Marlan Gas Processing Capacity Nearly Triples
Producers in New Mexico's Delaware basin gain processing capacity as the expansion targets completion by yearend 2028.
Updated on Nov. 2, 2026 in Oil and Gas
San Mateo Midstream, a joint venture of Matador Resources Co. (51%) and Five Point Infrastructure LLC (49%), agreed to expand its Marlan natural gas processing complex in Eddy County and signed a new long-term fixed-fee gas gathering and processing contract. For New Mexico operators, the expansion is targeted for completion by yearend 2028, subject to permitting and construction.
Why it matters
The new agreement includes a large-scale acreage dedication in the northern Delaware basin, and the company is expanding processing capacity alongside anticipated production growth from Matador. Securing long-term fixed-fee volumes gives midstream operators a more predictable revenue base while capacity is built out ahead of demand.
The Marlan expansion adds a 300-MMcfd processing train, which would lift San Mateo's total processing capacity from 460 MMcfd to more than 1.3 bcfd, or nearly triple. The company's estimated 2026 midstream capital budget is $170-190 million, with about $25 million of that increase tied to the expansion.
The players
San Mateo Midstream
A midstream gas gathering and processing joint venture that operates in the Delaware basin and expands capacity under long-term fixed-fee contracts.
Matador Resources Co.
A Dallas-based independent oil and gas producer whose 51% stake in San Mateo Midstream gives it a controlling role in the venture's midstream buildout.
Five Point Infrastructure LLC
An infrastructure investment firm holding a 49% stake in San Mateo Midstream, providing capital alongside Matador in the joint venture.
The details
The Marlan expansion includes a 300-MMcfd processing train and a new nitrogen rejection unit to handle gas quality. The company will also build about 20 miles of natural gas pipeline to connect newly dedicated acreage, along with a field treating facility that removes CO2. Together these additions let the system absorb volumes from the new long-term gathering agreement.
Timeline
December 2024: Matador contributed Pronto Midstream LLC to the venture, leaving capacity at 460 MMcfd.
October 2018: The original gas gathering and processing agreement was announced.
2026: Midstream capital expenditures increased by about $25 million for the year.
Yearend 2028: The Marlan expansion is targeted for completion, subject to permitting and construction.
Market Landscape
The expansion follows Matador's December 2024 contribution of Pronto Midstream LLC, which set the venture's current 460 MMcfd processing base. Building midstream capacity under long-term fixed-fee contracts is a pattern that ties processing investment to producer growth in the Delaware basin.
Operators in New Mexico's Delaware basin should track midstream capacity additions, since new processing trains can change gathering availability and the terms producers negotiate. Producers and service firms tied to Eddy and Lea County acreage should review how the new long-term dedications may affect their own volume commitments and capital planning.
The takeaway
Midstream capacity is being built ahead of production growth, and the 2028 completion target is the milestone to watch. Operators with exposure to Eddy or Lea County acreage should track permitting progress and review any gathering agreements with qualified counsel before committing volumes.
Further reading
For broader context on how producers and midstream firms in the state are building processing capacity, see Oil and Gas coverage across New Mexico.
