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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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 
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 
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 
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…
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 
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 
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…
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 
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 
Every now and again it’s fun to take a look at a “Top 10” list. Here’s one for you. How about a Top 10 List for drillers in southwestern PA, in Allegheny, Armstrong, Beaver, Butler, Clarion, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland counties. This Top 10 list ranks drillers by how many shale well permits they’ve been granted. The list is extracted from a Top 40 list prepared by the (must read) Pittsburgh Business Times. Can you guess which 10 drillers are in the Top 10? How about the Top 1? It may come as no surprise that Range Resources, the very first company to drill a Marcellus Shale well (in 2004), has received the most permits to drill in SWPA. Here’s the full Top 10 list, with some interesting extra details…
Last week Rice Energy turned in their second quarter 2017 update. The company reports during 2Q17 they turned to sales 18 net Marcellus wells with an average lateral length of 9,200 feet and 7 net operated Utica wells with an average lateral length of 10,500 feet. 2Q17 development costs per lateral foot were under budget and averaged $805 in the Marcellus and $1,105 in the Utica for wells drilled and completed. As we report today in our story “Rice Energy Paid $180M for LOLA Energy; CEO Didn’t Want to Sell” the company also announced they paid $180 million for core acreage in PA and WV from “an undisclosed seller”–which we know is LOLA Energy. The Rice boys gave an update on a conference call about 2Q17 and the impending sale to/merger with EQT. However, because of the upcoming merger, they took no questions from analysts. So it was a quick call–done in less than 15 minutes. The Rice 2Q17 update shows the company hit new record production and throughput, significantly reduced operating costs, increased their core acreage position by almost 20,000 net acres and divested a non-core asset in the Barnett Shale. Here’s Rice’s 2Q17 update, beginning with portions of the conference call…