Under SEC guidelines, Abraxas' proved reserves at Dec. 31, 2003 were computed utilizing unescalated year-end realized commodity prices of $31.03 per barrel of oil and $5.13 per MMBtu of natural gas on U.S. reserves and $31.02 per barrel of oil and $4.71 per MMBtu of natural gas on Canadian reserves. Using these prices, the discounted net present value of the proved reserves ("PV10"), before projected income taxes, at Dec. 31, 2003, using a 10% discount rate, was approximately $217 million. This PV10 compares to $136 million at the end of 2002, on retained assets, utilizing year-end 2002 realized prices.
Abraxas' President, Bob Watson, commented, "With the announcement of our year-end reserves, we have again demonstrated our business plan is working and our development activities continue to be successful. The fact that we were able to replace our 2003 production by over 200% at a very attractive finding cost of $1.15 per Mcfe testifies to the quality of our assets and should set up a continuation of this success for the near term. This replacement is even more impressive considering that a significant amount of our 2003 capital spending related to conversion of proved undeveloped reserves to proved developed, and did not generate new incremental reserves to our total. The continuing strength in the commodity markets and the demonstrated quality of our inventory of development projects should help us in our ongoing efforts to maximize shareholder value."
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