Rice Energy to spin off Pa. gas pipeline operations
Rice Energy Inc. plans to spin off its pipeline gathering and water systems in the Pennsylvania natural gas fields as a publicly traded company.
The announcement Monday by the Cecil-based company follows a trend among energy companies tapping the Marcellus and Utica shale formations as they look for more investors to fund expansion.
Rice said it will sell 10 million shares of stock to help fund its 2014 capital budget. The company said it plans to spend $1.2 billion this year, including $570 million on drilling and completing wells.
Rice stock closed up 75 cents to $27.52, a 2.8 percent increase.
CEO Daniel Rice IV said he could not discuss details related to the spinoff, such as how much money the company plans to raise or how many shares it will sell in the master limited partnership, or MLP. The company will submit a confidential plan to the Securities and Exchange Commission and hopes to complete an initial public offering in the first quarter of 2015.
Rice shares have appreciated 32 percent since the company went public in January at $21 a share. The successful IPO and stock appreciation have given the company valuable currency to fund its growth.
Rice's stock sale includes 7.5 million shares held by the company and 2.5 million held by other stockholders. Based on its Friday closing price of $26.77 per share, the company said in a securities filing that it expects to net $192.5 million from the sale after deducting underwriting expenses. Rice on Tuesday reported a $7.9 million loss, or 6 cents per share, during the three months that ended June 30, down from $19.6 million, or 23 cents per share, during the same period last year.
Revenue rose to $91.9 million from $23.9 million on the heels of an 84 percent increase in gas production. The company known for its unique well names brought online 10 new Marcellus wells during the quarter and its first Utica well in Ohio, on a well pad dubbed “Bigfoot.”
The company noted several expenses that hurt its profits, including an $11 million loss on derivatives during the quarter.
Other drillers, including Downtown-based EQT Corp., have had success putting their “midstream” operations — the pipes, processors and other infrastructure needed to get gas from the field to markets — into MLPs as Rice is looking to do. The spinoffs continue to generate revenue for the owners while standing alone as a separate investment option.
Cecil-based Consol Energy Inc. said in June it would form an MLP for those operations in a joint venture with Houston-based Noble Energy, its partner in other drilling arrangements.
David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Energy companies vie for experienced workers with skills in high demand
- Drops in gasoline prices won’t likely last, analysts say
- Energy-saving tactics pay off in Green Workplace Challenge
- Former athletes open businesses
- Chevron laying off 162 workers from Moon-based unit
- Password change can block hackers from wireless cameras
- Beaver County power plant cleaning up spill into creek
- Google to roll out wireless phone plan