PennEnergy Resources to buy Rex Energy for $600.5m

PennEnergy Resources has reached an agreement to acquire US-based bankrupt oil and gas production company Rex Energy for $600.5m.

Rex filed for protection under the bankruptcy code in the United States Bankruptcy Court for the Western District of Pennsylvania in May.

The court approved the sale to PennEnergy and the transaction is expected to be complete by 28 September.

The acquisition includes cash accounts of $29.5m held by Rex used to collateralise firm transportation contracts.

Following completion of the deal, PennEnergy Resources will operate 329 horizontal producing shale wells on a combined basis, with gross production of around 700 million cubic feet per day of natural gas equivalents (Mcfe) and net production of 450Mcfe per day.

The acquired assets include 203,500 gross leasehold acres, primarily in the Pennsylvania counties of Butler, Beaver and Armstrong, north of Pittsburgh.

Based on independent estimates, the assets contain total combined net proved reserves of 8.5 trillion cubic feet of natural gas equivalents (Tcfe).

The reserves also have an estimated net present value of $3.2bn.

PennEnergy Resources chairman and CEO Richard Weber said: “Almost all of the combined assets of the two companies are in the core of the Marcellus Shale, and with nearly 20-years of drilling inventory we have the opportunity to continue delivering growth at attractive rates of returns for many years to come.”

In order to fund the acquisition, the company will use equity contributions from its existing owners and revolving line of credit.

PennEnergy Resources President and chief operating officer Greg Muse said: “Most of Rex’s assets are contiguous to our existing operations and offer us the opportunity to improve on our industry leading costs per unit and further our reputation for safe operations and environmental stewardship.

“We plan to operate two horizontal rigs on the combined properties and eagerly look forward to integrating the Rex operations.”