Abraxas Provides Operations, A&D and 2014 Guidance Update; Announces 2015 Guidance and Capital Budget

Abraxas Petroleum Corporation (“Abraxas” or the “Company”) (NASDAQ:AXAS) today provided the following operations, A&D and 2014 guidance update; announces 2015 guidance and capital budget.

Williston Basin

At Abraxas’ North Fork prospect, in McKenzie County, North Dakota, the Company successfully fracture stimulated the Ravin 4H, which produced 1,143 boepd (914 barrels of oil per day, 1,376 mcf of natural gas per day)(1) over the well’s peak 30 days of production. In the Stenehjem unit, Abraxas recently set production casing in the lateral of the 4H. The three Stenehjem wells are scheduled to be fracture stimulated next week. Abraxas recently set surface casing on the Jore 5H, 6H, 7H and 8H. Next, the Company will drill the intermediate sections of all four wells. Abraxas owns a working interest of approximately 53%, 73% and 76% in the Ravin, Stenehjem and Jore wells, respectively.

Eagle Ford

At Abraxas’ Jourdanton prospect in Atascosa County, Texas, the Ribeye 1H produced 240 boepd (222 barrels of oil per day, 107 mcf of natural gas per day)(1) over the well’s peak 30 days of production. The Ribeye 2H produced 389 boepd (359 barrels of oil per day, 184 mcf of natural gas per day)(1) over the well’s peak 30 days of production. On the southern fault block of Abraxas’ Jourdanton prospect, the Company recently drilled and cased the Cat Eye 1H to 15,425 feet (6,500 foot lateral). The Cat Eye 1H is scheduled to be fracture stimulated in December. Abraxas is currently drilling the first of a two well pad in the northern fault block in Jourdanton at the Grass Farm 2H and 3H (7,600 and 5,800 foot laterals, respectively). Abraxas owns a 100% working interest across the Jourdanton prospect.

At Abraxas’ Cave prospect, in McMullen County, Texas, the Company successfully completed the Dutch 3H and Dutch 4H with a combined 74 frac stages. Both wells are expected to begin flowback shortly. Abraxas holds a 100% working interest in the Dutch 3H and 4H.

A&D Update

Abraxas recently monetized the Company’s Canadian subsidiary, Canadian Abraxas Petroleum, for approximately USD$3.0 million. In total, the Company received USD$3.4 million in proceeds from the sale of the subsidiary and various assets since the beginning of 2014. The assets sold produced on average 67 boepd (39 barrels of oil per day, 147 mcf of natural gas per day, 3 barrels of NGLs per day) for the month of September.

Fourth Quarter and Full Year 2014 Guidance Update

Abraxas is providing the following guidance for the Fourth Quarter and Full Year 2014:

(2) Cash G&A for the fourth quarter includes the potential accrual of bonuses on the Company’s incentive bonus plan. Incentive bonuses are calculated based off Net Asset Value (“NAV”) growth. Any potential bonus earned is unknown until Abraxas’ receives the Company’s fully audited reserve report as of December 31, 2014. These reserves numbers are furnished by the Company’s reserve engineers, Degolyer & MacNaughton, in the first quarter of 2015 and are used to calculate NAV growth. For purposes of this estimate, management is assuming a full bonus accrual. See Abraxas proxy statement filed on April 2, 2014 with the SEC for more information on Abraxas’ incentive bonus plan.

2015 Guidance and Capital Budget

Abraxas recently received board approval for a $200 million capital budget for 2015 (broken down in further detail below). Estimated production volumes associated with this budget are forecasted to be 9,050 boepd at the midpoint of guidance, representing 50% growth over 2014 estimated volumes. At the midpoint of guidance, lease operating expenses are projected to decline to approximately $11.00/boe from $12.50/boe in 2015 from 2014, respectively. Abraxas plans to fully fund the capital program with cash flow from operations and current liquidity on the Company’s credit facility. Importantly, using current strip pricing, management projects this budget allows the Company to maintain its commitment of operating under 1.0x debt to forward twelve months EBITDA.

Bakken: Abraxas plans to run a one rig Bakken program with the Company owned rig, Raven Drilling #1, for all of 2015. This capital program assumes the drilling of 12 gross/8 net wells and the completion 7 gross/4 net wells.

Eagle Ford: Abraxas plans to run a one rig Eagle Ford program for all of 2015. This capital program assumes the drilling of three gross/net wells and completion of five gross/net wells on the Company’s northern fault block at Jourdanton; the drilling of 10 gross/net wells and completion of eight gross/net wells on the Company’s southern fault block at Jourdanton; and the drilling of three gross/net wells and completion of four gross/net wells on the Company’s Dilworth East prospect.

Permian: Abraxas plans to further develop the Company’s Clearfork assets in Scurry and Mitchell County, Texas with a 29 gross / 27 net well development in 2015. The 2015 program will consist of 11 recompletions, eight workovers and 10 new drill wells.

PRB: Abraxas is currently marketing its PRB assets and plans to have a definitive answer on whether the Company will consummate a transaction by year end. Should Abraxas consummate a deal on the Company’s PRB assets, the proceeds will be used to further accelerate Eagle Ford and Permian development and for additional leasing in the Eagle Ford and Bakken.

Leasing/Other: Abraxas is budgeting $12.1 million for additional leasing, primarily in the Bakken and Eagle Ford, in addition to miscellaneous CAPEX for 2015.

Bob Watson, President and CEO of Abraxas, commented, “As we see the landscape today, we are comfortable pursuing a $200 million capital budget, which the Company anticipates fully funding via cash flow from operations and availability on Abraxas’ credit facility. This capital budget allows the Company to continue its rapid growth, while drilling several high impact wells to derisk potential future development.

“Our core principles at Abraxas remain generating strong rates of return on each well we drill, continuing our disciplined and focused development model and maintaining our strong balance sheet. Thus, it is Abraxas intention to remain very nimble with the Company’s 2015 capital plan. In the event commodity prices continue to deteriorate, capital spending can be swiftly reduced in all areas. This deferral of capital spending will have the added benefit of protecting Abraxas’ pristine balance sheet allowing the Company to aggressively pursue acquisitions in a distressed environment.

“In either scenario, we look forward to what promises to be a very productive 2015.”

(1) The production rates for each well do not include the impact of natural gas liquids and shrinkage at the processing plant and include flared gas.

Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploration and production company with operations across the Rocky Mountain, Permian Basin and onshore Gulf Coast regions of the United States.

Safe Harbor for forward-looking statements: Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause Abraxas’ actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be necessarily limited to, changes in the prices received by Abraxas for crude oil and natural gas. In addition, Abraxas’ future crude oil and natural gas production is highly dependent upon Abraxas’ level of success in acquiring or finding additional reserves. Further, Abraxas operates in an industry sector where the value of securities is highly volatile and may be influenced by economic and other factors beyond Abraxas’ control. In the context of forward-looking information provided for in this release, reference is made to the discussion of risk factors detailed in Abraxas’ filings with the Securities and Exchange Commission during the past 12 months.