Inergy Midstream LP (NYSE: NRGM) and Rangeland Energy LLC have reached a deal wherein Inergy will buy out Rangeland for $425 million in cash.
Through the deal, Inergy will gain access to the rapidly developing Bakken shale in North Dakota, particularly Rangeland’s Colt Hub. The hub, which has a 190,000 barrel-per-day capacity, is a key delivery point for Bakken Shale crude.
This is Inergy’s first significant crude project and its biggest deal ever. Inergy is based in Kansas City and owns natural gas and gas liquids storage and transportation facilities and infrastructure across North America.
North Dakota has seen rising oil output, from below 100,000 bpd in 2005 to 701,000 bpd this August. Oil from the fields tends to trade at a discount due to the lack of pipelines and transportation routes for crude to reach refineries.
But Rangeland’s hub in Williams County is key for transportation. It loads oil onto trains for shipment and includes a 21-mile pipeline connected to various systems owned by Enbridge (TSE: ENB) and Tesoro (NYSE: TSO).
Inergy is selling $225 million in common units in a private placement to help finance the deal. The dealis projected to close some time in December.
Inergy shares rose to $23.76, or 4.6 percent, on Monday afternoon, and shares were up 3.07% again on Tuesday. Inergy has gained over 27% year to date.