Daniel Rice IV, and his brothers Toby and Derek, sprinted through the past decade. They started Rice Energy in 2007 while in their mid-20s with little to no management experience.
CEO Daniel had done energy investment banking and worked for an offshore drilling company. President and COO Toby had a petroleum engineering degree. Executive Vice President of Exploration Derek had a petroleum geology degree.
As Rice Energy grew, they brought in private equity investors. In 2014, they took the company public, along with Rice Midstream Partners. They were the youngest management team to have two public companies in the history of the New York Stock Exchange. Rice Energy grew from 150 to 550 employees, and this summer, EQT Corp. agreed to acquire Rice Energy for $6.7 billion.
“We started with essentially $30 million of our own money, and we grew it into this billion dollar enterprise with the same approach and the same enthusiasm that we had from the beginning,” Daniel says.
Disadvantages into advantages
Part of Rice Energy’s success has come from taking challenges — young executives and global competitors — and using those to its advantage.
“People that have the perception that we’re less experienced go out of their way to prove that they’re more experienced. They might talk more and divulge a lot more information than they need to,” he says.
The Rice brothers couldn’t afford to underestimate anyone. Instead, they asked questions and learned quickly.
During their IPO roadshow, they met the issue head on; their first slide called attention to their age to reassure potential investors.
Daniel says culture starts with the role models within an organization. If you want a fun, hip culture, the leaders have to embody that.
“It was easy because with Toby, Derek and I at the top, we built a team that shared our same philosophy, same behaviors, same attitudes toward people and toward the business,” he says. “For us, it was organic. We didn’t have to say these are going to be the values and we’re going to start acting like these values.”
Rice Energy attracted bright, driven and entrepreneurial minds who didn’t want to work for a stodgy, bureaucratic oil company run from Texas, Daniel says.
At the same time, their cutthroat global competitors were slow to make decisions. Rice Energy positioned itself as the landowner-friendly, family-owned oil and gas company. Not only did they get strong leases, Daniel says their nimbleness let them react quickly.
“We spend so much of our time protecting against the downside, knowing that we’ve built a fantastic team and a business plan to capture the upside,” Daniel says.
That’s not to say they didn’t face doubt.
“We didn’t have 10 or 15 or 20 years of experience doing what we were doing. We had one or two, max,” he says. “But we had confidence in our approach. We believed that the way we were doing things was going to be the best thing in the long run — and in retrospect, it has been.”
Building a team, culture
The decision to sell wasn’t easy, not because it wasn’t best for the shareholders. They’ve enjoyed working here, Daniel says. It wasn’t just the Rices who enjoyed it, either — Rice Energy was named a best place to work this year.
Company leaders set the strategic direction, but they spend half of their time being a cheerleader, motivating employees and making sure people can execute the plan, he says.
A business has to be economically sound, but sustainability is also the people, culture and the intangible, such as empowering the workforce. Part of Rice Energy’s culture is an environment where everybody comfortably asks questions. This started with the Rice brothers, who had to learn on the job.
“It’s not that Toby, Derek and I are the best looking, the smartest or the tallest — because we’re not. We’re the shortest, we’re kind of ugly and we’re not the most brilliant. But we’ve done a good job of building the right team to capture the opportunity or the skill set that we have as a company,” Daniel says.
The three get credit for growing Rice Energy, but the only praise they deserve is for hiring people who helped them achieve that success over the past decade, he says.
When the company was small, Daniel handled finance and strategy, Toby handled petroleum engineering and land, and Derek handled geology and rocks. If something was in somebody’s wheelhouse, the others deferred. But that didn’t work when they had to cultivate management skills.
“It forced us to develop another level of communication with each other. Not just saying, ‘Here’s the information, Derek, make the decision,’” he says.
Daniel is the de facto tiebreaker, but 99 out of 100 times, they come to the same decision independently.
“Most decisions are pretty objective. It just requires fleshing out all of the information to get to it, and it can take some time to get there,” Daniel says. “You just need to be willing to have those conversations.”
The Rice brothers also try not to let family dynamics get in the way.
“The fact that we’ve made it through the other side as a family, still together and still loving each other as much as we did when we started the business, indicates that we probably did it the right way,” Daniel says.
The sale should go through in the fourth quarter. Daniel is joining the EQT board of directors, but essentially, the Rices will be out of a job.
“We don’t know what we’re going to do. Our wives are nervous,” he says.
It will be difficult to go from full steam to a sudden stop, but Daniel is looking forward to it.
“We’ll take a breather and we’ll reassess, but it’s a well-needed break, I could tell you that,” he says.