Document and Entity Information (USD $)

In Millions, except Share data, unless otherwise specified

12 Months Ended

Dec. 31, 2016

Jun. 30, 2016

Feb. 27, 2017

Common Units

Feb. 27, 2017

Subordinated Units

Document and Entity Information [Line Items]

Entity Registrant Name

Rice Midstream Partners LP

Trading Symbol

RMP

Entity Central Index Key

0001620928

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Document Type

10-K

Document Period End Date

Dec. 31, 2016

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

FY

Amendment Flag

false

Entity Common Stock, Shares Outstanding

73,519,133

28,753,623

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Public Float

$ 1,119.3

Consolidated Balance Sheets (USD $)

In Thousands, unless otherwise specified

Dec. 31, 2016

Dec. 31, 2015

Current assets:

Cash

$ 21,834 ¹

$ 7,597 ¹

Accounts receivable

8,758

9,926

Accounts receivable - affiliate

11,838

6,438

Prepaid expenses, deposits and other

64

192

Total current assets

42,494

24,153

Property and equipment, net

805,027

578,026

Deferred financing costs, net

12,591

2,310

Goodwill

494,580

39,142

Intangible assets, net

44,525

46,159

Total assets

1,399,217

689,790

Current liabilities:

Accounts payable

4,172

13,484

Accrued capital expenditures

9,074

15,277

Other accrued liabilities

8,376

3,067

Total current liabilities

21,622

31,828

Long-term liabilities:

Long-term debt

190,000

143,000

Other long-term liabilities

5,189

3,128

Total liabilities

216,811

177,956

Partners’ capital:

Parent net equity

0

Total partners’ capital

1,182,406 ¹

511,834 ¹

Total liabilities and partners’ capital

1,399,217

689,790

Common

Partners’ capital:

Common and subordinated units

1,276,036

624,557

Subordinated

Partners’ capital:

Common and subordinated units

$ (93,630)

$ (112,723)

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Consolidated Balance Sheets (Parenthetical)

Dec. 31, 2016

Dec. 31, 2015

Common

Common and Subordinated units issued

73,519,133

42,163,749

Common and Subordinated units outstanding

73,519,133

42,163,749

Subordinated

Common and Subordinated units issued

28,753,623

Common and Subordinated units outstanding

28,753,623

Consolidated Statements of Operations (USD $)

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Operating revenues:

Affiliate

$ 152,260,000 ¹

$ 93,668,000 ¹

$ 1,863,000 ¹

Third-party

49,363,000 ¹

20,791,000 ¹

4,585,000 ¹

Total operating revenues

201,623,000 ¹

114,459,000 ¹

6,448,000 ¹

Operating expenses:

Operation and maintenance expense

24,608,000 ¹

14,910,000 ¹

4,773,000 ¹

General and administrative expense

21,613,000 ¹ ²

17,895,000 ¹ ²

11,922,000 ¹ ²

Incentive unit expense

0 ¹ ³

1,044,000 ¹ ³

13,480,000 ¹ ³

Depreciation expense

25,170,000 ¹

16,399,000 ¹

4,165,000 ¹

Acquisition costs

125,000 ¹

0 ¹

1,519,000 ¹

Amortization of intangible assets

1,634,000 ¹

1,632,000 ¹

1,156,000 ¹

Other expense

1,531,000 ¹

543,000 ¹

0 ¹

Total operating expenses

74,681,000 ¹

52,423,000 ¹

37,015,000 ¹

Operating income (loss)

126,942,000 ¹

62,036,000 ¹

(30,567,000)¹

Other income (expense)

78,000 ¹

11,000 ¹

(110,000)¹

Interest expense

(3,931,000)¹ ⁴

(3,164,000)¹ ⁴

(13,571,000)¹ ⁴

Amortization of deferred finance costs

(1,479,000)¹

(576,000)¹

0 ¹

Income (loss) before income taxes

121,610,000 ¹

58,307,000 ¹

(44,248,000)¹

Income tax (expense) benefit

0 ¹

(5,812,000)¹

12,920,000 ¹

Net income (loss)

121,610,000 ¹

52,495,000 ¹

(31,328,000)¹

Calculation of limited partner interest in net income:

Less: Pre-acquisition net income (loss) allocated to general partner

0 ¹

7,296,000 ¹ ⁵

(4,703,000)¹ ⁵

Less: General partner interest in net income attributable to incentive distribution rights

1,428,000 ¹

0 ¹

Limited partner net income

120,182,000 ¹

45,199,000 ¹

1,162,000 ¹

Net income per limited partner unit (basic and diluted):

Common units (basic) (in dollars per share)

$ 1.47

$ 0.76

$ 0.02

Common units (diluted) (in dollars per share)

$ 1.47

$ 0.76

$ 0.02

General and Administrative Expense

Net income per limited partner unit (basic and diluted):

Equity compensation expense

2,900,000

4,500,000

800,000

Rice Energy

Operating expenses:

Interest expense

(800,000)

(13,500,000)

Net income per limited partner unit (basic and diluted):

General and administrative expenses from Rice Energy

16,600,000

11,900,000

10,300,000

Common

Calculation of limited partner interest in net income:

Limited partner net income

76,985,000

23,340,000

581,000

Net income per limited partner unit (basic and diluted):

Common units (basic) (in dollars per share)

$ 1.46 ¹ ⁶

$ 0.76 ¹ ⁶

$ 0.02 ¹ ⁶

Common units (diluted) (in dollars per share)

$ 1.45 ¹ ⁶

$ 0.76 ¹ ⁶

$ 0.02 ¹ ⁶

Subordinated

Calculation of limited partner interest in net income:

Limited partner net income

$ 43,197,000

$ 21,859,000

$ 581,000

Net income per limited partner unit (basic and diluted):

Common units (basic) (in dollars per share)

$ 1.50 ⁷

$ 0.76 ⁷

$ 0.02 ⁷

Common units (diluted) (in dollars per share)

$ 1.50 ⁷

$ 0.76 ⁷

$ 0.02 ⁷

Net income per limited partner unit (basic and diluted) (in dollars per share)

$ 1.50 ¹ ⁶

$ 0.76 ¹ ⁶

$ 0.02 ¹ ⁶

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

[2] General and administrative expenses include charges from Rice Energy of $16.6 million, $11.9 million and $10.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. Additionally, equity compensation expense of $2.9 million, $4.5 million and $0.8 million for the years ended December 31, 2016, 2015 and 2014, respectively, are included in general and administrative expenses.

[3] Incentive unit expense for the years ended December 2015 and 2014 was allocated from Rice Energy.

[4] Interest expense includes charges from Rice Energy of $0.8 million and $13.5 million for the years ended December 31, 2015 and 2014, respectively.

[5] Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.

[6] Net income per limited partner unit is presented only for the period subsequent to the Partnership’s initial public offering and does not include results attributable to the Water Assets prior to their acquisition as these results are not attributable to limited partners of the Partnership.

[7] Basic and diluted income per limited partner unit is presented as if all earnings for the period had been distributed. While it appears that more income is allocated to the subordinated unitholders than the common unitholders for the twelve months ended December 31, 2016, our partnership agreement prevents us from making a distribution to the subordinated unitholders in excess of those to the common unitholders.

Consolidated Statements of Cash Flows (USD $)

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Cash flows from operating activities:

Net income (loss)

$ 121,610,000 ¹

$ 52,495,000 ¹

$ (31,328,000)¹

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation expense

25,170,000 ¹

16,399,000 ¹

4,165,000 ¹

Amortization of intangibles

1,634,000 ¹

1,632,000 ¹

1,156,000 ¹

Amortization of deferred finance costs

1,479,000 ¹

576,000 ¹

0 ¹

Incentive unit expense

0 ¹ ²

1,044,000 ¹ ²

13,480,000 ¹ ²

Equity compensation expense

2,854,000 ¹

4,501,000 ¹

816,000 ¹

Deferred income tax expense (benefit)

0 ¹

1,388,000 ¹

(12,920,000)¹

Changes in operating assets and liabilities:

Accounts receivable

(4,232,000)¹

(14,174,000)¹

(2,106,000)¹

Prepaid expenses and other

37,000 ¹

2,000 ¹

(233,000)¹

Accounts payable

373,000 ¹

(478,000)¹

(566,000)¹

Accrued liabilities

5,192,000 ¹

6,621,000 ¹

2,515,000 ¹

Net cash provided by (used in) operating activities

154,117,000 ¹

70,006,000 ¹

(25,021,000)¹

Cash flows from investing activities:

Capital expenditures

(121,087,000)¹

(248,463,000)¹

(169,826,000)¹

Acquisition of Water Assets from Rice Energy

0 ¹

(131,528,000)¹

0 ¹

Acquisition of Marcellus joint venture assets

0 ¹

(55,000,000)¹

Acquisition of Momentum assets

0 ¹

(111,447,000)¹

Acquisition of Vantage Midstream Assets from Rice Energy

(600,000,000)¹

0 ¹

Net cash used in investing activities

(721,087,000)¹

(379,991,000)¹

(336,273,000)¹

Cash flows from financing activities:

Purchase price in excess of net assets from Rice Energy

0 ¹

(68,470,000)¹

0 ¹

Proceeds from borrowings

233,000,000 ¹

313,000,000 ¹

0 ¹

Repayments of borrowings

(186,000,000)¹

(170,000,000)¹

0 ¹

Costs related to initial public offering

0 ¹

(129,000)¹

(2,396,000)¹

Common units issuance, net of offering costs

620,330,000 ¹

171,902,000 ¹

444,134,000 ¹

Additions to deferred financing costs

(11,801,000)¹

3,000 ¹

(2,874,000)¹

Contributions from parent, net

39,000 ¹

78,480,000 ¹

363,549,000 ¹

Distributions paid to Rice Energy

(25,473,000)¹

(17,021,000)¹

(414,433,000)¹

Distributions paid to common unitholders

(46,239,000)¹

(17,017,000)¹

0 ¹

Employee tax withholding for settlement of common unit award vestings

(2,649,000)¹

0 ¹

Net cash provided by financing activities

581,207,000 ¹

290,748,000 ¹

387,980,000 ¹

Net increase (decrease) in cash

14,237,000 ¹

(19,237,000)¹

26,686,000 ¹

Cash at the beginning of the year

7,597,000 ¹

26,834,000 ¹

148,000 ¹

Cash at the end of the year

21,834,000 ¹

7,597,000 ¹

26,834,000 ¹

Supplemental disclosure of cash flow information:

Cash paid for interest

2,652,000 ¹

3,146,000 ¹

0 ¹

Capital expenditures financed by accounts payable

2,239,000 ¹

0 ¹

Noncash Elimination of Deferred Tax Liabilities

Supplemental disclosure of cash flow information:

Noncash elimination of deferred tax liabilities (assets)

$ 0 ¹

$ 7,715,000 ¹

$ (6,382,000)¹

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

[2] Incentive unit expense for the years ended December 2015 and 2014 was allocated from Rice Energy.

Consolidated Statements of Partners' Capital (USD $)

In Thousands, unless otherwise specified

Total

Common

Limited Partners

Common

Limited Partners

Subordinated

Parent Net Equity

Predecessor

Parent Net Equity

Balance at Dec. 31, 2013¹

$ 66,622

Increase (Decrease) in Partners' Capital [Roll Forward]

Contributions from parent, net¹

363,549

Tax impact of parent initial public offering¹

(4,118)

Incentive compensation expense¹

13,480

Stock compensation expense¹

678

Elimination of current and deferred tax assets¹

(6,382)

Contribution of net assets to Rice Midstream Partners LP¹

0

46

364,699

(364,745)

Issuance of common units to public, net of offering costs¹

441,738

Equity compensation expense¹

138

Distributions to unitholders¹

(414,433)

(52)

(414,381)

Pre-acquisition net loss attributable to the general partner¹

(4,703)²

(4,703)

Limited partner net income

1,162 ¹

581

581 ¹

Net income (loss)¹

(31,328)

(27,787)

Balance at Dec. 31, 2014¹

429,944

442,451

(49,101)

36,594

Increase (Decrease) in Partners' Capital [Roll Forward]

Contributions from parent, net¹

78,480

Incentive compensation expense¹

1,044

Elimination of current and deferred tax assets¹

7,715

Equity compensation expense¹

4,419

4,020

399

Offering costs related to the IPO¹

(129)

Distributions to unitholders¹

(34,038)

(17,019)

Issuance of common units, net of offering costs¹

171,902

Purchase price in excess of net assets from Rice Energy¹

(68,470)

(8)

(68,462)

Pre-acquisition net loss attributable to the general partner¹

7,296 ²

7,296

Water Assets from Rice Energy¹

(131,528)

Limited partner net income

45,199 ¹

23,340

23,340 ¹

21,859 ¹

Net income (loss)¹

52,495

Balance at Dec. 31, 2015¹

511,834

624,557

(112,723)

0

Increase (Decrease) in Partners' Capital [Roll Forward]

Contributions from parent, net¹

39

Issuance of common units to public, net of offering costs¹

620,330

Equity compensation expense¹

306

Distributions to unitholders¹

(71,713)

(46,243)

(25,470)

Pre-acquisition net loss attributable to the general partner¹

0

Limited partner net income

120,182 ¹

76,985

Net income (loss)¹

121,610

77,086

44,524

Balance at Dec. 31, 2016¹

$ 1,182,406

$ 1,276,036

$ (93,630)

$ 0

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

[2] Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.

Summary of Significant Accounting Policies and Related Matters

Organization, Operations and Principals of Consolidation/Combination

Rice Midstream Partners LP (“Rice Midstream Partners” or the “Partnership”), which closed its initial public offering (“IPO”) on December 22, 2014, is a growth-oriented Delaware limited partnership formed by Rice Energy Inc. (“Rice Energy”) in August 2014. Prior to December 22, 2014, the natural gas gathering, compression and water distribution assets of Rice Poseidon Midstream LLC (“Rice Poseidon”), together with the natural gas gathering and water distribution assets (the “Alpha Assets”) of Alpha Shale Resources, LP (“Alpha Shale”) constitute the predecessor to Rice Midstream Partners for accounting purposes (the “Predecessor”). References in these consolidated financial statements to the Partnership, when used for periods prior to its IPO, refer to the Predecessor. References in these consolidated financial statements, when used for periods beginning at or following the IPO, refer collectively to the Partnership and its consolidated subsidiaries. Additionally, as discussed below, the Partnership’s consolidated financial statements have been retrospectively recast for the year ended December 31, 2014 to include the historical results of the Water Assets (defined below), as the transaction was accounted for as a combination of entities under common control. References in these consolidated financial statements to “Rice Energy” refer collectively to Rice Energy Inc. and its consolidated subsidiaries, other than our Predecessor.

Rice Poseidon was formed in July 2013 to hold all of Rice Drilling B LLC’s (“Rice Drilling B”) wholly-owned natural gas gathering, compression and fresh water distribution assets in Pennsylvania. Rice Drilling B is a wholly-owned operating company of Rice Energy. At the time of the formation of Rice Poseidon, the only natural gas gathering, compression and fresh water distribution assets in Pennsylvania not included in Rice Poseidon and in which Rice Drilling B owned any interest were the Alpha Assets, which are treated as having been acquired by the Predecessor upon Rice Drilling B’s acquisition of the remaining 50% interest in Alpha Shale from a third party in January 2014. Prior to the formation of Rice Poseidon, the assets of Rice Poseidon were held in various subsidiaries of Rice Drilling B.

As it relates to the Predecessor, when discussing periods:


•	prior to January 29, 2014, refers to the natural gas gathering, compression and water distribution assets and operations of Rice Poseidon;


•	subsequent to January 29, 2014 through April 17, 2014, refers collectively to the natural gas gathering, compression and water distribution assets and operations of Rice Poseidon taken together with the Alpha Assets; and


•	subsequent to April 17, 2014 up to December 22, 2014, refers collectively to the natural gas gathering, compression and water distribution assets and operations of Rice Poseidon, the Alpha Assets and the Momentum Assets (discussed below) from their respective dates of acquisition.

