Exploration & Production | Finance & Investing | Capital Markets

Abraxas Ramps Up Eagle Ford Activity

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   |    Friday,June 13,2014

Abraxas Petroleum Corporation has reported the commencement of an underwritten public offering of 10,000,000 shares of its common stock, subject to market and other conditions.

The underwriters will have an option to purchase up to an additional 1,500,000 shares from Abraxas. Abraxas intends to use the net proceeds from this offering for general corporate purposes, which includes an acceleration of the company’s Eagle Ford drilling program.

Stephens Inc., Canaccord Genuity Inc. and Robert W. Baird & Co. Inc. are acting as joint book-runners in the offering.

Abraxas Petroleum Corporation has unveiled an acceleration in 2014 Eagle Ford activity and provide the following guidance update.

Eagle Ford Activity

Abraxas’ board of directors recently approved an increase in the company’s 2014 capital budget to $190 million, an additional $25 million above the amount previously announced. The total $65 million increase since the start of this year will go directly to maintaining a one rig program for the remainder of 2014 in the Eagle Ford and for additional Eagle Ford acreage acquisitions. The current plan includes drilling the remaining two wells on the company’s Cave prospect, drilling one additional well on the company’s Dilworth East prospect and drilling three additional wells on the company’s Jourdanton prospect.

Financial Update

Abraxas’ lenders today increased the borrowing base of Abraxas’ credit facility to $162.5 million from $130 million. In connection with this redetermination, the existing credit facility terms were modified to extend the maturity to June 30, 2018, reduce interest by 50 basis points across the grid and reduce the commitment fees to 37.5 basis points when utilization is less than 50%.

Guidance Update

With the increase in the Abraxas’ 2014 capital budget, the company is updating its 2014 guidance as well as providing a targeted exit rate.

Bob Watson, President and CEO of Abraxas, commented, "Our recent Eagle Ford performance has meaningfully surpassed our initial expectations. On the back of this success, we are electing to maintain a one rig program in the Eagle Ford for the remainder of 2014. This will not only bring forward the net present value of the assets, but also set the company up for a step change in production growth as evidenced by our targeted exit rate. We look forward to updating the market as we continue to execute on our stated business plan."