Rex Energy has provided an operational update today on its Marcellus Shale activities and 2009 capital budget.
These wells, drilled in the deeper portion of the Marcellus play, had peak flow rates of 400 and 1,200 Mcf per day respectively before being turned into sales. Each well continues to stabilize at daily production rates of 300 - 500 Mcf per day, and the high operating pressures suggest increased production is likely with further production facility optimization. The company's third vertical test well in Westmoreland County has been drilled and will be completed by mid-December.
In Clearfield County, Pennsylvania the company has recently completed drilling its first vertical test well encountering approximately 150 feet of Marcellus Shale formation. The company expects to complete the well in late December. Additionally, in Butler County, Pennsylvania area, the company participated in the drilling of two additional vertical wells with its partner. Both wells are expected to be completed during the first quarter of 2009 following installation of the company's gas processing facility.
The company also announced today that due to the current economic and commodity price environment, its Board of Directors has approved a revised 2009 capital budget for exploration and development activities of $49 million. The revised 2009 budget reflects the company's desire to maintain a conservative balance sheet while still making progress on its highest potential projects -- Marcellus Shale development in the Appalachian Region and the Lawrence Field ASP flood in the Illinois Region. During 2009, the revised capital budget will be allocated approximately 70% to Marcellus Shale drilling and 30% to the Lawrence Field ASP flood project.
"The revised budget approved today will enable the company to drill and complete 6-8 horizontal wells in the Marcellus Shale and begin ASP chemical injection on two 40-acre units in the Lawrence Field ASP project. We believe that this revised budget provides a favorable balance between maintaining the company's liquidity and continuing to grow our production, reserves and cash flow. The revised budget allocates the majority of our 2009 capital to our Marcellus Shale drilling activities where we believe we have the best opportunity for significant near term production and cash flow growth. At the same time we will be continuing to make progress on our Lawrence Field ASP project, albeit at a slightly slower pace than previously planned, where we continue to believe there is very significant long term potential,'' stated Rex Energy's President and Chief Executive Officer, Benjamin W. Hulburt.
"In these challenging times, Rex Energy's strong balance sheet represents a significant competitive advantage and we will continue to monitor the economic and commodity price environment throughout the year and to accelerate or delay our activities in order to preserve our liquidity position,'' stated Thomas C. Stabley, Executive Vice President and Chief Financial Officer.
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