Exhibit 99.1
8-K Robert L.G. Watson will be presenting at the First Albany Capital Emerging Resource Plays Conference on July 19, 2006
Slide 1: | Abraxas Petroleum Corporation |
First Albany Capital Emerging Resource Plays Conference
New York, NY, July 19, 2006
The information presented herein may contain predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, competition, government regulation and the ability of the Company to meet its stated business goals.
Picture: | Pencil drawing of a drilling rig in an oil field |
Abraxas Petroleum Corporation
• | AMEX: ABP | |
| • | Market capitalization ~ $200 million |
| • | Enterprise value ~ $330 million | |
| | | | | |
Natural gas (80%)
• | Operations in Texas and Wyoming | |
| • | Proved Reserves: 104.7 Bcfe | |
| • | 3P Reserves: 303.6 Bcfe | |
| • | Current Production: ~ 22 MMcfepd | |
| • | ~ 64,600 net undeveloped acres | |
| • | > 10 year inventory of projects on existing leasehold |
| • | Proved RLI: > 17 years | |
| | | | | | | | | |
Oates SW Field, Pecos County, Delaware Basin
Devonian field abandoned in the 1980’s
Re-develop using advanced technology
3 Primary Objectives: Devonian, Lower Wolfcamp, Woodford
+secondary objectives (Atoka, Upper Wolfcamp)
Picture: | Map of West Texas highlighting several ABP operated fields, namely Oates SW |
Hudgins Ranch
~ 12,000 acres, ~ 44% mineral interest owned, ~ 100% executive / surface rights
La Escalera
~ 1,200 acres leased (HBP)
La Escalera
Farmout from Petro-Hunt
~ 1,600 acres (produce to earn)
~ 640 acres (negotiating)
38 sq. miles proprietary 3-D
Abandoned wellbores (initially)
Total: 15,440 acres
Lease map of Oates SW detailing the above land position
Slide 5: | Primary Objectives... |
Knowledge Order
Devonian
Lower Wolfcamp
Woodford
Cartoon of stacked horizons
Lower Wolfcamp ~ 12,500’
Woodford ~ 13,500’
Devonian ~ 14,000’
Reservoir composition: Chert (Devonian-aged)
Depth: ~ 14,000’
Closure: Varying size structural traps
Reservoir thickness: 100 – 150’
3-D: Delineated productive closures / fault system
Penetrations: 14 vertical wells were drilled in the Oates SW Field to the Devonian and subsequently abandoned (4 dry) – with varying porosity – wells produced 0.5 – 2.5 Bcfe
Neighboring fields, Perry Bass & Oates NE (11 miles NE), averaged 3 & 10 Bcfe per well, respectively
Limiting factors: Stay above gas/water contact
Identified locations (in addition to activity to-date): 2 new drills, 5 re-entries
Completed (horizontal) well cost: $5 – 6 million (new drill), $2 – 3 million (re-entry)
Potential reserves: 2 – 5+ Bcfe per well
Activity to-date
2003 – | Hudgins 34-2H (horizontal re-entry) |
2005 – | La Escalera 1AH (horizontal new drill) |
2006 – | Hudgins 37-1H (horizontal re-entry) |
| Elsinore Cattle 56 (vertical – returned to production) |
Lease map of Oates SW detailing Devonian activity to-date
Hudgins 34-2H: < 1.0 MMcfepd | |
La Escalera 1AH: > 8.0 MMcfepd | |
Hudgins 37-1H: (completing) | |
Elsinore Cattle 56: ~ 0.2 MMcfepd |
| | | |
Slide 8: | Lower Wolfcamp... |
Reservoir composition: Sandstone (Early Permian-aged)
Depth: ~ 10,800 – 12,500’
Deposit: Turbidite channel
Reservoir thickness: 50 – 750’
3-D: Two vertically separate and aerially restricted high-amplitude seismic events (LWA/LWB) with North/South alignment
Penetrations: One abandoned well at Oates SW penetrated the edge of the LWA seismic amplitude (Hudgins 38-1) with ~50 feet of sandstone (20’ over 10% porosity and 100 ohms)
Gomez Field (22 miles NE) produced 67 Bcfe from detrital Wolfcamp sediments on the flank of the underlying Gomez (Ellenburger) Field
Aerial extent (LWA): 1,700 acres (14 potential locations)
Aerial extent (LWB): 700 acres (dual LWA: 6 potential locations)
