Tulsa-based midstream company Caballo Energy LLC is targeting the Mississippi Lime of Oklahoma and Kansas, and the Cana Woodford Shale with its acquisition of Eagle Chief Midstream LLC, which owns a gas gathering and processing system in northwestern Oklahoma.

The Eagle Chief assets are at the intersection of the liquids-rich Mississippi Lime and Cana Woodford plays, said Caballo, which is backed by private equity commitments from EnCap Flatrock Midstream of San Antonio.

"The Mississippi Lime and Cana Woodford Shale are two of the most exciting plays in the country," said Dennis Jaggi, one of EnCap Flatrock Midstream's three managing partners and a member of Caballo's board of managers. "We're seeing a surge in drilling activity in northwestern Oklahoma in the Mississippi Lime formation. This is a great acquisition in an underserved region with very strong demand for gathering, compression and processing services. Acquisition of Eagle Chief will enable Caballo Energy to grow as demand accelerates."

Eagle Chief is connected to more than 370 wells and serves 25 producers, Caballo said. Its system includes more than 600 miles of gathering pipeline, compression and processing assets in Alfalfa, Blaine, Garfield, Major and Woods counties.

In early 2013 the company plans to install a cryogenic gas processing plant, bringing total processing capacity to about 100 MMcf/d. Caballo delivers processed gas to Oneok Gas Transportation and Panhandle Eastern Pipe Line. Natural gas liquids are delivered to Oneok NGL Pipeline. The Eagle Chief system also includes salt water disposal and crude oil gathering systems.

According to NGI's Shale Daily Unconventional Rig Count, activity in the Cana Woodford Shale is up 9% from a year ago with 61 rigs active in the play. Of late, SandRidge Energy Inc. has been an active player in the Mississippi Lime, recently announcing two joint ventures in the play (see Shale Daily, Dec. 27, 2011; Aug. 8, 2011). Chesapeake Energy Corp. also is active in the play (see Shale Daily, Nov. 7, 2011).