Rice Energy Reports Second Quarter 2015 Results, Adjusted EBITDAX of $97.4 Million and Increases Full-Year 2015 Production Guidance

Aug 06, 2015, 07:00 ET from Rice Energy Inc.

CANONSBURG, Pa., Aug. 6, 2015 /PRNewswire/ -- Rice Energy Inc. (NYSE: RICE) ("Rice Energy") today reported second quarter 2015 financial and operational results. Highlights during the quarter include:

  • Net production averaged 529 MMcfe/d for the second quarter, a 120% increase relative to second quarter 2014
  • Record adjusted EBITDAX(1) of $97.4 million for the second quarter, a 93% increase from second quarter 2014
  • Adjusted realized natural gas price(2) of $2.98 per Mcf in the second quarter
  • Completed first Pennsylvania Utica well in Greene County, Pennsylvania with production planned for late third quarter 2015
  • Turned to sales 11 operated Ohio Utica and 14 operated Pennsylvania Marcellus wells, our most active quarter in our history
  • Achieved significant midstream throughput growth to 887 MDth/d, a 33% increase relative to first quarter 2015
  • Rice Midstream Partners ("RMP") received a favorable private letter ruling from the IRS providing that income from certain water services constitutes qualifying income
  • Increased 2016 hedge position to 389 BBtu/d at a weighted average floor price of $3.65 per MMBtu(3)
  • Strong second quarter liquidity position of over $1 billion, excluding RMP

Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "We had a tremendous quarter operationally, significantly surpassing our expected production by consistently turning wells online on time or ahead of schedule. I am proud of our team's collaborative efforts, evidenced by our strong quarterly results in spite of a challenging commodity price market."

(1)

Please see "Supplemental Non-GAAP Financial Measure" for a description of Adjusted EBITDAX.

(2)

Adjusted realized price includes our firm transportation sales, net, and the impact of hedging.

(3)

Excluding basis hedges.

 

Second Quarter 2015 Consolidated Results

Three Months Ended June 30, 2015

Six Months Ended June 30, 2015

Total production (MMcfe)

48,099

87,720

Total production (MMcfe/d)

529

485

% Gas

99

%

99

%

  % Operated

90

%

92

%

  % Marcellus

77

%

80

%

Average realized prices per Mcf:

Natural gas price before effects of hedges

$

2.08

$

2.23

Natural gas price after effects of hedges(1)

$

2.97

$

3.04

Adjusted realized price

$

2.98

$

3.08

Average oil and NGL price per Bbl

$

22.24

$

23.46

Average costs per Mcfe:

Lease operating

$

0.23

$

0.26

Gathering, compression and transportation

$

0.35

$

0.36

Production taxes and impact fees

$

0.04

$

0.04

General and administrative

$

0.42

$

0.43

Depletion, depreciation and amortization

$

1.58

$

1.58

Adjusted EBITDAX (in thousands)

$

97,387

$

181,663

Total midstream throughput (MDth/d)

887

778

% Third-party

21

%

19

%

(1)

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

Second Quarter 2015 Financial Results

During the second quarter, our net daily production averaged 529 MMcfe/d, a 20% increase relative to first quarter 2015 volumes and a 120% increase from second quarter 2014 production. Our second quarter realized natural gas price, before the effect of hedges, was $2.08 per Mcf.  After giving effect to hedges, our average natural gas price was $2.97 per Mcf. Our average adjusted realized price, including our firm transportation sales and the impact of hedges, was $2.98 per Mcf. Our average realized oil and NGL price was $22.24 per Bbl.  Per unit cash production costs (lease operating; gathering, compression and transportation; and production taxes and impact fees) were $0.62 per Mcfe, a 10% decrease from the first quarter 2015. Adjusted EBITDAX for the quarter was $97.4 million. We reported adjusted net income of $4.4 million, or $0.03 per share, after excluding unrealized gains on derivative contracts and other non-recurring income and expense items.

Year to Date Financial Results

Net daily production for the six months ended June 30, 2015, averaged 485 MMcfe/d, a 116% increase as compared to the prior year period. Our realized natural gas price, before the effect of hedges, was $2.23 per Mcf.  After giving effect to hedges, our 2015 average natural gas price was $3.04 per Mcf. Our average adjusted realized price was $3.08 per Mcf. Our average realized oil and NGL price was $23.46 per Bbl.  Per unit cash production costs were $0.66 per Mcfe.  Adjusted EBITDAX for the six months ended June 30, 2015 was $181.7 million. We reported an adjusted net loss of $21.6 million, or ($0.16) per share.

