UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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o Preliminary Proxy
Statement
o Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Pursuant to Rule 14a-11(c) or Rule 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)
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Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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number of securities to which transaction applies:
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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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Proposed
maximum aggregate value of transaction:
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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.
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Previously Paid:
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Schedule or Registration Statement No.:
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ABRAXAS
PETROLEUM CORPORATION
18803
Meisner Drive
San
Antonio, Texas 78258
(210)
490-4788
April 20,
2009
Dear
Stockholders:
You are
cordially invited to attend the 2009 Annual Meeting of Stockholders of Abraxas
Petroleum Corporation to be held on Thursday, May 21, 2009, at 9:00 a.m., local
time, at the Petroleum Club of San Antonio located at 8620 N. New Braunfels,
Suite 700, San Antonio, Texas 78217. 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 attend the Annual Meeting, it is important that you vote
your shares. We are offering multiple options for voting your
shares. All holders may vote their shares by mail or written ballot
at the Annual Meeting. If you are a beneficial holder, you may also
vote your shares by telephone or the Internet using the instructions on each
proxy card. In order to vote your shares by mail, please mark, sign,
and date the enclosed proxy and return it promptly in the enclosed
envelope.
Thank you
for your continued support of Abraxas Petroleum Corporation.
Robert
L.G. Watson
Chairman
of the Board, President,
and Chief
Executive Officer
ABRAXAS
PETROLEUM CORPORATION
18803
Meisner Drive
San
Antonio, Texas 78258
(210)
490-4788
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 21, 2009
To the
Stockholders of Abraxas Petroleum Corporation:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Abraxas Petroleum
Corporation (“Abraxas”) will be held at the Petroleum Club of San Antonio
located at 8620 N. New Braunfels, Suite 700, San Antonio, Texas 78217, on
Thursday, May 21, 2009, at 9:00 a.m., local time, for the following
purposes:
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(1)
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To
elect as directors to the Abraxas Board of Directors the two nominees
named below for a term of three
years:
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(2)
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To
ratify the appointment of BDO Seidman, LLP as Abraxas’ independent
registered public accounting firm for the year ending December 31, 2009;
and
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(3)
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To
transact any other business that has been properly brought before the
meeting in accordance with the provisions of the Company’s Amended and
Restated Bylaws.
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Our Board recommends that you vote FOR
Proposals 1 and 2.
We
cordially invite you to attend the Annual Meeting in person. Whether
or not you expect to attend the Annual Meeting, we urge you to mark, sign, date,
and return the enclosed proxy card as soon as possible in the enclosed
envelope. If you are a beneficial holder, you may also vote your
shares by telephone or the Internet using the instructions on each proxy
card. You may revoke your proxy at any time prior to the Annual
Meeting, and, if you attend the Annual Meeting, you may vote your shares of
Abraxas stock in person.
The Board
of Directors has fixed the close of business on April 15, 2009 as the record
date for the determination of the stockholders entitled to notice of and to vote
at the Annual Meeting and any adjournment thereof.
By Order
of the Board of Directors
Stephen
T. Wendel
SECRETARY
San
Antonio, Texas
April 20,
2009
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be held May 21, 2009: This proxy statement and our
2008 Annual Report on Form 10-K are available at www.abraxaspetroleum.com/proxy,
which does not have “cookies” that identify visitors to the site.
ABRAXAS
PETROLEUM CORPORATION
18803
Meisner Drive
San
Antonio, Texas 78258
(210)
490-4788
PROXY
STATEMENT
_______________________
The Board
of Directors of Abraxas Petroleum Corporation is soliciting proxies to vote
shares of common stock at the 2009 Annual Meeting of Stockholders to be held at
9:00 a.m., local time, on Thursday, May 21, 2009, at the Petroleum Club of San
Antonio located at 8620 N. New Braunfels, Suite 700, San Antonio, Texas 78217,
and at any adjournment thereof. This Proxy Statement and the
accompanying Proxy are first being mailed to stockholders on or about April 20,
2009. For ten days prior to the annual meeting, a complete list of
stockholders entitled to vote at the annual meeting will be available for
examination by any stockholder for any purpose relevant to the annual meeting
during ordinary business hours at Abraxas’ executive offices, located at the
address set forth above.
Record
Date; Shares Entitled To Vote; Quorum
The Board
of Directors has fixed the close of business on April 15, 2009 as the record
date for Abraxas stockholders entitled to notice of and to vote at the annual
meeting. Holders of common stock as of the record date are entitled
to vote at the annual meeting. As of the record date, there were
49,787,914 shares of Abraxas common stock outstanding, which were held by
approximately 1,180 holders of record. Stockholders are entitled to
one vote for each share of Abraxas common stock held as of the record
date.
The
holders of a majority of the outstanding shares of Abraxas common stock issued
and entitled to vote at the annual meeting must be present in person or by proxy
to establish a quorum for business to be conducted at the annual
meeting. Abstentions and “non-votes” are treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. “Non-votes” occur when a proxy:
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is
returned by a broker or other stockholder who does not have authority to
vote;
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does
not give authority to a proxy to vote;
or
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withholds
authority to vote on one or more
proposals.
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Votes
Required
The votes
required for each of the proposals is as follows:
Election of
Directors. The nominees for director who receive the most
votes will be elected. Therefore, if you do not vote for a particular
nominee or you indicate “withhold authority to vote” for a particular nominee on
your proxy card, your abstention will have no effect on the election of
directors.
Appointment of Independent
Registered Public Accounting Firm. The proposal to ratify the
appointment of Abraxas’ independent registered public accounting firm must
receive the affirmative vote of the holders of a majority of the shares of
Abraxas common stock represented and voting at the
meeting. Therefore, all abstentions will have the same legal effect
as a vote against the proposal. Non-votes are not considered present
at the meeting for this proposal and will have no effect on the ratification of
the appointment of Abraxas’ independent registered public accounting
firm.
Voting
of Proxies
Votes
cast in person or by proxy at the annual meeting will be tabulated at the annual
meeting. All valid, unrevoked proxies will be voted as
directed. In the absence of instructions to the contrary, properly
executed proxies will be voted in favor of each of the proposals listed in the
notice of annual meeting and for the election of the nominees for director set
forth herein.
If any
matters other than those addressed on the proxy card are properly presented for
action at the annual meeting, the persons named in the proxy will have the
discretion to vote on those matters in their best judgment, unless authorization
is withheld.
Many of
our stockholders hold their shares through a stockbroker, bank or other nominee
rather than directly in their own names. As summarized below, there are some
distinctions between shares held of record and those owned
beneficially.
Stockholder of
Record. If your shares are registered directly in your name or
with our transfer agent, American Stock Transfer & Trust Company, you are
considered the stockholder of record with respect to those shares and these
proxy materials are being sent directly to you by us. As a
stockholder of record, you have the right to grant your voting proxy directly to
us or to vote in person at the annual meeting. We have enclosed a proxy card for
your use.
Beneficial
Holder. If your shares are held in a brokerage account or by a
bank or other nominee, you are considered the beneficial owner of the shares
held in street name, and these proxy materials are being forwarded to you by
your broker or nominee who is considered the stockholder of record with respect
to those shares. As the beneficial owner, you have the right to direct your
broker on how to vote and are also invited to attend the meeting. However, since
you are not the stockholder of record, you may not vote these shares in person
at the meeting. Your broker or nominee has enclosed a proxy card for your
use.
How
To Vote By Proxy; Revocability of Proxies
To vote
by proxy, you must mark, sign, date, and return the proxy card in the enclosed
envelope. If you are a beneficial holder, you may also vote your
shares by telephone or the Internet using the instructions on each proxy
card. Any Abraxas stockholder who delivers a properly executed proxy
may revoke the proxy at any time before it is voted. Proxies may be
revoked by:
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delivering
a written revocation of the proxy to the Abraxas Secretary before the
annual meeting;
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submitting
a later-dated proxy by mail, telephone or the Internet;
or
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appearing
at the annual meeting and voting in
person.
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Attendance
at the annual meeting will not, in and of itself, constitute revocation of a
proxy. An Abraxas stockholder whose shares are held in the name of
its broker, bank or other nominee must bring a legal proxy from its broker, bank
or other nominee to the meeting in order to vote in person.
Deadline
for Voting by Proxy
In order
to be counted, votes cast by proxy must be received prior to the annual
meeting.
Solicitation
of Proxies
Proxies
will be solicited by mail. Proxies may also be solicited personally,
or by telephone, fax, or other means by the directors, officers, and employees
of Abraxas. Directors, officers, and employees soliciting proxies
will receive no extra compensation, but may be reimbursed for related
out-of-pocket expenses. In addition to solicitation by mail, Abraxas
will make arrangements with brokerage houses and other custodians, nominees, and
fiduciaries to send the proxy materials to beneficial owners. Abraxas
will, upon request, reimburse these brokerage houses, custodians, and other
persons for their reasonable out-of-pocket expenses in doing
so. Abraxas will pay the cost of solicitation of
proxies.
Important
Information Regarding Delivery of Proxy Material
The Securities and Exchange Commission
has adopted amendments to the proxy rules that change how companies must provide
proxy materials to its stockholders. These new rules are often
referred to as “notice and access,” under which a company may select either of
the following options for making proxy materials available to its
stockholders:
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the
full set delivery option; or
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the
notice only option.
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A company
may use a single method for all of its stockholders, or use full set delivery
for some while adopting the notice only option for others.
Abraxas
must comply with these new rules in connection with its 2009 Annual Meeting of
Stockholders.
Full
Set Delivery Option
Under the
full set delivery option, a company delivers all proxy material to its
stockholders by mail as it would have done prior to the change in the
rules. In addition to delivery of proxy materials to stockholders,
the company must post all proxy materials on a publicly-accessible website and
provide information to stockholders about how to access the
website.
In
connection with its 2009 Annual Meeting of Stockholders, Abraxas elected to use
the full set delivery option. Accordingly, you should have received
Abraxas’ proxy materials by mail. These proxy materials include the
Notice of Annual Meeting of Stockholders, proxy statement, proxy card and Annual
Report on Form 10-K. Additionally, Abraxas has posted these materials
at www.abraxaspetroleum.com/proxy.
Notice
Only Option
Under the
notice only option, a company must post all proxy materials on a
publicly-accessible website. Instead of delivering proxy materials to
its stockholders, the company instead delivers a “Notice of Internet
Availability of Proxy Material.” The notice includes, among other
matters:
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information
regarding the date and time of the annual meeting of stockholders as well
as the items to be considered at the
meeting;
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information
regarding the website where the proxy materials are posted;
and
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various
means by which a stockholder can request paper or e-mail copies of the
proxy materials.
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If a
stockholder requests paper copies of the proxy materials, these materials must
be sent to the stockholder within three business days and by first class
mail.
Abraxas
May Use the Notice Only Option in the Future
Although
Abraxas elected to use the full set delivery option in connection with the 2009
Annual Meeting of Stockholders, it may choose to use the notice only option in
the future. By reducing the amount of materials that a company needs
to print and mail, the notice only option provides an opportunity for costs
savings as well as conservation of paper products. Many companies
that have used the notice only option have also experienced a lower
participation rate resulting in fewer stockholders voting at the annual
meeting. Abraxas plans to evaluate the future possible cost savings
as well as the possible impact on stockholder participation as it considers
future use of the notice only option.
Householding
The
Securities and Exchange Commission has adopted rules that permit companies and
intermediaries (e.g. brokers) to satisfy the delivery requirements for proxy
materials with respect to two or more stockholders sharing the same address by
delivering a single set of proxy materials. This process, which is
commonly referred to as “householding,” potentially results in extra convenience
for stockholders and cost savings for companies.
If, at
any time, you no longer wish to participate in “householding” and would prefer
to receive a separate set of proxy materials, you may:
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Send
a written request to Investor Relations, Abraxas Petroleum Corporation,
18803 Meisner Drive, San Antonio, Texas 78258, if you are a stockholder of
record, or
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Notify
your broker, if you hold your common shares in street
name.
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PROPOSAL
ONE
Election
of Directors
Abraxas’
Articles of Incorporation 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 of stockholders. At this year’s meeting,
two Class I directors are to be elected for a term of three years, to hold
office until the expiration of his term in 2012, or until a successor has been
elected and duly qualified. The nominees for Class I directors are
Franklin A. Burke and Paul A. Powell, Jr.
Assuming
the presence of a quorum, the nominees for director who receive the most votes
will be elected. The enclosed proxy card provides a means for
stockholders to vote for or to withhold authority to vote for the nominees for
director. If a stockholder executes and returns a proxy, but does not
specify how the shares represented by such stockholder’s proxy are to be voted,
such shares will be voted FOR the election of the nominees for
director. In determining whether this item has received the required
number of affirmative votes, abstentions and broker non-votes will not be
counted and will have no effect.
The
Board of Directors recommends a vote “FOR” the election of the nominees to the
Board of Directors.
Board
of Directors and Executive Officers
The
following table sets forth the names, ages, and positions of the executive
officers and directors of Abraxas. The term of the Class I directors
expires in 2009, the term of the Class II directors expires in 2011 and the term
of the Class III directors expires in 2010.
Name
and Municipality of Residence
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Age
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Office
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Class
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Robert
L.G. Watson
San
Antonio, Texas
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58
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Chairman
of the Board, President and Chief Executive Officer
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III
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C.
Scott Bartlett, Jr.
Richmond
Hill, Georgia
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75
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Director
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II
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Franklin
A. Burke
Doyleston,
Pennsylvania
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75
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Director
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I
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Harold
D. Carter
Dallas,
Texas
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70
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Director
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III
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Ralph
F. Cox
Fort
Worth, Texas
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76
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Director
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II
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Dennis
E. Logue
Enfield,
New Hampshire
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65
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Director
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II
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Paul
A. Powell, Jr.
Roanoke,
Virginia
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63
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Director
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I
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Chris
E. Williford
San
Antonio, Texas
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58
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Executive
Vice President, Chief Financial Officer and Treasurer
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—
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Lee
T. Billingsley
San
Antonio, Texas
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56
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Vice
President – Exploration
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—
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William
H. Wallace
Blanco,
Texas
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51
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Vice
President – Operations
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—
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Stephen
T. Wendel
San
Antonio, Texas
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59
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Vice
President – Land & Marketing
and
Corporate Secretary
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—
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Barbara
M. Stuckey
San
Antonio, Texas
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40
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Vice
President – Corporate Development
and
Assistant Secretary
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—
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Executive
Officers
Robert L.G.
Watson has served as Chairman of the Board, President, Chief Executive
Officer and a director of Abraxas since 1977. Mr. Watson also serves
as Chairman of the Board and Chief Executive Officer of Abraxas General Partner,
LLC, the general partner of Abraxas Energy Partners, L.P., which we refer to as
the Partnership, an upstream master limited partnership formed by Abraxas in May
2007. Since January 2003, Mr. Watson has served as Chairman of the
Board, Chief Executive Officer and director of Grey Wolf Exploration Inc., which
we refer to as Grey Wolf, an oil and gas exploration and production company
whose shares are listed on the Toronto Stock Exchange and which was, until
February 2005, a wholly-owned subsidiary of Abraxas. From May 1996 to
January 2003, Mr. Watson served as President, Chairman of the Board and a
director of Grey Wolf Exploration, Inc., a former wholly-owned subsidiary of
Abraxas, which we refer to as Old Grey Wolf, the capital stock of which was sold
by Abraxas in January 2003. From November 1996 to January 2003, Mr.
Watson was Chairman of the Board, President and a director of Canadian Abraxas
Petroleum Limited, which we refer to as Canadian Abraxas, a former wholly-owned
Canadian subsidiary of Abraxas, the capital stock of which was sold by Abraxas
in January 2003. Prior to forming Abraxas, Mr. Watson held petroleum
engineering positions with Tesoro Petroleum Corporation and DeGolyer and
MacNaughton. 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. Mr. Watson currently devotes approximately one-third of his
business time to his obligations for Grey Wolf and he will devote as much time
to the management and affairs of the Partnership as is necessary for the proper
conduct of the Partnership’s business and affairs.
Chris E.
Williford 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. Mr. Williford resigned as a director
of Abraxas in December 1999. From November 1996 to January 2003, Mr.
Williford was Vice President and Assistant Secretary of Canadian Abraxas and
Vice President of Old Grey Wolf. Prior to joining Abraxas, Mr.
