[Editor's note: This story was updated at 7:43 p.m. CST Aug. 30.]

After more than a decade operating as a public oil and gas producer, State College, Pa.-based Rex Energy Corp. has agreed to sell itself to fellow Appalachia shale player PennEnergy Resources LLC for $600.5 million.

As part of the agreement, PennEnergy will acquire substantially all of Rex’s assets plus assume certain liabilities of the company which filed for bankruptcy earlier this year, according to filings with the U.S. Securities and Exchange Commission on Aug. 27.

Rex is a pure-play Appalachian Basin-focused company targeting wet gas windows in the Pennsylvania Marcellus and Ohio Utica shales. The company had previously traded on the NASDAQ since its IPO in July 2007.

Rex Energy Asset Map (Source: Rex Energy)

However, Rex struggled with debt woes since the 2014 commodities downturn when the company faced several possible delisting notices. Eventually, its stock was delisted in April, and a month later Rex filed for Chapter 11 bankruptcy. The company simultaneously launched a sale process for its remaining assets, which comprised roughly 98,000 net acres as of January.

Rex had previously sold a bulk of its assets, including a position in the Illinois Basin, as it coped with lower commodity prices. In March, the company sold certain nonop Appalachia interests in Westmoreland, Centre and Clearfield counties in Pennsylvania for $17.2 million.

Through the purchase of Rex’s assets, PennEnergy will more than double its holdings in Appalachia, where the company focuses on the acquisition and development of unconventional shale resources.

As of August, PennEnergy’s assets covered roughly 91,000 gross acres of oil and gas leasehold in southwest Pennsylvania’s Butler, Beaver, Armstrong and Allegheny counties with production from 86 Marcellus and Upper Devonian wells.

Upon closing of the Rex acquisition, though, PennEnergy will control 203,500 gross leasehold acres, primarily in the Pennsylvania counties of Butler, Beaver and Armstrong, north of Pittsburgh, where its headquarters are located. Additionally, The company will operate 329 horizontal shale wells with net production of roughly 450 million cubic feet per day of natural gas equivalent.

In total, PennEnergy will boast estimated net proved reserves of 8.5 trillion cubic feet of natural gas equivalents (Tcfe), of which 1.7 Tcfe are proved developed producing. About 34% of the reserves will be derived from NGL.

“Almost all of the combined assets of the two companies are in the core of the Marcellus Shale, and with nearly 20-years of drilling inventory we have the opportunity to continue delivering growth at attractive rates of returns for many years to come,” Richard D. Weber, chairman and CEO of PennEnergy, said in a statement on Aug. 30.

PennEnergy was founded in 2011 by Weber and the company’s COO, Gregory D. Muse, who together have more than 50 years of combined industry experience, according to PennEnergy’s website.

Muse added that most of the Rex assets are contiguous to the company’s existing operations and PennEnergy plans to operate two horizontal rigs on the combined properties. The Rex assets acquired also include cash accounts of $29.5 million held by Rex used to collateralize firm transportation contracts that will be released to PennEnergy at close.

PennEnergy is capitalized with $532 million of equity commitments from EnCap Investments LP and Wells Fargo Energy Capital, and it has access to a $375 million revolving credit facility. The company is majority-owned by funds controlled by Houston-based EnCap.

The company said it intends to fund its acquisition of Rex’s assets with equity contributions from its existing owners and from its revolving line of credit from a consortium of banks co-led by Wells Fargo and JP Morgan. Pro forma for the transaction, PennEnergy will have total funded debt of roughly two times EBITDA and expects to generate free cash flow immediately upon closing.

The transaction has been approved by the U.S. Bankruptcy Court for the Western district of Pennsylvania and PennEnergy expects to close the acquisition on Sept. 28. The company received financial advice from JP Morgan Securities and legal advice from Vinson & Elkins.

Emily Patsy can be reached at epatsy@hartenergy.com.