Matador announces contribution of Pronto Midstream to San Mateo JV

Matador (MTDR) Resources yesterday announced that it has executed a definitive agreement whereby Matador would contribute Pronto Midstream, Matador’s wholly-owned midstream subsidiary, to San Mateo Midstream, Matador’s midstream joint venture, for a total implied valuation of Pronto of approximately $600M. At the closing of the transaction, Matador will receive an up-front cash payment of approximately $220M for the contribution of Pronto to San Mateo. In addition, Matador may earn up to $75M in incentive payments from Five Point Energy as Matador executes its operational plans in northern Lea County, New Mexico over the next five years. San Mateo will continue to be owned 51% by Matador and 49% by an affiliate of Five Point. “Matador intends to use the up-front cash payment to repay borrowings outstanding under its revolving credit facility. Following the closing of this transaction, Matador expects its leverage ratio to be approximately 1.1 times at December 31, 2024. The transaction is expected to close prior to December 31, 2024, and is subject to customary closing conditions, including Five Point’s receipt of debt financing in accordance with its commitment letter from its lender. In connection with the transaction, Pronto and Matador will enter into certain natural gas gathering and processing agreements whereby Pronto will gather, treat and process natural gas produced from Matador’s operated wells in northern Lea County, New Mexico. In addition, Pronto will enter into certain agreements with Northwind Midstream Partners LLC, an affiliate of Five Point, whereby Northwind will treat certain sour gas gathered and delivered by Pronto in northern Lea County, New Mexico providing a sour gas solution for Matador’s northern Lea County acreage. Under these agreements, Northwind will redeliver the treated sweet gas from Pronto and other third-party customers to Pronto for processing,” the company stated.