Subsequent to January 29, 2014, the Predecessor includes the Alpha Assets. Prior to January 29, 2014, Rice Energy and a third party each owned a 50% interest in Alpha Shale, a joint venture formed to own and develop natural gas acreage in the Marcellus shale, including the Alpha Assets. On January 29, 2014, in connection with the completion of its IPO, Rice Energy acquired the remaining 50% third-party interest in Alpha Shale.

In addition, on April 17, 2014, Rice Poseidon acquired the natural gas gathering assets (the “Momentum Assets”) in eastern Washington and Greene Counties, Pennsylvania, from M3 Appalachia Gathering LLC.

On November 4, 2015, the Partnership entered into a Purchase and Sale Agreement (the “Purchase Agreement”) by and between the Partnership and Rice Energy. Pursuant to the terms of the Purchase Agreement, the Partnership acquired all of the outstanding limited liability company interests of Rice Water Services (PA) LLC and Rice Water Services (OH) LLC, two wholly-owned indirect subsidiaries of Rice Energy that own and operate Rice Energy’s water services business. The acquired business includes Rice Energy’s Pennsylvania and Ohio fresh water distribution systems and related facilities that provide access to fresh water from the Monongahela River, the Ohio River and other regional water sources in Pennsylvania and Ohio (the “Water Assets”). Rice Energy has also granted the Partnership, until December 31, 2025, (i) the exclusive right to develop water treatment facilities in the areas of dedication defined in the Water Services Agreements (defined in Note 9) and (ii) an option to purchase any water treatment facilities acquired by Rice Energy in such areas at Rice Energy’s acquisition cost (collectively, the “Option”).

The acquisition was accounted for as a combination of entities under common control, and as such, the Partnership’s consolidated financial statements have been retrospectively recast for all periods prior to November 1, 2015, the effective date of acquisition of the Water Assets, to include the historical results of the Water Assets. Our Predecessor included certain fresh water distribution assets and operations in Pennsylvania that were distributed to Rice Midstream Holdings LLC (“Rice Midstream Holdings”) concurrently with the closing of the Partnership’s IPO. These fresh water distribution assets are included as part of the Water Assets that were acquired on November 4, 2015, and as such, the historical results related to those operations are included for all periods presented.

On February 17, 2016, Rice Energy, Rice Midstream Holdings and Rice Midstream GP Holdings LP (“GP Holdings”), entered into a securities purchase agreement with EIG Energy Fund XVI, L.P., EIG Energy Fund XVI-E, L.P., and EIG Holdings (RICE) Partners, LP (collectively, the “Purchasers”) pursuant to which, among other things, GP Holdings agreed to sell common units representing an 8.25% limited partner interest in GP Holdings to the Purchasers (the “Midstream Holdings Investment”). The transaction closed on February 22, 2016 and had no direct impact on the Partnership’s condensed consolidated financial statements. Prior to the closing of the transaction, Rice Midstream Holdings assigned all of its equity interests in the Partnership, consisting of 3,623 common units, 28,753,623 subordinated units and all of its incentive distribution rights in the Partnership, to GP Holdings.

On September 26, 2016, the Partnership entered into a Purchase and Sale Agreement, as amended (the “Midstream Purchase Agreement”), by and between the Partnership and Rice Energy relating to its acquisition from Rice Energy of the entities owning the midstream assets (the “Vantage Midstream Asset Acquisition”) associated with Rice Energy’s acquisition of Vantage Energy, LLC and Vantage Energy II, LLC (collectively, “Vantage”) and their subsidiaries (the “Vantage Acquisition”). Pursuant to the terms of the Midstream Purchase Agreement, and following the close of the Vantage Acquisition, on October 19, 2016, the Partnership acquired from Rice Energy all of the outstanding membership interests of Vantage Energy II Access, LLC and Vista Gathering, LLC (collectively, the “Vantage Midstream Entities”). The Partnership’s acquisition of the Vantage Midstream Entities from Rice Energy is accounted for as a combination of entities under common control at historical cost. As the Vantage Midstream Asset Acquisition occurred concurrently with the Vantage Acquisition, no predecessor period existed, which would warrant retrospective recast of our financial statements. Therefore, no statements were required to be recast. Please see Note—2 for further detail regarding the Vantage Midstream Asset Acquisition.

The consolidated financial statements of the Partnership have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). As it relates to the Predecessor, the consolidated financial statements have been prepared, prior to December 22, 2014, from the separate records maintained by Rice Energy and may not necessarily be indicative of the actual results of operations that might have occurred if the Predecessor had been operated separately during the periods prior to the Partnership’s IPO. Because a direct ownership relationship did not exist among the businesses comprising the Predecessor, the net investment in the Predecessor is shown as parent net equity in the consolidated financial statements. Additionally, in connection with the IPO, Rice Energy was assigned all cash and cash equivalents, accounts receivable, accounts payable and accrued capital expenditures by our Predecessor on December 22, 2014. Subsequent to the Partnership’s IPO, the consolidated financial statements include the accounts of the Partnership and its subsidiaries: Rice Midstream OpCo LLC (“Rice Midstream OpCo”) and Rice Poseidon. Additionally, the consolidated financial statements include the historical results of the Water Assets. Transactions between the Partnership and Rice Energy have been identified in the consolidated financial statements as transactions between related parties.

The Partnership does not have any employees. Operational support for the Partnership is provided by Rice Energy. Rice Energy’s employees manage and conduct the Partnership’s daily business operations.

The Partnership’s cost of doing business incurred by Rice Energy on behalf of the Partnership have been reflected in the accompanying consolidated financial statements. These costs include general and administrative expenses allocated by Rice Energy to the Partnership in exchange for:


•	business services, such as payroll, accounts payable and facilities management;


•	corporate services, such as finance and accounting, legal, human resources and public and regulatory policy; and


•	employee compensation.

Nature of Business

The Partnership is a fee-based, growth-oriented limited partnership formed by Rice Energy to own, operate, develop and acquire midstream assets in the Appalachian Basin. The Partnership provides midstream services to Rice Energy and third parties within three counties in the Appalachian Basin through two primary segments: the gathering and compression segment and the water services segment.

Gathering and compression segment. The Partnership’s gas gathering assets consist of a high-pressure dry gas gathering systems and associated compression in Washington and Greene Counties, Pennsylvania. The Partnership provides gas gathering and compression services under long-term, fixed-fee contracts to Rice Energy and third parties.

Water services segment. The Partnership’s water services assets consist of water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities which are used to support well completion activities and to collect and recycle or dispose of flowback and produced water for Rice Energy and third parties in Washington and Greene Counties, Pennsylvania and Belmont County, Ohio. The Partnership provides water services under long-term, fee-based contracts, to Rice Energy and third parties.

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its subsidiaries. All intercompany transactions have been eliminated in consolidation. Transactions between the Partnership and Rice Energy have been identified in the Consolidated Financial Statements as transactions between related parties and are discussed in further detail in Note 9.

Use of Estimates

The Partnership prepares its consolidated financial statements in conformity with GAAP, which require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Risks and Uncertainties

The Partnership relies on revenues generated from its gathering, compression and water distribution systems, all of which are located in three counties within the Appalachian Basin. As a result of this concentration, the Partnership may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area. Additionally, the Partnership is substantially dependent on Rice Energy as its most significant current customer, as Rice Energy represented approximately 67% of the Partnership’s gathering revenues and 95% of the Partnership’s water revenues for the year ended December 31, 2016, and the Partnership expects to derive a substantial majority of its revenues from Rice Energy for the foreseeable future. As a result, any event, whether in the Partnership’s dedicated areas or otherwise, that adversely affects Rice Energy’s production, drilling and completion schedule, financial condition, leverage, market reputation, liquidity, results of operations or cash flows may adversely affect its revenues and cash available for distribution.

Additionally, for the year ended December 31, 2016, a single third-party customer represented approximately 33% of gathering revenues. The Partnership manages credit risk of sales to third parties by limiting dealings to those third parties meeting specified criteria for credit and liquidity strength and by actively monitoring these accounts. The Partnership may request a letter of credit, guarantee, performance bond or other credit enhancement from a third-party in order for that third-party to meet the Partnership’s credit criteria. The Partnership did not experience any significant defaults on accounts receivable for the years ended December 31, 2016, 2015 and 2014.

Revenue Recognition

Revenues relating to the gathering and compression of natural gas and relating to water services are recognized in the period service is provided. Under these arrangements, the Partnership receives a fee or fees for services provided. The revenue the Partnership recognizes from gathering and compression services is generally directly related to the volume of natural gas that flows through its systems and revenue the Partnership recognizes from water services is generally directly related to the volume of water that is delivered, recycled or disposed of.

Cash

The Partnership maintains cash at financial institutions which may at times exceed federally insured amounts and which may at times exceed consolidated balance sheet amounts due to outstanding checks. The Partnership has no accounts that are considered cash equivalents.

Accounts Receivable

Accounts receivable are stated at their historical carrying amount. The Partnership extends credit to parties in the normal course of business based upon management’s assessment of their creditworthiness. An allowance is provided for those accounts for which collection is estimated as doubtful; uncollectible accounts are written off and charged against the allowance. In estimating the allowance, management considers, among other things, how recently and how frequently payments have been received and the financial position of the party. There was no allowance recorded for any of the years presented in the consolidated financial statements.

Asset Retirement Obligations

The Partnership operates and maintains its gathering systems and it intends to do so as long as supply and demand for natural gas exists, which the Partnership expects for the foreseeable future. Therefore, no asset retirement obligation has been recorded for its gathering and compression systems as the Partnership believes that these assets have indeterminate useful lives. The asset retirement obligations recorded in the consolidated balance sheets at December 31, 2016 and 2015 were related to our water services assets. The Partnership records a liability for such asset retirement obligations and capitalizes a corresponding amount for asset retirement costs. The liability is estimated using the present value of expected future cash flows, adjusted for inflation and discounted at the Partnership’s credit adjusted risk-free rate. The current portion of asset retirement obligations are recorded in other accrued liabilities and the long term portion of asset retirement obligations are recorded in other long-term liabilities on the consolidated balance sheets.

A reconciliation of the beginning and ending aggregate carrying amount of asset retirement obligations for the years ended December 31, 2016 and 2015 is as follows:



(in thousands)
Balance at December 31, 2014	$	1,900
Liabilities incurred	1,479
Liabilities settled	(1,129		)
Accretion expense	172
Revisions in estimated cash flows	626
Balance at December 31, 2015	$	3,048
Liabilities incurred	46
Liabilities assumed in Vantage Midstream Asset Acquisition	2,452
Liabilities settled	(46		)
Accretion expense	290
Balance at December 31, 2016	$	5,790

Interest

The Partnership capitalizes interest on expenditures for significant capital projects while activities are in progress to bring the assets to their intended use. Upon completion of construction of the asset, the associated capitalized interest costs are included within the Partnership’s asset base and depreciated accordingly. The following table summarizes the components of the Partnership’s interest incurred for the years ended December 31, 2016, 2015 and 2014:



	Years Ended December 31,
(in thousands)	2016		2015		2014
Interest incurred:
Interest expensed	$	3,931	$	3,164	$	13,571
Interest capitalized	175		222		402
Total incurred	$	4,106	$	3,386	$	13,973

Property and Equipment

Property and equipment is recorded at cost and is being depreciated over estimated useful lives on a straight-line basis. Gathering pipelines and compressor stations are depreciated over a useful life of 60 years. Water pipelines, pumping stations and impoundment facilities are depreciated over a useful life of 10 to 15 years. The following table provides detail of property and equipment presented in the consolidated balance sheets at December 31, 2016 and 2015.



	Years Ended December 31,
(in thousands)	2016			2015
Natural gas gathering assets	$	675,830		$	453,537
Natural gas gathering assets in progress	3,780			540
Accumulated depreciation	(21,615		)	(10,725		)
Natural gas gathering assets, net	657,995			443,352
Water service assets	165,482			144,686
Water service assets in progress	4,060			1,324
Accumulated depreciation	(24,981		)	(12,014		)
Water service assets, net	144,561			133,996
Other property and equipment, net	2,471			678
Property and equipment, net	$	805,027		$	578,026

Impairment of Long-Lived Assets

The Partnership evaluates its long-lived assets for impairment when events and circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows for other assets and liabilities. Impairment exists when the carrying amount of an asset exceeds estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence. If the carrying amount of the long-lived asset is not recoverable, based on the estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying amount over its estimated fair value, such that the asset’s carrying amount is adjusted to its estimated fair value with an offsetting charge to impairment expense.

Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. Sources used to determine fair value include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analyses and analyses from outside advisors. Significant changes, such as changes in contract rates or terms, the condition of an asset, or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. A reduction of carrying value of fixed assets would represent a Level 3 fair value measure. No impairments for such assets have recorded for the years presented herein.

Goodwill and Intangible Assets

Goodwill is the cost of an acquisition less the fair value of the identifiable net assets of the acquired business. The Partnership evaluates goodwill for impairment at least annually during the fourth quarter, or whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis.

In 2014, $39.1 million of goodwill was allocated to the Gathering and Compression segment as a result of the acquisition of the remaining 50% interest in Alpha Holdings in its Marcellus joint venture. On October 19, 2016, the Partnership acquired from Rice Energy all of the outstanding membership interests in the Vantage Midstream Entities. As a result of the acquisition of the Vantage Midstream Entities from Rice Energy, and based on the purchase price allocation preliminarily performed by Rice Energy, the Partnership ascribed $455.4 million of goodwill to the Gathering and Compression segment. See Note 2 for further information regarding the Vantage Midstream Asset Acquisition.

The Partnership may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount. To the extent that such indicators exist, the Partnership would complete the two-step goodwill impairment test. The Partnership may also perform the two-step goodwill impairment test at its discretion without performing the qualitative assessment. The first step compares the fair value of a reporting unit to its carrying value. If the carrying amount of a reporting unit exceeds its fair value, the second step is required which compares the implied fair value of the goodwill of a reporting unit to its carrying value. If the carrying value of the goodwill of a reporting unit exceeds its implied fair value, the difference is recognized as an impairment charge. As deemed necessary, the Partnership uses a combination of the income and market approach to estimate the fair value of a reporting unit. The fair value estimation process requires considerable judgment and determining the fair value is sensitive to changes in assumptions impacting management’s estimates of future financial results. Although the Partnership believes the estimates and assumptions used in estimating the fair value are reasonable and appropriate, different assumptions and estimates could materially impact the calculated fair value. Additionally, future results could differ from our current estimates and assumptions.

The Partnership’s fourth quarter 2016 annual test included the assessment of qualitative factors to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying value. The qualitative assessment encompassed a review of events and circumstances specific to the reporting unit with goodwill as well as circumstances specific to the entity as a whole. The Partnership’s qualitative assessment considered among other things, factors such as macroeconomic conditions, industry and market considerations, including changes in the Partnership’s common unit price and market multiples, projected financial performance, cost factors, changes in carrying values and other relevant factors. In considering the totality of the qualitative factors assessed, based on the weight of evidence, circumstances did not exist that would indicate it was more likely than not that goodwill was impaired. Accordingly, the Partnership did not perform a two-step quantitative analysis in 2016.

No impairment was recorded for the years presented herein.

Intangible assets are comprised of customer contracts acquired in the Momentum Acquisition based upon the estimated fair value of the assets at the acquisition date. The customer contracts acquired had initial contract terms of 10 years with five and one-year renewal options. Based upon management’s understanding of the life of the underlying reserves and the geographically advantaged location of the acquired midstream assets, it has been determined that the customer contracts will have a useful life of 30 years. The assets are being amortized using a straight-line method and amortization expense for the years ended December 31, 2016, 2015 and 2014 was $1.6 million, $1.6 million and $1.2 million, respectively. The estimated annual amortization expense over the next five years is as follows: 2017-$1.6 million, 2018-$1.6 million, 2019-$1.6 million, 2020-$1.6 million and 2021-$1.6 million.

Goodwill for the years ended December 31, 2016 and 2015 are detailed below.



(in thousands)	Goodwill
Balance, December 31, 2014	$	39,142
Accumulated amortization	—
Balance, December 31, 2015	39,142
Accumulated amortization	—
Additions	455,438
Balance, December 31, 2016	$	494,580

Intangible assets for the years ended December 31, 2016 and 2015 are detailed below.



