Fourth Quarter 2012 Production
Production in the fourth quarter averaged approximately 4,147 barrels of equivalent per day (“boepd”). Variance from original guidance was caused by the delayed completions of the Ravin 2H and 3H, considerable unanticipated weather related downtime in the Williston Basin and gas plant issues in the Eagle Ford shale that relegated the Company to flare gas. These issues remained throughout the month of January. Production volumes for the month of February have returned to more normalized levels of an estimated 4,400-4,600 boepd before the recent incremental completions of the Ravin 2H, Ravin 3H and Gran Tornio A 1H as well as the upcoming completion of the Mustang 3H. Given the recent strong base production and incremental production anticipated from the above mentioned Bakken and Eagle Ford completions, Abraxas reiterates its production guidance of 4,900 – 5,200 boepd for 2013.
Non-Operated Bakken/Three Forks Sale Process
Abraxas recently retained E-Spectrum Advisors (formerly Energy Spectrum Advisors) to market its non-operated Bakken and Three Forks assets in North Dakota and Montana. The potential divestiture consists of approximately 435 boepd and 14,502 net acres. If the Company is successful in achieving an acceptable price for these assets, the proceeds will be used to pay down the Company’s revolver and redeployed into its core operated Bakken and Eagle Ford assets.Bob Watson, President and CEO of Abraxas commented, “2012 was a momentous year for Abraxas as we continued to transition our reserve base from natural gas to oil, moved our Company owned rig to the Bakken and began an active Eagle Ford drilling program. Despite a significant divestiture of Eagle Ford reserves and the loss of the remainder of our proved undeveloped gas reserves due to pricing, we still achieved an approximately 3% increase in total reserves and a substantial increase in oil reserves. Our business plan for 2013 remains simple: Focus CAPEX on our core basins primarily in the Eagle Ford and Bakken. Rationalize our portfolio by divesting low working interest, non-operated and non-core assets. And, most importantly, grow our production on an absolute basis with oil volumes. Recent production and well performance accompanied by the efficiency gains we are witnessing in our Eagle Ford program gives us confidence that each goal is readily achievable.”