Williford was Chief Financial Officer of American Natural Energy Corporation and
President of Clark Resources Corp. Mr. Williford received a Bachelor
of Science degree in Business Administration from Pittsburg State University in
1973.
Lee T.
Billingsley has served as Vice President – Exploration since joining
Abraxas in 1998. Dr. Billingsley founded Sandia Oil & Gas Corp.
in 1983 and served as its President until Sandia merged into Abraxas in
1998. Prior to forming Sandia, Dr. Billingsley worked for Tenneco Oil
Company and American Quasar Petroleum. Dr. Billingsley served as
President of the American Association of Petroleum Geologists (AAPG) for the
2006-2007 term. Dr. Billingsley holds three degrees in Geology, Bachelor of
Science and Doctorate from Texas A&M University and Master of Science from
Colorado School of Mines.
William H.
Wallace has served as Vice President – Operations since
2000. Mr. Wallace served as Abraxas’ Superintendent/Senior Operations
Engineer, from 1995 to 2000. Prior to joining Abraxas, Mr. Wallace
was associated with Dorchester Gas Producing Company and Parker and
Parsley. Mr. Wallace received a Bachelor of Science degree in
Petroleum Engineering from Texas Tech University in 1981.
Stephen T.
Wendel has served as Vice President - Land and Marketing since 1990 and
as Corporate Secretary since 1988. Mr. Wendel served as Abraxas’
Manager of Joint Interests and Natural Gas Contracts, from 1982 to
1990. Prior to joining Abraxas, Mr. Wendel held accounting, auditing
and marketing positions with Tenneco Oil Company and Tesoro Petroleum
Corporation. Mr. Wendel received a Bachelor of Business
Administration degree in Accounting from Texas Lutheran University in
1971.
Barbara M.
Stuckey has served as Vice President – Corporate Development and
Assistant Secretary since 2007. Ms. Stuckey also serves as President
of Abraxas General Partner, LLC, the general partner of Abraxas Energy Partners,
L.P., an upstream master limited partnership formed by Abraxas in May
2007. Ms. Stuckey joined Abraxas in 1997 and has held positions in
investor relations, corporate finance, land and marketing. Ms.
Stuckey received a Bachelor of Arts degree from the University of Texas at San
Antonio 1991 and a Master of Business Administration degree from the Bordeaux
Business School in 2004.
Director
Nominees
Franklin A.
Burke, a director of Abraxas since June 1992, has served as President and
Chief Executive Officer of Burke, Lawton, Brewer & Burke, a securities
brokerage firm, since 1964, as President of Venture Securities Corporation,
since 1971, and as President, Director of Research and Portfolio Management of
BLB&B Advisors, LLC, since 2006. Mr. Burke also serves as Trustee
and Treasurer of The Williamson Free School of Mechanical Trades. Mr.
Burke received a Bachelor of Science degree in Business Administration from
Kansas State University in 1955, a Masters 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.
Paul A. Powell,
Jr., a director of Abraxas since August 2005, has served as Vice
President and director of Mechanical Development Co., Inc. a maker of precision
production machine parts, since 1984. Mr. Powell is a managing
partner of Claytor Equity Partners, Cortland Partners, JWM Partners, Emory
Partners, Burnett Partners and President of Somerset Investments,
Inc. Mr. Powell is also manager of Westpoint (2002) LLC and WMP
Properties LLC, and co-manager of Wessex LLC. Mr. Powell also serves
on the board of the Blue Ridge Mountain Council, Boy Scouts of America, and as
trustee for numerous charitable trusts. Mr. Powell also serves on the
board of trustees of Emory & Henry College. Mr. Powell attended
Emory & Henry College and graduated from National Business College with a
degree in Accounting. Mr. Powell previously served as director of
Abraxas from 1987 to 1999 and as an advisory director from 1999 to August
2005.
Directors
with Terms Expiring in 2010 and 2011
C. Scott
Bartlett, Jr., a director of Abraxas since December 1999, has over 50
years of commercial banking experience, the most recent being with National
Westminster Bank USA (prior to being acquired by Bank of America), ultimately
serving as Executive Vice President, Senior Lending Officer and Chairman of the
Credit Policy Committee. Mr. Bartlett attended Princeton University,
and has a certificate in Advanced Management from Pennsylvania State
University.
Harold D. Carter
has served as a director of Abraxas since October 2003. Mr.
Carter has more than 40 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 to 1989. Mr. Carter currently serves as a director of
Brigham Exploration Company, a publicly traded oil and gas company, and Longview
Energy Company, a privately-owned oil and gas exploration and production
company. Mr. Carter also serves as Vice Chairman of the Board of
Trustees for the Texas Scottish Rite Hospital for Children. Mr.
Carter received a Bachelor of Business Administration degree in Petroleum Land
Management from the University of Texas and completed the Program for Management
Development at the Harvard University Business School. Mr. Carter was
a director of Abraxas from 1996 to 1999 and served as an advisory director from
1999 to October 2003.
Ralph F.
Cox, a director of Abraxas since December 1999, has over 50 years of oil
and gas industry experience, over 30 of which was with Atlantic Richfield
Company (ARCO). Mr. Cox retired from ARCO in 1985 after serving as
Vice Chairman. Mr. Cox then joined Union Pacific Resources, retiring
in 1989 as President and Chief Operating Officer. Mr. Cox then joined
Greenhill Petroleum Corporation as President until leaving in 1994 to pursue a
consulting business. Mr. Cox currently serves on the board of CH2M
Hill Companies, an engineering and construction firm, and as a trustee for
Fidelity Mutual Funds. Mr. Cox also serves as a director of Validus
International, a company specializing in oil field drilling tools, as a director
of World GTL Inc., a gas-to-liquids production facility, as a director of E-T
Energy Ltd., a Canadian oil sands extraction company, and as an advisory
director of Impact Petroleum, an oil and gas exploration and production
company. Mr. Cox also serves on the board of Abraxas General Partner,
LLC, the general partner of Abraxas Energy Partners, L.P., an upstream master
limited partnership formed by Abraxas in May 2007. Mr. Cox received
Bachelor of Science degrees in Petroleum Engineering and Mechanical Engineering
from Texas A&M University in 1954 and completed advanced studies at Emory
University.
Dennis E.
Logue, a director of Abraxas since April 2003, has served as Chairman of
the Board of Directors of Ledyard Financial Group since August
2005. Mr. Logue served as Dean and Fred E. Brown Chair at the Michael
F. Price College of Business at the University of Oklahoma from 2001 through
September 2005. Prior to joining Price College, Mr. Logue was the
Steven Roth Professor at the Amos Tuck School at Dartmouth College where he had
been since 1974. Mr. Logue currently serves as a director of Waddell
& Reed Financial, Inc., a national financial services organization, and
Duckwall-ALCO Stores, Inc., a general merchandise retailer serving smaller,
hometown communities. Mr. Logue also serves on the board of
Hypertherm, a privately-owned company specializing in plasma cutting tools and
technology, and as a Trustee for the Montshire Museum of Science. Mr.
Logue holds degrees from Fordham College, Rutgers, and Cornell
University.
Robert L.G.
Watson, Abraxas’ Chairman of the Board, President and Chief Executive
Officer, is a Class III director with a term expiring in 2010.
Meeting
Attendance
During
the fiscal year ended December 31, 2008, the Board of Directors held five
meetings, the Audit Committee held seven meetings, the Compensation Committee
held one meeting and the Nominating and Corporate Governance Committee held one
meeting. During 2008, each director attended at least 75% of all
Board and applicable Committee meetings. During 2008, Abraxas’
directors, other than Mr. Watson, received compensation for service to Abraxas
as a director. See “Executive Compensation—Compensation of
Directors.” The directors also received reimbursement of travel
expenses to attend meetings of the Board of Directors. Abraxas
encourages, but does not require, directors to attend the annual meeting of
stockholders. At Abraxas’ 2008 Annual Meeting, all members of the
Board were present.
Committees
of the Board of Directors
Abraxas
has standing Audit, Compensation and Nominating and Corporate Governance
Committees.
The Audit
Committee is a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit
Committee consists of Messrs. Bartlett, Burke and Powell. The Board
of Directors has determined that C. Scott Bartlett, Jr., as defined by SEC
rules, is an audit committee financial expert. The Audit Committee
Report, which begins on page 40, more fully describes the activities and
responsibilities of the Audit Committee. At each meeting which is
regularly attended by Mr. Williford and BDO Seidman, LLP, the Audit Committee
also meets in executive session.
The
Compensation Committee consists of Messrs. Cox, Carter and Logue. The
Compensation Committee’s role is to establish and oversee Abraxas’ compensation
and benefit plans and policies, administer its stock option plans, and to
annually review and approve all compensation decisions relating to Abraxas’
executive officers. The Compensation Discussion & Analysis, which
begins on page 15, more fully describes the activities and responsibilities of
the Compensation Committee. The Compensation Committee submits its
decisions regarding executive compensation to the independent members of the
Board for approval. The agenda for meetings of the Compensation
Committee is determined by its Chairman, Mr. Cox, and the meetings are regularly
attended by Mr. Watson. At each meeting, the Compensation Committee
also meets in executive session. Mr. Cox reports the committee’s
recommendations on executive compensation to the Board. The Company’s
personnel support the Compensation Committee in its duties and, along with Mr.
Watson, may be delegated authority to fulfill certain administrative duties
regarding the Company’s compensation programs. The Compensation
Committee has authority under its charter to retain, approve fees for and
terminate advisors, consultants and agents as it deems necessary to assist in
the fulfillment of its responsibilities but has not, in the past, utilized the
services of a third party consultant to review the policies and procedures with
respect to executive compensation. The Compensation Committee may
engage a third party to provide such services in the future, as it deems
necessary or appropriate at the time in question. For more
information on the Compensation Committee’s processes and procedures, please see
“Executive Compensation – Compensation Discussion and Analysis – Our
Compensation Committee” and – “Elements of Executive Compensation.”
The
Nominating and Corporate Governance Committee consists of Messrs. Cox,
Logue and Powell. The primary function of the Nominating and
Corporate Governance Committee is to develop and maintain the corporate
governance policies of Abraxas and to assist the Board in identifying, screening
and recruiting qualified individuals
to become
Board members and determining the composition of the Board and its committees,
including recommending nominees for annual stockholders meetings or to fill
vacancies on the Board.
Each of
the Board’s committees has a written charter, and copies of the charters are
available for review on the Company’s website at
www.abraxaspetroleum.com.
Director
Independence
The Board
of Directors has determined that each of the following members of the Board of
Directors is independent as determined in accordance with the listing standards
of The NASDAQ Stock Market and Rule 10A-3 of the Exchange Act: C.
Scott Bartlett, Jr., Franklin A. Burke, Harold D. Carter, Ralph F. Cox, Dennis
E. Logue and Paul A. Powell, Jr. All of the members of the Audit,
Compensation and Nominating and Corporate Governance Committees of the Board of
Directors are independent as determined in accordance with the listing standards
of The NASDAQ Stock Market and Rule 10A-3 of the Exchange Act. The
Board of Directors conducts an annual self-evaluation on key Board and
Committee-related issues, which has proven to be a beneficial tool in the
process of continuous improvement in Board functioning and
communication.
Messrs.
Cox, Carter and Logue served on the Compensation Committee during
2008. No member of the Compensation Committee was at any time during
2008 or at any other time an officer or employee of Abraxas, and no member had
any relationship with Abraxas requiring disclosure as a related-party
transaction in the section “Certain Relationships and Related Transactions” of
this proxy statement. Mr. Cox is also a member of the Board of
Directors of Abraxas General Partner, LLC, the general partner of the
Partnership. See “Transactions with Abraxas Energy Partners, L.P.”
which summarizes transactions between Abraxas and the Partnership during 2008
and certain contractual relationships between Abraxas and the Partnership for
services that Abraxas provides to the Partnership. No executive
officer of Abraxas has served on the board of directors or compensation
committee of any other entity that has or has had one or more executive officers
who served as a member of the Board of Directors or the Compensation Committee
during 2008.
Code
of Ethics
In April
2004, the Board of Directors unanimously approved Abraxas’ Code of
Ethics. This Code is a statement of Abraxas’ high standards for
ethical behavior, legal compliance and financial disclosure, and is applicable
to all directors, officers, and employees. A copy of the Code of
Ethics can be found in its entirety on Abraxas’ website at
www.abraxaspetroleum.com. Additionally, should there be any changes
to, or waivers from, Abraxas’ Code of Ethics, those changes or waivers will be
posted immediately on our website at the address noted above.
Stockholder
Communications with the Board
The Board
of Directors has implemented a process by which stockholders may communicate
with the Board of Directors. Any stockholder desiring to communicate
with the Board of Directors may do so in writing by sending a letter addressed
to The Board of Directors, c/o Corporate Secretary. The Corporate
Secretary has been instructed by the Board to promptly forward communications so
received to the members of the Board of Directors.
Nominations
The
Nominating and Corporate Governance Committee is responsible for determining the
slate of director nominees for election by stockholders, which the committee
recommends for consideration by the Board. All director nominees are
approved by the Board prior to annual proxy material preparation and are
required to stand for election by stockholders at the next annual
meeting. For positions on the Board created by a director’s leaving
the Board prior to the expiration of his current term, whether due to death,
resignation, or other inability to serve, Article III of the Company’s Amended
and Restated Bylaws provides that a Director elected by the Board to fill a
vacancy shall be elected for the unexpired term of his predecessor in
office.
The
Nominating and Corporate Governance Committee does not currently utilize the
services of any third party search firm to assist in the identification or
evaluation of Board member candidates. The Nominating
and
Corporate
Governance Committee may engage a third party to provide such services in the
future, as it deems necessary or appropriate at the time in
question.
The
Nominating and Corporate Governance Committee determines the required selection
criteria and qualifications of director nominees based upon the needs of the
Company at the time nominees are considered. A candidate must possess
the ability to apply good business judgment and must be in a position to
properly exercise his duties of loyalty and care. Candidates should
also exhibit proven leadership capabilities, high integrity and experience with
a high level of responsibility within their chosen fields, and have the ability
to quickly understand complex principles of, but not limited to, business and
finance. Candidates with potential conflicts of interest or who do
not meet independence criteria will be identified and
disqualified. The Nominating and Corporate Governance Committee will
consider these criteria for nominees identified by the Committee, by
stockholders, or through some other source. When current Board
members are considered for nomination for re-election, the Nominating and
Corporate Governance Committee also takes into consideration their prior Board
contributions, performance and meeting attendance records.
The
Nominating and Corporate Governance Committee will consider qualified candidates
for possible nomination that are recommended by
stockholders. Stockholders wishing to make such a recommendation may
do so by sending the required information to the Nominating and Corporate
Governance Committee, c/o Corporate Secretary at the address listed
above. Any such nomination must comply with the advance notice
provisions and provide all of the information required by Abraxas’ Amended and
Restated Bylaws. These provisions and required information are
summarized under “Stockholder Proposals for 2010 Abraxas Annual Meeting”
beginning on page 42 of this document.
The
Nominating and Corporate Governance Committee conducts a process of making a
preliminary assessment of each proposed nominee based upon the resume and
biographical information, an indication of the individual’s willingness to serve
and other background information. This information is evaluated
against the criteria set forth above as well as the specific needs of the
Company at that time. Based upon a preliminary assessment of the
candidate(s), those who appear best suited to meet the needs of the Company may
be invited to participate in a series of interviews, which are used for further
evaluation. The Nominating and Corporate Governance Committee uses
the same process for evaluating all nominees, regardless of the original source
of the information.
No
candidates for director nominations were submitted to the Nominating and
Corporate Governance Committee by any stockholder in connection with the 2009
Annual Meeting.
SECURITIES
HOLDINGS OF PRINCIPAL STOCKHOLDERS,
DIRECTORS,
NOMINEES AND OFFICERS
Based
upon information received from the persons concerned, each person known to
Abraxas to be the beneficial owner of more than five percent of the outstanding
shares of common stock of Abraxas, each director and nominee for director, each
of the executive officers and all directors and officers of Abraxas as a group,
owned beneficially as of April 1, 2009, the number and percentage of outstanding
shares of common stock of Abraxas indicated in the following
table. Abraxas’ Board has recently adopted stock ownership
guidelines, please read “Stock Ownership Guidelines.” None of the
shares listed below have been pledged as security, except for 350,000 shares
owned by Mr. Watson.
