador owns some shares. During the worst part of the pandemic, over 200 of the employees, which is 80% or so of the staff, were buying shares. We're very shareholder long-term oriented. We're not trying to do some immediate whatever's fashionable today, but what's tried and true to build long-term value. By that, the main one is a financial discipline to restrain during a time of high prices from drilling what I consider somewhat marginal wells. Continue to focus on drilling the A+ locations and work at developing more of that. That's the first thing. The second thing is, you know, the fixed-rate dividend we know works, and we will certainly continue down that path. David and I and everybody on the executive team has debated from time to time, the efficacy of these other return to shareholder type mechanisms. I'm not particularly high on. I have an open mind on everything. You know, we have a saying, we reserve the right to get smarter. I'm not particularly high on the buybacks, you know, because you buy back stocks from somebody, they go away. We'd rather, you know, invest that and build the value of Matador. The second one, the special dividend, you know, you don't have a history, so people don't know when a special dividend might be, is a weakness of that proposition. The variable dividend has some pros to it. We've looked at that. I, you know, I think at this time, the raising the dividend may be the more optimal approach, but nothing's been decided. We're gonna get further into the year, where we can see how things are going because we know it could change overnight. We're attuned to the shareholder because we're one of them, and we make more from our shareholder returns than we do from our salaries. When the stock goes up, we make more than we do from the compensation. Many of the staff, the key members and the executive committee do the same. Very much, but don't wanna do something because it's fashionable today and won't have lasting positive effects. We're very open on this free cash flow. We've always said we look for opportunities more than deciding the first of the year we're gonna dedicate so much to acquisitions. We'll just see what opportunities may come our way. I think there are more of them coming up now than they were a few years ago, and we're looking at them, but we're trying to be selective. David, I turn that to you. Joe, I think you answered very well. I think the only thing I might add, Scott, again, is just to reiterate the fact that, you know, I think that we're just sort of entering this phase, right? We still wanna get the rest of the RBL paid off, right? We're just about to, you know, we're just about there, and I think that you know, I hope your model's right. You know? I mean, that'll be a very high-class problem, you know, and for the company to begin to think about. I would just say, you know, having been a part of the company for so many years and having had the pleasure of working with Joe and seeing how the board functions, that I'm very confident that they're going to, you know, make the right decisions in terms of what's best for both the shareholders and the long-term value of our company. I think other than that, I think Joe laid things out very well. Appreciate that color. As a follow-up, can we talk a little bit on the operations side? I mean, obviously, you know, the Stateline has been a big focus area for the last, you know, year or two and, you know, performed quite outstandingly. You know, you will move into, you know, some of the you know the other areas, you know, we'll call it more of the you know legacy Matador areas or the areas pre-Stateline. Can you talk about, like, what you think about that mix shifting back to those other areas and the potential impact on returns, if any at all? You know, Scott, I'm gonna take the first part, and Matt or Billy or Tom can follow up. The first thing is, when we really started the development, you had the pandemic hit, and you had the Russian-Saudi oil price war. Those circumstances called for was doing something to scale. We had cut back to three rigs in light of what was happening. Where it made a compelling case was on the Rodney Robinson and the State Line area because you could do things to scale off of one pad. That was more efficient for that time. We still like the other areas. The legacy areas, a lot of them had the same or as good or better returns. They just didn't lend themselves to doing the big pad drilling with a number of wells at one time. We focused on that. It was necessary to get those going to earn some of the incentives on the midstream project, and that was what made the most economic sense at the time. Tom and Billy and Matt are eager to get back to some of those other areas where the returns have been just as robust. They didn't have the scale at the time that the State Line and Rodney Robinson had. Tom? That's right, Joe. The teams have been working very hard on these other assets while we've been focusing down at State Line and learning so much from being able to drill 50 wells down