Upstream energy player, Rice Energy Inc. recently announced its decision to acquire Vantage Energy for roughly $2.7 billion. The purchase price will include the assumption of debt of Vantage Energy. The deal will likely be completed by fourth quarter of 2016, upon compliance with customary closing conditions.
The upstream properties to be acquired comprise 85,000 net acres in the Marcellus Shale, permission to access 52,000 net acres in the deeper Utica Shale and 37,000 net acres in the Barnett Shale. During the second quarter, net production from the assets came in at 399 million cubic feet equivalent per day (MMcfe/D). Rice Energy added that it will drop down a part of the acquired midstream properties – which include 30 miles of dry gas gathering and compression properties – to Rice Midstream Partners LP for a consideration of $600 million.
Rice Energy intends to partially fund its acquisition with the proceeds from the public offering of 40,000,000 shares of its common stock.
Notably, the acquisition will provide Rice Energy access to 231,000 net acres in the Marcellus and Ohio Utica with roughly 1,164 drilling locations. Owing to this deal, the company has increased its 2016 exploration and production capital budget to $735 million from $660 million.
We note that several energy sector players have actively undertaken mergers and acquisitions this month in spite of oil prices remaining weak. Earlier this month, EOG Resources Inc. (EOG - Free Report) agreed to combine with Yates Petroleum Corporation, Abo Petroleum Corporation, MYCO Industries, Inc. and certain other entities (collectively, Yates). The deal was valued at $2.5 billion. This month, Spectra Energy Corp. (SE - Free Report) announced its decision to merge with Enbridge Inc. (ENB - Free Report) . The transaction price has been finalized at $28 billion.
Canonsburg, PA-based Rice Energy is an upstream energy player. The company currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RICE ENERGY INC Price
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>