February 15, 2018 [My San Antonio] - San Antonio-based midstream investment fund EnCap Flatrock Midstream is committing $400 million to a new crude oil infrastructure development company.
EnCap, which helps fund midstream oil and gas investments such as pipelines and storage terminals, committed the funds to Sugar Land-based Lotus Midstream, which was formed in January by former executives from Sunoco Logistics to develop new crude oil gathering and transportation pipelines.
Lotus CEO Mike Prince said he retired from the midstream industry in the summer of 2017 but decided to return soon after. Prince and his team founded Lotus in January.
Prince says the midstream industry, which has been dominated by master limited partnerships or MLPs for years, has been embracing the use of private equity firms.
“Cost of capital is really important right now,” Prince said. “It’s not to say that all MLPs have a high cost of capital or are highly leveraged but majority of the larger ones are. The private equity route provides a great opportunity and a lower cost of capital to enter the space.”
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