Matador Expands Midstream
Matador's San Mateo Acquires Cardinal Midstream, Expanding Delaware Basin Operations
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Key Points
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San Mateo will fund any required cash contributions with a new term loan of up to $650 million under its existing credit facility, helping keep the Cardinal acquisition cash-neutral and supported by possible drop-downs or asset sales.
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Cardinal's assets include a cryogenic natural gas processing plant complex in Loving County, Texas on about 75 acres, with a designed inlet capacity of approximately 320 MMcf/d, plus roughly 145 miles of low- and high-pressure natural gas gathering pipelines, and two residue gas takeaway connections and four natural gas liquids takeaway connections.
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Nine of Cardinal's natural gas gathering and processing customers would become new San Mateo customers, expanding San Mateo's third-party volumes.
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Cardinal is a portfolio company of EnCap Flatrock Midstream, linking Matador's San Mateo JV with EnCap Flatrock's midstream assets in the Delaware Basin.
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GuruFocus notes MTDR's valuation metrics, including a P/E of about 12.83 and a GF Score, with GF Value data not available, suggesting the stock may be undervalued relative to earnings potential.
Matador Resources announced on June 29, 2026 that its San Mateo Midstream joint venture will acquire Cardinal Midstream Partners' operating subsidiaries for $752 million in cash, according to Business Wire. The deal is targeted to close by July 31, 2026 — just 32 days away — and would push San Mateo's total pipeline reach past 800 miles and processing capacity above 1 billion cubic feet per day.
Cardinal is a portfolio company of EnCap Flatrock Midstream and has been building out its Pecos River Processing Complex in Loving County, Texas since 2022. Matador's CEO Joseph Foran said the deal was "built on relationships" and is a "continuation of the strategic vision Matador and Five Point share" to lead midstream operations in the Delaware Basin, Business Wire reported.
What Matador Is Actually Buying for $752 Million
Cardinal's core asset is a cryogenic natural gas processing plant complex sitting on about 75 acres in Loving County, Texas. It has a designed inlet capacity of roughly 320 million cubic feet per day, according to StockTitan. A cryogenic plant uses extreme cold to separate natural gas into sellable products like propane and butane.
The deal also includes about 145 miles of gathering pipelines and six takeaway connections — two for residue gas and four for natural gas liquids. Nine of Cardinal's customers will become new San Mateo customers, expanding its third-party revenue base beyond Matador's own production, MarketWatch reported.
Matador Calls the Deal Cash Neutral — Here's How
Matador says the acquisition will be "cash neutral" for the parent company. San Mateo plans to fund the purchase with a new term loan of up to $650 million under its existing credit facility, led by PNC Bank and Truist Bank, according to Investing.com. Any remaining gap will be covered by distributions from San Mateo or asset sales.
The structure lets Matador avoid dipping into its own balance sheet. That preserves cash for drilling in the Delaware Basin. Analysts at Seeking Alpha noted the deal is "immediately accretive" but cautioned that managing the new debt load will be a key test over the next year.
Cardinal Was Freshly Built Before Matador Swooped In
Cardinal only started in 2022, backed by EnCap Flatrock Midstream. In 2023, it bought Medallion Midstream's Delaware Basin gas business to get its first foothold. Then in October 2025, Cardinal finished 36 miles of new gathering pipeline across Eddy County, NM and Loving County, TX. In February 2026 — just four months before this deal — Cardinal completed its "Train III" expansion, bringing total design capacity to 360 MMcf/d.
For EnCap Flatrock, this exit marks the "fourth full-cycle iteration" of partnership with Cardinal CEO Doug Dormer since 2009, according to Business Wire. Dormer called it a "full-cycle" success for his team. Matthew Melton of EnCap Flatrock said the sale reinforces a "tradition of value creation." Matador is essentially buying brand-new infrastructure at a moment when Permian Basin takeaway capacity is tight.
MTDR Stock Trades at a Low Multiple Amid Big Expansion
Matador shares traded near $49.85 following the announcement, giving the company a market cap of about $6.2 billion, according to GuruFocus. Its price-to-earnings ratio sits at 12.83, which GuruFocus says suggests the stock may be undervalued relative to its earnings potential. The platform gave Matador a GF Score of 84 out of 100, signaling strong long-term return potential.
By 2028, the Cardinal plant complex is projected to add up to $110 million in annualized adjusted EBITDA to San Mateo, according to Seeking Alpha. Matador generated roughly $2.1 billion in EBITDA over the trailing twelve months. If the Cardinal assets hit their target, they would add about 5% on top of that — a meaningful lift from a single deal.
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