Rice Energy expands in Marcellus with $2.7-billion Vantage Energy buy

9/27/2016

CANONSBURG, Pennsylvania -- Rice Energy has entered into a purchase and sale agreement to acquire Vantage Energy, LLC and Vantage Energy II, LLC for approximately $2.7 billion, including the assumption of debt. In connection with the acquisition, Rice Midstream Partners (RMP) will purchase the acquired midstream assets from Rice Energy for $600 million. The transaction is expected to close in the fourth quarter.

The E&P assets to be acquired by Rice Energy include approximately 85,000 net core Marcellus acres in Greene County, Pa., with rights to the deeper Utica shale on approximately 52,000 net acres, and 37,000 net acres in the Barnett shale.

Second-quarter 2016 net production of the acquired assets was 399 MMcfed (approximately 65% Appalachia, 35% Barnett). The core midstream assets to be acquired by RMP include 30 miles of dry gas gathering and compression assets. As part of the transaction, Rice Energy will dedicate the acquired Pennsylvania acreage to RMP to provide gas gathering, compression and water services.

Following this transaction, Rice Energy will control approximately 231,000 net acres in the Marcellus and Ohio Utica cores with an inventory of 1,164 drilling locations that generate average single well returns of approximately 95% at strip pricing. Similarly, Rice Midstream Partners will control one of the largest and most concentrated core dry gas acreage dedications in the Marcellus shale, covering approximately 199,000 acres in Washington and Greene Counties.

Daniel J. Rice IV, CEO, said, "This deal represents the largest core dry gas Marcellus acquisition to date, one that is truly transformational for Rice Energy, Rice Midstream Partners and our respective shareholders. This acquisition adheres to our proven strategy of pursuing core shale gas acreage, leveraging our industry-leading technical shale team to deliver best-in-class well results and capturing a greater share of the value chain through our premier midstream services business. Our transaction financings are meant to strengthen Rice Energy's balance sheet even further, including positioning us to capture an additional 20,000–40,000 acres of leasehold adjacent to our existing position."

Roger Biemans, CEO of Vantage Energy, said, "Vantage, together with its three sponsors—Quantum, Riverstone, and Lime Rock—has assembled one of the largest and most attractive core dry gas positions in the Marcellus shale. We believe the combination of Rice and Vantage creates the premier natural gas company in the country. Rice will have a multi-decade inventory of the most economic dry gas in North America, a tremendous growth story for its midstream business, and a management team that has proven its ability to execute on its strategy."

 

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