CANONSBURG, Pa., May 3, 2017 /PRNewswire/ -- Rice Energy
Inc. (NYSE: RICE) ("Rice Energy") today reported first quarter
2017 financial and operating results. Highlights include:
- Net production averaged 1,273 MMcfe/d, an 11% increase from
fourth quarter 2016
- Rice Midstream Holdings LLC ("RMH") gathering throughput
averaged 969 MDth/d, a 7% increase from fourth quarter 2016
- Net loss attributable to common stockholders of $35 million, or $0.17 per diluted share
- Adjusted EBITDAX(1) of $244
million, a 21% increase relative to fourth quarter 2016
- Pre-hedge realized natural gas price of $3.11 per Mcf, including average basis
differential of ($0.29) per
MMBtu
- Exited the quarter with low leverage(1) of 1.3x
- RMH evaluating sale of over one-third of Rice Olympus Midstream
LLC ("ROM") to Rice Midstream Partners LP (NYSE: RMP) ("RMP") in
second half 2017
- Announcing three-year outlook targeting 27% - 33% compound
annual Appalachia net production growth(2) through 2019,
while targeting cash flow neutrality(3) and E&P
leverage below 1.5x in 2019
Commenting on the results, Daniel J.
Rice IV, Chief Executive Officer, said, "We are off to a
great start in 2017 on our continued path to create long-term value
for our shareholders. With the Vantage Energy acquisition complete,
we delivered solid first quarter 2017 operational results into an
improving gas price environment. Looking ahead, we are focused on
generating best-in-class E&P results to achieve our three-year
E&P targeted growth outlook. In addition, because ROM's
throughput growth and asset profile make it an ideal drop
candidate, we are evaluating the sale of over one-third of ROM to
RMP in the second half 2017."
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.
|
Based on mid-point
of 2017 annual Appalachia production guidance.
|
3.
|
Defined as fully
funding D&C capital expenditures from internal E&P cash
flows.
|
Three-Year E&P Economic Growth Outlook
Given the highly predictable nature of our 100% core asset base,
we have laid out a three-year growth outlook that we believe
delivers compelling economic cash flow growth on a risk-adjusted
basis. We are targeting 27% - 33% compound annual Appalachia net
production growth(1) from 2017 - 2019 predicated on
targeted annual Appalachia net production of 1,575 - 1,675 MMcfe/d
in 2018 and 2,000 - 2,200 MMcfe/d in 2019. Our three-year
production targets are based on intended drilling and completion
("D&C") investments of $1.2 - $1.3
billion in 2018 and $1.3 - $1.4
billion in 2019. Highlights of our three-year E&P
outlook include the following:
- Target 27% - 33% compound annual Appalachia net production
growth(1)
- Invest in core locations that generate approximately 85% single
well pre-tax IRR(2)
- Target cash flow neutrality(3) in 2019, while
maintaining leverage of less than 1.5x
- Drill average laterals of over 9,000 feet in Appalachia
Daniel Rice IV commented, "I
believe our target of over 2 Bcfe/d of 2019 net production offers a
highly attractive risk-adjusted growth profile and executing this
outlook will unlock significant value for our shareholders. We are
targeting differentiated production growth and cash flow neutrality
in 2019, a rare feat amongst E&P companies. This outlook
is supported by core acreage, high returns, technical expertise,
low leverage and significant hedges."
RMP reaffirmed its annual distribution growth target of 20%
through 2023. In addition, RMP provided three-year distributable
cash flow coverage and leverage targets supported by Rice Energy's
long-term growth outlook.
1.
|
Based on mid-point
of 2017 annual Appalachia production guidance.
|
2.
|
Assumes $3.00
NYMEX. Marcellus and Utica economics assume E&P is burdened by
50% of the gathering and compression fees and 50% of water
completion fees.
|
3.
|
Defined as fully
funding D&C capital expenditures from internal E&P cash
flows.