at State Line, and just over and over and over, getting better, getting faster, getting more efficient. We're taking those learnings out to these other parts of the basin, and the teams are already off to a great start, breaking drilling records, getting wells ready to produce in the San Mateo, back in the Rustler Breaks. We can't say how excited we are to get to work on Ranger and Antelope Ridge and back in Rustler Breaks and Wolf this year. We're very excited to be back drilling two-mile laterals in Antelope Ridge, and really kind of before Rodney Robinson, most of the projects we'd been doing in Antelope Ridge were one-mile. We're very, very proud of the progress we've made, and the number of targets, you know, keeps getting higher and better, and Ned and his geologic team are always looking at new and better places to land wells, so we're just very excited to get back to these other areas. Yeah. Tom, you said that well, too. I just wanna go back to what you said about drilling 50 wells in one spot. If you wanna put together a recipe to figure out how to be efficient, that's how you do it. You do the same type well over and over in the same type place, and you learn. You learn which bottom hole assemblies work, which bits it is, the motors, the MWD. We've just the longest run we've had out there in the field, which is a record, is a little over 13,000 ft. You know, that's 2.5 mi, so you can't drill any farther than what we've already drilled there. You take those learnings to the new place. The other thing is by doing this, by coming back to State Line periodically, we're able to optimize our production facilities so that we can flow wells back to a certain level and then let them trail off a little bit, come back and drill another set. We're not leaving forever. We're just going back to drill some of these assets that we're very excited to be operating on. Like, just following on to what Matt was saying there, you know, we get better and better at what we're doing there. While geology and reservoir is looking at, you know, different zones there, finding more as we're drilling these wells and getting that opportunity and land, blocking up the land around it, everybody's busy doing their thing. Like the drilling guys, they went in there to State Line and started out and had to run a fourth casing string in there. You heard us talk in the past about cutting out a casing string, how that'd save you $300,000-$500,000 for each point where you do that. Starting out, they went in and drilled the first three or four wells and had to set that extra string, but they worked at it and figured it out. Then we followed up with over 40 wells without having to run that string. Saved a lot of money there, and those are the kind of things we'll do as we get into these other areas and start working with them. On top of that, Joe mentioned earlier working with our vendors there, and, you know, they keep us going, and we work with them to do these things. B&L Pipe Co and Patterson and Universal and Halliburton, they work really well with us to save a lot of these dollars here, so we have more to keep drilling Ned's new zones there. Along with that, you know, the drilling side and, you know, Matt mentioned the bit technology and BHAs and cutting out, you know, trips and that saves like $1,000 now, or $100,000, excuse me. A little more. You know, the completion guys, you know, they get in there and get after it, and they've done the remote frac, and we've talked about that here today, I think, and I know it was in the release there, and that's saving $250,000 a well. The remote frac, we mentioned that. That was six wells, so that saved us $1.5 million right there. Then they started looking at the dual fuel, and that's already, you know, moved up to where we're thinking maybe we save $20,000 or $30,000 a well. We're saving $60,000 a well. We're now looking at adding field gas to that, and that'll save us $100,000 a well. These are just some of the things we'll be doing as we move to these different areas and start figuring them out, and it's gonna make us a lot of money, a lot more money for us and the shareholders and good all around. I guess, Glenn, you wanna jump on the production part of that or? Excuse me, Scott. This is Glenn Stetson. On the LOE side and the production side, we are forecasting the growth as you've seen in 2022 and a slight growth to LOE. We are the same as drilling and completions, working on ways to be more efficient, getting more water and oil on pipe, more sites on grid power, reducing compression where we can, and all those things kinda add up to Maybe we're forecasting a 6% increase to LOE for 2022 over 2021, but working on ways to mitigate that in every way. Great. I appreciate all that color, guys. Thank you. Thank you, Scott. Thanks, Scott. Thanks, Scott. Next question comes from the line of Zach Parham of JP Morgan. Zach, your line is now open. Hey, guys. Thanks for taking my question. First, I guess, could you talk about the decision to add the rig on the acquired acreage? Does that