Norwegian guru and co-founder of Viking Global Investors LP Andreas Halvorsen (Trades, Portfolio) purchased 10,134,260 shares of Rice Energy (RICE, Financial) on April 15.
Rice Energy is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin. The company's main customers include Sequent Energy Management and Dominion Field Services.
Rice Energy operates in two business segments, which are managed separately due to their distinct operational differences – the Exploration and Production segment and the Midstream segment. The Exploration and Production segment is responsible for the acquisition, exploration and development of natural gas, oil and NGL properties in the Appalachian Basin. The Midstream segment is engaged in the gathering and compression of natural gas, oil and NGL production and in the provision of water services to support the well completion services of the company and third parties in the Appalachian Basin.
Rice Energy is also traded in Germany.
Rice Energy has a market cap of $2.27 billion, an enterprise value of $4.2 billion, a P/B ratio of 1.77 and a quick ratio of 1.66.
According to GuruFocus Rice Energy has a below average Financial Strength rating of 3/10 with a 0.10 cash-to-debt ratio ranking it beneath 72% of the 446 companies in the Global Oil & Gas E&P industry. The company also has a 3/10 Profitability and Growth ranking, according to GuruFocus, with one severe warning sign. The company continues to issue long-term debt. Over the previous three years Rice Energy has issued $1.2 billion of new debt.
It is possible that Halvorsen sees hidden value in Rice Energy as the company reported in its most recent 10-K that it has been able to successfully drill and complete four horizon wells on the company’s Marcellus Shale acreage with a 100% success rate. The company has also increased its average production from 2014 to 552 MMcfe/d in 2015, a 101% increase from 2014 results. The company has also increased its revenue growth 20.80% during the previous 12 months, another good sign that may have influenced Halvorsen.
Below is a Peter Lynch Chart for Rice Energy.
Halvorsen has been adding to or purchasing stakes in the following oil and gas companies: Rice Energy, Gulfport Energy Corp. (GPOR, Financial), Encana Corp. (ECA, Financial), Range Resources (RRC, Financial), Cabot Oil & Gas Corp. (COG, Financial) and Southwestern Energy Co. (SWN, Financial). It is likely that Halvorsen is betting big on oil companies because he believes there is tremendous hidden value in the industry. It is likely that he is betting big on oil and gas companies because highly volatile oil prices may rise in the future and if that does happen Halvorsen's stakes in oil and gas companies could potentially turn into a fortune.
Cheers to your investment success.