Name
and Address
of Beneficial Owner
|
Number of Shares (1)
|
Percentage (%)
|
Robert
L.G. Watson
|
1,264,696
(2)
|
2.5%
|
Chris
E. Williford
|
319,483
(3)
|
*
|
Lee
T. Billingsley
|
267,094
(4)
|
*
|
William
H. Wallace
|
203,692
(5)
|
*
|
Stephen
T. Wendel
|
274,801
(6)
|
*
|
Barbara
M. Stuckey
|
53,914
(7)
|
*
|
C.
Scott Bartlett, Jr.
|
114,328
(8)
|
*
|
Franklin
A. Burke
|
4,164,827
(9)
|
8.3%
|
Harold
D. Carter
|
170,003
(10)
|
*
|
Ralph
F. Cox
|
386,828
(11)
|
*
|
Dennis
E. Logue
|
126,828
(12)
|
*
|
Paul
A. Powell, Jr.
|
176,207
(13)
|
*
|
All
Officers and Directors as a Group
(12
persons)
|
7,522,701
(2)(3)(4)(5)(6)
(7)(8)(9)(10)
(11)(12)(13)
|
15.1%
|
__________________
(1)
|
Unless
otherwise indicated, all shares are held directly with sole voting and
investment power.
|
(2)
|
Includes
283,713 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 1994 Long Term Incentive Plan (the “1994
LTIP”), 85,406 shares issuable upon exercise of options granted pursuant
to the Abraxas Petroleum Corporation 2005 Employee Long-Term Equity
Incentive Plan (the “2005 Employee Plan”) and 26,573 shares in a
retirement account. 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. Mr. Watson has pledged 350,000 shares of
common stock as security for a loan held by Plains Capital
Bank. In addition, Mr. Watson owns 40,714 common units of the
Partnership, which includes 6,000 restricted units granted pursuant to the
Partnership LTIP.
|
(3)
|
Includes
103,000 shares issuable upon exercise of options granted pursuant to the
1994 LTIP, 78,809 shares issuable upon exercise of options granted
pursuant to the 2005 Employee Plan and 15,055 shares in a retirement
account. In addition, Mr. Williford has been granted 2,500
restricted units of the Partnership pursuant to the Partnership
LTIP.
|
(4)
|
Includes
82,000 shares issuable upon exercise of options granted pursuant to the
1994 LTIP, 41,636 shares issuable upon exercise of options granted
pursuant to the 2005 Employee Plan and 25,625 shares in a retirement
account. In addition, Dr. Billingsley has been granted 2,500
restricted units of the Partnership pursuant to the Partnership
LTIP.
|
(5)
|
Includes
82,000 shares issuable upon exercise of options granted pursuant to the
1994 LTIP, 42,230 shares issuable upon exercise of options granted
pursuant to the 2005 Employee Plan and 23,546 shares in a retirement
account. In addition, Mr. Wallace has been granted 2,500
restricted units of the Partnership pursuant to the Partnership
LTIP.
|
(6)
|
Includes
42,000 shares issuable upon exercise of options granted pursuant to the
1994 LTIP, 41,333 shares issuable upon exercise of options granted
pursuant to the 2005 Employee Plan and 88,518 shares in a retirement
account. In addition, In addition, Mr. Wendel has been granted 2,500
restricted units of the Partnership pursuant to the Partnership
LTIP.
|
(7)
|
Includes
25,047 shares issuable upon exercise of options granted pursuant to the
2005 Employee Plan and 14,122 shares in a retirement
account. In addition, Ms. Stuckey owns 18,986 common units of
the Partnership, which includes 4,000 restricted units granted pursuant to
the Partnership LTIP.
|
(8)
|
Includes
40,000 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation 2005 Non-Employee Director Long-Term Equity
Incentive Plan (the “2005 Director Plan”) and 11,000 shares in a
retirement account.
|
(9)
|
Includes
15,000 shares issuable upon exercise of options granted pursuant to the
Abraxas Petroleum Corporation Amended and Restated Director Stock Option
Plan (the “Director Option Plan”), 45,000 shares issuable upon exercise of
certain option agreements, 40,000 shares issuable upon exercise of options
granted pursuant to the 2005 Director Plan, 219,930 shares in a retirement
account, 2,156,781 shares owned by Venture Securities Corporation Profit
Sharing Trust Plan (voluntary), Venture Securities Corporation Profit
Sharing Plan Trust (designated) and Venture Securities Corporation Pension
Plan Trust over which Mr. Burke has shared discretion to dispose of,
direct the disposition of, vote, and direct the voting of such shares for
the benefit of the beneficiary of the trust, 16,500 shares in various
trust and guardianship accounts, of which Mr. Burke is a trustee or
guardian, 24,222 shares in the Pleasantville Church Foundation, of which
Mr. Burke is a director, and 1,502,936 shares managed by BLB&B
Advisors, LLC, of which Mr. Burke is the sole owner, on behalf of third
parties. Mr. Burke does not have any voting rights with regard
to the shares managed by BLB&B Advisors, LLC. In addition, 71,428
common units of the Partnership are owned by Venture Securities
Corporation Pension Trust and Venture Securities Corporation Profit
Sharing Trust.
|
(10)
|
Includes
15,000 shares issuable upon exercise of options granted pursuant to the
Director Option Plan, 45,000 shares issuable upon exercise of certain
option agreements, 40,000 shares issuable upon exercise of options granted
pursuant to the 2005 Director Plan, 7,577 shares in a family partnership
and 40,598 shares in a retirement
account.
|
(11)
|
Includes
75,000 shares issuable upon exercise of certain option agreements and
40,000 shares issuable upon exercise of options granted pursuant to the
2005 Director Plan. In addition, Mr. Cox has been granted 4,000
restricted units of the Partnership pursuant to the Partnership
LTIP.
|
(12)
|
Includes
68,000 shares issuable upon exercise of certain option agreements and
40,000 shares issuable upon exercise of options granted pursuant to the
2005 Director Plan.
|
(13)
|
Includes
15,000 shares issuable upon exercise of options granted pursuant to the
Director Option Plan, 45,000 shares issuable upon exercise of certain
option agreements, 40,000 shares issuable upon exercise of options granted
pursuant to the 2005 Director Plan and 27,277 shares in various entities
managed by Mr. Powell.
|
Equity
Compensation Plan Information
The
following table gives aggregate information regarding grants under all of
Abraxas’ equity compensation plans through December 31, 2008.
Plan
Category
|
Number
of Securities to be Issued upon Exercise of Outstanding Options, Warrants
and Rights
(a)
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
(b)
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a))
(c)
|
Equity
compensation plans approved by security holders
|
1,967,526
|
$
3.14
|
1,503,072
|
Equity
compensation plans not approved by security holders
|
422,252
|
$
1.29
|
—
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires Abraxas’ directors and executive officers and
persons who own more than 10% of a registered class of Abraxas equity securities
to file with the Securities and Exchange Commission and The NASDAQ Stock Market
initial reports of ownership and reports of changes in ownership of Abraxas
common stock. Officers, directors and greater than 10% stockholders
are required by SEC regulation to furnish us with copies of all such forms they
file. Based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required,
Abraxas believes that during 2008, all of its directors and executive officers
complied on a timely basis with all applicable filing requirements under Section
16(a) of the Exchange Act.
EXECUTIVE
COMPENSATION
Compensation
Discussion & Analysis
We
compensate our executive officers through a combination of base salary, annual
incentive bonuses and long-term equity based awards. The compensation
is designed to be competitive with those of a peer group which we have selected
for comparative purposes and to align the interests of our executive officers
with the interests of our stockholders.
This
section discusses the principles underlying our executive compensation policies
and decisions, and the most important factors relevant to an analysis of these
policies and decisions. It provides qualitative information regarding the manner
and context in which compensation is awarded to and earned by our executive
officers and places in perspective the data presented in the tables and
narrative that follow.
Our
Compensation
Committee
Our
Compensation Committee approves, implements and monitors all compensation and
awards to executive officers including the chief executive officer, chief
financial officer and the other executive officers named in the Summary
Compensation Table below, to whom we refer as the named executive
officers. The Committee's membership is determined by the Board of
Directors and is composed of three independent, non-management
directors. The Committee, in its sole discretion, has the authority
to delegate any of its responsibilities to subcommittees as it deems
appropriate. The Committee did not delegate any of its
responsibilities during 2008.
The
Committee periodically approves and adopts, or makes recommendations to the
Board for Abraxas’ compensation decisions. In the first quarter of
each year, Mr. Watson, the Chief Executive Officer, submits to the Compensation
Committee his recommendations for salary adjustments and long-term equity
incentive awards based upon his subjective evaluation of individual performance
and his subjective judgment regarding each executive officer’s salary and equity
incentives, for each executive officer except himself. For more
information on our Compensation Committee, please refer to the discussion under
“Proposal One—Election of Directors—Committees of the Board of
Directors.”
The
Committee reviews all components of compensation for our executive officers,
including base salary, annual incentive bonuses, long-term equity based awards,
the dollar value to the executive and cost to Abraxas of all benefits and all
severance and change of control arrangements. Based on this review,
the Compensation Committee has determined that the compensation paid to our
executive officers reflects our compensation philosophy and
objectives.
Compensation
Philosophy and Objectives
Our
underlying philosophy in the development and administration of Abraxas’ annual
and long-term compensation plans is to align the interests of our executive
officers with those of Abraxas’ stockholders. Key elements of this
philosophy are:
|
·
|
Establishing
compensation plans that deliver base salaries which are competitive with
companies in our peer group, within Abraxas’ budgetary constraints and
commensurate with Abraxas’ salary
structure.
|
|
·
|
Rewarding
outstanding performance particularly where such performance is reflected
by an increase in Abraxas’ Net Asset Value, as adjusted for changes in oil
and gas prices.
|
|
·
|
Providing
equity-based incentives to ensure motivation over the long-term to respond
to Abraxas’ business challenges and opportunities as owners rather than
just as employees.
|
The
compensation currently paid to Abraxas’ executive officers consists of three
core elements: base salary, annual bonuses under a performance-based, non-equity
incentive plan and long-term equity based awards granted pursuant to our 2005
Employee Long-Term Equity Incentive Plan, to which we refer as the 2005 Employee
Plan, and the Abraxas Energy Partners, L.P. Long-Term Incentive Plan, to which
we refer as the Partnership LTIP,
plus
other employee benefits generally available to all employees of
Abraxas. The Partnership has no employees or dedicated senior
management. The general partner of the Partnership, which we refer to
as the General Partner, is a wholly-owned subsidiary of Abraxas and manages the
Partnership’s operations and activities. Mr. Watson, Ms. Stuckey and
Mr. Williford are the executive officers of the General Partner. The
executive officers of the General Partner will devote as much time to the
management of the Partnership’s business and affairs as is necessary for the
conduct of its business and affairs. Since the Partnership’s
formation in May 2007, we estimate that they have devoted approximately 30-60%
of their time to the Partnership’s business. Aside from incentive
compensation awards under the Partnership LTIP, the executive officers of the
General Partner are not compensated by the General Partner or Abraxas for their
services to the Partnership.
We
believe these elements support our underlying philosophy of aligning the
interests of our executive officers with those of Abraxas’ stockholders by
providing the executive officers a competitive salary, an opportunity for annual
bonuses, and equity-based incentives to ensure motivation over the
long-term. We view the three core elements of compensation as related
but distinct. Although we review total compensation, we do not
believe that significant compensation derived from one component of compensation
should increase or reduce compensation from another component. We
determine the appropriate level for each component of compensation
separately. We have not adopted any formal or informal policies or
guidelines for allocating compensation among long-term incentives and annual
base salary and bonuses, between cash and non-cash compensation, or among
different forms of non-cash compensation; however, we do consider the age,
tenure and seniority of each executive officer in making compensation
decisions. Abraxas’ Board has recently adopted stock ownership
guidelines. Please read “Stock Ownership Guidelines” for more
information.
Abraxas
does not have any other deferred compensation programs or supplemental executive
retirement plans and no benefits are provided to Abraxas’ executive officers
that are not otherwise available to all employees of Abraxas, and no benefits
are valued in excess of $10,000 per employee per year.
Elements
of Executive Compensation
Executive
compensation consists of the following elements:
Base
Salary. In determining base salaries for the executive
officers of Abraxas, we aim to set base salaries at a level we believe enables
us to hire and retain individuals in a competitive environment and to reward
individual performance and contribution to our overall business
goals. We review the salary structure of Abraxas as compared to a
peer group of exploration and production companies included in the William M.
Mercer 2008 Energy Compensation Survey, which we refer to as the Mercer Energy
Survey. We chose the Mercer Energy Survey as a benchmark because the
survey includes over 200 companies within the energy industry and covers all
components of compensation across the full spectrum of positions and
responsibilities. The companies included in this survey are listed on
Appendix A. Abraxas has participated in the survey since its inception in 1999
and of the participants, 66% categorized themselves as an exploration and
production company, and of these 75% are publicly-traded companies.
Abraxas’
salary range is set by reference to the salaries paid by our peer group
companies in the Mercer Energy Survey while remaining within Abraxas’ budgetary
constraints. We use the companies in our peer group to compare
Abraxas’ salary structure to that of other companies that compete with Abraxas
for executives but without targeting salaries to be higher, lower, or
approximately the same as those of the companies in the peer
group. We believe that the base salary levels for our executive
officers are consistent with the practices of the companies in our peer group
and increases in base salary levels from time to time are designed to reflect
competitive practices in the industry, individual performance and the officer’s
contribution to our overall business goals. Individual performance
and contribution to the overall business goals of Abraxas are subjective
measures and evaluated by Mr. Watson and the Compensation
Committee.
The base
salaries paid to our named executive officers in 2008 are set forth below in the
Summary Compensation Table. For 2008, base salaries, paid as cash
compensation, were $1,118,000 with Mr. Watson receiving $348,250. We
believe that the base salaries paid achieved our objectives.
Annual
Bonuses. Abraxas’ current bonus plan was adopted by our Board
of Directors in 2003, and later amended to include all of our executive
officers. The purpose of the bonus plan is to create financial
incentives for our executive officers that are tied directly to increases in Net
Asset Value, or NAV, per share of Abraxas common stock. We chose NAV
as the foundation of the bonus plan because we believe that NAV equates to the
value of Abraxas’ reserve base, giving risked credit for non-proven reserves,
and adjusted for other assets and liabilities, including long-term
debt. We believe that NAV is a better indicator of the health of
Abraxas than its stock price, as the success of finding oil and gas is directly
reflected in our NAV, while our stock price can be influenced by a number of
factors outside the control of the executive officers of Abraxas. In
addition, many exploration and production analysts use NAV per share comparisons
to establish price targets for the companies they follow. Under the
bonus plan, NAV is calculated at each year-end after receipt of the reserve
report from our independent petroleum engineering firm and the audited
financials, subject to certain adjustments, as follows:
Net
Asset Value Calculation:
|
+
+
+
+
+
±
−
|
|
PV10
Proved Reserves
PV10
Risked Probable Reserves
Abraxas’
Equity Value in the Partnership
Property
& Equipment
Acreage
Other
Assets
Net
Working Capital
Debt
|
=
|
|
Net
Asset Value (“NAV”)
|
÷
|
|
Shares
Outstanding
|
=
|
|
NAV
per
share
|
The
proved and probable reserves are estimated at year-end in accordance with
guidelines published by the Society of Petroleum Engineers (SPE), and all other
items in the calculation are derived from our year-end audited
financials. The PV10 of the proved and probable reserves is the
present value, using a 10% discount rate, of the future net cash flows before
income tax calculated within the parameters set forth by the Securities and
Exchange Commission. The calculated NAV is then divided by the number
of outstanding shares of Abraxas common stock at year-end to arrive at the NAV
per share.
The
annual bonuses are calculated by the percentage increase in the current year-end
NAV per share over the previous year-end NAV per share up to the first 10%;
after 10% has been achieved, all excess percentage increases are doubled, with a
maximum award for any one-year of 70% of the executive officer’s base annual
salary. For example, if the percentage increase in NAV for a given
year was 15%, the calculated bonus would be equal to 20% of the executive
officer’s annual base salary. Therefore, in order to compare NAV
year-over-year, the current year-end PV10 for proved and probable reserves are
calculated with commodity prices used in the previous year-end PV10
calculations. Then, for the ensuing year, the PV10 for proved and
probable reserves are calculated with current commodity prices to establish the
NAV per share at the beginning of a given year, thus the difference between the
calculated NAV per share at the end of a given year and the calculated NAV per
share at the beginning of the following year.
