Rex Energy agrees to $175 million joint venture

A local company announced a joint venture to develop 58 designated wells in the company’s Moraine East and Warrior North operated areas in Pennsylvania and Ohio, according to a release.

The $175 million joint venture will give State College-based Rex Energy a partner in an affiliate of New York-based credit manager Benefit Street Partners.

“We are very excited to form this new relationship with Benefit Street Partners, which together allows us to further develop our Moraine East acreage while continuing to increase production and reserves from this strategic asset for Rex Energy,” Rex Energy CEO Tom Stabley said. “This agreement also demonstrates the quality of both our Moraine East and Warrior North acreage despite a challenging commodity price environment.”

BSP committed to fund 15 percent of the first 16 wells in Moraine East, 12 of which have been drilled and completed, and 65 percent of six wells in Warrior North, three of which have been drilled and completed.

BSP’s initial commitment for the first 22 wells is $37 million with a cash reimbursement of $20 million for the completed 15 wells. The company will have the option to participate in the next 36 wells for a 65 percent working interest.

BSP will earn a 15 to 20 percent assignment in Moraine East and Warrior North for all acreage within the units it participates in.

“Rex has been a premier operator in the Appalachia Basin for many years,” BSP Managing Director Tim Murray said. “We believe this partnership will be mutually beneficial to both firms as development progresses on Rex’s top tier acreage.”

The agreement enables Rex Energy to complete 15 more wells in 2016 while lowering the company’s net operational capital to between $30 million and $40 million.

This story was originally published March 4, 2016 at 6:39 PM with the headline "Rex Energy agrees to $175 million joint venture."