Rex Energy Offers 1-for-10 Stock Split, Updated 2-Yr Plan

Two announcements from Rex Energy, one from Thursday and one from Friday, show the company is working hard to reassure investors that the company once again has momentum and that it’s safe to buy the company’s stock. On Thursday, Rex–a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA)–released an updated two-year operational and financial plan. It is an update to the plan originally released in January (see Rex Energy’s 2-Year Plan: Scale-up in 2017, Scale-down in 2018). Under the original plan released in January, Rex said they planned to spend $80-$90 million on drilling in 2017 and $20-$40 million in 2018. Last week Rex announced a new $300 million loan to help with the drilling budget (see Rex Energy Gets a New $300M Loan to Help Fund M-U Drilling). The loan made the difference. Rex’s revised drilling budget for 2017 is now $115-$130 million, and for 2018 it’s gone up to $65-$80 million. On Friday, Rex announced a one-for-ten reverse stock split. Rex’s stock is listed on the Nasdaq exchange, and Nasdaq threatened to delist the stock back in December because the per-share price had sunk below $1 (see Rex Energy Stock Threatened with De-Listing by Nasdaq). A common “fix” for low per-share stock prices is to combine outstanding shares into a smaller number of shares. As of this morning (when writing this post) Rex’s share price was $0.42 per share. If you combine 10 of those shares into a new, single share, presumably the price would be 10 x $0.42 = $4.20 per share. Voilà. The per share price is now in compliance with Nasdaq rules. The new stock price doesn’t mean the company is actually worth any more on paper–it simply means a fewer number of shares are worth more per share…

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