Rice Energy Reports Fourth Quarter and Full Year 2013 Results; Provides Operational Update and 2014 Guidance

13 Mar, 2014, 05:00 ET from Rice Energy Inc.

CANONSBURG, Pa., March 13, 2014 /PRNewswire/ -- Rice Energy Inc. (NYSE: RICE) today announced financial and operational results for the quarter and year ended December 31, 2013 and provided an update on its 2014 activities and guidance.

Unless otherwise indicated, information presented in this release gives pro forma effect to (i) our initial public offering and the completion of the corporate reorganization in connection with our initial public offering in January 2014 and (ii) the consummation of our acquisition of the remaining 50% interest in our Marcellus joint venture from Alpha Natural Resources, Inc. 

Highlights

  • Fourth quarter 2013 net production of 154 MMcf/d, representing a 120% increase relative to the fourth quarter of 2012 and a 20% sequential increase relative to the third quarter of 2013
  • Full year 2013 production of 126 MMcf/d, representing a 166% increase relative to 2012 production
  • Fourth quarter and full year 2013 Adjusted EBITDAX(1) of $39.2 million and $107.8 million, respectively
  • As of March 1, 2014, firm transportation portfolio covers approximately 330,000 MMBtu/d in 2014, 654,000 MMBtu/d in 2015 and 761,000 MMBtu/d in 2016
  • Previously announced agreement to acquire gathering assets for $110 million de-risks Marcellus takeaway plan and provides optionality for production acceleration
  • Currently running two horizontal rigs in Marcellus Shale and one horizontal rig in Utica Shale with 40 gross operated wells (approximately 230,000 net horizontal feet) in various stages of development today
  • Marcellus Shale leasehold position of 43,351 net acres and Utica Shale leasehold position of 46,488 net acres as of December 31, 2013

Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "2013 was a transformative year for Rice Energy. Over the course of the year we brought online 22 Marcellus wells totaling approximately 138,500 lateral feet with an average 60-day gross initial production rate of 11.0 MMcf/d and since year end we have turned online four additional Marcellus wells that averaged 11.8 MMcf/d per well for the initial 30 days. These results are a testament to the quality of our acreage and the proficiency of our shale-specific team.

"We measure our success, however, by our ability to make meaningful strides in the context of a long-term plan to maximize the value potential of our acreage positions in the cores of the Marcellus and Utica Shales. To that end, we believe we have further improved our positioning for long-term success with several key transactions. Our initial public offering in January 2014 was the second largest U.S. independent E&P IPO in history, providing us increased liquidity to pursue production growth and the ability to invest in strategic midstream and leasehold opportunities in order to support long-term value creation. Additionally, over the course of the last year we have selectively added to our robust portfolio of firm transportation contracts that now stands at 330,000 MMBtu/d, 654,000 MMBtu/d and 761,000 MMBtu/d of firm transportation in 2014, 2015 and 2016, respectively, supporting our ability to grow production and diversify our pricing exposure to Gulf Coast, Midwest and Northeast markets. Lastly, in February 2014, we bolstered the support for near-term production growth by entering into an agreement to acquire midstream assets in eastern Washington and Greene Counties.  We believe that these transactions collectively will strengthen our near-term execution and drive long-term value creation for shareholders."

2013 Results

For the Three Months Ended December 31, 2013

For the Year Ended December 31, 2013

(Unaudited)

Production data (MMcf/d) – 100% natural gas

154

126

Average prices before effects of hedges per Mcf

$

3.90

$

3.89

Average prices after effects of hedges per Mcf(1)   

$

4.25

$

4.01

Average costs per Mcf:

Lease operating

$

0.33

$

0.36

Gathering, compression and transportation

$

0.52

$

0.55

Production taxes and impact fees

$

0.08

$

0.06

General and administrative

$

0.58

$

0.44

Depletion, depreciation and amortization

$

1.34

$

1.57

 

Estimated proved reserves at December 31, 2013 – Natural gas (Bcf)(2):

Total estimated proved reserves

602

Total proved developed reserves

250

Proved developed producing reserves

177

Proved developed non-producing reserves

73

Proved undeveloped reserves

352

Percent developed reserves

42

%

PV-10 of proved reserves (in millions)(3)   

$

709

                               

(1)

The effect of hedges includes realized gains and losses on commodity derivative transactions.

