The $10 million increase over the initial capital expenditure budget of $22 million will be allocated predominantly to Wyoming and the Oates SW Field area in West Texas and will be funded out of cash flow and availability under our credit facility.
Recently announced operational results have positively impacted our total net production, which currently exceeds 21.5 MMcfepd and represents a 41% increase over 2nd quarter average.
In the Oates SW Field area, the La Escalera #2 is cleaning up after a frac treatment, following delays in obtaining service equipment. In addition, re-entry operations have commenced on an initial Woodford test on the recently acquired Hudgins Ranch.
In Brooks Draw, Wyoming, the Red Tail Hawk #1 reached a total depth of 9,130' and production casing was set after encountering encouraging oil shows in multiple zones. The Prairie Falcon #2 and the Red Tail Hawk #1 currently await completion equipment. The Bald Eagle #1 is drilling below 5,800'. Abraxas owns a 100% working interest in all five of the above-mentioned wells.
"We are extremely pleased that our current net production exceeds our exit rate guidance for the year, and we have several wells currently awaiting completion. Even though we continue to find ourselves in a tightening environment in terms of available rigs and related services, we are optimistic about our ability to achieve our expanded $32 million capital program. As these wells are successfully completed, we anticipate a continually growing production profile throughout 2005 and into 2006," commented Bob Watson, President and CEO.
In connection with the appointment of Paul A. Powell, Jr. to Abraxas' Board of Directors, 45,000 options have been awarded to Mr. Powell at a price of $4.59 per share.
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