Abraxas Petroleum shares rise on Eagle Ford shale JV

Thu Aug 19, 2010 10:39am EDT

Aug 19 (Reuters) - Shares of Abraxas Petroleum Corp (AXAS.O) rose as much as 9 percent on Thursday, a day after the company signed a $100-million joint venture deal with privately held Blue Stone Oil & Gas LLC to develop its Eagle Ford shale play.

Abraxas, an independent energy company, said it will contribute 8,333 net acres in the shale play in South Texas and hold a 25 percent interest in the joint venture, Blue Eagle Energy LLC.

Blue Stone will begin by investing $25 million in the joint venture and over time contribute a total of $75 million in cash to receive a 75 percent interest, the companies said in a joint statement.

Abraxas will operate the wells in the play and Blue Stone will manage the day-to-day business affairs of the joint venture.

In March, San Antonio, Texas-based Abraxas had divested about $11.2 million of non-operated, non-core assets to repay debt and boost capital spending. [ID:nSGE62E0UJ]

Abraxas shares, which have lost about 24 percent of their value since touching a year-high in April, rose to $2.60 in early trade. They later pared some gains and were up 5 percent at $2.51 Thursday morning on Nasdaq. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Unnikrishnan Nair)