Long Term Debt | 3 Months Ended |
Mar. 31, 2014 |
Debt Disclosure [Abstract] | ' |
Long-Term Debt | ' |
Long-Term Debt |
Long-term debt consists of the following as of March 31, 2014 and December 31, 2013 (in thousands): |
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Description | 31-Mar-14 | | December 31, 2013 |
Long-term Debt | | | |
Debentures (a) | $ | — | | | $ | 6,890 | |
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Second Lien Term Loan Facility (b) | 293,280 | | | 293,821 | |
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NPI Note, due June 2014 (1) | 8,286 | | | 8,028 | |
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Senior Secured Revolving Credit Facility (c) | — | | | 115,000 | |
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Other | 2,361 | | | 3,203 | |
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Total debt | $ | 303,927 | | | $ | 426,942 | |
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Less current portion | 13,086 | | | 20,120 | |
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Long-term debt | $ | 290,841 | | | $ | 406,822 | |
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(1) The NPI Note was repaid in full in April 2014. |
Debentures (a) |
In June of 2011, Rice Drilling B sold $60.0 million of its 12% Senior Subordinated Convertible Debentures due 2014 (the “Debentures”) in a private placement to certain accredited investors as defined in Rule 501 of Regulation D. The Debentures accrued interest at 12% per year payable monthly in arrears by the 15th day of the month and mature on July 31, 2014 (“Maturity Date”). The Debentures were Rice Drilling B’s unsecured senior obligations and ranked equally with all of Rice Drilling B’s then-current and future senior unsecured indebtedness. |
From July 31, 2013 through August 20, 2013 (the “put redemption period”), any holder of Debentures had the right to cause Rice Drilling B to repurchase all or any portion of the Debentures owned by such holder at 100% of the portion of the principal amount of the Debentures as to which the right was being exercised, plus a premium of 20%. During the put redemption period, Rice Drilling B repurchased $53.1 million of outstanding Debentures and paid a put premium of $10.6 million in accordance with the terms of the agreements. |
At any time after July 31, 2013 until the Maturity Date, Rice Drilling B had the right to redeem all, but not less than all, of the Debentures on 30 days prior written notice at a redemption price equal to 100% of the principal amount of the Debentures plus a premium of 50%. In connection with the IPO, the Debentures and warrants of Rice Drilling B were amended to become convertible or exercisable for shares of common stock of Rice Energy Inc. On February 28, 2014, Rice Drilling B issued a redemption notice on the remaining Debentures, which set a redemption date of March 28, 2014. Prior to the redemption date, $6.6 million of the Debentures were converted into 570,945 shares of Rice Energy Inc. common stock. The remaining principal balance of $0.3 million was not converted and is recorded as an accrued liability as of March 31, 2014 in the amount of $0.4 million, including the 50% premium of $0.1 million, and will be paid upon request from holders of the remaining Debentures. The premium of $0.1 million was recorded to expense in the three months ended March 31, 2014. As the principal amount of the Debentures outstanding has been reduced to zero, Rice Drilling B is no longer required to maintain restricted cash or comply with the restrictive covenants which apply thereto. |
In connection with the convertible debt offering, Rice Drilling B granted warrants that were issued on August 15, 2011, to certain of the broker-dealers involved in the private placement. These warrants are considered to be separate instruments issued solely in lieu of cash compensation for services provided by the broker-dealers. Two separate classes of warrants were issued with the sole difference being the exercise price. At March 31, 2014, 1,137 warrants remain exercisable at a weighted average price of $11.01 per share of Rice Energy Inc. common stock. The 1,137 warrants are exercisable into up to 982,837 shares. During the quarter ended March 31, 2014, warrants were exercised in exchange for 54,032 shares of Rice Energy Inc. common stock. |
Second Lien Term Loan Facility (b) |
On April 25, 2013, Rice Drilling B entered into a Second Lien Term Loan Facility (“Second Lien Term Loan Facility”) with Barclays Bank PLC, as administrative agent, and a syndicate of lenders in an aggregate principal amount of $300.0 million. Rice Drilling B estimated the discount on issuance of this instrument based upon an estimate of market rates at the inception of the instrument and recorded a discount of $4.5 million. The discount was being amortized over the life of the note using an effective interest rate of 0.284%. As of March 31, 2014, Rice Drilling B had a balance of $293.3 million relating to the Second Lien Term Loan Facility, this included borrowings outstanding of $297.0 million less a discount of $3.7 million. The Second Lien Term Loan Facility was to mature on October 25, 2018. Approximately $7.4 million in fees were capitalized in connection with the Second Lien Term Loan Facility. On April 25, 2014, the Company used a portion of the net proceeds from the Senior Notes Offering to repay and retire the Second Lien Term Loan Facility in the amount of $301.8 million. |
