Rex Energy Corporation announced yesterday that it, together with its partners Water Solutions Holdings, has agreed to sell Water Solutions and its subsidiaries, including Keystone Clearwater Solutions, to the U.S. water and wastewater utility company American Water Works Company, Inc.
Keystone, headquartered in Hershey, Pa., is a water service provider offering a range of water related services to the oil and gas industry primarily in the Appalachian region of Pennsylvania, Ohio and West Virginia.
The transaction is valued at approximately $130 million, inclusive of cash and debt. Rex Energy, which holds a 60 per cent interest in Water Solutions and is selling its entire interest, expects net proceeds from the sale (after taxes and subject to customary adjustments) to be approximately $66 million. The company announced that the proceeds will be used to pay down the revolving line of credit and for general corporate purposes.
Following the announcement of the sales Rex Energy Corporation (REXX) experienced unusually high volume on June 18, as the stock gained 0.6 per cent to a closing price of $4.99.
Upon completion of the acquisition, Keystone will operate as a separate, independent subsidiary of American Water. It was further agreed that American Water will continue to provide field and water-related services to Rex Energy within its Appalachian Basin properties in Pennsylvania and Ohio. RBC Capital Markets advised Water Solutions Holdings, LLC with respect to this transaction.
“Keystone Clearwater Solutions provides turn-key water solutions to the shale gas industry in a safe and environmentally responsible manner,” said Susan Story, president and CEO of American Water.
“We are excited because Keystone’s offerings are in line with American Water’s core competencies – supplying, transmitting, pumping and storing water and building the infrastructure required to do so. Keystone’s commitment to its customers, its operational focus and its commitment to environmental responsibility and safety are also aligned with American Water’s values and have allowed Keystone to grow into a market leader in the shale gas water services segment in only a few years. We will continue leveraging the expertise of the talented team of Keystone employees who have built this successful organization.”
Story added, “This acquisition delivers on one of our growth strategies to develop complementary businesses. Coupled with our existing activity in shale, the Keystone acquisition will enhance our ability to provide additional water services solutions to shale development companies.”
“We are excited about this acquisition by American Water,” said Ned Wehler, founder and chief executive officer of Keystone, who will continue to lead the organization. “American Water’s commitment to its customers, safety, the development of its employees and environmental protection is consistent with Keystone’s philosophy. We look forward to a bright future together.”
“This transaction marks a critical step for Rex Energy as we continue to enhance our balance sheet and provide the necessary flexibility for the development of our core assets in the Appalachian Basin,” said Tom Stabley, Rex Energy’s Chief Executive Officer. “We look forward to our new partnership with American Water and the successful development of our Appalachian Basin assets.”
American Water anticipates closing on the transaction in July.
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