3 Counties, 5 Drillers Led OH’s 50% Increase in 2Q Gas Production

The Pareto Principle is alive and well in the Buckeye State. You may know it as the 80/20 rule, or in this case, the 75/25 rule. The rule that states roughly 80% of the results come from 20% of the effort. Last week MDN brought you the latest update from the Ohio Dept. of Natural Resources–their second quarter 2018 report showing all production coming from the Ohio Utica Shale (see Top 25 Producing Gas & Oil Wells in Ohio Utica for 2Q18). While MDN provided you with Top 25 lists showing the best-performing wells (both gas and oil) during 2Q, and while we provided you with a better spreadsheet to view the information than that provided by the ODNR itself, our analysis was basic and high level. Utica natgas production was up a big 42% over the same period last year, and Utica oil production was up 11%–a cumulative 50% increase when you convert it all into equivalents. The experts at S&P Global Platts have done a deep dive into the numbers and have found that three counties represent 75% of all production in 2Q18, and five drillers represent 75% of all production in 2Q18. Which counties and which drillers? Read on…
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Rice Brothers Act II – $200M Marcellus/Utica Investment Firm

Good news! The four Rice brothers, all of whom formerly worked in the family business, Rice Energy, have launched a new venture. You will recall last November EQT consummated a deal to buy and merge in Rice Energy, paying $8.2 billion to do so (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). Not all of that money went into the pockets of Dan, Toby, Derek and Ryan Rice–but you can be sure a good chunk of it did. We’ve been wondering where the Rice boys would land since they have a non-compete clause with EQT. Would they leave the Pittsburgh region and restart somewhere else? Fortunately, no! The four boys plus a fifth partner, a former VP at Rice, have pooled their money and expertise and have just launched Rice Investment Group (RIG), a (so far) $200 million “multi-strategy fund investing in all verticals of the oil and gas sector with a focus on partnering where our operational, technical, and strategic experience add value.” We love everything about the Rice boys. They’re young, irreverent, know how to have a good time, and smart. They come from good stock. Their dad, Dan Rice III, was once the most successful mutual fund manager in the United States, for over a decade, until the company he worked for (BlackRock) booted him for their own bungling and lack of communication with investors (see BlackRock’s Screw-up with Dan Rice & Rice Energy). The boys learned from the best and now they’ve launched an investment firm of their own. When you look at their website homepage, it is classic Rice boys–an animated video of an 800-pound gorilla on the homepage, signalling their intention to be THE big player in funding Marcellus/Utica ventures…
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EQT Begins Process of Separating Midstream…into New Company?

Yesterday EQT released details about their plans for 2018 (see our lead story today, EQT Drills Longest Marcellus Well Ever, Reveals 2018 Plans). Plenty of news sources covered that news. However, EQT Midstream, the pipeline subsidiary of EQT, also released an announcement, which received almost no media coverage. And yet there is, for us, some big news in the EQT Midstream announcement. As you know by now, EQT recently bought and merged in Rice Energy, creating the largest onshore natural gas producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). EQT bought not only Rice the driller, but Rice the midstream company too. EQT has it’s own EQT Midstream subsidiary. And yet, EQT (the driller) still owns a number of midstream/pipeline assets, on paper, separate from EQT Midstream. Same with Rice Energy–they had Rice Midstream Partners as a subsidiary. It’s all kind of a mish mash–with pipeline assets spread around four (or more) different entities on paper. Yesterday’s announcement by EQT Midstream said (a) the EQT parent company is considering “dropping down” (shifting ownership on paper) for all remaining midstream assets to EQT Midstream, and (b) EQT is also considering combining EQT Midstream and Rice Midstream Partners into one single entity–one division for all midstream assets. Which certainly makes sense. Why not tidy up the operations and get everything under one umbrella? Except we think there may be another reason for combining all of the midstream assets into one, neat, lovable bundle: spinning off the midstream division into its own standalone company, completely separate from the EQT parent…
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Rice Energy CEO Dan Rice Gets $2.6M Golden Parachute from EQT

The golden parachute has popped open for Rice Energy’s former CEO, Dan Rice IV. And it’s worth $2.6 million. EQT filed paperwork with the Securities and Exchange Commission last week to say that Dan Rice IV has been terminated (as an employee) as of the day the two companies merged. In a deal worked out prior to the merger, Dan is getting a check for $2.6 million–$1.91 million as a severance payment and $704,000 in lieu of his annual bonus. Which frankly doesn’t sound like a whole lot, given Dan was one of the shareholding owners of Rice Energy. His salary in 2016 was $3.35 million. But don’t shed any tears for Dan. We suspect his stock in the newly-merged EQT is worth a fortune. And Dan gets a seat on the EQT board of directors, a gig that will pay him. What’s next for Dan and the other Rice boys? We don’t have the particulars for all of the Rice boys, but we do know (from the SEC filing) that Dan signed a 3-year non-compete agreement, so we won’t see Rice Energy II in the northeast for at least three years. Other than that, we suspect the boys already have something up their proverbial sleeve. The Rice boys don’t strike us as the lounge-around-the-pool types…
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Out with the Old – Part 2: EQT Sign Replaces Rice at HQ Building