Rice Drilling B was in compliance with the covenants and ratios under the Second Lien Term Loan Facility as of March 31, 2014. |
Senior Secured Revolving Credit Facility (c) |
On April 25, 2013, Rice Drilling B entered into a Senior Secured Revolving Credit Facility (“Senior Secured Revolving Credit Facility”) with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of lenders with a maximum credit amount of $500.0 million and a sublimit for letters of credit of $10.0 million. Concurrently with the closing of Rice Energy’s IPO, on January 29, 2014, Rice Drilling B amended its Senior Secured Revolving Credit Facility to, among other things, allow for the corporate reorganization that was completed simultaneously with the closing of the IPO, add Rice Energy Inc. as a guarantor, increase the maximum commitment amount to $1.5 billion and lower the interest rate on amounts borrowed under the Senior Secured Revolving Credit Facility. The Company used a portion of the net proceeds of the IPO to repay $115.0 million of borrowings under the Senior Secured Revolving Credit Facility. After giving effect to the amendment, the borrowing base under the Senior Secured Revolving Credit Facility was increased to $350.0 million as a result of the Marcellus JV Buy-In. The amount available to be borrowed under the Senior Secured Revolving Credit Facility is subject to a borrowing base that is redetermined semiannually as of each January 1 and July 1 and depends on the volumes of Rice Drilling B’s proved oil and gas reserves and estimated cash flows from these reserves, its commodity hedge positions, and other factors. The next redetermination is scheduled to occur in May 2014. As of March 31, 2014, the borrowing base was $350.0 million and the sublimit for letters of credit was $100.0 million. Rice Drilling B had no borrowings and approximately $71.3 million in letters of credit outstanding under its Senior Secured Revolving Credit Facility as of March 31, 2014, resulting in availability of $278.7 million. |
Eurodollar loans under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to LIBOR plus an applicable margin ranging from 150 to 250 basis points, depending on the percentage of borrowing base utilized. Base rate loans bear interest at a rate per annum equal to the greatest of (i) the agent bank’s reference rate, (ii) the federal funds effective rate plus 50 basis points and (iii) the rate for one month Eurodollar loans plus 100 basis points, plus an applicable margin ranging from 50 to 150 basis points, depending on the percentage of borrowing base utilized. Rice Drilling B is subject to the same financial ratios and substantively the same restricted covenants as under the Senior Secured Revolving Credit Facility prior to such amendment. The Senior Secured Revolving Credit Facility will mature upon the earlier of the date that is five years following the closing of the amendment and the date that is 180 days prior to the maturity of the Second Lien Term Loan Facility, if any amounts are outstanding under that facility as of such date. |
Concurrently with the Senior Notes Offering (as defined below), the Company, as borrower, and Rice Drilling B, as predecessor borrower, amended and restated its Senior Secured Revolving Credit Facility (“Amended Credit Agreement”) to, among other things, assign all of its rights and obligations under the Senior Secured Revolving Credit Facility to the Company, and the Company assumed all such rights and obligations as borrower under the Amended Credit Agreement. Please see “14. Subsequent Events—Third Amended and Restated Credit Agreement” for additional details on the Amended Credit Agreement. |
Rice Drilling B was in compliance with the covenants and ratios under its Senior Secured Revolving Credit Facility as of March 31, 2014. |
6.25% Senior Notes Due 2022 |
On April 25, 2014, the Company offered $900.0 million (the “Senior Notes Offering”) in aggregate principal amount of 6.25% senior notes due 2022 (the “Notes”) in a private placement to eligible purchasers under Rule 144A and Regulation S of the Securities Act, which resulted in net proceeds to it of $882.7 million after deducting estimated expenses and underwriting discounts and commissions of approximately $17.3 million. The Company used $301.8 million of the net proceeds to repay and retire the Second Lien Term Loan Facility, with the remainder expected to be used to fund the Company’s 2014 capital expenditure program. |
Expected Aggregate Maturities |
Expected aggregate maturities of notes payable as of March 31, 2014 are as follows (in thousands): |
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Remainder of Year Ended December 31, 2014 (1) | $ | 13,086 | | | | | |
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Year Ended December 31, 2015 | 2,847 | | | | | |
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Year Ended December 31, 2016 | 2,257 | | | | | |
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Year Ended December 31, 2017 | 2,173 | | | | | |
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Year Ended December 31, 2018 and Beyond (2) | 283,564 | | | | | |
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Total | $ | 303,927 | | | | | |
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(1) Includes $8.3 million attributable to the NPI Note, which was repaid in full in April 2014. |
(2) Excludes $900.0 million attributable to the Notes issued in the Senior Notes Offering in April 2014. |
Interest paid in cash was $7.0 million and $3.4 million for the three months ended March 31, 2014 and 2013, respectively. |