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Annual Report & Proxy Statement

Jun 23 2017 4:00PM
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Abraxas Provides Operational and Divestiture Update

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SAN ANTONIO--(BUSINESS WIRE)--Jan. 3, 2017-- Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (NASDAQ:AXAS) today provided the following operational and divestiture update.

Permian

In Ward County, Texas, Abraxas successfully completed the 4,963 foot effective lateral of the Caprito 99-101H with a 25 stage completion. The results of the well significantly exceeded expectations with a 24-hour IP rate of 1,267 boepd (1,053 barrels of oil per day, 1,285 mcf of natural gas per day)(1) and a 30-day IP rate of 997 boepd (811 barrels of oil per day, 1,115 mcf of natural gas per day). Abraxas owns a 100% working interest in the Caprito 99-101H.

Abraxas permitted and plans to spud a two well pad in the Caprito 98-201H and Caprito 98-301H in February, 2017. The Caprito 98-301H will target the Wolfcamp A2 zone, which Abraxas targeted in the Caprito 99-101H. The Caprito 98-201H will target an additional prospective zone in the Wolfcamp A1. Abraxas estimates it will own a working interest of approximately 90% in the Caprito 98-201H and 98-301H, respectively. Abraxas continues to explore opportunities to expand the Company’s existing position in the area and recently acquired an additional 24 net acres in the Caprito/R.O.C. area.

Williston Basin

At Abraxas’ North Fork prospect, in McKenzie County, North Dakota, the Company recently spudded a four well pad in the Stenehjem 6H-9H. Abraxas recently cased the intermediate section of the Stenehjem 6H and is currently drilling the intermediate section of the Stenehjem 7H. Abraxas working interest following the receipt of elections for the Stenehjem 6H-9H is approximately 75%. The Stenehjem 10H-15H continue to exceed expectations with two of the wells achieving cumulative oil production of over 100,000 barrels in just over four months of production.

Austin Chalk

At Abraxas’ Jourdanton prospect in Atascosa County, Texas, the Bulls Eye 101H averaged 366 boepd (321 barrels of oil per day, 220 mcf of natural gas per day)(1) over the wells highest 30 days of production. Abraxas continues to monitor the well and available cost-effective leases in the area. Abraxas owns a 100% working interest in the Bulls Eye 101H.

Divestiture Update

Today, Abraxas closed on the sale of the Company’s Brooks Draw assets in the Powder River Basin for $11.1 million in gross proceeds. Abraxas continues to market the Company’s remaining assets in the Powder River Basin.

Abraxas recently received a termination notice from the potential buyer of the Company’s Hudgins Ranch property in Pecos County, Texas. Abraxas did retain 50% of the survey fees associated with the terminated sale. Abraxas is currently remarketing the property and is in discussions with several potential buyers. As a reminder, Abraxas holds approximately 13,468 acres (12,178 acres owned; 1,291 acres leased) in Pecos County, Texas. This property is approximately five miles to the east of the most southeasterly portion of another operator’s recent discovery known as “Alpine High.” Abraxas currently has the surface ownership and a ½ of the Company’s current mineral ownership listed with a broker for $550/acre. Abraxas plans to retain the remaining ½ of the Company’s current mineral interests and executive rights over the leasehold. Abraxas also holds 3-D seismic, numerous logs and vertical production from the Barnett/Woodford on the leasehold. The Company also has salt water disposal wells and related infrastructure on the property. In addition to the potential sale of the surface ranch and ½ of Abraxas’ current mineral ownership, Abraxas will be looking for a third party to lease the property as well as take over the Company’s existing production and related infrastructure.

Hedging Update

Abraxas recently added the following hedges to minimize the impact of natural gas prices and Midland basin differentials for 2017:

     

2017

WTI Midland / WTI CMA (bbls/day) 500
Differential ($/bbl) ($0.65)
 
Henry Hub Costless Collar (mmbtu/day) 5000
Ceiling ($/mmbtu) $3.90
Floor ($/mmbtu) $3.00
 

Bob Watson, President and CEO of Abraxas, commented, “We continue to execute on our catalysts with the excellent drilling results in the Delaware Basin and the closing of the Brooks Draw sale in the Powder River Basin. Although we are disappointed our Hudgins Ranch sale counterparty walked in the eleventh hour from his contractual obligations, there remains a high level of interest in the property. We will continue to market our remaining Powder River Basin assets as well as our Hudgins Ranch property with anticipated proceeds used to further reduce borrowings on our facility in 2017.

“The results from the Caprito 98-101H significantly exceeded our expectations, especially considering the initial rates nearly matched offset operators results from wells with nearly twice the lateral length. This has encouraged us to start up our planned 2017 Delaware Basin program as soon as practical as well as focus on expanding our position in this play. We look forward to updating the market with the results of this activity.”

(1) The 30-day average rates represent the highest 30 days of production and do not include the impact of natural gas liquids and shrinkage at the processing plant and include flared gas.

Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountains, Permian Basin and South Texas in 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.

Source: Abraxas Petroleum Corporation

Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
gking@abraxaspetroleum.com
www.abraxaspetroleum.com

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