SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ] [ ] Confidential, for Use of the
Commission Only
Filed by a party other than the Registrant (as permitted by Rule 14a-6(e)(2))
[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
ABRAXAS PETROLEUM CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ABRAXAS PETROLEUM CORPORATION
April 24, 1998
Dear Stockholders:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of Abraxas Petroleum Corporation to be held on Friday, May 22,
1998, at 9:00 a.m., at the Petroleum Club of San Antonio located at 8620 North
New Braunfels, San Antonio, Texas. We hope that you will be able to attend the
meeting. Matters on which action will be taken at the meeting are explained in
detail in the Notice and Proxy Statement following this letter.
Whether or not you expect to be present and regardless of the number of
shares you own, please mark, sign and mail the enclosed proxy in the envelope
provided.
Robert L. G. Watson
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
ABRAXAS PETROLEUM CORPORATION
500 NORTH LOOP 1604 EAST, SUITE 100
SAN ANTONIO, TEXAS 78232
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
To the Stockholders of
Abraxas Petroleum Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Abraxas Petroleum Corporation (the "Company") will be held at the Petroleum Club
of San Antonio located at 8620 North New Braunfels, San Antonio, Texas 78217, on
Friday, May 22, 1998 at 9:00 A.M., local time, for the following purposes:
(1) To elect three directors;
(2) To approve the appointment of auditors for the 1998 fiscal year;
and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the Bylaws of the Company and a resolution of the
Board of Directors, the record date for the meeting has been fixed at April 13,
1998. Only stockholders of record at the close of business on that date will be
entitled to vote at the meeting or any adjournment thereof.
Stockholders who do not expect to attend the meeting in person are urged
to sign the enclosed proxy and return it promptly to the Company. A return
envelope is enclosed for that purpose.
By Order of the Board of Directors
Stephen T. Wendel
Secretary
Dated: April 24, 1998
<PAGE>
ABRAXAS PETROLEUM CORPORATION
500 NORTH LOOP 1604 EAST, SUITE 100
San Antonio, Texas 78232
PROXY STATEMENT
-----------------------
The accompanying Proxy is solicited by the Board of Directors of Abraxas
Petroleum Corporation, a Nevada corporation (the "Company" or "Abraxas"), to be
voted at the 1998 Annual Meeting of Stockholders to be held on May 22, 1998, and
at any adjournments thereof, at the Petroleum Club of San Antonio located at
8620 North New Braunfels, San Antonio, Texas 78217. This Proxy Statement and the
accompanying Proxy are being mailed to stockholders on or about April 24, 1998.
VOTING AND PROXIES
Only holders of record of common stock, par value $.01 per share
("Common Stock"), of the Company at the close of business on April 13, 1998
shall be entitled to vote at the meeting. There were 6,430,378 shares of Common
Stock issued and outstanding on the record date. Stockholders are entitled to
one vote for each share of Common Stock held as of the record date. Any
stockholder giving a proxy has the power to revoke the same at any time prior to
its use by giving notice in person or in writing to the Secretary of the
Company.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
1998 Annual Meeting of Stockholders and any adjournment thereof. Assuming the
presence of a quorum, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present at the meeting, in person or by
proxy, voting together as a single class is necessary for the approval of the
election of directors and/or ratification of the Company's independent auditors.
Under Nevada law and the Company's Bylaws, abstentions and broker non-votes are
tabulated in determining the number of shares present at the meeting.
Consequently, an abstention or a broker non-vote has the same effect as a vote
against a proposal or a director nominee, as each abstention or broker non-vote
would be one less vote in favor of a proposal or for a director nominee.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company divide the Board of
Directors into three classes of Directors serving staggered three-year terms,
with one class to be elected at each Annual Meeting. At this year's meeting,
three Directors are to be elected for terms of three years, each to hold office
until the expiration of his term in 2001 or until a successor shall have been
elected and shall have qualified. The terms of the remaining Directors will
continue as indicated below.
The shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the three nominees for the Board of
Directors named below. Each of the nominees is now serving as a Director and
each was elected at the Annual Meeting in 1995.
Information Regarding Nominees for Election as Directors
James C. Phelps, age 75, a director of Abraxas since December 1983, has
been a consultant to crude oil and natural gas exploration and production
companies such as Panhandle Producing Company and Tesoro Petroleum Corporation
since April 1981. Mr. Phelps served as a director of Grey Wolf Exploration Ltd.,
a subsidiary of the Company ("Grey Wolf"), from April 1995 until November 1997
and of Cascade Oil & Gas, Ltd., a subsidiary of the Company ("Cascade"), since
January 1996. From April 1995 to May 1996, Mr. Phelps served as Chairman of the
Board and Chief Executive Officer of Grey Wolf, and from January 1996 to May
1996, he served as President of Cascade. From March 1983 to September 1984, he
served as President of Osborn Heirs Company, a privately owned crude oil
exploration and production company based in San Antonio. Mr. Phelps was
President and Chief Operating Officer of Tesoro Petroleum Corporation from 1971
to 1981 and prior to that was Senior Vice President and Assistant to the
President of Continental Oil Company. He received a Bachelor of Science degree
in Industrial Engineering and a Master of Science degree in Industrial
Engineering from Oklahoma State University.
Robert L. G. Watson, age 47, has served as Chairman of the Board,
President, Chief Executive Officer and a director of Abraxas since 1977. From
May 1996 to November 1997, Mr. Watson also served as Chairman of the Board,
Chief Executive Officer and a director of Grey Wolf and since May 1996, Mr.
Watson has served as Chairman of the Board and a director of Cascade. In
November 1996, Mr. Watson was elected Chairman of the Board, President and as a
director of Canadian Abraxas. Prior to joining Abraxas, Mr. Watson was employed
in various petroleum engineering positions with Tesoro Petroleum Corporation, a
crude oil and natural gas exploration and production company, from 1972 through
1977, and DeGolyer & McNaughton, an independent petroleum engineering firm, from
1970 to 1972. Mr. Watson received a Bachelor of Science degree in Mechanical
Engineering from Southern Methodist University in 1972 and a Master of Business
Administration degree from the University of Texas at San Antonio in 1974.
