Differential Equations: The Rangeland Energy deal and the big picture

November 6, 2012
Forbes.com

Yesterday, Rangeland Energy, a small midstream oil and gas company backed by EnCap Flatrock, announced its sale to Inergy Midstream (NYSE:NRGM), a Kansas City-based master limited partnership, for a largish sum of $425 million.

No big deal, right? Not so fast.

The real story here has nothing to do with Rangeland’s EBITDA multiple, EnCap Flatrock’s ROI, or Inergy Midstream’s yield to unitholders. A deeper calculus drove this deal.

See, the oil and gas business in North America is not some monolithic, juggernautish exercise in capitalism but rather a highly competitive market where inefficiencies, and therefore, opportunities, still abound.

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