Rex Energy — Investor Presentation (February 2018)
53 slides from Rex Energy's investor presentation, Feb 8, 2018
Slide 1: Corporate Presentation
Exhibit 99.1 CORPORATE PRESENTATION January 2018 DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 2: Disclosures
Disclosures Forward Looking Statements Statements in this presentation that are not historical facts 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. We believe these stat
Slide 3: Executive Summary
Executive Summary DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 4: Company Overview
Company Overview Rex Energy is a pure-play Appalachian Basin focused company targeting wet- gas windows in the Pennsylvania Marcellus and Ohio Utica Shales Appalachian Basin Production(1) Net Acreage ~98,000 Butler Operated 3Q17A 182.0 Mmcfe/d Net Acreage ~76,000 4Q17E ~205.1 Mmcfe/d Warrior North 4
Slide 5: Investment Highlights
Investment Highlights Safety is Rex Energy’s #1 priority Core team has been together for six years Best in ClassHuman Capital Rex’s success is directly correlated to its employees’ success Focused on developing and retaining our existing talent Ability to run 2-3 rig program with current team Highly
Slide 6: "Stacked Pay" Effect
“Stacked Pay” Effect “Wet Gas” Acreage and Well Counts Acres Well Count Area Formation Gross Net Gross Net Marcellus 63,000 44,300 251 177 Legacy Burkett 63,000 44,300 318 222 Marcellus 36,000 31,700 175 141 Moraine East Burkett 36,000 31,700 154 125 Warrior North Utica 13,000 11,800 30 25 Total 211
Slide 7: Management Profiles
Management Profiles Co-founder of Rex Energy in 2003 –managed various partnershipsthat eventually were consolidated into Rex Energy Tom Stabley –President & Chief Executive Officer Guided the company through reorganization and consolidation that resulted in Rex Energy’s IPO in 2007 Over 20 years of
Slide 8: Key Metrics: 2014–2020E
Key Metrics: 2014 –2020E Production (Mmcfe/d) (1) 350.0 300.0 250.0 200.0 150.0 280.0 – 300.0 290.0 – 310.0 250.0 – 260.0 100.0 183.8 195.3 180.0 – 190.0 154.4 50.0 0.0 2014 2015 2016 2017E 2018E 2019E 2020E LOE ($/Mcfe) $2.50 $2.00 $1.50 $1.00 $1.94 $1.84 $1.78 $1.77 - $1.82 $1.55 - $1.60 $1.52 - $
Slide 9: Joint Ventures
Joint Ventures DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 10: Joint Venture Summary
Joint Venture Summary Benefit Street Partners (BSP) Joint Venture Summary ($ in millions) $175.0 million in initial consideration with $134.0 Benefit Street million committed and funded to date ArcLight Sumitomo Partners BSP’s initial capital and well commitment has ended Date March 2016 March 2015
Slide 11: Appalachia Benchmarking
Appalachia Benchmarking DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 12: Marcellus Performance Benchmarking
Marcellus Performance Benchmarking EUR (Bcfe) / 1,000 ft. REXX Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 4.40 3.18 3.25 2.95 2.71 2.66 Median: 2.49 2.40 2.46 2.40 2.52 2.15 2.16 2.00 1.60 Butler Butler Moraine Core Highly Rich Highly Rich Rich Gas Dry Gas SW PA Wet SW PA SW PA Dry Lower SW PA Conden
Slide 13: Operational & Financial Benchmarking
Operational & Financial Benchmarking(1) 2017E-2018E Production Growth % Liquids (Reserve Based) 39% 43% 39% 31% 35% Median: 28% 18% 21% 17% 18% 18% Median: 18% 15% 15% 14% 7% 7% 3% REXX Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 REXX Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Production
Slide 14: Operational & Financial Benchmarking
Operational & Financial Benchmarking(1) Hedge Profile (% of 2018E Production)(2) In-Basin Sales Exposure (% of 2018E NG Production) 2018E PDP Hedge Profile: 74% 77% 73% 64% Median: 54% 51% 54% 48% 63% 56% 26% Median: 47% 47% REXX Peer 1 Peer 2 Peer 3 Peer 4 38% 39% G&A Burden (2018E G&A/Mcfe) $0.29
Slide 15: Butler Operated Area
