Replies to This Discussion

Permalink Reply by Philip Brutz on January 6, 2015 at 4:47am

It is still to early to tell if there is a slowdown, but REX is cutting back by 40%.  The article does not say if the cutbacks are here or one of the other plays. 

http://ir.rexenergycorp.com/releasedetail.cfm?ReleaseID=888739

December 22, 2014

Rex Energy Announces 2015 Capital Budget and Production Guidance and Provides a Financial Update

STATE COLLEGE, Pa., Dec. 22, 2014 (GLOBE NEWSWIRE) -- Rex Energy Corporation ("Rex Energy") (Nasdaq:REXX) today announced its 2015 capital budget and production guidance and provided a financial update.

2015 Capital Budget and Production Guidance

The company expects its 2015 operational capital expenditures to be between $180 million and $220 million, a decrease of approximately 44% from the midpoint of its 2014 capital expenditure guidance and a decrease of 43% from the midpoint of its previously announced preliminary 2015 capital expenditure plans. Despite this reduced level of capital expenditures, the company anticipates that its average daily production for 2015 will be between 196 MMcfe/d and 205 MMcfe/d. The company expects production growth of approximately 33% at the midpoint of 2015 average daily production guidance as compared to the midpoint of 2014 average daily production guidance. The expected significant production growth in 2015 is due to the company focusing on its highest quality assets and locations.

In addition, given the strong performance of its recent wells, the company continues to expect it will fully utilize its dedicated processing capacity at the Bluestone and Sarsen facilities near the end of the first quarter of 2015. The company expects the Bluestone III processing facility to be placed in service early in the fourth quarter of 2015.

Additional details regarding the company's capital expenditure budget for 2015 ($ in millions) are shown below:

 

	Appalachia  Basin - Butler  Operated  Area	Appalachia  Basin -  Ohio Utica	Illinois  Basin	Total
Total 2015 Capital Budget1	~$115 - $140	~$45 - $60	~$20	~$180 - $220

(1) Land acquisition expense and capitalized interest are not included in the operational capital expenditures budget

"Given the current commodity price environment, we feel that Rex Energy's 2015 capital budget allows the company to significantly grow production while also maintaining financial flexibility," said Tom Stabley, Rex Energy's Chief Executive Officer. "Our 2015 capital budget is designed to target our highest quality assets and we believe the continued production growth we anticipate in 2015, even at a reduced capital budget, continues to illustrate the quality of our asset portfolio and operational efficiency."

Financial Update

Rex Energy's bank group has unanimously approved an amendment to the company's senior secured credit facility. The approved amendment replaces the previous leverage covenant for the senior secured credit facility with a new leverage covenant limiting senior secured borrowings to 1.75 times the company's trailing twelve month EBITDAX. Given the company expects to exit 2014 with no borrowings outstanding under its senior secured credit facility, this change to the leverage covenant provides Rex with substantial financial flexibility.

"I would like to thank our bank group for their continued support of Rex Energy," said Tom Stabley, Chief Executive Officer of Rex Energy. "Given the current commodity price environment, we felt it was important to continue to be proactive in our efforts to enhance our financial flexibility."

In addition, Rex Energy has engaged RBC Capital Markets, LLC as a strategic advisor in order to pursue the monetization of its 60% ownership interest in Keystone Clearwater Solutions, the company's water service subsidiary. Assuming this transaction is completed as planned, the proceeds from the transaction would further enhance the company's strong liquidity position. The company expects to provide an update on the progress of the monetization in the first half of 2015.

Finally, the company has decided to continue its pursuit of a joint venture partner for its Moraine East development area in 2015. The company has recently begun drilling its first well in the Moraine East area, and expects to have initial production results early in the second quarter of 2015. The company's updated capital expenditure budget for 2015 assumes that the company retains its 100% ownership in the Moraine East area.

Permalink Reply by cecily cox on January 6, 2015 at 8:28am

Many people have only one or two years left on their leases and the O/G companies aren't going to want to loose all that lease money by not producing on those properties and potentially having to spend more money on leasing again.

It took a long time to plan all these wells set everything in motion, if things do slow down, it will take some time to wind things down.

Think the "gassy" areas will continue, because gas can be made into so many other things

Permalink Reply by Philip Brutz on January 6, 2015 at 9:29am

The O/G companies may let some leases that are not in their core area expire.  It is what they are doing in parts of PA.  In core areas they may drill fewer laterals to try and hold more acreage by production.

I am leased with Gulfport but my land is surrounded on three sides by REX and on one side by Eclipse.  The Eclipse acreage is held by production from old Oxford wells so they have no time pressure. The REX acreage is mostly held by production from the J. Anderson well so they have less time pressure. My 82 acres is to small for Gulfport to drill without partnering with Eclipse and/ or REX.  Time will tell if I get drilled before my lease runs out. 

Permalink Reply by Rob Rotz on January 13, 2015 at 11:06am

I live near Lorain ohio,  Repubic steel makes much of the casing and pipe line.  there was a lay off warning letter sent out.  600 of 700 employees on the chopping block.  that is drastic for any company.  That tells me orders have almost stopped.  i think 2015-2016 are going to be very slow for us waiting for that well.... im slated for a well this year but i bet it gets pushed back for a long while.......

Permalink Reply by Philip Brutz on January 13, 2015 at 11:54am

I am hoping that the drilling slows down and we get another signing bonus in a couple of years.  Then get drilled a few years after that just as I am getting ready to retire.  Maybe the glut will be over by then.

Permalink Reply by Tony on January 20, 2015 at 5:23am

Agreed Philip....Articles that I have read suggest that current oil prices will stay this way for 2015...

Permalink Reply by Laura Bammerlin on January 19, 2015 at 5:35am

I heard Eclipse let over 300 folks go.

Permalink Reply by catt on January 19, 2015 at 1:28pm

Most of these employees that have been 'let go' are people that worked on researching titles....most all areas are leased here in our area.

Permalink Reply by BIG on January 20, 2015 at 10:41am

These were probably brokers, not employees.  Many O & G companies use brokers who work independently to lease and work on researching title.