Tuesday, August 31, 2010

Marcellus shale - Rex Energy Joint Venture

By Andrea: http://oilshalegas.com

Rex Energy Corp. (REXX) announced today that it will be entering into a joint venture with Japanese Company known as Summit Discovery Resources II, LLC. Rex Energy will transfer 12,900 net acres of their Marcellus shale assets including Marcellus shale wells and mid-stream assets. The transaction is valued at roughly $140.4 million. Under the transaction, Sumitomo will pay approximately $88.4 million in cash upon closing and an additional $52.0 million in the form of a drilling carry. Rex Energy will continue to serve as the operator of its Butler County, Pennsylvania project area.

Pursuant to the agreement, in addition to funding its own share of drilling obligations, Sumitomo has agreed to fund 80% of Rex Energy's remaining share of drilling and completion costs until the $52.0 million drilling carry is fully utilized. The closing of the joint venture transaction is subject to certain conditions, including obtaining any required consents to transfer the interests to Sumitomo. The transaction is expected to close in September 2010.

Benjamin W. Hulburt, Rex Energy President and CEO, commented, "We are extremely pleased to announce this joint venture and look forward to our partnership with Sumitomo. Upon closing this deal, we will once again be debt free with substantial cash on hand. We believe that this will enable us to continue to aggressively develop our assets, while maintaining one of the cleanest balance sheets in the industry. With approximately 91% of our capital being invested in oil and liquids rich gas assets, combined with our debt free balance sheet, we strongly believe we are very well positioned to prosper in the current commodity price environment."

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