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Page
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PART I
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PART II
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PART III
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PART IV
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•
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“Combined Year” refers to the combined periods from January 1, 2017 to November 12, 2017 and from November 13, 2017 to December 31, 2017.
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“EQT” refers to EQT Corporation, which effective November 13, 2017 indirectly owns the general partner interest, a limited partner interest and all of the incentive distribution rights in the Partnership, and its consolidated subsidiaries;
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“GP Holdings” refers to Rice Midstream GP Holdings LP, a wholly-owned subsidiary of EQT;
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“our general partner” or “Midstream Management” refers to Rice Midstream Management LLC, a wholly-owned subsidiary of EQT;
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“Rice Energy” refers to Rice Energy Inc., which indirectly owned the Partnership for the periods prior to November 13, 2017, and its consolidated subsidiaries;
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“RMP,” “Partnership,” “we,” “our,” “us” or like terms refers to Rice Midstream Partners LP and its consolidated subsidiaries;
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“Vantage Midstream Asset Acquisition” refers to the Partnership’s acquisition from Rice Energy of the Vantage Midstream Entities;
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“Vantage Midstream Entities” refers collectively to Vantage Energy II Access, LLC and Vista Gathering, LLC, each of which is a wholly-owned subsidiary of the Partnership;
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“Appalachian Basin” refers to the area of the United States composed of those portions of West Virginia, Pennsylvania, Ohio, Maryland, Kentucky and Virginia that lie in the Appalachian Mountains; and
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“Disclosure Document” means EQT’s 2018 Proxy Statement or amendments to its Annual Report on Form 10-K for the year ended December 31, 2017, as applicable, in each case as filed with the Securities and Exchange Commission (SEC).
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perform ongoing assessments of pipeline integrity;
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identify and characterize applicable threats to pipeline segments that could impact an HCA;
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improve data collection, integration and analysis;
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repair and remediate pipelines as necessary; and
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implement preventive and mitigating actions.
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requiring the installation of pollution-control equipment, imposing emission or discharge limits or otherwise restricting the way we operate resulting in additional costs to our operations;
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limiting or prohibiting construction activities in areas, such as air quality nonattainment areas, wetlands, coastal regions, endangered species habitat and other protected areas;
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delaying system modification or upgrades during review of permit applications and revisions;
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requiring investigatory and remedial actions to mitigate discharges, releases or pollution conditions associated with our operations or attributable to former operations; and
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enjoining operations deemed to be in non-compliance with permits issued pursuant to, or regulatory requirements imposed by, such environmental laws and regulations.
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Successor
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Predecessor
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Period from
November 13, 2017 to December 31, 2017 |
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Period from
January 1, 2017 to November 12, 2017 |
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Years Ended December 31,
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Operating revenues:
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2016
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2015
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||||||
Gathering and compression
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69
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%
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67
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%
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66
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%
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67
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%
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Water services
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31
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%
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33
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%
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34
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%
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33
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%
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•
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natural gas price volatility or a sustained period of lower commodity prices may have an adverse effect on EQT's drilling operations, revenue, profitability, future rate of growth and liquidity;
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a reduction in or slowing of EQT’s anticipated drilling and production schedule, which would directly and adversely impact demand for our services;
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infrastructure capacity constraints and interruptions;
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risks associated with the operation of EQT's wells, pipelines and facilities, including potential environmental liabilities;
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the availability of capital on a satisfactory economic basis to fund EQT's operations;
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EQT's ability to identify exploration, development and production opportunities based on market conditions;
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uncertainties inherent in projecting future rates of production;
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EQT's ability to develop additional reserves that are economically recoverable, to optimize existing well production and to sustain production;
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adverse effects of governmental and environmental regulation, changes in tax laws and negative public perception regarding EQT's operations;
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the loss of key personnel; and
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risk associated with cyber security threats.
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the volume of natural gas we gather and compress;
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the volume of fresh water we distribute and produced water we handle;
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the rates we charge for our gathering services and water services;
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the market price of natural gas and its effect on EQT’s and third parties’ drilling schedules as well as produced volumes;
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EQT’s and our third-party customers’ ability to fund their drilling programs;
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adverse weather conditions;
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the level of our operating, maintenance and general and administrative costs;
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regulatory action affecting the supply of, or demand for, natural gas, the rates we can charge for our services, how we contract for services, our existing contracts, our operating costs or our operating flexibility; and
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prevailing economic conditions.
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the level, timing and amounts of capital expenditures we make, which amounts could be impacted by costs of labor and materials;
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our debt service requirements and other liabilities;
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our ability to make borrowings under our revolving credit facility to pay distributions;
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fluctuations in our working capital needs;
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restrictions on distributions contained in any of our debt agreements;
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the cost of acquisitions, if any;
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fees and expenses of our general partner and its affiliates (including EQT) we are required to reimburse;
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the amount of cash reserves established by our general partner; and
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other business risks affecting our cash levels.
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the availability and cost of capital;
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prevailing and projected natural gas, NGL and oil prices;
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the proximity, capacity, cost and availability of gathering and transportation facilities, and other factors that result in differentials to benchmark prices;
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demand for natural gas, NGLs and oil;
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levels of reserves;
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geologic considerations;
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environmental or other governmental regulations, including the availability of drilling permits, the regulation of hydraulic fracturing, the potential removal of certain federal income tax deductions with respect to natural gas and oil exploration and development or additional state taxes on natural gas extraction; and
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the costs of producing the natural gas and the availability and costs of drilling rigs and crews and other equipment.
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incur or guarantee additional debt;
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redeem or repurchase units or make distributions under certain circumstances;
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make certain investments and acquisitions;
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incur certain liens or permit them to exist;
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enter into certain types of transactions with affiliates;
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merge or consolidate with another company; and
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transfer, sell or otherwise dispose of assets.
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures (including required well pad connections and well connections pursuant to our gas gathering and compression agreements as well as acquisitions) or other purposes may be impaired or such financing may not be available on favorable terms;
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our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make interest payments on our debt;
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we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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our flexibility in responding to changing business and economic conditions may be limited.
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mistaken assumptions about volumes, revenue and costs, including synergies and potential growth;
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an inability to secure adequate customer commitments to use the acquired systems or facilities;
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an inability to integrate successfully the assets or businesses we acquire;
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the assumption of unknown liabilities for which we are not indemnified or for which our indemnity is inadequate;
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limitations on rights to indemnity from the seller;
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mistaken assumptions about the overall costs of equity or debt;
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the diversion of management’s and employees’ attention from other business concerns; and
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unforeseen difficulties operating in new geographic areas or business lines.
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perform ongoing assessments of pipeline integrity;
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identify and characterize applicable threats to pipeline segments that could impact an HCA;
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improve data collection, integration and analysis;
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repair and remediate the pipeline as necessary; and
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implement preventive and mitigating actions.
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damage to pipelines, compressor stations, equipment and surrounding properties caused by hurricanes, earthquakes, tornadoes, floods, fires, landslides and other natural disasters and acts of sabotage and terrorism;
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damage from construction, farm and utility equipment, as well as other subsurface activity (for example, mine subsidence);
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leaks of natural gas or losses of natural gas as a result of the malfunction of equipment or facilities;
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ruptures and explosions;
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other hazards that could also result in personal injury and loss of life, pollution and suspension of operations; and
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hazards experienced by other operators that may affect our operations by instigating increased regulations and oversight.
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injury or loss of life;
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damage to and destruction of property, natural resources and equipment;
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pollution and other environmental damage;
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regulatory investigations and penalties;
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suspension of our operations; and
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repair and remediation costs.
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neither our partnership agreement nor any other agreement requires EQT to pursue a business strategy that favors us, and the directors and officers of EQT have a fiduciary duty to make these decisions in the best interests of EQT, which may be contrary to our interests. EQT may choose to shift the focus of its investment and growth to areas not served by our assets;
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EQT, as our anchor customer, has an economic incentive to cause us not to seek higher gathering fees and water service fees, even if such higher fees would reflect fees that could be obtained in arm’s-length, third-party transactions;
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EQT may choose to shift the focus of its investment and operations to areas not serviced by our assets, including areas serviced by EQM;
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EQT may choose to allocate capital and costs among EQGP, EQM and us in a manner that is not favorable to us;
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actions taken by our general partner may affect the amount of cash available to pay distributions to our unitholders;
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all of the officers and six of the directors of our general partner are also officers and/or directors of EQT and owe fiduciary duties to EQT; all of the officers and five of the directors of our general partner as also officers and/or directors of EQM’s general partner and owe fiduciary duties to EQM; and three of the officers and four of the directors of our general partner are also officers and/or directors of EQGP’s general partner and owe fiduciary duties to EQGP. The officers of our general partner also devote significant time to the business of EQT, EQM and EQGP and are compensated by EQT accordingly;
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our general partner is allowed to take into account the interests of parties other than us, such as EQT, in exercising certain rights under our partnership agreement, including with respect to conflicts of interest;
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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our general partner may cause us to borrow funds in order to permit the payment of cash distributions;
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disputes may arise under our commercial agreements with EQT and its affiliates;
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our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the level of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
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our general partner determines the amount and timing of any capital expenditure and the amount of estimated maintenance capital expenditures, which reduces operating surplus. The determination of estimated maintenance capital expenditures can affect the amount of cash from operating surplus that is distributed to our unitholders;
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our partnership agreement limits the liability of, and replaces the duties owed by, our general partner and also restricts the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty;
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common unitholders have no right to enforce obligations of our general partner and its affiliates under agreements with us;
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contracts between us, on the one hand, and our general partner and its affiliates, on the other, are not and will not be the result of arm’s-length negotiations;
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our partnership agreement permits us to distribute up to $35.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions to our general partner in respect of the general partner interest or our incentive distribution rights;
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our general partner determines which costs incurred by it and its affiliates are reimbursable by us;
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our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with its affiliates on our behalf;
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our general partner intends to limit its liability regarding our contractual and other obligations;
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our general partner may exercise its right to call and purchase common units if it and its affiliates own more than 80% of the common units;
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we may not choose to retain separate counsel for ourselves or for the holders of common units;
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our general partner’s affiliates, including EQT and EQM, may compete with us and may offer business opportunities and/or sell midstream assets to other affiliates or third parties without first offering us the right to bid for them; and
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the holder or holders of our incentive distribution rights may elect to cause us to issue common units to it in connection with a resetting of incentive distribution levels without the approval of our unitholders, which may result in lower distributions to our common unitholders in certain situations.
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•
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how to allocate business opportunities among us and its other affiliates, including EQT and EQM;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of the general partner;
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how to exercise its voting rights with respect to any units it owns;
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whether to exercise its registration rights; and
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•
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whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
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•
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provides that whenever our general partner, the board of directors of our general partner or any committee thereof (including the conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities, our general partner, the board of directors of our general partner and any committee thereof (including the conflicts committee) is required to make such determination, or take or decline to take such other action, in the absence of bad faith, and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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•
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provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith, meaning that it believed that the decision was not adverse to the interest of our partnership;
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•
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provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or their assignees resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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•
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provides that our general partner will not be in breach of its obligations under the partnership agreement or its fiduciary duties to us or our unitholders if a transaction with an affiliate or the resolution of a conflict of interest is:
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•
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval; or
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•
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approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates.
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•
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each unitholder’s proportionate ownership interest in us will decrease;
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•
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the amount of cash available for distribution on each unit may decrease;
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•
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because the amount payable to holders of incentive distribution rights is based on a percentage of the total distributable cash flow, the distributions to holders of incentive distribution rights will increase even if the per unit distribution on common units remains the same;
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•
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the ratio of taxable income to distributions may increase;
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•
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of the common units may decline.
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•
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a court or government agency determined that we were conducting business in a state but had not complied with that particular state’s partnership statute; or
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•
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a unitholder’s right to act with other unitholders to remove or replace the general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
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•
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our quarterly distributions;
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•
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our quarterly or annual earnings or those of other companies in our industry;
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•
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events affecting EQT and its affiliates;
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announcements by us or our competitors of significant contracts or acquisitions;
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changes in accounting standards, policies, guidance, interpretations or principles;
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general economic conditions;
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the failure of securities analysts to cover our common units or changes in financial estimates by analysts;
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•
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future sales of our common units; and
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•
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other factors described in these “Risk Factors.”
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2017
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|
2016
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Unit Price Range
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Distributions paid per Common Unit
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Unit Price Range
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Distributions paid per Common Unit
|
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(in dollars per share)
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High
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Low
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High
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Low
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1st Quarter
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$
|
26.42
|
|
|
$
|
22.48
|
|
|
$
|
0.2505
|
|
|
$
|
15.39
|
|
|
$
|
8.40
|
|
|
$
|
0.1965
|
|
2nd Quarter
|
|
$
|
26.18
|
|
|
$
|
16.87
|
|
|
$
|
0.2608
|
|
|
$
|
20.65
|
|
|
$
|
14.21
|
|
|
$
|
0.2100
|
|
3rd Quarter
|
|
$
|
21.50
|
|
|
$
|
19.52
|
|
|
$
|
0.2711
|
|
|
$
|
24.30
|
|
|
$
|
18.05
|
|
|
$
|
0.2235
|
|
4th Quarter
|
|
$
|
21.99
|
|
|
$
|
19.69
|
|
|
$
|
0.2814
|
|
|
$
|
24.88
|
|
|
$
|
20.05
|
|
|
$
|
0.2370
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
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|
Period from
November 13, 2017 to December 31, 2017
|
|
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Period from
January 1, 2017 to November 12, 2017
|
|
Years Ended December 31,
|
||||||||||||||||||
(in thousands, except per unit data)
|
|
|
|
2016
(2)
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Statement of operations data:
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|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total operating revenues
|
|
$
|
44,219
|
|
|
|
$
|
250,474
|
|
|
$
|
201,623
|
|
|
$
|
114,459
|
|
|
$
|
6,448
|
|
|
$
|
498
|
|
Operating income (loss)
|
|
$
|
25,945
|
|
|
|
$
|
163,478
|
|
|
$
|
126,942
|
|
|
$
|
62,036
|
|
|
$
|
(30,567
|
)
|
|
$
|
(5,208
|
)
|
Net income (loss)
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
|
$
|
(31,328
|
)
|
|
$
|
(9,012
|
)
|
Limited partner net income
|
|
$
|
23,535
|
|
|
|
$
|
146,657
|
|
|
$
|
120,182
|
|
|
$
|
45,199
|
|
|
$
|
1,162
|
|
|
|
||
Net income attributable to RMP per limited partner unit
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Common units (basic)
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.46
|
|
|
$
|
0.76
|
|
|
$
|
0.02
|
|
|
|
||
Common units (diluted)
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.45
|
|
|
$
|
0.76
|
|
|
$
|
0.02
|
|
|
|
||
Subordinated units (basic & diluted)
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.50
|
|
|
$
|
0.76
|
|
|
$
|
0.02
|
|
|
|
||
Cash distributions paid per limited partner unit
(1)
|
|
$
|
0.281
|
|
|
|
$
|
0.782
|
|
|
$
|
0.867
|
|
|
$
|
0.592
|
|
|
$
|
—
|
|
|
|
||
Balance sheet data
(at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
|
$
|
2,849,013
|
|
|
|
|
|
$
|
1,399,217
|
|
|
$
|
689,790
|
|
|
$
|
443,091
|
|
|
$
|
74,445
|
|
||
Revolving credit facility
|
|
$
|
286,000
|
|
|
|
|
|
$
|
190,000
|
|
|
$
|
143,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
|
$
|
22,430
|
|
|
|
$
|
150,811
|
|
|
$
|
154,117
|
|
|
$
|
70,006
|
|
|
$
|
(25,021
|
)
|
|
$
|
(7,186
|
)
|
Investing activities
|
|
$
|
(34,553
|
)
|
|
|
$
|
(131,421
|
)
|
|
$
|
(721,087
|
)
|
|
$
|
(379,991
|
)
|
|
$
|
(336,273
|
)
|
|
$
|
(44,244
|
)
|
Financing activities
|
|
$
|
9,959
|
|
|
|
$
|
(28,522
|
)
|
|
$
|
581,207
|
|
|
$
|
290,748
|
|
|
$
|
387,980
|
|
|
$
|
51,578
|
|
(1)
|
Net income per limited partner unit and cash distributions per limited partner unit are presented only for the periods subsequent to our initial public offering (IPO) and do not include results attributable to the Water Assets (defined in Note 1 to the Consolidated Financial Statements included in this Annual Report) prior to their acquisition as these results are not attributable to limited partners of the Partnership.
|
(2)
|
Includes post-acquisition results of the Vantage Midstream Entities. Please see Note 2 to the Consolidated Financial Statements included in this Annual Report for further detail regarding the Vantage Midstream Asset Acquisition.
