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]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only(as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
ABRAXAS PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ]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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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ABRAXAS PETROLEUM CORPORATION
April 30, 1999
Dear Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Abraxas Petroleum Corporation to be held on Friday, May 28,
1999, 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
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ABRAXAS PETROLEUM CORPORATION
500 NORTH LOOP 1604 EAST, SUITE 100
SAN ANTONIO, TEXAS 78232
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1999
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 28, 1999 at 9:00 A.M., local time, for the following purposes:
(1) To elect four directors;
(2) To amend and restate the Abraxas Petroleum Corporation
Director Stock Option Plan to increase the total number of
shares of common stock, par value $.01 per share, of the
Company available for issuance under such plan and to conform
such plan to changes under Section 16 of the Securities
Exchange Act of 1934, as amended;
(3) To approve the appointment of auditors for the 1999 fiscal
year; and
(4) 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 19,
1999. 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 30, 1999
<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 1999 Annual Meeting of Stockholders to be held on
May 28, 1999, at 9:00 a.m. 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 30, 1999.
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 19, 1999
shall be entitled to vote at the meeting. There were 6,501,441 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 1999 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, approval of the Abraxas Petroleum Corporation Second
Amended and Restated Director Stock Option Plan 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.
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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,
four Directors are to be elected for terms of three years, each to hold office
until the expiration of his term in 2002 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 four nominees for the Board of
Directors named below. Each of the nominees is now serving as a Director.
Information Regarding Nominees for Election as Directors
Franklin A. Burke, age 65, 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 60, 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 45, 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,
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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.
Robert W. Carington, Jr., age 37, was elected Executive Vice President
and a director of the Company in July 1998. Prior to joining the Company, Mr.
Carington was a Managing Director with Jefferies & Company, Inc. Prior to
joining Jefferies & Company, Inc. in January 1993, Mr. Carington was a Vice
President at Howard, Weil, Labouisse, Friedrichs, Inc. Prior to joining Howard,
Weil, Labouisse, Freidrichs, Inc., Mr. Carington was a petroleum engineer with
Unocal Corporation from 1983 to 1990. Mr. Carington received a degree of
Bachelor of Science in Mechanical Engineering from Rice University in 1983 and a
Masters of Business Administration from the University of Houston in 1990.
Terms Expiring in 2000
Richard M. Kleberg, III, age 56, a director of the Company since
December 1983, has held the position of President of SFD Enterprises, LLC, a
private investment company, 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 53, 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 17 investment trusts.
Mr. Powell is a managing partner of Powell Equity Partners, Cortland Partners,
JWM Partners, Emory Partners and NAD Partners and President of Somerset
Investments, Ltd. He attended Emory and Henry College and graduated from
National Business College with a degree in Accounting.
Richard M. Riggs, age 78, 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 Grey Wolf Exploration Inc., a subsidiary of the Company ("Grey
Wolf"), 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.
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Terms Expiring in 2001
Robert L. G. Watson, age 48, has served as Chairman of the Board,
President, Chief Executive Officer and a director of Abraxas since 1977. Since
May 1996, Mr. Watson has also served as Chairman of the Board and a director of
Grey Wolf. In November 1996, Mr. Watson was elected Chairman of the Board,
President and as a director of Canadian Abraxas. In January 1999, Mr. Watson was
elected Chairman of the Board and director of New Cache. 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.
Chris E. Williford, age 48, was elected Vice President, Treasurer and
Chief Financial Officer of Abraxas in January 1993, and as Executive Vice
President and a director of Abraxas in May 1993. In November 1996, Mr. Williford
was elected Vice President and Assistant Secretary of Canadian Abraxas. In
January 1999, Mr. Williford was elected Assistant Secretary of New Cache. Prior
to joining Abraxas, 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 Pittsburgh State University in 1973.
James C. Phelps, age 76, 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 has served as a director of Grey Wolf 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 Grey Wolf. 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.
INFORMATION CONCERNING DIRECTORS
During the fiscal year ended December 31, 1998, the Board of Directors
held four meetings. All directors attended each of these meetings except Messrs.
Burke and Kleberg who each missed one meeting. During 1998, the Company's
directors other than Messrs. Watson, Williford and Carington received
compensation for service to the Company as a director under the Company's
Restricted Share Plan For Directors (the "Director Share Plan") and under the
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Company's Director Stock Option Plan (the "Director Option Plan"). See
"Executive Compensation -- Compensation of Directors." Directors also received a
one-time grant of 3,000 options to purchase shares of Common Stock at $5.56 per
share in November 1998 and 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
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 1998. 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 two times during 1998. 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 1998. 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, each of the named executive officers and all directors and officers of
the Company as a group, owned beneficially as of March 31, 1999 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 549,967 (2) 8.20
Endowment Advisors, Inc. 534,739 (3) 8.22
450 Post Road East
Westport, CT 06881
Wellington Management Company 610,000 (4) 9.38
75 State Street
19th Floor
Boston, MA 02109
Dimensional Fund Advisors, Inc. 397,700 (5) 6.12
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Franklin A. Burke 297,772 (6) 4.57
Paul A. Powell, Jr. 68,583 (7) 1.05
James C. Phelps 61,586 (8) *
Richard M. Kleberg, III 36,884 (9) *
Robert D. Gershen 29,744 (10) *
Chris E. Williford 89,859 (11) 1.36
Richard M. Riggs 20,117 (12) *
Harold D. Carter 18,258 (13) *
Stephen T. Wendel 61,249 (14) *
Jack M. Roney 23,975 (15) *
Lee T. Billingsley 39,300 *
All Officers and Directors as a 1,297,294 (2)(7)(8) 18.73
Group (12 persons) (9)(10)(11)(12)
(13)(14)(15)
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* Less than 1%
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(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, 30,459 shares issuable upon exercise of options
granted pursuant to Abraxas Petroleum Corporation 1993 Key Contributor
Stock Option Plan and 174,541 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 419,831 shares of Common Stock owned by Endowment Energy
Partners, L.P. ("EEP") and 114,918 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) 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.
