Informing Landowners & Lease Holders of Marcellus Shale

by S. Tom Bond on August 22, 2019

Toby Rice is the new Chief Executive of EQT

How Toby Rice is Going to Conquer the World as EQT CEO

Essay by S. Tom Bond, FrackCheckWV, August 21, 2019

Monday night August 19, 2019, EQT held it’s third of four Landowner Town Hall meetings at Bridgeport, WV. It would be incorrect to say new CEO Toby Z. Rice was the main feature – in fact, he was the whole show. He talked for 40 minutes and answered questions from the crowd for 20, then spent the next hour talking to people individually.

The background first. The four Rice brothers along with a friend (and their dad, who put up much of the money) started Rice Energy in 2008. Then they pushed it into a company with 600 employees with a 250,000 acre position in the Marcellus and Utica field, and in 2017 sold it to EQT for $6.7 billion. Perhaps this was too much for EQT. For the third quarter of 2018, EQT announced disastrous results. It had overspent its capital budget by $300 million! The stock went down 39%.

After the sale to EQT, Rice maintained an office in Carnegie, PA, where there is a concentration of shale fracking companies. They played a smaller game with computer control of fracking technology and other interests.

As a result of the sale to EQT, the Rice family had gained a 3% interest in EQT. When the Board of Directors was elected on July 10 of this year, a Rice supported group was elected overwhelmingly, and they in turn named Toby Rice President and Chief Operating Officer.

The Monday night landowner message was about people. We care about our landowners came out loud and clear, first and foremost. EQT wants to interact with landowners and avoid the kinds of complaints heard about the industry. Families are important, and the Rice family was close-knit.

Toby told about his baseball days and how he would be a professional, but didn’t quite make it. Then oil and gas became an obsession with them. Rice like the technology and keep in touch with the latest. Rice industrial success in drilling and with control is what they have to offer.

He claimed a deep commitment to safety and health for workers, landowners and the community. This will be achieved by careful planning, proper maintenance, thorough training. Of course the realigned company plans to always use best practices.

EQT is able to sell its natural gas for more than other companies, he claimed, and showed a chart of prices. They plan to lower cost of production by careful planning so that laterals are longer, they are parallel, and fewer drill pads are needed. This makes more efficient use of acrage, eliminating large unfrocked spaces. The combined acreage of the Rice leases in the acquisition with the older area held by EQT makes this easier too, he claimed. Still another objective of planning and big pads is to drill one well after another on each pad to avoid moving around and shut in wells that occur from shifting from one pad to another.

EQT will help America “maintain energy dominance” and there will be natural gas for export.

When Toby started leasing for Rice Energy, he missed the core (high return) area, he told the crowd, but after he shifted to the core he leased one 800 acre tract for $200 an acre. Then a Range Resources company lease agent came along and offered the man $2000 an acre. However, the man stayed with Toby because the Rice lease was better overall. It would deliver more to the landowner when the gas was taken out. It helped with capital requirements, too.

EQT will emphasize teamwork between the company, the landowners, the workers and the community. The company will take care of details. They want EQT to be the “operator of choice” for lessors. They work for “transparency,” understanding between all stakeholders.

In the last 20 minutes there were several complaints about fracking from the audience. One man said he had an organic farm and fracking cost him his organic certification and his livelihood. Mr. Rice’s response was “I’m sorry,” and quickly went on to the next question. One woman complained her well water contaminated by a nearby well. Rice firmly and forcefully said something to the effect “Well water is never contaminated by fracking,” and moved on. In view of all the anecdotal evidence, the crowd should have roared, but it didn’t.

Another woman complained a 42 inch line went through her farm and decreased its value by half and subject whatever family lived on it to being burned up. Rice said, “It shouldn’t,” and went on. There several questions to which he could give happy answers and a few gratuitous complementary statements. You have to wonder if those was part of his long range planning, too.

