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02.11.2017 21:01:00
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Rice Energy Reports Third Quarter 2017 Results
CANONSBURG, Pa., Nov. 2, 2017 /PRNewswire/ -- Rice Energy Inc. (NYSE: RICE) ("Rice Energy") today reported third quarter 2017 financial and operating results. Highlights include:
- Net production averaged 1,440 MMcfe/d, a 6% increase from second quarter 2017
- Rice Midstream Holdings LLC ("RMH") gathering throughput averaged 1,438 MDth/d, a 22% increase from second quarter 2017
- Record low lease operating expense of $0.11 per Mcfe, a 21% decrease from second quarter 2017
- Net loss attributable to common stockholders of $107.1 million, or $0.49 per diluted share
- Reported Adjusted EBITDAX(1) of $233.9 million
- Exited the quarter with low leverage(1) of 1.4x
- Closed the sale of the Barnett assets for $175 million(2)
Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "On behalf of the Rice family and our board, I want to take this opportunity to express our gratitude to our employees and shareholders for their unwavering dedication to Rice Energy's mission of becoming the paradigm for oil and gas companies of the shale generation. We are proud of the shareholder value that we have created while operating within our core values of stewardship, innovation, seeking excellence and teamwork."
Mr. Rice continued, "Our success is a testament to the core assets that we have acquired and developed with our shalennial(3) team and I am highly confident that our operational momentum, as evidenced by our record third quarter results, will meaningfully contribute to EQT's future success. We are excited to combine our core assets with EQT's to create one of the most complete energy companies in the United States and derive even more long-term value for our shareholders."
1. | Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDAX, Further Adjusted EBITDAX and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Further Adjusted EBITDAX. | |
2. | On September 29, 2017, Rice Energy received $141 million associated with the closing of the sale of the Barnett assets, which reflects customary purchase price adjustments attributable to a January 1, 2017 effective date. | |
3. | Shalennial /SHālˈenēəl/ |
Special Meeting of Stockholders
We expect to hold a special meeting of stockholders in connection with the proposed merger with EQT Corporation (NYSE: EQT) ("EQT") on November 9, 2017 at 8:00 a.m. local time at Rice Energy's executive offices at 2200 Rice Drive, Canonsburg, PA 15317. Rice Energy stockholders of record at the close of business on September 21, 2017 will be entitled to receive notice of the special meeting and to vote at the special meeting.
Third Quarter 2017 Results
Consolidated Results | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||||||||
Operating revenues (in thousands) | $ | 365,282 | $ | 1,157,395 | ||||||||||||
Operating expenses | (in | ($ / Mcfe) | (in | ($ / Mcfe) | ||||||||||||
Lease operating(1) | $ | 14,392 | $ | 0.11 | $ | 54,336 | $ | 0.15 | ||||||||
Gathering, compression, transportation | 45,138 | 0.34 | 123,695 | 0.33 | ||||||||||||
Production taxes and impact fees | 6,179 | 0.05 | 19,011 | 0.05 | ||||||||||||
General and administrative(1) | 29,906 | 0.23 | 91,641 | 0.25 | ||||||||||||
Depreciation, depletion and amortization | 156,890 | 1.18 | 439,672 | 1.19 | ||||||||||||
(in | (per diluted | (in | (per diluted | |||||||||||||
Net loss attributable to common stockholders | $ | (107,092) | $ | (0.49) | $ | (79,382) | $ | (0.38) | ||||||||
Adjusted EBITDAX(2) | $ | 233,858 | $ | 710,175 | ||||||||||||
Adjusted net income(3) | $ | 11,706 | $ | 0.05 | $ | 85,481 | $ | 0.40 | ||||||||
Financial position (in millions) | As of September 30, 2017 | |||||||||||||||
Total liquidity(4) | $ | 1,648 | ||||||||||||||
Cash and cash equivalents | $ | 271 | ||||||||||||||
Long-term debt | $ | 1,803 | ||||||||||||||
Leverage(2) | 1.4 | |||||||||||||||
As of September 30, 2017, our liquidity position, excluding RMP, was $1,648 million comprised of $1,439 million of upstream liquidity ($187 million of cash on hand and $1,252 million revolver availability) and $209 million of RMH liquidity ($83 million of cash on hand and $127 million revolver availability). Our balance sheet remains strong with low leverage(2) of 1.4x.
