Rice Midstream Partners Investor Presentation

Rice Midstream Partners Investor Presentation2 www.riceenergy.com
Attractive Drop Down Potential Slide 12
Integrated Water Services Business Acquisition Slide 14
Western Greene County Midstream Update Slide 15
RICE Overview Slide 17
2016 Guidance Slide 6
3 www.riceenergy.com
RMP Investment Highlights 100% of RMP acreage dedications are located within the dry gas core of the Marcellus Shale and Utica Shales
RICE’s concentrated dry gas core position + multi-well pad drilling = minimal RMP capex to meaningfully increase gathering throughput and water delivery volumes
Significant optionality on emerging Pennsylvania Utica opportunity
RMP’s strong 2016 expected throughput growth of ~25% over 2015, driven by high quality sponsor
Significant growth expected from contracted third party dedications from top tier producers
Increased distributions in 2Q15, 3Q15 and 4Q15 ahead of previously anticipated distribution increase timing
RMP has a ROFO on RICE’s OH gas gathering system consisting of 58,000 acres dedicated in Belmont County
RICE closed Strike Force JV with Gulfport to provide midstream services on 75,000 acres dedicated in Belmont and Monroe Counties
Expect to continue to grow third party gathering and water services opportunities
MLP cash flow driven by scalable dry gas throughput, complementary water services business and protected with 100% fee-based contracts
Prolific assets and balance sheet strength positions RMP for continued growth through organic development and accretive acquisitions
Visible, top-tier distribution growth profile driven by disciplined and aligned sponsor, attractive drop down candidates, and high-quality third party dedications
148K net acres in the dry gas cores of the Marcellus and Utica w/ 13+ year inventory in each area
Top-tier well results generate attractive single-well returns of approximately ~30%(1) at strip pricing
Majority of 2016 production covered by firm sales and transportation and 662 BBtu/d hedged in 2016 at weighted avg. floor price of $3.26 / MMBtu
__________________________ 1. Assumes strip pricing as of 2/19/16.
Strategically Located Midstream Assets
RICE closed Strike Force JV w/ GPOR to develop gathering and compression for their Utica acreage
ROFO on RICE’s OH gas gathering and compression assets In 4Q15, acquired RICE’s PA & OH water services business for $200MM
purchase price
Fourth quarter average daily throughput of 703 MDth/d Increased acreage dedication in PA from RICE by 19,000 gross acres to
93,000 acres Increased distribution to $0.1965 / unit for 4Q15 Expect to increase distributions by 20% in 2016
$315MM liquidity w/ $143MM drawn under our revolving credit facility DCF coverage ratio of 1.22x for 4Q15 Cash flow driven by scalable dry gas throughput, complementary
water services business & protected w/ 100% fee based contracts
Ample liquidity and balance sheet strength positions RMP for continued growth through organic development and accretive acquisitions
Visible, top-tier distribution growth profile driven by disciplined and aligned sponsor, attractive drop-down candidates, and high-quality third party dedications
EXECUTION IS DRIVING
RAPID ORGANIC GROWTH
FINANCIAL SUMMARY
RMP Fourth Quarter 2015 Financial Summary
Fourth quarter average daily throughput of 703 MDth/d 18% attributable to third-party volumes
Adjusted EBITDA of $19MM Distributable Cash Flow of $17MM DCF coverage ratio of 1.22x
Solid fourth quarter results supported by strong throughput growth, well capitalized balance sheet and ample liquidity
$143MM drawn under our revolving credit facility $8MM of cash on hand
Three Months Ended ($ in millions, except per unit data) December 31, 2015 Affiliate gathering volumes (MDth/d) 577 Third-party gathering volumes (MDth/d) 126
Total gathering volumes (MDth/d) 703
Water service volumes (MMgal) 202
Total operating revenues $29,314
Adjusted EBITDA $19,065
Distribution declared $13,935 Distribution / unit $0.1965
DCF coverage ratio 1.22x
($ in millions) December 31, 2015 Revolver capacity $450 Less: Borrowings 143 Plus: Cash and cash equivalents 8
Liquidity $315
Increased distribution to $0.1965 / unit for 4Q15 $0.003 / unit increase
20% distribution growth target in 2016
DISTRIBUTIONS
Financial Summary
December 31, 2015
—
Net income
144
Reconciliation of Adjusted EBITDA to Cash used in operating activities:
Adjusted EBITDA
(12,134)
$ (69)
March 31, 2015
8
Liquidity
$315
EBITDA
Net income
144
Adjusted EBITDA
(12,134)
$ (69)
2016 GUIDANCE(1)
$ in millions, except per share data, as of 12/31/15 Common Units 42 Subordinated Units 29
Total Units Outstanding (MM) 71 Price as of 12/31/15 $13.49
Market Capitalization $957 Cash 8 Revolving credit facility 143
Enterprise Value $1,108
Leverage Statistics 4Q15 Net Debt / RR EBITDA 1.8x EBITDA / Interest NM Debt to EBITDA Covenant 4.75x
Liquidity Summary Revolving credit facility $450 Less: amount drawn 143 Availability under RCF $307 Plus: cash on hand 8 Liquidity as of 12/31/15 $315
__________________________ 1. As of February 24, 2016.
CAPITALIZATION AND LIQUIDITY AT 12/31/15
Capital Expenditure ($MM) Gas Gathering and Compression $ 140 Water Services $ 10 Total Capital Expenditures $ 150
Estimated Maintenance Capital $ 11
Cash G&A ($MM) 15$ - 18$
Adjusted EBITDA ($MM) Gas gathering and compression 85$ - 90$ Water business 25$ - 30$ Total Adjusted EBITDA 110$ - 120$
% Third Party
Distributable Cash Flow ($MM) 90$ 100$ Average DCF Coverage Ratio 1.3x 1.5x % Distribution Growth
Guidance
2015 Capital Budget (in millions)
Common Units
$48 $53
1.8x
DE
ROFO Assets
8.25% common
equity interest
($375MM invested)
41% LP interest, 100% of IDRs
RMP GP (non-economic)
equity interest
RMP: High Growth MLP in Prolific Appalachian Basin
__________________________ 1. As of February 24, 2016. 2. As of December 31, 2015. The agreement between RICE and RMP covers approximately 93,000 gross acres of the RICE’s acreage position in the dry gas core of the Marcellus Shale in southwestern Pennsylvania as of December 31, 2015 and any future acreage it acquires within these
counties, excluding the first 40.0 MDth/d of RICE’s production from approximately 19,000 gross acres subject to a pre-existing third-party dedication. Excludes ~49K net PA Utica acres dedicated to RMP from RICE and additional PA Utica acreage dedicated to RMP from EQT.
