San Mateo Adds $25M to 2026 Capex for Marlan Gas Plant Expansion

San Mateo Adds $25M to 2026 Capex for Marlan Gas Plant Expansion

San Mateo Midstream is adding about $25 million to its 2026 capex, now $170-190 million, to expand Delaware Basin processing past 1.3 bcfd, Oil & Gas Journal reports.

Market Impact

The spending follows two long-term agreements with a producer that the source does not name. One is a new fixed-fee gathering and processing contract covering newly dedicated acreage in Lea and Eddy Counties, NM, with processing at the Marlan complex. The other extends an existing agreement for Eddy County production, which will continue to be processed at the Black River plant for several years beyond the original term.

San Mateo is a joint venture of Matador Resources (51%) and Five Point Infrastructure (49%). The Marlan expansion includes:

• A 300-MMcfd processing train
• A new nitrogen rejection unit
• About 20 miles of gas pipeline to connect the newly dedicated acreage
• A field treating facility for CO2 removal

Completion is targeted for yearend 2028, subject to permitting, procurement and construction activities. When finished, total processing capacity will exceed 1.3 bcfd, nearly triple the 460 MMcfd the venture had before Matador contributed Pronto Midstream in December 2024.

Matador founder and CEO Joseph Wm. Foran said the Cardinal Midstream acquisition closed in the third quarter and the San Mateo and Cardinal systems are now connected in southern Eddy County. In 2027, he said, San Mateo plans to complete the full system connection with a northern pipeline linking its Lea County gathering infrastructure to the end of Cardinal’s Eddy County gathering system. That would let gas flow from Marlan in the north to the Pecos River Plant in the south. Foran said the new agreements are expected to increase volumes beginning in 2028.

What It Means for Subcontractors

The source does not name an EPC contractor or any awarded packages. Based on the “subject to permitting, procurement” language, we infer the work is still at the pre-award stage. Most of the build is a 2028 story, so the near-term job is positioning.

• Pre-qualify now. Facility, pipe and civil subs working the Permian should get on San Mateo’s vendor list, or on the list of whichever EPC it selects, ahead of the plant, treating and pipeline packages. Safety records and insurance paperwork should be current before bid invitations go out.
• Pipeline and civil crews. Two pipe scopes are in the source: the roughly 20-mile line connecting newly dedicated acreage, and the 2027 northern connection between Lea County and Cardinal’s Eddy County terminus. The 2027 tie-in is the nearer-term opportunity, so price it first.
• Mechanical, piping and E&I shops. The 300-MMcfd train, nitrogen rejection unit and CO2 treating facility are all process scopes at or near Marlan in Eddy County. Shops with Q1 capacity should price early and line up crews and materials before permitting and procurement finish.
• Budget timing. The $170-190 million 2026 midstream budget includes only about $25 million of added spend, and the source does not say how that splits across 2026 and later years. Ask San Mateo or its EPC directly which Marlan packages bid in 2026 versus 2027.