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Chris E. Williford, age 47, was elected Vice President, Treasurer and
Chief Financial Officer of the Company in January 1993, and as Executive Vice
President and a director of the Company in May 1993. Prior to joining the
Company, Mr. Williford was Chief Financial Officer of American Natural Energy
Corporation, a crude oil and natural gas exploration and production company,
from July 1989 to December 1992 and President of Clark Resources Corp., a crude
oil and natural gas exploration and production company, from January 1987 to May
1989. Mr. Williford received a Bachelor of Science degree in Business
Administration from Pittsburg State University in 1973.
Terms Expiring in 1999
Franklin A. Burke, age 64, a director of the Company since June 1992,
has served as President and Treasurer of Venture Securities Corporation since
1971, where he is in charge of research and portfolio management. He has also
been a general partner and director of Burke, Lawton, Brewer & Burke, a
securities brokerage firm, since 1964, where he is responsible for research and
portfolio management. Mr. Burke also serves as a director of Suburban Community
Bank, a commercial bank, JER Ventures, a retail furniture company, Omega
Institute, a job training entity, and Starkey Chemical Process Co., a chemical
processing company. Mr. Burke received a Bachelor of Science degree in Finance
from Kansas State University in 1955, a Master's degree in Finance from
University of Colorado in 1960 and studied at the graduate level at the London
School of Economics from 1962 to 1963.
Harold D. Carter, age 59, has served as a director of the Company since
May 1996. Mr. Carter has more than 30 years experience in the oil and gas
industry and has been an independent consultant since 1990. Prior to consulting,
Mr. Carter served as Executive Vice President of Pacific Enterprises Oil Company
(USA). Before that, Mr. Carter was associated for 20 years with Sabine
Corporation, ultimately serving as President and Chief Operating Officer from
1986 and 1989. Mr. Carter consults for Endowment Advisors, Inc. with respect to
its EEP Partnerships and Associated Energy Managers, Inc. with respect to its
Energy Income Fund, L.P. and is a director of Brigham Exploration Company. Mr.
Carter has a B.B.A. in Petroleum Land Management from the University of Texas
and has completed the Program for Management Development at the Harvard
University Business School.
Robert D. Gershen, age 44, a director of the Company since May 1995, has
served as President of Associated Energy Managers, Inc., an investment manager
specializing in structuring and managing private investments in the energy
industry, since July 1989. Mr. Gershen has served as an investment advisor to
Endowment Energy Partners, L.P. and Endowment Energy Partners II, Limited
Partnership, limited partnerships formed to make loans to companies in the crude
oil and natural gas business, since October 1989 and January 1993, respectively.
Mr. Gershen is also a managing director of EIF General Partner, L.L.C., which
serves as the general partner of Energy Income Fund, L.P. which invests in
reserve-backed energy loans and related securities of small independent crude
oil and natural gas exploration and production companies.
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Terms Expiring in 2000
Richard M. Kleberg, III, age 55, a director of the Company since
December 1983, has held the position of managing partner of SFD Enterprises,
Ltd., a private investment partnership, since 1980. Mr. Kleberg has served on
the boards of directors of Cullen Frost Bankers, Inc., a bank holding company,
since 1992; 1776 Restaurants, Inc., a restaurant concern, since 1983; The Frost
National Bank of San Antonio, a national banking association, since 1984; and
Kleberg & Co. Bankers, Inc., a bank holding company, since 1980. Mr. Kleberg
holds a Bachelor of Science degree in Political Science from Trinity University.
Paul A. Powell, Jr., age 52, a director of the Company since 1987, is
currently Trustee of the Paul A. Powell Trust and has served as Vice President
and Director of Mechanical Development Co., Inc., a tool and die and production
machine company, since 1984. He also serves as trustee of sixteen investment
trusts. Mr. Powell is a director and officer of Frameco, Inc., a tool and die
and production machine company, Somerset Investments, Ltd., an investment
company, and Powell Lake Properties, a real estate investment and management
company. He attended Emory and Henry College and graduated from National
Business College with a degree in Accounting.
Richard M. Riggs, age 77, a director of the Company since 1985, is a
self-employed geological consultant. He served as Vice President of Petro
Consultants Energy Corporation, a crude oil and natural gas exploration and
production company, from June 1978 to December 1984. Mr. Riggs has served as a
director of Cascade, since May 1996. He has previously been employed by Tesoro
Petroleum Corporation, a crude oil and natural gas exploration and production
company, as Exploration Vice President for North America, and prior to that time
was Manager of Domestic Exploration for Ashland Oil, Inc., a crude oil and
natural gas exploration and production company. Mr. Riggs graduated with a
Bachelors degree in Geology from Dartmouth College and a Masters degree in
Geology from Columbia University.
INFORMATION CONCERNING DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors
held four meetings. All directors attended each of these meetings. During 1997,
the Company's directors other than Messrs. Watson and Williford received
compensation for service to the Company as a director under the Company's
Restricted Share Plan For Directors (the "Director Share Plan"). See "Executive
Compensation -- Compensation of Directors." Directors also received
reimbursement of travel expenses to attend meetings of the Board of Directors.
None of the nominees for director or the executive officers of the
Company has a family relationship with any of the other executive officers or
other nominees for director. Except for Richard M. Kleberg, III, who is a
director of Cullen Frost Bankers, Inc., and Harold D. Carter, who is a director
of Brigham Exploration Company, none of the nominees or continuing directors is
a director of any other company which has a class of securities registered
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under, or is required to file reports under, the Securities Exchange Act of 1934
or of any company registered under the Investment Company Act of 1940.
The Company believes, based solely on its review of the copies of
Section 16(a) forms furnished to the Company and written representations from
executive officers and directors, that all Section 16(a) filing requirements
have been fulfilled. In making this disclosure, the Company has relied solely on
written representations of its directors and executive officers (and its ten
percent stockholders) and copies of the reports that they have filed with the
Securities and Exchange Commission.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors, which consists of Messrs.
Kleberg, Phelps and Riggs, met two times during 1997. The functions of the Audit
Committee are to recommend the appointment of the Company's independent
auditors, to review the arrangements for and the scope of the annual audit and
to review internal accounting controls.
