From the San Antonio Business Journal

Temporarily shutting down production at 18 oil wells put San Antonio-based Abraxas Petroleum Corp. in the red during second quarter, the company reported after stock markets closed Tuesday.

Abraxas (Nasdaq: AXAS) reported a $10.8 million loss on $30.9 million in revenue during the second quarter. The figures offer mixed results when compared to the $7.2 million profit on $13.2 million in revenue during second quarter 2017.

For stockholders, the second-quarter results translated into earnings per share of negative 6 cents compared to positive 4 cents during second quarter 2017. Abraxas missed analysts’ expectations on earnings per share and revenue.

In a statement, Abraxas Petroleum CEO Bob Watson reported that the company’s production was lower than expected during the second quarter. Abraxas produced nearly 8,200 barrels of oil equivalent per day during the second quarter compared to nearly 10,500 barrels per day during the first quarter.

Watson attributed the decline in production to an issue with two third-party operators that prompted Abraxas to temporarily shut in 18 high-volume wells for varying lengths of time during the second quarter. After cleaning those wells and bringing them back online, Watson said the company’s production is now above 11,000 barrels of oil equivalent per day.

Abraxas endured eight consecutive quarters of losses during a two-and-a-half-year oil industry downturn before returning to profitability during first quarter 2017. The exploration and production company had a couple of rough patches in the third and fourth quarters of 2017 but finished the year with a $16 million profit.

Increasingly focused on the Permian Basin of West Texas, the company reported a $10.8 million profit on $40.6 million or revenue during first quarter 2018.

Over the next few months, Abraxas will continue to test narrowing the spacing between its Permian Basin wells from 1,320 feet apart to 660 feet. If successful, the new drilling protocol could enable the company to drill more wells on on its leases in the West Texas shale play.

Watson confirmed in the company’s second quarter earnings that Abraxas entered into a $3 million deal to sell the company’s noncore assets in the eastern shelf of the Permian Basin — enabling it to focus more on its drilling operations in Ward County, where it has concluded multiple land trades, swaps and acquisitions.

“The goal of these transactions was to not only increase the size of our footprint, but to also make our acreage better by trading nonoperated leases for interests that lead to operated tracts,” Watson said in a statement. “We have been successful in this endeavor and have additional deals still in the works.”

 

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