Exhibit 99.1
8-K Robert L.G. Watson will be presenting at the Abraxas Petroleum Corporation Annual Meeting of Stockholders on June 26, 2007
Slide 1: | Abraxas Petroleum Corporation |
Annual Meeting of Stockholders, June 26, 2007
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 floor with crew |
Slide 2: | Company Overview |
Abraxas Petroleum Corporation
| • | AMEX: ABP |
| o | Market capitalization ~ $212 million |
| o | Enterprise value ~ $212 million |
= $0 debt & $11 million in cash
| • | Options: CBOE and PCX |
| • | Fully diluted shares outstanding ~ 50 million |
| • | Ownership: ~ 15% insider |
~ 32% institutional
| • | Average trading volume (3 mos): ~ 300,000 shares per day |
Slide 3: | Recent Transactions |
Closed: May 25, 2007
| Master Limited Partnership |
| • | Contributed 65 Bcfe of proved reserves |
| • | ABP Ownership = 47% |
Sources: | (millions) | Uses: | (millions) |
53% MLP to institutional investors: | $100.0 | Redeem existing notes: (1) | $ 139.3 |
5.9 million shares of ABP stock: | 22.5 | Repay credit facility: | 0.9 |
Societe Generale credit facility (MLP): | 35.0 | Fees & expenses: | 10.3 |
|
| Excess cash (ABP): | 7.0 |
TOTAL SOURCES: | $ 157.5 | TOTAL USES: | $ 157.5 |
| (1) | Includes call premium and interest |
Slide 4: | Transaction Rationale |
Opportunity to increase shareholder value:
| • | Valuation discrepancy between E&P MLP and C-Corps |
| 2008 P/CFPS | 12x | vs. | 6x (1) |
| Why ? |
| § | Tax-advantaged vehicle |
| § | Yield-oriented security |
| § | Stable cash flow = lower cost of capital |
Results:
| • | Debt-free Abraxas Corp. (interest payments = $16 million/yr) |
| • | Retained control of the properties |
| • | Significant cash-flow stream to Abraxas Corp. |
| • | Benefit from MLP valuation |
| • | Accelerate drilling activities |
(1) Coker & Palmer research report dated June 6, 2007
Slide 5: | Analyst Commentary |
Teekay Shipping (TK) (1)
| Market Cap = $4 billion |
“We believe that by utilizing the MLP structure for its subsidiaries, TK has enhanced the financial benefits to shareholders generated by these assets owning primarily to the advantages of an MLP structure”
The Williams Companies Inc. (WMB) (2)
| Market Cap = $16 billion |
“We believe long-term performance of WMB stock price should decouple from the rest of the oil and gas group as a result of value creation from the MLP”
| (1) | JP Morgan equity research report dated February 28, 2007 |
| (2) | Citigroup equity research report dated November 26, 2006 |
Slide 6: | Distribution of Assets |
Assets Contributed to MLP | Assets Retained at ABP | ||
Highlights (1) | Highlights (1) | ||
Proved Reserves (Bcfe): | 65.4 | Proved Reserves (Bcfe): | 33.4 |
- Percent Proved Developed: | 58% | - Percent Proved Developed: | 29% |
- Percent Natural Gas: | 91% | - Percent Natural Gas: | 67% |
Q1 07 Net Production (Mcfepd): | 16,900 | Q1 07 Net Production (Mcfepd): | 2,600 |
Gross Acres: | 16,400 | Gross Acres: | 88,200 |
Net Acres: | 13,500 | Net Acres: | 76,200 |
Delaware Basin Cherry Canyon EOG Montoya Other Delaware Basin ~85% Oates SW – 4 PDP / 5 PUD Gulf Coast Basin Edwards Portilla | Powder River Basin Mowry Shale “Resource Play” Eastern Shelf IRA / Martin Delaware Basin Other Delaware Basin ~15% Oates SW – 4 wells plus Woodford/Barnett “Resource Play” Gulf Coast Basin Edwards (leases) Wilcox | ||
Map of Texas with certain counties highlighted | Map of Wyoming and Texas with certain counties highlighted |
| (1) | As of 12/31/06, unless noted otherwise |
Slide 7: | Organizational Structure |
Slide 8: | Relationship |
Abraxas Petroleum Corporation
| will continue to operate the majority of the properties |
| • | receive reimbursement for cost of all operations, and |
| • | G&A reimbursement of $1.5 million per year |
Abraxas General Partner, LLC
| will manage Abraxas Energy Partners, L.P. |
| • | Executive Officers |
| • | Board of Directors |
Slide 9: Retained Asset Base
Quality assets
| • | High ownership interests (79% WI) |
| • | Operational control (99%) |
| • | Large acreage positions |
| • | Substantial upside |
Natural gas (67%)
| • | Operations in Texas and Wyoming |
| • | > 10 year inventory of projects on existing leasehold |
| • | High impact projects |
Bar & line chart from 1977 through 2006 detailing long-term debt, market cap and proved reserves at December 31st of each year (and at Jun-07), with a notation of acquisitions: <$0.65 / Mcfe in the mid-1990’s.
