Abraxas sells N. Dakota assets to reduce debt
Abraxas Petroleum Corp. may have a new lease on life after selling assets in North Dakota as part of a restructuring aimed at reducing debt.
The San Antonio-based oil and gas driller said Monday it sold its holdings in North Dakota’s Williston Basin for $87.2 million to Houston-based Lime Rock Resources. Abraxas said it would use the proceeds to pay off some of its debt. Other debt was exchanged for common stock to a lender that now will have majority control.
Abraxas now will operate only in the Permian Basin.
The company hasn’t posted an annual profit since 2018. It has struggled with an unwieldy debt burden and the pandemicdriven drop in oil prices that forced it to stop investing in drilling operations in early 2020.
At the end of September, Abraxas reported assets of $134 million versus $245 million in liabilities.
“The restructuring positions Abraxas as an unlevered, Delaware Basin pure play that can now access available capital sources to restart a drilling program in the Permian Basin,” President and CEO Bob Watson said in a statement.
He said the transactions pay off all the company’s bank debt and converts debt held by New York-based Angelo Gordon Energy Funding to preferred shares in Abraxas.
At the end of 2020, Abraxas said it had 103 producing wells in the Permian and 468 in the Williston. Through the first nine months of 2021, the Permian wells produced more oil than those in the Williston. But the wells in North Dakota produced more natural gas and far greater amounts of natural gas liquids, which are used as an industrial feedstock.
Abraxas was kicked off the Nasdaq exchange last fall after its stock price slipped to less than $1 per share. The company has been trading on over-the-counter markets since Aug. 4. It has faced high interest rates on its debt after defaulting on one loan last year. And the company has had to sharply reduce capital expenditures, which it could use to produce more oil or explore for new reservoirs, in order to satisfy its lenders.
On Monday, Abraxas shares closed at 82 cents, flat for the day but down nearly 60 percent since the stock was delisted by Nasdaq.