Market Overview

Abraxas Announces Acquisition of 853 Net Delaware Basin Bone Spring/Wolfcamp Acres and Provides Divestiture Update

Share:





Abraxas Petroleum Corporation ("Abraxas" or the "Company") (NASDAQ:AXAS)
today announced the signing of an agreement to acquire 853 net Delaware
Basin Bone Spring/Wolfcamp acres and provided a divestiture update.
Highlights include:

This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20170714005083/en/

Map of Abraxas' updated acreage position. Yellow indicates Abraxas existing acreage position. Hashed ...

Map of Abraxas' updated acreage position. Yellow indicates Abraxas existing acreage position. Hashed indicates additional working interests being acquired. Red indicates new acreage being acquired. (Graphic: Business Wire)

  • Definitive agreement signed to acquire 973 total net acres (853
    net acres with Bone Spring/Wolfcamp rights) and 130 Boepd (81% natural
    gas) in the Delaware Basin for $4.3 million in cash, 2.0 million
    shares of Abraxas Petroleum Common Stock, Abraxas' 12,188 net acre
    Pecos County Ranch ("Cayanosa Draw") and ½ of Abraxas' owned minerals
    under the Cayonosa Draw
  • Acquisition consists of 445 net acres within Abraxas' existing
    Caprito leasehold, 172 additional acres in Ward County, 356 net acres
    in Reeves, Pecos and Winkler Counties
  • Definitive agreement signed to sell a portion of the Company's
    Powder River Basin assets for $4.6 million
  • Closed Ward County acquisition announced May 23, 2017
  • Borrowing Base will remain unchanged at $115 million
  • Capital Expenditure Budget increasing to $120 million ($110
    million cash)

Ward County Acquisitions

Abraxas recently signed a definitive agreement to acquire 130 Boepd (5
barrels of oil per day, 633 mcf of natural gas per day and 19 barrels of
NGLs per day) and 973 net mineral acres (853 net mineral acres with Bone
Spring and Wolfcamp rights) for $4.3 million in cash, 2.0 million shares
of Abraxas Petroleum Common Stock, Cayanosa Draw and ½ of Abraxas' owned
minerals under the Cayanosa Draw. The acreage purchased is held by
production and includes incremental working interests in Abraxas'
Caprito leasehold, additional units in Ward County and interests in
Reeves, Winkler and Pecos County. The acreage is prospective for up to
four zones across the Wolfcamp and Third Bone Spring. The effective date
of this transaction is February 1, 2017 and closing is scheduled for
August 2017. Abraxas plans to fund the cash portion of the acquisition
using proceeds from the Powder River Basin divestiture. Abraxas' working
interest in the Caprito 98-201H and 301HR will move from 88% to 98%.
Abraxas' working interest in the Caprito 83-304H and 404H will move from
85% to 100%.

Abraxas recently closed the Ward County acquisition announced on May 23,
2017. Following adjustments for title defects, Abraxas acquired 1,894
net acres versus the originally announced 2,008 net acres. The closing
purchase price for the acreage was $20.9 million versus the originally
announced $22.2 million.

Powder River Basin Sale

Abraxas recently signed a definitive agreement to sell a portion of the
Company's Powder River Basin assets for gross proceeds of $4.6 million
subject to standard purchase price adjustments. The assets sold produced
approximately 100 Boepd (21 barrels of oil per day, 337 mcf of natural
gas per day, 23 barrels of NGLs per day) during the month of March 2017.
The effective date of this transaction is April 1, 2017 and closing is
scheduled for July 2017. Abraxas retained approximately 948 net held by
production acres in the high value Porcupine/Frazier Federal area, which
the Company plans to transact on in the near future. Stephens, Inc.
represented Abraxas on the sale of these properties.

Operational Update

In McKenzie County, North Dakota Abraxas successfully completed the
Stenehjem 6H-9H with a 75% working interest. Abraxas recently finished
drilling the plugs out on all four wells and is in the process of
installing production tubing. Early production has been in line with
expectations. All drilling operations in North Dakota remain on schedule.

