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Alpha Natural Resources Does NOT Own Nearly Half of Rice Energy

It’s not often we get to set the record straight on a story run in the financial press–but we get to this time. A story appeared yesterday on the American Banking & Market News site that coal company Alpha Natural Resources (ANR), which has a joint venture with Rice Energy to drill in the Marcellus Shale, owns 42.8% of Rice Energy’s outstanding common shares of stock. Which made our eyeballs nearly fall out. How in the world could a coal company that filed for bankruptcy earlier this year (see Alpha Natural Resources in Bankruptcy – What about Marcellus?), own that much of Rice Energy? It made no sense to us. So we went digging. The story quotes from an extensive filing by ANR with the Securities and Exchange Commission. The 13D/A filing appears to make the claim that ANR owns 54,306,610 shares of Rice Energy (see below). However, if you read it closely, the language is dense and even misleading. We believe what it means to say is that ANR along with Rice Energy Holding, Rice Energy Family Holdings, and NGP Rice Holdings–all of them together–own 54,306,610 shares of stock. NOT just ANR by itself. We think the author of the story misinterpreted what is very obscure financial language. We reached out to Rice Energy and Rice’s president Toby Rice responded that he believes (is not 100% sure) that ANR owns less than 4 million shares of stock in Rice Energy
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Rice Energy Sells Part Ownership in Rice Midstream for $500M

Rice Energy announced yesterday they’ve pocketed a cool $500 million from an unnamed energy investment company in return for an ownership stake in their subsidiary Rice Midstream. Rice Energy (the mother ship) will use $375 million of that new cash to pay off debts, and the other $125 million will get used for drilling new Marcellus and Utica Shale wells…
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Rice Energy President Toby Rice Buys $100K Worth of Co Stock

From time to time (not all of the time) when we notice a drilling or midstream company executive buying or selling company stock–called insider buying or insider selling–we bring you that news. We always take it as a good sign when those responsible for a company–either senior management or the board of directors–buys stock in the company they manage. For us, it’s evidence of confidence in the direction of the company. “Eating your own dog food.” Such is the case with one of our favorite Marcellus/Utica drillers–Rice Energy. Rice is a young company led by three young brothers–Dan (CEO), Toby (President & COO) and Derek (EVP). Toby has just purchased 7,500 shares of Rice Energy for $99,750…
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DUC DUC Goose! The Growing Backlog of Uncompleted Shale Wells

Ever hear of a DUC? No, we didn’t forget the “K” on the end of DUC. It stands for Drilled but UnCompleted (DUC) wells. Completing a well means taking the final step of fracking the well and hooking it up to production. Lately there’s been a lot of talk about DUCs–a large inventory of wells drilled (holes in the ground) not yet completed. Completing a well takes a lot of sand, water and money. There’s little incentive to complete wells when commodity prices for oil and gas are so low. In some cases drillers will drill the borehole and not complete a well as a way of holding their acreage before a lease expires. In other cases, they’d love to finish the job–but the price they will get is too darned low, so they put completion on hold. Sometimes a driller has contracted for a rig and crew to operate it–instead of canceling and owing that money anyway, they go ahead and drill. How many DUCs are there in general, and in the Marcellus/Utica specifically? The honest answer is, no one knows for sure. But smart analysts can make some pretty good guesses, based on company reports and their own industry knowledge. Below we bring you the latest we can find on DUCs–specifically how many DUCs there are in the Marcellus/Utica…
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Top 10 Marcellus/Utica Drillers by Number of Permits May-Aug 2015

MDN recently published Volume 2 of our 2015 Marcellus and Utica Shale Databook–a research book that chronicles who’s drilling and where in the Marcellus/Utica region. We thought it would be interesting to bring you some of the results from this latest volume. Below is a list of the top 10 Marcellus/Utica drillers based on the number of permits they were issued from May through August 2015. The numbers of permits shown are for discrete, individual wells. Each well drilled typically involves multiple permits–one to begin drilling, another to frack, etc. We toss out all of the multiples and show the numbers for discrete, individual wells. The top driller ranked by number of permits received may just surprise you–it did us. In addition to the list, we’ve included stock charts for each company to show you just how badly the industry has been hit over the past year. Stock prices for most of the top 10 have plunged…
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Rice Energy 3Q15: $59M Profit, $750M LOC, Selling Gas Outside NE

