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