Canonsburg, PA-based Rice Energy Inc. (RICE) has announced the closure of its previously declared underwritten public offering of 13,729,650 common shares – being sold by the company, together with major owners Natural Gas Partners and Alpha Natural Resources Inc. (ANR) – priced at $27.30 a piece, with a fully-exercised over-allotment option for an additional 1,790,824 shares.
The energy explorer plans to use the net proceeds from this offering – its share of approximately $196.3 million after the underwriting discount and estimated offering expenses – to partially fund its 2014 capital budget.
Rice Energy is an independent exploration and production company engaged in the acquisition, finding and development of oil and gas properties. The company’s operations are concentrated primarily in the Appalachian Basin.
Having done a stellar job at raising volumes and reserves, analysts are predicting strong earnings growth for Rice Energy over the next couple of years. The 2014 Zacks Consensus Estimate is 43 cents, representing whopping 367% earnings per share growth over 2013. Next year’s average forecast is 92 cents, corresponding with 116% growth.
However, as is the case with other independent exploration and production companies, Rice Energy’s results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces. Realized prices could differ significantly from our estimates, thereby affecting the company’s revenues, earnings and cash flow.
As a result, Rice Energy currently retains a Zacks Rank #3 (Hold), implying that it is expected perform in line with the broader U.S. equity market over the next one to three months.
However, some better-ranked domestic upstream energy stocks include Sanchez Energy Corp. (SN) and Cheniere Energy Inc. (LNG). Both of them carry a Zacks Rank #1 (Strong Buy).
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