Guarantor Financial Information | Guarantor Financial Information On April 25, 2014 , the Company issued $900.0 million in aggregate principal amount of the 2022 Notes and on March 26, 2015 , the Company issued $400.0 million in aggregate principal amount of the 2023 Notes. The obligations under the Notes are fully and unconditionally guaranteed by the Guarantors, subject to release provisions described in Note 3. In connection with the closing of the Vantage Acquisition, the Company and Rice Energy Operating entered into a Debt Assumption Agreement dated as of October 19, 2016 pursuant to which Rice Energy Operating agreed to become a co-obligor of the Notes and certain entities acquired in the Vantage Acquisition became wholly-owned became subsidiaries of Rice Energy Operating and Guarantors of the Notes. Each of the Guarantors is 100% owned by Rice Energy Operating. The Company is a holding company whose sole material asset is an equity interest in Rice Energy Operating. The Company is a member and the sole manager of Rice Energy Operating. Rice Energy owns an approximate 83.51% membership in Rice Energy Operating as of December 31, 2016. Rice Energy is responsible for all operational, management and administrative decisions related to Rice Energy Operating’s business. In accordance with Rice Energy Operating’s Third Amended and Restated Limited Liability Company Agreement, the Company may not be removed as the sole manager of Rice Energy Operating so long as it continues to be a member of Rice Energy Operating. As of December 31, 2016, the Company held approximately 83.51% of the economic interest in Rice Energy Operating, with the remaining 16.49% membership interest collectively held by the Vantage Sellers. The Vantage Sellers have no voting rights with respect to their membership interest in Rice Energy Operating. In connection with the closing of the Transaction, the Company issued shares of preferred stock to the Vantage Sellers in an amount equal to 1/1000 of the number of REO Common Units they received at the closing of the Vantage Acquisition. Pursuant to the certificate of designation setting forth the terms, rights and obligations and preferences of the preferred stock, each 1/1000 share of preferred stock entitles the holder to one vote on all matters submitted to a vote of the holders of common stock. Accordingly, the Vantage Sellers collectively have a number of votes in the Company equal to the aggregate number of REO Common Units that they hold. The Vantage Sellers have a redemption right to cause Rice Energy Operating to redeem, from time to time, all or a portion of their Common Units. Each REO Common Unit will be redeemed for, at Rice Energy Operating’s option, a newly-issued share of common stock of the Company or a cash payment equal to the volume-weighted average closing price of a share of the Company’s common stock for the five trading days prior to and including the last full trading day immediately prior to the date that the member delivers a notice of redemption (subject to customary adjustments, including for stock splits, stock dividends and reclassifications). Upon the exercise of the redemption right, the redeeming member surrenders its REO Common Units to Rice Energy Operating and the corresponding number of 1/1000ths of shares of preferred stock in respect of each redeemed Common Unit to Rice Energy Operating for cancellation. The Third A&R LLC Agreement requires that the Company contribute cash or shares of its common stock to Rice Energy Operating in exchange for a number of REO Common Units equal to the number of Rice Energy Operating Common Units to be redeemed from the member. Rice Energy Operating will then distribute such cash or shares of the Company’s common stock to such Vantage Seller to complete the redemption. Upon the exercise of the redemption right, the Company may, at its option, effect a direct exchange of the REO Common Units (and the corresponding shares of preferred stock (or fractions thereof) from