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Abraxas Petroleum Corp.'s CEO Robert Watson says management is in negotiations with "several interested parties" to sell off select proven reserves in. the United States and Canada to help pay down the company's $253.5 million in long-term debt.
Analysts say that debt continues to affect the San Antonio company's earnings and has limited Abraxas' ability to grow as an exploration and production firm. The sale of the reserves should net Abraxas between $50 million and $100 million, according to Watson. He declined to reveal the specific locations of the reserves or the amount of acreage included in the proposed sale for competitive reasons.
Abraxas' decision to sell off the reserves - which represent 26 to 27 percent of its overall production and proven reserves is being viewed by the investment community as a step in the fight direction to getting the company back on track financially.
Abraxas reported a loss of $5.9 million on revenues of $14.9 million for its most recently completed quarter, ended Sept. 30. For the comparable period a year ago, Abraxas posted a $13.6 million loss on revenues of $16.4 million.
The proposed asset sale - coupled with recent successes in discovering new reserves of oil and natural gas in West Texas and Canada - have led investment firms CIBC World Markets and Credit Lyonnaise Securities Inc. to issue "buy" recommendations on Abraxas' stock.
Analyst Brad L. Beago of the Houston...