Rice Midstream Partners First Quarter 2015 Supplemental Slides May - - PowerPoint PPT Presentation

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Rice Midstream Partners

First Quarter 2015 Supplemental Slides

May 7, 2015

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Rice Midstream Partners – MLP Overview

GATHERING SYSTEM INFORMATION

12/31/14 Dedicated Gross Acreage 1Q 2015 Throughput (MDth/d) 2015E EBITDA ($MM) 2015E Capex ($MM) PA Gathering 86,000 557 $ 55 – 60 $ 180

Marcellus Gathering and Compression

• Initial assets consist of gas gathering system with

expected capacity of 4.1 MMDth/d by YE15

• 1Q 2015 throughput of 557 MDth/d
• 11% 3rd Party throughput
• Gathering throughput driven by SW PA technical

leaders

• ~85% of 2015E estimated throughput from

RICE operated volumes, ~15% from 3rd party, primarily EQT

• RMP will spend $90MM to install compression in

2015 that will start generating revenue in 2016

• Completed the addition of compression

capacity for third party volumes in 1Q15

• Installing compression for RICE in 2H 2015
• RMP will spend $85MM to build ~30 miles of

gathering pipeline in 2015

• Substantially all of RICE’s drilling locations will be

within 2 miles of gathering pipeline by YE 2015

SYSTEM MAP

Greene Washington Marshall

Fayette Ohio Brooke Beaver

PENNSYLVANIA OHIO WEST VIRGINIA

Legend

RMP Gathering Pipeline to be Constructed RICE Acreage RMP Gathering Pipeline 3rd Party Dedicated to RMP Pre-existing 3rd Party Dedication Wetzel

Beaver Jefferson Brooke

Concentrated, Prolific Position to Drive Targeted 20% Distribution Growth

OH PA WV

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RMP First Quarter 2015 Financial Summary

• First quarter average daily throughput of 557 MDth/d; 8%

increase above fourth quarter throughput

• Adjusted EBITDA of $12.5MM
• Distributable Cash Flow of $10.9MM
• Distribution of $0.1875 / unit
• Coverage Ratio of 1.02x

Capitalization and Liquidity Financial Summary(1)

Solid first quarter results supported by well capitalized balance sheet and ample liquidity

• $9MM cash on hand as of 3/31/15
• Zero drawn under our revolving credit facility

Liquidity as of March 31, 2015

($ in millions) Revolver capacity 450 $ Less: Borrowings

—

Plus: Cash and cash equivalents 9 Liquidity 459 $

Distributable Cash Flow

Three Months Ended ($ millions, except per unit data) March 31, 2015 Affiliate gathering volumes (MDth/d) 494 Third-party gathering volumes (MDth/d) 63 Total gathering volumes (MDth/d) 557 Total operating revenues $16.2 Operating expenses 6.6 Total operating income $9.6 Adjusted EBITDA $12.5 Distributable cash flow $10.9 DCF / unit $0.1903 Distribution declared $10.8 Distribution / unit $0.1875 Coverage Ratio 1.02x

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Industry-Leading Throughput Growth

1Q 2015 throughput of ~668 MDth/d through RICE and RMP midstream systems (17% 3rd Party), 13% increase from 4Q14 throughput

• RMP System: 557 MDth/d (11% 3rd Party)
• RICE OH System: 111 MDth/d (44% 3rd Party)

RMP and RICE OH Midstream Historical Throughput

– 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 10/31/10 3/31/11 8/31/11 1/31/12 6/30/12 11/30/12 4/30/13 9/30/13 2/28/14 7/31/14 12/31/14 Dth/d RMP - Rice Operated (PA) RMP - 3rd Party (PA) RICE - Rice Operated (OH) RICE - 3rd Party (OH) Average Throughput (MDth/d) 2010 2011 2012 2013 2014 1Q 2015 Throughput 4 18 61 176 409 668 QoQ / YoY Growth 405% 238% 188% 133% 13%

(1) __________________________ 1. PA 3rd party volumes as of April 2014 close of Momentum asset acquisition.

