San Mateo Midstream has agreed to acquire the operating subsidiaries of rival US-based midstream energy company Cardinal Midstream Partners for $752m in cash.
Cardinal Midstream is a portfolio company of EnCap Flatrock Midstream, while San Mateo Midstream is a joint venture (JV) of Matador Resources (51%) and Five Point Infrastructure (49%).
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Closing of the transaction is expected on or before 31 July 2026, contingent upon customary closing conditions.
Based in Dallas, Texas, Cardinal Midstream operates approximately 145 miles of low and high-pressure natural gas-gathering pipelines.
Cardinal Midstream also owns a cryogenic natural gas processing plant complex in Loving County, Texas. The plant has a designed capacity of around 320 million cubic feet per day (mcf/d).
The site covers roughly 75 acres and offers two residue natural gas takeaway connections and four outlets for natural gas liquids.
Cardinal Midstream’s assets operate mainly in the Delaware Basin, with pipelines stretching into West Texas and southern Eddy County, New Mexico.
Matador founder, chairman and CEO and San Mateo founder Joseph Wm. Foran said: “We are very pleased to announce San Mateo’s acquisition of Cardinal Midstream. We believe the acquisition – which is being funded by midstream – is the next step in the growth of San Mateo and a continuation of the strategic vision Matador and Five Point share for our joint midstream business to be a leading midstream company in the Delaware Basin, providing flow assurance to Matador and third-party customers.”
The acquisition will combine and expand existing gathering and processing capabilities across the Delaware Basin.
Once completed, San Mateo’s total designed natural gas processing capacity is expected to surpass one billion cubic feet per day, while its gathering network will increase to more than 800 miles of pipeline.
The integration of Cardinal Midstream’s network is expected to enable more efficient movement of natural gas across the northern Delaware Basin and provide options for future expansion.
The acquisition introduces nine new third-party natural gas-gathering and processing customers to San Mateo, with Cardinal Midstream’s current customer base made up of major, mid-cap and private producers.
This addition is expected to directly increase San Mateo’s customer base, throughput and revenue generated from third-party business.
The companies see immediate synergies from combining Cardinal Midstream’s and San Mateo’s plants.
San Mateo’s Marlan and Black River processing plants in Eddy County, New Mexico, will be connected to Cardinal Midstream’s complex in Texas. This is intended to give producers more options and improve system reliability.
San Mateo expects the acquired assets to be immediately accretive to adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) and cash flow.
The company expects adjusted EBITDA from the Cardinal Midstream assets to reach up to $110m a year by 2028, once the plant is running at full capacity.
The financing package includes a new term loan of up to $650m, to be arranged under San Mateo’s credit facility, with PNC Bank and Truist Bank acting as lead banks.
The remainder of the purchase price will be covered by a combination of cash on hand, additional borrowings and capital contributions from the JV partners.
Legal counsel for San Mateo was provided by Baker Botts, led by Preston Bernhisel, and O’Melveny & Myers, led by Jason Schumacher.
Willkie Farr & Gallagher, led by Nathan Meredith, acted for Cardinal Midstream in the transaction.