(6) Includes 8,900 shares issuable upon exercise of options granted
pursuant to the Abraxas Petroleum Corporation 1984 Non-Qualified Stock
Option Plan and 4,500 shares issuable upon exercise of options granted
pursuant to the Amended and Restated Director Stock Option Plan (the
"Director Option Plan").
(7) 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, 18,470 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 4,500 shares
issuable upon exercise of options granted pursuant to the Director
Option Plan.
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(8) Includes 56,000 shares owned by Marie Phelps, Mr. Phelps' wife and
4,500 shares issuable upon exercise of options granted pursuant to the
Director Option Plan.
(9) Includes 16,688 shares owned by SFD Enterprises,LLC, a private
investment company, and 4,500 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.
(10) 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 4,500 shares issuable upon exercise of options granted
pursuant to the Director Option Plan.
(11) 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 63,750 shares issuable upon exercise of options
granted pursuant to the Abraxas Petroleum Corporation 1994 Long Term
Incentive Plan.
(12) 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 4,500 shares issuable upon exercise of options granted
pursuant to the Director Option Plan.
(13) Includes 4,500 shares issuable upon exercise of options granted
pursuant to the Director Option Plan.
(14) Includes 1,340 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 47,898 shares issuable upon exercise of options
granted pursuant to the Abraxas Petroleum Corporation 1994 Long Term
Incentive Plan.
(15) Includes 10,000 shares issuable upon exercise of options granted
pursuant to the Abraxas Petroleum Corporation 1993 Key Contributor
Stock Option Plan and 13,500 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 1998 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.
The amount of the bonuses to be paid to Messrs. Watson, Williford, Carington,
Wendel, Roney and Dr. Billingsley, 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, 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 Dr. Billingsley, 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%. For Messrs. Watson, Williford and Carington, the
base bonus could be as high as 35% of base salary if all goals are attained. For
Messrs. Wendel, Roney and Dr. Billingsley, the bonus could be as high as 25% of
base salary if all goals are attained. 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, Carington, Wendel, Roney and
Dr. Billingsley, 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 1998, none of the goals were attained and no bonuses were paid.
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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. In 1998, the Board amended the
LTIP in order to increase the number of shares of Common Stock which may be
issued thereunder to an aggregate of 1,550,000 shares 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 1998 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
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
11
<PAGE>
Compensation Summary
The following table sets forth a summary of compensation for the fiscal
years ended December 31, 1996, 1997 and 1998 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, Stephen T. Wendel, the Company's Vice
President-Land and Marketing, Robert E. Patterson, the Company's former Vice
President of Operations, and to Robert W. Carington, Jr., the Company's
Executive Vice President, for the fiscal year ended December 31, 1998. Abraxas
did not have any executive officers other than Messrs. Watson, Williford,
Patterson and Wendel whose total annual salary and bonus exceeded $100,000 for
the years ended December 31, 1996, and 1997 and Messrs. Watson, Williford,
Carington, Patterson and Wendel for the year ended December 31, 1998.
12
<PAGE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Annual Compensation Awards
------------------------------------------------
Options
Name and Principal /SARs
Position Year Salary ($) Bonus ($) (#)
---------------------------- ------- -------------- ------------ -----------
Robert L. G. Watson, 1996 $ 133,187 (1) $ 135,550 (2) 140,000
Chairman of the Board and 1997 $ 211,154 $ 39,373 (3) 100,000
President 1998 $ 253,367 -- 140,000
-
Chris E. Williford, 1996 $ 121,315 $ 72,000 (3) 40,000
Executive Vice President, 1997 $ 148,269 $ 26,250 (3) 40,000
Chief Financial Officer 1998 $ 155,770 -- 35,000
and Treasurer
Robert W. Carington, Jr., 1998 $ 103,846 -- 320,000
Executive Vice President
Robert E. Patterson, 1996 $ 124,615 $ 35,000 (3) 60,000
Vice President of Operations 1997 $ 148,269 $ 9,375 (3) 50,000
(4) 1998 $ 155,770 -- 30,000
Stephen T. Wendel, 1996 $ 76,577 $ 40,000 (3) 18,660
Vice President - Land and 1997 $ 106,731 $ 13,750 (3) 25,000
Marketing 1998 $ 114,231 -- 20,000
-------------------------------------------------------------------------------
(1) Includes $1,093 of stock awards and $107,188 of salary.
(2) Includes $95,000 in cash and $40,550 of stock awards.
(3) One-half paid in cash and one-half in stock awards.
(4) Mr. Patterson left the Company in March 1999.
