- Joint exploration and development agreement covers approximately 42,000 acres in Moraine East and approximately 6,300 acres in Warrior North
- Initial $37 million capital commitment for 22 wells
- Initial cash reimbursement of $20 million for 15 wells drilled and completed in 2015 once placed into sales
- Option to participate in 36 additional wells for an incremental capital commitment of $138 million
- Commenced free flow of gas from Moraine East
STATE COLLEGE, Pa., March 01, 2016 (GLOBE NEWSWIRE) -- Rex Energy Corporation (REXX) (Rex Energy or the company) announced a new $175 million joint exploration and development agreement in the Moraine East and Warrior North Operated Areas.
Joint Exploration and Development Agreement
Rex Energy has entered into an agreement with an affiliate of Benefit Street Partners L.L.C. (BSP) to jointly develop 58 specifically designated wells in the companys Moraine East and Warrior North operated areas. Under the agreement, BSP has committed to fund 15% of the first 16 wells in Moraine East, 12 of which have already been drilled and completed, and 65% of six wells in Warrior North, three of which have already been drilled and completed. BSP will also have the option to participate in the next 36 wells within the joint development area for a 65% working interest. In addition, BSP will earn a 15% - 20% assignment in Moraine East and Warrior North for all acreage within each unit they participate in.
The agreement with BSP allows Rex Energy to complete 15 additional wells in 2016, while lowering the companys net operational capital guidance to a range of $30MM - $40MM. Total consideration for the transaction is expected to be $175 million, with $37 million committed at closing for the first 22 wells. Once the first 15 wells within the joint development area are flowing into sales, the company will receive reimbursement of approximately $20 million, as these wells were drilled and completed in 2015. After the initial commitment of 22 wells, the company will have approximately 30% of its Moraine East acreage held by production / held by operations (HBP). Upon completion of the 58 well program, the company will have HBP approximately 42,000 acres in Moraine East and approximately 10,400 acres in Warrior North.
We are very excited to form this new relationship with Benefit Street Partners, which together allows us to further develop our Moraine East acreage while continuing to increase production and reserves from this strategic asset for Rex Energy, said Tom Stabley, Rex Energys Chief Executive Officer. This agreement also demonstrates the quality of both our Moraine East and Warrior North acreage despite a challenging commodity price environment.
Tim Murray, Managing Director at BSP added We are pleased to enter into this partnership with Rex Energy. Rex has been a premier operator in theAppalachia Basin for many years. We believe this partnership will be mutually beneficial to both firms as development progresses on Rexs top tier acreage.
SunTrust Robinson Humphrey, Inc. acted as financial advisor to the company on this transaction.
Moraine East Area
In the Moraine East Area, the company has commenced the free flow of gas into the gathering and transportation system and expects to place all 12 of its initial Moraine East wells into sales over the next two weeks. Final commissioning of the systems high pressure phase is expected in April 2016.
Tom Stabley, Rex Energys President and Chief Executive Officer commented, Were extremely pleased to have commissioned the gathering system for the Moraine East area. The timely completion of this project by our gathering provider, Stonehenge Appalachia, LLC, enables Rex to place the Moraine East wells into sales and demonstrate the full value of this strategic prospect. We thank Stonehenge and our midstream providers for a job well done and look forward to continued success in the area.
About Rex Energy Corporation
Headquartered in State College, Pennsylvania, Rex Energy is an independent oil and gas exploration and production company operating in the Appalachian and Illinois Basins within the United States. The companys strategy is to pursue its higher potential exploration drilling prospects while acquiring oil and natural gas properties complementary to its portfolio.
About Benefit Street Partners
Established in 2008, BSP and affiliates manage over $11 billion in assets under management across a broad range of credit strategies including middle market private debt, long-short liquid credit, opportunistic credit, long-only credit and commercial real estate debt. BSP utilizes fundamental credit analysis, proprietary sourcing, due diligence, sophisticated structuring and comprehensive risk management across all the credit strategies it manages. For further information, please visit http://www.provequity.com/credit.