Matador Resources announced Thursday it has executed a natural gas supply agreement and separate NGL marketing agreements with Energy Transfer LP affiliates, covering production from the Delaware Basin in the Permian region. The Dallas-based oil and gas producer said the deals are designed to improve all-in pricing netbacks and reduce its exposure to Waha Hub pricing in the second half of 2026.
Matador and Energy Transfer Sign Gas and NGL Marketing Deals
Both Matador Resources and Energy Transfer LP are headquartered in Dallas, Texas — making this a deal between two companies that share more than a business relationship. They share a zip code. Under the natural gas supply agreement, Matador will sell a portion of its Permian Basin production to Energy Transfer. Separately, NGL agreements were executed with various Energy Transfer affiliates to dedicate and sell NGLs gathered from multiple Delaware Basin sources, broadening the commercial relationship considerably.
Why Matador Pursued the Agreements: Reducing Waha Hub Exposure
The Waha Hub, located in West Texas, has long been a pressure point for Permian Basin producers. Prices there have historically been lower and more volatile than at other Texas trading hubs — driven by pipeline takeaway constraints that periodically cause local gas prices to collapse, sometimes turning negative.
Matador’s marketing team identified the Energy Transfer deal as a concrete step toward improving all-in pricing netbacks. The gas supply agreement is specifically designed to serve as a bridge: Matador has already secured firm transportation capacity on Energy Transfer’s Hugh Brinson Pipeline, but that arrangement has not taken effect yet. The new supply deal fills that interim window, giving Matador access to better-priced markets before its long-term transportation commitment kicks in.
Expected Effects: Higher Prices and Supply for Data Centers
Matador expects to realize higher natural gas prices for a portion of its production during the second half of 2026. The sale points targeted under the deal have historically shown elevated demand and prices relative to the Waha Hub — and that pricing differential is central to the deal’s appeal.
There is a second dimension here that extends well beyond Matador’s balance sheet. Energy Transfer is expected to use the gas supply to meet rising demand from artificial intelligence-driven data centers and power generation markets, both of which have been pushing electricity consumption higher across Texas. Natural gas remains the primary fuel for meeting that load growth. The deal connects upstream Permian production directly to one of the more consequential demand trends reshaping the energy sector right now.
Background: The Hugh Brinson Pipeline Project
The Hugh Brinson Pipeline — previously known as the Warrior Pipeline — sits at the center of Matador’s longer-term pricing strategy. Energy Transfer approved the project on December 6, 2024, with a budget of approximately $2.7 billion.
Phase 1 consists of a 400-mile, 42-inch pipeline running from Waha to Maypearl, Texas, with capacity to carry up to 1.5 Bcfd of natural gas. Energy Transfer expects to place Phase 1 into service by the end of 2026. That phase also includes the Midland Lateral — a 42-mile, 36-inch pipeline connecting the main line to processing plants owned by Energy Transfer and third parties.
Phase 2 would add compression to raise total system capacity to approximately 2.2 Bcfd. Once complete, the pipeline connects Permian Basin shippers to Energy Transfer’s broader intrastate network, including access to the Carthage and Katy hubs — markets that have historically commanded stronger prices than Waha. Matador locked in 500,000 MMBtu per day of firm transportation on Hugh Brinson in 2025, securing a meaningful share of its future production into those downstream markets.
A Longer-Term Strategy Complementing a Near-term Fix
The agreements between Matador Resources and Energy Transfer represent a near-term fix and a longer-term strategy working in tandem. The natural gas supply agreement addresses the pricing gap Matador faces before its Hugh Brinson firm transportation becomes effective, targeting sale points with historically stronger demand and prices than Waha Hub. The NGL agreements add another layer, dedicating Delaware Basin liquids production to Energy Transfer affiliates.
The Hugh Brinson Pipeline — a $2.7 billion, 400-mile project with Phase 1 capacity of 1.5 Bcfd — is expected in service by year-end 2026. When that capacity comes online, Matador’s 500,000 MMBtu per day of firm transportation will shift the company’s gas pricing exposure more permanently away from Waha. The current supply deal bridges the gap until that happens.
