Analysis MTDR
Matador's gas revenue went from negative to $162 million
A new route out of West Texas helped gas prices recover. Our comparison shows why the rebound looks smaller after hedges and did not lift overall quarterly profit.
Matador Resources went from recording negative revenue on its own natural gas production in the second quarter to $162 million in the third. A new route out of the Permian Basin helped improve its selling prices, while gas production increased 10%.
The rebound was smaller after hedging contracts, which had cushioned the earlier price slump. And it came alongside lower oil prices: profit attributable to Matador shareholders fell to $172.1 million from $390.7 million in the second quarter.
A new route for gas
Energy Transfer's Hugh Brinson pipeline started operating on September 1. Matador began moving gas through it during the quarter and attributed the revenue improvement to better prices and the pipeline's startup. The company had already told investors in August to expect a meaningful improvement in gas realizations as the route opened.
In the second quarter, Matador faced negative prices at the Waha gas hub in West Texas. Its average gas selling price before hedges was negative 79 cents per thousand cubic feet, leaving revenue from its own gas production at negative $38.8 million. In the third quarter, the selling price recovered to $2.99.
More gas contributed, too. Daily production increased to 590.7 million cubic feet from 537.1 million. The pipeline began operating in the final month of the quarter, so its contribution sits alongside that production growth and the wider change in prices.
The hedges change the comparison
Hedging contracts can offset changes in the prices a producer receives. They protected Matador during the second quarter: including realized hedge settlements, its gas price was positive $1.24 per thousand cubic feet, despite the negative selling price.
| Natural gas price per thousand cubic feet | Q2 2026 | Q3 2026 |
|---|---|---|
| Before realized hedges | -$0.79 | $2.99 |
| Including realized hedges | $1.24 | $2.81 |
Research by Ticker Byline shows that the gas-price improvement was $1.57 per thousand cubic feet including realized hedges, compared with $3.78 before them. In the third quarter, hedge settlements reduced the gas price Matador received, after having supported it in the second.
Oil moved the other way. Matador's average oil price before hedges fell to $87.25 a barrel from $98.16; including realized hedges, it fell to $74.84 from $83.19. A separate business reselling gas purchased from other producers also generated a smaller margin: $21.2 million, down from $80.2 million.
The quarterly profit comparison also includes a swing from an unrealized derivatives gain to a loss. Even after Matador's adjustments for unrealized derivatives and certain other items, diluted earnings fell to $2.08 a share from $2.61. The gas recovery therefore accompanied a weaker quarterly earnings result, although adjusted earnings remained above the $1.36 reported a year earlier.
Some spending moved into the next quarter
Matador reported $381.4 million of third-quarter capital spending on its ownership-share basis, below its $410 million to $440 million forecast. It said $28 million to $35 million of upstream and midstream spending was shifting into the fourth quarter. The full-year combined capital budget midpoint increased by $25 million to $1.70 billion as planned midstream investment rose.
The next results will also include the Paloma and Ridge Runner acquisitions, which closed in October. Matador expects them to contribute about 10,000 barrels of oil equivalent a day in the fourth quarter. Its company profile tracks those deals, the production outlook and the balance sheet behind the expansion.