“The natural gas industry in the Appalachian Basin will see a major transformation with the Rice Brothers taking over the leadership at EQT,” commented Bryce Custer, one of the leading commercial realtors in the Appalachian Basin.
Custer thinks drilling activity will become more focused in the Southwestern Pennsylvania and Southeastern Ohio. “We’ll be tracking activity,” stated Custer.
Here’s the story.
The millennial who’s taken the top job at the largest U.S. natural gas producer is a former All-American college baseball player turned shale tycoon.
Toby Rice, 37, is the new chief executive officer at EQT Corp. after Rice and his brother Derek, 34, won a proxy battle to take control of the board. The brothers, who sold their company to EQT in 2017 for $6 billion, launched a campaign to overhaul the producer after it missed output targets and boosted spending.
The Rices got their start in gas drilling 12 years ago, when Toby, Derek, and their brother Daniel, 38, founded Rice Energy Inc. Their father, former BlackRock Inc. fund manager Daniel Rice III, was a key investor in the company. By their telling, the brothers’ first big break in the world of fracking came in 2010, when a refurbished rig they’d rented for $18,500 a day finally started producing gas from shale rock buried beneath a Pennsylvania hilltop.
Toby Rice, who was named to the American Baseball Coaches Association’s All-America Third Team in 2004 as a right fielder at Florida’s Rollins College, is now tasked with revitalizing an explorer that’s trailed peers since the Rice Energy acquisition. Having worked as a roughneck in Texas, he’ll have to prove to shareholders that he can replicate the success of his previous company, where he and his brothers had custom heavyweight wrestling belts made to commemorate productive wells.
“The clock starts on our 100-day plan as soon as today,” Toby Rice told reporters after EQT’s annual general meeting in Pittsburgh on Wednesday. “By 2020 we want to have our foundational elements set up, best practices in place and then you’ll start to see the effects of large-scale development by mid-2021.”
The Rices, who have used the term “shalennial” to describe their management style, plan to use better technology at EQT to drill wells more cheaply and efficiently. They’ll also make changes to the company’s organizational structure, adding a chief information officer and chief human resources officer. EQT’s focus on the Marcellus shale of Pennsylvania and West Virginia, the country’s largest gas play, will remain.
But they’ll have to win over investors who have been burned by weak earnings and overspending. Though a shale producers have pushed U.S. gas output to a record, making the U.S. a net exporter, the resulting oversupply has sent prices for the fuel to 1990s-era lows, denting profits.
The “main thing investors will be watching going forward is their ability to execute on the cost reduction initiatives that underpinned” the Rices’ promise of $500 million per year in additional free cash flow, Sameer Panjwani, an analyst at Tudor Pickering Holt & Co. in Houston, said in an email. “Wouldn’t be surprised if this spurs more activism in the space by investors targeting underperforming companies.”