Mac Schmitz - Investor Relations Joe Foran - Chairman and Chief Executive Officer Matt Hairford - President David Lancaster - Executive Vice President and Chief Financial Officer Ned Frost - Vice President, Geoscience Brad Robinson - Senior Vice President, Reservoir Engineering and Chief Technology Officer.

Jeff Grampp - Northland Capital Irene Haas - Imperial Capital Neal Dingmann - SunTrust Ben Wyatt - Stephens Mike Scialla - Stifel Gabe Daoud - JPMorgan.

Good morning, ladies and gentlemen. Welcome to the Third Quarter 2017 Matador Resources Company Earnings Conference Call. My name is Nicole and I will be serving as your operator today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of company’s remarks.

As a reminder, this conference is being recorded for replay purposes and a replay will be available on the company’s website through November 30, 2017 as discussed in the company’s earnings press release issued yesterday. I would now like to turn the call over to Mr. Mac Schmitz, Capital Markets Coordinator for Matador. Mr. Schmitz, you may proceed..

Thank you, Nicole. Good morning, everyone and thank you for joining us for Matador’s third quarter 2017 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company’s financial performance.

Reconciliations of such non-GAAP financial measures with comparable financial measures calculated in accordance with GAAP are contained at the end of the company’s earnings press release.

As a reminder, certain statements included in this morning’s presentation maybe forward-looking and reflect the company’s current expectations or forecasts of future events based on the information that is now available. Actual results and future events could differ materially from those anticipated in such statements.

Additional information concerning factors that could cause actual results to differ materially is contained in the company’s earnings release and its most recent annual report on Form 10-K.

Finally, in addition to our earnings press release issued yesterday, I would like to remind everyone that you can find a short slide presentation summarizing the highlights of our third quarter 2017 earnings release on our website on Presentations & Webcasts page under the Investors tab. And with that, I would now like to turn the call over to Mr.

Joe Foran, our Chairman and CEO.

Joe?.

Thank you, Mac and good morning to everyone on the line. We really appreciate you participating in today’s call. Now, I would like to introduce you to the senior members of the operating staff who are joining me this morning who are standing by for any questions.

Matt Hairford, President; David Lancaster, Executive Vice President and Chief Financial Officer; Craig Adams, Executive Vice President, Land, Legal and Administration; Van Singleton, Executive Vice President of Land; Billy Goodwin, Senior Executive Vice President of Operations; Brad Robinson, Senior Vice President of Reservoir Engineering and Chief Technology Officer; Gregg Krug, Senior Vice President, Marketing and Midstream; Rob Macalik, our Senior Vice President and Chief Accounting Officer who was just promoted; Matt Spicer, Vice president and General Manager of Midstream; Kathy Wayne, Vice President, Controller and Treasurer; Brian Willey, Vice President and Co-General Counsel; Bryan Erman, Vice President and Co-General Counsel.

Ned Frost, Vice President of Geoscience; Tom Elsener, Vice President Engineering and Asset Manager; and Jim Basich, who has just been promoted to Vice President and Managing Director, IP.

I am pleased to announce another quarter of strong execution and better than expected operational and financial results by the Matador staff or its shareholders in the third quarter of 2017. I would like to highlight a few quick key points before taking your questions.

First, I think I would like to say as you read in our press release this is the best quarter where we have had in company history and I am pleased because we are dealing with $50 oil and not a $100 oil and through volume and execution in cutting costs, our team really delivered its record quarter in terms of reserves in nearly every other category, great work on reducing LOE.

And so as you can say in midstream advance to plan that it was a total team effort, but I would like to express particular appreciation to the field staff who anticipated the Hurricane Harvey and had our field operations in good order, so that Hurricane Harvey had minimal impact and all the extra effort that they have done to hook up, so we are not flaring any and that they have been very innovative on implementing artificial lift in improving our results there.

So, special shout out to them.

Second, to the group in the office, I attribute a good part of the good results at our land, midstream and E&P group have been quick to act on opportunities and that Dave Lancaster, Rob, our financial group, have had the financial flexibility to do so and the operational expertise to be quick on making changes and making improvements.

Finally, I’d like to open the questions by just noting that this is our 13th consecutive quarter where we met or exceeded guidance. All the areas of the company are working all around the basin. Each of our asset teams have delivered good results and we have had good results coming out of our ancillary areas in the Haynesville and in the Eagle Ford.

