Caiman Strikes $800M Deal on Infrastructure

July 12, 2012

MOUNDSVILLE - Processing and transporting Marcellus and Utica shale gas is so lucrative that Caiman Energy is getting back in the game with an $800 million deal to build new infrastructure in Ohio and Pennsylvania.

"We're very proud of the expansive system we built in the Marcellus and the great relationships Caiman developed with producers and the people of West Virginia. We look forward to continuing our work in new regions, especially the Utica Shale," said Jack Lafield, president and chief executive officer of Dallas, Texas-based Caiman.

In April, Caiman sold nearly all of its Marcellus Shale assets - most substantially the processing plant located at Fort Beeler along U.S. 250 between Moundsville and Cameron - to Tulsa, Okla.-based Williams Partners for $2.5 billion. Now Lafield and his partners, including Williams, are back at it with a deal to build $800 million in additional piping and processing commitments.

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"The development of this vast, liquids-rich resource will require similar midstream infrastructure as we built out in the Marcellus," said Lafield.

"Working alongside Williams and our other equity partners - the active exploration and production companies, and the people living in this region - we will draw on our important experience in the Marcellus and our proven ability to execute with integrity and exceptional results."

Companies like Caiman and Williams - along with Dominion Resources and MarkWest Liberty - are known in the natural gas and oil industry as processors or "midstreamers." This is because these processing companies accept the "wet" Marcellus and Utica shale gas that drillers like XTO Energy, Gastar Exploration, Chesapeake Energy or Chevron draw out of the ground.

This gas contains ethane, propane, butane, pentane and other liquid substances, in addition to the "dry" methane. At processing plants, midstreamers separate the methane from the other substances so that the methane can be sold by utility companies, such as Mountaineer Gas or Columbia Gas. During fractionation, the natural gas liquids and other substances are separated from each other. These separated gas products are then ready for marketing, with the ethane possibly going to a cracker plant.

"With this new venture, we can leverage the commercial relationships and success of Caiman's management and investors, along with Williams Partners' long experience in successfully constructing and reliably operating large-scale midstream infrastructure," said Alan Armstrong, chief executive officer of Williams Partners.

As Caiman makes its moves, MarkWest is building a $500 million processing complex spanning Harrison and Noble counties in eastern Ohio, while Dominion continues building its $500 million facility along the Ohio River at Natrium.

Chesapeake and M3 Midstream are working to build $900 million worth of natural gas gathering and compression facilities in Harrison and Columbiana counties in Ohio.

Caiman Energy has also made some personnel moves under Lafield's direction. Richard D. Moncrief has assumed the role of president of the company and will remain its chief operating officer. Stephen L. Arata has been promoted to executive vice president and will continue to serve as chief financial officer. Tony Strehlow, Caiman's chief accounting officer, has also been promoted to senior vice president. Scott Williams has been named senior vice president of commercial development, while Daniel Wentworth has been promoted to senior vice president of engineering and operations.

"There isn't a more experienced and skilled management team in the midstream sector. I am very proud of what this group accomplished in the Marcellus Shale and, with the addition of Scott Williams, we are very well positioned to create a similar success story serving producers in the Utica Shale," Lafield said.



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