San Mateo to expand Delaware basin gas processing capacity under new producer agreements
San Mateo Midstream LLC plans to expand natural gas gathering and processing infrastructure in New Mexico's Delaware basin after signing two long-term agreements with a producer.
San Mateo Midstream, a joint venture of Matador Resources Co. (51%) and Five Point Infrastructure LLC (49%), said the agreements are expected to add long-term volumes across its gathering and processing system. With that and anticipated production growth from Matador, the company plans to expand its Marlan natural gas processing complex in Eddy County, NM, with a 300-MMcfd processing train and a new nitrogen rejection unit. The company also expects to construct about 20 miles of natural gas pipeline to connect newly dedicated acreage and a field treating facility for CO2 removal.
Subject to permitting, procurement, and construction activities, the Marlan expansion is targeted for completion by yearend 2028.
The company said the project will increase its expected 2026 midstream capital expenditures by about $25 million, raising its estimated midstream capital budget for the year to $170-190 million.
Commercial agreements
The agreements consist of a new long-term fixed-fee gas gathering and processing contract and an extension of an existing gas gathering and processing agreement.
Under the new agreement, San Mateo will gather and treat natural gas from newly dedicated acreage in Lea and Eddy Counties, NM, and process the volumes at the Marlan complex. The agreement includes a large-scale acreage dedication in the northern Delaware basin.
Separately, San Mateo amended an existing gas gathering and processing agreement covering production from Eddy County. Under the extension, gas will continue to be gathered, treated, and processed at the Black River gas processing plant in Eddy County for several years beyond the original contract term. The extension builds on a gas gathering and processing agreement San Mateo announced in October 2018, the company noted.
Upon completion of the Marlan expansion, San Mateo's total natural gas processing capacity will exceed 1.3 bcfd, nearly tripling the 460-MMcfd capacity it had before Matador contributed Pronto Midstream LLC to the venture in December 2024.
Joseph Wm. Foran, Matador founder, chairman, and chief executive officer, and founder of San Mateo, said the agreements build on San Mateo's growth.
"Following the closing of the previously announced Cardinal Midstream acquisition in the third quarter, we completed the connection of the San Mateo and Cardinal systems in southern Eddy County, New Mexico," he said.
"In 2027, San Mateo plans to complete the full system connection with a northern pipeline connecting San Mateo's Lea County gathering infrastructure with the terminus of Cardinal's gathering infrastructure in Eddy County. This connection is expected to allow gas volumes to flow from the Marlan Plant complex in the north to the Pecos River Plant in the south, providing further flexibility for San Mateo and its customers."
He said the newly signed agreements are expected to increase volumes beginning in 2028.