Rice Energy, a very young but important pure play driller in the Marcellus/Utica, released its third quarter update yesterday. Bucking the trend of other northeast drillers, Rice earned $119 million in profit before interest, taxes and all that jazz (called EBITDAX), and they earned $59 million after all that jazz. In the black. No paper loss. It’s all good. One of the secrets to Rice’s success is that they’re selling their gas for an average of $0.38 higher per Mcf than others because of deals with the REX and Texas Eastern pipelines that carry Rice’s gas to markets outside of Appalachia. Production was 609 million cubic feet equivalent per day (Mmcfe/d) in 3Q15. The company reports expanding their line of credit at the bank to $750 million and transferring ownership (called a “drop down”) of their water services business from Rice Energy the driller to Rice Midstream the subsidiary, netting Rice Energy a nifty $200 million on paper. In essence they transferred money from one pocket to another. Here’s the full update from one of our favorite Marcellus/Utica drillers…
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Competitors Rice Energy & Gulfport Form $640M Utica Midstream JV

joint ventureYesterday Rice Energy announced that the company’s subsidiary, Rice Midstream, has signed a joint venture agreement with competitor Gulfport Energy to develop a pipeline gathering and water delivery system for Gulfport’s Utica Shale drilling program in Ohio’s eastern Belmont County and Monroe County. Rice will be 75% owner and in charge of the jv. Rice and Gulfport plan to invest a combined $640 million into the jv over the next six years. Construction begins immediately and the first gas (and water) will begin to flow through the new system by middle of next year. Here’s the details…
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Jeb Bush Visits Rice Energy in PA, Ticks Off Sierra Clubbers

Jeb BushLooking like he’d had his morning Ensure drink, Republican presidential candidate Jeb Bush had plenty of energy as he talked about energy policy in a speech he delivered yesterday at the headquarters of Rice Energy in Washington County, PA. As predicted, Bush said things the oil and gas industry can stand up and cheer for: lift the ban on exporting crude oil, make it easier to export natural gas, and repeal some of the onerous regulations now on the books. He would also roll back Barack Obama’s Clean Power Plan regulations that target coal (and natural gas) with a regulatory death sentence. Below is how it was reported, followed by Bush’s policy paper on how he would handle energy policy if he were to get out of single digits in the polls and get the nomination (something not very likely)…
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Jeb Bush Visits Rice Energy Today to Unveil New Energy Plan

Jeb BushLow energy Republican presidential candidate Jeb Bush (as Donald Trump calls him) has decided to inject some high energy (as in the energy industry) into his campaign. Jeb is today visiting the Pittsburgh headquarters of one of the Marcellus/Utica’s most successful drillers–Rice Energy–to unveil his energy plan that calls for the lifting of the crude oil export ban (something our Dear Leader, President Obama, opposes) and for the approval of the Keystone XL oil pipeline (Obama also opposes). However, the thing that makes Jeb’s visit to Rice Energy salient and meaningful for the Marcellus/Utica is that he will call for (a) lifting restrictions on exporting natural gas–making it easier to export natgas to Japan, China and European countries, and (b) fight Obama’s Clean Power Plan (CPP). There is no doubt Bush will say all of the right words and espouse policies the oil and gas industry can strongly support. The question is, will he actually do any of it if he gets elected?…
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New Washington Co PA Training Facility for Well Pad Fires

patchThe Washington County (PA) Firemen’s Association recently opened a new $500,000 gas well training center at the fire academy located at 895 Western Ave in Houston, PA. The project, which took more than a year to plan and complete, was completely funded by some of the biggest and best drillers in the Marcellus/Utica, including Range Resources, Rice Energy, CONSOL Energy, EQT, American Well Service and others. It will be used to train first responders not only in Washington County, but also from other parts of Pennsylvania along with West Virginia and Ohio. According to Pennsylvania Fire Commissioner Tim Solobay, “There’s nothing like it outside of Texas”…
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Rice Energy Raises & Donates $600K to First Responders

kudosIn an example of yet another instance of our wonderful industry blessing the communities in which it works, Rice Energy has just completed an annual fundraising event which raised $600,000 which they donated to 36 different first responder organizations in Pennsylvania and Ohio at a ceremony last Friday, September 11th. The first responder organizations include local volunteer fire departments, emergency medical services, regional safety organizations and police departments. Kudos to Rice for being good corporate citizens. By the way, when was the last time you heard about a “green” group like Delaware Riverkeeper, Food & Water Watch, or the Sierra Club raising and donating money to anyone but themselves? Oil & gas industry = generous givers; Environmental wackos = selfish takers…
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“Short Selling” – An Important Signal for Marcellus-Related Companies

short sellingWelcome to Friday. It’s time for a brief tutorial on “short selling” or “going short” in the stock market. Even if you don’t participate in the stock market, you need to pay attention if you work for a Marcellus driller or other publicly traded company that sells to or is part of the industry. You also need to pay attention if you are leased with a Marcellus driller. A company’s stock price is key to the value of the company–something called its market capitalization. The more a company is worth (the more “market cap” it has) the more it can borrow when it needs to for things like drilling new wells. A bigger market cap also means a company can borrow money at a lower interest rate (more collateral/value, less risk). Let’s take a look at the recent market gyrations and how those gyrations have encouraged something called short selling of Marcellus-related stocks…
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Stock Prices Fall 7-10% in Single Day for Big Marcellus Drillers

