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Rangeland Backers Form Another Company Focused on Resource Plays

Newly formed Rangeland Energy III LLC, with $300 million of funding from EnCap Flatrock Midstream and management, is looking for midstream deals across North American resource plays. Meanwhile, West Texas projects of a sibling company are advancing.

Rangeland Energy II LLC, the entity under which Rangeland is currently operating in the Permian Basin’s Delaware Basin, will continue to focus on the construction, operation and expansion of its RIO System, which provides midstream and logistics services to support the production of crude oil and condensate in Southeast New Mexico and West Texas.

The Rangeland III financing is the third commitment EnCap Flatrock has made to a Rangeland company, bringing the total to more than $600 million since Rangeland's formation in late 2009. The first Rangeland entity established the COLT System, a crude oil terminaling and pipeline system in the Bakken Shale. That company was acquired in late 2012 by Inergy Midstream LP (now Crestwood Midstream Partners LP). Rangeland II was formed in early 2013 with an initial $200 million equity commitment from EnCap Flatrock and Rangeland's founders.

Additionally, Rangeland said its RIO System Hub has been completed and commissioned, and construction has begun on the RIO Pipeline. The RIO System is designed to serve Delaware Basin crude production. The RIO Hub is a 300-acre rail facility near Loving, NM, in the center of the basin's drilling and production activity. The terminal provides services for outbound crude oil and condensate and inbound frack sand.

The hub provides frack sand suppliers with unit train unloading, silo storage and truck loading facilities for moving large quantities into the Delaware Basin. Initial rail-to-truck transload service began in November 2014. To date, the RIO Hub has received 14 unit trains and additional manifest railcars, and 175,000 tons of frack sand have been distributed to the region. Rangeland commissioned 26,000 tons of silo storage capacity in July.

"Demand continues to be strong in the Delaware Basin, and Rangeland expects volumes to increase significantly in the months ahead," the company said. As a result, Rangeland plans to expand the RIO Hub to accommodate more than 1 million tons of frack sand per year. Rangeland also is working with crude oil and condensate customers regarding the installation of truck unloading facilities, tankage and storage services and rail and pipeline connectivity.

The RIO Pipeline, now under construction, originates at the RIO State Line Terminal at the Texas-New Mexico border near Mentone, TX. The terminal will serve as a crude oil gathering hub by providing storage tanks and truck unloading facilities. The RIO Pipeline will terminate at the RIO Midland Terminal, which will provide tankage and connections to various terminals and interstate pipelines serving Cushing and Gulf Coast markets. Rangeland has executed contracts with four shippers and expects the pipeline and the two terminals to enter service in May. The RIO Pipeline will have a capacity of more than 85,000 b/d.

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