|
|
|
Successor
|
|
|
Predecessor
|
|
(Unaudited) Combined Year
|
|
Predecessor
|
|
|
|
Predecessor
|
|
|
||||||||||||||
|
|
Period from
November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
|
|
Year Ended December 31, 2015
|
|
Change
|
||||||||||||||
|
|
|
|
|
|
|
Change
|
|
|
||||||||||||||||||||
Statement of operations: (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Affiliate
|
|
$
|
44,134
|
|
|
|
$
|
203,642
|
|
|
$
|
247,776
|
|
|
$
|
152,260
|
|
|
$
|
95,516
|
|
|
$
|
93,668
|
|
|
$
|
58,592
|
|
Third-party
|
|
85
|
|
|
|
46,832
|
|
|
46,917
|
|
|
49,363
|
|
|
(2,446
|
)
|
|
20,791
|
|
|
28,572
|
|
|||||||
Total operating revenues
|
|
44,219
|
|
|
|
250,474
|
|
|
294,693
|
|
|
201,623
|
|
|
93,070
|
|
|
114,459
|
|
|
87,164
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operation and maintenance expense
|
|
7,182
|
|
|
|
33,768
|
|
|
40,950
|
|
|
24,608
|
|
|
16,342
|
|
|
14,910
|
|
|
9,698
|
|
|||||||
General and administrative expense
|
|
3,612
|
|
|
|
22,252
|
|
|
25,864
|
|
|
21,613
|
|
|
4,251
|
|
|
17,895
|
|
|
3,718
|
|
|||||||
Incentive unit expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|
(1,044
|
)
|
|||||||
Depreciation expense
|
|
7,480
|
|
|
|
26,420
|
|
|
33,900
|
|
|
25,170
|
|
|
8,730
|
|
|
16,399
|
|
|
8,771
|
|
|||||||
Acquisition costs
|
|
—
|
|
|
|
529
|
|
|
529
|
|
|
125
|
|
|
404
|
|
|
—
|
|
|
125
|
|
|||||||
Amortization of intangible assets
|
|
—
|
|
|
|
1,413
|
|
|
1,413
|
|
|
1,634
|
|
|
(221
|
)
|
|
1,632
|
|
|
2
|
|
|||||||
Other expense
|
|
—
|
|
|
|
2,614
|
|
|
2,614
|
|
|
1,531
|
|
|
1,083
|
|
|
543
|
|
|
988
|
|
|||||||
Total operating expenses
|
|
18,274
|
|
|
|
86,996
|
|
|
105,270
|
|
|
74,681
|
|
|
30,589
|
|
|
52,423
|
|
|
22,258
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income (loss)
|
|
25,945
|
|
|
|
163,478
|
|
|
189,423
|
|
|
126,942
|
|
|
62,481
|
|
|
62,036
|
|
|
64,906
|
|
|||||||
Other income (expense)
|
|
15
|
|
|
|
56
|
|
|
71
|
|
|
78
|
|
|
(7
|
)
|
|
11
|
|
|
67
|
|
|||||||
Interest expense
|
|
(826
|
)
|
|
|
(7,053
|
)
|
|
(7,879
|
)
|
|
(3,931
|
)
|
|
(3,948
|
)
|
|
(3,164
|
)
|
|
(767
|
)
|
|||||||
Amortization of deferred financing costs
|
|
—
|
|
|
|
(3,642
|
)
|
|
(3,642
|
)
|
|
(1,479
|
)
|
|
(2,163
|
)
|
|
(576
|
)
|
|
(903
|
)
|
|||||||
Income (loss) before income taxes
|
|
25,134
|
|
|
|
152,839
|
|
|
177,973
|
|
|
121,610
|
|
|
56,363
|
|
|
58,307
|
|
|
63,303
|
|
|||||||
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,812
|
)
|
|
5,812
|
|
|||||||
Net income
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
177,973
|
|
|
$
|
121,610
|
|
|
$
|
56,363
|
|
|
$
|
52,495
|
|
|
$
|
69,115
|
|
|
|
Successor
|
|
|
Predecessor
|
|
(Unaudited)
Combined Year
|
|
Predecessor
|
|
|
|
Predecessor
|
|
|
||||||||||||||
Financial data:
(in thousands) |
|
Period from
November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
|
|
Year Ended December 31, 2015
|
|
Change
|
||||||||||||||
|
|
|
|
|
|
Change
|
|
|
|||||||||||||||||||||
Gathering revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Affiliate
|
|
$
|
26,242
|
|
|
|
$
|
110,594
|
|
|
$
|
136,836
|
|
|
$
|
77,625
|
|
|
$
|
59,211
|
|
|
$
|
59,734
|
|
|
$
|
17,891
|
|
Third-party
|
|
19
|
|
|
|
34,136
|
|
|
34,155
|
|
|
38,669
|
|
|
(4,514
|
)
|
|
15,980
|
|
|
22,689
|
|
|||||||
Total gathering revenues
|
|
26,261
|
|
|
|
144,730
|
|
|
170,991
|
|
|
116,294
|
|
|
54,697
|
|
|
75,714
|
|
|
40,580
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Compression revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Affiliate
|
|
4,343
|
|
|
|
16,031
|
|
|
20,374
|
|
|
8,722
|
|
|
11,652
|
|
|
1,445
|
|
|
7,277
|
|
|||||||
Third-party
|
|
10
|
|
|
|
6,731
|
|
|
6,741
|
|
|
7,083
|
|
|
(342
|
)
|
|
52
|
|
|
7,031
|
|
|||||||
Total compression revenues
|
|
4,353
|
|
|
|
22,762
|
|
|
27,115
|
|
|
15,805
|
|
|
11,310
|
|
|
1,497
|
|
|
14,308
|
|
|||||||
Total operating revenues
|
|
30,614
|
|
|
|
167,492
|
|
|
198,106
|
|
|
132,099
|
|
|
66,007
|
|
|
77,211
|
|
|
54,888
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operation and maintenance expense
|
|
1,584
|
|
|
|
11,939
|
|
|
13,523
|
|
|
8,000
|
|
|
5,523
|
|
|
6,006
|
|
|
1,994
|
|
|||||||
General and administrative expense
|
|
3,265
|
|
|
|
18,944
|
|
|
22,209
|
|
|
17,301
|
|
|
4,908
|
|
|
13,886
|
|
|
3,415
|
|
|||||||
Depreciation expense
|
|
3,965
|
|
|
|
11,324
|
|
|
15,289
|
|
|
10,840
|
|
|
4,449
|
|
|
6,310
|
|
|
4,530
|
|
|||||||
Acquisition costs
|
|
—
|
|
|
|
529
|
|
|
529
|
|
|
125
|
|
|
404
|
|
|
—
|
|
|
125
|
|
|||||||
Amortization of intangible assets
|
|
—
|
|
|
|
1,413
|
|
|
1,413
|
|
|
1,634
|
|
|
(221
|
)
|
|
1,632
|
|
|
2
|
|
|||||||
Other expense
|
|
—
|
|
|
|
2,594
|
|
|
2,594
|
|
|
1,051
|
|
|
1,543
|
|
|
492
|
|
|
559
|
|
|||||||
Total operating expenses
|
|
8,814
|
|
|
|
46,743
|
|
|
55,557
|
|
|
38,951
|
|
|
16,606
|
|
|
28,326
|
|
|
10,625
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
|
$
|
21,800
|
|
|
|
$
|
120,749
|
|
|
$
|
142,549
|
|
|
$
|
93,148
|
|
|
$
|
49,401
|
|
|
$
|
48,885
|
|
|
$
|
44,263
|
|
|
|
Year Ended December 31,
|
|
Change
|
|
%
|
||||||
Operating data:
|
|
2017
|
|
2016
|
|
|
||||||
Gathering volumes: (in BBtu/d)
|
|
|
|
|
|
|
|
|
||||
Total gathering volumes
|
|
1,405
|
|
|
983
|
|
|
422
|
|
|
43
|
%
|
|
|
Year Ended December 31,
|
|
Change
|
|
%
|
||||||
Operating data:
|
|
2017
|
|
2016
|
|
|
||||||
Compression volumes: (in BBtu/d)
|
|
|
|
|
|
|
|
|
||||
Total compression volumes
|
|
958
|
|
|
572
|
|
|
386
|
|
|
67
|
%
|
|
|
Year Ended December 31,
|
|
Change
|
|
%
|
||||||
Operating data:
|
|
2016
|
|
2015
|
|
|
||||||
Gathering volumes: (in BBtu/d)
|
|
|
|
|
|
|
|
|
||||
Total gathering volumes
|
|
983
|
|
|
647
|
|
|
336
|
|
|
52
|
%
|
|
|
Year Ended December 31,
|
|
Change
|
|
%
|
||||||
Operating data:
|
|
2016
|
|
2015
|
|
|
||||||
Compression volumes: (in BBtu/d)
|
|
|
|
|
|
|
|
|
||||
Total compression volumes
|
|
572
|
|
|
64
|
|
|
508
|
|
|
794
|
%
|
|
|
Successor
|
|
|
Predecessor
|
|
(Unaudited)
Combined Year |
|
Predecessor
|
|
|
|
Predecessor
|
|
|
||||||||||||||
Financial data:
(in thousands) |
|
Period from
November 13, 2017 to December 31, 2017 |
|
|
Period from
January 1, 2017 to November 12, 2017 |
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
|
|
|
Year Ended December 31, 2015
|
|
Change
|
||||||||||||||
|
|
|
|
|
|
Change
|
|
|
|||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Affiliate
|
|
$
|
13,549
|
|
|
|
$
|
77,017
|
|
|
$
|
90,566
|
|
|
$
|
65,913
|
|
|
$
|
24,653
|
|
|
$
|
32,488
|
|
|
$
|
33,425
|
|
Third-party
|
|
56
|
|
|
|
5,965
|
|
|
6,021
|
|
|
3,611
|
|
|
2,410
|
|
|
4,760
|
|
|
(1,149
|
)
|
|||||||
Total operating revenues
|
|
13,605
|
|
|
|
82,982
|
|
|
96,587
|
|
|
69,524
|
|
|
27,063
|
|
|
37,248
|
|
|
32,276
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operation and maintenance expense
|
|
$
|
5,598
|
|
|
|
$
|
21,829
|
|
|
$
|
27,427
|
|
|
$
|
16,608
|
|
|
$
|
10,819
|
|
|
$
|
8,904
|
|
|
$
|
7,704
|
|
General and administrative expense
|
|
347
|
|
|
|
3,308
|
|
|
3,655
|
|
|
4,312
|
|
|
(657
|
)
|
|
4,009
|
|
|
303
|
|
|||||||
Incentive unit expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|
(1,044
|
)
|
|||||||
Depreciation expense
|
|
3,515
|
|
|
|
15,096
|
|
|
18,611
|
|
|
14,330
|
|
|
4,281
|
|
|
10,089
|
|
|
4,241
|
|
|||||||
Amortization of intangible assets
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other expense
|
|
—
|
|
|
|
20
|
|
|
20
|
|
|
480
|
|
|
(460
|
)
|
|
51
|
|
|
429
|
|
|||||||
Total operating expenses
|
|
9,460
|
|
|
|
40,253
|
|
|
49,713
|
|
|
35,730
|
|
|
13,983
|
|
|
24,097
|
|
|
11,633
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
|
$
|
4,145
|
|
|
|
$
|
42,729
|
|
|
$
|
46,874
|
|
|
$
|
33,794
|
|
|
$
|
13,080
|
|
|
$
|
13,151
|
|
|
$
|
20,643
|
|
Operating data:
|
|
Year Ended December 31,
|
|
|
|
%
|
||||||
Water services volumes: (in MMgal)
|
|
2017
|
|
2016
|
|
Change
|
|
|||||
Total water services volumes
|
|
1,833
|
|
|
1,253
|
|
|
580
|
|
|
46
|
%
|
Operating data:
|
|
Year Ended December 31,
|
|
Change
|
|
%
|
||||||
Water services volumes: (in MMgal)
|
|
2016
|
|
2015
|
|
|
||||||
Total water services volumes
|
|
1,253
|
|
|
777
|
|
|
476
|
|
|
61
|
%
|
•
|
the financial performance of our assets, without regard to financing methods, capital structure or historical cost basis;
|
•
|
our operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing or capital structure;
|
•
|
our ability to incur and service debt and fund capital expenditures;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Period from
November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
|
|
|
|
2016
(2)
|
|
2015
|
||||||||||
Adjusted EBITDA reconciliation to Net income:
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
Interest expense
|
|
826
|
|
|
|
7,053
|
|
|
3,931
|
|
|
3,164
|
|
||||
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,812
|
|
||||
Depreciation expense
|
|
7,480
|
|
|
|
26,420
|
|
|
25,170
|
|
|
16,399
|
|
||||
Acquisition costs
|
|
—
|
|
|
|
529
|
|
|
125
|
|
|
—
|
|
||||
Amortization of intangible assets
|
|
—
|
|
|
|
1,413
|
|
|
1,634
|
|
|
1,632
|
|
||||
Non-cash equity compensation expense
|
|
17
|
|
|
|
497
|
|
|
2,873
|
|
|
4,501
|
|
||||
Incentive unit expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
||||
Amortization of deferred financing costs
|
|
—
|
|
|
|
3,642
|
|
|
1,479
|
|
|
576
|
|
||||
Other expense
|
|
—
|
|
|
|
2,614
|
|
|
1,531
|
|
|
543
|
|
||||
Adjusted EBITDA attributable to Water Assets prior to acquisition
(1)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(22,386
|
)
|
||||
Adjusted EBITDA
|
|
$
|
33,457
|
|
|
|
$
|
195,007
|
|
|
$
|
158,353
|
|
|
$
|
63,780
|
|
Less:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash interest expense
|
|
(826
|
)
|
|
|
(7,053
|
)
|
|
(3,931
|
)
|
|
(2,356
|
)
|
||||
Estimated maintenance capital expenditures
|
|
(2,397
|
)
|
|
|
(15,103
|
)
|
|
(11,200
|
)
|
|
(4,480
|
)
|
||||
Distributable cash flow
|
|
$
|
30,234
|
|
|
|
$
|
172,851
|
|
|
$
|
143,222
|
|
|
$
|
56,944
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of net cash provided by operating activities to distributable cash flow:
|
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
|
$
|
22,430
|
|
|
|
$
|
150,811
|
|
|
$
|
154,117
|
|
|
$
|
70,006
|
|
Interest expense
|
|
826
|
|
|
|
7,053
|
|
|
3,931
|
|
|
3,164
|
|
||||
Acquisition costs
|
|
—
|
|
|
|
529
|
|
|
125
|
|
|
—
|
|
||||
Cash interest expense
|
|
(826
|
)
|
|
|
(7,053
|
)
|
|
(3,931
|
)
|
|
(2,356
|
)
|
||||
Estimated maintenance capital expenditures
|
|
(2,397
|
)
|
|
|
(15,103
|
)
|
|
(11,200
|
)
|
|
(4,480
|
)
|
||||
Other expense
|
|
—
|
|
|
|
2,614
|
|
|
1,531
|
|
|
543
|
|
||||
Changes in operating assets and liabilities which provided (used) cash
|
|
10,201
|
|
|
|
34,000
|
|
|
(1,351
|
)
|
|
12,453
|
|
||||
Adjusted EBITDA attributable to Water Assets prior to acquisition
(1)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(22,386
|
)
|
||||
Distributable cash flow
|
|
$
|
30,234
|
|
|
|
$
|
172,851
|
|
|
$
|
143,222
|
|
|
$
|
56,944
|
|
(1)
|
Adjusted EBITDA attributable to the Water Assets prior to their acquisition is excluded from our Adjusted EBITDA calculation as these amounts were generated by Rice Energy prior to the acquisition and are not attributable to our limited partners. Adjusted EBITDA attributable to the Water Assets prior to the acquisition for the year ended December 31, 2015 was calculated as net income of $7.3 million plus depreciation expense of $7 million, income tax expense of $5.8 million, incentive unit expense of $1.1 million and other charges of $1.2 million.
|
(2)
|
Includes post-acquisition results of the Vantage Midstream Entities. Please see Note 2 to the Consolidated Financial Statements included in this Annual Report for further detail regarding the Vantage Midstream Asset Acquisition.
|
•
|
Expansion capital expenditures
: Expansion capital expenditures are cash expenditures to construct new midstream infrastructure and those expenditures incurred in order to extend the useful lives of our assets, reduce costs, increase revenues or increase system capacity from current levels, including well connections that increase existing volumes. Examples of expansion capital expenditures include the construction, development or acquisition of additional gas gathering and water pipelines, compressor stations, pumping stations and impoundment facilities, in each case to the extent such capital expenditures are expected to expand our capacity or our operating income. In the future, if we make acquisitions that increase system throughput or capacity or our operating income, the associated capital expenditures may also be considered expansion capital expenditures.
|
•
|
Maintenance capital expenditures
: Maintenance capital expenditures are cash expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long term, our capacity or revenue. Examples of maintenance capital expenditures are expenditures to repair, refurbish and replace pipelines, to connect new wells and water sources, to maintain gathering, compression and impoundment facilities, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.
|
|
Payments due by period
For the Year Ending December 31,
|
||||||||||||||||||||||||||
(in thousands)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
286,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
286,000
|
|
Water infrastructure
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,547
|
|
|
19,547
|
|
|||||||
Purchase Obligations
|
7,031
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,031
|
|
|||||||
Operating lease obligations
|
1,164
|
|
|
1,164
|
|
|
606
|
|
|
323
|
|
|
323
|
|
|
—
|
|
|
3,580
|
|
|||||||
Total
|
$
|
8,851
|
|
|
$
|
287,164
|
|
|
$
|
606
|
|
|
$
|
323
|
|
|
$
|
323
|
|
|
$
|
32,013
|
|
|
$
|
329,280
|
|
|
Page
|
Rice Midstream Partners
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||
(in thousands)
|
December 31, 2017
|
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash
|
$
|
10,538
|
|
|
|
$
|
21,834
|
|
Accounts receivable
|
12,246
|
|
|
|
8,758
|
|
||
Accounts receivable - affiliate
|
46,182
|
|
|
|
11,838
|
|
||
Prepaid expenses, deposits and other
|
1,327
|
|
|
|
64
|
|
||
Total current assets
|
70,293
|
|
|
|
42,494
|
|
||
|
|
|
|
|
||||
Property and equipment, net
|
1,431,802
|
|
|
|
805,027
|
|
||
Deferred financing costs, net
|
—
|
|
|
|
12,591
|
|
||
Goodwill
|
1,346,918
|
|
|
|
494,580
|
|
||
Other assets
|
—
|
|
|
|
44,525
|
|
||
Total assets
|
$
|
2,849,013
|
|
|
|
$
|
1,399,217
|
|
|
|
|
|
|
||||
Liabilities and partners’ capital
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
4
|
|
|
|
4,172
|
|
||
Accrued capital expenditures
|
24,630
|
|
|
|
9,074
|
|
||
Other accrued liabilities
|
4,200
|
|
|
|
8,376
|
|
||
Total current liabilities
|
28,834
|
|
|
|
21,622
|
|
||
|
|
|
|
|
||||
Long-term liabilities:
|
|
|
|
|
||||
Revolving credit facility
|
286,000
|
|
|
|
190,000
|
|
||
Other long-term liabilities
|
9,360
|
|
|
|
5,189
|
|
||
Total liabilities
|
324,194
|
|
|
|
216,811
|
|
||
|
|
|
|
|
||||
Partners’ capital:
|
|
|
|
|
||||
Parent net equity
|
—
|
|
|
|
—
|
|
||
Common units (73,549,485 and 73,519,133 issued and outstanding at December 31, 2017 and 2016, respectively)
|
1,566,625
|
|
|
|
1,275,935
|
|
||
Subordinated units (28,753,623 issued and outstanding at December 31, 2017 and 2016)
|
612,454
|
|
|
|
(94,417
|
)
|
||
General Partner
|
345,740
|
|
|
|
888
|
|
||
Total partners’ capital
|
2,524,819
|
|
|
|
1,182,406
|
|
||
Total liabilities and partners’ capital
|
$
|
2,849,013
|
|
|
|
$
|
1,399,217
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Period from
November 13, 2017 to December 31, 2017 |
|
|
Period from January 1, 2017 to November 12, 2017
|
|
Years Ended December 31,
|
||||||||||
(in thousands, except per unit data)
|
|
|
|
|
2016
|
|
2015
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
|
$
|
44,134
|
|
|
|
$
|
203,642
|
|
|
$
|
152,260
|
|
|
$
|
93,668
|
|
Third-party
|
|
85
|
|
|
|
46,832
|
|
|
49,363
|
|
|
20,791
|
|
||||
Total operating revenues
|
|
44,219
|
|
|
|
250,474
|
|
|
201,623
|
|
|
114,459
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Operation and maintenance expense
|
|
7,182
|
|
|
|
33,768
|
|
|
24,608
|
|
|
14,910
|
|
||||
General and administrative expense
(1)
|
|
3,612
|
|
|
|
22,252
|
|
|
21,613
|
|
|
17,895
|
|
||||
Incentive unit expense
(2)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
||||
Depreciation expense
|
|
7,480
|
|
|
|
26,420
|
|
|
25,170
|
|
|
16,399
|
|
||||
Acquisition costs
|
|
—
|
|
|
|
529
|
|
|
125
|
|
|
—
|
|
||||
Amortization of intangible assets
|
|
—
|
|
|
|
1,413
|
|
|
1,634
|
|
|
1,632
|
|
||||
Other expense
|
|
—
|
|
|
|
2,614
|
|
|
1,531
|
|
|
543
|
|
||||
Total operating expenses
|
|
18,274
|
|
|
|
86,996
|
|
|
74,681
|
|
|
52,423
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
|
25,945
|
|
|
|
163,478
|
|
|
126,942
|
|
|
62,036
|
|
||||
Other income
|
|
15
|
|
|
|
56
|
|
|
78
|
|
|
11
|
|
||||
Interest expense
(3)
|
|
(826
|
)
|
|
|
(7,053
|
)
|
|
(3,931
|
)
|
|
(3,164
|
)
|
||||
Amortization of deferred finance costs
|
|
—
|
|
|
|
(3,642
|
)
|
|
(1,479
|
)
|
|
(576
|
)
|
||||
Income before income taxes
|
|
25,134
|
|
|
|
152,839
|
|
|
121,610
|
|
|
58,307
|
|
||||
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(5,812
|
)
|
||||
Net income
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Calculation of limited partner interest in net income:
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
Less: Pre-acquisition net income allocated to general partner
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
7,296
|
|
||||
Less: General partner interest in net income attributable to incentive distribution rights
|
|
1,599
|
|
|
|
6,182
|
|
|
1,428
|
|
|
—
|
|
||||
Limited partner net income
|
|
$
|
23,535
|
|
|
|
$
|
146,657
|
|
|
$
|
120,182
|
|
|
$
|
45,199
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per limited partner:
(4)
|
|
|
|
|
|
|
|
|
|
||||||||
Common units (basic)
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.46
|
|
|
$
|
0.76
|
|
Common units (diluted)
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.45
|
|
|
$
|
0.76
|
|
Subordinated units
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.50
|
|
|
$
|
0.76
|
|
(1)
|
In the Successor period, general and administrative expenses include charges from EQT of
$2.9 million
. For the Predecessor period from January 1, 2017 to November 12, 2017, and for the years ended December 31, 2016 and 2015,
$19.4 million
,
$16.6 million
and
$11.9 million
of general and administrative expenses include charges from Rice Energy Inc. (Rice Energy), respectively.
