Matador Cements Delaware Basin Dominance With $1.3 Billion Paloma Acquisition

Matador Resources is significantly strengthening its position in one of the most prolific oil basins in the US with a strategic acquisition worth $1.275 billion, while simultaneously marking a major exploration success in the Woodford formation of New Mexico.

Cementing Dominance: A $1.3 Billion Bet on the Permian

The purchase of privately held Paloma Permian LLC, backed by EnCap Investments, adds 16,235 net undeveloped acres in Eddy and Lea counties to the company's portfolio, alongside currently producing assets. The implications of this deal for the sector are as follows:

■The transaction is expected to deliver approximately 11,100 barrels of oil equivalent per day (boe/d) in production capacity during the third quarter of 2026.

■Proved reserves are increased by 55 million BOE, alongside more than 156 net drilling locations primarily targeting the Bone Spring and Wolfcamp formations.

■The deal is slated to close in the fourth quarter of 2026.

The Woodford Strategy and Production Metrics

Separately, Matador agreed to acquire primarily undeveloped acreage from another EnCap portfolio company, Ridge Runner Resources II, bolstering its stance in the emerging Woodford play. This move brings the company’s total contiguous Woodford acreage to roughly 50,000 net acres and increases its overall Delaware Basin holdings to approximately 240,000 net acres.

The most critical data validating the company's confidence comes from its first exploratory well in southeast Lea County, Rae's Creek:

■The well yielded over 2,200 BOE per day (comprising 72% oil) during its official 24-hour production test.

■Rae's Creek has outperformed the average Texas Woodford well on a 60-day cumulative oil production basis, validating the commercial potential of the formation in this part of the basin.

■Chief Executive Officer Joseph Foran anticipates that drilling and completion efficiencies will lower Woodford well costs by 30% to 40% over the next 12 to 18 months.

Financing and the Permian Consolidation Wave

Matador plans to finance both acquisitions using cash on hand and borrowings under its reserve-based lending facility. The company expects to generate approximately $1 billion in adjusted free cash flow during 2026, based on existing guidance and July commodity price assumptions. This cash flow will be utilized to reduce acquisition-related debt and return leverage toward 1.0x within 12 to 18 months after closing.

These transactions continue the consolidation trend in the Permian Basin, where operators are pursuing bolt-on acquisitions to expand high-quality drilling inventories and improve development efficiency as the most attractive acreage becomes increasingly scarce.

Aggressive consolidation moves by oil majors send a clear signal that supply security and long-term demand expectations remain robust. While we debate the rate path in Europe, such capital movements in the US serve as a reminder of the volatility in energy markets and the enduring importance of strategic reserves.