Rex Energy Corporation
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State College, Pennsylvania-based Rex Energy Corporation (NASDAQ: REXX) was reported in September, 2008 to have drilled its first Marcellus shale test well in Westmoreland County, Pennsylvania. This was the first of three planned vertical wells that were to be drilled to a depth of 9,000 feet. The company holds approximately 68,000 acres of Marcellus shale leases.
An October, 2008 report stated that Rex has active locations in Butler County, Pennsylvania. It owns a 50% interest with a partner in two wells there. Initial production on these wells was approximately 675 Mcf per day. In March, 2009 there was a further update that Rex also had two wholly-owned wells in Butler County that were selling between 50 and 400 mcf/d or as much as the pipelines were able to accept in that area.
The above mentioned March update indicated that Rex is building a refrigeration processing plant in Butler County that will initially be able to handle between 3-5 million cu. ft./d, but will be expandable up to 25 million/d.
In November, 2008, the company reported that drilling was complete on the three vertical test wells mentioned above in Westmoreland County. Two had already been hydro-fractured, and a third one was to be hydro-fractured in November. In the March 2009 update the company announced a third well in southwest Pennsylvania with an average flow-rate of 1.4 million cu. ft./day. This was probably the same one previously mentioned in Westmoreland County.
Also, in early December, 2008 it was reported that Rex had two wells in Clearfield County, Pennsylvania--one was complete and another one was still underway. Both were to be completed by year-end 2008.
Rex also has acreage in Centre County, Pennsylvania.
An approximate breakdown of Rex's drilling rights in the State are: * 29,000 acres - Clearfield and Centre Counties * 18,000 acres - Westmoreland County * 13,000 acres - Butler County * 10,000 acres - All other ------ 70,000 acres TOTAL
According to a March, 2009 report Rex owns drilling rights to 62,000 net acres that are prospective for Marcellus shale.
The company has also received permission from the Susquehanna River Basin Commission to withdraw up to four million gallons per day for Marcellus shale drilling operations.
The company provided an update in December, 2008 that stated the two completed Westmoreland County wells were now producing with a flowrate of 300 - 500 Mcf per day, and that a third well there was to be complete in mid-December. Drilling was still underway on the Clearfield and Butler County wells.
The company also completed drilling of its first vertical test well in Clearfield County, Pa., encountering 150 feet of Marcellus Shale formation. Two vertical wells in Butler County, Penn., were also drilled and were expected to be completed during the first quarter of 2009 after the gas processing facility had been installed.
According the aforementioned March, 2009 update by year-end 2008 Rex had seven vertical wells located in three distinct operating regions in Pennsylvania.
In a May, 2009 update, the company announced that it had finished drilling its first horizontal Marcellus shale well in southwest Pennsylvania. It is located in Butler County. The company planned to hydro-fracture and complete the well in June, 2009. Rex was in the process of gearing up to drill a second horizontal well in Westmoreland County, PA. Also, it was analyzing the core taken from the already drilled horizontal one as well as acquiring seismic data taken from its various areas of operation across the state. The company anticipated drilling several more wells before year-end 2009. It planned to analyze core samples from these wells and to conduct further testing in order to enhance its understanding of the reservoir and serve as a basis for further planning. Gathering pipelines had been established in all its areas of operations and a new gas processing plant built in Butler County. Rex continued to lease acreage in its prime areas of operations albeit on a very selective basis.
Wells located in Westmoreland County tend to be twice as deep as those in Butler County, and with the increased depth comes increased pressure and thus higher production rates. For that reason, most of the horizontal wells planned for the balance of 2009 were to be in the deeper Marcellus shale located in Westmoreland County.
A report in June, 2009 found Rex teaming up with The Williams Cos. to develop roughly 44,000 acres of the former's Marcellus shale leases in Pennsylvania's Centre, Clearfield and Westmoreland counties. Williams planneed to invest $33 million in the venture in exchange for a 50% share of Rex's working interest in the leases. The companies termed their agreement a "drill-to-earn" structure. Under the agreement Williams must to bear 90% of the drilling expense up $33 million on behalf of Rex or $41 million of its own expenses in order to earn its 50% share. Willimas has up until the end of 2011 to complete its investment.
Rex also announced in June, 2009 that it had bought out its 50% partner in its Butler County leasehold. The addition of this 6,500 net acres to its Butler acreage brings its total up to roughly 21,250 net acres. The property is located in close proximity to Rex's four producing vertical Marcellus wells in the county, its recently completed horizontal well there, and a gas processing plant.
The company's President and CEO is Benjamin W. Hulburt.
Thomas Stabley is Executive Vice President and CFO.
William Ottaviani is COO.