|
(2)
|
Incentive unit expense for the year ended December 31,
2015
was allocated from Rice Energy.
|
(3)
|
Interest expense includes charges from Rice Energy of
$0.8 million
for the year ended December 31,
2015
.
|
(4)
|
Net income per limited partner unit does not include results attributable to the Pennsylvania and Ohio fresh water services assets (Water Assets) prior to their acquisition as those results are not attributable to limited partners of the Partnership.
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Period from November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
|
|
2016
|
|
2015
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation expense
|
7,480
|
|
|
|
26,420
|
|
|
25,170
|
|
|
16,399
|
|
||||
Amortization of intangibles
|
—
|
|
|
|
1,413
|
|
|
1,634
|
|
|
1,632
|
|
||||
Amortization of deferred finance costs
|
—
|
|
|
|
3,642
|
|
|
1,479
|
|
|
576
|
|
||||
Incentive unit expense
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
||||
Equity compensation expense
|
17
|
|
|
|
497
|
|
|
2,854
|
|
|
4,501
|
|
||||
Deferred income tax expense
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,388
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(7,283
|
)
|
|
|
(30,540
|
)
|
|
(4,232
|
)
|
|
(14,174
|
)
|
||||
Prepaid expenses and other
|
176
|
|
|
|
(1,400
|
)
|
|
37
|
|
|
2
|
|
||||
Accounts payable
|
(2,327
|
)
|
|
|
1,751
|
|
|
373
|
|
|
(478
|
)
|
||||
Accrued liabilities
|
(767
|
)
|
|
|
(3,811
|
)
|
|
5,192
|
|
|
6,621
|
|
||||
Net cash provided by operating activities
|
22,430
|
|
|
|
150,811
|
|
|
154,117
|
|
|
70,006
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
(34,553
|
)
|
|
|
(123,767
|
)
|
|
(121,087
|
)
|
|
(248,463
|
)
|
||||
Acquisition of Water Assets
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(131,528
|
)
|
||||
Acquisition of Vantage Midstream Assets
|
—
|
|
|
|
—
|
|
|
(600,000
|
)
|
|
—
|
|
||||
Other acquisitions
|
—
|
|
|
|
(7,654
|
)
|
|
—
|
|
|
—
|
|
||||
Net cash used in investing activities
|
(34,553
|
)
|
|
|
(131,421
|
)
|
|
(721,087
|
)
|
|
(379,991
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||||||
Purchase price in excess of related party net assets
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(68,470
|
)
|
||||
Proceeds from borrowings
|
20,000
|
|
|
|
76,000
|
|
|
233,000
|
|
|
313,000
|
|
||||
Repayments of borrowings
|
—
|
|
|
|
—
|
|
|
(186,000
|
)
|
|
(170,000
|
)
|
||||
Costs related to initial public offering
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
||||
Common units issuance, net of offering costs
|
—
|
|
|
|
—
|
|
|
620,330
|
|
|
171,902
|
|
||||
Additions to deferred financing costs
|
—
|
|
|
|
(81
|
)
|
|
(11,801
|
)
|
|
3
|
|
||||
Contributions from parent, net
|
—
|
|
|
|
—
|
|
|
39
|
|
|
78,480
|
|
||||
Distributions paid to GP Holdings
|
(10,041
|
)
|
|
|
(26,218
|
)
|
|
(25,473
|
)
|
|
(17,021
|
)
|
||||
Distributions paid to common unitholders
|
—
|
|
|
|
(78,223
|
)
|
|
(46,239
|
)
|
|
(17,017
|
)
|
||||
Employee tax withholding for settlement of phantom unit award vestings
|
—
|
|
|
|
—
|
|
|
(2,649
|
)
|
|
—
|
|
||||
Net cash provided by (used in) financing activities
|
9,959
|
|
|
|
(28,522
|
)
|
|
581,207
|
|
|
290,748
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net (decrease) increase in cash
|
(2,164
|
)
|
|
|
(9,132
|
)
|
|
14,237
|
|
|
(19,237
|
)
|
||||
Cash at the beginning of the period
|
12,702
|
|
|
|
21,834
|
|
|
7,597
|
|
|
26,834
|
|
||||
Cash at the end of the period
|
$
|
10,538
|
|
|
|
$
|
12,702
|
|
|
$
|
21,834
|
|
|
$
|
7,597
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Period from November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
|
|
2016
|
|
2015
|
||||||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
||||||||
Cash paid for interest
|
$
|
1,836
|
|
|
|
$
|
7,331
|
|
|
$
|
2,652
|
|
|
$
|
3,146
|
|
Capital expenditures financed by accounts payable
|
4
|
|
|
|
15,197
|
|
|
2,239
|
|
|
—
|
|
||||
Noncash elimination of deferred tax liabilities for the Water Assets
|
—
|
|
|
|
—
|
|
|
—
|
|
|
7,715
|
|
Predecessor
|
|
|
Limited Partners
|
|
|
|
|
||||||||||||
(in thousands)
|
Parent Net Equity
|
|
Common
|
|
Subordinated
|
|
General Partner
|
|
Total
|
||||||||||
Balance at January 1, 2015
|
$
|
36,594
|
|
|
$
|
442,451
|
|
|
$
|
(49,101
|
)
|
|
$
|
—
|
|
|
$
|
429,944
|
|
Contribution from parent, net
|
78,480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,480
|
|
|||||
Incentive compensation expense
|
1,044
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|||||
Equity compensation expense
|
399
|
|
|
4,020
|
|
|
—
|
|
|
—
|
|
|
4,419
|
|
|||||
Offering costs related to the initial public offering
|
—
|
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
|||||
Distributions to unitholders
|
—
|
|
|
(17,019
|
)
|
|
(17,019
|
)
|
|
—
|
|
|
(34,038
|
)
|
|||||
Issuance of common units, net of offering costs
|
—
|
|
|
171,902
|
|
|
—
|
|
|
—
|
|
|
171,902
|
|
|||||
Elimination of current and deferred tax liabilities
|
7,715
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,715
|
|
|||||
Pre-acquisition net income allocated to general partner
|
7,296
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,296
|
|
|||||
Water Assets from Rice Energy
|
(131,528
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(131,528
|
)
|
|||||
Purchase price in excess of net assets from Rice Energy
|
—
|
|
|
(8
|
)
|
|
(68,462
|
)
|
|
—
|
|
|
(68,470
|
)
|
|||||
Net income
|
—
|
|
|
23,340
|
|
|
21,859
|
|
|
—
|
|
|
45,199
|
|
|||||
Balance at December 31 2015
|
$
|
—
|
|
|
$
|
624,557
|
|
|
$
|
(112,723
|
)
|
|
$
|
—
|
|
|
$
|
511,834
|
|
Contributions from parent, net
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|||||
Equity compensation expense
|
—
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|||||
Distributions to unitholders
|
—
|
|
|
(46,243
|
)
|
|
(24,930
|
)
|
|
(540
|
)
|
|
(71,713
|
)
|
|||||
Issuance of common units to public, net of offering costs
|
—
|
|
|
620,330
|
|
|
—
|
|
|
—
|
|
|
620,330
|
|
|||||
Net income
|
—
|
|
|
76,985
|
|
|
43,197
|
|
|
1,428
|
|
|
121,610
|
|
|||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
1,275,935
|
|
|
$
|
(94,417
|
)
|
|
$
|
888
|
|
|
$
|
1,182,406
|
|
Equity compensation expense
|
—
|
|
|
497
|
|
|
—
|
|
|
—
|
|
|
497
|
|
|||||
Distributions to unitholders
|
—
|
|
|
(78,227
|
)
|
|
(30,588
|
)
|
|
(5,667
|
)
|
|
(114,482
|
)
|
|||||
Net income
|
—
|
|
|
105,432
|
|
|
41,225
|
|
|
6,182
|
|
|
152,839
|
|
|||||
Balance at November 12, 2017
|
$
|
—
|
|
|
$
|
1,303,637
|
|
|
$
|
(83,780
|
)
|
|
$
|
1,403
|
|
|
$
|
1,221,260
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Successor
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at November 13, 2017
|
—
|
|
|
1,549,688
|
|
|
605,839
|
|
|
344,141
|
|
|
2,499,668
|
|
|||||
Equity compensation expense
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Net income
|
—
|
|
|
16,920
|
|
|
6,615
|
|
|
1,599
|
|
|
25,134
|
|
|||||
Balance, December 31, 2017
|
$
|
—
|
|
|
$
|
1,566,625
|
|
|
$
|
612,454
|
|
|
$
|
345,740
|
|
|
$
|
2,524,819
|
|
1.
|
Summary of Significant Accounting Policies and Related Matters
|
•
|
business services, such as payroll, accounts payable and facilities management;
|
•
|
corporate services, such as finance and accounting, legal, human resources and public and regulatory policy; and
|
•
|
employee compensation.
|
Predecessor
|
|
||
(in thousands)
|
|
||
Balance at December 31, 2015
|
$
|
3,048
|
|
Liabilities incurred
|
46
|
|
|
Liabilities assumed in Vantage Midstream Asset Acquisition
|
2,452
|
|
|
Liabilities settled
|
(46
|
)
|
|
Accretion expense
|
290
|
|
|
Balance at December 31, 2016
|
$
|
5,790
|
|
Liabilities incurred
|
384
|
|
|
Liabilities settled
|
(88
|
)
|
|
Accretion expense
|
393
|
|
|
Revisions in estimated liabilities
|
351
|
|
|
Balance at November 12, 2017
|
$
|
6,830
|
|
|
|
||
|
|
||
Successor
|
|
||
Revisions in estimated liabilities
(1)
|
2,489
|
|
|
Balance at November 13, 2017
|
9,319
|
|
|
Liabilities settled
|
(20
|
)
|
|
Accretion expense
|
22
|
|
|
Balance at December 31, 2017
|
$
|
9,321
|
|
(1)
|
Revisions in estimated liabilities reflect changes in assumptions associated with retirement costs and/or the estimated timing of settling retirement obligations. These revisions were recorded as an opening balance sheet adjustment at the Merger Date.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Period from
November 13, 2017 to December 31, 2017 |
|
|
Period from
January 1, 2017 to November 12, 2017 |
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
|
|
|
2016
|
|
2015
|
||||||||||
Interest incurred:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expensed
|
|
$
|
826
|
|
|
|
$
|
7,053
|
|
|
$
|
3,931
|
|
|
$
|
3,164
|
|
Interest capitalized
|
|
605
|
|
|
|
594
|
|
|
175
|
|
|
222
|
|
||||
Total incurred
|
|
$
|
1,431
|
|
|
|
$
|
7,647
|
|
|
$
|
4,106
|
|
|
$
|
3,386
|
|
(in thousands)
|
As of
December 31, 2017 |
|
As of
December 31, 2016
|
|||||
Natural gas gathering assets
|
$
|
1,138,581
|
|
|
$
|
675,830
|
|
|
Natural gas gathering assets in progress
|
101,154
|
|
|
3,780
|
|
|||
Accumulated depreciation
|
(4,020
|
)
|
|
(21,615
|
)
|
|||
Natural gas gathering assets, net
|
1,235,715
|
|
|
657,995
|
|
|||
Water service assets
|
176,209
|
|
|
165,482
|
|
|||
Water service assets in progress
|
17,616
|
|
|
4,060
|
|
|||
Accumulated depreciation
|
(3,363
|
)
|
|
(24,981
|
)
|
|||
Water service assets, net
|
190,462
|
|
|
144,561
|
|
|||
Other property and equipment, net
|
5,625
|
|
|
2,471
|
|
|||
Property and equipment, net
|
$
|
1,431,802
|
|
|
$
|
805,027
|
|
Predecessor
|
|
||
(in thousands)
|
Goodwill
|
||
Balance, December 31, 2015
|
$
|
39,142
|
|
Additions
|
455,438
|
|
|
Balance, December 31, 2016
|
$
|
494,580
|
|
Additions
|
—
|
|
|
Balance, November 12, 2017
|
$
|
494,580
|
|
|
|
||
|
|
||
Successor
|
|
||
Additional goodwill related to pushdown accounting, net of previously recognized
(1)
|
852,338
|
|
|
Balance, December 31, 2017
|
$
|
1,346,918
|
|
(1)
|
The Partnership has recorded goodwill as the excess of the estimated enterprise value over the sum of the fair value amounts allocated to the Partnership’s assets and liabilities. Goodwill was allocated to the value attributed to additional growth opportunities, synergies and operating leverage within the Partnership’s gathering and compression segment. See Note 2 for further information.
|
2.
|
Mergers and Acquisitions
|
(in thousands)
|
|
At November 13, 2017
|
||
Estimated Value of RMP
|
|
$
|
2,499,668
|
|
|
|
|
||
Estimated Fair Value of Assets Acquired and Liabilities Assumed:
|
|
|
||
Current assets
|
|
$
|
65,300
|
|
Property and equipment, net
|
|
1,419,077
|
|
|
Other non-current assets
|
|
47
|
|
|
Current liabilities
|
|
(56,351
|
)
|
|
Revolving credit facility
|
|
(266,000
|
)
|
|
Other non-current liabilities
|
|
(9,323
|
)
|
|
Total estimated fair value of assets acquired and liabilities assumed
|
|
$
|
1,152,750
|
|
Goodwill
|
|
$
|
1,346,918
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Period from
November 13, 2017 to December 31, 2017 |
|
|
Period from
January 1, 2017 to November 12, 2017
|
|
Period from October 19. 2016 to December 31, 2016
|
||||||
(in thousands)
|
|
|
|
|
|||||||||
Operating revenues
|
|
$
|
6,529
|
|
|
|
$
|
51,190
|
|
|
$
|
8,571
|
|
Net income
|
|
$
|
5,412
|
|
|
|
$
|
38,200
|
|
|
$
|
4,303
|
|
|
|
Predecessor
|
||||||
|
|
Year Ended
December 31,
|
||||||
(in thousands, except per unit data)
|
|
2016
|
|
2015
|
||||
Operating revenues
|
|
$
|
253,817
|
|
|
$
|
156,944
|
|
Limited partner net income
|
|
$
|
150,846
|
|
|
$
|
67,199
|
|
Earnings per common unit (basic)
|
|
$
|
1.54
|
|
|
$
|
0.84
|
|
Earnings per common unit (diluted)
|
|
$
|
1.54
|
|
|
$
|
0.83
|
|
Earnings per subordinated units
|
|
$
|
1.55
|
|
|
$
|
0.84
|
|
3.
|
Revolving Credit Facility
|
•
|
an interest coverage ratio, which is the ratio of the Partnership’s consolidated EBITDA (as defined within the Revolving Credit Facility) to its consolidated current interest expense of at least
2.50
to 1.0 at the end of each fiscal quarter;
|
•
|
a consolidated total leverage ratio, which is the ratio of consolidated debt to consolidated EBITDA, of not more than
4.75
to 1.0, and after electing to issue senior unsecured notes, a consolidated total leverage ratio of not more than
5.25
to 1.0, and, in each case, with certain increases in the permitted total leverage ratio following the completion of a material acquisition; and
|
•
|
if the Partnership elects to issue senior unsecured notes, a consolidated senior secured leverage ratio, which is the ratio of consolidated senior secured debt to consolidated EBITDA, of not more than
3.50
to 1.0.
|
4.
|
Commitments and Contingencies
|
5.