The Compensation Committee of the Board of Directors, which consists of
Messrs. Kleberg, Phelps and Riggs, met one time during 1997. The functions of
the Compensation Committee are to review and make recommendations concerning the
compensation of the Company's executive and non-executive officers. The
Compensation Committee also administers the Company's 1984 Incentive Stock
Option Plan, 1984 Nonqualified Stock Option Plan, 1993 Key Contributor Stock
Option Plan and 1994 Long Term Incentive Plan.
The Nominating Committee, which consists of Messrs. Phelps, Powell and
Riggs did not meet during 1997. The function of the Nominating Committee is to
seek out, evaluate and recommend to the Board qualified nominees for election as
directors of the Company and to consider other matters pertaining to the size
and composition of the Board. The Nominating Committee will give appropriate
consideration to qualified persons recommended by stockholders for nomination as
directors of the Company provided that such recommendations are accompanied by
information sufficient to enable the Nominating Committee to evaluate the
qualifications of the nominee.
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SECURITIES HOLDINGS OF PRINCIPAL STOCKHOLDERS,
DIRECTORS, NOMINEES AND OFFICERS
Based upon information received from the persons concerned, each person
known to the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock of the Company, each director and nominee for
director, and all directors and officers of the Company as a group, owned
beneficially as of March 31, 1998 the number and percentage of outstanding
shares of Common Stock of the Company indicated in the following table:
Name and Address of
Beneficial Owner Number of Shares (1) Percentage
Robert L. G. Watson 324,505 (2) 4.91
Endowment Advisors, Inc. 863,790 (3) 13.54
450 Post Road East
Westport, CT 06881
Wellington Management Company 505,000 (4) 7.92
75 State Street
19th Floor
Boston, MA 02109
State Street Research & 375,000(5) 5.92
Management Company
One Financial Center,
30th Floor
Boston, MA 02111
Dimensional Fund Advisors, Inc. 344,900 (6) 5.41
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Franklin A. Burke 117,468 (7) 1.78
Paul A. Powell, Jr. 35,389 (8) *
James C. Phelps 36,125 (9) *
Richard M. Kleberg, III 34,032 (10) *
Robert D. Gershen 26,804 (11) *
Chris E. Williford 49,345 (12) *
Richard M. Riggs 16,331 (13) *
Harold D. Carter 10,318 (14) *
Robert E. Patterson 27,223 (15) *
Stephen T. Wendel 35,995 (16) *
Jack M. Roney 16,572 (17)
All Officers and Directors 730,107 (2)(7)(8) 11.00
as a Group (11 persons) (9)(10)
(11)(12)
(13)(14)
(15)(16)
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* Less than 1%
(1) Unless otherwise indicated, all shares are held directly with sole
voting and investment power.
(2) Includes 20,316 shares owned by Wind River Resources Corporation, a
corporation owned by Mr. Watson, as to which Mr. Watson has sole voting
and investment power, 21,907 shares issuable upon exercise of options
granted pursuant to Abraxas Petroleum Corporation 1993 Key Contributor
Stock Option Plan and 58,093 shares issuable upon exercise of options
granted pursuant to the Abraxas Petroleum Corporation 1994 Long Term
Incentive Plan. Does not include a total of 75,880 shares owned by the
Robert L. G. Watson, Jr. Trust and the Carey B. Watson Trust, the
trustees of which are Mr. Watson's brothers and the beneficiaries of
which are Mr. Watson's children. Mr. Watson disclaims beneficial
ownership of the shares owned by these trusts.
(3) Includes 643,585 shares of Common Stock owned by Endowment Energy
Partners, L.P. ("EEP") and 220,205 shares of Common Stock owned by
Endowment Energy Partners II, Limited Partnership ("EEP II"). EEP and
EEP II are limited partnerships whose investors are educational
institutions and which were formed to make loans to companies in the
crude oil and natural gas business. The general partner of both EEP and
EEP II is Fairfield Partners, Inc. (Del.) ("Fairfield") which is a
wholly-owned subsidiary of Endowment Advisers, Inc. ("EAI"), a Delaware
nonstock corporation controlled by its trustees and management. Voting
and investment power over the shares held by EEP and EEP II is exercised
by the Board of Trustees of EAI, and by Susan J. Carter, the Senior Vice
President and Chief Operating Officer of both EAI and Fairfield. The
trustees of EAI are principally individuals who are financial officers
of educational institutions that have invested in investment
partnerships sponsored by EAI, including EEP and EEP II.
(4) Wellington Management Company is an investment manager which has the
power to make investment decisions for unrelated clients.
(5) State Street Research & Management Company is an investment manager
which has the power to make investment decisions for unrelated clients.
(6) Persons who are officers of Dimensional Fund Advisors Inc. also serve as
officers of DFA Investment Dimensions Group, Inc. (the "Fund") and The
DFA Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940.
In their capacities as officers of the Fund and the Trust, these persons
vote 50,000 shares which are owned by the Fund and 57,200 shares which
are owned by the Trust.
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(7) Includes 8,900 shares issuable upon exercise of options granted pursuant
to the Abraxas Petroleum Corporation 1984 Non-Qualified Stock Option
Plan and 2,000 shares issuable upon exercise of options granted pursuant
to the Director Option Plan.
(8) Includes 4,228 shares owned by Mechanical Development Co., Inc., all of
the outstanding capital stock of which is owned by members of Mr.
Powell's family, 13,998 shares owned by the Paul A. Powell Trust of
which Mr. Powell is a trustee and his family members are the primary
beneficiaries, 51 shares owned by the Paul A. Powell Individual Trust of
which Mr. Powell is a trustee, and 63 shares owned by NAD Properties of
which Mr. Powell is a general partner. Mr. Powell shares voting and
investment power as to all of such shares. Also includes 2,000 shares
issuable upon exercise of options granted pursuant to the Director
Option Plan.
(9) Includes 8,000 shares owned by Marie Phelps, Mr. Phelps' wife and 2,000
shares issuable upon exercise of options granted pursuant to the
Director Option Plan.
(10) Includes 16,688 shares owned by SFD Enterprises, Ltd., a private
investment partnership, and 2,000 shares issuable upon exercise of
options granted pursuant to the Director Option Plan. Mr. Kleberg shares
voting and investment power as to the shares owned by SFD Enterprises.