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Drop Down Opportunities

Overview Overview of Assets

• Assets include OH gas gathering and PA/OH water

services

• OH Gathering 1Q 2015 throughput of 111 MDth/d
• Gathering throughput driven by SE OH technical

leaders

• ~80% of 2015E estimated throughput from

RICE operated volumes, ~20% from GPOR

• OH gathering system will be attractive drop-down

candidate for RMP (RMP has a ROFO on RICE’s OH midstream system)

• Build-out will be largely complete by YE2015

SYSTEM INFORMATION

12/31/14 Dedicated Gross Acreage 1Q 2015 Throughput (MDth/d) 2015E EBITDA ($MM) 2015E Capex ($MM) RICE Retained Midstream 57,000 111 $ 35 – 40 $ 210

Greene Washington Belmont Marshall

Fayette Ohio Brooke Beaver Hancock Jefferson Harrison Monroe

PENNSYLVANIA OHIO WEST VIRGINIA

Legend

RICE Acreage RICE Gathering Pipeline RICE Gathering Pipeline to be Constructed 3rd Party Dedicated to RICE Pre-existing 3rd Party Dedication RICE Water Pipeline RICE Water Pipeline to be Constructed RICE Water Interconnects Wetzel

Building Significant Drop Down Potential

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RMP Financial Overview

CAPITALIZATION AND LIQUIDITY AT 3/31/15 2015 GUIDANCE

$ in millions, except per share data, as of 3/31/15 Common Units 29 Subordinated Units 29 Total Units Outstanding 58 Price as of 3/31/15 14.11 $ Market Capitalization 811 $ Cash 9 Revolving credit facility

• Debt
• Enterprise Value

802 $ Leverage Statistics Debt / EBITDA 0.0x EBITDA / Interest nm Debt to EBITDA Covenant 4.75 Liquidity Summary Revolving credit facility 450 $ Less: amount drawn

• Availability under RCF

450 $ Plus: cash on hand 9 Liquidity as of 3/31/15 459 $

2015 Capital Budget (in millions) Gas Gathering 85 $ Compression 90 $ Total Expansion Capex 175 $ Maintenance Capex 5 $ Total Capital Expenditures 180 $ Guidance Adjusted EBITDA (in millions) $55 $60 % Third Party 20% Distributable Cash Flow (in millions) $48 $53 Average DCF Coverage Ratio 1.1x 1.2x Annualized Distribution ($ per unit) $0.75 RMP Units Owned % of RMP Units - Public 50% % of RMP Units - RICE 50% % of RMP IDRs - RICE 100%

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RICE Overview

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Concentrated, Core Assets

CORE ASSETS

Monroe Harrison

Greene Washington Belmont

Fayette Monongalia

Utica Core Marcellus Core

COMPANY TOTAL OHIO PENNSYLVANIA

Highly concentrated position of ~146,000 net acres in the cores of the lowest breakeven gas shale plays in the U.S.

• ~1,230 net undeveloped locations(1)
• 440 MMcfe/d net 1Q15 production from 94 net wells
• Breakeven NYMEX PV-10 of $2.35-$3.05 / MMBTU

~57,000 net Utica acres, <1% developed

• 356 net undeveloped Utica locations(1)
• 8 net (3 net operated) producing Utica wells

RICE FT & MIDSTREAM

~89,000 net Marcellus acres, <5% developed

• 495 net undeveloped Marcellus locations(1)
• 382 net undeveloped Upper Devonian locations(1)
• 86 net producing wells (83 Marcellus, 3 Upper Devonian)
• Drilling first Pennsylvania Utica well
• FT: 1.3 MMDth/d of firm capacity: 66% to Gulf Coast/TCO/

Midwest markets in 2015  80% by Q4’17

• RMP Midstream by YE2015: 4.1 MMDth/d gas gathering

capacity

• RICE Midstream by YE2015: 2.6 MMDth/d gas gathering

capacity and ~26 MMgpd of water distribution

RMP Gathering Pipeline RMP Gathering Pipeline to be Constructed RICE OHIO Gathering Pipeline RICE OHIO Gathering Pipeline to be Constructed RICE Acreage

