Rex Energy Corp. (NASDAQ: REXX) said April 20 it has hired Evercore Group LLC as a financial adviser to pursue a sale or joint venture (JV) of its operated assets in the Illinois Basin.

The company continues to sell or enter JVs as it looks for capital to shore up liquidity for 2015 following its announced March JV in the Marcellus.

“The company announced it will market for potential joint venture or sale of its Illinois Basin assets, which produced 1,873 barrels per day in the first quarter of 2015,” said Gordon Douthat, senior analyst, Wells Fargo. “We value the asset at $56 million.”

Rex incurred a noncash impairment charge in the Illinois Basin of about $132.6 million during the fourth quarter of 2014. The reduction in carrying value was due to the recent decline in expected future prices for crude oil.

The Illinois Basin is a 100% crude oil asset with associated facilities located in Illinois, Indiana and Kentucky. The proceeds would further enhance the company's liquidity position and improve flexibility in the company's 2015 and 2016 development program.

Rex is also pursuing the sale of its 60% ownership interest in Keystone Clearwater Solutions, the company's water service subsidiary. The sale process is on track as expected and the company is encouraged by the interest that has been expressed in Keystone Clearwater Solutions. Rex expects to close the divesture by June 30 for estimated proceeds of $60 million to $80 million.

At the end of March, Rex entered a JV with ArcLight Capital Partners LLC in the Butler Operated Area of the Marcellus Shale. At closing, Rex received $16 million as part of an initial contract value of $67.6 million. The deal includes an option for the JV partner to participate as a 20% working interest partner in an additional 17 wells in 2016 with value of $21.4 million.

Rex Energy, Illinois Basin, JV, joint venture, divestiture, table

The company said it may also divest WPX Energy Inc. (NYSE: WPX) operated Marcellus assets, which include midstream and upstream assets.

The company may also sell its Ohio Utica Warrior South assets, which have an average daily production of 3,860 barrels of oil equivalent per day (boe/d) in Guernsey, Noble and Belmont counties, Ohio.

Rex reported first-quarter 2015 production volumes were 196 million cubic feet equivalent per day (MMcfe/d), a 60% increase from the first quarter of 2014. Production consisted of 128.5 MMcf/d of natural gas and 11.3 Mboe/d of oil and NGLs.

“I am extremely proud of our accomplishments during 2014,” said Tom Stabley, CEO of Rex Energy. “Over the course of the year, we achieved our goals of improving operational performance, reducing costs, and managing our balance sheet to continue targeted development of our legacy Butler Operated Area. With preliminary results from the Moraine East Development Area indicating analogous performance to our legacy Butler Operated Area, we are even more optimistic about our prospects and our plans for development. For 2015, our drilling plans are concentrated toward our best locations in the Appalachian Basin, and we will continue to focus on cost control and further improving our operational and capital efficiency.”

The company continues to explore a long-term partner in Moraine East to develop liquids-rich locations.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.