0000867665-12-000041.txt : 20120910 0000867665-12-000041.hdr.sgml : 20120910 20120910121942 ACCESSION NUMBER: 0000867665-12-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20120910 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120910 DATE AS OF CHANGE: 20120910 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABRAXAS PETROLEUM CORP CENTRAL INDEX KEY: 0000867665 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 742584033 STATE OF INCORPORATION: NV FISCAL YEAR END: 1112 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16071 FILM NUMBER: 121082342 BUSINESS ADDRESS: STREET 1: 500 N LOOP 1604 E STE 100 CITY: SAN ANTONIO STATE: TX ZIP: 78232 BUSINESS PHONE: 2104904788 MAIL ADDRESS: STREET 1: 500 N LOOP 1604 EAST STE 100 CITY: SAN ANTONIO STATE: TX ZIP: 78232 8-K 1 axas8kbee.htm FORM 8-K axas8kbee.htm
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
September 4, 2012
Date of Report (Date of earliest event reported)
 
ABRAXAS PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
 
Nevada
1-16071
74-2584033
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)

 
18803 Meisner Drive
San Antonio, Texas 78258
(210) 490-4788
(Address of principal executive offices and Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
  o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
  o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 
 

5900435v.1
Item 1.01                      Entry into a Material Definitive Agreement.
 
 
On September 4, 2012, Abraxas Petroleum Corporation entered into an Agreement to Dissolve (the” Agreement”)  Blue Eagle Energy, LLC (“Blue Eagle”) with Rock Oil, LLC (“Rock Oil”).
 
 
Under the terms of the Agreement, Abraxas retained a 100 percent interest in the Eagle Ford and shallower rights in Jourdanton, Atascosa County (4,401 net acres), a 100 percent interest in Yoakum, DeWitt County (1,868 net acres), a 25 percent interest in WyCross, McMullen County (695 net acres), and a 25 percent interest in Nordheim, DeWitt County (944 net acres). The producing wells are currently producing 205 barrels of oil equivalent per day (62 percent oil and 11 percent ngls) net to the interest retained by Abraxas. The proved reserves attributable to the Abraxas interests are approximately 2.4 million barrels of oil equivalent (27 percent oil and 25 percent ngls). The probable reserves attributable to the Abraxas interests are 3.7 million barrels of oil equivalent (54 percent oil and 15 percent ngls). Abraxas also received a $7 million cash payment, adjusted for various working capital components, and will receive 25 percent of the cash and working capital in Blue Eagle upon its final liquidation.
 
 
Abraxas, as operator, and its working interest partner will commence a ten well drilling program utilizing one rig in the WyCross area in the near future. The first well drilled at WyCross, the Abraxas Cobra #1H has produced over 110,000 barrels of oil equivalent since going on production in March of 2012 and is currently flowing approximately 430 barrels of oil equivalent per day (86 percent oil and 5 percent ngls).
 
Item 2.01.  Completion of Acquisition or Disposition of Assets.
 
See Item 1.01 above.
 
Item 9.01. Financial Statements and Exhibits.
 
(b)
Pro Forma Financial Information
 
The pro forma financial information specified in Article 11 of Regulation S-X is filed as Exhibit 99.1 to this Current Report on Form 8-K.
 
(d)
Exhibits
 
Number                  Description
 
2.1
Agreement to Dissolve Blue Eagle Energy, LLC dated September 4, 2012 by and among Blue Eagle, Abraxas and Rock Oil
 
99.1
Unaudited Pro Forma Condensed Consolidated Financial Information giving effect to the dissolution of Blue Eagle
 

 
 
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
ABRAXAS PETROLEUM CORPORATION
 
By:  /s/ Robert L. G. Watson                                                                     
Robert L. G. Watson
President and Chief Executive
Officer

Dated:  September 10, 2012
 



 EX-2.1 2 dissolutionage.htm AGREEMENT TO DISSOLVE dissolutionage.htm
                   Exhibit 2.1
 
AGREEMENT TO DISSOLVE
BLUE EAGLE ENERGY, LLC
 
This Agreement to Dissolve Blue Eagle Energy, LLC (this “Agreement”) is entered into as of the 4th day of September, 2012, by and among Blue Eagle Energy, LLC, a Delaware limited liability company (“BEE”), Abraxas Petroleum Corporation, a Nevada corporation (“Abraxas”), and Rock Oil Company, LLC, a Delaware limited liability company (“Rock Oil”).
 
