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03.05.2017 22:05
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PR Newswire
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Rice Energy Reports First Quarter 2017 Results and Provides Three-Year E&P Economic Growth Outlook
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PR Newswire
CANONSBURG, Pa., May 3, 2017
CANONSBURG, Pa., May 3, 2017 /PRNewswire/ -- Rice Energy Inc. (NYSE: RICE) ("Rice Energy") today reported first quarter 2017 financial and operating results. Highlights include:
- Net production averaged 1,273 MMcfe/d, an 11% increase from fourth quarter 2016
- Rice Midstream Holdings LLC ("RMH") gathering throughput averaged 969 MDth/d, a 7% increase from fourth quarter 2016
- Net loss attributable to common stockholders of $35 million, or $0.17 per diluted share
- Adjusted EBITDAX(1) of $244 million, a 21% increase relative to fourth quarter 2016
- Pre-hedge realized natural gas price of $3.11 per Mcf, including average basis differential of ($0.29) per MMBtu
- Exited the quarter with low leverage(1) of 1.3x
- RMH evaluating sale of over one-third of Rice Olympus Midstream LLC ("ROM") to Rice Midstream Partners LP (NYSE: RMP) ("RMP") in second half 2017
- Announcing three-year outlook targeting 27% - 33% compound annual Appalachia net production growth(2) through 2019, while targeting cash flow neutrality(3) and E&P leverage below 1.5x in 2019
Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "We are off to a great start in 2017 on our continued path to create long-term value for our shareholders. With the Vantage Energy acquisition complete, we delivered solid first quarter 2017 operational results into an improving gas price environment. Looking ahead, we are focused on generating best-in-class E&P results to achieve our three-year E&P targeted growth outlook. In addition, because ROM's throughput growth and asset profile make it an ideal drop candidate, we are evaluating the sale of over one-third of ROM to RMP in the second half 2017."
| 1. | Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDAX, Further Adjusted EBITDAX and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Further Adjusted EBITDAX. |
| 2. | Based on mid-point of 2017 annual Appalachia production guidance. |
| 3. | Defined as fully funding D&C capital expenditures from internal E&P cash flows. |
Three-Year E&P Economic Growth Outlook
Given the highly predictable nature of our 100% core asset base, we have laid out a three-year growth outlook that we believe delivers compelling economic cash flow growth on a risk-adjusted basis. We are targeting 27% - 33% compound annual Appalachia net production growth(1) from 2017 - 2019 predicated on targeted annual Appalachia net production of 1,575 - 1,675 MMcfe/d in 2018 and 2,000 - 2,200 MMcfe/d in 2019. Our three-year production targets are based on intended drilling and completion ("D&C") investments of $1.2 - $1.3 billion in 2018 and $1.3 - $1.4 billion in 2019. Highlights of our three-year E&P outlook include the following:
- Target 27% - 33% compound annual Appalachia net production growth(1)
- Invest in core locations that generate approximately 85% single well pre-tax IRR(2)
- Target cash flow neutrality(3) in 2019, while maintaining leverage of less than 1.5x
- Drill average laterals of over 9,000 feet in Appalachia
Daniel Rice IV commented, "I believe our target of over 2 Bcfe/d of 2019 net production offers a highly attractive risk-adjusted growth profile and executing this outlook will unlock significant value for our shareholders. We are targeting differentiated production growth and cash flow neutrality in 2019, a rare feat amongst E&P companies. This outlook is supported by core acreage, high returns, technical expertise, low leverage and significant hedges."
RMP reaffirmed its annual distribution growth target of 20% through 2023. In addition, RMP provided three-year distributable cash flow coverage and leverage targets supported by Rice Energy's long-term growth outlook.
| 1. | Based on mid-point of 2017 annual Appalachia production guidance. |
| 2. | Assumes $3.00 NYMEX. Marcellus and Utica economics assume E&P is burdened by 50% of the gathering and compression fees and 50% of water completion fees. |
| 3. | Defined as fully funding D&C capital expenditures from internal E&P cash flows. |
| First Quarter 2017 Results | ||||||||
| | ||||||||
| Consolidated Results | | Three Months Ended | ||||||
| | | | ||||||
| Operating revenues (in thousands) | | $ | 393,806 | | ||||
| | | | | | ||||
| Operating expenses | | (in thousands) | | (in Mcfe) | ||||
| Lease operating(1) | | $ | 22,459 | | | $ | 0.20 | |
| Gathering, compression and transportation | | $ | 39,426 | | | $ | 0.34 | |
| Production taxes and impact fees | | $ | 6,153 | | | $ | 0.05 | |
| General and administrative(1) | | $ | 28,737 | | | $ | 0.25 | |
| Depreciation, depletion and amortization | | $ | 136,878 | | | $ | 1.20 | |
| | | | | | ||||
| | | (in thousands) | | (per diluted share) | ||||
| Net loss attributable to common stockholders | | $ | (34,630) | | | $ | (0.17) | |
| Adjusted EBITDAX(2) | | $ | 244,221 | | | | ||
| Adjusted net income | | $ | 29,651 | | | $ | 0.12 | |
| | | | | |||||
| Financial position (in millions) | | | | |||||
| Total liquidity(3) | | $ | 1,884 | |||||
| Cash and cash equivalents | | $ | 431 | |||||
| Long-term debt | | $ | 1,543 | |||||
| Leverage(2) | | | 1.3 | |||||
Our lease operating expense was $0.20 per Mcfe for the quarter, an 11% increase from fourth quarter 2016 due to higher associated Barnett asset expenses and increased labor and rental expenses. Excluding the Barnett assets, our Appalachia lease operating expense was $0.18 per Mcfe. We expect our lease operating expense to trend lower throughout the year and full-year 2017 to be within our previously announced range of $0.16 - $0.18 per Mcfe.
As of March 31, 2017, our liquidity position, excluding RMP, was $1,884 million comprised of $1,626 million of upstream liquidity ($387 million of cash on hand and $1,239 million revolver availability) and $258 million of RMH liquidity ($31 million of cash on hand and $227 million revolver availability). Our balance sheet remains strong with low leverage(2) of 1.3x.
| 1. | Excludes non-cash equity compensation expense of $0.2 million and $5.1 million attributable to lease operating and general and administrative expenses, respectively, for the three months ended March 31, 2017. |
| 2. | Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDAX, Further Adjusted EBITDAX and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Further Adjusted EBITDAX. |
| 3. | Excludes Rice Midstream Partners LP. |
| E&P Segment Results | | Three Months Ended | |||||||
| | | | |||||||
| Production | | | |||||||
| Net production (Bcfe) | | 115 | | ||||||
| Net production (MMcfe/d) | | 1,273 | | ||||||
| | | | |||||||
| Operating revenues (in thousands) | | | |||||||
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