Matador's San Mateo to Acquire Cardinal Midstream in $752 Million Deal
San Mateo Midstream will acquire Cardinal Midstream for $752 million, adding 145 miles of natural gas gathering pipelines and expanding processing capacity beyond 1 billion cubic feet per day in the Delaware Basin.
(P&GJ) — San Mateo Midstream, Matador Resources' 51%-owned midstream joint venture with Five Point Infrastructure, has agreed to acquire Cardinal Midstream's operating subsidiaries for $752 million, expanding its natural gas gathering and processing footprint across the northern Delaware Basin.
The transaction, expected to close by July 31, includes Cardinal's 320-million-cubic-feet-per-day cryogenic natural gas processing complex in Loving County, Texas, and approximately 145 miles of low- and high-pressure natural gas gathering pipelines in West Texas and southern Eddy County, New Mexico.
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The acquisition is expected to increase San Mateo's total natural gas processing capacity to more than 1 billion cubic feet per day and expand its gathering network to more than 800 miles of pipeline. Matador said the combined system will improve flow assurance by allowing natural gas volumes to move between Cardinal's processing facilities and San Mateo's existing Marlan and Black River processing plants.
"We believe the acquisition... is the next step in the growth of San Mateo," said Joseph Wm. Foran, Matador's founder, chairman and CEO. "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."
The acquisition also expands San Mateo's third-party customer base, adding nine new natural gas gathering and processing customers. Matador said the Cardinal assets are expected to be immediately accretive to adjusted EBITDA and cash flow, with annualized EBITDA projected to reach as much as $110 million by 2028 once the processing complex reaches full utilization.
San Mateo expects to finance the acquisition with a combination of a new term loan of up to $650 million, borrowings under its existing credit facility, cash on hand and partner capital contributions.