DALLAS—Matador Resources Co. (NYSE: MTDR) Oct. 16 announced that a wholly owned subsidiary of its midstream joint venture, San Mateo Midstream LLC, has entered into a long-term agreement with a producer in Eddy County, N.M. relating to the gathering and processing of the producer’s natural gas production.

As a result of this agreement, along with prior natural gas gathering and processing agreements entered into by San Mateo with Matador and other customers, San Mateo has now entered into contracts to provide firm gathering and processing services for over 200 million cubic feet per day (MMcf/d) of natural gas, or over 80% of the designed inlet capacity of 260 MMcf/d of, at its Black River cryogenic natural gas processing plant in the Rustler Breaks asset area in Eddy County.

Capital expenditures directly associated with this agreement are expected to be minimal due to capacity-enhancement projects that San Mateo has already undertaken, including the expansion of the Black River Processing Plant, which was completed on time and on budget in first-quarter 2018. As a result, Matador’s estimated 2018 capital expenditures for midstream activities remains unchanged from previous guidance at $70 million to $90 million, which primarily reflects 51% of San Mateo’s total estimated capital expenditures for 2018.

This is the second announcement in 2018 of a significant customer addition by San Mateo. In June 2018, Matador announced that San Mateo had entered into a long-term agreement with a significant producer in Eddy County relating to the gathering and disposal of the producer’s salt water. The agreement included the dedication of over 65 wells, which are located within five miles of San Mateo’s existing salt water gathering system in Eddy County.

In addition, San Mateo completed its fourth and fifth commercial salt water disposal wells in Eddy County during third-quarter 2018 and is presently evaluating a sixth and seventh salt water disposal well. San Mateo currently has total salt water disposal capacity of approximately 225,000 barrels per day (bbl/d) in Eddy County and in Loving County, Texas. San Mateo expects to dispose of over 200,000 bbl/d of salt water as early as first-quarter 2019, which includes expected volumes from Matador and San Mateo’s other contracted producers in Eddy County, and Loving County.

Joseph Wm. Foran, Matador’s chairman and CEO, commented, “Our midstream team, San Mateo, continues to generate value for Matador’s shareholders. One of our midstream team’s primary goals for this year was to attract third-party volumes and further diversify San Mateo’s customer base. The announcement of two significant customers this year demonstrates San Mateo’s continued momentum on that front, as it has successfully grown its three-pipe offering—oil, natural gas and salt water—in Eddy County, New Mexico and Loving County, Texas throughout 2018.

“The Board and I congratulate the midstream team, and we look forward to continued success and future potential opportunities with our joint venture partner, Five Point Energy LLC, in continuing to establish San Mateo as a premier midstream company in the northern Delaware Basin.”

Onshore