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Tall Oak Creates Second Midstream Unit

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In this world of unending movie sequels, it’s no surprise that the trend would bleed over into the corporate world.

talloaklogoAfter launching the company in 2014, the founders of Tall Oak Midstream LLC have created a second entity to focus on other aspects of the North American oil and gas sector.

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Logically dubbed Tall Oak Midstream II LLC, the new company will pursue midstream opportunities in other resource plays across North America, whereas the original will continue to focus on operating and expanding its midstream assets in the Midcontinent.

Tall Oak II was formed with an initial equity commitment of up to $300 million from private equity firm EnCap Flatrock Midstream and Tall Oak management. The formation of Tall Oak II leverages the management team’s deep midstream experience and builds on its strong relationships with oil and gas producers, according to an April 23 company statement.

“We are excited to broaden our relationship with EnCap Flatrock Midstream with the goal of delivering world-class midstream solutions and customer service to North American oil and gas producers,” said Tall Oak president and CEO Ryan D. Lewellyn in the statement. “We look forward to building on the success we have had in the Midcontinent to bring our innovative approach to producers in other regions.”

Both Tall Oak companies are led by four founders: Lewellyn, Carlos Evans (chief commercial officer), Max J. Myers (chief financial officer) and Lindel R. Larison (chief operating officer). The $300 million equity commitment is the second EnCap Flatrock has made to the Tall Oak management team and brings total financing for Tall Oak and Tall Oak II to $850 million. Tall Oak was formed in early 2014 with an initial $400 million equity commitment from EnCap Flatrock and Tall Oak’s founders. In October 2014, Tall Oak’s subsidiary, TOMPC LLC closed on a $100 million credit facility, which is expandable to $150 million.

Tall Oak now operates two natural gas gathering and processing systems in the Midcontinent. The Tall Oak CNOW System and the Tall Oak STACK System serve multiple oil and gas producers targeting the region’s liquids-rich, stacked pay zones. In the third quarter of this year, Tall Oak’s total cryogenic processing capacity in the Midcontinent will reach 175 million cubic feet per day (MMcf/d) across both systems with more than 400 miles of gathering pipeline planned.

“We’re extremely proud of the progress our team has made in just 10 months of operation,” Larison said. “We have commissioned our first plant and are deep into construction of our second plant. We will continue to expand our gathering footprint and processing capacity while staying focused on providing superior service and staying ahead of our producers’ needs.”

The Tall Oak CNOW System serves producers targeting pay zones in the Central Northern Oklahoma Woodford (CNOW) region, including the Mississippi Lime, Woodford Shale and Cleveland formations. Located in Payne County, Oklahoma, the Battle Ridge Complex is the central processing and nitrogen rejection facility serving Tall Oak’s CNOW Gas Gathering system which spans Creek, Logan, Lincoln, Noble, Payne and Pawnee counties. The Battle Ridge Natural Gas Processing Plant came into service in mid-February with an initial processing capacity of 75 MMcf/d. The Tall Oak CNOW System provides direct access to premium downstream markets including Southern Star Central Gas Pipeline and Enable Gas Transmission for residue gas, and 175 miles of gathering pipelines and three compressor stations are in service. Tall Oak plans to install an additional 75 miles of pipe and five more compressor stations.

The STACK play sits northwest of Oklahoma City and targets the Woodford and Mississippian-age shale plays. Tall Oak is currently operating 60 miles of natural gas gathering pipelines and one compressor station with plans to complete an additional 150 miles of pipe and two more compressor stations in 2015. Tall Oak’s STACK gathering system will be served by the Chisholm Plant, a new, state-of-the-art cryogenic plant with 100 MMcf/d of processing capacity. Tall Oak expects to commission the Chisholm Plant in September 2015.

The Tall Oak companies are based in Oklahoma City, serving oil and gas producers with a full suite of midstream services, such as natural gas gathering, compression, treating and processing, as well as crude oil gathering and transportation, condensate and water handling and product marketing solutions.

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