Abraxas Petroleum Corp. has signed an agreement to purchase more than 2,000 net acres in West Texas with existing production for $22.2 million, bolting on to its adjacent acreage in the Delaware sub-basin and increasing its position in the play by more than one-third.
The San Antonio-based independent said Tuesday it is acquiring 2,008 net acres in Ward County that are prospective for the Bone Spring and Wolfcamp formations. The acquisition from an undisclosed seller includes 1,888 net acres currently held by production and 120 net acres covered by a three-year primary term lease. The acreage also includes existing production of 33 boe/d, 91% natural gas.
According to the producer, the acquisition includes two operated units, four nonoperated units and additional interests in three existing Abraxas-operated units on trend and adjoining its existing acreage. The acreage is prospective for up to four zones across the Wolfcamp and Third Bone Spring formations, and may provide an additional 80 gross potential drilling locations to the company’s inventory, not including increased working interests in existing operated units.
Specifically, the company said the acquisition would add 32 gross (25 net) operated potential drilling locations and 48 gross (eight net) nonoperated potential drilling locations.
"This Delaware Basin acquisition fits seamlessly within our existing acreage footprint and increases our exposure to the Delaware Basin Bone Spring/Wolfcamp play by approximately 35% to 7,757 net acres," said CEO Bob Watson. "Importantly this was done at a favorable price of just over $10,000/acre. We continue to evaluate similar bolt-on opportunities to further expand our Delaware Basin footprint."
The 7,757 net acres include 480 from the company's Howe lease, which is currently subject to a title dispute. Abraxas said it does not have any reserves or planned capital expenditures (capex) for 2017 relating to the disputed acreage.
Abraxas plans to fund the acquisition with its line of credit and close on the deal in June. The company said its capex budget of $110 million remains unchanged.
Earlier this month, Abraxas said it expects production to increase dramatically later this year once six wells are completed in the coming weeks. It also disclosed that it was in negotiations for bolt-on acquisitions in the plays where it is active -- the Delaware sub-basin, Williston Basin and the Eagle Ford Shale.