ABRAXAS PETROLEUM TO SPIN OFF COAL SUBSIDIARY TO SHAREHOLDERS
ABRAXAS PETROLEUM TO SPIN OFF COAL SUBSIDIARY TO SHAREHOLDERS SAN ANTONIO, Sept. 9 /PRNewswire/ -- Abraxas Petroleum Corporation (NASDAQ: AXAS) today announced that its board of Directors has approved a plan to distribute all of the common shares of Western Associated Energy Corporation (WAECO), a wholly-owned Abraxas subsidiary, to existing Abraxas shareholders. Concurrently, WAECO announced that it has sold its operating coal mine subsidiary, Eastside Coal Company, Inc., to Castle Minerals Inc. for a $1 million note and 16,792,310 Castle common shares, giving WAECO approximately 90 percent ownership in Castle. Castle Minerals Inc. is listed on the Vancouver Stock Exchange, symbol CTN. Robert L. G. Watson, president of Abraxas, explained that the purpose of the spin-off is multifold. "WAECO is a development-stage mining company with a highly leveraged balance sheet, while Abraxas is a growth-oriented oil and gas company," Mr. Watson pointed out. "Hence, on a consolidated basis, WAECO's leverage masks some of the growth achieved by Abraxas' oil and gas operations."
Besides giving Abraxas shareholders additional liquidity, the two companies' business plans will be more easily discernible as separate, distinct entities, Mr. Watson said. Castle plans to raise equity capital in order to expand the Eastside Mine.
Abraxas plans to file the necessary documents with the Securities and Exchange Commission to seek approval of the distribution of WAECO's shares by Abraxas. The spin-off will be to shareholders of record at some future date after receipt of approval by the SEC. Abraxas Petroleum Corporation is a San Antonio-based oil and gas exploration and production company with operations in eight states. Through a subsidiary, the company owns an underground bituminous coal mine in western Colorado. -0- 9/9/92 /CONTACT: Robert L. G. Watson, president of Abraxas Petroleum, 512-828-5354, or Larry Howell of Howell Communications, Inc., 214-340-9994, for Abraxas/ (AXAS) CO: Abraxas Petroleum Corporation; Western Associated Energy Corp. ST: Texas IN: OIL SU:
AH -- NY073 -- 7641 09/09/92 15:50 EDT
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|Date:||Sep 9, 1992|
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