Abraxas Petroleum Corp. (Nasdaq: AXAS) had a rocky start to 2014 in the Permian, yet the year still remains promising for the San Antonio-based company.
The company plans to add core acreage after selling off some of its Eagle Ford holdings for $75 million at the end of December, and now hopes to make a deal happen.
Abraxas announced results from a Permian well at Spires Ranch in Nolan County, Texas, on Jan. 6.
Hsulin Peng, an analyst with Baird Equity Research, called the results disappointing in a Jan. 6 report. The Spires well had a 30-day IP rate of 92 barrels of oil equivalent per day (BOE/d) with 64% of oil. The company previously said that it had at least six undrilled locations in Spires Ranch, but no further drilling plans have been announced.
In contrast with its recent Permian results, Abraxas’ core operations in the Bakken and Eagle Ford appear to be on track, Peng said.
In an update of its Williston operations in McKenzie County, N.D., the company announced results from four wells on the Lillibridge West pad producing an average 1,006 BOE/d with 84% oil. The results line up with similar 1,000 BOE/d results, with 80% oil, for wells drilled on the Lillibridge East pad, Peng said.
Lillibridge West Pad Results
Source: Abraxas Petroleum Corp.
In Jores Federal East, three wells are currently scheduled to be fracked in mid-February, however weather may cause delays.
At its Jourdanton prospect in Atascosa County, Texas, the company said the Blue Eyes 1H continues to show encouraging results, however no 30-day IP rate was provided. Abraxas recently permitted Snake Eyes 1H, which will spud in the first quarter of 2014.
“Given the early results of the Blue Eyes 1H, we have elected to drill the Snake Eyes 1H on the company’s Jourdanton prospect in Atascosa County, Texas. We look forward to an active development program on our 4,000+ net acre, 100% working interest lease block at Jourdanton in 2014,” said Bob Watson, Abraxas president and CEO.
At its Cave prospect in McMullen County, Texas, the company recently cased the lateral of Dutch 2H with completion scheduled for this month.
Abraxas closed the previously announced divestiture of its Eagle Ford interests at WyCross in McMullen County for $71.4 million on Dec. 23. Proceeds were used to repay debt, and will be used to fund additional Bakken and Eagle Ford assets.
Additionally, Abraxas reaped $3.6 million for several non-core assets in North Dakota, Wyoming and Texas at the December Oil and Gas Asset Clearinghouse Auction. The assets sold produced an estimated 54 BOE/d.
The company entered 2014 with a profitable and focused asset base, said Watson. The company continues to identify additional opportunities in the Bakken and Eagle Ford, and plans to have an active 2014 Bakken and Eagle Ford drilling program.
The company has budgeted $10 million in its 2014 capex guidance for acquiring leaseholds in its core areas. Recently, Abraxas acquired about 440 net acres of leasehold in McMullen County known as Dilworth East. The company thinks the acreage block can accommodate up to four 5,000-foot lateral wells.
Abraxas expects to announce further acreage acquisitions in the Eagle Ford in the near future.
“On the A&D front, Abraxas continues to execute on adding quality lease blocks in our targeted regions of the Eagle Ford as evidenced by the recent Dilworth East acquisition. The company is currently permitting its first well at Dilworth East, which it expects to spud early in the first quarter of 2014,” Watson said.