What: Shares of Rex Energy Corporation (NASDAQ:REXX) were down almost 10% by early afternoon trading on Wednesday. The news that's fueling the downdraft is the company's latest operational update. However, there actually wasn't any bad news in that update, so it seems as though investors are following the old investment adage to "buy the rumor, sell the news."
So what: Rex Energy's operational report detailed the test results of the company's remaining two wells on its four-well Renick pad in the Moraine East Area. The company said the two wells produced at an average 24-hour test rate of approximately 9.3 MMcfe/d. Those were really strong results, especially considering that the other two wells on the pad produced at 24-hour test rates of 6.6 MMcfe/d and 8.2 MMcfe/d, respectively. The only real difference is that the gas from the most recent wells averaged 1,300 BTU, while the prior two wells were higher at 1,309 BTU and 1,302 BTU.
In addition to those two wells, the company also provided an update on its Harvey two-well pad that was placed into sales in its legacy Butler operated area. These wells produced at an average 24-hour sales rate of 9.8 MMcfe/d per well. Again, that's a solid showing.
Now what: Rex Energy CEO Tom Stabley was quoted in the operational update as saying that the company was "very pleased to see continued strong performance from our new wells in the Moraine East and legacy Butler areas." Investors weren't quite as pleased, as they apparently were expecting even better results. Their displeasure still doesn't diminish the fact that these are fine well results and suggest that Rex Energy still has a lot of growth potential in not only its legacy area, but also in its recently acquired Moraine East area.