Matador Resources is expanding its Delaware Basin footprint as the region continues to draw oilfield activity.
San Mateo Midstream, a joint venture owned 51% by Matador Resources and Five Point Infrastructure, has agreed to acquire the operating subsidiaries of Cardinal Midstream Partners. Cardinal is a portfolio company of EnCap Flatrock Midstream. The total cash consideration is $752 million. The transaction is expected to close on or before July 31.
Cardinal’s midstream assets are complementary to San Mateo’s existing natural gas gathering and processing system and give San Mateo the ability to move natural gas more easily throughout the northern Delaware Basin in southeast New Mexico and West Texas. Those assets consist of a cryogenic natural gas processing plant complex in Loving County with a designed inlet capacity of about 320 million cubic feet of natural gas per day and about 145 miles of low-pressure and high-pressure natural gas gathering pipelines located in West Texas and southern Eddy County, New Mexico.
Cardinal’s plant complex sits on about 75 acres and has two residue natural gas takeaway connections and four natural gas liquids takeaway connections, giving San Mateo the ability to expand processing capacity in the future.
Joseph Wm. Foran, Matador’s founder, chairman and chief executive and founder of San Mateo, said in a statement, “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.”
Foran said, “The Cardinal Acquisition is expected to not only provide strategically increased flow assurance to Cardinal’s customers but also to provide natural gas processing for Matador’s development of its recently acquired federal lease acreage in Lea County, New Mexico. Additionally, because Cardinal’s system extends near Matador’s Wolf asset area in Loving County, San Mateo will be well positioned to provide flow assurance for volumes from this asset area too.”
Nine of Cardinal’s natural gas gathering and processing customers would be new natural gas customers for San Mateo. The mix of Cardinal’s major, mid-cap and private Delaware Basin producers is expected to directly increase San Mateo’s customer base, volume throughput and revenue generation from third-party customers. The acquisition is also expected to increase San Mateo’s designed natural gas processing capacity to more than 1 billion cubic feet per day and expand San Mateo’s gathering systems to over 800 miles of pipeline.
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