Saltstone Capital Management Calls for Special Committee of Board of Abraxas to Review Strategic Alternatives to Maximize Shareholder Value

DALLAS--()--Saltstone Capital Management, LLC, a Dallas-based investor in energy equities, released a letter sent today to the Board of Directors of Abraxas Petroleum Corporation (NASDAQ:AXAS) calling for a special committee of the Board of Directors to review strategic alternatives to maximize shareholder value.

The letter in its entirety follows:

August 8, 2019

Board of Directors
Abraxas Petroleum Corporation
18803 Meisner Drive
San Antonio, Texas 78258

Dear Members of the Board,

Another earnings release and another series of disappointments. It is hard to overstate our concerns about management’s inability to appropriately steward Company resources. This is the ninth consecutive quarter of failing to meet consensus estimates.i Management’s failure to work for the best interests of shareholders is galling and its ineptitude in acknowledging the importance of preserving the balance sheet by limiting drilling is very concerning. Their perpetual outspend is irresponsible. While we commend management’s decision to release the rig in the Permian Basin, the decision to “commence drilling” on six wells in the Bakken with no foresight into the timing of cash flows is a preposterous waste of shareholder money. The lack of oversight by the Board of Directors could, we guess, be understandable given no member of the Board has a significant ownership position in the company. Yet, the Board’s purpose is to serve shareholders. And in that regard, the Board is failing. Simply put, management and the Board do not feel the same pain each shareholder endures as the stock continues along this precipitous decline. Enormous shareholder value is being destroyed. Excuses are not acceptable nor are arguments based on “relative” performance. We need action.

  • We request the Board of Directors immediately forms a Special Committee with a mandate to review any and all alternatives including our plan to maximize shareholder value.

We have presented a credible four-point plan designed to restore shareholder value, and our views are shared by many frustrated large and small shareholders. Nothing is happening. We need to implement this plan now. Every day that passes is another day wasted. As shareholders, we do not have the luxury of collecting a $737,799 annuity like Bob.ii This is equivalent to a $0.40 cash distribution for every share that he owns or a 59% yield on his investment based on yesterday’s closing price.iii A serial diluter with a company that is worth pennies on every dollar invested since 1991 must hand the keys over to someone that can appropriately develop these resources. We do not have an asset problem; we have an oversight problem. While we were grateful for our hour conversation with Brian Melton, nothing material is happening. The two-paragraph response to our previous letters in the second quarter release only furthers that conviction.

  • Time is of the essence; we request an immediate response to this letter.

As always, I look forward to assisting in these efforts, at no benefit to myself or Saltstone Capital Management other than stock price appreciation. We are grateful for the abundance of shareholders that have let their voices be heard by sending me a personal email commending our letter. As consistent with my prior replies, it does not matter if you own 1 share or 1,000,000, we all own this company together. As management already knows, I can be reached 24/7 via email at or the office at 214-258-5639.


William (Billy) R. Bailey
Founder & Portfolio Manager

i Defined as AXAS’s self-reported EBITDA relative to consensus estimates per Capital IQ.
ii Per AXAS’s definition of cash compensation used to establish the CEO to Median Employee Pay Ratio in the 2019 Proxy Statement. Inclusive of Bob Watson’s Base Salary, Non-Equity Incentive Plan Compensation, Discretionary Bonus, and All Other Compensation.
iii Per the Form 4 filed on April 4, 2019, Bob Watson currently holds 1,861,485 shares. Yield based on the closing price of $0.6745 on August 7, 2019.



Elliot Sloane


Elliot Sloane