San Antonio,TX-based Abraxas Petroleum Corp. last week inked two asset sales worth about $7.9 million and suspended some drilling in the Permian Basin.
The deals offload South Texas assets and a separate nonoperated acreage position in Reeves County, TX. Altogether the assets produced roughly 310 boe/d with a 49% oil cut. The deals are expected to close in December, the company said.
Abraxas revised its 2019 capital budget to $86 million at the beginning of the year, down from previous guidance of $108 million, based on the “current commodity price environment and the company’s focus on capital efficiency.” But there were plans to bolt on more acreage in the Permian Basin. At the end of the second quarter, management said the company was on track to meet the budget.
During the second quarter, management acknowledged it had held “multiple discussions” with Dallas-based investor Saltstone Capital Management LLC, which sent a letter to the Abraxas board pressing for immediate changes to unlock shareholder value.
Abraxas also announced last week operational updates for its Ward County, TX, operations and its program in McKenzie County, ND, in the heart of the Bakken Shale.
Abraxas has suspended drilling operations this year in the Permian Delaware sub-basin, but three wells should be drilled in 2020, two of which would be 100% owned by Abraxas. The company would have a 50% interest in the other well.
In Ward County, Abraxas owns a 100% working interest in its two-well Woodberry pad, which produced roughly 72,000 bbl of oil and 85 MMcf of gas over the first 66 days of production. One of the wells is in the Wolfcamp A-1 formation while the other is in the lower Third Bone Spring formation. Both wells have 4,800-foot laterals and roughly 30 stages.
Abraxas’ fully-owned two-well Greasewood NE pad, also in Ward County, should be completed in the coming days with flowback to ramp up after. The pad includes a 4,800-foot lateral in the Wolfcamp A-1 and another 4,800-foot lateral in the Wolfcamp B, each with 32 stages.
In McKenzie County, ND, Abraxas has a six-well pad and a drilling rig that’s currently down for maintenance.
The company’s Jore Federal Extension pad is completed, with two-mile laterals in the Middle Bakken, Three Forks Upper Branch and Three Forks Second Branch, but with winter weather having already arrived in the state, completion of the wells is scheduled for the spring. Abraxas has a 90% interest in those wells.