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Rex Energy 1Q17: Production Drops 8.5%

As they have in previous quarters, Rex Energy released only part of their first quarter 2017 update earlier this week. Rex released an operation update on Monday, but elected to not release (yet) a financial update. Rex has struggled. They are a smaller driller focused mainly on the Marcellus/Utica–headquartered in State College, PA. In 2016, Rex lost $109 million (see Rex Energy Lost $109M in ’16, Drilling to Hold in ’17, NGLs in ’18). In company’s 2016 production was down from the previous year (see Rex Energy 4Q & 2016 Update – Production Slips from 2015). In Monday’s quarterly update, Rex reports production slipping again, down 8.5% from 1Q16. Is Rex Energy still our “little engine that could?” What’s going on with Rex? Perhaps some of the clues can be found in the quarterly production update and latest PowerPoint we could find (from March)…
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Rex Energy Lost $109M in ’16, Drilling to Hold in ’17, NGLs in ’18

Earlier this week Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), released their fourth quarter and full year 2016 financial update and held an earnings call with analysts to discuss. The company released their operational update back in January (see Rex Energy 4Q & 2016 Update – Production Slips from 2015). On the earnings call, Rex officials said 2017 will be spent focusing on drilling in OH and PA to hold existing acreage. With that done, and with the planned Mariner East 2 going online later this year, Rex intends to focus on drilling for NGLs in 2018. Much of 2016 was spent drilling in the company’s Moraine East area in western PA, and Warrior North area in Carroll County, OH. Rex sold off “noncore” Utica assets in southeastern OH in 2016. The company lost $109 million in 2016, which is a vast improvement over losing $373 million in 2015. So things are looking up for our little driller who could…
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Top 20 Marcellus Drillers in Southwest Pennsylvania

The sharp folks over at the Pittsburgh Business Times have been looking through data from the Pennsylvania Department of Environmental Protection (DEP) and have compiled a list of 20 drillers who have at least a dozen shale wells in the southwest PA region. And they ranked them from lowest to highest. We’ve grabbed the list below. The interesting thing for MDN is that there is one name in the list not familiar to us, and we’ve been watching this space since 2009. Always fun to learn something new. Here’s the list of southwest PA’s “Top 20” Marcellus drillers…
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Rex Energy 4Q & 2016 Update – Production Slips from 2015

Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), released their fourth quarter and full year 2016 operational update yesterday. As seems to be the trend with many drillers, Rex has released the “good news” about how they produced, etc. ahead of releasing their financial statements (which have tended to be the bad news). What do we find in the Rex update? Production of all hydrocarbons was up 12% when comparing 4Q16 with 4Q15, and up 6% when comparing all of 2016 with all of 2015. However, when you dig a little bit, you discover that Rex’s methane (dry gas) production was down slightly when comparing 2016 with 2015, which we attribute to lack of drilling new wells. Here’s the update…
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Handful of Butler Co. Residents Still Suing Rex Energy 5 Years Later

For years MDN has reported on a lingering/ongoing story of a community in western Pennsylvania (in Butler County) who say that nearby drilling by Rex Energy led to contamination of their well water supplies (see PA Residents Weary of Fight with Rex over Water Contamination and Rex Energy Water Contamination Case Shifts Focus to Water Pipeline). Several of the families sued Rex. The PA Dept. of Environmental Protection, after an extensive investigation, said that Rex’s drilling is not at fault in the situation. However, for most of the families, the issue progressed beyond blame–apparently water quality in the area was never the greatest to begin with. Rex had built a water line in the area to supply water for fracking and had expected to turn over control/ownership of that line in 2013. That water line can potentially be used to supply fresh water to the affected homes. The debate has been: Who will pay to hook up the homes and to maintain the pipes and infrastructure required? Since Rex, according to the DEP, is not to blame for the poor water quality in the area, the company understandably doesn’t want to pay big bucks to connect and maintain the line to residences in the area. As far as we can tell, the line is not hooked up. The families with bad water still have bad water and depend on donated water to this day for drinking and cooking…
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Rex Energy’s 2-Year Plan: Scale-up in 2017, Scale-down in 2018

Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges (see our stories here). Even though in some respects the company has been on the ropes, it’s never gone down and continues to hang in there. Yesterday Rex issued a two-year operational and financial plan, no doubt to address investor concerns. Rex says in 2017 they will spend $80-$90 million on drilling. The company will run one drilling rig and with that rig drill 21.0 gross (11.1 net) wells, complete 26.0 gross (12.7 net) wells and place into sales 23.0 gross (11.2 net) wells. That’s all in 2017. For the year 2018, things are a bit more fuzzy. Rex says it thinks it will spend $20-$40 million (a big reduction) and use one rig to drill 4.0 gross (2.8 net) wells, complete 6.0 gross (3.8 net) wells and place into sales 9.0 gross (5.3 net) wells. Here’s Rex’s road map for the next two years…
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Rex Energy Sells 4,100 Acres, 14 Utica Wells in OH to Antero Resources

Rex Energy announced yesterday the company has cut a deal with Antero Resources to sell all of Rex’s “Warrior South Area” assets to Antero. Which may should like a big deal, but really isn’t. The assets sold include 4,100 net acres in perhaps the hottest part of the Ohio Utica Shale: Guernsey, Noble and Belmont counties. It also includes 14 Utica Shale wells. However, the wells are only producing 9 million cubic feet per day (MMcf/d) collectively. The sale price is $30 million–or $7,317 per acre. Rex says the acreage and wells are in a “non-core” area for the company. Rex, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. In December the company was warned by the New York Stock Exchange that the per share price is too low and the stock is in danger of being delisted (see Rex Energy Stock Threatened with De-Listing by Nasdaq). This sale is the latest in a string of sales meant to improve the company’s financial health…
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Rex Energy Stock Threatened with De-Listing by Nasdaq

Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. It has swapped out IOUs for new IOUs, converted debt into equity (shares of stock), sold off assets in other basins–a whole lotta stuff to keep on drilling (see our Rex stories here). The company’s stock has taken a big hit over the past five years. The one thing we never read or heard about, however, was a threat to de-list the company’s stock. Rex’s stock (REXX) is traded on the Nasdaq Stock Exchange. So it was somewhat surprising to read a statement by the company, issued yesterday, that quotes Nasdaq as saying the exchange has decided to allow Rex’s stock to continue trading–for now. Apparently there was some doubt about it. Who knew? However, Rex has a deadline of June 17, 2017 “to regain compliance with Nasdaq’s minimum bid price requirement.” So Rex has been put on notice: Get the per-share price up, or you’re banished to the penny stock pink sheets. The company’s stock as of this morning was trading at 50 cents per share…
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Martians Use Riverkeeper to Continue Court Battle Against Rex

Maya van Rossum - THE Delaware Riverkeeper
Maya van Rossum – THE Delaware Riverkeeper

MDN previously reported on the injustice happening in Bulter County, PA where a handful of anti-drilling parents from the Mars School District (“Martians”), backed by money and legal help from Philadelphia Big Green groups Delaware Riverkeeper and Clean Air Council, have filed frivolous lawsuit after frivolous lawsuit. The effort is aimed at denying landowners in Middlesex Township revenue from legally permitted drilling. The actions by these radicalized parents have cost the taxpayers of Middlesex Township over $80,000 in legal fees. Landowners with leases got together and sued the radicals to stop this miscarriage of justice (see Shoe Now on Other Foot: Landowners Sue Martian Anti-Drillers). The lawsuit proceeded with the radicals claiming they should be able to sue, but not be sued (see Litigious Martians Cry Like Babies Over $500K Lawsuit Against Them). Unfortunately a county judge has agreed with the Big Money groups from Philly and has tossed the lawsuit against them (see $500K Lawsuit Against Litigious Martians Tossed by County Judge). Meanwhile, at least two of the wells were permitted and drilled by Rex Energy, despite the bleatings of the Martians (see Martian Victory! 2 Wells Near Mars School Nearly Done Drilling). But that hasn’t stopped the Martians, using legal assistance from THE Delaware Riverkeeper, from continuing to sue. The Martians have appealed a town ordinance that allows the wells to be drilled about 3/4 of a mile from the local Mars School. A panel of three western PA judges heard arguments in the case Monday afternoon…
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Rex Energy 3Q16: Swings into the Black, Drills 4.5 New Wells

Rex EnergyRex Energy, the little Marcellus/Utica driller that could, swung things around in the third quarter. Yesterday Rex issued its third quarter update and the company is in the black–earning $5.4 million. No, it’s not much in the o&g world, but it’s a whole lot better than losing $95 million as they did in 3Q15. During 3Q16 Rex drilled 1 Marcellus and 3.5 Utica wells, completed several more wells and brought a variety of wells online in both the Marcellus and Utica. Here’s the full update with details on what Rex did in 3Q16…
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Rex Energy Borrowing Base Re-Affirmed for $190M, 2nd Time in 3 Mos.