have to do with HBP requirements or just the returns up there you see from drilling? Are those compelling? You know, maybe talk about how you expect those returns to fit into the portfolio. Yeah. Hi, Zach. It's David. First of all, I'd say that, you know, of course, we wouldn't have bought it in the first place if we weren't quite excited by the opportunity that we have. We think that it's a great area, great rock. We like the high oil cut. We like the lower water cut in a lot of those wells up in that area. You know, it sorta is in an area that's between the Rodney and it's a little north of the Rodney, it's a little west of the Mallon. It's a nice area, you know, for rock there in the Delaware Basin. We're very excited about that. I think we feel like the returns are gonna fit in very well. As we mentioned in the release, this past year we drilled four wells in Ranger, not too far away, on a track we called Uncle Ches. We've delivered four very strong wells. I think the two we turned on in mid-2021 have already paid out, you know. We're very enthusiastic about this area. I think that it also just so happened that you know, there's a number of federal permits that are available and ready to go, and didn't seem like there was any sense to wait around and not get right on those. We've moved a rig out there, and we're gonna get busy, and looking forward to it. Got it. Thanks for that color. I guess just one follow-up on the operational side. You know, we've heard a lot of talk in the industry about simul-frac. And in the slide deck, you mentioned using remote simul-frac. Could you talk a little bit about how that's done from an operational perspective? Yeah. Hi, Zach. This is Chris Calvert. That's a great question. You know, I think the process on this is very similar to simulfrac. You have a set of wells that you are stimulating two wells at the same time. It's kinda Zipper Frac 2.0, if you will. You have one frac crew that's treating two wells at the same time while you have two wireline crews that are working on two other wells on the same pad. On remote frac, however, what that does is that opens up the opportunity to simulfrac wells that wouldn't otherwise set themselves up for the simulfrac process, be it an odd number pad layout or just wells on nearby pads that could be stimulated at the same time. With remote frac, what the group did set up the simulfrac crew on one pad and then basically ran hardline 7 in steel from one pad to the next. We had two wireline crews, or excuse me, one wireline crew on one pad, one wireline crew on a second pad, one simulfrac crew on one pad, and then we were treating two wells and two pads on two separate pads at the same time. It really allows for simul-frac on multiple pads throughout our assets. Hey, Zach, this is David again. Look, I just I cannot add anything to the great description that Chris just added to simul-frac and remote frac. I will say this is one where, you know, I gotta give props to the completions team, you know, for their learning about this technology and adopting it, you know, very quickly. I don't think hardly anybody else is doing that or has been doing that out in the basin. It's fit very well on a couple of recent opportunities that we've had. You know, I just think it's a testament to the way that our company and our technical teams really stay on top of what the latest innovations are out there and take advantage of it. A lot of things that Billy was enumerating, you know, in his comments to Scott's question there, I think reflect that. You know, whether it's on the drilling side or the completion side or the production side, have to compliment all our teams, you know, for their use of technology. I've always said that I think we're a team that punches above its weight for its size, and I truly believe that. I just you know you know pardon me a little bit for that advertisement, but I'd just like to you know I really do mean it. Not only the folks here in the office, but the guys in the field, we have a you know a first rate team of technical people. Yeah, Zach, this is Matt. I'm gonna pile on a bit here. Just Chris is too humble to mention the numbers, but what they actually did there, in 33 days, they pumped 407 frac stages. We estimate that saves about 20 days, which saves the money that Billy and Chris were talking about. In addition to that, it reduces the number of days you have to shut in offset wells by 20 days. It also gets these wells that we're completing to sales 20 days earlier. It works both on the revenue side and on the cost side. It's a really good deal for us. I'd like to pile on, too. We're piling on. Recognize Cliff Humphreys- Jump on, Joe. on doing this, and this is what I'm talking about, that Billy and I have been trying to urge is this group of young people have gained experience and expertise. They're coming to Billy and Matt more often to propose something like this. I didn't think of it. None of us thought of it. Cliff and Chris came up, said, "We ought to give this a try." Matt and Billy pressure tested