|
First Quarter 2017
Results
|
|
Consolidated
Results
|
|
Three Months
Ended March 31,
2017
|
|
|
|
Operating revenues
(in thousands)
|
|
$
|
393,806
|
|
|
|
|
|
|
Operating
expenses
|
|
(in
thousands)
|
|
(in
Mcfe)
|
Lease
operating(1)
|
|
$
|
22,459
|
|
|
$
|
0.20
|
|
Gathering,
compression and transportation
|
|
$
|
39,426
|
|
|
$
|
0.34
|
|
Production taxes and
impact fees
|
|
$
|
6,153
|
|
|
$
|
0.05
|
|
General and
administrative(1)
|
|
$
|
28,737
|
|
|
$
|
0.25
|
|
Depreciation,
depletion and amortization
|
|
$
|
136,878
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
(per diluted
share)
|
Net loss attributable
to common stockholders
|
|
$
|
(34,630)
|
|
|
$
|
(0.17)
|
|
Adjusted
EBITDAX(2)
|
|
$
|
244,221
|
|
|
|
Adjusted net
income
|
|
$
|
29,651
|
|
|
$
|
0.12
|
|
|
|
|
|
Financial position
(in millions)
|
|
|
|
Total
liquidity(3)
|
|
$
|
1,884
|
Cash and cash
equivalents
|
|
$
|
431
|
Long-term
debt
|
|
$
|
1,543
|
Leverage(2)
|
|
|
1.3
|
Our lease operating expense was $0.20 per Mcfe for the quarter, an 11% increase
from fourth quarter 2016 due to higher associated Barnett asset expenses and increased labor and
rental expenses. Excluding the Barnett assets, our Appalachia lease operating
expense was $0.18 per Mcfe. We expect
our lease operating expense to trend lower throughout the year and
full-year 2017 to be within our previously announced range of
$0.16 - $0.18 per Mcfe.
As of March 31, 2017, our liquidity position,
excluding RMP, was $1,884 million comprised of $1,626
million of upstream liquidity ($387 million of cash on hand and $1,239
million revolver availability) and $258
million of RMH liquidity ($31
million of cash on hand and $227 million revolver
availability). Our balance sheet remains strong with low
leverage(2) of 1.3x.
1.
|
Excludes non-cash
equity compensation expense of $0.2 million and $5.1 million
attributable to lease operating and general and administrative
expenses, respectively, for the three months ended March 31,
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.
|
Excludes Rice
Midstream Partners LP.
|
E&P Segment
Results
|
|
Three Months
Ended March 31,
2017
|
|
|
|
Production
|
|
|
Net production
(Bcfe)
|
|
115
|
|
Net production
(MMcfe/d)
|
|
1,273
|
|
|
|
|
Operating revenues
(in thousands)
|
|
|
Natural gas, oil and
NGL sales
|
|
$
|
356,834
|
|
Other
revenue
|
|
$
|
6,629
|
|
Realized loss on
derivative instruments
|
|
$
|
(12,363)
|
|
Total operating
revenues and realized loss on derivative instruments
|
|
$
|
351,100
|
|
|
|
|
Realized
Pricing
|
|
|
NYMEX Henry Hub price
($/MMBtu)
|
|
$
|
3.32
|
|
Average basis impact
($/MMBtu)
|
|
$
|
(0.29)
|
|
FT fuel and variables
($/MMBtu)
|
|
$
|
(0.07)
|
|
Btu uplift
(MMBtu/Mcf)
|
|
$
|
0.15
|
|
Pre-hedge realized
price ($/Mcf)
|
|
$
|
3.11
|
|
Post-hedge realized
price ($/Mcf)
|
|
$
|
3.00
|
|
|
|
|
Operating
expenses
|
|
(in
thousands)
|
|
(in
Mcfe)
|
Lease
operating(1)
|
|
$
|
22,459
|
|
|
$
|
0.20
|
|
Gathering and
compression
|
|
$
|
46,713
|
|
|
$
|
0.41
|
|
Transportation
|
|
$
|
35,182
|
|
|
$
|
0.31
|
|
Production taxes and
impact fees
|
|
$
|
6,153
|
|
|
$
|
0.05
|
|
Exploration
|
|
$
|
4,012
|
|
|
$
|
0.04
|
|
General and
administrative(1)
|
|
$
|
19,219
|
|
|
$
|
0.17
|
|
Depreciation,
depletion and amortization
|
|
$
|
131,839
|
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
|
Operating loss (in
thousands)
|
|
$
|
(7,707)
|
|
|
|
|
E&P capital
expenditures (in millions)
|
|
|
Operated
Marcellus
|
|
$
|
107
|
|
Operated Ohio
Utica
|
|
$
|
64
|
|
Non-operated
Utica
|
|
$
|
9
|
|
Total Drilling &
Completion
|
|
$
|
180
|
|
Land
|
|
$
|
62
|
|
Total
|
|
$
|
242
|
|
|
|
|
Financial position
(in millions)
|
|
|
E&P
liquidity
|
|
$
|
1,626
|
|
Cash and cash
equivalents
|
|
$
|
387
|
|
Long-term
debt
|
|
$
|
1,280
|
|
|
|
|
|
|
E&P Segment
Highlights
|
|
Three Months
Ended March 31,
2017
|
|
|
|
|
|
Marcellus
|
|
Utica
|
|
Barnett
|
|
Total
|
Production mix
(MMcfe/d)
|
|
777
|
|
409
|
|
87
|
|
1,273
|
Operational
activity (net wells)
|
|
|
|
|
|
|
|
|
Drilled
|
|
12
|
|
9
|
|
—
|
|
21
|
Completed
|
|
15
|
|