1. | Excludes stock-based compensation expense of $0.1 million and $6.3 million attributable to lease operating and general and administrative expenses, respectively, for the three months ended September 30, 2017 and $0.5 million and $17.6 million is excluded in lease operating and general and administrative expenses, respectively, for the nine months ended September 30, 2017. |
2. | Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDAX, Further Adjusted EBITDAX and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Further Adjusted EBITDAX. |
3. | The above Adjusted net income per diluted share calculation is computed based on the weighted average number of diluted shares outstanding of 220,893,125 and 211,353,970 for the three and nine months ended September 30, 2017, respectively. |
4. | Excludes Rice Midstream Partners LP. |
E&P Segment Results | Three Months Ended | Nine Months Ended | |||||||||||||||||||
Production | |||||||||||||||||||||
Net production (Bcfe) | 132 | 370 | |||||||||||||||||||
Net production (MMcfe/d) | 1,440 | 1,356 | |||||||||||||||||||
Operated | 93% | 92% | |||||||||||||||||||
Operating revenues (in thousands) | |||||||||||||||||||||
Natural gas, oil & NGL sales | $ | 303,196 | $ | 1,008,922 | |||||||||||||||||
Other revenue | 11,200 | 29,179 | |||||||||||||||||||
Realized gain (loss) on derivative instruments | 25,642 | (1,522) | |||||||||||||||||||
Total operating revenues and realized loss on derivative instruments | $ | 340,038 | $ | 1,036,579 | |||||||||||||||||
Realized Pricing ($/MMBtu) | |||||||||||||||||||||
NYMEX Henry Hub price | $ | 3.00 | $ | 3.17 | |||||||||||||||||
Average basis impact | (0.76) | (0.51) | |||||||||||||||||||
FT fuel and variables | (0.08) | (0.08) | |||||||||||||||||||
Btu uplift (MMBtu/Mcf) | 0.12 | 0.14 | |||||||||||||||||||
Pre-hedge realized price ($/Mcf) | 2.28 | 2.72 | |||||||||||||||||||
Post-hedge realized price ($/Mcf) | $ | 2.47 | $ | 2.71 | |||||||||||||||||
Operating expenses | (in | ($ / Mcfe) | (in | ($ / Mcfe) | |||||||||||||||||
Lease operating(1) | $ | 14,419 | $ | 0.11 | $ | 54,458 | $ | 0.15 | |||||||||||||
Gathering and compression | 60,068 | 0.45 | 160,635 | 0.43 | |||||||||||||||||
Transportation | 35,795 | 0.27 | 103,038 | 0.28 | |||||||||||||||||
Production taxes and impact fees | 6,179 | 0.05 | 19,011 | 0.05 | |||||||||||||||||
Exploration | 5,042 | 0.04 | 16,160 | 0.04 | |||||||||||||||||
General and administrative(1) | 18,759 | 0.14 | 58,709 | 0.16 | |||||||||||||||||
Depreciation, depletion and amortization | 153,221 | 1.16 | 426,538 | 1.15 | |||||||||||||||||
Operating (loss) income (in thousands) | $ | (21,396) | $ | 29,338 | |||||||||||||||||
E&P capital expenditures (in millions) | |||||||||||||||||||||
Operated Marcellus | $ | 149 | $ | 352 | |||||||||||||||||
Operated Ohio Utica | 69 | 202 | |||||||||||||||||||
Non-operated Utica | 8 | 42 | |||||||||||||||||||
Total Drilling & Completion | 226 | 596 | |||||||||||||||||||
Land(2) | 35 | 139 | |||||||||||||||||||
Total | $ | 261 | $ | 735 | |||||||||||||||||
Financial position (in millions) | As of September 30, 2017 | ||||||||||||||||||||
E&P liquidity | $ | 1,439 | |||||||||||||||||||
Cash and cash equivalents | $ | 187 | |||||||||||||||||||
Long-term debt | $ | 1,407 | |||||||||||||||||||
E&P Operational Highlights | Three Months Ended | |||||||||||
Marcellus | Utica | Barnett | Total | |||||||||
Production (MMcfe/d) | 899 | 472 | 69 | 1,440 | ||||||||
Operational activity (net wells) | ||||||||||||
Drilled | 25 | 7 | — | 32 | ||||||||
Completed | 20 | 10 | — | 30 | ||||||||
Average lateral lengths | 7,750 | 11,000 | — | — | ||||||||
Appalachia net acres | 211,000 | 66,000 | — | 277,000 | ||||||||
During the quarter, we turned to sales three net Marcellus wells with an average lateral length of 6,600 feet and five net operated Utica wells with an average lateral length of 8,000 feet. In addition, we turned to sales four net non-operated Ohio Utica wells. Our third quarter development costs per lateral foot averaged $860 in the Marcellus and $1,150 in the Utica for wells drilled and completed.
