Abraxas Petroleum Sells Non-Core Assets in South Texas
Abraxas Petroleum has closed on the sale of certain non-core assets located in South Texas for a total consideration of $12 million, subject to closing adjustments. The effective date of the sale was August 1, 2006.
The non-core assets were located in the Three Rivers (Edwards) Field of Live Oak County, Texas and represented less than 2% of the Company's net proved reserves as of December 31, 2005 and approximately 3% of the Company's current daily net production. The net proceeds will be used to repay outstanding indebtedness under the Company's revolving credit facility, to continue the development of our core assets in Texas, and for general corporate purposes.
"This asset sale will provide us the financial liquidity and flexibility to continue our 2006 capital development plan; however, due to the recent downturn in natural gas prices, we may delay certain drilling activities until rig rates come into balance with commodity prices. Since the valuation paid exceeds our historical finding and development costs, we feel confident in our ability to replace these reserves and associated production prior to year-end," commented Bob Watson, Abraxas' President and CEO.
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