the idea and said, "Let's give it a try." You can imagine how much extra production you get out of that 20 days, not counting the cost savings. Little differences like that, there's all sorts of ideas that they've had that have gone through Billy and his technical group, and what a difference they're making. Thank you all and the guys in the field who are really having to scramble to keep up with their ideas. We don't wanna forget while we're on operations here, the MaxCom room. Good point. Those guys, they do a great job and not only help us drill faster, and the faster we go, the more we need people all day long, all night long, middle of the night, making those decisions, keeping us in the preferred rock, and that makes us so much money. You know, it's hard to quantify, but you know, we know it's important to stay in the best rock. Ned and his team's all about that, and that's what we're doing. That, that's a big thing. Then on top of that, we have our MAX Ops and MAX Pro programs too. We bring engineers in, and they get out, like, wearing a lot of hats like we've been talking about, and they're out there getting experience. We have, you know, extra engineering help out there, you know, located in the field and in the MaxCom room. All good things. Yeah. Billy, some of these, the MaxCom room's 24/7. We also have a measurement room that does that, or a control room. We have measurement guys in the field that have all been an addition since we went public 10 years ago. These are just examples of the many improvements that have occurred, kinda like the old Volkswagen ads. It may look the same on the outside, but you remember they'd say, "Under the hood, there's 1,000 improvements to the Volkswagen Beetle." At the 10-year anniversary, I think it's important to recognize how far we've come. Even though we may look the same at the executive level, there's been plenty of positive changes. Got it. Thanks, guys. That's great color. Thanks, Zach. Yeah. Thanks, Zach. Thank you, Zach. One last thing while I got this is that when we went out to the Permian, if you remember our history, we were in the Haynesville, like that great gas but wanted an oil leg. We went down to the Eagle Ford to prove up that through horizontals and the fracking, you get the oil molecule through the shale. Then we went out to New Mexico, and that was gonna be our third leg of the stool. We went out there with a view that there were three or four zones that we were interested in. Ned, how many different zones are you producing from right now? I think we're in the 18 unique zone range right now. We kinda joke about geologists, they're lumpers and they're splitters. You know, whether you know, we wanna be granular or we wanna amalgamate those, but I think a conservative number is north of 18 right now. You know, the teams have done a really good job of bringing new targets forward and bringing new and exciting and profitable zones. You know, Billy and Chris and the operations group and MaxCom make it look easy, but I wanna tell you it's really not. This is still a complicated basin. There's, you know, over the course of a 2.5 mi lateral, there's a lot of variability, and these guys keep putting these wells down as fast as possible, staying, you know, in zone almost all the time. You know, we couldn't be happier with how the team's executing. It's really a combination of great rock and, you know, great operational execution, and it's fun to watch right now. Thank you, Ned. Back to y'all, Zach, or the next question. Next question comes from the line of John Freeman of Raymond James. John, your line is now open. Hi, guys. Congratulations on the 10-year anniversary, and again, echoing earlier comments, congratulations to Matt and David both on their terrific careers. The first question I had, I just wanna follow up a little bit on the prior discussion on the simul-fracs just quickly. If last year, y'all mentioned that you did 23 simul-fracs, what's the plan and the budget this year? How many simul-fracs are y'all planning? You know, this is David, John. I don't know exactly how many that there are. I think it'll be at least 1/3, you know, of our locations will be eligible for simul-frac. I can tell you, as we go through the course of the year, we're gonna be looking to do things like simul-frac and remote frac and, you know, any other flavor of frac that we can do to be more efficient. I expect we'll be talking about some other kind of hybrid frac, you know, six months from now that you guys have come up with. I think today it'll probably be, you know, at least 1/3 of the locations we'll be able to do it on. Okay. Just to make sure that I understand what's kind of already embedded in the guidance on, when y'all mentioned on that slide nine, the one that highlights the remote simul-frac. When y'all say, I know it's not just the simul-frac, but there's some other things as well. But when y'all highlight that y'all could reduce drilling and completion costs by 5% or more in 2022, that's not currently in the budget, right? That's 5% or