13
<PAGE>
Grants of Stock Options and Stock Appreciation Rights During the Fiscal Year
Ended December 31, 1998
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, Carington, Patterson and Wendel during
1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------
% of Total Potential Realizable Value
Options Exercise at Assumed Annual Rates of
Options Granted to Price Per Expiration Stock Price Appreciation
Name Granted Employees Share Date for Option Term
$
==========================================================================================================
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert L.G. Watson 100,000(1) 15.1 14.38 1/08 $904,000 $2,292,000
40,000(1) 6.0 5.56 11/08 140,000 354,400
Chris E. Williford 15,000 (1) 2.3 14.38 1/08 135,600 343,800
20,000 (1) 3.0 5.56 11/08 70,000 177,200
Robert W. Carington, 300,000(1) 45.2 8.75 5/08 1,650,000 4,185,000
Jr. 20,000(1) 3.0 5.56 11/08 70,000 177,200
Stephen T. Wendel 10,000 (1) 1.5 14.38 1/08 90,400 229,200
10,000 (1) 1.5 5.56 11/08 35,000 88,600
Robert E. Patterson 15,000 (2) 2.3 14.38 1/08 135,600 343,800
15,000 (2) 2.3 5.56 11/08 52,500 132,900
- -------------
</TABLE>
(1) One-fourth of the options becomes exercisable on each of the first four
anniversaries of the date of grant. (2) Mr. Patterson left the Company in March
1999 before any of the options became exercisable.
14
<PAGE>
The table below contains certain information concerning exercises of
stock options during the fiscal year ended December 31, 1998 by Messrs. Watson,
Williford, Carington, Patterson and Wendel and the fiscal year end value of
unexercised options held by Messrs. Watson, Williford, Carington, Patterson and
Wendel.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 1998
and Fiscal Year End Option Values
Value of
Number of Unexercised
Unexercised in-the-Money
Options on Options on
December 31,1998 December 31,
# 1998 ($)
Shares Acquired By Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert L. G. Watson 0 0 165,000/275,000 0 / 0
Chris E. Williford 0 0 68,750/86,250 0 / 0
Robert W. Carington, Jr. 0 0 0 /320,000 0 / 0
Stephen T. Wendel 0 0 44,420/50,580 0 / 0
Robert E. Patterson 0 0 56,250/83,750 (1) 0 / 0
- -------------
</TABLE>
(1) Mr. Patterson left the Company in March 1999. All of the options
granted to Mr. Patterson were terminated prior to their exercise.
Long Term Incentive Plan Awards During the Fiscal Year Ended December 31, 1998
The Company did not make any awards to any of Messrs. Watson,
Williford, Carington, Patterson, and Wendel under a long term incentive plan
during the fiscal year ended December 31, 1998.
Employment Agreements
The Company has entered into Employment Agreements (the "Employment
Agreements") with each of Messrs. Watson, Williford, Carington and Wendel as
well as with Jack M. Roney, Abraxas' Vice President-Corporate Development, and
Lee T. Billingsley, Abraxas' Vice President of Exploration, pursuant to which
each of Messrs. Watson, Williford, Carington, Wendel, Roney and Dr. Billingsley
will receive compensation as determined from time to time by the Board in its
sole discretion. The Employment Agreements, originally scheduled to terminate on
December 31, 1998, were automatically extended for one year and will terminate
on December 31, 1999, and may be automatically extended for an additional year
if by December 1 of the prior year neither the Company nor Messrs. Watson,
15
<PAGE>
Williford, Carington, Wendel, Roney or Dr. Billingsley, as the case may be, has
given notice that he or it, as the case may be, 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,
Carington's, Wendel's, Roney's and Dr. Billingsley'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, the expiration date of each of Messrs.
Williford's and Carington'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 Messrs. Wendel's, Roney's and Dr.
Billingsley'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, Carington's,
Wendel's, Roney's or Dr. Billingsley'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, Carington's, Wendel's, Roney's or Dr. Billingsley's death or
retirement or by Messrs. Watson, Williford, Carington, Wendel, Roney or Dr.
Billingsley, 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, Messrs. Williford
and Carington will each be entitled to receive a lump sum payment equal to four
times his annual base salary and Messrs. Wendel, Roney and Dr. Billingsley 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,
Carington, Wendel, Roney or Dr. Billingsley, 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 25, 1998, the Board of Directors approved a plan pursuant to
which the price of each outstanding stock option granted to employees and
directors of the Company with an exercise price greater than $7.44 per share was
reduced to $7.44 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.
The following table sets forth certain information concerning repricing
of stock options held by any current executive officer during the period
16
<PAGE>
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, 1998.