(11) Includes warrants to purchase 13,500 shares of Common Stock at a price
of $7.00 per share owned by Associated Energy Managers, Inc., the
principal shareholder and Chief Executive Officer of which is Mr.
Gershen, and 2,000 shares issuable upon exercise of options granted
pursuant to the Director Option Plan.
(12) Includes 1,786 shares issuable upon exercise of options granted pursuant
to the Abraxas Petroleum Corporation 1984 Incentive Stock Option Plan,
18,214 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 1993 Key Contributor Stock Option Plan and
25,000 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 1994 Long
Term Incentive Plan.
(13) Includes 700 shares owned by the Riggs Family Trust of which Mr. Riggs
is one of the trustees, 1,000 shares owned jointly by Mr. Riggs and his
wife and 2,000 shares issuable upon exercise of options granted pursuant
to the Director Option Plan.
(14) Includes 2,000 shares issuable upon exercise of options granted pursuant
to the Director Option Plan.
(15) Includes 25,000 shares issuable upon exercise of options granted
pursuant to the Abraxas Petroleum Corporation 1994 Long Term Incentive
Plan.
(16) Includes 4,340 shares issuable upon exercise of options granted pursuant
to the Abraxas Petroleum Corporation 1984 Incentive Stock Option Plan,
10,000 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 1993 Key Contributor Stock Option Plan and
19,665 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 1994 Long
Term Incentive Plan.
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(17) Includes 10,000 shares issuable upon exercise of options granted
pursuant to the Abraxas Petroleum Corporation 1993 Key Contributor Stock
Option Plan and 6,500 shares issuable upon exercise of options granted
pursuant to the Abraxas Petroleum Corporation 1994 Long Term Incentive
Plan.
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EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of directors who are not employees of the Company. The
Committee is responsible for establishing and administering the compensation
levels for the Company's executive and non-executive officers. The members of
the Committee believe that the ability to attract and retain qualified executive
and non-executive officers and provide appropriate incentives to the Company's
executive and non-executive officers is essential to the long-term success of
the Company.
In determining executive compensation, the Committee reviews the
compensation programs, pay levels and business results of the Company as
compared to those crude oil and natural gas exploration and production companies
included in the KPMG Peat Marwick LLP 1997 Energy Compensation Survey (the "KPMG
Survey").
Compensation Philosophy and Objectives. The philosophy underlying the
development and administration of the Company's annual and long-term
compensation plans is to align the interests of management with those of the
Company's stockholders. Key elements of this philosophy are:
*Establishing compensation plans that deliver base salaries which are
competitive with the companies included in the KPMG Survey, within the
Company's budgetary constraints and commensurate with the Company's
performance as measured by operating, financial and strategic
objectives.
*Providing equity-based incentives for executive and non-executive
officers to ensure that they are motivated over the long-term to respond
to the Company's business challenges and opportunities as owners rather
than just as employees.
*Rewarding executive and non-executive officers for outstanding
performance particularly where such performance is reflected by an
increase in the value of the Company's Common Stock.
The compensation currently paid to the Company's executive and non-executive
officers consists of base salary, various employee benefits (including medical
and life insurance and 401(k) plan benefits generally available to all employees
of the Company), annual cash bonuses and grants of stock options and awards
under the Company's 1994 Long Term Incentive Plan (the "LTIP").
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Elements of the Executive Compensation Program.
Base Salaries. The Committee believes that the Company's base salary
levels for executive officers are consistent with the practices of the companies
included in the KPMG Survey. Increases in base salary levels from time to time
are designed to reflect competitive practices in the industry, financial
performance of the Company and individual performance of the officer.
In the first quarter of each year, the Chief Executive Officer submits
to the Committee recommendations for salary adjustments based upon his
subjective evaluation of individual performance and his subjective judgment
regarding setting each executive and non-executive officer's salary within the
Company's salary range. This range is set by reference to the salaries paid by
the companies included in the KPMG Survey while remaining within the Company's
budgetary constraints. The companies included in the KPMG Survey are used to
compare the Company's salary structure to that of other companies that compete
with the Company for executives but without targeting salaries to be higher,
lower or approximately the same as those of the companies included in the KPMG
Survey. The Committee does not consider the performance of any of the companies
included in the KPMG Survey in setting the Company's salary structure.
Annual Cash Bonuses. In 1994, the Board of Directors adopted an annual
cash bonus plan which established certain criteria for the payment of annual
cash bonuses to all officers of the Company at or above the Vice President
level. The plan was amended in 1997. Under the plan as amended, each participant
is given an annual bonus opportunity based on the achievement of certain goals.
For Messrs. Watson and Williford, the base bonus could be as high as 35% of base
salary if all goals are attained. For Messrs. Wendel, Patterson, Roney and
Lischer, the bonus could be as high as 25% of base salary if all goals are
attained. The amount of the bonuses to be paid to Messrs. Watson, Williford,
Wendel and Roney, if any, will be based upon attaining goals set by the Board of
Directors after assessing the recommendations of management for earnings per
share, cash flow per share, share price and general and administrative expenses
per barrel of oil equivalent produced ("G & A"), with each factor being weighted
equally in the calculation. With respect to officers responsible for the
Company's operations, including Mr. Patterson, earnings per share, cash flow per
share, share price and G & A will account for 50% of the calculation and
performance factors unique to the Company's operations will account for the
remaining 50% of the calculation. With respect to officers responsible for the
Company's exploration and geological activities, including Mr. Lischer, all of
the goals described above are included and account for 50% of the calculation
and a goal for incremental proved (booked) reserves from certain properties
accounts for the remaining 50%. If all performance goals are met or exceeded,
additional bonuses of up to 25% of base salary can be earned by each
participant. The Board has the prerogative to adjust the bonus earned by any
participant, including Messrs. Watson, Williford, Patterson, Wendel, Lischer and
Roney, to take into account extraordinary factors not contemplated by the bonus
plan when the impact of such contributions or factors cannot be adequately
reflected by the bonus determined under the methodology described above. In
1997, the goals for share price and G & A were attained. As a result, the
following bonuses were paid:
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Name Amount
Robert L.G. Watson $39,375
Chris E. Williford $26,250
Robert E. Patterson $ 9,375
Stephen T. Wendel $13,750
Jack M. Roney $ 6,000
All of these bonuses were paid one-half in cash and one-half in shares
of the Common Stock.
