A major consolidation is underway in the Texas energy sector as two Dallas-based midstream companies prepare to merge operations.

San Mateo Midstream announced Monday that it has entered a definitive agreement to purchase the operating subsidiaries of Cardinal Midstream Partners for $752 million in cash. The transaction, which aims to optimize natural gas transportation and processing in West Texas, is scheduled to close by the end of July 2026.

The acquisition will substantially increase San Mateo’s infrastructure and operational capacity across the Delaware Basin, a prolific oil and gas region stretching through West Texas and southeastern New Mexico.

Expanding Capacity and Pipeline Infrastructure

Midstream companies serve as the critical link in the energy supply chain, transporting, storing, and processing raw resources after extraction before they reach final consumer markets. This deal significantly scales San Mateo’s ability to handle these logistics.

Through the acquisition, San Mateo will inherit a cryogenic natural gas processing complex located in Loving County, Texas. This facility boasts a processing capacity of roughly 320 million cubic feet of natural gas per day. Additionally, the deal includes approximately 145 miles of high- and low-pressure gathering pipelines.

Once integrated, the combined assets will elevate San Mateo’s total regional capabilities to:

• Processing Power: Over 1 billion cubic feet of natural gas per day.
• Transportation Network: A gathering system extending across more than 800 miles of pipeline.

“This acquisition gives San Mateo greater processing capacity, an expanded pipeline network, and a more diversified client base,” said Brian Willey, chairman of the San Mateo board and executive vice president of midstream for Matador Resources. “It also puts the company in a stronger position for future strategic transactions.”

Strategic Value and Regional Connectivity

A primary driver for the purchase is the geographic synergy between the two networks. San Mateo plans to link Cardinal’s newly acquired pipeline infrastructure directly into its own existing system, which includes two operational processing plants in Eddy County, New Mexico.

The acquired 75-acre site in Loving County also provides immediate avenues for future growth, featuring two natural gas takeaway connections alongside four natural gas liquid connections.

Financing the $752 Million Deal

To fund the multimillion-dollar transaction, San Mateo has secured a new term loan of up to $650 million, co-led by Truist Bank and PNC Bank. The company will cover the remaining balance using a combination of cash on hand, draws from its current revolving credit facility, and direct capital contributions from its parent partners.

San Mateo Midstream operates as a joint venture between Dallas-based Matador Resources Company and Houston-based Five Point Energy. The seller, Cardinal Midstream Partners, is backed by San Antonio-based private equity firm EnCap Flatrock Midstream.