Matador Resources has announced that its subsidiaries within San Mateo Midstream have signed two separate agreements with a major producer in the Northern Delaware Basin, New Mexico, US.
San Mateo is a joint venture with Matador holding a 51% stake and an affiliate of Five Point Infrastructure owning 49%. The company offers midstream services such as gathering, processing, disposal, and transportation for Matador as well as other customers in the area.
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The first agreement establishes a long-term fixed fee arrangement for San Mateo to gather and process natural gas from newly dedicated acreage in Lea and Eddy Counties, with the gas to be processed at the Marlan Plant in Eddy County.
The second is an amendment that extends San Mateo’s existing contract for gathering and treating natural gas from Eddy County at the Black River Plant, lengthening the original agreement that was first announced in October 2018.
Under these arrangements, San Mateo will handle gathering, treating, and processing of natural gas from the specified acreage, utilising both its Marlan natural gas processing complex and the Black River facility.
To handle volumes anticipated from the agreements and Matador’s production, San Mateo plans to add a 300 million cubic feet per day (mcf/d) processing train and a nitrogen rejection unit at Marlan.
It also expects to build approximately 20 miles of pipeline to connect the newly dedicated acreage and a field treating facility for carbon dioxide removal.
Matador founder, chairman and CEO and San Mateo founder Joseph Foran said: “We believe these agreements are a strong validation of San Mateo’s integrated midstream strategy and the quality of our assets and people.
“Our ability to provide scalable gathering, processing and related services gives our customers confidence that their infrastructure requirements will be met as their production grows.
“This ‘repeat business’ showcases San Mateo’s ability to provide the first-class midstream services and the flow assurance that oil and natural gas producers require.”
San Mateo is targeting completion of the Marlan expansion by the end of 2028, subject to routine permitting, procurement and construction.
To accommodate these developments and expected output from Matador, the company anticipates its 2026 midstream capital expenditures will increase by approximately $25m, with a revised estimate of $170m to $190m.
Upon completion of the expansion, San Mateo expects immediate capacity utilisation and volume increases.
According to the company, this could result in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for San Mateo in excess of $100m by the end of 2029.
Upon completion, San Mateo’s overall natural gas processing capacity is expected to surpass 1.3 billion cubic feet per day (bcf/d). This represents almost a threefold increase from its previous capacity of 460mcf/d before Matador contributed Pronto Midstream to San Mateo in December 2024.
