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$REXX Operational Update

Appalachian Basin - Legacy Butler Operated Area

During the third quarter of 2016, the company placed into sales the two-well Geyer pad. The Geyer wells were drilled to an average lateral length of approximately 4,200 feet and were completed in an average of 24 stages. The wells produced at an average 5-day sales rate per well, assuming full ethane recovery, of 6.1 MMcfe/d, consisting of 3.8 MMcf/d of gas and 387 bbls/d of NGLs.

Appalachian Basin - Moraine East Area

In the Moraine East Area, Rex Energy drilled one gross (0.4 net) well during the third quarter of 2016. In addition, the company had six gross (2.1 net) wells awaiting completion at the end of the third quarter.

During the third quarter of 2016, the company placed the four-well Fleeger II pad into sales, consisting of three Marcellus wells and one Upper Devonian well. The Fleeger II wells were drilled to an average lateral length of approximately 7,760 feet and completed in an average of 46 stages with average sand concentrations of 2,444 pounds per foot. The three Marcellus wells produced at an average 24-hour sales rate per well, assuming full ethane recovery, of 10.4 MMcfe/d, consisting of 4.3 MMcf/d of natural gas, 851 bbls/d of NGLs and 154 bbls/d of condensate. The Upper Devonian Burkett well, the Fleeger II 3H, produced at a 24-hour sales rate of 7.0 MMcfe/d, consisting of 2.9 MMcf/d of natural gas, 557 bbls/d of NGLs and 133 bbls/d of condensate. The Fleeger II 3H has not fully dewatered and is continuing to improve as it cleans up.

The company recently completed the two-well Klever pad, which was drilled to an average lateral length of approximately 7,460 feet. The pad is expected to be placed into sales during the fourth quarter of 2016. The company also expects to complete the four-well Baird pad in the fourth quarter of 2016 and place the pad into sales in January 2016. Horizontal drilling has started on the six-well Shields pad, which is expected to have an average lateral length of approximately 7,750 feet. The Shields pad is expected to be placed into sales in the second quarter of 2017.

Appalachian Basin - Warrior North Area - Carroll County, Ohio

In the Warrior North Area, Rex Energy drilled 3.5 gross (1.2 net) wells during the third quarter of 2016. The company is currently completing the four-well Vaughn pad, which was drilled to an average lateral length of approximately 7,200 feet. The Vaughn pad is expected to be placed into sales in December 2016.

Appalachian Basin - Year to Date HBP / Production

Rex Energy continues to focus its development efforts in its core areas of the Appalachian Basin. The table below provides the company's projections for assets held by production to date and by year-end 2016, with associated potential future drilling locations and exit rate estimates.

Moraine East Warrior North
YE 2016E YTD YE 2016E
Total Acreage HBP 22,000 6,700 11,800
% Acreage HBP 61 % 56 % 98 %
Gross / Net Locations HBP 217 / 184 40 / 32 54 / 46
% Gross / Net Locations HBP 56% / 56% 68% / 63% 92% / 90%
Gross Exit Rate Production 69.1 MMcfe/d -- 67.6 MMcfe/d

Appalachian Basin - Marketing Update

On November 1, 2016, Rex Energy began transporting 130 MMbtu/d of natural gas volumes from its Butler Operated Area to the Gulf Coast and Midwest markets. The commencement of this transportation allows the company to access premium markets in the Midwest and the Gulf Coast, including the future Freeport LNG export facilities, where the company will receive Henry Hub pricing at a minimal discount. Rex Energy expects to transport approximately 50% of its natural gas volumes to these markets. With Gulf Coast transportation in place for full-year 2017, the company expects its overall basis differential to improve by approximately 50% over its full-year 2016 basis differential.

Earlier this year, Rex Energy began selling ethane from the Butler Operated and Warrior North Areas on Mariner East out of the Marcus Hook facility. The access to international markets has resulted in the company receiving a premium to Mont. Belvieu pricing.

During the second half of 2016, the company renegotiated its condensate pricing agreements, resulting in over $5.00/bbl incremental value in condensate pricing.

Liquidity Update

During the third quarter, Rex Energy completed the sale of its Illinois Basin assets for approximately $40 million and the company's bank group reaffirmed the $190 million borrowing base under the its senior secured credit facility.

Projections for Operations; Fourth Quarter and Full Year 2016 Guidance

The following table summarizes Rex Energy's operational activities for full-year 2016 and projected status at year-end in each of its core operating areas:

Legacy Butler Moraine East Warrior North
Wells Drilled Gross / Net 2.0 / 1.4 10.0 / 3.5 7.0 / 2.5
Wells Completed Gross / Net 2.0 / 1.4 6.0 / 2.7 10.0 / 4.2
Wells Placed Into Sales Gross / Net 2.0 / 1.4 18.0 / 8.7 13.0 / 5.2
Commenced Pad Operations (@ YE) -- 3.0 pads --

In addition, the company is providing its guidance for the fourth quarter of 2016 and full-year 2016 ($ in millions):

4Q2016 Full Year 2016
Production 194.0 - 200.0 MMcfe/d 7% YoY Growth
Lease Operating Expense $28.0 - $31.0 million --
Cash G&A $3.7 - $4.7 million --
Net Operational Capital Expenditures -- $35.5 million
(1) Land acquisition expense and capitalized interest are not included in the operational capital expenditures budget
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https://www.barchart.com/stocks/quotes/REXX#/news/2041458/rex-energy-reports-third-quarter-operational-and-financial-results