− RECITALS –
 
Abraxas and Rock Oil are the sole members of BEE, and are parties to that certain Limited Liability Company Agreement of Blue Eagle Energy, LLC, dated as of August 18, 2010 (the “LLC Agreement”).  Section 7.1(b) of the LLC Agreement provides that BEE is to be dissolved upon the occurrence of, among other events, “written agreement” of Abraxas and Rock Oil “that the business of the Company shall be discontinued.”  Abraxas and Rock Oil have reached an agreement on the terms pursuant to which the business of BEE is to be discontinued, including the distribution of BEE’s assets to and assumption of associated liabilities by Abraxas and Rock Oil.  If and to the extent any provisions set forth in this Agreement are inconsistent with the terms of the LLC Agreement, the terms of the LLC Agreement shall be deemed to be amended to be consistent with the terms of this Agreement.
 
NOW, THEREFORE, in consideration of the premises, the terms and provisions set forth herein, the mutual benefits to be derived from the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
 
− AGREEMENT –
 
1. Distribution of Oil and Gas Interests and Assumption of Related Liabilities.  Effective at the Effective Time (defined below), BEE shall distribute, convey, assign and transfer the following interests and assets to Abraxas and Rock Oil, respectively, without warranty of any kind (other than a special warranty of title), and each of Abraxas and Rock Oil shall agree to assume any liabilities associated with the interests and assets being assigned and transferred to it:
 
A.  
all rights, title and interest in the Yoakum properties, which are described on Exhibit A to this Agreement, shall be conveyed to Abraxas;
 
B.  
an undivided 25% working interest in the Sugarkane and Wycross properties, which are described on Exhibit B to this Agreement, shall be conveyed to Abraxas;
 
 
C.  
all rights, title and interest in and to the Jourdanton properties limited in depth from the surface to the base of the Buda formation (defined as the stratagraphic equivalent of 8,125 feet as noted on the Dual Induction-SFL-Sonic log of the Leede Oil and Gas, Inc. #1 W.E. Stapp (API Number 42-013-31128)), including the Grass Farms Wells, which are described on Exhibit C to this Agreement, shall be conveyed to Abraxas;
 
 
 
 
D.  
an undivided 75% working interest in the Sugarkane and Wycross properties, which are described on Exhibit B to this Agreement, shall be conveyed to Rock Oil; and
 
E.  
all rights, title and interest in and to the Jourdanton properties for all depths below the base of the Buda formation (as defined above), which are described in Exhibit C to this Agreement, shall be conveyed to Rock Oil;
 
The assignment and assumption of liabilities with respect to the interests described in A through E above shall be effected by an Assignment, Bill of Sale and Conveyance in form and substance satisfactory to each of Rock Oil and Abraxas. The properties described in paragraphs A through C above are sometimes referred to as the “Abraxas Properties” and the properties described in paragraphs D and E above are sometimes referred to above as the “Rock Oil Properties.”
 
2. Other BEE Assets and Liabilities.  As set forth in Exhibit D to this Agreement:  (A) BEE will be retaining cash in the amount set forth in Exhibit D to fund various ongoing matters which will be addressed subsequent to the Closing Date (defined below); and (B) BEE shall distribute on the Closing Date cash to Abraxas and cash to Rock Oil in the respective amounts set forth in Exhibit D.  In addition, on the Closing Date:  (C) BEE, Abraxas and Rock Oil shall enter into an Assignment and Assumption Agreement with respect to distribution of the proceeds, expenses, receivables, payables and liabilities set forth on Exhibit D,  in form and substance satisfactory to each of Rock Oil and Abraxas ; and (D) BEE will convey to Rock Oil title to BEE’s Toyota Tundra truck.
 
