San Mateo to add 300-MMcfd Marlan train, push Delaware basin capacity past 1.3 bcfd

San Mateo Midstream LLC will add a 300-MMcfd processing train and a nitrogen rejection unit at its Marlan natural gas complex in Eddy County, New Mexico, pushing total processing capacity above 1.3 bcfd. The expansion, announced alongside two long-term producer agreements, is targeted for completion by yearend 2028, subject to permitting, procurement and construction.

The figure marks a near-tripling of capacity. Before Matador Resources Co. contributed Pronto Midstream LLC to the venture in December 2024, San Mateo operated 460 MMcfd of processing capacity. The joint venture — 51% Matador, 49% Five Point Infrastructure LLC — now anchors one of the larger gathering and processing positions in the northern Delaware basin.

What do the new agreements cover?

The commercial package consists of two elements:

• A new long-term fixed-fee gas gathering and processing contract covering newly dedicated acreage in Lea and Eddy Counties, with volumes to be gathered, treated and processed at the Marlan complex. The deal includes a large-scale acreage dedication in the northern Delaware basin.
• An extension of an existing gas gathering and processing agreement covering Eddy County production. Gas will continue to be gathered, treated and processed at the Black River gas plant in Eddy County for several years beyond the original term, building on a contract first announced in October 2018.

Both agreements are fee-based and long-term, giving the venture contracted throughput to underpin the Marlan build-out. In plain terms: the producer has committed its gas, and San Mateo has committed the steel.

How much capital is involved?

The Marlan expansion will raise San Mateo's expected 2026 midstream capital expenditures by about $25 million. That lifts the estimated midstream capital budget for the year to $170-190 million.

Beyond the processing train and nitrogen rejection unit (a unit that strips excess nitrogen from processed gas to meet pipeline quality specifications), the project includes about 20 miles of new natural gas pipeline. The line will connect the newly dedicated acreage. A field treating facility for CO2 removal is also planned, addressing the high carbon dioxide content typical of some Delaware basin gas streams.

What did Matador's CEO say?

Joseph Wm. Foran, Matador founder, chairman and chief executive officer, and founder of San Mateo, said the agreements extend the venture's growth trajectory.

"Following the closing of the previously announced Cardinal Midstream acquisition in the third quarter, we completed the connection of the San Mateo and Cardinal systems in southern Eddy County, New Mexico," Foran said.

He outlined the next integration step: "In 2027, San Mateo plans to complete the full system connection with a northern pipeline connecting San Mateo's Lea County gathering infrastructure with the terminus of Cardinal's gathering infrastructure in Eddy County. This connection is expected to allow gas volumes to flow from the Marlan Plant complex in the north to the Pecos River Plant in the south, providing further flexibility for San Mateo and its customers."

Foran said the newly signed agreements are expected to increase volumes beginning in 2028.

Why the timing matters

The schedule stacks three milestones in sequence. The Cardinal acquisition closed in the third quarter, with the southern Eddy County system connection already complete. The northern pipeline tie between Lea County and Cardinal's Eddy County terminus follows in 2027. The Marlan train and volumes from the new contracts arrive in 2028.

That sequencing converts the 1.3-bcfd capacity target from an ambition into a scheduled build, with 2026 capex already budgeted and acreage dedicated. Watch items: permit approvals governing the yearend 2028 completion date, and confirmation that the 2027 northern pipeline connection stays on schedule.