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What Drove Rice Midstream’s Revenue since Its IPO?

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Rice Midstream

Rice Midstream Partners (RMP) is a midstream MLP that provides natural gas gathering and compression services to natural gas producers in the dry gas core of the Marcellus Shale in southwestern Pennsylvania. Rice Midstream Partners was formed by Rice Energy (RICE) to own, operate, acquire, and develop midstream assets in the Appalachian Basin. Rice Energy accounts for 1.77% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Rice Midstream Partners went public in December 2014.

Rice Energy owns and controls Rice Midstream Partners’ general partner. Apart from a general partner interest, Rice Energy owns an ~50% limited partner interest and all of the IDRs (incentive distribution rights) in Rice Midstream Partners.

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Rice Midstream’s revenue

Rice Midstream’s total 2Q15 operating revenue rose to $19.7 million from $16.2 million in 1Q15. This represents a quarter-over-quarter rise of $3.5 million or 21.60%. Rice Energy is Rice Midstream’s largest customer. It accounted for 84.70% of Rice Midstream’s 2Q15 gathering volumes and 79.30% of its total 2Q15 operating revenue.

Revenue drivers

  • Gathering volumes – Rice Midstream’s biggest revenue driver is gathering volumes. The partnership’s total gathering volumes for 2Q15 rose to 655,000 dekatherms per day from 368,000 dekatherms per day in 2Q14. This is a YoY (year-over-year) rise of 287,000 dekatherms per day or 77.90%. Compared to 1Q15, the partnership’s throughput volumes rose by 18% “with 15% attributable to third-party volumes.” One dekatherm is equivalent to 0.99976 MMBtu (British thermal units in millions)
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Rice Midstream’s adjusted EBITDA

Rice Midstream went public in December 2014. It reported 2Q15 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $16.7 million. This was a 34% rise over 1Q15. The partnership’s EBITDA growth was mainly driven by higher third-party gathering volumes.

Midstream MLP subsidiaries

Similar to midstream subsidiaries of upstream c-corps that are the subject of our series, a few US refiners also have midstream subsidiaries. Valero Energy (VLO) formed Valero Energy Partners (VLP), Tesoro (TSO) formed Tesoro Logistics (TLLP), and Phillips 66 (PSX) formed Phillips 66 Partners (PSXP).

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