RICE’s stock performance since IPO
Rice Energy (RICE) launched an initial public offering (or IPO) on January 24, 2014. The natural gas–weighted company was performing well before energy prices crashed in July 2014. RICE stock has been mostly in a downward trend since then, falling as much as 61% by late 2015.
However, as we can see in the above graph, since natural gas prices started improving in 2016, RICE stock has really stepped on the gas. It has risen 18.5% since its IPO launch and a massive 138% year-to-date. Natural gas prices have increased 12% year-to-date.
Another reason for RICE’s upbeat stock performance is likely the improved price forecasts for natural gas. These speculations are born out of expectations of lower supplies since upstream producers have cut down on spending and higher natural gas consumption on the back of a hot summer. Another likely factor propelling natural gas prices could be exports of LNG (liquefied natural gas).
Other natural gas–weighted upstream companies that will benefit from higher natural gas prices include Chesapeake Energy (CHK), Cabot Oil & Gas (COG), and Noble Energy (NBL). These companies make up 1.3% of the iShares Global Energy (IXC).
Daniel Rice, chief executive officer of Rice Energy, said in the company’s 2Q16 earnings conference, “I think the one thing that’s probably really important to be able to just distinguish is everything that we’re seeing playing out with gas prices starting to rise and this thesis actually starting to crystallize.”
He went on to say, “We’ve already done a ton of work on just the positioning with really prefunding a lot of 2017 production growth by spending a lot on drilling completion activities in 2016.”