Rex Energy Announces Initial Well Results in the Moraine East Area

http://ir.rexenergycorp.com/releasedetail.cfm?ReleaseID=917508


Rex Energy Corporation (Nasdaq:REXX) ("the company") today announced initial production test results from the company's first two wells in the Moraine East Area, the Renick 2H (Marcellus) and the Renick 3H (Upper Devonian Burkett).

As previously announced, the company finished completion operations on the four-well Renick pad, consisting of three Marcellus wells and one Upper Devonian Burkett well. The Renick 2H was drilled to a lateral length of approximately 6,000 feet and completed in 40 stages with sand concentrations of 2,300 pounds per foot. The Renick 2H produced at a 24-hour test rate, assuming full ethane recovery, of approximately 6.6 MMcfe/d, consisting of 3.0 MMcf/d of natural gas, 566 bbls/d of NGLs and 47 bbls/d of condensate. At the time the Renick 2H was shut in, the well was still cleaning up and continuing to experience an increase in the production rate. Based on composition analysis, the gas being produced is approximately 1,309 BTU.

The Renick 3H was drilled to a lateral length of approximately 5,700 feet and completed in 38 stages with sand concentrations of 2,300 pounds per foot. The Renick 3H produced at a 24-hour rate, assuming full ethane recovery, of approximately 8.2 MMcfe/d, consisting of 3.5 MMcfe/d of natural gas, 675 bbls/d of NGLs and 101 bbls/d of condensate. Of particular note is the increased condensate production from the Renick 3H, which represents the highest condensate production rate to date in the Butler Operated Area. Based on composition analysis, the gas being produced is approximately 1,302 BTU.

The four-well Renick pad is expected to be placed into sales at the end of 2015 in conjunction with MarkWest Energy Partners, L.P. (NYSE:MWE) commissioning the Bluestone III processing facility and the completion of the Moraine East gathering system. The company does not plan to test the remaining two wells on the Renick pad.

"I am extremely pleased with the initial results of our first two Moraine East wells," said Tom Stabley, Rex Energy's Chief Executive Officer. "The initial test results mark a significant milestone in our development of the Moraine East Area, demonstrating the value of the prospect, and further supporting our belief that it is analogous to the legacy Butler Operated Area. We are particularly pleased with the increased liquids production from these wells, and anticipate that our increased sand concentration and completion design will continue to yield increased IPs and EURs going forward."

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Replies to This Discussion

Permalink Reply by Robert Allingham on June 11, 2015 at 3:57am

Thanks TomH for the early info. Anyone on here decipher these results as good, bad or indifferent?

Permalink Reply by Trapper on June 11, 2015 at 4:35am
The main thing is they state they are pleased with the results. If they're happy,we're happy! Lol
Permalink Reply by Trapper on June 13, 2015 at 8:48am
And the 3H is the burkett well!
Burkett,Marcellus,Utica...what else can be drilled and produced from one location in the "Marcellus" areas? More gas & ngls than you can shake a stick at!
The country better hurry up and switch gears to ng pretty quick!
Permalink Reply by Trapper on June 13, 2015 at 8:51am
Permalink Reply by Jon on June 16, 2015 at 4:29pm

I wonder how may acres are in the production unit.

Permalink Reply by Philip Thackray on June 18, 2015 at 1:43am

See:

Oliver Perry - Renick Unit Declarations in this Discussion Forum

Phil

Permalink Reply by DMS on July 9, 2015 at 1:38pm

Looking for a little help comparing this example royalty calculator (attached) to what the initial results are from the Renick wells...  I'm not sure how to equate the 32,854MCF from the first month to the Renick results??  I know it's only 21 acres, but the royalty seems a little low??  I know it is for Oakland Twp, but Cherry Twp doesn't have any results for this calculator to pull from...  Thanks for your help!

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Permalink Reply by Jon on July 9, 2015 at 3:03pm

That does seem low. Don't forget NGLs. That's a different calculation. Rennick sounds like it produced 3,500 mcf of gas a day. so that would be 105,000m in the first month if it's consistent.

Permalink Reply by Philip Thackray on July 10, 2015 at 12:37am

DMS

Based on the simplified inputs, the calculation is correct.  Wellhead mcf includes NGLs and methane (residual gas).  Rex reports wellhead mcf to the PADEP each month and the royalty statement for each month lists the quantity of each NGL (gallons) and the residual gas (mcf).  By comparing the PADEP report and the royalty statement for a given month, it is possible to determine the makeup of the wellhead gas.

The township information is only used to develop a decline curve.

The Marcellusgas calculator is only good for dry gas.

Also, If this were a fully fleshed out unit there would be 10-12 wells in the Marcellus and 10-12 wells (potentially) in the Burkett.

I assume that you have the BCLG lease?

Where did you get the production numbers?

Phil

Permalink Reply by DMS on July 10, 2015 at 2:20am

Philip

I do have a BCLG lease...   I'm fairly certain the production numbers used in the Marcellusgas.org calculator use an average of the reported production from the wells in the township.   If what you say about this calculator only using dry gas numbers in the calculator is accurate, then that would help explain why the numbers may seem low, correct?

DMS

Permalink Reply by Philip Thackray on July 10, 2015 at 2:55am

DMS,

You are right the calculator uses nearby wells to estimate production and decline.  I never use that calculator.

The calculator is using $2.80/mcf of wellhead gas.  Even with the NGLs sales factored in right now that is probably high. 

Aside from low prices, the main factor making the royalty look low is the number of wells in the unit.  A well drains about 100 acres so the sample unit you have created could contain up to 12 wells in each economic shale layer.

Also, as Jon pointed out, the Renick well's initial one month production is probably in the 90 million cubic feet range not the 32 million cubic feet the calculator used from Oakland Township.

The calculator averages old and new wells and the new wells are much better than the old wells.

Phil

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