Key Takeaways From Rice Energy's Acquisition Announcement

The upstream deal, which results in dilution of about 55 percent for common stockholders, boosts Rice's Marcellus core acreage by about 55 percent. Production from the Vantage assets in the second quarter was about 400 Mmcfe/d.

"As a first cut at deal metrics, we apply $2,500 per Mcfe/d to the 400 Mmcfe/d in production to estimate the PDP value at $1.0 billion, and we value the 37,000 Barnett acres at $500/acre back off a further $18.5 million," analyst Charles Meade wrote in a note.

Related Link: Rice Energy Shares Lower On News Of Acquisition, Common Share Offering

"The implied ~$1,080 million for the 80,000 acres of Marcellus leasehold yields ~$13,500 per acre, an attractive metric in our view," Meade continued.

Meanwhile, on acquiring midstream assets, Rice Midstream Partners will receive a gas gathering pipeline with capacity of more than 400 Mmcf/d and 7,100 horsepower of compression.

Meade has a Hold rating on Rice Energy shares.

At time of writing, shares of Rice Energy fell 7.18 percent to $25.19.

Full ratings data available on Benzinga Pro.