2015 Production Guidance Update

Due to continued efficiency gains across our drilling, completion and midstream departments, our project cycle times have shortened, and we anticipate maintaining these efficiencies through the second half of the year. As a result, we are increasing our 2015 annual production guidance to 485 - 505 MMcfe/d and reaffirming our 2015 capital budget for E&P and retained midstream investments of $890 million.

Upstream Segment

Marcellus Shale

Marcellus net production averaged 403 MMcfe/d for the quarter, a 10% increase from the prior quarter and a 68% increase from second quarter 2014.

We turned to sales 14 gross (12 net) horizontal Marcellus wells with an average lateral length of 8,185 feet at an average development cost of $1,191 per lateral foot. These wells are currently producing approximately 150 MMcf/d on managed chokes. As of June 30, 2015, our Marcellus leasehold position in Washington and Greene Counties, Pennsylvania totaled approximately 88,600 net acres.

In July 2015, we turned to sales 6 gross (5 net) Marcellus wells with an average lateral length of approximately 6,400 feet.

The following table provides operational data through June 30, 2015, for Rice Energy's operated Marcellus wells.

Periodic Flow Rates (MMcfe/d)

Period

Gross Operated Wells Turned Into Sales

Average Lateral Length (Feet)

0-90

91-180

181-360

361-720

D&C ($/Foot)

2010-2011

6

3,279

5.7

6.0

4.4

2.7

$

2,363

2012

9

5,731

9.2

10.0

6.8

4.1

$

1,636

2013

22

6,320

11.2

10.6

7.6

4.8

$

1,440

2014(1)

41

7,272

10.6

9.4

6.8

N/A

$

1,236

 Q1 2015

8

6,225

7.6

N/A

N/A

N/A

$

1,303

 Q2 2015

14

8,185

N/A

N/A

N/A

N/A

$

1,191

Total(2)

100

6,729

10.0

9.6

6.9

3.9

$

1,384

(1)

Excludes 7 acquired producing wells.

(2)

With the exception of wells turned into sales, totals represent averages weighted by number of wells.

Utica Shale - Ohio

Ohio Utica net production averaged 126 MMcfe/d for the quarter, a 74% increase from the prior quarter.

We turned to sales 11 gross (6 net) operated horizontal Utica wells with an average lateral length of 9,963 feet at an average development cost of $1,509 per lateral foot. These wells are currently producing approximately 185 MMcf/d on managed chokes. As of June 30, 2015, our leasehold position totaled approximately 55,500 net acres in southeast Ohio, primarily in Belmont County.

Our five operated Utica wells turned to sales prior to the second quarter continue to produce at a flat rate on a restricted choke, including our first well Bigfoot 9H, which has been producing since June 2014.

The following table provides operational data through June 30, 2015, for Rice Energy's operated Ohio Utica wells.

 

Periodic Flow Rates (MMcf/d)

Period

Gross Operated Wells Turned Into Sales

Average Lateral Length (Feet)

0-90

91-180

181-360

361-720

D&C ($/Foot)

Q2 2014

1

6,957

14.0

14.2

15.9

N/A

$

3,316

Q3 2014

2

8,879

14.5

15.9

N/A

N/A

$

2,027

Q4 2014

N/A

N/A

N/A

N/A

N/A

N/A

Q1 2015

2

8,639

16.0

N/A

N/A

N/A

$

1,890

Q2 2015

11

9,963

N/A

N/A

N/A

N/A

$

1,509

Total (1)

16

9,474

15.0

15.3

15.9

N/A

$

1,734

(1)

With the exception of wells turned into sales, totals represent averages weighted by number of wells.

Utica Shale - Pennsylvania

We are currently developing our first Utica well in Pennsylvania, the John Briggs 50U, located in western Greene County. We have drilled and completed the 5,800 foot lateral section and are currently installing production facilities. Development is ahead of schedule and we anticipate first production occurring late in the third quarter of 2015.

