Toby Rice, EQT’s New CEO, is NOT Cleaning House re Top Management

The clock is now ticking for Toby and Derek Rice who have made big promises about the future of the company they just seized control of (EQT). The Rice boys have a “100 day plan” they have already begun to implement. During the proxy fight to control EQT’s board, and ultimately its management team, Toby Rice threw some sharp barbs including talk that EQT’s existing management was not up to the task. The Rice boys said so, their board nominees said so, heck, Institutional Shareholder Services (ISS) said so too. There will be change (i.e. personnel change) at the “operational level” said ISS. But apparently that change only extended to two people: EQT’s (now former) CEO Robert McNally, and EQT’s (now former) top attorney, Jonathan Lushko–who were shown the door.
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Radicals Terrorize Outgoing CEO Rob McNally & Family at His Home

Do you consider it “free speech” to assemble a mob outside someone’s home at 2 o’clock in the morning and start hollering and shouting, beating a drum, thereby threatening and menacing an innocent family in that home? We sure don’t call it free speech. We call it gang activity–or maybe even terrorism. When the people inside the home feel threatened, what else can you call it? That’s what happened to EQT’s then-CEO Rob McNally and his family in the early morning hours of July 10, the day he lost his job following EQT’s annual meeting. Those outside doing the terrorizing were radical anti-fossil fuel nutters–some from out of state. Crazies. They should have been arrested. They weren’t.
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Rice Bros. Win Proxy War to Control EQT – Toby Rice New CEO

Toby Rice – New EQT CEO (photo credit: Pittsburgh Post-Gazette)

Monumentally BIG NEWS! The Rice boys, Toby and Derek, have won the proxy fight to elect their candidates to the EQT board. In a joint announcement made this morning, preliminary results show the Rice boys prevailed in a huge upset (80% of the vote) to gain control of the largest natural gas producing company in the U.S. Later today the new board will meet and vote to appoint Toby Rice CEO and President of EQT. The firing and replacement of top management won’t be far behind.
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PA Landowners Seek Class Action Against EQT re Gas Storage

Last July a group of 100+ southwestern Pennsylvania landowners sued EQT for failure to pay them rental fees for storing natural gas under their properties (see 100+ PA Landowners Sue EQT re Gas Storage Field Payments). That same group has just filed a request in U.S. District Court to upgrade the lawsuit to class action status, potentially including thousands of affected landowners.
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LOLA Energy Sues EQT for Trespass, Drilling Wells Under LOLA Land

In another MDN exclusive, last Friday LOLA Energy filed a lawsuit in Greene County, PA against EQT for allegedly drilling shale wells under property EQT formerly leased, property for which the leases had lapsed and were subsequently scooped up by LOLA Energy (see LOLA Energy is Back! Scoops Up Rice Acreage EQT Let Expire). LOLA says they are now the owners of those leases and that EQT has drilled under some of their properties. LOLA tried to broker a deal for compensation but those talks broke down and hence a lawsuit was filed.
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Proxy Advisory Firm Egan-Jones Supports Rice Bros. in Proxy War

A week ago we brought you the news that the country’s top two shareholder advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis & Co., are each supporting opposing sides in the EQT proxy war (see Latest Round of Proxy Announcements from Rice Bros., EQT). A third firm, Egan-Jones–perhaps not quite as high profile as ISS and Glass Lewis but a big deal nonetheless (in the list of the top 6 such firms)–has just endorsed…
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Handicapping the EQT/Rice Proxy Fight – Does it Matter Who Wins?

Photo credit: LA Times

Who’s winning the proxy war to control the board of EQT Corporation? According to an article in the Pittsburgh Post-Gazette, the ultimate outcome doesn’t much matter, at least for investors. “Investors love a proxy fight,” begins the article. Why? Because the share price for the company’s stock almost always rises during a proxy fight. As for who has more momentum going into next week’s July 10 annual meeting, it’s hard to deny that the Rice brothers have the big mo. The #1 shareholder in EQT, T. Rowe Price (owns 10% of all EQT stock), along with two other “top 10” EQT shareholders, are backing the Rice plan.
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EQT & Rice Trade Barbs Again, EQT Releases Refreshed Slide Deck

