Rex Energy Reports Second Quarter Operational and Financial Results

• Production of 206.8 MMcfe/d, a 61% increase year-over-year
• Reduced well cost in Legacy Butler Operated Area to $5.5 million
• Cash G&A per Mcfe reduced by 44% year over year to $0.35 / Mcfe
• Completed sale of Keystone Clearwater Solutions in July 2015 for net proceeds of $67 million

STATE COLLEGE, Pa., Aug. 04, 2015 (GLOBE NEWSWIRE) -- Rex Energy Corp. (Nasdaq:REXX) announced its second quarter 2015 operational and financial results.

“We remain steadfast in our strategy to navigate through the current commodity price cycle,” said Tom Stabley, President and Chief Executive Officer of Rex Energy. “We have increased production, controlled costs and are divesting non-core assets. The team at Rex is implementing measures that are resulting in improved well performance while maintaining liquidity and financial discipline.”

Second Quarter Financial Results

Operating revenue from continuing operations for the three and six months ended June 30, 2015 was $45.8 million and $99.9 million, respectively, which represents a decrease of 37% and 35% over the same periods in 2014, respectively. Commodity revenues, including settlements from derivatives, were $59.3 million and $124.0 million for the three and six months ended June 30, 2015, respectively, a decrease of 16% for each of the comparable periods of 2014. Commodity revenues from oil and natural gas liquids (NGLs), including settlements from derivatives, represented 49% of total commodity revenues for the three months ended June 30, 2015.

Including the effects of cash settled basis differential derivatives, the company’s basis differential for its Appalachian Basin assets averaged approximately ($0.77) off the Henry Hub price of $2.64 for the three months ended June 30, 2015.

LOE from continuing operations was $30.6 million, or $1.63 Mcfe for the quarter. For the six months ended June 30, 2015, LOE was approximately $59.7 million, or $1.64 per Mcfe. Cash general and administrative expenses from continuing operations, a non-GAAP measure, were $6.5 million for the second quarter of 2015, a 44% decrease on a per unit basis as compared to the same period in 2014. For the six months ended June 30, 2015, cash G&A expenses from continuing operations were $13.2 million, a 46% decrease on per unit basis as compared to the same period in 2014.

The company incurred a non-cash impairment charge of approximately $117.8 million during the second quarter of 2015. The reduction in carrying value, which was primarily focused on the company’s non-operated dry gas Marcellus assets in Westmoreland and Clearfield Counties, Pennsylvania, is attributable to market conditions related to these properties indicating a decrease in market prices for similar assets.

Net loss attributable to common shareholders for the three months ended June 30, 2015 was $155.2 million, or $2.87 per basic share. Net loss attributable to common shareholders for the six months ended June 30, 2015 was $175.4 million, or $3.25 per basic share. Adjusted net loss, a non-GAAP measure, for the three months ended June 30, 2015 was $12.1 million, or $0.22 per share. Adjusted net loss for the six months ended June 30, 2015 was $17.8 million, or $0.33 per share.

EBITDAX from continuing operations, a non-GAAP measure, was $22.4 million for the second quarter of 2015 and $51.8 million for the six months ended June 30, 2015.

Reconciliations of adjusted net income (loss) to GAAP net income (loss) from continuing operations before income taxes, EBITDAX to GAAP net income (loss) and cash G&A to GAAP G&A for the three months and six months ended June 30, 2015, as well as a discussion of the uses of each measure, are presented in the appendix of this release.

Production Results and Price Realizations

Second quarter 2015 production volumes were 206.8 MMCfe/d, an increase of 61% over the second quarter of 2014, consisting of 131.1 MMcf/d of natural gas and 12.6 Mboe/d of oil, condensate and NGLs (including 3.2 Mboe/d of ethane). Oil, condensate and NGLs (including ethane) accounted for 37% of net production for the second quarter of 2015.

Including the effects of cash-settled derivatives, realized prices for the three months ended June 30, 2015 were $56.99 per barrel for oil and condensate, $2.53 per Mcf for natural gas, $17.61 per barrel for NGLs (C3+) and $6.62 per barrel for ethane. Before the effects of hedging, realized prices for the three months ended June 30, 2015 were $49.28 per barrel for oil and condensate, $1.77 per Mcf for natural gas, $13.92 per barrel for NGLs (C3+) and $6.39 per barrel for ethane.