4
|
|
—
|
|
19
|
Turned to
sales
|
|
15
|
|
10
|
|
—
|
|
25
|
Excluding hedges, our first quarter average realized natural gas
price was $3.11 per Mcf, representing
an average basis differential of ($0.29) per MMBtu, which is a 52% improvement
relative to fourth quarter 2016. Approximately 32% of our first
quarter production received local Appalachian pricing, where basis
differentials tightened to ($0.49) per MMBtu. We expect Appalachian
differentials to further contract as additional firm transportation
capacity is placed in-service over the next several years.
Furthermore, our targeted local basis exposure increases
to approximately 60% by 2019, positioning us to benefit from
anticipated, enhanced pre-hedge realizations.
We are on track to achieve our 2017 goal of leasing
approximately 15,000 net acres during the year, as we added 2,000
net acres in the Marcellus and 2,000 net acres in the Utica during the first quarter. As
of March 31, 2017, our core Appalachian acreage position
totaled approximately 252,000 net acres, consisting of
approximately 187,000 net Marcellus acres in Pennsylvania and approximately 65,000
net Utica acres in Ohio. In addition, we control
approximately 107,000 net Utica acres
in Pennsylvania.
During the quarter, we turned to sales 15 net Marcellus wells
with an average lateral length of 6,000 feet and 10 net operated
Utica wells with an average
lateral length of 8,400 feet. Full-year 2017 online lateral lengths
are in-line with our previously announced guidance of 8,000 feet in
the Marcellus and 9,000 feet in the Utica. Our first quarter development costs per
lateral foot were below budget and averaged $825 in the Marcellus and $1,130 in the Utica for wells drilled and completed.
In April, we set a new Utica
record, drilling 6,170 feet in twenty-four-hours, a 15% improvement
relative to the prior Utica
drilling record. This notable achievement is a testament to our
drilling and completion teams' peer-leading execution.
1.
|
Excludes non-cash
equity compensation expense of $0.2 million and $5.1 million
attributable to lease operating and general and administrative
expenses, respectively, for the three months ended March 31,
2017.
|
Commodity Hedge Position
As depicted in the table below, we have 1,282 BBtu/d hedged in
2017 at a NYMEX weighted average floor price of $3.15 per MMBtu, representing approximately 92%
of expected production (based on the midpoint of guidance). Please
see the "Derivatives Information" table at the end of this press
release for more detailed information about our derivatives
positions.
Fixed Price
Derivatives
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
NYMEX Volume Hedged
(BBtu/d)
|
|
1,009
|
|
980
|
|
530
|
|
560
|
|
293
|
NYMEX Wtd Avg. Fixed
Floor Price ($/MMBtu)
|
|
$3.15
|
|
$3.04
|
|
$2.96
|
|
$2.92
|
|
$2.84
|
Total Volume Hedged
(BBtu/d)
|
|
1,282
|
|
1,259
|
|
631
|
|
560
|
|
293
|
Total Wtd Avg. Fixed
Floor Price ($/MMBtu)
|
|
$2.98
|
|
$2.87
|
|
$2.87
|
|
$2.92
|
|
$2.84
|
|
|
|
|
|
|
|
|
|
|
|
RMH Segment
Results (in thousands, except volumes)
|
|
Three Months
Ended
March 31, 2017
|
|
|
|
Operating volumes
(MDth/d)
|
|
|
Gathering
volumes
|
|
|
Affiliate
|
|
461
|
Third-party
|
|
508
|
Total
|
|
969
|
|
|
|
Compression
volumes
|
|
|
Affiliate
|
|
300
|
Third-party
|
|
262
|
Total
|
|
562
|
|
|
|
Operating
revenues
|
|
|
Gathering
|
|
$
|
23,539
|
Compression
|
|
3,305
|
Total
|
|
$
|
26,844
|
|
|
|
Total operating
expenses
|
|
$
|
7,011
|
Operating
income
|
|
$
|
19,833
|
|
|
|
Capital expenditures
(in millions)
|
|
$
|
69
|
|
|
|
Financial position
(in millions)
|
|
|
RMH
liquidity
|
|
$
|
258
|
Cash and cash
equivalents
|
|
$
|
31
|
Revolving credit
facility
|
|
$
|
73
|
|
|
|
LP + IDR cash
distributions received from RMP(1) (in
millions)
|
|
$
|
8
|
|
First quarter gathering throughput averaged 969 MDth/d, which
consisted of 950 MDth/d related to the operations of ROM and 271
MDth/d related to the operations of Strike Force Midstream, offset
by an elimination of 252 MDth/d that is related to operations of
both ROM and Strike Force Midstream.
