Replies to This Discussion

Permalink Reply by Mike h on May 29, 2012 at 5:11am

I signed with Rex and overall I'm pleased in my dealings with them. As I've indicated in other posts we were part of the SURE group so we didn't negotiate any terms ourselves. My recommendation would be to compare the lease they have offered you with the SURE group lease (go to alov.us ). I'm not talking about the signing bonus or the royalty but rather the protections for the landowner. 

Negotiating yourself is a different ballgame from being part of a group. You might also speak with your neighbors to understand why they approached you. Are you in the middle of other leases they have or adjacent to other leases they have? I recommend getting an attorney to help you with this although it is hard to find competent attorneys in this space - every attorney who has read a couple of books seem to call themselves an expert these days.

The other comment I'll make is that you are likely to get drilled/in a unit sooner with an operator like Rex than with CHK.

Hope this helps.

Mike

 

 

Permalink Reply by Tonya Rosie on May 30, 2012 at 3:04am

Thank you! Very helpful!

Permalink Reply by Mike h on May 29, 2012 at 2:44pm

L S,

I don't follow your argument regarding Rex. They just sold their Keystone midstream assets for more than they anticipated getting for Keystone plus their Rocky Mountain midstream assets. They are actually in fairly decent shape financially. From what I can tell they have been executing well on their stated programs in PA, Ohio and Illinois. The single rig they have in the PA/Ohio area is sufficient for the drilling program. In fact, interesting press release from Rex today - http://ir.rexenergycorp.com/releasedetail.cfm?ReleaseID=677823. Moving the rig back to Butler County makes sense and matches their stated goal of 2 Utica wells in Carroll in 2012. I'm guessing they plan on waiting for the results from the Brace well before drilling the Graham well.

I also question your statement regarding CHK and acquisitions. The reality is that CHK is shopping all kinds of properties they already own to reduce debt. They are in no position to acquire Rex and I don't think the principals of Rex are interested in selling based on what I know of them. They have plenty of shares in friendly hands so I doubt there would be an unfriendly takeover attempt.

 CHK IS the dominant player in Eastern Ohio but that doesn't really mean much other than trading of odd parcels among multiple players. I'd also point out CHKs lawsuit against the 92 landowners with Anshutz leases as another distraction/problem. One of those parcels is adjacent to my land. That kind of ties up/delays any potential for drilling until the lawsuit(s) are resolved.

Permalink Reply by Tonya Rosie on May 30, 2012 at 3:05am

Thank you! Interesting point. 

Permalink Reply by Mike h on May 30, 2012 at 4:00am

So LS, what does the number of permits have to do with the price of tea in China? CHK has roughly 1.2 million Utica acres including what they laid off/JV to Total, etc. REXX has 17.5k acres in the Utica. The number of permits and drilled wells reflects the fact that CHK has been drilling over a year and is a much larger company/operation than REX.

I'm not a fanboy of Rexx but they have been doing what they said they will do when they said they will do it. You haven't pointed to anything meaningful that supprots your earlier comments. So, again....

1) What supports your assertion that REXX is about to go broke?

2) What causes you to believe that they were looking to sell out to CHK from the very beginning?

2) What causes you to believe that CHK has the interest and capability to buy REXX at this point in time?

Unsupported assertions without facts are of little value to anyone reading this thread.

 

Permalink Reply by Mike h on May 30, 2012 at 4:30am

 

The absolute number of permits and wells drilled is not an indicator at all. I'm not going to take the time to run the numbers but if you compared the ratio of acres in a unit and/or permitted to the total number of acres leased by the entity (CHK/REXX), they would compare favorably. I would argue (with a basis in FACTS) that anyone signed with REXX in Carroll that is in acreage large enough to form a unit will almost certainly get drilled within the 5 years of the primary term of the lease. I'd also argue based on publicly available information that they are not likely to get drilled just for HBP (Held by production) purposes (unlike with CHK). CHK has a track record of playing the arbitrage game. Lock up the land and then offload interests to 3rd parties. REXX on the other hand has shown that it is an operator, a driller and not playing the HBP/Arbitrage game.

If you are so down on REXX LS, why did you sign with them?

 

 

Permalink Reply by Mike h on May 30, 2012 at 8:25am

LS,

If you provide facts to support your assertions I'll gladly change my opinions. I don't have all the answers but I have taken the time to read annual reports and SEC filings from both REXX and CHK. I attended the REXX annual shareholders meetings and I read the news. The information is out there for anyone who cares to make the effort - nobody has to rely on what either you or I post.

When you make assertions without providing supporting facts I'll treat your comments as just that - unsubstantiated and unsupported opinions.

Permalink Reply by Utica Shale on May 30, 2012 at 4:35am

L_S,

 And now the single REXX rig in Ohio is headed back to PA ...

 

"... But perhaps the biggest news yesterday from REXX, at least for landowners, is that REXX has completed  drilling its first Ohio Utica well, the BRACE Well in Carroll County. Fracking of the well begins in June, and REXX is now moving the rig back to PA where they will drill their second Utica well — in Lawrence County ..."

 

 This leaves REXX's "Newly Permitted" GRAHAM well site in Carroll County, located across the road from the drilled BRACE well pad, un-developed. We will now have to wait and see when REXX returns to Ohio with a Drill Rig.

 

Permalink Reply by Mike h on May 30, 2012 at 8:53am

If they are fracking Brace in June and waiting 60 days for flowback (check the rex website) then I would expect the earliest we would see the rig back for the Graham well is sometime in August or early September.