(WO) — Matador Resources has agreed to acquire Permian basin operator Paloma Permian LLC for $1.275 billion in cash while also expanding its position in the emerging Woodford play, where the company reported encouraging results from its first exploratory well in southeast New Mexico.

The acquisition from EnCap Investments portfolio company Paloma includes 16,235 net undeveloped acres in Eddy and Lea counties, N.M., along with producing properties expected to average approximately 11,100 boed (57% oil) during the third quarter of 2026. The transaction also adds an estimated 55 MMboe of proved reserves and more than 156 net drilling locations across the Bone Spring and Wolfcamp formations. The acquisition is expected to close during the fourth quarter.

Separately, Matador has agreed to acquire primarily undeveloped acreage from Ridge Runner Resources II, another EnCap portfolio company, expanding its footprint in the Woodford formation across West Texas and southeast New Mexico. Combined with prior acquisitions, the deal brings Matador's Woodford position to approximately 50,000 contiguous net acres and increases its total Delaware basin acreage to roughly 240,000 net acres.

The acreage expansion follows what the company described as a successful validation of the emerging Woodford play in New Mexico. Matador's Rae's Creek exploratory well recorded an initial 24-hour production rate of more than 2,200 boed, with oil accounting for 72% of production. The company said the well continues to outperform the average Woodford well in Texas by approximately 20% on a 60-day cumulative oil production basis, supporting the commercial potential of the formation in this portion of the Delaware basin.

Matador said the Ridge Runner acquisition adds more than 150 operated Woodford drilling locations and creates opportunities for longer laterals, larger development programs and improved drilling and completion efficiencies. The company expects those efficiencies could reduce well costs by 30% to 40% over the next 12 to 18 months.

"Matador is excited to announce the expansion of our Delaware basin asset base with these assets from Paloma," said Joseph Wm. Foran, founder, chairman and CEO of Matador. He added that the company also views the Rae's Creek results as evidence of the commercial viability of the Woodford formation in southeast New Mexico and expects the expanded acreage position to support future development.

The transactions continue Matador's strategy of expanding its operated position in the core Delaware basin while increasing exposure to emerging unconventional opportunities in the Woodford formation.