Just for everything, this was just one of those quarters where everything came together. We hope to continue it and want to invite everybody to only call to come see us sometime and meet the whole staff.

David and Matt and I try to get out on a regular basis, but would like for you to meet the actual guys on the front lines who are really making it happen. And with that, I would like to now open the call back to the operator for your questions..

Thank you. [Operator Instructions] Our first question comes from the line of Jeff Grampp of Northland Capital. Your line is now open..

Good morning, guys and congrats on all the success..

Thanks, Jeff..

Obviously, a lot of focus in the space lately seems to be on free cash flow neutrality or move into a positive free cash flow generation corporate return that sort of thing.

And I know you guys tend to think much more holistically and not running the company for any specific metric, but it would be great to get your all thoughts on that and potentially managing the business with that mindset and if and when mattered or maybe in a position to be in a free cash flow neutral or positive type of mode here?.

Yes, hey, Jeff. This is David. I will start and let the other guys chime in. I think what we have tried to focus on, Jeff, is the opportunity set that we have and not focus so much on the out-spend, but more on what we are spending the money for.

And I think that we feel like that we spend our money primarily in three ways or our shareholders money primarily in three ways. One, by drilling good wells for less money which I think we have done well in the past few years, particularly out in the Delaware Basin, but also prior to that in the Eagle Ford.

I think that we have demonstrated our ability to create value through our midstream opportunities and the midstream program that we have got going out in the Delaware particularly and have demonstrated that a couple of times with even a couple of monetization events so far. And I think that continues to grow well.

And then the other thing is on the land side, I think that we have demonstrated that we have put together an extremely high-quality land position at prices that had tended to be very attractive and below market. So, we try to focus on the opportunities that are out there for us and when we see them we hope to be able to take advantage of them.

And we obviously can’t take advantage of all of them, but we try to focus in on the ones that are most important. With regard to the cash flow neutrality, it isn’t something that we are averse to, obviously and that we run various different scenarios as I am sure others do too as to how to achieve that.

As you would know it’s probably a function of growth versus commodity price versus opportunity set that you have available and we continue to look for the right mix of that.

I think we expect that we will out-spend our cash flow a bit next year, but if commodity prices find themselves continuing to move forward in the $60 range, well, that may get us there. So, we certainly would be much closer. So, I hope that answers your question. Joe may want to add a little bit to that, but I think that’s how we are looking at it.

And again, I just want to emphasize that we feel like that we are trying to take advantage of what we consider to be very special opportunities that we see available to Matador..

David, I think you did a really good job in explaining, it’s a very good question.

It’s something that we talked about everyday, but one of the reasons when you are a company like ours that’s starting off small and trying to get bigger, you can’t do it like everybody else, you have got to be a little nimble and you got to do things a little differently.

And one of things that we have always done differently in our 34-year history is that we plan for difficult times when prices are low and we make more as much more progress in difficult times than we do in the more robust times and you are like a farmer or a rancher, if you are a farmer or a rancher and you don’t plan every 4, 5 years to have a drought, you will not be in business long and then when you are a small company like ours, if you are not prepared during the robust times that there will be a drought, you are not going to be around very long.

And so we really try to be extra careful more robust times so that when the difficult times come, we have the borrowing capacity, we have the shareholder support to take advantage of some of those special opportunities that come up in the more difficult times that are not around in the robust times.

And that’s what we experienced this year and last year that there was a number of opportunities that if we hadn’t acted upon to buy land for example, it’s on the land or the midstream they wouldn’t have been around in the year or two or three from here.

When the land came up, you could buy it then or you will never get it and we are able to get it at such good prices on average of about weighted average 6,000 to 8,000 and it’s nibbling here and there, you just couldn’t pass it up and when midstream came around, it was not only needed, because you have processed your gas, but we saw that there is an absence and with our drilling plans we knew we could be the anchored tenant and thought it was the right thing to do.

And I think it’s proven out that way. We went public 5 years ago. Our value prior to going public is about $300 million and today it’s over $3 billion and shareholders have moved from $12 a share to approaching $30 a share, even when oil prices are half of what they were 2 or 3 years ago.

And I am not saying that strategy will always work for us, but while we are small, we are adding value, but we got to do things a little different and be a little more flexible. And on the technical side, a little more innovative and be among the first to do things rather than at company that has other advantages.

