Rex Energy Corp. on Tuesday said it would reduce capital expenditures by another 30% this year after it announced a joint venture (JV) agreement with private equity firm ArcLight Capital Partners LLC to help fund the development of its key assets in western Pennsylvania.

The deal will net $67 million for Rex, including $16.6 million upfront and the rest for a 35% working interest in 32 wells that will be drilled in the company’s core Butler Operated Area and its newly acquired Moraine East Area in northeast Butler County (see Shale Daily, Aug. 13, 2014).

As a result, the company lowered its 2015 budget by $60 million to $135-145 million and cut this year’s production forecast slightly from the previously announced range of 196-205 MMcfe/d to 185-195 MMcfe/d. If Rex achieves the midpoint of this year’s production guidance, it would produce 23% more than it did in 2014.

CEO Tom Stabley said the move would help hold acreage in its Bulter Operated and Moraine East areas. “This new relationship provides greater flexibility for Rex to manage its capital program, while continuing to increase production and reserves,” he said of the JV.

The agreement with ArcLight comes as part of a broader plan to monetize a series of assets this year to offset the company’s growing leverage as oil and gas prices remain depressed (see Shale Daily, Feb. 19). The company is marketing a 60% stake in its water distribution subsidiary, Keystone Clearwater Solutions, and is also hoping to sell noncore acreage in Pennsylvania’s Westmoreland, Clearfield and Centre counties. In March, Rex completed drilling operations at its first pad in the Moraine East and said the well data was encouraging and would help attract a JV partner (seeShale Daily, March 16).

If the JV wells perform strongly and meet undisclosed benchmarks, ArcLight’s working interest would revert to 17.5%. The deal also gives the firm an option to take a 20% working interest in an additional 17 Moraine East wells.

Rex also said Tuesday that its bank group relaxed conditions under its senior secured credit facility. But its borrowing base was redetermined at $350 million, which is down from $400 million. Wells Fargo Securities analyst Gordon Douthat said that while the JV and redetermination would buy time for the company, more asset sales would be needed to resolve near-term leverage concerns.