Including the effects of cash-settled derivatives, realized prices for the six months ended June 30, 2015 were $54.17 per barrel for oil and condensate, $2.72 per Mcf for natural gas, $21.75 per barrel for NGLs (C3+) and $6.72 per barrel for ethane. Before the effects of hedging, realized prices for the six months ended June 30, 2015 were $44.35 per barrel for oil and condensate, $2.11 per Mcf for natural gas, $18.45 per barrel for NGLs (C3+) and $6.46 per barrel for ethane.

Second Quarter 2015 Capital Investments

For the second quarter of 2015, the company made operational capital investments of approximately $30.7 million, of which $26.8 million was used to fund Marcellus and Ohio Utica operations and $3.9 million was used to fund conventional drilling, water flood enhancement and facility upgrades in the Illinois Basin. The Marcellus and Ohio Utica capital investment funded the drilling of five gross (3.5 net) wells, fracture stimulation of eight gross (4.0 net) wells, placing four gross (2.1 net) wells into sales and other projects related to drilling and completing wells in the Appalachian Basin.

Investments for leasing and property acquisition were $2.6 million and capitalized interest was $1.7 million for the second quarter of 2015.

Operational Update

Appalachian Basin – Legacy Butler Operated Area

In the Legacy Butler Operated Area, the company drilled four gross (2.5 net) wells in the second quarter of 2015, with four gross (1.4 net) wells fracture stimulated and four gross (2.1 net) wells placed into sales. The company had 11.0 gross (5.6 net) wells drilled and awaiting completion as of June 30, 2015.

The company has placed into sales the Bloom 6H well which was drilled to a lateral length of approximately 4,600 feet and completed in 31 stages with average sand concentrations of 2,800 pounds per foot. The well produced at a 5-day sales rate, assuming full ethane recovery, of 8.3 MMcfe/d, consisting of 4.0 MMcf/d of natural gas and 717 bbls/d of NGLs and condensate.

In addition, the company has reduced its cost to drill and complete wells by approximately 4% to $5.5 million per well, assuming a 5,000 foot lateral, as compared to the previously reported $5.7 million per well at year-end 2014. The decrease in well cost is attributable to operational efficiencies and improved pricing from service providers. The company continues to focus intensely on cost control measures and expects to achieve further cost reductions and efficiencies by year-end.

Appalachian Basin – Moraine East Area

In the Moraine East Area, the company is currently drilling the fourth well on the four-well Fleeger pad. The four wells will be drilled to an average lateral length of approximately 6,000 and completed with an average sand concentration of approximately 2,300 pounds per foot. The company expects to complete the four wells in the fourth quarter of 2015 and place the pad into sales in late 2015 or early 2016, as the necessary infrastructure comes into service.

Appalachian Basin – Western Lawrence Utica

In the Western Lawrence Utica, drilling operations have been completed on the Patterson 2H, the company’s first dry gas Utica well in the region. The well was drilled to a lateral length of approximately 6,800 feet and is currently being completed. The Patterson 2H is expected to be placed into sales in late third quarter 2015.

Appalachian Basin – Moraine East Gathering and Bluestone III

In the Moraine East Area, the company anticipates the Moraine East gathering and processing system to be commissioned by the end of 2015. In addition, the company continues to anticipate the commissioning of Bluestone III in the fourth quarter of 2015. Bluestone III will add approximately 105 MMcf/d of processing capacity in the Butler Operated Area.

Liquidity Update

As of June 30, 2015, the company had approximately $6.1 million of cash and $93.0 million of its $350.0 million borrowing base outstanding under its senior secured credit facility. During July 2015, Rex Energy completed the sale of Keystone Clearwater Solutions and received reimbursement for previous pipeline expenditures for net proceeds of $72.4 million. Pro forma for the sale of Keystone Clearwater Solutions, reimbursements from previous pipeline expenditures and additional reimbursements from the company’s drilling joint venture in Moraine East, the company has approximately $8.8 million outstanding under its $350 million borrowing base.

