U-Turn Horizontal Wells

[dan_s]

During the U.S. Energy Development webcast on February 19th I mentioned that a promising new technology is "U-Turn Wells".

Sweet 16 company, Matador Resources (MTDR) is using this technology in the Delaware Basin.

From their Q4 press releases:
"Matador continued to advance operational efficiencies to drive production higher and average well costs lower during 2024. In fact, Matador turned to sales a record five new ‘U-Turn’ wells during the fourth quarter of 2024 (see Slide J). Matador estimates that these five U-Turn wells saved drilling days and a total of $15 million, or approximately $3 million for each U-Turn well, as compared to drilling ten vertical wellbores and ten one-mile laterals. Initial results from the five U-Turn wells indicate that these U-Turn wells are performing as good or better than traditional two-mile straight lateral wells in the same area. Capital savings realized by drilling U-Turn wells decrease project payout times and reduce oil breakeven prices by as much as 20% in certain areas. This focus on operational efficiencies and synergies, along with marketing efforts and the quality of its wells, has helped Matador lead its peer group in profitability (see Slide K and Slide L)."

Matador is an "Aggressive Growth" company, which is somewhat out of favor with the Wall Street Gang. MTDR trades at a deep discount to my current valuation of $94.00 per share. Based on Matador's guidance, which is normally very conservative, the Company should generate over $1 billion of free cash flow from operations in 2025. The balance sheet is in good shape, and they recently raise their fixed dividend.