News

• Initial plans for Tall Oak’s STACK System call for more than 150 miles of gas gathering pipeline, multiple compressor stations and a state-of-the-art cryogenic processing plant with the capacity to process 100 million cubic feet of natural gas per day (MMcf/d).
• Felix Energy, LLC and PayRock Energy, LLC have made long-term acreage dedications to Tall Oak’s STACK System. Together, the two dedications total more than 100,000 net acres.
• The new gathering and processing system is Tall Oak’s second in Oklahoma and will create 30 new jobs in Kingfisher and Payne counties.
• In Q3 2015 Tall Oak’s total cryogenic processing capacity in the Mid-Continent will reach 175 MMcf/d across two systems with a total of 400 miles of gathering pipeline.

OKLAHOMA CITY – January 6, 2015 – Tall Oak Midstream, LLC (“Tall Oak”) announced today that initial natural gas gathering operations are underway on the Tall Oak STACK System. The company’s new gas gathering and processing system is designed to serve producers in Oklahoma’s STACK play. STACK is an acronym for the Sooner Trend, the Anadarko Basin and Oklahoma’s Canadian and Kingfisher counties. The STACK play sits northwest of Oklahoma City and targets the Woodford and Mississippian-age shales.

Tall Oak is already gathering gas on its STACK System for multiple customers. The company expects to commission the system’s first processing plant, named the Chisholm Plant, in the third quarter of 2015.

The Tall Oak STACK System serves producers targeting the STACK play’s liquids-rich pay zones including the Upper and Lower Mississippian Meramec, Osage, Woodford Shale and Hunton formations. The system will also have the capacity to serve production from the Woodford and Springer shale plays and other portions of the South Central Oklahoma Oil Province, known as the SCOOP. Tall Oak’s STACK System is anchored by long-term gathering and processing agreements with Felix Energy, LLC (“Felix”) and PayRock Energy, LLC (“PayRock”). Together, Felix and PayRock control more than 100,000 net acres in the STACK play. Both companies continue to expand their acreage positions and pursue aggressive regional development programs. Tall Oak is also in discussions with other producers in the area to bring gas onto the STACK System.

“The team at Tall Oak Midstream has already demonstrated a deep understanding of producer needs and a strong ability to execute. We have great confidence that Tall Oak will be a very effective midstream provider for Felix Energy. We look forward to a long, productive relationship,” said Felix Energy CEO Skye Callantine.

“We are very impressed with the superior service that Tall Oak offers. We were looking forward to timely connectivity, strong recovery rates, and solid performance. The Tall Oak team can deliver on all fronts,” said PayRock CEO Rick Kirby.

“We are excited to see the impressive drilling results that Felix and PayRock are consistently delivering, and we are committed to quickly expanding our STACK system to serve producers’ growing needs across this play and the entire Mid-Continent,” said Tall Oak CEO Ryan Lewellyn. “Strong results coupled with lower drilling costs make the Mid-Continent a very attractive place to operate, even in the current pricing environment. We feel very positive about the region’s future.”

STACK System Specifics
Tall Oak’s initial STACK System will consist of 150 miles of high- and low-pressure natural gas gathering pipeline, multiple compressor stations and the Chisholm Plant, a state-of-the-art cryogenic processing plant with the capacity to process 100 million cubic feet of natural gas per day (MMcf/d). Located in Kingfisher County, the Chisholm Plant site will be able to accommodate multiple expansions that could bring total processing capacity to 400 MMcf/d to serve expanding production.

Tall Oak is also building a natural gas gathering and processing system to serve producers in Oklahoma’s Central Northern Oklahoma Woodford play, known as the CNOW play. Tall Oak’s CNOW System consists of 250 miles of gas gathering pipeline and the Battle Ridge Plant, a 75 MMcf/d cryogenic processing facility with nitrogen rejection capabilities located in Payne County, Oklahoma. Tall Oak expects to bring the plant into service at the end of this month.

Rapid Growth
Tall Oak was founded in February 2014. In the third quarter of 2015, just 18 months after its formation, Tall Oak’s total cryogenic processing capacity in the Mid-Continent is expected reach 175 MMcf/d across two systems with a total of 400 miles of gathering pipeline. To support the CNOW and STACK systems, Tall Oak plans to open field offices in Payne and Kingfisher counties and expects to hire approximately 30 new employees.

“There is a lot of excitement and activity in the CNOW, the STACK and the SCOOP, three of the most exciting shale plays in the country. We’ve made it a priority to move quickly in these areas, putting gathering and processing assets in place so our growing customer base has reliable access to the best markets. We’re very pleased with the way producers have responded to our approach,” said Tall Oak Chief Commercial Officer Carlos Evans. “Tall Oak is a fast-growing midstream provider in the Mid-Continent, and as Oklahomans, we’re very proud to be creating value and jobs in our home state.”

Financing
Today’s announcement follows recent news that Tall Oak has secured a $100 million credit facility, which can be expanded to $150 million, bringing the company’s total financing to more than half a billion dollars. In addition to the credit facility, Tall Oak is supported by $400 million in private equity commitments from EnCap Flatrock Midstream and Tall Oak’s management team. Five banks participated in the credit facility with Capital One Securities Inc. and Compass Bank acting as joint lead arrangers and Amegy Bank, BancFirst and Bank of Oklahoma serving as additional participants.

About Tall Oak Midstream, LLC
Formed in early 2014 and based in Oklahoma City, Tall Oak Midstream is an innovative midstream company led by its four founders: Ryan D. Lewellyn, CEO; Max J. Myers, CFO; Carlos P. Evans, CCO; and Lindel R. Larison, COO. Tall Oak is dedicated to bringing a fresh perspective to serving oil and gas producers with a full suite of midstream services. Core capabilities include natural gas gathering, compression, treating and processing; crude oil gathering and transportation; condensate and water handling; and product marketing solutions. The company is currently focused on building out two natural gas gathering and processing systems in Oklahoma. www.talloakmidstream.com

About EnCap Flatrock Midstream
EnCap Flatrock Midstream provides value-added private equity capital to proven management teams focused on midstream infrastructure opportunities across North America. The firm was formed in 2008 by a partnership between EnCap Investments L.P. and Flatrock Energy Advisors. Based in San Antonio, Texas, and Edmond, Oklahoma, EnCap Flatrock is led by Managing Partners William D. Waldrip, Dennis F. Jaggi and William R. Lemmons Jr. The firm manages investment commitments of nearly $6 billion from a broad group of institutional investors. EnCap Flatrock is currently making commitments to new management teams from EFM Fund III, a $3 billion fund. www.efmidstream.com

About Felix Energy, LLC
Felix Energy is a Denver-based private exploration and production company focused on projects in numerous onshore domestic basins. The company’s leadership team has directed thousands of unconventional horizontal wells across numerous basins with the largest and best operators in the industry. Felix is active in all phases of the E&P value chain, including acquisition, exploration, development and production. Felix is backed by equity commitments from EnCap Investments L.P., private investors and management. www.felix-energy.com

About PayRock Energy, LLC
PayRock Energy is a private, independent oil and natural gas exploration and production company based in Oklahoma City. Formed in 2012, PayRock is led by an experienced management team with diverse geological, engineering, operational and business expertise. The company is focused on the acquisition, exploration, and development of oil and gas reserves in the STACK play across Canadian and Kingfisher counties, Oklahoma. PayRock is backed by EnCap Investments L.P. and PayRock’s management team. www.payrockenergy.com

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