Abraxas Announces Third Quarter 2013 Results

  Abraxas Announces Third Quarter 2013 Results

Business Wire

SAN ANTONIO -- November 6, 2013

Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and
operating results for the three and nine months ended September 30, 2013.

Financial and Operating Results for the Three Months Ended September 30, 2013

The three months ended September 30, 2013 resulted in:

  *Production of 440 MBoe (4,781 Boepd)
  *Revenue of $29.1 million
  *Adjusted EBITDA^(a) of $18.1 million inclusive of Raven Drilling
  *Adjusted discretionary cash flow^(a) of $17.1 million inclusive of Raven
    Drilling
  *Net income of $3.2 million, or $0.03 per share
  *Adjusted net income^(a), excluding certain non-cash items and inclusive of
    Raven Drilling of $8.4 million, or $0.09 per share

^(a) See reconciliation of non-GAAP financial measures below.

Net income for the three months ended September 30, 2013 was $3.2 million, or
$0.03 per share, compared to a net loss of $18.6 million, or $(0.20) per
share, for the three months ended September 30, 2012.

Adjusted net income, excluding certain non-cash items, for the three months
ended September 30, 2013 was $8.4 million, or $0.09 per share, compared to an
adjusted net loss, excluding certain non-cash items, of $0.5 million or
$(0.01) per share for the three months ended September 30, 2012. For the three
months ended September 30, 2013 and 2012, adjusted net income (loss) excludes
the unrealized loss on derivative contracts of $4.5 million and $5.3 million,
respectively. Also excluded is a full cost impairment on Canadian assets of
$0.2 million and $11.8 million for the quarters ended September 30, 2013 and
September 30, 2012, respectively. Included in adjusted net income for the
quarters ended September 30, 2013 and September 30, 2012 is the net income
from our subsidiary, Raven Drilling, LLC of $0.6 million and $1.1 million,
respectively.

Pursuant to SEC regulation S-X, no income is recognized for Raven Drilling,
LLC. Contractual drilling services performed in connection with properties in
which Abraxas holds an ownership interest cannot be recognized as income,
rather it is credited to the full cost pool and recognized through lower
amortization as reserves are produced.

Unrealized gains or losses on derivative contracts are based on mark-to-market
valuations which are non-cash in nature and may fluctuate drastically from
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 either 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 30,
2012 were $92.19 per barrel compared to $102.33 on September 30, 2013;
therefore, the mark-to-market valuation changed considerably period to period.

Comments

Bob Watson, Abraxas’ President and CEO, commented, “Evidence of Abraxas’
transformation into a focused high rate of return E&P is clearly evident in
our third quarter numbers, which more than doubled street expectations.
Notably, the company showed a marked improvement in LOE driven by the
divestiture of high LOE properties and production from new wells. Heading
forward, we expect this expense trend to continue. With our balance sheet in
order, we will continue to focus on adding to our already high quality
inventory in the Eagle Ford and Bakken while using the drill bit to turn these
acreage positions into cash flow."

Conference Call

Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its third quarter 2013
earnings conference call at 11 AM ET on November 6, 2013. To participate in
the conference call, please dial 888.679.8035 and enter the passcode 87993460.
Additionally, a live listen-only webcast of the conference call can be
accessed under the investor relations section of the Abraxas website at
www.abraxaspetroleum.com. A replay of the conference call will be available
until December 4, 2013 by dialing 888.286.8010 and entering the passcode
11755363 or can be accessed under the investor relations section of the
Abraxas website.

Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas
exploration and production company with operations across the Rocky Mountain,
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 crude oil and natural gas. In addition, Abraxas’ future crude
oil and natural gas production is highly dependent upon Abraxas’ level of
success in acquiring or finding additional reserves. Further, Abraxas operates
in an industry sector 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 for in this release, reference
is made to the discussion of risk factors detailed in Abraxas’ filings with
the Securities and Exchange Commission during the past 12 months.

