Published: December 20, 2024 |

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Matador Resources has executed a definitive agreement where Matador would contribute Pronto Midstream, Matador’s wholly-owned midstream subsidiary, to San Mateo Midstream, Matador’s midstream joint venture, for a total implied valuation of Pronto of approximately $600 million.

At the closing of the transaction, Matador will receive an up-front cash payment of approximately $220 million for the contribution of Pronto to San Mateo. In addition, Matador may earn up to $75 million in incentive payments from Five Point Energy as Matador executes its operational plans in northern Lea County, New Mexico over the next five years. San Mateo will continue to be owned 51 percent by Matador and 49 percent by an affiliate of Five Point.

The transaction is expected to close prior to December 31, 2024, and is subject to customary closing conditions.

In connection with the transaction, Pronto and Matador will enter into certain natural gas gathering and processing agreements where Pronto will gather, treat, and process natural gas produced from Matador’s operated wells in northern Lea County, New Mexico. In addition, Pronto will enter into certain agreements with Northwind Midstream Partners, an affiliate of Five Point, where Northwind will treat certain sour gas gathered and delivered by Pronto in northern Lea County, New Mexico providing a sour gas solution for Matador’s northern Lea County acreage. Under these agreements, Northwind will redeliver the treated sweet gas from Pronto and other third-party customers to Pronto for processing.

Pronto currently owns and operates the Marlan cryogenic natural gas processing plant, which has a designed inlet capacity of 60 million cubic feet of natural gas per day. Pronto is currently expanding the Marlan Processing Plant to add an additional plant with a designed inlet capacity of 200 million cubic feet of natural gas per day increasing the total capacity of the Marlan Processing Plant complex to 260 million cubic feet of natural gas per day.

“We are excited about the opportunity to combine San Mateo and Pronto. Importantly, Matador will continue to operate and own 51 percent of San Mateo following this transaction. This combination will provide San Mateo with additional scale and expansion of its operations into Lea County, New Mexico where Matador and third-party customers are increasing their focus and production. Pronto’s Marlan Processing Plant expansion remains on time and on budget and is expected to come online in the first half of 2025. We expect that this transaction, as well as other third-party opportunities, will fill up much of this new plant as early as 2026,” said Joseph Foran, Matador’s founder, chairman, and CEO.

“This transaction provides Matador with a long-term sour gas solution in northern Lea County, New Mexico. Northwind has been one of our service providers that has gathered and treated sour gas in other areas of the Delaware Basin, and we are pleased with this opportunity to expand our working relationship with Northwind. A majority of the acreage dedicated as part of the transaction is just north of the Advance acreage we acquired in 2023. The additional flow assurance for our natural gas provided by both San Mateo and Northwind allows us to accelerate our development plans in an area of northern Lea County, New Mexico where we have experienced encouraging well results,” added Foran.

“Matador wishes to express its appreciation to Five Point for their professionalism and investment as a partner in San Mateo over the last seven years. We also express our appreciation to the Matador midstream team as well as our vendors, banks, partners and shareholders that have been instrumental in building additional shareholder value while growing Matador’s midstream business,” concluded Foran.

Matador Resources 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 Eagle Ford shale play in South Texas and 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, oil, natural gas and produced water gathering services and produced water disposal services to third parties.

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