3. Operating and Area of Mutual Interest Agreements.  On the Closing Date, Abraxas and Rock Oil shall execute and deliver to the other party (A) an Operating Agreement with respect to their joint interests in the Sugarkane properties, (B) a second Operating Agreement with respect to their joint interests in the Wycross properties, and (C) an Area of Mutual Interest Agreement with respect to the Wycross and Sugarkane properties, which Agreements shall be in form and substance satisfactory to Rock Oil and Abraxas.
 
4. Contribution by Rock Oil; Distribution of Cash to Abraxas.  On the Closing Date, Rock Oil shall contribute $28 million to BEE, $7 million of which will be in the form of cash, and $21 million of which will be an account receivable from Rock Oil to BEE (which receivable shall be distributed to Rock Oil on the Closing Date).
 
5. Termination of Current Operating Agreement.  Effective at the Effective Time, that certain Model Form Operating Agreement dated August 18, 2010, between Abraxas and BEE, shall be deemed to have terminated and be of no further force and effect.
 
6. Winding Up of BEE; LLC Agreement and Master Services Agreement.  From and after the Closing Date, Rock Oil shall continue to manage BEE in accordance with the terms of the LLC Agreement (as amended by this Agreement) and the Master Services Agreement dated August 18, 2010, between BEE and Rock Oil (the “Master Services Agreement”), except that its authority and responsibilities shall be limited to executing and delivering the agreements, documents and instruments contemplated by this Agreement and winding up the business and affairs of BEE as provided in Article VII of the LLC Agreement.  For this purpose, Rock Oil shall be the “liquidator” of BEE’s assets as
 
 
 
 
provided in Article VII of the LLC Agreement, and shall wind up the business and affairs of BEE in accordance with the provisions of such Article VII, the terms of this Agreement, and Section 18-804 of the Delaware Limited Liability Company Act, as amended.  Notwithstanding the foregoing, the parties acknowledge and agree that Rock Oil will have such authority as is necessary, and BEE will continue its existence, to address the EnerQuest transaction and certain other matters for which BEE is retaining cash, as set forth on Exhibit D to this Agreement.  Upon the filing of the Certificate of Cancellation with the Secretary of State of Delaware, as provided in Section 7.6 of the LLC Agreement, the LLC Agreement and Master Services Agreement shall terminate.
 
7. Proceeds and Expenses.
 
A. Proceeds After Effective Time.  All proceeds attributable to the Abraxas Properties accruing from and after the Effective Time shall belong to Abraxas and all proceeds attributable to the Rock Oil Properties accruing from and after the Effective Time shall belong to Rock Oil .  If BEE, Abraxas or Rock Oil has received proceeds belonging to either Abraxas or Rock Oil after the Effective Time, such party will account to the other for such proceeds at the same price received for the production in accordance with its existing product purchase and sale contracts.
 
B. Expenses after Effective Time.  BEE, Abraxas and Rock Oil shall be entitled to be reimbursed by Abraxas and Rock Oil, as the case may be, for any costs and expenses paid by BEE, Abraxas and Rock Oil with respect to the Abraxas Properties and the Rock Oil Properties for any period from and after the Effective Time attributable to the ownership or operation of the Abraxas Properties and the Rock Oil Properties from and after the Effective Time. Abraxas and Rock Oil agree to reimburse BEE and each other for all such costs and expenses within five (5) days after receipt from BEE, Abraxas or Rock Oil, as appropriate, of a notice of reimbursement accompanied by written evidence of the underlying payment on account of such costs and expenses.
 
