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It appears as though Rice Energy Inc. will become the next pure-play Appalachian operator to go public after the company confirmed months of rumors this week that it plans to make an offering sometime in the next month and begin trading shares during the first quarter.
According to the company's website, Rice is the second largest producer of natural gas in Washington County, PA, where drilling is intensifying in a liquids-rich portion of the Marcellus Shale. In October,Reuters reported that the company was considering an initial public offering that could value the company at $2.5 billion.
Rice has filed a confidential Form S-1 with the U.S. Securities and Exchange Commission for the IPO. On Monday, its joint venture partner, Virginia-based Alpha Natural Resources, said it would sell its 50% stake in a southwest Pennsylvania drilling program -- one that has seen more than 30 wells drilled -- to Rice for $300 million, including $200 million in stock when Rice goes public and another $100 million in cash.
Alpha and Rice entered into the venture in 2010 to develop a portion of Alpha’s Marcellus natural gas holdings in Greene County, PA.
Energy analysts have expected more small independents to go public, especially after the immense success of pure-play Appalachian operator Antero Resources in October (see Shale Daily, Nov. 25).
Late last month, Gabriele Sorbara, vice president of exploration and production research at Topeka Capital Markets, told NGI's Shale Daily that he believed Rice holds about 50,000 acres in the Utica Shale as well. It holds five permits in Belmont and Guernsey counties and has started work on its first well there as more operators move into southeast Ohio where a sweet spot with solid production results is shaping up (see Shale Daily, Nov. 19).
Rice has 110 permits in the Marcellus, and the holdings of Canonsburg-PA-based company are centered in Southwest Pennsylvania.
The company was founded in 2005 by Dan Rice, who formerly served as portfolio manager at the global wealth management firm BlackRock. In 2007, the company began exploring the Marcellus in Pennsylvania. Today, the company is run by Rice's three sons and it is backed by Texas-based Natural Gas Partners, which manages a number of funds that invest private equity in oil and gas production and other energy-related companies.