Legend Marshall Wetzel

Fayette Ohio Brooke Beaver Hancock Jefferson Harrison Monroe

Utica Stack Potential __________________________ 1. Net undeveloped locations as of 12/31/14. Approximately 77,000 net acres in the Marcellus Shale is also prospective for the Geneseo (Upper Devonian) Shale. The Upper Devonian and the Marcellus Shale are stacked formations within the same geographic acreage and footprint. See slide entitled “Additional Disclosures” on detail regarding RICE’s methodology for the calculation of locations.

OH PA WV

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• 1Q15 net production of 440 MMcfe/d; 11% increase above 4Q14
• 51% of 1Q15 production sold to premium, non-Appalachian mkts.
• Adjusted EBITDAX of $84MM
• Completed successful $400MM bond offering at 7.25% due 2023
• Increased borrowing base ~20% to $650MM in April

RICE First Quarter 2015 Financial Summary

Financial Summary

Solid first quarter results supported by well capitalized balance sheet and ample liquidity

Operating Statistics Capitalization at 3/31/2015

($ in millions) 3/31/2015 Cash Rice Energy 339 $ Rice Midstream Holdings 1 Rice Midstream Partners 9 Total consolidated cash 349 $ 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 17 Rice Midstream Partners revolver

• Total consolidated debt

1,314 $ Net debt 965 Shareholders equity 1,996 $ Total capitalization 3,310 $ Total net capitalization 2,961

1Q 2015 Actual Total production (MMcfe/d) 440 % Gas 99% % Operated 92% % Marcellus 85% NYMEX Henry Hub price ($/MMBtu) 2.87 $ Average basis impact ($/MMBtu) (0.47) Firm transportation fuel & variables ($/MMBtu) (0.09) Btu uplift (MMBtu/Mcf) 0.11 Pre-hedge realized price ($/Mcf) 2.42 Realized hedging gain ($/Mcf) 0.70 Post-hedge realized price ($/Mcf) 3.12 Net firm transportation sales 0.08 Adjusted realized price ($/Mcf) 3.20 $ Average costs per Mcfe: Actual ($MM) $ / Mcfe E&P Revenue (including net FT sales) 100 $ 2.52 $ Hedging gain 27 0.69 Lease operating 12 0.29 Gathering, compression and transportation 14 0.36 Production taxes and impact fees 1 0.04 General and administrative 17 0.44 Depletion, depreciation and amortization 63 1.58 Adjusted EBITDAX 84 $ 2.12 $

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$536 $283 $450 $339 $875 $284 $459 – $200 $400 $600 $800 $1,000 Rice Energy Rice Midstream Holdings Rice Midstream Partners Cash Available Revolver

Ample Liquidity and Financial Flexibility

RICE is capable of funding 100% of 2015 capital plan with liquidity on-hand

• Favorable credit metrics & covenants ensure flexibility

Cash & Revolver Capacity – 3/31/15

Debt/EBITDA Covenant NONE 4.25x 4.75x 1Q15 Debt/RR EBITDA(3) 3.3x 0.3x 0.0x EBITDA/Interest Covenant 2.5x 2.5x 2.5x LTM EBITDA/Interest 5.9x NM NM

(E&P)

(1) __________________________ (1) E&P segment cash balance. (2) Assumes $650MM borrowing base less $114MM letters of credit balance at 3/31/15. (3) E&P leverage metric uses Net Debt / RR EBITDA.