Long-Term Incentives. In 1994, the Board adopted the LTIP in order to
compensate executive and non-executive officers and employees who contribute
significantly to the operation of the Company. The LTIP makes available to the
Committee a number of incentive devices such as incentive stock options and
non-qualified stock options, stock appreciation rights, restricted stock,
performance units, performance shares and dividend units. The Committee adopts
administrative guidelines from time to time which define specific eligibility
criteria, the types of awards to be employed and the value of such awards.
Specific terms of each award, including minimum performance criteria which must
be met to receive payment, are provided in individual award agreements granted
to each award recipient. Award agreements also contain change in control
provisions. Option holdings and previous awards are not taken into account.
The Board believes that the LTIP has given the Company the flexibility
to structure awards to meet the Company's business needs. In making long-term
incentive awards under the LTIP, the Committee seeks to ensure that the total
compensation package, including cash compensation, is competitive with the
compensation paid by the companies included in the KPMG Survey, yet
substantially contingent upon the success of individual and corporate efforts to
produce attractive long-term returns to the Company's stockholders.
CEO Compensation. Mr. Watson's salary in 1997 was based on the
Committee's evaluation of his performance and the Company's performance, after
reviewing competitive salary data from the companies included in the KPMG Survey
and the Company's budgetary constraints. The Committee's determination of Mr.
Watson's total salary was based upon the salaries paid to chief executive
officers of the companies included in the KPMG Survey and the salary structure
of the Company.
Policy on Deductibility of Compensation. In 1993, the federal tax laws
were amended to limit the deduction a publicly-held company is allowed for
compensation paid to the chief executive officer and to the four most highly
compensated executive officers other than the chief executive officer.
Generally, amounts paid in excess of $1 million to a covered executive, other
than performance-based compensation, cannot be deducted. In order to constitute
performance-based compensation for purposes of the tax law, the performance
12
<PAGE>
measures must be approved by the stockholders. Since the Company does not
anticipate that the compensation for any executive officer will exceed the $1
million threshold in the near term, stockholder approval necessary to maintain
the tax deductibility of compensation at or above that level is not being
requested. The Committee will reconsider this matter if compensation levels
approach this threshold, in light of the tax laws then in effect. The Committee
will consider ways to maximize the deductibility of executive compensation,
while retaining the discretion the Committee deems necessary to compensate
executive officers in a manner commensurate with performance and the competitive
environment for executive talent.
This report is submitted by the members of the Committee:
Richard M. Kleberg, III
James C. Phelps
Richard M. Riggs
Compensation Committee Interlocks and Insider Participation
Mr. Phelps, a member of the Committee during 1997, served as Chief
Executive Officer of Grey Wolf from April 1995 to May 1996 and as President of
Cascade from January 1996 to May 1996. Mr. Phelps also served as a director of
Grey Wolf until November 1997, when Grey was merged into Cascade, and as a
director of Cascade during 1997.
Mr. Riggs, a member of the Committee during 1997, served as a director
of Cascade during 1997.
Mr. Watson, the Company's President, Chief Executive Officer and
Chairman of the Board, served as Chairman of the Board, Chief Executive Officer
and a director of Grey Wolf until November 1997, when Grey was merged into
Cascade, and as Chairman of the Board and a director of Cascade during 1997.
Messrs. Watson, Phelps and Riggs were founders of Grey Wolf and were
granted options to purchase shares of the capital stock of Grey Wolf and
Cascade. See "Certain Transactions."
Compensation Summary
The following table sets forth a summary of compensation for the fiscal
years ended December 31, 1995, 1996 and 1997 paid by the Company to Robert L.G.
Watson, the Chairman of the Board, President and Chief Executive Officer of the
Company, Chris E. Williford, the Executive Vice President, Chief Financial
Officer and Treasurer of the Company, and Stephen T. Wendel, the Company's Vice
President-Land and Marketing and to Robert E. Patterson, the Company's Vice
President of Operations for the fiscal year ended December 31, 1997. Abraxas did
not have any executive officers other than Messrs. Watson and Williford whose
total annual salary and bonus exceeded $100,000 for the years ended December 31,
1995, and Messrs. Watson, Williford, Patterson and Wendel for the years ended
December 31, 1996 and 1997.
13
<PAGE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
--------------
Annual Compensation Awards
------------------------------------ --------------
Options
Name and Principal /SARs
Position Year Salary ($) Bonus ($) (#)
------------------------------------------------------------ --------------
Robert L. G. Watson, 1995 $108,281 (1) -- 60,000
Chairman of the Board 1996 $133,187 (2) $ 135,550 (3) 140,000
and President 1997 $211,154 $ 39,373 (4) 100,000
Chris E. Williford, 1995 $115,795 (5) -- 20,000
Executive Vice 1996 $121,315 $ 72,000 (4) 40,000
President, 1997 $148,269 $ 26,250 (4) 40,000
Chief Financial
Officer
and Treasurer
Robert E. Patterson, 1996 $124,615 $ 35,000 (4) 60,000
Vice President of 1997 $148,269 $ 9,375 (4) 50,000
Operations
Stephen T. Wendel, 1995 $ 63,210 -- 20,000
Vice President - Land 1996 $ 76,577 $ 40,000 (4) 18,660
and Marketing 1997 $106,731 $ 13,750 (4) 25,000
------------------------------------------------------------- --------------
(1) Mr. Watson received a repayment of loans to Abraxas of $354,677 during 1995.
(2) Includes $1,093 of stock awards and $107,188 of salary.
(3) Includes $95,000 in cash and $40,550 of stock awards.
(4) One-half paid in cash and one-half in stock awards.
(5) Includes $8,607 of stock awards and $107,188 of salary.
