EQT Announces Late Annual Meeting, a “Screw You” to Rice Bros.

EQT is not holding their annual meeting in April this year, the month they’ve traditionally held the annual meeting until last year, when it was held in June due to an impending split of the company into upstream and midstream. Instead, the current board is using a legal loophole to delay this year’s annual meeting to July–as a way of obstructing the efforts of Toby and Derek Rice and their proxy war to take over the company.
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EQT 2018: $2.2B Loss; CEO Ridicules Rice Plan, No “Magic App”

EQT released its fourth quarter and full year 2018 update yesterday. The numbers show the company lost, on paper, $2.2 billion–but the loss was from “impairments,” writing off the value of old assets they had sold. Not an actual $2.2B out-of-pocket loss. The company, which is the largest natural gas producer in the U.S., produced 1.49 trillion cubic feet equivalent of gas in 2018, up an incredible 68% from the 888 billion cubic feet produced in 2017.
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Rice Boys Goose EQT Board – Ask for April (not June) Annual Mtg

Earlier this month Toby and Derek Rice, formerly executives with Rice Energy (before it sold to EQT), launched a proxy war to nominate board members who will appoint Toby CEO of EQT (see Proxy War: Rice Brothers Say Top EQT Mgmt, Board Must Go). The Rice boys are goosing the EQT board, asking them to schedule the annual meeting (where a vote will be taken) in April and not two months later in June as currently planned.
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Rice Boys Secret Sauce for Reviving EQT: Digital & Data

EQT CEO Rob McNally and board chairman Jim Rohr are in a pitched battle to maintain their control of the company. They dismiss a plan by Toby and Derek Rice to enhance EQT’s production at a lower cost as something that worked for small potatoes Rice Energy, but couldn’t work for a big, important company like EQT. The Rice boys shoot back that EQT is bloated and lumbering and needs a good house-cleaning. So what is the essence of the Rice plan to get EQT back on track? What’s the Rice boys’ secret sauce?
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Proxy War: Rice Brothers Say Top EQT Mgmt, Board Must Go

Let the fight begin. Yesterday the Rice brothers, Toby and Derek, held a conference call with EQT investors to lay out their detailed proposal for how EQT should be run. The Rice plan includes giving the boot to current EQT CEO Rob McNally and much of top management, and installing Toby as CEO, bringing along 15 Rice alumni to kick-start EQT’s “moribund performance” (our interpretation of what Toby said).
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WSJ Says EQT is “Failing”, DE Shaw Says EQT Mgmt “Not Up to Task”

More drama in the ongoing soap opera of EQT and the Rice brothers’ attempt to take it over. The latest items of interest: The Wall Street Journal ran an article in today’s online edition with a headline that says EQT is “failing.” And one of EQT’s biggest investors, D.E. Shaw, is telling the board that current top management “doesn’t have what it takes” to get the company financially performing again. Ouch.
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EQT Settles 2 Class Action Lawsuits for $5.7M re Employee Issues

Two separate cases before U.S. District Judge David S. Cercone (in Pennsylvania) were settled yesterday by EQT. One of class action cases, brought against EQT, alleged the company had intentionally misclassified employees as independent contractors to avoid paying overtime. The settlement awards “more than 100” workers back wages totaling $2.8 million. The other class action case is similar, except it was filed against Rice Energy before Rice was bought out by EQT. Now that Rice is part of EQT, it is EQT paying the bills. In the Rice Energy lawsuit, some 90 workers are being paid $2.9 million for unpaid overtime. Wednesday was an expensive day for EQT.
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More Rice Bros. vs. EQT Intrigue – Better than Dynasty & Dallas!

Remember the Carrington’s from the 1980s prime time soap Dynasty? Or how about the Ewings, as in J.R. and Bobby, from the prime time soap Dallas? No, we’re not talking about the remakes of those shows appearing in recent years. We’re talking about the originals. Both shows revolved around oil families of immense wealth–one in Colorado, the other in Texas. We have a real-life version of Dynasty and Dallas playing out right now–in Pittsburgh–with the Rice brothers and EQT. Not all the sex stuff–get your head straight! We’re talking about the backroom deals and bare-knuckle politics stuff. Last week we told you that Toby and Derek Rice, formerly of Rice Energy, have launched an effort to take over the company they sold Rice Energy to (see Rice Brothers Attempt to Take Over EQT, Install Toby as CEO). Earlier this week we told you that EQT Chairman Jim Rohr and CEO Rob McNally want to “talk” (yell, scream?) some more with the Rice boys (see EQT Chairman Rohr & CEO McNally Ready to “Talk” with Rice Boys). According to an article appearing in the Wall Street Journal, the Rice boys have more backing for their takeover plan, from Elliott Management. The details that leaked say the Rices want to replace Rohr and McNally. This is epic.
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EQT Chairman Rohr & CEO McNally Ready to “Talk” with Rice Boys

A week ago MDN brought you the news that Toby and Derek Rice, formerly of Rice Energy, have launched an effort to take over the company they sold Rice Energy to (see Rice Brothers Attempt to Take Over EQT, Install Toby as CEO). In recent months the Rice boys have had private conversations with EQT’s top dogs, Chairman of the Board Jim Rohr and CEO Rob McNally, but according to Toby and Derek, those talks went nowhere. The Rice boys say EQT needs some new energy and a new direction, to leverage the world class assets it now owns. And the Rice boys think they have just the plan to accomplish it. After going public with their plan and their intent to wage a proxy war (get board members elected who will endorse their plan), word has leaked out from “sources” that Rohr and McNally want to have another round of talks with the Rice boys, to hear more about their plan. Which causes us to ask, didn’t all that get discussed the first time around? What’s the real purpose of more “talks” with the Rice brothers?
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Rice Brothers Attempt to Take Over EQT, Install Toby as CEO

“Well, the EQT situation is a total mess.” So began a super secret email to MDN from a highly-placed source we implicitly trust. Not long after receiving that email, we spotted a press release from the Rice brothers, Toby and Derek, who along with their other two brothers, previously founded and built Rice Energy into a major Marcellus/Utica operator. The Rice brothers sold their company to EQT last year for $8.2 billion (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). As part of the deal, the boys took 80% of their compensation in the form of EQT stock. The Rice boys now say EQT and its stock performance ain’t doin’ so hot. They (the Rice boys) think they have the solution. The solution is to install Rice leadership at EQT. Wouldn’t that be the ultimate head fake? Sell your company to a much larger company, creating the the largest natgas producer in the U.S.–then take it ALL over. A reverse takeover. Dan Rice III didn’t raise stupid boys.
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Rice Boys Invest in Fracking Software Company, Toby Joins Board

After selling Rice Energy to EQT (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US), the four Rice brothers, all of whom worked at Rice Energy (and left after the merger), launched a new venture (see Rice Brothers Act II – $200M Marcellus/Utica Investment Firm). Dan, Toby, Derek and Ryan Rice plus a fifth partner, a former VP at Rice, pooled $200 million of their money (and their expertise) and launched Rice Investment Group (RIG). RIG has just closed on a round of investment in Cold Bore Technology, a company that uses software to do better fracking. Toby Rice joined Cold Bore’s board. It’s good to see the boys back and active.
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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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