We have got to be more nimble and more quick and that’s where I look at, I think David’s answer was very good and when we sit down and talk about these things, we aim for – we try to be very physically disciplined, but we don’t – I think there is – you hurt yourself either being too conservative or too aggressive, we just try to be middle of the fairway, but opportunistic.

Matt, you want to add to that?.

Yes. I think David and Joe both said it very well, but when I think about it, Jeff and you heard us say this over and over and over, it’s profitable growth at a measured pace.

A lot of times people think about that in different terms with commodity prices are higher and people trying to maybe know how to grow and what the right rate to grow is when I think about this, I think as David has said very well, it’s how you invest those dollars.

As long as you are creating value and you are consistent with how you are creating value and you are looking at things from an opportunity standpoint for instance, its midstream surface Joe was talking about, that’s something I think that’s been available to us as a result of low commodity prices and I think we have been able to do a good job at exploding that and again getting back to the profitable growth at a measured pace..

Those are all great responses. And I appreciate those thoughts there guys. And for my follow-up just on the operations side, I want to get a little more thoughts on this Wolfcamp B well at Wolf.

I am just kind of curious how you guys are thinking about maybe incorporating that zone going forward, obviously not a bad comparison at all to be compared to the Blair up in Rustler. And then just wanted to clarify is that kind of I guess commodity mix in line with what you guys were expecting on a pre-drill basis? Thanks..

Yes. Hi, Jeff. This is David again. We are real pleased with the results of the Wolfcamp B.

As we mentioned in the earnings release probably floated the highest pressure of any well that we have had out in the Delaware Basin, I feel that it’s likely if we noted it up a little more, it would have just kept coming on – it’s results were excellent, I think they were quite comparable to the Wolfcamp B up in the Rustler Breaks area, it’s a little deeper here.

So I think the expectation that it might be a little bit gassier was sort of in line with what we thought, but still – still had nice oil production coming along with it and I certainly think that will look to incorporate this zone going forward. I think we see it now as another very viable completion target.

For us that at Wolf and I’m sure we’ll have a couple of additional tests so that zone if we can get it worked in the to our plans for next year and there’s I think we’ll probably want to test it to the West and maybe up to the North.

We just got this one test Colorado in the East to begin with, so we’re going to want to validated across the acreage position, but all-in-all I would say that’s – that we were – we were very happy with the results from that well and look forward to doing more tests on it..

Yes, Jeff, this is Matt.

Just to add to what David has said, there are two and I think one of the other things that is encouraging about this and it’s a hats off to Ned and the Geoscience team is about delineating yet another horizon and how that gives us confidence in our ability to go in and look at data and determine which of these zones may or may not be perspective go in and pick the right zone and drill it and Billy and his operations teams, about going in and staying in these zones and completing these zones and getting good wells.

I think it just gives us confidence to try even more zones in the basin..

Alright. Perfect. Appreciate that stuff guys and great quarter..

Thank you. Our next question comes from the line of Irene Haas of Imperial Capital. Your line is now open..

Hey, congratulations guys. I mean it’s just amazing to see on your original thinking turning into real organic growth and congrats on the reserve at this well. Question is probably a little color on your transaction, because Joe mentioned earlier that if you see land that’s available sometimes you can come back and get it.

Can you give us a little color on what’s the urgency to grab the land in New Mexico and some of the significance of that please?.

Well, Irene, it didn’t just buying isolated tracts. What we focus on is buying within our existing units is one thing. So we are bolting on additional working interest to what we already have. So, that may add people, we know the property, it’s already producing or about to drill we have control over.

That’s our main focus or on the adjacent acreage where we will soon be drilling. And when that acreage becomes available like that either take it or somebody else will snap at that and then the well produces and they won’t be available again for years to come. So, your good sense is you just need to find a way to make that work.

The other things that we try to do is as you remember, Irene, when we started in Rustler Breaks, we had a few scattered tracts and we filled in the gaps and they now it’s getting a little blockier, that’s what we wanted to. And then the third thing is our guys have done a good job of delineating acreage and we can see where the trends are going.

And the last thing is the minerals, we have had some mineral opportunities become available to us and that fit in well with our drilling, because they add to our net of revenue interest and make it that much more valuable.

So, we are on the lookout for opportunities like that and work with people who are interested and sometimes we have some great deals where we give carried interest for people who don’t want to – who don’t want to expand all the capital, they keep some and will carry them for some or make a deal of some sort and that’s worked out pretty favorably.

