Matador Resources Company has announced that San Mateo Midstream, Matador’s 51%-owned midstream joint venture with Five Point Infrastructure, has entered into a definitive agreement to acquire the operating subsidiaries of Cardinal Midstream Partners, a portfolio company of EnCap Flatrock Midstream, for total cash consideration of $752 million. The transaction is expected to close on or before July 31, 2026, subject to customary closing conditions. Matador anticipates the Cardinal Acquisition to be cash neutral for Matador as it expects to use distributions from San Mateo and/or proceeds from the potential drop-down to San Mateo or sale of a portion of Matador’s wholly-owned midstream assets to fund any required cash contributions to San Mateo related to the acquisition.

Cardinal Acquisition Highlights

• Complementary Midstream Assets. Cardinal’s midstream assets are complementary to San Mateo’s existing natural gas gathering and processing system and provide San Mateo the ability to move natural gas more easily throughout the northern Delaware Basin in southeast New Mexico and West Texas (see map, Exhibit A). Cardinal’s assets consist of (i) a cryogenic natural gas processing plant complex in Loving County, Texas with a designed inlet capacity of approximately 320 million cubic feet of natural gas per day, and (ii) approximately 145 miles of low-pressure and high-pressure natural gas gathering pipelines located in West Texas and southern Eddy County, New Mexico. The Cardinal plant complex sits on approximately 75 acres with two residue natural gas takeaway connections and four natural gas liquids takeaway connections, providing San Mateo the ability to expand processing capacity in the future.
• Third-Party Customer Relationships and Volumes. 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.
• Expanded Scale. The Cardinal Acquisition is expected to increase San Mateo’s designed natural gas processing capacity to more than one billion cubic feet per day and expand San Mateo’s gathering systems to over 800 miles of pipeline.
• Enhanced Flow Assurance for Matador and Other Customers. The combined natural gas system is expected to provide immediate synergies for San Mateo’s gas gathering and processing system. These expected synergies include the ability to flow volumes between Cardinal’s natural gas processing plant in Loving County, Texas and San Mateo’s existing Marlan Processing Plant and Black River Processing Plant, both located in Eddy County, New Mexico. Once acquired, the Cardinal plant complex in Texas as shown on the map should provide additional options and coverage to producers in the area.
• Accretive to Adjusted EBITDA and Cash Flows. San Mateo expects the Cardinal assets to be immediately accretive to both San Mateo’s Adjusted EBITDA and cash flows. Adjusted EBITDA from the Cardinal assets is expected to increase to up to $110 million on an annualized basis by 2028 when the Cardinal plant complex is anticipated to be completely full.

Financing Highlights

San Mateo expects to finance the Cardinal Acquisition, in part, through a new term loan of up to $650 million under its existing credit facility. This new term loan will be led by PNC Bank, the lead bank under Matador’s reserves-based credit facility, and Truist Bank, the lead bank under San Mateo’s existing credit facility. The new term loan will become due and payable 364 days following the closing of the Cardinal Acquisition. The remainder of the purchase price is expected to be funded through a combination of cash on hand, borrowings under San Mateo’s existing credit facility and capital contributions from its partners. Matador expects to use distributions from San Mateo and/or proceeds from the potential drop-down to San Mateo or sale of a portion of Matador’s wholly-owned midstream assets to fund any cash contribution.

Management Comments

Joseph Wm. Foran, Matador’s Founder, Chairman and CEO and San Mateo’s Founder, commented, “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. This transaction was built on relationships. Matador’s relationship with the EnCap Investments L.P. (“EnCap”) team and its affiliated entities goes back decades. We look forward to welcoming and building relationships with Cardinal’s customers and working with the talented Cardinal operating team.

“We believe this acquisition will provide substantial benefits to Matador, Cardinal and San Mateo and their respective stakeholders. Financially, this acquisition is expected to add immediate third-party volumes and cash flows, enhancing both San Mateo’s and Cardinal’s expected outlook for 2026 and beyond. This increased scale further improves San Mateo’s positioning for potential strategic alternatives at the corporate level. Strategically, the Cardinal system effectively “completes the circle” for San Mateo infrastructure in the Delaware Basin. Connecting Cardinal’s natural gas gathering and processing assets to San Mateo’s existing natural gas system is expected to give San Mateo the ability to move natural gas throughout the northern Delaware Basin—north to south or south to north—creating better flow assurance and system flexibility that we believe few midstream providers can match.

“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, Texas, San Mateo will be well positioned to provide flow assurance for volumes from this asset area too.

“It is also important to note that “midstream money is being used to fund midstream acquisitions” as any capital contributions from Matador to San Mateo are expected to be paid with either cash distributions from San Mateo and/or proceeds received from the potential drop-down to San Mateo or sale of Matador’s wholly-owned midstream assets. These wholly-owned midstream assets continue to provide critical flow assurance for Matador’s natural gas, oil and water in Matador’s Ameredev area and other locations in Lea County, New Mexico.

“We also express our appreciation to PNC Bank and Truist Bank for their continued support and to each of San Mateo’s lenders that we anticipate participating in the new term loan. This new term loan is expected to effectively provide a bridge to San Mateo’s potential future strategic transactions.

“As we have noted before, San Mateo began as a startup midstream company in 2017 and has grown into one of the premier midstream businesses in the northern Delaware Basin and one of the only midstream companies that provides integrated services for all three streams—natural gas, oil and water. We believe the addition of Cardinal will position San Mateo for its next chapter of growth.”

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