In the
first quarter of each year, the NAV per share for the prior year is calculated
after reserves are estimated and audited financial statements are
available. Mr. Watson submits the annual bonus calculation to the
Compensation Committee for review and discussion.
For
example, at the beginning of 2006, the calculated NAV per share was $5.98 and
the calculated NAV per share at the end of 2006 was $4.77, utilizing commodity
prices as of December 31, 2005. As a result, no bonuses were earned
under this plan in 2006. At the beginning of 2007, the calculated NAV
per share was $1.60, utilizing
commodity prices as of December 31, 2006 and the calculated NAV per share at the
end of 2007 was $3.17, a 98% increase.
On March
11, 2008, the Compensation Committee recommended 2007 annual bonus awards for
our executive officers, and the board approved these annual bonus awards at its
meeting on March 11, 2008. The following table details the 2007 bonus
earned by our named executive officers:
Name
|
Base
Salary
|
Bonus
Award Achieved
(Percentage
of Salary) (1)
|
Maximum
Award (Percentage of Salary)
|
Annual
Bonus Awarded Under the Annual Bonus Plan
|
Robert
L.G. Watson
|
$ 343,000
|
186%
|
70%
|
$ 240,100
|
Chris
E. Williford
|
209,000
|
186%
|
70%
|
146,300
|
Lee
T. Billingsley
|
195,000
|
186%
|
70%
|
136,500
|
William
H. Wallace
|
195,000
|
186%
|
70%
|
136,500
|
Stephen
T. Wendel
|
158,000
|
186%
|
70%
|
110,600
|
__________________
(1)
|
98% i crease in NAV: 1% for the first 10%, then 2% for each percent
increase (10 + (88 x 2)) = 186%
|
At the
beginning of 2008, the calculated NAV per share was $3.61 and the calculated NAV
per share at the end of 2008 was $2.96, utilizing commodity prices as of
December 31, 2007. As a result, no bonuses were earned under this
plan in 2008. The award opportunities for 2008 are reflected in the
Grants of Plan-Based Awards table in the “Estimated Future Payouts Under
Non-Equity Incentive Plan Awards” columns and in the Summary Compensation Table
as earned with respect to 2008 in the “Non-Equity Incentive Plan Compensation”
column.
The
Compensation Committee has the discretion to defer all or any part of any bonus
to future years, to pay all or any portion of any bonus, or deferred bonus, in
shares of Abraxas common stock and has the discretion to pay bonuses even if no
bonus would be payable under the bonus plan, and further has the discretion not
to pay bonuses even if a bonus was earned under the bonus plan. In
the past, the Committee has elected to pay a portion of an annual bonus in
shares of Abraxas common stock and may continue to do so in the
future. The Committee reviews the cash position of the Company and
the amount of the annual bonus when making such determinations. The
Compensation Committee also has the discretion to pay bonuses outside of this
plan.
Long-Term Equity
Incentives. Our executive
officers are eligible to receive long-term equity incentives under our 2005
Employee Plan and the Partnership LTIP.
In
determining whether to grant long-term incentive awards, such awards will be
substantially contingent upon the conclusion of Mr. Watson and the Abraxas
Board of Directors, in the case of the 2005 Employee Plan, and the Board of
Directors of the General Partner of the Partnership (which we refer to at the
Partnership Board), in the case of the Partnership LTIP (and only the Board of
Directors and the Partnership Board, as the case may be, with respect to awards
to be made to Mr. Watson) as to whether individual and management's
collective efforts have produced attractive long-term returns to Abraxas
stockholders by increasing the market price of our common stock and the
Partnership’s unitholders by increasing cash distributions and the market price
of its common units over time as well as the Partnership’s ability to make
accretive acquisitions. In determining whether to grant long-term
incentive awards, we anticipate that neither Mr. Watson nor the Board of
Directors or the Partnership Board will have specific numerical targets, but
rather will make a subjective determination based upon the state of the oil and
gas exploration and production industry and other general economic factors at
the time of their evaluation.
In the
first quarter of each year, Mr. Watson submits his recommendations for long-term
equity incentive awards under the 2005 Employee Plan to the Compensation
Committee and under the Partnership LTIP to the Partnership Board based upon his
subjective evaluation of the individual performance of each executive officer,
except himself. Mr. Watson also factors in the quantity and value of
the long-term incentives that each executive officer has been previously
awarded. The Compensation Committee, for awards under the 2005
Employee Plan, and the Partnership Board, for awards under the Partnership LTIP,
reviews and discusses Mr. Watson’s recommendations and makes final
determinations as to such awards. For awards to be made to Mr.
Watson, the Compensation Committee and the Partnership Board, as the case may
be, subjectively evaluate Mr. Watson’s performance and, in their sole authority,
determine, how many, if any, long-term equity incentive awards to grant to Mr.
Watson. The Compensation Committee and the Partnership Board also
consider the quantity and value of the
long-term
equity incentive awards previously granted to Mr. Watson when considering making
awards to him. In determining whether to grant long-term equity
incentive awards, we seek to ensure that the total compensation package,
including cash compensation, is competitive with the compensation paid by the
companies included in the Mercer Energy Survey, in the case of Abraxas, and the
group of upstream master limited partnerships described below, in the case of
the Partnership, yet such awards are substantially contingent upon the
conclusion of Mr. Watson and the Compensation Committee, in the case of Abraxas,
or the Partnership Board, in the case of the Partnership, as to whether
individual and management’s collective efforts have produced attractive
long-term returns to Abraxas stockholders, in the case of Abraxas, and to the
Partnership’s unitholders, in the case of the Partnership. We also
consider past grants to each executive officer and the level to which such past
grants are (or are not) “in-the-money”.
Abraxas
has historically granted long-term equity incentives after Mr. Watson presents
his recommendations to the Compensation Committee, in the case of Abraxas, in
the first quarter; however, we have not granted long-term equity incentives
every year and we have awarded long-term equity incentive awards at other times
during the year, principally in the event of a new hire, substantial promotion
or significant event, such as the completion of a financing transaction or an
accretive acquisition. We believe that such events warrant the
granting of awards outside the normal course of business as these events are
significant to the future success of Abraxas and the Partnership. We
do not time award grants in coordination with the release of material non-public
information.
2005 Employee
Plan. Abraxas’ 2005 Employee Plan, which was approved by our
stockholders at the 2006 annual meeting and amended by our stockholders at the
2008 annual meeting, authorizes us to grant incentive stock options,
non-qualified stock options and shares of restricted stock to our executive
officers, as well as to all employees of Abraxas. We use equity incentives
as a form of long-term compensation because it provides our executive officers
an opportunity to acquire an equity interest in Abraxas and further aligns their
interest with those of our stockholders. Options grants generally
have a term of 10 years and vest in equal increments over four
years. Restricted stock grants vest in accordance with each
individual grant agreement. Vesting is accelerated in certain events
described under “Employment Agreements and Potential Payments Upon Termination
or Change in Control.”
The
purposes of this plan are to employ and retain qualified and competent personnel
and to promote the growth and success of Abraxas, which can be accomplished by
aligning the long-term interests of the executive officers with those of the
stockholders by providing the executive officers an opportunity to acquire an
equity interest in Abraxas. All grants are made with an exercise
price equal to the closing price of our common stock on the date of such
grant.
A total
of 2,100,000 shares of Abraxas common stock have been reserved under the 2005
Employee Plan, subject to adjustment following certain events, such as stock
splits. The maximum annual award for any one employee is 200,000
shares of Abraxas common stock. If options, as opposed to restricted
stock, are awarded, the exercise share price shall be no less than 100% of the
fair market value on the date of the award, unless the employee is awarded
incentive stock options and at the time of the award, owns more than 10% of the
voting power of all classes of stock of Abraxas. Under this
circumstance, the exercise share price shall be no less than 110% of the fair
market value on the date of the award. Option terms and vesting
schedules are at the discretion of the Compensation Committee.
Partnership
LTIP. In connection with the formation of the Partnership in
May 2007, the Partnership Board adopted the Partnership LTIP to provide
incentive compensation awards for employees, consultants and directors who
perform services for the General Partner and its affiliates, including
Abraxas. Under the Partnership LTIP, options, restricted units,
phantom units, unit appreciation rights and other unit-based awards are
available for issuance. Awards may provide for the issuance of common
units of the Partnership, payments of cash, or a combination of
both. Awards under the Partnership LTIP are limited to 1,136,160
units. The Partnership LTIP is administered by the Partnership Board.
The exercise price of all unit option awards will be no less than 100% of the
fair market value on the date of the award, and as a general rule, all long-term
incentive awards will contain a four-year vesting schedule to ensure motivation
over the long-term to respond to the Partnership’s business challenges and
opportunities as owners rather than just employees.
On
January 31, 2008, in connection with the closing of the acquisition of oil and
gas properties from St. Mary Land & Exploration Company, the Partnership
Board awarded 63,008 phantom units with distribution equivalency
rights under the Partnership LTIP to certain key employees of
Abraxas. The phantom units and associated distribution equivalency
rights vest over four years and their value is based on the market price of the
Partnership’s common units, the Partnership’s quarterly cash distributions and
the percentage increase in the Partnership’s cash distributions over time. For
each quarter that unvested phantom units are outstanding, distribution
equivalency rights entitle the holder of phantom units to receive additional
phantom units equal to the cash distribution per unit made by the Partnership to
the common unitholders divided by the market price of the Partnership’s common
units on the date of the distribution multiplied by the
holder’s cumulative number of unvested phantom units. On each vesting date, a
holder of phantom units is entitled to receive a cash payment equal to the
product of: (1) the number of vested phantom units awarded to such
participant (including phantom units awarded pursuant to distribution
equivalency rights), (2) the market price of the Partnership’s common units
on the vesting date and (3) a performance milestone multiplier that is
based on the percentage increase in the Partnership’s cash distribution per unit
as of the most recent quarterly distribution on the first vesting date compared
to the most recent quarterly distribution on the phantom unit grant date. After
the first vesting date, the percentage increase in the Partnership’s cash
distribution per unit is based on the most recent quarterly distribution on a
particular vesting date compared to the most recent quarterly distribution on
the prior vesting date. The performance milestone multiplier is determined as
follows:
Percentage
Increase
in
Cash Distribution
|
|
Performance
Milestone
Multiplier
|
0
to 4.99%
|
|
0
|
5.00%
|
|
1.0
|
5.01%
to 14.99%
|
|
1.0
plus 0.1 for each whole percentage point over 5.00%
|
15.00%
and above
|
|
2.0
|
|
|
|
In making
the awards of phantom units, the Partnership Board established a basket of
phantom unit awards for acquisitions. After the closing of a significant
acquisition (or a group of smaller acquisitions), the Partnership Board will
determine what amount of phantom units, if any, to award to the Partnership’s
executive officers and our executive officers and key employees based on their
subjective determination of the contributions by each such officer or key
employee to the acquisition. For the first vesting period, the
maximum performance milestone of 2.0 was achieved and on February 16, 2009, a
total of $266,508 was paid to the phantom unit award recipients based on an
implied market price of $7.67 per unit. The implied market price was
calculated based on the closing market price of a peer group of E&P MLPs
divided by that entity’s most recently paid or declared quarterly distribution
times four. The trading yields were averaged and a 10% premium was
applied to compensate for the Partnership being a private entity, and the
resultant yield was applied to the Partnership’s most recently paid or declared
distribution times four.
On
January 2, 2009, the Partnership Board awarded 52,000 restricted units to
employees of Abraxas and directors of the General Partner. In
conjunction with and subject to the consummation of the initial public offering
of the Partnership, the Partnership Board approved the grant of 248,950 unit
options to certain key employees of Abraxas.
The
awards to the named executive officers of Abraxas were as follows:
Name
|
Phantom
Units
|
Restricted
Units
|
Unit
Options
|
Robert
L.G. Watson
|
9,991
|
6,000
|
63,000
|
Chris
E. Williford
|
5,693
|
2,500
|
15,750
|
Lee
T. Billingsley
|
5,693
|
2,500
|
15,750
|
William
H. Wallace
|
5,693
|
2,500
|
15,750
|
Stephen
T. Wendel
|
5,693
|
2,500
|
15,750
|
|
|
|
|
The
remaining 30,245 phantom units, 36,000 restricted units and 122,950 unit options
were awarded to certain key employees of Abraxas and directors of the General
Partner. In making the awards of unit options and restricted units,
the Partnership Board reviewed similar awards made by a group of upstream master
limited partnerships and further reviewed the components of those awards with
respect to the percentage of restricted units compared to the percentage of unit
options awarded. The group of master limited partnerships reviewed
consisted
of
Breitburn Energy Partners L.P., EV Energy Partners, L.P., Atlas Energy
Resources, LLC, Constellation Energy Partners LLC, Legacy Reserves LP, Linn
Energy, LLC, and Vanguard Natural Resources, LLC.
As a
result of this review, the Partnership Board determined that of the comparable
partnerships that granted awards at the time of their initial public offerings,
an average of 25% of the awards available under their respective long-term
incentive plans were granted and that approximately 16% of those awards were in
the form of restricted units and the remainder were granted as unit
options. Several of the comparable partnerships did not grant awards
at the time of their initial public offerings. In connection with and
subject to the Partnership’s initial public offering and on January 2, 2009 with
respect to the restricted unit awards, the Partnership Board granted 300,950
units to directors of the General Partner and certain key employees of Abraxas,
which equate to 26% of the available awards under the Partnership LTP, with 17%
being in the form of restricted units and the remainder, unit
options.
Employment Contracts,
Change-In-Control Arrangements and Certain Other Matters. We
provide the opportunity for our executive officers to be protected under the
severance and change in control provisions contained in their employment
agreements. We believe that these provisions help us to attract and
retain an appropriate caliber of talent for these positions. Our
severance and change in control provisions for the executive officers are
summarized in “Employment Agreements and Potential Payments Upon Termination or
Change in Control” below. Based upon the Mercer Energy Survey, we
believe that our severance and change in control provisions are consistent with
the programs and levels of severance and post employment compensation of other
companies in our peer group and believe that these arrangements are
reasonable.
Other Employee
Benefits. Abraxas’ executive officers are eligible to
participate in all of our employee benefit plans, such as medical, dental, group
life and long-term disability insurance, in each case on the same basis as other
employees. In addition to employee group life insurance, Abraxas has
a key-man life insurance policy on Mr. Watson. Abraxas’ executive
officers are also eligible to participate in our 401(k) plan on the same basis
as other employees. Abraxas’ Board of Directors, at its sole
discretion, may authorize Abraxas to match (in part or in whole) the
contributions of each employee to the 401(k) plan during a given year; Abraxas
contributions may be in the form of cash, shares of common stock or a
combination thereof. In addition, Abraxas’ Board of Directors has
recently declared a cap on the amount (or percentage) of Abraxas common stock
that each employee can own in their individual 401(k) account. The
maximum percentage has been set at 20% and each employee is given two years to
reduce their ownership of Abraxas common stock in their 401(k) account in the
event such employee is over the recently imposed 20% limit.
2009
Compensation Decisions
Base
Salaries. Base salaries for 2009 did not increase or decrease
from 2008 for our named executive officers. We believe this reflects
current practices in the industry as supported by the Mercer Energy
Survey.
Annual
Bonuses. At the beginning of 2009, the calculated NAV per
share was $1.52, utilizing commodity prices as of December 31,
2008.
Long-Term Equity
Incentives. On January 2, 2009, the Partnership Board awarded
52,000 restricted units to employees of Abraxas and directors of the General
Partner. The restricted units vest over four years with 25% vesting
on each anniversary date of the award. On March 17, 2009, Abraxas’
Board of Directors awarded 600,400 options to employees of Abraxas, of which
325,000 were awarded to the named executive officers.
Impact
of Regulatory Requirements
Deductibility of Executive
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 $1.0 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, stockholders must approve the
performance measures. Since Abraxas does not anticipate that the compensation
for any executive officer will exceed the $1.0 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. We will reconsider
this matter if compensation levels approach this threshold, in light of the tax
laws then in effect. We will consider ways to maximize the
deductibility of executive
compensation,
while retaining the discretion necessary to compensate executive officers in a
manner commensurate with performance and the competitive environment for
executive talent.
Nonqualified Deferred
Compensation. On October 22, 2004, the American Jobs
Creation Act of 2004 was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. We believe we are in compliance
with the statutory provisions which were effective January 1, 2005 and the
regulations which became effective on January 1, 2009.