RMP OVERVIEW
PA gas gathering system of over 4.0 MMDth/d design capacity
Oversized to accommodate future growth and emerging PA Utica potential
Gathering throughput driven by SW PA technical leaders
~80% of 2016E throughput from RICE operated volumes, and ~20% from 3rd parties, primarily EQT
2016 GUIDANCE(1)
$140MM gathering and compression
RMP constructing ~15 miles of gathering pipeline in 2016
RMP installing compression for RICE in 1H16 that will start generating revenue mid-2016
GATHERING SYSTEM INFORMATION
Dedicated Gross Acreage(2)
4Q 2015 Throughput
(MDth/d) 2016E Capex
WEST VIRGINIA
OH PA
RICE Acreage
3rd Party Dedicated to RMP
RMP Water Pipeline RMP Water Pipeline to be Constructed RMP Water Interconnects
GPOR Water Dedication
RMP Gathering and Water System Build-out
PA gathering system oversized to accommodate future growth and emerging PA Utica potential
Mileage: 128 miles by YE16
Total Design Capacity: over 4.0 MMDth/d
Substantially all of RICE’s drilling locations within the RMP dedication will be within 2 miles of the completed PA gathering system
112 miles of water pipeline to deliver fresh water to well pads for completions
152 million gallons of water impoundment capacity
SUMMARY
2013
2014 2015
RMP Gathering Pipeline RMP Gathering Pipeline to be Constructed RMP Water Pipeline RMP Water Pipeline to be Constructed RICE Acreage
2012
2016E
RMP 3rd Party Dedications from Top Operators in the Basin
SYSTEM MAP
RMP’s Assets are Well Positioned to Capture 3rd Party Growth
3rd Party Gathering Dedication Summary PA
Dedicated Acreage 21,000
Contract Term ~10 years (wtd. avg)
Gathering / Compression Fee ($/Dth)
OVERVIEW
High quality 3rd party operators with active development programs
EQT and GPOR (primary 3rd party customers) are technical leaders with strong balance sheets and attractive firm transportation portfolios and hedges to support development
Pennsylvania:
~21,000 gross acres dedicated
127 MDth/d gathered in 4Q 2015 (18% of RMP’s throughput)
Ohio: GPOR Water Dedication within 1.5 mile perimeter
around water distribution system in Ohio
WEST VIRGINIA
OH PA
RICE Acreage
3rd Party Dedicated to RMP
RMP Water Pipeline RMP Water Pipeline to be Constructed RMP Water Interconnects
GPOR Water Dedication
Industry-Leading Throughput Growth 4Q 2015 throughput of ~1,027 MDth/d through RICE and RMP midstream systems (25% 3rd Party)
RMP System: 703 MDth/d (18% 3rd Party) RICE OH System: 323 MDth/d (40% 3rd Party)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Dth/d
RMP - Rice Operated (PA) RMP - 3rd Party (PA) RICE - Rice Operated (OH) RICE - 3rd Party (OH)
Average Throughput (MDth/d)
Throughput 4 18 61 176 409 894
YoY Growth 350% 238% 188% 133% 119%
(1)
__________________________ 1. PA 3rd party volumes as of April 2014 close of Momentum asset acquisition.
RMP AND RICE OH MIDSTREAM HISTORICAL THROUGHPUT
Attractive Drop Down Potential – OH Gathering
__________________________ 1. As of February 24, 2016. 2. As of December 31, 2015.
RMH OVERVIEW
OH gas gathering system of over 2.0 MMDth/d design capacity
Gathering throughput driven by SE OH technical leaders
~65% of 2016E throughput from RICE volumes, and ~35% from GPOR(1)
Will access TETCO, REX, ET Rover and DEO to deliver gas to Gulf Coast and Midwest markets
2016 GUIDANCE(1)
Constructing ~30 miles of gathering pipeline in 2016
Premier Midstream Systems in Prolific Dry Gas Utica Core Adds to Inventory of Drop Down Candidates
GATHERING SYSTEM INFORMATION
Strike Force JV 75,000 -
WV
Legend RICE Ohio Gathering Pipeline RICE Ohio Gathering Pipeline to be Constructed
GPOR Dedicated to RICE RICE Acreage Dedicated to 3rd
Party
Attractive Drop Down Potential – Strike Force JV TRANSACTION OVERVIEW STRATEGIC RATIONALE
RICE and GPOR completed the formation of Utica Shale strategic midstream JV (“Strike Force”)
Provide gas gathering and compression services to GPOR’s Eastern Belmont and Monroe acreage in Ohio
Supported by long-term, fee-based service agreements with GPOR
Ownership: RICE 75% and GPOR 25% with RICE to construct and operate all JV assets:
Dry gas gathering system with capacity to gather up to 1.8 MMDth/d
System will consist of ~165 miles of high and low pressure 12” – 24” gathering pipelines with multiple interconnections to Rockies Express, ET Rover, TETCO, Dominion East Ohio and other future pipelines
~50,000 horsepower of compression for gathering and delivery into various downstream interstate pipelines
GPOR dedicated ~75,000 leasehold acres within the Strike Force AMI of ~319,000 acres
Constructing Extensive Dry Gas Gathering and Water Systems in One of the Most Prolific Natural Gas Plays
Strike Force strengthens Rice’s leading midstream position in the core of the Utica Shale
Expands relationship with GPOR across its premier position in the dry gas Utica Shale
Achieves efficiencies of simultaneous development of gathering and compression
Leverages existing footprint to grow 3rd party business and pursue additional 3rd party opportunities within a ~319,000-acre AMI
System designed to accommodate future growth
Significantly adds to RICE’s attractive inventory of drop down candidates
PHASE 1 COMPLETED AHEAD OF SCHEDULE AND FIRST FLOW
COMMENCED ON FEBRUARY 1, 2016
__________________________ 1. Assumes fee of $0.06 per gallon and operating expense of $0.013 per gallon in Pennsylvania and 11,000,000 gallons of water per well that utilize the fresh water delivery system based on a 7,000’ lateral. 2. Assumes fee of $0.07 per gallon and operating expense of $0.013 per gallon in Ohio and 16,900,000 gallons of water per well that utilize the fresh water delivery system based on a 9,000’ lateral.
Acquisition Assets – Integrated Water Services Business WATER SERVICES BUSINESS OVERVIEW WATER DISTRIBUTION SYSTEM MAP
Delivers fresh water to well pads for completions
Collects, recycles or disposes of flowback and produced water for RICE & 3rd parties
Volumetric fee structure to provide revenue & cash flow stability
PENNSYLVANIA & OHIO WATER SYSTEMS
PA trunk line substantially complete in 1Q15 and OH trunk line substantially complete in 3Q15
Trunk lines consist primarily of 24-30” polyethylene pipe & laterals consist of 18” polyethylene pipe
~90% of 2016E PA volumes expected to come from RICE & ~75% of 2016E OH volumes expected to come from RICE
PROJECTED FRESH WATER DELIVERY INFRASTRUCTURE
PA OH TOTAL
Cash Operating Margin: $517,000(1) $963,000(2) Water Pipeline Water Pipeline to be Constructed RICE Acreage
Wetzel P A
Western Greene County Midstream Update
Development area located in western Greene County, PA in the heart of the Marcellus dry gas core and the emerging super-deep dry gas Utica core
RMP will now gather all production above 40 MDth/d
– Williams will provide Rice with gathering and compression services for the first ~40 MDth/d of production from this area
Improvement to Rice’s single well economics – ~45% increase in Marcellus PV10/well(1): ~$7MM ~$10MM – Rice also benefits economically from RMP distribution growth associated
with the organic growth opportunity
Strategically accretive to RMP – Increases RMP’s acreage dedication from Rice Energy by 19,000 Marcellus
acres (25% increase, ~110 undeveloped net Marcellus wells) and 17,000 Utica acres (~40 undeveloped Utica wells)
– RMP has acquired the necessary right-of-ways and has submitted permits in order to construct the header system
__________________________ 1. Increase PV10 due to assumed gathering and compression fee of $0.30/dth and $0.07/dth versus previous historical fees of $0.45/dth and $0.12/dth. Actual midstream fees for this area to be determined. Assumes $3.50 HHUB. See appendix for single well return assumptions.
