Abraxas Announces Third Quarter Results

Abraxas Announces Third Quarter Results

SAN ANTONIO--(BUSINESS WIRE)-- Abraxas Petroleum Corporation (NAS: AXAS) today reported financial and operating results for the three and nine months ended September 30, 2012 and provided an operational update.

Financial and Operating Results

Including Abraxas' equity interest in the Blue Eagle joint venture (which was dissolved on August 31, 2012), the three months ended September 30, 2012 resulted in:

  • Production of 384.3 MBoe (4,177 Boepd), up 3% over Q3 2011, of which 53% was oil or natural gas liquids.

The three months ended September 30, 2012 resulted in:

  • Production of 370.5 MBoe (4,027 Boepd), excluding Abraxas' equity interest in Blue Eagle's production, a 3% increase over Q2 2012;
  • Revenue of $17.2 million;
  • EBITDA(a) of $5.8 million;
  • Discretionary cash flow(a) of $5.2 million;
  • Net loss of $18.6 million, or $0.20 per share; and
  • Adjusted net loss(a) of $547,000, or $0.01 per share.
  • Debt Covenant Metrics:
    Working Capital 1.49:1.0 (min 1.0:1.0)
    Debt to EBITDA 3.31:1.0 (max 4.0:1.0)
    Interest Coverage 7.96:1.0 (min 2.5:1.0)
    (a) See reconciliation of non-GAAP financial measures below.

Net loss for the quarter ended September 30, 2012 was $18.6 million, or $0.20 per share, compared to a net income of $20.1 million, or $0.22 per share, for the same period in 2011.

Adjusted net loss, excluding certain non-cash items, for the quarter ended September 30, 2012 was $547,000 or $0.01 per share, compared to adjusted net income, excluding certain non-cash items, of $3.6 million or $0.04 per share for the same period in 2011. For the quarters ended September 30, 2012 and 2011, adjusted net income (loss) excludes the unrealized loss on derivative contracts of $5.3 million and an unrealized gain of $16.5 million respectively. Also excluded is a full cost impairment on Canadian assets of $11.8 million for the quarter ended September 30, 2012. Included in adjusted net loss for the quarter ended September 30, 2012 is the net income from our subsidiary, Raven Drilling, LLC of $1.1 million.

Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and may fluctuate drastically period to period. As commodity prices fluctuate, these derivative contracts are valued against current market prices at the end of each reporting period in accordance with Accounting Standards Codification 815, "Derivatives and Hedging," as amended and interpreted, and require Abraxas to record an unrealized gain or loss based on the calculated value difference from the previous period-end valuation. For example, NYMEX oil prices on September 28, 2012 were $92.19 per barrel compared to $84.96 on June 30, 2012.

Conference Call

Abraxas invites you to participate in a conference call on Monday, November 12, 2012 at 10:30 a.m. CT (11:30 a.m. ET) to discuss the contents of this release and respond to questions. Please dial 1.888.679.8033 passcode 90153817 #, 10 minutes before the scheduled start time, if you would like to participate in the call. The conference call will also be webcast live on the Internet and can be accessed directly on the Company's website at www.abraxaspetroleum.com under Investor Relations. In addition to the audio webcast replay, a transcript of the conference call will be posted on the Investor Relations section of the Company's website approximately 24 hours after the conclusion of the call and will be accessible for at least 60 days.

Abraxas Petroleum Corporation is a San Antonio-based oil and gas exploration and production company with operations across the Rocky Mountain, Mid-Continent, Permian Basin and onshore Gulf Coast regions of the United States and in the province of Alberta, Canada.

Safe Harbor for forward-looking statements: Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause Abraxas' actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be necessarily limited to, changes in the prices received by Abraxas for its oil and gas. In addition, Abraxas' future oil and gas production is highly dependent upon Abraxas' level of success in acquiring or finding additional reserves. Further, Abraxas operates in an industry where the value of securities is highly volatile and may be influenced by economic and other factors beyond Abraxas' control. In the context of forward-looking information provided in this release, reference is made to the discussion of risk factors detailed in Abraxas' filings with the Securities and Exchange Commission ("SEC") during the past 12 months.



