- Year-end 2010 proved reserves increased to 201.7 BCFE
- Total reserve replacement at 1,560% with reserve to production ratio of 27.6 years
- Drill Bit Finding and Development Costs of $.68/ MCFE
STATE COLLEGE, Pa., Feb. 14, 2011 (GLOBE NEWSWIRE) -- Rex Energy Corporation (Nasdaq:REXX) reported year end 2010 proved oil and gas reserves of 201.7 Bcfe, an increase of 61% over year end 2009. Of the 201.7 Bcfe proved reserves, 63% was attributable to natural gas and 37% to oil, condensate and natural gas liquids. The proved developed portion of year-end 2010 reserves was 43% of total proved reserves.
Rex Energy successfully replaced 1,560% of its estimated 2010 production of 7,310 MMcfe, which equates to a reserves to production ratio of approximately 27.6 years.
Unaudited estimates of exploration and development costs for 2010 were $78.0 million. When including lease acquisitions, total 2010 capital expenditures were $150.4 million. Drill bit finding and development (F&D) costs were $0.68 per Mcfe while total F&D costs for 2010 were $1.97 per Mcfe.
Year-End 2010 Proved Reserves
The following table is a reconciliation of the changes in the company's proved reserves between December 31, 2009 and December 31, 2010:
The majority of Rex Energy's proved reserve growth was attributed to the expanded horizontal drilling in its operated Butler County, Pennsylvania development. Total proved reserves attributed to the company in Butler County increased by 248%. Excluding the sale of minerals in place to Rex Energy's joint venture partner, Sumitomo Corporation, Butler County reserves increased by 278% over year-end 2009 reserves.
Of the 51.4 net PUD wells booked in 2010, 8.3 net wells were booked based on the use of reliable technologies for reporting proved reserves. The company had a total net proved developed to proved undeveloped ratio of Marcellus Shale wells of 2.29 to 1.0 at year-end 2010. Rex Energy expects to convert 40% of its Butler County proved undeveloped reserves to proved developed reserves by the end of 2011.
Additionally, reserve estimates were performed at commodity spot prices as of December 31, 2010 (year-end case) and the NYMEX futures strip from December 31, 2010. The following table summarizes the results from the alternative pricing scenarios:
PV-10 is the estimated future net cash flows from proved reserves discounted at an annual rate of 10 percent before giving effect to income taxes. Standardized Measure is the after-tax estimated future cash flows from proved reserves discounted at an annual rate of 10 percent, determined in accordance with GAAP. Rex uses PV-10 as one measure of the value of the Company's proved reserves and to compare relative values of proved reserves among exploration and production companies without regard to income taxes. Rex believes that securities analysts and rating agencies use PV-10 in similar ways. Rex's management believes PV-10 is a useful measure for comparison of proved reserve values among companies because, unlike Standardized Measure, it excludes future income taxes that often depend principally on the characteristics of the owner reserves rather than on the nature, location and quality of the reserves themselves. Below is a reconciliation of PV-10 to Standardized Measure for SEC oil and gas NYMEX pricing (in thousands):
Netherland, Sewell & Associates, Inc. (NSAI), an independent reserve engineering firm, prepared the proved reserves report at year-end 2010.
In this release, the following terms have the following definitions:
PV-10: PV-10 represents the present value, discounted at 10% per annum, of estimated future net revenue before income tax and asset retirement obligations of Rex Energy's estimated proved reserves. PV-10 is a financial measure that is not in accordance with generally accepted accounting principles (GAAP) because it excludes the effects of income taxes and asset retirement obligations.
Drill Bit Finding and Development Cost: The sum of total capital deployed, less lease acquisition costs, divided by total extensions and discoveries.
Total Finding and Development Cost: The sum of total capital deployed divided by the sum of extensions, discoveries, acquisitions, divestitures, conversions, revisions, less prior year's production.
Reserves to Production (R/P) Ratio: Total proved reserves divided by total production for the year.
Reserve Replacement: Total of extensions and discoveries divided by total production for the year.
About Rex Energy Corporation
Rex Energy is headquartered in State College, Pennsylvania and is an independent oil and gas company operating in the Appalachian, Illinois and Denver-Julesburg Basins within the United States. The company's strategy is to pursue its higher potential exploration drilling prospects while acquiring oil and natural gas properties complimentary to its portfolio.
The Rex Energy Corporation logo is available at
Except for historical information, statements made in this release, including those relating to Rex Energy's expectations to convert 40% of its Butler County proved undeveloped reserves to proved developed by the end of 2011 are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are indicated by words such as "expects" and similar words. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including (without limitation) the following:
- adverse economic conditions in the United States and globally;
- the difficult and adverse conditions in the domestic and global capital and credit markets;
- domestic and global demand for oil and natural gas;
- sustained or further declines in the prices the company receives for oil and natural gas;
- the effects of government regulation, permitting and other legal requirements;
- the geologic quality of the company's properties with regard to, among other things, the existence of hydrocarbons in economic quantities;
- uncertainties about the estimates of the company's oil and natural gas reserves;
- the company's ability to increase production and oil and natural gas income through exploration and development;
- the company's ability to successfully apply horizontal drilling techniques and tertiary recovery methods;
- the number of well locations to be drilled, the cost to drill and the time frame within which they will be drilled;
- the effects of adverse weather on operations;
- drilling and operating risks;
- the ability of contractors to timely and adequately perform their drilling, construction, well stimulation, completion and production services;
- the availability of equipment, such as drilling rigs and transportation pipelines;
- changes in the company's drilling plans and related budgets;
- the adequacy of capital resources and liquidity including (without limitation) access to additional borrowing capacity; and
- uncertainties associated with our legal proceedings and the outcome.
The company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on the company's risks and uncertainties is available in the company's filings with the SEC.
The company's internal estimates of reserves may be subject to revision and may be different from estimates by the company's external reservoir engineers at year end. Although the company believes the expectations and forecasts reflected in these and other forward-looking statements are reasonable, it can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties.
CONTACT: Tom Stabley Executive Vice President and Chief Financial Officer (814) 278-7215 firstname.lastname@example.org