8. Indemnification.  Following the Closing (defined below), Abraxas shall indemnify and hold harmless BEE and Rock Oil, as well as their respective managers, officers, employees, and members (other than Abraxas), from and against any and all liabilities, obligations and expenses (A) arising in connection with the interests and assets which are being assigned and transferred to Abraxas pursuant to this Agreement, to the extent any such liabilities, obligations and expenses relate to the period from and after the Effective Time, and (B) resulting from any breach by Abraxas of the representations, warranties and covenants made by Abraxas in this Agreement.  Following the Closing, Rock Oil shall indemnify and hold harmless BEE and Abraxas, as well as their respective officers, directors, managers, employees and members (other than Rock Oil), from and against any and all liabilities, obligations and expenses (X) arising in connection with the interests and assets which are being assigned and transferred to Rock Oil pursuant to this Agreement, to the extent any such liabilities, obligations and expenses relate to the period from and after the Effective Time, and (Y) resulting from any breach by Rock Oil of the representations, warranties and covenants made by Rock Oil in this Agreement.
 
 
 
 
9. Representations and Warranties.
 
A.  
Representations and Warranties by Abraxas.  Abraxas makes the following representations and warranties to Rock Oil and BEE:
 
(i)  
Abraxas has all requisite power and authority to enter into this Agreement, to perform its obligations under this Agreement, and to operate the interests and assets being conveyed to it pursuant to this Agreement.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Abraxas.
 
(ii)  
The consummation of the transactions contemplated hereby will not violate, nor be in conflict with, any provision of Abraxas’ Articles of Incorporation or other governing documents, or any agreement or instrument to which Abraxas is a party or is bound, or any judgment, decree, order, statute, rule or regulation applicable to Abraxas, except for any consents and approvals of governmental authorities customarily obtained subsequent to transfer.
 
B.  
Representations and Warranties by Rock Oil.  Rock Oil makes the following representations and warranties to Abraxas and BEE:
 
(i)  
Rock Oil has all requisite power and authority to enter into this Agreement, to perform its obligations under this Agreement, and to operate the interests and assets being conveyed to it pursuant to this Agreement.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Rock Oil.
 
(ii)  
The consummation of the transactions contemplated hereby will not violate, nor be in conflict with, any provision of Rock Oil’s Amended and Restated Operating Agreement or other governing documents, or any agreement or instrument to which Rock Oil is a party or is bound, or any judgment, decree, order, statute, rule or regulation applicable to Rock Oil, except for any consents and approvals of governmental authorities customarily obtained subsequent to transfer.
 
10. Closing.  The closing (the “Closing”) of the transactions contemplated by this Agreement shall take place simultaneously with the parties’ execution and delivery of this Agreement at the offices of Ducker, Montgomery, Lewis & Bess P.C., counsel to Rock Oil, and Jackson Walker LLP, counsel to Abraxas, on September 5, 2012 (the “Closing Date”).  Each closing transaction under this Agreement shall be deemed held in escrow until all closing transactions are completed.  Upon completion of the Closing, all transactions effected at the Closing shall be deemed to be effective for all purposes as of 12:01 a.m., Central Time, on September 1, 2012 (the “Effective Time”).  At the Closing :
 
A.  
the parties shall execute and deliver to each other this Agreement;
 
 
 
 
B.  
Rock Oil shall make a cash capital contribution to BEE in the amount of $7 million;
 
C.  
BEE shall make a cash distribution to Abraxas, by wire transfer of immediately available funds to an account designated in writing by Abraxas, in the amount set forth on Exhibit D;
 
D.  
BEE shall make a cash distribution to Rock Oil in the amount set forth on Exhibit D;
 
E.  
BEE shall execute and deliver to Rock Oil such instrument as is necessary to convey to Rock Oil title to BEE’s Toyota Tundra truck;
 
F.  
BEE and Abraxas shall execute and deliver to each other one or more forms of Assignment, Bill of Sale and Conveyance, to convey the interests to Abraxas, as described in Section 1 of this Agreement;
 
G.  
BEE and Rock Oil shall execute and deliver to each other one or more forms of Assignment, Bill of Sale and Conveyance, to convey the interests to Rock Oil, as described in Section 1 of this Agreement;
 
