EnCap Flatrock supplies $300M to form Rangeland Energy II

Rangeland Energy has secured an equity commitment of $300 million from EnCap Flatrock Midstream and management to support the formation of a new entity, Rangeland Energy III LLC. Rangeland III plans to pursue new midstream opportunities in resource plays across North America.

The $300 million equity commitment is the third commitment EnCap Flatrock has made to a Rangeland company, bringing the total to more than $600 million since Sugarland, TX-based 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. Rangeland Energy II, the entity under which Rangeland is currently operating in the Permian’s Delaware Basin, continues 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.

RIO System update
The RIO System is a multipart system designed to support the production of crude oil and condensate in the Delaware Basin. The RIO Hub is a 300-acre rail facility located near Loving, New Mexico, in the center of the basin’s drilling and production activity. The terminal provides services for outbound crude oil and condensate and inbound frac sand. The hub, which was fully commissioned in July 2015, provides

frac 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 approximately 175,000 tons of frac sand have been distributed to the region. Rangeland commissioned 26,000 tons of silo storage capacity in July. Rangeland plans to expand the RIO Hub to accommodate more than 1 million tons of frac 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.

Now under construction, the RIO Pipeline originates at the RIO State Line Terminal located at the Texas-New Mexico border near Mentone, Texas. 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 come into service in May 2016. The RIO Pipeline will have a capacity of more than 85,000 barrels per day.

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