(in thousands)	December 31, 2016			December 31, 2015
Intangible assets	$	48,947		$	48,947
Less: accumulated amortization	(4,422		)	(2,788		)
Intangible assets, net	44,525			46,159

Deferred Financing Costs

Deferred financing costs are amortized on a straight-line basis, which approximates the interest method, over the term of the related agreement. Accumulated amortization was $2.1 million and $0.6 million at December 31, 2016 and 2015, respectively, and amortization expense was $1.5 million, $0.6 million and zero for the years ended December 31, 2016, 2015 and 2014, respectively.

Segment Reporting

Business segments are components of the Partnership for which separate financial information is produced internally and are subject to evaluation by the Partnership’s chief operating decision maker in deciding how to allocate resources. The Partnership reports its operations in two segments: (i) gathering and compression and (ii) water services, which reflect its lines of business. Business segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income. All of the Partnership’s operating revenues, income from operations and assets are located in the United States. See Note 10 for additional information regarding segment reporting.

Net Income per Limited Partner Unit

The Partnership’s net income is allocated to the limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to the incentive distribution rights held by GP Holdings. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions and pre-acquisition net income attributable to the general partner, by the weighted average number of outstanding limited partner units during the period.

We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the Partnership’s partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. The allocation of undistributed earnings, or net income in excess of distributions, to the incentive distribution rights is limited to cash available for distribution for the period. The Partnership’s net income allocable to the limited partners is allocated between common and subordinated unitholders by applying the provisions of the Partnership’s partnership agreement under the two-class method that govern actual cash distributions as if all earnings for the period had been distributed. Any common units issued during the period are included on a weighted-average basis for the days in which they were outstanding. Net income attributable to the Water Assets for the periods prior to their acquisition was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these results are not attributable to limited partners of the Partnership.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the Rice Midstream Partners LP 2014 Long Term Incentive Plan (the “LTIP”), were exercised, settled or converted into common units. When it is determined that potential common units should be included in diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. The FASB created Topic 606 which supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance throughout the Industry Topics of the Codification. The FASB and International Accounting Standards Board initiated this joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for both U.S. GAAP and International Financial Reporting Standards. ASU 2014-09 will enhance comparability of revenue recognition practices across entities, industries and capital markets compared to existing guidance. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing.” In May 2016, the FASB issued ASU 2016-11, “Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606) – Narrow Scope Improvements and Practical Expedients.” These updates do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather provide further guidance with respect to implementation of ASU 2014-09. The effective date for ASU 2016-10, 2016-11, 2016-12 and ASU 2014-09, as amended by ASU 2015-14, is for annual reporting periods beginning after December 15, 2017, including interim periods within those years. In preparation for the adoption of the new standard in the fiscal year beginning January 2018, the Partnership has obtained representative samples of contracts and other forms of agreements with its customers and are evaluating the provisions contained therein in light of the five-step model specified by the new guidance. That five-step model includes: (1) determination of whether a contract-an agreement between two or more parties that creates legally enforceable rights and obligations-exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company anticipates adopting the standard using the modified retrospective approach at adoption. The Partnership will be evaluating individual customer contracts within each of our business segments as we continue to evaluate the impact of the adoption of this standard.

In August 2014, the FASB issued ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which specifies the responsibility an entity’s management has to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The Partnership has adopted ASU 2014-15 in the fourth quarter of 2016 and has determined that substantial doubt does not exist about its ability to continue as a going concern.

In April 2015, the FASB issued ASU 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplification of Debt Issuance Costs.” ASU 2015-03 was issued to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. ASU 2015-03 is effective for periods beginning after December 15, 2015. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” ASU 2015-15 clarifies the guidance in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The Securities and Exchange Commission (“SEC”) staff announced they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Partnership adopted ASU 2015-15 in the first quarter of 2016 and presents debt issuance costs associated with the Partnership’s revolving credit facility (defined in Note 3) as deferred financing costs, net in the consolidated balance sheets. Additionally, the Partnership will utilize the guidance in ASU 2015-03 for the presentation of debt issuance costs that are the result of an issuance of future debt.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires, among other things, that lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Partnership is currently evaluating the impact of the new guidance on its financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions, which include: (i) income tax consequences, (ii) classification of awards as either equity or liabilities, (iii) classification on the statement of cash flows and (iv) forfeiture rate calculations. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Partnership plans to adopt ASU 2016-09 in the first quarter of 2017. The Partnership does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by current GAAP and thereby reduce the current diversity in practice. ASU 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. The Partnership does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU eliminates Step 2 from the goodwill impairment test which previously required measurement of any goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new standard, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, without exceeding the total amount of goodwill allocated to that reporting unit. The provisions of this ASU are effective for fiscal years, and any interim goodwill impairment tests within those fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. A reporting entity should apply the amendment on a prospective basis. The Partnership plans to adopt ASU 2017-04 in the first quarter of 2017.

Acquisitions

On September 26, 2016, the Partnership entered into the Midstream Purchase Agreement by and between the Partnership and Rice Energy. Pursuant to the terms of the Midstream Purchase Agreement, and following the close of the Vantage Acquisition, on October 19, 2016, the Partnership acquired from Rice Energy all of the outstanding membership interests of the Vantage Midstream Entities. The Vantage Midstream Entities, which became wholly-owned subsidiaries of Rice Energy in connection with the Vantage Acquisition, own midstream assets, including approximately 30 miles of dry gas gathering and compression assets and water assets. In consideration for the Vantage Midstream Asset Acquisition, the Partnership paid Rice Energy $600.0 million in aggregate consideration, which the Partnership paid in cash with the net proceeds of its private placement of common units (the “2016 Private Placement”) of $441.0 million and borrowings under its revolving credit facility (defined in Note 3) of $159.0 million. The preliminary purchase price allocation ascribed approximately $144.6 million to property and equipment and $455.4 million to goodwill. The Partnership’s acquisition of the Vantage Midstream Entities from Rice Energy is accounted for as a combination of entities under common control at historical cost. As the Vantage Midstream Asset Acquisition occurred concurrently with the Vantage Acquisition, no predecessor period existed which would warrant retrospective recast of our financial statements. In connection with the Vantage Midstream Asset Acquisition, the Partnership acquired a 67.5% interest in the Wind Ridge gathering system previously owned by Access Midstream Partners for approximately $14.3 million, of which $10.9 million was ascribed to property and equipment and $3.4 million to goodwill.

The preliminary purchase price allocation was performed by Rice Energy. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of assets acquired. Rice Energy expects to complete the purchase price allocation once it has received all of the necessary information, during which time the value of the assets may be revised as appropriate. The fair values of the assets acquired were determined using various valuation techniques, including the cost approach. The assumed purchase price and fair values have been prepared with the assistance of external specialists, and represent Rice Energy’s best estimate of the fair values of the assets acquired as of this date. Goodwill of $455.4 million related to the value attributed to additional growth opportunities, synergies and operating leverage within the Partnership’s gathering and compression segment.

Post-Acquisition Operating Results

Subsequent to the completion of the Vantage Midstream Asset Acquisition, the Vantage Midstream Entities contributed the following to the Partnership’s consolidated operating results for the period from October 19, 2016 through December 31, 2016.



(in thousands)
Operating revenues	$	8,571
Net income	$	4,303

Pro Forma Information

The following unaudited pro forma combined financial information presents the Partnership’s results as though the acquisition of the Vantage Midstream Entities and the 2016 Private Placement had been completed at January 1, 2015.



	Year Ended December 31,
(in thousands, except per share data)	2016		2015
Pro forma operating revenues	$	253,817	$	156,944
Pro forma limited partner net income	$	150,846	$	67,199
Pro forma earnings per common unit (basic)	$	1.54	$	0.84
Pro forma earnings per common unit (diluted)	$	1.54	$	0.83
Pro forma earnings per subordinated units	$	1.55	$	0.84

Long-Term Debt

On December 22, 2014, Rice Midstream OpCo entered into a revolving credit agreement (as amended, the “revolving credit facility”) with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of lenders. The Partnership’s revolving credit facility provided for lender commitments of $450.0 million, with an additional $200.0 million of commitments available under an accordion feature subject to lender approval. The credit facility provided for a letter of credit sublimit of $50.0 million. In connection with the Partnership’s completion of the Vantage Midstream Asset Acquisition, on October 19, 2016, Rice Midstream OpCo entered into a second amendment (the “Second Amendment”) to its credit agreement to, among other things, (i) permit the completion of the Vantage Midstream Asset Acquisition, (ii) increase the Partnership’s ability to borrow under the facility from $450.0 million to $850.0 million, without exercise of any portion of the $200.0 million accordion feature, and (iii) adjust the interest rate payable on amounts borrowed thereunder (as described below).

As of December 31, 2016, Rice Midstream OpCo had $190.0 million of borrowings outstanding and no letters of credit under this facility, resulting in availability of $660.0 million. The average daily outstanding balance of the credit facility was approximately $110.0 million and interest was incurred on the facility at a weighted average annual interest rate of 4.7% during 2016. The revolving credit facility is available to fund working capital requirements and capital expenditures, to purchase assets, to pay distributions and repurchase units and for general partnership purposes. The Partnership is the guarantor of the obligations under the revolving credit facility, which matures on December 22, 2019.

Principal amounts borrowed are payable on the maturity date, and interest is payable quarterly for base rate loans and at the end of the applicable interest period for Eurodollar loans. Rice Midstream OpCo may elect to borrow in Eurodollars or at the base rate. Following the effectiveness of the Second Amendment, Eurodollar loans bear interest at a rate per annum equal to the applicable LIBOR Rate plus an applicable margin ranging from 200 to 300 basis points, depending on the leverage ratio then in effect, and base rate loans bear interest at a rate per annum equal to the greatest of (i) the agent bank’s reference rate, (ii) the federal funds effective rate plus 50 basis points and (iii) the rate for one month Eurodollar loans plus 100 basis points, plus an applicable margin ranging from 100 to 200 basis points, depending on the leverage ratio then in effect. The carrying amount of the revolving credit facility is comprised of borrowings for which interest accrues under a fluctuating interest rate structure. Accordingly, the carrying value approximates fair value as of December 31, 2016 and represents a Level 2 measurement. Following the effectiveness of the Second Amendment, Rice Midstream OpCo also pays a commitment fee based on the undrawn commitment amount ranging from 37.5 to 50 basis points.

The revolving credit facility is secured by mortgages and other security interests on substantially all of its properties and guarantees from the Partnership and its restricted subsidiaries. The revolving credit facility limits the Partnership’s ability to, among other things, incur or guarantee additional debt; redeem or repurchase units or make distributions under certain circumstances; make certain investments and acquisitions; incur certain liens or permit them to exist; enter into certain types of transactions with affiliates; merge or consolidate with another company; and transfer, sell or otherwise dispose of assets.

The revolving credit facility also requires the Partnership to maintain the following financial ratios:


•	an interest coverage ratio, which is the ratio of the Partnership’s consolidated EBITDA (as defined within the revolving credit facility) to its consolidated current interest expense of at least 2.50 to 1.0 at the end of each fiscal quarter;


•	a consolidated total leverage ratio, which is the ratio of consolidated debt to consolidated EBITDA, of not more than 4.75 to 1.0, and after electing to issue senior unsecured notes, a consolidated total leverage ratio of not more than 5.25 to 1.0, and, in each case, with certain increases in the permitted total leverage ratio following the completion of a material acquisition; and


•	if the Partnership elects to issue senior unsecured notes, a consolidated senior secured leverage ratio, which is the ratio of consolidated senior secured debt to consolidated EBITDA, of not more than 3.50 to 1.0.

The Partnership was in compliance with such covenants and ratios as of December 31, 2016.

Interest paid in cash for the years ended December 31, 2016, 2015 and 2014 was $2.7 million, $3.1 million and zero, respectively.

Commitments and Contingencies

From time to time the Partnership is party to various legal and/or regulatory proceedings arising in the ordinary course of business. While the ultimate outcome and impact to the Partnership cannot be predicted with certainty, the Partnership believes that all such matters are without merit and involve amounts which, if resolved unfavorably, either individually or in the aggregate, will not have a material adverse effect on its financial condition, results of operations or cash flows. When it is determined that a loss is probable of occurring and is reasonably estimable, the Partnership accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Partnership discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed.

Lease Obligations

The Partnership has lease obligations for compression equipment under existing contracts with third parties. Rent expense included in operation and maintenance expense for the years ended December 31, 2016, 2015 and 2014 was $1.6 million, $1.7 million and $0.8 million, respectively. Future payments for this equipment as of December 31, 2016 totaled $5.0 million (2017: $1.5 million, 2018: $1.2 million, 2019: $1.2 million, 2020: $0.6 million, 2021: $0.3 million and thereafter: $0.3 million).

Water Assets Conveyance

In consideration for the acquisition of the Water Assets, the Partnership paid Rice Energy $200.0 million in cash plus an additional amount, if certain of the conveyed systems’ capacities increased by 5.0 MMgal/d on or prior to December 31, 2017, equal to $25.0 million less the capital expenditures expended by the Partnership to achieve such increase, in accordance with the terms of the Purchase Agreement. The Partnership has not recorded a contingent liability associated with the additional consideration as the required capacity increases were not considered probable as of December 31, 2016.

Partners' Capital

Partners’ Capital

On June 13, 2016, the Partnership completed an underwritten public offering of an aggregate of 9,200,000 common units representing limited partner interests in the Partnership at a price to the public of $18.50 per unit, which included 1,200,000 common units sold pursuant to the exercise of the underwriters’ option to purchase additional units. After deducting underwriting discounts and commissions of approximately $6.0 million and transaction costs, the Partnership received net proceeds of approximately $164.1 million. The Partnership used a portion of the net proceeds to repay outstanding debt and the remainder for general partnership purposes, including acquisitions and capital expenditures.

During the second quarter of 2016, the Partnership entered into an equity distribution agreement that established an at-the-market common unit offering program (the “ATM program”), pursuant to which the Partnership may sell from time to time through a group of managers, acting as the Partnership’s sales agents, the Partnership’s common units having an aggregate offering price of up to $100.0 million. As of December 31, 2016, the Partnership had issued and sold 944,700 common units at an average price per unit of $17.21 through its ATM program. The Partnership used the net proceeds of $15.8 million for general partnership purposes, including repayment of outstanding debt, acquisitions and capital expenditures.

On October 7, 2016, the Partnership issued 20,930,233 common units representing limited partner interests in the 2016 Private Placement for gross proceeds of approximately $450.0 million, or $21.50 per unit. After deducting underwriting discounts and commissions of approximately $9.4 million, the Partnership received net proceeds of $440.6 million. The Partnership used the proceeds of the 2016 Private Placement to fund a portion of the Vantage Midstream Asset Acquisition.

The following table presents the Partnership’s common and subordinated units issued from January 1, 2015 through December 31, 2016:



	Limited Partners			GP Holdings
	Common	Subordinated	Total	Ownership %
Balance, January 1, 2015	28,753,623	28,753,623	57,507,246	50	%
Equity offering in November 2015	13,409,961	—	13,409,961
Vested phantom units, net	165	—	165
Balance, December 31, 2015	42,163,749	28,753,623	70,917,372	41	%
Equity offering in June 2016	9,200,000	—	9,200,000
Equity offering in October 2016	20,930,233	—	20,930,233
Common units issued under ATM program	944,700	—	944,700
Vested phantom units, net	280,451	—	280,451
Balance, December 31, 2016	73,519,133	28,753,623	102,272,756	28	%

As of December 31, 2016, GP Holdings owned approximately 28% of the Partnership consisting of 3,623 common units, 28,753,623 subordinated units and all of the incentive distribution rights.

Phantom Unit Awards

The Partnership’s general partner can grant phantom unit awards under the LTIP to certain non-employee directors of the Partnership and executive officers and employees of Rice Energy that provide services to the Partnership under an omnibus agreement (the “Omnibus Agreement”). Pursuant to the LTIP, the maximum aggregate number of common units that may be issued pursuant to any and all awards under the LTIP shall not exceed 5,000,000 common units, subject to adjustment due to recapitalization or reorganization, or related to forfeitures or the expiration of awards, as provided under the LTIP.

