Matador Raises Capital Spending by $25 Million to Expand Delaware Gas Processing
Key Facts
Matador Resources announced on November 2, 2026, that its San Mateo joint venture signed two agreements with a large producer in the northern Delaware Basin, paving the way for an expansion of gas processing and gathering facilities in New Mexico. Matador owns 51% of San Mateo; the producer that signed the agreements was not identified. The first agreement is a long-term, fixed-fee contract to gather and process natural gas from newly dedicated acreage in Lea and Eddy counties. The second extends for several years beyond its original term an existing agreement to gather and process gas in Eddy County through the Black River facility. The agreements provide a contractual basis for expanding infrastructure, while the company expects long-term growth in San Mateo’s processing volumes and cash flows.
The Marlan complex expansion includes a new processing unit with capacity of 300 million cubic feet per day, along with about 20 miles of natural gas pipelines. The plan also includes a new nitrogen rejection unit, and completion is targeted by the end of 2028, subject to permitting, procurement and construction. Matador said San Mateo’s total gas processing capacity will exceed 1.3 billion cubic feet per day after the project is completed. That would expand processing capacity, which surpassed 1 billion cubic feet per day after San Mateo acquired Cardinal Midstream on July 31, 2026. The original Black River agreement was announced in October 2018, before the new agreement extended it for several years beyond its original term.
Matador raised its estimate for average 2026 capital spending in its midstream segment by about $25 million, to a range of $170 million to $190 million. The company tied the increase to the expansion plan, which requires construction of the new unit, gas pipelines and nitrogen rejection facilities. Matador said the Marlan work supports activity in Eddy and northern Lea counties and allows San Mateo to pursue additional volumes from other producers. The spending adds capital commitments in the current year, while the announced completion target is the end of 2028. In June, Matador estimated that Cardinal’s assets could lift adjusted EBITDA to as much as $110 million annually by 2028 when the processing complex is full.
The expansion is part of San Mateo’s integration of assets in the Delaware Basin following its acquisition of Cardinal Midstream, completed on July 31, 2026. In 2027, San Mateo plans to complete a northern connector linking gas gathering infrastructure in Lea County to the end of Cardinal’s network in Eddy County. The connector is expected to enable gas to flow north from Marlan to the Pecos River in the south. In the second quarter of 2026, San Mateo and Matador’s wholly owned midstream assets reported combined net income of $57.9 million, while adjusted EBITDA reached $89.9 million. These figures show the scale of existing midstream activity before the new expansion enters service, while expected cash flow growth remains tied to long-term increases in processing volumes.
Matador shares, traded under the ticker MTDR, closed at $60.88 on October 30, 2026. That close preceded the announcement of the agreements on November 2, so it does not reflect the market’s response to the news. Matador announced an increase in its quarterly cash dividend on October 21. The company is scheduled to hold a conference call to present its third-quarter results on November 4, 2026. In an August update, it forecast sequential oil production growth of about 3% to a quarterly record of about 129,500 barrels per day in the third quarter. Operating factors the company cited for the second quarter included shutting in about 9,900 barrels of oil equivalent per day, 24% of it oil, because of weak Waha prices and scheduled maintenance at third-party processing facilities.