Completed (vertical) well cost: $3 – 4 million
Potential reserves: 2 – 4+ Bcfe per well
Slide 9: | Lower Wolfcamp... |
Activity to-date
2006 – La Escalera 5-1 (vertical new drill)
Excerpt from 3-D seismic
Lease map of Oates SW detailing Lower Wolfcamp activity to-date
Hudgins 38-1: ~50 feet of LWA sandstone |
La Escalera 5-1: (completing) | |
Reservoir composition: Rich, black shale (Devonian-aged) with sandy, silty and dolomitic members
Depth: ~ 13,500’
Deposit: Blanket
Reservoir thickness: 350’
Penetrations: 15 vertical wells at Oates SW drilled through the Woodford, including 1 ABP new drill
Log analysis: NuTech petro-physically analyzed all logs at Oates SW and calculated ample hydrocarbon pore volume
Potential locations: > 190 locations (80 acre spacing)
Completed (horizontal) well cost: $4 – 6 million
Potential reserves: 2 – 4+ Bcfe per well
Keys to Resource Gas (Shale) Plays:
Natural Parameters:
• | Formation thickness (h) | |
• | Total Organic Carbon (thermal maturity ~ 4 - 5%) | |
• | Vitrinite reflectance (dry gas window ~ 1.4 – 2.0 Ro) |
| | | |
Technical Processes:
• | Horizontal wellbores | |
• | Large hydraulic fracture treatments (large tubulars) |
• | Avoid faults (3-D, a must) | |
• | Monitor fracture orientation and length | |
| | | | | |
Business Sense:
• | Large acreage position | |
• | Large R&D budget | |
• | Stable (and relatively high) gas price |
| | | |
Activity to-date
2005 – Hudgins 11-1 (vertical re-entry)
Upside: gained valuable reservoir knowledge
• | dry gas window | |
• | thermally mature | |
• | reservoir thickness |
| | | | |
Downside:
| • | re-entry wells have insufficient tubulars for effective fracture stimulation |
| • | requires new horizontal wells | |
Plans: | Watch and Wait... | |
| | | | | |
Lease map of Oates SW detailing Woodford activity to-date
Hudgins 11-1: Producing small amount of dry gas
West Texas Shale Players: EOG, ECA, BR, KWK, SWN, RRC, PPP, K2X, CWEI, XTO, Reliance and Petro-Hunt
1.5 million estimated leased acres (1)
3 counties = 7.2 million acres
Map of Texas highlighting Culberson, Reeves and Pecos Counties in West Texas
EOG (building pipeline after positive test) |
BR (flowing gas) | |
Petro-Hunt (flowing gas) | |
| | |
ABP: Nine Mile Draw Field, 2,350 net acres HBP and Oates SW Field ~ 15,000 acres
(1) | Source: Sanford C. Bernstein report dated 05/30/06 |
Slide 14: | What OATES SW means... |
... to Abraxas
| Number of potential / identified locations | ($MM) CapEx | Bcfe | F&D Costs ($/ Mcfe) |
Devonian | 7 | 20-27 | 14 – 35 | $0.57 – 1.93 |
Lower Wolfcamp | 14 | 42–56 | 28 – 56 | $0.75 – 2.00 |
Woodford | 190 | 760–1,140 | 380 – 760 | $1.00 – 3.00 |
Total OATES SW | 211 | 822 –1,223 | 422 – 851 | $0.97 – 2.90 |
Abbreviated Company Overview
Slide 16: | Appendix (Where We Came From)... |
Bar & line chart from 1977 through 2005 detailing long-term debt, market cap and proved reserves at December 31st of each year:
1977 – Abraxas founded by Bob Watson | |
1991 – Rolled up MLP’s and went public (NASDAQ: AXAS) | |
1992-1994 – Acquired ~86 Bcfe for ~$54MM (funded with equity & bank debt) |
1995 – Entered Canada | |
1996 – Acquired ~181 Bcfe for ~$169MM (funded with high-yield debt) | |
1997 – Equity Prospectus drafted – window shut before launch | |
1999 – 1st Restructuring; Delisted from NASDAQ | |
1999-2003 – Non-Core Asset Sales | |
2000 – Listed on AMEX (ABP) | |
2003 – 2nd Restructuring; Sold majority of Canada | |
2005 – Exited Canada (IPO) | |
| | | | | | | | | | |
Slide 17: | Appendix (How We Survived): |
Quality Assets
• | Operational control (95%) | |
• | High ownership interest (79% WI) |
• | High producing rates per well | |