H.  
BEE, Abraxas and Rock Oil shall execute and deliver to each other an Assignment and Assumption Agreement, as described in Section 2 of this Agreement;
 
I.  
Abraxas and Rock Oil shall execute and deliver to each other an Operating Agreement with respect to their joint interests in the Sugarkane properties, as described in Section 3 of this Agreement;
 
J.  
Abraxas and Rock Oil shall execute and deliver to each other an Operating Agreement with respect to their joint interests in the Wycross properties, as described in Section 3 of this Agreement;
 
K.  
Abraxas and Rock Oil shall execute and deliver to each other an Area of Mutual Interest Agreement with respect to the Wycross and Sugarkane properties, as described in Section 3 of this Agreement; and
 
L.  
Abraxas and Rock Oil shall execute and deliver to each other a Transfer of Operations Agreement in form and substance satisfactory to Abraxas and Rock Oil.
 
 
 
 
11. Consents. No later than one business day following the Closing Date, BEE and Rock Oil shall transmit all consents to assignment and similar documents to any third parties having a right of first refusal, a right to consent to assignment, a right to receive notice of assignment or any similar rights.
 
12. Miscellany.
 
A.  
Transaction Expenses.  BEE shall be responsible for the payment of all fees and expenses incurred by Abraxas and Rock Oil in connection with the negotiation and preparation of this Agreement and all other all agreements and documents ancillary hereto and the transactions contemplated hereby and thereby (collectively the “Transaction  Expenses”).  The Transaction Expenses shall include all fees, costs, and expenses of legal counsel, accountants and all other third party consultants and advisors engaged by each such party to assist with the negotiation or preparation of this Agreement and all other agreements and documents ancillary hereto and the transactions contemplated hereby and thereby.  Promptly after Closing, BEE shall pay all Transaction Expenses or, if necessary, reimburse Abraxas and Rock Oil for any Transaction Expenses paid by them prior to the date hereof.
 
B.  
Amendment; Waiver.
 
(i)  
Any amendment to this Agreement shall require the written approval of each of Abraxas and Rock Oil.
 
(ii)  
Failure on the part of a party to complain of any act or omission of any party or to declare any party in breach or default with respect to an obligation, irrespective of how long that failure continues, shall not be construed as a waiver of the breach or default until the applicable statute of limitations has run.  No waiver of any obligation under this Agreement shall be effective unless in writing signed by or on behalf of the party to whom the obligation is owed.
 
C.  
Entire Agreement.  This Agreement, together with the other agreements and instruments referred to herein, constitute the entire agreement between Abraxas and Rock Oil with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings, whether written or oral, between them with respect to the subject matter hereof.  All Exhibits hereto are expressly made a part of this Agreement.
 
D.  
Parties in Interest.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (it being understood and agreed that, except as expressly provided herein, nothing contained in this Agreement is intended to confer any rights, benefits or remedies of any kind or character on any other person, other than BEE, under or by reason of this Agreement).
 
 
 
 
E.  
Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware (without regard to any conflicts of law principles that would require the application of the laws of any other jurisdiction).
 
F.  
Severability.  In the event that any provision contained herein shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
 
G.  
Headings.  The headings herein are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit, extend or otherwise affect the meaning of any of the provisions hereof.
 
H.  
Further Assurances.  In connection with this Agreement and the transactions contemplated hereby, each party agrees to execute and deliver any additional documents and instruments and to perform any additional acts necessary or appropriate to effectuate the provisions of this Agreement and the transactions contemplated hereby.
 
I.  
Counterparts; Electronic Signature Delivery.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.  In the event that any signature is delivered by electronic transmission of a facsimile thereof (including a “.pdf” format data file), such signature shall create a valid and binding obligation of the party executing with the same force and effect as if such facsimile were an original signature.
 
J.  
Amendments to LLC Agreement.  From and after the Effective Time, (i) Section 3.4 of the LLC Agreement shall be of no further force and effect; and (ii) Section 12.2 of the LLC Agreement shall not apply with respect to any information related to those assets which are being distributed to Abraxas and Rock Oil pursuant to this Agreement.
 

