Abraxas Announces Acquisition of 853 Net Delaware Basin Bone Spring/Wolfcamp Acres and Provides Divestiture Update

7/16/17

SAN ANTONIO--(BUSINESS WIRE)--Abraxas Petroleum Corporation (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:

  • 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.

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