PAWV
Washington
Greene
Rice Western Greene Area
RMP Proposed Gathering Trunkline
RICE has renegotiated its gathering agreement with Williams, allowing RMP to provide gas gathering services for RICE in western Greene County, PA
2015 Midstream System Statistics
__________________________ 1. The agreement between RICE and RMP covers approximately 93,000 gross acres of the RICE’s acreage position in the dry gas core of the Marcellus Shale in southwestern Pennsylvania as of December 31, 2015 and any future acreage it acquires within these counties, excluding the first
40.0 MDth/d of RICE’s production from approximately 19,000 gross acres subject to a pre-existing third-party dedication. 2. Fees will be annually escalated based upon changes in the Consumer Price Index. Compression fees are derived on a per stage basis 3. Certain of RMP’s third-party contracts provided for an increase in the gathering fee RMP will receive upon completion of construction of an 18-mile, 30 inch pipeline connecting its gathering system to TETCO, which was completed in November 2014. Represents weighted average
based on historical throughput. 4. Assumes fee of $0.06 per gallon in Pennsylvania and 11,000,000 gallons of water per well that utilize the fresh water delivery system based on a 7,000’ lateral. Assumes fee of $0.07 per gallon in Ohio and 16,900,000 gallons of water per well that utilize the fresh water delivery system
based on a 9000’ lateral.
RMP Assets
Pennsylvania Ohio
Gathering and Compression Statistics Gathering and Compression Statistics Design Gathering Capacity (MMDth/d) > 4.0 Design Gathering Capacity (MMDth/d) > 2.0
YE15 YE16 YE15 YE16 Gas Gathering Pipeline Mileage (miles) 113 128 Gas Gathering Pipeline Mileage (miles) 54 65
Acreage Dedications Acreage Dedications RICE(1) 93,000 RICE 38,000 3rd Party 21,000 3rd Party 20,000
Total Acreage Dedications 114,000 Total Acreage Dedications 58,000
Midstream Fees Paid by RICE to RMP ($/Dth) (2) Midstream Fees Paid by RICE to RICE OH ($/Dth) (2)
Gathering $0.30 Gathering $0.30 Compression (per stage of compression) $0.07 Compression (per stage of compression) $0.07
3rd Party Midstream Fees ($/Dth) 3rd Party Midstream Fees ($/Dth) Gathering (3) $0.43 Gathering undisclosed Compression vairies Compression undisclosed
Water Distribution System Statistics Water Distribution System Statistics YE15 YE15
Connected Water Sources (MMGPD) 8.7 Connected Water Sources (MMGPD) 10.7 Water Services Fee Paid by RICE ($/gallon)(4) $0.06 Water Services Fee Paid by RICE ($/gallon)(4) $0.07
Strike Force JV
Gathering and Compression Statistics YE15 YE16
Gas Gathering Pipeline Mileage (miles) 7 29 AMI Acreage 319,000 GPOR Dedicated Acreage 75,000
RICE Overview
Concentrated Core Upstream Assets
__________________________ 1. Net undeveloped locations as of 12/31/15. See slide entitled “Additional Disclosures” on detail regarding RICE’s methodology for the calculation of locations. 2. Strip as of 1/4/16.
92,000
56,000
449
175
197,000
Deep PA Utica Core
Premier E&P Company in the Lowest Cost Gas Shale Plays
100% of assets located in the cores of the Marcellus and Utica
Valuable production base of 624 MMcfe/d ($1.2bn PD + Hedge PV10)(2)
Low breakevens of $2.15/MMBtu across Marcellus and dry-gas OH Utica
Strong hedge and FT portfolio provides protection from downcycles
Inventory (Wells)
upside from PA Utica
* Stacked Pay on PA Acreage
*49,000 PA Utica
2013 2014 2015 LOE and Taxes FT Gathering G&A
127 274
552 720
$1,439 $1,237 $1,181 $1,150
2013 2014 2015 2016E
Track Record of Low-Cost Growth PER UNIT CASH COSTS ($/MCFE) (1)UTICA D&C COSTS ($/FT)MARCELLUS D&C COSTS ($/FT)
MIDSTREAM THROUGHPUT (MDTH/D)NET PRODUCTION (MMCFE/D)PROVED RESERVES (BCFE)
__________________________ 1. E&P segment costs. RICE gathering agreements in OH and PA began in 2015. Gathering fee per Mcfe applied to 2013 and 2014 to show a comparison on apples to apples basis.
2016 budget positions RICE for success in 2016 and beyond – Focused on balance sheet and E&P returns while creating significant future midstream value – 2016 D&C budget maintains clean balance sheet while investing in 2017
Financial Strength – Healthy balance sheet, ample liquidity and robust hedges – Healthy Balance Sheet: Expect to exit 2016 at 3.0x leverage with no dependence on drop downs or capital markets – Ample Liquidity: $1.4bn of liquidity(1): $1.1B E&P and $300MM RMH – Robust & Attractive Hedges: 87% of 2016 production hedged at $3.26/MMBtu; majority of 2017 production hedged at $3.14/MMBtu
Highly concentrated acreage position in the most economic areas of the Marcellus and Utica Shale – Core Locations: 134 net producing wells (624 MMcfe/d in Q4’15) + 487 net undeveloped Marcellus wells + 215 net undeveloped OH Utica wells + 105 net undeveloped PA Utica
wells – Resilient Economics: Development and operating cost declines have driven avg. breakeven PV-10 to ~$2.15/MMBtu (~15% lower than 2015) – Compelling Returns in Challenging Market: ~30% Pre-Hedge IRRs at strip pricing(2)
Midstream is a valuable and differentiated element of the RICE story – #1 Gatherer in the Dry Gas Core: 247,000 acres(3) dedicated from 3 of the 5 most active operators in SW Appalachia – Unique Financial Advantages: ~$1.0B of midstream monetizations and financings to date with ~$1.3B of estimated remaining drop down inventory and GP Holdings with expected
future value of $1.0B+ – High Growth MLP: RMP expects 20% distribution growth with current asset base while maintaining 1.3x-1.5x coverage in 2016
Firm Transportation (FT) Portfolio is right-sized for Rice’s production growth and basis outlook – Right-Sized: FT covers >80% of 2016 production and decreases to ~60% by 2020 – Right Exposure: Expect local basis to improve from $0.75 in 2016 (30% of production) to $0.50 in 2020 (~40% of production)
Well Positioned to Navigate Environment
__________________________ 1. As of 12/31/2015 pro forma for the preferred equity transaction of $375 million. 2. Strip pricing as of 2/19/16. See Economics slide for more detailed assumptions used to generate single well economics. 3. Excludes ~49K net PA Utica acres dedicated to RMP from RICE and additional PA Utica acreage dedicated to RMP from EQT.