Butler Operated Area DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 16: Butler Operated Area
Butler Operated Area Currently control 898 potential “wet gas” locations in the Moraine East Butler Operated Area Rex ~85%/BSP ~15% ~99% of these locations are held by production/operations Acres Well Count Legacy Area Area Lease Status Gross Net Gross Net Rex 70%/Sumitomo 30% Legacy HBP/HBO 62,500
Slide 17: Legacy Butler Operated Area
Legacy Butler Operated Area Contiguous acreage position of ~63,000 gross/44,300 net acres Average working interest: 70% Gas pipeline from Sumitomo JV: 30% WI in all wells Moraine East Field ArcLight: 35% WI in 16 wells (will revert to 17.5%) Gross/Net Potential Locations: 569/399 based on 800’ spaci
Slide 18: Enhanced Performance – Butler Legacy
Enhanced Performance –Butler Legacy(1) Central South 9.7 Bcfe EUR 11.7Bcfe EUR 15.6 Bcfe EUR 15.7 Bcfe EUR 17.0 Bcfe EUR 17.3 Bcfe EUR (80% ethane) (80% ethane) (80% ethane) (80% ethane) (80% ethane) (80% ethane) 8.9 Bcfe EUR 10.7 Bcfe EUR 14.4 Bcfe EUR 14.5 Bcfe EUR 15.9 Bcfe EUR 16.2 Bcfe EUR (55%
Slide 19: Legacy Butler Marcellus Economics
Legacy Butler Marcellus Economics(1) Marcellus Economics (55%Ethane Recovery)(2) Butler Butler Butler Butler Central Central South South 12,000 14.0 3rd Party 3rd Party 3rd Party 3rd Party YE16 YE17 YE16 YE17 All-in Well Cost $6.0 million $6.0 million$6.0 million$6.0 million 12.0 10,000 Lateral Leng
Slide 20: Butler Central Type Curve Evolution-Adjusted
Butler Central Type Curve Evolution-Adjusted 10,000 1,000 100 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Months Production linearly adjusted to 5,000ft equivalent lateral Plotted above are 28 representative wells in Butler Central with RCS completions DRAFT FRE 408 Settlement Communication; No
Slide 21: Butler South Type Curve Evolution-Adjusted
Butler South Type Curve Evolution- Adjusted 10,000 1,000 100 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Months Production linearly adjusted to 5,000ft equivalent lateral Plotted above are 17 representative wells in Butler South with RCS completions DRAFT FRE 408 Settlement Communication; Not a
Slide 22: Moraine East
Moraine East DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 23: Moraine East Area
Moraine East Area Contiguous acreage position of ~36,000 gross/31,700 net acres Average working interest: 85% Gross/Net Potential Locations: 329/266 based on 800’ spacing Leasing additional acreage adds ~160 potential gross locations Currently have 37 wells placed into sales: 30 Marcellus Fleeger-2
Slide 24: Moraine East Area – Recent Developments
Moraine East Area –Recent Developments Drilled to an average lateral length of ~6,750 feet Three-well Manuel pad Placed into sales in 4Q17 Drilled to an average lateral length of ~6,300 feet 24-hour sales rate per well of 9.4 Mmcfe/d Two-wellFrye pad On a per lateral foot basis, highest rates achiev
Slide 25: Moraine East Sample Unit Development
Moraine East Sample Unit Development nd Initial Development 2 Wave of Development Initial development 2 nd wave of of 4 PDP Wells development will ~4,000 acres are held focus on one of the units (ie: northeast by production (HBP) within the units unit) Use existing pad sites Initial wells hold all D
Slide 26: Achievable Performance Improvements in ME
Achievable Performance Improvements in ME After analyzing the production data from existing Moraine East wells the latest 2017 wells have been 0.7 60 completed with optimized completion techniques. Proppant loading, stage size, water ratio, treatment 0.70 rates, and other variables have been optimiz
Slide 27: Moraine East Economics
Moraine East Economics(1) Marcellus Economics (55% Ethane Recovery) (2) ME ME Rex ME 2017 3rd Party 3rd Party YE17 Program YE16 9,000 14.0 All-in Well Cost $6.5million $6.5 million $6.5 million 8,000 12.0 Lateral Length 7,500 ft 7,500 ft. 7,500 ft. BCFE/1000ft (6) 7,000 1.34 1.74 2.15 (55% C2) 10.0
