Source: Rex Energy
Rex Energy Corporation (Nasdaq:REXX) today announced its first quarter 2012 production results, the commencement of drilling operations on its first horizontal Ohio Utica well in the Warrior Prospect and an update on the recently adopted Pennsylvania impact fee.
Rex Energy exceeded the high end of its first quarter production guidance of 60.0 MMcfe/d by approximately 1%, with an average daily production rate of 60.7 MMcfe/d. This is an increase of approximately 23% over the fourth quarter of 2011 and an increase of 120% over the average daily production rate of the first quarter of 2011. This marks the sixth consecutive quarter that the company has achieved double digit production growth. Oil and natural gas liquids accounted for 26% of the total net production for the quarter.
After the effects of cash settled derivatives, realized natural gas prices were $3.72 per Mcf, realized oil prices were $98.08 per Bbl and realized natural gas liquids prices were $48.98 per Bbl, which was approximately 48% of the NYMEX quoted average price of oil for the quarter.
Appalachian Basin -- Warrior Prospect, Carroll County, Ohio
Rex Energy recently spud its first horizontal well in the Warrior Prospect, located in Carroll County, Ohio. Drilling operations on the Brace 1H, which is targeting the liquids rich window of the Utica Shale, began on April 13, 2012. The company anticipates completion results to be available during the second quarter 2012 conference call in August. Additionally, Rex Energy plans to drill an additional two horizontal Utica Shale wells in the Warrior Prospect in 2012. The Company has closed on all 15,000 net acres in Carroll County that were previously announced and continues to actively lease in the region.
Pennsylvania Impact Fee
During the first quarter of 2012, Pennsylvania state legislators approved Act 13 instituting an impact fee on producers of unconventional natural gas. The legislation, which covers the majority of Rex's Marcellus Shale acreage, imposes an annual fee for a period of fifteen years on each well drilled. Unconventional gas wells spud before the fee was imposed will be considered to be spud in 2011 for purposes of determining the fee. The fee for each unconventional gas well will be determined using the following matrix (note that for vertical unconventional gas wells, the fee will be 20% of the amounts stated below):
(a) The fee will be determined using the average annual price of natural gas for the calendar year in which the fee is imposed.
As a result of the impact fee, Rex Energy expects to record expenses for the first quarter of 2012 of approximately $0.6 million, or $0.12 per mcfe of natural gas and natural gas liquids produced during the quarter. Additionally, the company will record a one-time expense of approximately $2.8 million for the required retroactive payment for wells drilled prior to 2012. Excluding the retroactive payment, the company estimates its full year impact fee liability to be approximately $2.8 million or approximately $0.14 per mcfe of natural gas and natural gas liquids at the company's mid case guidance. The retroactive payment has been excluded from the majority of First Call consensus estimates for the first quarter of 2012.
Results Subject to Review
The financial results contained in this release remain subject to the review of the company and its independent auditors.