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Sunday, September 25, 2022

Abraxas Petroleum Corp. (OTCMKTS: AXAS) Major Run Northbound for Delaware Basin Pure Play as Oil Continues to Rise

Abraxas Petroleum Corp. (OTCMKTS: AXAS) has been rocketing up the charts since hitting a low of $0.52 in January, recently moving over $3 per share as the price of oil continues to rise steadily. With just 8,421,910 shares outstanding the stock has been getting noticed by penny stock speculators based on the Company’s total market valuation of just $25,771,045. Bob Watson, President and CEO of Abraxas has been very upbeat recently stating: “This is a new chapter for the Company as we begin 2022 as a pure play Delaware Basin operator with no debt. We are currently finalizing our 2022 drilling plans and are in advanced negotiations with new lenders for a credit facility to help fund developmental drilling on our highly economic WTX leasehold. We will seek to drill at a measured pace, and within cash flow in order to drive multiple-years of growth and returns for our shareholders.”  

Since the sale of its Williston Basin assets to Lime Rock Resources for $87.2MM Abraxas Petroleum has restructured into a debt free, Delaware basin pure play that can now easily access capital sources to restart a drilling program in the Permian Basin. Currently Abraxas Petroleum has approximately 11k net acres in the heart of the Southern Delaware Basin where it has successfully drilled 23 Wolfcamp/3rd Bone Springs horizontals across 5 distinct geologic benches. According to its recently received reserve report, as of December 31, 2021, Abraxas’ proved oil and natural gas reserves consist of approximately 24.1MMBoe with a value of at least $450 million based on the most recent price of oil. 

Abraxas Petroleum Corp. (OTCMKTS: AXAS) operating out of San Antonio, TX is an independent exploration and production company focused primarily on the development of conventional and unconventional resources in its primary operating areas in the Rocky Mountains, South Texas, Powder River Basin and Permian Basin. At December 31, 2020, the Company’s estimated net proved reserves were 16.8 MMBoe, of which 100% were classified as proved developed, 57% were oil and 97% of which (on a Boe basis) were operated by Abraxas Petroleum. The Company’s daily net production for the year ended December 31, 2020 was 4,922 Boepd, of which 63% was oil.

In January AXAS sold its Williston Basin assets to Lime Rock Resources for $87.2MM, a part of the Company’s previously announced strategic alternatives review. Bob Watson, Abraxas President & CEO stated, “For some time, Abraxas has been trying to find a solution that would resolve the indebtedness held by our lenders while at the same time providing continuing opportunity for our stockholders. The transactions announced today pay off all of our bank debt and convert AG’s 2L Term Loan into preferred equity. Most importantly, the restructuring positions Abraxas as an unlevered, Delaware Basin pure play that can now access available capital sources to restart a drilling program in the Permian Basin. In short, we now have the opportunity to drill and complete wells in order to grow our production for the benefit of our common and preferred stockholders.” 

  • On February 28 AXAS provided the following reserve and operational update. Note that all annual reserve comparisons stated below are for Delaware Basin assets only (all sold Bakken assets were removed from the December 31, 2020 totals). Highlights include: 
  • Total Proved PV-10 reserves grew 467% to $229 million at December 31, 2021 using SEC pricing 
  • Reserve Report captures the Company’s Delaware Basin West Texas assets only, post-sale of the Company’s Bakken assets, as previously reported 
  • Reserve Report doesn’t include additional geologic horizons being pursued by offset operators such as the Woodford/Meramec 
  • Company has approximately 11k net acres in the heart of the Southern Delaware Basin where it has successfully drilled 23 Wolfcamp/3rd Bone Springs horizontals across 5 distinct geologic benches. 
  • Company’s leasehold is entirely HBP and includes all depths/rights along with associated water infrastructure 

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According to its recently received reserve report, as of December 31, 2021, Abraxas’ proved oil and natural gas reserves consisted of approximately 24.1MMBoe, a net increase of 8.5 MMBoe over 2020 year-end reserves of 15.6 MMBoe. December 31, 2021 reserves consisted of approximately 16.8 million barrels of oil, 2.5 million barrels of NGLs and 29.2 billion cubic feet of natural gas. Proved developed producing reserves were 8.3 MMBoe and comprised 34% of proved reserves as of December 31, 2021. The SEC-priced pre-tax PV-10(1) (a non-GAAP financial measure) was $229.3 million, using 2021 average prices of $66.55/bbl of oil and $3.64/mcf of natural gas. Realized pricing, including differentials, used in this calculation equated to $62.89/bbl of oil and $1.85/mcf of natural gas. 

Bob Watson, President and CEO of Abraxas commented, “In working with D&M the Company has developed a conservative approach to assigning future drilling locations using 1,320’ acre spacing between wells with 4 wells per section across 4 benches equating to 16 wells per section. As outlined below, the Company has over 200 net locations on 1,320’ spacing, which have been largely delineated from development drilling. However, given the SEC’s 5-year limitation on booking PUD locations depending on a company’s funding ability, Abraxas can only book 27 (net) of these locations as proved. Alternatively, a company with the funding availability to develop all the locations could book the majority of these engineered locations as proven. Further, utilizing the industry standard spacing of 880’ between wells increases the Company’s location count to over 300 net future locations. We are excited with the balance sheet moves we’ve made over the past 60 days. These include the full retirement our prior credit facility along with a debt for preferred equity exchange with Angelo Gordon. This is a new chapter for the Company as we begin 2022 as a pure play Delaware Basin operator with no debt. We are currently finalizing our 2022 drilling plans and are in advanced negotiations with new lenders for a credit facility to help fund developmental drilling on our highly economic WTX leasehold. We will seek to drill at a measured pace, and within cash flow in order to drive multiple-years of growth and returns for our shareholders.” 

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AXAS has been rocketing up the charts since hitting a low of $0.52 in January, recently moving over $3 per share as the price of oil continues to rise steadily. With just 8,421,910 shares outstanding the stock has been getting noticed by penny stock speculators based on the Company’s total market valuation of just $25,771,045. Bob Watson, President and CEO of Abraxas has been very upbeat recently stating: “This is a new chapter for the Company as we begin 2022 as a pure play Delaware Basin operator with no debt. We are currently finalizing our 2022 drilling plans and are in advanced negotiations with new lenders for a credit facility to help fund developmental drilling on our highly economic WTX leasehold. We will seek to drill at a measured pace, and within cash flow in order to drive multiple-years of growth and returns for our shareholders.” Since the sale of its Williston Basin assets to Lime Rock Resources for $87.2MM Abraxas Petroleum has restructured into a debt free, Delaware basin pure play that can now easily access capital sources to restart a drilling program in the Permian Basin. Currently Abraxas Petroleum has approximately 11k net acres in the heart of the Southern Delaware Basin where it has successfully drilled 23 Wolfcamp/3rd Bone Springs horizontals across 5 distinct geologic benches. According to its recently received reserve report, as of December 31, 2021, Abraxas’ proved oil and natural gas reserves consist of approximately 24.1MMBoe with a value of at least $450 million based on the most recent price of oil. We will be updating on AXAS so make sure you Subscribe to Microcapdaily so you know what’s going on with AXAS.

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Disclosure: we hold no position in AXAS either long or short and we have not been compensated for this article.

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