1. | Excludes stock-based compensation expense of $0.1 million and $4.7 million attributable to lease operating and general and administrative expenses, respectively, for the three months ended September 30, 2017 and $0.5 million and $13.6 million is included in lease operating and general and administrative expenses, respectively, for the nine months ended September 30, 2017. |
2. | Excludes $36 million and $105 million of royalty purchases for the three and nine months ended September 30, 2017, respectively. During the first nine months of the year, we added approximately 11,000 royalty acres. |
RMH Segment Results (in thousands, except volumes) | Three Months Ended | Nine Months Ended | |||||
Operating volumes (MDth/d) | |||||||
Gathering volumes | |||||||
Affiliate | 546 | 487 | |||||
Third-party | 892 | 709 | |||||
Total | 1,438 | 1,196 | |||||
Compression volumes | |||||||
Affiliate | 295 | 270 | |||||
Third-party | 235 | 242 | |||||
Total | 530 | 512 | |||||
Operating revenues | |||||||
Gathering | $ | 36,312 | $ | 89,185 | |||
Compression | 3,212 | 9,130 | |||||
Total | 39,524 | 98,315 | |||||
Total operating expenses | 10,554 | 29,413 | |||||
Operating income | $ | 28,970 | $ | 68,902 | |||
Capital expenditures (in millions) | $ | 60 | $ | 173 | |||
LP + IDR cash distributions received from RMP(1) (in millions) | $ | 9 | $ | 26 | |||
Financial position (in millions) | As of September 30, 2017 | ||||||
RMH liquidity | $ | 209 | |||||
Cash and cash equivalents | $ | 83 | |||||
Revolving credit facility | $ | 174 | |||||
Acreage dedication | 172,000 | ||||||
Third-party | 72% | ||||||
Second quarter gathering throughput averaged 1,438 MDth/d, which consisted of 1,093 MDth/d related to the operations of Rice Olympus Midstream ("ROM") and 668 MDth/d related to the operations of Strike Force Midstream, offset by an elimination of 323 MDth/d that is related to operations of both ROM and Strike Force Midstream.
1. | Net of 91.75% ownership interest. |
RMP Segment Results (in thousands, except volumes) | Three Months Ended September 30, 2017 | Nine Months Ended | ||||||
Operating volumes (MDth/d) | ||||||||
Gathering volumes | ||||||||
Affiliate | 1,168 | 1,106 | ||||||
Third-party | 315 | 254 | ||||||
Total | 1,483 | 1,360 | ||||||
Compression volumes | ||||||||
Affiliate | 712 | 661 | ||||||
Third-party | 315 | 255 | ||||||
Total | 1,027 | 916 | ||||||
Water services assets (MMGal) | ||||||||
Pennsylvania | 279 | 652 | ||||||
Ohio | 298 | 714 | ||||||
Total | 577 | 1,366 | ||||||
Operating revenues | ||||||||
Gathering | $ | 47,068 | $ | 123,601 | ||||
Compression | 7,266 | 19,318 | ||||||
Water | 27,367 | 73,909 | ||||||
Total | 81,701 | 216,828 | ||||||
Total operating expenses | 27,054 | 74,571 | ||||||
Operating income | 54,647 | 142,257 | ||||||
Capital expenditures (in millions) | $ | 63 | $ | 136 | ||||
Financial position (in millions) | As of September 30, 2017 | |||||||
RMP liquidity | $ | 630 | ||||||
Cash and cash equivalents | $ | 2 | ||||||
Revolving credit facility | $ | 222 | ||||||
Acreage dedication | 243,000 | |||||||
Third-party | 14% | |||||||
Third quarter gathering throughput averaged 1,483 MDth/d, consisting of 1,168 MDth/d affiliate volumes and 315 MDth/d third party volumes. Freshwater delivery volumes were 577 MMgal, consisting of 431 MMgal affiliate volumes and 146 MMgal third party volumes, driving significant growth as a result of accelerated completion activity.
On October 20, 2017, RMP declared a quarterly distribution of $0.2814 per unit for the third quarter 2017, an increase of $0.0103 per unit, or 4%, relative to second quarter 2017. The distribution will be payable on November 16, 2017 to unitholders of record as of November 7, 2017.
RMP's results were released today and are available at www.ricemidstream.com.
About Rice Energy
Rice Energy Inc. is an independent natural gas and oil company focused on the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin. For more information, please visit our website at www.riceenergy.com.
Forward Looking Statements
This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than historical facts included or incorporated herein that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), projected operational results, production growth, basis exposure, hedging, the timing and number of well completions, forecasted gathering volumes, revenues, Adjusted EBITDAX, further Adjusted EBITDAX; distribution growth, distributable cash flow, the timing of completion and nature of midstream projects, the terms, timing and completion of any acquisitions or divestitures, business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to: commodity price volatility; inflation; lack of availability of drilling and production equipment and services; environmental risks; drilling and other operating risks; regulatory changes; the uncertainty inherent in estimating natural gas reserves and in projecting future rates of production, cash flow and access to capital; the timing of development expenditures; and risks related to joint venture operations. Information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by us will be realized, or even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
This release does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed business combination between EQT and Rice.
In connection with the proposed transaction, EQT has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 on July 27, 2017, that includes a joint proxy statement of EQT and Rice and also constitutes a prospectus of EQT, and has filed a definitive proxy statement on October 12, 2017. Each of EQT and Rice also plan to file other relevant documents with the SEC regarding the proposed transactions. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. The definitive joint proxy statement/prospectus(es) for EQT and/or Rice will be mailed to shareholders of EQT and/or Rice, as applicable.
