Matador and Five Point Energy form new midstream JV in Delaware Basin

Matador Resources Company has signed an agreement with private equity firm Five Point Energy to form a new joint venture (JV) to expand natural gas gathering and processing in the Delaware Basin, US.

The new San Mateo Midstream II JV will construct multi-commodity gathering, processing, and disposal infrastructure to serve exploration and production operators in the basin.

It is the second JV transaction between the companies after San Mateo Midstream I, which was formed in February 2017.

Matador owns a 51% interest in both JVs, while Five Point holds the remaining 49%.

The JV will also enhance saltwater gathering and disposal, as well as oil gathering operations in the region.

Under the agreement, San Mateo II will build a new cryogenic natural gas processing plant near San Mateo I’s existing Black River 260 million cubic feet per day (MMcf/d) natural gas processing plant near Carlsbad, New Mexico.

The proposed plant will have up to 200MMcf/d of inlet capacity and is expected to come on stream in mid-2020. It will increase the gas processing capacity of San Mateo to up to 460MMcf/d, allowing the company to meet the growing processing demand in the area.

Matador Resources Company chairman and CEO Joseph Foran said: “We expect that San Mateo will continue to provide first class service to Matador and other producers along San Mateo’s pipeline systems in Eddy County, New Mexico and Loving County, Texas, in some of the prime producing areas of the Delaware Basin.

“We obviously are pleased with the progress of our existing JV with Five Point, and this transaction is a further testament to the existing joint venture’s success and positive outlook.”

Under the expansion plans, San Mateo intends to expand its natural gas pipeline system to run from the Black River plant north to Matador’s Stebbins leasehold area and south to Matador’s new Stateline asset area.

Meanwhile, Matador has dedicated acreage totalling around 25,500 gross acres to San Mateo under 15-year fixed-fee contracts.