Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (AXAS) today provided the following operations update.
At Abraxas’ North Fork prospect, in McKenzie County, North Dakota, the Jore 5H, Jore 6H, Jore 7H and Jore 8H, producing from the Middle Bakken, averaged 819 boepd (653 barrels of oil per day, 994 mcf of natural gas per day) (1) over the wells’ peak 30 days of production. Each well was constrained on a smaller than normal choke to minimize flaring. To date, total drill and complete costs (before any needed expenditures for pump) averaged $6.3 million. On the Ravin Northwest pad, the Ravin 8H, Sten–Rav 1H and Stenehjem 5H are scheduled to be completed in August. Recently, Abraxas successfully mobilized to the Stenehjem 10H-15H pad where it is currently drilling the intermediate section on the first well of a six well pad. Abraxas owns a working interest of approximately 76%, 74% and 78% in the Jore 5H-8H, Ravin Northwest wells and Stenehjem 10H-15H, respectively.
Abraxas recently participated in its first Second Bench Three Forks test, drilled by a third party operator, on a unit directly offsetting the Company’s North Fork acreage. Early results from the well are very encouraging with a 24 hour IP of 1,169 boepd (917 barrels of oil per day, 1,510 mcf of natural gas per day) (1). If the well continues to perform in-line with expectations, Abraxas has approximately 20 gross incremental Second Bench Three Forks wells across the Company’s 5 operated units at North Fork and Lillibridge.
At Abraxas’ Dilworth East prospect, in McMullen County, Texas, the R. Henry 1H averaged 703 boepd (428 barrels of oil per day, 1,649 mcf of natural gas per day) (1) over the well’s peak 30 days of production. Abraxas holds a 100% working interest in the R. Henry 1H.
At Abraxas’ Jourdanton prospect in Atascosa County, Texas, the Grass Farm 2H averaged 191 boepd (179 barrels of oil per day, 70 mcf of natural gas per day) (1) over the well’s peak 30 days of production. Abraxas owns a 100% working interest in the Grass Farm 2H.
Second Quarter 2015 Production
Production for the second quarter of 2015 averaged approximately 5,471 boepd (3,653 barrels of oil per day, 7,669 mcf of natural gas per day, 539 barrels of NGLs per day). Production volumes for the quarter were negatively impacted by an estimated 433 boepd due to gas processing constraints and related curtailments in the Bakken and Permian. Downtime associated with offsetting fracture stimulations also negatively impacted volumes during the quarter by an estimated 289 boepd.
Recently, Abraxas has been selling virtually all of the Company’s produced gas in the Bakken and gas processing constraints in the Permian have partially abated. Moreover, Abraxas’ Bakken well performance continues to exceed expectations. With three additional Bakken wells now ready for completion, Abraxas reiterates the Company’s 2015 production guidance of 6,500-7,000 boepd. Abraxas also reiterates that the Company forecasts production of over 7,000 boepd in 2016 and 2017 by maintaining a one rig Bakken program, which requires approximately $50-$60 million/year in capital expenditures.
Bob Watson, President and CEO of Abraxas, commented, “As expected and previously guided, second quarter production dipped with the downtime associated with offset fracture stimulations and gas processing constraints in the Bakken and Permian. These issues have abated and we expect they will continue to improve with third party infrastructure expansion in the fourth quarter of this year.”
“We remain very pleased with the consistent and above average Bakken well performance we continue to experience. Additionally, the early results from the second bench Three Forks test we participated in are very encouraging and have the potential to provide even more inventory at North Fork and Lillibridge. With drill and complete costs continuing to trend down, the economics of our Bakken development continue to positively surprise.”
(1) The production rates for each well do not include the impact of natural gas liquids and shrinkage at the processing plant and include flared gas.
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountain, Permian Basin and onshore Gulf Coast regions of the United States.
Safe Harbor for forward-looking statements: Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause Abraxas’ actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be necessarily limited to, changes in the prices received by Abraxas for crude oil and natural gas. In addition, Abraxas’ future crude oil and natural gas production is highly dependent upon Abraxas’ level of success in acquiring or finding additional reserves. Further, Abraxas operates in an industry sector where the value of securities is highly volatile and may be influenced by economic and other factors beyond Abraxas’ control. In the context of forward-looking information provided for in this release, reference is made to the discussion of risk factors detailed in Abraxas’ filings with the Securities and Exchange Commission during the past 12 months.