MATADOR RESOURCES COMPANY The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes thereto contained herein and the consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 (the "Annual Report") filed with theSecurities and Exchange Commission (the "SEC") onFebruary 28, 2022 , along with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report. The Annual Report is accessible on theSEC's website at www.sec.gov and on our website at www.matadorresources.com. Our discussion and analysis includes forward-looking information that involves risks and uncertainties and should be read in conjunction with the "Risk Factors" section of the Annual Report and the section entitled "Cautionary Note Regarding Forward-Looking Statements" below for information about the risks and uncertainties that could cause our actual results to be materially different than our forward-looking statements. In this Quarterly Report on Form 10-Q (this "Quarterly Report"), (i) references to "we," "our" or the "Company" refer toMatador Resources Company and its subsidiaries as a whole (unless the context indicates otherwise), (ii) references to "Matador" refer solely toMatador Resources Company and (iii) references to "San Mateo" refer toSan Mateo Midstream, LLC , collectively with its subsidiaries. For certain oil and natural gas terms used in this Quarterly Report, please see the "Glossary of Oil and Natural Gas Terms" included with the Annual Report.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Additionally, forward-looking
statements may be made orally or in press releases, conferences, reports, on our
website or otherwise, in the future by us or on our behalf. Such statements are
generally identifiable by the terminology used such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "forecasted," "hypothetical,"
"intend," "may," "might," "plan," "potential," "predict," "project," "should,"
"would" or other similar words, although not all forward-looking statements
contain such identifying words.
By their very nature, forward-looking statements require us to make assumptions
that may not materialize or that may not be accurate. Forward-looking statements
are subject to known and unknown risks and uncertainties and other factors that
may cause actual results, levels of activity and achievements to differ
materially from those expressed or implied by such statements. Such factors
include, among others: general economic conditions; our ability to execute our
business plan, including whether our drilling program is successful; changes in
oil, natural gas and natural gas liquids prices and the demand for oil, natural
gas and natural gas liquids; our ability to replace reserves and efficiently
develop current reserves; the operating results of our midstream business' oil,
natural gas and water gathering and transportation systems, pipelines and
facilities, the acquiring of third-party business and the drilling of any
additional salt water disposal wells; costs of operations; delays and other
difficulties related to producing oil, natural gas and natural gas liquids;
delays and other difficulties related to regulatory and governmental approvals
and restrictions; impact on our operations due to seismic events; availability
of sufficient capital to execute our business plan, including from future cash
flows, available borrowing capacity under our revolving credit facilities and
otherwise; our ability to make acquisitions on economically acceptable terms;
our ability to integrate acquisitions; the operating results of and any
potential distributions from our joint ventures; weather and environmental
conditions; the impact of the worldwide spread of the novel coronavirus
("COVID-19") on oil and natural gas demand, oil and natural gas prices and our
business; and the other factors discussed below and elsewhere in this Quarterly
Report and in other documents that we file with or furnish to the SEC , all of
which are difficult to predict. Forward-looking statements may include
statements about:
•our business strategy;
•our estimated future reserves and the present value thereof, including whether
or not a full-cost ceiling impairment could be realized;
•our cash flows and liquidity;
•the amount, timing and payment of dividends, if any;
•our financial strategy, budget, projections and operating results;
•the supply and demand of oil, natural gas and natural gas liquids;
•oil, natural gas and natural gas liquids prices, including our realized prices
thereof;
•the timing and amount of future production of oil and natural gas;
•the availability of drilling and production equipment;
•the availability of oil storage capacity;
•the availability of oil field labor;
•the amount, nature and timing of capital expenditures, including future
exploration and development costs;
•the availability and terms of capital;
•our drilling of wells;
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•our ability to negotiate and consummate acquisition and divestiture
opportunities;
•the integration of acquisitions with our business;
•government regulation and taxation of the oil and natural gas industry;
•our marketing of oil and natural gas;
•our exploitation projects or property acquisitions;
•our ability and the ability of our midstream joint venture to construct,
maintain and operate midstream pipelines and facilities, including the operation
of its Black River cryogenic natural gas processing plant and the drilling of
additional salt water disposal wells;
•the ability of our midstream business to attract third-party volumes;
•our costs of exploiting and developing our properties and conducting other
operations;
•general economic conditions;
•competition in the oil and natural gas industry, including in both the
exploration and production and midstream segments;
•the effectiveness of our risk management and hedging activities;
•our technology;
•environmental liabilities;
•our initiatives and efforts relating to environmental, social and governance
matters;
•counterparty credit risk;
•geopolitical instability and developments in oil-producing and natural
gas-producing countries;
•the impact of COVID-19 on the oil and natural gas industry and our business;
•our future operating results; and
•our plans, objectives, expectations and intentions contained in this Quarterly
Report or in our other filings with the SEC that are not historical.
Although we believe that the expectations conveyed by the forward-looking statements in this Quarterly Report are reasonable based on information available to us on the date hereof, no assurances can be given as to future results, levels of activity, achievements or financial condition.
You should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We undertake no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements, except as required by law, including the securities laws ofthe United States and the rules and regulations of theSEC .