 
[signature page follows]
 

 EX-99.1 3 proforma.htm PRO FORMA INFORMATION proforma.htm
Exhibit 99.1
 
 
UNAUDITED PRO FORMA FINANCIAL INFORMATION

 
The following unaudited pro forma financial information is derived from the historical financial statements of the Abraxas Petroleum Corporation and reflects the impact of the dissolution of its Blue Eagle Energy, LLC joint venture. On September 4, 2012 Abraxas dissolved its Eagle Ford joint venture, Blue Eagle Energy LLC. Abraxas and its joint venture partner will split the assets with Abraxas retaining a 100 percent interest in the Eagleford and shallower rights in Jourdanton, Atascosa County (4,401 net acres), a 100 percent interest in Yoakum, DeWitt County (1,868 net acres), a 25 percent interest in WyCross, McMullen County (695 net acres), and a 25 percent interest in Nordheim, DeWitt County (944 net acres). The producing wells are currently producing 205 barrels of oil equivalent per day (62 percent oil and 11 percent ngls) net to the interest retained by Abraxas. The proved reserves attributable to the Abraxas interests are approximately 2.4 million barrels of oil equivalent (27 percent oil and 25 percent NGLS). The probable reserves attributable to the Abraxas interests are 3.7 million barrels of oil equivalent (54 percent oil and 15 percent NGLS). Abraxas will receive a $7 million cash payment, adjusted for various working capital components, and will receive 25 percent of the remaining cash and working capital in Blue Eagle upon its final liquidation.
 
The Unaudited Pro Forma Condensed Balance Sheet of Abraxas Petroleum Corporation as of June 30, 2012, has been prepared assuming the dissolution of the joint venture was consummated on June 30, 2012.  The Unaudited Pro Forma Statements of Operations of Abraxas Petroleum Corporation for the year ended December 31, 2011 and for the six month period ended June 30, 2012 have been prepared assuming the dissolution of the joint venture was consummated on January 1, 2011. These Unaudited Pro Forma Condensed financial statements should be read in conjunction with the notes thereto, and the Consolidated Financial Statements  and notes thereto of Abraxas Petroleum Corporation filed with the Company’s Form 10-K for the year ended December 31, 2011 and Form 10-Q for the six months ended June 30, 2012.

The Unaudited Pro Forma Financial Information is not indicative of the financial position or results of operations of Abraxas Petroleum Corporation which would actually have occurred if the transaction had occurred at the dates presented or which may be obtained in the future. In addition, future results may vary significantly from the results reflected in such statements due to normal crude oil and natural gas production declines, reductions in prices paid for crude oil and natural gas, future acquisitions and other factors.

 
 
 


 

Abraxas Petroleum Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(in thousands)


   
June 30,
    
Pro-Forma
    
June 30,
  
   
2012
    
Adjustments
    
2012
  
   
(Unaudited)
          
Pro- Forma
  
Assets
    
`
                
Current assets:
                      
Cash and cash equivalents
  
$
308
    
6,025
  
(a)
$
6,333
  
Accounts receivable, net:
    
11,405
    
(263
)
(b)
  
11,142
  
Derivative asset – current
    
2,535
    
—
      
2,535
  
Other current assets
   
455
    
—
      
455
  
Total current assets
    
14,703
    
5,762
      
20,465
  
                       
Property and equipment:
                      
Oil and gas properties, full cost method of accounting:
                      
Proved
   
521,919
    
20,540
  
(c)
  
542,459
  
Unproved properties excluded from depletion
   
2,185
    
—
      
2,185
  
Other property and equipment
   
37,290
    
—
      
37,290
  
Total
    
561,394
    
20,540
      
581,934
  
Less accumulated depreciation, depletion, and amortization
    
(358,232
)
  
 
—
      
(358,232
)
Total property and equipment – net                                                                 
    
203,162
    
20,540
      
223,702
  
 
                      
