Rice Energy shares rise in their market debut
Rice Energy Inc. weathered a stormy day on Wall Street for its stock market debut on Friday, finishing up 4 percent after being priced at the upper end of its range.
The performance was a successful opening for the Cecil-based driller, said Kathleen S. Smith, a principal at Renaissance Capital LLC, an investment advisory firm that specializes in initial public offerings.
“You can't be negative about how Rice traded,” she said. “They managed to pull off the IPO just fine.”
The stock, which underwriters priced at $21, closed up 90 cents at $21.90 per share. It fell below the offering price and traded as high as $22.50 per share on a day of dramatic declines on Wall Street. The Dow Jones industrial average fell 318.24 points, or 2 percent.
Debuting stocks historically average a 13 percent jump, but they usually don't have to contend with a troubled market, Smith said.
Rice went public to pay off debt and help expand its natural gas drilling in Western Pennsylvania and eastern Ohio shale. The company and one of its stockholders sold 44 million shares, raising $924 million total. Nearly $600 million of that would go to the company, Rice officials had said.
After telling investors to expect a price between $19 and $21, the company announced on Thursday evening that it would sell at the higher end of that estimate.
“That it was trading at the upper end of the range, that's good,” Smith said. “It tells you investors are interested.”
Rice officials could not be reached for comment and have not been talking to the media in the lead up to their stock's debut. Companies are subject to a Securities and Exchange Commission ban on promotional publicity, or a quiet period, surrounding their IPO.
Energy companies have been struggling with IPOs this year after a hot fall. Three of four other energy companies with January IPOs finished their first day below their offer prices, according to Renaissance Capital LLC, which tracks IPOs.
But because of its shale gas holdings, Rice is more comparable with Antero Resources Corp., Smith said. It also drills in Appalachia and had one of 2013's most successful public offerings.
Antero raised $1.57 billion with a stock price that jumped 18 percent to $52.01 when it made its debut in October. Antero fell 0.9 percent on Friday, but it's still up from its initial offering, finishing the day at $57.99 per share.
Timothy Puko is a Trib Total Media staff writer. Reach him at 412-320-7991 or firstname.lastname@example.org.