14
<PAGE>
Grants of Stock Options and Stock Appreciation Rights During the Fiscal Year
Ended December 31, 1997
Pursuant to the Abraxas Petroleum Corporation 1984 Incentive Stock
Option Plan (the "ISO Plan"), the Abraxas Petroleum Corporation 1993 Key
Contributor Stock Option Plan (the "1993 Plan") and the Abraxas Petroleum
Corporation 1994 Long Term Incentive Plan (the "LTIP"), the Company grants to
employees and officers of the Company (including directors of the Company who
are also employees) incentive stock options and non-qualified stock options. The
ISO Plan, the 1993 Plan and the LTIP are administered by the Compensation
Committee which, based upon the recommendation of the Chief Executive Officer,
determines the number of shares subject to each option.
The table below contains certain information concerning stock options
granted to Messrs. Watson, Williford, Patterson and Wendel during 1997:
OPTION GRANTS IN FISCAL YEAR
- --------------------------------------------------------------------------------
% of Potential Realizable
Total Exercise Value at Assumed
Options Options Price Per Expiration Annual Rates of Stock
Name Granted Granted Share Date Price Appreciation
to for Option Term
Employees
================================================================================
5% 10%
Robert 100,000 35.1 7.44 3/26/07 $1,211,898 $1,929,744
L. G.
Watson
Chris E. 40,000 14.0 7.44 3/26/07 484,579 771,898
Williford
Robert E. 50,000 17.5 7.44 3/26/07 605,949 964,872
Patterson
Stephen T. 25,000 8.8 7.44 3/26/07 302,974 482,436
Wendel
- --------------
(1) One-fourth of the options become exercisable on each of the first four
anniversaries of the date of grant.
15
<PAGE>
The table below contains certain information concerning exercises of
stock options during the fiscal year ended December 31, 1997 by Messrs. Watson,
Williford, Patterson and Wendel and the fiscal year end value of unexercised
options held by Messrs. Watson, Williford, Patterson and Wendel.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 1997
and Fiscal Year End Option Values
Value of
Number of Unexercised
Unexercised in-the-Money
Options on Options on
December 31,1997 December 31,
(#) 1997 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name By Exercise (#) Realized Unexercisable Unexercisable
($)
<S> <C> <C> <C> <C>
Robert L. G. Watson -0- -0- 65,000/235,000 518,750/1,476,250
Chris E. Williford -0- -0- 40,000/80,000 325,000/495,000
Robert E. Patterson -0- -0- 14,998/95,002 122,484/567,516
Stephen T. Wendel -0- -0- 29,005/48,995 238,954/301,451
</TABLE>
Long Term Incentive Plan Awards During the Fiscal Year Ended December 31, 1997
The Company did not make any awards to any of Messrs. Watson, Williford,
Patterson and Wendel under a long term incentive plan during the fiscal year
ended December 31, 1997.
Employment Agreements
The Company has entered into Employment Agreements (the "Employment
Agreements") with each of Messrs. Watson, Williford, Patterson and Wendel as
well as with Jack M. Roney, Abraxas' Vice President-Corporate Development, and
Lowell Lischer, Abraxas' Vice President of Exploration, pursuant to which each
of Messrs. Watson, Williford, Patterson, Wendel, Roney and Lischer will receive
compensation as determined from time to time by the Board in its sole
discretion. The Employment Agreements terminate on December 31, 1998 except that
the term of the Employment Agreements may be automatically extended for an
additional year if by December 1 of the prior year neither the Company nor
Messrs. Watson, Williford, Patterson, Wendel, Roney or Lischer, as the case may
be, has given notice that it does not wish to extend the term. Except in the
event of a change in control, at all times during the term of the Employment
Agreements, each of Messrs. Watson's, Williford's, Patterson's, Wendel's,
Roney's and Lischer's employment is at will and may be terminated by the Company
for any reason without notice or cause. If a change in control occurs during the
term of the Employment Agreement or any extension thereof, the expiration date
of Mr. Watson's Employment Agreement is automatically extended to a date no
earlier than five years following the effective date of such change in control,
16
<PAGE>
the expiration date of Mr. Williford's Employment Agreement is automatically
extended to a date no earlier than four years following the effective date of
such change in control and the expiration date of each of Mr. Patterson's, Mr.
Wendel's, Mr. Roney's and Mr. Lischer's Employment Agreement is automatically
extended to a date no earlier than three years following the effective date of
such change in control. If, following a change in control, Messrs. Watson's,
Williford's, Patterson's, Wendel's, Roney's or Lischer's employment is
terminated other than for Cause (as defined in each of the Employment
Agreements) or Disability (as defined in each of the Employment Agreements), by
reason of Messrs. Watson's, Williford's, Patterson's, Wendel's, Roney's or
Lischer's death or retirement or by Messrs. Watson, Williford, Patterson,
Wendel, Roney or Lischer, as the case may be, other than for Good Reason (as
defined in each of the Employment Agreements), then Mr. Watson will be entitled
to receive a lump sum payment equal to five times his annual base salary, Mr.
Williford will be entitled to receive a lump sum payment equal to four times his
annual base salary and Messrs. Patterson, Wendel, Roney and Lischer will each be
entitled to receive a lump sum payment equal to three times his annual base
salary. If any such lump sum payment would individually or together with any
other amounts paid or payable constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
("Section 280G"), and applicable regulations thereunder (the "Code"), the
amounts to be paid will be increased so that Messrs. Watson, Williford,
Patterson, Wendel, Roney or Lischer, as the case may be, will be entitled to
receive the amount of compensation provided in his contract after payment of the
tax imposed by Section 280G.
Report on Repricing of Options
On March 7, 1996, the Committee approved a plan pursuant to which the
exercise price of each outstanding stock option granted to employees of the
Company prior to January 1, 1996, including options granted to Messrs. Watson,
Williford and Wendel, were reduced to $6.75 per share.
The Committee believed that repricing the existing options was in the
best interests of the Company and its stockholders. In the view of the
Committee, the decline of the market price of the Company's Common Stock
substantially impaired the effectiveness of the existing options as a means of
attracting and retaining qualified executive and non-executive officers and
providing appropriate incentives to the Company's executive and non-executive
officers. In addition, the Committee believed that a significant portion of the
decline in the market price was the result of market factors that affected the
stocks of the companies included in the KPMG Survey.
The following table sets forth certain information concerning repricing
of stock options held by any executive officer during the period commencing on
May 7, 1991 (the date on which the Company became a reporting company pursuant
to the Securities Exchange Act of 1934, as amended) and ending on December 31,
1997.