Accounting for Stock-Based
Compensation. Beginning on October 1, 2005, we began
accounting for stock-based compensation in accordance with the requirements of
FASB Statement 123(R) for all of our equity-based compensation
plans. See note 8 of the notes to our consolidated financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission on February
24, 2009 for a discussion of all assumptions made in the calculation of this
amount.
Policy on Recovery of
Compensation. Our CEO and CFO are required to repay certain
bonuses and equity-based compensation they receive if we are required to restate
our financial statements as a result of misconduct as required by Section 304 of
the Sarbanes-Oxley Act of 2002.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of Abraxas has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement.
This
report is submitted by the members of the Compensation Committee.
Ralph F.
Cox, Chairman
Harold D.
Carter
Dennis E.
Logue
SUMMARY
COMPENSATION TABLE
The
following table sets forth a summary of compensation paid to each of its named
executive officers for the last three fiscal years.
Name
and
Principal
Position
|
Year
|
Salary
($)
(1)
|
Bonus
($)
(2)
|
Stock
Awards
($)
(3)
|
Option
Awards
($)
(4)
|
Non-Equity
Incentive Plan Compensation
($)
(5)
|
All
Other Compensation
($)
(6)
|
Total
($)
(7)
|
Robert
L.G. Watson
President,
Chief Executive Officer and Chairman of the Board
|
2008
|
348,250
|
13,462
|
50,893
|
119,273
|
—
|
10,250
|
542,128
|
2007
|
339,750
|
13,192
|
4,299
|
103,366
|
240,100
|
10,250
|
710,957
|
2006
|
326,000
|
12,692
|
—
|
101,688
|
—
|
10,000
|
450,380
|
Chris
E. Williford
Executive
Vice President, Chief Financial Officer and Treasurer
|
2008
|
212,750
|
8,231
|
26,453
|
104,784
|
—
|
7,245
|
359,463
|
2007
|
207,000
|
8,038
|
1,574
|
98,383
|
146,300
|
7,245
|
468,540
|
2006
|
199,000
|
7,731
|
—
|
98,456
|
—
|
8,254
|
313,441
|
Lee
T. Billingsley
Vice
President — Exploration
|
2008
|
198,000
|
7,654
|
26,846
|
57,293
|
—
|
10,250
|
300,043
|
2007
|
193,250
|
7,500
|
1,709
|
51,248
|
136,500
|
10,250
|
400,457
|
2006
|
186,250
|
7,231
|
—
|
48,950
|
—
|
10,000
|
252,431
|
William
H. Wallace
Vice
President — Operations
|
2008
|
198,000
|
7,654
|
39,894
|
58,598
|
—
|
10,250
|
314,396
|
2007
|
193,250
|
7,500
|
6,197
|
51,697
|
136,500
|
10,250
|
405,394
|
2006
|
186,250
|
7,231
|
—
|
48,950
|
—
|
6,519
|
248,950
|
Stephen
T. Wendel
Vice
President – Land & Marketing
|
2008
|
161,000
|
6,231
|
26,482
|
56,628
|
—
|
7,750
|
258,091
|
2007
|
156,500
|
6,077
|
1,584
|
50,648
|
110,600
|
7,750
|
333,159
|
2006
|
150,750
|
33,846
|
—
|
48,919
|
—
|
6,784
|
240,299
|
__________________
(1)
|
The
amounts in this column include any contributions made by the named
executive officer to his 401(k) plan
account.
|
(2)
|
The
amounts in this column reflect a discretionary holiday bonus and, in the
case of Mr. Wendel in 2006, also include a one-time discretionary bonus
due to a change in his annual bonus
plan.
|
(3)
|
The
amounts in this column reflect the recognized value of stock awards
granted to the named executive officer calculated in accordance with SFAS
123R for the year ended December 31, 2008, which include stock awards
granted in prior years to the extent they were not fully-vested by January
1, 2008 and amounts relating to the recognized value of phantom units
granted under the Partnership LTIP. See note 8 of the notes to
our consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2008 filed with the Securities
and Exchange Commission on February 24, 2009 for a discussion of all
assumptions made in the calculation of this amount. The
following table sets forth the amounts attributable to each named
executive officer for equity awards under the 2005 Employee Plan and the
Partnership LTIP in 2008.
|
Name
|
Plan
|
Stock
Award
($)
|
Robert
L.G. Watson
|
2005
Employee Plan
Partnership
LTIP
|
12,500
38,393
|
Chris
E. Williford
|
2005
Employee Plan
Partnership
LTIP
|
4,576
21,877
|
Lee
T. Billingsley
|
2005
Employee Plan
Partnership
LTIP
|
4,969
21,877
|
William
H. Wallace
|
2005
Employee Plan
Partnership
LTIP
|
18,017
21,877
|
Stephen
T. Wendel
|
2005
Employee Plan
Partnership
LTIP
|
4,605
21,877
|
(4)
|
The
amounts in this column reflect the recognized value of options granted to
the named executive officer, calculated in accordance with SFAS 123R for
the year ended December 31, 2008, which include options granted in prior
years to the extent they were not fully-vested by January 1,
2008. See note 8 of the notes to our consolidated financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission on
February 24, 2009 for a discussion of all assumptions made in the
calculation of this amount.
|
(5)
|
The
amounts in this column represent cash bonuses earned under the annual
bonus plan.
|
(6)
|
The
amounts in this column represent contributions by Abraxas to the named
executive officers 401(k) plan
account.
|
(7)
|
The
dollar value in this column for each named executive officer represents
the sum of all compensation reflected in the previous
columns.
|
GRANTS
OF PLAN-BASED AWARDS
The
following table provides information with regard to grants of non-equity
incentive compensation and all other stock awards to our named executive
officers. Abraxas did not grant any option awards in 2008; therefore, these
columns have been omitted from the following table.
Name
|
Grant
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Grant
Date Fair Value of Stock and Option Awards ($) (4)
|
Robert
L.G. Watson
|
n/a
(1)
|
—
|
240,100
|
245,000
|
—
|
—
|
01/31/2008
(2)
|
—
|
—
|
—
|
9,991
|
38,393
|
09/10/2008
(3)
|
—
|
—
|
—
|
3,469
|
8,638
|
Chris
E. Williford
|
n/a
(1)
|
—
|
146,300
|
149,800
|
—
|
—
|
01/31/2008
(2)
|
—
|
—
|
—
|
5,693
|
21,877
|
09/10/2008
(3)
|
—
|
—
|
—
|
1,270
|
3,162
|
Lee
T. Billingsley
|
n/a
(1)
|
—
|
136,500
|
139,300
|
—
|
—
|
01/31/2008
(2)
|
—
|
—
|
—
|
5,693
|
21,877
|
09/10/2008
(3)
|
—
|
—
|
—
|
1,379
|
3,434
|
William
H. Wallace
|
n/a
(1)
|
—
|
136,500
|
139,300
|
—
|
—
|
01/31/2008
(2)
|
—
|
—
|
—
|
5,693
|
21,877
|
09/10/2008
(3)
|
—
|
—
|
—
|
5,000
|
12,450
|
Stephen
T. Wendel
|
n/a
(1)
|
—
|
110,600
|
113,400
|
—
|
—
|
01/31/2008
(2)
|
—
|
—
|
—
|
5,693
|
21,877
|
09/10/2008
(3)
|
—
|
—
|
—
|
1,278
|
3,182
|
__________________
(1)
|
Awards
potentially payable under our annual bonus plan. The annual
bonus plan does not provide for a threshold level as the bonuses under the
plan can range from 0 to the maximum, which equals 70% of each named
executive officers base salary. The target amount was not
determinable on the date of grant; therefore, the amount set forth in the
target column reflects the amount each named executive officer earned
under the plan in 2007, which was the most recent year in which bonuses
under this plan were earned, as a representative amount. Please
see the discussion under “Compensation Discussion and Analysis – Elements
of Executive Compensation – Annual Bonuses” for more
information. During 2007, our named executive officers earned
$770,000 in bonuses under the annual bonus plan. Please
refer to column 5 of the Summary Compensation
Table.
|
(2)
|
Phantom
units granted by the Partnership on January 31, 2008 under the Partnership
LTIP.
|
(3)
|
Restricted
shares of Abraxas common stock issued on September 10, 2008 under the 2005
Employee Plan.
|
(4)
|
The
amounts in this column reflect the recognized value of stock awards
granted in 2008 to the named executive officer calculated in accordance
with SFAS 123R for the year ended December 31, 2008. See note 8
of the notes to our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2008 filed with
the Securities and Exchange Commission on February 24, 2009 for a
discussion of all assumptions made in the calculation of this
amount.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The table
below contains information concerning outstanding equity awards at December 31,
2008 for our named executive officers.
|
OPTION
AWARDS
|
STOCK
AWARDS
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(Exercisable)
|
Number
of
Securities
Underlying
Unexercised
Options
(Unexercisable)
(1)
|
Option
Exercise
Price ($) (2)
|
Option
Expiration
Date
|
Number
of
Shares
of Stock
That
Have Not
Vested
(3)
|
Market
Value
of
Shares of
Stock
That
Have
Not
Vested
($) (4)
|
Robert
L.G. Watson
|
60,000
|
|
0.66
|
05/26/2010
|
|
|
60,000
|
|
1.38
|
05/26/2010
|
|
|
30,000
|
|
0.66
|
03/23/2011
|
|
|
30,000
|
|
4.83
|
03/23/2011
|
|
|
6,856
|
|
0.66
|
09/17/2011
|
|
|
6,857
|
|
2.21
|
09/17/2011
|
|
|
90,000
|
|
0.65
|
11/22/2012
|
|
|
75,000
|
25,000
|
4.59
|
09/13/2015
|
|
|
10,406
|
31,218
|
3.60
|
08/28/2017
|
|
|
|
|
|
|
13,875
|
9,990
|
Chris
E. Williford
|
40,000
|
|
0.66
|
05/26/2010
|
|
|
20,000
|
|
0.66
|
03/23/2011
|
|
|
43,000
|
|
0.65
|
11/22/2012
|
|
|
75,000
|
25,000
|
4.59
|
09/13/2015
|
|
|
3,809
|
11,424
|
3.60
|
08/28/2017
|
|
|
|
|
|
|
5,078
|
3,656
|
Lee
T. Billingsley
|
30,000
|
|
0.66
|
11/18/2009
|
|
|
15,000
|
|
0.66
|
03/23/2011
|
|
|
22,000
|
|
0.65
|
11/22/2012
|
|
|
15,000
|
|
0.68
|
04/24/2013
|
|
|
37,500
|
12,500
|
4.59
|
09/13/2015
|
|
|
4,136
|
12,407
|
3.60
|
08/28/2017
|
|
|
|
|
|
|
5,514
|
3,970
|
William
H. Wallace
|
30,000
|
|
0.66
|
11/18/2009
|
|
|
15,000
|
|
0.66
|
03/23/2011
|
|
|
22,000
|
|
0.65
|
11/22/2012
|
|
|
15,000
|
|
0.68
|
04/24/2013
|
|
|
37,500
|
12,500
|
4.59
|
09/13/2015
|
|
|
4,730
|
14,190
|
3.60
|
08/28/2017
|
|
|
|
|
|
|
20,000
|
14,400
|
Stephen
T. Wendel
|
15,000
|
|
0.66
|
11/18/2009
|
|
|
10,000
|
|
0.66
|
03/23/2011
|
|
|
17,000
|
|
0.65
|
11/22/2012
|
|
|
37,500
|
12,500
|
4.59
|
09/13/2015
|
|
|
3,833
|
11,497
|
3.60
|
08/28/2017
|
|
|
|
|
|
|
5,110
|
3,679
|
__________________
(1)
|
Options
vest in twenty-five percent (25%) increments each year for four (4) years
on the anniversary of the grant
date.
|
(2)
|
On
December 6, 2002, the Board of Directors approved a plan pursuant to which
the price of each outstanding stock option granted to employees of Abraxas
with an exercise price greater than $0.66 per share was reduced to $0.66
per share. However, only one-half of Mr. Watson’s options were
repriced at $0.66. The repricing was approved in connection with Abraxas’
financial restructuring which was consummated in January
2003. As part of the negotiations that Abraxas had undertaken
with the beneficial holder of the largest block of Abraxas’ then
outstanding second lien notes, the holder conditioned its participation in
the exchange offer for the second lien notes on the repricing. Because the
Board believed that the financial restructuring, including the exchange
offer, represented the best alternative available to Abraxas to reduce its
long term indebtedness and to increase its liquidity, the Board approved
the repricing. The
|
|
effectiveness
of the repricing was conditioned upon the consummation of the financial
restructuring which occurred on January 23,
2003.
|
(3)
|
In
general, stock awards vest in twenty-five percent (25%) increments each
year for four (4) years on the anniversary of the grant
date. As each increment vests, a new award equal to the most
recently vested portion is granted and vests on the 4th
anniversary after the grant date.
|
(4)
|
The
market value was calculated from the closing price of Abraxas’ common
stock on December 31, 2008 of $0.72 per share multiplied by the number of
shares of stock that had not vested as of December 31,
2008.
|
OPTION
EXERCISES AND STOCK VESTED
The table
below contains information concerning exercises of stock options and other stock
awards by our named executive officers during the fiscal year ended December 31,
2008.
|
OPTION
AWARDS
|
|
Name
|
Number
of Shares
Acquired
on
Exercise
|
|
Value
Realized
on
Exercise
($)
|
|
Robert
L.G. Watson
|
20,000
|
|
65,200
|
(3)
|
Chris
E. Williford
|
20,000
|
(1)
|
58,600
|
(4)
|
Lee
T. Billingsley
|
33,000
|
|
90,420
|
(5)
|
William
H. Wallace
|
6,500
|
(2)
|
17,225
|
(6)
|
Stephen
T. Wendel
|
10,000
|
|
18,200
|
(7)
|
__________________
(1)
|
Of
this amount, 3,677 shares were utilized as payment of the exercise
price.
|
(2)
|
Of
this amount, 1,315 shares were utilized as payment of the exercise
price.
|
(3)
|
These
options were exercised on July 24, 2008 with an exercise price of $0.66
and the closing price of Abraxas’ common stock on even date was $3.92, for
a realized value of $3.26 per
share.
|
(4)
|
These
options were exercised on July 28, 2008 with an exercise price of $0.66
and the closing price of Abraxas’ common stock on that date was $3.59, for
a realized value of $2.93 per
share.
|
(5)
|
These
options were exercised on April 4, 2008 with an exercise price of $0.66
and the closing price of Abraxas’ common stock on that date was $3.40, for
a realized value of $2.74 per
share.
|
(6)
|
These
options were exercised on August 25, 2008 with an exercise price of $0.66
and the closing price of Abraxas’ common stock on that date was $3.31, for
a realized value of $2.65 per
share.
|
(7)
|
These
options were exercised on September 9, 2008 with an exercise price of
$0.66 and the closing price of Abraxas’ common stock on that date was
$2.48, for a realized value of $1.82 per
share.
|
Pension
Benefits
Abraxas
does not sponsor any pension benefit plans and none of the named executive
officer’s contribute to such a plan.
Non-Qualified
Deferred Compensation
Abraxas
does not sponsor any non-qualified defined compensation plans or other
non-qualified deferred compensation plans and none of the named executive
officer’s contributes to any such plans.
Stock
Ownership Guidelines
Abraxas’
Board has recently established stock ownership guidelines to strengthen the
alignment of director and executive officer interests with those of
stockholders. As of December 31, 2008, we had six non-employee
directors and six executive officers subject to stock ownership
guidelines. Under the guidelines below, each director and officer is
precluded from selling any shares of common stock of Abraxas or common units of
the Partnership until the director or officer satisfies the ownership guidelines
set forth in the following table. The stock ownership guidelines may
be satisfied by owning common shares of Abraxas and/or common units of the
Partnership. Satisfaction of the ownership guidelines will fluctuate
with the market value of the underlying common shares of Abraxas and/or common
units of the Partnership.
