Abraxas Provides Operational Update, Divestiture and Guidance Update
March 12 2014 - 6:00AM
Business Wire
Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to
provide the following operational, divestiture and guidance
update.
Eagle Ford
As previously announced, at Abraxas’ Jourdanton prospect in
Atascosa County, Texas, the Blue Eyes 1H averaged 405 boepd (383
barrels of oil per day, 134 mcf of natural gas per day) (1) over
the well’s first 30 full days of production flowing naturally.
Subsequent to this initial 30 day period, the well was placed on
submersible pump. Over the following thirty days on submersible
pump, the well averaged 527 boepd (494 barrels of oil per day, 194
mcf of natural gas per day) (1). Total acreage at Jourdanton now
consists of approximately 6,150 net acres. Also at Jourdanton,
Abraxas recently drilled the Snake Eyes 1H to a total depth of
12,668 feet and the well is scheduled to be fracture stimulated
with a 19 stage completion later this week. Abraxas is currently
drilling the Spanish Eyes 1H at a depth of 7,108 feet and the well
is scheduled to be fracture stimulated at the end of March. Next,
the company will spud its fourth well at Jourdanton, the Eagle Eyes
1H. Abraxas owns a 100% working interest across the Jourdanton
prospect.
At Abraxas’ Cave prospect, in McMullen County, Texas, the
company recently completed the Dutch 2H with a 36 stage
stimulation. The well has been flowing to sales at very encouraging
rates and a thirty day rate will be provided when available.
Abraxas holds a 100% working interest in the Dutch 2H.
At Abraxas’ Dilworth East prospect, in McMullen County, Texas,
the company plans to complete the R. Henry 2H with a 19 stage
fracture stimulation in April. Abraxas holds a 100% working
interest in the R. Henry 2H.
Williston Basin
In McKenzie County, North Dakota, the Jore 1H, 2H and 4H are now
scheduled to be fracture stimulated in early April. With the recent
downspacing success reported by other operators in the Williston
Basin, Abraxas elected to change its original plans on the Ravin
West pad from two Middle Bakken and two Three Forks wells to four
Middle Bakken wells 660 feet apart. Raven Rig #1 has successfully
drilled and cased the surface on these four Middle Bakken tests,
the Ravin 4H, Ravin 5H, Ravin 6H and Ravin 7H. Next, the company
will drill the intermediate sections of all four wells. Abraxas
owns a working interest of approximately 76% and 51% in the Jore
and Ravin West pads, respectively.
Divestiture Update
Abraxas recently closed and/or signed a Purchase and Sale
Agreement on several non-core Permian Basin and Gulf Coast
properties for combined proceeds of $2.6 million. The assets sold
produced a combined 56 boepd (83% natural gas) of production.
Guidance Update
At Abraxas’ March 2014 board meeting, the Board of Directors
approved an increase to Abraxas’ 2014 CAPEX budget to $125.0
million. The increase in 2014 CAPEX will go directly to drilling
two incremental wells and acquiring additional leasehold in the
Eagle Ford. In connection with this increase in CAPEX and
compensating for recent asset sales, Abraxas is raising the
company’s 2014 production guidance from 4,900-5,100 boepd to
5,200-5,300 boepd.
Abraxas is also providing the following additional guidance for
the first quarter and full year 2014.
1Q14E
2014E Low
High Low
High Production Total (Boepd) 4,000
4,100 5,200 5,300 % Oil
60%
64%
% NGL
10%
9%
% Natural Gas
30%
27%
Operating Costs LOE ($/Boe) $17.25 $17.75 $13.00
$15.00 Production Tax (% Rev) 9.0% 9.5% 9.0% 9.5% Cash G&A
($mm) (3) $2.3 $2.5 $11.5 $12.0
CAPEX ($mm)
$33
$125
(3) Does not include stock based compensation.
Bob Watson, President and CEO of Abraxas, commented, “We
continue to be positively surprised with the outperformance of the
Blue Eyes 1H and elected to increase our CAPEX budget in an effort
to further derisk and delineate our acreage position at Jourdanton.
Furthermore, after witnessing the downspacing success of other
operators in the Bakken, we elected to pursue a downspacing test on
our North Fork acreage by drilling four Middle Bakken wells 660’
apart. If successful, this could potentially add up to 31
incremental wells to our inventory at North Fork (not including
second and third Three Forks bench potential). Importantly, this
additional activity in the Eagle Ford and Bakken does not come at
the sacrifice of the balance sheet, which we expect to hold at or
below 1.0x forward twelve months EBITDA throughout 2014 (2).
“Given the moving parts associated with our divestiture activity
in 2013 are now behind us, we are also providing more detailed
guidance for 2014. We hope this provides greater clarity to our
shareholder base for modeling purposes. We look forward to updating
the markets with the results of our Eagle Ford and Bakken activity
in the near future.”
(1) The production rates for each well do not
include the impact of natural gas liquids and shrinkage at the
processing plant and include flared gas.
(2) Excluding building mortgage and rig loan
which are secured by the building and rig, respectively. Using
definition of EBITDA per bank loan agreement (excludes rig
EBITDA).
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 onshore Gulf Coast
regions of the United States and in the province of Alberta,
Canada.
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.
Abraxas Petroleum CorporationGeoffrey King, 210-490-4788Vice
President – Chief Financial
Officergking@abraxaspetroleum.comwww.abraxaspetroleum.com
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