CHICAGO - Iowa Pacific Holdings (IPH) announced extensive upgrades to its Texas-New
Mexico Railroad (TNMR) subsidiary, a key rail line in the Permian Basin oilfield. TNMR has
experienced massive growth in rail carloads as a result of the vast expansion of oil and gas
drilling and production in the Permian Basin. IPH's recent sale of a rail line in Arizona has
resulted in the availability of substantial funds for capital spending on existing infrastructure,
facilities and equipment.
TNMR operates between a connection with the Union Pacific Railroad (NYSE:UNP) at
Monahans, TX and Lovington, NM, about 100 miles away. The line was built in the 1920's
when the Permian Basin oilfield was first developed. IPH has invested about $10 million in
track upgrades in the past two years, mostly for crossties and improvements to surface and
alignment. The new, multi-year program will cost over $20 million and will include installation
of new, heavier rail to support increased volumes of heavy cars of sand, crude oil, and other
oilfield commodities. It will also include upgrades to TNMR's locomotive fleet, and a new
locomotive maintenance facility to be constructed in Eunice, NM. TNMR's carloads have
tripled in 2011 from 2010, and are currently running at an annual rate of 7,000 cars per year.
New customers coming on stream in 2011 and 2012 will result in another tripling of carloads to
21,000. In addition, a proposed crude oil unit train facility is under development, and could add
another 30,000 annual carloads to the railroad as early as 3rd quarter 2012.
"We are investing in this crucial link now in order to ensure we are able to maintain the excellent
rail service we are providing to the major oilfield services companies as they grow their business
with us," said Steve Gregory, Executive Vice President Marketing for IPH. "Also, we are
working to develop anexpanded switching facility at Monahans to improve the flow of traffic .
This represents a major commitment for us in the Permian Basin, and we are making these
investments as a result of comparable investments made by our customers in new shipping
facilities attached to our rail line. New developments in drilling technology have re-energized this oilfield, and our customers are telling us rail traffic is solid for at least a ten-year period. We expect to continue to provide timely and consistent service for these critical commodities."
IPH's real estate department continues to work with a number of customers looking to locate or expand facilities on the TNMR. "So far this year several customers have purchased or leased property adjacent to the TNMR," stated Todd Cecil, Vice President of Real Estate for IPH. "We are presently working with over a dozen additional customers looking to locate in Monahans or Kermit, Texas, or in the New Mexico towns we service including Eunice, Hobbs and Lovington. Fortunately, there are a number of excellent sites available with good highway access, so we believe we will be able to accommodate everyone who needs rail access in the Permian Basin."
"The timing of our sale of Arizona Eastern Railway to GWI was remarkable, given the rapidly expanding need for rail service in the Permian Basin," said Ed Ellis, President of IPH. "We have a strong record of reinvesting in the rail properties operated by our companies, and our investment in the TNMR will continue to grow alongside customer investment."
Iowa Pacific is a privately-held, Chicago-based operator of six US railroads, and manages two UK rail lines and other rail-related businesses.