Position
|
|
Stock
Ownership Guidelines
|
Chief
Executive Officer
|
|
5x
annual base salary
|
|
|
|
All
other Executive Officers
|
|
3x
annual base salary
|
|
|
|
Non-employee
Directors
|
|
3x
all fees received during the prior 12-month period, including the value of
common shares awarded in lieu of cash payments at the time of
issuance
|
Abraxas’ Board has discretion to review
special situations; however, non-compliance without board approval can result in
the loss of future bonuses and discretionary stock-based
compensation. As of December 31, 2008, the market value of common
shares of Abraxas was $0.72 per share and the market value of common units of
the Partnership was $7.23 for common unit. As an example, Mr. Watson,
our chief executive officer, would be required to own 2,418,403 common shares of
Abraxas or 240,837 common units of the Partnership, or a combination thereof, to
meet the stock ownership guidelines. As of December 31, 2008, three
directors had satisfied the minimum stock ownership guidelines.
Employment
Agreements and Potential Payments Upon Termination or Change in
Control
Abraxas
has entered into employment agreements with each of our named executive officers
pursuant to which each will receive compensation as determined from time to time
by the Board in its sole discretion. Abraxas has also established the
Abraxas Petroleum Corporation Severance Plan, effective as of December 31, 2008,
for all employees that are not subject to an employment
agreement. This plan provides severance benefits in the event of a
change of control and for certain other changes in conditions of
employment. The affected employees would be entitled to receive one
month of base salary for each year of service with Abraxas Petroleum, up to a
maximum of 12 months.
The
employment agreements for Messrs. Watson and Williford are scheduled to
terminate on December 21, 2009, and are automatically extended for additional
one-year terms unless Abraxas gives 120 days notice of its intention not to
renew the employment agreement. The employment agreements for Messrs.
Wallace and Wendel and Dr. Billingsley are scheduled to terminate on December
31, 2009, and are automatically extended for an additional year if by December 1
neither Abraxas nor Messrs. Wallace, Wendel, or Dr. Billingsley, as the case may
be, has given notice to the contrary.
The
employment agreements contain the following defined terms:
“Cause”
means termination upon
(i) the
continued failure by the officer to substantially perform his duties with
Abraxas (other than any such failure resulting from his incapacity due to
physical or mental illness or any such actual or anticipated failure resulting
from termination by him for Good Reason) after a written demand for substantial
performance is delivered to the officer by the Board, which demand specifically
identifies the manner in which the Board believes that he has not substantially
performed his duties, or
(ii) the
engaging by the officer in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. The officer shall not be
deemed to have been terminated for Cause unless and until the officer has been
delivered a copy of a resolution duly adopted by the affirmative vote (which
cannot be delegated) of not less than a majority of the members of the Board who
are not officers of the Company at a meeting of the Board called and held for
such purposes (after reasonable notice to the officer and an opportunity for the
officer, together with the officer’s counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the officer was guilty of
conduct set forth above in clauses (i) or (ii) above and specifying the
particulars thereof in detail.
“Change
in Control” means the occurrence of
(i) any
“person” or “group” (as such terms are used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) becoming the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), 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 making 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”), ceasing for any reason to constitute a majority
thereof,
(iv) the
Company consolidating, merging or exchanging securities with any other entity
and the stockholders of the Company immediately before the effective time of
such transaction not beneficially owning, 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 not constituting 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 acquiring 50% or more of the Company's assets.
“Disability”
means the incapacity of the officer due to physical or mental illness which
causes the officer to have been absent from the full-time performance of his
duties with the Company for six consecutive months, and within 30 days after the
Company gives the officer written notice of termination, the officer has not
returned to the full-time performance of his duties.
“Good
Reason” means, without the officer’s express written consent, any of the
following:
(i) a
material adverse alteration in the nature or status of his position, duties or
responsibilities,
(ii) a
reduction in his current annual base salary,
(iii) a
change in the principal place of his employment to a location more than
twenty-five (25) miles from the Company’s current principal place of employment,
excluding required travel on the Company's business to an extent substantially
consistent with the officer’s present business travel obligations,
(iv) the
failure by the Company, without his consent, to pay to him any portion of his
current compensation, or to pay to him any portion of any deferred compensation,
within ten (10) days of the date any such compensation payment is
due,
(v) the
failure by the Company to continue in effect any compensation plan in which he
participates, or any substitute plans or the failure by the Company to continue
his participation therein on the same basis, both in terms of the amount of
benefits provided and the level of his participation relative to other
participants, as existing,
(vi) the
failure by the Company to continue to provide him with benefits at least as
favorable to those enjoyed by him under any of the Company's pension, life
insurance, medical, health and accident, disability, deferred compensation or
savings plans in which he is currently participating, the taking of any action
by the Company which would directly or indirectly materially reduce any of such
benefits or deprive the officer of any material fringe benefit enjoyed by him,
or the failure by the Company to provide him with the number of paid vacation
days to which he is entitled on the basis of the Company's practice with respect
to him,
(vii) the
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform his employment agreement, or
(viii) any
purported termination of his employment which is not effected pursuant to the
employment agreement’s termination provisions.
“Retirement”
means termination in accordance with the Company's retirement policy, generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with the officer’s consent with respect to
himself.
If,
during the term of the employment agreement for each named executive officer or
any extension thereof, an officer’s employment is terminated other than for
Cause or Disability, by reason of the officer’s death or Retirement, or by such
officer for Good Reason, then such officer will be entitled to receive the
following:
Watson and Williford:
a lump sum payment equal to the greater of (a) his annual base salary for the
last full year during which he was employed by Abraxas or (b) his annual base
salary for the remainder of the term of his employment agreement.
Wallace, Wendel and
Billingsley: no provisions for termination of employment because at all
times during the term of each officer’s employment agreements, such officer’s
employment is at will and may be terminated by Abraxas for any reason with
notice or cause. If, during the term of the employment agreement for
each of Messrs. Wallace and Wendel or Dr. Billingsley or any extension thereof,
a change in control occurs, then such officer will be entitled to an automatic
extension of the term of the officer’s employment agreement for a period of 36
months beyond the term in effect immediately before the change in
control.
If,
following a change in control, an officer’s employment is terminated other than
for Cause or Disability, by reason of the officer’s death or Retirement or by
such officer for Good Reason, then such terminated officer will be entitled to
the following:
Watson and
Williford: a lump sum payment equal to 2.99 times his annual
base salary.
Wallace, Wendel and
Billingsley: a lump sum payment equal
to three times his annual base salary.
If any
lump sum payment to a named executive officer 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, and applicable regulations thereunder, the amounts to be paid will be
increased so that each named executive officer, 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.
In
addition, unvested options that have been awarded to our named executive
officers will vest upon any change in control. As of December 31,
2008, 168,236 options were unvested, none of which were “in-the-money” as of
December 31, 2008.
The table
below contains information concerning termination and change in control payments
to each of our named executive officers as if the event occurred on December 31,
2008.
Termination
and Change in Control Payments Table
Name
|
Type
of Benefit
|
Before
Change
in
Control
Termination
w/o
Cause
or for
Good
Reason
($)
(1)
|
After
Change in
Control
Termination
w/o
Cause
or for
Good
Reason
($)
(2)
|
Voluntary
Termination
($)
|
Death
/
Disability
($)
|
Change
in
Control
($)
(3)
|
Robert
L.G. Watson
|
Severance
pay
|
350,000
|
1,046,500
|
—
|
—
|
—
|
Chris
E. Williford
|
Severance
pay
|
214,000
|
639,860
|
—
|
—
|
—
|
Lee
T. Billingsley
|
Severance
pay
|
—
|
597,000
|
—
|
—
|
597,000
|
William
H. Wallace
|
Severance
pay
|
—
|
597,000
|
—
|
—
|
597,000
|
Stephen
T. Wendel
|
Severance
pay
|
—
|
486,000
|
—
|
—
|
486,000
|
__________________
(1)
|
These
amounts reflect a lump sum payment equal to the officer’s annual base
salary as of December 31, 2008.
|
(2)
|
These
amounts reflect a lump sum payment equal to 2.99x (Watson and Williford)
and 3.0x (Billingsley, Wallace and Wendel) the named executive officer’s
annual base salary as of December 31,
2008.
|
(3)
|
These
amounts reflect a 36-month extension of each officer’s respective
employment agreement based on the named executive officer’s annual base
salary on December 31, 2008 and would be paid over the 36-month extension
period.
|
Compensation
of Directors
All
compensation paid to directors is limited to non-employee
directors. We use a combination of cash and stock-based incentive
compensation to attract and retain qualified individuals to serve on the
Board.
Compensation. Abraxas pays
each director an annual retainer fee of $12,000 in four quarterly
payments. Each quarterly payment is paid in shares of restricted
stock pursuant to the 2005 Director Plan. The number of shares issued
to each non-employee director is calculated each quarter by dividing one-quarter
of the then-established annual retainer fee by the closing price of our common
stock on the date of each quarterly board meeting. Fractional shares
are not issued; therefore, any shortfall of the then-established annual retainer
fee will be paid in cash after the last quarterly board meeting of each
year. Any non-employee director who leaves the Board during the
calendar year is not eligible for any restricted stock awards after leaving the
Board. In addition, Abraxas pays each director $1,500 for each board
meeting attended and $1,000 for each committee meeting attended. The
chairman of the audit committee receives an additional annual fee of $3,000 and
the chairmen of the compensation and governance and nominating committees each
receive an additional annual fee of $1,500.
Stock Options. Abraxas has
awarded each director a total of 155,000 options, which includes options awarded
on March 17, 2009, with exercise prices equal to the prevailing market prices at
the time of issuance, ranging from $0.68 to $4.59 per share. In
addition, each year at the first regular board meeting following the annual
meeting, Abraxas awards each director 10,000 options, in accordance with the
terms of the 2005 Director Plan. The amended 2005 Directors Plan
reserves 900,000 shares of Abraxas common stock, subject to adjustment following
certain events, such as stock splits. The maximum annual award for
any one director is 60,000 shares plus the number of restricted shares awarded
pursuant to the retainer payment described above. The exercise price
of all options awarded are no less than 100% of the fair market value on the
date of the award while the option terms and vesting schedules are at the
discretion of the Compensation Committee. The following is a
description of the material terms of the 2005 Director Plan.
Unless
otherwise provided in the applicable award agreement or any severance agreement,
vested awards granted under the 2005 Directors Plan shall expire, terminate, or
otherwise be forfeited as follows:
|
·
|
three
months after the date the Company delivers a notice of termination of a
Participant's Active Status, other than in circumstances covered by the
following three circumstances:
|
|
§
|
immediately
upon termination for misconduct;
|
|
§
|
12
months after the date of death; and
|
|
§
|
36
months after the date on which the director ceased performing services as
a result of retirement.
|
The
following table sets forth a summary of compensation for the fiscal year ended
December 31, 2008 that Abraxas paid to each director. Abraxas does
not sponsor a pension benefits plan, a non-qualified deferred compensation plan
or a non-equity incentive plan for our directors; therefore, these columns have
been omitted from the following table. Except for reimbursement of
travel expenses to attend board and committee meetings, no other or additional
compensation for services were paid to any of the directors.
Director
Compensation Table
Name
|
Fees
Earned or
Paid
in Cash
($)
(1)
|
Stock
Awards
($)
(2)
|
Option
Awards
($)
(3)
|
Total
($)
(4)
|
C.
Scott Bartlett, Jr.
|
28,882
|
11,993
|
25,280
|
66,155
|
Franklin
A. Burke
|
23,007
|
11,993
|
25,280
|
60,280
|
Harold
D. Carter
|
17,007
|
11,993
|
25,280
|
54,280
|
Ralph
F. Cox (5)
|
25,632
|
11,993
|
25,280
|
62,905
|
Barry
J. Galt (6)
|
8,500
|
8,994
|
25,280
|
42,774
|
Dennis
E. Logue
|
15,882
|
11,993
|
25,280
|
53,155
|
Paul
A. Powell, Jr.
|
22,007
|
11,993
|
68,302
|
102,302
|
_________________
(1)
|
This
column represents the amounts paid in cash to each
director.
|
(2)
|
This
column represents the dollar value of stock awarded to each director for
his annual retainer fee. During 2008, each director, except Mr.
Galt, was awarded a total of 4,692 vested shares of Abraxas common
stock. The quarterly awards were 867 shares on March 11, 2008,
666 shares on May 21, 2008, 970 shares on September 4, 2008 and 2,189
shares on November 12, 2008 and the closing price of our common stock on
those dates was $3.46, $4.50, $3.09 and $1.37 per share,
respectively.
|
(3)
|
The
amounts in this column reflect the recognized value of options granted to
each director, calculated in accordance with SFAS 123R for the year ended
December 31, 2008, which include options granted in prior years to the
extent they were not fully-vested by January 1, 2008. The grant
date fair value of all options awarded during 2008, calculated in
accordance with SFAS 123R, was $176,960. See note 8 of the
notes to our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission on February 24, 2009 for a discussion
of all assumptions made in the calculation of this
amount.
|
(4)
|
The
dollar value in this column for each director represents the sum of all
compensation reflected in the previous
columns.
|
(5)
|
Included
in fees earned by Mr. Cox is $6,750 paid in cash for serving as a director
on the Partnership Board during
2008.
|
(6)
|
Mr.
Galt passed away on August 22,
2008.
|
The table
below contains information concerning outstanding option awards at December 31,
2008 for each of the directors. None of the named directors had
outstanding stock awards at December 31, 2008.
Outstanding
Equity Awards at Fiscal-Year End Table
Name
|
Option
Awards
|
C.
Scott Bartlett, Jr.
|
90,000
|
Franklin
A. Burke
|
102,000
|
Harold
D. Carter
|
102,000
|
Ralph
F. Cox
|
115,000
|
Barry
J. Galt (1)
|
115,000
|
Dennis
E. Logue
|
108,000
|
Paul
A. Powell, Jr.
|
102,000
|
__________________
(1)
|
Mr.
Galt passed away on August 22,
2008.
|
2009
Compensation Decisions
Long-Term Equity
Incentives. On January 2, 2009, Mr. Cox was granted 4,000
restricted units for his serving as a director on the Partnership Board and on
March 17, 2009, Abraxas’ Board of Directors awarded 50,000 options to each
non-employee director of Abraxas for a total award of 300,000
options.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
General
On
February 21, 2007, our Board of Directors adopted a formal written related
person transaction approval policy, which sets out Abraxas’ policies and
procedures for the review, approval, or ratification of “related person
transactions.” For these purposes, a “related person” is a director,
nominee for director, executive officer, or holder of more than 5% of our common
stock, or any immediate family member of any of the foregoing. This policy
applies to any financial transaction, arrangement or relationship or any series
of similar financial transactions, arrangements or relationships in which
Abraxas is a participant and in which a related person has a direct or indirect
interest, other than the following:
|
·
|
payment
of compensation by Abraxas to a related person for the related person’s
service in the capacity or capacities that give rise to the person’s
status as a “related person;”
|
|
·
|
transactions
available to all employees or all stockholders on the same
terms;
|
|
·
|
purchases
of supplies from Abraxas in the ordinary course of business at the same
price and on the same terms as offered to our other customers, regardless
of whether the transactions are required to be reported in Abraxas’
filings with the SEC; and
|
|
·
|
transactions
which when aggregated with the amount of all other transactions between
the related person and Abraxas involve less than $10,000 in a fiscal
year.
|
Our Audit
Committee is required to approve any related person transaction subject to this
policy before commencement of the related person transaction, provided that if
the related person transaction is identified after it commences, it shall be
brought to the Audit Committee for ratification, amendment or rescission. The
chairman of our Audit Committee has the authority to approve or take other
actions in respect of any related person transaction that arises, or first
becomes known, between meetings of the Audit Committee, provided that any action
by the chairman must be reported to our Audit Committee at its next regularly
scheduled meeting.
Our Audit
Committee will analyze the following factors, in addition to any other factors
the members of the Audit Committee deem appropriate, in determining whether to
approve a related person transaction:
|
·
|
whether
the terms are fair to Abraxas;
|
|
·
|
whether
the transaction is material to
Abraxas;
|
|
·
|
the
role the related person has played in arranging the related person
transaction;
|
|
·
|
the
structure of the related person transaction;
and
|
|
·
|
the
interest of all related persons in the related person
transaction.
|
Transactions
in 2008
Abraxas did not have any related party
transactions in 2008.
Our Audit
Committee may, in its sole discretion, approve or deny any related person
transaction. Approval of a related person transaction may be conditioned upon
Abraxas and the related person following certain procedures designated by the
Audit Committee.
TRANSACTIONS
WITH ABRAXAS ENERGY PARTNERS, L.P.
