Abraxas Provides Operational Update; Provides Fourth Quarter and Year-End Production and Reserve Data; Announces Commencement of

  Abraxas Provides Operational Update; Provides Fourth Quarter and Year-End
  Production and Reserve Data; Announces Commencement of Sale Process for
  Non-Operated Bakken/Three Forks Assets

Business Wire

SAN ANTONIO -- February 20, 2013

Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to provide the
following operational update; provide fourth quarter and year-end production
and reserve data; and announce the commencement of a sale process for its
non-operated Bakken and Three Forks assets.

Eagle Ford Shale

In McMullen County, Abraxas successfully completed the Corvette C 1H with a 20
stage fracture stimulation. This is the first WyCross well drilled on an
East-West azimuth by the Company and is currently flowing to sales at rates
above the Company’s type curve. Moreover, the well was drilled, completed and
turned to sales for approximately $6.1 million or almost $2 million below
originally projected AFE. The Gran Torino A 1H is currently being fracture
stimulated with a 19 stage completion. The Company recently drilled and cased
the Mustang 3H to a total depth of 15,007 feet with an anticipated fracture
stimulation date in March. Abraxas plans to spud its next well at WyCross, the
Mustang 2H, within the next week. Abraxas owns a 25% working interest in the
Corvette C 1H and an 18.75% working interest in the Gran Torino A 1H, Mustang
3H and Mustang 2H.

Williston Basin

Drilling continues on the Company’s Lillibridge East PAD with intermediate
casing set on the 1H, 2H, 3H and 4H. The Company is currently preparing to
drill the lateral on the 4H after which the rig will move to drill the
laterals of the 3H, 2H and 1H. Abraxas owns an approximately 34% working
interest in the Lillibridge East PAD. The Company recently completed the Ravin
3H and is currently finishing the fracture stimulation of the Ravin 2H.
Flowback is expected to commence within the next few days from both wells.
Abraxas owns a 49% working interest in both the Ravin 2H and 3H.

December 31, 2012 Reserves

Abraxas’ December 31, 2012 proved oil and natural gas reserves consisted of
approximately 30.1 million barrels of equivalent (“mmboe”), a net increase of
0.84 mmboe over 2011 year end reserves of 29.3 mmboe^(1). December 31, 2012
reserves consisted of approximately 58% oil, 9% NGLs and 34% natural gas
versus December 31, 2011 reserves of approximately 46% oil, 8% NGLs and 46%
natural gas. Proved oil reserves increased approximately 30% in 2012. 48% of
proved reserves as of December 31, 2012 and December 31, 2011 were classified
as proved developed. The present value, using a 10% discount rate (“PV-10”),
of future net cash flows before income taxes of Abraxas’ proved reserves was
approximately $316.9 million, using 2012 average prices of $2.86/mcf of
natural gas and $95.14/bbl of oil. The lower average natural gas price of
$2.86/mcf in 2012 versus $4.16/mcf in 2011 resulted in the removal of 3.1
mmboe of previously proved undeveloped natural gas reserves, which were
uneconomic to drill at 2012 average natural gas prices. The independent
reserve engineering firm DeGloyer and MacNaughton (“D&M”) prepared a complete
engineering analysis on 98.9% of Abraxas’ proved reserves on a BOE basis.

The following table outlines changes in Abraxas’ proved reserves from December
31, 2011:

                                                          
                         Oil           Natural Gas       NGL           Total

                         (MMbbl)       (Bcf)             (MMbbl)       (MMboe)
                                                                       
Proved Reserves
December 31,             13.37         81.37             2.36          29.29
2011^(1)
Additions                4.87          6.98              0.94          6.97
Purchases^(2)            0.00          0.07              0.00          0.01
Revisions^(2)            0.05          (16.77   )        (0.06 )       (2.80 )
Sales^(3)                (0.31 )       (6.36    )        (0.54 )       (1.91 )
Production               (0.64 )       (4.11    )        (0.11 )       (1.43 )
Proved Reserves          17.34         61.18             2.59          30.13
December 31, 2012

(1) Includes Abraxas’ 34% working interest in Blue Eagle as of December 31,
2011
(2) Reserves associated with Abraxas’ Ward county acquisition in July, 2012
included as a positive revision. Revisions also includes the removal of proved
developed not producing and proved undeveloped gas reserves
(3) Reserves associated with Abraxas’ sale of its Eagle Ford Nordheim
properties in December, 2012

Fourth Quarter 2012 Production

Production in the fourth quarter averaged approximately 4,147 barrels of
equivalent per day (“boepd”). Variance from original guidance was caused by
the delayed completions of the Ravin 2H and 3H, considerable unanticipated
weather related downtime in the Williston Basin and gas plant issues in the
Eagle Ford shale that relegated the Company to flare gas. These issues
remained throughout the month of January. Production volumes for the month of
February have returned to more normalized levels of an estimated 4,400-4,600
boepd before the recent incremental completions of the Ravin 2H, Ravin 3H and
Gran Tornio A 1H as well as the upcoming completion of the Mustang 3H. Given
the recent strong base production and incremental production anticipated from
the above mentioned Bakken and Eagle Ford completions, Abraxas reiterates its
production guidance of 4,900 – 5,200 boepd for 2013.

Non-Operated Bakken/Three Forks Sale Process

Abraxas recently retained E-Spectrum Advisors (formerly Energy Spectrum
Advisors) to market its non-operated Bakken and Three Forks assets in North
Dakota and Montana. The potential divestiture consists of approximately 435
boepd and 14,502 net acres. If the Company is successful in achieving an
acceptable price for these assets, the proceeds will be used to pay down the
Company’s revolver and redeployed into its core operated Bakken and Eagle Ford
assets.

Bob Watson, President and CEO of Abraxas commented, “2012 was a momentous year
for Abraxas as we continued to transition our reserve base from natural gas to
oil, moved our Company owned rig to the Bakken and began an active Eagle Ford
drilling program. Despite a significant divestiture of Eagle Ford reserves and
the loss of the remainder of our proved undeveloped gas reserves due to
pricing, we still achieved an approximately 3% increase in total reserves and
a substantial increase in oil reserves. Our business plan for 2013 remains
simple: Focus CAPEX on our core basins primarily in the Eagle Ford and Bakken.
Rationalize our portfolio by divesting low working interest, non-operated and
non-core assets. And, most importantly, grow our production on an absolute
basis with oil volumes. Recent production and well performance accompanied by
the efficiency gains we are witnessing in our Eagle Ford program gives us
confidence that each goal is readily achievable.”

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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