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EnCap Flatrock Midstream agrees to invest up to $500m in Tall Oak

11 Feb 2014

shaleEnergy-focused private equity firm EnCap Flatrock Midstream has agreed to invest up to $500m in Oklahoma-based oil and gas group Tall Oak Midstream.

Tall Oak, which was launched by former executives of DCP Midstream Partners and Chesapeak Energy, will invest in oil and gas gathering and processing assets in the US, CEO Ryan Lewellyn told Bloomberg.

Tall Oak today said that it has received an initial $100m equity investment from EnCap, which it said would increase its commitment as the company executes its growth strategy.

The company will focus on investing in infrastructure that services horizontal wells, which are increasingly being drilled on shale oil and gas projects, said Lewellyn, adding that most pipelines in the US were built to serve traditional vertical wells.

EnCap Flatrock closed its most recent vehicle, Midstream Fund II, on its $1.75bn hard cap in July 2012. The fund was oversubscribed and comfortably exceeded its initial $1.25bn target.

A recent report from EY showed that more than half of private equity executives were being drawn to the oil and gas industry due to the increased capital required by businesses in the sector.

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