Overview
We are an independent energy company founded inJuly 2003 engaged in the exploration, development, production and acquisition of oil and natural gas resources inthe United States , with an emphasis on oil and natural gas shale and other unconventional plays. Our current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in theDelaware Basin inSoutheast New Mexico andWest Texas . We also operate in the Eagle Ford shale play inSouth Texas and theHaynesville shale andCotton Valley plays inNorthwest Louisiana . Additionally, we conduct midstream operations in support of our exploration, development and production operations and provide natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties. Second Quarter Highlights For the three months endedJune 30, 2022 , our total oil equivalent production was 10.1 million BOE, and our average daily oil equivalent production was 110,750 BOE per day, of which 64,300 Bbl per day, or 58%, was oil and 278.5 MMcf per day, or 42%, was natural gas. Our average daily oil production of 64,300 Bbl per day for the three months endedJune 30, 2022 increased 21% year-over-year from 53,400 Bbl per day for the three months endedJune 30, 2021 . Our average daily natural gas production of 278.5 MMcf per day for the three months endedJune 30, 2022 increased 16% year-over-year from 239.1 MMcf per day for the three months endedJune 30, 2021 . For the second quarter of 2022, we reported net income attributable to Matador shareholders of$415.7 million , or$3.47 per diluted common share, on a generally accepted accounting principles inthe United States ("GAAP") basis, as compared to net income attributable to Matador shareholders of$105.9 million , or$0.89 per diluted common share, for the second quarter of 2021. For the second quarter of 2022, our Adjusted EBITDA attributable to Matador shareholders ("Adjusted EBITDA"), a 24
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non-GAAP financial measure, was$663.8 million , as compared to Adjusted EBITDA of$261.0 million during the second quarter of 2021. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income and net cash provided by operating activities, see "-Liquidity and Capital Resources-Non-GAAP Financial Measures." For more information regarding our financial results for the three months endedJune 30, 2022 , see "-Results of Operations" below. For the six months endedJune 30, 2022 , we reported net income attributable to Matador shareholders of$622.8 million , or$5.20 per diluted common share, on a GAAP basis, as compared to net income attributable to Matador shareholders of$166.6 million , or$1.40 per diluted common share, for the six months endedJune 30, 2021 . For the six months endedJune 30, 2022 , our Adjusted EBITDA, a non-GAAP financial measure, was$1.1 billion , as compared to Adjusted EBITDA of$459.1 million during the six months endedJune 30, 2021 . For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income and net cash provided by operating activities, see "-Liquidity and Capital Resources-Non-GAAP Financial Measures." For more information regarding our financial results for the three and three and six months endedJune 30, 2022 , see "-Results of Operations" below. OnJune 30, 2022 , we acquired a cryogenic gas processing plant, 3 compressor stations and approximately 45 miles of natural gas gathering pipelines inLea andEddy Counties,New Mexico through the acquisition of a wholly-owned subsidiary of Summit Midstream Partners, LP ("Summit") that was subsequently renamedPronto Midstream, LLC ("Pronto"). In addition, the Company assumed certain takeaway capacity on aFederal Energy Regulatory Commission regulated natural gas pipeline. As consideration for the business combination, the Company paid approximately$77.8 million in cash, subject to certain customary post-closing adjustments.
Operations Update
We began 2022 operating five drilling rigs in theDelaware Basin but contracted a sixth drilling rig during the first quarter to begin development of certain acquired assets in the western portion of the Ranger asset area inLea County, New Mexico . We operated six drilling rigs in theDelaware Basin throughout the second quarter of 2022. AtJuly 26, 2022 , three of these rigs were operating in the Ranger asset area, two of these rigs were operating in the Rustler Breaks asset area and the sixth rig was operating in the Stateline asset area. We signed a contract for a seventh drilling rig late in the second quarter of 2022, which we plan to begin operating inSeptember 2022 . Thereafter, we plan to operate seven drilling rigs throughout the remainder of 2022. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors. We turned to sales a total of 29 gross (7.7 net) horizontal wells in theDelaware Basin during the second quarter of 2022, including 11 gross (6.4 net) operated horizontal wells and 18 gross (1.3 net) non-operated horizontal wells. During the second quarter of 2022, we turned to sales 11 gross (6.4 net) horizontal operated wells in the Rustler Breaks asset area: four were Second Bone Spring completions, three were First Bone Spring completions, two were Third Bone Spring completions, one was a Wolfcamp B completion and one was a Wolfcamp A completion. We also participated in nine gross (0.1 net) non-operated wells turned to sales in theAntelope Ridge asset area, five gross (0.4 net) non-operated wells in the Rustler Breaks asset area, two gross (0.7 net) non-operated wells in the Arrowhead asset area and two gross (0.1 net) non-operated wells in the Ranger asset area. Our average daily oil equivalent production in theDelaware Basin for the second quarter of 2022 was 105,200 BOE per day, consisting of 63,300 Bbl of oil per day and 251.4 MMcf of natural gas per day, a 20% increase from 87,500 BOE per day, consisting of 51,700 Bbl of oil per day and 214.7 MMcf of natural gas per day, in the second quarter of 2021.The Delaware Basin contributed approximately 98% of our daily oil production and approximately 90% of our daily natural gas production in the second quarter of 2022, as compared to approximately 97% of our daily oil production and approximately 90% of our daily natural gas production in the second quarter of 2021. During the second quarter of 2022, we did not turn to sales any operated wells or participate in any non-operated wells turned to sales on our leasehold properties in the Eagle Ford shale play inSouth Texas or in theHaynesville shale andCotton Valley plays inNorthwest Louisiana .
2022 Capital Expenditure Budget
AtJuly 26, 2022 , we increased our estimated 2022 capital expenditures for drilling, completing and equipping wells ("D/C/E capital expenditures") to$765.0 to$835.0 million from$640.0 to$710.0 million , as originally estimated, primarily to accommodate the seventh drilling rig and an accelerated drilling program on ourRodney Robinson leasehold in the western portion of theAntelope Ridge asset area and additional working interests obtained through acreage trades and other transactions. AtJuly 26, 2022 , our anticipated midstream capital expenditures remained$50.0 to$60.0 million , which includes our proportionate share of estimated 2022 capital expenditures for San Mateo and other wholly-owned midstream projects. 25
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Capital Resources Update
Our Board of Directors (the "Board") declared quarterly cash dividends of$0.05 per share of common stock in both the first and second quarters of 2022, which were paid onMarch 14, 2022 andJune 3, 2022 , respectively. InJune 2022 , the Board amended the Company's dividend policy to increase the quarterly dividend to$0.10 per share of common stock. InJuly 2022 , the Board declared a quarterly cash dividend of$0.10 per share of common stock payable onSeptember 1, 2022 to shareholders of record as ofAugust 17, 2022 . During the second quarter of 2022, we repaid the remaining$50.0 million of borrowings under our fourth amended and restated credit agreement (the "Credit Agreement"). We did not have any outstanding borrowings under our Credit Agreement atJune 30, 2022 . We repurchased$144.0 million of our outstanding senior notes due 2026 (the "Notes") for$142.4 million during the three months endedJune 30, 2022 and also repurchased an additional$14.2 million of Notes for$13.7 million betweenJune 30, 2022 andJuly 25, 2022 . InApril 2022 , the lenders under our Credit Agreement, led by Royal Bank of Canada, completed their review of our proved oil and natural gas reserves, and, as a result, the borrowing base was increased to$2.0 billion from$1.35 billion , the Company's elected borrowing commitment increased to$775.0 million from$700.0 million , the maximum facility amount remained$1.5 billion and one additional bank joined our lending group. In addition, the terms of the Credit Agreement were amended to increase the sublimit for issuances of letters of credit under the Credit Agreement from$50 million to$100 million and replace the London Interbank Offered Rate ("LIBOR") interest rate benchmark with an Adjusted Term SOFR (as defined in the Credit Agreement) interest rate benchmark. After giving effect to the amendment to the Credit Agreement, the applicable interest rate margin for borrowings under the Credit Agreement ranges from 1.75% to 2.75% per annum for borrowings bearing interest with reference to the Adjusted Term SOFR and from 0.75% to 1.75% per annum for borrowings bearing interest with reference to the Alternate Base Rate (as defined in the Credit Agreement), in each case depending on the level of borrowings under the Credit Agreement. In addition, the Adjusted Term SOFR includes a credit spread adjustment of 0.10% per annum for all interest periods. ThisApril 2022 redetermination constituted the regularly scheduledMay 1 redetermination. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected borrowing commitment.