Slide 28: Moraine East vs. Type Curve
Moraine East vs. Type Curve 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Compression commencement month for first 12 wells 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Month Production linearly adjusted to a 6,000ft equivalent lateral and adjusted f
Slide 29: Warrior North
Warrior North DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 30: Warrior North Area
Warrior North Area Contiguous acreage position of ~13,000 gross/11,800 net acres Average working interest: 95% Gross/Net Potential Locations: 30/25 based on 800’ spacing Currently have 25 wells placed into sales Gas gathering and field compression by provided by BlueRacer; gas processed at Natrium f
Slide 31: Warrior North Economics
Warrior North Economics (1) Warrior North Economics (55% Ethane Recovery) (2) 1,800 1200.0 3rd Party 3rd Party 3rd Party Rex Upside YE17 YE17 YE16 Case 2017 Life Yield=54 Life Yield=60 1,600 1000.0 All-in Well Cost $6.8 million $6.8 million $6.8 million $6.8 million 1,400 Lateral Length 6,500 ft 6,5
Slide 32: Transportation & Marketing
Transportation & Marketing DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 33: Appalachian Basin Takeaway
Appalachian Basin Takeaway Natural Gas Currently selling natural gas in the Gulf Coast and Northeast local markets (DOMSP & TETCO) Natural Gas Liquids (NGLs) Ethane Exports NGL’s are currently being sold in domestic markets Upon Mariner East 2 commencement, a portion of Rex NGL’s will Sarnia, Canada
Slide 34: Marketing Summary
Marketing Summary Butler (Legacy) Moraine East Acreage dedication to MarkWest for Acreage dedication to Stonehenge for gathering & gathering/processing/compression compression Gathering, compression can be expanded to over 285mcf/d of priority capacity rights 400mcf/d Tiered volume pricing structure
Slide 35: Butler/Moraine East Map
Butler/Moraine East Map Dominion Transmission Residue Pipeline 8” MarkWest Ethane Pipeline connecting to Mariner West Mariner West Ethane Pipeline Mariner East Ethane Pipeline ATEX Ethane Pipeline DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only 35
Slide 36: Warrior North Map
Warrior North Map Rex Energy Acreage TPL-7 Natrium Plant Berne Plant DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only 36
Slide 37: Natural Gas LOE vs. Revenue Deduct
Natural Gas LOE vs. Revenue Deduct Rex residue gas is split 50/50 between two primary markets: Gulf Coast Dom South 130,000 Firm Transportation 158,000 Firm Transportation $0.67 Average Rate $0.14 Rate 100,000 Gulf Coast transportation began 11/1/2016, remaining 30,000 came online 4/1/2017. Increase
Slide 38: Rex/BP NGL Deal Summary
Rex/BP NGL Deal Summary Bluestone C3+ NGL Sale • Rex Energy to sell all C3+ NGL products (less ME2 INEOS commitments) out of the Mark West Bluestone Facility to BP at improved net back pricing. Term of the deal is January 2018 – March 2021. • Based on historic NGL price fluctuations, the new improve
Slide 39: Reserve Summary
Reserve Summary DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 40: Projected Reserves YE17 – Aries Strip Runs
Projected Reserves YE17 – Aries Strip Runs(1,2) Net Reserves NPV10 (MM$) (Bcfe) YE17 YE17 PDP $504,584 969 PNP $19,482 32 PUD $365,709 2,765 PROB $2,657 82 Total $892,432 3,848 YE17 Aries Strip Run contains Growth Plan development program along with ~$100MM net capital spend per year program until 2
Slide 41: Growth Plan NPV10 Strip by Area
Growth Plan NPV10Strip(1) by Area ($MM) YE17 PDP Only Growth Plan Run (1) YE17 Total Growth Plan Run(1) 505 $MM $20 $0 892 $MM $20 [CELLRANGE] $- [CELLRANGE] $71 $131 $307 $503 $98 $229 $9 $9 Butler West Lawr Butler West Lawr Moraine East Warrior North Moraine East Warrior North Westmoreland Westmor