Firm Transportation and Realized Gas Pricing

Approximately 61% of our second quarter production received favorable Gulf Coast, TCO and Midwest pricing, while the remainder of our production was sold at local Appalachian prices. Our average basis differential for the quarter was ($0.61) per MMBtu, while TETCO M2 and Dominion South averaged ($1.26) and ($1.28) per MMBtu, respectively, below NYMEX Henry Hub for the quarter. For the remainder of 2015, we anticipate that approximately 84% of our production will be transported to premium gas markets outside of Appalachia.

The following tables provide basis exposure as a percentage of our production and average differentials to NYMEX for actual results through June 30, 2015 and estimated results for the remainder of 2015 through 2016.

Basis Exposure

Actual

Estimated

1Q15

2Q15

3Q15

4Q15

Full Year 2015

Full Year 2016

Basis

    Gulf Coast

27

%

35

%

41

%

51

%

44

%

52

%

    TCO

23

%

17

%

18

%

16

%

18

%

10

%

    Midwest/Dawn

1

%

9

%

21

%

20

%

11

%

15

%

    DTI / M2 / M3

49

%

39

%

20

%

13

%

27

%

23

%

 

Realized Price

Actual

Estimated(1)

1Q15

2Q15

3Q15

4Q15

Full Year 2015

Full Year 2016

NYMEX Henry Hub price ($/MMBtu)

$

2.87

$

2.72

$

2.81

$

2.96

$

2.84

$

3.10

Average basis impact ($/MMBtu)

(0.47)

(0.61)

(0.39)

(0.23)

(0.42)

(0.37)

Firm transportation fuel & variables ($/MMBtu)

(0.09)

(0.13)

(0.16)

(0.19)

(0.16)

(0.16)

Btu uplift (MMBtu/Mcf)

0.11

0.10

0.15

0.17

0.14

0.17

Pre-hedge realized price ($/Mcf)

2.42

2.08

2.41

2.71

2.40

2.74

Realized hedging gain (loss) ($/Mcf)

0.70

0.89

0.94

0.88

0.86

0.40

Post-hedge realized price ($/Mcf)

3.12

2.97

3.35

3.59

3.26

3.14

Net firm transportation sales

0.08

0.01

0.02

Adjusted realized price ($/Mcf)

$

3.20

$

2.98

$

3.35

$

3.59

$

3.28

$

3.14

(1)

NYMEX price as of 8/4/15.

Commodity Hedging Update

During the second quarter, we had 70% of our production hedged at an average price of $3.62 per MMBtu. For the remainder of the year, we have 465 BBtu/d of our production hedged at a weighted average floor price of $3.72 per MMBtu, representing 88% of our 2015 expected production, based on the midpoint of our updated production guidance. In addition, we have added to our 2016 derivatives portfolio and currently have 389 BBtu/d hedged at a weighted average floor price of $3.65 per MMBtu for calendar 2016. Please see the "Derivatives Information" table at the end of this press release for more detailed information about our derivatives positions.

Financial Position and Liquidity

As of June 30, 2015, we had approximately $1 billion in liquidity, consisting of $545 million available under our upstream credit facility(1), $203 million available under our retained midstream credit facility and $257 million of cash on hand. In addition, we hold approximately 29 million RMP common units with a current market value of approximately $475 million.

(1)

      $650 million undrawn credit facility, net of $105 million in letters of credit outstanding.

Midstream Segment

For the second quarter, average daily throughput was 887 MDth/d, a 33% increase relative to first quarter 2015, with 21% attributable to third-party volumes. Gathering, compression and water distribution revenues totaled $34.8 million for the quarter. Operating and maintenance expenses totaled $2.8 million, 16% lower than first quarter 2015, and operating income was $20.7 million

For the six month period ended June 30, 2015, average daily throughput was 778 MDth/d, with 19% attributable to third-party volumes. Gathering, compression and water distribution revenues totaled $64.3 million. Operating and maintenance expenses totaled $6.1 million and operating income was $36.6 million.

Rice Midstream Partners LP (NYSE: RMP) ("the Partnership")

Pennsylvania Gathering System

Average daily throughput for the second quarter was 655 MDth/d, an 18% increase relative to first quarter 2015, with 15% attributable to third-party volumes. Operating revenues during the quarter were $19.7 million and operating and maintenance expenses totaled $0.9 million. The Partnership reported net income of $12.3 million, or $0.21 per limited partner unit.