As of March 31, 2017,
RMH controlled one of the largest and most concentrated core
dry gas acreage dedications in the Utica Shale, covering
approximately 166,000 acres in Belmont
and Monroe Counties with approximately 70% of its
dedication from high quality, third party customers.
1.
|
Net of 91.75%
ownership interest.
|
RMP Segment
Results (in thousands, except volumes)
|
|
Three Months
Ended
March 31, 2017
|
|
|
|
|
|
Operating volumes
(MDth/d)
|
|
|
|
Gathering
volumes
|
|
|
|
Affiliate
|
|
1,003
|
|
Third-party
|
|
232
|
|
Total
|
|
1,235
|
|
|
|
|
|
Compression
volumes
|
|
|
|
Affiliate
|
|
594
|
|
Third-party
|
|
232
|
|
Total
|
|
826
|
|
|
|
|
|
Water services assets
(MMGal)
|
|
|
|
Pennsylvania
|
|
224
|
|
Ohio
|
|
141
|
|
Total
|
|
365
|
|
|
|
|
|
Operating
revenues
|
|
|
Gathering
|
|
$
|
36,220
|
|
Compression
|
|
$
|
5,782
|
|
Water
|
|
$
|
20,748
|
|
Total
|
|
$
|
62,750
|
|
|
|
|
Total operating
expenses
|
|
$
|
22,154
|
|
Operating
income
|
|
$
|
40,596
|
|
|
|
|
Capital expenditures
(in millions)
|
|
$
|
32
|
|
|
|
|
Financial position
(in millions)
|
|
|
RMP
liquidity
|
|
$
|
673
|
|
Cash and cash
equivalents
|
|
$
|
13
|
|
Revolving credit
facility
|
|
$
|
190
|
|
|
|
|
RMP 1Q17 Quarterly
Distribution
|
|
$
|
0.2608
|
|
% Growth
YoY
|
|
|
24
|
%
|
% Growth
QoQ
|
|
|
4
|
%
|
|
First quarter gathering throughput averaged 1,235 MDth/d,
consisting of 1,003 MDth/d affiliate volumes and 232 MDth/d third
party volumes. There were no third party wells turned to sales
during the first quarter.
As of March 31, 2017, RMP's
concentrated gathering and compression acreage dedication in
the Marcellus Shale core covered approximately 218,000
acres in Washington and Greene Counties with
approximately 29,000 acres dedicated from high quality, third party
customers.
On April 21, 2017, RMP declared a quarterly distribution of
$0.2608 per unit for the first
quarter 2017, an increase of $0.0103
per unit, or 4%, relative to fourth quarter 2016. The distribution
will be payable on May 18, 2017 to unitholders of record as of
May 9, 2017. In addition, a cash distribution of $1.2 million will be made to GP Holdings on
May 18, 2017 related to its incentive
distribution rights in the Partnership based upon the level of
distribution paid per common and subordinated unit.
RMP's first quarter results were released today and are
available at www.ricemidstream.com.
Conference Call
Rice Energy will host a conference call on May 4, 2017 at 10:00 a.m.
Eastern time (9:00 a.m. Central
time) to discuss first quarter 2017 financial and operating
results. To listen to a live audio webcast of the conference call,
please visit Rice Energy's website at www.riceenergy.com. A replay
of the conference call will be available for two weeks and can also
be accessed from our homepage.