LIQUIDITY
Ample Liquidity: $1.4B of total liquidity YE15(1) consisting of $1.1bn of E&P liquidity and $300MM of RMH liquidity
Strong Balance Sheet and Financing: E&P budget fully funded with cash flow and cash on hand (no dependence on drop-downs or capital markets) and ~3.0x levered throughout 2016
Attractive Hedge Book – 87% hedged in 2016 at wtd. avg. floor of $3.26/MMBtu – 563 MMBtu/d hedged in 2017 at wtd. avg. floor of
$3.14/MMBtu
__________________________ 1. As of 12/31/2015 pro forma for the preferred equity transaction of $375 million.
$720
Undrawn Facility
662
563
285
150
$3.25
HEDGE SUMMARY
RMP Consolidated
2015 Net Debt / LQA EBITDA 2016 Net Debt / LQA EBITDA
RMH
($375MM invested)
RMP GP (non-economic)
EIG Managed Funds
Transaction Highlights – Attractive cost of capital attributable to RMH’s midstream assets and future
GP Value – RICE cash flow + preferred proceeds fully fund 2016 E&P budget with no
additional debt incurred – Highlights significant value of embedded midstream – Highlights symbiotic structure of upstream and midstream
Healthy Upstream Healthy Midstream Healthy Upstream
Key Investment Terms – $375MM preferred equity in RMH and 8.25% LP interest in GP Holdings
(LPs & IDRs) – 8% preferred distribution, 2 yrs. of PIK – Remaining return will come from 8.25% common equity interest in GP
Holdings – Use of proceeds: $75MM to repay RMH outstanding borrowings and pay
related transaction fees and $300MM distributed to RICE to fund 2016 E&P budget
– Flexibility to execute drop strategy and make distributions to RICE
$375MM equity investment fortifies balance sheet and illuminates significant embedded midstream value
100% equity interest
$2.50 $3.00 $3.50 $4.00 $4.50 Marcellus 750' Utica Dry 1000'
Attractive Single Well Economics
HHUB PV-10 Breakeven ($/MMBtu) $2.08 $2.18
DRY GAS SINGLE WELL ECONOMICS
Rice continues to drive down D&C and operating costs to maximize returns Inventory currently generates ~30% returns at strip(1); HHUB PV10 breakevens of $2.08-$2.18 HHUB
__________________________ Note: See appendix for summary of assumptions used to generate single well IRRs.. 750’ and Utica 1,000’ economics assume E&P is burdened by 50% of the gathering and compression fee and 50% of water completion fees (RICE owns a 41% LP interest in RMP, 100% of Rice Ohio Midstream and 100% of RMP IDRs). 1. Strip as of 2/19/16. 2. See slide titled Western Greene County Midstream Update. 3. Excludes ~47 wet Utica net undeveloped locations and ~105 dry-gas PA Utica net undeveloped locations.
Marcellus Changes Economics • D&C/ft decreased by 8% • Operating & FT costs decreased by 25% • EUR/ft increased by 9% • 30% Pre-Hedge Single Well IRRs at Strip Locations • Pro forma for amended gathering
agreement, reclassified ~110 net locations to “Marcellus” given change to economics(2)
Dry Gas Utica Changes Economics • D&C/ft decreased by 3% • Operating & FT costs decreased by 25% • EUR/ft decreased by 7% • 30% Pre-Hedge Single Well IRRs at Strip Locations • Avg. lateral length increased 1K’ and increased
well spacing to 1K’ results in fewer locations
Dotted lines represent previously reported economics
NYMEX ($/MMBtu)
Right-Sized Firm Transport Portfolio Growing Exposure to an Improving Local Basis Market Right-Sized: FT covers >80% of 2016 takeaway volumes. FT coverage decreases to ~60% in 2020. Right Exposure: 30% of 2016 gas exposed to local markets when differentials are expected to be $0.75, growing to 40%+ in 2020
when differentials are expected to tighten to ~$0.50 (1)
RICE’S RIGHT-SIZED FT PORTFOLIO & ILLUSTRATIVE TAKEAWAY VOLUME GROWTH
–
500
1,000
1,500
2,000
2,500
3,000
1/1/15 7/1/15 1/1/16 7/1/16 1/1/17 7/1/17 1/1/18 7/1/18 1/1/19 7/1/19 1/1/20 7/1/20 1/1/21
$ / MMbtuMdth/d
Base Case Details 2015 2016 2017 2018 2019 2020
% Exposed to App. 25% 30% 30% 15% 25% 40% M2 Basis ($1.22) ($0.75) ($0.62) ($0.56) ($0.55) ($0.52)
Takeaway volumes = Volumes that fill firm transportation (2)
__________________________ 1. Illustrative takeaway volumes assume 2016 growth in-line with guidance. In 2017+, low and high volume range grow at 7% and 20% ,respectively. Volumes beyond 2016 are for illustrative purposes only and do not constitute guidance. 2. Takeaway volumes = gross PA and working interest OH volumes.
(1)
0 100 200 300 400 500 600 700 800 900
2012 2013 2014 2015 2016E
$MM
36 37 27
Wells
PA OH
2016 Guidance
_______________________ Note: 2014 Pro Forma for ASR transaction. 1. As of February 24, 2016. 2. Does not include wells from the Greene County Acquisition. 3. Consolidated midstream includes Rice Midstream Holdings and Rice Midstream Partners.
47 127
MMcfe/d
$45 $150 $170 150
$MM
MDth/d
2016E E&P GUIDANCE(1)
2016E CONSOLIDATED MIDSTREAM GUIDANCE(1)(3)
Increasing premium market exposure and narrowing differentials 91% of 4Q15 production transported outside of Appalachia Non-Appalachia exposure ~80% during 1Q16 Low FT expense of $0.42/Mcf in 4Q15 that allows for continued
economic development
Initiated production from 6 Marcellus wells; 5 wells ahead of schedule – Average lateral length of ~7,500 ft.