the redeeming Vantage Seller. As a result, the Company expects that over time it will have an increasing economic interest in Rice Energy Operating as the Vantage Sellers elect to exercise their redemption right. Moreover, any transfers of Common Units by the Vantage Sellers (other than permitted transfers to affiliates) must be approved by the Company. The Company intends to retain full voting and management control over Rice Energy Operating. The Company’s subsidiaries that comprise its Rice Midstream Holdings segment and Rice Midstream Partners segment are unrestricted subsidiaries under the indentures governing the Notes and consequently are not Guarantors. In accordance with positions established by the SEC, the following shows separate financial information with respect to the Company, Rice Energy Operating and the Guarantors and the Non-Guarantor subsidiaries. Separate financial statements for Rice Energy Operating will be provided in Rice Energy Operating’s Annual Report on Form 10-K. The principal elimination entries below eliminate investment in subsidiaries and certain intercompany balances and transactions. Balance Sheet as of December 31, 2016 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Assets Current assets: Cash $ 2,756 $ 230,944 $ 164,522 $ 71,821 $ — $ 470,043 Accounts receivable 22,525 — 201,122 28,990 (34,012 ) 218,625 Receivable from affiliate — — — — Prepaid expenses, deposits and other 2,651 — 2,214 194 — 5,059 Derivative instruments — 689 — — — 689 Total current assets 27,932 231,633 367,858 101,005 (34,012 ) 694,416 Gas collateral account — — 5,220 112 — 5,332 Investments in subsidiaries 2,928,250 4,406,023 6,101 — (7,340,374 ) — Property, plant and equipment, net 25,622 — 4,947,518 1,203,047 (58,275 ) 6,117,912 Deferred financing costs, net — 21,372 — 15,012 — 36,384 Goodwill — 384,430 — 494,581 — 879,011 Intangible assets, net — — — 44,525 — 44,525 Derivative instruments 138 27,894 11,296 — — 39,328 Other non-current assets — — 614 — — 614 Total assets $ 2,981,942 $ 5,071,352 $ 5,338,607 $ 1,858,282 $ (7,432,661 ) $ 7,817,522 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 926 $ — $ 8,724 $ 8,594 $ — $ 18,244 Royalties payables — — 87,098 — — 87,098 Accrued capital expenditures — — 89,403 35,297 — 124,700 Leasehold payables — — 22,869 — — 22,869 Derivative instruments — 72,391 66,997 — — 139,388 Other accrued liabilities 54,064 18,994 84,950 16,451 (34,012 ) 140,447 Total current liabilities 54,990 91,385 360,041 60,342 (34,012 ) 532,746 Long-term liabilities: Long-term debt — 1,279,481 — 243,000 — 1,522,481 Leasehold payable — — 9,237 — — 9,237 Deferred tax liabilities — 26,561 209,276 122,789 — 358,626 Derivative instruments — 9,766 16,711 — — 26,477 Other long-term liabilities 8,858 — 66,949 5,541 — 81,348 Total liabilities 63,848 1,407,193 662,214 431,672 (34,012 ) 2,530,915 Mezzanine equity: Redeemable noncontrolling interest — — — 382,525 — 382,525 Stockholders’ equity before noncontrolling interest 2,972,578 2,928,250 4,676,393 (270,370 ) (7,398,649 ) 2,908,202 Noncontrolling interests in consolidated subsidiaries (54,484 ) 735,909 — 1,314,455 — 1,995,880 Total liabilities and stockholders’ equity $ 2,981,942 $ 5,071,352 $ 5,338,607 $ 1,858,282 $ (7,432,661 ) $ 7,817,522 Balance Sheet as of December 31, 2015 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Assets Current assets: Cash $ 78,474 $ 2 $ 57,798 $ 15,627 $ — $ 151,901 Accounts receivable 27,817 — 140,493 18,675 (32,171 ) 154,814 Prepaid expenses, deposits and other 4,376 — 817 295 — 5,488 Derivative instruments — 47,262 139,698 — — 186,960 Total current assets 110,667 47,264 338,806 34,597 (32,171 ) 499,163 Gas collateral account — — 3,995 82 — 4,077 Investments in subsidiaries 1,200,143 2,378,292 — — (3,578,435 ) — Property, plant and equipment, net 21,443 — 2,382,878 865,040 (26,230 ) 3,243,131 Deferred financing costs, net — 3,896 — 4,915 — 8,811 Goodwill — — — 39,142 — 39,142 Intangible assets, net — — — 46,159 — 46,159 Derivative