trending downThere is no doubt the current stock market crash (what else can you call it?) has affected everyone and everything–including the Marcellus/Utica industry. Yesterday the price of West Texas Intermediate (WTI) crude oil closed the trading day at $38.24 per barrel–the lowest price since 2009 during the dark days of “the Great Recession”. Natural gas trading at the benchmark Henry Hub in southern Louisiana, often used as a proxy for all natural gas, closed at $2.64 per thousand cubic feet (Mcf). The Dow Jones Industrial average sunk another 588 points to close down more than 1,000 points in two trading sessions–last Friday and yesterday. At the beginning of trading yesterday, the DJIA experienced its biggest intraday (within a single day) loss ever–plunging more than 1,000 points as trading began. Thankfully it regained nearly half of that–but still, it was scary on many levels. All of that fear has affected all stocks, including the stock price for some of the biggest Marcellus/Utica drillers, who saw losses averaging 7-10% in a single day–yesterday…
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Vote of Confidence: 2nd Rice Energy Exec Purchased Company Stock

eating your own dog foodWe’re always a little bit troubled when we see senior management at a company selling their shares of stock in the company they continue to manage. Not long ago four top Carrizo Oil & Gas executive officers, including the CEO, dumped 50,000 shares of stock (see 4 Top Carrizo O&G Officers, Incl CEO, Sell 50K Shares of Company Stock). Not long after that, Carrizo’s CEO Chip Johnson dumped another 6,000 shares (see Carrizo CEO Chip Johnson Sells Another 6K Shares of Stock). Then there are some companies where senior management continues to buy shares of stock. One such company is Marcellus/Utica driller Rice Energy. In May, Rice Energy senior VP and CFO Grayson T. Lisenby bought 6,000 shares of Rice Energy Midstream (see Rice Energy CFO Buys Another 6K Shares of Rice Midstream Stock). We’ve just learned (albeit late) that another Rice Energy executive–James Rogers, senior VP and chief accounting & administrative officer–also purchased stock in Rice Energy Midstream in May…
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Top 10 Dry Gas Utica Shale Wells of All Time (as of Aug 2015)

Top 10A slide we spotted in a Gastar presentation got us to thinking: What are the top 10 Utica Shale wells? Who drilled them? And how much was their initial production (IP) rates? So we went searching and came up with the handy list below. This list is current as of August 2015. A few caveats: First, some of the wells in the list produced not only methane (“dry gas”) but also oil, condensate and natural gas liquids–i.e. other hydrocarbons. However, the numbers in the list below are for the methane/dry gas only portion of what the well flowed during an initial period of time (typically the first 24 hours). So keep that in mind. These are not necessary dry gas only wells, but the numbers are for the dry gas portion coming from the well. Second, we scoured the MDN archives and other sources to compile the list. If you believe we’ve overlooked a well–let us know! We would be happy to correct the list. As it is, we believe it to be accurate. It tells a pretty incredible story. Below the Top 10 list is another list–of MDN stories covering the details for the wells in the Top 10 list…
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Rice Energy 2Q15: Another PA Utica Monster Well on the Way?!

Rice Energy, a relatively young but rapidly growing and important driller in both the Marcellus and Utica Shale plays, turned in their second quarter 2015 update yesterday. Like virtually every other North American driller the bad news is Rice experienced a net loss after expenses of $63.5 million in 2Q15 vs. a net loss of $7.9 million in 2Q14. But there was plenty of good news in the Rice update. For one thing, 2Q15 production was up an amazing 120% over 2Q14–to an average 529 million cubic feet equivalent per day (MMcfe/d). For another thing, Rice turned in to sales 11 operated Ohio Utica and 14 operated Pennsylvania Marcellus wells–the most active quarter in the company’s young history. Perhaps most exciting of all, Rice reports they have drilled their first Pennsylvania Utica well in Greene County and will hook that well up to sales sometime in the next month or two. Greene County is the location for the current ruling champ of Utica wells, drilled by EQT (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). Will this Rice well beat it? Come close? We’re on pins and needles waiting to see!…

UPDATE: Rice Energy said on their earnings call yesterday that although they will hook up their new Greene County, PA Utica well to production in 3Q15, they will not run an initial production (IP) test on the well. Why? “Recently reported IP tests in close proximity to our position have proven our geologic model’s expectation that this area is highly prospective for Utica development. From other data we’ve gathered during the drilling and completion of this well, we would fully expect similar IP results, but our main focus is determining long-term production potential.” Bummer!
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