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Start-Up Gas Midstream Firm to Focus on Permian Shale Plays

With activity heating up in several Permian Basin shale plays, Houston-based start-up Nuevo Midstream, LLC announced Wednesday it has secured a $65 million equity commitment to develop midstream infrastructure for natural gas producers in the Permian.

Specific emphasis will be on the Bone Springs and Wolfcamp formations and the Avalon Shale trend in southeast New Mexico and West Texas, the company said in a press release.

The $65 million in start-up money comes from the EnCap Energy Infrastructure Fund (EEIF), Torch Energy Advisors Inc. and Petroleum Fuels Co., Inc. EEIF is managed by EnCap Flatrock Midstream, a private equity firm based in San Antonio with more than $1.2 billion in midstream equity under management.

Nuevo Midstream will be owned by EEIF, Houston-based Torch Energy and Petroleum Fuels, which is headquartered in League City, TX. Torch Energy will contribute management services to Nuevo Midstream along with assets it co-owns with Petroleum Fuels, including the Ramsey gas gathering system.

The Ramsey system consists of approximately 130 miles of gathering pipeline; compressor and measurement stations; and processing, fractionation, storage and loading facilities located in Reeves County, TX. The gathering system crosses through Eddy County in southeast New Mexico and Culberson, Loving and Reeves counties in West Texas.

"The Bone Springs and Wolfcamp formations and the Avalon Shale are unconventional plays that are generating big news and strong results. We are excited about working with this highly experienced management team to develop Nuevo's acreage dedications and midstream capacities as production accelerates in the area," said Dennis Jaggi, one of EnCap Flatrock's three managing partners.

Nuevo Midstream's management team will be led by Jay Lendrum, Torch Energy's current president and COO.

Torch Energy Advisors is a privately held company owned by J.P. Bryan and Jay Lendrum. The company provides well production services and owns and operates upstream, midstream and renewable energy assets, including interests in 57 natural gas gathering systems in Texas, New Mexico, Oklahoma, Louisiana and Mississippi.

Petroleum Fuels is a privately held company involved in onshore and offshore natural gas gathering, compression, treating, processing and marketing in Texas, New Mexico, Oklahoma, Arkansas and the Gulf of Mexico. Petroleum Fuels will direct the development of Nuevo Midstream's natural gas liquids marketing efforts.

EnCap Flatrock Midstream is a private equity firm that manages the EnCap Energy Infrastructure Fund, investing in enterprises with proven management teams focusing on midstream energy infrastructure opportunities throughout North America. The firm has 66 institutional investors.

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