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 the sale of
any portion of ROM to RMP, 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.
Rice Energy
Inc.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
(in thousands,
except share data)
|
2017
|
|
2016
|
Operating
revenues:
|
|
|
|
Natural gas, oil and
natural gas liquids sales
|
$
|
356,834
|
|
|
$
|
112,442
|
|
Gathering,
compression and water distribution
|
30,343
|
|
|
24,552
|
|
Other
revenue
|
6,629
|
|
|
2,948
|
|
Total operating
revenues
|
393,806
|
|
|
139,942
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Lease
operating
|
22,459
|
|
|
10,976
|
|
Gathering,
compression and transportation
|
39,426
|
|
|
28,132
|
|
Production taxes and
impact fees
|
6,153
|
|
|
1,651
|
|
Exploration
|
4,012
|
|
|
990
|
|
Midstream operation
and maintenance
|
6,636
|
|
|
9,548
|
|
Incentive unit
expense
|
2,883
|
|
|
24,142
|
|
Acquisition
expense
|
207
|
|
|
472
|
|
Stock compensation
expense
|
5,291
|
|
|
4,809
|
|
Impairment of gas
properties
|
92,355
|
|
|
—
|
|
Impairment of fixed
assets
|
—
|
|
|
2,595
|
|
General and
administrative
|
28,737
|
|
|
20,233
|
|
Depreciation,
depletion and amortization
|
136,878
|
|
|
79,185
|
|
Amortization of
intangible assets
|
402
|
|
|
408
|
|
Other
expense
|
6,158
|
|
|
4,191
|
|
Total operating
expenses
|
351,597
|
|
|
187,332
|
|
|
|
|
|
Operating income
(loss)
|
42,209
|
|
|
(47,390)
|
|
Interest
expense
|
(27,023)
|
|
|
(24,521)
|
|
Other
income
|
180
|
|
|
214
|
|
(Loss) gain on
derivative instruments
|
(14,779)
|
|
|
70,179
|
|
Amortization of
deferred financing costs
|
(2,652)
|
|
|
(1,552)
|
|
Loss before income
taxes
|
(2,065)
|
|
|
(3,070)
|
|
Income tax
benefit
|
576
|
|
|
6,375
|
|
Net (loss)
income
|
(1,489)
|
|
|
3,305
|
|
Less: Net income
attributable to noncontrolling interests
|
(24,809)
|
|
|
(20,893)
|
|
Net loss attributable
to Rice Energy Inc.
|
(26,298)
|
|
|
(17,588)
|
|
Less: Preferred
dividends and accretion of redeemable noncontrolling
interests
|
(8,332)
|
|
|
(3,458)
|
|
Net loss attributable
to Rice Energy Inc. common stockholders
|
$
|
(34,630)
|
|
|
$
|
(21,046)
|
|
Weighted average
number of shares of common stock—basic
|
|
203,435,154
|
|
|
|
136,419,903
|
|
Weighted average
number of shares of common stock—diluted
|
|
203,435,154
|
|
|
|
136,419,903
|
|
Loss per
share—basic
|
$
|
(0.17)
|
|
|
$
|
(0.15)
|
|
Loss per
share—diluted
|
$
|
(0.17)
|
|
|
$
|
(0.15)
|
|
Rice Energy
Inc.