Critical Accounting Policies
There have been no changes to our critical accounting policies and estimates from those set forth in the Annual Report.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on our financial statements.
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Results of Operations
Revenues
The following table summarizes our unaudited revenues and production data for
the periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Operating Data
Revenues (in thousands)(1)
Oil $ 650,233 $ 315,114 $ 1,110,355 $ 528,393
Natural gas 242,536 96,960 408,929 199,914
Total oil and natural gas revenues 892,769 412,074 1,519,284 728,307
Third-party midstream services revenues 21,886 19,850 39,192 35,288
Sales of purchased natural gas 60,008 10,918 79,347 15,428
Realized loss on derivatives (61,163) (42,611) (83,602) (68,524)
Unrealized gain (loss) on derivatives 30,430 (42,804) (44,599) (86,227)
Total revenues $ 943,930 $ 357,427 $ 1,509,622 $ 624,272
Net Production Volumes(1)
Oil (MBbl)(2) 5,855 4,855 10,675 8,594
Natural gas (Bcf)(3) 25.3 21.8 47.2 39.3
Total oil equivalent (MBOE)(4) 10,078 8,482 18,535 15,140
Average daily production (BOE/d)(5) 110,750 93,210 102,406 83,650
Average Sales Prices
Oil, without realized derivatives (per Bbl) $ 111.06 $ 64.90 $ 104.01 $ 61.49
Oil, with realized derivatives (per Bbl) $ 105.21 $ 56.13 $ 99.10 $ 53.49
Natural gas, without realized derivatives (per Mcf) $ 9.57 $ 4.46 $ 8.67 $ 5.09
Natural gas, with realized derivatives (per Mcf) $ 8.51 $ 4.46 $ 8.01 $ 5.09
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(1)We report our production volumes in two streams: oil and natural gas, including both dry and liquids-rich natural gas. Revenues associated with natural gas liquids are included with our natural gas revenues.
(2)One thousand Bbl of oil.
(3)One billion cubic feet of natural gas.
(4)One thousand Bbl of oil equivalent, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas.
(5)Barrels of oil equivalent per day, estimated using a conversion ratio of one Bbl of oil per six Mcf of natural gas.
Three Months Ended
Oil and natural gas revenues. Our oil and natural gas revenues increased$480.7 million , or 117%, to$892.8 million for the three months endedJune 30, 2022 , as compared to$412.1 million for the three months endedJune 30, 2021 . Our oil revenues increased$335.1 million , or 106%, to$650.2 million for the three months endedJune 30, 2022 , as compared to$315.1 million for the three months endedJune 30, 2021 . This increase in oil revenues resulted from a 71% increase in the weighted average oil price realized for the three months endedJune 30, 2022 to$111.06 per Bbl, as compared to$64.90 per Bbl for the three months endedJune 30, 2021 , and from a 21% increase in our oil production to 5.9 million Bbl for the three months endedJune 30, 2022 , as compared to 4.9 million Bbl for the three months endedJune 30, 2021 . Our natural gas revenues increased$145.6 million , or 150%, to$242.5 million for the three months endedJune 30, 2022 , as compared to$97.0 million for the three months endedJune 30, 2021 . The increase in natural gas revenues resulted from a 115% increase in the weighted average natural gas price realized for the three months endedJune 30, 2022 to$9.57 per Mcf, as compared to a weighted average natural gas price of$4.46 per Mcf realized for the three months endedJune 30, 2021 , and from a 16% increase in our natural gas production to 25.3 Bcf for the three months endedJune 30, 2022 , as compared to 21.8 Bcf for the three months endedJune 30, 2021 . 27
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Third-party midstream services revenues. Our third-party midstream services revenues increased$2.0 million , or 10%, to$21.9 million for the three months endedJune 30, 2022 , as compared to$19.9 million for the three months endedJune 30, 2021 . Third-party midstream services revenues are those revenues from midstream operations related to third parties, including working interest owners in our operated wells. This increase was primarily attributable to an increase in our third-party produced water disposal revenues to$8.4 million for the three months endedJune 30, 2022 , as compared to$7.0 million for the three months endedJune 30, 2021 , and an increase in our third-party natural gas gathering and processing revenues to$10.7 million for the three months endedJune 30, 2022 , as compared to$10.3 million for the three months endedJune 30, 2021 . Sales of purchased natural gas. Our sales of purchased natural gas increased$49.1 million , over five-fold, to$60.0 million for the three months endedJune 30, 2022 , as compared to$10.9 million for the three months endedJune 30, 2021 . This increase was the result of both an increase in purchased natural gas volumes sold and the natural gas price realized during the three months endedJune 30, 2022 . Sales of purchased natural gas reflect those natural gas purchase transactions that we periodically enter into with third parties whereby we purchase natural gas and (i) subsequently sell the natural gas to other purchasers or (ii) process the natural gas at San Mateo's cryogenic natural gas processing plant inEddy County, New Mexico (the "Black River Processing Plant") and subsequently sell the residue gas and natural gas liquids ("NGL") to other purchasers. These revenues, and the expenses related to these transactions included in "Purchased natural gas," are presented on a gross basis in our interim unaudited condensed consolidated statements of operations. Realized loss on derivatives. Our realized net loss on derivatives was$61.2 million for the three months endedJune 30, 2022 , as compared to a realized net loss of$42.6 million for the three months endedJune 30, 2021 . We realized a net loss of$34.2 million related to our oil costless collar and oil basis swap contracts for the three months endedJune 30, 2022 , resulting primarily from oil prices that were above the ceiling prices of certain of our oil costless collar contracts and above the strike prices of certain of our oil basis swap contracts. We realized a net loss of$26.9 million related to our natural gas costless collar contracts for the three months endedJune 30, 2022 , resulting primarily from natural gas prices that were above the ceiling prices of certain of our natural gas costless collar contracts. We realized an average loss on our oil derivatives of approximately$5.85 per Bbl produced during the three months endedJune 30, 2022 , as compared to an average loss of approximately$8.77 per Bbl produced during the three months endedJune 30, 2021 . We realized an average loss on our natural gas derivatives of approximately$1.06 per Mcf produced during the three months endedJune 30, 2022 . Unrealized gain (loss) on derivatives. During the three months endedJune 30, 2022 , the aggregate net fair value of our open oil and natural gas derivative contracts changed to a net liability of$59.5 million from a net liability of$89.9 million atMarch 31, 2022 , resulting in an unrealized gain on derivatives of$30.4 million for the three months endedJune 30, 2022 . During the three months endedJune 30, 2021 , the aggregate net fair value of our open oil and natural gas derivative contracts changed to a net liability of$122.1 million from a net liability of$79.3 million atMarch 31, 2021 , resulting in an unrealized loss on derivatives of$42.8 million for the three months endedJune 30, 2021 .