Investment in joint venture
    
28,249
    
(28,249
)
(d)
  
—
  
                       
Deferred financing fees, net
    
3,797
    
—
      
3,797
  
Derivative asset – long-term
    
2,640
    
—
      
2,640
  
Other assets
   
744
    
—
      
744
  
Total assets
  
$
253,295
    
(1,947
)
  
$
251,348
  


See accompanying notes to consolidated pro forma financial statements

 
 
 


 
Abraxas Petroleum Corporation
 Unaudited Pro Forma Condensed Consolidated Balance Sheet (continued)
(in thousands, except share data)

 
   
June 30,
    
Pro-Forma
    
June 30,
  
   
2012
    
Adjustments
    
2012
  
   
(Unaudited)
          
Pro- Forma
  
Liabilities and Stockholders’ Equity
                      
Current liabilities:
                      
Accounts payable
  
$
18,491
     $
—
    
$
18,491
  
Oil and gas production payable
    
7,208
    
(1,958
)
(e)
  
5,250
  
Accrued interest
    
151
    
—
      
151
  
Other accrued expenses
    
1,319
    
—
      
1,319
  
Derivative liability – current
    
4,058
    
—
      
4,058
  
Current maturities of long-term debt
    
186
    
—
      
186
  
Total current liabilities
    
31,413
    
(1,958
)
    
29,455
  
                       
Long-term debt, excluding current maturities
    
136,664
    
—
      
136,664
  
                       
Derivative liability – long-term
    
1,128
    
—
      
1,128
  
Future site restoration
    
8,716
    
11
  
(f)
  
8,727
  
Total liabilities
    
177,921
    
(1,947
)
    
175,974
  
Stockholders’ Equity
          
—
          
Preferred stock, par value $0.01 per share, authorized 1,000,000 shares; -0- issued and outstanding
                      
Common stock, par value $0.01 per share, authorized 200,000,000 shares; 92,335,057 and 92,261,057 issued and outstanding
    
923
    
—
      
923
  
Additional paid-in capital
    
249,738
    
—
      
249,738
  
Accumulated deficit
    
(174,748
)
  
—
      
(174,748
)
Accumulated other comprehensive loss
    
(539
)
  
—
      
(539
)
Total stockholders’ equity
    
75,374
    
—
      
75,374
  
Total liabilities and stockholders’ equity
  
$
253,295
    $
(1,947
)
  
$
251,348
  


See accompanying notes to consolidated pro forma financial statements


 
 
 


 
Abraxas Petroleum Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 2012
 (Unaudited)
(in thousands, except per share data)

   
June 30,
2012
  
Pro Forma Adjustments
    
Pro-Forma
June 30,2012
  
Revenue:
                      
Oil and gas production revenues
  
$
32,313
  
$
3,212
  
(a)
$
35,525
  
Other
    
18
    
—
      
18
  
     
32,331
    
3,212
      
35,543
  
Operating costs and expenses:
                      
Lease operating expenses
    
11,316
    
357
  
(b)
  
11,673
  
Production taxes
    
2,985
    
135
  
(b)
  
3,120
  
Depreciation, depletion, and amortization
    
10,218
    
446
  
(c)
  
10,664
  
Impairment
    
1,306
    
—
      
1,306
  
General and administrative (including stock-based compensation of  $1,199)
    
4,305
    
 
—
      
4,305
  
     
30,130
    
938
      
31,068
  
Operating income (loss)
    
2,201
    
2,274
      
4,475
  
                       
Other (income) expense:
                      
Interest income
    
(2
)
  
—
      
(2
)
Interest expense
    
2,465
    
—
      
2,465
  
Amortization of deferred financing fee
    
296
    
—
      
296
  
(Gain) loss on derivative contracts  - realized
    
(866
)
  
—
      
(866
)
(Gain) loss on derivative contracts – unrealized
    
(9,420
)
  
—
      
(9,420
)
Equity in income of joint venture
    
(2,034
)
  