For the six months ended June 30, 2015, average daily throughput was 607 MDth/d, with 13% attributable to third-party volumes. Operating revenues were $35.9 million and operating and maintenance expenses were $2.3 million. The Partnership reported net income of $21.4 million, or $0.37 per limited partner unit. Maintenance capital expenditures totaled $2.2 million and interest expense was $0.9 million.

As of June 30, 2015, RMP had $30 million drawn under its revolving credit facility, providing $420 million of total liquidity.

On July 24, 2015, RMP declared its quarterly distribution of $0.1905 per common unit for the second quarter 2015, an increase of $0.003 per unit above the first quarter 2015. The distribution will be payable on August 13, 2015 to unitholders of record as of August 4, 2015.

RMP Distribution Guidance

In addition, based on RMP's continued solid operational results and strong distributable cash flow coverage, RMP expects to increase its distributions by $0.003 per unit in each of the third and fourth quarters of 2015 and is raising its full-year 2015 forecasted distribution to $0.7680 per unit. RMP's targeted fourth quarter 2015 distribution of $0.1965 per unit represents a 5% increase above its minimum quarterly distribution of $0.1875 per unit.

Rice Midstream Holdings

Ohio Gathering System

Average daily throughput for the second quarter of 2015 was 232 MDth/d, a 109% increase from first quarter 2015, with 38% attributable to third-party volumes. For the six months ended June 30, 2015, average daily throughput was 172 MDth/d, with 39% attributable to third-party volumes.

Similar to our E&P development, the buildout of our Ohio gathering system has remained ahead of schedule. During the second quarter, we completed construction of our main trunkline, which was six months ahead of schedule. This trunkline has 2.6 MMDth/d of design capacity and connects Rice Energy and other customers to TETCO and Rockies Express (REX) Pipeline. In addition, we commissioned our first interconnect to REX during the second quarter, which was two months ahead of schedule, allowing Rice Energy and other customers to access better priced markets outside of Appalachia earlier than expected.

Fresh Water Distribution Systems

Continued buildout of our fresh water distribution systems remains on schedule. By year end 2015, these systems are expected to provide direct access to 9.2 MMGPD of fresh water from the Monongahela River and other regional water sources in Pennsylvania and 14.7 MMGPD of fresh water from the Ohio River and several other regional sources in Ohio. These systems provide tangible economic and operational benefits to us and our customers, while at the same time reducing local truck traffic in the communities where we and our customers operate.

Subsequent to quarter end, RMP received a favorable private letter ruling from the U.S. Internal Revenue Service providing that income earned by RMP from the delivery of water and the collection, treatment and transport of flowback, produced water and other fluids will constitute qualifying income.

Conference Call

Rice Energy will host a conference call on August 6, 2015 at 9:00 a.m. Eastern time (8:00 a.m. Central time) to discuss second quarter 2015 financial and operating results. To listen to a live audio webcast of the conference call, please visit Rice Energy's website at www.riceenergy.com. A replay of the conference call will be available for two weeks and can also be accessed from our homepage.

Please visit www.riceenergy.com to view a presentation containing supplemental second quarter 2015 information.

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 future capital expenditures (including the amount and nature thereof), projected operational results, production growth, basis exposure, hedging, the timing and number of well completions, forecasted gathering volumes, revenues, adjusted EBITDA, distribution growth, distributable cash flow, the timing of completion and nature of midstream projects, 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.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,

(in thousands, except per share data)

2015


2014


2015


2014

Natural gas production (MMcf)

47,559


21,966


86,647


38,356

Oil and NGL production (MBbls)

90


1


179


1

Total production (MMcfe)

48,099


21,969


87,720


38,359









Operating revenues:








Natural gas, oil and natural gas liquids ("NGL") sales

$

100,890


$

88,524


$

197,802


$

178,990

Firm transportation sales, net

438


2,113


3,264


2,113

Gathering, compression and water distribution

11,566


1,303


21,367


1,314

Total operating revenues

112,894


91,940


222,433


182,417









Operating expenses:








Lease operating

11,090


6,667


22,681


11,853

Gathering, compression and transportation

16,842


8,014


31,262


14,471

Production taxes and impact fees

1,694


871


3,148


1,510

Exploration

356


473


1,095


959

Midstream operation and maintenance

2,801


1,162


6,132


1,835

Incentive unit expense

23,099


1,474


46,557


75,276

Stock compensation expense

4,212


1,125


7,467


1,216

General and administrative

20,425


14,845


37,914


26,275

Depreciation, depletion and amortization

76,140


32,552


138,721


58,059

Amortization of intangible assets

408


340


816


340

Other expense

1,998



3,889


Operating (loss) income

(46,171)