Two of
our wholly-owned subsidiaries, Abraxas Investments, LLC, which we refer to as
Abraxas Investments, and the General Partner own interests in the
Partnership. Abraxas Investments owns 5,131,959 common units of the
Partnership and the General Partner owns 227,232 general partner units in the
Partnership. The following sections describe the distributions and payments that
the Partnership made to Abraxas in 2008 and summarizes the terms under which
Abraxas provides certain services to the Partnership and acts as operator of
certain of the Partnership’s producing properties. None of these
transactions are “related party transactions” as defined by Item 404 of
Regulation S-K promulgated by the SEC; however, Abraxas has elected to provide a
summary of these transactions to its stockholders.
Distributions
and Payments to Abraxas Investments and the General Partner
The
following table summarizes the distributions and payments made by the
Partnership in connection with the ongoing operation and liquidation of the
Partnership.
Distributions
of available cash to Abraxas Investments and the General
Partner
|
The
Partnership generally distributes 98% of its available cash to all of its
unitholders, including Abraxas Investments (as the holder of
5,131,959 common units) and 2% of its available cash to the General
Partner. During 2008, Abraxas Investments received
distributions of approximately $8.5 million on its common units and
the General Partner received distributions of approximately $376,000 on
its 2% general partner interest.
|
Payments
to Abraxas Investments and the General Partner
|
The
partnership agreement requires the Partnership to reimburse the General
Partner for all actual direct and indirect expenses it incurs or actual
payments it makes on the Partnership’s behalf and all other expenses
allocable to the Partnership or otherwise incurred by the General Partner
in connection with operating of the Partnership’s business, including
expenses allocated to the General Partner by its
affiliates. These expenses include salary, bonus, incentive
compensation and other amounts paid to persons who perform services for
the Partnership or on the Partnership’s behalf, and expenses allocated to
the General Partner by its affiliates. The Partnership does not
expect to incur any additional fees or to make other payments to these
entities in connection with operating the Partnership’s
business. The General Partner is entitled to determine in good
faith the expenses that are allocable to the Partnership. The
omnibus agreement requires the Partnership to reimburse us for expenses
incurred on the Partnership’s behalf and to pay us $2.6 million per
year for the first two years following the Partnership’s initial public
offering for general and administrative expenses.
|
Withdrawal
or removal of the General Partner
|
If
the General Partner withdraws or is removed, its general partner interest
will either be sold to the new general partner for cash or converted into
common units, in each case for an amount equal to the fair market value of
those interests.
|
Liquidation
|
Upon
liquidation of the Partnership, the partners, including the General
Partner and Abraxas Investments, will be entitled to receive liquidating
distributions according to their particular capital account
balances.
|
Contracts
with the Partnership
Because
the Partnership has no employees, we provide certain services to the Partnership
under the terms of an omnibus agreement and operate a number of the
Partnership’s producing properties under an operating
agreement. These agreements were not the result of arm’s-length
negotiations, and they, or any of the transactions that they provide for, may
not be effected on terms at least as favorable to us as could have been obtained
from unaffiliated third parties. The following summaries are
qualified in their entirety by the complete versions of the documents, copies of
which are available to any stockholder upon written request.
Omnibus
Agreement
The
omnibus agreement, among other things, governs (i) our obligations to
provide certain general and administrative services to the Partnership and its
subsidiaries and (ii) our obligations to indemnify the Partnership and
Abraxas Operating against certain environmental, tax and other liabilities. In
connection with its provision of services, the Partnership is required to
reimburse us for all direct and indirect expenses incurred on our behalf and on
behalf of our subsidiaries. The Partnership will pay us $2.6 million per
year for the first two years following its initial public offering for general
and administrative expenses, subject to annual adjustments for inflation and
acquisition or other expansion adjustments. Reimbursements for
certain public partnership expenses and insurance coverage expenses incurred by
us on the Partnership’s behalf pursuant to the omnibus agreement are not subject
to this fee. The fee was determined by reference to our historical general and
administrative expenses and our analysis and determination that the properties
contributed to the Partnership are predominantly developed and require
relatively less management time than undeveloped properties and drilling
prospects.
Under the
omnibus agreement we will indemnify the Partnership through May 24, 2010
against certain potential environmental claims. Additionally, we will indemnify
the Partnership for losses attributable to right of way fees and taxes
attributable to pre-closing operations. Our maximum liability for these
indemnification obligations will not exceed $5 million and we will not have
any obligation under this indemnification until the Partnership’s aggregate
losses exceed $500,000. We will have no indemnification obligations with respect
to environmental claims made as a result of additions to or modifications of
environmental laws promulgated after May 25, 2007. The Partnership has
agreed to indemnify us against environmental liabilities related to their assets
to the extent we are not required to indemnify the Partnership. The Partnership
will also indemnify us for all losses and liabilities arising on or after
May 25, 2007 and attributable to operations of the assets contributed by
us, to the extent not subject to our indemnification obligations under the
omnibus agreement, including plugging and abandonment costs.
Operating
Agreement
On
May 25, 2007, Abraxas Operating entered into an operating agreement with
us. Pursuant to the operating agreement, we will act as operator of Abraxas
Operating’s properties, if their working interest entitles them to control the
appointment of the operator. In addition, we will continue as operator of their
properties that were subject to existing operating agreements, to the extent we
were the operator prior to the contribution of properties by us or to the extent
we assumed operations from St. Mary Land & Exploration as a result of the
acquisition that closed on January 31, 2008. Under these operating agreements,
the Partnership will reimburse us for operating expenses incurred on their
behalf. Operating expenses are the costs incurred in the operation of producing
properties. Expenses for utilities, direct labor, water injection and disposal,
production taxes and materials and supplies comprise the most significant
portion of the Partnership’s operating expenses. Operating expenses do not
include G&A expenses. A majority of their operating cost components are
variable and increase or decrease as the level of production increases or
decreases. Certain items, however, such as direct labor and materials and
supplies, generally remain relatively fixed and do not fluctuate with changes in
production volumes, but can fluctuate depending on activities performed during a
specific period.
Under the
operating agreement, we will establish a joint account for each well in which
the Partnership has an interest. The Partnership will be required to pay its
working interest share of amounts charged to the joint account. The joint
account will be charged with all direct expenses incurred in the operation of
the Partnership’s wells. The determination of which direct expenses can be
charged to the joint account and the manner of charging direct expenses to the
joint account for the Partnership’s wells will be done in accordance with the
Council of Petroleum Accountants Societies, or COPAS, model form of accounting
procedure.
Under the
COPAS model form, direct expenses include the costs of third party services
performed on the Partnership’s properties and other equipment used on the
Partnership’s properties. In addition, direct expenses will include the
allocable share of the cost of our employees who perform services on the
Partnership’s properties. The allocation of the cost of our employees who
perform services on the Partnership’s properties will be based on time sheets
maintained by our employees.
PROPOSAL
TWO
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Abraxas Board of Directors has selected BDO Seidman, LLP to serve as the
independent registered public accounting firm for Abraxas for the fiscal year
ending December 31, 2009. Although stockholder ratification is not
required, the Board of Directors has directed that such appointment be submitted
to the stockholders of Abraxas for ratification at the annual
meeting. BDO Seidman, LLP provided audit services to Abraxas for the
year ended December 31, 2008. A representative of BDO
Seidman, LLP will be present at the annual meeting, and will have an opportunity
to make a statement if he or she desires to do so and will be available to
respond to appropriate questions.
No report
of BDO Seidman, LLP on Abraxas’ financial statements for either of Abraxas’ last
two fiscal years contained any adverse opinion or disclaimer of opinion, nor was
any such report qualified or modified as to uncertainty, audit scope or
accounting principles.
In
connection with the audits of Abraxas’ financial statements for the last two
fiscal years, there were no disagreements with BDO Seidman, LLP on any matters
of accounting principles, financial statement disclosure or audit scope and
procedures which, if not resolved to the satisfaction of BDO Seidman, LLP, would
have caused the firm to make reference to the matter in its
report. During Abraxas’ last two fiscal years, there were no
reportable events as described in Item 304(a)(1)(v) of Regulation
S-K.
Assuming
the presence of a quorum, the affirmative vote of the holders of a majority of
the shares of common stock present in person or by proxy and entitled to vote on
this item at the annual meeting is necessary to ratify the appointment of
Abraxas’ independent registered public accounting firm. The enclosed
proxy card provides a means for stockholders to vote for the ratification of the
selection of Abraxas’ independent registered public accounting firm, to vote
against it or to abstain from voting with respect to it. If a stockholder executes and returns
a proxy, but does not specify how the shares represented by such stockholder’s
proxy are to be voted, such shares will be voted FOR the ratification of
selection of Abraxas’ independent registered public accounting
firm. Abstentions will have the same legal effect as a vote
against the proposal. Non-votes are not considered present at the
meeting for this proposal and will have no effect on the ratification of the
appointment of Abraxas’ independent registered public accounting
firm.
The
Board of Directors recommends a vote “FOR” the ratification of the selection of
BDO Seidman, LLP, as Abraxas’ independent registered public accounting firm for
the fiscal year ending December 31, 2009.
AUDIT
COMMITTEE REPORT
The Audit
Committee represents and assists the Board in fulfilling its responsibilities
for general oversight of the integrity of Abraxas’ financial statements,
Abraxas’ compliance with legal and regulatory requirements, the independent
auditor's qualifications and independence, the performance of Abraxas’ internal
audit function and independent audit firm, and risk assessment and risk
management. The Audit Committee manages Abraxas’ relationship with
its independent auditors (which report directly to the Audit
Committee). The Audit Committee has the authority to obtain advice
and assistance from outside legal, accounting or other advisors as the Audit
Committee deems necessary to carry out its duties and receives appropriate
funding, as determined by the Audit Committee, from Abraxas for such advice and
assistance.
Abraxas’
management is primarily responsible for Abraxas’ internal control and financial
reporting process. Abraxas’ independent auditors, BDO Seidman, LLP,
are responsible for performing an independent audit of Abraxas’ consolidated
financial statements and issuing opinions on the conformity of those audited
financial statements with United States generally accepted accounting principles
and the effectiveness of Abraxas’ internal control over financial
reporting. The Audit Committee monitors Abraxas’ financial reporting
process and reports to the Board on its findings.
In this
context, the Audit Committee hereby reports as follows:
1. The
Audit Committee has reviewed and discussed the audited financial statements with
Abraxas’ management.
2. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by the Statement on Auditing Standards No. 61, as amended
(Codification of Statements on Auditing Standards, AU 380), as adopted by the
Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
3. The
Audit Committee has received the written disclosures and the letter from the
independent auditors required by the PCAOB regarding the independent auditors’
communications with the Audit Committee concerning independence, and has
discussed with the independent auditors their independence.
4. Based
on the review and discussions referred to in paragraphs (1) through (3) above,
the Audit Committee recommended to the Board, and the Board has approved, that
the audited financial statements be included in Abraxas’ Annual Report on Form
10-K for the year ended December 31, 2008, and for filing with the Securities
and Exchange Commission.
This
report is submitted by the members of the Audit Committee.
C. Scott
Bartlett, Jr., Chairman
Franklin
A. Burke
Paul A.
Powell, Jr.
PRINCIPAL
AUDITOR FEES AND SERVICES
Audit Fees. The
aggregate fees billed for professional services rendered by BDO Seidman, LLP for
the audit of Abraxas’ annual financial statements for the years ended December
31, 2008 and December 31, 2007, for the audit of Abraxas’ internal controls over
financial reporting for the years ended December 31, 2008 and December 31, 2007,
and the reviews of the condensed financial statements included in Abraxas’
quarterly reports on Form 10-Q for the years ended December 31, 2008 and
December 31, 2007, were $622,327 and $476,525, respectively.
Audit-Related
Fees. The aggregate fees billed by BDO Seidman, LLP for
assurance and related services that were reasonably related to the performance
of the audit or review of Abraxas’ financial statements and are not reported in
“audit fees” above, for the years ended December 31, 2008 and December 31, 2007,
were $23,350 and $182,844, respectively. These fees were for services
provided by BDO Seidman, LLP related to consulting services associated with
determining the appropriate accounting treatment of various
transactions.
All Other
Fees. The aggregate fees billed for other services, exclusive
of the fees disclosed above relating to financial statement audit services,
rendered by BDO Seidman, LLP during the years ended December 31, 2008 and
December 31, 2007, were $366,453 and $251,411, respectively. These
fees were for services provided by BDO Seidman, LLP related to the audit of the
Partnership’s annual financial statements for the years ended December 31, 2008
and December 31, 2007, and the Partnership’s registration
statement.
Consideration of Non-audit Services
Provided by the Independent Auditors. The Audit Committee has
considered whether the services provided for non-audit services are compatible
with maintaining BDO Seidman, LLP’s independence, and has concluded that the
independence of such firm has been maintained.
AUDIT
COMMITTEE PRE-APPROVAL POLICY
The Audit
Committee’s policy is to pre-approve all audit, audit-related and non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. The Audit Committee may also pre-approve particular services on
a case-by-case basis. The independent public accountants are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent public accountants in accordance with such
pre-approval. The Audit Committee may also delegate pre-approval authority to
one or more of its members. Such member(s) must report any decisions to the
Audit Committee at the next scheduled meeting.
STOCKHOLDER
PROPOSALS FOR 2010 ABRAXAS ANNUAL MEETING
Abraxas
intends to hold its next annual meeting during the second quarter of 2010,
according to its normal schedule. In order to be included in the
proxy material for the 2010 Annual Meeting, Abraxas must receive eligible
proposals from stockholders intended to be presented at the annual meeting on or
before December 21, 2009, directed to the Abraxas Secretary at the address
indicated on the first page of this proxy statement.
According
to our Amended and Restated Bylaws, Abraxas must receive timely written notice
of any stockholder nominations and proposals to be properly brought before the
2010 Annual Meeting. To be timely, such notice must be delivered to
the Abraxas Secretary at the principal executive offices set forth on the first
page of this proxy statement between February 21, 2010 and the close of business
on March 21, 2010. The written notice must set forth, as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such stockholder,
as they appear on Abraxas’ books, and of such beneficial owner, if any, (ii) (a)
the class or series and number of Abraxas shares which are, directly or
indirectly, owned beneficially and of record by such stockholder and such
beneficial owner, (b) any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege or
a settlement payment or mechanism at a price related to any class or series of
Abraxas shares or with a value derived in whole or in part from the value of any
class or series of Abraxas shares, whether or not such instrument or right shall
be subject to settlement in the underlying class or series of Abraxas capital
stock or otherwise (a “Derivative Instrument”) directly or indirectly owned
beneficially by such stockholder and any other direct or indirect opportunity to
profit or share in any profit derived from any increase or decrease in the value
of Abraxas shares, (c) any proxy, contract, arrangement, understanding, or
relationship pursuant to which such stockholder has a right to vote any shares
of any Abraxas security, (d) any short interest in any Abraxas security (for
purposes of this Section 13, a person shall be deemed to have a short interest
in a security if such person, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has the opportunity to
profit or share in any profit derived from any decrease in the value of the
subject security), (e) any rights to dividends on the Abraxas shares owned
beneficially by such stockholder that are separated or separable from the
underlying Abraxas shares, (f) any proportionate interest in Abraxas shares or
Derivative Instruments held, directly or indirectly, by a general or limited
partnership in which such stockholder is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner and (g) any
performance-related fees (other than an asset-based fee) that such stockholder
is entitled to based on any increase or decrease in the value of Abraxas shares
or Derivative Instruments, if any, as of the date of such notice including,
without limitation, any such interests held by members of such stockholder’s
immediate family sharing the same household (which information shall be
supplemented by such stockholder and beneficial owner, if any, not later than 10
days after the record date for the meeting to disclose such ownership as of the
record date), and (iii) any other information relating to such stockholder and
beneficial owner, if any, that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for, as applicable, the proposal and/or for the election of directors
in a contested election pursuant to Section 14 of the Exchange Act, and the
rules and regulations promulgated thereunder.
If the
notice relates to any business other than a nomination of a director or
directors that the stockholder proposes to bring before the meeting, the notice
must set forth (i) a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest of such stockholder and beneficial owner, if any, in such
business and (ii) a description of all agreements, arrangements and
understandings between such stockholder and beneficial owner, if any, and any
other person or persons (including their names) in connection with the proposal
of such business by such stockholder.
