Abraxas to defer interest coupon on notes, expects to pay within grace period

New York, May 1 - Abraxas Petroleum Corp. said it will defer payment of $11 million of interest due May 1 on its $191 million of 11.5% senior secured notes maturing 2004.

The San Antonio, Texas oil and gas exploration and production company said it expects to be able to pay the coupon within the 30-day grace period using cash on hand and expected cash flows.

"While we are disappointed at having to utilize our grace period to make our interest payment, we are confident that this is a short-term timing issue caused by events beyond our control and not a long-term problem," said Abraxas chief executive officer Robert Watson in a news release.

"Although we have not had a conventional bank line for the past several years to assist in managing our liquidity needs, we have been successful in managing cash flow, fixed charges, capital expenditures, asset sales and other financings to meet all of our obligations timely, while developing our significant asset base. Nothing operationally has changed at Abraxas. The expected completion of our previously announced non-core asset sales and the recovery in commodity prices will allow us to continue to develop our sizable inventory of projects and to improve our balance sheet to maximize shareholder value."

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