Matador Resources has entered into a definitive agreement to acquire Paloma Permian from EnCap Investments in a deal valued at $1.27bn.
The transaction will add 16,235 net undeveloped acres in Eddy and Lea Counties in New Mexico, US, the majority of which is held by active production.
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Estimated third quarter (Q3) production from the acquired assets is approximately 11,100 barrels of oil equivalent per day (boepd), with 57% of the output classified as oil.
The acquisition is expected to be finalised in Q4 2026.
In a separate transaction, Matador has agreed to purchase largely undeveloped acreage in the Woodford formation in West Texas and south-east New Mexico from Ridge Runner Resources II, also a portfolio company of EnCap.
The combined Ridge Runner purchase, earlier acreage additions and the company’s ongoing land strategy will see Matador build a Woodford position of nearly 50,000 contiguous undeveloped net acres, mainly in its Antelope Ridge asset area and extending into West Texas.
Following these acquisitions, Matador’s total net acreage in the Delaware Basin will reach around 240,000 acres.
Matador founder, chairman and CEO Joseph Wm. Foran said: “Matador is excited to announce this catalyst and the expansion of our Delaware Basin asset base with these assets from Paloma, a successful and respected exploration firm in the Permian Basin and other oil and gas areas.
“Similar to Matador’s previous transactions with EnCap, and its portfolio companies, we anticipate this acquisition will be integrated efficiently into Matador’s operating plan, contribute to Matador’s cash flow generation and deliver significant efficiency gains, increases in oil and natural gas production, and reserve growth.”
Matador also reported initial results from its first exploratory well in the Woodford formation in south-east Lea County, New Mexico.
According to the company, the Rae’s Creek well recorded initial production rates above 2,200boepd, 72% of which was oil, during a 24-hour test conducted on 29 June 2026.
The Rae’s Creek well continues to produce around 20% more than the average for Woodford wells in Texas over 60 days.
The Paloma acquisition brings more than 156 net locations, mostly in the Bone Spring and Wolfcamp formations, and total proved reserves of 55 million barrels of oil equivalent.
The deal adds $816m of PV-10 value as of 31 May 2026.
Both the Paloma and Ridge Runner acquisitions are set to be financed through a combination of existing cash and a reserve-based lending facility, which Matador repaid in May 2026.
The company expects additional production from the acquired assets to speed up repayment of these borrowings and targets a leverage ratio close to 1.0x within 12–18 months following transaction closure.
In May this year, Matador acquired 5,154 net undeveloped acres in the Delaware Basin for approximately $1.14bn during the latest US Bureau of Land Management Oil and Gas Lease Sale.
