EnCap Flatrock Midstream, the energy-focused private equity firm, will invest as much as $500 million in Tall Oak Midstream LLC, a new company started by former executives of DCP Midstream Partners LP and Chesapeake Energy Corp. (CHK)
Tall Oak, based in Oklahoma City, will invest in new and existing oil and gas gathering and processing assets in the middle of the U.S., Ryan Lewellyn, Tall Oak’s chief executive officer, said in an interview.
The firm will focus on opportunities to buy and build infrastructure that services horizontal wells, which exploration companies are increasingly drilling to unearth shale oil and gas, Lewellyn said. There is a need for such investments because most pipelines in the U.S. were built to serve traditional vertical wells, he said.
EnCap Flatrock, an affiliate of buyout firm EnCap Investments LP, has committed to an initial $100 million investment in Tall Oak and may invest as much as another $400 million over time, Lewellyn said.
Lewellyn, 34, was previously a managing director in DCP’s mid-continent business, where he handled operations and business development in areas including southern Colorado and Kansas. Tall Oak Chief Commercial Officer Carlos Evans, 34, was previously manager of gas sales at Chesapeake.
Tall Oak Chief Financial Officer Max Myers was previously treasurer of OGE Energy Corp., and Chief Operating Officer Lindel Larison was previously manager of construction and engineering with Chesapeake.
EnCap Flatrock raised $1.75 billion for its second fund in 2012, according to a company press release.
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