instruments — 29,972 75,973 — — 105,945 Other non-current assets $ — 2,618 52 — — 2,670 Total assets $ 1,332,253 $ 2,462,042 $ 2,801,704 $ 989,935 $ (3,636,836 ) $ 3,949,098 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 4,179 $ — $ 48,191 $ 31,183 $ — $ 83,553 Royalties payables — — 40,572 — — 40,572 Accrued capital expenditures — — 45,240 34,507 — 79,747 Leasehold payables — — 17,338 — — 17,338 Derivative instruments — 132 367 — — 499 Other accrued liabilities 21,946 14,208 71,282 3,367 (32,171 ) 78,632 Total current liabilities 26,125 14,340 222,990 69,057 (32,171 ) 300,341 Long-term liabilities: Long-term debt — 1,275,790 — 160,000 — 1,435,790 Leasehold payable — — 6,289 — — 6,289 Deferred tax liabilities — (47,663 ) 299,741 19,910 — 271,988 Derivative liabilities — 16,344 — — — 16,344 Other — 3,088 7,661 3,129 — 13,878 Total liabilities 26,125 1,261,899 536,681 252,096 (32,171 ) 2,044,630 Stockholders’ equity before noncontrolling interest 1,306,128 1,200,143 2,265,023 113,268 (3,604,665 ) 1,279,897 Noncontrolling interests in consolidated subsidiaries — — — 624,571 — 624,571 Total liabilities and stockholders’ equity $ 1,332,253 $ 2,462,042 $ 2,801,704 $ 989,935 $ (3,636,836 ) $ 3,949,098 Statement of Operations for the Year Ended December 31, 2016 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ — $ 653,441 $ — $ — $ 653,441 Gathering, compression and water services — — — 265,556 (164,499 ) 101,057 Other revenue — — 24,408 — — 24,408 Total operating revenues — — 677,849 265,556 (164,499 ) 778,906 Operating expenses: Lease operating — — 50,708 — (134 ) 50,574 Gathering, compression and transportation — — 232,478 — (108,626 ) 123,852 Production taxes and impact fees — — 13,866 — — 13,866 Exploration — — 15,159 — — 15,159 Midstream operation and maintenance — — — 27,618 (4,403 ) 23,215 Incentive unit expense — — 49,426 2,335 — 51,761 Impairment of gas properties — 20,853 — — 20,853 Impairment of fixed assets — — 23,057 — 23,057 General and administrative — — 78,094 39,999 — 118,093 Depreciation, depletion and amortization — — 350,865 31,298 (13,708 ) 368,455 Acquisition expense — — 5,500 609 — 6,109 Amortization of intangible assets — — — 1,634 — 1,634 Other expense — — 25,652 1,656 — 27,308 Total operating expenses — — 842,601 128,206 (126,871 ) 843,936 Operating (loss) income — — (164,752 ) 137,350 (37,628 ) (65,030 ) Interest expense — (91,734 ) (68 ) (7,825 ) — (99,627 ) Other income (expense) — (898 ) 2,206 98 — 1,406 Gain on derivative instruments — (83,324 ) (136,912 ) — — (220,236 ) Amortization of deferred financing costs — (5,283 ) — (2,262 ) — (7,545 ) Equity in income (loss) in affiliate (324,235 ) (322,022 ) (3,197 ) — 649,454 — (Loss) income before income taxes (324,235 ) (503,261 ) (302,723 ) 127,361 611,826 (391,032 ) Income tax benefit (expense) — 179,026 (8,242 ) (28,572 ) — 142,212 Net (loss) income (324,235 ) (324,235 ) (310,965 ) 98,789 611,826 (248,820 ) Less: net (income) loss attributable to noncontrolling interests 54,484 — — (75,415 ) — (20,931 ) Net (loss) income attributable to Rice Energy (269,751 ) (324,235 ) (310,965 ) 23,374 611,826 (269,751 ) Less: accretion and preferred dividends on redeemable noncontrolling interests — — (28,450 ) — — (28,450 ) Net (loss) income attributable to Rice Energy Inc. common stockholders $ (269,751 ) $ (324,235 ) $ (339,415 ) $ 23,374 $ 611,826 $ (298,201 ) Statement of Operations for the Year Ended December 31, 2015 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ — $ 446,515 $ — $ — $ 446,515 Gathering, compression and water services — — — 141,823 (92,644 ) 49,179 Other revenue — — 6,447 — — 6,447 Total operating revenues — — 452,962 141,823 (92,644 ) 502,141 Operating expenses: Lease operating — — 44,356 — — 44,356 Gathering, compression and transportation — — 150,015 — (65,308 ) 84,707 Production taxes and impact fees — — 7,609 — — 7,609 Exploration — — 3,137 — — 3,137 Midstream operation and maintenance — — — 16,988 — 16,988 Incentive unit expense — — 33,873 