Third Quarter and Full Year 2015 Guidance

Rex Energy is providing its guidance for the third quarter and maintaining its full year 2015 guidance ($ in millions). Third quarter production is expected to be relatively flat to second quarter production due to processing constraints at the Bluestone II facility. The company currently has an inventory of wells in the Butler Operated Area waiting to be placed into sales following the expected commissioning of Bluestone III in the fourth quarter of 2015.

Conference Call Information

Management will host a live conference call and webcast on Wednesday, August 5, 2015 at 10:00 a.m. Eastern to review second quarter 2015 financial results and operational highlights. All financial results included in this release or discussed on the conference call are preliminary pending the completion by our independent auditors of the second quarter 2015 review. The telephone number to access the conference call is (866) 437-1772. Presentation slides containing reference materials will be available on the company’s website, www.rexenergy.com, under the Investor Relations tab.

About Rex Energy Corporation

Rex Energy, headquartered in State College, Pennsylvania, is an independent oil and gas exploration and production company operating in the Appalachian and Illinois 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 complementary to its portfolio.

Forward-Looking Statements

Except for historical information, statements made in this release, including those relating to the timing and nature of development plans; drilling and completion schedules; anticipated fracture stimulation activities; expected dates for availability and infrastructure and placement of wells into sales; and our financial guidance for third quarter and full year 2015 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. Forward-looking statements may contain words such as "expected", "expects", "scheduled", "planned", "plans", "anticipates" or similar words. These statements are based on management's experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. However, management's assumptions and the company's future performance are subject to a wide range of business risks and uncertainties, both known and unknown, and we cannot assure that the company can or will meet the goals, expectations, and projections included in this release. Any number of factors could cause our actual results to be materially different from those expressed or implied in our forward looking statements, including (without limitation):

• economic conditions in the United States and globally;
• domestic and global demand for oil, NGLs and natural gas;
• volatility in oil, NGL, and natural gas pricing;
• new or changing government regulations, including those relating to environmental matters, permitting, or other aspects of our operations;
• the geologic quality of the company's properties with regard to, among other things, the existence of hydrocarbons in economic quantities;
• uncertainties inherent in the estimates of our oil and natural gas reserves;
• our ability to increase oil and natural gas production and income through exploration and development;
• drilling and operating risks;
• the success of our drilling techniques in both conventional and unconventional reservoirs;
• the success of the secondary and tertiary recovery methods we utilize or plan to employ in the future;
• the number of potential well locations to be drilled, the cost to drill them, and the time frame within which they will be drilled;
• 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 infrastructure, such as transportation, pipelines, processing and midstream services;
• the effects of adverse weather or other natural disasters on our operations;
• competition in the oil and gas industry in general, and specifically in our areas of operations;
• changes in our drilling plans and related budgets;
• the success of prospect development and property acquisition;
• the success of our business and financial strategies, and hedging strategies;
• conditions in the domestic and global capital and credit markets and their effect on us;
• the adequacy and availability of capital resources, credit, and liquidity including, but not limited to, access to additional borrowing capacity; and
• uncertainties related to the legal and regulatory environment for our industry, and our own legal proceedings and their 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 Securities and Exchange Commission.

APPENDIX
REX ENERGY CORPORATION
NON-GAAP MEASURES

EBITDAX

“EBITDAX” means, for any period, the sum of net income for such period plus the following expenses, charges or income to the extent deducted from or added to net income in such period: interest, income taxes, DD&A, unrealized losses from financial derivatives, non-recurring gains and losses, exploration expenses and other similar non-cash charges, minus all non-cash income, including but not limited to, income from unrealized financial derivatives and gains on asset dispositions, added to net income. EBITDAX, as defined above, is used as a financial measure by our management team and by other users of its financial statements, such as our commercial bank lenders to analyze such things as:

• Our operating performance and return on capital in comparison to those of other companies in our industry, without regard to financial or capital structure;
• The financial performance of our assets and valuation of the entity without regard to financing methods, capital structure or historical cost basis;
• Our ability to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our stockholders; and
• The viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

EBITDAX is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) (the most directly comparable GAAP financial measure) in measuring our performance, nor should it be used as an exclusive measure of cash flows, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions, and other sources and uses of cash, which are disclosed in our consolidated statements of cash flows.

