Rice Midstream Partners First Quarter 2015 Supplemental Slides May 7, 2015 1
2 Rice Midstream Partners MLP Overview Marcellus Gathering and Compression Initial assets consist of gas gathering system with expected capacity of 4.1 MMDth/d by YE15 1Q 2015 throughput of 557 MDth/d 11% 3 rd Party throughput Gathering throughput driven by SW PA technical leaders ~85% of 2015E estimated throughput from RICE operated volumes, ~15% from 3 rd party, primarily EQT RMP will spend $90MM to install compression in 2015 that will start generating revenue in 2016 Completed the addition of compression capacity for third party volumes in 1Q15 Installing compression for RICE in 2H 2015 RMP will spend $85MM to build ~30 miles of gathering pipeline in 2015 Substantially all of RICE s drilling locations will be within 2 miles of gathering pipeline by YE 2015 Legend Jefferson OHIO RMP Gathering Pipeline RMP Gathering Pipeline to be Constructed RICE Acreage 3 rd Party Dedicated to RMP Ohio Brooke Pre-existing 3 rd Party Dedication Brooke Beaver Washington SYSTEM MAP Beaver Greene PENNSYLVANIA GATHERING SYSTEM INFORMATION Marshall OH Fayette PA 12/31/14 Dedicated Gross Acreage 1Q 2015 Throughput (MDth/d) 2015E EBITDA ($MM) 2015E Capex ($MM) PA Gathering 86,000 557 $ 55 60 $ 180 Wetzel Concentrated, Prolific Position to Drive Targeted 20% Distribution Growth WV WEST VIRGINIA
RMP First Quarter 2015 Financial Summary 3 Solid first quarter results supported by well capitalized balance sheet and ample liquidity Financial Summary (1) First quarter average daily throughput of 557 MDth/d; 8% increase above fourth quarter throughput Adjusted EBITDA of $12.5MM Distributable Cash Flow of $10.9MM Distribution of $0.1875 / unit Coverage Ratio of 1.02x Capitalization and Liquidity $9MM cash on hand as of 3/31/15 Zero drawn under our revolving credit facility Distributable Cash Flow Three Months Ended ($ millions, except per unit data) March 31, 2015 Affiliate gathering volumes (MDth/d) 494 Third-party gathering volumes (MDth/d) 63 Total gathering volumes (MDth/d) 557 Total operating revenues $16.2 Operating expenses 6.6 Total operating income $9.6 Adjusted EBITDA $12.5 Distributable cash flow $10.9 DCF / unit $0.1903 Distribution declared $10.8 Distribution / unit $0.1875 Coverage Ratio 1.02x ($ in millions) Liquidity as of March 31, 2015 Revolver capacity $ 450 Less: Borrowings Plus: Cash and cash equivalents 9 Liquidity $ 459
Industry-Leading Throughput Growth 1Q 2015 throughput of ~668 MDth/d through RICE and RMP midstream systems (17% 3 rd Party), 13% increase from 4Q14 throughput RMP System: 557 MDth/d (11% 3 rd Party) RICE OH System: 111 MDth/d (44% 3 rd Party) RMP and RICE OH Midstream Historical Throughput Dth/d 800,000 700,000 Average Throughput (MDth/d) 2010 2011 2012 2013 2014 1Q 2015 Throughput 4 18 61 176 409 668 QoQ / YoY Growth 405% 238% 188% 133% 13% 600,000 500,000 400,000 300,000 200,000 100,000 10/31/10 3/31/11 8/31/11 1/31/12 6/30/12 11/30/12 4/30/13 9/30/13 2/28/14 7/31/14 12/31/14 1. PA 3 rd party volumes as of April 2014 close of Momentum asset acquisition. RMP - Rice Operated (PA) RMP - 3rd Party (PA) RICE - Rice Operated (OH) RICE - 3rd Party (OH) 4 (1)
5 Drop Down Opportunities Overview Overview of Assets Assets include OH gas gathering and PA/OH water services OH Gathering 1Q 2015 throughput of 111 MDth/d Gathering throughput driven by SE OH technical leaders Legend RICE Gathering Pipeline RICE Gathering Pipeline to be Constructed RICE Water Pipeline RICE Water Pipeline to be Constructed RICE Water Interconnects RICE Acreage Hancock Beaver ~80% of 2015E estimated throughput from RICE operated volumes, ~20% from GPOR 3 rd Party Dedicated to RICE Pre-existing 3 rd Party Dedication Jefferson PENNSYLVANIA OH gathering system will be attractive drop-down candidate for RMP (RMP has a ROFO on RICE s OH midstream system) Harrison Brooke Washington Build-out will be largely complete by YE2015 OHIO Belmont Ohio Greene Fayette Marshall Monroe SYSTEM INFORMATION 12/31/14 Dedicated Gross Acreage 1Q 2015 Throughput (MDth/d) 2015E EBITDA ($MM) 2015E Capex ($MM) Wetzel WEST VIRGINIA RICE Retained Midstream 57,000 111 $ 35 40 $ 210 Building Significant Drop Down Potential
