San Mateo Midstream, the joint venture backed by Matador Resources and Five Point Infrastructure, is making a big swing in the northern Delaware Basin with a $752 million cash acquisition of Cardinal Midstream’s gas gathering and processing business. The deal hands San Mateo a cryogenic processing complex in Loving County, Texas, plus roughly 145 miles of gathering lines that extend into Eddy County, New Mexico.
Company leaders say the transaction pushes San Mateo’s designed processing capacity above 1 billion cubic feet per day and expands its gathering network to more than 800 miles, effectively tightening its grip on a key corner of the Permian.
What San Mateo Is Buying
According to a company release from San Mateo Midstream, the package centers on a cryogenic plant in Loving County with about 320 million cubic feet per day of inlet capacity and approximately 145 miles of low and high pressure gathering pipelines.
The plant sits on roughly 75 acres and is connected to multiple residue and natural gas liquids takeaway options that San Mateo says give it room to expand processing over time. It is a ready-made bolt-on system that drops directly into the joint venture’s existing Delaware Basin footprint.
Seller, Price And Reporting
Cardinal Midstream Partners and its sponsor EnCap Flatrock Midstream agreed to sell the operating subsidiaries in a cash deal valued at $752 million. As reported by Reuters, the purchase continues a broader wave of consolidation among midstream operators, as companies scale up to handle growing Permian volumes.
On the ground, the move will significantly widen San Mateo’s presence across the northern Delaware Basin, according to the Houston Business Journal, setting the joint venture up as a more formidable competitor in the region.
Financing And Timeline
San Mateo said it expects to fund a large portion of the purchase with a new term loan of up to $650 million under its existing credit facility, with PNC Bank and Truist Bank expected to lead the borrowing. The new term loan is structured as a short term bridge that will come due roughly 364 days after closing.
The balance of the purchase price will come from cash on hand, existing borrowings and capital from the joint venture partners. The transaction is expected to close on or before July 31, 2026, subject to customary closing conditions, according to legal advisers at O’Melveny.
Why It Matters For The Permian
Producers in the Permian are still wrestling with takeaway constraints even as associated gas volumes continue to climb. The U.S. Energy Information Administration projects further growth in Permian gas output through 2026 to 2027, a trend that keeps pressure on midstream operators to add processing and routing options.
At the same time, industry coverage highlights multiple pipeline projects racing to relieve bottlenecks in the basin, according to Oil & Gas Journal. In that context, San Mateo’s expanded footprint is less a luxury and more a necessary piece of the regional logistics puzzle.
What San Mateo Says
Executives at San Mateo and Matador say the Cardinal acquisition delivers immediate synergies for the joint venture and improves flow assurance for both Matador and third party customers. In its announcement, San Mateo Midstream said the Cardinal system will effectively “complete the circle” for its Delaware Basin infrastructure, knitting together existing assets into a more seamless network.
San Mateo projects that the Cardinal assets could contribute up to $110 million of Adjusted EBITDA on an annualized basis by 2028. For regional producers and shippers, the deal means more routing options and additional processing capacity in what is already a busy year for Permian midstream buildout. For San Mateo and its backers, it is a scale play that could set the stage for future roll ups or drop downs once the ink is dry.
Closing still depends on regulatory and contractual conditions, and lenders and advisers are expected to pin down the bridge financing ahead of the target closing date. Until then, the Delaware Basin’s midstream chessboard is already looking a lot more crowded.
