SAN ANTONIO--(BUSINESS WIRE)--Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (NASDAQ:AXAS):
In response to current market conditions, the Company has reduced G&A expense by approximately 40%. This was accomplished by a combination of salary reductions, reduction in board size, and selective layoffs. In addition, while current oil market conditions persist, our capital expenditures will be limited to minor projects that will reflect a meaningful and permanent reduction in lease operating expenses. We will not drill and/or complete any new wells while these conditions persist. Most of the Company’s lands are currently held by production and at current commodity prices, the economics of drilling and completions in the Delaware and Bakken are questionable.
Approximately 95% of the Company’s current oil production is hedged at approximately $55 per barrel for the remainder of 2020 and approximately 100% of the Company’s anticipated oil production for 2021 is hedged at approximately $58 per barrel. This hedge position, currently valued at over $50 million, will allow the Company to generate free cash flow for both years which will be used to pay down debt
Due to the market uncertainty, Company guidance will be suspended.
Bob Watson, CEO, commented, “While parting with quality employees has been a regrettable task, this, combined with a dramatic reduction in planned capital expenditures I feel is necessary in the current environment.”
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountain and Permian Basin 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.