Yesterday saw the latest round of shareholder letters from both sides in the proxy war to control the board of EQT Corporation–the largest natural gas producing company in the United States (not to mention they are focused 100% on the Marcellus/Utica). The Rice brothers, Toby and Derek, crowed about the fact the country’s most prominent shareholder advisory service, ISS, has sided with them, along with three of the top 10 EQT shareholders. EQT made the case that current management and the coming “refreshed” board mean that EQT is essentially a new company, and now is not the time to screw it up (our words, their sentiment).
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Latest Round of Proxy Announcements from Rice Bros., EQT

Another day, another round of press releases from both EQT and the Rice brothers over the future of the company. The two sides are locked in a proxy battle to nominate a majority of board members, who in turn will appoint (or keep) top management for the company. Yesterday’s round of letters was, in essence, a recap of news that broke late last week: One major shareholder advisory firm, Institutional Shareholder Services (ISS), supports the Rice brothers’ attempt to take over the company, while a second major advisory firm, Glass Lewis & Co., believes existing management is the right answer for EQT’s future.
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Proxy War: ISS Supports Rice Brothers, Glass Lewis Supports EQT

Early on Friday, Institutional Shareholder Services (ISS), which makes recommendations to shareholders on how to vote in proxy fights, gave their stamp of approval to Toby and Derek Rice’s “activist” board takeover picks. ISS is heavily influential with institutional investors–organizations like hedge funds, mutual funds, and pension funds. We thought, “Oh oh, it’s all over now. The Rice boys have won.” But not so fast. Late Friday a second highly influential service that institutional investors look to for guidance, Glass Lewis & Co., threw their support behind the EQT slate of board candidates. The two most influential guidance services have split their support. What will shareholders do?
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Mass. Retirement Fund Sues EQT for Plummeting Stock Price

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The Cambridge (Massachusetts) Retirement System is not happy with their investment in EQT shares of stock, so they’re suing the company. They hope to turn the lawsuit into a class action on behalf of other shareholders. Cambridge claims EQT made false and misleading statements about their purchase of Rice Energy–claims about cost efficiencies that never materialized, and claims about the location of Rice leases that were not as close to EQT’s acreage as claimed. In a word, Cambridge is alleging fraud on the part of EQT.
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Another Round of Dueling Letters to Shareholders from Rice, EQT

Both the Rice brothers and EQT are issuing press releases just about every day now in their battle to wrest (or keep) control of EQT. Yesterday the latest round of letters to shareholders, circulated via press release for the world to see, were issued. First up was a letter early yesterday from John F. McCartney, a Rice Team board nominee, praising Toby Rice (potential new EQT CEO). Later in the day EQT issued a letter chronicling what we would call an EQT listening tour. Although both letters tell shareholders to not vote for the other side’s board picks, noticeably absent from this latest round was the acrimony and personal attacks that have been present in recent letters.
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Former EQT CEO: Shale Revolution a “Disaster” for Investors

Steve Schlotterbeck

One of the highlights for MDN editor Jim Willis in attending last week’s Northeast Petrochemical Conference in Pittsburgh was the opportunity to meet and hear speak Steve Schlotterbeck, former CEO of EQT. Steve is the guy who pulled off the buyout/merger of Rice Energy into EQT, creating the largest natural gas producing company in the United States. He had the guts to walk away from EQT when the board refused to pay him what he was worth (see EQT CEO Steve Schlotterbeck Suddenly Quits, Leaves Company). Last Friday morning Steve opened the final day of the conference with more guts and plain talk. He said the shale industry has been “an unmitigated disaster for buy and hold investors.” Whoa! What did he mean?

UPDATE: We have a full transcript of Steve’s speech below.
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EQT Claims Toby Rice Mismanaged Rice Energy, Not Fit to be CEO

The nasty proxy war between EQT CEO Rob McNally and Toby Rice over who will control the company following a July 10 annual meeting just got a whole lot nastier. Last Friday, McNally revealed that a review of internal documents they received as part of their purchase of Rice Energy in 2017 show that in the span of two weeks in 2015 some 25 complaints by Rice employees were made against Toby with the Rice HR department, although the nature of the charges are not detailed, leaving it open to shareholders to speculate.
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EQT Fires Back at Rice Bros. with New Investor Presentation

On Tuesday Toby and Derek Rice published a presentation to EQT investors in connection with EQT’s upcoming annual meeting of shareholders on July 10 that “takes no prisoners” (our words), condemning EQT’s current management and most of its board members (see Rice Brothers Publish Scalding EQT Investor Presentation). We said in our post that if the allegations (or spin, or whatever word you want to use) are true, EQT would need to respond, strongly, to refute it. Yesterday EQT issued its response by publishing a newly updated investor presentation. Continue reading