EnCap Flatrock sets $2.25 bln target for Fund III

Firm: EnCap Investments LP

Fund: EnCap Flatrock Midstream III

Target: $2.25 billion

Hard Cap: $3 billion

EnCap Flatrock Midstream III is targeting $2.25 billion, with a hard cap $750 million above that. The effort comes only two years after its predecessor, EnCap Flatrock Midstream II LP, closed with $1.75 billion in limited partner commitments.

The latest fund traces its roots to a six-year-old partnership between EnCap Investments and Flatrock Energy Advisors. Flatrock is led by managing partners Dennis Jaggi, Billy Lemmons and Bill Waldrip, with offices in San Antonio, Texas, and Edmond, Oklahoma. Portfolio companies include Caiman Energy and Cardinal Midstream.

The team specializes in growth capital for proven midstream management teams in North America, with equity commitments typically ranging from $100 million to $200 million per management team. The firm also pursues larger deal opportunities with EnCap’s investment partners.

As a backdrop to the fund, the North American upstream business of finding and developing oil and gas resources requires about $150 billion per year to replace and grow supply. For every dollar spent on this side of the business, 15 cents to 30 cents needs to be invested in midstream assets to get fossil fuel from the wellhead to the market, according to firm executives.

”The size of the opportunity is not only recurring, it is large and will continue to grow as new wells are drilled across emerging resources players where midstream infrastructure does not exist or legacy system are both aging and insufficient to handle current ad anticipated production volumes,” EnCap Flatrock said in a November interview with Oil & Gas Investor.

Project types include natural gas gathering, treating, compression, processing and storage operations; crude oil gathering and transportation; natural gas liquid fractionation, storage and transportation; water handling and disposal, and carbon dioxide gathering, transportation and sequestration.

In one deal disclosed last July, EnCap Flatrock Midstream committed $150 million to Isis Energy LLC, a recently launched specialist in  transportation, storage and distribution of crude oil and related products. Isis Energy aims to draw business from producers, refiners, traders and other marketers and suppliers by providing rail and waterborne services in the United States and Canada.

No stranger to the fundraising trail, EnCap closed EnCap Energy Capital Fund IX LP, its flagship energy fund, at its $5 billion hard cap, in February 2013.