Increased proved reserves 30% to 1.7 Tcfe 4Q15 net production of 624 MMcfe/d, 57% increase from 4Q14
Benefitted by accelerated online activity and improved performance
~$1.4B liquidity(1) (excl. RMP) to fund 2016 E&P and Midstream capex Disciplined hedging strategy supports CF & protects balance sheet
– ~76% 4Q15 production hedged and $1.34/Mcf hedge price uplift Robust 2016 hedging portfolio of 662 BBtu/d at weighted avg. fixed
floor price of $3.26/MMBtu
1,026 MDth/d total throughput with 25% third-party volumes in 4Q15 Closed Strike Force JV w/ GPOR to construct & operate gathering,
compression & water services for dry Utica acreage in OH Increased RMP’s acreage dedication from RICE to 93,000 acres in PA Illuminated midstream value by closing $375MM preferred investment
EXECUTION IS DRIVING
INDUSTRY–LEADING GROWTH
RICE Fourth Quarter 2015 Highlights
Net production averaged 624 MMcfe/d; 57% increase from 4Q14 Includes 40 MMcfe/d of well outperformance
91% of 4Q15 production sold to premium, non-Appalachian markets Record further adjusted quarterly EBITDAX of $144MM $1.34 / Mcfe hedging uplift
RICE Fourth Quarter 2015 Financial Summary Solid fourth quarter results supported by well-capitalized balance sheet and ample liquidity
Total net production (MMcfe/d) 624 % Gas 100% % Operated 94% % Marcellus 72%
Actual ($MM) $ / Mcfe NYMEX Henry Hub price ($/MMBtu) $2.23
Average basis impact ($/MMBtu) (0.14) Firm transportation fuel & variables ($/MMBtu) (0.15) Btu uplift (MMBtu/Mcf) 0.11
Pre-hedge realized price ($/Mcf) 2.05 Realized hedging gain ($/Mcf) 1.34
Post-hedge realized price ($/Mcf) 3.39
Lease operating $9 0.16 Gathering, compression and transportation 29 0.51 Production taxes and impact fees 3 0.04 General and administrative 24 0.43 Depletion, depreciation and amortization 95 1.65
Adjusted EBITDAX $132 Further Adjusted EBITDAX(2) $144
Three Months Ended
($ in millions) 12/31/2015
Cash Rice Energy $436 Rice Midstream Holdings - Rice Midstream Partners 8
Total consolidated cash $444
Long-term debt Rice Energy
E&P credit facility - 6.25% Senior notes due 2022 900 7.25% Senior notes due 2023 397
Total Rice Energy debt 1,297 Rice Midstream Holdings revolver - Rice Midstream Partners revolver 143
Total consolidated debt $1,440
Net debt 996
Leverage 4Q15 Net Debt / LQA EBITDA Rice Energy 1.8x Rice Midstream Holdings 0.0x Rice Midstream Partners 1.8x Consolidated 1.7x
4Q15 Net Debt / LTM EBITDA Rice Energy 2.2x
Rice Midstream Holdings 0.0x
QUARTERLY HIGHLIGHTS
__________________________ 1. As of 12/31/2015 pro forma for the preferred equity transaction that closed February 22, 2016. 2. Please see “Reconciliation of Further Adjusted EBITDAX” for a description.
CAPITALIZATION AT 12/31/2015(1)
$2.23
(0.15)
900
397
3
0.04
$ 2.72
[(0.01)]
900
397
$ 101
$ 1.92
Gathering, compression and transportation
4
0.08
Rice Energy
RMP 2016 GUIDANCE(1)
Guidance Net Wells Spud Online Total Net Production (MMcfe/d) 700 - 740 Operated Marcellus 25 27 % Natural gas % Operated Ohio Utica 12 13 % Operated % Non-operated Ohio Utica 5 14 % Marcellus % Total Net Wells 42 54
Pricing FT Fuel & Variable (Deduction) ($0.14) - ($0.16)
Lateral Length (ft.) of Wells Turned Online Heat Content (Btu/Scf) Operated Marcellus 7,700 Marcellus Operated Ohio Utica 9,300 Utica Non-operated Ohio Utica 8,200
Cash Operating Costs ($/Mcfe) Lease Operating Expense $0.22 - $0.25 Gathering and Compression $0.45 - $0.50
2016 Capital Budget ($ in millions) Firm Transportation Expense $0.35 - $0.40 E&P Production Taxes and Impact Fees $0.04 - $0.06 Operated Marcellus $ 285 Total Cash Operating Costs $1.06 - $1.21 Operated Ohio Utica $ 175 Non-operated Ohio Utica $ 100 Cash G&A ($ in millions)
Total Drilling & Completion $ 560 E&P 85$ - 90$ Land $ 80 Midstream 25$ - 28$ Total E&P $ 640 Total Cash G&A 110$ - 118$
Midstream Midstream Adjusted EBITDA ($ in millions) Rice Midstream Holdings $ 155 Rice Midstream Holdings 40$ - 45$ Rice Midstream Partners $ 150 Rice Midstream Partners 110$ - 120$ Total Midstream $ 305 Total Midstream EBITDA 150$ - 165$
Guidance
1050
1080
65
2016 Capital Budget ($ in millions) Gas Gathering and Compression $ 140 Water Services $ 10 Total RMP $ 150
Estimated Maintenance Capital $ 11
Cash G&A ($ in millions) 15$ - 18$
Adjusted EBITDA ($ in millions) Gas Gathering and Compression 85$ - 90$ Water Services 25$ - 30$ Total Adjusted EBITDA 110$ - 120$
% Third Party
Distributable Cash Flow ($ in millions) 90$ - 100$ Average DCF Coverage Ratio 1.3x - 1.5x % Distribution Growth
Guidance
Water Services Business Drop Down Summary TRANSACTION OVERVIEW TRANSACTION HIGHLIGHTS
__________________________ 1. Excludes Strike Force JV. 2. Assumes fee of $0.06 per gallon in Pennsylvania and 11,000,000 gallons of water per well that utilize the fresh water delivery system based on a 7,000’ lateral. 3. Assumes fee of $0.07 per gallon in Ohio and 16,900,000 gallons of water per well that utilize the fresh water delivery system based on a 9,000’ lateral.
Immediately accretive to distributable cash flow per unit
Integrates RMP’s gathering and compression business with water services business driving enhanced 3rd party opportunities
Volumetric tiers provide revenue and cash flow stability
Minimal future organic capital requirements for RICE development
RMP acquired Rice Energy’s water business for $200 million in November 2015
$25 million earn out upon achievement of certain increases to system capacities
Funded with borrowings under RMP’s RCF and partially repaid with proceeds from $175MM PIPE
WATER SERVICES AGREEMENTS OVERVIEW
Fresh Water Volumes (MMGal / Well)
Tier I <8.25 <12.5
Thereafter >13.25 >20
Produced Water Services Fee 2% of cost 2% of cost
ASSET OVERVIEW
Fresh water distribution systems(1) & related facilities servicing Marcellus and Utica completion operations in PA and OH
The right to provide fresh water for completion operations and to collect, recycle, and dispose of flowback and produced water for RICE in services area
Access to 19.4 MMGPD of fresh water
112 miles of pipeline and 152 million gallons of water impoundment capacity
As compared to trucking, water distribution systems are the more efficient way to transport fresh water for completions
Faster, more reliable completion jobs
Capable of delivering up to 3x more water per day, plus on- demand storage via impoundments
Improved social responsibility by reducing truck traffic and resulting emissions, noise, road repairs and safety incidents
Peer 1 Rice Energy
Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9
Peer 10
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Asset Quality – Industry High Grading to Quality
Top Ten Active Operators
February 2016: 43 Rigs
5+ Rigs
2-4 Rigs
1 Rig
RICE Acreage
__________________________ 1. RigData + Baker Hughes Rig Reports.
RICE’s footprint is located in the epicenter of remaining activity in Appalachia due to best in class economics
Early 2012 Peak of 175 Rigs
Feb 2016 43 Rigs
RICE OH Utica >40 MMcfe/d
RICE PA Utica Peer Results
60-70 MMcfe/d
RICE OHIO UTICA
RICE PENNSYLVANIA UTICA
16 Producing Wells
1 Producing Well
OH WV Guernsey Belmont Marshall Washington / Greene
PA
The Utica core extends directly underneath RICE’s Pennsylvania assets. Initial RICE and Industry wells point to massive resource potential.