|
Segment Results of
Operations
|
(Unaudited)
|
|
Exploration and
Production Segment
|
|
|
|
Three Months Ended
March 31,
|
(in thousands,
except volumes)
|
|
2017
|
|
2016
|
|
|
|
|
|
Operating
volumes:
|
|
|
|
|
Natural gas
production (MMcf)
|
|
113,192
|
|
|
61,043
|
|
Oil and NGL
production (MBbls)
|
|
223
|
|
|
56
|
|
Total production
(MMcfe)
|
|
114,530
|
|
|
61,379
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
Operating
revenues:
|
|
|
|
|
Natural gas, oil and
NGL sales
|
|
$
|
356,834
|
|
|
$
|
112,442
|
|
Other
revenue
|
|
6,629
|
|
|
2,948
|
|
Total operating
revenues
|
|
363,463
|
|
|
115,390
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Lease
operating
|
|
22,459
|
|
|
10,976
|
|
Gathering,
compression and transportation
|
|
81,895
|
|
|
48,203
|
|
Production taxes and
impact fees
|
|
6,153
|
|
|
1,651
|
|
Exploration
|
|
4,012
|
|
|
990
|
|
Incentive unit
expense
|
|
2,800
|
|
|
22,871
|
|
Acquisition
costs
|
|
207
|
|
|
—
|
|
Impairment of gas properties
|
|
92,355
|
|
|
—
|
|
Impairment of fixed
assets
|
|
—
|
|
|
2,595
|
|
Stock compensation
expense
|
|
4,186
|
|
|
2,635
|
|
General and
administrative
|
|
19,219
|
|
|
13,901
|
|
Depreciation,
depletion and amortization
|
|
131,839
|
|
|
74,956
|
|
Other
expense
|
|
6,045
|
|
|
4,403
|
|
Total operating
expenses
|
|
371,170
|
|
|
183,181
|
|
|
|
|
|
|
Operating
loss
|
|
$
|
(7,707)
|
|
|
$
|
(67,791)
|
|
|
|
|
|
|
Average costs per
Mcfe:
|
|
|
|
|
Lease
operating
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
Gathering and
compression
|
|
0.41
|
|
|
0.40
|
|
Transportation
|
|
0.31
|
|
|
0.39
|
|
Production taxes and
impact fees
|
|
0.05
|
|
|
0.03
|
|
Exploration
|
|
0.04
|
|
|
0.02
|
|
Incentive unit
expense
|
|
0.02
|
|
|
0.37
|
|
Stock
compensation
|
|
0.04
|
|
|
0.04
|
|
General and
administrative
|
|
0.17
|
|
|
0.23
|
|
Depreciation,
depletion and amortization
|
|
1.15
|
|
|
1.22
|
|
|
Rice Midstream
Holdings Segment
|
|
|
|
Three Months Ended
March 31,
|
(in thousands,
except volumes)
|
|
2017
|
|
2016
|
|
|
|
|
|
Operating
volumes:
|
|
|
|
|
Gathering volumes
(MDth/d)
|
|
969
|
|
|
454
|
|
Compression volumes
(MDth/d)
|
|
562
|
|
|
362
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
Operating
revenues:
|
|
|
|
|
Gathering
revenues
|
|
$
|
23,539
|
|
|
$
|
8,537
|
|
Compression
revenues
|
|
3,305
|
|
|
2,114
|
|
Total operating
revenues
|
|
26,844
|
|
|
10,651
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Midstream operation
and maintenance
|
|
747
|
|
|
1,002
|
|
Incentive unit
expense
|
|
83
|
|
|
1,271
|
|
Acquisition
expense
|
|
—
|
|
|
400
|
|
Stock compensation
expense
|
|
973
|
|
|
1,188
|
|
General and
administrative
|
|
3,811
|
|
|
2,575
|
|
Depreciation,
depletion and amortization
|
|
1,397
|
|
|
1,090
|
|
Total operating
expenses
|
|
7,011
|
|
|
7,526
|
|
|
|
|
|
|
Operating
income
|
|
$
|
19,833
|
|
|
$
|
3,125
|
|
|
Rice Midstream
Partners Segment
|
|
|
|
Three Months Ended
March 31,
|
(in thousands,
except volumes)
|
|
2017
|
|
2016
|
|
|
|
|
|
Operating
volumes:
|
|
|
|
|
Gathering volumes
(MDth/d)
|
|
1,235
|
|
|
835
|
|
Compression volumes
(MDth/d)
|
|
826
|
|
|
152
|
|
Water services
volumes (MMGal)
|
|
365
|
|
|
463
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
Operating
revenues:
|
|
|
|
|
Gathering
revenues
|
|
$
|
36,220
|
|
|
$
|
25,686
|
|
Compression
revenues
|
|
5,782
|
|
|
1,114
|
|
Water services
revenues
|
|
20,748
|
|
|
27,743
|
|
Total operating
revenues
|
|
62,750
|
|
|
54,543
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Midstream operation
and maintenance
|
|
8,179
|
|
|
8,546
|
|
Acquisition
expense
|
|
—
|
|
|
73
|
|
Stock compensation
expense
|
|
132
|
|
|
985
|
|
General and
administrative
|
|
5,707
|
|
|
3,756
|
|
