Market Overview

PennEnergy Resources to Acquire the Assets of Rex Energy


PennEnergy Resources, LLC ("PennEnergy" or the "Company") has agreed to
acquire substantially all the assets of Rex Energy Corporation ("Rex")
for a cash purchase price of $600.5 million. The assets acquired include
cash accounts of $29.5 million held by Rex used to collateralize firm
transportation contracts that will be released to PennEnergy at close.

Rex had filed for bankruptcy protection on May 18, 2018. The transaction
has been approved by the United States Bankruptcy Court for the Western
District of Pennsylvania. Closing is expected to occur on September 28,

On a combined basis, PennEnergy Resources will operate 329 horizontal
producing shale wells. The Company will control 203,500 gross leasehold
acres, primarily in the Pennsylvania counties of Butler, Beaver and
Armstrong, north of Pittsburgh. Independent Petroleum Consultants,
Wright & Company, Inc., estimated total combined net proved reserves of
8.5 trillion cubic feet of natural gas equivalents ("TCFE"), of which
1.7 TCFE are proved developed producing. Assuming current strip pricing,
these reserve estimates had an estimated net present value using a 10%
discount rate of $3.2 billion and $1.3 billion, respectively.
Approximately 34% of the Company's reserves will be derived from natural
gas liquids.

With combined gross production of approximately 700 million cubic feet
per day of natural gas equivalents ("Mmcfe") and net production of 450
Mmcfe per day, the Company believes it will be the 10th
largest natural gas producer in Pennsylvania and the third largest
headquartered in the Commonwealth.

The Company intends to fund the transaction with equity contributions
from its existing owners and from its revolving line of credit from a
consortium of banks co-led by Wells Fargo and JP Morgan. Pro forma for
the transaction, PennEnergy will have total funded debt of approximately
2.0x EBITDA and expects to generate free cash flow immediately upon

"We are thrilled to have the opportunity to integrate the assets of Rex
Energy into PennEnergy," stated Richard D. Weber, Chairman and CEO.
"Almost all of the combined assets of the two companies are in the core
of the Marcellus Shale, and with nearly 20-years of drilling inventory
we have the opportunity to continue delivering growth at attractive
rates of returns for many years to come."

Greg Muse, President and COO added, "Most of Rex's assets are contiguous
to our existing operations and offer us the opportunity to improve on
our industry leading costs per unit and further our reputation for safe
operations and environmental stewardship. We plan to operate two
horizontal rigs on the combined properties and eagerly look forward to
integrating the Rex operations."

About PennEnergy Resources:

PennEnergy Resources, based in Pittsburgh, Pennsylvania, is a
privately-held natural gas producer founded by Rich Weber and Greg Muse
in 2011. The Company is majority-owned by funds controlled by EnCap
Investments of Houston, Texas. Learn more at

PennEnergy Resources received financial advice from JP Morgan Securities
and legal advice from Vinson & Elkins.

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