Appalachian pure-play Rex Energy Corp. is seeking buyers for all of its oil and natural gas assets in western Pennsylvania and eastern Ohio, the company said Friday after voluntarily filing for bankruptcy in a federal court in Pittsburgh.
The company said days ago that a bankruptcy filing was imminent. Rex had disclosed earlier this year that it was exploring financial alternatives, and it failed to make a semi-annual interest payment last month and violated its credit agreement in the process.
The announcement Friday to sell its assets capped months of unsuccessful discussions between management and lenders. All of the first lien lenders and nearly three-quarters of its second lien noteholders agreed to the bankruptcy, which Rex said would facilitate the asset sale and help address debt obligations. Total liabilities now stand at more than $1 billion, according to a quarterly report that was recently filed with the U.S. Securities and Exchange Commission.
“Over the past seven months, Rex Energy has been in deep discussion with our lenders and advisors to evaluate every aspect of our business and take proactive steps to overcome the challenges our industry continues to face,” said CEO Tom Stabley. “...Ultimately, we decided that the best possible outcome was to put our remaining assets into the hands of owners with the financial strength necessary to position them for long-term growth and success. Chapter 11 provides an orderly process to achieve these goals in a way that maximizes value for our stockholders.”
Stabley co-founded the State College, PA-based company in 2004 along with Benjamin Hulburt, who left to form Eclipse Resources Corp. in 2011. Rex went public in 2007 and has operated various onshore assets over the years. But its position has dwindled to include only properties in Butler County, PA, and Carroll County, OH.
The company said Friday it has secured $100 million of debtor-in-possession financing from first lien lenders to help keep the doors open and operations running during the bankruptcy proceedings. A series of first day motions were filed in the U.S. Bankruptcy Court for the Western District of Pennsylvania, that, if approved, would allow the company to uphold various commitments to stakeholders such as employees, vendors and royalty owners.
The company expects to complete the sale process under the bankruptcy code over the next five months or so. All offers, management said, “will be evaluated to ensure the highest and best sale agreement is reached.” Parties interested in participating in the sale process can contact Tudor, Pickering, Holt & Co., the company said.