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Annual Report & Proxy Statement

Oct 18 2017 10:29AM
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AXAS
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Abraxas Provides Operational Update

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SAN ANTONIO--(BUSINESS WIRE)--Sep. 19, 2017-- Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (NASDAQ: AXAS) today provided an operational update. Highlights include:

  • Caprito 98-201H and Caprito 98-301HR averaged 1,036 and 999 Boepd over each well’s first 30 days of production, respectively
  • Company plans to test 660’ spacing on four-well pad on Section 99

Delaware Basin

In Ward County, Texas, the Caprito 98-201H, a 4,880 foot lateral targeting the Wolfcamp A1 zone, averaged 1,036 Boepd (873 barrels of oil per day, 978 mcf of natural gas per day)(1) over the well’s first 30 days of production. The Caprito 98-301HR, a 4,880 foot lateral targeting the Wolfcamp A2 zone, averaged 999 Boepd (838 barrels of oil per day, 962 mcf of natural gas per day)(1) over the well’s first 30 days of production. Abraxas flowed both wells back using a more conservative choke management protocol after observing the practices of offsetting operators. While an uplift compared to earlier results is expected, its magnitude will not be fully measurable until the new wells reach maximum pressure drawdown. Abraxas owns a working interest of approximately 98% in the Caprito 98-201H and 98-301HR.

The completions of the Caprito 83-304H and 83-404H, targeting the Wolfcamp A2 and Wolfcamp B, respectively, are expected to begin this week. Abraxas owns a 100% working interest in the Caprito 83-304H and 83-404H. Abraxas is currently drilling the Caprito 82-101H and 82-202H, in which the Company owns a 100% and 62.5% working interest, respectively. Following these wells, Abraxas plans to test 660’ spacing at Caprito. The four-well downspacing test will consist of two Wolfcamp A2 wells and two Wolfcamp A1 wells. With success Abraxas’ assumed well spacing will move from four wells per section to the industry norm eight wells per section in the Wolfcamp A1 and A2.

Williston Basin

In McKenzie County, North Dakota, Abraxas recently drilled and cased a replacement well in the Yellowstone 4HR. The Yellowstone 2H-4HR three-well pad, in which Abraxas owns a 52% working interest, is scheduled for completion in October. Abraxas recently spud the first well on the Yellowstone 5H-7H pad in which the company will hold a 52% working interest.

South Texas/Guidance Update

Abraxas’ producing assets in South Texas sustained no damage as a result of Hurricane Harvey. Sales volumes were temporarily reduced due to the shuttering of third party midstream facilities and Gulf Coast refineries. Wells with associated production of approximately 700 Boepd were curtailed for a period of one to three weeks. All wells are now on production and producing at full rates. Abraxas was also informed that the Company’s scheduled frac date on the Shut Eye 1H has been postponed to mid-October 2017 as a result of delays associated with the storm. From mid-August through September, Abraxas has also been subject to gas curtailments in the Permian and Bakken due to outages at third party processing and/or compression facilities. Abraxas has been informed by the respective third party midstream companies that the outages in the Permian and Bakken will be resolved this week. In total, Abraxas expects the curtailments in the Eagle Ford, Permian and Bakken to negatively impact largely natural gas and NGL production volumes by approximately 350 Boepd for the quarter. Abraxas is maintaining yearly average production and exit rate guidance for the year.

Hedging Update

Abraxas recently added additional crude oil hedges for the remainder of 2017 and 2018. Abraxas’ updated hedging schedule is as follows:

    3Q17     4Q17     2018     2019
Oil Swaps (bbls/day) 2,417 4,063 2,651 1,200
NYMEX WTI (1) $ 54.60 $ 52.82 $ 48.53 $ 54.54
 
WTI Midland / WTI CMA (bbls/day) 500 500
Differential ($/bbl) ($0.65 ) ($0.65 )
 
Henry Hub Costless Collar (mmbtu/day) 5,000 5,000
Ceiling ($/mmbtu) $ 3.90 $ 3.90
Floor ($/mmbtu) $ 3.00 $ 3.00
 

Presentation

Bob Watson, President and CEO of Abraxas, will be presenting at the Johnson Rice 2017 Energy Conference on September 29, 2017 at 1:30 PM CT. Mr. Watson will also be presenting at the IPAA OGIS Chicago on October 3, 2017 at 11:00 AM CT. A live webcast of this presentation can be accessed under the investor relations section of the Company’s website at www.abraxaspetroleum.com.

Mr. Watson commented, “We are pleased to announce the results from our first Wolfcamp A1 well in the Caprito 98-201H, which derisks an additional zone across our acreage position. As a reminder, we flowed back both the Caprito 98-201H and 301HR on a more restricted choke in an effort to enhance the long-term well performance. Despite the fact both wells have yet to flow on more than a 24/64 inch choke, they continue to outperform our expectations.

“The fourth quarter of 2017 promises to be busy for Abraxas operationally. We expect to begin completions on our next Wolfcamp pad in the Caprito 83-304H and Caprito 83-404H in the next few days. With success, the Caprito 83-404H will derisk a third zone for us in the Wolfcamp B. In October, we will attempt our first modern completion design in the Eagle Ford in the Shut Eye 1H. The following week we will complete a three well pad in the Bakken on our Yellowstone unit. Finally, in November, we plan to finish the year with a two well completion in the Delaware. In total, we plan to complete and bring six net wells on production in the fourth quarter. We look forward to what promises to be another step-change in production.”

(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 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.

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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