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Abraxas Petroleum Corp. (NASDAQ: AXAS) said Sept. 20 that it landed two deals worth about $20 million and is also marketing its Powder River Basin assets as it slims down into three operating areas.
The San Antonio, Texas-based E&P said it closed on the sale of the Portilla Field in the Gulf Coast region for about $13 million.
The company also signed a contract to sell 12,178 acres and 50% of its minerals in the Permian Basin in Pecos County, Texas, for $6.7 million. The contract is in a 30-day option period.
Abraxas will retain the remaining half of the mineral interest. The company said it expects the Permian transaction to close by November.
Proceeds from both sales will be used to pay down the company’s credit facility.
Bob Watson, president and CEO of Abraxas, said the company will continue to trim its portfolio with an ultimate goal of focusing on the Permian and Williston basins and South Texas.
“Although the Portilla Field was a productive asset for us over our 23 years of ownership, it no longer fits with our focus on unconventional resources in these three key regions,” Watson said.
As of 2015, the San Patricio County, Texas, field had racked up production of 80 million barrels of oil (bbl). The company held 100% working interest in the acreage.
The company is producing above expectations despite the asset sales, Watson said.
Production associated with the Portilla included:
- Overall production of145 barrels of oil equivalent per day (boe/d);
- 127 bbl/d of oil; and
- 112 thousand cubic feet of gas.
So far in 2016, Abraxas has sold $24.2 million of noncore assets and is marketing others, including positions in the Powder River Basin.
Abraxas holds 5,248 net acres along the eastern edge of the Delaware Basin in Reeves and Ward counties, Texas. The acreage is prospective for four potential zones in the Bone Spring and Wolfcamp.
The company is actively spending capex in Ward as well as McKenzie County, N.D. and the Austin Chalk.
U.S. Energy
Also on Sept. 20, U.S. Energy Corp. (NASDAQ: USEG) said it entered an earnings and participation agreement with IronHorse Resources LLC in the Denver-Julesburg Basin.
As part of the deal, U.S. Energy will earn interest in IronHorse farm-out agreements to develop three core areas in the Wattenberg Field in Weld County, Colo. Terms of the transaction weren’t disclosed.
In exchange for its participation, U.S. Energy will receive working interests averaging 11.6% in 21 horizontal wells to be drilled in the A, B and C benches of the Niobrara and Codell formations.
The company’s drilling and completion commitment will cost about $9.6 million and will generate about $4.9 million in revenue in the first two years of the program.
Darren Barbee can be reached at dbarbee@hartenergy.com.
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