more savings relative to the budget y'all have got out there. Yeah. That is correct, John. Okay. You know, we have not built that into the budget. We're just saying that, you know, those are some things that we think that we may do as we work on mitigating some of the cost increases. The budget number does not include that. Okay, great. Yeah, John, I think if you look back. I know- If you look back historically, John, with what the operations team has done, it's like quarter after quarter, they find ways to drill these wells faster, complete them more efficiently and save money. I think going forward the expectation would be that we're just gonna continue to mash on those guys, and I think they'll be able to deliver. Yeah, there's no doubt. Y'all's track record on beating guidance is pretty phenomenal. The other question I had on San Mateo. I know last year it was a priority, and again, this year, y'all listed, you know, a priority on focus on adding more third-party customers. Can you just remind us what percent of San Mateo right now is third-party? You know, John, it's. I'll make a comment here, and then I'll ask Brian to add some comments too. We typically strive for around 1/3, you know, maybe as high as 40% at times, but I think right now we're kind of in that 30%-33% range, and that feels pretty good to us. We do have a situation now where, you know, as we've talked about before, we're large enough, we have enough volumes, you know, particularly at the plant and, well, actually, all three pipes, we've got volumes to bring on third-party customers. Maybe if you look out into the future several years ahead, those volumes are spoken for, but that gives us a chance to bring them on in the short term and then add these projects that we've talked about to generate a rate of return. Brian, is that accurate? Yeah, Matt. This is Brian. Exactly right. I think that's accurate. Those numbers are close to right. I think, you know, we're really pleased with the third-party opportunities we've had in 2021. We were able to add a number of customers, not just new customers, but one of the things that we're we pride ourselves on is we were able to add some additional volumes from existing customers. Shout out to those guys in the field that are providing great service and to the BD team to continue those relationships. We look forward in 2022 to continuing to build those relationships and have additional contracts with third parties. We already have some that we've signed up and look forward to continuing to do that now. I think those numbers Matt said are right, and hopefully in the future those numbers continue to increase as we continue to build the third-party opportunities. Sounds good, guys. Appreciate all the answers. Thanks, John. Thank you, John. Thanks, John. Next question comes from the line of Subash Chandra of Benchmark. Subash, your line is now open. There you go. Thank you. Good morning, everybody. First question is- Good morning. Good morning. On acquisition, trying to, I guess, handicap your appetite. You talked in depth about the benefits of scale, and then we saw tuck-in deals like this, which, you know, is easily covered by your liquidity and free cash flows. Do you think you need a transformative deal if it comes along and the metrics are okay? No, Subash. I mean, we'll look at, you know, whatever somebody generally suggests, but no, we don't need one. We've entered a different inflection point now than back when we were $300 million. You know, we're over a $5 billion company, approaching $6 billion, and that's. You know, we'll look at things, but we're at a pretty good size where we have scale with our vendors and we're growing at a good pace. You don't wanna grow so fast that you don't have the people to populate it or your systems. We don't prefer the company to company because it can be distracting. As David often says, "We want to be a better company, not just a bigger company." That's why we're as selective as we are in what we do, to make sure that it fits and we have the people that can attend to it. We have a large inventory right now, so if you're gonna make an acquisition, you would like to get right on it and, you know, that would, you know, involve another rig, and we don't wanna upset the capital expenditure plan. I wouldn't say that has a high probability. You know, our first one is these continued bolt-on that we did last year. Those opportunities we could just fit right into the drilling program. We had the people. It was seamless. To the extent we can find those, that's probably what we look for first. First Matador grew mainly by acquisition and exploitation. This Matador has primarily grown through organically, and it's been a good way to grow. We feel like it's earned a higher rate of return, and it's been something that's been easier to fit into our capital plans and be capital efficient. I don't, you know, I don't wanna say never to something, but it's not likely. What is most likely is it will continue as we've done in the past few years, do it optimistically on