Rex Energy Corp., which filed for bankruptcy in May, said this week that it has entered a deal to sell all of its oil and gas assets in western Pennsylvania and eastern Ohio to PennEnergy Resources LLC for $600.5 million.
The decision is no surprise, as Rex said it would liquidate when it filed for bankruptcy. The asset purchase agreement has been approved by a federal bankruptcy court in Pittsburgh. The deal is expected to be completed in September.
The court approved bidding procedures in June and an auction was rescheduled several times before Rex decided to select Pittsburgh-based PennEnergy’s offer last week as the highest bid. The company, which had liabilities of more than $1 billion at the time it filed for bankruptcy, said it would use the sale proceeds to pay some of its creditors. PennEnergy has also agreed to assume some of Rex’s liabilities.
Rex was founded in 2004 and was later taken public. It has operated various onshore assets over the years, controlling more than 200,000 acres at one point. In recent years, however, the company has sold properties in the Illinois Basin and Southeast Ohio in an effort to boost liquidity and keep rigs running. Its position has dwindled to holdings only in Butler County, PA, and Carroll County, OH, older parts of the Appalachian Basin where the industry used to be more active.
For privately-held PennEnergy, the package is contiguous with its current acreage. The company operates primarily in the western Pennsylvania counties of Beaver, Butler and Armstrong. After the Rex transaction, PennEnergy said it would operate 329 horizontal producing shale wells and control 203,500 gross acres. The company is also expected to produce 700 MMcfe/d after it takes over the Rex properties.
PennEnergy COO Greg Muse said the company plans to operate two horizontal rigs on the combined properties.