Rex Energy Corporation reported that the company received final court approval of a settlement agreement that resolves pending litigation with landowners in Westmoreland County, Pennsylvania.
Under the terms of the settlement agreement, Rex has extended 114 lease offers to landowners who have not already leased with other parties. The lease offers, which were negotiated specifically for the settlement agreement, provide for a term of five years with bonus payments of $2,500 per acre and a 15% royalty.
To date, the lease offers cover approximately 5,000 acres and, if accepted, provide for a maximum value of approximately $12.5 million in lease bonus payments. Rex may reject any lease if there is a defect in the title to the property. The company expects that total leasing costs will be reduced by the number of leases that are ultimately excluded due to title defects or leases with third parties. Approximately 15 percent of the leases that were originally contemplated under the settlement agreement have been excluded to date.
All leases that are executed as a result of this settlement lie within the Marcellus Shale fairway and will strengthen the company's existing leasehold position in Westmoreland County. Rex will offer its partners the opportunity to participate in the leases, which fall within an area of mutual interest under its joint venture agreements. With participation at expected levels, Rex does not anticipate its 2011 operational or leasing capital budget to be materially affected by the settlement agreement.