2,034
  
(e)
  
—
  
Other
    
42
    
—
      
42
  
     
(9,519
)
  
2,034
      
(7,485
)
Net income (loss)
  
$
11,720
  
$
240
    
$
11,960
  
                       
Net income (loss) per common share – basic
  
$
0.13
  
$
—
    
$
0.13
  
Net income (loss) per common share – diluted
  
$
0.13
  
$
—
    
$
0.13
  



See accompanying notes to consolidated pro forma financial statements


 
 
 


 
Abraxas Petroleum Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2011
 (Unaudited)
(in thousands, except per share data)

   
December 31,
2011
  
Pro Forma Adjustments
    
Pro-Forma
December 31, 2011
  
Revenue:
                      
Oil and gas production revenues
  
$
64,615
  
$
3,223
  
(a)
$
67,838
  
Other
    
7
    
—
      
7
  
     
64,622
    
3,223
      
67,845
  
Operating costs and expenses:
                      
Lease operating expenses
    
21,581
    
125
  
(b)
  
21,706
  
Production taxes
    
5,766
    
73
  
(b)
  
5,839
  
Depreciation, depletion, and amortization
    
16,194
    
740
  
(c)
  
16,934
  
General and administrative (including stock-based compensation of $1,987)
    
9,433
    
 
—
      
9,433
  
     
52,974
    
938
      
53,912
  
Operating income (loss)
    
11,648
    
2,285
      
13,933
  
                       
Other (income) expense:
                      
Interest income
    
(7
)
  
—
      
(7
)
Interest expense
    
4,898
    
1
  
(d)
  
4,899
  
Amortization of deferred financing fee
    
1,762
    
—
      
1,762
  
(Gain) loss on derivative contracts  - realized
    
676
    
—
      
676
  
(Gain) loss on derivative contracts – unrealized
    
(7,476
)
  
—
      
(7,476
)
Equity in income of joint venture
    
(2,187
)
  
2,187
  
(e)
  
—
  
Other
    
316
    
—
      
316
  
     
(2,018
)
  
2,188
      
170
  
Net income (loss) before income tax
  
$
13,666
  
$
97
    
$
13,763
  
Income tax (expense) benefit
    
77
    
—
      
77
  
Net income (loss)
  
$
13,743
  
$
97
    
$
13,840
  
                       
Net income (loss) per common share – basic
  
$
0.15
  
$
—
    
$
0.15
  
Net income (loss) per common share – diluted
  
$
0.15
  
$
—
    
$
0.15
  

 
See accompanying notes to consolidated pro forma financial statements
 
 

 


 
 
 

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

NOTE 1. The Unaudited Pro Forma Condensed Balance Sheet as of June 30, 2012 reflects the dissolution of the joint venture as if it had occurred as of June 30, 2012:

(a)  
Cash proceeds to Abraxas Petroleum.
(b)  
Record assignment of Blue Eagle receivable to Abraxas Petroleum.
(c)  
Transfer net balance of investment in joint venture to proved properties. Properties and assets acquired are recorded as a purchase of assets. No gain or loss is recognized in connection with this transaction.
(d)  
Net balance in joint venture transferred to proved properties.
(e)  
Record assignment of Blue Eagle revenue receivable to Abraxas Petroleum.
(f)  
Record future site restoration liability for producing properties distributed from joint venture.


NOTE 2. The Unaudited Pro Forma Statement of Operations for the six months ended June 30, 2012 and the year ended December 31, 2011, reflects the dissolution of the joint venture as if it had been consummated as of January 1, 2011.

(a)  
Revenue attributable to the oil and gas properties retained by Abraxas Petroleum.
(b)  
Lease operating expense and taxes related to properties retained by Abraxas Petroleum.
(c)  
Depletion on production from oil and gas properties retained by Abraxas Petroleum.
(d)  
Record accretion of future site restoration liability.
(e)  
Eliminate income from joint venture.



The Company estimates that the cost completing of this transaction were approximately $45,000.