On Monday, Rice Energy was merged into EQT, creating the largest onshore natural gas producing company in these United States (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). In that post we shared with you a short video taken by an MDN friend that showed a pair of cranes taking down the Rice Energy name from Rice’s (now former) headquarters building in Canonsburg, PA (just outside Pittsburgh). Another MDN friend sent us a pair of pictures (below), taken the following day, which show an EQT sign now fixed over top of where the Rice Energy sign once stood. Our second MDN friend also told us that all the parking lot signs at the facility have EQT stickers on them, covering over the Rice Energy name. As we said in our Tuesday post, EQT isn’t wasting any time making a statement: Out with the old, in with the new. EQT is firmly large and in charge. A few days after the merger and Rice is already a memory, starting to fade away…
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Corp Raider Slinks Away After Losing EQT Fight; Selling Stock

On Monday, Rice Energy was merged into EQT, creating the largest onshore natural gas producing company these United States (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). The $8.2 billion deal was first announced back in June (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). There was plenty of drama along the way to the deal getting done–primarily opposition by evil corporate raider Jana Partners, in collusion with Atlas Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana was fresh off from helping Amazon take over the Whole Foods grocery store chain. Yet somehow EQT was able to vanquish Jana’s efforts to stop the merger. How did EQT do it? We went behind the curtain yesterday to share EQT’s winning strategy in defeating Jana (see EQT’s 4-Pronged Strategy for Defeating Corp Raider Jana in Rice Deal). They way corporate raiders work, as we’ve explained many times before, is to buy enough stock in a company to get a board seat, then agitate in the board room, forcing the company to layoff people and sell assets–all in a bid to make the stock price pop so the raider can sell their shares at a handsome profit and move on to the next victim. Disgusting organizations. Since Jana lost face and reputation by not stopping the EQT/Rice merger, they’ve decided to slink away, back into the darkness. We spotted a story that says Jana has already sold a portion of their EQT stock–and they continue shop more of it. They’ve thrown in the towel on EQT and will now go pick on someone else to destroy…
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EQT’s 4-Pronged Strategy for Defeating Corp Raider Jana in Rice Deal

On Monday, Rice Energy was merged into EQT, creating the largest onshore natural gas producing company these United States (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). The $8.2 billion deal was first announced back in June (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). There was plenty of drama along the way–primarily opposition to the deal by evil corporate raider Jana Partners, in collusion with Atlas Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Another corporate raider, D.E. Shaw, piled on too, but at least they supported the deal to merger Rice into EQT (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). You know we loathe corporate raiders. They buy enough stock in a company to get a board seat, then agitate, forcing the company to layoff people and sell assets–all in a bid to make the stock price pop so they can sell their shares at a handsome profit and move on to the next victim. Disgusting organizations and disgusting people. Jana was the primary opponent to the EQT/Rice deal. Jana was fresh off from helping Amazon take over the Whole Foods grocery store chain. Yet somehow EQT was able to fend off Jana’s efforts against their company. How did they do it? That was the subject of a recent post on the Seeking Alpha investor’s website. Here’s a fascinating look at the strategy EQT used to fend off an evil corporate raider…
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Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger

Yesterday the Marcellus/Utica experienced a fracking earthquake of historic proportions. That is, a fracking earthquake metaphorically speaking. Yesterday Rice Energy was merged into EQT, creating the largest onshore natural gas producing company in these United States. The $8.2 billion deal was first announced back in June (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). There was plenty of drama along the way–primarily opposition to the deal by evil corporate raider Jana Partners, in collusion with Atlas Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Shame on both of them. Fortunately their effort to stop the deal didn’t gain traction. Yesterday was the day when the two companies became one. Two Rice Energy board members, Dan Rice IV and Bobby Vagt, joined the EQT board. Another two independent (outside either firm) board members were also added–Thomas Karam, founder and Chairman of Karbon Partners, and Norman Szydlowski, former president and CEO of SemGroup Corporation. Standing by the virtual water cooler, MDN has overheard that many Rice personnel were nervous about what yesterday would bring. You know the routine: Two rooms–one for those staying, and one for those getting the heave-ho. Everyone waiting to get “the call” to whichever room they’re assigned. We’ve been there. It sucks. But that’s the reality in today’s corporate world. One thing we found interesting is that the huge Rice Energy sign on the company’s (former) HQ building was taken down yesterday–the very day the two merged. An MDN friend caught some of it on a smartphone video (below). EQT isn’t wasting any time making a statement: In with the new, out with the old…
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EQT/Rice Shareholders Make it Official – Merger Happens Nov 13