(2)

Our estimated pro forma proved reserves and PV-10 were determined using a 12-month average price for natural gas consistent with requirements established by the SEC. The prices used in the reserve reports prepared by our independent petroleum engineers yield weighted average wellhead prices, which are based on index prices and adjusted for energy content, transportation fees and regional price differentials. The index price and the equivalent wellhead price as of December 31, 2013 were $3.67 per MMBtu and $3.90 per Mcf, respectively.

(3)

PV-10 is a non-GAAP financial measure and generally differs from standardized measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Our pro forma standardized measure was approximately     $443.7 million as of December 31, 2013. Neither PV-10 nor standardized measure represents an estimate of the fair market value of our natural gas properties. We and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.

Financial Results

Our production volumes were 14.2 Bcf for the quarter ended December 31, 2013, with natural gas price realizations, including the effect of hedges, of $4.25 per Mcf.  For the quarter ended December 31, 2013, per unit cash production costs (lease operating; gathering, compression, and transportation; and production taxes and impact fees) were $0.93 per Mcf, depreciation, depletion and amortization expense was $19.0 million and loss on derivative instruments was $20.4 million.  These factors contributed to a net loss of $8.7 million ($0.07 per diluted share) for the quarter ended December 31, 2013. 

Our production volumes were 45.9 Bcf for the year ended December 31, 2013, with natural gas price realizations, including the effect of hedges, of $4.01 per Mcf.  For the year ended December 31, 2013, per unit cash production costs were $0.97 per Mcf, depreciation, depletion and amortization expense was $71.9 million and restricted unit expense was $32.9 million.  These factors contributed to a net loss of $16.5 million ($0.13 per diluted share) for the year ended December 31, 2013. 

2013 and 2014 Operational Highlights

During the fourth quarter of 2013, we averaged 154 MMcf/d of net production, an increase of 120% over the prior year's comparable quarter and 20% over the third quarter of 2013. The sequential period production growth was the result of three pads consisting of seven new Rice-operated Marcellus wells being turned into sales in the fourth quarter of 2013.  The following table provides certain operational data as of March 1, 2014 related to the seven wells added in the fourth quarter of 2013.

Aggregate Periodic Flow Rates (MMcf/d)

0-90 Days

Wells per Pad

Average Lateral Length (Feet)

D&C ($/Foot)

3

6,317

34.6

$

1,309

1

3,800

8.5

$

2,032

3

9,000

47.2

$

1,165

The following table provides certain operational data related to our proved developed producing Marcellus Shale wells as of December 31, 2013.  We are the operator of each of these wells. 

Periodic Flow Rates (MMcf/d) (1)

Year(s)

Wells Turned Into Sales

Average Wells per Rig Move

Average Lateral Length (Feet)

0-90

91-180

181-360

361-720

D&C ($/Foot) (2)

2010-2011

6

1.4

3,281

5.5

6

4.4

2.9

$

2,341

2012

9

2

5,731

9

10

6.8

N/A

$

1,609

2013

22

2.1

6,286

11.1

10.3

9.2

N/A

$

1,461

Total

37

1.9

5,664

9.7

9.3

6.3

2.9

$

1,640

 

(1)

   Based on production data through March 1, 2014.

(2)

   D&C costs are shown gross of our working interest's proportionate share.

Financial Position and Liquidity

Pro forma for our initial public offering, we had $311.9 million of total debt, $347.0 million of cash and cash equivalents on hand, and $317.1 million available and zero drawn under our revolving credit facility.

First Quarter 2014 Operational and Hedging Update

Despite the severe weather experienced in Ohio and Pennsylvania during the first two months of 2014, we have been able to maintain high levels of producing well uptime. In addition, we brought online a four-well Marcellus pad (average lateral length of 6,691 feet) in Washington County, Pennsylvania.  These wells are producing in line with management expectations, with a combined 30-day average gross production rate of 47.1 MMcf/d (average 11.8 MMcf/d per well) and a combined day 30 spot production rate of 53.8 MMcf/d (average 13.4 MMcf/d per well) on a restricted-choke program.

