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Cecil shale gas driller focuses on growth, value

| Tuesday, Dec. 30, 2014, 11:54 p.m.
David Conti
Rice Energy CEO Daniel Rice IV

Rice Energy ended 2014 the way it started, making headlines with an initial public stock offering.

Eleven months since taking the Cecil-based shale gas company public, CEO Daniel Rice IV oversaw the spin-off of Rice Midstream as a master limited partnership to operate its pipeline gathering and water systems in Greene and Washington counties.

It was a bold move in a down market by a company known for not following the pack in Appalachia's shale gas rush. The three Rice brothers, who run Pennsylvania's 15th-largest gas producer, drill prolific wells where others say the shale isn't rich. They give the wells fantastic names and celebrate with professional wrestling-style championship belts.

Rice, 34, known as Danny around the company's new headquarters at Southpointe, works closely with brothers Toby, 32, the president and COO, and Derek, 29, vice president of geology and exploration. Their brother Ryan, 23, is a petroleum engineer at the company, and their father, Daniel III, is on the board.

On a leather couch in Toby's corner office — from which the brothers broadcast company news to nearly 300 employees over a PA connected to a microphone, keyboard and turntables — Danny Rice talked about a busy year and where the company is headed.

Trib: Why did you move ahead with the midstream IPO during such a tough market for gas companies?

Rice: We know what the well economics will look like going forward. We left a couple of bucks on the table to get the deal done. That was most important. This gives us access to capital to make more investments. And it makes us really well-positioned heading into 2015.

Trib: Analysts say there will be a lot of acquisitions in the industry next year. You said there have been opportunities to sell the business. Would you be ready to sell now?

Rice: We're on the other side of the fence. If there are opportunities, we'd look to be ready to pull the trigger.

Trib: As a buyer?

Rice: Yes. It would be too hard for us to walk away from our landowners and partners.

Trib: How is it operating as both a publicly traded company and a family business?

Rice: It's really not that difficult. For us, internally, it's really, really natural. We're all in different capacities in the company. To outsiders looking in ... they say, ‘Is there nepotism?' And the answer is a resounding ‘no.' But to give investors that confidence that there is that independence, that we're really looking out for the best interest of the company, when we went public, we made sure our chairman of the board didn't have the last name Rice. (It's former Heinz Endowments President Robert Vagt.)

Trib: Any regrets about launching two IPOs in one year?

Rice: Absolutely zero. It was done ... for two reasons: to provide us access to capital to continue to grow two profitable businesses and really to illuminate the value of everything we're doing here.

Trib: How do you name the wells?

Rice: Most people name their wells after landowners. ... Off-shore, they have cool prospect names. They'll pick a naming convention and run with it. So in Pennsylvania, we do superheroes.

Trib: And in Ohio?

Rice: It's monster trucks. So that's Bigfoot. Most people think it's Sasquatch Bigfoot, but it's the monster truck. Landowners have the chance to approve the name, and they all like it. And it's memorable. When you hear Bigfoot, you know it's a Rice well.

Trib: Do you worry investors won't take you seriously?

Rice: No. I think people look at our track record and say, ‘These guys ... are one of the safest operators up here, they're drilling some of the most economic, prolific wells up here. Good for them, for enjoying what they do.' We are really enjoying running this company.

David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or dconti@tribweb.com.

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