$MM

(2)

Leverage Metrics as of 03/31/15

$1.2B pro forma liquidity (excl. CFFO) v. $890MM 2015 capex $459MM liquidity (excl. CFFO) v. $180MM 2015 capex

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RMP Market Snapshot

Rice Midstream Partners LP (NYSE: RMP) Rice Energy Inc (NYSE: RICE)

__________________________ 1. As of March 31, 2015.

$ millions, except per share data, as of 05/01/15 Common Units 29 Subordinated Units 29 Total Units Outstanding 58 Price as of 5/1/2015 $15.80 Market Capitalization $909 Cash 9 Revolving credit facility – Debt – Enterprise Value $900 Distribution / Unit $0.1875 Yield 4.56% 52 Week Price Range High $17.86 Low 13.16 RMP Units Owned % of RMP Units - Public 50% % of RMP Units - RICE 50% % of RMP IDRs - RICE 100% Website: www.ricemidstream.com Investor Contact: Julie Danvers Julie.Danvers@RiceMidstream.com

$ millions, except per share data, as of 05/01/15 Management Ownership 30% Shares Outstanding (MM) 136 Price as of 5/1/2015 $24.84 Market Capitalization $3,386 Cash(1) $340 Revoling credit facilities 17 6.25% Senior notes due 2022 900 7.25% Senior notes due 2023 397 Enterprise Value $4,360 52 Week Price Range High $33.32 Low 16.57 Website: www.riceenergy.com Investor Contact: Julie Danvers Julie.Danvers@RiceEnergy.com

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Appendix

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3rd Party Midstream Dedications – RMP

SYSTEM MAP

Greene Washington Marshall

Fayette Ohio Brooke Beaver

PENNSYLVANIA OHIO WEST VIRGINIA

Legend

RMP Gathering Pipeline to be Constructed RICE Acreage RMP Gathering Pipeline 3rd Party Dedicated to RMP Pre-existing 3rd Party Dedication

Beaver Jefferson Brooke

Commentary

• 3rd party gathering dedications



~21,000 gross acres dedicated



1Q 2015 production of 63 MDth/d (11% of total RMP throughput)

• Contracted high quality third party operators

with active development programs

• 3rd party dedications differentiate RMP from
• ther recent E&P sponsored MLP IPOs

3RD PARTY DEDICATION SUMMARY PA Dedicated Acreage 21,000 Gatherer RMP Shipper EQT/AR/RRC 1Q 2015 Throughput (MDth/d) 63 Contract Term ~11 years (wtd. avg)(1) Gathering/Compression Fee $0.44/$0.05

__________________________ 1. Calculated based on weighted average historic throughput.

RMP’s Assets are Well Positioned to Capture 3rd Party Growth

OH PA WV

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Right of First Offer – RICE PA + OH Water Systems

__________________________ Note: RMP’s potential acquisition of the fresh water distribution systems will be conditioned upon RICE obtaining a ruling or interpretive guidance from the IRS that income from fresh water distribution services is qualifying income for federal income tax purposes. 1. In PA, water usage per well based on 7,000’ lateral, 200’ stage spacing (35 stages) and 378,000 gallons per stage. In OH, water usage per well based on 8,000’ lateral, 200’ stage spacing (40 stages) and 399,000 gallons per stage.

OVERVIEW OF ASSETS

WATER DISTRIBUTION SYSTEM INFORMATION

System YE2015 Connected Sources (MMGPD) Water Usage per Well (MMGal) (1) Pennsylvania 11 13 Ohio 15 16 Total 26

• RICE is expanding two independent fresh water

distribution systems to service PA and OH completions operations

• PA is in-service now and OH is partially

in-service - systems to be fully constructed by YE2015

• Water distribution system is a more cost efficient

method to transport fresh water than trucking and minimizes operational delays due to greater certainty of water availability and elimination of truck traffic

• We expect RICE will use these systems to

complete substantially all of their wells going forward

• Building the system beyond RICE’s water

completion needs, given its expectation to contract 3rd party business

PA and OH Water Asset Description

Water Pipeline Water Pipeline to be Constructed RICE Acreage

Wetzel

PA OH

Greene Washington Monroe Marshall Harrison Jefferson Ohio Brooke Hancock Beaver Allegheny Carroll Belmont Monongahela River Withdrawal Ohio River Withdrawal OH PA WV