And the other thing is the repeat business that we have had with people. So, it’s just one of those things that comes up and at the prices we have been getting it, it’s I think it’s a value-add, because in many cases we are actually adding reserves with the purchase or adding production with the purchase.

One example was it’s federal sale where one track already had two wells drilled on it, so that was money in the bank and that’s a good example of the opportunity. Once that was sold that lease wouldn’t come up again, but that completes our 640 acre section there.

So, did that answer your question?.

Yes, great. Just one more follow-up, are there sellers like multiple party, are they mostly private producers? That’s all I have..

Irene, it’s the full range of people out there and our guys are just out there trying to cover everything, but we welcome people bringing deals to us. We have booked at some of the bigger deals, but they just haven’t had the same fit as acquiring it a brick at a time as David likes to say.

Operator, will you pickup with the next question please?.

Our next question comes from the line of Neal Dingmann of SunTrust. Your line is now open..

Good morning, gentlemen. Joe, maybe for you or the team you guys continued to do such a tremendous job of adding acreage, not only just the amount of acreage, but the price you are paying. Two questions there.

One, when you look at the appetite I guess is it just more based on decrease in the returns you see, what sort of drives the amount? And then secondly will you stay in sort of your general Delaware footprint now or do you see maybe expanding that?.

I would like to stress is that the way we do particularly brand is a group effort that we all – that we get in here together with Ned, Geoscience and Brad on the engineering and Matt Hairford and Dave and we talked about this and we are in all of one opinion and it just kind of work your way around, but I think the first option is to stay with the Delaware, but it’s – we always try to look down the road a little bit for what next.

I still think that Twin Lakes has a lot of promise the Culbertson well has performed well. It came on – it’s the best Wolfcamp B well, we drilled up there and even though we can see a lot of room for improvement, it came on for over 600 barrels a day and it’s leveled off and then very, very flat better than expected flat.

We had predicted it would level off and be very steady performer and that’s what it’s developed, which is giving us encouragement. We are drilling with Cimarex out there and seeing what it is over the West, but we have – we have been approached by another operator to drill a well with them in the East.

So, we are starting to get data points and the results that we have gotten, it looks like some other people interested and we still plan to drill a well in the Kemnitz area, but that’s an example of some we are still looking at what next, but the opportunities in the Delaware have been strong enough that we have had a pretty full plate down there, but always ready to add to it under the right circumstances.

I don’t know if I said that well.

Matt, would you add?.

Yes, Neal, this is Matt. And I think just to build on that, one of the things I think that’s very favorable to us is you mentioned the appetite based on returns and lot of these acreage that we are able to put together are on blocks as Joe said that we either have wells drilled on them or we are proposing to drill wells on them.

So, we were very comfortable with the economics on those acreage and it’s very easy for us to slide that into the inventory and we do.

We all have separate mines and we said that and we talked about this, but a lot of these things like I said in blocks where we are proposing wells or have drilled wells or will be drilling wells, that’s a pretty easy add.

And the thing that’s to our advantage there are lot of times, maybe it’s not 500 acres, maybe it’s 5 acres or maybe it’s 10 acres or whatever it is, but Van and his team are able to go in there, negotiate these purchases at very favorable prices. So, it’s a great way to slowly build on to our acreage position..

Great details guys. And then one second if I could, just looking at CapEx being aware, Joe, you guys I know haven’t released ‘18 plans yet, but it’s noticeable kind of it looks like at least they have guided CapEx for the rest of this year should go down, while our production and EBITDA continues do extremely well.

And I am just wondering without saying much too much about ‘18 yet trying to get a sense of if that trend continue as we exit this year and into ‘18 as far as that reduced CapEx and the ramp in production and EBITDA associated..

Well, Neal that’s kind of almost a do you beat your wife type of question or how hard – how many times do you expect to beat your wife in the next years. The spending you are taking what is assumed that you are spending on capital, spending will achieve the same kind of returns that you had this year.

Well, if you cut that back you are going to ultimately cutback your production growth in the ride.

And I think Matt had said it very well that we try to do proper growth at a measured pace and tell us what price is, it’s not a one variable thing that tell us what price is and we give you better idea of what CapEx is going to be, but – and what the economics are, I just – we want to grow, but we want proper growth at that measured pace and you are not going to see us throw 5 extra rigs out there, because you lose innovation and you lose progress, you are going to see us kind of go – we are more of a tortoise than a hare and we want that that profitable growth.