24,417


(77,249)


(9,377)









Interest expense

(23,359)


(15,941)


(39,488)


(22,983)

Gain on purchase of Marcellus joint venture




203,579

Other income (loss)

1,035


(195)


1,196


396

(Loss) gain on derivative instruments

(3,710)


(11,198)


57,657


(31,578)

Amortization of deferred financing costs

(1,306)


(532)


(2,409)


(1,021)

Loss on extinguishment of debt


(3,001)



(3,144)

Write-off of deferred financing costs


(6,060)



(6,896)

Equity loss of joint ventures




(2,656)

(Loss) income before income taxes

(73,511)


(12,510)


(60,293)


126,320

Income tax benefit (expense)

9,992


4,593


1,462


(4,782)

Net (loss) income

(63,519)


(7,917)


(58,831)


121,538

Less: Net income attributable to noncontrolling interests

(6,164)



(10,699)


Net (loss) income attributable to Rice Energy Inc.

$

(69,683)


$

(7,917)


$

(69,530)


$

121,538









Adjusted net income(1)

$

4,351


$

(943)


$

(21,608)


$

58,666









Adjusted EBITDAX(1)

$

97,387


$

50,391


$

181,663


$

105,916









Weighted average shares—basic

136,315,882


128,419,606


136,303,914


121,925,915

Weighted average shares—diluted

136,315,882


128,419,606


136,303,914


122,255,908









Earnings per share—basic

$

(0.51)


$

(0.06)


$

(0.51)


$

1.00

Earnings per share—diluted

$

(0.51)


$

(0.06)


$

(0.51)


$

0.99









Adjusted earnings per share—basic

$

0.03


$

(0.01)


$

(0.16)


$

0.48

Adjusted earnings per share—diluted

$

0.03


$

(0.01)


$

(0.16)


$

0.48


(1) Please see "Supplemental Non-GAAP Financial Measures" for a description of Adjusted EBITDAX and Adjusted net income.


 

Rice Energy Inc.

Segment Results of Operations

(Unaudited)


Exploration and Production Segment



Three Months Ended
June 30,


Six Months Ended
June 30,


(in thousands, except volumes)

2015


2014


2015


2014











Operating volumes:









Natural gas production (MMcf)

47,559


21,966


86,647


38,356


Oil and NGL production (MBbls)

90


1


179


1


Total production (MMcfe)

48,099


21,969


87,720


38,359











Operating revenues:









Natural gas, oil and NGL sales

$

100,890


$

88,524


$

197,802


$

178,990


Firm transportation sales, net

438


2,113


3,264


2,113


Total operating revenues

101,328


90,637


201,066


181,103











Operating expenses:









 Lease operating

11,090


6,667


22,681


11,853


Gathering, compression and transportation

32,691


8,104


60,367


14,616


Production taxes and impact fees

1,694


871


3,148


1,510


Exploration

356


473


1,095


959


Incentive unit expense

21,885


2,462


44,383


70,564


Stock compensation expense

3,011


994


5,231


1,085


General and administrative

16,115


9,430


29,414


18,998


Depreciation, depletion and amortization

73,342


31,397


132,256


56,461


Other expense

1,159



3,050



Total operating expenses

161,343


60,398


301,625


176,046











Operating (loss) income

$

(60,015)


$

30,239


$

(100,559)


$

5,057











Average costs per Mcfe:









 Lease operating

$

0.23


$

0.30


$

0.26


$

0.31


  Gathering and compression

0.37



0.36



  Transportation

0.31


0.37


0.32


0.38


  Production taxes and impact fees

0.04


0.04


0.04


0.04


  Exploration

0.01


0.02


0.01


0.03


Incentive unit expense

0.45


0.11


0.51


1.84


Stock compensation expense

0.06


0.05


0.06


0.03


General and administrative

0.34


0.43


0.34


0.50


Depreciation, depletion and amortization

1.52


1.43


1.51


1.47



Midstream Segment



Three Months Ended
June 30,


Six Months Ended
June 30,


(in thousands, except volumes)