We maintain a natural gas hedging program and have continued to add to our derivative positions. Please see the "Derivatives Information" table at the end of this press release for more detailed information about our derivative position as of March 1, 2014.

2014 Capital Budget and Guidance

Our updated capital budget for 2014 is expected to be $1,230 million, consisting of the following:

  • $430 million for drilling and completion in the Marcellus Shale;
  • $150 million for drilling and completion in the Utica Shale;
  • $385 million for leasehold acquisitions; and
  • $265 million for midstream infrastructure development.

This represents a 96% increase over our $629 million 2013 capital budget.  The 2014 updated capital budget excludes $100 million of cash paid with respect to the purchase of the remaining interests in our Marcellus joint venture and approximately $110 million expected to be paid for our previously-announced agreement to acquire midstream assets. 

Of the $580 million 2014 drilling and completion budget, approximately 85% is related to Rice Energy-operated drilling and approximately 74% is allocated to the Marcellus Shale.  Furthermore, approximately $200 million of the drilling and completion budget is for wells that Rice plans to begin producing in 2015.  We anticipate running two horizontal rigs in the Marcellus Shale and one horizontal rig in the Utica Shale throughout 2014. 

Assuming the execution of the $1,230 million capital plan discussed above, we anticipate that 2014 average net daily production will be between 260 MMcf/d and 310 MMcf/d (100% natural gas), representing a 106% to 146% increase over 2013 average net daily production.  This increase is expected to be driven primarily by increasing development of our core Marcellus Shale acreage in southwestern Pennsylvania.  Furthermore, in 2014, we anticipate that we will spud 43 net and initially produce 37 net horizontal Marcellus Shale wells, and that we will spud 13 net and initially produce 7 net horizontal Utica Shale wells.  The production guidance presented above is based on the key assumptions in the table below.

2014 Guidance

Low

High

Forecasted average daily production (MMcf/d)

260

310

Forecasted natural gas as a percentage of production

100%

Heat content (Btu/Scf)

1,050

Average costs per Mcf:

Lease operating

$

(0.40)

$

(0.35)

Gathering, compression and transportation

$

(0.55)

$

(0.45)

Production taxes and impact fees

$

(0.03)

$

(0.02)

Cash general and administrative (in millions)

$

40.0

$

35.0

Conference Call

Rice Energy will host a conference call on March 13, 2014 at 10 a.m. ET (9 a.m. CT) to discuss fourth quarter and full year 2013 earnings and operational results and to provide 2014 guidance.  Interested parties are invited to participate on the call by dialing (888) 323-9686 (Conference ID:  RICE ENERGY) at least 15 minutes prior to the start of the call.  A replay of the call will be available on the Rice Energy website for a fourteen-day period following the call.

About Rice Energy

Rice Energy Inc. is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin.  For more information, please visit our website at www.riceenergy.com.

Forward Looking Statements

This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").   Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than historical facts included in this release, that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as our future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas and oil. These risks include, but are not limited to: commodity price volatility; inflation; lack of availability of drilling and production equipment and services; environmental risks; drilling and other operating risks; regulatory changes; the uncertainty inherent in estimating natural gas reserves and in projecting future rates of production, cash flow and access to capital; and the timing of development expenditures.  Information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by us will be realized, or even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

RICE ENERGY INC.

PRO FORMA CONDENSED

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2013

(Unaudited)

(in thousands)

Historical Rice Drilling B

Consolidation of Marcellus JV Pro Forma Adjustments

Reorganization and Offering Pro Forma Adjustments

Pro Forma Rice Energy Inc.