The equity-based awards are valued at the date of issuance and the related compensation cost is recognized into earnings on a straight-line basis over the vesting period. The equity-based awards will cliff vest at the end of the requisite service period of approximately one year. The Partnership recorded $2.8 million, $4.1 million and $0.1 million of equity compensation cost related to these awards in the years ended December 31, 2016, 2015 and 2014, respectively, in general and administrative expenses on the consolidated statements of operations. At December 31, 2016, total unrecognized compensation cost expected to be recognized over the remaining vesting periods was $0.2 million for these awards.

The following table summarizes the activity for the equity-based awards during the years ended December 31, 2016 and 2015.



	Number of units		Weighted average grant date fair value
Total unvested, January 1, 2015	434,094		$	16.50
Granted	18,196		16.87
Vested	(242	)	16.50
Forfeited	(19,420	)	16.50
Total unvested - December 31, 2015	432,628		$	16.52
Granted	30,352		17.81
Vested	(399,158	)	16.52
Forfeited	(33,470	)	16.50
Total unvested - December 31, 2016	30,352		$	17.81

Net Income per Limited Partner Unit and Cash Distributions

The Partnership’s net income is allocated to the limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to the incentive distribution rights held by GP Holdings. The allocation of undistributed earnings, or net income in excess of distributions, to the incentive distribution rights is limited to cash available for distribution for the period. The Partnership’s net income allocable to the limited partners is allocated between common and subordinated unitholders by applying the provisions of the Partnership’s partnership agreement that govern actual cash distributions as if all earnings for the period had been distributed. Any common units issued during the period are included on a weighted-average basis for the days in which they were outstanding. Net income attributable to the Water Assets for the periods prior to their acquisition was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these results are not attributable to limited partners of the Partnership.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the LTIP, were exercised, settled or converted into common units. When it is determined that potential common units should be included in diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method.

The following table presents Partnership’s calculation of net income per limited partner unit for common and subordinated limited partner units.



	Years Ended December 31,
(in thousands, except unit data)	2016		2015		2014
Net income (loss)	$	121,610	$	52,495	$	(31,328	)
Less: Pre-IPO net loss allocated to parent	—		—		(27,787		)
Less: Pre-acquisition net income (loss) allocated to general partner ⁽¹⁾	—		7,296		(4,703		)
Less: General partner interest in net income attributable to incentive distribution rights	1,428		—		—
Limited partner net income	$	120,182	$	45,199	$	1,162

Net income allocable to common units	$	76,985	$	23,340	$	581
Net income allocable to subordinated units	43,197		21,859		581
Limited partner net income	$	120,182	$	45,199	$	1,162

Weighted-average limited partner units outstanding - basic:
Common units	52,822,030		30,700,864		28,753,623
Subordinated units	28,753,623		28,753,623		28,753,623
Total	81,575,653		59,454,487		57,507,246

Weighted-average limited partner units outstanding - diluted:
Common units ⁽²⁾	53,065,865		30,807,972		28,755,346
Subordinated units	28,753,623		28,753,623		28,753,623
Total	81,819,488		59,561,595		57,508,969

Net income per limited partner unit - basic:
Common units	$	1.46	$	0.76	$	0.02
Subordinated units ⁽³⁾	1.50		0.76		0.02
Total	$	1.47	$	0.76	$	0.02

Net income per limited partner unit - diluted:
Common units	$	1.45	$	0.76	$	0.02
Subordinated units ⁽³⁾	1.50		0.76		0.02
Total	$	1.47	$	0.76	$	0.02

Cash distributions declared per limited partner unit: ⁽⁴⁾
Common units	$	0.9210	$	0.7680	$	0.0204
Subordinated units	$	0.9210	$	0.7680	$	0.0204

(1) Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.


(2)	Diluted weighted-average limited partner common units includes the effect of 243,835, 107,108 and 1,723 units for the years ended December 31, 2016, 2015 and 2014, respectively.

(3) Basic and diluted income per limited partner unit is presented as if all earnings for the period had been distributed. While it appears that more income is allocated to the subordinated unitholders than the common unitholders for the twelve months ended December 31, 2016, our partnership agreement prevents us from making a distribution to the subordinated unitholders in excess of those to the common unitholders.


(4)	See below for further discussion of cash distributions declared for the period presented.

Within 60 days after the end of each quarter, it is the Partnership’s intent to distribute to the holders of common and subordinated units on a quarterly basis the minimum quarterly distribution of $0.1875 per unit (or $0.75 on an annualized basis) to the extent it has sufficient cash after the establishment of cash reserves and the payment of its expenses, including payments to its general partner and affiliates.

Subordinated Units

GP Holdings owns all of the Partnership’s subordinated units. The principal difference between the Partnership’s common units and subordinated units is that, for any quarter during the “subordination period,” holders of the subordinated units will not be entitled to receive any distribution from operating surplus until the common units have received the minimum quarterly distribution for such quarter plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages. When the subordination period ends, each outstanding subordinated unit will convert into one common unit, which will then participate pro rata with the other common units in distributions.

Incentive Distribution Rights

All of the incentive distribution rights are held by GP Holdings. Incentive distribution rights represent the right to receive increasing percentages (15%, 25% and 50%) of quarterly distributions from operating surplus after the minimum quarterly distribution and the target distribution levels (described below) have been achieved.

For any quarter in which the Partnership has distributed cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum distribution, then the Partnership will distribute any additional available cash from operating surplus for that quarter among the unitholders and the incentive distribution rights holders in the following manner:



		Marginal Percentage Interest in Distributions
	Total Quarterly Distribution Per Unit	Unitholders	Incentive Distribution Rights Holders
Minimum Quarterly Distribution	$0.1875	100%	—%
First Target Distribution	above $0.1875 up to $0.2156	100%	—%
Second Target Distribution	above $0.2156 up to $0.2344	85%	15%
Third Target Distribution	above $0.2344 up to $0.2813	75%	25%
Thereafter	above $0.2813	50%	50%

In 2016, cash distributions of $0.5 million were made to GP Holdings related to its incentive distribution rights in the Partnership based upon the level of distribution paid per common and subordinated unit.

The Board of Directors of the Partnership’s general partner declared the following cash distributions to the Partnership’s common and subordinated unitholders for the periods presented.



Quarters Ended	Total Quarterly Distribution per Unit		Date of Distribution
December 31, 2015	$	0.1965	February 11, 2016
March 31, 2016	0.2100		May 12, 2016
June 30, 2016	0.2235		August 11, 2016
September 30, 2016	0.2370		November 10, 2016
December 31, 2016	0.2505		February 16, 2017

Income Taxes

The Partnership is not subject to federal and state income taxes as a result of its limited partner structure. For federal and state income tax purposes, all income, expenses, gains, losses and tax credits generated by the Partnership flow through to the unitholders. As such, the Partnership does not record a provision for income taxes in the current period. Prior to the Partnership’s IPO, the Partnership’s income was included as part of Rice Energy’s consolidated federal tax return.

Prior to the acquisition of the Water Assets, the operations of the Water Assets were subject to income taxes and were included as part of Rice Energy’s consolidated federal tax return. Accordingly, the income tax effects associated with the operations of the Water Assets continued to be subject to income taxes until the Water Assets were acquired by the Partnership. Due to the Partnership’s status for U.S. federal and state income tax purposes, net current and deferred income tax liabilities of the Water Assets of $7.7 million eliminated through equity for periods following the effective date of their acquisition by the Partnership on November 1, 2015.

Net income for financial statement purposes may differ significantly from taxable income of unitholders because of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the Partnership’s partnership agreement. The aggregate difference in the basis of the Partnership’s net assets for financial and tax reporting purposes cannot be readily determined because information regarding each partner’s tax attributes is not available to us. The components of the income tax benefit for the period from January 29, 2014 to December 21, 2014 for the Predecessor (not including the fresh water distribution assets and operations in Pennsylvania that were distributed to Rice Midstream Holdings concurrently with the closing of the Partnership’s IPO) and from January 29, 2014 to December 31, 2014 for the Water Assets, are as follows:



	Years Ended December 31,
(in thousands)	2016		2015		2014
Current tax expense (benefit):
Federal	$	—	$	3,720	$	—
State	—		704		—
Total	—		4,424		—
Deferred tax expense (benefit):
Federal	—		986		(9,809		)
State	—		402		(3,111		)
Total	—		1,388		(12,920		)
Total income tax benefit	$	—	$	5,812	$	(12,920	)

Income tax expense differs from amounts computed at the federal statutory rate of 35% on pre-tax income as follows:



	Years Ended December 31,
(in thousands)	2016			2015			2014
Tax at statutory rate	$	42,563		$	18,150		$	(15,488	)
State income taxes	—			719			(2,022		)
Incentive unit expense	—			365			4,718
Equity compensation expense	—			140			—
Partnership net income not subject to taxes	(42,563		)	(13,562		)	(366		)
Permanent difference	—			—			238
Income tax expense (benefit)	$	—		$	5,812		$	(12,920	)
Effective tax rate	—		%	10.0		%	29.2		%

Pursuant to an agreement between the Partnership and the IRS regarding our 2016 tax reporting, we will have two short tax years for the calendar year 2016 as a result of a technical termination that occurred on February 22, 2016. This technical termination will result in a significant deferral of depreciation deductions that were otherwise allowable in computing the taxable income of the Partnership’s unitholders for the period February 23, 2016 through December 31, 2016. The Partnership expects to provide a single Schedule K-1 to each unitholder reflecting the unitholder’s taxable income for the full calendar year.

Based on management’s analysis, the Partnership did not have any uncertain tax positions as of December 31, 2016.

Related Party Transactions

In the ordinary course of business, the Partnership has transactions with affiliated companies. During the years ended December 31, 2016, 2015 and 2014, related parties included Rice Energy and certain of its subsidiaries. Prior to the IPO, the push-down impact of the transactions were recorded in the consolidated statements of operations, and although no cash settlement occurred, all transactions with Rice Energy and its subsidiaries were recorded in parent net equity. On December 22, 2014, upon completion of the IPO, the Partnership entered into the Omnibus Agreement with its general partner, Rice Energy, Rice Poseidon and Rice Midstream Holdings. Pursuant to the Omnibus Agreement, Rice Energy performs centralized corporate and general and administrative services for the Partnership, such as financial and administrative, information technology, legal, health, safety and environmental, human resources, procurement, engineering, business development, investor relations, insurance and tax. In exchange, the Partnership reimburses Rice Energy for the expenses incurred in providing these services, except for any expenses associated with Rice Energy’s long-term incentive programs.

The expenses for which the Partnership reimburses Rice Energy and its subsidiaries related to corporate and general and administrative services may not necessarily reflect the actual expenses that the Partnership would incur on a stand-alone basis. The Partnership is unable to estimate what the costs would have been with an unrelated third party.

Also upon completion of the IPO, the Partnership entered into a 15 year, fixed-fee gas gathering and compression agreement (the “Gas Gathering and Compression Agreement”) with Rice Drilling B and Alpha Shale, pursuant to which the Partnership gathers Rice Energy’s natural gas and provides compression services on the Partnership’s gathering systems located in Washington and Greene Counties, Pennsylvania. Pursuant to the Gas Gathering and Compression Agreement, the Partnership charges Rice Energy a gathering fee of $0.30 per Dth and a compression fee of $0.07 per Dth per stage of compression, each subject to annual adjustment for inflation based on the Consumer Price Index. The Gas Gathering and Compression Agreement covers substantially all of Rice Energy’s acreage position in the dry gas core of the Marcellus Shale in southwestern Pennsylvania as of December 31, 2016 and any future acreage it acquires within Washington and Greene Counties, Pennsylvania, excluding certain production subject to a pre-existing third-party dedication.

In connection with the closing of the acquisition of the Water Assets, the Partnership entered into amended and restated water services agreements with Rice Energy (the “Water Services Agreements”), whereby the Partnership has agreed to provide certain fluid handling services to Rice Energy, including the exclusive right to provide fresh water for well completions operations in the Marcellus and Utica Shales and to collect and recycle or dispose of flowback and produced water for Rice Energy within areas of dedication in defined service areas in Pennsylvania and Ohio. The initial terms of the Water Services Agreements are until December 22, 2029 and from month to month thereafter. Under the agreements, Rice Energy will pay the Partnership (i) a variable fee, based on volumes of water supplied, for freshwater deliveries by pipeline directly to the well site, subject to annual CPI adjustments and (ii) a produced water hauling fee of actual out-of-pocket cost incurred by the Partnership, plus a 2% margin.

During the year ended December 31, 2014, Rice Energy granted stock compensation awards to certain non-employee directors and employees. The awards consisted of restricted stock units, which vest upon the passage of time, and performance stock units, which vest based upon attainment of specified performance criteria. Stock compensation expense related to these awards allocated to the Partnership based on its estimate of the expense attributable to its operations, prior to the IPO, was $0.6 million for the year ended December 31, 2014. Additionally, in the years ended December 31, 2015 and 2014, $0.4 million and $0.1 million, respectively, of equity compensation expense was allocated to the Water Assets by Rice Energy and is reflected in the consolidated financial statements. For periods subsequent to the IPO, no stock compensation expense has been allocated to the Partnership by Rice Energy. However, equity compensation expense includes amounts allocated to the Water Assets from Rice Energy for periods subsequent to the IPO. See Note 6 for a discussion of the Partnership’s equity compensation expense subsequent to the IPO.

Prior to Rice Energy’s initial public offering on January 29, 2014, the only long-term incentives offered to certain executives and employees were through grants of incentive units, which were profits interests representing an interest in the future profits (once a certain level of proceeds has been generated) of Rice Energy’s predecessor parent entity Rice Energy Appalachia LLC, currently known as Rice Energy Operating LLC, a subsidiary of Rice Energy (“Rice Energy Operating”), and granted pursuant to the limited liability company agreement of Rice Energy Operating. The compensation expense recognized in these consolidated financial statements is a non-cash charge, with the settlement obligation resting on NGP Rice Holdings LLC (“NGP Holdings”) and Rice Energy Holdings LLC (“Rice Holdings”). Payments on the incentive units are made by Rice Holdings and NGP Holdings and not by Rice Energy or the Partnership, and as such, are not dilutive to Rice Energy or the Partnership. Incentive unit expense allocated to the Partnership based on its estimate of the expense attributable to its operations was $12.0 million for the year ended December 31, 2014. Additionally, in the years ended December 31, 2015 and 2014, $1.0 million and $1.5 million, respectively, of incentive unit expense was allocated to the Water Assets by Rice Energy and is reflected in the consolidated financial statements. No expense was recognized prior to Rice Energy’s initial public offering as the performance conditions related to the incentive units were deemed not probable of occurring. For periods subsequent to the IPO, no incentive unit expense will be allocated to the Partnership by Rice Energy. However, incentive unit expense includes amounts allocated to the Water Assets from Rice Energy for periods subsequent to the IPO through the acquisition date.

Financial Information by Business Segment

The Partnership operates in two business segments: (i) gathering and compression and (ii) water services. The gathering and compression segment provides natural gas gathering and compression services for Rice Energy and third parties in the Appalachian Basin. The water services segment is engaged in the provision of water services to support well completion activities and to collect and recycle or dispose of flowback and produced water for Rice Energy and third parties in the Appalachian Basin.

Business segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income, which is defined as segment operating revenues less operating expenses. Other income and expenses, interest and income taxes are managed on a consolidated basis. There were no inter-segment transactions during any of the periods presented. The segment accounting policies are the same as those described in Note 1 to these consolidated financial statements. The operating results and assets of the Partnership’s reportable segments were as follows as of and for the years ended December 31, 2016, 2015 and 2014.



