Abraxas Provides Operational Update; Announces Closing of Non-Operated Bakken Sale; Provides Activity, CAPEX and Production

  Abraxas Provides Operational Update; Announces Closing of Non-Operated
  Bakken Sale; Provides Activity, CAPEX and Production Guidance Update

Business Wire

SAN ANTONIO -- August 13, 2013

Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to provide an
operational update, announce the closing of the Company’s non-operated Bakken
asset sale and provide an activity, CAPEX and production guidance update.

Operational Update

In McKenzie County, North Dakota, Abraxas successfully remediated the sand
plug on the Lillibridge 4H. The Lillibridge 4H, producing from the Three
Forks, is currently producing 1,436 boepd (1,112 barrels of oil per day, 140
barrels of NGLs per day, 1,105 mcf of natural gas per day) on a 20/64” choke.
Combined, the four wells on the company’s Lillibridge East pad are producing
approximately 5,503 boepd (4,036 barrels of oil per day, 721 barrels of NGLs
per day, 4,476 mcf of natural gas per day). Abraxas owns a working interest of
approximately 34% in the Lillibridge East pad.

Non-Operated Bakken Closing

Abraxas recently closed the sale of its non-operated Bakken assets for $38.3
million after accounting for purchase price adjustments. Accounting for the
asset sale, Abraxas’ credit facility was revised to $143 million. After
providing the company’s updated June 30, 2013 internal reserve report to the
company’s bank group, Abraxas will undergo its fall redetermination process.
Given the activity levels and reserve adds from the company’s Eagle Ford and
Bakken assets over the last six months, it is management’s expectation that
the facility will increase from $143 million.

Activity, CAPEX and Production Guidance Update

Abraxas plans to use a portion of the additional liquidity following the
non-operated Bakken asset sale to accelerate growth in its core regions.
Additions to the capital program include the following:

Eagle Ford: Abraxas currently holds 100% working interest in approximately
4,400 net acres in Atascosa County, TX in the Jourdanton Prospect. In
September 2011, Abraxas completed a lateral in the Eagle Ford, the Grass Farm
1H, as part of the Blue Eagle Joint venture on the same prospect. This well
averaged a modest 103 BOPD over its first 30 days of production, but the
relatively flat decline rate has yielded cumulative production of 40,000 BO.
Since completion of the initial well, Abraxas acquired a new 3D seismic
survey, and interpretation indicates that the Grass Farm 1H was only in the
target zone about 10% of its lateral length. Also, recent completions by area
operators at similar depths (8,000-8,200 ft) have shown marked improvement in
initial rates. The company plans to drill one 100% working interest Eagle Ford
horizontal in late September 2013 at an estimated completed well cost of $6
million.

Abraxas also recently secured a new 410 net acre prospect in northern McMullen
County. The lease will accommodate up to four Eagle Ford laterals with
anticipated lengths of 7000-9000 ft. Abraxas plans to spud an initial well in
the 4^th quarter of 2013 with 100% working interest.

Williston Basin: In addition to Abraxas’ Bakken acreage in the Williston
Basin, it also holds low risk development targets of a conventional nature.
The company plans to drill the Crusch 2-33 as a PUD replacement for a
producing well in Roosevelt County, MT, which has to be abandoned for
mechanical reasons. Producing zones included the Red River, Gunton and
Winnepegosis. The new well will spud in 4^th quarter with an estimated $2.5
million completed well cost. Similarly, Abraxas plans to drill another 100%
working interest twin well to develop reserves in the Ratcliff zone. The
original well produced from the deeper Red River zone, but was abandoned for
mechanical reasons. The shallower Ratcliff at a depth of about 8,000 ft had an
excellent oil show. The Christiansen 12-2 will also spud in 4^th quarter 2013
at an estimated completed well cost of $1.5 million.

Permian: Over the last several years, Abraxas drilled four horizontal wells on
its Spires Ranch prospect targeting the Strawn formation. The most recent of
these wells, the Spires Ranch 89 #1H, was drilled in a non-pressure depleted
area, and consequently it is the best producer. The Company recently drilled
the Spires Ranch 129 #2H in a similar environment to the 89 #1H targeting the
Strawn formation. Given the company’s past success in stimulating analogous
rock in the Edwards formation which greatly enhanced well productivity,
Abraxas plans to stimulate this well with a small, multi-stage frac
completion, rather than the open hole design of previous wells. Abraxas holds
a 100% working interest in the Spires 129 #2H and anticipates a completed well
cost of $2.3 million.

Guidance Update:

Given the revised activity levels and production revisions associated with
recent asset sales and Eagle Ford acreage acquisitions, Abraxas projects
production of approximately 4,600-4,800 boepd on an $85 million CAPEX budget.
As these additional volumes are largely scheduled to come online in the fourth
quarter of 2013, Abraxas expects minimal impact to 2013 average volumes.
However, Abraxas anticipates a more pronounced impact on the company’s 2013
exit rate, which it forecasts to be approximately 5,300 boepd. Abraxas
continues to anticipate exiting 2013 at 2.0x Debt/EBITDA^(1) on the company’s
revised $85 million CAPEX budget.

Bob Watson, President and CEO of Abraxas, commented, “After a considerable
divestiture campaign over the last eleven months, Abraxas now finds itself
with a more focused asset base and right sized balance sheet. Our goal
continues to be to grow profitable production by focusing our efforts on our
core basins in the Eagle Ford, Bakken, PRB and Permian. With commodity prices
remaining firm and numerous low risk opportunities in the portfolio, we
believe it is the right time to bring forward NPV and accelerate growth in our
core areas. Importantly, this does not come at a cost of stretching our
balance sheet as we still plan to exit 2013 at or below 2.0x Debt/EBITDA^(1).
We look forward to updating the market as we continue to execute on our
business plan.”

^(1) Debt/EBITDA calculation per bank loan agreement. Excludes debt associated
with Raven Drilling as well as all EBITDA generated by Raven Drilling. Also
excludes building mortgage.

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 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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