Peer Results 40-60
MMcfe/d Wet Gas Dry Gas Dry Gas Dry GasRICE Deep Utica Well
In Sales, 12 MMcfe/d choked Expect flat production for
700+ days
RRC Test 59 MMcfe/d
CNX Test 61 MMcfe/d
Rice PA Utica:
One well placed online in August 2015 Lateral Length: 5800’ Initial Pressure: 10,000 psi
Expect to be competitive with Marcellus/OH Utica returns at $15 MM well costs
-
Top 21 Wells 100% RICE/GPOR AMI
Top 100 Wells 75% located within Belmont and Monroe, RICE Midstream’s Footprint
Q 3
20 15
C um
ul at
iv e
Pr od
uc tio
n (M
cf e)
RICE & GPOR: Strong Partnership Demonstrated by Top-Tier Well Results 1,088 Utica Shale wells producing in Q3 2015(1) - RICE & GPOR partnership takes top 21 wells (300 MMcfe/d avg.)
Quality over Quantity: RICE’s 16 operated wells accounted for 7% of the Utica Shale’s total gas production(1)
RICE / GPOR AMI(2)
RICE Midstream Footprint
Other Belmont/Monroe
Other Counties
__________________________ 1. Source: ODNR 3rd Quarter 2015 Horizontal Shale Production Report. 2. RICE/GPOR AMI is located in Goshen, Smith, Washington and Wayne Townships in Belmont County, OH.
Utica Core
– 250 500 750 1,000 1,250 1,500 1,750 2,000
–
Days Online Peer Marcellus Rice Greene Rice Washington Rice Geneseo
UTICA & SUSQUEHANNA, PA HISTORICAL PRODUCTION(2)WASHINGTON & GREENE COUNTY HISTORICAL PRODUCTION(1)
Differentiated Long-Term Production per Well
__________________________ 1. Data for RICE based on actuals through 12/31/15, peer data based on Pennsylvania Department of Environmental Protection production reports through 11/30/15. 2. Data for RICE based on actuals through 12/31/15, peer data based on Ohio Department of Natural Resources report through 9/30/15.
Our drilling and completion techniques have yielded greater production profile per well than our peers
Cumulative Production (Bcfe) RICE has 5 of the
top 10 wells based on cumulative
production
RICE has the top 8 Utica wells based on average rate
Cumulative Production (Bcfe)
Most Efficient Growth in Appalachia
__________________________ 1. Horizontal Marcellus and Utica wells only. Data for RICE based on actuals through 1/31/2016, peer data based on Pennsylvania Department of Environmental Protection and Ohio Department of Natural Resources production reports through September 30, 2015. RICE production
excludes acquired CHK wells. Peers: APC, AR, CHIEF, CHK, COG, CNX, EQT, GPOR, NFG, RRC, SWN & TLM.
RICE’s peer-leading production growth is driven by a focus on well quality, not quantity RICE reached over 850 MMcfe/d of gross operated production with fewer wells than every other operator(1) in Appalachia Chart below demonstrates RICE’s ability to rapidly grow production w/ a clear path to 1 Bcf/d & beyond w/ ~1,200+ wells left to drill
MMcf/d PRODUCTION VERSUS WELLS - TOP PRODUCERS IN APPALACHIA(1)
SW Appalachia Operators
NE Appalachia Operators
153 Operated Wells
Producing Well Count
Common Units 42 Subordinated Units 29
Total Units Outstanding (MM) 71 Price $11.27
Market Capitalization $800 Cash 8 Revolving credit facility 143
Enterprise Value $935
52 Week Price Range High $17.94 Low $9.11
Website: Investor Contact:
Rice Midstream Partners LP (NYSE: RMP)
Rice Energy Inc. (NYSE: RICE)
$ millions, except per share data, as of 2/23/2016
Management Ownership 30%
Shares Outstanding (MM) 136 Price $8.97
Market Capitalization $1,223 Cash (1) 436 Preferred Equity 375 Revolving credit facilities (1) – 6.25% Senior notes due 2022 900 7.25% Senior notes due 2023 397
Enterprise Value $2,459
Website: www.riceenergy.com Investor Contact: Julie Danvers
[email protected]
Diverse Market Exposure
_______________________ 1. Conversion of Dth to Mcf assumes 1,050 Btu factor. 2. Source: Company Filings, TPH Estimates.
FT portfolio includes 1.3 MMDth/d (1.2 Bcf/d) of firm capacity to premium North American markets(1)
Canadian Markets
GULF COAST (MDTH/D) 2016 2017 2018 464 603 870
Midwest Markets
Appalachian Markets
RICE Acreage
RICE FIRM CAPACITY COMMITMENTS(MDTH/D)
Project Pipeline Start Date Volume Market TEAM South TETCO Sept 2014 270 Gulf Coast
Westside Expansion CGT/TCO Nov 2014 125 TCO, Gulf Coast
Rockies Express REX Aug 2015 175 Midwest/Canada/Gulf Coast
Union Town to Gas City TETCO Sept 2015 87 Midwest/Gulf Coast
OPEN TETCO Sept 2015 50 Gulf Coast
ET Rover Rover Nov 2017 100 Canada
Access South TETCO Nov 2017 320 Gulf Coast
CANADA (MDTH/D) 2016 2017 2018
25 42 125
than NE demand growth(2)
71 50 50
Chart1
LNG
Industry
Power
Mexico
REALIZED PRICING
18% 17%
(0.28)
(0.32)
1Q16 2Q16 3Q16 4Q16 2016 2017
Gulf Coast TCO Midwest / Dawn DTI / M2 / M3 Average Basis Impact
HHUB is increasingly challenged
Appalachian basis has tightened
Market opportunity to hedge at attractive levels ($0.50) relative to green-field FT projects ($1.00)
FT portfolio diversifies markets
As new FT projects come online, our diverse FT portfolio and inter- connected gathering system will allow Rice to take advantage of arbitrage and optimization opportunities
1Q16 2Q16 3Q16 4Q16 2016 2017
NYMEX Henry Hub Strip ($/MMBTU) $2.08 $2.00 $2.18 $2.37 $2.16 $2.58 Plus/Less: Average Basis Impact (0.28) (0.32) (0.41) (0.38) (0.35) (0.32) Less: Firm Transportation Fuel & Variables (0.14) (0.12) (0.11) (0.12) (0.12) (0.13) Plus: BTU Uplift (MMBtu/Mcf) 0.10 0.10 0.11 0.12 0.11 0.14
Pre-Hedge Realized Price ($/Mcf) $1.77 $1.66 $1.77 $2.00 $1.80 $2.27 Plus: Realized Hedging Gain/Loss ($/Mcf) 1.03 1.09 0.94 0.81 0.96 0.34
Post Hedged Realized Price ($/Mcf) $2.79 $2.75 $2.71 $2.81 $2.76 $2.61 Plus: Firm Transportation Sales, Net ($/Mcf) – – – – – –
Adjusted Post-Hedge Realized Price ($/Mcf) $2.79 $2.75 $2.71 $2.81 $2.76 $2.61 FT Demand Expense ($0.40) ($0.36) ($0.32) ($0.33) ($0.35) ($0.37)
FT Expense (Fuel & Variables + Demand) ($0.54) ($0.49) ($0.43) ($0.45) ($0.47) ($0.49) FT Expense + Basis + BTU Uplift ($0.72) ($0.71) ($0.74) ($0.70) ($0.71) ($0.67)
Hedging Summary HEDGE SUMMARY
RICE’s gas will be marketed into 4 areas – (1) Gulf Coast (ELA, M1) – (2) TCO – (3) Midwest (Chicago, Dawn) – (4) Appalachia (M2, M3, & Dominion)
78% of first quarter 2016 production transported out of Appalachian basin
Our Gulf Coast firm transportation contracts deliver to markets in the Gulf Coast (ELA, M1)
– We hedge our Gulf Coast basis exposure opportunistically, but believe our Henry Hub NYMEX derivatives serve as a hedge against these indices which have historically traded within a narrow band of $0.05-$0.15 below Henry Hub
~87% of 2016 production hedged at weighted avg. fixed price floor of $3.26/MMBtu
2016 2017 2018 2019
Hedged M2 / Dominion Volumes (BBtu/d) 189 163 165 150 Wtd Avg Floor Price ($/MMBtu) $2.35 $2.20 $2.50 $2.48 % of Basis Hedged 84% n.a. n.a. n.a.
