Abraxas Petroleum Corp. (AXAS) announced the execution of a definitive agreement to sell its Eagle Ford interests at WyCross in McMullen County, Texas. The purchase consideration for the transaction is slated to be $73 million. However, the name of the buyer has not been disclosed by the company.
The assets to be sold consist of approximately 1,200 net acres, 3.7 million barrels of proved reserves. The assets produced 655 barrels of oil equivalent per day (boepd) during the month of Sep 2013. Abraxas plans to use the proceeds to pay down its outstanding lines of credit, and then redeploy the credit lines into additional lease blocks in both the Eagle Ford and Bakken.
With the removal of the WyCross production volumes and two additional WyCross well completions in 2013, Abraxas revised its 2013 production and exit rate guidance. The company now expects 2013 production to average 4,300-4,350 boepd with an exit rate of approximately 4,500 boepd.
Abraxas Petroleum Corporation is an independent energy company engaged primarily in the acquisition, exploration, exploitation and production of crude oil and natural gas. The San Antonio-based company has operations across regions of the United States in the Rocky Mountains, Permian Basin, onshore Gulf Coast and in the province of Alberta, Canada.
Going forward, Abraxas Petroleum seeks to complement its acquisition and development activities by selectively participating in exploration projects with experienced industry partners. This would be complemented by the company’s strong balance sheet, steady improvement in lease operating expense (LOE) driven by the divestiture of high LOE properties and production from new wells.
Currently, Abraxas Petroleum has a Zacks Rank #1 (Strong Buy). Other stocks worth consideration in the exploration and production sector include Bonanza Creek Energy Inc. (BCEI), Clayton Williams Energy, Inc. (CWEI) and Harvest Natural Resources Inc. (HNR). All the stocks sport a Zacks Rank #1 (Strong Buy).
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