RMP Financial Overview 6 CAPITALIZATION AND LIQUIDITY AT 3/31/15 $ in millions, except per share data, as of 3/31/15 Common Units 29 Subordinated Units 29 Total Units Outstanding 58 Price as of 3/31/15 $ 14.11 Market Capitalization $ 811 Cash 9 Revolving credit facility - Debt - Enterprise Value $ 802 2015 GUIDANCE 2015 Capital Budget (in millions) Gas Gathering $ 85 Compression $ 90 Total Expansion Capex $ 175 Maintenance Capex $ 5 Total Capital Expenditures $ 180 Leverage Statistics Debt / EBITDA 0.0x EBITDA / Interest nm Debt to EBITDA Covenant 4.75 Guidance Adjusted EBITDA (in millions) $55 $60 % Third Party 20% Distributable Cash Flow (in millions) $48 $53 Average DCF Coverage Ratio 1.1x 1.2x Annualized Distribution ($ per unit) $0.75 Liquidity Summary Revolving credit facility $ 450 Less: amount drawn - Availability under RCF $ 450 Plus: cash on hand 9 Liquidity as of 3/31/15 $ 459 RMP Units Owned % of RMP Units - Public 50% % of RMP Units - RICE 50% % of RMP IDRs - RICE 100%
RICE Overview 7
Concentrated, Core Assets COMPANY TOTAL CORE ASSETS Highly concentrated position of ~146,000 net acres in the cores of the lowest breakeven gas shale plays in the U.S. ~1,230 net undeveloped locations (1) 440 MMcfe/d net 1Q15 production from 94 net wells Breakeven NYMEX PV-10 of $2.35-$3.05 / MMBTU Legend RMP Gathering Pipeline RMP Gathering Pipeline to be Constructed RICE OHIO Gathering Pipeline RICE OHIO Gathering Pipeline to be Constructed RICE Acreage PENNSYLVANIA Hancock Beaver ~89,000 net Marcellus acres, <5% developed Harrison Marcellus Core 495 net undeveloped Marcellus locations (1) Harrison Jefferson 382 net undeveloped Upper Devonian locations (1) 86 net producing wells (83 Marcellus, 3 Upper Devonian) Drilling first Pennsylvania Utica well Utica Core Belmont Brooke Ohio Washington OHIO ~57,000 net Utica acres, <1% developed 356 net undeveloped Utica locations (1) 8 net (3 net operated) producing Utica wells Monroe Marshall Greene Fayette Wetzel RICE FT & MIDSTREAM Monroe Utica Stack Potential Fayette FT: 1.3 MMDth/d of firm capacity: 66% to Gulf Coast/TCO/ Midwest markets in 2015 80% by Q4 17 Monongalia RMP Midstream by YE2015: 4.1 MMDth/d gas gathering capacity OH PA RICE Midstream by YE2015: 2.6 MMDth/d gas gathering capacity and ~26 MMgpd of water distribution WV 1. Net undeveloped locations as of 12/31/14. Approximately 77,000 net acres in the Marcellus Shale is also prospective for the Geneseo (Upper Devonian) Shale. The Upper Devonian and the Marcellus Shale are stacked formations within the same geographic acreage and footprint. See slide entitled Additional Disclosures on detail regarding RICE s methodology for the calculation of locations. 8
9 RICE First Quarter 2015 Financial Summary Solid first quarter results supported by well capitalized balance sheet and ample liquidity Financial Summary 1Q15 net production of 440 MMcfe/d; 11% increase above 4Q14 51% of 1Q15 production sold to premium, non-appalachian mkts. Adjusted EBITDAX of $84MM Completed successful $400MM bond offering at 7.25% due 2023 Increased borrowing base ~20% to $650MM in April Capitalization at 3/31/2015 ($ in millions) 3/31/2015 Cash Rice Energy $ 339 Rice Midstream Holdings 1 Rice Midstream Partners 9 Total consolidated cash $ 349 Long-term debt Rice Energy E&P credit facility $ - 6.25% Senior notes due 2022 900 7.25% Senior notes due 2023 397 Total Rice Energy debt 1,297 Rice Midstream Holdings revolver 17 Rice Midstream Partners revolver - Total consolidated debt $ 1,314 Net debt 965 Shareholders equity $ 1,996 Total capitalization $ 3,310 Total net capitalization 2,961 Operating Statistics 1Q 2015 Actual Total production (MMcfe/d) 440 % Gas 99% % Operated 92% % Marcellus 85% NYMEX Henry Hub price ($/MMBtu) $ 2.87 Average basis impact ($/MMBtu) (0.47) Firm transportation fuel & variables ($/MMBtu) (0.09) Btu uplift (MMBtu/Mcf) 0.11 Pre-hedge realized price ($/Mcf) 2.42 Realized hedging gain ($/Mcf) 0.70 Post-hedge realized price ($/Mcf) 3.12 Net firm transportation sales 0.08 Adjusted realized price ($/Mcf) $ 3.20 Average costs per Mcfe: Actual ($MM) $ / Mcfe E&P Revenue (including net FT sales) $ 100 $ 2.52 Hedging gain 27 0.69 Lease operating 12 0.29 Gathering, compression and transportation 14 0.36 Production taxes and impact fees 1 0.04 General and administrative 17 0.44 Depletion, depreciation and amortization 63 1.58 Adjusted EBITDAX $ 84 $ 2.12