Six Months Ended
Oil and natural gas revenues. Our oil and natural gas revenues increased$791.0 million , or 109%, to$1.5 billion for the six months endedJune 30, 2022 , as compared to$728.3 million for the six months endedJune 30, 2021 . Our oil revenues increased$582.0 million , or 110%, to$1.1 billion for the six months endedJune 30, 2022 , as compared to$528.4 million for the six months endedJune 30, 2021 . This increase in oil revenues resulted from a 69% increase in the weighted average oil price realized for the six months endedJune 30, 2022 to$104.01 per Bbl, as compared to$61.49 per Bbl for the six months endedJune 30, 2021 , and from a 24% increase in our oil production to 10.7 million Bbl for the six months endedJune 30, 2022 , as compared to 8.6 million Bbl for the six months endedJune 30, 2021 . Our natural gas revenues increased by$209.0 million , or 105%, to$408.9 million for the six months endedJune 30, 2022 , as compared to$199.9 million for the six months endedJune 30, 2021 . The increase in natural gas revenues resulted from a 70% increase in the weighted average natural gas price realized for the six months endedJune 30, 2022 to$8.67 per Mcf, as compared to a weighted average natural gas price of$5.09 per Mcf for the six months endedJune 30, 2021 , and from a 20% increase in our natural gas production to 47.2 Bcf for the six months endedJune 30, 2022 , as compared to 39.3 Bcf for the six months endedJune 30, 2021 . Third-party midstream services revenues. Our third-party midstream services revenues increased$3.9 million , or 11%, to$39.2 million for the six months endedJune 30, 2022 , as compared to$35.3 million for the six months endedJune 30, 2021 . This increase was primarily attributable to an increase in our third-party produced water disposal revenues to$16.2 million for the six months endedJune 30, 2022 , as compared to$13.5 million for the six months endedJune 30, 2021 , and an increase in our third-party natural gas gathering and processing revenues to$18.4 million for the six months endedJune 30, 2022 , as compared to$17.1 million for the six months endedJune 30, 2021 . Sales of purchased natural gas. Our sales of purchased natural gas increased$63.9 million , or over four-fold, to$79.3 million for the six months endedJune 30, 2022 , as compared to$15.4 million for the six months endedJune 30, 2021 . This increase was the result of both an increase in natural gas volumes sold and the natural gas price realized during the six months endedJune 30, 2022 . 28
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Realized loss on derivatives. Our realized net loss on derivatives was$83.6 million for the six months endedJune 30, 2022 , as compared to a realized net loss of$68.5 million for the six months endedJune 30, 2021 . We realized a net loss of$52.4 million related to our oil costless collar and oil basis swap contracts for the six months endedJune 30, 2022 , resulting primarily from oil prices that were above the ceiling prices of certain of our oil costless collar contracts and above the strike prices of certain of our oil basis swap contracts. We realized a net loss of$31.2 million related to our natural gas costless collar contracts for the six months endedJune 30, 2022 , resulting primarily from natural gas prices that were above the ceiling prices of certain of our natural gas costless collar contracts. We realized an average loss on our oil derivatives of approximately$4.91 per Bbl produced during the six months endedJune 30, 2022 , as compared to an average loss of$8.00 per Bbl produced during the six months endedJune 30, 2021 . We realized an average loss on our natural gas derivatives of approximately$0.66 per Mcf produced during the six months endedJune 30, 2022 . Unrealized gain (loss) on derivatives. During the period fromDecember 31, 2021 throughJune 30, 2022 , the aggregate net fair value of our open oil and natural gas derivative contracts changed to a net liability of$59.5 million from a net liability of$14.9 million , resulting in an unrealized loss on derivatives of$44.6 million for the six months endedJune 30, 2022 . During the period fromDecember 31, 2020 throughJune 30, 2021 , the aggregate net fair value of our open oil and natural gas derivative contracts changed to a net liability of$122.1 million from a net liability of$35.9 million , resulting in an unrealized loss on derivatives of$86.2 million for the six months endedJune 30, 2021 . 29
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Expenses
The following table summarizes our unaudited operating expenses and other income (expense) for the periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except expenses per BOE) 2022 2021 2022 2021
Expenses
Production taxes, transportation and processing$ 85,658 $ 43,843 $ 145,477 $ 78,017 Lease operating 39,857 28,752 73,812 54,691 Plant and other midstream services operating 22,014 13,746 41,475 27,409 Purchased natural gas 56,440 9,628 73,461 12,483 Depletion, depreciation and amortization 120,024 91,444 215,877 166,307 Accretion of asset retirement obligations 517 511 1,060 1,011 General and administrative 24,431 24,397 54,164 46,585 Total expenses 348,941 212,321 605,326 386,503 Operating income 594,989 145,106 904,296 237,769 Other income (expense) Net loss on asset sales and impairment - - (198) - Interest expense (18,492) (17,940) (34,744) (37,590) Other (expense) income (4,342) 14 (4,486) (661) Total other expense (22,834) (17,926) (39,428) (38,251) Income before income taxes 572,155 127,180 864,868 199,518 Income tax provision Current 36,261 - 51,670 - Deferred 99,699 5,349 152,818 8,189 Total income tax provision 135,960 5,349 204,488 8,189 Net income 436,195 121,831 660,380 191,329