2,224 — 36,097 Impairment of gas properties — — 18,250 — — 18,250 Impairment of goodwill — — 294,908 — — 294,908 General and administrative — — 78,592 24,446 — 103,038 Depreciation, depletion and amortization — — 304,703 19,185 (1,104 ) 322,784 Acquisition expense — — 107 1,128 — 1,235 Amortization of intangible assets — — — 1,632 — 1,632 Other expense — — 5,075 492 — 5,567 Total operating expenses — — 940,625 66,095 (66,412 ) 940,308 Operating (loss) income — — (487,663 ) 75,728 (26,232 ) (438,167 ) Interest expense — (82,664 ) (166 ) (4,616 ) — (87,446 ) Other income — 615 441 52 — 1,108 Gain on derivative instruments — 68,248 205,500 — — 273,748 Amortization of deferred financing costs — (4,072 ) — (1,052 ) — (5,124 ) Equity in income (loss) of joint ventures and subsidiaries (291,336 ) (287,044 ) — — 578,380 — (Loss) income before income taxes (291,336 ) (304,917 ) (281,888 ) 70,112 552,148 (255,881 ) Income tax benefit (expense) — 13,581 (16,404 ) (9,295 ) — (12,118 ) Net (loss) income (291,336 ) (291,336 ) (298,292 ) 60,817 552,148 (267,999 ) Less: net income attributable to noncontrolling interests — — — (23,337 ) — (23,337 ) Net (loss) income attributable to Rice Energy $ (291,336 ) $ (291,336 ) $ (298,292 ) $ 37,480 $ 552,148 $ (291,336 ) Statement of Operations for the Year Ended December 31, 2014 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ — $ 359,201 $ — $ — $ 359,201 Gathering, compression and water services — — — 7,300 (1,796 ) 5,504 Other revenue — — 26,237 — — 26,237 Total operating revenues — — 385,438 7,300 (1,796 ) 390,942 Operating expenses: Lease operating — — 24,971 — — 24,971 Gathering, compression and transportation — — 37,180 (1,562 ) 35,618 Production taxes and impact fees — — 4,647 — — 4,647 Exploration — — 4,018 — 4,018 Midstream operation and maintenance — — — 4,607 — 4,607 Incentive unit expense — — 86,020 19,941 — 105,961 General and administrative — — 45,268 16,303 — 61,570 Depreciation, depletion and amortization — — 153,282 2,988 — 156,270 Acquisition expense — — 820 1,519 — 2,339 Amortization of intangible assets — — — 1,156 — 1,156 Other expenses — — — 207 — 207 Total operating expenses — — 356,206 46,721 (1,562 ) 401,364 Operating income (loss) — — 29,232 (39,421 ) (234 ) (10,422 ) Interest expense — (27,177 ) (10,130 ) (12,884 ) — (50,191 ) Gain on purchase of Marcellus joint venture — — 203,579 — — 203,579 Other income (loss) — 247 754 (108 ) — 893 Gain on derivative instruments — 55,580 130,897 — — 186,477 Amortization of deferred financing costs — (2,006 ) (489 ) — — (2,495 ) Loss on extinguishment of debt — — (7,654 ) — — (7,654 ) Write-off of deferred financing costs — — (6,896 ) — — (6,896 ) Equity in income (loss) of joint ventures and subsidiaries 218,454 184,679 (2,656 ) — (403,132 ) (2,656 ) Income (loss) before income taxes 218,454 211,323 336,637 (52,413 ) (403,366 ) 310,635 Income tax expense — 7,131 (107,171 ) 8,440 — (91,600 ) Net income (loss) 218,454 218,454 229,466 (43,973 ) (403,366 ) 219,035 Less: net income attributable to noncontrolling interests — — — (581 ) — (581 ) Net income (loss) attributable to Rice Energy $ 218,454 $ 218,454 $ 229,466 $ (44,554 ) $ (403,366 ) $ 218,454 Condensed Statement of Cash Flows for the Year Ended December 31, 2016 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Net cash provided by (used in) operating activities $ 44,594 $ (94,101 ) $ 396,899 $ 189,958 $ (51,465 ) $ 485,885 Capital expenditures for property and equipment (2,982 ) — (688,998 ) (234,285 ) 45,751 (880,514 ) Capital expenditures for acquisitions — (381,080 ) (44,266 ) (611,700 ) — (1,037,046 ) Investment in subsidiaries (1,572,040 ) (139,499 ) (5,714 ) — 1,717,253 — Net cash used in investing activities (1,575,022 ) (520,579 ) (738,978 ) (845,985 ) 1,763,004 (1,917,560 ) Proceeds from borrowings — — — 338,000 — 338,000 Repayments of debt obligations (1,189 ) (706,911 ) — (255,001 ) — (963,101 ) Debt issuance costs — (19,507 ) — (12,464 ) — (31,971 ) Distributions to the Partnership's