We have reported EBITDAX because it is a financial measure used by our existing commercial lenders, and because this measure is commonly reported and widely used by investors as an indicator of a company’s operating performance and ability to incur and service debt. You should carefully consider the specific items included in our computations of EBITDAX. While we have disclosed EBITDAX to permit a more complete comparative analysis of our operating performance and debt servicing ability relative to other companies, you are cautioned that EBITDAX as reported by us may not be comparable in all instances to EBITDAX as reported by other companies. EBITDAX amounts may not be fully available for management’s discretionary use, due to requirements to conserve funds for capital expenditures, debt service and other commitments.

We believe that EBITDAX assists our lenders and investors in comparing our performance on a consistent basis without regard to certain expenses, which can vary significantly depending upon accounting methods. Because we may borrow money to finance our operations, interest expense is a necessary element of our costs. In addition, because we use capital assets, DD&A are also necessary elements of our costs. Finally, we are required to pay federal and state taxes, which are necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations.

To compensate for these limitations, we believe it is important to consider both net income determined under GAAP and EBITDAX to evaluate our performance.

For purposes of consistency with current calculations, we have revised certain amounts relating to prior period EBITDAX. The following table presents a reconciliation of our net income to EBITDAX for each of the periods presented.

Adjusted Net Income

“Adjusted Net Income” means, for any period, the sum of net income (loss) from continuing operations before income taxes for the period plus the following expenses, charges or income, in each case, to the extent deducted from or added to net income in the period: unrealized losses from financial derivatives, non-cash compensation expense, dry hole expenses, disposals of assets, impairment and other one-time or non-recurring charges, minus all gains from unrealized financial derivatives, disposal of assets and deferred income tax benefits, added to net income. Adjusted Net Income is used as a financial measure by Rex Energy's management team and by other users of its financial statements, to analyze its financial performance without regard to non-cash deferred taxes and non-cash unrealized losses or gains from oil and gas derivatives. Adjusted Net Income is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) in measuring the company's performance.

Rex Energy reports Adjusted Net Income because it believes that this measure is commonly reported and widely used by investors as an indicator of a company's operating performance. You should carefully consider the specific items included in the company's computation of this measure. You are cautioned that Adjusted Net Income as reported by Rex Energy may not be comparable in all instances to that reported by other companies.

To compensate for these limitations, the company believes it is important to consider both net income determined under GAAP and Adjusted Net Income.

The following table presents a reconciliation of Rex Energy’s net income from continuing operations to its adjusted net income for each of the periods presented ($ in thousands):

Cash General and Administrative Expenses

Cash General and Administrative Expenses (Cash G&A) is the difference between GAAP G&A and non-Cash G&A, which is primarily comprised of non-cash compensation expense. Rex Energy has reported Cash G&A because it believes that this measure is commonly reported and widely used by management and investors as an indicator of overhead efficiency without regard to non-cash expenditures, such as stock compensation. Cash G&A is not a calculation based on GAAP financial measures and should not be considered as an alternative to GAAP G&A in measuring the company’s performance. You should carefully consider the specific items included in the company’s computation of this measure. You are cautioned that Cash G&A as reported by Rex Energy may not be comparable in all instances to that reported by other companies.

To compensate for these limitations, the company believes it is important to consider both Cash G&A and GAAP G&A. The following table presents a reconciliation of Rex Energy’s GAAP G&A to its Cash G&A for each of the periods presented (in thousands):

Pro Forma Borrowing under Senior Credit Facility

Pro forma borrowing under the company’s senior secured credit facility presents information about availability of its borrowing base pro forma for certain events that occurred after the close of the second quarter. The company believes it is important to consider the pro forma borrowings under the senior credit facility. The following table presents a reconciliation of Rex Energy’s borrowings under its senior credit facility as of June 30, 2015 to its pro forma borrowings under its senior credit facility of the period presented (in thousands):

For more information contact:

Investor Relations
(814) 278-7130
InvestorRelations@rexenergycorp.com