Ample Liquidity and Financial Flexibility RICE is capable of funding 100% of 2015 capital plan with liquidity on-hand Favorable credit metrics & covenants ensure flexibility Cash & Revolver Capacity 3/31/15 $MM $1,000 $800 $875 $339 (1) $1.2B pro forma liquidity (excl. CFFO) v. $890MM 2015 capex $459MM liquidity (excl. CFFO) v. $180MM 2015 capex Cash $600 $459 Available Revolver $400 $200 $536 (2) $284 $283 $450 Rice Energy Rice Midstream Holdings Rice Midstream Partners (E&P) Leverage Metrics as of 03/31/15 Debt/EBITDA Covenant NONE 4.25x 4.75x 1Q15 Debt/RR EBITDA (3) 3.3x 0.3x 0.0x EBITDA/Interest Covenant 2.5x 2.5x 2.5x LTM EBITDA/Interest 5.9x NM NM (1) E&P segment cash balance. (2) Assumes $650MM borrowing base less $114MM letters of credit balance at 3/31/15. (3) E&P leverage metric uses Net Debt / RR EBITDA. 10
RMP Market Snapshot Rice Midstream Partners LP (NYSE: RMP) $ millions, except per share data, as of 05/01/15 Common Units 29 Subordinated Units 29 Total Units Outstanding 58 Price as of 5/1/2015 $15.80 Market Capitalization $909 Cash 9 Revolving credit facility Debt Enterprise Value $900 Distribution / Unit $0.1875 Yield 4.56% 52 Week Price Range High $17.86 Low 13.16 Rice Energy Inc (NYSE: RICE) $ millions, except per share data, as of 05/01/15 Management Ownership 30% Shares Outstanding (MM) 136 Price as of 5/1/2015 $24.84 Market Capitalization $3,386 Cash (1) $340 Revoling credit facilities 17 6.25% Senior notes due 2022 900 7.25% Senior notes due 2023 397 Enterprise Value $4,360 52 Week Price Range High $33.32 Low 16.57 RMP Units Owned % of RMP Units - Public 50% % of RMP Units - RICE 50% % of RMP IDRs - RICE 100% Website: www.ricemidstream.com Website: www.riceenergy.com Investor Contact: Julie Danvers Julie.Danvers@RiceMidstream.com Investor Contact: Julie Danvers Julie.Danvers@RiceEnergy.com 1. As of March 31, 2015. 11
Appendix 12
3 rd Party Midstream Dedications RMP Commentary SYSTEM MAP 3 rd party gathering dedications ~21,000 gross acres dedicated 1Q 2015 production of 63 MDth/d (11% of total RMP throughput) Contracted high quality third party operators with active development programs 3 rd party dedications differentiate RMP from other recent E&P sponsored MLP IPOs Legend Jefferson RMP Gathering Pipeline RMP Gathering Pipeline to be Constructed RICE Acreage 3 rd Party Dedicated to RMP Brooke Pre-existing 3 rd Party Dedication Brooke Beaver Beaver PENNSYLVANIA OHIO Washington Ohio 3 RD PARTY DEDICATION SUMMARY PA Dedicated Acreage 21,000 Gatherer RMP Greene Shipper EQT/AR/RRC Fayette 1Q 2015 Throughput (MDth/d) 63 Marshall OH PA Contract Term ~11 years (wtd. avg) (1) Gathering/Compression Fee $0.44/$0.05 1. Calculated based on weighted average historic throughput. 13 WEST VIRGINIA RMP s Assets are Well Positioned to Capture 3 rd Party Growth WV
Right of First Offer RICE PA + OH Water Systems PA and OH Water Asset Description RICE is expanding two independent fresh water distribution systems to service PA and OH completions operations PA is in-service now and OH is partially in-service - systems to be fully constructed by YE2015 Water distribution system is a more cost efficient method to transport fresh water than trucking and minimizes operational delays due to greater certainty of water availability and elimination of truck traffic We expect RICE will use these systems to complete substantially all of their wells going forward Building the system beyond RICE s water completion needs, given its expectation to contract 3 rd party business OVERVIEW OF ASSETS Hancock Beaver Carroll Jefferson Harrison Brooke Washington Belmont Ohio Allegheny Monongahela River Withdrawal WATER DISTRIBUTION SYSTEM INFORMATION System YE2015 Connected Sources (MMGPD) Water Usage per Well (MMGal) (1) Pennsylvania 11 13 Ohio 15 16 Water Pipeline Water Pipeline to be Constructed RICE Acreage Note: RMP s potential acquisition of the fresh water distribution systems will be conditioned upon RICE obtaining a ruling or interpretive guidance from the IRS that income from fresh water distribution services is qualifying income for federal income tax purposes. 1. In PA, water usage per well based on 7,000 lateral, 200 stage spacing (35 stages) and 378,000 gallons per stage. In OH, water usage per well based on 8,000 lateral, 200 stage spacing (40 stages) and 399,000 gallons per stage. Total 26 Monroe 14 Ohio River Withdrawal Marshall Wetzel OH Greene OH WV PA PA
