What: Shares of Rex Energy Corp.(NASDAQ: REXX) soared 15% in June. Fueling that rise was strong well results in the company's Moraine East prospect area and the sale of its Keystone Clearwater Solutions business.
So what: Rex Energy announced initial production test results from two of the four wells it drilled in the East Moraine Area in Pennsylvania, a prospect the company acquired last August that offsets its legacy acreage in Butler County, Pa. In those initial results, the wells proved to be very liquids-rich. The results supports the company's belief that the prospect is analogous to its legacy core operating area in the region.
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Keystone Clearwater Solutions provides field and water-related services to Rex Energy. Rex Energy held a 60% stake in the business, and sale of which after taxes and adjustments is expected to yield net cash proceeds of about $66 million. While that's a small amount of cash for Rex Energy, which has a $1 billion enterprise value, that cash will enable the company to enhance its balance sheet, which has over $660 million in net debt outstanding. That balance sheet breathing room will also give the company a bit more financial flexibility as it develops its core natural gas assets.
Now what: June was a good month for Rex Energy. Not only did initial test results support its belief that its recently acquired East Moraine acreage holds significant value, but the company sold a noncore asset to improve its balance sheet. A stronger balance sheet will allow the company to continue to develop its acreage and create long-term value for investors.
The article Heres What Drove Rex Energy Corporations Stock 15% Higher in June originally appeared on Fool.com.
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