INVESTORS AND SECURITY HOLDERS OF EQT AND RICE ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT(S), PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents containing important information about EQT and Rice, once such documents are filed with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by EQT will be available free of charge on EQT's website at www.eqt.com or by directing a request to Investor Relations, EQT Corporation, EQT Plaza, 625 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3111, Tel. No. (412) 553-5700. Copies of the documents filed with the SEC by Rice will be available free of charge on Rice's website at www.riceenergy.com or by directing a request to Investor Relations, Rice Energy Inc., 2200 Rice Drive, Canonsburg, Pennsylvania 15317, Tel. No. (724) 271-7200.
EQT, Rice and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Rice is set forth in Rice's proxy statement for its 2017 annual meeting of shareholders, which was filed with the SEC on April 17, 2017. Information about the directors and executive officers of EQT is set forth in its proxy statement for its 2017 annual meeting, which was filed with the SEC on March 6, 2017. These documents may be obtained free of charge from the sources indicated above.
Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when such materials become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from EQT or Rice using the sources indicated above.
Rice Energy Inc. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended | ||||||||||||||
(in thousands, except share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Operating revenues: | |||||||||||||||
Natural gas, oil and natural gas liquids sales | $ | 303,196 | $ | 162,354 | $ | 1,008,922 | $ | 397,108 | |||||||
Gathering, compression and water services | 50,886 | 25,176 | 119,294 | 73,456 | |||||||||||
Other revenue | 11,200 | 11,390 | 29,179 | 24,296 | |||||||||||
Total operating revenues | 365,282 | 198,920 | 1,157,395 | 494,860 | |||||||||||
Operating expenses: | |||||||||||||||
Lease operating | 14,392 | 11,668 | 54,336 | 31,557 | |||||||||||
Gathering, compression and transportation | 45,138 | 29,597 | 123,695 | 84,898 | |||||||||||
Production taxes and impact fees | 6,179 | 3,695 | 19,011 | 8,005 | |||||||||||
Exploration | 5,042 | 3,396 | 16,160 | 9,934 | |||||||||||
Midstream operation and maintenance | 6,536 | 4,080 | 21,498 | 18,225 | |||||||||||
Incentive unit expense | 3,271 | 5,920 | 10,954 | 44,902 | |||||||||||
Acquisition expense | 6,330 | 614 | 8,945 | 1,171 | |||||||||||
Stock compensation expense | 6,469 | 5,953 | 18,170 | 16,994 | |||||||||||
Impairment of gas properties | — | — | 92,355 | — | |||||||||||
Impairment of fixed assets | — | — | — | 2,595 | |||||||||||
Loss on sale of Barnett Assets | 15,915 | — | 15,915 | — | |||||||||||
General and administrative | 29,906 | 24,365 | 91,641 | 67,721 | |||||||||||
Depreciation, depletion and amortization | 156,890 | 83,195 | 439,672 | 247,132 | |||||||||||
Amortization of intangible assets | 412 | 411 | 1,220 | 1,222 | |||||||||||
Other expense | 14,876 | 10,153 | 34,241 | 25,800 | |||||||||||
Total operating expenses | 311,356 | 183,047 | 947,813 | 560,156 | |||||||||||
Operating income (loss) | 53,926 | 15,873 | 209,582 | (65,296) | |||||||||||
Interest expense | (28,734) | (24,421) | (83,026) | (73,744) | |||||||||||
Other (expense) income | (196) | (1,900) | 258 | 862 | |||||||||||
Gain on derivative instruments | 32,534 | 183,915 | 121,313 | 52,539 | |||||||||||
Gain (loss) on embedded derivatives | 1,049 | — | (14,368) | — | |||||||||||
Amortization of deferred financing costs | (3,262) | (1,247) | (9,340) | (4,416) | |||||||||||
Income (loss) before income taxes | 55,317 | 172,220 | 224,419 | (90,055) | |||||||||||
Income tax benefit (expense) | (10,559) | (81,142) | (43,900) | 45,729 | |||||||||||
Net income (loss) | 44,758 | 91,078 | 180,519 | (44,326) | |||||||||||
Less: Net income attributable to noncontrolling interests | (44,438) | (16,665) | (122,971) | (55,535) | |||||||||||
Net (loss) income attributable to Rice Energy Inc. | 320 | 74,413 | 57,548 | (99,861) | |||||||||||
Less: Preferred dividends and accretion of redeemable noncontrolling interests | (107,412) | (8,581) | (136,930) | (19,983) | |||||||||||