Midstream System Statistics Marcellus (PA) Utica (OH) Gathering and Compression Statistics Gathering and Compression Statistics YE14 YE15 YE14 YE15 Gathering and Compression Statistics Gas Gathering Pipeline Mileage (miles) 81 111 Gas Gathering Pipeline Mileage (miles) 21 50 Design Gathering Capacity (MMDth/d) 3.2 4.1 Design Gathering Capacity (MMDth/d) 0.5 2.6 Acreage Dedications Acreage Dedications RICE 65,000 RICE 37,400 3rd Party 21,000 3rd Party 19,600 Total Acreage Dedications 86,000 Total Acreage Dedications 57,000 Midstream Fees Paid by RICE to RMP ($/dth) (1) (1) (2) Midstream Fees Paid by RICE to RICE OH ($/dth) Gathering $0.30 Gathering $0.30 Compression (per stage of compression) $0.07 Compression (per stage of compression) $0.07 3rd Party Midstream Fees ($/dth) 3rd Party Midstream Fees ($/dth) Gathering (3) $0.43 $0.44 Gathering undisclosed Compression (4) $0.07 $0.05 Compression undisclosed Water Distribution System Statistics Water Distribution System Statistics YE15 YE15 Water Distribution System Statistics Connected Water Sources (MMGPD) 11 9.2 Connected Water Sources (MMGPD) 1516.7 RMP Assets at IPO 1. Fees will be annually escalated based upon changes in the Consumer Price Index. Compression fees are derived on a per stage basis 2. Assumes that gathering and compression fees for OH services are equivalent to those to be paid by RICE to RMP for gathering and compression for Pennsylvania assets. The gathering and compression fees for OH services are subject to negotiation and final agreement and may ultimately be changed. 3. Certain of RMP s third-party contracts provide for an increase in the gathering fee we will receive upon completion of construction of an 18-mile, 30 inch pipeline connecting its gathering system to TETCO (completed November 2014) 4. Certain of RMP s 3rd party agreements, the per stage fees charged for compression varies depending on line pressure as opposed to being a flat fee per stage. Accordingly, the 3rd party compression fee is shown on a wtd avg based on historical throughput. 15
1Q 2015 Adjusted EBITDA Reconciliation Three Months Ended ($ in thousands) March 31, 2015 Adjusted EBITDA reconciliation to loss from continuing operations: Net income $ 9,068 Interest expense 394 Depreciation expense 1,449 Amortization of intangible assets 408 Non-cash stock compensation expense 996 Amortization of deferred financing costs 144 Adjusted EBITDA $ 12,459 Cash interest expense (394) Estimated maintenance capital expenditures (1,120) Distributable cash flow $ 10,945 Reconciliation of Adjusted EBITDA to Cash used in operating activities: Adjusted EBITDA $ 12,459 Interest expense $ (394) Changes in operating assets and liabilities which provided cash (12,134) Net cash used in operating activities $ (69) Note: Adjusted EBITDA is a supplemental non-gaap financial measure that is used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as net income (loss) attributable to us before non-controlling interest, interest expense or interest income; income taxes; write-down of abandoned leases; depreciation, depletion and amortization; amortization of deferred financing costs; amortization of intangible assets; equity in (income) loss of our joint ventures; derivative fair value (gain) loss, excluding net cash receipts on settled derivative instruments; non-cash stock compensation expense; (gain) loss from sale of interest in gas properties; (gain) loss on acquisition; acquisition expense; (gain) loss on extinguishment of debt; write-off of deferred financing costs; and exploration expenses. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles, or GAAP. 16