	Year Ended December 31, 2016
(in thousands)	Gathering and Compression		Water Services		Consolidated Total
Total operating revenues	$	132,099	$	69,524	$	201,623
Total operating expenses	38,951		35,730		74,681
Operating income	$	93,148	$	33,794	$	126,942

Segment assets	$	1,260,681	$	138,536	$	1,399,217
Goodwill	$	494,580	$	—	$	494,580
Depreciation expense	$	10,840	$	14,330	$	25,170
Capital expenditures for segment assets	$	113,033	$	8,054	$	121,087



	Year Ended December 31, 2015
(in thousands)	Gathering and Compression		Water Services		Consolidated Total
Total operating revenues	$	77,211	$	37,248	$	114,459
Total operating expenses	28,326		24,097		52,423
Operating income	$	48,885	$	13,151	$	62,036

Segment assets	$	547,810	$	141,980	$	689,790
Goodwill	$	39,142	$	—	$	39,142
Depreciation expense	$	6,310	$	10,089	$	16,399
Capital expenditures for segment assets	$	149,706	$	98,757	$	248,463



	Year Ended December 31, 2014
(in thousands)	Gathering and Compression			Water Services			Consolidated Total
Total operating revenues	$	6,448		$	—		$	6,448
Total operating expenses	32,059			4,956			37,015
Operating loss	$	(25,611	)	$	(4,956	)	$	(30,567	)

Segment assets	$	399,295		$	43,796		$	443,091
Goodwill	$	39,142		$	—		$	39,142
Depreciation expense	$	2,856		$	1,309		$	4,165
Capital expenditures for segment assets	$	138,151		$	31,675		$	169,826

Subsequent Events

On January 20, 2017, the Board of Directors of our general partner declared a cash distribution to our unitholders for the fourth quarter of 2016 of $0.2505 per common and subordinated unit. The cash distribution was paid on February 16, 2017 to unitholders of record at the close of business on February 7, 2017. Also on February 16, 2017, a cash distribution of $0.9 million was made to GP Holdings related to its incentive distribution rights in the Partnership based upon the level of distribution paid per common and subordinated unit.

Quarterly Financial Information (Unaudited)

The Partnership’s quarterly financial information for the years ended December 31, 2016 and 2015 is as follows (in thousands, except per unit data):



Year ended December 31, 2016: ⁽¹⁾	First quarter		Second quarter		Third quarter		Fourth quarter⁽²⁾
Operating revenues	$	54,543	$	46,547	$	41,067	$	59,466
Operating expenses	18,926		17,547		15,531		22,677
Operating income	35,617		29,000		25,536		36,789
Net income	$	34,426	$	27,936	$	24,989	$	34,259
Net income per limited partner unit - basic	$	0.49	$	0.38	$	0.30	$	0.33
Net income per limited partner unit - diluted	$	0.48	$	0.38	$	0.30	$	0.33



Year ended December 31, 2015: ⁽¹⁾	First quarter		Second quarter		Third quarter		Fourth quarter
Operating revenues	$	26,511	$	28,560	$	30,075	$	29,314
Operating expenses	11,025		11,794		14,065		15,539
Operating income	15,486		16,766		16,010		13,775
Net income	$	12,924	$	13,790	$	1,326	$	12,521
Net income per limited partner unit - basic	$	0.16	$	0.21	$	0.21	$	0.18
Net income per limited partner unit - diluted	$	0.16	$	0.21	$	0.21	$	0.18


(1)	The sum of quarterly data in some cases may not equal the yearly total due to rounding.


(2)	Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.

Summary of Significant Accounting Policies and Related Matters (Policies)

Combination of Entities under Common Control

The acquisition was accounted for as a combination of entities under common control, and as such, the Partnership’s consolidated financial statements have been retrospectively recast for all periods prior to November 1, 2015, the effective date of acquisition of the Water Assets, to include the historical results of the Water Assets. Our Predecessor included certain fresh water distribution assets and operations in Pennsylvania that were distributed to Rice Midstream Holdings LLC (“Rice Midstream Holdings”) concurrently with the closing of the Partnership’s IPO. These fresh water distribution assets are included as part of the Water Assets that were acquired on November 4, 2015, and as such, the historical results related to those operations are included for all periods presented.

The Partnership’s acquisition of the Vantage Midstream Entities from Rice Energy is accounted for as a combination of entities under common control at historical cost. As the Vantage Midstream Asset Acquisition occurred concurrently with the Vantage Acquisition, no predecessor period existed, which would warrant retrospective recast of our financial statements. Therefore, no statements were required to be recast.

Basis of Presentation

The consolidated financial statements of the Partnership have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its subsidiaries. All intercompany transactions have been eliminated in consolidation. Transactions between the Partnership and Rice Energy have been identified in the Consolidated Financial Statements as transactions between related parties and are discussed in further detail in Note 9.

As it relates to the Predecessor, the consolidated financial statements have been prepared, prior to December 22, 2014, from the separate records maintained by Rice Energy and may not necessarily be indicative of the actual results of operations that might have occurred if the Predecessor had been operated separately during the periods prior to the Partnership’s IPO. Because a direct ownership relationship did not exist among the businesses comprising the Predecessor, the net investment in the Predecessor is shown as parent net equity in the consolidated financial statements. Additionally, in connection with the IPO, Rice Energy was assigned all cash and cash equivalents, accounts receivable, accounts payable and accrued capital expenditures by our Predecessor on December 22, 2014. Subsequent to the Partnership’s IPO, the consolidated financial statements include the accounts of the Partnership and its subsidiaries: Rice Midstream OpCo LLC (“Rice Midstream OpCo”) and Rice Poseidon. Additionally, the consolidated financial statements include the historical results of the Water Assets. Transactions between the Partnership and Rice Energy have been identified in the consolidated financial statements as transactions between related parties.

The Partnership does not have any employees. Operational support for the Partnership is provided by Rice Energy. Rice Energy’s employees manage and conduct the Partnership’s daily business operations.

The Partnership’s cost of doing business incurred by Rice Energy on behalf of the Partnership have been reflected in the accompanying consolidated financial statements. These costs include general and administrative expenses allocated by Rice Energy to the Partnership in exchange for:


•	business services, such as payroll, accounts payable and facilities management;


•	corporate services, such as finance and accounting, legal, human resources and public and regulatory policy; and


•	employee compensation.

Nature of Business and Segment Reporting

Segment Reporting

Business segments are components of the Partnership for which separate financial information is produced internally and are subject to evaluation by the Partnership’s chief operating decision maker in deciding how to allocate resources. The Partnership reports its operations in two segments: (i) gathering and compression and (ii) water services, which reflect its lines of business. Business segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income. All of the Partnership’s operating revenues, income from operations and assets are located in the United States. See Note 10 for additional information regarding segment reporting.

Nature of Business

The Partnership is a fee-based, growth-oriented limited partnership formed by Rice Energy to own, operate, develop and acquire midstream assets in the Appalachian Basin. The Partnership provides midstream services to Rice Energy and third parties within three counties in the Appalachian Basin through two primary segments: the gathering and compression segment and the water services segment.

Gathering and compression segment. The Partnership’s gas gathering assets consist of a high-pressure dry gas gathering systems and associated compression in Washington and Greene Counties, Pennsylvania. The Partnership provides gas gathering and compression services under long-term, fixed-fee contracts to Rice Energy and third parties.

Water services segment. The Partnership’s water services assets consist of water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities which are used to support well completion activities and to collect and recycle or dispose of flowback and produced water for Rice Energy and third parties in Washington and Greene Counties, Pennsylvania and Belmont County, Ohio. The Partnership provides water services under long-term, fee-based contracts, to Rice Energy and third parties.

The Partnership operates in two business segments: (i) gathering and compression and (ii) water services. The gathering and compression segment provides natural gas gathering and compression services for Rice Energy and third parties in the Appalachian Basin. The water services segment is engaged in the provision of water services to support well completion activities and to collect and recycle or dispose of flowback and produced water for Rice Energy and third parties in the Appalachian Basin.

Business segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income, which is defined as segment operating revenues less operating expenses. Other income and expenses, interest and income taxes are managed on a consolidated basis. There were no inter-segment transactions during any of the periods presented.

Use of Estimates

The Partnership prepares its consolidated financial statements in conformity with GAAP, which require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Credit Risk

The Partnership manages credit risk of sales to third parties by limiting dealings to those third parties meeting specified criteria for credit and liquidity strength and by actively monitoring these accounts. The Partnership may request a letter of credit, guarantee, performance bond or other credit enhancement from a third-party in order for that third-party to meet the Partnership’s credit criteria.

Revenue Recognition

Revenues relating to the gathering and compression of natural gas and relating to water services are recognized in the period service is provided. Under these arrangements, the Partnership receives a fee or fees for services provided. The revenue the Partnership recognizes from gathering and compression services is generally directly related to the volume of natural gas that flows through its systems and revenue the Partnership recognizes from water services is generally directly related to the volume of water that is delivered, recycled or disposed of.

Cash

The Partnership maintains cash at financial institutions which may at times exceed federally insured amounts and which may at times exceed consolidated balance sheet amounts due to outstanding checks. The Partnership has no accounts that are considered cash equivalents.

Accounts Receivable

Accounts receivable are stated at their historical carrying amount. The Partnership extends credit to parties in the normal course of business based upon management’s assessment of their creditworthiness. An allowance is provided for those accounts for which collection is estimated as doubtful; uncollectible accounts are written off and charged against the allowance. In estimating the allowance, management considers, among other things, how recently and how frequently payments have been received and the financial position of the party. There was no allowance recorded for any of the years presented in the consolidated financial statements.

Asset Retirement Obligations

The Partnership operates and maintains its gathering systems and it intends to do so as long as supply and demand for natural gas exists, which the Partnership expects for the foreseeable future. Therefore, no asset retirement obligation has been recorded for its gathering and compression systems as the Partnership believes that these assets have indeterminate useful lives. The asset retirement obligations recorded in the consolidated balance sheets at December 31, 2016 and 2015 were related to our water services assets. The Partnership records a liability for such asset retirement obligations and capitalizes a corresponding amount for asset retirement costs. The liability is estimated using the present value of expected future cash flows, adjusted for inflation and discounted at the Partnership’s credit adjusted risk-free rate. The current portion of asset retirement obligations are recorded in other accrued liabilities and the long term portion of asset retirement obligations are recorded in other long-term liabilities on the consolidated balance sheets.

Interest

The Partnership capitalizes interest on expenditures for significant capital projects while activities are in progress to bring the assets to their intended use. Upon completion of construction of the asset, the associated capitalized interest costs are included within the Partnership’s asset base and depreciated accordingly.

Property and Equipment

Property and equipment is recorded at cost and is being depreciated over estimated useful lives on a straight-line basis.

Impairment of Long-Lived Assets

The Partnership evaluates its long-lived assets for impairment when events and circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows for other assets and liabilities. Impairment exists when the carrying amount of an asset exceeds estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence. If the carrying amount of the long-lived asset is not recoverable, based on the estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying amount over its estimated fair value, such that the asset’s carrying amount is adjusted to its estimated fair value with an offsetting charge to impairment expense.

Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. Sources used to determine fair value include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analyses and analyses from outside advisors. Significant changes, such as changes in contract rates or terms, the condition of an asset, or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. A reduction of carrying value of fixed assets would represent a Level 3 fair value measure. No impairments for such assets have recorded for the years presented herein.

Goodwill and Intangible Assets

Goodwill is the cost of an acquisition less the fair value of the identifiable net assets of the acquired business. The Partnership evaluates goodwill for impairment at least annually during the fourth quarter, or whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis.

In 2014, $39.1 million of goodwill was allocated to the Gathering and Compression segment as a result of the acquisition of the remaining 50% interest in Alpha Holdings in its Marcellus joint venture. On October 19, 2016, the Partnership acquired from Rice Energy all of the outstanding membership interests in the Vantage Midstream Entities. As a result of the acquisition of the Vantage Midstream Entities from Rice Energy, and based on the purchase price allocation preliminarily performed by Rice Energy, the Partnership ascribed $455.4 million of goodwill to the Gathering and Compression segment. See Note 2 for further information regarding the Vantage Midstream Asset Acquisition.

The Partnership may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount. To the extent that such indicators exist, the Partnership would complete the two-step goodwill impairment test. The Partnership may also perform the two-step goodwill impairment test at its discretion without performing the qualitative assessment. The first step compares the fair value of a reporting unit to its carrying value. If the carrying amount of a reporting unit exceeds its fair value, the second step is required which compares the implied fair value of the goodwill of a reporting unit to its carrying value. If the carrying value of the goodwill of a reporting unit exceeds its implied fair value, the difference is recognized as an impairment charge. As deemed necessary, the Partnership uses a combination of the income and market approach to estimate the fair value of a reporting unit. The fair value estimation process requires considerable judgment and determining the fair value is sensitive to changes in assumptions impacting management’s estimates of future financial results. Although the Partnership believes the estimates and assumptions used in estimating the fair value are reasonable and appropriate, different assumptions and estimates could materially impact the calculated fair value. Additionally, future results could differ from our current estimates and assumptions.

The Partnership’s fourth quarter 2016 annual test included the assessment of qualitative factors to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying value. The qualitative assessment encompassed a review of events and circumstances specific to the reporting unit with goodwill as well as circumstances specific to the entity as a whole. The Partnership’s qualitative assessment considered among other things, factors such as macroeconomic conditions, industry and market considerations, including changes in the Partnership’s common unit price and market multiples, projected financial performance, cost factors, changes in carrying values and other relevant factors. In considering the totality of the qualitative factors assessed, based on the weight of evidence, circumstances did not exist that would indicate it was more likely than not that goodwill was impaired. Accordingly, the Partnership did not perform a two-step quantitative analysis in 2016.

No impairment was recorded for the years presented herein.

Intangible assets are comprised of customer contracts acquired in the Momentum Acquisition based upon the estimated fair value of the assets at the acquisition date. The customer contracts acquired had initial contract terms of 10 years with five and one-year renewal options. Based upon management’s understanding of the life of the underlying reserves and the geographically advantaged location of the acquired midstream assets, it has been determined that the customer contracts will have a useful life of 30 years. The assets are being amortized using a straight-line method

Deferred Financing Costs

Deferred financing costs are amortized on a straight-line basis, which approximates the interest method, over the term of the related agreement.

Net Income per Limited Partner Unit

The Partnership’s net income is allocated to the limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to the incentive distribution rights held by GP Holdings. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions and pre-acquisition net income attributable to the general partner, by the weighted average number of outstanding limited partner units during the period.

We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the Partnership’s partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. The allocation of undistributed earnings, or net income in excess of distributions, to the incentive distribution rights is limited to cash available for distribution for the period. The Partnership’s net income allocable to the limited partners is allocated between common and subordinated unitholders by applying the provisions of the Partnership’s partnership agreement under the two-class method that govern actual cash distributions as if all earnings for the period had been distributed. Any common units issued during the period are included on a weighted-average basis for the days in which they were outstanding. Net income attributable to the Water Assets for the periods prior to their acquisition was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these results are not attributable to limited partners of the Partnership.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the Rice Midstream Partners LP 2014 Long Term Incentive Plan (the “LTIP”), were exercised, settled or converted into common units. When it is determined that potential common units should be included in diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. The FASB created Topic 606 which supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance throughout the Industry Topics of the Codification. The FASB and International Accounting Standards Board initiated this joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for both U.S. GAAP and International Financial Reporting Standards. ASU 2014-09 will enhance comparability of revenue recognition practices across entities, industries and capital markets compared to existing guidance. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing.” In May 2016, the FASB issued ASU 2016-11, “Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606) – Narrow Scope Improvements and Practical Expedients.” These updates do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather provide further guidance with respect to implementation of ASU 2014-09. The effective date for ASU 2016-10, 2016-11, 2016-12 and ASU 2014-09, as amended by ASU 2015-14, is for annual reporting periods beginning after December 15, 2017, including interim periods within those years. In preparation for the adoption of the new standard in the fiscal year beginning January 2018, the Partnership has obtained representative samples of contracts and other forms of agreements with its customers and are evaluating the provisions contained therein in light of the five-step model specified by the new guidance. That five-step model includes: (1) determination of whether a contract-an agreement between two or more parties that creates legally enforceable rights and obligations-exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company anticipates adopting the standard using the modified retrospective approach at adoption. The Partnership will be evaluating individual customer contracts within each of our business segments as we continue to evaluate the impact of the adoption of this standard.