<TABLE>
<CAPTION>
Length of
Original
Market Price Option Term
of Stock at Exercise Remaining
Number of Securities Time of Price at at Date of
Date of Underlying Options Repricing or Time of New Exercise Repricing
Repriced or Amended Repricing or or
Name Repricing Old New Amendment Amendment Price Amendment
- ---- --------- --- --- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. G. 03/07/96 60,000 60,000 $6.75 $9.50 $6.75 95 Mos
Watson, 03/25/98 100,000 100,000 $7.44 $7.50 $7.44 104 Mos
Chairman of the 03/25/98 100,000 100,000 $7.44 $10.75 $7.44 108 Mos
Board, 03/25/98 100,000 100,000 $7.44 $14.38 $7.44 116 Mos
President and
Chief Executive
Officer
Chris E. 03/07/96 6,252 6,252 $6.75 $7.50 $6.75 75 Mos
Williford, 03/07/96 13,748 13,748 $6.75 $9.75 $6.75 76 Mos
Executive Vice 03/07/96 20,000 20,000 $6.75 $9.50 $6.75 95 Mos
President, 03/25/98 20,000 20,000 $7.44 $7.50 $7.44 104 Mos
Chief Financial 03/25/98 40,000 40,000 $7.44 $10.75 $7.44 108 Mos
Officer and 03/25/98 15,000 15,000 $7.44 $14.38 $7.44 116 Mos
Treasurer
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 03/25/98 8,000 8,000 $7.44 $7.50 $7.44 104 Mos
- - Land and 03/25/98 25,000 25,000 $7.44 $10.75 $7.44 108 Mos
Marketing 03/25/98 10,000 10,000 $7.44 $14.38 $7.44 116 Mos
</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:
17
<PAGE>
Adams Resources & Energy, Inc.; Arch Petroleum, Inc.; Basin Exploration, Inc.;
Bellwether Exploration Company; Callon Petroleum Company; COHO Energy, Inc.;
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 1993, 1994, 1995, 1996, 1997 and
1998.
S&P EVEREN
500 INDEX ABRAXAS
------- ------- -------
Dec-93 100 100 100
Mar-94 96 90 107
Jun-94 95 98 117
Sep-94 99 114 105
Dec-94 98 109 90
Mar-95 107 115 87
Jun-95 117 130 85
Sep-95 125 126 79
Dec-95 132 139 61
Mar-96 138 141 53
Jun-96 144 151 63
Sep-96 147 156 56
Dec-96 159 186 96
Mar-97 162 163 107
Jun-97 190 187 125
Sep-97 203 201 142
Dec-97 208 168 144
Mar-98 236 167 82
Jun-98 243 146 89
Sep-98 218 90 67
Dec-98 263 62 43
Compensation of Directors
Non-Qualified Stock Option Plan. Each director of the Company, other
than Messrs. Watson, Williford, Carington, 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.
18
<PAGE>
Restricted Share Plan for Directors. Pursuant to the Abraxas Petroleum
Corporation Restricted Share Plan for Directors (the "Director Share Plan"),
each director of the Company, other than Messrs. Watson, Williford, and
Carington 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 Share 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 Share Plan) divided by the Average Stock Price (as
defined in the Director Share Plan) as of the date of a meeting of the Board. In
1997, the Director Share Plan was amended to provide that one-half of the
compensation under the Director Share Plan shall be paid in cash and one-half in
shares of Abraxas Common Stock. For 1998, each of the directors, received the
number of shares of Common Stock and cash compensation set forth opposite his
name under the Director Share Plan:
Name Number of Shares Cash Compensation
- ---------------------- -------------------- ------------------------
Franklin M. Burke 297 $2,000
Harold D. Carter 440 3,000
Robert D. Gershen 440 3,000
Richard M. Kleberg 352 2,500
James C. Phelps 586 4,000
Paul A. Powell 371 2,500
Richard M. Riggs 586 4,000
Director Stock Option Plan. Pursuant to the Abraxas Petroleum
Corporation Director Stock Option Plan (the "Director 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 Director Option Plan was amended and restated 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 Common
Stock on such date. On each of March 25, 1998 and on March 25, 1999, each
non-employee Director received options to purchase 2,000 shares of Common Stock.
Other Compensation. On November 19, 1998, the Company granted 3,000
options at an exercise price of $5.56 per share to each director other than
Messrs. Watson, Williford and Carington.The directors of the Company received no
other compensation for services as directors, except for reimbursement of travel
expenses to attend Board meetings.
19
<PAGE>
CERTAIN TRANSACTIONS
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 $302,289 for use of the
plane during 1998.
Grey Wolf 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
manages the operations of Canadian Abraxas pursuant to a management agreement
between Canadian Abraxas and Grey Wolf. Under the management agreement, Canadian
Abraxas reimburses Grey Wolf 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 Grey Wolf. In 1998, Canadian Abraxas paid CDN $1,485.155 to Grey
Wolf 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.
20
<PAGE>
PROPOSAL TWO
APPROVAL OF ABRAXAS PETROLEUM CORPORATION
SECOND AMENDED AND RESTATED DIRECTOR STOCK OPTION PLAN
The Abraxas Petroleum Corporation Director Stock Option Plan (the
"Director Option Plan") was adopted by the Board of Directors and approved by
the stockholders in 1996. In March 1998, the Director Option Plan was amended
and restated 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.
The aggregate number of shares of the Common Stock that currently may
be issued under the Director Option Plan may not exceed 104,000 shares. As of
March 31, 1999, there were no shares of the Common Stock remained available for
future awards under the Director Option Plan. The Board of Directors proposes to
amend the Director Option Plan to increase the aggregate number of shares of
Common Stock that may be issued thereunder to 254,000 shares.
In addition, the Board of Directors proposes to amend the Director
Option Plan to conform to recent changes under Section 16 of the Securities
Exchange Act. Section 14 of the Director Option Plan, entitled "Amendment or
Termination of Plan," currently states:
Except as otherwise provided herein, the Plan may be amended or
terminated in whole or in part by the Board of Directors of the Company
(in its sole discretion), but no such action shall adversely affect or
alter any right or obligation with respect to any Option or Option
Agreement then in effect, except to the extent that any such action
shall be required or desirable (in the opinion of the Company or its
counsel) in order to comply with any rule or regulation promulgated or
proposed under the Code by the Internal Revenue Service.