Next Monday the largest natural gas-producing company in the these United States will be born–from the merger of EQT and Rice Energy, based in Pittsburgh. Yesterday the shareholders for both EQT and Rice voted to approve the merger/deal by overwhelming majorities. The megadeal was first announced back in June (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). Evil corporate raider Jana Partners tried to stop the deal–but failed, as they acknowledged earlier this week (see Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote). Next Monday the transaction will be complete and the new EQT will produce more natural gas in the Lower 48 States than Chesapeake Energy, the current reigning champ. Some 84% of the EQT shareholders who voted, voted to approve the deal, and 74% of voting Rice shareholders voted in favor of the deal. What happens next? After the consummation of the merger on Monday, EQT CEO Steve Schlotterbeck said the company will immediately appoint a committee to look into…splitting the company. Yes, you read that right. Not splitting it back into EQT and Rice, but splitting it into upstream (drilling) and midstream (pipelines). Two companies will become one and then become two again. Go figure. A recommendation and decision about whether to proceed with a split will happen, according to Schlotterbeck, by “the end of the first quarter 2018.” There’s little doubt the decision will be “yes” on a split…
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Corp Raider Jana Partners Admits Defeat Ahead of EQT/Rice Vote

The guy who runs the investment firm Jana Partners, Barry Rosenstein, is a corporate raider. He invests millions in a company he’s targeted in order to get one or two people elected to the board of directors. Those people then agitate and force the company to lay off hundreds or thousands of employees, and sell off assets, in a bid to make the stock price jump. When the price does jump, corporate raiders like Rosenstein then sell their shares, making a profit on the new/higher price (buy low sell high). It may be legal, but we consider it immoral. In June, EQT, one of the biggest drillers in the Marcellus/Utica, announced a deal to buyout and merge in Rice Energy, another sizable M-U driller (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later Jana targeted EQT in an attempt to stop the deal (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana believes it could make a whole lot more money if the deal doesn’t go through, and instead if EQT splits itself in two–one half a drilling company, the other half a pipeline company (firing a bunch of people along the way). So Jana went on a smear campaign, making all sorts of wild accusations against EQT, including calling EQT management’s compensation structure “perverse,” and accusing the company of using “deceptive” maps of EQT and Rice acreage positions (see Corp Raider Continues to Trash Talk EQT/Rice Merger, Vote Set Nov 9). All the trash-talking and bullying didn’t worked. The deal will happen–this week–and Jana is now officially throwing in the towel. They will still vote against the deal with their shares, but they have withdrawn their proxy fight to enlist enough other shares to vote down the deal…
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Rice Energy 3Q17: Record High Production for “Shalennial Team”

Rice Energy, while not the biggest, is certainly one of the best-operated drillers in the Marcellus/Utica. Rice issued their third quarter 2017 update last week. It will be the last quarterly update for the company as Rice shareholders will vote this week to sell out to larger competitor EQT. Because of the impending vote this Wednesday, Rice elected not to conduct an analyst phone call with the release of their 3Q17 update–we only have written statements to go by. The latest quarterly report shows Rice hit yet another record-high for production for natural gas and equivalents, producing 1.44 billion cubic feet equivalent per day (Bcfe/d). During 3Q17 Rice drilled 25 Marcellus wells and 7 Utica wells (32 total). The company lost $107 million during 3Q17, versus making a profit of $66 million in 3Q16. Rice is and always has been run by young guys (and gals). The Rice boys are Millennials. So in this last quarterly update, they displayed some of their trademark irreverent humor by coining a new word: shalennial. Dan Rice, CEO, said this in a quote in the release: “Our success is a testament to the core assets that we have acquired and developed with our shalennial 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.” A footnote next to the word shalennial defines the term thus: “Shalennial /SH?l?en??l/ noun: (1) an evolving, tech-driven leader of the shale generation; (2) an employee of Rice Energy.” We’ll sure miss Rice’s humor, and their go-get-em, can-do attitude, around the Marcellus/Utica shale patch…
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Corp Raider Supports EQT/Rice Merger, but Lawsuit Still Looms

