San Mateo Midstream has completed its acquisition of Cardinal Midstream’s operating subsidiaries for $752 million in cash, subject to customary post-closing adjustments.
San Mateo is a joint venture owned 51% by Matador Resources and 49% by an affiliate of Five Point Infrastructure.
The transaction expands San Mateo’s natural gas gathering and processing operations across the northern Delaware Basin.
Following the acquisition, San Mateo has more than 1 billion cubic feet per day of designed natural gas processing capacity and over 800 miles of gathering pipelines.
The acquired assets include a processing complex in Loving County, Texas, with approximately 320 million cubic feet per day of designed inlet capacity.
Cardinal also owns approximately 145 miles of gathering pipelines. San Mateo believes the system will provide additional processing capacity, operational flexibility and opportunities for future expansion.
The acquisition adds nine natural gas customers and increases San Mateo’s third-party volumes and revenue.
Nearly 100 drilling rigs are operating within 10 miles of the combined gathering and processing network, which San Mateo believes creates additional opportunities to attract third-party producers.
San Mateo offered employment to Cardinal’s 26 field employees, and all accepted positions with the combined company.
The Cardinal assets are expected to contribute immediately to cash flow and adjusted EBITDA.
San Mateo projects that annualized adjusted EBITDA from the acquired assets could reach as much as $110 million by 2028, when the processing complex is expected to be fully utilized.
The company financed the acquisition using a new $650 million term loan under its existing credit facility, cash on hand and capital contributions from Matador and Five Point.
The term loan matures in July 2027.
Baker Botts and O’Melveny & Myers represented San Mateo. Willkie Farr & Gallagher served as legal counsel to Cardinal.
