By Oil & Gas Financial Journal staff
Caiman Energy LLC, an EnCap Flatrock Midstream portfolio company, has completed the second of two recent financings adding more than $1 billion to help fund its planned expansion of midstream infrastructure in the Marcellus Shale.
Lack of processing infrastructure and markets in the Northeast US has fueled speculation that some producers in the area may be forced to curtail natural gas production. Dallas-based Caiman launched it's midstream infrastructure expansion in the Marcellus Shale in July 2010 to help provide natural gas producers with the infrastructure needed to deliver product to high-value markets.
On July 26, New York-based Highstar Capital IV LP and two of Caiman’s existing limited partners made a joint equity commitment to Caiman of up to $300 million. Highstar Capital is a private equity firm with significant experience in the midstream energy sector.
In late March, Caiman closed on a $200 million, four-year syndicated revolving credit facility. Twelve banks participated in the financing, which was led by Bank of America NA and Wells Fargo Securities LLC.
The completion of these two financings, combined with an existing $380 million equity commitment from San Antonio, TX-based private equity firm EnCap Flatrock Midstream and Caiman’s expected cash flow through the end of 2012, provide Caiman with more than $1 billion of total capital to finance the build-out and expansion of its midstream infrastructure network in the Marcellus shale.
Caiman currently operates Fort Beeler I, a 120 MMcfd cryogenic processing facility in Marshall County, West Virginia, near Cameron. An additional 200 MMcfd facility at the Fort Beeler site is expected to be completed by the end of this year. Fort Beeler III, Caiman’s third processing facility, is expected to be complete within one year, bringing total processing capacity at Fort Beeler to 520 MMcfd. Caiman’s natural gas liquids, Y-grade pipeline and the initial phase of its fractionation facility on the Ohio River are scheduled for completion by the end of this year. Gathering pipeline construction is ongoing, with the backbone of Caiman’s 140-mile rich gas system in West Virginia’s Marshall and Wetzel counties to near completion by the end of this year. These projects will bring Caiman’s total investment in the Marcellus Shale to more than $500 million by the end of 2011.
“With the combined expertise and financial strength of EnCap Flatrock Midstream, Highstar Capital and our bank group behind us, we will continue to move forward with our aggressive build-out program in the rich area of the Marcellus Shale so that we can provide natural gas producers with the infrastructure they need to rapidly deliver product to high-value markets,” said Caiman President and CEO, Jack Lafield.
Barclays Capital acted as exclusive financial adviser and Thompson & Knight LLP acted as legal counsel to Caiman Energy and EnCap Flatrock Midstream. Morgan Stanley acted as exclusive financial adviser and Latham & Watkins LLP acted as legal counsel to Highstar Capital.
