1397516--3/31/2008--REX_ENERGY

related topics

{gas, price, oil}

{loss, insurance, financial}

{stock, price, share}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{stock, price, operating}

{provision, law, control}

{competitive, industry, competition}

{customer, product, revenue}

{regulation, change, law}

{personnel, key, retain}

Risks Related to Our Company A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments. Enhanced Oil Recovery, or EOR, techniques that we may use, such as our Alkali-Surfactant-Polymer flooding in the Lawrence Field, involve more risk than traditional waterflooding. We have limited experience in drilling wells to the Marcellus Shale and less information regarding reserves and decline rates in the Marcellus Shale than in other areas of our Appalachian operations. Wells drilled to the Marcellus Shale will be deeper, more expensive and more susceptible to mechanical problems in drilling and completing than wells in the other areas. Absent a sufficient level of vertical fracturing in the shale acreage we control, our New Albany Shale projects may not be successful. A significant part of the value of our production and reserves is concentrated in the Illinois Basin. Because of this concentration, any production problems or changes in assumptions affecting our proved reserve estimates related to these areas could have a material adverse impact our business. We depend on a relatively small number of purchasers for a substantial portion of our revenue. The inability of one or more of our purchasers to meet their obligations or the loss of our market with Countrymark Cooperative, LLP, in particular, may adversely affect our financial results. PennTex Illinois and Rex Operating are defendants in a putative class action lawsuit concerning complaints of hydrogen sulfide emissions from the Lawrence Field, which could expose us to monetary damages or settlement costs. Our results of operations and cash flow may be adversely affected by risks associated with our oil and gas financial derivative activities, and our oil and gas financial derivative activities may limit potential gains. If oil and natural gas prices decrease, we may be required to take write-downs of the carrying values of our oil and natural gas properties, potentially triggering earlier-than-anticipated repayments of any outstanding debt obligations and negatively impacting the trading value of our securities. Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations. Our estimated reserves are based on many assumptions that may turn out to be inaccurate. Any significant inaccuracies in these reserve estimates or underlying assumptions may materially affect the quantities and present value of our reserves. Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities. We cannot control activities on properties that we do not operate and are unable to control their proper operation and profitability. If our access to markets is restricted, it could negatively impact our production, our income and ultimately our ability to retain our leases. Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our business, financial condition and results of operations. Our future acquisitions may yield revenues or production that vary significantly from our projections. Our development and exploration operations require substantial capital, and we may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a loss of properties and a decline in our oil and natural gas reserves. The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oil field services could adversely affect our ability to execute on a timely basis our exploration and development plans within our budget. We may incur substantial losses and be subject to substantial liability claims as a result of our oil and natural gas operations, and we may not have enough insurance to cover all of the risks that we face. Our business may suffer if we lose key personnel. We are subject to complex laws and regulations that can adversely affect the cost, manner or feasibility of doing business. Our operations expose us to substantial costs and liabilities with respect to environmental matters. Competition in the oil and natural gas industry is intense, which may adversely affect our ability to compete. Being a public company has increased our expenses and administrative workload. Risks Related to Our Common Stock Our common stock has only been publicly traded since July 30, 2007 and the price of our common stock has fluctuated substantially since then and may fluctuate substantially in the future. You may experience dilution of your ownership interests due to the future issuance of additional shares of our common stock. Our certificate of incorporation, bylaws and Delaware law contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors and our Chairman and other executive officers, which collectively beneficially own approximately 52% of the outstanding shares of our common stock as of March 31, 2008. Because we have no plans to pay dividends on our common stock, stockholders must look solely to appreciation of our common stock to realize a gain on their investments.

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1397516--3/31/2008--REX_ENERGY_CORP