Abraxas Petroleum Corporation is pleased to provide the following operational and financial update, announces upcoming presentations.
Eagle Ford Shale
In McMullen County, the Gran Torino A 1H averaged 790 boepd (701 barrels of oil per day, 532 mcf of natural gas per day) on a restricted choke over its first 30 days of production. The Gran Torino A 1H is currently flowing to sales at a rate of 720 boepd (635 barrels of oil per day, 509 mcf of natural gas per day) on a 22/64" choke. The Mustang 3H continues to flow to sales at rates significantly above the Company's type curve. Additionally, the Company drilled, completed and turned to sales the Mustang 3H for approximately $6.2 million. The Mustang 2H is currently being completed with a 19 stage fracture stimulation. The Sting Ray A 1H, the Company's first 7,500 foot lateral well, is currently drilling at a depth of 15,005 feet. Abraxas owns an 18.75% working interest in the Gran Torino A 1H, Mustang 3H, Mustang 2H and Sting Ray A 1H.
Drilling continues on the Company's Lillibridge East PAD with the laterals drilled and cased on the 3H and 4H. The Company is currently spudding the lateral on the 2H, which will be followed by the 1H. Abraxas owns a working interest of approximately 34% in the Lillibridge East PAD. The Ravin 2H averaged 421 boepd (333 barrels of oil per day, 526 mcf of natural gas per day) on a 22/64" choke over its first 30 days of production. The Ravin 3H is currently shut in while the Company pulls the 4½" tie back string to install long term production equipment. Thirty day rates are expected shortly. Before being shut in, the well was producing at rates significantly above the Company's type curve. The completion of the Ravin 2H and 3H also had a positive impact on the previously drilled offsetting Ravin 1H, which averaged 630 boepd (534 barrels of oil per day, 577 mcf of natural gas per day) over its first seven days since returning to production. The Ravin 1H previously produced approximately 150 boepd before being shut in during the Ravin 2H and 3H completions. Abraxas owns a 49% working interest in the Ravin 1H, 2H and 3H.
The Company recently drilled and cased two shallow Yates wells, the Wilkes #1 and Wilkes #2, in Ward County, Texas. The Company is currently testing the Yates C sand in the Wilkes #2 well, to be followed by the Yates B, Yates A and Tensill. Abraxas owns a 100% working interest in both wells.
Abraxas recently closed its Fourth Amended and Restated Credit Agreement with the Company's bank group. The facility is governed by a $155 million borrowing base, an increase of $5 million over the previous $150 million borrowing base. Unless redetermined otherwise based on new reserve and production information from the June 30, 2013 engineering report, the borrowing base would reduce to $145 million on October 1, 2013. Management and the bank group anticipate the facility will be redetermined in a timely manner post the Company providing its June 30, 2013 reserve report.
As part of the revised agreement, the Company entered into a more standard covenant package resulting in the removal of the $7.5 million quarter end liquidity covenant. The agreement was also adjusted to remove debt associated with the Company's wholly owned subsidiary, Raven Drilling, from all debt calculations. Additionally, Abraxas is pleased to announce that the Company added an incremental member to its bank facility during the redetermination process, Mutual of Omaha.
As part of the agreement, Abraxas entered into incremental hedge positions to protect the Company's cash flows. In an effort to better correlate hedge prices to the Company's realized prices in the Gulf Coast and Eagle Ford, which have dislocated to a substantial premium to WTI, the Company added and restructured several existing WTI hedges to Brent.
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