OGFJ: What opportunity did you see in the non-op E&P market that pushed you to expand outside of your midstream control equity focus? As a middle market private equity firm, we feel these complementary strategies provide us a strong and sustainable competitive advantage. This two-prong strategy, midstream and upstream, can be used as offensive weapons for us. And in February of this year, we closed on our second E&P fund for $218 million, which will have the same investment methodology. So we have a lot of asset-level exposure and information per dollar invested. Our first non-operated E&P fund raised $120 million, and we have more than 200 wells that we are partnering in. We get the added benefit of exposure and ownership in different wellbores across multiple basins. Because of the numerous delineated infill locations in North America, we can design interesting vehicles and cherry-pick the best areas behind the best operators. While we have historically done traditional control private equity in E&P, today we prefer non-operated working interest opportunities. The upstream space is a little different. We target basins where the geologic opportunity makes sense economically and where we can underwrite a deliverable value-add proposition. But generally it's always control private equity, and it's been that way since we started. It involves backing teams to de-bottleneck areas by providing growth capital for solutions-oriented midstream developments. Because of the opportunity we saw in the market, we moved from a singular philosophy of backing management teams with control equity in the midstream and upstream industries, to adding an additional investment alternative of purchasing non-operated upstream investments.ĮDWARD HERRING: Our midstream strategy is pretty straightforward. OGFJ: So what's your ultimate strategy and where are you seeing opportunity in today's market?ĭOWNIE: Over time, our investment strategy has evolved. We've actually worked together for more than 18 years - the last 13 of which have been exclusively in energy. Edward and I co-founded Tailwater in January 2013 after working at a large generalist private equity firm where we focused on energy investments. Two of the four funds are focused on midstream control equity, and the other two funds are focused on non-operated working interest upstream investments. JASON DOWNIE: Tailwater invests exclusively in energy and has $1.7 billion of private capital in four funds. Can you tell us about the firm and how you started? Your investments are predominately focused on midstream companies and upstream projects. OIL & GAS FINANCIAL JOURNAL: Tailwater Capital is a private equity firm totally dedicated to the energy industry. Fritz Brinkman, president and CEO of Align Midstream Partners, also participated in the interview. PRIVATE EQUTY FIRM INVESTS IN MIDSTREAM AND IN NON-OPERATED WORKING INTEREST UPSTREAM ASSETSĮDITOR'S NOTE: We recently spoke with Tailwater Capital's co-founders, Jason Downie and Edward Herring, about their thoughts on the role of private capital in the current low-price environment.

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