Abraxas Petroleum Corp. (NASDAQ: AXAS) will bolt on Delaware Basin acreage in Ward County, Texas, prospective for the Bone Spring and Wolfcamp—increasing its position by more than one-third, the company said May 23.

Abraxas, based in San Antonio, Texas, agreed to pay $22.2 million for 2,008 net mineral acres and average production of 33 barrels of oil equivalent. The company said the acreage will add 25 net operated potential locations and eight net nonoperated potential locations.Abraxas Stitches On Low-Priced Delaware Basin Acreage Ward County Texas Map

“This Delaware Basin acquisition fits seamlessly within our existing acreage footprint and increases our exposure to the Delaware Basin Bone Spring/Wolfcamp Play by approximately 35% to 7,757 net acres,” Bob Watson, president and CEO said. “Importantly, this was done at a favorable price of just over $10,000/acre. We continue to evaluate similar bolt on opportunities to further expand our Delaware Basin footprint.”

Delaware Basin acreage often sells for double or more Abraxas’ cost. A recent Ward acquisition by Callon Petroleum Co. (NYSE: CPE) cost about $20,000 per acre.

The acquisition adds:

  • Up to four identified zones across the Third Bone Spring and Wolfcamp;
  • Interests in three incremental operated units, four nonoperated units along with interests in three existing Abraxas-operated units;
  • 32 gross, 25 net operated potential locations; and
  • 48 gross, 8 net nonoperated potential locations, excluding increased working interests in existing operated units.

The acreage consists of about 1,888 net acres HBP and 120 net leasehold acres covered by a three-year primary term lease.

Abraxas plans to fund the acquisition using its line of credit with an anticipated closing date in June. The company’s capital budget of $110 million remains unchanged.

Watson said that during its 2017 equity raise the company’s goals were to add Delaware acreage; derisk its position; and increase its production.

Abraxas operates in the Rocky Mountain, Permian Basin and South Texas regions of the U.S.

Darren Barbee can be reached at dbarbee@hartenergy.com.