Matador Expands Delaware Basin With $1.28 Billion Paloma Acquisition

By Charles Kennedy - Jul 23, 2026

Matador Resources has agreed to acquire privately held Paloma Permian LLC for $1.275 billion in cash, significantly expanding its footprint in the Delaware Basin while strengthening its long-term inventory through a separate acreage acquisition and a successful Woodford shale test in New Mexico.

The acquisition from EnCap Investments-backed Paloma includes 16,235 net undeveloped acres in Eddy and Lea counties, New Mexico, along with producing assets expected to deliver approximately 11,100 barrels of oil equivalent per day during the third quarter of 2026. The transaction also adds an estimated 55 million BOE of proved reserves and more than 156 net drilling locations, primarily targeting the Bone Spring and Wolfcamp formations. The deal is expected to close in the fourth quarter of 2026.

Separately, Matador agreed to acquire primarily undeveloped acreage from another EnCap portfolio company, Ridge Runner Resources II. The purchase expands the company's position in the emerging Woodford play, bringing its total contiguous Woodford acreage to roughly 50,000 net acres and increasing Matador's overall Delaware Basin holdings to approximately 240,000 net acres.

Supporting its confidence in the play, Matador reported strong initial results from its first exploratory Woodford well in southeast Lea County. The Rae's Creek well produced more than 2,200 BOE per day, consisting of 72% oil, during its official 24-hour production test and has continued to outperform the average Texas Woodford well on a 60-day cumulative oil production basis. The company said the results validate the commercial potential of the Woodford formation in this part of the Delaware Basin.

Chief Executive Officer Joseph Foran said the Paloma assets are expected to contribute to cash flow, production growth and reserve additions, while the expanding Woodford position provides additional long-term development opportunities. The company also expects drilling and completion efficiencies to lower Woodford well costs by 30% to 40% over the next 12 to 18 months.

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

The 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.

By Charles Kennedy for Oilprice.com