Rex Announces $67M Deal to Develop Butler Area
STATE COLLEGE, Pa. – A joint venture with ArcLight Capital Partners LLC is expected to reduce Rex Energy Corp.’s expenditures in its Butler Operated Area by $60 million.
Under the agreement, which Rex Energy announced this morning, the two companies will jointly develop 32 specifically designated wells in the Butler County, Pa. area. ArcLight will participate and fund 35% of the well costs in the designated wells.
The joint venture agreement is expected to reduce the company’s 2015 capital expenditure program to between $135 million and $145 million, or a decrease of 30% at the midpoint of guidance, Rex said. Total consideration for the transaction will equal $67 million, with $16.6 million received at closing.
Upon achieving certain threshold triggers of internal rate of return and return on investment on specific well groups, ArcLight’s working interest will revert to 17.5%. In addition, ArcLight will have the option to participate as a 20% working interest partner in 17 additional Moraine East wells in 2016.
“This joint venture is consistent with our 2015 strategy to further our liquids-rich prospects in the Butler Operated Area, specifically in the Moraine East Area,” said Tom Stabley, Rex Energy CEO, in a statement. “This new relationship provides greater flexibility for Rex to manage its capital program, while continuing to increase production and reserves. We continue to evaluate solutions that will further enhance our ability to develop the Butler Operated Area.”
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