Net (loss) income attributable to Rice Energy Inc. common stockholders | $ | (107,092) | $ | 65,832 | $ | (79,382) | $ | (119,844) | |||||||
(Loss) earnings per share—basic | $ | (0.49) | $ | 0.42 | $ | (0.38) | $ | (0.80) | |||||||
(Loss) earnings per share—diluted | $ | (0.49) | $ | 0.41 | $ | (0.38) | $ | (0.80) | |||||||
Rice Energy Inc. | |||||||||||||||
Segment Results of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
Exploration and Production Segment | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended | ||||||||||||||
(in thousands, except volumes) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Operating volumes: | |||||||||||||||
Natural gas production (MMcf) | 131,162 | 68,524 | 366,295 | 198,269 | |||||||||||
Oil and NGL production (MBbls) | 215 | 35 | 646 | 132 | |||||||||||
Total production (MMcfe) | 132,449 | 68,733 | 370,168 | 199,058 | |||||||||||
Operating results: | |||||||||||||||
Operating revenues: | |||||||||||||||
Natural gas, oil and NGL sales | $ | 303,196 | $ | 162,695 | $ | 1,008,922 | $ | 397,449 | |||||||
Other revenue | 11,200 | 11,390 | 29,179 | 24,296 | |||||||||||
Total operating revenues | 314,396 | 174,085 | 1,038,101 | 421,745 | |||||||||||
Operating expenses: | |||||||||||||||
Lease operating | 14,419 | 11,668 | 54,458 | 31,557 | |||||||||||
Gathering, compression and transportation | 95,863 | 56,957 | 263,673 | 156,467 | |||||||||||
Production taxes and impact fees | 6,179 | 3,695 | 19,011 | 8,005 | |||||||||||
Exploration | 5,042 | 3,396 | 16,160 | 9,934 | |||||||||||
Incentive unit expense | 3,177 | 5,751 | 10,641 | 42,763 | |||||||||||
Acquisition costs | 6,410 | 614 | 7,973 | 614 | |||||||||||
Impairment of gas properties | — | — | 92,355 | — | |||||||||||
Impairment of fixed assets | — | — | — | 2,595 | |||||||||||
Loss on sale of Barnett Assets | 15,915 | — | 15,915 | — | |||||||||||
Stock compensation expense | 4,794 | 4,053 | 14,062 | 10,035 | |||||||||||
General and administrative | 18,759 | 15,934 | 58,709 | 45,027 | |||||||||||
Depreciation, depletion and amortization | 153,221 | 79,736 | 426,538 | 234,207 | |||||||||||
Other expense | 12,013 | 10,063 | 29,268 | 25,561 | |||||||||||
Total operating expenses | 335,792 | 191,867 | 1,008,763 | 566,765 | |||||||||||
Operating income (loss) | $ | (21,396) | $ | (17,782) | $ | 29,338 | $ | (145,020) | |||||||
Average costs per Mcfe: | |||||||||||||||
Lease operating | $ | 0.11 | $ | 0.17 | $ | 0.15 | $ | 0.16 | |||||||
Gathering and compression | 0.45 | 0.44 | 0.43 | 0.42 | |||||||||||
Transportation | 0.27 | 0.39 | 0.28 | 0.37 | |||||||||||
Production taxes & impact fees | 0.05 | 0.05 | 0.05 | 0.04 | |||||||||||
Exploration | 0.04 | 0.05 | 0.04 | 0.05 | |||||||||||
Incentive unit expense | 0.02 | 0.08 | 0.03 | 0.21 | |||||||||||
Stock compensation | 0.04 | 0.06 | 0.04 | 0.05 | |||||||||||
General and administrative | 0.14 | 0.23 | 0.16 | 0.23 | |||||||||||
Depreciation, depletion and amortization | 1.16 | 1.16 | 1.15 | 1.18 | |||||||||||
Rice Midstream Holdings Segment | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(in thousands, except volumes) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating volumes: | ||||||||||||||||
Gathering volumes (MDth/d) | 1,438 | 812 | 1,196 | 642 | ||||||||||||
Compression volumes (MDth/d) | 530 | 483 | 512 | 436 | ||||||||||||
Operating results: | ||||||||||||||||
Operating revenues: | ||||||||||||||||
Gathering revenues | $ | 36,312 | $ | 16,189 | $ | 89,185 | $ | 33,969 | ||||||||
Compression revenues | 3,212 | 2,796 | 9,130 | 7,540 | ||||||||||||
Total operating revenues | 39,524 | 18,985 | 98,315 | 41,509 | ||||||||||||
Operating expenses: | ||||||||||||||||
Midstream operation and maintenance | 1,505 | 960 | 3,242 | 2,418 | ||||||||||||
Incentive unit expense | 94 | 169 | 313 | 2,139 | ||||||||||||
Acquisition expense | (115) | — | 443 | 484 | ||||||||||||
Stock compensation expense | 1,505 | 1,291 | 3,679 | 4,231 | ||||||||||||
General and administrative | 4,882 | 4,058 | 13,889 | 9,958 | ||||||||||||
Depreciation, depletion and amortization | 2,067 | 1,577 | 5,254 | 4,222 | ||||||||||||
Other expense | 616 | — | 2,593 | — | ||||||||||||