Assets

Current assets:

Cash

$

31,612

$

(88,701)

$

630,000

$

347,011

(35,500)

(190,400)

Restricted cash

8,268

8,268

Accounts receivable

31,765

12,827

44,592

Receivable from affiliate

2,244

10

2,254

Prepaid expenses and other

863

93

956

Total current assets

74,752

(75,771)

404,100

403,081

Investments in joint ventures

49,814

(49,760)

54

Gas collateral account

3,700

295

3,995

Proved natural gas properties, net

270,523

320,000

590,523

Unproved natural gas properties

457,836

457,836

Property and equipment, net

5,972

83

6,055

Deferred financing costs, net

12,292

851

13,143

Other non-current assets

4,921

366,042

370,963

Total assets

879,810

561,740

404,100

1,845,650

Liabilities and members'/stockholders' capital

Current liabilities:

Current portion of long-term debt

20,120

20,120

Accounts payable

51,219

20,024

71,243

Royalties payable

9,393

6,831

16,224

Accrued interest

250

16

266

Accrued capital expenditures

16,753

1,775

18,528

Other accrued liabilities

8,283

2,048

10,331

Leasehold payable

18,606

69

18,675

Derivative liabilities

965

2,427

3,392

Payable to affiliate

6,148

11

6,159

Operated prepayment liability

1,201

1,201

Total current liabilities

132,938

33,201

166,139

Long-term liabilities:

Long-term debt

406,822

75,400

(190,400)

291,822

Leasehold payable

1,675

69

1,744

Deferred tax liability

57,118

(96,487)

(39,369)

Restricted units

36,306

36,306

Other long-term liabilities

3,422

712

4,134

Total liabilities

581,163

166,500

(286,887)

460,776

Members'/stockholders' capital

298,647

395,240

690,987

1,384,874

Total liabilities and members'/stockholders' capital

$

879,810

$

561,740

$

404,100

$

1,845,650

 

 

RICE ENERGY INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2013

(Unaudited)

(in thousands, except per share data)

Historical Rice Drilling B

Consolidation of Marcellus JV Pro Forma Adjustments

Reorganization and Offering Pro Forma Adjustments

Pro Forma Rice Energy Inc.

Revenues:

Natural gas sales

$

27,628

$

27,739

$

$

55,367

Other revenue

238

238

Total revenues

27,866

27,739

55,605

Operating expenses:

Lease operating

2,587

2,095

4,682

Gathering, compression and transportation

2,751

4,619

7,370

Production taxes and impact fees

600

596

1,196

Exploration

8,167

8,167

Restricted unit expense

(7,181)

(7,181)

General and administrative

7,001

1,256

8,257

Depreciation, depletion and amortization

9,600

9,450

19,050

Loss on impairment of natural gas properties

146

146

Loss from sale of interest in gas properties

4,230

4,230

Total expenses

27,755

18,162

45,917

Operating income

111

9,577

9,688

Interest income (expense)

(4,882)

(403)

1,523

(3,762)

Other income (expense)

(10)

106

96

Loss on derivative instruments

(9,807)

(10,581)

(20,388)

Amortization of deferred financing costs

(470)

(57)

(527)

Equity in income (loss) of joint ventures

123

(30)

93

Income (loss) before income taxes

(14,935)

(1,388)

1,523

(14,800)

Income tax benefit

6,140

6,140

Net income (loss)

$

(14,935)

$

(1,388)

$

7,663

$

(8,660)

Earnings per share—basic

$

(0.07)

Earnings per share—diluted

$

(0.07)

RICE ENERGY INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013

(Unaudited)

(in thousands, except per share data)

Historical Rice Drilling B

Consolidation of Marcellus JV Pro Forma Adjustments

Reorganization and Offering Pro Forma Adjustments

Pro Forma Rice Energy Inc.

Revenues:

Natural gas sales

$

87,847

$

90,677

$

$

178,524

Other revenue

757

757

Total revenues

88,604

90,677

179,281

Operating expenses:

Lease operating

8,309

8,193

16,502

Gathering, compression and transportation

9,774

15,663

25,437

Production taxes and impact fees

1,629

1,258

2,887

Exploration

9,951

9,951

Restricted unit expense

32,906

32,906

General and administrative

16,953

3,256

20,209

Depreciation, depletion and amortization

32,815

39,071

71,886

Loss on impairment of natural gas properties

146

146

Loss from sale of interest in gas properties

4,230

4,230

Total expenses

116,567

67,587

184,154

Operating income (loss)

