Rex Energy Corp. spent the first quarter buying time and looking ahead for what management hopes will be a more stable 2017, executing balance sheet initiatives to boost liquidity and save more money, while steadily drilling acreage in Ohio and Pennsylvania to hold it with production.

The company exchanged some of its senior notes and swapped a portion of its preferred stock for common stock, saving about $75.4 million this year on interest and dividend payments. Its joint ventures (JV) with Benefit Street Partners LLC (BSP) and ArcLight Capital Partners LLC, meanwhile, helped it to drill and complete more wells in the Marcellus, Utica and Upper Devonian shales to protect its acreage and increase production.

“As we move into 2017, from a liquidity standpoint and from an operational perspective, the company will be in a really good position that will have held-by-production (HBP) a majority of its acreage and be in a position to selectively drill from there or slow down further given commodity prices,” CEO Tom Stabley said during an earnings call on Wednesday to discuss first quarter results.

It was the first time Stabley has updated investors publicly since 3Q2015. The company canceled its year-end call and has struggled with low commodity prices this year (see Shale Daily, March 16). Since the beginning of 2016, the company has received a delisting warning from Nasdaq, had its borrowing base reduced twice and seen its debt climb significantly (see Shale Daily, March 15).

The company has inked two JVs since last year to help keep rigs running (see Shale Daily, March 2; March 31, 2015). Stabley said the primary focus this year and next will be the Moraine East area in Western Pennsylvania’s Butler County, which lies to the north of its core legacy acreage. The company has drilled 16 wells to date and placed 12 to sales. The remaining four wells are to be turned to sales in the second quarter.

Stabley said the company has choked back the wells to about 30 MMcf/d, curtailing some production as it awaits the commissioning of a high-pressure gathering line in the Moraine that it expects to come online this quarter. Those wells have allowed Rex to HPB about 16,500 of its 52,800 gross acres in the Moraine. Stabley added that the curtailments aren’t a bad thing given low commodity prices, considering that production from the region is primarily liquids.

Rex plans to drill another 12 wells in the Moraine this year and up to nine in 2017 to finish most of the HBP work there.

“For 2016 and 2017, our goals for the Moraine East are to HBP the acreage, continue to test longer laterals and enhance our completion design in the region,” Stabley said. “Our joint development agreement with Benefit Street Partners is providing both capital and liquidity to support our HBP efforts as we execute our plan.”

BSP has elected to participate in the company’s next four wells, increasing its capital commitment to $51.6 million for the year. Stabley said Rex won’t have to pay out-of-pocket to fund its operations until the third quarter. The company plans to spend $15-40 million this year, depending on further commitments from its JV partners.

The company turned eight wells to sales during the first quarter, mostly in the Moraine, which helped push production to 200 MMcfe/d, up from 196.2 MMcfe/d in the year-ago period and up from the 186.1 MMcfe/d the company produced in the fourth quarter.

The note exchange and stock swap also have bought it more time to earn a better price for assets it’s been trying to sell since last year in the Illinois Basin, Ohio and Pennsylvania (see Shale Daily, April 20, 2015). Rex has been marketing some assets it does not operate in Westmoreland, Clearfield and Centre counties, PA, along with its Warrior South prospect in Ohio’s Noble, Belmont and Guernsey counties (see Shale Daily, May 6, 2015).

“With the completion of the unsecured note exchange, with the Benefit Street Partners JV we’ve done and some other additional liquidity enhancements, we feel like the sale of the Illinois Basin is something we can hold off on just a little bit longer as we continue to see commodity prices, or oil in particular, improve,” Stabley said. “We have had some inbound calls; I think the valuations we’re seeing at this point are not at the level that we’re ready to execute on, but it’s certainly something that if we need, we could pull the trigger on.”

Stabley said the same was true of the assets for sale in Ohio and Pennsylvania. A sale in Ohio would still leave the company with its Warrior North prospect in Carroll County. The company remains low on cash, however, last reporting $25.9 million on the balance sheet in February.

Average realized prices, including hedges, dropped across the board. The company produces mostly natural gas, which fell from $2.92/Mcf in the year-ago period to $2.10 in the first quarter. Oil, natural gas liquids and ethane prices also fell significantly for Rex year-over-year. Revenue was down as a result during the period to $30.5 million from $54.1 million in 1Q2015.

Rex reported a net loss of $62.2 million (minus $1.11/share), compared to a net loss of $20.2 million (minus 38 cents) in the year-ago quarter.