Meritage Midstream and Arch Coal to Form Joint Venture

  Meritage Midstream and Arch Coal to Form Joint Venture

Proposed JV Will Develop Crude Oil Terminal at Arch’s Black Thunder Mining
Complex In Wyoming’s Powder River Basin

Business Wire

GOLDEN, Colo. & ST. LOUIS -- May 15, 2013

Meritage Midstream Services II, LLC (“Meritage”) and Arch Coal, Inc. (NYSE:
ACI) (“Arch”) announced today that the companies have executed a letter of
intent to create a joint venture. The new entity, to be called Black Thunder
Terminal, LLC, will develop a rail terminal to provide crude oil handling,
storage, rail loading and marketing services to producers in Wyoming’s Powder
River Basin and downstream refiners.

Arch will contribute reclaimed land, rail switching and loop and other
existing infrastructure assets at its Black Thunder mining complex in Campbell
County, Wyoming. Meritage will contribute capital and will build and operate
the crude oil terminal on property east of Arch’s active operations and
located near the basin’s crude oil production activity. Meritage will own the
majority interest in Black Thunder Terminal, LLC.

Because much of the required rail infrastructure is already in place, early
stage crude oil transloading operations from inbound trucks to outbound trains
are expected to begin at Black Thunder as early as September 2013. As demand
from producers and refiners warrants, the Black Thunder Terminal will have the
ability to increase outbound shipping capacity from 10,000 barrels per day in
the initial phase to 120,000 barrels of crude oil per day via outbound unit
train. Significant acreage is available for further expansions. The terminal
will be served by BNSF Railway Company.

“This is an exciting day for both companies as well as the Powder River Basin.
With an ideal land position and significant infrastructure already in place at
its Black Thunder mine, Arch is the perfect partner for Meritage on this
project,” said Meritage Midstream chairman and CEO Steve Huckaby. “We’re
excited this joint venture will provide crude oil producers in the Powder
River Basin with the optionality they need to bring their products to multiple
markets. This is a natural, common-sense and forward-thinking partnership that
will produce a positive outcome for both companies and their customers and
investors – as well as the region and the country.”

“We’re pleased to welcome Meritage Midstream to the Black Thunder mining
complex. This joint venture will allow us to further optimize our assets and
unlock the value of our existing infrastructure without any impact to our coal
loading operations,” said Paul A. Lang, executive vice president and COO of
Arch Coal. “This JV is a great fit for Arch. Our Black Thunder complex is
ideally situated in the PRB, the required infrastructure and logistics are in
place, and we already have a strong working relationship with the Meritage

The Powder River Basin is one of the most resource-rich areas of the United
States, with massive reserves of coal and crude oil. The U.S. Geological
Survey (USGS) estimates that the Powder River Basin contains approximately 1
billion barrels of remaining recoverable oil.

“The Powder River Basin has been the largest coal-producing region in the
country for many years and currently accounts for approximately 40 percent of
U.S. coal production. Now new drilling technologies are being applied to
legacy oil fields in the Basin, allowing operators to expand their drilling
programs,” Huckaby said. “Approximately 25 rigs are operating in the region,
more than 430 horizontal drilling permits were issued in the Powder River
Basin in 2012, and 222 have been issued thus far in 2013. What the basin lacks
is sufficient pipeline and rail infrastructure at the right location to move
crude oil and condensate to the highest value markets.”

The proposed joint venture between Arch Coal and Meritage is subject to
customary approvals, which the companies expect to receive in three to six

About Meritage Midstream Services

Headquartered in Golden, Colo., Meritage Midstream provides oil and gas
producers with a full complement of midstream services. Capabilities include
the gathering, treating, processing and handling of crude oil, natural gas,
natural gas liquids, condensate and produced water. The company’s senior
management team has more than 200 years of collective experience in the oil
and gas midstream business. Meritage is backed by equity commitments from
Riverstone Holdings LLC. For more information visit

About Arch Coal

U.S.-based Arch Coal, Inc. is one of the world’s top coal producers for the
global steel and power generation industries, serving customers in 25
countries on five continents. Its network of mining complexes is the most
diversified in the United States, spanning every major coal basin in the
nation. The company controls a 5.5 billion-ton reserve base of high-quality
metallurgical and thermal coals, with access to all major railroads, inland
waterways and a growing number of seaborne trade channels. For more
information, visit

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TEN|10 Group for Meritage Midstream
Casey Nikoloric, 720-524-8832
Mobile: 303-507-0510
Arch Coal (NYSE: ACI)
Kim Link, 314-994-2936
Communications Director
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