Rex Energy Corp. has agreed to sell its 60% stake in water distribution subsidiary Keystone Clearwater Solutions LLC in a deal expected to net the company $66 million.
New Jersey-based American Water Works Co. Inc. agreed to purchase Keystone for $130 million total from Rex and partner Water Solutions Holdings LLC, Rex said. American Water, one of the country's largest publicly traded water and wastewater utilities, would continue to provide field and water-related services to Rex's Appalachian Basin operations in Ohio and Pennsylvania under the agreement.
"This transaction marks a critical step for Rex Energy as we continue to enhance our balance sheet and provide the necessary flexibility for the development of our core assets in the Appalachian Basin," said Rex CEO Tom Stabley.
At the beginning of the year, Rex said it would market Keystone to offset its growing leverage (see Shale Daily, Feb. 19). In March, the company entered into a joint venture (JV) with private equity firm ArcLight Capital Partners LLC to develop acreage in western Pennsylvania (see Shale Daily, March 31). Rex continues to explore a sale or partnership for its legacy assets in the Illinois Basin, as well (see Shale Daily, April 20).
The JV with ArcLight netted it $67 million. Profits from the Keystone sale, subject to regulatory conditions, are to be used to pay down debt and for other general operational purposes.