Q4 Profits Increase 21% for Rex Energy

Rex Energy reported that production in the fourth quarter of 2007 totaled 260,472 BOE, of which approximately 80% was attributable to oil. Production volumes increased approximately 2% from the same period in 2006 and 1% over the third quarter of 2007. The Company's Illinois Basin operations contributed 75% to fourth quarter production, while the Company's Appalachian Basin operations contributed 15% and the Company's southwestern region 10% to fourth quarter production.

Revenues for the fourth quarter of 2007 were $16.1 million, representing a 21% increase from revenues of $13.3 million in the fourth quarter of 2006 and an increase of approximately $1.0 million, or 7%, from the third quarter of 2007.

The company's average realized oil price in the fourth quarter 2007, before the effect of derivatives, was $86.60 per barrel ("Bbl"), up 55.6% from $55.67 per Bbl in the fourth quarter of 2006. The company's average realized natural gas price in the fourth quarter of 2007, before the effects of derivatives, was $7.06 per thousand cubic feet ("Mcf") of natural gas, an increase of 10.7% from $6.38 per Mcf of natural gas in the fourth quarter of 2006.

Total operating expenses for the fourth quarter 2007 were $16.3 million, up from $13.8 million in the fourth quarter of 2006. Production and Lease operating expenses were $6.1 million for the fourth quarter of 2007, up from $5.6 million for the same period in 2006, and up from $5.9 million in the third quarter of 2007. General and administrative expenses were $3.2 million in the fourth quarter of 2007, a decrease of approximately $367,000 from the fourth quarter of 2006.

Exploration expenses were $1.2 million for the fourth quarter of 2007, which were the result of the expense of three Indiana New Albany Shale wells which were drilled in 2006. The company did not incur any exploration expenses during the fourth quarter of 2006. Depreciation, depletion, amortization and accretion ("DD&A") expenses were $5.5 million in the fourth quarter of 2007, up from $4.4 million in the fourth quarter of 2006. Included in the fourth quarter DD&A expense was an impairment charge of approximately $642,000 due to the write-down of the company's coalmine methane project in West Virginia.

The company reported a loss before minority interests and provision for taxes of $17.5 million in the fourth quarter of 2007 compared with a net loss before minority interest and provision for taxes of $3.5 million for the fourth quarter of 2006. All of the minority interests were acquired as part of the company's initial public offering and reorganization, which closed on July 30, 2007.

Net income comparable to analyst estimates, a non-GAAP financial measure of net income which excludes deferred tax benefits, dry hole and impairment expenses, gains or losses on the sale of assets, unrealized gains or losses from financial derivatives and non-cash compensation expenses was $1.7 million, or $0.06 per fully diluted share, in the fourth quarter of 2007, an increase of $780,000 over the fourth quarter of 2006. (See the accompanying table reconciling this non-GAAP financial measure.)

EBITDAX, a non-GAAP financial measure, was $7.2 million in the fourth quarter of 2007. This represented an increase of 68% over the fourth quarter of 2006 (See the accompanying table reconciling this non-GAAP financial measure.).

Capital expenditures for drilling and development in the fourth quarter 2007 were $12.5 million, which funded the drilling or recompletion of 35 gross wells (34 net wells) and related improvements to infrastructure. Of the wells drilled or recompleted, 18 gross wells (18 net wells) are producing, 14 gross wells (13 net wells) are expected to be productive, but are awaiting completion, and 3 gross wells (3 net wells) are continuing to be evaluated to determine if the wells will be economical to produce. Additionally, the company expended $1.9 million on leasing and acquisitions during the fourth quarter of 2007.

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