RICE MIDSTREAM PARTNERS LP
400 Woodcliff Drive
Canonsburg, Pennsylvania 15317
November 24, 2014
Mara L. Ransom
Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-3561
| Re: | Rice Midstream Partners LP |
Registration Statement on Form S-1
Filed November 6, 2014
File No. 333-199932
Ladies and Gentlemen:
Set forth below are the responses of Rice Midstream Partners LP (the “Company”, “we,” “us” or “our”), to comments received from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated November 20, 2014, with respect to the Registration Statement on Form S-1, File No. 333-199932 (the “Registration Statement”), filed with the Commission on November 6, 2014.
Concurrently with the submission of this letter, we are filing Amendment No. 1 to the Registration Statement (“Amendment No. 1”) via EDGAR.
For the Staff’s convenience, each response is prefaced by the exact text of the Staff’s corresponding comment in bold, italicized text. All references to pages numbers and captions correspond to the text of the Staff’s comment or the Registration Statement, unless otherwise specified. Capitalized terms used in this response letter, but not defined herein, have the meanings given to them in the Registration Statement.
Dilution, page 58
| 1. | We note your responses to comments 12 and 13 in our letter dated October 31, 2014 and your inclusion of the decrease in net tangible book value per common unit attributable to the distribution to Rice Energy. We reissue our comment and ask that you present a separate line for each item impacting the change in pro forma net tangible book value. Further, please explain why you have not reduced Rice Energy’s consideration for your distribution of the water systems to be retained by Rice Energy or revise footnote (2) on page 59 to also include the distribution of the water systems. |
Securities and Exchange Commission
November 24, 2014
Page 2
RESPONSE:
We have revised our disclosure on pages 59-60 of Amendment No. 1 accordingly.
Unaudited Pro Forma Cash Available for Distribution for the Year Ended December 31, 2013 and the Twelve Months Ended June 30, 2014, page 62
| 2. | Please ensure pro forma adjusted EBITDA for the year ended December 31, 2013 is mathematically correct. |
RESPONSE:
We have revised our disclosure on page 66 of Amendment No. 1 accordingly.
Rice Midstream Partners Predecessor Audited Annual Financial Statements
2. Summary of Significant Accounting Policies, page F-16
Property and Equipment, page F-16
| 3. | We note your response to comment 29 in our letter dated October 31, 2014. Please also provide disclosure showing the major classes of depreciable assets included within Property and Equipment for the unaudited interim period. Reference is made to Rule 10-01(a)(5) of Regulation S-X. |
RESPONSE:
We have revised our disclosure on page F-26 of Amendment No. 1 accordingly.
Rice Midstream Partners Predecessor Unaudited Interim Financial Statements
3. Property and Equipment, page F-26
| 4. | We note your response to comment 32 in our letter dated October 31, 2014. In your response you stated $56.4 million of the increase in property and equipment related to your acquisition of the Momentum Assets and we note capital expenditures of $60,123 on your cash flow statement for the six months ended June 30, 2014 along with accrued capital expenditures of $3,490 on your balance sheet as of June 30, 2014. Please provide us a rollforward of your property and equipment that reconciles with amounts disclosed in your cash flow statement and amounts accrued on your balance sheet. |
RESPONSE:
We acknowledge the Staff’s comment and have provided the requested roll-forward. As shown below, the cash flows from investing activities for the periods in question include the acquisition costs for each of the Momentum acquisition and the acquisition of the Marcellus joint venture. These acquisitions included intangible customer contract and goodwill components, respectively, which resulted in increased cash flows from investing activities relative to the net book value increase. The roll-forward below outlines the calculation of the change in net tangible book value for the periods shown as well as the additional components that are used to calculate amounts shown on the cash flow statement for the applicable periods.
Securities and Exchange Commission
November 24, 2014
Page 3
| 12/31/2013 | 6/30/2014 | 9/30/2014 | ||||||||||||||||||||||
Property and equipment, net at beginning of period | $ | 30,283 | $ | 72,526 | $ | 72,526 | ||||||||||||||||||
Property and equipment, net at end of period | 72,526 | 197,722 | 248,808 | |||||||||||||||||||||
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Change in net book value of property and equipment | $ | 42,243 | $ | 125,196 | $ | 176,282 | ||||||||||||||||||
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Property and Equipment Reconciliation | ||||||||||||||||||||||||
| Balance Sheet Reconciliation | Cash Flow Components | Balance Sheet Reconciliation | Cash Flow Components | Balance Sheet Reconciliation | Cash Flow Components | |||||||||||||||||||
Momentum acquisition: | ||||||||||||||||||||||||
In-service property and equipment | $ | — | $ | — | $ | 56,375 | $ | 56,375 | $ | 56,375 | $ | 56,375 | ||||||||||||
Right-of-way assets | — | — | 6,126 | 6,126 | 6,126 | 6,126 | ||||||||||||||||||
Intangible customer contracts (1) | — | 48,947 | 48,947 | |||||||||||||||||||||
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Cash outflow from investing activities | $ | — | $ | — | $ | 62,501 | $ | 111,448 | $ | 62,501 | $ | 111,448 | ||||||||||||
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Marcellus joint venture acquisition: | ||||||||||||||||||||||||
Property and equipment (2) | — | — | — | — | 25,669 | 25,669 | ||||||||||||||||||
Goodwill allocation (3) | — | — | 34,817 | |||||||||||||||||||||
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Cash outflow from investing activities | $ | — | $ | — | $ | — | $ | — | $ | 25,669 | $ | 60,486 | ||||||||||||
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Capital expenditures (cash outflow from investing activities) | $ | 43,272 | $ | 60,123 | $ | 62,945 | ||||||||||||||||||
Change in accrued capital expenditures | $ | (207 | ) | $ | 2,900 | $ | 22,217 | |||||||||||||||||
Change in accounts payable related to capital expenditures | $ | 364 | $ | 1,101 | $ | 5,493 | ||||||||||||||||||
Depreciation expense incurred during the period | $ | (1,186 | ) | $ | (1,429 | ) | $ | (2,543 | ) | |||||||||||||||
Change in net book value of property and equipment | $ | 42,243 | $ | 125,196 | $ | 176,282 | ||||||||||||||||||
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| (1) | This amount is a component of the change to Intangible assets, net on our Balance Sheets dated June 30, 2014 and September 30, 2014. |
| (2) | The net book value of property and equipment acquired in the Marcellus joint venture acquisition was included in capital expenditures on the cash flow statement at June 30, 2014 as the purchase accounting had not been finalized. |
| (3) | This amount is a component of the change to Goodwill on our Balance Sheet dated September 30, 2014. |
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Securities and Exchange Commission
November 24, 2014
Page 4
Please direct any questions that you have with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact Douglas E. McWilliams of Vinson & Elkins L.L.P. at (713) 758-3613.
| Very truly yours, | ||
| RICE MIDSTREAM PARTNERS LP | ||
| By: | /s/ Daniel J. Rice IV | |
| Name: | Daniel J. Rice IV | |
| Title: | Chief Executive Officer | |
Enclosures