In August 2014, the FASB issued ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which specifies the responsibility an entity’s management has to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The Partnership has adopted ASU 2014-15 in the fourth quarter of 2016 and has determined that substantial doubt does not exist about its ability to continue as a going concern.

In April 2015, the FASB issued ASU 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplification of Debt Issuance Costs.” ASU 2015-03 was issued to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. ASU 2015-03 is effective for periods beginning after December 15, 2015. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” ASU 2015-15 clarifies the guidance in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The Securities and Exchange Commission (“SEC”) staff announced they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Partnership adopted ASU 2015-15 in the first quarter of 2016 and presents debt issuance costs associated with the Partnership’s revolving credit facility (defined in Note 3) as deferred financing costs, net in the consolidated balance sheets. Additionally, the Partnership will utilize the guidance in ASU 2015-03 for the presentation of debt issuance costs that are the result of an issuance of future debt.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” ASU 2016-02 requires, among other things, that lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Partnership is currently evaluating the impact of the new guidance on its financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions, which include: (i) income tax consequences, (ii) classification of awards as either equity or liabilities, (iii) classification on the statement of cash flows and (iv) forfeiture rate calculations. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Partnership plans to adopt ASU 2016-09 in the first quarter of 2017. The Partnership does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by current GAAP and thereby reduce the current diversity in practice. ASU 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. The Partnership does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU eliminates Step 2 from the goodwill impairment test which previously required measurement of any goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new standard, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, without exceeding the total amount of goodwill allocated to that reporting unit. The provisions of this ASU are effective for fiscal years, and any interim goodwill impairment tests within those fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. A reporting entity should apply the amendment on a prospective basis. The Partnership plans to adopt ASU 2017-04 in the first quarter of 2017.

Commitments and Contingencies

From time to time the Partnership is party to various legal and/or regulatory proceedings arising in the ordinary course of business. While the ultimate outcome and impact to the Partnership cannot be predicted with certainty, the Partnership believes that all such matters are without merit and involve amounts which, if resolved unfavorably, either individually or in the aggregate, will not have a material adverse effect on its financial condition, results of operations or cash flows. When it is determined that a loss is probable of occurring and is reasonably estimable, the Partnership accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Partnership discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed.

Summary of Significant Accounting Policies and Related Matters (Tables)

Schedule of Change in Asset Retirement Obligation

A reconciliation of the beginning and ending aggregate carrying amount of asset retirement obligations for the years ended December 31, 2016 and 2015 is as follows:



(in thousands)
Balance at December 31, 2014	$	1,900
Liabilities incurred	1,479
Liabilities settled	(1,129		)
Accretion expense	172
Revisions in estimated cash flows	626
Balance at December 31, 2015	$	3,048
Liabilities incurred	46
Liabilities assumed in Vantage Midstream Asset Acquisition	2,452
Liabilities settled	(46		)
Accretion expense	290
Balance at December 31, 2016	$	5,790

Schedule of Components of Interest Incurred

The following table summarizes the components of the Partnership’s interest incurred for the years ended December 31, 2016, 2015 and 2014:



	Years Ended December 31,
(in thousands)	2016		2015		2014
Interest incurred:
Interest expensed	$	3,931	$	3,164	$	13,571
Interest capitalized	175		222		402
Total incurred	$	4,106	$	3,386	$	13,973

Property, Plant and Equipment

The following table provides detail of property and equipment presented in the consolidated balance sheets at December 31, 2016 and 2015.



	Years Ended December 31,
(in thousands)	2016			2015
Natural gas gathering assets	$	675,830		$	453,537
Natural gas gathering assets in progress	3,780			540
Accumulated depreciation	(21,615		)	(10,725		)
Natural gas gathering assets, net	657,995			443,352
Water service assets	165,482			144,686
Water service assets in progress	4,060			1,324
Accumulated depreciation	(24,981		)	(12,014		)
Water service assets, net	144,561			133,996
Other property and equipment, net	2,471			678
Property and equipment, net	$	805,027		$	578,026

Schedule of Goodwill

Goodwill for the years ended December 31, 2016 and 2015 are detailed below.



(in thousands)	Goodwill
Balance, December 31, 2014	$	39,142
Accumulated amortization	—
Balance, December 31, 2015	39,142
Accumulated amortization	—
Additions	455,438
Balance, December 31, 2016	$	494,580

Schedule of Intangible Assets

Intangible assets for the years ended December 31, 2016 and 2015 are detailed below.



(in thousands)	December 31, 2016			December 31, 2015
Intangible assets	$	48,947		$	48,947
Less: accumulated amortization	(4,422		)	(2,788		)
Intangible assets, net	44,525			46,159

Acquisitions (Tables)

Business Acquisition, Pro Forma Information

The following unaudited pro forma combined financial information presents the Partnership’s results as though the acquisition of the Vantage Midstream Entities and the 2016 Private Placement had been completed at January 1, 2015.



	Year Ended December 31,
(in thousands, except per share data)	2016		2015
Pro forma operating revenues	$	253,817	$	156,944
Pro forma limited partner net income	$	150,846	$	67,199
Pro forma earnings per common unit (basic)	$	1.54	$	0.84
Pro forma earnings per common unit (diluted)	$	1.54	$	0.83
Pro forma earnings per subordinated units	$	1.55	$	0.84

Subsequent to the completion of the Vantage Midstream Asset Acquisition, the Vantage Midstream Entities contributed the following to the Partnership’s consolidated operating results for the period from October 19, 2016 through December 31, 2016.



(in thousands)
Operating revenues	$	8,571
Net income	$	4,303

Partners' Capital Partners' Capital (Tables)

Schedule of Capital Units

The following table presents the Partnership’s common and subordinated units issued from January 1, 2015 through December 31, 2016:



	Limited Partners			GP Holdings
	Common	Subordinated	Total	Ownership %
Balance, January 1, 2015	28,753,623	28,753,623	57,507,246	50	%
Equity offering in November 2015	13,409,961	—	13,409,961
Vested phantom units, net	165	—	165
Balance, December 31, 2015	42,163,749	28,753,623	70,917,372	41	%
Equity offering in June 2016	9,200,000	—	9,200,000
Equity offering in October 2016	20,930,233	—	20,930,233
Common units issued under ATM program	944,700	—	944,700
Vested phantom units, net	280,451	—	280,451
Balance, December 31, 2016	73,519,133	28,753,623	102,272,756	28	%

Phantom Unit Awards (Tables)

Schedule of Share-based Compensation, Phantom Share Units (PSUs) Activity

The following table summarizes the activity for the equity-based awards during the years ended December 31, 2016 and 2015.



	Number of units		Weighted average grant date fair value
Total unvested, January 1, 2015	434,094		$	16.50
Granted	18,196		16.87
Vested	(242	)	16.50
Forfeited	(19,420	)	16.50
Total unvested - December 31, 2015	432,628		$	16.52
Granted	30,352		17.81
Vested	(399,158	)	16.52
Forfeited	(33,470	)	16.50
Total unvested - December 31, 2016	30,352		$	17.81

Net Income per Limited Partner Unit and Cash Distributions (Tables)

Schedule of Earnings Per Share, Basic and Diluted

The following table presents Partnership’s calculation of net income per limited partner unit for common and subordinated limited partner units.



	Years Ended December 31,
(in thousands, except unit data)	2016		2015		2014
Net income (loss)	$	121,610	$	52,495	$	(31,328	)
Less: Pre-IPO net loss allocated to parent	—		—		(27,787		)
Less: Pre-acquisition net income (loss) allocated to general partner ⁽¹⁾	—		7,296		(4,703		)
Less: General partner interest in net income attributable to incentive distribution rights	1,428		—		—
Limited partner net income	$	120,182	$	45,199	$	1,162

Net income allocable to common units	$	76,985	$	23,340	$	581
Net income allocable to subordinated units	43,197		21,859		581
Limited partner net income	$	120,182	$	45,199	$	1,162

Weighted-average limited partner units outstanding - basic:
Common units	52,822,030		30,700,864		28,753,623
Subordinated units	28,753,623		28,753,623		28,753,623
Total	81,575,653		59,454,487		57,507,246

Weighted-average limited partner units outstanding - diluted:
Common units ⁽²⁾	53,065,865		30,807,972		28,755,346
Subordinated units	28,753,623		28,753,623		28,753,623
Total	81,819,488		59,561,595		57,508,969

Net income per limited partner unit - basic:
Common units	$	1.46	$	0.76	$	0.02
Subordinated units ⁽³⁾	1.50		0.76		0.02
Total	$	1.47	$	0.76	$	0.02

Net income per limited partner unit - diluted:
Common units	$	1.45	$	0.76	$	0.02
Subordinated units ⁽³⁾	1.50		0.76		0.02
Total	$	1.47	$	0.76	$	0.02

Cash distributions declared per limited partner unit: ⁽⁴⁾
Common units	$	0.9210	$	0.7680	$	0.0204
Subordinated units	$	0.9210	$	0.7680	$	0.0204

(1) Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.


(2)	Diluted weighted-average limited partner common units includes the effect of 243,835, 107,108 and 1,723 units for the years ended December 31, 2016, 2015 and 2014, respectively.

(3) Basic and diluted income per limited partner unit is presented as if all earnings for the period had been distributed. While it appears that more income is allocated to the subordinated unitholders than the common unitholders for the twelve months ended December 31, 2016, our partnership agreement prevents us from making a distribution to the subordinated unitholders in excess of those to the common unitholders.


(4)	See below for further discussion of cash distributions declared for the period presented.

Schedule of Incentive Distribution Rights

The Board of Directors of the Partnership’s general partner declared the following cash distributions to the Partnership’s common and subordinated unitholders for the periods presented.



Quarters Ended	Total Quarterly Distribution per Unit		Date of Distribution
December 31, 2015	$	0.1965	February 11, 2016
March 31, 2016	0.2100		May 12, 2016
June 30, 2016	0.2235		August 11, 2016
September 30, 2016	0.2370		November 10, 2016
December 31, 2016	0.2505		February 16, 2017

For any quarter in which the Partnership has distributed cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum distribution, then the Partnership will distribute any additional available cash from operating surplus for that quarter among the unitholders and the incentive distribution rights holders in the following manner:



		Marginal Percentage Interest in Distributions
	Total Quarterly Distribution Per Unit	Unitholders	Incentive Distribution Rights Holders
Minimum Quarterly Distribution	$0.1875	100%	—%
First Target Distribution	above $0.1875 up to $0.2156	100%	—%
Second Target Distribution	above $0.2156 up to $0.2344	85%	15%
Third Target Distribution	above $0.2344 up to $0.2813	75%	25%
Thereafter	above $0.2813	50%	50%

Income Taxes (Tables)

Schedule of Components of Income Tax Expense (Benefit)

The components of the income tax benefit for the period from January 29, 2014 to December 21, 2014 for the Predecessor (not including the fresh water distribution assets and operations in Pennsylvania that were distributed to Rice Midstream Holdings concurrently with the closing of the Partnership’s IPO) and from January 29, 2014 to December 31, 2014 for the Water Assets, are as follows:



	Years Ended December 31,
(in thousands)	2016		2015		2014
Current tax expense (benefit):
Federal	$	—	$	3,720	$	—
State	—		704		—
Total	—		4,424		—
Deferred tax expense (benefit):
Federal	—		986		(9,809		)
State	—		402		(3,111		)
Total	—		1,388		(12,920		)
Total income tax benefit	$	—	$	5,812	$	(12,920	)

Schedule of Effective Income Tax Rate Reconciliation

Income tax expense differs from amounts computed at the federal statutory rate of 35% on pre-tax income as follows:



	Years Ended December 31,
(in thousands)	2016			2015			2014
Tax at statutory rate	$	42,563		$	18,150		$	(15,488	)
State income taxes	—			719			(2,022		)
Incentive unit expense	—			365			4,718
Equity compensation expense	—			140			—
Partnership net income not subject to taxes	(42,563		)	(13,562		)	(366		)
Permanent difference	—			—			238
Income tax expense (benefit)	$	—		$	5,812		$	(12,920	)
Effective tax rate	—		%	10.0		%	29.2		%

Financial Information by Business Segment (Tables)

Schedule of Segment Reporting Information, by Segment

The operating results and assets of the Partnership’s reportable segments were as follows as of and for the years ended December 31, 2016, 2015 and 2014.



	Year Ended December 31, 2016
(in thousands)	Gathering and Compression		Water Services		Consolidated Total
Total operating revenues	$	132,099	$	69,524	$	201,623
Total operating expenses	38,951		35,730		74,681
Operating income	$	93,148	$	33,794	$	126,942

Segment assets	$	1,260,681	$	138,536	$	1,399,217
Goodwill	$	494,580	$	—	$	494,580
Depreciation expense	$	10,840	$	14,330	$	25,170
Capital expenditures for segment assets	$	113,033	$	8,054	$	121,087



	Year Ended December 31, 2015
(in thousands)	Gathering and Compression		Water Services		Consolidated Total
Total operating revenues	$	77,211	$	37,248	$	114,459
Total operating expenses	28,326		24,097		52,423
Operating income	$	48,885	$	13,151	$	62,036

Segment assets	$	547,810	$	141,980	$	689,790
Goodwill	$	39,142	$	—	$	39,142
Depreciation expense	$	6,310	$	10,089	$	16,399
Capital expenditures for segment assets	$	149,706	$	98,757	$	248,463



	Year Ended December 31, 2014
(in thousands)	Gathering and Compression			Water Services			Consolidated Total
Total operating revenues	$	6,448		$	—		$	6,448
Total operating expenses	32,059			4,956			37,015
Operating loss	$	(25,611	)	$	(4,956	)	$	(30,567	)

Segment assets	$	399,295		$	43,796		$	443,091
Goodwill	$	39,142		$	—		$	39,142
Depreciation expense	$	2,856		$	1,309		$	4,165
Capital expenditures for segment assets	$	138,151		$	31,675		$	169,826

Quarterly Financial Information (Unaudited) (Tables)

Schedule of Quarterly Financial Information

The Partnership’s quarterly financial information for the years ended December 31, 2016 and 2015 is as follows (in thousands, except per unit data):



Year ended December 31, 2016: ⁽¹⁾	First quarter		Second quarter		Third quarter		Fourth quarter⁽²⁾
Operating revenues	$	54,543	$	46,547	$	41,067	$	59,466
Operating expenses	18,926		17,547		15,531		22,677
Operating income	35,617		29,000		25,536		36,789
Net income	$	34,426	$	27,936	$	24,989	$	34,259
Net income per limited partner unit - basic	$	0.49	$	0.38	$	0.30	$	0.33
Net income per limited partner unit - diluted	$	0.48	$	0.38	$	0.30	$	0.33



Year ended December 31, 2015: ⁽¹⁾	First quarter		Second quarter		Third quarter		Fourth quarter
Operating revenues	$	26,511	$	28,560	$	30,075	$	29,314
Operating expenses	11,025		11,794		14,065		15,539
Operating income	15,486		16,766		16,010		13,775
Net income	$	12,924	$	13,790	$	1,326	$	12,521
Net income per limited partner unit - basic	$	0.16	$	0.21	$	0.21	$	0.18
Net income per limited partner unit - diluted	$	0.16	$	0.21	$	0.21	$	0.18


(1)	The sum of quarterly data in some cases may not equal the yearly total due to rounding.


(2)	Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.