• | Large acreage positions | |
• | Substantial upside | |
| | | | | |
Plus, creative financial engineering and perseverance
Picture: The tortoise and the Hare
Slide 18: | Appendix (Where We Are Today)... |
Abraxas Petroleum Corporation
• | AMEX: ABP | |
| • | Market capitalization ~ $200 million |
| • | Enterprise value ~ $330 million | |
• | Options: CBOE and PCX | |
| | | | | | | |
• | Fully diluted shares outstanding – 44.3 million | |
• | Average trading volume: > 500,000 shares per day |
Natural gas (80%)
• | Operations in Texas and Wyoming | |
• | > 10 year inventory of projects on existing leasehold |
• | Proved RLI: > 17 years | |
| | | |
Line chart of ABP share price and NYMEX gas since January 2005
Slide 19: | Appendix (Areas of Operation)... |
Proved Reserves – 104.7 Bcfe (1)
3P Reserves – 303.6 Bcfe (1)
Net Production ~ 22 MMcfepd (2)
Net Undeveloped Acres ~ 64,600 (3)
237 Identified (3P) Projects
221 Incremental Projects
Map of the United States highlighting Wyoming and Texas
Wyoming | 10 wells (100% WI) (1) | |
| 1.5 Bcfe (Proved) | |
| 9.9 Bcfe (3P) | |
| 0.4 MMcfepd | |
| 45,800 NUA | |
| 29 projects (3P) | |
| 60 projects (incr) | |
| Average depth: 9,000’ | |
West Texas | 165 wells (74% WI) (1) | |
| 73.0 Bcfe (Proved) | |
| 254.3 Bcfe (3P) | |
| 14.8 MMcfepd | |
| 17,600 NUA | |
| 175 projects (3P) | |
| 157 projects (incr) | |
| Average depth: > 14,000’ |
South Texas | 46 wells (93% WI) (1) | |
| 30.2 Bcfe (Proved) | |
| 39.4 Bcfe (3P) | |
| 6.8 MMcfepd | |
| 1,200 NUA | |
| 33 projects (3P) | |
| 4 projects (incr) | |
| Average depth: > 11,000’ |
| (1) | as of 12/31/05 | |
| (2) | current | |
| | | | | | | | | | | | | | | | | | | | | |
(3) as of 12/31/05 (includes mineral interest)
Slide 20: | Appendix (Net Asset Value)... | |
| | MM | |
Proved Reserves (1) | | $ | 311.9 | |
Probable Reserves (2) | | | 63.4 | |
Possible Reserves (3) | | | 161.2 | |
Acreage, Land & Other (4) | | | 12.8 | |
Working Capital (5) | | | (6.1) |
Debt (5) | | | (129.8) |
Net Asset Value | | $ | 413.4 | |
Fully Diluted Shares Outstanding (6) | | | 44.3 | |
NAV/Share | | $ | 9.33 | |
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Notes:
(1) | 104.7 Bcfe of proved reserves (12/31/05) at SEC PV10 with realized prices of $56.92 / $8.84 |
(2) | 27.4 Bcfe of probable reserves (12/31/05) at SEC PV10 with realized prices of $56.92 / $8.84 |
(3) | 171.5 Bcfe of possible reserves (12/31/05) at SEC PV10 with realized prices of $56.92 / $8.84 |
(4) | 12,775 surface acres, 49,135 net undeveloped acres, 300,000 GWE shares, 2 workover rigs & 22 vehicles |
(5) | Balance sheet as of March 31, 2006 | |
(6) | Treasury method | |
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Slide 21: | Appendix (2006 Guidance)... |
Production | |
Annual (Bcfe) | 7.5 – 8.5 |
Exit Rate (MMcfe/d) | 22 – 24 |
Price Differentials off NYMEX | |
Gas (%/Mcf) | 15% |
Oil ($/Bbl) | 2.00 |
Production Taxes (% of Revenue) | 10% |
Direct Lease Operating Expenses ($/Mcfe) | 1.10 |
G&A ($/Mcfe) | 0.55 |
Interest ($/Mcfe) | 2.00 |
D/D/A ($/Mcfe) | 1.80 |
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Capital Expenditures ($MM) | 40.0* |
*or 1x cash flow, whichever is lower
Guidance does not include non-cash and extraordinary items
Hedge position: 10,000 Mcf/d through January 2007 with $5.00-$7.00 floor
Slide 22: | Appendix (Summary)... |
What: | Niche exploitation and production company |
Why: | High quality assets with substantial upside |
How: | Increase shareholder value through the drill bit, targeting conventional reservoirs & emerging resource plays |
Slide 23: | www.abraxaspetroleum.com | |
Picture: | Hudgins Ranch, Delaware Basin, West Texas |