Jun-07 reflects the transactions announced on May 25, 2007 and includes 47% of the proved reserves contributed to the MLP
Slide 10: | Upside Potential |
| Number of potential / identified projects (1) | Potential Bcfe (2) | $0.50 per Mcfe ($MM) | $1.00 per Mcfe ($MM) | $1.50 per Mcfe ($MM) |
Probable & Possible (3) |
59 |
64 |
$ 32 |
$ 64 |
$ 96 |
Woodford Shale Play |
185 |
555 |
$ 277 |
$ 555 |
$ 832 |
Mowry Shale Oil Play |
300 |
600 |
$ 300 |
$ 600 |
$ 900 |
Exploratory Wilcox Plays |
15 |
37 |
$ 19 |
$ 37 |
$ 56 |
Total |
559 |
1,256 |
$ 628 |
$ 1,256 |
$ 1,884 |
Upside Potential |
|
|
$ 13 |
$ 25 |
$ 38 |
Retained over 98% of Upside Potential !
(1) Woodford Shale on 80 acre spacing and Mowry Shale on 160 acre spacing
(2) Capital required $1.8 billion – volumes and resultant values are mid-point of range
(3) Net of reserves in specific plays
Slide 11: | Operational Goals |
Increase Shareholder Value
through...
Drill Bit Growth targeting Conventional Reservoirs & emerging Resource Plays
Reserve Ratio Improvement by converting proved undeveloped and un-booked reserves to the proved developed category
Slide 12: | Abraxas Corp. Properties |
Wyoming – Powder River Basin – Converse & Niobrara Counties |
West Texas – Delaware Basin – Pecos & Ward Counties
| - Eastern Shelf – Coke, Dawson, Howard, Martin, Midland, Mitchell & Scurry Counties |
South Texas – Gulf Coast Basin – Bee, DeWitt, Goliad, Karnes & Live Oak Counties
Map of the United States highlighting Wyoming and Texas and certain counties
Slide 13: | Reserves / Acreage |
Proved Reserves – 33.4 Bcfe (1)
Pie chart = Wyoming 3%, South Texas 18%, West Texas 79%
Net Undeveloped Acres ~ 63,500 (1)
Pie chart = Wyoming 67%, South Texas 5%, West Texas 28%
| (1) | Pro forma as of 12/31/06 |
Slide 14: | Conventional Reservoirs |
Map of Texas highlighting certain counties in Texas
Developing Existing Proved Reserves
Projects for 2007 and beyond...”the low hanging fruit”
IRA
| Clearfork / Strawn Reef |
Delaware
| Mississippian / Devonian |
Oates SW
| Devonian |
Edwards & Wilcox
Slide 15: | Oates SW Field |
Map of Texas highlighting Pecos County in West Texas
~15,000 acres
> 75 sq. miles of 3-D
ABP retained wells:
| Manzanita 1H (2007 Devonian) |
| Hudgins 11-1 (Woodford) |
| La Escalera 5-1 (Lower Wolfcamp) |
| La Escalera 2 (Atoka) |
ABP retained the following:
| Surface rights |
| Mineral rights |
| Executive rights |
| All formations from MLP wells w/o proved reserves |
Wells contributed to MLP (plus 3 Devonian PUDs & 2 Montoya completions):
| Hudgins 37-1H (Devonian) |
| Elsinore Cattle 56 (Devonian) |
La Escalera 1AH (Devonian)
Hudgins 34-2H (Devonian)
Lease map of Oates SW Field area with well locations, outline of 3-D seismic surveys, current activity and available wellbores.
Slide 16: | Woodford Shale Play |
Map of Texas highlighting Pecos County in West Texas with well locations and acreage positions depicted
Reliance / CHK / PXD – 3-D seismic & data swap
PXD (1 drilled & 1 permitted)
CHK 50% / Petro-Hunt 50% ~100,000 acres – 3-D seismic swap
Petro-Hunt (2 permitted & 1 flowing gas)
ABP: Oates SW Field ~15,000 acres
(gained valuable reservoir knowledge & producing small amount of dry gas from the Woodford)
Slide 17: | Mowry Shale Oil Play |
Map of Wyoming highlighting certain counties in east central Wyoming & detailed map of Converse & Niobrara Counties, Wyoming with well locations, 3-D seismic survey and acreage positions depicted.
Brooks Draw
~50,000 acres (1)
23 sq. miles proprietary 3-D seismic survey
Converse & Niobrara Counties, Wyoming
ABP: Brooks Draw 10 wells (5 horizontal / 5 vertical)
3 vertical wells producing from Mowry (commingled with other zones)
2007 Plans
Permitting several wells (full-scale technical evaluation of our acreage)
AEZ/BEXP: Krejci
Horizontal Mowry Shale ~15 miles to the SE of Brooks Draw
2007 Plans – Continuous drilling program
(1) Gross acres (>92% MI), 12,000 HBP
Slide 18: | Exploratory Plays |
Map of Texas highlighting Bee, Karnes and Live Oak Counties
Potentially High Impact
Targeting the Wilcox Formation
Janssen Prospect, Karnes County
Goebel Prospect, Live Oak County
Plummer & Tuleta Prospects, Bee County
Slide 19: | Capture the Upside |
Increase shareholder value
Maintain financial flexibility and liquidity
Prioritize opportunity set
Line chart of ABP share price and NYMEX gas from January 2005 to current
Slide 20: | Summary |
Niche exploitation and production company
High quality assets with substantial upside
Goals:
Drill Bit Growth
Reserve Ratio Improvement
CONTINUE TO INCREASE SHAREHOLDER VALUE
Slide 21: | www.abraxaspetroleum.com |
Picture: | Manzanita 1H, Hudgins Ranch, Delaware Basin, West Texas |