acreage it's bolt-on because we know that area, and it has less risk, easier to absorb, and we think it's really more capital efficient. I don't think just 'cause you get bigger, you're necessarily better, and most of the opportunities presented to us would dilute some of our quality. We're gonna continue to be selective, but we are also working with other companies on trading acreage. You know, this has been a period of time where the majors have traded acreage for people to get to the longer laterals. We trade a section for another section, so we get a two-mile lateral, and they get a two-mile lateral. We think that makes a lot of sense, and they're small but efficient and good economics. Does that help? Matt, want to say something. No, I just wanna build on what you were saying about bigger and better. I think for us, the focus absolutely always has been on better. Mm-hmm. I think at this point, we're to the size that I think we've got the scale that you were talking about, and it's part of our strategy is we built this company was to establish relationships with good vendors. We've done that with Patterson, both on the drilling side and with Universal on the pressure pumping. We've been partners for a very long time, and we've been partners in good times and partners in not so good times, and we just made it work. Same with Halliburton, Schlumberger, BNL that Billy mentioned earlier. These are all great relationships for which we have scale. You know, when we start talking about, you know, the way others do it, which there's nothing wrong with that, ours is a little different. When times get bad, we talk to our vendors and say, "Look, we're not wanting to run you in the ground. The last thing we want is just for you guys not to be here. We want you to help us create value." And they've done that throughout the good times and the bad. You know, the focus absolutely is on better. All right. Thanks for that, guys, for sure. The second question is on, you know, permitting lease sales back in the headlines, because of litigation on the social cost of carbon issue. Have you seen any disruptions, you know, in the Permian? It might have more to do with future lease sales than it might have to do with permits, but, what are you seeing on the ground there? Hey, Subash, it's David, and Tom, if you wanna chime in, but I think the simplest and most succinct answer is no. You know, we have not encountered any problems or any concerns. I think our team has a good working relationship, works very hard with the folks out in Carlsbad. They're very helpful. They've been very good through the last several years with all the pandemic and working at home and everything. Those folks have been very good to help us along and to respond to our needs, and I hope us to them as well. We've really... You know, I think that process has proceeded just fine, and we have what we need to, you know, prosecute our current drilling plans and we'll continue to work forward. But like I say, I think the crispest answer to the question is no, we're doing good. Yeah. I think the BLM has been very professional, and with the restrictions that they've had on the pandemic has been really remarkable getting out and being responsive, returning phone calls, when you're communicating with them and yet making sure to look after the BLM. It's been very fair. Whatever additional information or request they made of us, we feel they've been very reasonable. Tom, is that a- All that's correct. Yeah, David and Joe both said it correctly, and I think we even got a few kind of final signatures we needed yesterday afternoon. Things continue to advance, and we've gotten a whole bunch of sundry notices approved and extensions, so we're ready to go for 2022. I certainly appreciate, if I failed to say it, certainly appreciate the efforts of those on our team, our land team that have worked very hard over the last couple years to keep the pipeline full. We're very grateful for all their efforts. Thanks, guys. Next question comes from the line of Michael Scialla of Stifel. Michael, your line is now open. Yeah. Hi, guys. I'd like to echo everybody else and offer my congratulations to Matt and David on their great careers. As Scott said, good luck trying to hide from Joe during your retirement. We're not even gonna try to hide, Mike. I'd probably suggest some sort of restraining order personally, but I just wanted to ask on slide 14, you show you've got about a quarter of this year's production hedged with basis swaps. I'm just wondering if you've done anything there for next year and any concern about takeaway capacity out of the basin for next year on the gas side? Of course, the basis swaps. This is David, Mike. The basis swaps that we have in place are for oil. We put most of those hedges in two or three years ago, as I recall. With regard to oil, no, we haven't added any additional ones, you know, going forward. With regard to gas, I don't believe we have any basis swaps in place. I don't think we ever have had. We certainly are aware of some of the concerns