In something of a good omen ahead of a vote on Nov. 9 by shareholders of EQT and Rice Energy to approve a merger, one of two EQT-shareholding corporate raiders, D.E. Shaw, supports the merger. In point of fact, Shaw has not opposed the merger since it was announced in June. Shaw’s “issue” has been that the merged EQT/Rice should immediately split itself in two–into upstream (drilling) and midstream (pipelines). Shaw’s pressure seems to be one of the (main?) reasons why EQT moved up the timing to consider such a split (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). Last week EQT CEO Steve Schlotterbeck all but confirmed the company will split in two after a special committee formed to explore that option makes its final recommendation (see EQT CEO Signals Company Likely to Split in Two After Rice Merger). Evil corporate raider Jana Partners is still opposed to the merger and is fighting it tooth and nail. Jana may have some help. A flurry of lawsuits have been filed by shareholders opposing the merger–most of them going nowhere. However, one of the lawsuits, filed in Allegheny County Court, will go before a judge three days before the Nov. 9 vote. That lawsuit requests an emergency injunction against the vote. It’s possible the county judge could block the vote, giving Jana more time to whip up opposition…
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EQT CEO Signals Company Likely to Split in Two After Rice Merger

It looks like all of the agitating and nasty letters and lobbying by corporate raiders has had an effect on EQT. In June, EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). A vote is scheduled for Nov. 9 on the merger deal–expected to pass. From the beginning, Jana has used bullying tactics to try and pressure EQT into abandoning the buyout/merger, and instead split itself into two companies–upstream (i.e. drilling) and midstream (i.e. pipelines). The language thrown around is called “sum of the parts”–as in if EQT splits apart into two separate companies (the parts) the two would be worth more to investors, each company’s stock would preform better, than continuing on as a single company. Other EQT investors, like corporate raider D.E. Shaw Group, have also lobbied for the same split. Under pressure, EQT announced in September that it will move up the timeline to consider such a split (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). Last week EQT issued their third quarter update and held an analyst phone call. In response to a question from an analyst, EQT CEO Steve Schlotterbeck all but said the company will split in two after a special committee formed to explore that option makes it final recommendation…
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EQT 3Q17: Profit $23.3M, 2.3 Bcfe/d Production, Rice Merger on Track

Yesterday one of the biggest Marcellus/Utica drillers, EQT, issued their third quarter 2017 update. EQT will soon be THE biggest Marcellus/Utica driller, indeed the biggest shale gas producer in the United States (surpassing Chesapeake Energy), once a deal to buy Rice Energy consummates later this year. But what about just EQT in 3Q17? The company reports making a profit of $23.3 million during the quarter, versus losing $8 million in the same quarter last year. EQT produced 205.1 billion cubic feet equivalent (Bcfe) of natural gas during the quarter–which works out to be 2.3 Bcfe per day. Here are some interesting stats from the update: Since EQT began drilling shale wells, they have drilled (called “spud” in the industry) 1,288 shale wells. Of those wells drilled, 1,060 are online, making the company money. Below we have the full update, a copy of the transcript from the analyst phone call, the latest slide deck loaded with charts and graphs, and a bit of amusing analysis about the update/phone call…
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Corp Raider Continues to Trash Talk EQT/Rice Merger, Vote Set Nov 9

The disgusting corporate raiders at Jana Partners are fighting to the bitter end in their attempt to stop the merger/takeover of Rice Energy by EQT. In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana is the same company that recently helped Amazon in its hostile takeover of grocery company Whole Foods. Unfortunately (for Jana), their strategy isn’t working this time around. Over the past few weeks Jana has sent a couple of nasty letters to EQT’s board, making some rather wild claims. The tone of Jana’s communication is becoming more shrill as time goes on, as desperation sets in and a vote by EQT shareholders on the deal draws near (Nov. 9). The problem is the financial press picks up on these wild claims and repeats them, so yesterday EQT felt it necessary to (once again) respond and set the record straight–to debunk the lies Jana is spreading about the deal and about EQT’s past performance…
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EQT Raises $3B in IOUs as Down Payment for Rice Energy Purchase

On Wednesday, EQT announced the company has floated $3 billion (yikes!) of IOUs–called “notes” in the financial industry–with various due dates and interest rates payable, in order to make a cash payment due as part of their purchase of Rice Energy. The total deal is worth $8.2 billion, with EQT paying $6.7 billion and assuming Rice’s existing debt of $1.5 billion (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). This deal is moving ahead, over the objections of two different corporate raiders who own a considerable amount of EQT stock (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal and Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). In addition to raising $3 billion in cash from IOUs, EQT is also tapping into its line of credit and the money it has socked away in its checking account to get this deal done…
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