EQT gives away too much for Rice's wells

EQT also would assume or refinance $1.5 billion of Rice's net debt and preferred equity.

EQT has acquired more than 485,000 acres in the Marcellus shale since early 2016, Chief Executive Officer Steven Schlotterbeck said in the statement.

Investors wait Rice Energy Inc (NYSE:RICE) to report on August, 2. its quarterly earnings Wall Street analysts expect $0.17 EPS, up $0.24 or 342.86 % from last year's $-0.07 same quarter earnings.

The plan now is to shift the focus from acquisitions to integration, by improving well efficiencies through longer laterals and reduced operating costs.

Rice Energy's shares surged more than 24 percent to $24.47 in early trading, but below the $27.05 per share offered by EQT.

EQT Corporation is a natural gas company.

As part of the transaction, EQT also would obtain Rice's midstream properties, which include a 92% stake in Rice Midstream GP Holdings LP, which owns 100% of the general partner and 28% of the limited partner interests in Rice Midstream Partners LP. See the Non-GAAP Disclosures section for important information regarding the non-GAAP financial measures included in this news release.

EQT shareholders will own 65 percent of the combined company, RBC Capital Markets analysts led by Scot Hanold wrote in research published Monday. Deutsche Bank upgraded the stock and raised the price target on November 21 boosting the price target from $23.00 to $33.00 and raising the rating from "Hold" to "Buy".

On the ratings front, Rice Energy has been the subject of a number of recent research reports. Stifel Nicolaus initiated it with "Buy" rating and $14.0 target in Thursday, December 10 report. Sorbara has a success rate of 38% and is ranked #4357 out of 4570 analysts, while Rezvan has a success rate of 54% and is ranked #755. This translates into $27.13 million profit for RICE giving the stock a 37.13 P/E. Last fall Rice paid $2.7 billion to take over Vantage Energy Inc. subsidiaries that not only expanded its Appalachian holdings but gave it entry into the Barnett Shale in North Texas. One equities research analyst has rated the stock with a sell rating, six have issued a hold rating and fourteen have assigned a buy rating to the company. $26.19's average target is 3.72% above currents $25.25 stock price.

In addition, EQT said the two companies' infrastructure footprint contemplating EQT Midstream Partners LP (NYSE: EQM), where the company is planning dropdowns and additional organic projects. The Midstream segment is involved in the gathering and compression of natural gas, oil and NGL production of, and in the provision of water services to support the well completion activities of, Rice Energy and third parties.

  • Zachary Reyes