Hot Oil and Gas Stock Inks $140M Joint-venture Agreement

Posted by on Sep 01, 2010 | No comment

Rex Energy Corporation (NASDAQ: REXX) is a State College, Pennsylvania-based independent oil and gas company. The company operates in the Appalachian Basin and the Illinois Basin. The company focuses on the Marcellus Shale drilling projects in the Appalachian Basin.

On Tuesday, Rex Energy announced that it entered into a joint venture agreement with Summit Discovery Resources LLC, a wholly owned subsidiary of Japan’s Sumitomo Corp. Per the agreement between the two companies, Rex Energy will sell and transfer interests in its Marcellus Shale assets, some producing Marcellus Shale wells and associated mid-stream assets in a deal valued at around $140.4 million. Of the total amount, Sumitomo will pay $88.4 million in cash upon closing of the transaction and the remaining $52 million in the form of a drilling carry.Benjamin W. Hulburt, president and CEO of Rex Energy, said that the company is extremely pleased to announce the joint venture and looks forward to its partnership with Sumitomo. Hulburt said that once the deal is closed, the company will be debt free with plenty of cash on its balance sheet.

August 17, Rex Energy announced that the Commonwealth of Pennsylvania’s Department of Environmental Protection issued the required air permit for the Sarsen Plant. The Sarsen Plant is the company’s jointly owned cryogenic gas processing facility in Butler County, Pennsylvania.

Rex Energy reported its second-quarter financial results on August 3. The company reported that production in the second quarter of 2010 was up 21% on a year-over-year basis. The company’s second-quarter revenue increased 36% on a year-over-year basis. The company reported second-quarter net income of $0.9 million, or $0.02 per share.

For the third quarter of 2010, Rex Energy expects production to come in between 20 MMcfe per day and 22 MMcfe per day.

The Rex Energy stock has a 52-week range of $5.60-$15.39. Year-to-date, the stock is down 5.75%. The stock is currently trading above its 50-day and below its 200-day moving average. The stock has a support level at $9.15 and a resistance level at $13.80.

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