|
Partners’ Capital
|
|
Limited Partners
|
|
|
|
GP Holdings
|
||||||
|
Common
|
|
Subordinated
|
|
Total
|
|
Ownership %
|
||||
Balance, January 1, 2016
|
42,163,749
|
|
|
28,753,623
|
|
|
70,917,372
|
|
|
41
|
%
|
Equity offering in June 2016
|
9,200,000
|
|
|
—
|
|
|
9,200,000
|
|
|
|
|
Equity offering in October 2016
|
20,930,233
|
|
|
—
|
|
|
20,930,233
|
|
|
|
|
Common units issued under at the market program
(1)
|
944,700
|
|
|
—
|
|
|
944,700
|
|
|
|
|
Vested phantom units, net
|
280,451
|
|
|
—
|
|
|
280,451
|
|
|
|
|
Balance, December 31, 2016
|
73,519,133
|
|
|
28,753,623
|
|
|
102,272,756
|
|
|
28
|
%
|
Vested phantom units, net
(2)
|
30,352
|
|
|
—
|
|
|
30,352
|
|
|
—
|
%
|
Balance, December 31, 2017
|
73,549,485
|
|
|
28,753,623
|
|
|
102,303,108
|
|
|
28
|
%
|
(1)
|
In May 2016, the Partnership entered into an equity distribution agreement that established an at the market common unit offering program, pursuant to which a group of managers, acting as sales agents, may sell RMP common units having an aggregate offering price of up to $
100 million
(the ATM Program). The Partnership has used the net proceeds from the sale of common units pursuant to the ATM Program for general partnership purposes, including repayment of debt, acquisitions and capital expenditures.
|
(2)
|
All 2017 phantom unit vestings occurred prior to the Merger Date.
|
6.
|
Phantom Unit Awards
|
|
|
Number of
units
|
|
Weighted average grant date fair value
|
|||
Total unvested, January 1, 2016
|
|
432,628
|
|
|
$
|
16.52
|
|
Granted
|
|
30,352
|
|
|
17.81
|
|
|
Vested
|
|
(399,158
|
)
|
|
16.52
|
|
|
Forfeited
|
|
(33,470
|
)
|
|
16.50
|
|
|
Total unvested - December 31, 2016
|
|
30,352
|
|
|
$
|
17.81
|
|
Granted
(1)
|
|
20,688
|
|
|
24.41
|
|
|
Vested
(1)
|
|
(30,352
|
)
|
|
17.81
|
|
|
Total unvested - December 31, 2017
|
|
20,688
|
|
|
$
|
24.41
|
|
(1)
|
All 2017 equity-based awards were granted or vested prior to the Merger Date.
|
7.
|
Net Income per Limited Partner Unit and Cash Distributions
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(in thousands, except per unit data)
|
|
Period from
November 13, 2017 to December 31, 2017
|
|
|
Period from
January 1, 2017 to
November 12, 2017
|
|
Years Ended December 31,
|
||||||||||
2016
|
|
2015
|
|||||||||||||||
Net income
|
|
$
|
25,134
|
|
|
|
$
|
152,839
|
|
|
$
|
121,610
|
|
|
$
|
52,495
|
|
Less: Pre-acquisition net income allocated to general partner
(1)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
7,296
|
|
||||
Less: General partner interest in net income attributable to incentive distribution rights
|
|
1,599
|
|
|
|
6,182
|
|
|
1,428
|
|
|
—
|
|
||||
Limited partner net income
|
|
$
|
23,535
|
|
|
|
$
|
146,657
|
|
|
$
|
120,182
|
|
|
$
|
45,199
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income allocable to common units
|
|
$
|
16,920
|
|
|
|
$
|
105,432
|
|
|
$
|
76,985
|
|
|
$
|
23,340
|
|
Net income allocable to subordinated units
|
|
6,615
|
|
|
|
41,225
|
|
|
43,197
|
|
|
21,859
|
|
||||
Limited partner net income
|
|
$
|
23,535
|
|
|
|
$
|
146,657
|
|
|
$
|
120,182
|
|
|
$
|
45,199
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average limited partner units outstanding - basic:
|
|
|
|
|
|
|
|
|
|
||||||||
Common units
|
|
73,549,485
|
|
|
|
73,535,414
|
|
|
52,822,030
|
|
|
30,700,864
|
|
||||
Subordinated units
|
|
28,753,623
|
|
|
|
28,753,623
|
|
|
28,753,623
|
|
|
28,753,623
|
|
||||
Total
|
|
102,303,108
|
|
|
|
102,289,037
|
|
|
81,575,653
|
|
|
59,454,487
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average limited partner units outstanding - diluted:
|
|
|
|
|
|
|
|
|
|
||||||||
Common units
(2)
|
|
73,558,609
|
|
|
|
73,544,497
|
|
|
53,065,865
|
|
|
30,807,972
|
|
||||
Subordinated units
|
|
28,753,623
|
|
|
|
28,753,623
|
|
|
28,753,623
|
|
|
28,753,623
|
|
||||
Total
|
|
102,312,232
|
|
|
|
102,298,120
|
|
|
81,819,488
|
|
|
59,561,595
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per limited partner unit - basic:
|
|
|
|
|
|
|
|
|
|
||||||||
Common units
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.46
|
|
|
$
|
0.76
|
|
Subordinated units
(3)
|
|
0.23
|
|
|
|
1.43
|
|
|
1.50
|
|
|
0.76
|
|
||||
Total
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.47
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per limited partner unit - diluted:
|
|
|
|
|
|
|
|
|
|
||||||||
Common units
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.45
|
|
|
$
|
0.76
|
|
Subordinated units
(3)
|
|
0.23
|
|
|
|
1.43
|
|
|
1.50
|
|
|
0.76
|
|
||||
Total
|
|
$
|
0.23
|
|
|
|
$
|
1.43
|
|
|
$
|
1.47
|
|
|
$
|
0.76
|
|
(1)
|
Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.
|
(2)
|
Diluted weighted-average limited partner common units includes the effect of
9,124
,
9,083
,
243,835
and
107,108
units for the period from November 13, 2017 to
December 31, 2017
, the period from January 1, 2017 to November 12, 2017 and for the years ended December 31,
2016
and
2015
, respectively.
|
|
|
|
Marginal Percentage Interest in Distributions
|
||
|
Total Quarterly Distribution Per Unit
|
|
Unitholders
|
|
Incentive Distribution Rights Holders
|
Minimum Quarterly Distribution
|
$0.1875
|
|
100%
|
|
—%
|
First Target Distribution
|
above $0.1875 up to $0.2156
|
|
100%
|
|
—%
|
Second Target Distribution
|
above $0.2156 up to $0.2344
|
|
85%
|
|
15%
|
Third Target Distribution
|
above $0.2344 up to $0.2813
|
|
75%
|
|
25%
|
Thereafter
|
above $0.2813
|
|
50%
|
|
50%
|
Quarters Ended
|
|
Total Quarterly Distribution per Unit
|
|
Date of Distribution
|
||
March 31, 2016
|
|
$
|
0.2100
|
|
|
May 12, 2016
|
June 30, 2016
|
|
$
|
0.2235
|
|
|
August 11, 2016
|
September 30, 2016
|
|
$
|
0.2370
|
|
|
November 10, 2016
|
December 31, 2016
|
|
$
|
0.2505
|
|
|
February 16, 2017
|
March 31, 2017
|
|
$
|
0.2608
|
|
|
May 18, 2017
|
June 30, 2017
|
|
$
|
0.2711
|
|
|
August 17, 2017
|
September 30, 2017
|
|
$
|
0.2814
|
|
|
November 16, 2017
|
December 31, 2017
|
|
$
|
0.2917
|
|
|
February 14, 2018
|
8.
|
Income Taxes
|
9.
|
Related Party Transactions
|
10.
|
Financial Information by Business Segment
|
|
Successor
|
||||||||||
|
Period from November 13, 2017 to December 31, 2017
|
||||||||||
(in thousands)
|
Gathering and Compression
|
|
Water Services
|
|
Consolidated Total
|
||||||
Total operating revenues
|
$
|
30,614
|
|
|
$
|
13,605
|
|
|
$
|
44,219
|
|
Total operating expenses
|
8,814
|
|
|
9,460
|
|
|
18,274
|
|
|||
Operating income
|
$
|
21,800
|
|
|
$
|
4,145
|
|
|
$
|
25,945
|
|
|
|
|
|
|
|
||||||
Segment assets
|
$
|
2,640,682
|
|
|
$
|
208,331
|
|
|
$
|
2,849,013
|
|
Depreciation expense
|
$
|
3,965
|
|
|
$
|
3,515
|
|
|
$
|
7,480
|
|
Capital expenditures for segment assets
|
$
|
28,320
|
|
|
$
|
6,233
|
|
|
$
|
34,553
|
|
|
Predecessor
|
||||||||||
|
Period from January 1, 2017 to November 12, 2017
|
||||||||||
(in thousands)
|
Gathering and Compression
|
|
Water Services
|
|
Consolidated Total
|
||||||
Total operating revenues
|
$
|
167,492
|
|
|
$
|
82,982
|
|
|
$
|
250,474
|
|
Total operating expenses
|
46,743
|
|
|
40,253
|
|
|
86,996
|
|
|||
Operating income
|
$
|
120,749
|
|
|
$
|
42,729
|
|
|
$
|
163,478
|
|
|
|
|
|
|
|
||||||
Depreciation expense
|
$
|
11,324
|
|
|
$
|
15,096
|
|
|
$
|
26,420
|
|
Capital expenditures for segment assets
|
$
|
113,373
|
|
|
$
|
10,394
|
|
|
$
|
123,767
|
|
|
Predecessor
|
||||||||||
|
Year Ended December 31, 2016
|
||||||||||
(in thousands)
|
Gathering and Compression
|
|
Water Services
|
|
Consolidated Total
|
||||||
Total operating revenues
|
$
|
132,099
|
|
|
$
|
69,524
|
|
|
$
|
201,623
|
|
Total operating expenses
|
38,951
|
|
|
35,730
|
|
|
74,681
|
|
|||
Operating income
|
$
|
93,148
|
|
|
$
|
33,794
|
|
|
$
|
126,942
|
|
|
|
|
|
|
|
||||||
Segment assets
|
$
|
1,260,681
|
|
|
$
|
138,536
|
|
|
$
|
1,399,217
|
|
Depreciation expense
|
$
|
10,840
|
|
|
$
|
14,330
|
|
|
$
|
25,170
|
|
Capital expenditures for segment assets
|
$
|
113,033
|
|
|
$
|
8,054
|
|
|
$
|
121,087
|
|
|
Predecessor
|
||||||||||
|
Year Ended December 31, 2015
|
||||||||||
(in thousands)
|
Gathering and Compression
|
|
Water Services
|
|
Consolidated Total
|
||||||
Total operating revenues
|
$
|
77,211
|
|
|
$
|
37,248
|
|
|
$
|
114,459
|
|
Total operating expenses
|
28,326
|
|
|
24,097
|
|
|
52,423
|
|
|||
Operating income
|
$
|
48,885
|
|
|
$
|
13,151
|
|
|
$
|
62,036
|
|
|
|
|
|
|
|
||||||
Segment assets
|
$
|
547,810
|
|
|
$
|
141,980
|
|
|
$
|
689,790
|
|
Depreciation expense
|
$
|
6,310
|
|
|
$
|
10,089
|
|
|
$
|
16,399
|
|
Capital expenditures for segment assets
|
$
|
149,706
|
|
|
$
|
98,757
|
|
|
$
|
248,463
|
|
11.
|
Quarterly Financial Information (Unaudited)
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||
Year ended December 31, 2017:
(1)
|
First
quarter
|
|
Second quarter
|
|
Third quarter
|
|
Period from October 1 to November 12
|
|
|
Period from November 13 to December 31
|
||||||||||
Operating revenues
|
$
|
62,750
|
|
|
$
|
72,377
|
|
|
$
|
81,701
|
|
|
$
|
33,646
|
|
|
|
$
|
44,219
|
|
Operating expenses
|
22,154
|
|
|
25,363
|
|
|
27,054
|
|
|
12,424
|
|
|
|
18,274
|
|
|||||
Operating income
|
40,596
|
|
|
47,014
|
|
|
54,647
|
|
|
21,222
|
|
|
|
25,945
|
|
|||||
Net income
|
$
|
37,615
|
|
|
$
|
44,060
|
|
|
$
|
51,454
|
|
|
$
|
19,710
|
|
|
|
$
|
25,134
|
|
Net income per limited partner unit - basic
|
$
|
0.36
|
|
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
0.18
|
|
|
|
$
|
0.23
|
|
Net income per limited partner unit - diluted
|
$
|
0.36
|
|
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
0.18
|
|
|
|
$
|
0.23
|
|
|
Predecessor
|
||||||||||||||
Year ended December 31, 2016:
(1)
|
First
quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
(2)
|
||||||||
Operating revenues
|
$
|
54,543
|
|
|
$
|
46,547
|
|
|
$
|
41,067
|
|
|
$
|
59,466
|
|
Operating expenses
|
18,926
|
|
|
17,547
|
|
|
15,531
|
|
|
22,677
|
|
||||
Operating income
|
35,617
|
|
|
29,000
|
|
|
25,536
|
|
|
36,789
|
|
||||
Net income
|
$
|
34,426
|
|
|
$
|
27,936
|
|
|
$
|
24,989
|
|
|
$
|
34,529
|
|
Net income per limited partner unit - basic
|
$
|
0.49
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
$
|
0.33
|
|
Net income per limited partner unit - diluted
|
$
|
0.48
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
$
|
0.33
|
|
(1)
|
The sum of quarterly data in some cases may not equal the yearly total due to rounding.
|
(2)
|
Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.
|
Name
|
Age
|
Position with Our General Partner
|
J.J. Ashcroft III
|
45
|
Director, Senior Vice President and Chief Operating Officer
|
L.B. Gardner
|
60
|
Director
|
S.C. Hildebrandt
|
53
|
Director
|
D.M. Leland
|
56
|
Director
|
J.H. Lytal
|
60
|
Director
|
R.J. McNally
|
47
|
Director, Senior Vice President and Chief Financial Officer
|
D.L. Porges
|
60
|
Chairman
|
S.T. Schlotterbeck
|
52
|
Director, President and Chief Executive Officer
|
J.S. Smith
|
45
|
Chief Accounting Officer
|
R.F. Vagt
|
70
|
Director
|
•
|
Steven T. Schlotterbeck, President and Chief Executive Officer;
|
•
|
Robert J. McNally, Senior Vice President and Chief Financial Officer;
|
•
|
Daniel J. Rice, IV, former Chief Executive Officer;
|
•
|
Grayson T. Lisenby, former Senior Vice President and Chief Financial Officer;
|
•
|
William E. Jordan, former Senior Vice President, General Counsel and Corporate Secretary; and
|
•
|
Robert R. Wingo, former Senior Vice President and Chief Operating Officer.
|
Name and Principal Position (1)
|
|
Year
|
|
Salary
($)(2)
|
|
Bonus
($)
|
|
Stock Awards
($)(3)
|
|
Option Awards
($)(3)
|
|
Non-Equity
Incentive Plan
Compensation
($)(4)
|
|
All Other
Compensation
($)(5)
|
|
Total
($)
|
S.T. Schlotterbeck
President and Chief Executive Officer
|
|
2017
|
|
18,515
|
|
—
|
|
—
|
|
—
|
|
52,603
|
|
5,420
|
|
76,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.J. McNally
Senior Vice President and Chief Financial Officer
|
|
2017
|
|
12,263
|
|
—
|
|
—
|
|
—
|
|
19,068
|
|
2,847
|
|
34,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.J. Rice IV
Former Chief Executive Officer
|
|
2017
|
|
76,923
|
|
—
|
|
—
|
|
—
|
|
104,474
|
|
2,128
|
|
183,525
|
|
2016
|
|
80,000
|
|
—
|
|
—
|
|
—
|
|
114,240
|
|
478
|
|
194,718
|
|
|
2015
|
|
40,000
|
|
—
|
|
—
|
|
—
|
|
55,897
|
|
1,590
|
|
97,487
|
|
G.T. Lisenby
Former Senior Vice President and Chief Financial Officer
|
|
2017
|
|
76,923
|
|
—
|
|
—
|
|
—
|
|
104,474
|
|
3,600
|
|
184,997
|
|
2016
|
|
80,000
|
|
—
|
|
—
|
|
—
|
|
114,240
|
|
1,435
|
|
195,675
|
|
|
2015
|
|
40,000
|
|
—
|
|
—
|
|
—
|
|
55,897
|
|
—
|
|
95,897
|
|
W.E. Jordan
Former Senior Vice President, General Counsel and Corporate Secretary
|
|
2017
|
|
70,269
|
|
—
|
|
—
|
|
—
|
|
94,976
|
|
3,600
|
|
168,845
|
|
2016
|
|
73,000
|
|
—
|
|
—
|
|
—
|
|
96,018
|
|
1,452
|
|
170,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Wingo
Former Senior Vice President and Chief Operating Officer
|
|
2017
|
|
159,808
|
|
—
|
|
—
|
|
—
|
|
237,440
|
|
9,000
|
|
406,248
|
|
2016
|
|
175,000
|
|
—
|
|
—
|
|
—
|
|
234,728
|
|
3,646
|
|
413,374
|
|
|
2015
|
|
137,500
|
|
—
|
|
—
|
|
—
|
|
76,150
|
|
7,950
|
|
221,600
|
(1)
|
No other executive officers who served during 2017 had more than $100,000 of their compensation allocated to us in 2017.
|
(2)
|
For the EQT Executives, this column represents the portion of base salary paid to the executive by EQT following the Mergers that was reimbursable by us under the Amended Omnibus Agreement. For the Former Rice Executives, this column represents the portion of the base salary paid to the executive by Rice Energy prior to the Mergers that was reimbursable by us under the Initial Omnibus Agreement.
|
(3)
|
No awards were granted under the LTIP to the named executive officers in 2017. None of the awards granted to the Former Rice Executives under the Rice Energy Inc. 2014 Long-Term Incentive Plan or the EQT Executives under the EQT Corporation 2014 Long-Term Incentive Plan were reimbursable by us.
|
(4)
|
For the EQT Executives, this column reflects the dollar value of annual incentive compensation earned under the EQT Executive STIP (as defined and described under the caption “Narrative Disclosure to Summary Compensation Table and 2017 Grants of Plan-Based Awards Table” below) that was reimbursable by us under the Amended Omnibus Agreement. See “Non-Equity Incentive Plan Compensation - EQT Executive Short-Term Incentive Plan (EQT Executive STIP)” under the caption “Narrative Disclosure to Summary Compensation Table and 2017 Grants of Plan-Based Awards Table” below for further discussion of the EQT Executive STIP for the 2017 plan year. For the Former Rice Executives, for 2017, this column reflects the dollar value of the annual bonuses allocated to us for the ten and a half months of service provided by the Former Rice Executives. See “Non-Equity Incentive Plan Compensation - Rice Energy Inc. Annual Incentive Bonus Plan (Rice Annual Bonus Plan)” under the caption “Narrative Disclosure to Summary Compensation Table and 2017 Grants of Plan-Based Awards Table” below for further discussion of the Rice Annual Bonus Plan for the 2017 plan year.