Summary of Significant Accounting Policies and Related Matters (Narrative) (Details) (USD $)

12 Months Ended

0 Months Ended

12 Months Ended

0 Months Ended

Dec. 31, 2016

business_segment

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2016

Gathering and Compression

Dec. 31, 2015

Gathering and Compression

Dec. 31, 2014

Gathering and Compression

Dec. 31, 2016

Appalachian Basin

county

Dec. 31, 2016

Net Assets, Geographic Area

Appalachian Basin

county

Dec. 31, 2016

Gathering revenues

Customer Concentration Risk

Single Third Party Customer

Dec. 31, 2016

Common Units

Dec. 31, 2015

Common Units

Dec. 31, 2016

Subordinated Units

Dec. 31, 2015

Subordinated Units

Feb. 21, 2016

Limited Partners

GP Holdings

Common Units

Partnership Interest

Feb. 21, 2016

Limited Partners

GP Holdings

Subordinated Units

Partnership Interest

Feb. 22, 2016

Limited Partners

GP Holdings

Common Units

Private Placement

Dec. 31, 2016

Rice Energy

Gathering revenues

Customer Concentration Risk

Gathering Revenue

Dec. 31, 2016

Rice Energy

Gathering revenues

Customer Concentration Risk

Water Revenue

Dec. 31, 2014

Alpha Shale Joint Venture

Dec. 31, 2014

Alpha Shale Joint Venture

Gathering and Compression

Nov. 4, 2015

Water Assets

Subsidiary of Common Parent

subsidiary

Oct. 19, 2016

Vantage Midstream Entities

Subsidiary of Common Parent

Gathering and Compression

Jan. 29, 2014

Predecessor

Alpha Shale Joint Venture

Jan. 28, 2014

Predecessor

Alpha Shale Joint Venture

Subsidiary, Sale of Stock [Line Items]

Percentage of voting interests acquired

50.00%

Equity investment ownership percentage

50.00%

Number of subsidiaries acquired

2

Limited partner interest percentage

8.25%

Number of common units and subordinated units assigned to the Partnership

73,519,133

42,163,749

28,753,623

3,623

28,753,623

Number of counties

3

Percentage of revenues

33.00%

67.00%

95.00%

Goodwill

$ 494,580,000

$ 39,142,000

$ 494,580,000

$ 39,142,000

$ 39,100,000

$ 455,400,000

Accumulated amortization

2,100,000 ¹

600,000 ¹

Amortization of deferred finance costs

$ 1,479,000 ¹

$ 576,000 ¹

$ 0 ¹

Number of business segments

2

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Summary of Significant Accounting Policies and Related Matters (Reconciliation of Beginning and Ending Aggregate Carrying Amount of Asset Retirement Obligations) (Details) (USD $)

In Thousands, unless otherwise specified

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]

Balance

$ 3,048

$ 1,900

Liabilities incurred

46

1,479

Liabilities settled

(46)

(1,129)

Accretion expense

290

172

Revisions in estimated cash flows

626

Balance

5,790

3,048

Vantage Midstream Entities

Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]

Liabilities incurred

$ 2,452

Summary of Significant Accounting Policies and Related Matters (Schedule of Interest Incurred) (Details) (USD $)

In Thousands, unless otherwise specified

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Interest incurred:

Interest expensed

$ 3,931

$ 3,164

$ 13,571

Interest capitalized

175

222

402

Total incurred

$ 4,106

$ 3,386

$ 13,973

Summary of Significant Accounting Policies and Related Matters (Schedule of Property and Equipment) (Details) (USD $)

In Thousands, unless otherwise specified

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2016

Gathering Pipelines and Compressor Stations

Dec. 31, 2016

Water Pipelines, Pumping Stations, and Impoundment Facilities

Minimum

Dec. 31, 2016

Water Pipelines, Pumping Stations, and Impoundment Facilities

Maximum

Dec. 31, 2016

Natural gas gathering assets, net

Dec. 31, 2015

Natural gas gathering assets, net

Dec. 31, 2016

Natural gas gathering assets in progress

Dec. 31, 2015

Natural gas gathering assets in progress

Dec. 31, 2016

Water service assets, net

Dec. 31, 2015

Water service assets, net

Dec. 31, 2016

Other property and equipment, net

Dec. 31, 2015

Other property and equipment, net

Property, Plant and Equipment [Line Items]

Useful life

60 years

10 years

15 years

Natural gas gathering assets

$ 675,830

$ 453,537

$ 3,780

$ 540

Accumulated depreciation

(21,615)

(10,725)

Natural gas gathering assets, net

657,995

443,352

Water assets

4,060

1,324

165,482

144,686

Accumulated depreciation

(24,981)

(12,014)

Property and equipment, net

$ 805,027

$ 578,026

$ 144,561

$ 133,996

$ 2,471

$ 678

Summary of Significant Accounting Policies and Related Matters (Schedule of Goodwill and Intangible Assets) (Details) (USD $)

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Finite-Lived Intangible Assets [Line Items]

Amortization of intangibles

$ 1,634,000 ¹

$ 1,632,000 ¹

$ 1,156,000 ¹

Goodwill [Roll Forward]

Goodwill, Beginning Balance

39,142,000

Additions

455,438,000

Goodwill, Ending Balance

494,580,000

39,142,000

Finite-lived Intangible Assets, Net [Abstract]

Intangible assets

48,947,000

Less: accumulated amortization

(4,422,000)

(2,788,000)

Intangible assets, net

44,525,000

46,159,000

Momentum Acquisition |
Customer contracts

Finite-Lived Intangible Assets [Line Items]

Initial contract terms of customer contracts

10 years

Useful life of customer contracts

30 years

Amortization of intangibles

1,600,000

1,200,000

2017

1,600,000

2018

1,600,000

2019

1,600,000

2020

1,600,000

2021

$ 1,600,000

Momentum Acquisition |
Maximum |
Customer contracts

Finite-Lived Intangible Assets [Line Items]

Duration of renewal options

5 years

Momentum Acquisition |
Minimum |
Customer contracts

Finite-Lived Intangible Assets [Line Items]

Duration of renewal options

1 year

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Acquisitions (Narrative) (Details) (USD $)

12 Months Ended

0 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2016

Gathering and Compression

Dec. 31, 2015

Gathering and Compression

Dec. 31, 2014

Gathering and Compression

Oct. 19, 2016

Vantage Midstream Entities

Revolving Credit Facility

Oct. 19, 2016

Vantage Midstream Entities

Private Placement

Oct. 7, 2016

Vantage Midstream Entities

Private Placement

Oct. 19, 2016

Vantage Midstream Entities

Subsidiary of Common Parent

Oct. 19, 2016

Vantage Midstream Entities

Subsidiary of Common Parent

mi

Oct. 19, 2016

Vantage Midstream Entities

Subsidiary of Common Parent

Gathering and Compression

Oct. 19, 2016

Vantage Midstream Entities

Subsidiary of Common Parent

Gas gathering and compression assets

Oct. 19, 2016

Wind Ridge Gathering System

Oct. 19, 2016

Wind Ridge Gathering System

Business Acquisition [Line Items]

Number of miles of dry gas gathering and compression assets

30

Aggregate purchase price

$ 600,000,000

$ 14,300,000

Net proceeds from private placement

620,330,000 ¹

171,902,000 ¹

444,134,000 ¹

441,000,000

450,000,000

Proceeds from borrowings

233,000,000 ¹

313,000,000 ¹

0 ¹

159,000,000

Gas gathering and compression assets

144,600,000

10,900,000

Goodwill

$ 494,580,000

$ 39,142,000

$ 494,580,000

$ 39,142,000

$ 455,400,000

$ 3,400,000

Percentage of voting interests acquired

67.50%

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Acquisitions (Schedule of Post-Acquisition Operating Results and Pro Forma Information) (Details) (Subsidiary of Common Parent, Vantage Midstream Entities, USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Business Acquisition [Line Items]

Operating revenues

$ 8,571

Net income

4,303

Pro forma operating revenues

253,817

156,944

Pro forma limited partner net income

$ 150,846

$ 67,199

Common Units

Business Acquisition [Line Items]

Pro forma earnings per common unit (basic) (in dollars per unit)

$ 1.54

$ 0.84

Pro forma earnings per common unit (diluted) (in dollars per unit)

$ 1.54

$ 0.83

Subordinated Units

Business Acquisition [Line Items]

Pro forma earnings per subordinated units (in dollars per unit)

$ 1.55

$ 0.84

Long-Term Debt (Narrative) (Details) (USD $)

12 Months Ended

0 Months Ended

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Oct. 19, 2016

Revolving Credit Facility

Minimum

Oct. 19, 2016

Revolving Credit Facility

Maximum

Oct. 19, 2016

Revolving Credit Facility

London Interbank Offered Rate (LIBOR)

Minimum

Oct. 19, 2016

Revolving Credit Facility

London Interbank Offered Rate (LIBOR)

Maximum

Oct. 19, 2016

Revolving Credit Facility

Federal Funds Rate

Oct. 19, 2016

Revolving Credit Facility

One Month Eurodollar

Oct. 19, 2016

Revolving Credit Facility

One Month Eurodollar, Additional Margin

Minimum

Oct. 19, 2016

Revolving Credit Facility

One Month Eurodollar, Additional Margin

Maximum

Dec. 31, 2016

Revolving Credit Facility

Wells Fargo Bank, N.A.

Oct. 19, 2016

Revolving Credit Facility

Wells Fargo Bank, N.A.

Oct. 18, 2016

Revolving Credit Facility

Wells Fargo Bank, N.A.

Dec. 22, 2014

Revolving Credit Facility

Wells Fargo Bank, N.A.

Dec. 31, 2016

Revolving Credit Facility

Wells Fargo Bank, N.A.

Letter of Credit

Dec. 22, 2014

Revolving Credit Facility

Wells Fargo Bank, N.A.

Letter of Credit

Debt Instrument [Line Items]

Maximum credit amount

$ 850,000,000

$ 450,000,000

$ 50,000,000

Additional commitments available under accordion feature

200,000,000

Borrowings outstanding

190,000,000

0

Amount of availability under facility

660,000,000

Average daily balance of the credit facility

110,000,000

Weighted average annual interest rate percentage

4.70%

Applicable margin (basis points)

2.00%

3.00%

0.50%

1.00%

2.00%

Commitment fee based on undrawn commitment (basis points)

0.375%

0.50%

Consolidated current interest expense ratio

2.50

Consolidated total leverage ratio

4.75

Consolidated total leverage ratio after electing to issue senior unsecured notes

5.25

Consolidated senior secured leverage ratio

3.50

Interest paid

$ 2,652,000 ¹

$ 3,146,000 ¹

$ 0 ¹

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Commitments and Contingencies (Details) (USD $)

In Millions, unless otherwise specified

0 Months Ended

12 Months Ended

Nov. 4, 2015

Water Assets

Subsidiary of Common Parent

gal

Nov. 4, 2015

Water Assets

Subsidiary of Common Parent

Dec. 31, 2016

Compression equipment

Dec. 31, 2016

Compression equipment

Operation and Maintenance Expense

Dec. 31, 2015

Compression equipment

Operation and Maintenance Expense

Dec. 31, 2014

Compression equipment

Operation and Maintenance Expense

Other Commitments [Line Items]

Rent expense

$ 1.6

$ 1.7

$ 0.8

Future payments for equipment

5.0

2017

1.5

2018

1.2

2019

1.2

2020

0.6

2021

0.3

Thereafter

0.3

Aggregate purchase price

200.0

Increase in conveyed systems' capacities

5,000,000

Amount of earn out provision

$ 25.0

Partners' Capital (Details) (USD $)

12 Months Ended

0 Months Ended

12 Months Ended

3 Months Ended

0 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2016

Common

Dec. 31, 2015

Common

Dec. 31, 2016

Subordinated

Dec. 31, 2015

Subordinated

Dec. 31, 2016

GP Holdings

Limited Partners

Dec. 31, 2015

GP Holdings

Limited Partners

Dec. 31, 2014

GP Holdings

Limited Partners

Dec. 31, 2016

GP Holdings

Common

Limited Partners

Dec. 31, 2016

GP Holdings

Subordinated

Limited Partners

Jun. 13, 2016

Equity offering in June 2016

Jun. 13, 2016

Equity offering in June 2016

Jun. 13, 2016

Over-Allotment Option

Dec. 31, 2016

Common units issued in ATM program, net of offering costs

Jun. 30, 2016

Common units issued in ATM program, net of offering costs

Maximum

Dec. 31, 2016

Common units issued in ATM program, net of offering costs

Weighted Average

Oct. 19, 2016

Private Placement

Vantage Midstream Entities

Oct. 7, 2016

Private Placement

Vantage Midstream Entities

Oct. 7, 2016

Private Placement

Vantage Midstream Entities

Subsidiary, Sale of Stock [Line Items]

Limited partner common units sold through underwritten public offering (number of units)

9,200,000

1,200,000

944,700

20,930,233

Price per limited partner common unit

$ 18.50

$ 17.21

$ 21.50

Underwriting discounts and commissions

$ 0 ¹

$ 129,000 ¹

$ 2,396,000 ¹

$ 6,000,000

$ 9,400,000

Net proceeds

164,100,000

15,800,000

440,600,000

Aggregate offering price

100,000,000

Net proceeds from private placement

$ 620,330,000 ¹

$ 171,902,000 ¹

$ 444,134,000 ¹

$ 441,000,000

$ 450,000,000

Ownership %

28.00%

41.00%

50.00%

Common and Subordinated units outstanding

73,519,133

42,163,749

28,753,623

3,623

28,753,623

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Partners' Capital (Schedule of Common and Subordinated Units Issued) (Details)

12 Months Ended

0 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Equity offering in November 2015

Dec. 31, 2016

Equity offering in June 2016

Dec. 31, 2016

Equity offering in October 2016

Dec. 31, 2016

Common units issued in ATM program, net of offering costs

Dec. 31, 2016

Common

Limited Partners

Dec. 31, 2015

Common

Limited Partners

Dec. 31, 2015

Common

Limited Partners

Equity offering in November 2015

Dec. 31, 2016

Common

Limited Partners

Equity offering in June 2016

Dec. 31, 2016

Common

Limited Partners

Equity offering in October 2016

Dec. 31, 2016

Common

Limited Partners

Common units issued in ATM program, net of offering costs

Dec. 31, 2016

Subordinated

Limited Partners

Dec. 31, 2015

Subordinated

Limited Partners

Dec. 31, 2015

Subordinated

Limited Partners

Equity offering in November 2015

Dec. 31, 2016

Subordinated

Limited Partners

Equity offering in June 2016

Dec. 31, 2016

Subordinated

Limited Partners

Equity offering in October 2016

Dec. 31, 2016

Subordinated

Limited Partners

Common units issued in ATM program, net of offering costs

Dec. 31, 2016

Limited Partners

GP Holdings

Dec. 31, 2015

Limited Partners

GP Holdings

Dec. 31, 2014

Limited Partners

GP Holdings

Increase (Decrease) in Partners' Capital [Roll Forward]

Balance (in units)

70,917,372

57,507,246

42,163,749

28,753,623

Equity offering and common units issued (in units)

13,409,961

9,200,000

20,930,233

944,700

13,409,961

9,200,000

20,930,233

944,700

0

Vested phantom units, net (in units)

280,451

165

280,451

165

0

Balance (in units)

102,272,756

70,917,372

73,519,133

42,163,749

28,753,623

Ownership %

28.00%

41.00%

50.00%

Phantom Unit Awards (Details) (USD $)

12 Months Ended

0 Months Ended

12 Months Ended

Dec. 31, 2016

General and Administrative Expense

Dec. 31, 2015

General and Administrative Expense

Dec. 31, 2014

General and Administrative Expense

Dec. 22, 2014

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

Dec. 31, 2016

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

Dec. 31, 2015

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

Dec. 22, 2014

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

Dec. 31, 2016

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

General and Administrative Expense

Dec. 31, 2015

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

General and Administrative Expense

Dec. 31, 2014

Rice Midstream Partners LP 2014 LTIP

Phantom unit awards

General and Administrative Expense

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Maximum aggregate number of common units that may be issued

5,000,000

Award vesting period

1 year

Equity compensation expense

$ 2,900,000

$ 4,500,000

$ 800,000

$ 2,800,000

$ 4,100,000

$ 100,000

Unrecorded compensation expense

$ 200,000

Number of units

Total unvested, beginning balance (in units)

432,628

434,094

Granted (in units)

30,352

18,196

Vested (in units)

(399,158)

(242)

Forfeited (in units)

(33,470)

(19,420)

Total unvested, ending balance (in units)

30,352

432,628

Weighted average grant date fair value

Total unvested, beginning balance (in dollars per unit)

$ 16.52

$ 16.50

Granted (in dollars per unit)

$ 17.81

$ 16.87

Vested (in dollars per unit)

