Matador Resources has formed a joint venture with a subsidiary of Five Point Capital Partners to operate and expand midstream assets in the Delaware Basin in the US.
Named as San Mateo Midstream, the joint venture will own, operate and expand natural gas, crude oil, and produced water midstream assets in the region.
San Mateo Midstream will also own midstream assets of Matador in Loving County, Texas and Eddy County, New Mexico.
Matador will own 51% in the joint venture and will continue to operate the midstream assets while the remaining stake in the joint venture will be held by the Texas based private equity firm, Five Point Capital Partners.
The implied value of the midstream assets as well as the related gathering, processing and disposal are worth nearly $500m.
Five Point CEO and managing partner David Capobianco said: “The joint venture will build oil, NGL, gas and water infrastructure to support the needs of Matador, as our anchor customer, as well as third party producers in the region who seek infrastructure solutions.
“We firmly believe that the joint venture will create significant value, as the Delaware is one of the most promising producing basins in North America, yet currently lacks sufficient permanent 'in-basin' midstream infrastructure.”
Five Point alongside certain co-investors has provided an initial funding of $176.4m to the joint venture for the 49% stake while a Matador subsidiary has provided the midstream assets.
Both the partners in the joint venture have agreed to spend $150m to expand the asset base and midstream operations.
Matador chairman and CEO Joseph Wm. Foran said: “San Mateo will not only provide midstream services for Matador but will also serve third party customers in and around our Rustler Breaks and Wolf asset areas.
“We had many opportunities to make a deal on these assets with a number of different companies over the past year, and we are confident that Five Point is the right joint venture partner for Matador.”
The midstream assets acquired by the joint venture are the Black River Cryogenic Processing Plant, four salt water disposal wells along with their associated commercial salt water disposal facilities besides all the oil, natural gas and water gathering systems and pipelines.
As part of deal, the joint venture will expand Black River Cryogenic Processing Plant from 60 million cubic feet of natural gas per day to 260 million cubic feet which will be completed by the first quarter of 2018.
It will also expand the oil, natural gas and water gathering lines throughout both the Rustler Breaks and Wolf asset and drill additional commercial salt water disposal well in the Rustler Breaks asset area during this year.