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Who are Rice Midstream’s major customers?

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Rice Energy: A major revenue source

Rice Energy Inc. (RICE) is Rice Midstream Partners’ (RMP) largest customer. According to company reports, for the 12 months ending December 31, 2015, Rice Energy is projected to represent approximately 84% of Rice Midstream’s gathering volumes.

As the above image shows, Rice Energy has increased its production by almost 95% since 2013, to 247 MMcfe/d (million cubic feet per day).

This rapid production growth is a positive for Rice Midstream, as increased production growth will result in a significant increase in gathering volumes for Rice Midstream.

One of Rice Midstream’s company reports noted, “Because of our close operational and contractual relationship with Rice Energy and its economic interest in us, we expect to grow significantly as Rice Energy pursues its development plan.”

Rice Midstream Partners IRMP) is a subsidiary of Rice Energy Inc. (RICE), which is a component of several energy ETFs, including the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Vanguard Energy ETF (VDE), and the Vanguard Total World Stock Index Fund (VT).

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Rice Midstream’s other third-party customers

For the 12 months ended June 30, 2014, third parties represented approximately 12% of Rice Midstream’s pro forma gathering volumes.

Rice Midstream has entered into fixed-fee contracts with “a weighted average remaining term of six years for gathering and compression services in the dry gas core of the Marcellus Shale in southwestern Pennsylvania with respect to current third-party acreage positions of approximately 21,000 gross acres, and any future acreage acquired by such third-parties within areas of mutual interest of approximately 66,000 acres.”

In the following part, we’ll compare Rice Midstream’s stock market reaction with the reaction to the recent debut of Antero Midstream (AM) and Shell Midstream (SHLX).

 

 

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