Hedged TCO Volumes (BBtu/d) 44 27 19 10 Wtd Avg Floor Price ($/MMBtu) $2.97 $2.81 $2.77 $2.73 % of Basis Hedged 46% n.a. n.a. n.a.
Hedged Gulf Coast Volumes (BBtu/d) 355 349 79 – Wtd Avg Floor Price ($/MMBtu) $3.20 $3.07 $2.91 – % of Basis Hedged 67% n.a. n.a. n.a.
Hedged Chicago/Dawn Volumes (BBtu/d) 74 24 22 20 Wtd Avg Floor Price ($/MMBtu) $3.27 $3.09 $3.09 $2.99 % of Basis Hedged 70% n.a. n.a. n.a.
Total Hedged Volumes (BBtu/d) 662 563 285 180 Wtd Avg Floor Price ($/MMBtu) $2.95 $2.81 $2.68 $2.55 % Hedged 87% n.a. n.a. n.a. Wtd. Avg. Fixed Price Floor $3.26 $3.14 $3.16 $3.11
M M
cf /d
Marcellus Type Curve – Updated
Restricted Rate
__________________________ Note: See appendix for summary of assumptions used to generate single well IRRs.
MARCELLUS SINGLE WELL TYPE CURVE
Cumulative Production Current Prior Var.
1 Year 3.4 3.8 (0.5) 2 Year 5.2 5.6 (0.5) 5 Year 8.1 8.2 (0.2) 10 Year 10.6 10.3 0.4 EUR 15.1 13.9 1.2
TYPE CURVE UPDATES
Rice revised Marcellus type well to reflect latest production history, which resulted in an increase to EURs
– 136 operated wells online
Updated economic assumptions including D&C, operating and FT costs
Type curve reflects more aggressive choke management program to drive
increased EURs on longer laterals
Marcellus Current Prior Var. (%)
EUR (Bcf / 1,000') 2.16 1.98 9% Lateral Legnth 7,000 7,000 – EUR (Bcf) 15.1 13.9 9% Interwell Spacing (ft) 750 750 –
Choke (MMcf/d per 1,000') 1.50 1.85 (19%) Flat Time (days) 180 150 20% 1-Year Cum. (Bcf) 3.4 3.8 (12%) 2-Year Cum. (Bcf) 5.2 5.6 (8%)
5-Year Cum. (Bcf) 8.1 8.2 (2%) 10-Year Cum. (Bcf) 10.6 10.3 4%
IRR ($3.50 HHUB) 77% 46% 67% PV-10 ($ mm) ($3.50 HHUB) $10.1 $5.8 74%
MM cf
Utica Type Curve – Updated
Restricted Rate
__________________________ Note: See appendix for summary of assumptions used to generate single well IRRs.
UTICA SINGLE WELL TYPE CURVE
TYPE CURVE UPDATES
Rice revised Utica type well to reflect latest production history
– 16 operated wells online
Rice has observed interference between wells spaced at 750’, and believe 1,000’ spacing may be the optimal development spacing to maximize PV-10 in the current environment
– Rice will continue to collect data from spacing trials and seek to maximize full-field value
Updated economic assumptions including D&C, operating and FT costs
Choke management extends flat time from 9 months to 12 months.
Incorporated historical decline data
Cumulative Production Current Prior Var.
1 Year 5.8 5.2 0.6 2 Year 9.0 7.8 1.2 5 Year 12.5 11.3 1.2 10 Year 15.2 14.2 1.0 EUR 21.0 19.9 1.0
Utica Current Prior Var. (%)
EUR (Bcf / 1,000') 2.33 2.50 (7%) Lateral Legnth 9,000 8,000 13% EUR (Bcf) 21.0 20.0 5% Interwell Spacing (ft) 1,000 750 33%
Choke (MMcf/d per 1,000') 1.80 1.87 (4%) Flat Time (days) 365 270 35% 1-Year Cum. (Bcf) 5.8 5.2 12% 2-Year Cum. (Bcf) 9.0 7.8 16%
5-Year Cum. (Bcf) 12.5 11.3 11% 10-Year Cum. (Bcf) 15.2 14.2 7%
IRR ($3.50 HHUB) 83% 56% 48% PV-10 ($ mm) ($3.50 HHUB) $13.7 $10.3 33%
RMP 4Q 2015 Adjusted EBITDA and DCF Reconciliation
__________________________ Note: Adjusted EBITDA 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 EBITDA as net income (loss) attributable to us before non-controlling interest, interest expense or interest income; income taxes; write-down of abandoned leases; depreciation, depletion and amortization; amortization of deferred financing costs; amortization of intangible assets; equity in (income) loss of our joint ventures; derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments; non-cash stock compensation expense; (gain) loss from sale of interest in gas properties; (gain) loss on acquisition; acquisition expense; (gain) loss on extinguishment of debt; write-off of deferred financing costs; and exploration expenses. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP. 1. Adjusted EBITDA attributable to the Water Assets prior to their acquisition is excluded from our adjusted EBITDA calculation as these amounts are not attributable to our limited partners. For the three months ended December 31, 2015, the Adjusted EBITDA attributable to the Water
Assets prior to acquisition was calculated with net income of $1.0 million, plus interest expense of $0.1 million, depreciation expense of $1.1 million and non-cash equity compensation of $0.1 million. For the year ended December 31, 2015, the Adjusted EBITDA attributable to the Water Assets prior to acquisition was calculated with net income of $7.3 million plus interest expense of $0.8 million, income tax expense of $5.8 million, depreciation expense of $7.0 million, non-cash equity compensation of $0.4 million and $1.0 million of incentive unit expense.
Three Months Ended Year Ended ($ in thousands) December 31, 2015 December 31, 2015 Adjusted EBITDA reconciliation to loss from continuing operations: Net income 12,521$ 52,495$
Interest expense 1,094 3,164 Income tax expense 17 5,812 Depreciation expense 5,944 16,399 Amortization of intangible assets 408 1,632 Non-cash stock compensation expense 1,185 4,501 Incentive unit (income) expense (4) 1,044 Amortization of deferred financing costs 144 576 Other expense 51 543 Adjusted EBITDA attributable to Water Assets prior to acquisition(1) (2,295)$ (22,386)$
Adjusted EBITDA attributable to limited partners 19,065$ 63,780$
Adjusted EBITDA attributable to limited partners 19,065$ 63,780$ Cash interest expense (948) (2,356) Estimated maintenance capital expenditures (1,120) (4,480)
Distributable cash flow 16,997$ 56,944$
Reconciliation of Adjusted EBITDA to Cash used in operating activities: Adjusted EBITDA 19,065$ 63,780$
Interest expense (1,094) (3,164) Other expense (51) (543) Adjusted EBITDA attributable to Water Assets prior to acquisition(1) 2,295 22,386 Changes in operating assets and liabilities which provided cash (1,426) (12,453)
Net cash provided by operating activities 18,789$ 70,006$
Financial Summary
September 30, 2015
19
Liquidity
$ 397
EBITDA
Net income
144
576
$ (2,295)
$ (22,386)
$ 19,065
$ 19,065
$ 63,780
Adjusted EBITDA
2,295
22,386
(1,426)
(12,453)
$ 18,789
$ 70,006
RICE 4Q 2015 Adjusted EBITDAX Reconciliation
__________________________ Note: 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. 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.
