Abraxas Announces Sale of WyCross for $73 Million
SAN ANTONIO -- December 9, 2013
Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to announce the
execution of a definitive agreement to sell the company’s Eagle Ford interests
at WyCross in McMullen County, Texas for $73 million.
Abraxas recently executed a definitive agreement to sell the company’s Eagle
Ford interests at WyCross in McMullen County, Texas to an undisclosed buyer
for $73 million. The sale is subject to customary closing conditions and
purchase price adjustments and reflects an effective date of December 1, 2013.
The assets to be sold consist of approximately 1,200 net acres, 3.7 million
barrels of proved reserves ^(1) (2.8 million barrels of oil, 3.0 billion cubic
feet of gas and 0.5 million barrels of NGLS) and produced 655 boepd (597
barrels of oil per day, 154 million cubic feet of gas per day and 32 barrels
of NGLs per day) net to Abraxas during the month of September 2013. Abraxas
plans to use the proceeds from this sale to immediately pay down the company’s
bank line, before being ultimately redeployed into additional operated lease
blocks in the Eagle Ford and Bakken. Closing is scheduled for December 2013.
With the removal of the WyCross production volumes and two additional WyCross
well completions in 2013, Abraxas is revising its 2013 production and exit
rate guidance. Abraxas now expects 2013 production to average 4,300-4,350
boepd with an exit rate of approximately 4,500 boepd.
Bob Watson, President and CEO of Abraxas, commented, “Abraxas continues to
focus the company’s portfolio on high quality, operated assets with a high
working interest. Although the WyCross properties were certainly of the
highest quality, they carried a low working interest and are now non-operated.
We continue to identify additional lease blocks available in our targeted
regions of the Eagle Ford and expect to be in a position to announce
additional Eagle Ford acreage acquisitions in the near future.
“Upon the closing of WyCross, Abraxas will have received approximately $99.5
million ^ (2) in asset sale and dissolution proceeds from the Eagle Ford since
originally contributing 8,333 net Eagle Ford acres to the Blue Eagle Joint
Venture in August 2010. Furthermore, from that original Joint Venture the
company still maintains a 100% working interest in 4,115 net acres and 50 bopd
at its Jourdanton prospect in Atascosa County, a 100% working interest in
1,908 net acres at its Yoakum prospect in Dewitt County and the entirety of
its original Edwards production and reserves at both Nordheim and Yoakum. This
clearly was a tremendous deal for our shareholders.
“Abraxas currently has approximately $95 million drawn on its $147 million
revolver. With the downward revision to the company’s borrowing base from the
sale of WyCross expected to be minimal, upon closing the company will be in a
unique position of being substantially delevered and on the cusp of a
significant cash flow and production ramp from the company’s Bakken and other
Eagle Ford assets. Specifically on Abraxas’ Atascosa County acreage, the
company recently turned to sales an Eagle Ford test in the Blue Eyes 1H (100%
working interest), which was completed with a 22 stage fracture stimulation.
Abraxas continues to operate one rig in the Eagle Ford and recently spudded
the Dutch 2H (100% working interest) in McMullen County. Heading forward, it
is the company’s intention to more aggressively develop these assets and add
additional opportunities while maintaining its financial discipline by staying
in a long term targeted debt/EBITDA ^(3) range of 1.25-1.75x. Abraxas looks
forward to updating the market on its 2014 production growth and CAPEX plans
post the closing of the WyCross transaction.”
(1) Per internal reserve report dated June 30, 2013.
(2) Proceeds Calculation:
Abraxas Proceeds ($MM)
Abraxas/Blue Eagle Dissolve JV $ 7.7
Abraxas Net Proceeds on Nordheim 18.8
Upcoming WyCross Monetization 73.0
Total net Cash Proceeds to Abraxas $ 99.5
(3) Excluding building mortgage and rig loan which are secured by the
building and rig,
respectively. EBITDA definition per bank loan agreement (excludes
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.
Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
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