Abraxas Announces Acquisition of 853 Net Delaware Basin Bone Spring/Wolfcamp Acres and Provides Divestiture Update
July 14 2017 - 7:00AM
Business Wire
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
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 source
version on businesswire.com: http://www.businesswire.com/news/home/20170714005083/en/
Abraxas Petroleum CorporationGeoffrey King, 210-490-4788Vice
President – Chief Financial
Officergking@abraxaspetroleum.comwww.abraxaspetroleum.com
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