(27,963)

23,090

(4,873)

Interest income (expense)

(17,915)

(880)

2,373

(16,422)

Other expense

(357)

(796)

(1,153)

Gain on derivative instruments

6,891

3,347

10,238

Amortization of deferred financing costs

(5,230)

(164)

(5,394)

Loss on extinguishment of debt

(10,622)

(10,622)

Equity in income (loss) of joint ventures

19,420

(19,330)

90

Income (loss) before income taxes

(35,776)

5,267

2,373

(28,136)

Income tax benefit

11,674

11,674

Net income (loss)

$

(35,776)

$

5,267

$

14,047

$

(16,462)

Earnings per share—basic

$

(0.13)

Earnings per share—diluted

$

(0.13)

 

 

RICE DRILLING B LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

(in thousands)

2013

2012

Assets

Current assets:

Cash

$

31,612

$

8,547

Restricted cash

8,268

Accounts receivable

31,765

8,557

Receivable from affiliate

2,244

11,879

Prepaid expenses and other

863

321

Total current assets

74,752

29,304

Investments in joint ventures

49,814

30,976

Gas collateral account

3,700

5,843

Proved natural gas properties, net

270,523

159,988

Unproved natural gas properties

457,836

111,030

Property and equipment, net

5,972

2,622

Deferred financing costs, net

12,292

5,208

Other non-current assets

4,921

Total assets

$

879,810

$

344,971

Liabilities and members' capital

Current liabilities:

Current portion of long-term debt

$

20,120

$

8,814

Accounts payable

51,219

19,793

Royalties payable

9,393

1,960

Accrued interest

250

2,004

Accrued capital expenditures

16,753

2,359

Other accrued liabilities

8,283

5,585

Leasehold payable

18,606

3,954

Derivative liabilities

965

2,260

Payable to affiliate

6,148

2,482

Operated prepayment liability

1,201

11,553

Total current liabilities

132,938

60,764

Long-term liabilities:

Long-term debt

406,822

140,506

Leasehold payable

1,675

106

Restricted units

36,306

3,400

Other long-term liabilities

3,422

2,004

Total liabilities

581,163

206,780

Members' capital

298,647

138,191

Total liabilities and members' capital

$

879,810

$

344,971

ALPHA SHALE RESOURCES, LP

BALANCE SHEETS

December 31,

(in thousands)

2013

2012

Assets

Current assets:

Cash

$

11,299

$

4,445

Accounts receivable

14,842

5,716

Receivable from affiliate

10

1

Prepaid expenses and other

93

108

Total current assets

26,244

10,270

Gas collateral account

295

295

Proved natural gas properties, net

182,333

114,128

Property and other equipment, net

83

91

Deferred financing costs, net

851

387

Other non-current assets

1,010

Total assets

$

210,816

$

125,171

Liabilities and partners' capital

Current liabilities:

Accounts payable

$

20,024

$

18,953

Royalties payable

6,831

2,082

Accrued interest

16

413

Accrued capital expenditures

1,775

3,489

Other accrued liabilities

2,048

726

Leasehold payable

69

331

Derivative liabilities

2,427

138

Payable to affiliate

2,026

8,538

Total current liabilities

35,216

34,670

Long-term liabilities:

Long-term debt

75,400

29,200

Leasehold payable

69

Other long-term liabilities

712

542

Total liabilities

111,397

64,412

Partners' capital

99,419

60,759

Total liabilities and partners' capital

$

210,816

$

125,171

 

 

RICE DRILLING B LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended December 31,

Year Ended December 31,

(in thousands)

2013

2012

2013

2012

Revenues:

(Unaudited)

Natural gas sales

$

27,628

$

11,216

$

87,847

$

26,743

Other revenue

238

457

757

457

Total revenues

27,866

11,673

88,604

27,200

Operating expenses:

Lease operating

2,587

1,462

8,309

3,688

Gathering, compression and transportation

2,751

1,341

9,774

3,754

Production taxes and impact fees

600

217

1,629

1,382

Exploration

8,167

425

9,951

3,275

Restricted unit expense

(7,181)

