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Rice Energy's Midstream Footprint Expands During 1Q

Rice Energy Inc. and its affiliates continued to expand their midstream operations in the Appalachian Basin during the first quarter, with throughput in Ohio increasing 309% and in Pennsylvania 50% compared to year-ago levels.

Rice Midstream Holdings (RMH) LLC, which provides gathering and compression in Belmont and Monroe counties, OH, averaged 454 million Dth/d during the period, of which 63% was attributable to third-party volumes. In February, the company completed its Utica Shale midstream joint venture, Strike Force Midstream LLC, and immediately got to work to serve Gulfport Energy Corp. production in both counties (see Shale DailyFeb. 12).

Management also said that RMH signed a natural gas gathering agreement with a subsidiary of Consol Energy Inc. to serve that company's dry gas production in Monroe County, OH. Consol dedicated 13,000 gross acres to RMH, which purchased pipelines and related facilities from Consol for $8.7 million.

Rice Energy's midstream master limited partnership, Rice Midstream Partners LP, reported 835 million Dth/d in Washington and Greene counties, PA, of which 26% was driven by third-party volumes.

Rice Energy reported production of 675 MMcfe/d, up 53% from the year-ago period when it produced 440 MMcfe/d and up from the fourth quarter when it produced 624 MMcfe/d. CEO Daniel Rice said in the last week, the company reached a milestone by surpassing 1 Bcf/d of gross operated production with just 180 wells in operation.

The Marcellus Shale continues to drive the company's volumes, accounting for 70% of production during the first quarter, while the Utica accounted for the rest. The company turned nine Marcellus wells to sales during the quarter and drilled and completed another eight Utica wells, but turned none online during the period. The company also participated in seven non-operated wells that were turned to sales in the Utica.

The company also completed a $312 million offering of its common stock that it plans to use to acquire the Marcellus Shale assets of bankrupt coal producer Alpha Natural Resources, as long as it's not outbid by other producers at an auction later this month (see Shale DailyApril 28). In the process, energy investment firm Natural Gas Partners, which backed Rice Energy before it went public in 2014, sold its remaining shares in the company. CFO Grayson Lisenby said NGP Managing Director Scott Gieselman would remain on the board of directors.

Including hedges, the company's average natural gas price during the first quarter was $2.88/Mcf, compared to $3.12/Mcf in the year-ago quarter. Higher production lifted revenues to $139.9 million, up from $109.5 million a year ago. Rice Energy reported a net loss of $21 million (minus 15 cents/share), compared to net income of $152,000 ($0/share) in 1Q2015.

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