Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today announced that MRC Energy Company, a wholly-owned subsidiary of the Company, closed an amended and restated senior secured revolving credit agreement (the “Credit Agreement”) on September 28, 2012. Under the Credit Agreement, the borrowing base was increased to $200 million, up from the previous borrowing base of $125 million. The amendment increased the maximum facility size from $400 million to $500 million and named Royal Bank of Canada as Administrative Agent. The Credit Agreement matures in December 2016. The Company plans to use the increased borrowing capacity along with its operating cash flows for working capital and general corporate purposes and, in particular, to continue to execute its Eagle Ford drilling program in South Texas.
With the closing of the Credit Agreement, the Company’s bank group was expanded to include five banks. Joining Royal Bank of Canada, Comerica Bank and Citibank, N.A. in the facility are The Bank of Nova Scotia and SunTrust Bank. At October 9, 2012, the Company had $120 million in borrowings outstanding, approximately $1.1 million in outstanding letters of credit and approximately $78.9 million available for additional borrowings under the Credit Agreement.
Matador has recently finalized a gas transportation and processing agreement for its Eagle Ford natural gas production effective September 1, 2012 for an initial term of five years. This agreement will ensure that Matador has firm capacity to transport and process its Eagle Ford natural gas production and to transport the natural gas liquids to fractionation facilities. In addition to acquiring the firm capacity to move, process and transport natural gas and natural gas liquids, this contract will provide for improved overall netback pricing for the Company’s Eagle Ford natural gas and natural gas liquids production.
The Company continues to make improvements in its drilling and completion costs. Drilling and completion costs for a typical 5,000-ft horizontal Eagle Ford well currently range from $7.0 to $7.5 million in northern La Salle County and $7.5 to $8.0 million in northwest Karnes County where wells are completed with white frac sand in both areas. In DeWitt County, where wells are completed with high strength proppant and, on occasion, intermediate casing strings are required, well costs currently range from $9.0 to $10.5 million. These drilling and completion costs represent a 20% reduction since the end of the first quarter of 2012.
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