Ironhorse Resources

Ironhorse Resources has built a legacy based on seeking opportunity. After waiting patiently for one of its short line railroad properties to return to viability, Ironhorse is now seeing a mass of activity at its Gardendale Railroad in Gardendale, Texas.

“My father started Ironhorse in 1989 and acquired a few small railroad operations,” Executive Vice President Matt Cundiff says. “One was Gardendale, at the time called Crystal City Railroad, acquired from Missouri Pacific. In the early 1990s, it lost its viability so we abandoned and sold 49 of the 50 miles, maintaining ownership of the connecting interchange track and railroad right-of-way. Then we started getting calls a few years ago about the track as the Eagle Ford Shale play began to heat up and new pipeline projects came into place.”

Today, Ironhorse is headquartered in O’Fallon, Ill. and the parent company of a number of operating companies. Its subsidiaries are five short line railroads, two transload facilities and two trucking companies.

Fertile Garden
When Ironhorse recognized the growing excitement about the Eagle Ford Shale development, it established an agency agreement with Union Pacific Railroad for the interchanging of railroad cars. The company then went into an acquisition strategy. It had only the 100-foot right-of-way, so it needed to acquire some acreage. Ironhorse negotiated a deal with a neighbor to the north for an 80-year lease at the company’s option for adjacent 100 acres. This allowed the company to widen Gardendale’s right-of-way to 900 feet. Ironhorse also replaced the old 1,600 feet of track.

Customers in the oil and gas industry such as frac sand and crude oil companies started lining up for subleases. Ironhorse worked on designing customized solutions and developing Gardendale as fast as possible. It acquired another 150 acres adjacent to the site, expanded and developed an interchange yard and installed backbone track for customer support.

Since 2010, Ironhorse has gone from zero customers at Gardendale to nine and created 170 full-time jobs. Its locomotive fleet, which was also at zero, is now up to five. Operations have grown from 15 acres to 270 acres of property served, and it has grown from 1,600 feet of track to 28 miles of track. Most of the track is yard track for serving customers. Whereas annual carloads stood at 395, they are projected to reach 22,000 in 2013.

At Gardendale and beyond, Cundiff is very proud of what Ironhorse’s portfolio does to meet customer expectations. If a customer needs an extra switch or a line moved around, Ironhorse’s people are there on site and can help move cars and provide additional services to help customers succeed.

“Another aspect of the Gardendale site as opposed to other sites is that some customers move 100-car trains while other customers receive product in what is called manifest service,” Cundiff says.

On the Lookout
Clearly, the oil and gas industry in the Eagle Ford Shale has been crucial to Gardendale’s rebirth. Cundiff is confident that the industry will remain strong for many years to come, which will help Gardendale retain its viability.

“One of the unique things about the Eagle Ford Shale is that it sits on oil, wet gas and dry gas,” Cundiff says. “It has flexibility depending on the market so we see the future of the industry as strong in this region. We continue to grow and have plans to add a third phase of acreage, and we are looking for new investment above and beyond the nine customers we have.”

To continue to support its oil and gas customers, Ironhorse will ensure its track is wesll maintained, which in the short term isn’t a major issue because it has laid so much new track in recent years. It will also add locomotives and acquire additional acreage as customer needs dictate. “We are positioned to make investments to support the industry in the region if the market demands it,” Cundiff says.

Cundiff also believes Ironhorse can take its experience with the oil and gas industry in Gardendale and expand it to other locations. Ironhorse’s Rio Valley Switching Company is well positioned to support development in another part of the Eagle Ford Shale should it materialize, while Southern Switching Company is positioned to support the industry.

“Our plan is to continue to work closely with Union Pacific and stay ahead of the game from an investment perspective,” Cundiff says.