November 13, 2008
Abraxas Announces 2009 Capital Expenditure Budget
Abraxas Petroleum Corporation (NASDAQ:AXAS) today announced its 2009 capital expenditure budget of $20 million, on a stand-alone basis, which excludes the capital expenditures of Abraxas Energy Partners, L.P., the master limited partnership (MLP) in which the Company owns a 47% interest.
The capital program for 2009 will be selected from the Company's inventory of projects and will include new drills and re-completions / workovers in the Company's primary producing regions of Texas and the Rocky Mountains. The ultimate mix of projects will be based on commodity prices, service costs and drilling results.
The 2009 capital expenditure budget will be funded from cash flow and cash on hand, including cash distributions from Abraxas Energy, and will be directed as follows:
-- 50% to target projects that the Company deems suitable as a potential drop-down to the MLP;
-- 30% to target projects that the Company deems potentially suitable as a potential drop-down to the MLP over time; and
-- 20% to target projects with an exploratory focus that the Company does not currently deem suitable as a potential drop-down to the MLP.
"As previously announced, we have chosen to be conservative and reduce our capital spending in 2009 due to the events that have occurred in the markets over the past few months, including a staggering decline in commodity prices and unprecedented turmoil in the equity and credit markets. It is anticipated that our 2009 capital program will be funded solely out of cash flow from operations, cash on hand, and quarterly cash distributions received from our 47% ownership in Abraxas Energy Partners and we do not anticipate borrowing any monies under our credit facility to fund our 2009 capital program. Even though we are reducing capital spending in 2009 by 35-40% from 2008 levels, we continue to expect double digit growth in production year over year, on a stand-alone basis," commented Bob Watson, Abraxas' President and CEO.
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations principally in Texas and the Rocky Mountains. 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.