Abraxas Provides Divestiture, Financial and Operational Update

  Abraxas Provides Divestiture, Financial and Operational Update

Business Wire

SAN ANTONIO -- November 12, 2012

Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to provide the
following divestiture, financial and operational update.

Divestiture Update

Abraxas today announced an agreement in principle, subject to the signing of a
definitive agreement and satisfactory resolution of several final due
diligence items, to sell the Company’s 25% working interest at the Nordheim
Project in the Eagle Ford shale to a large institutional buyer for
approximately $20mm. The potential sale will also be subject to customary
closing conditions and purchase price adjustments and will reflect an
effective date of September 1, 2012. The divestiture consists of 544 net acres
in DeWitt County, Texas and approximately 64 boepd (56% gas; 26% NGLs; 26%
oil) of net production. Abraxas will retain the rights to its Edwards
production, reserves and upside across both its Nordheim and Wagner lease
blocks. Closing is estimated to take place in early December. Petrie Partners
acted as financial advisor to Abraxas in this sale.

Abraxas also recently signed an agreement to sell its Alberta Basin properties
and lease the Company’s mineral acres in the area for combined proceeds of
$2.85mm and an ORRI that varies between 1.25-5% depending on lease terms. The
sale is subject to customary closing conditions and purchase price
adjustments. The Alberta Basin properties do not have any associated
production or reserves. Closing is scheduled for late November.

Bob Watson, President and CEO of Abraxas commented, “The Alberta Basin and
potential Nordheim asset sales are the start of what we hope to be an active
and profitable campaign of divesting non-core assets. We remain committed to
enhancing shareholder return by delevering the balance sheet and refocusing
the portfolio on our highest returning and highest growth basins.”

Financial Update

Abraxas announced the closing of its Second Amended and Restated Credit
Agreement with the Company’s bank group. The new facility provides for a
$150mm facility consisting of a $140mm fully conforming and $10mm
nonconforming borrowing base. The facility also fully reflects the removal of
reserves and production associated with the potential Nordheim divestiture.
Furthermore, the previous covenant limiting capital expenditures to
$10mm/quarter subject to various carry forward provisions has been removed. As
of September 30, 2012 Abraxas had $134mm outstanding on the facility and
$2.6mm in cash. Abraxas entered into the following additional hedge positions
as part of the facility:

                                                
Position           Volume            Year        Price
WTI Nymex Swap   6,000 bopm     Cal14    $86
WTI Nymex Swap   28,000 bopm    Cal15    $85
WTI Nymex Swap   26,500 bopm    Cal16    $84
                                                           

Geoff King, Vice President and CFO of Abraxas commented, “We would like to
thank all the members of our bank group for their continued support of the
Company. The new facility in connection with the Alberta Basin and potential
Nordheim asset sales will provide adequate liquidity and flexibility with
which we can continue to execute on our business plan.”

Operational Update

Abraxas provided the following companywide operational update.

At the WyCross prospect in the Eagle Ford shale, Abraxas recently set a
company record drilling to 15,150 feet in less than eight drilling days on the
first of its ten well program with the Cobra B1H. The well is currently
scheduled to be completed in mid-November. Drilling has commenced on the
Company’s second well the Mustang 1H and well site construction is underway on
the Company’s third well the Corvette C 1H.

In the Williston Basin, completion operations remain ongoing on the Raven 2H,
3H and the Jore-Federal 3H. In accordance with the Abraxas’ historical
practice in the Bakken, the Company will furnish 30 day IP rates for each well
when available. The Company’s wholly owned rig has moved to the Lillibridge
block where drilling has commenced on the four well pad.

In the Permian Basin the Spires 89 1H continues to perform as expected posting
cumulative production of 7,838 boe (6,932 bbls of oil and 5.4 mmcf of liquids
rich gas).

For the quarter ended September 30, 2012, companywide production averaged
approximately 4,177 boepd inclusive of two months of Blue Eagle JV production.
In the Eagle Ford shale, processing downtime at Regency’s Tilden plant during
the month of September shut in production from the Cobra 1H for the month.
Volumes from the company’s Ward county acquisition and volumes post the
dissolution of the Blue Eagle JV were recognized upon the effective dates of
August and September, respectively.

Bob Watson President and CEO of Abraxas commented, “Operations continue to run
smoothly for Abraxas. Although we unfortunately lost some volumes due to plant
downtime at the Cobra 1H in the third quarter, the issue is merely transitory
and has been ameliorated. The facility is now accepting volumes from the Cobra
1H and is positioned to accept additional volumes from the remainder of the
Company’s WyCross development. Bakken completion operations remain ongoing at
our first three well pad. Our company owned drilling rig continues to run
smoothly as evidenced by the recent setting of surface casing on all four
Lillibridge wells. We look forward to what promises to be a transformational
quarter for Abraxas.”

Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas
exploration and production company with operations across the Rocky Mountain,
Mid-Continent, 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.

Contact:

Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
gking@abraxaspetroleum.com
www.abraxaspetroleum.com
 
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