This strategic move aims to substantially reduce exposure to the volatile Waha Hub pricing and boost the company's natural gas price realizations and free cash flow.
Matador Resources Company announced a strategic overhaul of its natural gas marketing strategy, securing multiple transportation and marketing agreements designed to significantly enhance its netback pricing by gaining exposure to NYMEX Henry Hub and lucrative Liquefied Natural Gas (LNG) markets.
The cornerstone of this initiative is a new firm transportation agreement with Energy Transfer on the planned Hugh Brinson Pipeline. Matador has locked in capacity to transport 500,000 MMBtu per day of natural gas production out of the Permian Basin. The pipeline is expected to be operational in the fourth quarter of 2026.
This new pipeline will route Matador’s gas from West Texas to Maypearl, Texas, south of the Dallas/Fort Worth Metroplex. From this crucial interchange point, the gas will gain access to East Texas and key Gulf Coast markets, which are strategically positioned near major LNG export facilities and other high-demand trading hubs.
Matador's move is a direct response to the recurring pricing challenges faced in the Permian Basin, particularly at the Waha Hub, which often experiences significant discounts relative to other U.S. benchmarks.
The company highlighted that natural gas sold in the targeted Gulf Coast and East Texas markets has historically commanded an average price more than two dollars per MMBtu higher than the average Waha Hub price since 2024. Matador expects this price advantage to widen, driven by increasing demand from new LNG export projects and the development of natural gas-powered data centers.
Joseph Wm. Foran, Matador’s Founder, Chairman, and CEO, emphasized the critical nature of the deal, stating, "With takeaway constraints increasingly visible across the Permian Basin, locking in firm transportation out of the basin is an important part of our long-term planning... When the Hugh Brinson Pipeline is placed into service, Matador expects that the access to new markets and reduced exposure to Waha will increase the price that Matador realizes for its natural gas production, as well as serve to increase Matador’s expected free cash flow..."
The financial implications of the strategy are substantial. Matador estimates that for every $0.50 per MMBtu of increased natural gas price realization achieved through these agreements, its annual revenue is expected to increase by approximately $90 million. This anticipated revenue uplift is set to solidify Matador’s position as one of the highest-margin operators in the Delaware Basin.
In addition to the extensive Gulf Coast agreements, Matador is further diversifying its market exposure by extending a separate gas transportation agreement with another pipeline company. This agreement will allow a portion of its natural gas to be transported to the Southern California market, a region where gas pricing has also historically exceeded pricing in Texas and Louisiana.