Three Months Ended Year Ended ($ in thousands) December 31, 2015 December 31, 2015
Adjusted EBITDAX reconciliation to net income (loss): Net income (274,253)$ (267,999)$ Interest expense 24,009 87,446 Depreciation, depletion and amortization 94,787 322,784 Impairment of gas properties 18,250 18,250 Impairment of goodwill 294,908 294,908 Amortization of deferred financing costs 1,403 5,124 Amortization of intangible assets 408 1,632
Gain on derivative instruments (1) (89,019) (273,748) Net cash receipts on settled derivative instruments (1)
76,228 193,908
Acquisition expense 1,111 1,235 Non-cash stock compensation expense 4,847 16,528
Non-cash incentive unit (income) expense (9,773) 36,097 Income tax expense (6,217) 12,118 Gain from sale of interest in gas properties - (953) Exploration expense 1,212 3,137 Other expense 756 4,380 Non-controlling interest (6,504) (23,337)
Adjusted EBITDAX 132,153$ 431,510$
Post-hedge Realized Pricing ($/Mcf)
$78
$3.41
--
1,403
5,124
(89,019)
(273,748)
76,228
193,908
(9,773)
36,097
-
RICE 4Q 2015 Further Adjusted EBITDAX Reconciliation
Three Months Ended Year Ended ($ in thousands) December 31, 2015 December 31, 2015
Further Adjusted EBITDAX reconciliation: Adjusted EBITDAX 132,153$ 431,510$
Non-controlling interest(1) 6,504 23,337
Water revenue adjustment(2) 5,577 27,336 Further Adjusted EBITDAX 144,234$ 482,183$
__________________________ 1. Add back non-controlling interest to Adjusted EBITDAX to calculate leverage metrics. 2. Add back RMP water distribution revenue from RICE’s working interest share of the water fees that was eliminated in the RICE consolidation.
Sheet1
$78
$3.41
--
Disclaimer FORWARD-LOOKING STATEMENTS This presentation and the oral statements made in connection therewith may contain “forward looking statements” within the meaning of the securities laws. All statements, other than statements of historical fact, regarding Rice Midstream’s strategy, future operations, financial position, estimated revenues and income/losses, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements often include the words “could,” “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation specifically include expectations of plans, strategies, objectives, anticipated financial and operating results of Rice Midstream. These forward-looking statements are based on Rice Midstream's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Rice Midstream assumes no obligation to and does not intend to update any forward looking statements included herein. You are cautioned not to place undue reliance on any forward-looking statements. Rice Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond their control, incident to our gathering and compression and water services business. These risks include, but are not limited to, commodity price volatility; environmental risks; regulatory changes; the uncertainty inherent in projecting throughput volumes, cash flow and access to capital; the timing of development expenditures of RICE and our other customers; and the other risks described under “Risk Factors” in Rice Midstream’s most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Rice Midstream’s actual results and plans could differ materially from those expressed in any forward-looking statements. This presentation has been prepared by Rice Midstream and includes market data and other statistical information from sources believed by Rice Midstream to be reliable, including independent industry publications, government publications or other published independent sources. Some data are also based on Rice Midstream’s good faith estimates, which are derived from its review of internal sources as well as the independent sources described above. Although Rice Midstream believes these sources are reliable, it has not independently verified the information and cannot guarantee its accuracy and completeness.
Determination of Identified Drilling Locations as of December 31, 2015:
Net undeveloped locations are calculated by taking RICE’s total net acreage and multiplying such amount by a risking factor which is then divided by RICE’s expected well spacing. RICE then subtracts net producing wells to arrive at undeveloped net drilling locations.
Undeveloped Net Marcellus Locations – RICE assumes these locations have 7,000 foot laterals and 750 foot spacing between wells which yields approximately 121 acre spacing. In the Marcellus, RICE applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of December 31, 2015, RICE had approximately 73,000 net acres in the Marcellus which results in 375 undeveloped net locations.
Undeveloped Net Greene County Locations – RICE assumes these locations have 7,000 foot laterals and 750 foot spacing between wells which yields approximately 121 acre spacing. In Greene County, RICE applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of December 31, 2015, RICE had approximately 19,000 net acres in Greene County which results in 112 undeveloped net locations.
Undeveloped Net Upper Devonian Locations – RICE assumes these locations have 7,000 foot laterals and 1,000 foot spacing between wells which yields approximately 161 acre spacing. In the Upper Devonian, RICE applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of December 31, 2015, RICE had approximately 85,000 net acres prospective for the Upper Devonian which results in 418 undeveloped net locations.
Undeveloped Net Ohio Utica Locations – RICE assumes these locations have 9,000 foot laterals and 1,000 foot spacing between wells which yields approximately 207 acre spacing. In the Ohio Utica, RICE applies a 10% risking factor to its net acreage to account for inefficient unitization. As of December 31, 2015, RICE had approximately 56,000 net acres prospective for the Utica in Ohio which results in 215 undeveloped net locations.
Undeveloped Net Pennsylvania Utica Locations – RICE assumes these locations have 8,000 foot laterals and 2,000 foot spacing between wells which yields approximately 367 acre spacing. In the Pennsylvania Utica, RICE applies a 20% risking factor to its net acreage to account for inefficient unitization. As of December 31, 2015, RICE had approximately 49,000 net acres prospective for the Utica in Pennsylvania which results in 105 undeveloped net locations.
Additional Disclosures
RMP Fourth Quarter 2015 Financial Summary
RMP Financial Overview
RMP: High Growth MLP in Prolific Appalachian Basin
RMP Gathering and Water System Build-out
RMP 3rd Party Dedications from Top Operators in the Basin
Industry-Leading Throughput Growth
Attractive Drop Down Potential – Strike Force JV
Acquisition Assets – Integrated Water Services Business
Western Greene County Midstream Update
2015 Midstream System Statistics
Healthy Balance Sheet Protected by Strong Hedge Book
Strategic Preferred Investment
RICE Fourth Quarter 2015 Financial Summary
2016 Detailed Guidance
Asset Quality – Industry High Grading to Quality
Pennsylvania Utica: A Natural Extension for Rice
Ohio Q3 2015 Production Summary – Top 100 Wells
Differentiated Long-Term Production per Well
Most Efficient Growth in Appalachia
RICE and RMP Market Snapshot
Diverse Market Exposure
RICE 4Q 2015 Adjusted EBITDAX Reconciliation
RICE 4Q 2015 Further Adjusted EBITDAX Reconciliation
Disclaimer

Documents

Rice Midstream Partners Investor Presentation