Notwithstanding anything else herein contained to the contrary, (a)
stockholder approval shall be required for any amendment which will (i)
increase the aggregate number of shares of Common Stock that may be
issued and sold under the Plan, or (ii) change the designation of class
of persons eligible to receive options; and (b) the provisions of the
Plan relating to (i) the number of shares of Common Stock for which an
option may be granted, (ii) the option price, (iii) the timing of the
grant and vesting of an option, may not be amended more than once every
six months, with the exception of amendments required to be made so
that the Plan continues to comply with the Code, ERISA, or the
regulations promulgated or proposed thereunder.
Under the proposed amendment, the first sentence of Section 14 of the Director
Option Plan would remain unchanged and the second sentence of Section 14 would
be deleted.
The following summary of the Director Option Plan, including the
proposed amendments thereto, is qualified in its entirety by reference to
Exhibit A. The Director Option Plan is a non-discretionary plan which authorizes
the grant of non-statutory stock options to acquire shares of Common Stock to
those persons who are directors and not officers of the Company. All directors
21
<PAGE>
other than Messrs. Watson, Williford and Carington are eligible to receive
grants under the Director Option Plan. The number of shares for which options
may be granted are subject to adjustment in the event of a stock dividend, split
up or combination of stock, or reclassification of shares of stock.
Participants and Terms
Pursuant to the terms of the Director Option Plan, each director of the
Company, other than Messrs. Watson, Williford and Carington, was granted an
option to acquire 8,000 shares of Common Stock on June 1, 1996. Directors who
join the Board for the first time on or after June 1, 1996 are granted an option
to acquire 8,000 shares of Common Stock on the date they become directors of the
Company. Additionally, on the date of the first regular meeting of the Board of
Directors of the Company in each year, each director of the Company, other than
Messrs. Watson, Williford and Carington, who has been a director for one year
prior to such date shall be granted an option to purchase 2,000 shares of Common
Stock.
The option price per share for each option is the fair market value
(as defined in the Director Option Plan) of the Common Stock on the date of
grant. The Director Option Plan contains change in control provisions. Grants of
options vest evenly over a four year period commencing on the first anniversary
of the date of grant. Each option expires on the tenth anniversary of the date
of grant. No option granted under the Director Option Plan is transferable other
than by will or the laws of descent and distribution.
Shares of Common Stock Subject to the Director Option Plan
The Director Option Plan currently provides that the aggregate number
of shares of Common Stock that may be issued may not exceed 104,000. Under the
Director Option Plan, as proposed to be amended, the aggregate number of shares
of the Common Stock that may be issued would be increased to 254,000 shares.
Amendments
The Director Option Plan currently provides that the Board of Directors
may amend such plan; provided, that stockholder approval is required for any
amendment which will (i) increase the aggregate number of shares of Common Stock
that may be issued and sold under the Director Option Plan or (ii) change the
designation of the class of persons eligible to receive options. The Director
Option Plan also currently provides that the provisions of the Director Option
Plan relating to (i) the number of shares of Common Stock for which an option
may be granted, (ii) the option price and (iii) the timing of the grant and
vesting of an option, may not be amended more than once every six months, with
the exception of amendments required to be made so that the Director Option Plan
continues to comply with the Internal Revenue Code, ERISA, or the rules
promulgated thereunder. The Director Option Plan, as proposed to be amended, may
be amended or terminated by the Board of Directors (in its sole discretion), but
no such action shall adversely affect or alter any right or obligation with
22
<PAGE>
respect to any option or option agreement then in effect, except to the extent
that any such action shall be required or desirable (in the opinion of the
Company or its counsel) in order to comply with any rule or regulation
promulgated or proposed under the Internal Revenue Code by the Internal Revenue
Service.
Federal Income Tax Considerations
Options granted under the Director Option Plan will be nonqualified
stock options. A nonqualified stock option is a right to purchase a specified
number of shares of Common Stock at a fixed option price over a specified period
of time. Because the fair market value of an option at the time it is granted is
ordinarily not considered to be "readily ascertainable," the grant of a
nonqualified option results in neither taxable income to the option holder nor a
tax deduction to the Company. Except as noted below, when an option holder
exercises such an option he will realize, for federal income tax purposes,
ordinary income in the amount of the difference between the option price and the
then fair market value of the shares, and the Company will be entitled to a
corresponding deduction if federal income tax withholding requirements are
satisfied. Any such ordinary income will increase the option holder's tax basis
for the purpose of computing his gain or loss on the later sale or exchange of
the shares.
With respect to options exercised by officers and directors of the
Company who could be subject to Section 16(b) of the Securities Exchange Act of
1934, instead of the tax treatment described above, a different rule will apply
unless an election is filed by the option holder with the Internal Revenue
Service under Section 83(b) of the Code within 30 days of the date the option is
exercised. If such an election is not filed, such option holder will recognize
ordinary income upon the lapse of the Section 16(b) restrictions (rather than on
the exercise of the option) in the amount by which the fair market value of the
shares on the date the restriction lapses exceeds the option price, and the
Company will be entitled to a corresponding deduction at such time. Any such
ordinary income will increase the option holder's tax basis for the purpose of
computing his gain or loss on the sale or exchange of the shares.
