Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal
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). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. Have you ever wondered how a massive deal like this comes together? Did the top brass at EQT phone up the top brass at Rice and say “let’s go for coffee” and a few months later there’s a deal? Nope. Doesn’t happen that way. In paperwork filed with the Securities and Exchange Commission, EQT (and Rice) outlined the chronology of how this deal came together. It’s far more complicated than the most complicated soap opera you can imagine. The story begins with EQT keeping a close eye on available acreage in the southwestern Marcellus region. EQT noticed an “accelerating trend” of consolidation. In 2015, a full two years before the EQT/Rice announcement, EQT lusted for more acreage and feared that if Rice combined with someone else, an important opportunity would be lost. So EQT got outside help (Wachtell Lipton) to begin the process of evaluating a buyout of Rice (June 2015). In July 2015, the muckety mucks from both Rice and EQT got together to talk, and “informally” discussed the potential benefits of a merger. But the talks went nowhere at the time. In early 2016, two other companies (unnamed) held similar talks with Rice. EQT then jumped back into the mix, in May 2016. EQT and Rice promptly got more serious about sniffing around each other, signing confidentiality agreements and beginning the due diligence process. Things moved quickly. Rice investigated mergers with two other companies and with EQT. EQT pressed Rice for an answer in July 2016. Talks broke down by the end of the summer in 2016. Rice then bought out Vantage and EQT snapped up more Marcellus acreage in various deals. And the soap opera goes on from there. We have the full script below…
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NGI’s Shale Daily has done it again. Ace reporter Jamison Cocklin has unearthed news that (so far) no one else has: Rice Energy has quietly, confidentially, hush-hush purchased all of the assets of LOLA Energy. The sale raises a lot of questions. But first, who is LOLA? No, not the show girl in Barry Manilow’s 1978 hit song Copacabana. LOLA Energy was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see 
One of our favorite oil and gas analysts, Richard Zeits, says it’s a long shot at best that the corporate raiders at Jana Partners will be able to scuttle EQT’s planned purchase of Rice Energy. In June, EQT announced a deal to buy out Rice Energy for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion (see 
Earlier this week MDN told you the news that corporate raider Jana Partners, along with the Cohen family (of Atlas Energy fame), are colluding to try and stop the merger/sale of Rice Energy to EQT (see 
When EQT and Rice Energy announced a deal in June for EQT to buyout and merge in Rice to create the largest natgas-producing company in the U.S., it seemed like a match made in heaven (see 
In January, MDN reported on a well pad fire at Rice Energy’s Papa Bear well pad in Somerset Township (Washington County), PA (see 
A week ago yesterday, EQT and Rice Energy announced some of the biggest news we’ve every reported: EQT is buying out and merging in Rice Energy, to create the largest natural gas producing company in the United States (see 
On Monday EQT announced what is some of the biggest news MDN has covered in the past few years: EQT is buying Rice Energy (see 
Move over Exxon Mobil and Chesapeake Energy. There’s now (or soon will be, when the transaction is complete) a new #1 natural gas producer in the United States: EQT. In a deal you’ve no doubt heard about from multiple sources by now (because the news broke yesterday, just after MDN published for the day), EQT and Rice Energy announced that EQT will purchase Rice Energy, lock, stock and barrel, for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion. Along with 187,000 net acres in the PA Marcellus, and 65,000 net acres in the OH Utica Shale, EQT will get 1.3 billion cubic feet per day of Rice Energy natural gas production. When added to its own prodigious production (EQT was already one of the biggest and brightest shale companies), the combined output for the newly merged company will eclipse #2 Exxon and #3 Chesapeake Energy’s output to become the largest natural gas producing company in the country. Wow! Rice’s midstream (i.e. pipeline) assets are part of the deal. If you peg the midstream part of the deal at $1.8 billion, which some analysts say is the right number, and then calculate the per acre price of the deal, it works out to be around $9,900 per acre. Below we have the EQT/Rice announcement, the PowerPoint slide deck they used for a conference call held yesterday, and plenty of analysis about the deal–why it happened, and why now…
Last Thursday Rice Energy President Toby Rice gave Ohio U.S. Senator Rob Portman a tour of the “Son Uva Digger” well pad in Belmont County, OH. Cool name. Although no doubt Portman thought of the trip as a photo-op, from his comments following the visit, it sounds like Portman actually learned something. Portman now “gets it” with respect to rapid changes in technology that have vastly reduced the footprint of drilling operations–better for the environment, less hassle for residents who live nearby. He also gets just how much money shale drilling is pumping into the local, state and national economy. Sounds like the Rice brothers have made a convert of Sen. Portman–so three cheers for them! This is how we win the battle–one person at a time. And if that person happens to be a U.S. Senator, all the better. Here’s how it went last week when Rob went to Belmont… 
On Wednesday Rice Energy released its first quarter 2017 update, and yesterday the company held an earnings call to discuss it. On the down side, Rice continued to lose money during the quarter. Rice lost $21 million in 1Q16, and the loss widened to $35 million in 1Q17. But it seems to us the rest of the news they shared was pretty darned good. Production soared–from 61.4 billion cubic feet equivalent (Bcfe) in 1Q16, to 114.5 Bcfe in 1Q17–an 86% increase year over year (vast majority of that was natural gas). Rice’s lateral length now measures over 9,000 feet on average. In 1Q17 Rice added 2,000 Marcellus acres and 2,000 Utica acres to its portfolio, and the company says it’s on track to add a total of 15,000 acres this year. During 1Q17, Rice brought 15 new Marcellus wells online, and 10 new Utica wells. Rice CEO Dan Rice, on the earnings call, said (our words) while everyone is zigging, they like to zag. While everyone else is trying to buy up acreage all over Hades half acre, Rice prefers to concentrate and narrow its focus on truly prime locations that will produce stellar wells. Dan also said the company is in the catbird seat when it comes to new pipelines coming online over the next several years. We’ll explain. Below are excerpts from the earnings call, the 1Q17 update (with financials), and the latest PowerPoint slide deck…
The sharp folks over at the Pittsburgh Business Times have been looking through data from the Pennsylvania Department of Environmental Protection (DEP) and have compiled a list of 20 drillers who have at least a dozen shale wells in the southwest PA region. And they ranked them from lowest to highest. We’ve grabbed the list below. The interesting thing for MDN is that there is one name in the list not familiar to us, and we’ve been watching this space since 2009. Always fun to learn something new. Here’s the list of southwest PA’s “Top 20” Marcellus drillers…
Deal-making (mergers and acquisitions, or M&A) in the Marcellus went through the roof in 2016 as compared with 2015. In 2016, there were 13 deals worth $100 million or more. The total value of deals in 2016 was a big $7.25 billion, compared with $920 million in 2015. What was the #1 M&A deal in the Marcellus for 2016? Rice Energy’s purchase of Vantage Energy for $2.7 billion (see 
Tired of having their application to expand a pipeline compressor station blocked, Rice Energy has sued West Pike Run Township in Washington County, PA. In the lawsuit, Rice says that the town had 90 days (under law) to render a decision on the request and did not do so. Eventually the town told Rice “no” to expanding an existing compressor station. The lawsuit asks the court to force the town to approve the application forthwith…