2015


2014


2015


2014











Operating volumes:









Gathering volumes (MDth/d)

887


369


778


310


Compression volumes (MDth/d)

58


25


61


13


Water distribution volumes (MMGal)

163



348












Operating revenues:









Gathering revenues

$

25,164


$

1,237


$

43,910


$

1,303


Compression revenues

818


156


1,174


156


Water distribution revenues

8,830



19,175



Total operating revenues

34,812


1,393


64,259


1,459











Operating expenses:









Midstream operation and maintenance

2,801


1,162


6,132


1,835


Incentive unit expense

1,214


(988)


2,174


4,712


Stock compensation expense

1,201


131


2,236


131


General and administrative

4,310


5,415


8,500


7,277


Depreciation, depletion and amortization

3,330


1,155


6,997


1,598


Amortization of intangible assets

408


340


816


340


       Other expense

839



839



Total operating expenses

14,103


7,215


27,694


15,893











Operating income (loss)

$

20,709


$

(5,822)


$

36,565


$

(14,434)

 

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 non-controlling interest; interest expense; income taxes; depreciation, depletion and amortization; amortization of deferred financing costs; amortization of intangible assets; derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments; non-cash stock compensation expense; non-cash incentive unit expense; exploration expenses; and other non-recurring items. Adjusted EBITDAX is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP.


Management believes Adjusted EBITDAX is useful because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. Our computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDAX is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements.


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


(in thousands)

Three Months Ended
June 30, 2015


Six Months Ended
June 30, 2015

Adjusted EBITDAX reconciliation to net income (loss):




Net loss

$

(63,519)


$

(58,831)

Interest expense

23,359


39,488

Depreciation, depletion and amortization

76,140


138,721

Amortization of deferred financing costs

1,306


2,409

Amortization of intangible assets

408


816

Loss (gain) on derivative instruments(1)

3,710


(57,657)

Net cash receipts on settled derivative instruments(1)

42,474


69,870

Non-cash stock compensation expense

4,212


7,467

Non-cash incentive unit expense

23,099


46,557

Income tax expense

(9,992)


(1,462)

Exploration expense

356


1,095

Other expense

1,998


3,889

Noncontrolling interest

(6,164)


(10,699)

Adjusted EBITDAX

$

97,387


$

181,663



(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.
Supplemental Non-GAAP Financial Measure
(Unaudited)


Adjusted net income (loss) 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 net income (loss) as net income (loss) before derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments incentive unit expense and other non-recurring items. Adjusted net income (loss) is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP.


We believe that many investors use adjusted net income in making investment decisions and in evaluating our operational trends and our performance relative to other oil and gas producing companies.


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


(in thousands)

Three Months Ended
June 30, 2015


Six Months Ended
June 30, 2015

Reconciliation to net income (loss) attributable to Rice Energy Inc:




Net loss attributable to Rice Energy Inc.

$

(69,683)


$

(69,530)

Loss (gain) on derivative instruments, net of tax(1)

4,639


(72,095)

Net cash receipts on settled derivative instruments, net of tax(1)

53,110


87,366

Incentive unit expense, net of tax

13,787


27,788

Other expense, net of tax

2,498


4,863

Adjusted net income (loss) attributable to Rice Energy Inc.

$

4,351


$

(21,608)



(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 net income 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 August 6, 2015 for the periods indicated: 


All-In Fixed Price Derivatives


Remainder
of 2015


2016


2017


2018










NYMEX Natural Gas Swaps:









Volume Hedged (BBtu/d)


194


308


115


5

Weighted Average Swap Price ($/MMBtu)


$

4.07


$

3.87


$

3.81


$

3.60










NYMEX Natural Gas Collars:









Volume Hedged (BBtu/d)


158


50


220


220

Weighted Average Floor Price ($/MMBtu)


$

3.96


$

2.91


$

3.13


$

3.20

Weighted Average Collar Price ($/MMBtu)


$

4.65


$

3.60


$

3.61


$

3.69










NYMEX Volume Hedged (BBtu/d)


353


358


335


225

Swap + Collar Floor ($/MMBtu)


$

4.02


$

3.74


$

3.36


$

3.21










Dominion Natural Gas Swaps









Volume Hedged (BBtu/d)


71


31



Weighted Average Swap Price ($/MMBtu)