32,906

General and administrative

7,001

2,225

16,953

7,599

Depreciation, depletion and amortization

9,600

3,940

32,815

14,149

Write-down of abandoned leases

30

2,253

Loss from sale of interest in gas properties

4,230

4,230

Total operating expenses

27,755

9,640

116,567

36,100

Operating income (loss)

111

2,033

(27,963)

(8,900)

Other income (expense):

Interest expense

(4,882)

(1,686)

(17,915)

(3,487)

Other income (expense)

(10)

36

(357)

112

Gain (loss) on derivative instruments

(9,807)

2,026

6,891

(1,381)

Amortization of deferred financing costs

(470)

(1,680)

(5,230)

(7,220)

Loss on extinguishment of debt

(10,622)

Equity in income of joint ventures

123

1,668

19,420

1,532

Total other income (expense)

(15,046)

364

(7,813)

(10,444)

Net income (loss)

$

(14,935)

$

2,397

$

(35,776)

$

(19,344)

 

 

ALPHA SHALE RESOURCES, LP

STATEMENTS OF OPERATIONS

Three Months Ended December 31,

Year Ended December 31,

(in thousands)

2013

2012

2013

2012

Revenue:

(Unaudited)

Natural gas sales

$

27,739

$

11,828

$

90,677

$

26,284

Operating expenses:

Depreciation, depletion and amortization

8,031

2,322

25,008

9,411

Gathering, compression and transportation

4,619

3,295

15,663

6,671

Lease operating

2,095

1,841

8,193

3,331

Production taxes and impact fees

596

141

1,258

869

Loss on impairment of natural gas properties

146

146

General and administrative expenses

1,256

721

3,256

2,058

Total operating expenses

16,743

8,320

53,524

22,340

Operating income

10,996

3,508

37,153

3,944

Other income (expense):

Other income (expense)

106

(4)

(796)

Gain (loss) on derivative instruments

(10,581)

(74)

3,347

(74)

Amortization of deferred financing costs

(57)

(15)

(164)

(15)

Interest expense

(403)

(101)

(880)

(372)

Total other income (expense)

(10,935)

(194)

1,507

(461)

Net income

$

61

$

3,314

$

38,660

$

3,483

 

 

RICE DRILLING B LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

(in thousands)

2013

2012

Cash flows from operating activities:

Net loss

$

(35,776)

$

(19,344)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation, depletion and amortization

32,815

14,149

Amortization of deferred financing costs

5,230

7,220

Loss from sale of interest in gas properties

4,230

Restricted unit expense

32,906

Write-off of unsuccessful exploratory well costs

8,143

Derivative instruments fair value (gain) loss

(6,891)

1,381

Equity in income of joint ventures

(19,420)

(1,532)

Write-down of abandoned leases and other leasehold costs

2,253

(Increase) decrease in:

Accounts receivable

(17,208)

(3,828)

Receivable from affiliate

9,635

(8,403)

Gas collateral account

643

(4,137)

Prepaid expenses and other

(541)

(212)

Cash receipts for settled derivatives

676

879

Increase (decrease) in:

Accounts payable

2,273

(30)

Royalties payable

7,432

775

Other accrued expenses

5,859

7,391

Payable to affiliate

3,666

424

Net cash provided by (used in) operating activities

33,672

(3,014)

Cash flows from investing activities:

Capital expenditures for natural gas properties

(463,128)

(109,149)

Investment in joint ventures

(9,957)

Capital expenditures for property and equipment

(2,259)

(867)

Proceeds from sale of interest in gas properties

6,792

Net cash used in investing activities

(458,595)

(119,973)

Cash flows from financing activities:

Proceeds from borrowings

435,500

44,361

Repayments of debt obligations

(160,760)

(10,152)

Restricted cash for convertible debt

(8,268)

Debt issuance costs

(12,194)

(1,913)

Capital contributions

195,977

96,782

Repurchase of restricted units

(2,267)

(1,133)

Return of capital

(800)

Net cash provided by financing activities

447,988

127,145

Net increase in cash

23,065

4,158

Cash at the beginning of the year

8,547

4,389

Cash at the end of the year

$

31,612

$

8,547

 