Net income attributable to non-controlling interest in subsidiaries
(20,477) (15,926) (37,538) (24,779)
Net income attributable to
$ 415,718 $ 105,905 $ 622,842 $ 166,550 Expenses per BOE Production taxes, transportation and processing$ 8.50 $ 5.17 $ 7.85 $ 5.15 Lease operating$ 3.95 $ 3.39 $ 3.98 $ 3.61 Plant and other midstream services operating$ 2.18 $ 1.62 $ 2.24 $ 1.81 Depletion, depreciation and amortization$ 11.91 $ 10.78 $ 11.65 $ 10.98 General and administrative$ 2.42 $ 2.88 $ 2.92 $ 3.08
Three Months Ended
Production taxes, transportation and processing. Our production taxes and transportation and processing expenses increased$41.8 million , or 95%, to$85.7 million for the three months endedJune 30, 2022 , as compared to$43.8 million for the three months endedJune 30, 2021 . On a unit-of-production basis, our production taxes and transportation and processing expenses increased 64% to$8.50 per BOE for the three months endedJune 30, 2022 , as compared to$5.17 per BOE for the three months endedJune 30, 2021 . These increases were primarily attributable to a$39.4 million increase in production taxes to$70.5 million for the three months endedJune 30, 2022 , as compared to$31.1 million for the three months endedJune 30, 2021 , primarily due to the significant increase in the oil and natural gas revenues between the two periods. Lease operating. Our lease operating expenses increased$11.1 million , or 39%, to$39.9 million for the three months endedJune 30, 2022 , as compared to$28.8 million for the three months endedJune 30, 2021 . Our lease operating expenses on a unit-of-production basis increased 17% to$3.95 per BOE for the three months endedJune 30, 2022 , as compared to$3.39 per BOE for the three months endedJune 30, 2021 . These increases were primarily attributable to the increased number of wells 30
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being operated by us and other operators (where we own a working interest) and
to operating cost inflation for the three months ended
Plant and other midstream services operating. Our plant and other midstream services operating expenses increased$8.3 million , or 60%, to$22.0 million for the three months endedJune 30, 2022 , as compared to$13.7 million for the three months endedJune 30, 2021 . This increase was primarily attributable to our increased volumes as well as increased third-party volumes, which resulted in (i) increased expenses associated with our commercial produced water disposal operations of$11.7 million for the three months endedJune 30, 2022 , as compared to$6.6 million for the three months endedJune 30, 2021 , and (ii) increased expenses associated with our pipeline operations of$6.8 million for the three months endedJune 30, 2022 , as compared to$3.7 million for the three months endedJune 30, 2021 . Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased$28.6 million , or 31%, to$120.0 million for the three months endedJune 30, 2022 , as compared to$91.4 million for the three months endedJune 30, 2021 , primarily as a result of the 19% increase in our total oil equivalent production for the three months endedJune 30, 2022 , as compared toJune 30, 2021 . On a unit-of-production basis, our depletion, depreciation and amortization expenses increased 10% to$11.91 per BOE for the three months endedJune 30, 2022 , as compared to$10.78 per BOE for the three months endedJune 30, 2021 , primarily as a result of the increase in actual costs and estimated future costs to drill, complete and equip our wells between the two periods. General and administrative. Our general and administrative expenses remained consistent at$24.4 million for the three months endedJune 30, 2022 , as compared to the three months endedJune 30, 2021 . Our general and administrative expenses decreased 16% on a unit-of-production basis to$2.42 per BOE for the three months endedJune 30, 2022 , as compared to$2.88 per BOE for the three months endedJune 30, 2021 , which was attributable to the 19% increase in our total oil equivalent production between the two periods. Interest expense. For the three months endedJune 30, 2022 , we incurred total interest expense of$19.3 million . We capitalized$0.8 million of our interest expense on certain qualifying projects for the three months endedJune 30, 2022 and expensed the remaining$18.5 million to operations. For the three months endedJune 30, 2021 , we incurred total interest expense of$19.8 million . We capitalized$1.9 million of our interest expense on certain qualifying projects for the three months endedJune 30, 2021 and expensed the remaining$17.9 million to operations. Income tax provision. As a result of the full-cost ceiling impairments recorded during 2020, we recognized a valuation allowance against our federal net deferred tax assets as ofSeptember 30, 2020 , which remained in place atJune 30, 2021 . As a result, we recorded an income tax provision of$5.3 million for the three months endedJune 30, 2021 . Our income tax provision differed from amounts computed by applying theU.S. federal statutory rate to the pre-tax income due to recording the net deferred tax liability for state taxes, primarily inNew Mexico , and continuing to recognize a valuation allowance against ourU.S. federal net deferred tax assets. Due to a variety of factors, including our significant net income during 2021, our federal valuation allowance was reversed in the third quarter of 2021. Our current income tax provision was$36.3 million and our deferred income tax provision was$99.7 million for the three months endedJune 30, 2022 . Our effective tax rate of 25% for the three months endedJune 30, 2022 differed from theU.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily inNew Mexico .
