UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
February 26, 2004
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State of other jurisdiction of incorporation)
0-19118 74-2584033
(Commission File Number) (I.R.S. Employer Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
210-490-4788
Item 7. Financial Statements and Exhibits.
(c) Exhibits
10.1 Amendment No. 2 dated as of February 23, 2004 to Loan and Security
Agreement by and among Abraxas Petroleum Corporation, the subsidiaries of
Abraxas that are signatories thereto, as Guarantors, the Lenders that are
signatories thereto, as Lenders, and Wells Fargo Foothill, Inc., formerly known
as Foothill Capital Corporation, as the Arranger and Administrative Agent.
99.1 Press Release dated February 24, 2004.
Item 9. Regulation FD Disclosure.
On February 23, 2004, Abraxas entered into an amendment to its existing
senior credit agreement providing for two revolving credit facilities and a new
non-revolving credit facility as described below. Subject to earlier termination
on the occurrence of events of default or other events, the stated maturity date
for these credit facilities is February 1, 2007. In the event of an early
termination, we will be required to pay a prepayment premium, except in the
limited circumstances described in the amended senior credit agreement.
First Revolving Credit Facility. Lenders under the amended senior credit
agreement have provided a revolving credit facility to Abraxas with a maximum
borrowing base of up to $20 million. Our current borrowing base under this
revolving credit facility is the full $20.0 million, subject to adjustments
based on periodic calculations and mandatory prepayments under the senior credit
agreement. We have borrowed $6.6 million under this revolving credit facility,
which was used to refinance principal and interest on advances under our
preexisting revolving credit facility under the senior credit agreement, and to
pay certain fees and expenses relating to the transaction. Outstanding amounts
under this revolving credit facility bear interest at the prime rate announced
by Wells Fargo Bank, N.A. plus 1.125%.
Second Revolving Credit Facility. Lenders under the amended senior credit
agreement have provided a second revolving credit facility to Abraxas, with a
maximum borrowing of up to $30 million. This revolving credit facility is not
subject to a borrowing base. We have borrowed $30.0 million under this revolving
credit facility, which was used to refinance principal and interest on advances
under our preexisting revolving credit facility, and to pay certain transaction
fees and expenses. Outstanding amounts under this revolving credit facility bear
interest at the prime rate announced by Wells Fargo Bank, N.A. plus 3.00%.
Non-Revolving Credit Facility. Abraxas has borrowed $15.0 million pursuant
to a non-revolving credit facility, which was used to repay the preexisting term
loan under our senior credit agreement, to refinance principal and interest on
advances under the preexisting revolving credit facility, and to pay certain
transaction fees and expenses. This non-revolving credit facility is not subject
to a borrowing base. Outstanding amounts under this credit facility bear
interest at the prime rate announced by Wells Fargo Bank, N.A. plus 8.00%.
Covenants. Under the amended senior credit agreement, Abraxas is subject to
customary covenants and reporting requirements. Certain financial covenants
require Abraxas to maintain minimum ratios of consolidated EBITDA (as defined in
the amended senior credit agreement) to adjusted fixed charges (which includes
certain capital expenditures), minimum ratios of consolidated EBITDA to cash
interest expense, a minimum level of unrestricted cash and revolving credit
availability, minimum hydrocarbon production volumes and minimum proved
developed hydrocarbon reserves. In addition, if on the day before the end of
each fiscal quarter the aggregate amount of our cash and cash equivalents
exceeds $2.0 million, we are required to repay the loans under the amended
senior credit agreement in an amount equal to such excess. The amended senior
credit agreement also requires us to enter into hedging agreements on not less
than 40% or more than 75% of our projected oil and gas production. We are also
required to establish deposit accounts at financial institutions acceptable to
the lenders and we are required to direct our customers to make all payments
into these accounts. The amounts in these accounts will be transferred to the
lenders upon the occurrence and during the continuance of an event of default
under the amended senior credit agreement.
In addition to the foregoing and other customary covenants, the amended
senior credit agreement contains a number of covenants that, among other things,
restrict our ability to:
o incur additional indebtedness;
o create or permit to be created liens on any of our properties;
o enter into change of control transactions;
o dispose of our assets;
o change our name or the nature of our business;
o make guarantees with respect to the obligations of third parties;
o enter into forward sales contracts;
o make payments in connection with distributions, dividends or
redemptions relating to our outstanding securities, or
o make investments or incur liabilities.
Security. The obligations of Abraxas under the amended senior credit
agreement continue to be secured by a first lien security interest in
substantially all of Abraxas' assets, including all crude oil and natural gas
properties.
Guarantees. The obligations of Abraxas under the amended senior credit
agreement continue to be guaranteed by Abraxas' subsidiaries, Sandia Oil & Gas,
Sandia Operating, Wamsutter, Grey Wolf, Western Associated Energy and Eastside
Coal. The guarantees under the amended senior credit agreement continue to be
secured by a first lien security interest in substantially all of the
guarantors' assets, including all crude oil and natural gas properties.
Events of Default. The amended senior credit agreement contains customary
events of default, including nonpayment of principal or interest, violations of
covenants, inaccuracy of representations or warranties in any material respect,
cross default and cross acceleration to certain other indebtedness, bankruptcy,
material judgments and liabilities, change of control and any material adverse
change in our financial condition.
SIGNATURES
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/ Chris Williford
Chris Williford
Executive Vice President, Chief Financial
Officer and Treasurer
Dated: February 26, 2004