Rice Energy Inc. (NYSE: RICE), the Appalachian natural gas producer that went public in January, intends to form an MLP to help finance its expanding pipeline network, Bloomberg said Aug. 11.
Rice would control the partnership that would initially own gas gathering and water distribution lines in Pennsylvania used for hydraulic fracturing, the company said that day in a statement. It expects to offer stakes in the first half of 2015.
MLPs 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 per day (Bcf/d) and water distribution capacity of 5 million gallons a day by mid-2015, according to slides posted Aug. 11 on the Canonsburg, Pa.-based company’s website.
Midstream assets in Ohio might 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 a share, compared with profit of $19.6 million, or 24 cents, a year earlier. Profit was 3 cents a 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 MMcf/d gas.
The announcement was made before regular trading began on U.S. markets. Rice rose 2.8% Aug. 8. The shares have gained 27% since trading began in January.
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