Brothers Rice cook up a plan to improve EQT’s direction
Thirteen months after selling Rice Energy Inc., two of the three founders signed an investor letter expressing concern about the direction EQT Corp. is headed and recommending that one founder be installed as chief executive officer.
The letter, signed by brothers Toby and Derek Rice, was released Monday morning. EQT, based in downtown Pittsburgh, bought fellow oil and gas company Rice for $6.7 billion in 2017. Rice Energy was headquartered in Southpointe at the time.
The third founder, Daniel Rice IV, another brother, did not sign. He is an EQT board member.
Referring to themselves as “The Rice Team,” Toby and Derek said in the letter they still “believe strongly in the potential of EQT’s assets, but that the firm’s “operational performance has translated into a severely depressed stock price.”
They went on to say, “EQT has the potential to unlock significant value for all its shareholders, but, to deliver the results this asset base deserves, a course correction is needed. EQT must add proven operational experience to the Board and senior management team – in particular, individuals with experience in large-scale operational planning.”
As part of the described “course correction,” the team recommended that Toby Rice be installed as chief executive officer. They also wrote that they “have a proven, detailed business plan to generate” $400 million to $600 million of free cash flow per year above EQT’s projections. Details of the plan, the brothers added, are at www.eqtpathforward.com.
Toby and Derek said in the letter, filed with the U.S. Securities and Exchange Commission, that they spoke privately with Chairman Jim Rohr and current CEO Rob McNally “to express our concerns and propose solutions, which included, among other things, inserting Toby Rice into the organization with proper authority and support to oversee operations. Unfortunately, given the lack of reciprocal engagement – and EQT pushing forward with establishing its 2019 operational plan and budget – it has become apparent that they are unwilling to make the changes needed.”
The Rice Team said it is prepared for a proxy battle if that is necessary.
Before the sale, Toby was the chief operating officer at Rice and Derek was vice president of exploration. Daniel IV was CEO.
The acquisition is one facet – albeit a major one – in a year of change at EQT. The company has experienced a number of shifts in top management.
Linda Robertson, spokeswoman for EQT, said in a prepared statement: “EQT is a refreshed company with a new management team, new operating plan and substantially reconstituted Board. … We are confident that EQT is taking the right steps to deliver superior value.”