Upon the subsequent sale or exchange by the option holder of stock
purchased upon exercise of the option, any excess of the selling price over the
option holder's tax basis (which tax basis will generally equal the amount paid
for the shares plus the ordinary income recognized as described above) will be
treated as capital gain, and any diminution of such selling price below his
purchase price will be treated as capital loss. If the holding period and other
requirements of the capital gains provisions are satisfied, any profit realized
by the option holder on such a later sale or exchange of such shares will be
long-term capital gain and any loss will be long-term capital loss. A resale by
the option holder has no tax consequence as far as the Company is concerned.
New Plan Benefits
The following table sets forth the benefits to be received by the named
group under the Director Option Plan in 1999:
23
<PAGE>
Abraxas Petroleum Corporation
Director Stock Option Plan
Dollar Number
Name Value (1) of Units (2)
- ----------------------------- --------- ------------
Non-Executive Director Group $20,580 14,000
- ----------------
(1) Shares of Common Stock have been valued at $1.47 per share, the average of
the high and low sale prices of the Company's Common Stock as reported on the
NASDAQ Stock Market on April 22, 1999.
(2) Includes 2,000 shares of Common Stock awarded on March 25, 1999 to each
eligible Director. The Director Option Plan provides for an annual grant of
2,000 options to each eligible Director.
Approval of the amendments to the Director Option Plan as described
above requires the affirmative vote of a majority of the outstanding shares of
Common Stock eligible to vote at the meeting. The Board of Directors recommends
a vote "FOR" adoption of this proposal.
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PROPOSAL THREE
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
1999 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.
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STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting must be received in writing by the Company at its principal executive
offices not later than December 25, 1999. 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.
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, 1998. 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 30, 1999
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EXHIBIT A
ABRAXAS PETROLEUM CORPORATION
SECOND AMENDED AND RESTATED
DIRECTOR STOCK OPTION PLAN
Abraxas Petroleum Corporation, a Nevada corporation (the "Company"),
hereby amends and restates the following Director Stock Option Plan (the "Plan")
for non-officer members of the Board of Directors of the Company who are not
employees or officers of the Company.
1. Purpose.
The Abraxas Petroleum Corporation Director Stock Option Plan (the
"Plan") is intended to promote the best interests of the Company and its
stockholders by enabling the Company to attract and retain persons of
exceptional ability as directors and by providing an incentive to directors of
the Company in the form of an equity participation in the Company.
2. Definitions.
The following terms shall have the following meanings when used herein
unless the context clearly otherwise requires:
(a) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(b) "Company" means Abraxas Petroleum Corporation, a Nevada
corporation, and any subsidiary corporation, as defined in Section 424(f) of the
Code, to which the Board of Directors of Abraxas Petroleum Corporation has
determined to extend the application of the Plan.
(c) "Common Stock" means Common Stock, par value $.01 per
share, of the Company issued pursuant to the Plan.
(d) "Eligible Participant" means any member of the Board of
Directors of the Company who has not, within one year immediately preceding the
determination of such director's eligibility, (i) been an employee of the
Company and (ii) received any award under any plan of the Company or any of its
affiliates that entitles the participants therein to acquire shares of Common
Stock or other securities of the Company or any of its affiliates (other than
the Plan or any other plan under which participants' entitlements are governed
by provisions meeting the requirements of Rule 16b-3(c) promulgated under the
Exchange Act).
(e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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(f) "Exercise Price" means the price at which a share of
Common Stock may be purchased by a particular Participant pursuant to the
exercise of an Option, as determined in accordance with Section 8 hereof.
(g) "Option Agreement" means an agreement by and between a
Participant and the Company setting forth the specific terms and conditions of
an Option as well as the specific terms and conditions under which Common Stock
may be purchased by such Participant pursuant to the exercise of such Option.
Such Option Agreement shall be subject to the provisions of the Plan (which
shall be incorporated by reference therein) and shall be in substantially the
form attached hereto as Exhibit A.
(h) "Option" means the right of a Participant to purchase
shares of Common Stock in accordance with the terms of the Plan and the Option
Agreement which does not qualify as an incentive stock option under Section 422
of the Code, at a fixed option price equal to no less than 100 percent of the
Fair Market Value (as defined in Section 8 hereof) of the Common Stock on the
date the Option is granted.
(i) "Participant" means any Eligible Participant who is a
party to an Option Agreement.
3. Adoption and Administration of Plan.
The Plan shall become effective upon approval by the stockholders of
the Company at the Annual Meeting of Stockholders held on May 16, 1996 or at any
adjournments or postponements thereof. Upon such effectiveness, except as
otherwise set forth herein, any action taken by the Board of Directors of the
Company with respect to the implementation, interpretation or administration of
the Plan shall be final, conclusive and binding including, without limitation,
the grant of any Options pursuant to the Plan. The Board of Directors shall
administer the Plan.
4. Total Number of Shares of Common Stock.
The number of shares of Common Stock which may be issued in the
aggregate by the Company under the Plan pursuant to the exercise of Options
granted hereunder shall not be more than 254,000 shares. Such shares of Common
Stock may be issued out of the authorized and unissued shares of Common Stock of
the Company or out of shares of Common Stock held in the Company's treasury. Any
shares subject to an Option which expires or is terminated unexercised as to
such shares may again be subject to an Option under the Plan, subject to
adjustment pursuant to the provisions of Section 12 hereof.
5. Term.
The Plan will continue until May 16, 2006 or until all shares of Common
Stock issuable pursuant to the Plan shall have been issued.
