Rice Energy to acquire start-up Lola Energy
August 4, 2017
Amid the depths of the natural gas industry downturn two years ago, an analyst predicted there would be a number of mergers before drilling in the Marcellus and Utica shales returned to normal levels.
The latest iteration of that prediction occurred last month. Rice Energy, which itself is in the process of being acquired by Pittsburgh-based EQT, acknowledged in releasing its second-quarter earnings Wednesday that it is buying Wexford-based Lola Energy. The purchase price is $180 million.
“This acquisition is highly complementary to our existing position and consists of 11,700 net undeveloped acres in Greene County and 4,800 net undeveloped acres in Monongalia and Wetzel counties, West Virginia,” the company stated in its second-quarter financial report.
Lola was formed in late 2015 by several former EQT executives after it closed on a $250 million equity commitment from Denham Capital, supplemented by equity from Lola Chief Executive Jim Crockard and other members of the company’s executive management team.
Lola’s strategy was to start with a small amount of leasehold, perhaps 5,000 acres, with a focus on value for itself and the landowners with whom it established leases. Crockard, who grew up in Carmichaels and is a graduate of Waynesburg University, said the company also planned to do business with the local supply chain as much as possible.
Now Lola, which was preparing to drill its first well in Greene County, is becoming part of Rice, which before the end of the year will become part of EQT.
Until that occurs, Rice will continue to operate as a separate company.
In 2016, Rice acquired subsidiaries of Vantage Energy Inc. At the time, Vantage was Greene County’s largest leaseholder.
On June 19, when EQT announced its $6.7 billion purchase of Southpointe-based Rice, it stated that it has added more than 485,000 acres to its development portfolio since the start of 2016.
EQT CEO Steve Schlotterbeck noted that Rice’s acreage footprint is largely contiguous to EQT’s existing acreage, which he said will provide substantial synergies, particularly in Greene and Washington counties, where the companies have significant overlap.
It appears that Rice’s Lola acquisition will augment those synergies.
EQT has pursued a consolidation strategy aimed at longer laterals and more operational efficiencies. If the deal to acquire Rice is completed, EQT would become the nation’s largest natural gas producer.