|
(5)
|
For the EQT Executives, this column includes the portion reimbursable by us under the Amended Omnibus Agreement of EQT’s contributions to the EQT Corporation 401(k) plan and 2006 Payroll Deduction and Contribution Program. Once 401(k) contributions for the EQT Executives reach the maximum level permitted under the EQT Corporation 401(k) plan, EQT contributions are continued
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
||||
Name
|
|
Type of Award
($)(1)
|
|
Percentage of Award Reimbursed (%)
|
|
Threshold
($)(2)
|
|
Target
($)(2)
|
|
Maximum
($)(2)
|
S.T. Schlotterbeck
|
|
ESTIP
|
|
20
|
|
—
|
|
22,356
|
|
131,507
|
R.J. McNally
|
|
ESTIP
|
|
20
|
|
—
|
|
9,370
|
|
131,507
|
D.J. Rice IV
|
|
RAIB
|
|
20
|
|
35,200
|
|
70,400
|
|
140,800
|
G.T. Lisenby
|
|
RAIB
|
|
20
|
|
35,200
|
|
70,400
|
|
140,800
|
W.E. Jordan
|
|
RAIB
|
|
20
|
|
32,000
|
|
64,000
|
|
128,000
|
R.R. Wingo
|
|
RAIB
|
|
50
|
|
80,000
|
|
160,000
|
|
320,000
|
(1)
|
Type of Award:
|
(2)
|
For the EQT Executives, these columns reflect the amount we would be allocated based upon the target and maximum amounts under the EQT Executive STIP for the 2017 plan year under the Amended Omnibus Agreement. Under the EQT Executive STIP, a formula based on adjusted 2017 EQT EBITDA compared to EQT’s business plan establishes the maximum payment from which the EQT MDC Committee typically exercises its discretion downward in determining the actual payment. The payout amounts could range from no payment, to the percentage of base salary identified as the target annual incentive award (target), to $5 million (maximum). See “Non-Equity Incentive Plan Compensation - EQT Executive Short-Term Incentive Plan (EQT Executive STIP)” under the caption “Narrative Disclosure to Summary Compensation Table and 2017 Grants of Plan-Based Awards Table” below for further discussion of the EQT Executive STIP for the 2017 plan year. For the Former Rice Executives, the amounts in these columns reflect the amount we would be allocated based upon the threshold, target and maximum values of the 2017 grants under the Rice Annual Bonus Plan. See “Non-Equity Incentive Plan Compensation - Rice Energy Inc. Annual Incentive Bonus Plan (Rice Annual Bonus Plan)” under the caption “Narrative Disclosure to Summary Compensation Table and 2017 Grants of Plan-Based Awards Table” below for further discussion of the Rice Annual Bonus Plan for the 2017 plan year.
|
ADJUSTED 2017 EQT EBITDA COMPARED TO
BUSINESS PLAN
|
|
PERCENTAGE OF ADJUSTED 2017 EQT EBITDA AVAILABLE FOR EQT EXECUTIVE OFFICER 2017 ANNUAL INCENTIVE AWARDS
|
|
At or above plan
|
|
2
|
%
|
5% below plan
|
|
1.5
|
%
|
25% below plan
|
|
1
|
%
|
Greater than 25% below plan
|
|
No bonus
|
|
Named Executive Officer
|
|
2017 Target Bonus
|
D.J. Rice, IV
|
|
$352,000
|
G.T. Lisenby
|
|
$352,000
|
W.E. Jordan
|
|
$320,000
|
R.R. Wingo
|
|
$320,000
|
Metric
|
|
Percentage of Award
|
|
Net Production (MMcfe/d)
|
|
25
|
%
|
E&P CapEx
|
|
20
|
%
|
Midstream CapEx
|
|
20
|
%
|
G&A ($MM)
|
|
10
|
%
|
LOE ($/Mcfe)
|
|
5
|
%
|
Safety (% improvement)
|
|
20
|
%
|
Total
|
|
100
|
%
|
(1)
|
Messrs. Rice III, Rice IV and Wingo served as directors until the Mergers and did not receive additional compensation for serving as directors. Mr. Vagt did not receive any compensation for serving as a director during 2017. Messrs. Ashcroft, Gardner, McNally, Porges and Schlotterbeck did not receive additional compensation for serving as directors after the Mergers.
|
(2)
|
Amounts reflect the grant date fair value of phantom units granted on May 31, 2017 to Messrs. Leland and Lytal and Ms. Hildebrandt, calculated in accordance with FASB ASC Topic 718. The amounts are calculated by multiplying the number of units granted (Mr. Leland 6,964, Mr. Lytal 6,964 and Ms. Hildebrandt 6,760) by the closing price of units on the day prior to the date of grant ($24.41).
|
•
|
our general partner;
|
•
|
beneficial owners of 5% or more of our common units;
|
•
|
each director and named executive officer; and
|
•
|
all of our directors and executive officers as a group.
|
Name of Beneficial Owner
(1)
|
|
Common Units Beneficially Owned
(2)
|
|
Percentage of Common Units Beneficially Owned
(3)
|
|
Subordinated Units Beneficially Owned
|
|
Percentage of Subordinated Units Beneficially Owned
|
|
Percentage of Common and Subordinated Units Beneficially Owned
(3)
|
|||||
EQT
(4)
|
|
3,623
|
|
|
*
|
|
|
28,753,623
|
|
|
100%
|
|
|
28.1
|
%
|
OppenheimerFunds, Inc.
(5)
|
|
8,037,144
|
|
|
10.9
|
%
|
|
—
|
|
|
—
|
|
|
7.9
|
%
|
Harvest Fund Advisors, LLC
(6)
|
|
7,105,148
|
|
|
9.7
|
%
|
|
—
|
|
|
—
|
|
|
6.9
|
%
|
Tortoise Capital Advisors, LLC
(7)
|
|
6,179,074
|
|
|
8.4
|
%
|
|
—
|
|
|
—
|
|
|
6.0
|
%
|
ALPS Advisors, Inc.
(8)
|
|
6,122,118
|
|
|
8.3
|
%
|
|
—
|
|
|
—
|
|
|
6.0
|
%
|
Salient Capital Advisors, LLC, LP
(9)
|
|
5,386,008
|
|
|
7.3
|
%
|
|
—
|
|
|
—
|
|
|
5.3
|
%
|
Goldman Sachs Asset Management
(10)
|
|
5,256,021
|
|
|
7.2
|
%
|
|
—
|
|
|
—
|
|
|
5.1
|
%
|
S.T. Schlotterbeck
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
R.J. McNally
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
J.J. Ashcroft III
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
L.B. Gardner
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
D.L. Porges
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
S.C. Hildebrandt
|
|
11,762
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
D.M. Leland
|
|
53,311
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
J.H. Lytal
|
|
17,566
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
R. F. Vagt
|
|
—
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
D.J. Rice IV
|
|
11,380
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
G.T. Lisenby
|
|
27,007
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
W.E. Jordan
|
|
17,611
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
R.R. Wingo
|
|
29,108
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
All directors and executive officers as a group (14 persons)
|
|
167,745
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
*
|
Less than one percent.
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners in this table is c/o Rice Midstream Partners LP, 625 Liberty Avenue, Suite 1700, Pittsburgh, PA 15222.
|
(2)
|
This column does not include 6,694, 6,694, and 6,760 phantom units held by Messrs. Leland and Lytal and Ms. Hildebrandt, respectively, that were granted in connection with their respective service as directors and which will cliff vest at the end of the requisite service period in our common units.
|
(3)
|
Percentages of beneficial ownership are based on 73,549,485 common units and 28,753,623 subordinated units outstanding as of February 1, 2018. See Note 7 to the Consolidated Financial Statements for a discussion of the conversion of the subordinated units to common units.
|
(4)
|
As a result of the Mergers, EQT acquired beneficial ownership, indirectly through Rice Midstream GP Holdings LP, of 3,623 common units representing limited partner interests in us, 28,753,623 subordinated units representing limited partner interests in us and all of our incentive distribution rights.
|
(5)
|
Information based on an SEC Schedule 13G filed on February 6, 2018 reporting that OppenheimerFunds, Inc. has shared voting power and shared dispositive power over 8,037,144 common units. The address of the beneficial owner is 225 Liberty Street, New York, NY 10281.
|
(6)
|
Information based on an SEC Schedule 13G filed on October 26, 2017 reporting that Harvest Fund Advisors, LLC has sole voting power and sole dispositive power over 7,105,148 common units. The address of the beneficial owner is 100 W. Lancaster Avenue, Suite 200, Wayne, PA 19087.
|
(7)
|
Information based on an SEC Schedule 13G filed on February 13, 2018 reporting that Tortoise Capital Advisors, LLC has sole voting power and sole dispositive power over 1,156,485 common units and shared voting power and shared dispositive power over 5,022,589 common units. The address of the beneficial owner is 11550 Ash Street, Suite 300, Leawood, Kansas 66211.
|
(8)
|
Information based on SEC Schedule 13G filed on February 7, 2018 reporting that ALPS Advisors, Inc. has shared voting and shared dispositive power over 6,112,118 common units, of which 6,068,989 common units are attributable to Alerian MLP ETF, an investment company to which ALPS Advisors, Inc. furnishes investment advice. Alerian MLP ETF has shared voting and dispositive power with respect to the 6,068,989 common units. The address of the beneficial owner is 1290 Broadway, Suite 1100, Denver, CO 80203.
|
(9)
|
Unit information based on a SEC Schedule 13G filed on January 18, 2018 reporting that Salient Advisors, LLC has sole voting and dispositive power over 5,386,008 common units. The address of the beneficial owner is 4265 San Felipe, 8th Floor, Houston, Texas 77027.
|
(10)
|
Information based on an SEC Schedule 13G filed on February 7, 2018 reporting that Goldman Sachs Asset Management, LP has shared voting power and shared dispositive power over 5,256,021 common units. The address of the beneficial owner is 200 West Street, New York, NY 10282.
|
Name
|
|
Exercisable
Stock Options (1) |
|
Number of EQT Shares Beneficially Owned
(2)
|
|
Percent of Class
(3)
|
||
S.T. Schlotterbeck
(4)
|
|
143,400
|
|
|
190,798
|
|
|
*
|
R.J. McNally
|
|
—
|
|
|
27,389
|
|
|
*
|
J.J. Ashcroft III
|
|
—
|
|
|
47,014
|
|
|
*
|
L.B. Gardner
|
|
33,300
|
|
|
47,575
|
|
|
*
|
D.L. Porges
(5)
|
|
299,700
|
|
|
502,108
|
|
|
*
|
S.C. Hildebrandt
|
|
—
|
|
|
—
|
|
|
*
|
D.M. Leland
|
|
—
|
|
|
—
|
|
|
*
|
J.H. Lytal
|
|
—
|
|
|
—
|
|
|
*
|
R.F. Vagt
|
|
—
|
|
|
18,669
|
|
|
*
|
D. J. Rice IV
|
|
—
|
|
|
223,419
|
|
|
*
|
G.T. Lisenby
|
|
—
|
|
|
61,719
|
|
|
*
|
W.E. Jordan
|
|
—
|
|
|
96,999
|
|
|
*
|
R.R. Wingo
|
|
—
|
|
|
72,471
|
|
|
*
|
All directors and executive officers as a group (14) persons
|
|
476,400
|
|
|
1,288,161
|
|
|
*
|
(1)
|
This column reflects the number of shares of EQT common stock that the executive officers and directors had a right to acquire within 60 days after February 1, 2018 through the exercise of stock options.
|
(2)
|
This column reflects shares held of record and shares owned through a bank, broker or other nominee, including, for EQT employees, shares owned through EQT’s 401(k) plan. For Messrs. Rice IV and Vagt, this column also reflects 380 deferred stock units, including accrued dividends thereon, awarded in connection with their service as non-employee directors of EQT that will be settled in EQT common stock, over which they have no voting or investment power prior to settlement.
|
(3)
|
This column reflects (i) the sum of the shares beneficially owned, the options exercisable within 60 days of February 1, 2018 and Messrs. Rice IV’s and Vagt’s deferred stock units that will be settled in EQT common stock, as a percentage of (ii) the sum of EQT’s outstanding shares at February 1, 2018, all options exercisable within 60 days of February 1, 2018 and Messrs. Rice IV’s and Vagt’s deferred stock units that will be settled in EQT common stock upon termination of their respective service on the EQT
|
(4)
|
Shares beneficially owned include 28,012 shares owned by Mr. Schlotterbeck's wife.
|
(5)
|
Shares beneficially owned include 50,000 shares that are held in a trust of which Mr. Porges is a co-trustee and in which he shares voting and investment power.
|
Plan Category
|
|
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
(a)
(1)
|
|
Weighted
average exercise price of outstanding options, warrants and rights
(b)
(2)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
(3)
|
|||
Equity compensation plans approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
Equity compensation plans not approved by security holders
|
|
20,688
|
|
|
N/A
|
|
|
7,168,344
|
|
Total
|
|
20,688
|
|
|
N/A
|
|
|
7,168,344
|
|
(1)
|
The amounts in column (a) of this table reflect only phantom units that are settled in our common units that have been granted under the RMP LTIP. No equity or equity-based awards have been granted by us other than phantom units under the RMP LTIP.
|
(2)
|
This column is not applicable because phantom units do not have an exercise price.
|
(3)
|
The figures in this column reflect the total number of common units remaining available for future issuance under the RMP LTIP as of December 31, 2017. Such figures take into account 7,500,000 million units provided under the RMP LTIP less phantom unit awards which have vested or remain outstanding at December 31, 2017. The RMP LTIP was adopted by our general partner in connection with but prior to the closing of our IPO and provides for the grant of a wide variety of cash and equity awards. For a summary of the material terms of the RMP LTIP, please refer to the section of our Registration Statement on Form S-1 initially filed with the SEC on December 8, 2014, entitled “Management-Long-Term Incentive Plan.”
|
The aggregate consideration received by our general partner and its affiliates, including Rice Energy, for the contribution of our initial assets
|
3,623 common units;
28,753,623 subordinated units;
the non-economic general partner interest;
the incentive distribution rights; and
approximately $414.4 million of the net proceeds from our IPO, $195.3 million of which represents a reimbursement of capital expenditures incurred by Rice Energy on our behalf and $219.1 million of which represents a distribution to Rice Energy.
|
Liquidation
|
Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.
|
•
|
EQT joined the amended and restated omnibus agreement as a party and assumed certain rights and obligations of LLC Sub (as successor-in-interest to Rice Energy) as further discussed below;
|
•
|
EQT granted us a right of first offer, subject to certain exceptions, on any future divestiture of EQT’s (or its affiliates’) interests in its gas gathering system in the Utica Shale in Belmont County, Ohio, which is a continuation of the right of first offer granted by Rice Energy under the omnibus agreement entered into in connection with our IPO;
|
•
|
We are obligated to reimburse EQT or its designees for all expenses incurred by EQT or its affiliates (or payments made on our behalf) in conjunction with its provision of general and administrative services to us, including but not limited to, our publicly traded partnership expenses and an allocated portion of the compensation expense of the executive officers and other employees of EQT and its affiliates who perform general and administrative services for us or on our behalf; and
|
•
|
LLC Sub (as successor-in-interest to Rice Energy) has provided us with a license to use certain Rice Energy-related names and trademarks in connection with our operations.
|
•
|
EQT joined the amended and restated employee secondment agreement as a party and assumed the rights and obligations of LLC Sub (as successor-in-interest to Rice Energy) thereunder; and
|
•
|
specified employees of EQT (or certain of its affiliates) will be seconded to us to provide operating and other services with respect to our business under the direction, supervision and control of us or our general partner.
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
DESCRIPTION OF EXPENSES
|
|
|
|
|
|
|
||||||
Reimbursement under omnibus agreement
|
|
$
|
19,366
|
|
|
$
|
16,597
|
|
|
$
|
11,863
|
|
Reimbursement under secondment agreement
|
|
$
|
2,860
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(in thousands)
|
|
Years Ended December 31,
|
||||||||||
Description of Revenue
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gathering and compression
|
|
$
|
198,106
|
|
|
$
|
132,099
|
|
|
$
|
77,211
|
|
Water services
|
|
$
|
96,587
|
|
|
$
|
69,524
|
|
|
$
|
37,248
|
|
•
|
approved by the Conflicts Committee of our general partner, although our general partner is under no obligation to seek such approval; or
|
•
|
approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner or any of its affiliates.
|
(in thousands)
|
2017
|
|
2016
|
||||
Audit Fees
(1)
|
$
|
607.0
|
|
|
$
|
740.0
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
|
—
|
|
|
—
|
|
||
All Other Fees
|
—
|
|
|
—
|
|
||
Total
|
$
|
607.0
|
|
|
$
|
740.0
|
|
(1)
|
For fiscal year 2017 and 2016, includes E&Y fees for professional services provided in connection with (a) audit of our financial statements and internal control over financial reporting, (b) review of our quarterly consolidated financial statements and (c) review of our filings with the SEC, including review of registration statements, comfort letters and consents.
|
(2)
|
$213,933 of the total audit fees for 2017 was incurred following the closing of the Mergers.
|
•
|
Bookkeeping or other services related to the accounting records or financial statements
|
•
|
Financial information systems design and implementation
|
•
|
Appraisal or valuation services, fairness opinions or contribution-in-kind reports
|
•
|
Actuarial services
|
•
|
Internal audit outsourcing services
|
•
|
Management functions
|
•
|
Human resources functions
|
•
|
Broker-dealer, investment adviser or investment banking services
|
•
|
Legal services
|
•
|
Expert services unrelated to the audit
|
•
|
Prohibited tax services
|
a.
|
The following documents are filed as a part of this Annual Report on Form 10-K or incorporated herein by reference:
|
(1)
|
Financial Statements:
|
(2)
|
Financial Statement Schedules:
|
(3)
|
Exhibits:
|
Exhibit No.
|
Description
|
2.1***
|
|
2.2***
|
|
3.1
|
|
3.2
|
|
3.3
|
|
3.4
|
|
3.5
|
|
4.1
|
|
4.2
|
|
4.3
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7†
|
|
RICE MIDSTREAM PARTNERS LP
|
|
|
By:
|
Rice Midstream Management LLC, its General Partner
|
By:
|
/s/ STEVEN T. SCHLOTTERBECK
|
|
Steven T. Schlotterbeck
|
|
President and Chief Executive Officer
|
|
February 15, 2018
|
Signature
|
|
Title (Position with Rice Midstream Management LLC)
|
|
Date
|
|
|
|
|
|
/s/ STEVEN T. SCHLOTTERBECK
|
|
President, Chief Executive Officer, and Director
|
|
February 15, 2018
|
Steven T. Schlotterbeck
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ ROBERT J. MCNALLY
|
|
Senior Vice President, Chief Financial Officer, and Director
|
|
February 15, 2018
|
Robert J. McNally
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ JIMMI SUE SMITH
|
|
Chief Accounting Officer
|
|
February 15, 2018
|
Jimmi Sue Smith
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ JEREMIAH J. ASHCROFT III
|
|
Director
|
|
February 15, 2018
|
Jeremiah J. Ashcroft III
|
|
|
|
|
|
|
|
|
|
/s/ LEWIS B. GARDNER
|
|
Director
|
|
February 15, 2018
|
Lewis B. Gardner
|
|
|
|
|
|
|
|
|
|
/s/ STEPHANIE C. HILDEBRANDT
|
|
Director
|
|
February 15, 2018
|
Stephanie C. Hildebrandt
|
|
|
|
|
|
|
|
|
|
/s/ D. MARK LELAND
|
|
Director
|
|
February 15, 2018
|
D. Mark Leland
|
|
|
|
|
|
|
|
|
|
/s/ JAMES H. LYTAL
|
|
Director
|
|
February 15, 2018
|
James H. Lytal
|
|
|
|
|
|
|
|
|
|
/s/ DAVID L. PORGES
|
|
Chairman
|
|
February 15, 2018
|
David L. Porges
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT F. VAGT
|
|
Director
|
|
February 15, 2018
|
Robert F. Vagt
|
|
|
|
|
A.
|
The predecessors in interest to each Party entered into certain Gas Gathering Agreements, dated March 1, 2011 by and between M3 Appalachia Gathering, LLC and Chesapeake Energy Marketing, Inc. and Chesapeake Appalachia, LLC and by and between M3 Appalachia Gathering, LLC and Statoil Natural Gas, LLC and Statoil Onshore Properties, LLC, as first amended September 6, 2011, as second amended December 12, 2012, and as third amended on January 1, 2015 by successors in interest of Rice Poseidon Midstream LLC and EQT Energy LLC and EQT Production Company. On December 18, 2015, the Parties entered into a Fourth Amended and Restated Gas Gathering Agreement and on April 1, 2016 the Parties entered into a Fifth Amended and Restated Gas Gathering Agreement (the “
Gathering Agreement
”) further amending and restating the prior gathering agreements.
|
B.
|
The Parties now desire to further amend and restate the Gathering Agreement as set forth herein in this Agreement.
|
C.
|
Shipper purchases all of the gas produced from wells drilled on well pads controlled by Producer or its predecessor in interest as of March 1, 2011 or hereafter acquired by Producer in Allegheny County and Washington County, Pennsylvania, and specifically located within the area of mutual interest as depicted on
Exhibit A
, as modified pursuant to
Section 2.4(a)
, (the “
Acreage
”) and desires to deliver to Gatherer all gas produced from the Acreage that Shipper purchases.
|
D.
|
Gatherer is developing the Appalachia Gathering System as depicted on
Exhibit C
(the “
AGS Gathering System
”) and desires to construct the AGS Gathering System to accept deliveries of gas from Shipper at the central delivery points (“
CDPs
”) and redeliver the gas to Shipper at the Redelivery Points (defined below), all as set forth in this Agreement.
|
E.
|
Gatherer is developing the Denex Gathering System as depicted on
Exhibit C
(the “
Denex Gathering System
”) and desires to construct and expand the Denex Gathering System to accept deliveries of gas from Shipper at CDPs and redeliver the gas to Shipper at the Redelivery Points (defined below), all as set forth in this Agreement. The AGS Gathering System and Denex Gathering System may be referenced collectively as the “
Gathering Systems
”.
|
1.1.
|
Defined terms
. Unless otherwise defined in the recitals or text of this Agreement, capitalized terms are defined in the additional Terms and Conditions contained in
Exhibit B
attached to, and by this reference made a part of this Agreement, and shall have the meanings respectively ascribed to them therein.
|
2.1.
|
Commitment
. Producer covenants to sell and Shipper covenants to purchase from Producer all of the gas (including natural gas, natural gasoline and other liquefiable hydrocarbons) that Producer owns or controls and produces from the Acreage (“
Dedicated Gas
”). Dedicated Gas shall not include gas produced from well pads located within the Acreage that are not operated by Producer or its Affiliate. Notwithstanding the prior sentence, Dedicated Gas shall always include all gas produced from well pads located within the Acreage that are initially operated by Producer or Shipper but may later become non-operated by Producer or Shipper due to a voluntary or involuntary loss of operatorship. Shipper covenants to deliver all of the Dedicated Gas exclusively to Gatherer at the CDPs without other disposition except as otherwise provided in this Agreement. Shipper may also deliver gas produced from Producer’s wells outside of the Acreage to CDPs located within the Acreage. Such gas shall be excluded from the exclusive dedication of Dedicated Gas made by Shipper in this
Section 2.1
during the term of this Agreement, but shall in all other respects be treated on the same terms and conditions as the Dedicated Gas delivered hereunder.
|
2.2.
|
Services
. Gatherer shall receive the Dedicated Gas at the CDPs and Gatherer will gather, compress and dehydrate such Gas as set forth herein. Gatherer will redeliver such Dedicated Gas, less the Fuel (defined in
Exhibit B
), to Shipper at certain interconnect points constructed or to be constructed by Gatherer between the Gathering Systems and certain pipelines, including Texas Eastern Transmission, LP pipelines (“
TETCO
”) at the Tombstone interconnect, Equitrans LP pipeline H-148 (“
EQT
”) at the Jaybird interconnect, Dominion Transmission, Inc. pipeline TL-342 (“
DTI
”) at the California interconnect, M3 Gathering System pipeline (“
M3
”) at the High Noon interconnect, and Columbia Gas Transmission pipeline (“
TCO
”) at the Kryptonite interconnect, all located or to be located in Washington County and/or Greene County, Pennsylvania, as applicable (such interconnect points, collectively, the “
Redelivery Points
” and individually a “
Redelivery Point
”) subject to Gatherer having available capacity to confirm Shipper’s nominations to such Redelivery Points during the entirety of the Month. As part of the Firm Service (as defined below), Gatherer is obligated to redeliver to Shipper only at the Tombstone interconnect at a maximum of [***] MMBtu per Day, the High Noon interconnect at a maximum of [***] MMBtu per Day, and the California interconnect at a maximum of [***] MMBtu per Day (with aggregate quantities on each Gathering System subject to Gatherer’s applicable maximum receipt obligations for Firm Service set forth in Section 2.2(d)). All quantities
|
(a)
|
AGS Gathering System Firm Service
. The total maximum daily volume (“
MDV
”) that Gatherer is obligated to accept into the AGS Gathering System at the CDPs shall equal [***] MMBtu per Day on any Day during the Primary Term and the Extended Term (the “
AGS Gathering System Firm Service
”); provided that notwithstanding the foregoing, Shipper’s AGS Gathering System Firm Service shall at all times be subject to Section 2.2(c) and Section 2.2(d). The AGS Gathering System Firm Service shall not be curtailed, interrupted or discontinued by Gatherer without liability for any reason except for (x) an event of Force Majeure; (y) failure or refusal of Shipper to receive or deliver Gas to or from Gatherer, as applicable, in accordance with this Agreement, and (z) failure or refusal of Shipper to comply with the terms and provisions of this Agreement.
|
(b)
|
Denex Gathering System Firm Service
. The total MDV that the Gatherer is obligated to accept into the Denex Gathering System at the CDPs, excluding the Trax Farms CDP, collectively shall be equal to [***] MMBtu per Day on any Day during the Primary Term and the Extended Term (the “
Denex Gathering System Firm Service
”); provided that notwithstanding the foregoing, Shipper’s Denex Gathering System Firm Service shall at all times be subject to Section 2.2(c) and Section 2.2(d). Gatherer is not obligated to accept Gas into the Denex Gathering System at the Trax Farms CDP. Shipper’s Denex Gathering System Firm Service shall not be curtailed, interrupted or discontinued by Gatherer without liability for any reason except for (x) an event of Force Majeure; (y) failure or refusal of Shipper to receive of deliver Gas to or from Gatherer, as applicable, in accordance with this Agreement, and (z) failure or refusal of Shipper to comply with the terms and provisions of this Agreement. The AGS Gathering System Firm Service and Denex Gathering System Firm Service may be referenced collectively as “
Firm Service
”. Gatherer acknowledges and agrees that Firm Service is the highest priority level of service on the Gathering System.
|
(c)
|
Release
. In the event that Firm Service to Shipper is interrupted, curtailed or disrupted for any reason other than as provided in clauses (x), (y) and (z) of
Section 2.2(a)
or
Section 2.2(b)
, above (but expressly excluding any failure to meet the runtime requirements in
Section 3.4
, below, where the remedy for such failure is expressly set forth therein) for [***] ([***]) Days during any [***] ([***]) period, then Shipper shall be entitled to a temporary release from this Agreement of the Firm Service Gas volumes that Gatherer is unable to accept. Such release shall be conditional for a continuous period beginning on the [***] ([***]) Day of interruption or curtailment during such [***] period, and shall not exceed [***] thereafter. Should Gatherer reestablish regular Firm Service to Shipper during the [***] release period which it does not reasonably believe will be subject to further interruption, Gatherer shall give Shipper written notice of such fact; and, within [***] ([***]) Days after its
|
(d)
|
Reversion to Gatherer for Non-Use
. Beginning on October 1, 2015, and continuing each Year thereafter, the Parties shall re-evaluate the MDV for the AGS Gathering System Firm Service at the end of each Year of the Primary Term and Extended Term to provide Shipper with the capacity it requires while affording the Gatherer with the flexibility needed to utilize unused capacity on the AGS Gathering System. The Parties shall adjust the MDV for the following [***] ([***]) Months (the “
MDV Adjustment Period
”) for the AGS Gathering System to equal the sum of (i) no less than [***]% of the average daily quantity received at the CDPs delivering into the AGS Gathering System in the previous [***] ([***]) Months and (ii) no less than [***]% of [***] ([***]) Months of forecasted peak quantity of gas flowing into the AGS Gathering System from new wells not producing during the previous month, but never to exceed the initial MDV of [***] MMBtu per Day unless agreed to in writing by the Parties.
|
2.3.
|
Term
. This Agreement shall become effective on the March 1, 2011 and remain in full force and effect for a primary term ending January 31, 2021 (“
Primary Term
”) and, upon the expiration of the Primary Term, an additional ten (10) year term ending January 31, 2031 (the “
Extended Term
”). This Agreement shall continue beyond the Extended Term on a year-to-year basis unless otherwise terminated by either party by providing at least [***] ([***]) Days’ written notice.
|
2.4.
|
Dedicated Lease Swap
.
|
(a)
|
As of December 25, 2014, the Parties agreed to the following acreage swap: (i) Gatherer hereby releases certain leases located within the Acreage (the “
Released Leases
”) in consideration of the dedication by Producer of substantially similar leases located within the Acreage (the “
Replacement Leases
”) and (ii) Producer hereby dedicates the Replacement Leases to this Agreement (clauses (i) and (ii) together, the “
Dedicated Lease Swap
”), all as represented by the area of mutual interest set forth in Exhibit D Beginning on December 25, 2014, the Released Leases will no longer be dedicated hereunder and the Replacement Leases will be dedicated to this Agreement for the remainder of the Primary Term and the Extended Term.
|
3.1.
|
Shipper’s Construction Responsibilities
. Shipper shall be solely responsible for the design, construction, acquisition of rights-of-way, and all costs associated with the construction of pipelines, free liquids removal and handling, and wellhead metering facilities to connect the wells on the Acreage (or outside of the Acreage) to the CDPs.
|
3.2.
|
[Intentionally Omitted]
|
3.3.
|
Gatherer’s Construction Responsibilities
. Gatherer shall own, and shall be solely responsible for the construction, maintenance, and operation of the Gathering System. Gatherer shall install, own and operate the CDPs which shall be located within each Drilling Unit within the Acreage. Gatherer shall not be required to extend the Gathering Systems beyond the Acreage to CDPs that do not qualify as a Drilling Unit (unless requested under
Section 3.3(b)
below) or install CDPs outside of the Acreage. The general locations of the CDPs are set forth in the attached
Exhibit C
;
however
, the precise locations of each CDP shall be mutually determined by Shipper and Gatherer (the actual location of a CDP as constructed to evidence such agreed location).
|
(a)
|
Future Construction.
Shipper may request in writing that Gatherer construct additional laterals and pipeline extensions
(
“
Future Construction
”
)
to connect future CDPs within the Acreage to the Gathering Systems. Gatherer shall work diligently to complete the Future Construction as promptly as commercially reasonable. Additionally, upon securing the required rights-of-way and governmental or regulatory permits, Gatherer shall use commercially reasonable efforts to insure any Future Construction is completed within a timeframe allotting [***] ([***]) weeks for each mile of pipeline to be constructed;
provided,
that any
|
(b)
|
Shipper may request Gatherer, in writing, to construct additional laterals, pipeline extensions, and meter stations to connect CDPs to the Gathering Systems to lands that are not within a Drilling Unit (as defined herein). Gatherer shall work diligently to complete the construction as promptly as commercially reasonable. Shipper shall reimburse Gatherer for [***]% of Gatherer’s costs incurred in the construction of such laterals, pipeline extensions, and meter stations. Such costs shall [***] include all [***] capital costs incurred including, but not limited to, materials, labor, rights-of-way acquisition costs, permitting costs, and inspector costs. Such reimbursement shall be paid in [***] ([***]) [***]. For any lateral or extension constructed under this
Section 3.3(b),
Shipper’s Dedicated Gas on such laterals or extensions shall have priority over all other deliveries from other shippers flowing on such laterals or extensions.
|
(c)
|
At Gatherer’s sole cost and expense, Gatherer anticipates placing into service facilities necessary to connect the Denex Gathering System to the Harbison CDP by July 15, 2018 and the Redd CDP [***] ([***]) months after the Redd CDP commences flow, and will attempt to connect earlier based on a commercially reasonable basis. Once the connection to the Harbison CDP is completed, the Shipper’s MDV for the Denex Gathering System will be increased to [***] MMBtu/Day. A general description of such facilities are as follows:
|
(i)
|
Gatherer shall construct, or cause its Affiliate to construct, approximately [***] ([***]) miles of gathering pipeline to service EQT’s wells. Specifically, for the Harbison Well and Lutes Well , Gatherer shall construct, or cause its Affiliate to construct, approximately [***] [***] miles of pipeline loop from the area in proximity to the Harbison Well to the eastern end of the Denex Gathering System. For the Redd Well, Rice shall construct an approximately [***] ([***]) mile of gathering pipelineto transition the Redd Well to the suction of compression towards the middle of the Denex Gathering System. Notwithstanding anything else in this Section 3.3(c)(i), Gatherer shall have sole discretion over the construction of the facilities necessary to satisfy its obligations in this Section 3.3(c).
|
3.4.
|
Run Time
. Gatherer shall endeavor to maintain the run time of its facilities at [***] percent ([***]%) per Month on an hourly basis;
provided, however
, such run time calculation shall
|
3.5.
|
AGS Gathering System Pressure
. Gatherer shall endeavor to maintain a pressure at each CDP delivered into the AGS Gathering System located within the Acreage of no greater than [***] psi. To calculate the average AGS Gathering System pressure, Gatherer shall take the summation of the average daily pressure from each CDP delivering into the AGS Gathering System over each Month and divide by the aggregate number of CDPs. In the event the pressure at any CDP within the Acreage averages between [***] psi and [***] psi during any given Month, then Gatherer shall credit Shipper [***] ($[***]) per MMBtu for the gas affected during the given Month. In the event the pressure at any CDP within the Acreage averages greater than [***] psi during any Month, then Gatherer shall credit Shipper [***] ($[***]) per MMBtu for the gas affected during the given Month; provided that if the average Daily gas volumes delivered by Shipper to Gatherer at all CDPs and redelivered by Gatherer to Shipper at all Redelivery Points for such Month were in excess of the MDV, then Gatherer shall have no obligation to credit Shipper for such Month. Notwithstanding anything in this Agreement to the contrary, commencing on January 1, 2015 and continuing Month to Month thereafter until the date that is [***] ([***]) [***] after the Day Shipper notifies Gatherer in writing that it will not, for the remainder of the Primary Term or Extended Term, deliver to the AGS Gathering System volumes of gas in excess of the volumes being then presently produced from wells within the Acreage (and provided that average Daily volumes of gas delivered by Shipper during such [***] ([***]) [***] period are less than or equal to the volumes of gas delivered by Shipper on the date of such notification), Shipper waives and releases Gatherer from the obligation to credit Shipper for gas received within the Acreage during any Month that has an average AGS Gathering System pressure of less than [***] psi for such Month; provided that the termination of such waiver and release will not become effective until Shipper delivers, for an uninterrupted [***] ([***]) [***] period, Daily average volumes of gas that are less than or equal to the volumes of gas delivered by Shipper on the date of such notification. No pressure obligations shall apply to the Denex Gathering System and Gatherer will use commercially reasonable efforts to maintain a pressure at each CDP delivering into the Denex Gathering System of no greater than [***] psig.
|
3.6.
|
Buy-Back Meter
.
|
(a)
|
Installation
. At the written request of either Producer or Shipper, Gatherer shall provide Producer with a cost estimate and plans for the procurement and installation
|
(b)
|
Operation
. Producer shall be solely responsible for all costs and operations downstream of each Buy-Back Meter, including but not limited to using each such Buy-Back Meter to remove gas from the Gathering System. Any such gas removed by Producer shall be deemed to be pre-delivered to Shipper from Shipper’s account and such Buy-Back Meter shall be deemed a Redelivery Point for all purposes hereunder except with respect to Gatherer’s obligation to provide Firm Service at any such Buy-Back Meter Redelivery Point; the Parties acknowledge that Gatherer will only provide interruptible service at any such Buy-Back Meter Redelivery Point. The gas removed by Producer shall constitute a loan of an equivalent quantity of gas, in MMBtus, from Shipper to Producer; provided that (i) Producer shall repay to Shipper such loaned amount in-kind as soon as possible and (ii) all subsequent deliveries of gas by Shipper at the CDPs shall be deemed to repay any imbalance in Shipper’s account until the same quantity of MMBtus pre-delivered to Producer is fully restored to Shipper’s account. PRODUCER AND SHIPPER SHALL RELEASE, INDEMNIFY AND HOLD GATHERER HARMLESS FROM ANY AND ALL COSTS, FEES, TAXES, LOSSES AND DAMAGES RELATED TO ANY BUY-BACK METER.
|
4.1.
|
Service Fees
. The gathering and dehydration fee, the compression fee, and the interconnect fee are collectively referenced in this Agreement as the “
Service Fee
”
|
(a)
|
Gathering and Dehydration Fee
. Shipper shall pay a gathering and dehydration fee of [***] ($[***]) per MMbtu for all gas delivered to the CDPs into the Gathering Systems
provided, however
, that until the date that the TETCO Redelivery Point is in service and available for the redelivery of Shipper’s gas (and regardless of Shipper’s nominations, if any, to such Redelivery Point), the gathering and dehydration fee shall be [***] ($[***]) per MMBtu for all gas delivered into the CDPs. Upon Shipper’s delivery of [***] MMBtu per Day during any Month at any or all of the CDPs delivering into the AGS Gathering System, the applicable gathering and dehydration fee for all gas delivered at all CDPs shall be reduced by [***] ($[***]) per MMBtu for the remainder of the Primary Term and Extended Term.
|
(b)
|
Compression Fee
. Shipper shall pay [***] ($[***]) per MMBtu for compression fee for all gas delivered to the CDPs into the AGS Gathering System (“
AGS Compression Fee
”) and Shipper shall pay [***] ($[***]) per MMBtu for compression fee for all gas delivered to the CDPS into the Denex Gathering System (“
Denex Compression Fee
”). No Denex Compression Fee shall be assessed to a CDP when Gatherer has that specific CDP on bypass of compression as permitted by Section 2.2(d) of this Agreement.
|
4.2.
|
Fuel
. Shipper shall be allocated its pro rata share of the actual Fuel in MMBtus for each Gathering System. The lost and unaccounted for gas component of the Fuel allocated to Shipper shall not exceed [***] ([***]%) of Shipper’s Dedicated Gas delivered at the CDPs delivered into each Gathering System (measured in MMBtus) during any [***] ([***]) [***] period. If applicable, the compression component of the Fuel allocated to Shipper shall not exceed [***] ([***]%) of Shipper's Dedicated Gas per stage of compression performed by Gatherer in any [***].
|
4.3.
|
CPI Adjuster
. All Service Fees, except the Denex Compression Fee, shall be adjusted upward or downward, annually, for inflation or deflation on each January 1, beginning January 1, 2013 by multiplying each Service Fee by the sum of (a) one, plus (b) the percentage increase or decrease, if any, in the final Consumer Price Index for All Urban Consumers U.S. City Average, All Items, Not Seasonally Adjusted (“
CPI-U
”) (as reported by the United States Department of Labor, Bureau of Labor Statistics) for the previous twelve-Month (12-Month) period for which changes are reported;
provided, however
, that in no event will the Service Fee ever be reduced below the amounts set forth in
Section 4.1
. For purposes of this
Section 4.3
, the CPI-U shall not exceed [***]% per year. The Denex Compression Fee and Interconnect Fee will be adjusted by the same mechanism on each January 1, beginning January 1, 2017.
|
5.1.
|
Notices
. Unless expressly specified otherwise in this Agreement, all notices, demands or communications (“
Notices
”) under this Agreement shall be in writing and shall be addressed to the party as set forth in this Section 5. Notices shall be deemed effective and shall be deemed delivered (i) if by personal delivery or by overnight courier, on the date of delivery if delivered on or before 4:30 p.m. local time on such Day, (ii) if by electronic communication,
|
By:
/s/ Donald M. Jenkins
|
By:
/s/ Rob Wingo
|
Name:
Donald M. Jenkins
|
Name:
Rob Wingo
|
By:
/s/ David Schlosser
|
Name:
David Schlosser
|
Title:
EVP
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1.1.
|
Defined Terms
. The following terms, when capitalized in the Agreement and/or this
Exhibit B
, shall have the meanings defined either in this
Section 1.1
, or shall have the meanings ascribed to them elsewhere in the text of this Agreement.
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2.1.
|
General Representations and Warranties
. As of May 31, 2013 for Shipper and Producer and as of February 12, 2014 for Gatherer, and during the term of this Agreement, each party, as to itself only, represents and warrants that: (a) it has the right, power, authority and capacity to enter into and perform this Agreement and all transactions contemplated herein, and all actions required to authorize it to enter into and perform this Agreement have been properly taken; (b) there are no bankruptcy, insolvency, reorganization, receivership or other arrangement proceedings pending or being contemplated by it; (c) there are no pending or threatened lawsuits, proceedings, judgments or orders by or before any court or governmental authority that affect either its ability to perform this Agreement or the rights of the other party hereunder.
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2.2.
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Warranty of Title and Covenant to Defend
. Shipper hereby warrants that at the time of delivery of Shipper’s Dedicated Gas to the CDPs it will have good title to or the right to deliver the gas delivered hereunder and Shipper’s right to sell the same, or market said gas free from all liens and adverse claims, including liens to secure payment of production taxes, severance taxes, and other taxes. Shipper shall defend and indemnify Gatherer and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of adverse claims, whether meritorious or not, of any and all Persons relating to ownership of said gas or to royalties, overriding royalties, taxes, license fees, or charges thereon, resulting from actions of, by, or through or under Shipper. Gatherer shall be entitled to recover all reasonable attorneys’ fees incurred as a result of its involvement in any action or claim described herein.
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2.3.
|
Redelivery of Gas
. Shipper covenants to accept or otherwise make suitable arrangements for the disposition of its gas at the Redelivery Points. Upon Shipper’s failure to do so, Gatherer shall be immediately entitled to discontinue receipt of the Shipper’s Gas until Shipper is able to make such suitable arrangements.
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2.4.
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Operational Nomination and Balancing
. Nominations are to be submitted by Shipper to the attention of Gatherer’s gas scheduling department in writing, by electronic means designated by Gatherer by 11:30 a.m. Central Time on the Day before Gas is to flow. The nominations shall cite the aggregate volume of gas by system, adjusted for Fuel, as applicable, to be delivered by Shipper at the CDP(s) for redelivery by Gatherer at specified Redelivery Point(s), all in accordance with Gatherer’s then current nomination procedure. Gatherer shall notify Shipper of differences in nominated and scheduled quantities in a timely manner on the Day the nomination is made.
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2.5.
|
Agreement for Grant of Easement
. To the extent that Shipper or any of its Affiliates owns any surface property in fee or pursuant to a leasehold interest, Shipper shall, without cost to Gatherer and to the extent it has the right to do so, grant, assign or convey, or request the Affiliate to grant, assign or convey, to Gatherer an easement and right-of-way over, under and across such property, and through any adjoining lands in which Shipper may have an interest, for the purpose of installing, using, inspecting, repairing, operating, replacing, and/or removing Gatherer’s pipe, meters, lines, and other equipment used or useful in the performance of the Agreement. Any property of Gatherer placed in or upon any of such land shall remain the personal property of Gatherer. Gatherer shall indemnify and hold Shipper harmless of and from any and all claims and damages for all injuries to persons, including death, or damage to property arising out of or incident to Gatherer’s use of the easement hereunder transferred, only in the event said claim or damage shall be the result of the negligence of Gatherer, their employees, agents and representatives.
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3.1.
|
Points of Delivery and Redelivery
. The inlet block valve flange of Gatherer’s metering facilities located at a CDP is the point of delivery for all of the Shipper’s Gas delivered into the applicable Gathering System at such CDP. The outlet block valve flange of Gatherer’s metering facilities located at a Redelivery Point is the point of redelivery for all of the Shipper’s Gas delivered at such Redelivery Point.
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3.2.
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Transfer of Title
. Title to all of the Shipper’s Gas shall remain with Shipper and shall not pass to Gatherer, unless otherwise provided in this Agreement.
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3.3.
|
Possession and Control
. Shipper shall be in possession and control of the gas deliverable under the Agreement and responsible for any injury or damage caused thereby until the same shall have been delivered to Gatherer at the CDPs. Gatherer shall be deemed to be in exclusive possession and control of the gas once it is received at the CDPs until redelivery at the Redelivery Points, and responsible for any injury or damage caused thereby.
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3.4.
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Uniform Rate of Flow
. The parties recognize the desirability of maintaining a uniform rate of flow of gas to the Gathering Systems, and Shipper agrees to use its best commercially reasonable efforts to regulate its delivery of Shipper’s Gas so that gas shall be made available at the CDPs at as uniform a rate of flow as practicable.
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3.5.
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Pressure
. Shipper shall deliver gas, or cause gas to be delivered, at the CDPs at pressures sufficient to affect delivery into the Gathering Systems, but in no event shall Shipper cause the pressure at the CDPs to exceed the maximum allowable operating pressure (“
MAOP
”) as determined by Gatherer. Shipper shall also install and operate, or cause to be installed and operated, an automatic high pressure shutoff valve on the equipment at each CDP to shut off gas flow at a maximum pressure as determined by Gatherer from time to time to limit the pressure at which Shipper delivers gas to prevent the over-pressuring of the Gathering System for safety purposes.
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4.1.
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Excluded Gas
. Shipper or Producer hereby expressly reserves the following rights with respect to Shipper’s or Producer’s Gas and the Acreage prior to delivery of the same to Gatherer at the CDPs: (a) to use the gas for fuel in the development and operation of the leases from which the gas is produced; (b) to provide the gas for delivery to unaffiliated lessors of the leases of the gas if such lessors are entitled to use or take such gas in kind under the terms of the leases, provided however, that such gas is not delivered to the lessors via Gatherer’s Gathering Systems; (c) to use the gas for fuel or lift gas in the operation of the facilities which Shipper may install in order to deliver gas hereunder in accordance with the terms hereof; (d) to pool or unitize the leases (or any portion thereof) with other lands and leases;
provided
, that, this Agreement will cover Shipper’s interest in the pool or unit and the gas attributable thereto; and (e) [***].
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5.1.
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Obligation to Receive Gas
. Shipper acknowledges and understands that Gatherer will use the Gathering Systems to receive gas delivered by other parties and that Gatherer has the right to designate or utilize gathering, compression or dehydration facilities owned and operated by third parties to gather, compress, and dehydrate the Shipper’s Gas. Gatherer’s obligation to receive the Shipper’s Gas under the Agreement is subject to the limitations and conditions set forth below:
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(A)
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Restrictions
. If Gatherer is unable to receive the total volumes of the Gas due to any event of Force Majeure, Gatherer shall use its commercially reasonable efforts to control and receive only that portion of the Gas available for delivery from each CDP which is ratable on a volumetric basis with the total volumes subject to such restrictions and available for delivery from all CDPs on the Gathering Systems based upon the most recent Accounting Period of production during which no events of Force Majeure were in effect.
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(B)
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Unacceptable Gas
. Gatherer shall not be required to accept gas from any CDP where Gatherer reasonably believes an unsafe condition exists or where such gas does not meet the quality specifications set forth in
Section 7.1
.
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6.1.
|
Measurement Equipment
. Gatherer shall furnish and install at the CDPs a suitable Senior orifice meter run, and other ancillary devices as needed, such as transmitters and flow computers, or other types of meter or meters of standard make and design commonly acceptable in the industry and meter design where the facility will not require a shutdown to perform meter calibration, at the CDPs. Each meter installed shall be a meter acceptable in the industry and each meter shall be fabricated, constructed, installed, and operated in accordance with the requirements of applicable provisions in American Gas Association (“
AGA
”) - American Petroleum Institute (“
API
”) AGA 2000 I API 14.3 specifications, and American National Standards Institute (“
ANSI
”) - API ANSVAPI 2530, “
Orifice Metering of Natural Gas
” (AGA gas Measurement Committee Report No. 3) of the Natural Gas Department of the AGA, Electronic flow measurement shall comply with API 21.1, Flow Measurement Using Electronic Metering Systems, in effect at the time of installation, as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the parties. Chart recorded measurement should not be installed or accepted as primary measurement without mutual agreement by both parties. Any meter installed hereunder shall be open to inspection by Shipper at all reasonable times. The charts, electronic flow measurement (“
EFM
”) data and/or records pertaining to measurement hereunder shall be retained by Gatherer for a period of [***] ([***]) [***] (or longer to the extent required by Law) for the mutual use of the parties.
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6.2.
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Shipper’s Check Meters
. Shipper may, at its option and sole expense, install, maintain and operate check meters of a suitable type and other equipment to check Gatherer’s meters;
provided, however
, that such check meters and other equipment shall be installed by Shipper so as not to interfere with the operation of any of Gatherer’s facilities. Gatherer and Shipper shall have access to each other’s measuring equipment at all times during business hours, but the reading, calibrating and adjustment thereof and the changing of charts shall be done only by the employees or agents of Gatherer and Shipper, respectively, as to meters or check meters so installed hereunder. If EFM is installed by Shipper, Shipper shall allow Gatherer to connect to it and access all relevant data.
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6.3.
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Meter Calibration
.
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(A)
|
Calibration
. Gatherer shall calibrate meters as often as required, as determined by Gatherer in accordance with standard industry practices to reasonably assure accurate measurement, but at least twice per year. Calibrations of meters will be made in the presence of representatives of Shipper, if Shipper chooses to be represented. If either party, at any time, desires a special test of any of the meters, the party will promptly notify the other party, and the parties will then cooperate to secure a calibration test and a joint observation of any adjustments, and the meter shall then be adjusted to accuracy. The costs of special tests shall be borne by the requesting party unless the meter is found to be more than [***] percent ([***]%) in error, in which case Gatherer shall pay the costs. Gatherer shall give Shipper notice of the time of all regular tests of its meters and other tests, sufficiently in advance to allow Shipper to have its representative present. Orifice plate inspection will be made at each meter calibration.
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(B)
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Errors Less Than or Equal to [***]%.
If upon any test, any of Gatherer’s measurement equipment is found to be in error by [***] percent ([***]%) or less, previous recordings of such equipment shall not be adjusted by the amount of the error, but such equipment shall be adjusted to a condition of accuracy.
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(C)
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Errors Greater Than [***]%
. If, upon any test, any of Gatherer’s measurement equipment is found to be inaccurate by greater than [***] percent ([***]%), and the total inaccuracy is greater than [***] MCF [***], then the registrations and billings shall be corrected for a period from the beginning of the Accounting Period in which the test was conducted, using the order of preference set forth in
Section 6.4
below. Following any test, measurement equipment found inaccurate shall be adjusted to a condition of accuracy.
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6.4.
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Measurement Equipment Out of Service or Repair
. If Gatherer’s measurement equipment is found to be measuring inaccurately and the amount of gas delivered cannot be ascertained or computed from the reading, then the gas delivered during the Accounting Period shall be estimated and agreed upon by the parties based on the best data available, using the first available of (i) the registration of any check meter, including Shipper’s Check Meters, or meters if installed and accurately registering; or, (ii) correction of the errors, if the percentage of error is ascertainable by meter calibration, test or mathematical calculation; or (iii) estimation based on comparison of the quantity of deliveries with deliveries during preceding periods under similar conditions when the meter was registering accurately.
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6.5.
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Standards for Computations
. All fundamental constants, observations, records, calculations, and procedures involved in the determination and/or verification of the quantity and other characteristics of gas measured hereunder, for CDP measurement purposes, unless otherwise specified herein, shall be in accordance with the applicable provisions in ANSI - API ANSI/API 2530, “
Orifice Metering of Natural Gas
” (AGA Gas Measurement Committee Report No. 3) as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the parties. Factors required in the computations shall be determined in the following manner:
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(A)
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Temperature
. The temperature of gas flowing through each meter shall be determined by a recording thermometer or EFM installed by Gatherer (at its sole cost and expense) to properly record the temperature of the flowing gas and the arithmetical average of the temperature recorded while the gas is flowing during each meter chart interval shall be used in correcting volumes delivered hereunder to a temperature base of sixty degrees Fahrenheit (60°F).
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(B)
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Base Pressure
. The base pressure that shall be used for all gas measurement hereunder shall be 14.73 Psia.
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(C)
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Barometric Pressure
. The average absolute atmospheric (barometric) pressure shall be assumed to be 14.40 Psia regardless of the actual elevation or location of the CDP above sea level or of a variation of barometric pressure from time to time.
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(D)
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Unit of Measurement
. The unit of gas volume measurement shall be a MCF of gas. If the pressure base is changed or modified from 14.73 Psia by any regulatory agency having jurisdiction, the unit of measurement shall be adjusted to conform to the new pressure base by use of a factor, the numerator which is 14.73 Psia and the new pressure base (expressed in Psia) is the denominator.
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(E)
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Deviation from Ideal Gas Laws
. Deviation from Ideal Gas Laws shall be determined in accordance with the formulas prescribed in AGA Report No. 8 or other approved methods. The pressure and temperature data shall be taken by appropriate methods, and deviation from Ideal Gas Laws shall be calculated. The accuracy of the super-compressibility factors determined shall be verified once each year, or more often if necessary, and such factors shall be determined in accordance with the AGA Report No. 8 or other approved methods.
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6.6.
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Gas Analysis
. The heating value and specific gravity of the gas shall be determined using chromatographic methods as often as required, using representative spot samples or continuous samplers as determined by mutually agreed between Shipper and Gatherer in accordance with standard industry practice, to reasonably assure accurate determinations, [***]. The tests shall determine the heating value and specific gravity to be used in computations in the measurement of natural gas received by Gatherer until the next regular test, or until changed by special test. For purposes of determining heating value, all gas measured shall be based on actual water vapor content at delivered pressure and temperature conditions. No heating value will be credited for Btus attributable to hydrogen sulfide or other nonhydrocarbon components. Shipper may obtain comparative samples and may connect in parallel for samples. Comparative cylinders are to be connected and/or removed at the same time as Gatherer’s sample.
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6.7.
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Electronic Flow Measurement
. Gatherer may install EFM devices to measure all or part of the gas delivered pursuant to the Agreement. If the EFM equipment is installed, it shall be utilized, and volumes shall be calculated in accordance with generally accepted industry standards. Shipper shall be provided access to the relevant EFM data from Gatherer’s flow measurement equipment. Any cost or expense incurred by Shipper to receive such data shall be the sole responsibility of Shipper.
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6.8.
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New Measurement Techniques
. If at any time a new industry accepted method or technique is developed with respect to gas measurement or the determination of the factors used in such gas measurement, such new method or technique may, at Gatherer’s sole election, be substituted.
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7.1.
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Gas Quality Requirements
. The gas received by Gatherer hereunder at each CDP shall be commercial in quality, and free of all odor and deleterious substances injurious to pipelines (including dust, dirt, gum-forming constituents, free water, bacteria, and other liquid or solid matter that might interfere with its merchantability or cause injury to or interference with proper operations of the facilities through which the gas flows). Concentrations of hazardous substances must not be hazardous to health, injurious to pipeline facilities, or a limit to marketability. Hazardous substances shall be defined as toxic substances, carcinogenic substances, and/or reproductive toxins. The Shipper’s Gas delivered at the CDPs shall always conform to the specifications of the pipelines connected to the downstream side of each of the Redelivery Points, as the same may be modified or revised from time to time, and shall initially conform to the following specifications:
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(A)
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Hydrogen Sulfide
– not contain more than one-half (1/2) of a grain per one hundred (100) cubic feet, or 8 parts per million (8 PPM).
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(B)
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Total Sulfur
– not more than five (5) grains per one hundred (100) cubic feet.
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(C)
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Flowing Gas Temperature
– not less than forty degrees (40°F) Fahrenheit nor more than one hundred twenty degrees (120°F) Fahrenheit.
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(D)
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Heating Value
– the gross heating value shall not be Jess than 967 BTU per standard cubic foot on a saturated basis at a base pressure of 14.73 Psia or greater than 1100 BTU per standard cubic foot on a saturated basis at a base pressure of 14.73 Psia.
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(E)
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Wobbe Number
– not less than 1314 nor greater than 1400 or current TETCO Wobbe specifications in effect (calculated using Total Heating Value (THV), dry, under standard conditions at 14.73 psia at 60 degrees (60°F) Fahrenheit.
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(F)
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Water
– there shall not be any free water.
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(G)
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Oxygen
– not more than one tenth of one percent (0.1%) by volume.
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(H)
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Nitrogen and Oxygen Content
– not more than two and seventy-five hundredths percent (2.75%) by volume.
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(I)
|
Carbon Dioxide (CO2)
– not more than two percent (2%) by volume.
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(J)
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Total Non-Combustible Gases
– not more than four percent (4%) by volume.
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(K)
|
Hydrocarbon Dewpoint
– not more than fifteen degrees (15°) Fahrenheit.
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7.2.
|
Nonconforming Gas
.
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(A)
|
Free Flow of Gas
. Shipper shall cause its gas to meet the quality specifications contained in this Article and insure that the gas contains no free liquids (except fluids entrained in the gas phase) and solids that could accumulate in Gatherer’s pipelines and impede the free flow of gas. Gatherer shall be responsible and shall make no additional charge to Shipper for the disposal of water, fluids and solids collected through mechanical means. Gatherer shall remit to Shipper all of its pro rata share of the Condensate Proceeds from any sale of liquid hydrocarbons (including condensate and drip liquids) so collected from only the AGS Gathering System and allocated to Shipper on an inlet MMBtu basis. As used herein, “
Condensate Proceeds
” means the actual proceeds received by Gatherer from the sale of condensate collected from the Gathering Systems after deducting Gatherer’s allocation of capital expenses directly incurred or made by Gatherer to collect, remove, treat, condition, store, or transport such liquids, including water and condensate, operating and direct expenses such as personnel costs, chemical costs, and disposal costs, taxes, fees, and adjustments, including, but not limited to, transportation, marketing, loading, third party blending or treating fees, commissions, fuel, losses, freight allowances and adjustments for product quality incurred or made by Gatherer in connection with the sale of said condensate.
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(B)
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Testing
. Gatherer may test the Dedicated Gas for adherence to the specifications contained in this Article. Such testing shall take place at or near the applicable CDP, and shall be in accordance with generally accepted industry standards and procedures. If the Dedicated Gas does not meet the specifications set forth in
Section 7.1
above, Gatherer, at its option, may accept or refuse to accept delivery of said gas into the Gathering Systems. Gatherer’s acceptance of such nonconforming Dedicated Gas shall not constitute a waiver of this provision with respect to any future delivery of gas by Gatherer. If Gatherer declines to accept any Dedicated Gas, Shipper shall make reasonable efforts to cause the nonconforming Dedicated Gas to be altered to conform to the quality specifications set forth in
Section 7.1
, above. Shipper shall give Gatherer notice of the actions taken to meet the specifications. If Shipper’s nonconforming Dedicated Gas is delivered into Gatherer’s pipeline without the prior knowledge or approval of Gatherer, Shipper shall be liable for any damage or injury to any meters, equipment or other facilities of Gatherer caused by Shipper or its agents.
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(C)
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Remedial Action
. Notwithstanding the foregoing, in the event that the Gas does not conform to the quality specifications set forth in this Article, Gatherer shall have the sole right but not the obligation to install facilities necessary to cause the nonconforming gas to conform thereto. In such event, Gatherer shall charge, and Shipper agrees to pay, additional fees and fuel allowances as the same shall be determined by both parties in good faith, as consideration for such corrective services.
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8.1.
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Shipper shall pay or cause to be paid, and agree to indemnify and hold harmless Gatherer from and against the payment of, all excise, gross production, severance, sales, occupation, and all other taxes, charges, or impositions of every kind and character required by statute or by any Governmental Authority with respect to Shipper’s Dedicated Gas [***]. Subject to
Section 8.2
, Gatherer shall pay or cause to be paid all taxes and assessments, if any, imposed upon Gatherer for the activity of gathering of Shipper’s Dedicated Gas [***].
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8.2.
|
Shipper shall reimburse Gatherer for [***] (a) any additional, increased, or subsequently applicable taxes (other than income taxes and any real or personal property or other ad valorem tax imposed on Gathering Systems) implemented or imposed after March 1, 2011 that are lawfully levied on or paid by Gatherer with respect to its performance under this Agreement or on any part of Gathering Systems and (b) any new or subsequently applicable assessments, fees or other charges implemented or imposed on Gatherer with respect to the services provided hereunder, including any such assessments, fees or other charges arising from any carbon tax or cap and trade law, rule or regulation adopted after March 1, 2011. [***]. [***]. If any Governmental Authority takes any action (including issuance of any “policy statement,” rule, or regulation) whereby the receipt, gathering, treating, or delivery of Shipper’s gas as contemplated under this Agreement shall be prohibited or subject to terms, conditions or regulations, including rate or price controls or ceilings or open access requirements not in effect on March 1, 2011, and which, in the reasonable judgment of Gatherer, materially adversely affect the economics of the services provided, and Fees received, under this Agreement, then, upon notice by Gatherer to Shipper, the Parties shall as promptly as practicable meet to negotiate in good faith such changes to the terms of this Agreement as may be necessary or appropriate to preserve and continue for the Parties the rights and benefits originally contemplated for the Parties by this Agreement, including returns expected by Gatherer, with such amendment to this Agreement to be effective no later than the effective date of such new or amended applicable law.
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9.1.
|
Gatherer’s Invoice
. After delivery of the Shipper’s Gas has commenced, Gatherer shall send a monthly statement to Shipper indicating the quantity of the Shipper’s Gas delivered (excepting the percentages retained by Gatherer) and the Service Fees due to Gatherer for the services provided during the preceding Accounting Period. [***], Shipper shall remit the invoiced amount on the date that is the later of the 25th Day of the Month following the Accounting Period or fifteen (15) Days after the date of Gatherer’s statement, If Shipper does dispute a portion the invoiced amount, [***]. Shipper shall indemnify and hold Gatherer harmless from any and all charges, penalties, costs and expenses of whatever kind or nature arising from Shipper’s failure to pay undisputed amounts, including costs and expenses of any litigation and reasonable attorneys’ fees associated therewith. Unpaid [***] amounts due shall accrue interest at the lesser of a rate equal to the prime rate in effect at JP Morgan Chase Bank or its successor on the first Day of the month in which delinquency occurs plus [***]% or the maximum permitted by Law.
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9.2.
|
Records; Finality of Statement
. Each party agrees to keep records and books of account in accordance with generally accepted accounting principles in the industry. Any statement shall be final as to both parties unless questioned within [***] ([***]) [***] after payment thereof has been made.
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9.3.
|
Errors
. If following payment of a statement either party asserts an error regarding measurements, billings, payments, or other charge or computation regarding the statement, it shall be adjusted without interest or penalty as soon as reasonably possible, but in any event, within one Month from the date the error is asserted and resolved. Neither party will have any right to recoup or recover prior overpayments or underpayments that result from errors that occur in spite of good faith performance if the amounts involved do not exceed $[***] per Month per CDP. Either party may require prospective correction of such errors. Statements not questioned within [***] ([***]) [***] from the statement date shall be final as to both parties.
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9.4.
|
Records and Charts
. Each party shall have the right for [***] ([***]) [***] following receipt of any statement, charge, or computation to examine the books, records, charts, or EFM data of the other party, during normal working hours, to the extent necessary to verify the accuracy of any statement, charge or computation made under the Agreement. The parties shall each preserve all test data, charts, data and other similar records in conformance with Law, but not less than [***] ([***]) [***]. Gatherer shall provide charts and records to Shipper for verifying the accuracy of measurements within [***] ([***]) [***] after request by Shipper. Shipper shall return the charts and records, and any and all copies, within [***] ([***]) [***] after receipt.
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10.1.
|
Suspension of Obligations
. In the event either Gatherer or Shipper is rendered unable, by reason of an event of Force Majeure, as hereinafter defined, to perform, wholly or in part, any obligation or commitment set forth in the Agreement, then upon such party giving notice and full particulars (including all supporting documentation) of such event as soon as practicable after the occurrence thereof, the obligations of both parties shall be suspended to the extent and for the period of such Force Majeure provided that the party claiming an event of Force Majeure shall make all reasonable attempts to remedy the same with all reasonable dispatch.
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10.2.
|
Force Majeure Defined
. The term “Force Majeure”, as used herein, means an event that (i) was not within the control of the party claiming its occurrence; and (ii) could not have been prevented by such party through the exercise of due diligence. Events of Force Majeure shall include acts of God, strikes, lockouts or industrial disputes or disturbances, civil disturbances, arrest and restraint of rulers or people, interruptions by government or court orders, necessity for compliance with any present and future valid orders of court, or any law, statute, ordinance or regulation promulgated by any governmental or regulatory authority having proper jurisdiction, acts of the public enemy, wars, riots, blockades, insurrections, including inability to secure materials by reason of allocations promulgated by authorized governmental agencies, epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts, inclement weather which necessitates extraordinary measures and expense to construct facilities and/or maintain operations, explosions, partial or entire failure of gas supply, breakage or accident to machinery, compressors or lines of pipe, freezing of wells, compressors or pipelines, inability to obtain or delays in obtaining materials, easements or rights-of-way (provided they were pursued with diligence and in a timely manner), inability of downstream markets to take gas or liquids or market failure due to conditions other than price, the shutting in of facilities for the making of repairs, alterations or maintenance to wells, pipelines or plants, or any other cause whether of the kind herein enumerated or otherwise, not reasonably within the control of the party claiming “
Force Majeure
”.
|
10.3.
|
Inapplicability of this Article
. Neither party shall be entitled to the benefit of the provisions of this Article if the failure was caused by lack of funds, or with respect to the payment of any amount or amounts then due hereunder.
|
10.4.
|
Strikes and Lockouts
. Settlement of strikes and lockouts shall be entirely within the discretion of the party affected, and the duty that any event of Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demands of the parties directly or indirectly involved in such strikes or lockouts when such course is inadvisable in the discretion of the party having such difficulty.
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11.1.
|
Termination of the Agreement
. If either party shall materially fail to perform any of its covenants or obligations under this Agreement, in addition to its other rights and remedies that the non-breaching party may have at law or in equity, the non-breaching party may proceed as follows:
|
(A)
|
Notice of Default
. The non-defaulting party will provide written Notice to the other party in default, stating specifically the cause for terminating the Agreement, and declaring it to be the intention of the party giving notice to terminate the same; thereupon, the party in default shall have [***] ([***]) [***] Days after receipt of the Notice to remedy or remove or cure the default. If the default is of a nature that requires more than [***] Days to cure, the party in default shall inform the non-defaulting party of the anticipated period (such period not to extend longer than [***] ([***]) [***]) and must diligently begin to cure. If within such period the defaulting party cures the default, then such notice shall be withdrawn and the Agreement shall continue in full force and effect. Failure to cure within the identified period will result in immediate termination of the Agreement. Notwithstanding the foregoing, with respect to a default of Shipper or Gatherer to make payment of undisputed amounts to the other, as applicable, when due, then the period to cure such default shall be [***] ([***]) Days from receipt of Notice thereof.
|
(B)
|
Termination
. In case the defaulting party does not cure the default within the applicable periods, then the non-defaulting party may immediately terminate this Agreement; provided however, that any termination this Agreement shall not affect or negate any obligations of a party arising or accruing prior to the termination date or otherwise affect any other remedy that the non-breaching party may have at law or in equity.
|
(C)
|
Specific Performance
. The parties recognize and agree that remedies at law will not be adequate to satisfy a breach of the respective obligations of Producer to sell and Shipper to deliver the Dedicated Gas to the CDPs pursuant to
Section 2.1
of this Agreement. Accordingly, the non-breaching party shall be entitled to specific performance in the event of any actual breach by Shipper or Producer of their obligations set forth in
Section 2.1
of this Agreement, which remedy shall be exclusive and not in addition to any remedy available by contract, tort, common law or applicable state and federal statutes.
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11.2.
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Waiver
. No waiver by either Shipper or Gatherer of any default of the other under this Agreement shall operate as a waiver of any future default, whether or like or different character or nature, nor shall any failure to exercise any right hereunder be considered as a waiver of such right in the future.
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12.1.
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Binding Nature of the Agreement and Assignment
. Gatherer shall make no assignment of this Agreement to a non-Affiliate without the express written consent of the Shipper, such consent not to be unreasonably withheld, conditioned, or delayed;
provided,
however
, that no such consent shall be required where the assignee [***]. Nothing herein contained shall in any way prevent Gatherer from pledging or mortgaging all or any part of the Gathering System as security under any mortgage, deed of trust, or other similar lien, or from pledging this Agreement or any benefits accruing hereunder to the party making the pledge, without the assumption of obligations hereunder by the mortgagee, pledgee or other grantee under such an instrument. It is agreed that no sale of all or substantially all of the Gathering Systems nor sale or assignment of any of a Producer’s Acreage shall be made unless the purchaser or assignee thereof shall assume and agree to be bound by this Agreement insofar as the same shall affect and relate to the Acreage, AGS Gathering System or interests so sold or conveyed.
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12.2.
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No Third Party Beneficiaries
. Nothing in this Agreement, expressed or implied, confers any rights or remedies on any person or entity not a party hereto other than successors and assigns, or heirs.
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12.3.
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Entire Agreement; Amendments
. This Agreement and the attached exhibits together with the provisions of those certain Assignments and Assumptions of Cracker Jack Gas Gathering Agreements dated as of May 31, 2013, among the parties described in Recital A, are the entire agreement and understanding between the parties, and supersedes and renders null and void and of no further force and effect any prior understandings, negotiations or agreements between the parties relating to the subject matter hereof, and all amendments and letter agreements in any way relating thereto. No provision of this Agreement may be changed, modified, waived or discharged orally, and no change, modification, waiver or amendment of any provision will be effective except by written instrument to be executed and approved by the parties hereto. No representation, understanding, warranty, condition or agreement of any kind shall be relied upon by the parties except those contained in this Agreement.
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12.4.
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Headings
. The article and section headings are for reference and convenience only and shall not be considered in the interpretation of this Agreement.
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12.5.
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Governing Law
. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas without regard to principles of conflicts of laws. This Agreement has been drafted jointly by the parties. Therefore the rules of contract construction that ambiguities shall be construed against the drafter shall not apply.
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12.6.
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Counterparts
. This Agreement may be executed in one or more original counterparts, all of which, taken together shall constitute an original. This Agreement shall not become effective unless and until it has been executed by both parties.
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12.7.
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Severability
. If any provision of this Agreement is held to be invalid or unenforceable in whole or in part, such provision, only to the extent invalid or unenforceable, shall be severable from this Agreement, and the other provisions of this Agreement shall remain in full force and effect and the remaining provisions hereof shall be liberally construed to carry out the purpose and intent of this Agreement.
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12.8.
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Non-Disclosure
. Unless otherwise agreed to in writing by all the Parties hereto, the terms and conditions of this Agreement shall not be disclosed or revealed to any persons or entities other than those employed by or working on behalf of the parties hereto, except for disclosures: (i) made to a bona fide potential purchaser, investor, partner, lender, financial advisor, consultant or attorney of such party; (ii) required by applicable law, order, decree, regulation, rule (including without limitation, those of any regulatory agency, securities commission or stock exchange) or judicial, administrative, regulatory or self-regulatory proceeding; or (iii) made to owners of a royalty interest in the Acreage whose gas is sold by Shipper, but only for the purpose of determining the cost attributable to such royalty owner’s interest. Notwithstanding the foregoing or anything herein to the contrary, the parties may, without liability hereunder, disclose the existence of this Agreement and the identities of the parties hereto.
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12.9.
|
Limitation of Liability
. No party shall be liable to the other party for any indirect, incidental, consequential, special, exemplary, or punitive damages arising from any breach of this Agreement, including, without limitation, any breach of a warranty contained herein or of any obligation to perform services and/or provide deliverables by a specified time.
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12.10.
|
Anti-Corruption and Facilitation Payments
. In implementing the requirements of this Agreement, the Parties agree to use reasonable endeavors to comply with, and to use reasonable endeavors to procure that relevant third parties used for fulfilling the Parties’ respective obligations under the Agreement comply with, all laws, rules, regulations, decrees or official governmental orders prohibiting bribery, corruption and money laundering. All financial settlements, billings and reports in connection with the Agreement shall properly reflect the facts related to any activities and transactions handled for the account of the other Party.
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12.11.
|
Further Assurances
. Each Party and Producer shall take such acts and execute and deliver such documents as may be reasonably required to effectuate the purposes of this Agreement. Upon termination of this Agreement in accordance with its terms, each Party and Producer shall file any releases with the proper Governmental Authorities as requested by such other Party.
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Company
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Jurisdiction of Organization
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Rice Midstream OpCo LLC
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Delaware
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Rice Poseidon Midstream LLC
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Delaware
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Rice Water Services (OH) LLC
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Delaware
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Rice Water Services (PA) LLC
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Delaware
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Vantage Energy II Access, LLC
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Delaware
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Vista Gathering, LLC
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Delaware
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(1)
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Registration Statement (Form S-3 No. 333-209089) of Rice Midstream Partners LP,
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(2)
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Registration Statement (Form S-3 No. 333-214313) of Rice Midstream Partners LP, and
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(3)
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Registration Statement (Form S-8 No. 333-201169) pertaining to the 2014 Long Term Incentive Plan of Rice Midstream Partners LP;
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1.
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I have reviewed this Annual Report on Form 10-K of Rice Midstream Partners LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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1.
|
I have reviewed this Annual Report on Form 10-K of Rice Midstream Partners LP;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of RMP.
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/s/ Steven T. Schlotterbeck
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February 15, 2018
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Steven T. Schlotterbeck
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President and Chief Executive Officer, Rice Midstream Management LLC, RMP’s General Partner
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/s/ Robert J. McNally
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February 15, 2018
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Robert J. McNally
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Senior Vice President and Chief Financial Officer, Rice Midstream Management LLC, RMP’s General Partner
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