6. Eligibility and Formula Awards.
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(a) All members of the Board of Directors of the Company who
are Eligible Participants shall be eligible to receive Options under the Plan.
All of the Options granted under the Plan shall be subject to all of the terms
and conditions of the Plan and of the Option Agreement under which they are
granted.
(b) On June 1, 1996, each person who is, as of June 1, 1996,
an Eligible Participant shall be granted an Option to purchase 8,000 shares of
Common Stock. Each person who becomes an Eligible Participant on or after June
1, 1996 shall be granted, on the date such person first becomes an Eligible
Participant, an Option to purchase 8,000 shares of Common Stock.
(c) On the date of the first regular meeting of the Board of
Directors of the Company in each year, each Eligible Participant who has been an
Eligible Participant for one year prior to such date shall, in addition to the
Option granted under Section 6(b) hereof, be granted an Option to purchase 2,000
shares of Common Stock.
7. Grant, Exercise Rights and Termination of Options.
(a) An Eligible Participant shall have an Option, and shall
thereby become and be a Participant, only upon the due execution by such
Eligible Participant and the Company of an Option Agreement (in the form
attached hereto as Exhibit A).
(b) An Option of a Participant may be exercised during the
period such Option is in effect and as set forth herein and in the Option
Agreement, and only if compliance with all applicable federal and state
securities laws can be effected, and may be exercised only by (i) such
Participant's completion, execution and delivery to the Company of a notice of
exercise as supplied by the Company and (ii) the payment to the Company of the
aggregate Exercise Price, as provided under Section 9 hereof, for the shares of
Common Stock to be purchased pursuant to such exercise (as shall be specified by
such Participant in such notice) in accordance with the terms of the Plan and
the Option Agreement. Except as specifically provided by a duly executed Option
Agreement or unless waived by the Board of Directors of the Company, an Option
or any of the rights thereunder may be exercised by such Participant only, and
may not be transferred or assigned, voluntarily, involuntarily or by operation
of law, except by will or the laws of descent and distribution.
(c) Notwithstanding any terms or provisions of the Plan to the
contrary, the Board of Directors of the Company may delegate to the appropriate
officer or officers of the Company the authority to prepare, execute and deliver
any Option Agreement reflecting any Option granted under the Plan; provided,
however, that any such Option Agreement shall be consistent with the terms and
conditions of the Plan.
(d) Subject to the provisions of Section 13 hereof, Options
granted pursuant to the Plan shall become exercisable according to the following
schedule: (i) 25% shall become exercisable on the first anniversary of the date
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of grant; (ii) 25% shall become exercisable on the second anniversary of the
date of grant; (iii) 25% shall become exercisable on the third anniversary of
the date of grant; and (iv) 25% shall become exercisable on the fourth
anniversary of the date of grant; provided, however, that the Participant must
be an Eligible Participant at each of the vesting dates and, except as otherwise
set forth in the Option Agreement, no Options may be exercised after the
expiration of ninety (90) days from the date a Participant ceases to be an
Eligible Participant.
8. Purchase Price of Common Stock.
The Exercise Price of an Option shall be equal to one hundred percent
(100%) of the Fair Market Value of the shares of Common Stock of the Company on
the date that such Option shall be granted. The Fair Market Value of the shares
of Common Stock of the Company shall be the closing price on any given date or,
if no shares of the Common Stock are traded on such date, the most recent prior
date on which shares of the Common Stock were traded, as quoted on the principal
stock exchange on which the Common Stock has been listed, or if the Common Stock
is not listed on an exchange, the NASDAQ National Market or the NASDAQ Small Cap
Market or, if the Common Stock is not quoted on the NASDAQ Stock Market or the
NASDAQ Small Cap Market, the average of the final bid and final asked prices for
a share of the Common Stock in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting prices) or if the Common Stock is no
longer publicly traded, as determined by the Board of Directors in good faith.
9. Payment for Shares of Common Stock.
Payment by each Participant for the shares of Common Stock purchased
hereunder shall be made in accordance with the terms of any Option Agreement
executed by such Participant.
10. Costs and Expenses.
All costs and expenses with respect to the adoption, implementation,
interpretation and administration of the Plan shall be borne by the Company;
provided, however, that, except as otherwise specifically provided in the Plan
or the applicable Option Agreement between the Company and a Participant, the
Company shall not be obligated to pay any costs or expenses (including legal
fees) incurred by any Participant in connection with any Option Agreement, the
Plan or any Option or Common Stock held by any Participant.
11. No Prior Right of Award.
Nothing in the Plan shall be deemed to give any director of the
Company, or his legal representatives or assigns, or any other person or entity
claiming under or through him, any contract or other right to participate in the
benefits of the Plan. Nothing in the Plan shall be construed as constituting a
commitment, guarantee, agreement or understanding of any kind or nature that the
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Company shall continue to engage any individual (whether or not a Participant).
The Plan shall not affect, in any way, the right of the Company to remove any
director (whether or not a Participant) at any time and for any reason
whatsoever. No change of a Participant's duties as a director of the Company
shall result in a modification of the terms of any rights of such Participant
under the Plan or any Option Agreement executed by such Participant.