After the end of speaking to the whole audience for an hour a line formed of people to talk to him individually. I maneuvered into the line and asked about global warming. He seemed surprised and told me that the world needed the energy, as though that made global warming go away. No rationalization, no relief, no apology.

Today I looked up Toby Rice’s compensation on the net. I could find the figure for the last full year of Rice energy.1 It was $3,346, 007 with stock, etc. thrown in. Enough to make him a multi-millionaire each year.

The figure is there for what he is getting from EQT, if you want to look, but it costs a subscription, and I didn’t bother. Far more, no doubt.

Who do you believe about global warming, the guys who have the education and have done the research, or the guys who stand to loose so much?

(1) https://www1.salary.com/Toby-Z-Rice-Salary-Bonus-Stock-Options-for-RICE-ENERGY-INC.html

(2) https://www.bizjournals.com/pittsburgh/news/2019/07/10/heres-how-much-toby-rice-is-getting-paid-to-be-eqt.html

{ 3 comments… read them below or add one }

Mary Wildfire August 23, 2019 at 9:33 am

RE: Toby Rice, EQT, public meeting in WV …

Well, sounds like it was a little less of dog-and-pony show than I expected, since he did allow audience questions all could hear.

But the way he dealt with complaints makes it clear that there is no sincerity here. He’s calculated that this little PR tour will help with community relations and is thus worth the time (maybe they get a tax write-off for it).

Things I’ve read elsewhere suggest he will not be able to turn EQT around into profitability; his explanation of why things will change with him at the helm had no more substance than they do here.

I’m disappointed that the crowd let him off so easy. I hope it’s not like that everywhere.

Mary Wildfire, Roane County, WV

Reply

MDN Abstract August 24, 2019 at 6:35 pm

EQT Plans to Make Money with $2/Mcf NatGas Price

From the Marcellus Drilling News (MDN), August 19, 2019

For years MDN has observed that Cabot Oil & Gas is one of the few Marcellus/Utica drilling companies that can “spin straw into gold”–meaning it makes money on selling natural gas even when the price of that gas is in the basement.

The new management at EQT aim to turn their company in a spinning-straw-into-gold company too. In a recent interview with the Pittsburgh Business Times, EQT CEO Toby Rice said his strategy for making $500 million in “free cash flow” within two years anticipates the price of natgas to be $2 per thousand cubic feet (Mcf).

Reply

WV EDITORIAL August 31, 2019 at 10:33 pm

Gas Industry Executive Right on Values

Editorial from the Wheeling WV Intelligencer, Aug 31, 2019

West Virginians are big on the concept of being good neighbors. So, when the head of the second-largest natural gas producer in our state talks about “old-school values,” we do not feel any need to applaud — because that is what we expect from other people.

Nevertheless, recent comments by EQT Corp. CEO Toby Rice were good to hear. During a panel discussion at the state Chamber of Commerce’s annual business summit this week, Rice vowed that EQT will take a new approach to many of its operations.

“We’re really talking about our values,” Rice said, according to the Charleston Gazette-Mail.

Building trust with landowners and minimizing the adverse effects of drilling were two specifics Rice cited. He pledged to adopt a “greener, friendlier approach to drilling.” We hope he can make that happen at EQT.

It appears most Mountain State residents believe the natural gas revolution in our state is a good thing — but many are critical of damage to roads, abusive practices toward some landowners and damage to the environment involving multiple companies, not just EQT.

Just named CEO of the corporation this summer, Rice is still new to the EQT culture, though he has been involved in the energy industry for more than a decade. He may face resistance from some in the company who feel the approach he has espoused is not the way to maximize profits.

But in the long run, Rice is right. In many ways, gas producers depend on trust and goodwill from those who own mineral rights, landowners, local government officials and state regulatory agencies. If EQT is to remain a major player in the West Virginia energy industry, the path outlined by its new CEO is the only way to go.

https://www.theintelligencer.net/opinion/editorials/2019/08/gas-executive-right-on-values/

Reply

Leave a Comment

Previous post:

Next post: