Rice Energy plans midstream MLP to finance expanding pipeline network

By JIM POLSON
Bloomberg

Rice Energy, the Appalachian natural gas producer that went public in January, intends to form a master-limited partnership (MLP) to help finance its expanding pipeline network.

Rice would control the partnership that would initially own gas gathering and water-distribution lines in Pennsylvania used for hydraulic fracturing, the company said. It expects to offer stakes in the first half of 2015.

Master-limited partnerships in energy production and transportation have gained favor with investors seeking cash payouts because they don’t pay federal income tax, leaving more money for distributions.

Rice’s partnership will own gas transport capacity of 3 billion cubic feet/day and water distribution capacity of 5 million gal/day by mid-2015, according to slides posted on the Canonsburg, Pennsylvania-based company’s website.

Midstream assets in Ohio may be sold to the MLP at a later date, according to the slides.

Rice reported a second quarter net loss of $7.9 million, or 6 cents/share, compared with profit of $19.6 million, or 24 cents, a year earlier. Profit was 3 cents/share excluding quarterly adjustments, below the 4.6-cent average of 19 analysts’ estimates compiled by Bloomberg.

Production rose 84% from the year-earlier quarter to the equivalent of 241 million cubic feet/day of gas.

• Most Read
• Most Commented