en.Wedoany.com Reported - Matador Resources has entered into a natural gas supply agreement and a separate NGL marketing agreement with affiliates of Energy Transfer LP, aiming to improve its composite pricing netback and reduce exposure to Waha Hub pricing in the second half of 2026. Both companies are headquartered in Dallas, Texas.
Under the natural gas supply agreement, Matador will sell a portion of its Permian Basin production to Energy Transfer. Simultaneously, the parties have signed NGL agreements with multiple Energy Transfer affiliates to delineate and market NGLs gathered from various Delaware Basin sources, thereby broadening their commercial partnership.
The Waha Hub in West Texas has long been a pressure point for Permian Basin producers. Due to pipeline takeaway capacity constraints, natural gas prices at this hub periodically plummet, sometimes turning negative, with historical price levels consistently lower and more volatile than other Texas trading hubs. Matador's marketing team views this transaction as a concrete step to improve composite pricing netbacks. The natural gas supply agreement is designed as a bridge: Matador has secured firm transportation capacity on Energy Transfer's Hugh Brinson pipeline, but that arrangement has not yet taken effect. The new supply agreement fills this interim window, allowing Matador to access better-priced markets before its long-term transportation commitments become operational.
Matador expects to achieve higher natural gas prices for a portion of its production starting in the second half of 2026. Under the agreement, target sales points have historically demonstrated higher demand and prices compared to the Waha Hub, with this pricing differential being central to the agreement's appeal. Additionally, Energy Transfer is expected to utilize these natural gas supplies to meet the growing demand from artificial intelligence-driven data centers and power generation markets, both of which are driving rising electricity consumption in Texas, where natural gas remains the primary fuel for load growth. This agreement directly connects upstream Permian production to key demand trends currently reshaping the energy industry.
The Hugh Brinson pipeline (formerly known as the Warrior pipeline) is central to Matador's long-term pricing strategy. Energy Transfer approved the project on December 6, 2024, with a budget of approximately $2.7 billion. The first phase includes a 400-mile, 42-inch pipeline from Waha to Maypearl, Texas, with a capacity of up to 1.5 billion cubic feet per day, expected to be operational by the end of 2026. This phase also includes a 42-mile, 36-inch Midland Lateral pipeline connecting the mainline to processing plants owned by Energy Transfer and third parties. The second phase will add compression capacity, increasing the system's total capacity to approximately 2.2 billion cubic feet per day. Once completed, Permian Basin shippers can connect to Energy Transfer's broader intrastate network, including access to the Carthage and Katy hubs, which historically have had higher prices than Waha. Matador secured 500,000 MMBtu per day of firm transportation capacity on the Hugh Brinson pipeline in 2025, ensuring its future production can reach these downstream markets.
The agreement between Matador Resources and Energy Transfer represents a synergy of short-term fixes and long-term strategy. The natural gas supply agreement addresses the pricing gap Matador faces before its firm transportation on the Hugh Brinson pipeline takes effect, targeting sales points with historically stronger demand and prices than the Waha Hub. The NGL agreement adds another layer, dedicating Delaware Basin liquid production to Energy Transfer affiliates. With the Hugh Brinson pipeline project expected to be operational by the end of 2026, Matador's 500,000 MMBtu per day of firm transportation will more permanently shift the company's natural gas pricing exposure away from Waha, with the current supply agreement serving as a bridge until that goal is achieved.
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