12. Changes in Capital Structure.
If the outstanding shares of Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
or property of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split up, combination
of shares or otherwise), or if the number of such shares of Common Stock shall
be increased by a stock dividend or stock split, there shall be substituted for
or added to each share of Common Stock theretofore reserved for the purposes of
the Plan, whether or not such shares are at the time subject to outstanding
Options, the number and kind of shares of stock or other securities or property
into which each outstanding share of Common Stock shall be so changed or for
which it shall be so exchanged, or to which each such share shall be entitled,
as the case may be. Outstanding Options shall also be considered to be
appropriately amended as to price and other terms as may be necessary or
appropriate to reflect the foregoing events. If there shall be any other change
in the number or kind of the outstanding shares of Common Stock, or of any stock
or other securities or property into which such Common Stock shall have been
changed, or for which it shall have been exchanged, and if the Board shall in
its sole discretion determine that such change equitably requires an adjustment
in the number or kind or price of the shares then reserved for the purposes of
the Plan, or in any Options theretofore granted or which may be granted under
the Plan, then such adjustment shall be made by the Board and shall be effective
and binding for all purposes of the Plan. In making any such substitution or
adjustment pursuant to this Section 12, fractional shares may be ignored.
The Board shall have the power, in the event of any merger or
consolidation of the Company with or into any other corporation, or the merger
or consolidation of any other corporation with or into the Company, to amend all
outstanding Options to permit the exercise thereof in whole or in part at
anytime, or from time to time, prior to the effective date of any such merger or
consolidation (but not more than ten (10) years after the date of grant of any
incentive stock option) and to terminate each such Option as of such effective
date.
13. Acceleration; Change in Control. Unless expressly provided to the
contrary in the Option Agreement:
(a) Upon the occurrence of a Change of Control (as hereinafter
defined), Options shall automatically become fully vested and exercisable.
(b) Anything in this Plan to the contrary notwithstanding, no
termination, amendment or modification of this Plan after the occurrence of a
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Change of Control shall in any manner adversely affect any Eligible
Participant's rights under this Section 13 without the written consent of the
Eligible Participant affected by such termination, amendment or modification.
(c) The term "Change of Control" shall mean the occurrence of
any of the following events:
(i) any "person" or "group" (as such terms are used
in Section 13(d) and 14(d) of the Exchange Act is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act as in effect on the date
hereof, except that a person shall be deemed to be the "beneficial owner" of all
shares that any such person has the right to acquire pursuant to any agreement
or arrangement or upon exercise of conversion rights, warrants, options or
otherwise, without regard to the sixty day period referred to in such Rule),
directly or indirectly, of securities representing 20% or more of the combined
voting power of the Company's then outstanding securities;
(ii) any person or group shall make a tender offer or
an exchange offer for 20% or more of the combined voting power of the Company's
then outstanding securities;
(iii) at any time during any period of two
consecutive years, individuals who at the beginning of such
period constituted the Board and any new directors, whose election by the Board
or nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the Company directors then still in office who
either were the Company directors at the beginning of the period or whose
election or nomination for election was previously so approved ("Current
Directors"), cease for any reason to constitute a majority thereof;
(iv) the Company shall consolidate, merge or exchange
securities with any other entity and the
stockholders of the Company immediately before the effective time of such
transaction do not beneficially own, immediately after the effective time of
such transaction, shares entitling such stockholders to a majority of all votes
(without consideration of the rights of any class of stock entitled to elect
directors by a separate class vote) to which all stockholders of the corporation
issuing cash or securities in the consolidation, merger or share exchange would
be entitled for the purpose of electing directors or where the Current Directors
immediately after the effective time of the consolidation, merger or share
exchange would not constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the consolidation, merger or share
exchange; or
(v) any person or group acquires 50% or more of the
Company's assets.
Notwithstanding the foregoing, however, a Change in Control shall not
be deemed to occur merely by reason of an acquisition of Company securities by,
or any consolidation, merger or exchange of securities with, any entity that,
immediately prior to such acquisition, consolidation, merger or exchange of
securities, was a "subsidiary", as such term is defined below. For these
purposes, the term "subsidiary" means (a) any corporation of which 95% of the
capital stock of such corporation is owned, directly or indirectly, by the
Company and (b) any unincorporated entity in respect of which the Company has,
directly or indirectly, an equivalent degree of ownership.
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14. Amendment or Termination of Plan.
Except as otherwise provided herein, the Plan may be amended or
terminated in whole or in part by the Board of Directors of the Company (in its
sole discretion), but no such action shall adversely affect or alter any right
or obligation with respect to any Option or Option Agreement then in effect,
except to the extent that any such action shall be required or desirable (in the
opinion of the Company or its counsel) in order to comply with any rule or
regulation promulgated or proposed under the Code by the Internal Revenue
Service.
15. Burden and Benefit.
The terms and provisions of the Plan shall be binding upon, and shall
inure to the benefit of, each Participant and such Participant's executors and
administrators, estate, heirs and personal and legal representatives.
16. Gender.
The use of any gender hereunder shall be deemed to be or include the
other genders and the use of the singular herein shall be deemed to be or
include the plural (and vice versa), wherever appropriate.
17. Headings.
The headings and other captions contained in the Plan are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of the Plan.
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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 28, 1999 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 30, 1999.
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.)
Franklin A. Burke, Harold D. Carter, Robert D. Gershen,
and Robert W. Carington, Jr.
2. PROPOSAL TO APPROVE THE ABRAXAS PETROLEUM CORPORATION SECOND AMENDED
AND RESTATED DIRECTOR STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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: ______________, 1999 ___________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE ___________________________________________
ENCLOSED ENVELOPE. Signature if held jointly