Total operating expenses | 10,554 | 8,055 | 29,413 | 23,452 | ||||||||||||
Operating income | $ | 28,970 | $ | 10,930 | $ | 68,902 | $ | 18,057 | ||||||||
Rice Midstream Partners Segment | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(in thousands, except volumes) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating volumes: | ||||||||||||||||
Gathering volumes (MDth/d) | 1,483 | 957 | 1,360 | 909 | ||||||||||||
Compression volumes (MDth/d) | 1,027 | 745 | 916 | 488 | ||||||||||||
Water services volumes (MMGal) | 577 | 135 | 1,366 | 932 | ||||||||||||
Operating results: | ||||||||||||||||
Operating revenues: | ||||||||||||||||
Gathering revenues | $ | 47,068 | $ | 28,473 | $ | 123,601 | $ | 80,408 | ||||||||
Compression revenues | 7,266 | 5,030 | 19,318 | 9,931 | ||||||||||||
Water services revenues | 27,367 | 7,564 | 73,909 | 51,818 | ||||||||||||
Total operating revenues | 81,701 | 41,067 | 216,828 | 142,157 | ||||||||||||
Operating expenses: | ||||||||||||||||
Midstream operation and maintenance | 10,259 | 4,559 | 28,139 | 17,292 | ||||||||||||
Acquisition expense | 35 | 411 | 529 | 73 | ||||||||||||
Equity compensation expense | 169 | 609 | 429 | 2,728 | ||||||||||||
General and administrative | 6,265 | 4,373 | 19,043 | 12,736 | ||||||||||||
Depreciation expense | 7,667 | 5,489 | 22,831 | 17,714 | ||||||||||||
Amortization of intangible assets | 412 | — | 1,220 | 1,222 | ||||||||||||
Other expense | 2,247 | 90 | 2,380 | 239 | ||||||||||||
Total operating expenses | 27,054 | 15,531 | 74,571 | 52,004 | ||||||||||||
Operating income | $ | 54,647 | $ | 25,536 | $ | 142,257 | $ | 90,153 | ||||||||
Rice Energy Inc.
Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDAX and Further Adjusted EBITDAX are supplemental non-GAAP financial measures that are used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net (loss) before non-controlling interest; interest expense; income taxes; depreciation, depletion and amortization; amortization of deferred financing costs; amortization of intangible assets; derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments; non-cash stock compensation expense; non-cash incentive unit expense; exploration expenses; and other non-recurring items. We define Further Adjusted EBITDAX as Adjusted EBITDAX after non-controlling interest and water revenue adjustment. Neither Adjusted EBITDAX nor Further Adjusted EBITDAX is a measure of net income as determined by United States generally accepted accounting principles, or GAAP.
Management believes Adjusted EBITDAX is a useful measure to the users of our financial statements because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Management believes Further Adjusted EBITDAX is useful because it allows them to assess the level of consolidated leverage of the company and compare this level to peers. The adjustments made to Adjusted EBITDAX to calculate Further Adjusted EBITDAX address the intercompany eliminations of items impacting Adjusted EBITDAX as a result of the consolidation of RMP, the outstanding indebtedness of which is consolidated with that of the company without regard to non-controlling interest. These adjustments include the addition of non-controlling interest as well as the addition of a water revenue adjustment attributable to charges for fresh water delivery services and produced water hauling services provided by RMP to RICE, a charge that generates revenue for RMP but does not have a corresponding expense at the RICE level, as such costs are capitalized.
Adjusted EBITDAX and Further Adjusted EBITDAX should not be considered as alternatives to, or more meaningful than, net income as determined in accordance with GAAP or as indicators of our operating performance or liquidity. Certain items excluded from Adjusted EBITDAX and Further Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX or Further Adjusted EBITDAX. Our computations of Adjusted EBITDAX and Further Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies. We believe that these measures are widely followed measures of operating performance used by investors.
The following table presents a reconciliation of the non-GAAP financial measure of Adjusted EBITDAX to the GAAP financial measure of net income (loss).