Depreciation,
depletion and amortization
|
|
7,621
|
|
|
5,370
|
|
Amortization of
intangible assets
|
|
402
|
|
|
408
|
|
Other
expense
|
|
113
|
|
|
(212)
|
|
Total operating
expenses
|
|
22,154
|
|
|
18,926
|
|
|
|
|
|
|
Operating
income
|
|
$
|
40,596
|
|
|
$
|
35,617
|
|
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
March 31, 2017
|
|
Twelve
Months Ended March 31, 2017
|
Adjusted EBITDAX
reconciliation to net loss:
|
|
|
|
Net loss
|
$
|
(1,489)
|
|
|
$
|
(253,614)
|
|
Interest
expense
|
27,023
|
|
|
102,129
|
|
Depreciation,
depletion and amortization
|
136,878
|
|
|
426,148
|
|
Amortization of
deferred financing costs
|
2,652
|
|
|
8,645
|
|
Amortization of
intangible assets
|
402
|
|
|
1,628
|
|
Acquisition
expense
|
207
|
|
|
5,844
|
|
Impairment of gas
properties
|
92,355
|
|
|
113,208
|
|
Impairment of fixed
assets
|
—
|
|
|
20,462
|
|
Gain on derivative
instruments (1)
|
14,780
|
|
|
305,194
|
|
Net cash receipts on
settled derivative instruments (1)
|
(12,363)
|
|
|
124,646
|
|
Non-cash stock
compensation expense
|
5,291
|
|
|
22,397
|
|
Non-cash incentive
unit expense
|
2,883
|
|
|
30,502
|
|
Income tax expense
(benefit)
|
(576)
|
|
|
(136,413)
|
|
Exploration
expense
|
4,012
|
|
|
18,181
|
|
Other
expense
|
—
|
|
|
5,679
|
|
Non-controlling
interest attributable to midstream entities
|
(27,834)
|
|
|
(82,356)
|
|
Adjusted
EBITDAX(2)
|
$
|
244,221
|
|
|
$
|
712,280
|
|
|
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 and the elimination of intercompany water
revenues between Rice Energy subsidiaries and Rice Midstream
Partners of $27.8 million and $14.5 million, respectively, for
the three months ended March 31, 2017 and $82.4 million and $49.8
million, respectively, for the twelve months ended March 31, 2017.
When including these impacts, our Further Adjusted EBITDAX is
$286.7 million and $844.4 million for the three and twelve months
ended March 31, 2017, respectively. Our consolidated net debt to
last twelve months Further Adjusted EBITDAX ratio is 1.3x. 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 Measure
(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 (loss) to the GAAP
financial measure of net income (loss).
(in
thousands)
|
Three Months
Ended
March 31, 2017
|
Reconciliation to
net (loss) income attributable to Rice Energy Inc:
|
|
Net loss
|
$
|
(1,489)
|
|
Non-controlling
interest attributable to midstream entities
|
(27,834)
|
|
Impairment of gas
properties
|
92,355
|
|
Gain on derivative
instruments (1)
|
14,780
|
|
Net cash payments on
settled derivative instruments (1)
|
(12,363)
|
|
Incentive unit
expense
|
2,883
|
|
Income tax effect of
reconciling items
|
(38,681)
|
|
Adjusted net
income attributable to Rice Energy
Inc.(2)
|
$
|
29,651
|
|
|
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.
|
Excluded from the
above Adjusted net income reconciliation is the impact of
non-controlling of $27.8 million for the three months ended March
31, 2017.
|
Rice Energy
Inc.
|
Supplemental
Balance Sheet Data
|
(Unaudited)
|
|
The table below
provides supplemental balance sheet data as of March 31,
2017.
|
|
(in
thousands)
|
March 31,
2017
|
Cash and cash
equivalents
|
$
|
430,956
|
|
Long-term
debt
|
|
Senior Secured
Revolving Credit Facility
|
—
|
|
6.25% Senior Notes
Due April 2022(1)
|
$
|
888,540
|
|
7.25% Senior Notes
Due May 2023(2)
|
391,840
|
|
Midstream Holdings
Revolving Credit Facility
|
73,000
|
|
RMP Revolving Credit
Facility
|
190,000
|
|
Total long-term
debt
|
$
|
1,543,380
|
|
Net debt
|
$
|
1,112,424
|
|
|
1.
|
Net of unamortized
deferred finance costs and original discount issuances of $11,460
(in thousands).
|
2.
|
Net of unamortized
deferred finance costs and original discount issuances of $8,160
(in thousands).
