Caiman Energy’s Lafield: Private Equity Filling the Gathering Gap

Gas Processor's Report

One of the most obvious effects that the economic recession in the United States has had on natural gas producers is in the downturn of the end-user market, which has cut down on demand. However, producers also face headwinds due to the downturn in the public markets that have caused master limited partnerships (MLPs) to withdraw from building some of the infrastructure necessary to fully develop some of the emerging shale plays. This situation has presented an opportunity for private equity to step into the midstream.

“The MLP structure has faced difficulties over the past year in putting significant capital in brand new facilities, especially the developing shale plays where you have to take risks alongside producers. It’s very difficult for them [MLPs] since they can’t pay distributions immediately off capital that won’t generate cash flow immediately. The MLP structure is great, but everything has its purpose,” Jack Lafield, president and chief operating officer of Caiman Energy told Gas Processors Report.

Lafield, along with his partners Danny Thompson and Rick Moncrief, formed Caiman Energy last February with an eye towards using the company’s equity commitment from EnCap Energy Infrastructure Fund LP to build gathering systems and other midstream infrastructure in the Haynesville and Eagle Ford.

“We saw the opportunity to secure private equity that would allow us to align ourselves closer with the producers as they execute on their drilling plans. We’re back into the traditional gathering and processing mentality where we’re going to conduct a very educated study of the play, that will help us gain more confidence in taking some risks when building out new systems,” he said.

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