(in thousands) | Three Months Ended | Nine Months Ended | Twelve Months Ended September 30, 2017 | ||||||||
Adjusted EBITDAX reconciliation to net income: | |||||||||||
Net income (loss) | $ | 44,758 | $ | 180,519 | $ | (23,975) | |||||
Interest expense | 28,734 | 83,026 | 108,909 | ||||||||
Depreciation, depletion and amortization | 156,890 | 439,672 | 560,995 | ||||||||
Amortization of deferred financing costs | 3,262 | 9,340 | 12,469 | ||||||||
Amortization of intangible assets | 412 | 1,220 | 1,632 | ||||||||
Acquisition expense | 6,330 | 8,945 | 13,883 | ||||||||
Impairment of gas properties | — | 92,355 | 113,208 | ||||||||
Impairment of fixed assets | — | — | 20,462 | ||||||||
(Gain) loss on derivative instruments (1) | (32,534) | (121,313) | 151,462 | ||||||||
Net cash receipts (payments) on settled derivative instruments (1) | 25,642 | (1,522) | 36,243 | ||||||||
Non-cash stock compensation expense | 6,469 | 18,170 | 40,068 | ||||||||
Non-cash incentive unit expense | 3,271 | 10,954 | 17,813 | ||||||||
Income tax expense | 10,559 | 43,900 | (52,583) | ||||||||
Exploration expense | 5,042 | 16,160 | 21,385 | ||||||||
(Gain) loss on embedded derivatives | (1,049) | 14,368 | 14,368 | ||||||||
Loss on sale of Barnett Assets | 15,915 | 15,915 | 15,915 | ||||||||
Other expense | — | — | 6,506 | ||||||||
Non-controlling interest attributable to midstream entities | (39,843) | (101,534) | (121,414) | ||||||||
Adjusted EBITDAX(2) | $ | 233,858 | $ | 710,175 | $ | 937,346 | |||||
1. | The adjustments for the derivative fair value (gains) losses and net cash receipts on settled commodity derivative instruments have the effect of adjusting net income (loss) for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDAX on a cash basis during the period the derivatives settled. |
2. | Excluded from the above Adjusted EBITDAX reconciliation is the impact of non-controlling interest attributable to midstream entities and the elimination of intercompany water revenues between Rice Energy subsidiaries and Rice Midstream Partners of $39.8 million and $14.4 million, respectively, for the three months ended September 30, 2017, $101.5 million and $46.0 million, respectively, for the nine months ended September 30, 2017, and $121.4 million and $64.7 million, respectively, for the twelve months ended September 30, 2017. When including these impacts, our Further Adjusted EBITDAX is $288.1 million, $857.7 million and $1.1 billion for the three, nine and twelve months ended September 30, 2017, respectively. Our consolidated net debt to last twelve months Further Adjusted EBITDAX ratio is 1.4x. Also included in the above reconciliation is the non-controlling interest attributable to Rice Energy Operating LLC, as we view our business on a fully diluted basis. |
Rice Energy Inc.
Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted net income (loss) is a supplemental non-GAAP financial measure that is used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define adjusted net income (loss) as net income (loss) before impairment of gas properties, impairment of fixed assets, derivative fair value (gain) loss, net cash receipts on settled derivative instruments, incentive unit expense, acquisition expense and other non-recurring items. Adjusted net income (loss) is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP.
We believe that many investors use adjusted net income (loss) in making investment decisions and in evaluating our operational trends and our performance relative to other oil and gas producing companies.
The following table presents a reconciliation of the non-GAAP financial measure of adjusted net income to the GAAP financial measure of net income.
(in thousands) | Three Months Ended | Nine Months Ended | |||||
Reconciliation to net income attributable to Rice Energy Inc: | |||||||
Net income | $ | 44,758 | $ | 180,519 | |||
Non-controlling interest attributable to midstream entities | (39,843) | (101,534) | |||||
Impairment of gas properties | — | 92,355 | |||||
Gain on derivative instruments (1) | (32,534) | (121,313) | |||||
Net cash receipts (payments) on settled derivative instruments (1) | 25,642 | (1,522) | |||||
Incentive unit expense | 3,271 | 10,954 | |||||
(Gain) loss on embedded derivatives | (1,049) | 14,368 | |||||
Loss on sale of Barnett Assets | 15,915 | 15,915 | |||||
Income tax effect of reconciling items | (4,454) | (4,261) | |||||
Adjusted net income attributable to Rice Energy Inc.(2) | $ | 11,706 | $ | 85,481 | |||
1. | The adjustments for the derivative fair value (gains) losses and net cash receipts on settled commodity derivative instruments have the effect of adjusting net income (loss) for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within adjusted net income on a cash basis during the period the derivatives settled. |