David?.

Well, maybe Joe, I’d just say Neal, I think as we – we tried to lay out in the earnings release obviously we are well into the process of deciding on our plans for 2018. We are going to wait till after the first of the year to roll those out. I think we have stated we will most likely be in that 5 to 6 rig range.

And I think that’s where we will end up and I think at this point of the year you are at the point of negotiating new agreements for services and things going into the next year, which certainly informs what’s your – what’s your capital plan is going to be, but I am excited going into next year, because I am very pleased with the lineup of wells that we have to drill and I know that our operations team will do everything they can to keep the capital spending as low as they can.

I think they have done a very nice job this year of innovating in certain ways to be able to mitigate what service cost increases we did see and obviously that will be something that we pay a lot of attention to going into next year.

So, we will be pleased to share all that with everybody after the first of the year, but obviously we are looking to continue to drill great wells as cheap as we possibly can..

And Joe, I wouldn’t say anything about Nancy. So I just want make that clear. Thank you..

Thanks, Neal..

Thank you. Our next question comes from the line of Ben Wyatt of Stephens. Your line is now open..

Hi, good morning, guys and nice quarter..

Thanks, Ben..

Hey, David.

Maybe for you, if we can just kind of stay on ‘18 it kind of feels like maybe we go to 6 rigs in ‘18 if that’s the case, I am assuming we should kind of assume 6 rigs to frac crews and just to kind of confirm you guys are still kind of one dedicated frac crew in the spot crew right now?.

Yes. So, Ben I think if in fact we elect to keep the sixth rig as we pointed out, we have a sixth rig, it is currently pretty well dedicated to drilling saltwater disposal wells.

San Mateo would like to see 5 saltwater disposal wells up in the Rustler Breaks area and we have got – we have got a couple now that are drilled and completed in the disposing of water, a third that’s been drilled and likely two more that are going to come over the next few months.

So once we have completed that program, then we will be making a decision as to whether to hang on to that sixth rig or stay at the 5. So, I don’t think that in any case it’s going to be a full 6 rigs for next year.

I mean it maybe like 5.75 or 5.30 or something like that, because I don’t think what we would have even in the scenario where we kept it that sixth rig working all year drilling oil and gas wells. So, that’s one point I would make.

Certainly as we get to if we do go to the sixth rig, I think that will lend itself more to the two crews that are probably pretty close to full-time dedicated to Matador and you are correct right now we are using primarily one dedicated crew and kind of spot uses as we needed, but I have to give a shout out to our completion of the guys I think they have done a terrific job in 2017 of getting our wells frac really much right on schedule with what we had planned for the year.

And so I give them a lot of credit even though it hasn’t been two dedicated crews. They have been able to work successfully with the service companies to achieve what we needed them to do. So, my compliments to them.

Matt, you may have something else you want add on that?.

Yes. And just to kind of build on what David saying is just getting back to starting with the drilling rigs.

As you know, we have got three of these rigs that we have under a longer term contract and they are kind of – at the towards the end of those contracts, but really even there 1 and 1.5 on those rigs, the other three we have got on shorter contracts, which gives us the lot of optionality for us to go down or for us to even go up if we wanted to.

And I think it speaks to the strength of the relationship we have with Patterson. They have been very good with and very receptive to what we need. So, in regards to the rigs that we are using all 6 of them are these high-tech rigs that we have been talking about.

We have got the one that’s drilling the saltwater disposal wells is kind of the biggest and baddest one we have. So, it’s great to have that rig drilling saltwater disposal wells, if you do decide you want to move that over and start struggling the E&P wells that’s very easy for us to do and are very comfortable doing that.

As far as the frac crews, you are right, we do have one that’s fully dedicated. It’s our contract right now is with Halliburton. They have done a great job. And as we have talked about throughout the course of the year, the way we plan our business, we are able to get well out in front to get the second crew that you mentioned on board on a spot basis.

So, even as far as going into Q1 of 2018 where we need that second crew we have already got that superior with our vendors. So, going into the end of 2017 we will be negotiating service company pricing with our frac vendors and we will in all likelihood take the same approach where we will have some optionality within that contract.

If we need to go outside the contract to get our wells fraced, we will, but very comfortable with the drilling rigs and the frac crews that we have onsite right now..

