Rex Energy Corp. appears to be shaking off the cold that daunted many Appalachian operators this winter, reporting Thursday that the momentum it gained during the first quarter will land it at the high end of its 115-118 MMcfe/d production guidance for the first three months of this year.

Last year, the Pennsylvania-based company said it was tinkering with multi-well stacked lateral pads and testing new spacing designs across its acreage in Ohio and Pennsylvania (see Shale Daily, Nov. 11, 2013). Company officials have said that strategy would minimize long-term costs and prove the individual reservoir potential of the Upper Devonian-Burkett and Marcellus shale formations, while maximizing efficiency in the Utica Shale.

Although Thursday’s operational update was largely a confirmation of those plans, Wells Fargo financial analyst Gordon Douthat said the update was a positive one, reaffirming that the company is on track to meet its goals and grow production.

Rex said it recently deployed a second drilling rig in its Butler Operated area located in western Pennsylvania so that it can spud more wells per pad than it ever has before. Two full-time rigs will allow the company to drill up to 45 wells in Pennsylvania this year, with plans for four pads that accommodate “at least five wells per pad.” The new rig is currently drilling the first of five wells at the Ferree pad, which is also the first of two stacked Upper Devonian/Marcellus tests it has planned for this year.

As it continues to test new drilling methods and shallower formations in Pennsylvania, the company has recently reported steadily improving results. In January, the Baillie Trust pad in Butler County, PA — considered crucial to Rex’s strategy because it is the first well tested with vertically offset laterals — produced at a five-day sales rate of 6 MMcfe/d per four wells targeting the Upper Devonian and Marcellus shales (see Shale Daily, Jan. 16).

Rex also said Thursday that it is drilling the second of three wells on its Shipley pad in Butler County and undertaking completion operations at its three-well Schilling pad in the same area. Both of those pads will accommodate average lateral lengths of approximately 5,800 feet, which is the longest the company has drilled horizontally to date. Those wells are expected to further validate the company’s Butler Operated acreage and will be placed into sales during 2Q2014.

In Carroll County, OH, in Rex’s Warrior North Prospect, completion operations are underway at the six-well Grunder pad, drilled to a total measured depth of 12,905 feet, with an average lateral length of 4,800 feet. Test results are expected from that pad sometime in the middle of this year, Douthat said in a research note.

Additionally, Rex has started flowback operations at its three-well Ocel pad in Carroll County. Test results there are expected next quarter.

As previously announced, MarkWest Energy Partners LP’s Bluestone II facility in Evans City, PA, near the Butler Operated area (see Shale Daily, May 9, 2012) is on track to be commissioned next quarter as well, giving Rex an additional 100 MMcf/d of processing capacity.

“With the construction of the Bluestone II plant progressing as expected, I am confident that the positive momentum that Rex has gained during the early part of 2014 will continue for the foreseeable future,” CEO Tom Stabley said.

In a commodities research note last week, analysts at Barclays Capital said natural gas production across the country will continue to recover for the rest of March and April, with pipeline flows and the storage deficit indicating an uptick, as colder weather begins to wane in production areas across the country.

Douthat said producers in the Marcellus Shale continue to face basis headwinds and noted that Rex has locked in hedges for 36% of its overall Butler County production — indexed to the Dominion South hub — at 37 cents below the New York Mercantile Exchange, which he indicated could provide the company with a limited measure of certainty going forward.