Each one in plain English, with the numbers worked through for a shareholder.
22 Dec 2009material agreement● Neutral
On December 17, 2009, two Rex subsidiaries agreed to settle a class action, filed in October 2006, over hydrogen sulfide released from their Illinois oil operations near Bridgeport and Petrolia. They will pay $1.9 million without admitting liability, of which the insurer will fund $1.0 million, and will plug four inactive wells. The deal takes effect only after final court approval, with a hearing set for March 26, 2010; it does not release other class members' individual claims.
On June 18, 2009 (effective May 5), Rex signed a Marcellus Shale joint venture with Williams covering about 43,672 net acres in Centre, Clearfield and Westmoreland Counties, Pennsylvania. Williams can earn 50% of Rex's working interest by paying 90% of well costs until it has invested about $74 million (about $33 million on Rex's behalf), and committed to at least ten horizontal wells, with the carry to be funded before December 31, 2011 or paid in cash. Williams reimbursed Rex about $3.6 million for past costs, Rex stays operator until December 31, 2009 and then Williams takes over, and the two will jointly own a gathering company, RW Gathering, LLC. This advances the Marcellus focus the company set out when selling the Permian assets.
On April 24, 2009, Rex signed a third amendment to its KeyBank credit facility, keeping the borrowing base at $80 million until the next review. That base had dropped from $90 million on March 24, 2009 when the Permian sale closed, as the earlier amendment foresaw. The amendment also raises borrowing costs: Eurodollar loan margins go from 1.00%-1.75% to 1.75%-2.50%, the base margin from a fixed 0.5% to 0.5%-1.25%, and the unused commitment fee from 0.25%-0.375% to 0.375%-0.5%.
30 Mar 2009asset acquisition disposition● NeutralMajor
On March 24, 2009, Rex completed the sale of its Permian Basin assets in Texas and New Mexico to Adventure Exploration Partners, as agreed in December 2008. Net cash proceeds were about $17.3 million (against the $18 million price), subject to post-closing adjustments, plus Adventure assumed certain liabilities. The filing's pro forma figures show cash rising from $7.0 million to $24.3 million and a small estimated loss on the sale of about $425,000. The company says it intends to use the proceeds for Marcellus Shale drilling and the Lawrence Field ASP flood project.
On March 9, 2009, Rex Energy I and Adventure amended the Permian Basin sale, setting the closing date at March 24, 2009 (later than the earlier February 27 target) unless they agree otherwise. At closing, the lesser of uncured title or environmental defect claims or $1 million goes into escrow and is deducted from the price paid, so Rex may receive up to $1 million less at closing. The $18.0 million price and other terms are otherwise unchanged.
Rex signed a second amendment to its KeyBank credit facility, effective December 23, 2008, keeping the $90 million borrowing base until the next review. If the Permian Basin sale to Adventure closes first, the base drops to $80 million, so the sale reduces the company's borrowing capacity by $10 million. The amendment also changes the definition of the Alternate Base Rate used to price some loans.
On December 23, 2008, Rex agreed to sell its Southwestern Region assets in the Permian Basin (Texas and New Mexico) to Adventure Exploration Partners for $18.0 million, plus assumption of certain liabilities. The company says the sale is part of a plan to focus on Marcellus Shale and the Lawrence Field in Illinois, and expects to close by February 27, 2009 (the 8-K says first quarter 2009). The sale includes about 10,000 net acres, 10.7 Bcfe of year-end 2007 proved reserves and about 1.6 MMcfe per day of production.