Neal, a couple other subtle points just to keep in mind is that as you move north in the basin, you run into more fractionated leases and it’s harder to have a pure 100% lease and so you are going to normally pickup some working interest partners. That means you don’t have 100% of the rig.

And so having the sixth rig that means you had one full in that rig. The second makes the difference is whether we are drilling Bone Springs or the deeper Wolfcamp wells, because that’s if you are drilling the deep well, you won’t drill as many wells as you might on the Bone Springs.

So, it sounds that depends on what we think is the optimal well count for next year between Bone Springs and Wolfcamp.

Those are just a couple of the subtleties, but you can expect us to be probably 20 to 5 and in the 6 rigs watching whether this current surge in price is a spike or an actual turnaround in the forward-look on the wall and we are watching that very closely, but think it’s safe to say that we will have at least 5 rigs running and we hope that circumstances will and cash flow will be such that we do – we can add that sixth rig at an appropriate time during the year, but it will be based on economics and return on capital and those things are not just growth for growth sake.

We are seeking the profitable growth and that’s what we are going to achieve..

Very good guys. That was helpful.

And maybe if I can just ask one more David, you are kind of ragging on the completion guys there, I believe the guide for this year you called for about 6 stages a day, it sounds like that’s on plan, but just curious if you can maybe give us a sense of maybe where leading edge stages a day are and maybe just how we should think about that as we head into ‘18 with the efficiencies you guys are seeing?.

Yes. I think that’s, Ben, the – again the completion guys have done a great job there. I think they have probably been somewhere in the 6 to 8 on average as far as stages go this year. So, that’s been terrific. I know one of the Eagle Ford wells, I think that you have got 10 in one of those wells.

So that was probably the – that was probably the top end of it for 2017, but I think by doing so many of our jobs and payers this year and kind of doing the simultaneous operations where we have been perfing and prepping one while we are fracing the zone in the other back and forth. That’s been very effective.

The increase and decrease in the number of stages has been great. And all those things have helped us to reduce costs.

The other thing I think in terms of the just the efficiency of the operation I think that’s also been helpful in terms of what we needed the second crew from time-to-time the fact that – the fact that we can typically get on and off these wells, very efficiently from a frac standpoint is also a positive when we are trying to fill in some of those gaps..

Very good. And then I appreciate the time here I want to give Van a pat on the back, it’s quite to see the amount of acreage you guys have been able to buy at the prices you have. So congrats..

Well, thanks. It’s a team effort.

Van has done a good job of bringing his team along the system in that and again we send an invitation to all of you out there listening to come see us and meet these guys, you are hearing from Matt, David and me, but we are happy to make the whole team, because everybody has done their part this quarter and in the other quarters..

Thank you. [Operator Instructions] Our next question comes from the line of Mike Scialla with Stifel. Your line is now open..

Yes, good morning, everybody..

Hi..

I just want to get a sense of where you are kind of with the maturation of your asset base here.

You guys have touched at a lot of different things and a lot of different areas and wanted to see at this point, are there any other either major zones or concepts that you want to test over the next couple of years and if so can you share those or is there – are you starting to move more to a full phase development mode here?.

Mike, I am going to jump in here real quick and then turn it over to the technical guys, but of course, we haven’t seen the end. We have got a 5,000, 6,000 foot column and yes some of these others have come to the forefront, but there is others down the road. We are looking at them.

We can’t identify all of them, because that affects acreage acquisition and other factors, but we see – continue to see a lot of opportunity out here in the Delaware and in the Twin Lakes area and we have seen where just moving your landing target a relatively few feet really adds to the productivity and the recovery of the wells.

So, we haven’t reached the limit, the number of zones that I think are very prospective and we have grown that number and hopefully we are not going to be in full development, 100% development for time to come, but we will continue to turn up some exploration ideas that want to be tested, so that you keep your acreage fresh.

There are some zones as obviously are coming out to be concentrate on is very prudent at this point, but how we stay around here, we reserve the right to get smarter, we reserve the right to keep coming up with new ideas and new concepts.

David or Ned, you want to respond?.

Sure, Joe. Ned here. I think Joe said it really nicely, but there always are going to be new zones that we are looking, I mean you will see completely new tests like the Wolfcamp B and Wolf, I mean I think that was a good win for the team and really kind of showed the quality of the asset over there.

