8.	RELATED PARTY TRANSACTIONS

Aircraft Services

We have an oral month-to-month agreement with Charlie Brown Air Corp. (“Charlie Brown”), a New York corporation owned by Lance T. Shaner, our Chairman, regarding the use of one airplane owned or managed by Charlie Brown. Under our agreement with Charlie Brown, we pay a monthly fee for the right to use the airplane equal to our percentage (based upon the total number of hours of use of the airplane by us) of the monthly fixed costs for the airplane, plus a variable per hour flight rate that ranges from $700 to $1,560 per hour. For the year ended December 31, 2017, we did not pay Charlie Brown for use of the aircraft. For the years ended December 31, 2016 and 2015 we paid Charlie Brown zero and approximately $0.1 million, respectively, for the use of the aircraft, including the variable per hour cost in addition to pilot fees, maintenance, hangar rental and other miscellaneous expenses.

We own a 50% membership interest in Charlie Brown Air II, LLC (“Charlie Brown II”). The other 50% is owned by Shaner Hotel Group Limited Partnership, a Delaware limited partnership controlled by Lance T. Shaner (“Shaner Hotel”). Charlie Brown II owns and operates an Eclipse 500 aircraft. In June 2007, Charlie Brown II borrowed approximately $1.5 million in original principal amount from BB&T Bank to purchase the aircraft. The loan currently bears interest at a rate equal to the Prime Rate as published in the Wall Street Journal. Charlie Brown II is required to make monthly payments of principal and interest of approximately $0.1 million in the aggregate annually and a final balloon payment of approximately $0.6 million at maturity in August 2019. The Company and Shaner Hotel each guarantee up to fifty percent of the principal balance of the loan. The balance of this loan as of December 31, 2017 and 2016 was approximately $0.8 million and $0.9 million, respectively. For the years ended December 31, 2017, 2016 and 2015, we paid Charlie Brown II approximately $0.2 million, $0.2 million and $0.3 million, respectively, for loan interest, services rendered and retainer fees.

The business affairs of Charlie Brown II are managed by two members, appointed by each of its two owners. We have designated Thomas C. Stabley, our President and Chief Executive Officer, as the manager representing our membership interest. Actions of the company must be approved by a majority of the interest percentages of the managers. Each manager votes in matters before the company in accordance with the membership interest percentage of the member that appointed the manager. Certain events, such as the sale by a member of its interest, the merger or consolidation of the company, the filing of bankruptcy, or the sale of the airplane owned by Charlie Brown II require the written consent of both managers. The consent of managers is also required before the company may change or terminate the management agreement with Charlie Brown, incur any indebtedness, sell substantially all of the company’s assets or sell the airplane owned by the company. In the event that the members are unable to unanimously agree upon any of these matters within 10 days of the proposal of any such matter, an “impasse” may be declared, and the airplane will be sold by the company.

Office Rental

On June 27, 2012, we entered into an office lease agreement with Shaner Office Holdings, L.P., a limited partnership controlled by Lance T. Shaner. The office lease, which replaced our former headquarters office lease in State College, Pennsylvania, calls for monthly rental payments in the initial amount of $35,000 beginning on April 1, 2013, with an annual Consumer Price Index (“CPI”) adjustment. The annual CPI adjustment is capped at 2.5%. The terms of the lease provided that the lease may be extended for up to three five-year periods following the initial five-year term, or in the alternative, that the property could be purchased outright by our exercise of a purchase option at the end of the initial five-year term. On September 15, 2017, we exercised our option to renew the lease for a five-year period beginning on January 1, 2018 and ending on December 31, 2022, and did not exercise the purchase option. For the year ended December 31, 2017, we paid Shaner Office Holdings, L.P. approximately $0.6 million in office rental payments and utilities. We account for this lease as an operating lease, subsequently recording the rental payments as General and Administrative Expense on our Consolidated Statements of Operations.

Second Lien Notes

In May 2017, the Lance T. Shaner Revocable Trust (which is solely controlled by Lance T. Shaner) acquired approximately $4.6 million in principal amount of our 1.00%/8.00% Senior Secured Second Lien Notes due 2020 (the “Second Lien Notes”) at face value in an open market purchase. As a result, Mr. Shaner is entitled to all of the rights of a holder of Second Lien Notes as described in the Indenture governing the Second Lien Notes, including the right to receive twice-yearly interest payments, and to payment of the principal amount at maturity.

Bronder Technical Services

From time to time, Bronder Technical Services, Inc. (“Bronder”), an electrical services contractor in which Lance T. Shaner owns a controlling interest, provides wellsite-based electrical services to the Company. The electrical work on each of the Company’s well sites is subject to a competitive bidding process. In 2017, Bronder’s bid was selected for various electrical jobs on four of the Company’s well pads. Due to this competitive bidding process, the pricing terms applicable to these projects were consistent with, or more favorable than, market rates for the type of services performed. In 2017, the Company compensated Bronder in an aggregate amount of approximately $0.3 million for these services. Rex is under no continuing obligation to use Bronder, and electrical services will continue to be awarded on a wellsite-by-wellsite basis based on price and quality of work of contractors.

As of December 31, 2017, there were negligible amounts due to us from or from us to any Shaner affiliated entities.

RW Gathering, LLC

As of December 31, 2017, we owned a 40% interest in RW Gathering which owns gas-gathering assets that facilitate the development of our joint operations with WPX and Sumitomo (see Note 5, Equity Method Investments, to our Consolidated Financial Statements). We incurred approximately $0.6 million, $0.6 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015, respectively, in compression expenses that were charged to us from Williams Appalachia, LLC, which relate to compression costs incurred by RW Gathering. These costs are recorded as Production and Lease Operating Expense on our Consolidated Statement of Operations. As of December 31, 2017, 2016 and 2015, there were no receivables or payables in relation to RW Gathering due to or from us. Effective as of January 1, 2018, we sold our 40% interest in RW Gathering to COG2, LLC in connection with the Westmoreland Sale.

Water Solutions

We incurred approximately $6.1 million in gross water transfer and equipment rental expenses that were charged to us from Water Solutions during 2015 (through the date of sale in July 2015). Of the amounts incurred, we eliminated approximately $4.7 million in consolidation for the year 2015. As of December 31, 2015, we had no payables owed to Water Solutions for work performed during the period due to sale of our interest in Water Solutions during third quarter 2015. As of December 31, 2015, we classified the operations of Water Solutions as Discontinued Operations. See note 4, Discontinued Operations/Assets Held for Sale, of our Consolidated Financial Statements for additional information.