Matador Resources Company Announces Expansion of San Mateo’s Delaware Basin Footprint Through the Acquisition of Cardinal Midstream

DALLAS--(BUSINESS WIRE)--Matador Resources Company (NYSE: MTDR) (“Matador” or the “Company”) today announced that San Mateo Midstream, LLC (“San Mateo”), Matador’s 51%-owned midstream joint venture with Five Point Infrastructure (“Five Point”), has entered into a definitive agreement to acquire the operating subsidiaries of Cardinal Midstream Partners, LLC (“Cardinal”), 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 (the “Cardinal Acquisition”). 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.”

Advisors

Baker Botts L.L.P., led by Preston Bernhisel, and O’Melveny & Myers LLP, led by Jason Schumacher, acted as counsel to San Mateo on the Cardinal Acquisition. Willkie Farr & Gallagher LLP, led by Nathan Meredith, acted as counsel to Cardinal on the acquisition.

About Matador Resources Company

Matador is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. Its current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. Matador also operates in the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, Matador conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, oil transportation services, natural gas, oil and produced water gathering services and produced water disposal services to third parties.

For more information, visit Matador Resources Company at www.matadorresources.com.

About San Mateo Midstream, LLC

San Mateo is a midstream joint venture owned 51% by Matador and 49% by an affiliate of Five Point Infrastructure LLC. San Mateo provides natural gas gathering, treating and processing, produced water gathering and disposal, and oil gathering and transportation services to Matador and third-party customers in the Delaware Basin in Southeast New Mexico and West Texas.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking statements” are statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “could,” “believe,” “would,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “should,” “continue,” “plan,” “predict,” “potential,” “project,” “hypothetical,” “forecasted” and similar expressions that are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements include, but are not limited to, statements regarding the anticipated timing and closing of the Cardinal Acquisition; the expected benefits, opportunities and results of the Cardinal Acquisition, including the expected impact on cash flows and Adjusted EBITDA, third-party volumes, system connectivity, flow assurance, expansion opportunities and other anticipated impacts of the Cardinal Acquisition; the anticipated financing of the Cardinal Acquisition, including any bridge term loan or other financing transaction, or the required capital contributions or sources thereof, including any potential drop-down to San Mateo or sale of Matador’s wholly-owned midstream assets; other aspects of the Cardinal Acquisition, including guidance, projected or forecasted financial and operating results, future liquidity and the payment of distributions; and San Mateo’s future growth and potential strategic alternatives. Actual results and future events could differ materially from those anticipated in such statements, and such forward-looking statements may not prove to be accurate. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, the satisfaction of closing conditions for the Cardinal Acquisition; the possibility that the Cardinal Acquisition may not close on the anticipated timeline or at all; the ability of San Mateo to integrate the Cardinal assets and realize the anticipated benefits of the Cardinal Acquisition; the availability and terms of financing; commodity price volatility; operational risks; regulatory changes; risks related to obtaining the requisite regulatory approvals for the Cardinal Acquisition; disruption from the Cardinal Acquisition making it more difficult to maintain business and operational relationships; significant transaction costs associated with the Cardinal Acquisition; the risk of litigation and/or regulatory actions related to the Cardinal Acquisition, as well as the other factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. For further discussions of risks and uncertainties, you should refer to Matador’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of Matador’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Matador undertakes no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

(1) Adjusted EBITDA is a non-GAAP financial measure. Matador and San Mateo define Adjusted EBITDA as earnings before interest expense, income taxes, depletion, depreciation and amortization, accretion of asset retirement obligations, unrealized derivative gains and losses, non-recurring transaction costs for certain acquisitions, non-cash stock-based compensation expense, loss on debt extinguishment, net gain or loss on asset sales and impairments and certain other non-cash items. The most comparable GAAP measures to Adjusted EBITDA are net income or net cash provided by operating activities. Estimated Adjusted EBITDA attributable to the Cardinal assets is presented on an asset-level basis and reflects earnings before interest expense, income taxes, depreciation, depletion, amortization and certain other non-cash or non-recurring items. Matador and San Mateo are unable to provide a reconciliation of this forward-looking non-GAAP financial measure to the most directly comparable GAAP measure without unreasonable effort due to the inherent difficulty in forecasting certain reconciling items.