Slide 42: Growth Plan Net Strip Reserves by Area
Growth Plan Net Strip(1) Reserves by Area (Bcfe) YE17 PDP Only Growth Plan Run (1) YE17 Total Growth Plan Run(1) 969 Bcfe 83 Bcfe 34 Bcfe 3,848 Bcfe 34 Bcfe [CELLRANGE] 196 Bcfe 164 Bcfe 1,099 Bcfe 677 Bcfe 2,508 Bcfe 11 Bcfe 11 Bcfe Butler West Lawr Butler West Lawr Moraine East Warrior North Morai
Slide 43: Growth Plan Reserves Data Sheet
Growth Plan Reserves Data Sheet Butler Legacy Butler Legacy Moraine East Warrior North Central South EUR (Bcfe) 21.3 21.7 13.0 6.8 EUR (Mmboe) 3.6 3.6 2.2 1.1 % Liquids 35% 28% 40% 49% Lateral Length (ft.) 6,700 6,700 7,500 6,500 Well Cost ($MM) $6.0 $6.0 $6.5 $6.8 Bcfe/1,000’ 3.18 3.25 1.74 1.05 IR
Slide 44: Reserves – Key Takeaways
Reserves – Key Takeaways Rex continues to unlock more potential in Legacy Butler, Moraine East and Warrior North Performed completion study with third party engineering firm to optimize frac designs for improvement in IPs and EURs Currently completing wells with next generation fracdesigns in Morain
Slide 45: Financial Strategy & Development Plan
Financial Strategy & Development Plan DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 46: Financial Strategy
Financial Strategy Increase cash flow in 2018 to achieve cash flow neutrality in 2019 and 2020 while still achieving moderate growth (5% 1- 5%) Utilize existing rig and completion contracts through current terms while maintaining efficiencies and minimizing termination fees Select highest return loc
Slide 47: Growth Plan – Well Activity
Growth Plan –Well Activity Well Count Breakdown by Asset Area Capex Breakdown by Asset Area 20 $120,000,000 18 16 $100,000,000 14 $80,000,000 12 10 $60,000,000 8 6 $40,000,000 4 $20,000,000 2 0 $0 2018 2019 2020 2018 2019 2020 Butler Legacy South Butler Legacy Central Butler Legacy South Butler Lega
Slide 48: Growth Plan Key Metrics: 2017–2020
Growth Plan Key Metrics: 2017 –2020 EBITDAX Growth ($MM) Production Growth (Mmcfe/d) $123.0 $119.4 $123.0 297.3 288.5 255.2 184.1 $59.2 2017 2018 2019 2020 2017 2018 2019 2020 LOE/Mcfe Cash G&A/Mcfe $1.79 $0.26 $0.18 $0.17 $0.17 $1.58 $1.54 $1.53 2017 2018 2019 2020 2017 2018 2019 2020 DRAFT FRE 408
Slide 49: Financial Projections – Growth Plan
Financial Projections –Growth Plan 2017A 2018E 2019E 2020E AverageDaily Production (Mmcfe/d) 184.1 255.2 288.5 297.3 % LiquidsProduction 38% 45% 46% 46% Key Metrics EBITDAX (000s) $59,176 $122,994 $119,350 $122,968 LOE/Mcfe $1.79 $1.58 $1.54 $1.53 G&A/Mcfe $0.26 $0.18 $0.17 $0.17 Development Plan CA
Slide 50: Financial Projections – Reduced Plan
Financial Projections –Reduced Plan 2017A 2018E 2019E 2020E Average Daily Production (Mmcfe/d) 184.1 259.6 255.1 264.8 % Liquids Production 38% 44% 44% 44% Key Metrics EBITDAX (000s) $59,176 $124,841 $96,719 $107,087 LOE/Mcfe $1.79 $1.56 $1.60 $1.56 G&A/Mcfe $0.26 $0.18 $0.19 $0.19 Development Plan
Slide 51: Opportunities and Risks
Opportunities and Risks Opportunities and Risks to Plan Achievement Opportunities Risks Most recent base production has exceeded Availability and consistency of service crews when not production profile running a full 12-month development program Recent wellperformance has exceeded current type- Per
Slide 52: Appendix: Hedge Positioning
Appendix: Hedge Positioning DRAFT FRE 408 Settlement Communication; Not admissible for any purpose; For discussion purposes only
Slide 53: Hedge Position
Hedge Position(1) 100% 90% 80% Avg. Floor: $47.15 70% Avg. Avg. Floor: Avg. Floor: 64% $47.68 Floor: $33.30 60% 60% Avg. $12.90 Avg. Floor: Avg. Floor: $2.73 Floor: $2.97 $26.15 50% Avg. Floor: $12.93 Avg. 40% Floor: 37% Avg. $52.88 Avg. Floor: Floor: 30% $2.70 $12.79 Avg. Floor: 20% $31.16 10% 0% N