Abraxas Announces Spudding of First Well Targeting the Austin Chalk at Jourdanton; Updates Status of Potential Joint Venture and Provides Capital Expenditure Update; Announces Departure of Vice President of Exploration

SAN ANTONIO--()--Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (NASDAQ:AXAS) today announced the spudding of the Company’s first well targeting the Austin Chalk at Jourdanton, updated the status of the Company’s potential joint venture, provided a capital expenditure update and announced the departure of the Vice President of Exploration.

Austin Chalk – Atascosa County

Abraxas spudded the Company’s first well targeting the Austin Chalk, the Bulls Eye 101H, on June 16, 2016. The Company recently set surface casing to 4,670 feet. Gross drilling and completion costs for Abraxas’ first 5,700 foot lateral Austin Chalk well are estimated at $5.8 million. Abraxas expects to complete this well in August 2016 and expects first production by September 2016.

Abraxas recently elected to terminate discussions with the previously disclosed potential joint venture candidate after being unable to reach an agreement on acceptable terms in a timely manner. Abraxas will continue to explore other joint venture opportunities on this asset.

Capital Expenditure Update

Abraxas recently received bids for the Company’s upcoming fracture stimulation of the Stenehjem 10H-15H, which is scheduled to take place in the coming weeks. Bids were approximately 50% lower than originally projected costs based on Abraxas’ most recent stimulation in November 2015. Therefore, Abraxas now expects total capital expenditures associated with drilling and completion, inclusive of one Austin Chalk well, two Wolfcamp/Bone Spring wells and the seven gross Bakken completions, to be approximately $24 million. Currently Abraxas has approximately $7 million of offers outstanding, primarily targeting working interest owners in the Company’s existing units in the Permian Basin. Correspondingly, Abraxas is adjusting the Company’s yearly capital expenditure guidance to $30-$40 million. Production guidance remains 6,000-6,400 boepd for 2016.

Departure of Vice President of Exploration

On June 20, 2016, Lee T. Billingsley, Abraxas’ Vice President of Exploration, notified the Company of his intention to resign effective July 5, 2016 to pursue a business opportunity with his son.

Bob Watson, President and CEO of Abraxas, commented, “During our recent capital raise, Abraxas announced that we were already building in a contingency plan of drilling an Austin Chalk well without a joint venture partner. Although we are disappointed we could not come to an agreement with this potential partner in a timely manner, drilling this well on our own will give our shareholders more upside exposure compared to the reduced working interest in the joint venture. Moreover, since we began the joint venture process, additional well results in an analogous environment have substantiated and given us additional confidence in our play concept. We also find ourselves in a much more favorable commodity price environment and financial position. We look forward to updating the street in the near future on the result of this well.

“We would also like to thank Lee Billingsley for his nearly 18 years of service to Abraxas. He will be missed by all employees and we wish him nothing but success as he embarks on a new venture with his son.”

Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountain, Permian Basin and onshore Gulf Coast regions of the United States.

Safe Harbor for forward-looking statements: Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause Abraxas’ actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be necessarily limited to, changes in the prices received by Abraxas for crude oil and natural gas. In addition, Abraxas’ future crude oil and natural gas production is highly dependent upon Abraxas’ level of success in acquiring or finding additional reserves. Further, Abraxas operates in an industry sector where the value of securities is highly volatile and may be influenced by economic and other factors beyond Abraxas’ control. In the context of forward-looking information provided for in this release, reference is made to the discussion of risk factors detailed in Abraxas’ filings with the Securities and Exchange Commission during the past 12 months.

Contacts

Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
gking@abraxaspetroleum.com
www.abraxaspetroleum.com

Contacts

Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
gking@abraxaspetroleum.com
www.abraxaspetroleum.com