17
<PAGE>
<TABLE>
<CAPTION>
Length of
Market Original
Price of Exercise Option Term
Number of Securities Stock at Price at Remaining at
Underlying Options Time of Time of New Date of
Date of Repriced or Amended Repricing or Repricing or Exercise Repricing or
Name Repricing Old New Amendment Amendment Price Amendment
- ------------ ---------- -------------------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. 03/07/96 60,000 60,000 $6.75 $9.50 $6.75 95 Mos
G. Watson,
Chairman of
the Board,
President
and Chief
Executive
Officer
Chris E. 03/07/96 6,252 6,252 $6.75 $7.50 $6.75 75 Mos
Williford, 13,748 13,748 $6.75 $9.75 $6.75 76 Mos
Executive 20,000 20,000 $6.75 $9.50 $6.75 95 Mos
Vice
President,
Chief
Financial
Officer and
Treasurer
Robert E. __ __ __ __ __ __ __
Patterson,
Vice
President
of
Operations
Stephen T. 03/07/96 10,000 10,000 $6.75 $9.75 $6.75 76 Mos
Wendel, 03/07/96 20,000 20,000 $6.75 $9.50 $6.75 95 Mos
Vice
President -
Land and
Marketing
</TABLE>
This report is submitted by the members of the Committee:
Richard M. Kleberg, III
James C. Phelps
Richard M. Riggs
Performance Graph
Set forth below is a performance graph comparing yearly cumulative total
stockholder return on the Company's Common Stock with (a) the monthly index of
stocks included in the Standard and Poor's 500 Index and (b) the Everen
Securities monthly index (the "Everen Index") of stocks of crude oil and natural
gas exploration and production companies with a market capitalization of less
than $300 million (the "Comparable Companies"). The Comparable Companies are:
Adams Resources & Energy, Inc.; Arch Petroleum, Inc.; Basin Exploration, Inc.;
Bellwether Exploration Company; Callon Petroleum Company; COHO Energy, Inc.;
18
<PAGE>
Columbus Energy Corporation; Edge Petroleum Corporation, Equity Oil Company;
Goodrich Petroleum Corporation; Harcor Energy, Inc.; Howell Corporation; Key
Production Company, Inc.; Magnum Hunter Resources, Inc.; Maynard Oil Company;
McFarland Energy, Inc.; The Meridian Resource Corporation; Offshore Energy
Development Corporation; PetroCorp Incorporated; Plains Resources, Inc.; Prima
Energy Corporation; Unit Corporation; Venus Exploration, Inc.; Wainoco Oil
Corporation; and Wiser Oil Company.
All of these cumulative total returns are computed assuming the
reinvestment of dividends at the frequency with which dividends were paid during
the applicable years. The years compared are 1991, 1992, 1993, 1994, 1995, 1996
and 1997 with 1991 beginning on May 7, 1991, the first day that the Company's
Common Stock was traded on NASDAQ.
[Performance Graph]
S&P EVEREN
500 INDEX ABRAXAS
------- ------- -------
May-91 100 100 100
Jun-91 98 92 59
Sep-91 103 112 52
Dec-91 111 93 107
Mar-92 107 98 122
Jun-92 108 98 122
Sep-92 111 107 126
Dec-92 115 100 139
Mar-93 120 116 128
Jun-93 119 128 157
Sep-93 122 127 209
Dec-93 124 111 178
Mar-94 118 112 187
Jun-94 118 121 209
Sep-94 123 130 183
Dec-94 122 112 161
Mar-95 133 116 154
Jun-95 144 115 152
Sep-95 155 118 140
Dec-95 163 120 109
Mar-96 171 124 93
Jun-96 178 132 118
Sep-96 182 151 100
Dec-96 196 179 172
Mar-97 201 163 191
Jun-97 235 179 223
Sep-97 251 210 252
Dec-97 257 169 257
Compensation of Directors
Non-Qualified Stock Option Plan. Each director of the Company, other
than Messrs. Watson, Williford, Carter and Gershen, has previously been granted
options to purchase 8,900 shares of Common Stock under the Company's 1984
Non-Qualified Stock Option Plan (the "Non-Qualified Plan"). There are currently
outstanding options to purchase 8,900 shares of Common Stock under the
Non-Qualified Plan. Mr. Burke holds an option to purchase 8,900 shares of Common
Stock at an exercise price of $6.75 per share.
19
<PAGE>
Restricted Share Plan for Directors. Pursuant to the Abraxas Petroleum
Corporation Restricted Share Plan for Directors (the "Director Plan"), each
director of the Company, other than Messrs. Watson and Williford, is entitled to
receive compensation for attendance at regular and special meetings of the Board
of Directors. Initially each eligible director of the Company was issued 400
shares of Common Stock during 1994 as an initial grant under the Director Plan
and thereafter received a number of shares of Common Stock equal to the product
of 1,000 times the Capitalization Factor (as defined in the Director Plan)
divided by the Average Stock Price (as defined in the Director Plan) as of the
date of a meeting of the Board. In 1997, the Director Plan was amended to
provide that one-half of the compensation under the Director Plan shall be paid
in cash and one-half in shares of Abraxas Common Stock. For 1997, each of the
directors, received the number of shares of Common Stock and cash compensation
set forth opposite his name under the Director Plan:
Number of Cash
Name Shares Compensation
- ------------------- ---------------- --------------
Franklin M. Burke 846 $2,000
Harold D. Carter 825 2,000
Robert D. Gershen 1,115 2,000
Richard M. Kleberg 318 2,750
James C. Phelps 318 2,750
Paul A. Powell 1,098 2,000
Richard M. Riggs 318 2,750
Director Stock Option Plan. Pursuant to the Abraxas Petroleum
Corporation Director Stock Option Plan, each non-employee member of the Board of
Directors of the Company on June 1, 1996 was granted an option to purchase 8,000
shares of Common Stock at a price of $6.75 per share. Each person who becomes a
director after that date will also be granted an option to purchase 8,000 shares
of Common Stock at the then prevailing price of the Common Stock as quoted on
the Nasdaq National Market. In addition, in March 1998, the Plan was amended to
provide that each non-employee member of the Board of Directors as of the date
of the first meeting of the Board of Directors in each year will receive options
to purchase 2,000 shares of common stock at the closing price of the Company's
Common Stock on such date. On March 25, 1998, each non-employee Director
received options to purchase 2,000 shares of Common Stock.