Rex EnergyThree months ago MDN told you that Rex Energy’s bankers had reaffirmed the company’s “borrowing base” as being worth $190 million (see Rex Energy’s $190M Borrowing Base Reaffirmed by Bankers). Rex is a pure play driller focused on the Marcellus/Utica. A company’s borrowing base is the value of its assets–in this case the value of the leases and oil/gas wells Rex owns. Those assets are used as collateral to back up loans and IOUs. Rex has plenty of both (see Rex Energy Swapping $631M in Private IOUs for Public IOUs). Three months later and once again Rex’s banks are saying those assets are still worth $190 million. Usually banks reevaluate the borrowing base every six months. For some reason they felt it necessary to do it sooner. However, in yesterday’s announcement from Rex, the company mentions that the next redetermination will happen in April 2017–six months from now. Must be the bankers are getting more comfortable with Rex’s finances…
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Rex Energy to Ship Marcellus Gas to Midwest & Gulf Coast in Nov

go west young manHigher prices for Rex Energy’s Marcellus/Utica gas are on the way. Why? Because the company will, beginning in November, begin to ship some of its gas out of the northeast–to the Midwest and Gulf Coast, where it can get higher prices. So says Rex in an update issued yesterday. Rex issued an operational update yesterday to discuss recent results and the next round of drilling they plan to do–4 more wells on the Vaughn pad in Carroll County, OH–and the news that a new high pressure gathering system is on the way in Butler County, PA. Included in the update is the good news that Rex will begin to ship 100 million cubic feet per day (MMcf/d) of natgas to the Gulf Coast and 30 MMcf/d to the Midwest, starting in November, via two different pipelines. Which pipelines?…
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Rex Energy Production Up 2% in 2Q16, Bleeding Slows w/$55M Loss

Rex EnergyRex Energy released their second quarter 2016 update yesterday. While production was up a small 2% over the same period last year, both operating revenue and profits were down. Operating revenue in 2Q15 was $35.8 million, revenue in 2Q16 was $31.2 million. The good news is that the bleeding is slowing. In 2Q15 Rex lost $153 million, while in 2Q16 Rex lost $55 million. At least it’s heading in the right direction. In Rex’s Moraine East Area (Butler County, PA) Rex drilled 5 gross (1.8 net) wells in 2Q16. Due to a delay in a gathering line, Rex did not (as previously expected) put the 4-well Fleeger II well pad online last quarter. In Rex’s Warrior North Area (Carroll County, OH), Rex placed the 3-well Goebeler pad and the 2-well Perry pad online. Below is the full update…
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Rex Energy Deal Converts $43.5M of Debt into Stock Ownership

Rex EnergyToday’s lead story on MDN is about Atlas Resource Partners’ plan to file a pre-packaged bankruptcy turning some $900 million of debt into ownership equity (see Atlas Resource Partners Filing for Bankruptcy Tomorrow). Another Marcellus/Utica company is doing something similar, but without filing for bankruptcy. In April MDN told you about Rex Energy’s plan to convert some outstanding debt into shares of stock (see Rex Energy Converts IOUs into Common Stock, Avoids Bankruptcy?). Rex is doing it again. Yesterday Rex announced they’ve cut an agreement with an unnamed investor to convert $43.5 million owed to that investor into shares of stock. By doing so, Rex not only saves paying back the $43.5 million, they’ll also save paying out an additional $11.1 million in interest payments that would have been due over the life of the loan. However, our understanding is that converting debt into equity (shares of stock) dilutes the ownership interest of all current stockholders. The only difference we can see between what Atlas is doing and what Rex is doing is that (so far) Rex has stayed out of bankruptcy court…
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PA DEP Fines Stonehenge $1.5M for Damaging 2 Butler County Swamps

StonehengeA year ago MDN told you about a new gathering pipeline project in Butler County, PA. Rex Energy contracted with Stonehenge Energy Resources to build a gathering system in Butler County (see Rex Energy Hires Stonehenge to Build Gathering Pipeline in PA). The new system got built last year and now provides Rex with an additional 400 million cubic feet per day of natural gas pipeline capacity. The Stonehenge gathering system delivers Rex’s gas to MarkWest Energy’s Bluestone processing plant. When Stonehenge built the pipeline, they had a few minor accidents. Some dirt slid down a hill into a creek. The creek empties into a couple of swamps. Ergo, some of the dirt got into the swamps. For that little mishap, Stonehenge has agreed to pay the PA Dept. of Environmental Protection a $1.5 million fine. DEP Acting Secretary Pat McDonnell called the minor mishaps “egregious and avoidable.” Whatever…
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