ALPHA SHALE RESOURCES, LP

STATEMENTS OF CASH FLOWS

Year Ended December 31,

(in thousands)

2013

2012

Cash flows from operating activities:

Net income

$

38,660

$

3,483

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

25,008

9,411

Amortization of deferred financing costs

164

15

Loss on impairment of natural gas properties

146

Derivative instruments fair value (gain) loss

(3,347)

74

(Increase) decrease in:

Accounts receivable

(9,126)

(5,067)

Receivable from affiliate

25

Gas collateral account

(295)

Prepaid expenses and other

15

55

Cash receipts for settled derivatives

4,627

64

Increase (decrease) in:

Accounts payable

69

347

Royalties payable

4,749

1,734

Other accrued expenses

928

1,050

Payable to affiliate

(6,512)

2,499

Net cash provided by operating activities

55,381

13,395

Cash flows from investing activities:

Capital expenditures for natural gas properties

(94,099)

(63,847)

Capital expenditures for property and other equipment

(12)

Net cash used in investing activities

(94,099)

(63,859)

Cash flows from financing activities:

Proceeds from borrowings

46,200

29,200

Debt issuance costs

(628)

(402)

Capital contributions

20,000

Net cash provided by financing activities

45,572

48,798

Net increase (decrease) in cash

6,854

(1,666)

Cash at the beginning of the year

4,445

6,111

Cash at the end of the year

$

11,299

$

4,445

 

Rice Energy Inc. Supplemental Non-GAAP Financial Measure (Unaudited)

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net income (loss) before interest expense or interest income; income taxes; write-down of abandoned leases; depreciation, depletion and amortization; amortization of deferred financing costs; equity in (income) loss of our joint ventures; derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments; non-cash compensation expense; (gain) loss from sale of interest in gas properties; and exploration expenses. Adjusted EBITDAX is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP.

The following table presents a pro forma reconciliation of the non-GAAP financial measure of Adjusted EBITDAX to the GAAP financial measure of net income (loss).

Three Months Ended

Year Ended

(in thousands)

December 31, 2013

December 31, 2013

Adjusted EBITDAX reconciliation to net income (loss):

Net loss

$

(8,660)

$

(16,462)

Interest expense

3,762

16,422

Depreciation, depletion and amortization

19,050

71,886

Amortization of deferred financing costs

526

5,394

Equity in income of joint ventures

(93)

(90)

Derivative fair value (gain) loss (1)   

20,388

(10,238)

Net cash receipts on settled derivative instruments (1)  

4,966

5,302

Restricted unit expense

(7,181)

32,906

Income tax benefit

(6,140)

(11,674)

Loss from sale of interest in gas properties

4,230

4,230

Loss on impairment of natural gas properties

146

146

Exploration expenses

8,167

9,951

Adjusted EBITDAX

$

39,161

$

107,773

(1)

 The adjustments for the derivative fair value (gains) losses and net cash receipts on settled commodity derivative instruments have the effect of adjusting net income (loss) for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDAX on a cash basis during the period the derivatives settled.

 

Rice Energy Inc.

Derivatives Information

(Unaudited)

The table below provides data associated with our derivatives at March 1, 2014 for the periods indicated:

2014

2015

2016

2017

Natural Gas Swaps: (1)

Volume (BBtu/d)

162

92

99

60

Price ($/MMBtu)

$

4.12

$

4.16

$

4.20

$

4.24

Natural Gas Collars: (1)

Volume (BBtu/d)

10

70

Ceiling Price ($/MMBtu)

$

5.80

$

4.68

n/a

n/a

Floor Price ($/MMBtu)

$

3.00

$

3.91

n/a

n/a

Natural Gas Puts: (1)

Volume (BBtu/d)

23

Strike Price ($/MMBtu)

$

4.55

$

$

$

Put Premium ($/MMBtu)

$

0.45

$

$

$

                                                                                          

(1)

The index prices for the natural gas price swaps, collars and puts are based on the NYMEX – Henry Hub last trading day futures price.

 

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SOURCE Rice Energy Inc.



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