Bracewell

Texas is saturated with oil and gas , but the infrastructure to carry the resources from the field to the market are overloaded . Alan Rafte has spent much of the past three years figuring out ways that clients in the midstream oil and gas industry can raise the capital for new , very expensive pipeline projects . Rafte has been involved with 10 of these new projects and has employed a novel method of financing : special purpose acquisition companies , or SPACs , that normally raise money through initial public offerings for the sole purpose of buying other entities . Rafte put a twist on the concept to help a major client obtain a needed infusion of cash .

In 2018 , Rafte represented Apache Corp . in the creation of a $ 3.5 billion Permian midstream company with the help of a SPAC , Kayne Anderson Acquisition Corp . But Apache was not swallowed up in the deal . It contributed its Alpine High midstream assets to Altus Midstream , a newly formed partnership jointly owned by Apache and Kayne Anderson . “ We got some cash and a whole lot of shares and a public vehicle , which allows us to raise more cash and monetize the position over time .”

Public markets aren ’ t keen on energy companies , sensing an untenable amount of risk . Yet , Rafte sees “ unbelievable amounts of money ” coming into midstream companies to finance new construction . “ There is a lot of oil and gas coming online , so much that it overwhelms the existing infrastructure and new infrastructure has to get built in order for it to be able to come to market .” Rafte thinks this wave of investment is likely to continue , at least in the short term . But energy prices are notoriously volatile , and “ these low prices are straining everybody .”

Reprinted with permission from the October / November 2019 edition of Texas Lawyer © 2019 ALM Media Properties , LLC . All rights reserved . Further duplication without permission is prohibited . For information , contact 877-257-3382 or reprints @ alm . com . # TXL-08152019-411630