CANONSBURG, Pa., Oct. 8, 2015 /PRNewswire/ -- Rice Energy Inc. (NYSE: RICE) today announced that its wholly owned subsidiary, Rice Midstream Holdings LLC ("Rice"), has signed a Letter of Intent (the "Agreement") with Gulfport Energy Corporation (NASDAQ: GPOR) ("Gulfport") to form a midstream joint venture ("JV") to develop natural gas gathering and water services assets to support Gulfport's dry gas Utica Shale development in eastern Belmont County and Monroe County, Ohio. The JV will be supported by long-term, fee-based service agreements with Gulfport.
Rice will own 75% of the JV and be responsible for constructing and operating the JV's assets:
- A dry gas gathering system with capacity to gather over 1.8 MMDth/d of natural gas consisting of approximately 165 miles of high and low pressure 12" – 30" gathering pipelines with multiple interconnections to interstate pipelines including: Rockies Express, ET Rover, TETCO and Dominion East Ohio
- Approximately 50,000 horsepower of compression for gathering and delivery into various downstream interstate pipelines
- A fresh water distribution system designed to deliver fresh water to pads for completion activities
Under the terms of the Agreement, Gulfport will own the remaining 25% of the JV and dedicate approximately 77,000 leasehold acres, including the acreage recently acquired in its Paloma Partners III, LLC and American Energy – Utica, LLC transactions. In addition, Gulfport will also contribute to the JV an existing 11-mile gas gathering pipeline and a 350 MDth/d TETCO interconnect, which are both located in Monroe County.
Rice and Gulfport plan to invest approximately $520 million to develop gathering and compression assets and $120 million for water assets within the JV over the next six years. Each partner will fund its proportionate share of the total capital investments. Initial construction of the system is expected to begin immediately and first deliveries are planned for the middle of 2016.
The JV significantly increases Rice's leading midstream position in the core of the Utica Shale. By leveraging its existing footprint, Rice is able to grow its third-party business and expand its relationship with Gulfport across Gulfport's premier position in the prolific dry gas Utica Shale. Rice and Gulfport plan to pursue third-party gas gathering and water services opportunities within a 340,000-acre area of mutual interest that will cover portions of eastern Belmont County and Monroe County, Ohio.
Commenting on the announcement, Daniel J. Rice IV, Chief Executive Officer, said, "We are excited about furthering our midstream relationship with Gulfport across their position in the core of the Ohio Utica Shale. This joint venture will be one of the premier midstream systems in the prolific dry gas core of the Utica and adds to Rice's attractive inventory of potential drop down candidates to Rice Midstream Partners."
About Rice Energy
Rice Energy Inc. is an independent natural gas and oil company engaged in 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. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements, including those related to our planned midstream joint venture with Gulfport and the terms thereof and capital requirements for the construction of midstream assets by the joint venture. 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. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including, but not limited to: commodity price volatility; the availability of capital on an economic basis; drilling and other operating risks; legislative and regulatory changes adversely affecting the industry; and transportation capacity constraints and interruptions. Furthermore, our planned midstream joint venture and related transactions may not be completed as described or at all and drilling and construction plans may change. 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. 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.
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SOURCE Rice Energy Inc.