2. | The above Adjusted net income reconciliation deducts the tax impact of non-controlling interest attributable to midstream entities of $39.8 million and $101.5 million for the three and nine months ended September 30, 2017, respectively. Also, the above reconciliation does not deduct the non-controlling interest attributable to Rice Energy Operating LLC, as we view our business on a fully diluted basis. |
Rice Energy Inc. | |||
Supplemental Balance Sheet Data | |||
(Unaudited) | |||
The table below provides supplemental balance sheet data as of September 30, 2017. | |||
(in thousands) | September 30, 2017 | ||
Cash and cash equivalents | $ | 271,243 | |
Long-term debt | |||
6.25% Senior Notes Due April 2022(1) | 889,668 | ||
7.25% Senior Notes Due May 2023(2) | 392,510 | ||
Senior Secured Revolving Credit Facility | 125,000 | ||
Midstream Holdings Revolving Credit Facility | 173,500 | ||
RMP Revolving Credit Facility | 222,000 | ||
Total long-term debt | $ | 1,802,678 | |
Net debt | $ | 1,531,435 | |
1. | Net of unamortized deferred finance costs and original discount issuances of $10,332 (in thousands). |
2. | Net of unamortized deferred finance costs and original discount issuances of $7,490 (in thousands). |
Rice Energy Inc. | |||||||||||||||||||
Derivatives Information | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
This table provides data associated with our derivatives as of October 9, 2017 for the periods indicated: | |||||||||||||||||||
All-In Fixed Price Derivatives | Rem. | 2018 | 2019 | 2020 | 2021 | ||||||||||||||
NYMEX Natural Gas Swaps: | |||||||||||||||||||
Volume Hedged (BBtu/d) | 720 | 665 | 467 | 578 | 338 | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | 3.22 | $ | 3.00 | $ | 2.93 | $ | 2.92 | $ | 2.85 | |||||||||
NYMEX Natural Gas Collars: | |||||||||||||||||||
Volume Hedged (BBtu/d) | 290 | 285 | 190 | — | — | ||||||||||||||
Wtd Average Floor Price ($/MMBtu) | $ | 3.08 | $ | 3.15 | $ | 3.00 | $ | — | $ | — | |||||||||
Wtd Average Call Price ($/MMBtu) | $ | 3.73 | $ | 3.63 | $ | 3.50 | $ | — | $ | — | |||||||||
NYMEX Natural Gas Calls: | |||||||||||||||||||
Volume Hedged (BBtu/d) | 50 | 120 | 152 | 135 | 20 | ||||||||||||||
Wtd Average Price ($/MMBtu) | $ | 2.92 | $ | 3.32 | $ | 3.45 | $ | 3.47 | $ | 3.70 | |||||||||
NYMEX Natural Gas Deferred Puts: | |||||||||||||||||||
Volume Hedged (BBtu/d) | 80 | 30 | 20 | — | — | ||||||||||||||
Wtd Avg. Net Floor Price ($/MMBtu) | $ | 2.59 | $ | 2.77 | $ | 2.80 | $ | — | $ | — | |||||||||
NYMEX Volume Excl Calls (BBtu/d) | 1,090 | 980 | 677 | 578 | 338 | ||||||||||||||
NYMEX Volume Incl Calls (BBtu/d) | 1,140 | 1,100 | 829 | 713 | 358 | ||||||||||||||
Swap, Collar & Put Floor ($/MMBtu) | $ | 3.14 | $ | 3.04 | $ | 2.95 | $ | 2.92 | $ | 2.85 | |||||||||
Waha Natural Gas Swaps | |||||||||||||||||||
Volume Hedged (BBtu/d) | 45 | 22 | 9 | — | — | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | 3.11 | $ | 3.01 | $ | 3.29 | $ | — | $ | — | |||||||||
Dominion Natural Gas Swaps | |||||||||||||||||||
Volume Hedged (BBtu/d) | 250 | 257 | 92 | — | — | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | 2.24 | $ | 2.23 | $ | 2.34 | $ | — | $ | — | |||||||||
Total Fixed Price Derivatives | |||||||||||||||||||
Volume Hedged Excl. Calls (BBtu/d) | 1,385 | 1,259 | 778 | 578 | 338 | ||||||||||||||
Volume Hedged Incl. Calls (BBtu/d) | 1,435 | 1,379 | 930 | 713 | 358 | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | 2.97 | $ | 2.87 | $ | 2.88 | $ | 2.92 | $ | 2.85 | |||||||||
Basis Contract Derivatives | |||||||||||||||||||
Appalachian Basis | |||||||||||||||||||
Volume Hedged (BBtu/d) | 500 | 361 | 450 | 515 | 340 | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | (0.96) | $ | (0.65) | $ | (0.58) | $ | (0.56) | $ | (0.54) | |||||||||
Other Basis (MichCon/Gulf Coast) | |||||||||||||||||||
Volume Hedged (BBtu/d) | 447 | 302 | 167 | 73 | 20 | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | (0.13) | $ | (0.13) | $ | (0.15) | $ | (0.14) | $ | (0.12) | |||||||||
Total Basis Swaps | |||||||||||||||||||
Volume Hedged (BBtu/d) | 947 | 663 | 617 | 588 | 360 | ||||||||||||||
Wtd Average Swap Price ($/MMBtu) | $ | (0.57) | $ | (0.41) | $ | (0.46) | $ | (0.51) | $ | (0.52) | |||||||||
WTI Swaps | |||||||||||||||||||
Volume Hedged (Bbls/d) | 50 | — | — | — | — | ||||||||||||||
Wtd Average Swap Price ($/bbl) | $ | 45 | $ | — | $ | — | $ | — | $ | — | |||||||||
NGL Swaps | |||||||||||||||||||
Volume Hedged (Bbls/d) | 496 | — | — | — | — | ||||||||||||||
Wtd Average Swap Price ($/bbl) | $ | 15 | $ | — | $ | — | $ | — | $ | — | |||||||||
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SOURCE Rice Energy Inc.
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