Abraxas Petroleum (AXAS -2.98%) today announced the sale of 1,200 net acres in McMullen County Texas to an undisclosed buyer for $73 million. The assets sold include 3.7 million barrels of oil equivalent, or BOE in proved reserves with production averaging 655 BOE per day as of this past September. Abraxas Petroleum plans to use the proceeds to pay down its bank line, and then redeploy the cash into additional lease blocks in both the Eagle Ford and Bakken.
While Abraxas Petroleum sees the Eagle Ford Shale as an important focus area, these assets were deemed non-core as the company had a low working interest. The company intends to use the cash to build a portfolio of high-quality, operated assets where it owns a high working interest. To achieve that goal, the company plans to redeploy the capital into new lease blocks and it intends to announce these additional Eagle Ford acreage acquisitions shortly.
With the sale, Abraxas Petroleum also revised its 2013 production guidance and exit rate guidance. Abraxas now sees 2013 production averaging 4,300-4,350 BOE per day and a 2013 exit rate of 4,500 BOE per day. The company believes it is now well-positioned to capture growth as it has increased its financial flexibility at a time when it's expecting significant growth. The company sees both cash flow and production from its assets in the Bakken and elsewhere in the Eagle Ford Shale growing in the year ahead.