Key update on Rice Midstream’s assets
An investor’s guide to the Rice Energy IPO (Part 3 of 6)
Rice Midstream’s assets
Rice Midstream Partners’ (RMP) initial assets consist of natural gas gathering and compression assets in the Marcellus Shale in southwestern Pennsylvania.
Rice Midstream Partners 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).
Rice Midstream’s initial assets include the following:
A dry gas gathering system and associated compression in Washington County, Pennsylvania, with connections to the Dominion system at the Columbia gas transmission (or TCO), and the EQT and Texas Eastern Pipeline (or TETCO) interstate pipelines.
A dry gas gathering system in Greene County, Pennsylvania, with connections to Dominion, TCO, and NFGS (natural fuel gas supply) interstate pipelines.
As the above chart shows, the Washington County system has a capacity of 2,772 million dekatherms per day (or MDth/d) and expects to raise this to 3,266 MDth/d in 2015. The system also consists of a 72.9-mile pipeline, which it expects to expand to 92 miles by 2015.
The Green County system, on the other hand, has a capacity of 420 MDth/d, which it expects to raise to 840 by 2015, a 50% increase. The system also consists of a 9.7-mile pipeline, which it expects to expand to 19.3 miles by 2015.
Rice Midstream’s major revenue source
Rice Midstream’s assets will be under 15-year, fixed-fee contracts with Rice Energy. Rice Midstream will generate revenues through these fixed fees.
In the following part, we’ll discuss Rice Midstream Partners’ major customers in detail.
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