Dallas, Texas 05/12/2014 (FINANCIALSTRENDS) –Abraxas Petroleum Corp (NASDAQ:AXAS), the San Antonio-based company might unload the acreage located in the Powder River Basin in Northeast Wyoming & in Southeast Montana, said Robert Watson, the chief executive officer, on the analyst call last week. Abraxas, is active in the South Texas’ Eagle Ford & in North Dakota’s Bakken shale-plays, has been very frustrated that it is not able to increase the total acreage in this Powder River area, where the nearby operators like EOG Resources Inc. have very successful drilling programs, said Watson.
The divestiture candidate
That makes AXAS’ 17,800 acres in this formation the “divestiture candidate,” added the CEO. It makes much more sense for some of these other companies that have the surrounding acreage positions, as it’s a big bolt-on for them said Watson. And they can hopefully use it to increase their inventory in Bakken or in the Eagle-Ford or both. While the company does not have any active plans to sell thee holdings, the CEO says they have not been able to execute any of the transactions that would now allow it to expand that acreage. They have looked at the numbers of deals, and tried to do the numbers of deals.
Shedding other assets
People are very proud of the acreage and they do not want to give it up. But that does not mean that it is not valuable. It may be something they can use for trading for an interest in some other area that they can have more growth within. The company has also shed some other assets in order that it can focus its attention on the oil-productive Eagle Ford & the Bakken holdings. In April, it reached a deal for selling the non-core property located in the West Texas’ Permian Basin for $2.5M. In one more recent divestiture, the company unloaded the WyCross assets in Eagle Ford for $71.4M slating these proceeds to repay the borrowings & to fund new acquisitions in Eagle Ford and Bakken.