Other Compensation. The directors of the Company received no other
compensation for services as directors, except for reimbursement of travel
expenses to attend Board meetings.
CERTAIN TRANSACTIONS
Messrs. Watson, Phelps and Riggs were founders of Grey Wolf and
in April 1995 purchased 900,000 shares of the capital stock of Grey Wolf
(initially representing 39% of the outstanding shares) for an aggregate of
CDN$90,000 (or CDN$0.10 per share) in cash. In January 1996, the Company
purchased 20,325,096 shares of the capital stock of Grey Wolf (representing 78%
20
<PAGE>
of the outstanding shares) for an aggregate of approximately CDN$4.1 million (or
CDN$.20 per share) in cash. In November 1997, Grey Wolf was merged into Cascade.
Messrs. Phelps, Riggs and Watson currently own 5.1% of the issued and
outstanding capital stock of Cascade.
Messrs. Phelps and Riggs own options to purchase in the aggregate up to
1,000,000 shares of capital stock of Cascade at an exercise price of CDN$.20 per
share, and Mr. Watson owns options to purchase up to 800,000 shares of Cascade's
capital stock at an exercise price of CDN$.20 per share. Cascade currently has
76,981,000 shares of capital stock outstanding.
Wind River Resources Corporation ("Wind River"), all of the capital
stock of which is owned by Mr. Watson, owns a twin-engine airplane. The airplane
is available for business use by employees of the Company from time to time at
Wind River's cost. The Company paid Wind River a total of $330,000 for use of
the plane during 1997.
Cascade owns a 10% interest in certain producing properties owned by
Canadian Abraxas Petroleum Limited, the Company's wholly-owned subsidiary
("Canadian Abraxas") and in Canadian Abraxas' natural gas processing plants and
an 8% interest in certain producing properties acquired by Canadian Abraxas in
1997 and manages the operations of Canadian Abraxas pursuant to a management
agreement between Canadian Abraxas and Cascade. Under the management agreement,
Canadian Abraxas reimburses Cascade for reasonable costs or expenses
attributable to Canadian Abraxas and for administrative expenses based upon the
percentage that Canadian Abraxas' gross revenue bears to the total gross revenue
of Canadian Abraxas and Cascade. In 1997, Canadian Abraxas paid Cdn $1,239,998
to Cascade pursuant to the management agreement.
Abraxas has adopted a policy that transactions, including loans, between
Abraxas and its officers, directors, principal stockholders, or affiliates of
any of them, will be on terms no less favorable to Abraxas than can be obtained
on an arm's length basis in transactions with third parties and must be approved
by the vote of at least a majority of the disinterested directors.
21
<PAGE>
PROPOSAL TWO
APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP
("Ernst & Young") to examine the financial statements of the Company for the
1998 fiscal year. Representatives of Ernst & Young are expected to be present at
the Annual Meeting of Stockholders with the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions.
Approval of the appointment of auditors is not a matter which is
required to be submitted to a vote of stockholders, but the Board of Directors
considers it appropriate for the stockholders to express or withhold their
approval of the appointment. If stockholder approval should be withheld, the
Board of Directors would consider an alternative appointment for the succeeding
fiscal year. The Board of Directors recommends that the stockholders approve the
appointment of Ernst & Young.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting must be received in writing by the Company at its principal executive
offices not later than December 20, 1998. The Company's principal executive
offices are located at 500 North Loop 1604 East, Suite 100, San Antonio, Texas
78232.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited through the mail and through telephonic or telegraphic
communications to, or meetings with, stockholders or their representatives by
directors, officers and other employees of the Company who will receive no
additional compensation therefor.
The Company requests persons such as brokers, nominees and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy materials to their
principals and to request authority for the execution of the proxy, and the
Company will reimburse such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this Proxy Statement is
expected to come before the meeting, but should any other matters requiring a
vote of stockholders arise, including a question of adjourning the meeting, the
persons named in the accompanying Proxy will vote thereon according to their
best judgment in the interests of the Company. If any of the nominees for office
of director should withdraw or otherwise become unavailable for reasons not
presently known, the persons named as proxies may vote for another person in his
place in what they consider the best interests of the Company.
22
<PAGE>
Upon the written request of any person whose proxy is solicited
hereunder, the Company will furnish without charge to such person a copy of its
annual report filed with the Securities and Exchange Commission on Form 10-K,
including financial statements and schedules thereto, for the fiscal year ended
December 31, 1997. Such written request is to be directed to the attention of
Stephen T. Wendel, 500 North Loop 1604 East, Suite 100, San Antonio, Texas
78232.
By Order of the Board of Directors
Stephen T. Wendel
Secretary
Dated: April 24, 1998
23
<PAGE>
FORM OF PROXY
FRONT
ABRAXAS PETROLEUM CORPORATION
500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
This Proxy is Solicited on behalf of the Board of Directors
The undersigned shareholder of Abraxas Petroleum Corporation, a Nevada
corporation (the "Company"), hereby appoints Robert L. G. Watson, Chris
Williford and Stephen T. Wendel, and each of them, as Proxies, each with the
power to appoint his or her substitute, and hereby authorizes them to represent
and to vote, as designated below, all the shares of common stock of the Company
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders to be held on May 22, 1998 and any adjournment thereof, with all
powers which the undersigned would possess if personally present.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement of the Company dated April 24, 1998.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
BACK
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this
proxy will be voted "FOR" the election of Directors and "FOR" the
Approval of Proposals 2 and 3.
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) [ ] listed below [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the
list below.)
James C. Phelps, Robert L.G. Watson, Chris E. Williford
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
CHECK HERE FOR ADDRESS CHANGE [ ] NEW ADDRESS:______________________
__________________________________
__________________________________
__________________________________
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: ______________, 1998 ___________________________
Signature
__________________________________
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE ___________________________
ENCLOSED ENVELOPE. Signature if held jointly