Six Months Ended
Production taxes, transportation and processing. Our production taxes, transportation and processing expenses increased by approximately$67.5 million , or 86%, to approximately$145.5 million for the six months endedJune 30, 2022 , as compared to$78.0 million for the six months endedJune 30, 2021 . On a unit-of-production basis, our production taxes, transportation and processing expenses increased by 52% to$7.85 per BOE for the six months endedJune 30, 2022 , as compared to$5.15 per BOE for the six months endedJune 30, 2021 . These increases were primarily attributable to a$64.4 million increase in production taxes to$119.2 million for the six months endedJune 30, 2022 , as compared to$54.8 million for the six months endedJune 30, 2021 , primarily due to the significant increase in oil and natural gas revenues between the two periods. Lease operating expenses. Our lease operating expenses increased by approximately$19.1 million , or 35%, to$73.8 million for the six months endedJune 30, 2022 , as compared to$54.7 million for the six months endedJune 30, 2021 . Our lease operating expenses per unit of production increased 10% to$3.98 per BOE for the six months endedJune 30, 2022 , as compared to$3.61 per BOE for the six months endedJune 30, 2021 . These increases were primarily attributable to the increased number of wells being operated by us and other operators (where we own a working interest) and to operating cost inflation for the six months endedJune 30, 2022 , as compared to the six months endedJune 30, 2021 . Plant and other midstream services operating. Our plant and other midstream services operating expenses increased$14.1 million , or 51%, to$41.5 million for the six months endedJune 30, 2022 , as compared to$27.4 million for the six months endedJune 30, 2021 . This increase was primarily attributable to our increased volumes as well as third-party volumes, 31
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which caused (i) increased expenses associated with our commercial produced water disposal operations of$21.7 million for the six months endedJune 30, 2022 , as compared to$14.2 million for the six months endedJune 30, 2021 , (ii) increased expenses associated with our pipeline operations of$12.5 million for the six months endedJune 30, 2022 , as compared to$7.0 million for the six months endedJune 30, 2021 , and (iii) increased expenses associated with operating the Black River Processing Plant of$7.3 million for the six months endedJune 30, 2022 , as compared to$6.2 million for the six months endedJune 30, 2021 . Depletion, depreciation and amortization. Our depletion, depreciation and amortization expenses increased by$49.6 million to$215.9 million , or an increase of 30%, for the six months endedJune 30, 2022 , as compared to$166.3 million for the six months endedJune 30, 2021 , primarily as a result of the 22% increase in our oil equivalent production. On a unit-of-production basis, our depletion, depreciation and amortization expenses increased to$11.65 per BOE for the six months endedJune 30, 2022 , or 6%, from$10.98 per BOE for the six months endedJune 30, 2021 , primarily as a result of the increase in actual costs and estimated future costs to drill, complete and equip our wells between the two periods. General and administrative. Our general and administrative expenses increased by$7.6 million to$54.2 million , or 16%, for the six months endedJune 30, 2022 , as compared to$46.6 million for the six months endedJune 30, 2021 , primarily due to increased payroll for our existing employees as well as with additional employees joining Matador to support our increased land, geoscience, drilling, completion, production, midstream and administration functions as a result of our continued growth. While our general and administrative expenses increased 16% on an absolute basis, our general and administrative expenses decreased by 5% on a unit-of-production basis to$2.92 per BOE for the six months endedJune 30, 2022 , as compared to$3.08 per BOE for the six months endedJune 30, 2021 , primarily as a result of the 22% increase in our oil equivalent production between the two periods. Interest expense. For the six months endedJune 30, 2022 , we incurred total interest expense of approximately$39.1 million . We capitalized approximately$4.4 million of our interest expense on certain qualifying projects for the six months endedJune 30, 2022 and expensed the remaining$34.7 million to operations. For the six months endedJune 30, 2021 , we incurred total interest expense of approximately$40.1 million . We capitalized approximately$2.5 million of our interest expense on certain qualifying projects for the six months endedJune 30, 2021 and expensed the remaining$37.6 million to operations. Income tax provision. As a result of the full-cost ceiling impairments recorded during 2020, we recognized a valuation allowance against our federal net deferred tax assets as ofSeptember 30, 2020 , which remained in place atJune 30, 2021 . As a result, we recorded an income tax provision of$8.2 million for the six months endedJune 30, 2021 . Our income tax provision differed from amounts computed by applying theU.S. federal statutory rate to the pre-tax income due to recording the net deferred tax liability for state taxes, primarily inNew Mexico , and continuing to recognize a valuation allowance against ourU.S. federal net deferred tax assets. Due to a variety of factors, including our significant net income during 2021, our federal valuation allowance was reversed in the third quarter of 2021. Our current income tax provision was$51.7 million and our deferred income tax provision was$152.8 million for the six months endedJune 30, 2022 . Our effective tax rate of 25% for the six months endedJune 30, 2022 differed from theU.S. federal statutory rate due primarily to permanent differences between book and taxable income and state taxes, primarily inNew Mexico .
Liquidity and Capital Resources
Our primary use of capital has been, and we expect will continue to be during the remainder of 2022 and for the foreseeable future, for the acquisition, exploration and development of oil and natural gas properties and for midstream investments. Excluding any possible significant acquisitions, we expect to fund our capital expenditures for the remainder of 2022 primarily through a combination of cash on hand, operating cash flows and performance incentives paid to us by a subsidiary ofFive Point Energy LLC , our joint venture partner in San Mateo, in connection with San Mateo. If capital expenditures were to exceed our operating cash flows during the remainder of 2022, we expect to fund any such excess capital expenditures through borrowings under the Credit Agreement or San Mateo's revolving credit facility (the "San Mateo Credit Facility") (assuming availability under such facilities) or through other capital sources, including borrowings under additional credit arrangements, the sale or joint venture of midstream assets, oil and natural gas producing assets, leasehold interests or mineral interests and potential issuances of equity, debt or convertible securities, none of which may be available on satisfactory terms or at all. Our future success in growing proved reserves and production will be highly dependent on our ability to generate operating cash flows and access outside sources of capital. 32
