Abraxas Petroleum Corporation Announces 2019 Guidance; Provides Operations and Corporate Updates
January 28 2019 - 4:05PM
Business Wire
Abraxas Petroleum Corporation (“Abraxas” or the “Company”)
(NASDAQ: AXAS) today provided 2019 Guidance, Operations and
Corporate Updates.
GUIDANCE
In light of the current commodity price environment and the
Company’s focus on capital efficiency, Abraxas has revised its 2019
capital budget to $95 million, down from the previously announced
$108 million. This budget is designed to produce free cash flow in
the current commodity price environment, with limited impact on
future production growth. The free cash flow will be used to pay
down debt.
This revised budget will entail the drilling and completion of 6
gross (4.3 net) wells and the completion of 4 gross (1.0) net wells
in the Bakken, and the drilling and completion of 5 gross (4.75
net) wells and the completion of 2 gross (1.9 net) wells in the
Delaware Basin of West Texas. The budget includes $10 million for
additional leasing and infrastructure in the Delaware.
Using preliminary numbers, 2018 daily sales averaged 9,811
barrels of oil equivalent per day (BOEPD), with the 4th quarter
sales averaging 10,498 BOEPD and December sales averaging 11,427
BOEPD. The yearly average, which was up 33% over 2017, was slightly
below the low end of our guidance of 10,000 BOEPD. As previously
announced, production was negatively impacted by shut ins for
offset frac protection, continuing issues of gas flaring, and the
purposeful restriction of Bakken production during December due to
a temporary increase in basis differential to over $20 per barrel
and a more favorable differential of approximately $9 per barrel in
January 2019. Capital expenditures for 2018 were approximately $171
million, which is above our original guidance of $140 million, due
to several reasons. We were successful in acquiring more net acres
in the Delaware than originally anticipated, which subsequently led
to higher working interests and costs, in several wells drilled
and/or completed. In addition, the planned sale of our Eagleford
assets did not close in 2018, the anticipated proceeds from which
were included as a credit in our original net $140 million
budget.
In anticipation of future offset frac operations, we have
incorporated into our 2019 production guidance an estimate of
production shut ins, as well as an estimate for future gas flaring.
Our production guidance for 2019 is an average daily production
between 10,500 and 11,500 BOEPD, the midpoint of which would result
in a year over year production growth of approximately 12%. These
production numbers are generated using our type curves on the
various formations we are developing in our program. We encourage
the reader to consult our website, www.abraxaspetroleum.com to see
how our wells are performing versus the type curves currently in
use.
OPERATIONS
Williston Basin, North Dakota
In North Dakota, other than normal operational occurrences, all
wells are on production except for one recently completed well that
is waiting on equipment and weather to retrieve a piece of coil
tubing from the cased wellbore before completing operations for
production. The newer wells are still producing under voluntary
choke restriction as differentials continue to improve from over
$21 in December to under $9 for January to under $6 for February.
Despite our choke management regime, we are encouraged with the
performance of our newest Bakken wells incorporating our 5th
generation completion design. Specifically, our four well Ravin NE
Pad recently reached a peak rate average of 2,155 BOEPD per well
(84% oil), with the Ravin 13H achieving an IP 24 of 2,925 BOEPD
(81% oil) on an 18/64” choke, a new production record for the
Company. During the fourth quarter production was down
approximately 1,085 BOEPD due to frac protection early in the
quarter and gas flaring throughout the quarter. The frac protect
protocol is behind us, but the flaring is unacceptable. We have
begun a high priority project to find an alternative to conserve
this currently flared gas. We have shut down the Raven drilling rig
until spring to not only conserve our budget, but also to give us
time to resolve the flaring issue. We have 19 gross (11.5 net)
Middle Bakken and First Bench Three Forks proved undeveloped wells
yet to drill, and a currently unknown number of Second Bench Three
Forks wells where offset activity has been encouraging.
Delaware Basin, West Texas
In the Delaware Basin, West Texas and specifically Ward and
Winkler Counties, operations are running smoothly. We are currently
drilling in the lateral on the initial well on our Hackberry Pad
where Abraxas has a 75% working interest. The rig will move next to
the two-well Woodberry Pad where we have a 100% interest. Frac
operations are scheduled to commence the second week of February on
the two well Creosote Pad where we have a 95.5% working interest.
We continue to close on small bolt-on lease acquisitions. Our net
acreage is now approximately 11,130 acres, essentially all of which
is held by production. This number excludes approximately 2,389
acres of perpetual mineral acres near the Alpine High area
in Pecos County.
CORPORATE
As part of our efforts to crystalize the value of our Bakken
assets for our shareholders, Abraxas has engaged Petrie Partners
LLC to assist the Company with identifying and assessing options
for our Bakken holdings. This process may lead to a sale, a
securitization, some other transaction, or it may lead us to
continue to develop the asset and retain it as a source of cash
flow.
Abraxas CEO, Bob Watson, stated, “Operations are running very
well despite challenging weather this time of year. As I have
mentioned on multiple occasions in the past, including on our third
quarter 2018 call, one of my highest priorities is to crystalize
the value of our Bakken assets in our share price. Hiring a highly
regarded firm like Petrie Partners is the next logical step in this
process. We are willing to consider a wide range of options for
this asset. If the process results in an outright sale for cash,
the proceeds would be used to significantly pay down or fully
retire our debt, to fund our Raven rig in the Delaware until it
reaches free cash flow status, and to possibly buy back
shares.”
Abraxas Petroleum Corporation is a San
Antonio based crude oil and natural gas exploration and
production company with operations across the Permian
Basin, Rocky Mountain, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190128005642/en/
Abraxas Petroleum CorporationSteven P. Harris, 210-490-4788Vice
President -
CFOsharris@abraxaspetroleum.comwww.abraxaspetroleum.com
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