ND crude-by-rail operator mulls asset sales

OREANDA-NEWS. Dakota Plains is considering the sale of some or all of its assets — including by its 55,000 b/d Bakken crude loading Pioneer Terminal at New Town, North Dakota — as shippers in the region reel from lower crude prices.

The board of directors has formed a committee to explore various options, including "strategic combinations, continuing to hold and operate the Pioneer Terminal, divestiture of some or all of the assets, recapitalization and other similar transactions."

The company also announced new independent directors Steven Blank and Adam Kroloff have joined the board, while directors Terry Rust and Paul Cownie will resign effective 1 May.

Many firms have been cutting back on their crude-by-rail plans in the wake of a cutback in drilling following the 60pc drop in crude prices since June. Canadian Pacific Railway cut its 2015 crude-by-rail traffic forecast by 30pc last month, while Union Pacific Railroad said it expected the business to not grow as it did last year. Kansas City Southern (KCS) railroad system said it expects to see its crude-by-rail volumes grow, however, as it moves more Canadian crude to the US Gulf coast.

In December, Dakota Plains said it had "significant growth opportunities even during the current low oil price environment" because of its focus on term contracts. A new storage tank expansion was set to bring capacity up to 80,000 b/d this summer. Chief executive Craig McKenzie told analysts last fall that the company's goal was to gradually ramp up terminal capacity to 160,000 b/d.

Also in December, the company bought out former rail terminal partner Petroleum Transport Solutions for \$43mn.