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AtJune 30, 2022 , we had cash totaling$230.4 million and restricted cash totaling$51.9 million , which was primarily associated with San Mateo. By contractual agreement, the cash in the accounts held by our less-than-wholly-owned subsidiaries is not to be commingled with our other cash and is to be used only to fund the capital expenditures and operations of these less-than-wholly-owned subsidiaries. InFebruary 2022 , the Board declared a quarterly cash dividend of$0.05 per share of common stock, which was paid onMarch 14, 2022 . InApril 2022 , the Board declared a quarterly cash dividend of$0.05 per share of common stock, which was paid onJune 3, 2022 . InJune 2022 , the Board amended our dividend policy to increase the quarterly dividend to$0.10 per share of common stock. InJuly 2022 , the Board declared a quarterly cash dividend of$0.10 per share of common stock payable onSeptember 1, 2022 to shareholders of record as ofAugust 17, 2022 . AtJune 30, 2022 , we had (i)$906.0 million of outstanding senior notes due 2026 (the "Notes"), (ii) no borrowings outstanding under the Credit Agreement and (iii) approximately$45.6 million in outstanding letters of credit issued pursuant to the Credit Agreement. During the first quarter of 2022, the$7.5 million unsecuredU.S. Small Business Administration loan was forgiven under the terms of the loan agreement. During the second quarter of 2022, we repaid the remaining$50.0 million of borrowings under the Credit Agreement and repurchased$144.0 million of our Notes for$142.4 million . InApril 2022 , the lenders under our Credit Agreement completed their review of our proved oil and natural gas reserves, and, as a result, the borrowing base was increased to$2.0 billion from$1.35 billion , the borrowing commitment was increased to$775.0 million from$700.0 million and the maximum facility amount remained$1.5 billion . In addition, the terms of the Credit Agreement were amended to increase the sublimit for issuances of letters of credit under the Credit Agreement from$50 million to$100 million and replace the LIBOR interest rate benchmark with an Adjusted Term SOFR interest rate benchmark. After giving effect to the amendment to the Credit Agreement, the applicable interest rate margin for borrowings under the Credit Agreement ranges from 1.75% to 2.75% per annum for borrowings bearing interest with reference to the Adjusted Term SOFR and from 0.75% to 1.75% per annum for borrowings bearing interest with reference to the Alternate Base Rate, in each case depending on the level of borrowings under the Credit Agreement. In addition, the Adjusted Term SOFR includes a credit spread adjustment of 0.10% per annum for all interest periods. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected commitment (subject to compliance with the covenant noted below). The Credit Agreement matures inOctober 2026 . The Credit Agreement requires us to maintain (i) a current ratio, which is defined as (x) total consolidated current assets plus the unused availability under the Credit Agreement divided by (y) total consolidated current liabilities less current maturities under the Credit Agreement, of not less than 1.0 to 1.0 at the end of each fiscal quarter and (ii) a debt to EBITDA ratio, which is defined as debt outstanding (net of up to$75.0 million of cash or cash equivalents), divided by a rolling four quarter EBITDA calculation, of 3.5 to 1.0 or less. We believe that we were in compliance with the terms of the Credit Agreement atJune 30, 2022 . AtJune 30, 2022 , San Mateo had$420.0 million in borrowings outstanding under the San Mateo Credit Facility and approximately$9.0 million in outstanding letters of credit issued pursuant to the San Mateo Credit Facility. The San Mateo Credit Facility maturesDecember 19, 2023 and the lender commitments under that facility are$450 million (subject to San Mateo's compliance with the covenants noted below). The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in lender commitments to up to$700.0 million . The San Mateo Credit Facility is guaranteed by San Mateo's subsidiaries, secured by substantially all of San Mateo's assets, including real property, and is non-recourse with respect to Matador and its wholly-owned subsidiaries. The San Mateo Credit Facility requires San Mateo to maintain a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.0 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo's consolidated interest expense for such period, of 2.5 or more. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo's liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility. We believe that San Mateo was in compliance with the terms of the San Mateo Credit Facility atJune 30, 2022 . During the six months endedJune 30, 2022 , the oil and natural gas industry experienced continued improvement in commodity prices as compared to 2021, primarily resulting from (i) improvements in oil demand as the impact from COVID-19 has subsided, (ii) actions taken by theOrganization of Petroleum Exporting Countries ,Russia and certain other oil-exporting countries ("OPEC+") to moderate the worldwide supply of oil and (iii) changes in supply and demand dynamics, particularly with respect to instability inRussia andUkraine . As a result, West Texas Intermediate ("WTI") oil prices have increased from$75.21 per barrel atDecember 31, 2021 to as high as$123.70 per barrel in earlyMarch 2022 , before falling back to$105.76 per barrel atJune 30, 2022 , based upon the WTI oil futures contract price for earliest delivery date. Prices for natural gas were also much higher during the six months endedJune 30, 2022 as compared to 2021, increasing from$3.73 per MMBtu at December 33
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31, 2021 to as high as$9.32 per MMBtu in earlyJune 2022 , before falling back to$5.42 per MMBtu atJune 30, 2022 , based upon the NYMEX Henry Hub natural gas futures contract price for earliest delivery date. While oil and natural gas prices have improved significantly in 2022, the general outlook for the oil and natural gas industry for the remainder of the year remains unclear, and we can provide no assurances that commodity prices will remain at current levels. In fact, commodity prices may decline from their current levels. The economic disruptions associated with COVID-19 and the conflict betweenRussia andUkraine and the volatility in oil and natural gas prices have also impacted our ability to access the capital markets on reasonably similar terms as were available prior to 2020. We expect that development of ourDelaware Basin assets will be the primary focus of our operations and capital expenditures for the remainder of 2022. We began 2022 operating five contracted drilling rigs in theDelaware Basin but contracted a sixth drilling rig during the first quarter to begin development of certain acquired assets in the western portion of the Ranger asset area inLea County, New Mexico . We operated six drilling rigs in theDelaware Basin throughout the second quarter of 2022. We signed a contract for a seventh drilling rig late in the second quarter of 2022, which we plan to begin operating in September. Thereafter, we plan to operate seven drilling rigs throughout the remainder of 2022. We have built significant optionality into our drilling program, which should generally allow us to decrease or increase the number of rigs we operate as necessary based on changing commodity prices and other factors. AtJuly 26, 2022 , we increased our estimated 2022 capital expenditures forD/C/E capital expenditures to$765.0 to$835.0 million from$640.0 to$710.0 million , as originally estimated, primarily to accommodate the seventh rig and an accelerated drilling program on ourRodney Robinson leasehold in the western portion of theAntelope Ridge asset area and additional working interests obtained through acreage trades and other transactions. AtJuly 26, 2022 , our anticipated midstream capital expenditures for 2022 remained at$50.0 to$60.0 million , which includes our proportionate share of estimated 2022 capital expenditures for San Mateo and other wholly-owned midstream projects. Substantially all of these 2022 estimated capital expenditures are expected to be allocated to (i) the further delineation and development of our leasehold position, (ii) the construction, installation and maintenance of midstream assets and (iii) our participation in certain non-operated well opportunities in theDelaware Basin , with the exception of amounts allocated to limited operations in ourSouth Texas andHaynesville shale positions to maintain and extend leases and to participate in certain non-operated well opportunities. Our 2022Delaware Basin operated drilling program is expected to continue to focus on the continued development of our various asset areas throughout theDelaware Basin , with a continued emphasis on drilling and completing a higher percentage of longer horizontal wells in 2022, including 90% with anticipated completed lateral lengths of two miles or greater. We may divest portions of our non-core assets, particularly in the Eagle Ford shale inSouth Texas and theHaynesville shale andCotton Valley plays inNorthwest Louisiana as we have done in the first half of 2022, as well as consider monetizing other assets, such as certain acreage, mineral and royalty interests and midstream assets, as value-creating opportunities arise. In