that are being expressed about the takeaway at Waha. I can assure you that Gregg Krug and Anton and, you know, my marketing group is already very proactively looking at, you know, how we will meet that challenge if and when it does manifest itself, you know. I do feel like that. You know, I feel confident that we're out in front of it and working to try to mitigate any impact that it may have going forward. I guess without trying to front run anything you're doing there, is firm transportation a consideration there? Well, you know, we have had for the last several years, you know, we were one of the first people to get on GCX, right? We've had quite a bit of our gas, you know, with firm transportation to the Gulf. I think we're, you know, the guys have done a very good job over the years of finding other alternative, you know, markets so that to kind of diversify us away from, you know, from Waha. You know, we go to other parts of the country at different times of the year. That's been helpful. I think that currently they're, you know, they're looking at other avenues to continue to diversify the, you know, the takeaway away from Waha. Like I say, my hat's off to them for being, you know, for being conscious of what's going on and being kind of proactive and ahead of the game, and I feel confident in our abilities to mitigate that problem. Good. Then I just wanted to follow up a little bit more on the recent acquisitions. Can you talk about how you see the full cycle returns on those acquisitions? You gave a PV-10 number for the proved reserves you acquired. Can you give any sort of split on how much of the proved reserves are developed versus undeveloped? You know, I think, Mike, that it was probably from the PV-10 side, of course, it was a little heavily weighted toward developed, you know, PDP, as opposed to undeveloped. In terms of volumes, it may have been a little more like 50/50 or so. Of course, you know, we've only booked a very small amount of what we would anticipate to be future reserves, you know, as current PUDs, you know. I mean, you know, we tend to be fairly conservative in our reserves bookings anyway, and this was no exception. While we did book a few PUDs to some of the existing producing wells, you know, it's not a case as to where we PUD'd up the whole thing. I mean, there will still be, as we mentioned in the release, quite a lot of future value to be added as a result of the drilling activities that we undertake. In terms of the full cycle returns on acquisitions versus maybe just drilling more of your legacy inventory? Well, you know, I think this is an area that's gonna have very strong returns, Mike, and that's gonna compete favorably for capital with others of our legacy areas. I'm, you know, confident that we're gonna be pleased with the long-term returns that we receive that we get out there. I think we paid a very good price for the acreage, you know, relative to what we have done in that area previously. You know, I think we've always had for a company that came in and, you know, sort of 10 years ago or nine years ago and started building its position. I think as we used to talk about, we felt like we had one of the lowest entry points on a dollar per acre basis of almost anybody out there, unless you were just sort of a legacy company that was sitting on a lot of the PDP acreage, you know. But for someone to be a, you know, an entrant into the shale, I think our brick- by- brick approach, you know, has been very cost effective, you know, in terms of the, you know, what we had to pay to acquire the position that we did. I think that's a tribute to just a lot of good work by our land team and our philosophy that no acre should be left behind. I mean, you know, they don't, you know. I mean, if it's something we want, they go get it, you know. I remember, you know, sorry if I'm waxing a little nostalgic, but I remember in the beginning, people, you know, looking at our map and going, you know, "Gosh, it seems like that's a little scattered, you know, don't you think?" I'm like, "Nope, sure don't." I think it's in a lot of good spots and just watch it all get drilled up. You know, if you were sitting here this morning, like I am, looking at a map across the wall of that much of HBP, you know, I think people would be shocked to see how much of that we have either operated into development or participated in really good non-op wells over the years because the rock was good. I couldn't be more complimentary of our land staff and the asset that they put together and our geologic team that helped to direct us there in the first place. It's been a great team effort and, you know, these guys, you know, they know how to do it, and they do. Thanks for the detail, David. Thanks, Mike. Next question comes from the line of David Heikkinen of Pickering Energy. David, your line is now open. Morning, y'all, and thanks for taking the question. Just thinking back, a year ago, y'all went from three rigs to four rigs, and now you're at six. It kinda got ahead of what we're hearing