We will also look at a interval like that would even targeting within the Wolfcamp B. The team had a couple of different zones that they looked at when we originally planned that well. So likely we will get back and test some of the different zones there. So you will see kind of targeting refinements.

An another example would be the first Bone Spring in Antelope Ridge, we have a couple of wells keyed for later in the year, maybe 2018 that will still target the first Bone Spring so that would be a new zone over there.

But Joe mentioned also the importance of targeting we are acquiring more 3D seismic around our assets and really we have seen in the past 3D seismic can help us really kind of hone in on the best zone. So, we will also kind of be working into targets with 3D..

Okay, Mike. This is Matt. Just to add to what Matt has said there, finding these new zones and exploring these new zones is fantastic in regards to maturation that you mentioned we are going to continue to evolve on the zones that we are drilling in the development phase.

I am not going to say we are anywhere close to the end of the line and where we are going to go with completion design and targeting intervals and things like that. So, we have got still got improvements that we think we can make in regards to the ones that we would consider more of the developmental stage as well..

And that’s overly piled on, this is David, but I will just say – I want to just want to deemphasize what that’s it about Antelope Ridge, because it was something I was going to bring up too and that is the fact that we haven’t tested anything there as yet, Mike.

I think we are very optimistic given what others in the industry have been doing, but I think we are looking at first, second, third Bone Springs and at least one target in the Wolfcamp if not more and the Brushy Canyon on top of that.

So, there is lots of opportunities for us over there and we were tickled to see these announcements about the first Bone Springs, because we actually have a well just sort of in an offsetting section that we have already got to drill in 2018.

So, looking forward, we have been able to take advantage of all those opportunities and that’s in early 2018..

That’s great.

Is there a rig or two that you would dedicate the sort of development drilling at this point and then something that you would dedicate to more delineation work or?.

Look I think like Matt was saying I think when you look at an area like at Rustler Breaks, where we are running rigs will be moving on out in the Northwestern part of the acreage, but there is a lot of that acreage where I would consider we already are pretty solidly in development mode and are driven in 2s and 3s and they may have plans to drill more per single pads next year down in Wolf, a lot of what we are doing right now, I would say is very much in development mode at the moment, but we spent a fair amount of time this kind of delineating out the second Bone Spring, testing the Avalon, testing the Wolfcamp B, we will do that again next year, but as far as some of the new zones go, but mostly, we are planning to drill X, Y wells, because we have the opportunity to drill a lot longer laterals on that acreage.

And so we are going to be sort of focusing right in and through the heart of that acreage and drilling predominantly Wolfcamp X and Y wells next year..

Yes, I think that’s a great thing, Mike and that’s just the asset base is as you can do both on the same pads.

We are able to go in and drill development wells like David is talking about and then also like we did down at Wolf – we will drill a Wolfcamp B exploratory test, so you are able to do both and mix some in there and still see the efficiencies for batch drilling and things like that..

Pretty good.

I just want to follow-up on what are your thoughts now with the Avalon at Wolf, that well – like that well more, does it tell you that you are done there with the Avalon?.

Yes, Mike, this Matt. I wouldn’t say in any means that we are done with the Avalon there. I think it’s early off the well is making more water than we thought it might.

So, initially, we went in knowing that this well is probably something we are going to have to put on ESP in which we did and we thought the ESP for what was always going to be the right size. It turns we need a slightly larger capacity on that pump, which we just recently installed it.

So, it’s been producing for a few days here and it’s going to take a while for us to get the fluid level drawn down on that thing to where we can actually see what it’s going to make, but as far as being encouraged by the Avalon, we still like the Avalon a lot from what we saw when we drilled through it and why we initially drilled this initial well..

Yes. And I would just point out too Mike that just remind everybody the Avalon is 800, 900 foot thick section here and we have drilled the one target, we had at least three targets that we thought looked very viable here.

So no means are we done? I mean, we will continue working with this well, but there will be – there will be other concepts that are put together for the Wolfcamp here..

Yes. And to follow-on David, Ned here, I mean there is some of our original assumptions were confirmed here. The thermal maturity looked right in line where we expected it to be which is very positive for that. It’s more or less in line with what you see at the state line acreage.

So, we are just going to wait and see and see how the new ESP helps clean this well up, but I think – I remain and the team remains very optimistic on the potential of the Avalon and we will look forward to move forward on that..

Thank you, guys..

Thanks Mike..

Thank you. And our last question comes from the line of Gabe Daoud of JPMorgan. Your line is now open..

