Current RICE Stock Info

Rice Energy (ticker: RICE) is an independent natural gas and oil company engaged in the acquisition, exploration and development of hydrocarbons in the Appalachian Basin. The company filed its initial public offering in January 2014. Approximately 33% of the company’s shares are owned by management following the closing of $900 million in unsecured senior notes in April 2014. Proceeds from the offering are being used to de-risk Rice’s 2014 capital expenditures plan.

Rice announced the acquisition of approximately 22,000 net acres in the Marcel...

Analyst Commentary

Capital One Securities - (7.7.14)

Rice Energy will spend $336MM on 22K net acres in western Greene County, Pennsylvania, in a deal scheduled to close in August. The properties include 7 producing wells (~20 MMcf/d) with 5 additional wells in progress. Backing out the current production at $5,000 per flowing Mcf of daily production implies a value of roughly $11K/acre. These 22K net acres will be incremental to the company's already anticipated 30K net acres of organic leasing to be added in 2014. The $336MM will also be incremental to the current CAPEX total, which was previously guided to $1,340MM and is now raised to $1,691MM. Well performance on the new acreage is similar to what we model for RICE's existing Marcellus acreage, and the addition of the ~190 unrisked locations (we model an increase of 165 net locations to inventory) takes our target price higher by $2 to $32. The additional spending will be financed by the company through an equity offering (also announced this morning) along with some combination of cash on hand and borrowings under the revolver. In a separate release this morning, RICE announced that a total of ~20.5MM shares will be offered to the public. Of that total, 7.5MM will be newly issued shares with proceeds of about $220MM net to RICE. The remaining 13MM shares are being sold by existing holders with no proceeds net to RICE. We see the acquisition as accretive and view it as a positive long-term move for RICE that extends its Marcellus drilling inventory to nearly 500 net locations in our model.  


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