Rex Energy Drills First Utica Well, Sells Keystone Midstream

Rex Energy announced yesterday that it has closed on a previously announced deal to sell its subsidiary Keystone Midstream to MarkWest Energy for $512 million (see this MDN story for the original announcement). Rex also announced that their Bluestone cryogenic processing plant, part of the sale, has just gone online and will begin selling gas by June 1st.

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

From the Rex press release:

Rex Energy Corporation announced today that it, together with its partners in Keystone Midstream Services, LLC (Keystone), has closed on the previously announced sale of Keystone to a subsidiary of MarkWest Energy Partners L.P. (MarkWest). The sale of Keystone includes two cryogenic gas processing plants, the Sarsen Plant and the newly commissioned Bluestone Plant, with a combined 90 MMcf/d of capacity, a gas gathering system and associated field compression in Butler County, Pennsylvania. Simultaneous with the closing, affiliates of Rex Energy and its non-operating partner, Sumitomo Corporation, entered into a new, long-term gathering, processing and NGL fractionation arrangement with MarkWest.

Rex Energy Chief Executive Officer, Tom Stabley, commented, "The closing of the Keystone Midstream sale marks the beginning of a new relationship between Rex Energy and MarkWest. This transaction not only significantly improves Rex Energy’s balance sheet; it is also a major step forward in our strategy to maximize the potential of our Butler and Ohio Utica operated assets."

Update on Ohio Utica Well

Rex Energy has completed drilling its first Ohio Utica well, the Brace #1H, located in Carroll County. The well encountered approximately 135 feet of Point Pleasant formation and approximately 143 feet of overlying Utica Shale formation. The vertical hole was plugged back and the well was drilled to a total measured depth of 12,332 feet with a lateral length of approximately 4,170 feet. Fracture stimulation is currently scheduled for June 2012. Rex Energy intends to shut in the well for approximately 60 days following fracture stimulation to allow for dissipation of frac water before flowing the well back.  The rig is in the process of moving back to the Butler operated area where it is scheduled to drill one Utica well in Lawrence County, Pennsylvania, the Hufnagel #1.

BlueStone Plant Commissioned

Rex Energy is also pleased to announce the commissioning of the Bluestone cryogenic processing plant located in Butler County, Pennsylvania. Once fully operational, the Bluestone plant will have a full inlet capacity of 50 MMcf/d and will not require additional field compression. First gas sales at the plant are expected by June 1, 2012.

In preparation for the commissioning of the plant, Rex Energy completed fracture stimulation operations on the five Marcellus wells at the Gilliland pad in May. In addition, this pad also contains the company’s first Upper Devonian Burkett well, the Gilliland #11HB. These six wells, along with the two-well Carson pad, are expected to be turned into sales ratably as the plant ramps up operations over the next 45-60 days.*

*Rex Energy (May 29, 2012) – Rex Energy Announces Closing of Midstream Asset Sale, Update on First Ohio Utica Well and Commissioning of MarkWest’s Bluestone Plant

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