Disclaimer 17 FORWARD-LOOKING STATEMENTS This presentation and the oral statements made in connection therewith may contain forward looking statements within the meaning of the securities laws. All statements, other than statements of historical fact, regarding Rice Midstream s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements often include the words could, believe, anticipate, intend, estimate, expect, project and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation specifically include expectations of plans, strategies, objectives, and anticipated financial and operating results of Rice Midstream and RICE. These forward-looking statements are based on Rice Midstream's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Rice Midstream assumes no obligation to and does not intend to update any forward looking statements included herein. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading Risk Factors included in the prospectus. These forward-looking statements are based on Rice Midstream s current belief, based on currently available information, as to the outcome and timing of future events. Rice Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond their control, incident to the exploration for and development, production, gathering and sale of natural gas, natural gas liquids and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under Risk Factors in the prospectus. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Rice Midstream s actual results and plans could differ materially from those expressed in any forward-looking statements. This presentation has been prepared by Rice Midstream and includes market data and other statistical information from sources believed by Rice Midstream to be reliable, including independent industry publications, government publications or other published independent sources. Some data are also based on Rice Midstream s good faith estimates, which are derived from its review of internal sources as well as the independent sources described above. Although Rice Midstream believes these sources are reliable, it has not independently verified the information and cannot guarantee its accuracy and completeness.
Additional Disclosures 18 Determination of Identified Drilling Locations as of December 31, 2014 Net undeveloped locations are calculated by taking RICE s total net acreage and multiplying such amount by a risking factor which is then divided by RICE s expected well spacing. RICE then subtracts net producing wells to arrive at undeveloped net drilling locations Undeveloped Net Marcellus Locations: RICE assume these locations have 7,000 foot laterals and 750 foot spacing between wells which yields approximately 121 acre spacing. In the Marcellus, we applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of 12/31/14, RICE had 64,355 net acres in the Marcellus which results in 356 undeveloped net locations Undeveloped Net Western Greene County Locations: RICE assumes these locations have 7,000 foot laterals and 750 foot spacing between wells which yields approximately 121 acre spacing. In Western Greene County, RICE applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of 12/31/14, RICE had 22,000 net acres in Western Greene County which results in 139 undeveloped net locations Undeveloped Net Upper Devonian Locations: RICE assumes these locations have 7,000 foot laterals and 1,000 foot spacing between wells which yields approximately 161 acre spacing. In the Upper Devonian, we applies a 20% risking factor to its net acreage to account for inefficient unitization and the risk associated with its inability to force pool in Pennsylvania. As of 12/31/14, RICE had 77,242 net acres prospective for the Upper Devonian which results in 382 undeveloped net locations Undeveloped Net Utica Locations: RICE assumes these locations have 8,000 foot laterals and 750 foot spacing between wells which yields approximately 138 acre spacing. In the Utica, RICE applies a 10% risking factor to its net acreage to account for inefficient unitization. As of 12/31/14, RICE had 55,000 net acres prospective for the Utica in Ohio which results in 356 undeveloped net locations. This excludes ~2,500 net acres in Guernsey and Harrison Counties in Ohio