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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

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:

Natural Gas



Proved Reserves December 31, 2011 (1) 13.37 81.37 2.36 29.29
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 December 31, 2012 17.34 61.18 2.59 30.13

(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

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