Tall Oak Midstream, LLC will build a natural gas gathering and processing system in the Central Northern Oklahoma Woodford (“CNOW”) play. The system will serve multiple producers targeting the play’s liquids-rich, stacked pay zones including the Mississippi Lime, Woodford Shale and Cleveland formations. Tall Oak’s CNOW system will be anchored by a long-term acreage dedication from American Energy – Woodford, LLC (AEW), an affiliate of American Energy Partners, LP (AELP). The dedication spans an area of approximately one million acres that covers all previously undedicated acreage in Payne County and portions of Creek, Logan, Lincoln, Noble and Pawnee counties. In addition, AEW contributed its existing gathering lines in exchange for a minority interest in the Tall Oak CNOW system. AEW has an option to increase its non-operating interest up to 50 percent in the system.
“It’s a very exciting time to be working in the Mid-Continent,” said Tall Oak Chief Executive Officer Ryan Lewellyn. “Drilling and production schedules continue to climb, and the long-term outlook for the CNOW play is very positive. We are excited about this opportunity and focused on providing AEW and other producers in the area a near-term solution with reliable access to multiple markets.”
Private Equity Support
Tall Oak is now supported by a total of $400 million in private equity commitments from EnCap Flatrock Midstream (“EnCap Flatrock”) and Tall Oak’s founders. EnCap Flatrock made an initial $100 million commitment to Tall Oak in February and has since made additional commitments totaling $300 million.
AEW is supported by a total of $500 million in private equity commitments led by The Energy & Minerals Group (“EMG”), AEW’s management team and others.
System Specifics and Market Access
Tall Oak’s initial CNOW System will include a 250-mile, low-pressure gas gathering system with multiple compression sites and a state-of-the-art cryogenic processing plant located in Payne County, Oklahoma. Tall Oak acquired 60 miles of existing gas gathering pipeline from AEW to establish the gathering footprint. Tall Oak’s new cryogenic processing facility, known as the Battle Ridge Plant, is expected to be in service in December 2014. The plant will have an initial capacity of 75 million cubic feet per day (MMcf/d) and will include nitrogen rejection capabilities.
“The Battle Ridge facility is large enough to accommodate planned expansions, which are expected to bring processing capacity to 300 MMcf/d as customer demand increases”, said Carlos Evans, Tall Oak Midstream’s chief commercial officer. “We look forward to expanding our system and services to provide premium midstream solutions to producers in the CNOW area.”
Tall Oak’s CNOW System will provide direct access to premium downstream markets including Southern Star Central Gas Pipeline and Enable Gas Transmission for residue gas.
Paul Hastings LLP served as legal counsel to Tall Oak Midstream with Jimmy Vallee, a partner in the firm’s Houston office, in the lead role. Thompson & Knight LLP represented EnCap Flatrock Midstream with partner Sarah McLean leading that firm’s legal team from Thompson & Knight’s Houston office.