|
Rice Energy
Inc.
|
Derivatives
Information
|
(Unaudited)
|
|
The table below
provides data associated with our derivatives as of April 24, 2017
for the periods indicated:
|
|
All-In Fixed
Price Derivatives
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
NYMEX Natural Gas
Swaps:
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
646
|
|
|
665
|
|
|
340
|
|
|
560
|
|
|
293
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
3.24
|
|
|
$
|
3.00
|
|
|
$
|
2.94
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX Natural Gas
Collars:
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
290
|
|
|
285
|
|
|
170
|
|
|
—
|
|
|
—
|
|
Wtd Average Floor
Price ($/MMBtu)
|
$
|
3.08
|
|
|
$
|
3.15
|
|
|
$
|
3.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Wtd Average Call Price
($/MMBtu)
|
$
|
3.73
|
|
|
$
|
3.63
|
|
|
$
|
3.52
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX Natural Gas
Calls:
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
80
|
|
|
120
|
|
|
110
|
|
|
135
|
|
|
20
|
|
Wtd Average Price
($/MMBtu)
|
$
|
3.53
|
|
|
$
|
3.32
|
|
|
$
|
3.55
|
|
|
$
|
3.47
|
|
|
$
|
3.70
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX Natural Deferred
Puts:
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
73
|
|
|
30
|
|
|
20
|
|
|
—
|
|
|
—
|
|
Wtd Avg. Net Floor
Price ($/MMBtu)
|
$
|
2.58
|
|
|
$
|
2.77
|
|
|
$
|
2.80
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX Volume Excl
Calls (BBtu/d)
|
1,009
|
|
|
980
|
|
|
530
|
|
|
560
|
|
|
293
|
|
NYMEX Volume Incl
Calls (BBtu/d)
|
1,089
|
|
|
1,100
|
|
|
640
|
|
|
695
|
|
|
313
|
|
Swap, Collar &
Put Floor ($/MMBtu)
|
$
|
3.15
|
|
|
$
|
3.04
|
|
|
$
|
2.96
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
Waha Natural Gas
Swaps
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
47
|
|
|
22
|
|
|
9
|
|
|
—
|
|
|
—
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
3.07
|
|
|
$
|
3.01
|
|
|
$
|
3.29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Natural Gas
Swaps
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
226
|
|
|
257
|
|
|
92
|
|
|
—
|
|
|
—
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
2.21
|
|
|
$
|
2.23
|
|
|
$
|
2.34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total Fixed Price
Derivatives
|
|
|
|
|
|
|
|
|
|
Volume Hedged Excl.
Calls (BBtu/d)
|
1,282
|
|
|
1,259
|
|
|
631
|
|
|
560
|
|
|
293
|
|
Volume Hedged Incl.
Calls (BBtu/d)
|
1,362
|
|
|
1,379
|
|
|
741
|
|
|
695
|
|
|
313
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
2.98
|
|
|
$
|
2.87
|
|
|
$
|
2.87
|
|
|
$
|
2.92
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
Basis Contract
Derivatives
|
|
|
|
|
|
|
|
|
|
Appalachian
Basis
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
473
|
|
|
356
|
|
|
450
|
|
|
515
|
|
|
340
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
(1.09)
|
|
|
$
|
(0.65)
|
|
|
$
|
(0.58)
|
|
|
$
|
(0.56)
|
|
|
$
|
(0.54)
|
|
|
|
|
|
|
|
|
|
|
|
Other Basis
(MichCon/Gulf Coast)
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(BBtu/d)
|
501
|
|
|
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)
|
974
|
|
|
659
|
|
|
617
|
|
|
588
|
|
|
360
|
|
Wtd Average Swap Price
($/MMBtu)
|
$
|
(0.59)
|
|
|
$
|
(0.41)
|
|
|
$
|
(0.47)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.51)
|
|
|
|
|
|
|
|
|
|
|
|
WTI Swaps
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(Bbls/d)
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Wtd Average Swap Price
($/bbl)
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
NGL Swaps
|
|
|
|
|
|
|
|
|
|
Volume Hedged
(Bbls/d)
|
498
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Wtd Average Swap Price
($/bbl)
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Logo -
http://photos.prnewswire.com/prnh/20140123/DA51701LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rice-energy-reports-first-quarter-2017-results-and-provides-three-year-ep-economic-growth-outlook-300450931.html
SOURCE Rice Energy Inc.