As to
each person, if any, whom the stockholder proposes to nominate for election or
reelection to the Board of Directors (i) all information relating to such person
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors in a contested election pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder (including such person’s
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected) and (ii) a description of all direct and
indirect compensation and other material monetary agreements, arrangements and
understandings during the past three years, and any other material
relationships, between or among such stockholder and beneficial owner, if any,
and their respective affiliates and associates, or others acting in concert
therewith, on the one hand, and each proposed nominee, and his or her respective
affiliates and associates, or others acting in concert therewith, on the other
hand, including, without limitation all information that would be required to be
disclosed pursuant to Rule 404 promulgated under Regulation S-K (or any
successor rule) if the stockholder making the nomination and any beneficial
owner on whose behalf the nomination is made, if
any, or
any affiliate or associate thereof or person acting in concert therewith, were
the “registrant” for purposes of such rule and the nominee were a director or
executive officer of such registrant and with respect to each nominee for
election or reelection to the Board of Directors, include a completed, dated and
signed questionnaire, representation and agreement.
To be
eligible to be a nominee for election or reelection as a director of Abraxas, a
person must deliver (in accordance with the time periods prescribed above for
delivery of notice) to the Secretary at the principal executive offices of
Abraxas a written questionnaire with respect to the background and qualification
of such person and the background of any other person or entity on whose behalf
the nomination is being made (which questionnaire shall be provided by the
Secretary upon written request) and a written representation and agreement (in
the form provided by the Secretary upon written request) that such person (i) is
not and will not become a party to (a) any agreement, arrangement or
understanding with, and has not given any commitment or assurance to, any person
or entity as to how such person, if elected as a director of Abraxas, will act
or vote on any issue or question (a “Voting Commitment”) that has not been
disclosed to Abraxas or (b) any Voting Commitment that could limit or interfere
with such person’s ability to comply, if elected as a director of Abraxas, with
such person’s fiduciary duties under applicable law, (ii) is not and will not
become a party to any agreement, arrangement or understanding with any person or
entity other than Abraxas with respect to any direct or indirect compensation,
reimbursement or indemnification in connection with service or action as a
director that has not been disclosed therein, and (iii) in such person’s
individual capacity and on behalf of any person or entity on whose behalf the
nomination is being made, would be in compliance, if elected as a director of
Abraxas, and will comply with all applicable publicly disclosed corporate
governance, conflict of interest, confidentiality and stock ownership and
trading policies and guidelines of Abraxas. Abraxas may also require
any proposed nominee to furnish such other information as may reasonably be
required by Abraxas to determine the eligibility of such proposed nominee to
serve as an independent director of Abraxas or that could be material to a
reasonable stockholder’s understanding of the independence, or lack thereof, of
such nominee.
In the
event that the 2010 Annual Meeting is more than 30 days from May 21, 2010 (the
anniversary of the 2009 Annual Meeting), the dates for submission with the proxy
materials and to be properly brought before the 2010 Annual Meeting will change
according to Abraxas’ Amended and Restated Bylaws and Regulation 14A under the
Exchange Act. A copy of Abraxas’ Amended and Restated Bylaws setting
forth the advance notice provisions and requirements for submission of
stockholder nominations and proposals may be obtained from the Abraxas Secretary
at the address indicated on the first page of this proxy statement.
OTHER
MATTERS
No
business other than the matters set forth in this document is expected to come
before the meeting, but should any other matters requiring a stockholder’s vote
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 Abraxas. If a nominee 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 Abraxas.
Upon
the written request of any person whose proxy is solicited hereunder, Abraxas
will furnish without charge to such person a copy of its annual report filed
with the United States Securities and Exchange Commission on Form 10-K,
including financial statements and schedules thereto, for the fiscal year ended
December 31, 2008. Such written request is to be directed to Investor
Relations, 18803 Meisner Drive, San Antonio, Texas 78258.
By Order
of the Board of Directors
Stephen
T. Wendel
SECRETARY
San
Antonio, Texas
April 20,
2009
FORM
OF PROXY
FRONT
ABRAXAS
PETROLEUM CORPORATION
18803
Meisner Drive
San
Antonio, Texas 78258
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING ON MAY 21, 2009
The
undersigned shareholder of Abraxas Petroleum Corporation, a Nevada corporation,
hereby appoints Robert L.G. Watson and Chris E. Williford, 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
Abraxas common stock which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on May 21, 2009, 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 Abraxas dated April 20, 2009.
(CONTINUED
AND TO BE SIGNED ON THE REVERSE SIDE)
BACK
ANNUAL
MEETING OF STOCKHOLDERS OF
ABRAXAS
PETROLEUM CORPORATION
MAY
21, 2009
Important Notice Regarding
the Availability of Proxy Materials for the
Annual Meeting of
Shareholders to be held May 21, 2009:
The proxy
materials are available at http://abraxaspetroleum.com/proxy
Please
sign, date and mail your proxy card in the envelope provided as soon as
possible.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [ X ]
|
FOR
ALL
NOMINEES
|
WITHOLD
AUTHORITY FOR ALL NOMINEES
|
FOR
ALL EXCEPT (See instructions below)
|
|
1. ELECTION
OF DIRECTORS.
|
[ ]
|
[ ]
|
[ ]
|
Nominees:
m Franklin A.
Burke
m Paul A.
Powell, Jr.
|
INSTRUCTION: To
withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill
in the circle next to each nominee you wish to withhold, as shown
here:●
|
2. PROPOSAL
TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR ABRAXAS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2009.
|
|
[ ] FOR
|
[ ] AGAINST
|
[ ] ABSTAIN
|
3. In
their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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
Ratification of Proposal 2.
|
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please
note that changes to the registered name(s) on the account may not be
submitted via this method.
|
[ ]
|
Signature
of Stockholder
|
Date:
|
Signature
of Stockholder
|
Date:
|
Note: Please sign exactly as
your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name
by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
APPENDIX
A
Abraxas
Petroleum Corporation
|
Aera
Energy Services Company
|
AGL
Resources
|
Alliance
Pipeline, Inc.
|
Alliance
Pipeline, Inc. - Aux Sable Liquid Products
|
Ameren
Corporation
|
American
Transmission Company
|
Anadarko
Petroleum Corporation
|
Apache
Corporation
|
Arch
Coal, Inc
|
Aspect
Energy, LLC
|
Aspect
Energy, LLC - Aspect Abundant Shale LP
|
Aspect
Energy, LLC - HHE
|
Associated
Electric Cooperative, Inc.
|
Baker
Hughes, Inc.
|
Baker
Hughes, Inc. - Baker Atlas
|
Baker
Hughes, Inc. - Baker Hughes Business Support Services
|
Baker
Hughes, Inc. - Baker Hughes Drilling Fluids
|
Baker
Hughes, Inc. - Baker Hughes Inteq
|
Baker
Hughes, Inc. - Baker Oil Tools
|
Baker
Hughes, Inc. - Baker Petrolite
|
Baker
Hughes, Inc. - Centrilift
|
Baker
Hughes, Inc. - Hughes Christensen
|
Baker
Hughes, Inc. - Production Quest
|
Basic
Energy Services
|
Black
Stone Minerals Company, LLP
|
Boart
Longyear
|
Brigham
Exploration Company
|
Cameron
International
|
Carrizo
Oil & Gas, Inc.
|
CCS
Income Trust - Energy Services
|
CDX
Gas, LLC
|
CenterPoint
Energy
|
CGGVeritas
|
Chesapeake
Energy Corporation
|
Chesapeake
Energy Corporation - CEMI
|
Chesapeake
Energy Corporation - Chesapeake App
|
Chesapeake
Energy Corporation - Compass
|
Chesapeake
Energy Corporation - Great Plains
|
Chesapeake
Energy Corporation - Hodges
|
Chesapeake
Energy Corporation - Midcon
|
Chesapeake
Energy Corporation - Nomac
|
Chesapeake
Energy Corporation - Yost
|
Chief
Oil & Gas, LLC
|
CHS
Inc. - Energy
|
Cimarex
Energy Company
|
Cinco
Natural Resources Corporation
|
Citation
Oil & Gas Corp.
|
CITGO
Petroleum Corporation
|
Cleco
Corporation
|
COG
Operating, LLC
|
Colonial
Group, Inc
|
Conectiv
Energy
|
Constellation
Energy Group, Inc. - Constellation Energy Resources
|
Core
Laboratories
|
CPS
Energy
|
Crosstex
Energy Services
|
DCP
Midstream, LLC
|
Det
Norske Veritas US
|
Devon
Energy
|
Diamond
Offshore Drilling, Inc.
|
Dominion
Resources, Inc.
|
Dominion
Resources, Inc. - Dominion Energy
|
Dominion
Resources, Inc. - Dominion Generation
|
Dominion
Resources, Inc. - Dominion Virginia Power
|
Dresser-Rand
Company
|
Dresser-Rand
Company - Dresser-Rand Product Services
|
Dresser-Rand
Company - Field Operations
|
Dresser-Rand
Company - NAO
|
Dresser-Rand
Company - New Equipment Company
|
Duke
Energy
|
Duke
Energy - Commercial Power
|
Duke
Energy - US Franchised Electric and Gas
|
Duquesne
Light Holdings, Inc.
|
DynMcDermott
Petroleum Operations
|
E.ON
U.S.
|
Edge
Petroleum Corporation
|
Edison
Mission Energy
|
El
Paso Corporation
|
El
Paso Corporation - Exploration and Production
|
El
Paso Corporation - Pipeline Group
|
Enbridge
Energy Partners, LP
|
EnCana
Oil & Gas (USA) Inc.
|
Energen
Corporation - Energen Resources Corporation
|
Energy
Future Holdings - Luminant
|
Energy
Future Holdings Corporation - Oncor
|
Energy
Partners, Ltd.
|
EnergySouth,
Inc. - Bay Gas Storage
|
EnergySouth,
Inc. - EnergySouth Midstream, Inc
|
EnergySouth,
Inc. - Mobile Gas Service, Corporation
|
Enerplus
Resources Fund - Enerplus Resources (USA) Corporation
|
EnerVest
Management Partners, Ltd.
|
Eni
US Operating Company, Inc.
|
ENSCO
International, Inc.
|
ENSCO
International, Inc. - North & South America Business
Unit
|
Ensign
United States Drilling, Inc.
|
Ensign
United States Drilling, Inc. - California
|
Entegra
Power Services, LLC
|
EOG
Resources, Inc
|
Explorer
Pipeline Company
|
Exterran
|
Fasken
Oil and Ranch, Ltd.
|
Forest
Oil Corporation
|
Fortuna
Energy Inc.
|
FX
Energy, Inc.
|
FX
Energy, Inc. - FX Drilling Company, Inc.
|
GE
Oil & Gas CONMEC LLC
|
GE
Oil & Gas Operations LLC
|
Geokinetics
|
GeoMet,
Inc.
|
Global
Industries
|
Halliburton
Company
|
Hallwood
Petroleum, LLC
|
Helmerich
& Payne, Inc.
|
HighMount
E&P
|
Holly
Corporation
|
Hunt
Oil Company
|
Information
Handling Services (IHS)
|
ION
Geophysical Corporation
|
Jacksonville
Electric Authority
|
KCPL
|
Kinder
Morgan, Inc.
|
Lario
Oil & Gas Company
|
Legacy
Reserves, LP
|
Mack
Energy Co.
|
Maersk,
Inc. - Maersk Oil America
|
Magellan
Midstream Holdings, LP
|
Magellan
Midstream Holdings, LP - Pipeline Operations
|
Magellan
Midstream Holdings, LP - Terminal Services
|
Magellan
Midstream Holdings, LP - Transportation
|
MCN
Energy Enterprises
|
MCX
Exploration(USA), Ltd.
|
MDU
Resources Group, Inc. - Montana Dakota Utilities
|
MDU
Resources Group, Inc. - WBI Holdings, Inc.
|
Mestena
Operating, Ltd.
|
Mirant
Corp
|
MitEnergy
Upstream LLC
|
Murphy
Oil Corporation
|
NATCO
Group, Inc.
|
NATCO
Group, Inc. - BTO
|
NATCO
Group, Inc. - S&T
|
Nexen,
Inc. - Nexen Petroleum USA, Inc.
|
Nippon
Oil Exploration USA Ltd
|
NiSource
Inc. - Bay State Gas Company
|
NiSource
Inc. - Columbia Gas of Ohio
|
NiSource
Inc. - Columbia Gas of Pennsylvania
|
NiSource
Inc. - Columbia Gas of Virginia
|
NiSource
Inc. - NiSource Corporate Services Co
|
NiSource
Inc. - Northern Indiana Fuel & Light
|
NiSource
Inc. - Northern Indiana Public Service Co
|
NiSource
Inc. - Northern Utilities, Inc
|
NiSource
Inc. - Transmission Corp
|
Noble
Corporation
|
Noble
Energy, Inc.
|
North
Coast Energy, Inc.
|
Nustar
Energy LP
|
Oceaneering
International, Inc.
|
Oceaneering
International, Inc. - Americas
|
Oceaneering
International, Inc. - Multiflex
|
Oceaneering
International, Inc. - OIE
|
OGE
Energy Corp
|
OGE
Energy Corp - Enogex
|
ONEOK,
Inc.
|
ONEOK,
Inc. - Kansas Gas Service Division
|
ONEOK,
Inc. - Oklahoma Natural Gas Division
|
ONEOK,
Inc. - ONEOK Partners
|
ONEOK,
Inc. - Texas Gas Services Division
|
Osage
Resources, LLC
|
PacifiCorp
|
Parallel
Petroleum Corporation
|
Parker
Drilling Company
|
Pepco
Holdings, Inc.
|
Petro-Canada
- Petro-Canada Resources (USA)
|
Petron
Resources
|
PII
North America, Inc.
|
Pioneer
Natural Resources
|
PJM
Interconnection
|
Plains
Exploration & Production Company
|
PPL
Corporation
|
Pride
International
|
Questar
Market Resources
|
Quicksilver
Resources Inc.
|
R.
Lacy, Inc.
|
R.
Lacy, Inc. - Lacy Operations, Ltd
|
Renaissance
Alaska, LLC
|
Resolute
Natural Resources Company
|
RKI
Exploration & Production, LLC
|
Rosewood
Resources, Inc.
|
Rosewood
Resources, Inc. - Advanced Drilling Technologies
|
Rowan
Companies, Inc.
|
SAIC
|
SCANA
Corporation
|
SCANA
Corporation - Carolina Gas Transmission
|
SCANA
Corporation - PSNC Energy (Public Service Company of North Carolina,
Inc.)
|
SCANA
Corporation - SCE&G (South Carolina Electric and Gas
Company)
|
Schlumberger
Oilfield Services
|
Seneca
Resources Corporation
|
Seneca
Resources Corporation - Bakersfield
|
Seneca
Resources Corporation - Williamsville
|
Shaw
- Shaw Pipe Protection LLP
|
Southern
Company - Georgia Power
|
Southern
Company - Gulf Power Company
|
Southern
Company - Mississippi Power Company
|
Southern
Company - SouthernLINC
|
Southern
Union Company - Missouri Gas Energy
|
Southern
Union Company - New England Gas
|
Southern
Union Company - Panhandle Energy
|
Southern
Union Gas Services
|
Southern
Ute Tribe dba Red Willow Production Co
|
Southwest
Gas Corporation
|
Southwestern
Energy Company
|
Sprague
Energy Corp
|
Superior
Natural Gas Corporation
|
Tellus
Operating Group, LLC
|
The
Williams Companies, Inc.
|
The
Williams Companies, Inc. - E&P
|
The
Williams Companies, Inc. - Midstream
|
The
Williams Companies, Inc. - Williams Gas Pipeline (WGP)
|
Thums
Long Beach Company
|
TransCanada
|
TransCanada
- Gas Transmission Northwest? (GTN)
|
TransCanada
- Northern Border Pipeline
|
TransCanada
- US Pipeline Central
|
Transocean
|
TXCO
Resources, Inc.
|
TXCO
Resources, Inc. - Output Acquisition Corp.
|
TXCO
Resources, Inc. - Texas Tar Sands, Inc.
|
TXU
Corporation - TXU Energy Retail
|
Ultra
Petroleum Corp.
|
Unit
Corporation
|
Unit
Corporation - Superior Pipeline Company, LLC
|
Unit
Corporation - Unit Drilling Company
|
Unit
Corporation - Unit Petroleum Company
|
Vanco
Energy Company
|
Venoco,
Inc.
|
Washington
Gas
|
Weatherford
|
Wells
Fargo & Company - Wholesale Banking
|
Woodside
Energy (USA) Inc
|
Xcel
Energy, Inc.
|
XTO
Energy, Inc.
|
5