Abraxas Petroleum Corporation (“Abraxas” or the “Company”)
(NASDAQ:AXAS) today provided the following operational, acquisition
and guidance update. Highlights include:
- All three Delaware Basin wells,
three Bakken/Three Forks wells and one Eagle Ford well successfully
fracture stimulated to full design and on production
- January to date production averaging
approximately 11,400 Boepd, in excess of planned exit rate of
10,750 Boepd
- Recently entered into an agreement
to acquire approximately over 900 net Wolfcamp/Bone Spring acres in
Winkler County
- 2017 and 2018 CAPEX guidance
increased to approximately $133 and $140 million,
respectively
- Fourth Quarter 2017 production
guidance revised to 8,775-8,825 Boepd
- First Quarter 2018 production
guidance of 10,000-11,000 Boepd
- As of December 31, 2017,
approximately $84 million drawn on the Company’s $135 million line
of credit with approximately $1 million in cash, providing over $52
million of liquidity
Delaware Basin
In Ward County, Texas, the Caprito 83-304H, a 4,820 foot lateral
targeting the Wolfcamp A2 zone, averaged 1,014 Boepd (781 barrels
of oil per day, 1,399 mcf of natural gas per day)(1) over the
well’s first 30 days of production. Abraxas completed the remaining
17 stages on the Caprito 83-404H, a 4,860 foot lateral targeting
the Wolfcamp B zone, following a successful remediation of the
well. The Caprito 83-404H averaged 603 Boepd (509 barrels of oil
per day, 566 mcf of natural gas per day)(1) over the well’s first
30 days of production. Abraxas owns a 100% working interest in the
Caprito 83-304H and 83-404H.
Abraxas successfully completed the Caprito 82-101H and 82-202H
to full design. The Caprito 82-101H, a 4,820 foot lateral and the
Company’s first Third Bone Spring test, averaged in excess of 1,000
Boepd over the last 13 days. The Caprito 82-202H, a 4,820 foot
lateral targeting the Wolfcamp A1 zone, also averaged in excess of
1,000 Boepd over the last 13 days. Both wells continue to clean up
and are expected to achieve peak rates in the coming weeks and
ultimately average similar 30-day rates to the Company’s previous
Wolfcamp A1 and A2 completions. Abraxas owns a 100% and 57.1%
working interest in the Caprito 82-101H and 82-202H,
respectively.
Abraxas is currently drilling the Company’s 660’ downspacing
test at Caprito. The four-well downspacing test will consist of two
Wolfcamp A2 wells, the Caprito 99-301H and Caprito 99-311H, and two
Wolfcamp A1 wells, the Caprito 99-202H, Caprito 99-211H. With
success, Abraxas’ assumed well spacing will move from four wells
per section to the industry norm eight wells per section in the
Wolfcamp A1 and A2. Abraxas owns a 57.8% working interest in the
Caprito 99-301H, Caprito 99-311H, Caprito 99-202H and Caprito
99-211H.
Williston Basin
In McKenzie County, North Dakota, Abraxas began flowback on the
Yellowstone 2H-4HR three-well pad in mid-to-late December. To date,
production from the wells represents the strongest Bakken/Three
Forks completions in the Company’s history with 24 hour IP rates
exceeding 2,000 Boepd. The Yellowstone 2H and 4H wells, targeting
the Middle Bakken, averaged 1,777 Boepd (1,363 barrels of oil per
day, 2,480 mcf of natural gas per day)(1) over their first 30 days
of production. The Yellowstone 3H, targeting the Three Forks,
averaged 1,371 Boepd (1,094 barrels of oil per day, 1,662 mcf of
natural gas per day)(1) over the well’s first 30 days of
production. Abraxas owns a 52% working interest in the Yellowstone
2H-4HR.
Abraxas recently drilled and cased the Yellowstone 5H-7H wells
in which the company owns a 52% working interest. Abraxas
anticipates these wells will be completed in May 2018. Abraxas is
currently drilling the Lilibridge 9H-12H in which the Company owns
a 25-30% working interest.
South Texas
In Atascosa County, Texas, the Shut Eye 1H averaged 510 boepd
(479 barrels of oil per day, 182 mcf of natural gas per day)(1)
over the well’s first 30 days of production. As a reminder, this
well was completed with a modern completion design. Abraxas owns a
100% working interest in the Shut Eye 1H. Abraxas recently retained
Stephens, Inc. to pursue options to maximize the value of the
Company’s South Texas assets.
A&D and CAPEX Update
In Winkler County, Texas, Abraxas recently entered into an
agreement to acquire over 900 net acres on trend with the Company’s
Caprito assets for $14.2 million. The assets are 100% HBP and
consist of two operated units and two non-operated units. Abraxas
will be participating in two 5,000 foot laterals that are currently
drilling on the non-operated acreage at a 30% working interest. Pro
forma for all recent acquisitions, Abraxas combined net acreage
position consists of 9,208 net acres.
Abraxas is adjusting the Company’s 2018 CAPEX budget to account
for recent acquisitions and additional identified opportunities
that will allow Abraxas to achieve the Company’s short-term goal of
amalgamating over 10,000 net Bone Spring/Wolfcamp acres.
Furthermore, with efficiencies Abraxas believes it will now drill
and complete 12 gross, 9 net operated wells in 2018 versus the
previous assumption of 10 gross, 7 net wells. Abraxas will also be
participating in two non-operated wells at a 30% working interest.
