American Oil and Gas Reporter - January 2012 - 108

raising 15 funds and $11 billion to back
independent oil and gas producers, partnered with Flatrock Energy Advisors in
2008 to create a series of funds focused
entirely on midstream opportunities. EnCap Flatrock Midstream is led by Jaggi,
William D. Waldrip, and William R. Lemmons Jr., all of whom have 25-40 years'
experience as engineers, managers and
executives in both the upstream and midstream sectors.
"Our collective experience brings a
strong suit to EnCap Flatrock Midstream,"
Jaggi says. "Because of our relationships
and knowledge, we have great access to
the best midstream management teams

in the country."
As of mid-December, EnCap Investments was funding seven midstream companies:
* Caballo Energy, which focuses on
Texas, Oklahoma and Kansas;
* Caiman Energy, which owns and
operates natural gas gathering, processing,
fractionation and transportation assets in
rich-gas areas of the Marcellus;
* Cardinal Midstream, which operates
gathering and processing assets in the
Arkoma Woodford Shale and provides
portable treating and processing equipment;
* Meritage Midstream Services, which

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concentrates on gas gathering and treating
in the Eagle Ford Shale and other plays
in Southwest Texas;
* Nuevo Midstream, which operates
in the Permian Basin, particularly the
Avalon Shale trend and the Bone Springs
and Wolfcamp formations;
* Rangeland Energy, a Bakken player
that is developing COLT, North Dakota's
first open-access crude oil marketing hub,
where customers have access to gathering
lines, unit trains, trucks, pipelines and
storage tank facilities; and
* U.S. Infrastructure, which has midstream assets in the Bossier/Haynesville
plays.
"We select management teams carefully, so producers can be sure that our
companies have both the experience and
expertise to meet their needs," Jaggi says.
Investment Philosophy
According to Jaggi, EnCap Flatrock
Midstream looks for management teams
that have held leadership positions in
large companies or have track records of
building successful midstream companies.
"We look for people with good commercial,
technical and financial skills with strong
backgrounds in operations," he adds.
It is also important for the team to
have an entrepreneurial spirit, Jaggi says.
"We want teams that have proven they
can work hard and sell an idea," he clarifies. "They need to be able to meet with
a producer and demonstrate through their
relationships, their expertise and their
history that they can put the proper facilities in place to give that producer reliable
and economical service."
In addition to looking for the right
people, EnCap Flatrock looks for the
right place. "We are vigorous in our
review of the reserve situation around
any opportunity," Jaggi reports. "We look
at the wells producers are drilling and
how their economics will be affected by
price fluctuations. If drilling makes sense
even at low prices, we know we have
identified the right location for a team to
start building an opportunity."
Producers can rest assured that any
company backed by EnCap Flatrock will
have the funds to execute its commitments,
Jaggi states. "Our fund contains $800
million, and we have access to additional
capital when we need it," he says. "Many
of our investors want to add more to our
fund because they see the same story we
do: low exploration risk and high returns
in unconventional plays that will lead to
decades of development in areas across
the United States. The midstream sector
is just another way for capital providers
to participate in that growth."
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American Oil and Gas Reporter - January 2012

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