Rex Energy Corporation: Oil marks the spot

Crystal D. Vogt | May 20, 2008 10:14am EDT | Comment

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Rex Energy Corporation (Nasdaq:REXX)
State College, Pa.
http://www.rexenergy.com/

52-week low/high: $7.55/$25.49
Shares Outstanding: 31 million
Market Capitalization: $733 million

These days, Pennsylvania isn't only about the Amish, the Pittsburgh Steelers and a pro-Hillary Clinton vote. Unbeknownst to many, oil has taken center stage, in the form of oil exploration company Rex Energy Corporation (Nasdaq:REXX).

Rex Energy is based in State College, Pa., best known as home to Penn State University. The company has been scoring key explorations in its back yard of the Appalachian region of western Pennsylvania and West Virginia.
Rex also operates in the Illinois Basin region of Illinois and Indiana, the New Albany shale deposit throughout southern Indiana, and in the Permian region found in Texas and New Mexico.

Riding a wave of improved drilling techniques, better exploration technologies and soaring demand, Rex is off to a fast and furious start as a public company. With oil and natural gas prices shooting to stratospheric heights, smaller companies with a track record and decent potential have enticed investors to take notice.

Since emerging through an initial public offering last summer from a variety of partnerships and tiny entities, Rex has roared to life with a steady stream of announcements of added drilling acreage and project successes.

Technology is also driving Rex’s growth. For example, in the Illinois Basin from the 1960s through the 1980s, Marathon Oil Corporation (NYSE:MRO), the former Texaco, Exxon Mobil Corporation (NYSE:XOM) and Shell developed surfactant-polymer projects that became cost-prohibitive when oil was trading far below $50 a barrel. At double that price, there's money to be made from some of these difficult-to-deliver deposits. Rex is testing a process known as alkali-surfactant-polymer flooding that reduces production costs.

Thus far, Rex has been successful at finding its black gold: for the quarter ended March 31, 2008, the company clocked in operating revenues of $18.4 million, a 40.3% increase compared with operating revenues of $13.1 million for the same period in 2007. Production volumes were 257,370 barrels of oil equivalent, up 3.3% from the same period in 2007. Although the company reported a loss before provision for taxes of $12 million for the first quarter of 2008, compared with a net loss of $5 million for the first quarter of 2007, EBITDAX was $8.7 million in the first quarter of 2008. This was an increase of 67.1% over the same quarter of 2007, and an increase of 20.8% over the fourth quarter of 2007.

"This was a solid quarter with both revenue and EBITDAX experiencing strong growth over the first quarter of 2007. We were able to continue a trend of steady production growth despite experiencing record levels of flooding in the Illinois Basin, which caused us to shut in some of our oil fields for periods during the quarter,” said Benjamin Hulburt, president and CEO of Rex Energy.

For more on the company, read Rex Energy: Eureka!.

Note: Rex Energy Corporation (Nasdaq:REXX) is on the "Watch List" of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Rex Energy displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.