Abraxas Petroleum Sells North Dakota Assets to Pay Off Debt

Abraxas Petroleum Corp. could have a new lease of life after the sale of assets in North Dakota as part of a debt reduction restructuring.

The San Antonio-based oil and gas driller said Monday he had sold his holdings in North Dakota’s Williston Basin for $ 87.2 million and would use the proceeds to pay off some of his debt . Other debt was swapped for common stock at a lender who will now hold majority control.

Abraxas now operates only in the Permian Basin.

The company has not posted an annual profit since 2018. It is grappling with a heavy debt burden and falling oil prices due to the pandemic that has forced it to stop investing in drilling operations in early 2020.

“The restructuring positions Abraxas as a pure play without leverage of the Delaware Basin that can now access the sources of capital available to restart a drilling program in the Permian Basin,” said President and CEO Bob Watson in a statement.

He said the transactions paid off all of the company’s bank debt and converted debt held by Angelo Gordon Energy Funding into preferred shares of Abraxas. Angelo Gordon will also take majority control of the five members of the company’s board of directors.

Abraxas was launched on the Nasdaq stock exchange last fall after its stock price did not stay above $ 1 per share. The company has been trading over-the-counter since August 4.

She had to face high interest rates on her debt after defaulting on a loan last year. And the company had to cut back sharply on its capital spending, which it could use to produce more oil or explore new reservoirs, in order to satisfy its lenders.

Abraxas’ capital budget was limited to just $ 3 million per year under a credit agreement with Angelo Gordon. In the first nine months of 2021, the company spent $ 856,000 on capital expenditures.

By comparison, from 2017 to 2019, it spent an average of $ 132 million annually on capital expenditures such as acquisitions or oil exploration.

But with Angelo Gordon now a shareholder – rather than a lender – Abraxas “will have the ability to drill and complete wells in order to increase our production,” Watson said.

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