is an ever-tightening service environment by picking up the sixth rig. Some operators talking about four to six months to secure tubulars and the like. How long ago did you start working on, you know, the plan to add the sixth rig? And can you kinda talk through the pinch points in that process of you've really highlighted your service providers working with you, like where the tight points were and kinda where you would think about kinda the limits in the services space today, if we're thinking of other operators adding activity. Well, David, this is Matt, and you know, I think the short answer to that is what we talked about earlier. It's about relationships. When we're talking to Patterson, you know, we've got optionality on both sides of this thing. We've got contracts that we stagger in. If we wanted to go down a rig, it makes it easy to go down a rig. We have this ongoing conversation with Patterson. Andy Hendricks and I and Billy and Joe are all friends. You know, if we think we might want to be adding a rig, we call them and say, "Hey, we might be wanting to add one." You know, when there's 250 rigs around in the country, that's not hard. To your point, when the high-tech rigs start getting more and more hard to find, then Patterson tells us, "Don't worry, we've got a rig for you." That's kind of the way we do it. In regards to the pipe, you know, pinch point there, same kind of thing. Foster Smith is our representative at BNL, and we sit down and we talk about what we're doing for the next three months, for the next six months, for the next year, and we act accordingly. Same thing with the services, with Chris and Cliff. We'll be, when they're contracting these frac crews, we look at what the drill schedule is for at least a year out, and that's how we kinda put that stuff together. Yeah. Really when you think about the doubling of activity year-over-year, you've been working on this, like, rolling three-month, six-month, 12-month, almost maybe even two-year plan, to gear up to this sixth rig program that, as I think about it. There are these pinch points that are emerging, but you just kind of this rolling activity level that allowed you to add the sixth. You know, I think from a planning standpoint, David, that we try to think far enough ahead in terms of, you know. I mean, we scenario plan, as you might expect, you know, and it's like, if this is, you know, if conditions are this way and the opportunity might present itself, you know, what do we need to do to be ready for that? Likewise, if things go the other way, how do we need to plan our business, you know, so that we can react quickly in that way too, you know? I think we try to, you know, think through as much of it as we can, so that we're prepared as much as we can be. It is just pretty much, David, every bit of our business we try to build a lot of optionality into. I mean, it just we typically have lots of different directions we can go depending on what the environment is. That's definitely helpful. Congratulations, David, Matt, Billy, and Van. I was thinking about it. I don't think you can make retirement look too good for Joe to step out, but do your best, and have a little Thanks, Dave. Thanks, David. That's funny. Thank you, ladies and gentlemen. This ends Q&A portion of this morning's conference call. I'd like to turn the call over to management for any closing remarks. My only closing remarks is to really thank all of y'all for participating in this. Wanna say again our standing invitation to please come see us if you're in the area and have breakfast or lunch or some sort of meeting. We'd like for you to get to know more of these young people who are really making a difference in our business, and that we're turning to more all the time for guidance and direction and recommendations on what we ought to be doing. Thank them and everybody else and really thank you on the questions. We believe going public has made us a better company, and that every quarter and every so often, we're in front of you or talking to you're asking us questions, you know, keeping us sharp. I often tell the story on the IPO, where'd we get the idea for midstream? It was on the IPO when we kept being asked about how we were getting our gas out of the Eagle Ford. We weren't having a problem, but by the questions, we knew others were, and we went back and re-recruited Gregg to rejoin. There he is. He was missing from his spot. He's trying to get out, but that's an example of getting with y'all. Y'all have made us a better company. You know, they're not only in ideas, but having to report every quarter has inspired us to do longer range planning, you know, getting good people. I found it's easier to get people to come to work with us 'cause they know how we're doing. It's more transparent. We're excited by the 10 years, and we look forward to the next 10 years, but really do appreciate y'all and hope y'all come to see us. Thank you so much. Ladies and gentlemen, thank you for your participation today. This concludes the program. Have a great day.