(In thousands except per share data)Three Months Ended

September 30,

Nine Months Ended
September 30,
 2012   2011  2012   2011 
Financial Results:
Discretionary cash flow(a)5,2268,14018,78718,417
Net income (loss)(18,644)20,085(6,924)19,003
Net income (loss) per share - basic$(0.20)$0.22$(0.08)$0.21
Adjusted net income (loss)(a)(547)3,6353,6225,572
Adjusted net income (loss) per share(a) - basic$(0.01)$0.04$0.04$0.06
Weighted average shares outstanding - basic91,89891,50991,86689,663
Crude oil per day (Bopd)1,7751,6631,7071,451
Natural gas per day (Mcfpd)11,56911,82611,12211,674
Natural gas liquids per day (Bblpd)3239529266
Crude oil equivalent per day (Boepd)4,0273,7293,8533,462
Crude oil equivalent (MBoe)370.5343.11,055.6945.1
Crude oil equivalent per day (Boepd)(b)4,1774,0554,0883,858
Crude oil equivalent (MBoe)(b)384.3373.11,120.21053.3
Realized Prices, net of realized hedging activity:
Crude oil ($ per Bbl)$73.88$77.87$71.92$75.70
Natural gas ($ per Mcf)2.925.614.555.65
Natural gas liquids ($ per Bbl)31.6950.2037.0450.24
Crude oil equivalent ($ per Boe)43.5153.8047.8051.73
Lease operating ($ per Boe)$18.40$16.53$17.18$16.14
Production taxes (% of oil and gas revenue)10.0%8.8%9.5%8.8%
General and administrative, excluding stock-based compensation ($ per Boe)





Cash interest ($ per Boe)3.982.533.513.79

Depreciation, depletion and amortization ($ per Boe)





(a) See reconciliation of non-GAAP financial measures below.
(b) Includes Abraxas' equity interest in Blue Eagle's production.



(In thousands)September 30, 2012December 31, 2011
Working capital (a)9,127(14,404)
Property and equipment - net204,625179,552
Total assets250,128241,150
Long-term debt145,616126,258
Stockholders' equity57,90562,651
Common shares outstanding92,38992,261

(a) Excludes current maturities of long-term debt and current derivative assets and liabilities.



(In thousands except per share data)Three Months Ended September 30,Nine Months Ended September 30,
 2012   2011  2012   2011 
Oil and gas production revenues$17,146$17,665$49,459$48,165
Other 24  1  42  5 
Operating costs and expenses:
Lease operating6,8165,67018,13215,251
Production taxes1,7141,5494,6994,229
Depreciation, depletion, and amortization5,9714,16116,18911,371
General and administrative (including stock-based compensation of $413, $430, $1,612 and $1,499) 








 28,529  13,441  58,659  38,004 
Operating income (loss)(11,359)4,225(9,158)10,166
Other (income) expense:
Interest income(1)(2)(3)(6)
Interest expense1,5969834,0613,924
Amortization of deferred financing fees3112456071,515
Loss (gain) on derivative contracts (unrealized of $5,267, $(16,450), $(4,153), $(13,431))5,351(16,641)(4,935)(12,394)
Equity in (income) loss of joint venture(282)(546)(2,316)(2,064)
Other   101  42  188 
 6,975  (15,860) (2,544) (8,837)
Net income (loss) before income tax(18,334)20,085(6,614)19,003
Income tax expense 310    310   
Net income (loss)$(18,644)$20,085 $(6,924)$19,003 
Net income (loss) per common share - basic$(0.20)$0.22 $(0.08)$0.21 
Net income (loss) per common share - diluted$(0.20)$0.21 $(0.08)$0.21 
Weighted average shares outstanding:



To fully assess Abraxas' operating results, management believes that, although not prescribed under generally accepted accounting principles ("GAAP"), discretionary cash flow and EBITDA are appropriate measures of Abraxas' ability to satisfy capital expenditure obligations and working capital requirements. Discretionary cash flow and EBITDA are non-GAAP financial measures as defined under SEC rules. Abraxas' discretionary cash flow and EBITDA should not be considered in isolation or as a substitute for other financial measurements prepared in accordance with GAAP or as a measure of the Company's profitability or liquidity. As discretionary cash flow and EBITDA exclude some, but not all items that affect net income and may vary among companies, the discretionary cash flow and EBITDA presented below may not be comparable to similarly titled measures of other companies. Management believes that operating income calculated in accordance with GAAP is the most directly comparable measure to discretionary cash flow; therefore, operating income is utilized as the starting point for the discretionary cash flow reconciliation.

Discretionary cash flow is defined as operating income plus depreciation, depletion and amortization expenses, non-cash expenses and impairments, cash portion of other income (expense) less cash interest. The following table provides a reconciliation of discretionary cash flow to operating income for the periods presented.

(In thousands) Three Months Ended

September 30,

 Nine Months Ended
September 30,
 2012   2011  2012   2011 
Operating (loss) income$(11,359)$4,225$(9,158)$
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