addition, we intend to continue evaluating the opportunistic acquisition of acreage, mineral and royalty interests and midstream assets, principally in theDelaware Basin , during the remainder of 2022. These monetizations, divestitures and capital expenditures are opportunity-specific, and purchase price multiples and per-acre prices can vary significantly based on the asset or prospect. As a result, it is difficult to estimate these monetizations, divestitures and capital expenditures with any degree of certainty; therefore, we have not provided estimated proceeds related to monetizations or divestitures or estimated capital expenditures related to acquiring acreage, mineral and royalty interests and midstream assets for 2022. Our 2022 capital expenditures may be adjusted as business conditions warrant, and the amount, timing and allocation of such expenditures is largely discretionary and within our control. The aggregate amount of capital we expend may fluctuate materially based on market conditions, the actual costs to drill, complete and place on production operated or non-operated wells, our drilling results, the actual costs and scope of our midstream activities, the ability of our joint venture partners to meet their capital obligations, other opportunities that may become available to us and our ability to obtain capital. If oil or natural gas prices decline, or costs increase significantly, we have the flexibility to defer a significant portion of our capital expenditures until later periods to conserve cash or to focus on projects that we believe have the highest expected returns and potential to generate near-term cash flows. We routinely monitor and adjust our capital expenditures in response to changes in prices, availability of financing, drilling, completion and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, success or lack of success in our exploration and development activities, contractual obligations, drilling plans for properties we do not operate and other factors both within and outside our control. Exploration and development activities are subject to a number of risks and uncertainties, which could cause these activities to be less successful than we anticipate. A significant portion of our anticipated cash flows from operations for the remainder of 2022 is expected to come from producing wells and development activities on currently proved properties in the Wolfcamp and Bone Spring plays in theDelaware Basin , the Eagle Ford shale inSouth Texas and theHaynesville shale inNorthwest Louisiana . Our existing wells may not produce at the levels we are forecasting and our exploration and development activities in these areas may not be as successful as we anticipate. Additionally, our anticipated cash flows from operations are based upon current expectations of oil and natural gas prices for the remainder of 2022 and the hedges we currently have in place. For further discussion of our expectations of such commodity prices, see "-General Outlook and Trends" below. We 34
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use commodity derivative financial instruments at times to mitigate our exposure to fluctuations in oil, natural gas and NGL prices and to partially offset reductions in our cash flows from operations resulting from declines in commodity prices. See Note 7 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for a summary of our open derivative financial instruments. Our unaudited cash flows for the six months endedJune 30, 2022 and 2021 are presented below: Six Months Ended June 30, (In thousands) 2022 2021 Net cash provided by operating activities$ 975,256 $ 427,595 Net cash used in investing activities (521,004) (251,122) Net cash used in financing activities (258,889) (188,648) Net change in cash and restricted cash$ 195,363 $ (12,175) Adjusted EBITDA attributable toMatador Resources Company shareholders(1)$ 1,125,637 $ 459,081 __________________ (1)Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to our net income (loss) and net cash provided by operating activities, see "-Non-GAAP Financial Measures" below.
Cash Flows Provided by Operating Activities
Net cash provided by operating activities increased$547.7 million to$975.3 million for the six months endedJune 30, 2022 from$427.6 million for the six months endedJune 30, 2021 . Excluding changes in operating assets and liabilities, net cash provided by operating activities increased$625.8 million to$1.1 billion for the six months endedJune 30, 2022 from$457.4 million for the six months endedJune 30, 2021 , primarily attributable to significantly higher realized oil and natural gas prices and higher oil and natural gas production for the six months endedJune 30, 2022 , as compared to the six months endedJune 30, 2021 . Changes in our operating assets and liabilities between the two periods resulted in a net decrease of approximately$78.2 million in net cash provided by operating activities for the six months endedJune 30, 2022 , as compared to the six months endedJune 30, 2021 .
Cash Flows Used in Investing Activities
Net cash used in investing activities increased$269.9 million to$521.0 million for the six months endedJune 30, 2022 from$251.1 million for the six months endedJune 30, 2021 . This increase in net cash used in investing activities was primarily due to (i) an increase of$179.2 million inD/C/E capital expenditures, (ii) an increase of$57.8 million in expenditures related to the acquisition of oil and natural gas properties for the six months endedJune 30, 2022 , as compared to the six months endedJune 30, 2021 , and (iii) the acquisition of a cryogenic natural gas processing plant, compressor stations and natural gas gathering pipelines through the acquisition of a wholly-owned subsidiary of Summit for$75.8 million . These increases were partially offset by a$46.1 million increase in proceeds from the sale of primarily non-core oil and gas assets. Cash used forD/C/E capital expenditures and for the acquisition of oil and natural gas properties for the six months endedJune 30, 2022 and 2021 was primarily attributable to our operated and non-operated drilling and completion activities in theDelaware Basin .
Cash Flows Used in Financing Activities
Net cash used in financing activities increased$70.2 million to$258.9 million for the six months endedJune 30, 2022 from$188.6 million for the six months endedJune 30, 2021 . During the six months endedJune 30, 2022 , our primary uses of cash related to financing activities were for the repurchase of Notes for$142.4 million and the net repayment of$100.0 million in borrowings under our Credit Agreement. These payments were partially offset by net borrowings under the San Mateo Credit Facility of$35.0 million . During the six months endedJune 30, 2021 , our primary use of cash related to financing activities was for the net repayment of$200.0 million in borrowings under our Credit Agreement.
See Note 4 to the interim unaudited condensed consolidated financial statements in this Quarterly Report for a summary of our debt, including the Credit Agreement, the San Mateo Credit Facility and the Notes.
Guarantor Financial Information
The Notes are jointly and severally guaranteed by certain subsidiaries of Matador (the "Guarantor Subsidiaries") on a full and unconditional basis (except for customary release provisions). AtJune 30, 2022 , the Guarantor Subsidiaries were 100% owned by Matador. Matador is a parent holding company and has no independent assets or operations, and there are no significant restrictions on the ability of Matador to obtain funds from the Guarantor Subsidiaries by dividend or loan. Neither San Mateo or its subsidiaries nor Pronto are guarantors of the Notes. 35
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The following tables present summarized financial information of Matador (as issuer of the Notes) and the Guarantor Subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances between the parent and the Guarantor Subsidiaries and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor. This financial information is presented in accordance with the amended requirements of Rule 3-10 of Regulation S-X. The following financial information may not necessarily be indicative of results of operations or financial position had the Guarantor Subsidiaries operated as independent entities.
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