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Abraxas Announces 2008 Capital Expenditure Budget of $35 Million

Posted on: Monday, 26 November 2007, 12:00 CST

Abraxas Petroleum Corporation (AMEX:ABP) today announced its 2008 capital expenditure budget of $35 million, which does not include capital expenditures for Abraxas Energy Partners, L.P., the limited partnership recently formed by the Company.

The budgeted projects for 2008 were selected from the Company's inventory of projects on its existing leasehold and will include the following -- the listed projects are subject to change based on rig availability and drilling results:

West Texas

Clearfork (3,500') in-fill drilling / waterflood in Mitchell and Scurry Counties;

Spraberry (9,000') in-fill drilling in Midland County;

Strawn Reef (6,000') in-fill drilling in Coke County;

Mississippian / Devonian / Montoya (12,000' -- 14,000') drilling / recompletions in Ward County; and

Canyon Reef (7,000') prospect in Nolan County.

South Texas

Edwards (13,500') horizontal well in DeWitt County; and

Several exploratory wells (9,000'--12,000') targeting the Wilcox on internally generated prospects in Bee, Karnes and Live Oak Counties.

Wyoming

Mowry (9,000') wells in the Brooks Draw Field of Converse and Niobrara Counties.

The 2008 capital expenditure budget will be funded from cash flow, including partnership cash distributions and cash on hand, and was formulated as follows:

50% to target projects that the Company deemed suitable to the MLP structure;

30% to target projects that the Company deemed potentially suitable for the MLP structure over time; and

20% to target projects with an exploratory focus that the Company does not currently deem suitable for the MLP structure.

The Company does not plan to issue production guidance for 2008 as a single well could have a significant impact on our relatively small production base on a stand-alone basis. For a point of reference, on average, the Company has historically added 1 Mcfe per day of production per $4,500 of capital expended.

"Our 2008 budget is weighted towards oil as a result of the divergence of the traditional 6:1 gas to oil price parity and was designed to balance risk and reward among our portfolio of projects, with a limit of 20% targeting the higher-risk, albeit potentially, higher-return projects in South Texas. We targeted half of our 2008 budget on projects that we deemed suitable for the MLP structure as these projects, after successfully drilled and placed on-line, could provide us a relatively inexpensive source of capital by dropping these assets down into the MLP. We look forward to a very active 2008, with several projects scheduled to get under way before year-end. We anticipate that our activities will significantly increase our daily production and our underlying reserve base as we progress through another exciting year," commented Bob Watson, President and CEO.

Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations in Texas and Wyoming. Abraxas Petroleum Corporation also owns a 47% interest in an upstream master limited partnership, Abraxas Energy Partners, L.P., which entitles Abraxas Petroleum Corporation to receive its proportionate share of cash distributions made by Abraxas Energy Partners, L.P.

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 natural gas and crude oil. In addition, Abraxas' future natural gas and crude oil 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.

Source: Business Wire

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