In Ward County, Texas Abraxas successfully completed the Caprito 98 201H
and 301HR. The Company recently drilled out plugs on both wells and
flowback is expected to begin shortly. Post the recent acquisition,
Abraxas now holds a 98% working interest in these wells. All drilling
operations in the Delaware Basin remain on schedule.

In Atascosa County, Texas Abraxas drilled and cased the Shut Eye 1H 100%
in the targeted zone using rotary steerables. Abraxas holds a 100%
interest in the Shut Eye 1H, which is scheduled for an August completion.

Guidance Update

Taking the Delaware Basin acquisition, increased working interests in
the Caprito wells and removal of one planned Eagle Ford Well into
consideration, Abraxas is increasing the capital expenditure budget to
$120 million(1) for 2017. Abraxas' $120 million capital
budget consists of $110 million in cash with the remainder in equity and
ranch value associated with the above-mentioned acquisition and asset
exchange. Abraxas' cash capital expenditures for 2017 remain unchanged
at $110 million. With continued cost control and the divestiture of high
LOE barrels, Abraxas is reducing the midpoint of LOE guidance by
approximately $1.00/bbl. The midpoint of G&A guidance is increasing by
approximately $1.25 million to account for bonus accruals and additional
staffing needs. Abraxas plans to revisit production guidance after
achieving stabilized rates from the Company's recent completions and
taking into consideration recent acquisitions, divestitures and
increased working interests in the Delaware Basin.

  2017E
Low   High
Operating Costs
LOE ($/Boe) $ 5.00 $ 7.00
Production Tax (% Rev) 8.0 % 10.0 %
Cash G&A ($mm) $ 11.0 $ 13.5
 
CAPEX ($mm)

$120 (1)

   
2017E

Net CAPEX

($mm )
Basin/Region
Permian (including acq) $

71.3

(1)

Bakken 42.2
Eagle Ford/Austin Chalk 6.0
Other   0.5  
Total $

120.0

(1)

 

(1) Includes $110 million in cash and approximately $10
million in Abraxas common stock and the sale of Cayanosa Draw
associated with the June 2017 acreage acquisition in the Delaware
Basin.

 

Bob Watson, President and CEO of Abraxas, commented, "We are pleased to
announce another meaningful increase in our core Delaware Basin Bone
Spring/Wolfcamp position to 8,497(2) net acres. This
transaction meaningfully increases our core operated position in and
around Caprito. We continue to search for similar transactions to
further expand our position in the basin. Importantly, this transaction
was accomplished while preserving our balance sheet via an asset swap
and use of equity. Our divestitures in the Powder River Basin and
Cayanosa Draw mark an important shift for Abraxas as we continue to
focus on our high quality unconventional asset base in the Permian
Basin, Williston Basin and in South Texas."

"Given our balance sheet strength we are well positioned for the current
commodity price environment. We will continue to execute on our current
capital plan as we are realizing more than acceptable returns on our
Bakken and Wolfcamp developments. We look forward to updating the street
on our recent well results shortly."

 

(2) Includes 853 net acres associated with potential
acquisitions. Includes 480 net acres on Abraxas' Howe lease which
is currently subject to a title dispute. Abraxas does not have any
reserves or planned 2017 capital expenditures relating to the
acreage that is subject to this title dispute.

 

Abraxas Petroleum Corporation is a San Antonio based crude oil and
natural gas exploration and production company with operations across
the Rocky Mountain, Permian Basin and South Texas regions of the United
States.

Safe Harbor for forward-looking statements: Statements in this release
looking forward in time involve known and unknown risks and
uncertainties, which may cause Abraxas' actual results in future periods
to be materially different from any future performance suggested in this
release. Such factors may include, but may not be necessarily limited
to, changes in the prices received by Abraxas for crude oil and natural
gas. In addition, Abraxas' future crude oil and natural gas production
is highly dependent upon Abraxas' level of success in acquiring or
finding additional reserves. Further, Abraxas operates in an industry
sector where the value of securities is highly volatile and may be
influenced by economic and other factors beyond Abraxas' control. In the
context of forward-looking information provided for in this release,
reference is made to the discussion of risk factors detailed in Abraxas'
filings with the Securities and Exchange Commission during the past 12
months.

View Comments and Join the Discussion!