Sumitomo Corp. (SC) has signed a participation agreement with Rex Energy Corp. to participate in the development and production of REX’s Marcellus Shale Gas drilling project in the state of Pennsylvania through its consolidated subsidiary in USA, Summit Discovery Resources II LLC. SC’s total net acreage is 22,000 acres and the total cost for development is estimated at USD 1200 million. In this project, SC will acquire non-operated interests in the projected leases, interests in existing wells and in midstream assets which REX has on the closing date. In addition, SC and REX have agreed to form an area of mutual interest in Butler County in which REX will act as leasing agent. Pursuant to the agreement, SC has agreed to pay all of the costs to lease additional net acres. This project will allow SC to participate in several strategic areas within the Marcellus Shale. In conclusion, SC will acquire the assets required for having about 30% of the working interests of the Project by paying USD 88 million upon closing and an additional USD 106 million between the closing date and the end of December 2011. The Project will drill more than 1100 wells for the coming 10 years.
