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Marcellus, Utica Production Boosts Rice's First Post-IPO Numbers

The first three months of 2014, in which Rice Energy Inc. completed a $594.5 million initial public offering (IPO), also brought the Canonsburg, PA-based company good news out of the Marcellus and Utica shales.

Rice's total production volumes reached 209 MMcf/d in 1Q2014, an increase of 135% compared with 1Q2013, with natural gas price realizations of $4.82/Mcf, the company said Tuesday. A gain on the purchase of a Marcellus joint venture of $200.9 million helped inflate 1Q2014 net income to $124.1 million (99 cents/share).

"While we benefited from high realized gas prices to start the year, we would not have been able to capitalize on such prices without the record uptime, operating proficiency and hard work of our field personnel," said CEO Daniel J. Rice.

"We have brought online 10 Marcellus wells in 2014, and we just recently completed our first Utica well, which we expect to bring online in the second quarter of 2014. In addition, we accessed the high-yield bond market at favorable rates, allowing us to replace existing debt with lower rates and providing an incremental $581 million of liquidity that can be used to fund our 2014 capital expenditures program. And lastly, we closed on our Momentum acquisition [see Shale Daily, Feb. 14)], which improves our infrastructure to support our Marcellus production growth in southwestern Pennsylvania."

At the end of March, Rice held 43,978 net acres in the Marcellus and 46,700 net acres in the Utica.

During the first quarter, the pure-play Appalachian operator brought online a four-well Marcellus pad with an average lateral length of 6,691 feet and combined 90-day average gross production rate of 51 MMcf/d (average 12.7 MMcf/d per well). Since the end of 1Q2014, Rice has brought online six Marcellus wells in Washington County, PA -- four on the Mono pad with an average 9,134-foot lateral, and two on the Lusk pad with an average 5,993-foot lateral -- that are producing approximately 80 MMcf/d (gross). Rice is operating two horizontal rigs and three tophole rigs on 43,978 net acres in the Marcellus.

In the Utica, Rice drilled and completed the Bigfoot 9H (7,000 foot lateral) and expects to test the well in the near term. The company also drilled and cased its second horizontal Utica well, Blue Thunder 12H, in 34 days. The well has a 9,000 foot lateral and was drilled from kick-off point to total depth in seven days. "We are currently drilling a second 9,000 foot lateral from the Blue Thunder pad and will frack [fracture] these wells as part of our science efforts to determine optimal well spacing," the company said. Rice is operating one horizontal rig and one tophole rig in the Utica.

Rice completed its IPO in January (see Shale Daily, Jan. 31). The IPO was billed as a success, but a question mark hung over the Canonsburg, PA-based company, which received $300 million in private equity investments from Natural Gas Partners prior to going public (see Shale Daily, Dec. 17, 2013).

In March, Rice officials laid out a development plan that looks as far ahead as 2016 and made a case for why they believe the pure-play Appalachian company is poised for unique growth (see Shale Daily, March 13). In a prospectus filed in December before the IPO, Rice said it would spend $1.08 billion this year to explore and develop its 48,660 net acres in the Utica and its 43,551 net acres in the Marcellus.

In February, Rice agreed to acquire gathering assets in southwest Pennsylvania from a subsidiary of M3 Midstream LLC for $110 million in cash. The deal included permits and rights-of-way in Washington and Greene counties to construct an 18-mile, 30-inch diameter pipeline connecting its northern gathering system to the Texas Eastern pipeline. Rice already owns and operates a gathering system that can handle up to 1.5 Bcf/d. It also has contracted another 110 MMcf/d of capacity on third-party systems. Once fully constructed, the latest acquisitions are expected to have a capacity of more than 1 Bcf/d.

It hasn't all been good news for Rice this year. In April a Texas man was crushed by a large piece of equipment and killed at a drilling site in Belmont County, OH, where the company was preparing to commence completion operations at its first Utica Shale well (see Shale Daily, April 7).

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