Abraxas is adjusting the Company’s 2018 capital budget to $140
million to account for incremental acquisitions and drilling.
2018E Net CAPEX ($mm)
Basin/Region Delaware Basin $ 71.2 Bakken/Three Forks 33.8
Acquisitions/Facilities/Other
35.0 Total
$ 140.0
Abraxas is also adjusting the Company’s fourth quarter CAPEX
guidance to $43 million from $30 million. This incremental CAPEX
accounts for additional fourth quarter leasehold acquisitions in
the Delaware basin, a higher than assumed working interest in
several Wolfcamp and Bakken wells, higher than anticipated drilling
activity driven by efficiencies and higher than anticipated
completion capital expenditures. Abraxas ended the year
approximately $84 million drawn on the Company’s $135 million line
of credit with approximately $1 million in cash, providing over $52
million of liquidity. Abraxas anticipates this Company’s bank line
to increase meaningfully at the Company’s next redetermination
given the Company’s substantial reserve and production adds in the
fourth quarter. Abraxas also estimates the Company ended December
31, 2017 approximately 1.4x Debt/EBITDA remaining substantially
underlevered on a relative basis. Given the Company’s favorable
leverage position and an anticipated increase in borrowing base
availability, Abraxas anticipates cash flow from operations at
current strip pricing and the Company’s balance sheet will enable
the Company to fund planned 2018 drilling and completion
activity.
Production Update
January to date production is averaging approximately 11,400
Boepd despite continued curtailments and shut-ins caused by third
party midstream issues. Due to the late arrival of frac equipment
and other third-party issues, Abraxas well completions and
flowbacks were delayed by several weeks during the fourth quarter.
Moreover, similar to offset operator commentary, Abraxas’ Wolfcamp
wells are taking approximately 30-90 days to clean up and reach
peak rates. For example, the Caprito 83-304H achieved its peak
24-hour rate approximately 90 days after first production. These
issues pushed out the Company’s anticipated exit rate by
approximately one month and led to a lower contribution of volumes
earlier in the fourth quarter than originally anticipated.
Moreover, the extreme winter weather conditions late in the fourth
quarter led to approximately 2,000 Boepd of lost volumes for
several weeks due to gas curtailments and compressor freeze-offs.
Abraxas is revising fourth quarter production guidance to
8,775-8,825 Boepd from 9,500-10,000 Boepd. Abraxas plans to revisit
2018 average production guidance to account for the higher levels
of activity and higher than anticipated current production rates
once the Company’s recent completions stabilize from their
currently flush production rates.
Abraxas is providing the following revised fourth quarter 2017
and issuing first quarter 2018 production guidance:
4Q17E
1Q18E Low
High Low
High Production Total (Boepd) 8,775
8,825 10,000 11,000 % Oil 61% 65% % NGL 16% 14% % Natural Gas 23%
21%
Operating Costs LOE ($/Boe) $4.25 $4.75 $4.00
$5.00 Production Tax (% Rev) 7.5% 8.0% 7.5% 8.5% Cash G&A ($mm)
$4.5 $4.7 $1.9 $2.1
CAPEX ($mm) $43 $25
Bob Watson, President and CEO of Abraxas, commented, “Our
business plan for 2017 focused on derisking four zones on our Ward
County assets, growing our production base to critical mass, adding
Bone Spring/Wolfcamp acres at a reasonable cost and maintaining our
balance sheet. We have now proven up to four productive zones in
the Bone Spring/Wolfcamp in Ward County, grown our production base
to approximately 11,400 Boepd, added over 3,000 net Bone/Spring
Wolfcamp acres and project to end 2017 at an estimated 1.4x
Debt/EBITDA.
“We are now entering 2018 with substantial production ahead of
our originally anticipated rates. This is due to well performance
that continues to trend substantially above our type curves. In the
Delaware Basin, we recently brought on the Caprito 83-404H and
Caprito 82-101H our first Wolfcamp B and Third Bone Spring
completions, respectively. Both wells appear to be productive
horizons on our acreage. The Caprito 83-304H and Caprito 82-202H
were also solid completions further derisking the Wolfcamp A2 and
A1 across our acreage. We are also very excited about the extremely
robust rates we’re seeing on our Yellowstone completions and the
remaining locations we have in this unit. In the Eagle Ford, we are
pleased with the results of the Shut Eye 1H and will be looking at
options to maximize the value of this asset in 2018.
“We continue to actively acquire leasehold in the Delaware Basin
with the addition of over 900 net incremental acres in Winkler
County on trend with our Caprito acreage. We now stand 800 net
acres short of achieving our short-term goal of 10,000 net acres,
which, with currently identified opportunities, we believe we will
ultimately exceed. We are increasing our capital budget for 2018
largely to accommodate these planned acquisitions. Importantly, we
forecast cash flow from operations and our balance sheet, given our
underlevered capital structure, will be sufficient to fund our
capital program for 2018 and beyond.”
(1) The 30-day average rates represent the
highest 30 days of production and do not include the impact of
natural gas liquids and shrinkage at the processing plant and
include flared gas.
Abraxas Petroleum Corporation is a San Antonio based crude oil
and natural gas exploration and production company with operations
across the Rocky Mountains, Permian Basin and South Texas in the
United States.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180130006480/en/
Abraxas Petroleum CorporationGeoffrey King, 210-490-4788Vice
President – Chief Financial
Officergking@abraxaspetroleum.comwww.abraxaspetroleum.com
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