$ 16.52

$ 16.50

Forfeited (in dollars per unit)

$ 16.50

Total unvested, ending balance (in dollars per unit)

$ 17.81

$ 16.52

Net Income per Limited Partner Unit and Cash Distributions (Schedule of Calculation of Net Income per Limited Partner Unit) (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 22, 2014

Dec. 31, 2014

Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]

Net income (loss)

$ 34,259 ¹ ²

$ 24,989 ¹

$ 27,936 ¹

$ 34,426 ¹

$ 12,521 ¹

$ 1,326 ¹

$ 13,790 ¹

$ 12,924 ¹

$ 121,610 ³

$ 52,495 ³

$ (27,787)³

$ (31,328)³

Less: Pre-acquisition net income (loss) allocated to general partner

0 ³

7,296 ³ ⁴

(4,703)³ ⁴

Less: General partner interest in net income attributable to incentive distribution rights

1,428 ³

0 ³

Limited partner net income

120,182 ³

45,199 ³

1,162 ³

Weighted-average limited partner units outstanding - basic:

Weighted-average limited partner units outstanding - basic (in units)

81,575,653

59,454,487

57,507,246

Weighted-average limited partner units outstanding - diluted:

Weighted-average limited partner units outstanding - diluted (in units)

81,819,488

59,561,595

57,508,969

Net income per limited partner unit - basic:

Net income per limited partner unit - basic (in dollars per unit)

$ 0.33 ¹ ²

$ 0.30 ¹

$ 0.38 ¹

$ 0.49 ¹

$ 0.18 ¹

$ 0.21 ¹

$ 0.16 ¹

$ 1.47

$ 0.76

$ 0.02

Net income per limited partner unit - diluted:

Net income per limited partner unit - diluted (in dollars per unit)

$ 0.33 ¹ ²

$ 0.30 ¹

$ 0.38 ¹

$ 0.48 ¹

$ 0.18 ¹

$ 0.21 ¹

$ 0.16 ¹

$ 1.47

$ 0.76

$ 0.02

Phantom unit awards

Cash distributions declared per limited partner unit:

Effect of units on diluted weighted-average limited partner common units (in units)

243,835

107,108

1,723

Common

Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]

Limited partner net income

76,985

23,340

581

Weighted-average limited partner units outstanding - basic:

Weighted-average limited partner units outstanding - basic (in units)

52,822,030

30,700,864

28,753,623

Weighted-average limited partner units outstanding - diluted:

Weighted-average limited partner units outstanding - diluted (in units)

53,065,865 ⁵

30,807,972 ⁵

28,755,346 ⁵

Net income per limited partner unit - basic:

Net income per limited partner unit - basic (in dollars per unit)

$ 1.46 ³ ⁶

$ 0.76 ³ ⁶

$ 0.02 ³ ⁶

Net income per limited partner unit - diluted:

Net income per limited partner unit - diluted (in dollars per unit)

$ 1.45 ³ ⁶

$ 0.76 ³ ⁶

$ 0.02 ³ ⁶

Cash distributions declared per limited partner unit:

Cash distributions declared per limited partner unit (in dollars per unit)

$ 0.9210 ⁷

$ 0.768 ⁷

$ 0.0204 ⁷

Subordinated

Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]

Limited partner net income

$ 43,197

$ 21,859

$ 581

Weighted-average limited partner units outstanding - basic:

Weighted-average limited partner units outstanding - basic (in units)

28,753,623

Weighted-average limited partner units outstanding - diluted:

Weighted-average limited partner units outstanding - diluted (in units)

28,753,623

Net income per limited partner unit - basic:

Net income per limited partner unit - basic (in dollars per unit)

$ 1.50 ⁸

$ 0.76 ⁸

$ 0.02 ⁸

Net income per limited partner unit - diluted:

Net income per limited partner unit - diluted (in dollars per unit)

$ 1.50 ⁸

$ 0.76 ⁸

$ 0.02 ⁸

Cash distributions declared per limited partner unit:

Cash distributions declared per limited partner unit (in dollars per unit)

$ 0.9210 ⁷

$ 0.768 ⁷

$ 0.0204 ⁷

[1] The sum of quarterly data in some cases may not equal the yearly total due to rounding.

[2] Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.

[3] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

[4] Pre-acquisition net income allocated to the general partner relates to operations of the Water Assets for periods prior to their acquisition.

[5] Diluted weighted-average limited partner common units includes the effect of 243,835, 107,108 and 1,723 units for the years ended December 31, 2016, 2015 and 2014, respectively.

[6] Net income per limited partner unit is presented only for the period subsequent to the Partnership’s initial public offering and does not include results attributable to the Water Assets prior to their acquisition as these results are not attributable to limited partners of the Partnership.

[7] See below for further discussion of cash distributions declared for the period presented.

[8] Basic and diluted income per limited partner unit is presented as if all earnings for the period had been distributed. While it appears that more income is allocated to the subordinated unitholders than the common unitholders for the twelve months ended December 31, 2016, our partnership agreement prevents us from making a distribution to the subordinated unitholders in excess of those to the common unitholders.

Net Income per Limited Partner Unit and Cash Distributions (Incentive Distribution Rights) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

0 Months Ended

12 Months Ended

0 Months Ended

12 Months Ended

0 Months Ended

12 Months Ended

Nov. 10, 2016

Aug. 11, 2016

May 12, 2016

Feb. 11, 2016

Dec. 31, 2016

Feb. 16, 2017

Subsequent Event

Dec. 31, 2016

GP Holdings

Limited Partners

Feb. 16, 2017

GP Holdings

Limited Partners

Subsequent Event

Dec. 31, 2016

Minimum

Dec. 31, 2016

Maximum

Incentive Distribution Made to Managing Member or General Partner [Line Items]

Period after the end of each quarter in which the partnership intends to distribute the minimum quarterly distribution

60 days

Minimum quarterly distribution per unit

$ 0.1875

Annualized distribution per unit

$ 0.75

First Target Distribution, Total Quarterly Distribution Per Unit

$ 0.1875

$ 0.2156

Second Target Distribution, Total Quarterly Distribution Per Unit

$ 0.2156

$ 0.2344

Third Target Distribution, Total Quarterly Distribution Per Unit

$ 0.2344

$ 0.2813

Thereafter, Total Quarterly Distribution Per Unit

$ 0.2813

Unitholders

Minimal Quarterly Distribution, Marginal Percentage Interest in Distributions, Unitholders

100.00%

First Target Distribution, Marginal Percentage Interest in Distributions, Unitholders

100.00%

Second Target Distribution, Marginal Percentage Interest in Distributions, Unitholders

85.00%

Third Target Distribution, Marginal Percentage Interest in Distributions, Unitholders

75.00%

Thereafter, Marginal Percentage Interest in Distributions, Unitholders

50.00%

Incentive Distribution Rights Holders

Minimal Quarterly Distribution, Marginal Percentage Interest in Distributions, Incentive Distribution Rights Holders

0.00%

First Target Distribution, Marginal Percentage Interest in Distributions, Incentive Distribution Rights Holders

0.00%

Second Target Distribution, Marginal Percentage Interest in Distributions, Incentive Distribution Rights Holders

15.00%

Third Target Distribution, Marginal Percentage Interest in Distributions, Incentive Distribution Rights Holders

25.00%

Thereafter, Marginal Percentage Interest in Distributions, Incentive Distribution Rights Holders

50.00%

Cash distribution

$ 0.5

$ 0.9

Total Quarterly Distribution per Unit

$ 0.2370

$ 0.2235

$ 0.2100

$ 0.1965

$ 0.2505

Income Taxes (Narrative) (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

0 Months Ended

Dec. 31, 2016

tax_year

Nov. 1, 2015

Deferred Tax Liability Eliminated through Equity

Water Assets

Income Taxes [Line Items]

Tax impact of acquisition of Water Assets

$ 7.7

Federal statutory percentage rate

35.00%

Number of short tax years

2

Income Taxes (Schedule of Components of Income Tax Provision) (Details) (USD $)

In Thousands, unless otherwise specified

11 Months Ended

12 Months Ended

Dec. 31, 2014

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Current tax expense (benefit):

Federal

$ 0

$ 3,720

State

0

704

Total

0

4,424

Deferred tax expense (benefit):

Federal

(9,809)

0

986

State

(3,111)

0

402

Total

(12,920)

0

1,388

Total income tax benefit

$ (12,920)

$ 0 ¹

$ 5,812 ¹

$ (12,920)¹

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Income Taxes (Schedule of Effective Income Tax Rate) (Details) (USD $)

In Thousands, unless otherwise specified

11 Months Ended

12 Months Ended

Dec. 31, 2014

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Tax at statutory rate

$ (15,488)

$ 42,563

$ 18,150

State income taxes

(2,022)

0

719

Incentive unit expense

4,718

0

365

Equity compensation expense

0

140

Partnership net income not subject to taxes

(366)

(42,563)

(13,562)

Permanent difference

238

0

Total income tax benefit

$ (12,920)

$ 0 ¹

$ 5,812 ¹

$ (12,920)¹

Effective tax rate (percentage)

29.20%

0.00%

10.00%

[1] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Related Party Transactions (Details) (USD $)

12 Months Ended

0 Months Ended

12 Months Ended

0 Months Ended

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Nov. 4, 2015

Subsidiary of Common Parent

Water Assets

Dec. 22, 2014

Fixed-Fee Gas Gathering and Compression Agreement

Gas Gathering and Compression Agreement

Subsidiary of Common Parent

Dec. 22, 2014

Gas Gathering and Compression Agreement, Gathering Fee

Gas Gathering and Compression Agreement

Affiliated Entity

Dec. 22, 2014

Gas Gathering and Compression Agreement, Compression Fee

Gas Gathering and Compression Agreement

Affiliated Entity

Dec. 31, 2014

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Dec. 31, 2016

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Dec. 31, 2015

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Dec. 22, 2014

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Dec. 31, 2015

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Water Assets

Dec. 31, 2014

Stock Compensation Awards Granted by Related Party

Affiliated Entity

Water Assets

Jan. 29, 2014

Incentive Units Granted Pursuant to Limited Liability Company Agreement of Rice Energy Appalachia LLC

Affiliated Entity

Dec. 31, 2014

Incentive Units Granted Pursuant to Limited Liability Company Agreement of Rice Energy Appalachia LLC

Affiliated Entity

Dec. 31, 2015

Incentive Units Granted Pursuant to Limited Liability Company Agreement of Rice Energy Appalachia LLC

Affiliated Entity

Water Assets

Dec. 31, 2014

Incentive Units Granted Pursuant to Limited Liability Company Agreement of Rice Energy Appalachia LLC

Affiliated Entity

Water Assets

Related Party Transaction [Line Items]

Duration of fixed fee gas gathering and compression agreement

15 years

Gathering fee (per Dth)

0.30

0.07

Margin percentage

2.00%

Equity compensation expense

$ 0

$ 600,000

$ 400,000

$ 100,000

Incentive unit expense

$ 0 ¹ ²

$ 1,044,000 ¹ ²

$ 13,480,000 ¹ ²

$ 0

$ 12,000,000

$ 1,000,000

$ 1,500,000

[1] Incentive unit expense for the years ended December 2015 and 2014 was allocated from Rice Energy.

[2] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Financial Information by Business Segment (Narrative) (Details)

12 Months Ended

Dec. 31, 2016

business_segment

Segment Reporting [Abstract]

Number of business segments

2

Financial Information by Business Segment (Schedule of Operating Results and Assets) (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2014

Segment Reporting Information [Line Items]

Operating revenues

$ 59,466 ¹ ²

$ 41,067 ¹

$ 46,547 ¹

$ 54,543 ¹

$ 29,314 ¹

$ 30,075 ¹

$ 28,560 ¹

$ 26,511 ¹

$ 201,623 ³

$ 114,459 ³

$ 6,448 ³

Operating expenses

22,677 ¹ ²

15,531 ¹

17,547 ¹

18,926 ¹

15,539 ¹

14,065 ¹

11,794 ¹

11,025 ¹

74,681 ³

52,423 ³

37,015 ³

Operating income (loss)

36,789 ¹ ²

25,536 ¹

29,000 ¹

35,617 ¹

13,775 ¹

16,010 ¹

16,766 ¹

15,486 ¹

126,942 ³

62,036 ³

(30,567)³

Segment assets

1,399,217

689,790

1,399,217

689,790

443,091

Goodwill

494,580

39,142

494,580

39,142

Depreciation expense

25,170

16,399

4,165

Capital expenditures for segment assets

121,087

248,463

169,826

Gathering and Compression

Segment Reporting Information [Line Items]

Operating revenues

132,099

77,211

6,448

Operating expenses

38,951

28,326

32,059

Operating income (loss)

93,148

48,885

(25,611)

Segment assets

1,260,681

547,810

1,260,681

547,810

399,295

Goodwill

494,580

39,142

494,580

39,142

Depreciation expense

10,840

6,310

2,856

Capital expenditures for segment assets

113,033

149,706

138,151

Water Services

Segment Reporting Information [Line Items]

Operating revenues

69,524

37,248

0

Operating expenses

35,730

24,097

4,956

Operating income (loss)

33,794

13,151

(4,956)

Segment assets

138,536

141,980

138,536

141,980

43,796

Goodwill

0

Depreciation expense

14,330

10,089

1,309

Capital expenditures for segment assets

$ 8,054

$ 98,757

$ 31,675

[1] The sum of quarterly data in some cases may not equal the yearly total due to rounding.

[2] Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.

[3] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.

Subsequent Events (Narrative) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

12 Months Ended

0 Months Ended

Dec. 31, 2016

GP Holdings

Limited Partners

Jan. 20, 2017

Subsequent Event

Feb. 16, 2017

Subsequent Event

GP Holdings

Limited Partners

Subsequent Event [Line Items]

Cash distributions declared per limited partner unit (in dollars per unit)

$ 0.2505

Cash distribution

$ 0.5

$ 0.9

Quarterly Financial Information (Unaudited) (Details) (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

12 Months Ended

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2015

Sep. 30, 2015

Jun. 30, 2015

Mar. 31, 2015

Dec. 31, 2016

Dec. 31, 2015

Dec. 22, 2014

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Operating revenues

$ 59,466 ¹ ²

$ 41,067 ¹

$ 46,547 ¹

$ 54,543 ¹

$ 29,314 ¹

$ 30,075 ¹

$ 28,560 ¹

$ 26,511 ¹

$ 201,623 ³

$ 114,459 ³

$ 6,448 ³

Operating expenses

22,677 ¹ ²

15,531 ¹

17,547 ¹

18,926 ¹

15,539 ¹

14,065 ¹

11,794 ¹

11,025 ¹

74,681 ³

52,423 ³

37,015 ³

Operating income (loss)

36,789 ¹ ²

25,536 ¹

29,000 ¹

35,617 ¹

13,775 ¹

16,010 ¹

16,766 ¹

15,486 ¹

126,942 ³

62,036 ³

(30,567)³

Net income (loss)

$ 34,259 ¹ ²

$ 24,989 ¹

$ 27,936 ¹

$ 34,426 ¹

$ 12,521 ¹

$ 1,326 ¹

$ 13,790 ¹

$ 12,924 ¹

$ 121,610 ³

$ 52,495 ³

$ (27,787)³

$ (31,328)³

Net income per limited partner unit - basic (in dollars per unit)

$ 0.33 ¹ ²

$ 0.30 ¹

$ 0.38 ¹

$ 0.49 ¹

$ 0.18 ¹

$ 0.21 ¹

$ 0.16 ¹

$ 1.47

$ 0.76

$ 0.02

Net income per limited partner unit - diluted (in dollars per unit)

$ 0.33 ¹ ²

$ 0.30 ¹

$ 0.38 ¹

$ 0.48 ¹

$ 0.18 ¹

$ 0.21 ¹

$ 0.16 ¹

$ 1.47

$ 0.76

$ 0.02

[1] The sum of quarterly data in some cases may not equal the yearly total due to rounding.

[2] Includes the results of the Vantage Midstream Entities for the period from October 19, 2016 to December 31, 2016.

[3] Financial statements for 2014 have been retrospectively recast to reflect the acquisition of the Water Assets.