$

2.49


$

2.62


$


$










TCO Natural Gas Swaps









Volume Hedged (BBtu/d)


41




Weighted Average Swap Price ($/MMBtu)


$

3.30


$


$


$










Total Fixed Price Derivatives









Volume Hedged (BBtu/d)


465


389


335


225

Weighted Average Swap Price ($/MMBtu)


$

3.72


$

3.65


$

3.36


$

3.21










Basis Contract Derivatives









TCO Basis Swaps









Volume Hedged (BBtu/d)


53


34


17


Weighted Average Swap Price ($/MMBtu)


$

(0.32)


$

(0.33)


$

(0.34)


$










Dominion Basis Swaps









Volume Hedged (BBtu/d)


16


45


50


75

Weighted Average Swap Price ($/MMBtu)


$

(1.12)


$

(1.10)


$

(0.98)


$

(0.70)










M2 Basis Swaps









Volume Hedged (BBtu/d)


20


40


60


Weighted Average Swap Price ($/MMBtu)


$

(0.94)


$

(1.08)


$

(1.01)


$










MichCon Basis Swaps









Volume Hedged (BBtu/d)


1


24


4


4

Weighted Average Swap Price ($/MMBtu)


$

(0.04)


$

(0.01)


$

(0.04)


$

(0.04)










ELA Basis Swaps









Volume Hedged (BBtu/d)


30


60


30


30

Weighted Average Swap Price ($/MMBtu)


$

(0.13)


$

(0.10)


$

(0.08)


$

(0.09)










Chicago Basis Swaps









Volume Hedged (BBtu/d)



40


10


10

Weighted Average Swap Price ($/MMBtu)


$


$

(0.05)


$

(0.16)


$

(0.19)










ANR SE Basis Swaps









Volume Hedged (BBtu/d)



15



Weighted Average Swap Price ($/MMBtu)


$


$

(0.13)


$


$










Physical Triggered Basis









Appalachian Fixed Basis (Physical)









Volume Hedged (BBtu/d)


25


21



Weighted Average Swap Price ($/MMBtu)


$

(0.72)


$

(0.79)


$


$










MichCon Fixed Basis (Physical)









Volume Hedged (BBtu/d)


3


10


10


8

Weighted Average Swap Price ($/MMBtu)


$

0.05


$

0.05


$

0.05


$

0.05










Gulf Coast Fixed Basis (Physical)









Volume Hedged (BBtu/d)


87


100


100


100

Weighted Average Swap Price ($/MMBtu)


$

(0.17)


$

(0.17)


$

(0.17)


$

(0.17)










Total Basis Swaps (Financial + Physical)









Volume Hedged (BBtu/d)


235


389


281


227

Weighted Average Swap Price ($/MMBtu)


$

(0.38)


$

(0.38)


$

(0.48)


$

(0.33)

 

The table below provides supplemental balance sheet data as of June 30, 2015.


Supplemental Balance Sheet data (in thousands)

June 30, 2015

Cash and cash equivalents

$

256,676

Long-term debt


6.25% Senior Notes Due April 2022

$

900,000

7.25% Senior Notes Due May 2023

397,033

Senior Secured Revolving Credit Facility

Midstream Holdings Revolving Credit Facility

97,000

RMP Revolving Credit Facility

30,000

Total long-term debt

$

1,424,033

Net debt

$

1,167,357

 

The table below outlines our firm transportation capacity by pipeline.


Project

Pipeline

Start Date

Volume (Dth/d)

Term

Market

TEAM South

TETCO

Sept-14

270,000

38 Yrs

Gulf Coast

Westside Expansion

TCO

Nov-14

125,000

10 Yrs

TCO/Gulf Coast

Rockies Express Reversal

REX

Aug-15

175,000

20 Yrs

Midwest/Gulf Coast

Union Town to Gas City

TETCO

Sept-15

86,500

10 Yrs

Midwest/Gulf Coast

OPEN

TETCO

Sept-15

50,000

20 Yrs

Gulf Coast

ET Rover

Rover

July-17

100,000

15 Yrs

Canada

Access South

TETCO

Nov-17

320,000

25 Yrs

Gulf Coast

 

Logo - http://photos.prnewswire.com/prnh/20140123/DA51701LOGO

 

SOURCE Rice Energy Inc.



RELATED LINKS

http://www.riceenergy.com