Hey, good morning, guys. Thanks for all the great detail so far. Just maybe following up and piggybacking a little bit off the last question from Mike. Just as you think about 2018 and just more broadly, do you move to larger multi well pads and try to I guess drain the column at once or do you worry at all with parent-child relationships.

It’s kind of been brought up a little bit more recently.

Just how do you think about ultimately draining and developing the resources at parent-child, is it kind of doing the stack all at once, just any thoughts around that?.

Well, Gabe, we think about those things on every well, what’s the best way to do that. And it’s just a complex calculus of which way you do that and you watch what others are doing and what seems to have success and it varies from area to area dependent on what zones are most viable also what your lease terms are.

There is one well hold all rights, all depths or is there few clauses that limit it. So, I mean, it’s just a lot of factors that go into it and I don’t think we are typically not in company that gets to the point that says one-size-fits-all and then we are going to do all these like this or all these like that.

We really try to tailor the drilling, the batch drilling or anything else and tailoring it to the individual property. One consideration of course is that if we were to go out there and leave a rig, which you could potentially, drill on one location all year, but you couldn’t complete them till all were drilled.

Then you would have a big timing difference on production.

So, there is another factor in there that you want to work on making sure you don’t – that you keep them all timely and not too much of one or the other and we have a sizable acreage position and it’s important to work all areas of that, because the nice thing is we have been having success in different areas, all these different areas, different zones, different areas, but having that success.

So David I thought phrased it pretty well in some areas we are pretty much in full development mode and in other areas that we have zones that we could be full development, but there are some interesting target intervals we want to test.

So, it’s a – and in those you have a mix of development of some zones, but you are doing some exploratory or delineation on a third zone. So, it’s across the board there. We are trying to optimize the economics of it and be sure that tailors to the property and that we have the infrastructure ready to supporting too.

What am I leaving out? David, Brad anything to that?.

I don’t think you are leaving out anything, Joe. I think you….

I thought you did a really good job and he hit the nail on the head, it really depends on the quality of the reservoirs and the reservoir properties in each of the different layers and part of that delineation process is evaluating those reservoirs how far out they can drain and both laterally away from the wellbore and vertically up and down and that dictates how you stacked those wells in, the distance vertically between the wells as well as laterally away from each other.

So, it’s a learning process. We are gathering that data with each new well we drill and where we are comfortable with certain well spacings and vertical spacings and so forth. Wolf is a good example. We are going to be going in and drilling those wells. In other areas, we are still learning. So, it’s a fairly timely process..

I mean, Gabe, your question is a good one that we talk about nearly everyday around here what do we want to do here or there, but one thing we did do in anticipation is the rigs that we have, have been specialty field to allow joint operations off of the same path.

And so we have done that with the anticipation that we would do more and more dispatch drilling as we firm this up.

And then the last thing that I would mention now this whole sequence of the best drilling and development and everything else is that you need data is real important, because when you first – if you are spacing them too closely, I maybe getting in a little bit in the weeds, you will notice that at first when those wells first come on, it’s generally about a year before you really start to see the interference something you have taken your time, you think maybe I am ready for full development, but you sometimes need to wait a year or so to be sure the interference is going on.

That’s just one more factor that goes into the calculus in the puzzle.

But I think our deal teams have been very pragmatic and some of the early drilling we did in the Eagle Ford has made us a little more cautious here in the future development, so that you make sure you have got optimal spacing and you understand not only the way the oil and gas flows to the horizontally, but also potentially vertically into other zones so that you don’t, I would drill the sections that you make the maximum use of your kit.

David?.

I think you fared well again I do..

These guys are giving me way too much or I am spending way too much time..

Thank you. Ladies and gentlemen, this ends the Q&A portion of this morning’s call. I would like to turn the call back over to management for any closing remarks..

Thank you again. I know it’s a busy morning that you have got a lot of different calls to take.

We appreciate you listening in and again want to extend the invitation to come see us, so that you are not scheduled on a call, but you have more time for your questions and to meet more of the staff and see the depth that we are trying to develop around here. But thanks again.

Thanks again to the staff for such a special quarter, to our vendors for working so much with us and of course through our shareholders and other supporters who really helped us with the offering and taken a long-term view and allowing us to grow to reach this point and we are excited about the outlook going forward. And with that, we will sign off..

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Everyone have a great day..