By OGJ editors
HOUSTON, July 9 -- Williams Cos. Inc. plans to acquire 50% interest in Rex Energy Corp.’s Marcellus shale properties in Pennsylvania.
The 44,000 gross acres involved are in Westmoreland, Clearfield, and Centre counties in Pennsylvania. Terms call for Williams to pay $33 million via a “drill to earn” structure. Rex Energy is based in State College, Pa.
The participation and exploration agreement provides for Williams to bear 90% of all drilling and completion costs of all wells jointly drilled in the project areas until Williams invests $74 million ($33 million on behalf of Rex Energy and $41 million for Williams’s 50% share of the wells).
Subject to certain termination rights, Williams must fund all of the carry before Dec. 31, 2011, or make a cash payment to Rex Energy for the remaining amount.
After Williams finances its initial carry, the parties will share the joint venture costs. Participating interests are expected to be on a 50:50 basis.
Rex Energy will continue to operate the areas through the end of 2009, and Williams is scheduled to be the operator after that.
