Houston crude-by-rail company files for $150 million IPO

HOUSTON – Houston rail terminal operator USD Partners told regulators Friday it plans to make a $150 million Wall Street debut later this year as U.S. oil companies turn to trains to transport crude.

It owns a crude-by-rail terminal that starts in Alberta, Canada and can daily load up two trains, each with 120 oil-laden railcars, and send them to San Antonio and West Colton, California. Combined, its trains can carry up to 33,000 barrels per day.

It’s one of several crude-by-rail companies that have seized on the oil industry’s need to move oil from major U.S. shale plays or Canadian heavy crude fields to North American markets and buyers.

“High-growth production areas in North America are often located at significant distances from refining centers,” the company said in regulatory filings. The North American rail network “has strategically positioned rail as a long-term alternative transportation solution to the growing and evolving energy infrastructure needs.”

A subsidiary of privately held energy infrastructure company USD Group, the firm is planning to structure itself as a master limited partnership, a tax-advantaged corporate structure that typically pays investors most of its cash and tries to constantly grow its cash-generating assets.

USD Partners said it will initially pay 98 percent of its cash to owners of its securities, called units, which trade like shares. It made $9.2 million in net cash last year, up from $1.8 million the year before, according to regulatory filings.

The company didn’t say how many units it would sell, or for what price. It said it will trade under the symbol “USDP” on the New York Stock Exchange. The initial public offering is expected later this year.