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Midstream System Statistics

__________________________ 1. Fees will be annually escalated based upon changes in the Consumer Price Index. Compression fees are derived on a per stage basis 2. Assumes that gathering and compression fees for OH services are equivalent to those to be paid by RICE to RMP for gathering and compression for Pennsylvania assets. The gathering and compression fees for OH services are subject to negotiation and final agreement and may ultimately be changed. 3. Certain of RMP’s third-party contracts provide for an increase in the gathering fee we will receive upon completion of construction of an 18-mile, 30 inch pipeline connecting its gathering system to TETCO (completed November 2014) 4. Certain of RMP’s 3rd party agreements, the per stage fees charged for compression varies depending on line pressure as opposed to being a flat fee per stage. Accordingly, the 3rd party compression fee is shown on a wtd avg based on historical throughput.

RMP Assets at IPO

Marcellus (PA) Utica (OH) Gathering and Compression Statistics Gathering and Compression Statistics YE14 YE15 YE14 YE15 Gathering and Compression Statistics Gas Gathering Pipeline Mileage (miles) 81 111 Gas Gathering Pipeline Mileage (miles) 21 50 Design Gathering Capacity (MMDth/d) 3.2 4.1 Design Gathering Capacity (MMDth/d) 0.5 2.6 Acreage Dedications Acreage Dedications RICE 65,000 RICE 37,400 3rd Party 21,000 3rd Party 19,600 Total Acreage Dedications 86,000 Total Acreage Dedications 57,000 Midstream Fees Paid by RICE to RMP ($/dth) (1) Midstream Fees Paid by RICE to RICE OH ($/dth) (1) (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 (4) $0.07 Compression undisclosed Water Distribution System Statistics Water Distribution System Statistics YE15 YE15 Water Distribution System Statistics Connected Water Sources (MMGPD) 9.2 Connected Water Sources (MMGPD) 16.7

11 15 $0.44 $0.05

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1Q 2015 Adjusted EBITDA 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.

Three Months Ended ($ in thousands) March 31, 2015 Adjusted EBITDA reconciliation to loss from continuing operations: Net income 9,068 $ Interest expense 394 Depreciation expense 1,449 Amortization of intangible assets 408 Non-cash stock compensation expense 996 Amortization of deferred financing costs 144 Adjusted EBITDA 12,459 $ Cash interest expense

(394)

Estimated maintenance capital expenditures

(1,120)

Distributable cash flow 10,945 $ Reconciliation of Adjusted EBITDA to Cash used in operating activities: Adjusted EBITDA 12,459 $ Interest expense (394) $ Changes in operating assets and liabilities which provided cash

(12,134)

Net cash used in operating activities (69) $

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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

• perations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are

forward-looking statements. These statements often include the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” 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, and anticipated financial and operating results of Rice Midstream and RICE. 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. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in the prospectus. These forward-looking statements are based on Rice Midstream’s current belief, based on currently available information, as to the outcome and timing of future events. 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 the exploration for and development, production, gathering and sale of natural gas, natural gas liquids and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under “Risk Factors” in the prospectus. Should one or more

• f 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.

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Determination of Identified Drilling Locations as of December 31, 2014 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 assume these locations have 7,000 foot laterals and 750 foot spacing between wells which yields approximately 121 acre spacing. In the Marcellus, we 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 12/31/14, RICE had 64,355 net acres in the Marcellus which results in 356 undeveloped net locations Undeveloped Net Western 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 Western 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 12/31/14, RICE had 22,000 net acres in Western Greene County which results in 139 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, we 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 12/31/14, RICE had 77,242 net acres prospective for the Upper Devonian which results in 382 undeveloped net locations Undeveloped Net Utica Locations: RICE assumes these locations have 8,000 foot laterals and 750 foot spacing between wells which yields approximately 138 acre spacing. In the Utica, RICE applies a 10% risking factor to its net acreage to account for inefficient unitization. As of 12/31/14, RICE had 55,000 net acres prospective for the Utica in Ohio which results in 356 undeveloped net locations. This excludes ~2,500 net acres in Guernsey and Harrison Counties in Ohio

Additional Disclosures