public unitholders — — — (47,875 ) — (47,875 ) Proceeds from the issuance of common stock, net of offering costs 1,465,671 — — — — 1,465,671 Proceeds from issuance of common units sold by RMP, net of offering costs — — — 620,330 — 620,330 Proceeds from conversion of warrants 89 — — — — 89 Proceeds from issuance of non-controlling redeemable interest — — — 368,747 — 368,747 Contribution to Strike Force Midstream by Gulfport Midstream — — — 11,030 — 11,030 Preferred dividends to redeemable noncontrolling interest holders — — — (6,900 ) — (6,900 ) Employee tax withholding for settlement of stock compensation award vestings (9,861 ) — — 5,658 — (4,203 ) Contributions from parent — 1,572,040 448,803 (309,304 ) (1,711,539 ) — Net cash provided by financing activities 1,454,710 845,622 448,803 712,221 (1,711,539 ) 1,749,817 Increase (decrease) in cash (75,718 ) 230,942 106,724 56,194 — 318,142 Cash, beginning of year 78,474 2 57,798 15,627 — 151,901 Cash, end of year $ 2,756 $ 230,944 $ 164,522 $ 71,821 $ — $ 470,043 Condensed Statement of Cash Flows for the Year Ended December 31, 2015 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Net cash provided by (used in) operating activities $ (41,029 ) $ (18,178 ) $ 413,984 $ 85,546 $ (27,336 ) $ 412,987 Capital expenditures for property and equipment (9,775 ) — (859,359 ) (404,476 ) 27,336 (1,246,274 ) Investment in subsidiaries (52,558 ) (421,068 ) — — 473,626 — Acquisition of Greene County assets — — 19,054 — — 19,054 Proceeds from sale of interest in gas properties — — 10,201 — — 10,201 Net cash used in investing activities (62,333 ) (421,068 ) (830,104 ) (404,476 ) 500,962 (1,217,019 ) Proceeds from borrowings — 411,932 — 502,000 — 913,932 Repayments of debt obligations — (15,922 ) (697 ) (342,000 ) — (358,619 ) Distributions to the Partnership’s public unitholders — — — (17,017 ) — (17,017 ) Debt issuance costs — (9,320 ) — (946 ) — (10,266 ) Proceeds from issuance of common stock sold in our IPO, net of offering costs — — — (129 ) — (129 ) Proceeds from issuance of common units sold by RMP, net of offering costs — — — 171,902 — 171,902 Contributions from parent, net — 52,558 432,682 (11,614 ) (473,626 ) — Net cash provided by financing activities — 439,248 431,985 302,196 (473,626 ) 699,803 Increase (decrease) in cash (103,362 ) 2 15,865 (16,734 ) — (104,229 ) Cash, beginning of year 181,836 — 41,933 32,361 — 256,130 Cash, end of year $ 78,474 $ 2 $ 57,798 $ 15,627 $ — $ 151,901 Condensed Statement of Cash Flows for the Year Ended December 31, 2014 (in thousands) Rice Energy Inc. Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Net cash provided by (used in) operating activities $ 15,894 $ 246 $ 95,372 $ (26,437 ) $ — $ 85,075 Investment in subsidiaries (1,033,221 ) (1,913,945 ) — — 2,947,166 — Capital expenditures for property and equipment (8,588 ) — (684,541 ) (277,145 ) — (970,274 ) Capital expenditures for acquisitions — — (357,635 ) (166,447 ) — (524,082 ) Proceeds from sale of interest in gas properties — — 12,891 — — 12,891 Net cash used in investing activities (1,041,809 ) (1,913,945 ) (1,029,285 ) (443,592 ) 2,947,166 (1,481,465 ) Proceeds from borrowings — 900,000 190,000 — — 1,090,000 Repayments of debt obligations — — (689,873 ) — — (689,873 ) Restricted cash for convertible debt — — 8,268 — — 8,268 Debt issuance costs — (19,521 ) — (5,022 ) — (24,543 ) Proceeds from conversion of warrants 1,975 — — — — 1,975 Proceeds from issuance of common stock, net of offering costs 793,342 — — — — 793,342 Proceeds from issuance of common units sold in RMP IPO, net of offering costs — — — 441,739 — 441,739 Distributions to parent 412,434 — — (412,434 ) — — Contributions from parent — 1,033,220 1,436,043 477,903 (2,947,166 ) — Net cash provided by financing activities 1,207,751 1,913,699 944,438 502,186 (2,947,166 ) 1,620,908 Increase (decrease) in cash 181,836 — 10,525 32,157 — 224,518 Cash, beginning of year — — 31,408 204 — 31,612 Cash, end of year $ 181,836 $ — $ 41,933 $ 32,361 $ — $ 256,130 |