Tailwater Capital signs deals to acquire Tall Oak Midstream II and III

US-based private equity firm Tailwater Capital has agreed to acquire midstream service providers Tall Oak Midstream II (Tall Oak II) and Tall Oak Midstream III (Tall Oak III) from EnCap Flatrock Midstream for an undisclosed sum.

Tailwater Energy Fund III, a private equity fund managed by Tailwater Capital, will acquire Tall Oak III in the Arkoma Basin.

As part of this deal, Tailwater will merge Tall Oak III assets with Tailwater’s existing portfolio company, Connect Midstream, a full-suite midstream service provider, to create the potential for immediate significant operating synergies, Tailwater noted.

Tailwater Capital co-founder and managing partner Jason Downie said: “These transactions are the next logical step in both Tailwater and Connect Midstream’s long-term Arkoma STACK consolidation and growth strategy and will significantly expand our footprint and processing capacity in the liquids-rich Arkoma Basin.”

Upon completion, Tall Oak team will assume operatorship as well as manage an enhanced footprint with materially improved processing and compression capacities.

It will also manage an expanded pipeline network with a more diverse customer base.

Assets of Tall Oak III comprise more than 120 miles of low-pressure and high-pressure pipelines in the Arkoma Basin.

It also operates fully operational Panther Creek Plant, a 200MMscf/d processing plant designed to process gas to MarkWest’s Arkoma Connector.

The transaction is subject to customary regulatory and closing conditions.

Upon completion of the deal, Tall Oak will manage an enhanced footprint with materially improved processing and compression capacities, as well as an expanded pipeline network with a more diverse customer base.

Under a separate deal, Tailwater Capital-manages private equity fund Tailwater Energy Fund IV will acquire a majority of assets of Tall Oak II, which was established to pursue greenfield and acquisition opportunities in oil and gas plays across North America.

Tall Oak II currently owns over 750 miles of low and high-pressure gathering lines across eight Oklahoma counties in the STACK Extension.

The deal with Tailwater, however, excludes Tall Oak II assets in Custer County, Oklahoma.

Tall Oak president and CEO Ryan Lewellyn said: “These transactions will provide our business with tremendously improved system capacity infrastructure and an increasingly diverse customer base, positioning us to compete with larger peers in the region and to capitalize on a number of exciting opportunities alongside our new partners at Tailwater.”

In March 2019, EnCap Flatrock Midstream-supported firm Nuevo Midstream Dos signed an agreement to acquire US-based Republic Midstream from an affiliate of ArcLight Capital Partners.