                                                  
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED

FINANCIAL HIGHLIGHTS
                                                   
(In thousands except      Three Months Ended        Nine Months Ended
per share data)           September 30,              September 30,
                           2013      2012        2013       2012    
                                                                   
Financial Results:
Revenues                  $ 29,095     $ 17,170      $ 71,785      $ 49,501
Adjusted EBITDA^(a)         18,115       7,356         41,312        25,400
Adjusted Discretionary      17,085       6,752         38,002        33,696
cash flow^(a)
Net income (loss)           3,190        (18,644 )     11,651        (6,924  )
Net income (loss) per     $ 0.03       $ (0.20   )   $ 0.12        $ (0.08   )
share – diluted
Adjusted net income
(loss), excluding           8,431        (547    )     13,802        3,622
certain non-cash
items^(a)
Adjusted net income
(loss), excluding
certain non-cash          $ 0.09       $ (0.01   )   $ 0.15        $ 0.04
items^(a), per share –
diluted
Weighted average shares     93,542       91,898        93,375        91,866
outstanding – diluted
                                                                   
Production:
Crude oil per day           2,733        1,775         2,313         1,707
(Bopd)
Natural gas per day         9,457        11,569        9,924         11,122
(Mcfpd)
Natural gas liquids         472          323           403           292
(Bblpd)
Crude oil equivalent        4,781        4,027         4,371         3,853
per day (Boepd)
Crude oil equivalent        439.8        370.5         1,193.2       1,055.6
(MBoe)
Crude oil equivalent        4,781        4,177         4,371         4,088
per day (Boepd) (b)
Crude oil equivalent        439.8        384.3         1,193.2       1,120.2
(MBoe) (b)
                                                                   
Realized Prices, net of
realized hedging
activity:
Crude oil ($ per Bbl)     $ 90.98      $ 73.88       $ 88.05       $ 71.92
Natural gas ($ per Mcf)     3.00         2.92          3.17          4.55
Natural gas liquids ($      34.20        31.69         33.54         37.04
per Bbl)
Crude oil equivalent ($     61.31        43.51         56.91         47.80
per Boe)
                                                                   
Expenses:
Lease operating ($ per    $ 12.43      $ 18.40       $ 15.17       $ 17.18
Boe)
Production taxes (% of      9.1    %     10.0    %     9.0     %     9.5     %
oil and gas revenue)
General and
administrative,
excluding stock-based       4.30         5.00          5.09          4.70
compensation ($ per
Boe)
Cash interest ($ per        2.17         3.98          2.59          3.51
Boe)
Depreciation, depletion
and amortization            16.50        16.12         16.38         15.34
($ per Boe)

(a) See reconciliation of non-GAAP financial measures below.
(b) Includes Abraxas’ equity interest in Blue Eagle’s production which was
dissolved effective August 31, 2012.

                                                 
BALANCE SHEET DATA
                                                    
(In thousands)                 September 30, 2013   December 31, 2012
                                                    
Cash                           $    4,985           $   2,061
Working capital ^(a)                (27,454   )         (27,391   )
Property and equipment – net        209,655             212,832
Total assets                        257,235             240,607
                                                    
Long-term debt                      108,495             124,101
Stockholders’ equity                59,608              46,700
Common shares outstanding           92,838              92,733

(a) Excludes current maturities of long-term debt and current derivative
assets and liabilities in accordance with our loan covenants

                                                 
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED

STATEMENTS OF OPERATIONS
                                                  
(In thousands     Three Months Ended September      Nine Months Ended
except per        30,                              September 30,
share data)
                    2013          2012           2013        2012   
                                                                    
Revenues:
Oil and gas       $  29,092        $  17,146        $  71,733       $ 49,459
production
Other               3              24             52           42     
                     29,095           17,170           71,785         49,501
Operating costs
and expenses:
Lease operating      5,469            6,816            18,097         18,132
Production and
ad valorem           2,637            1,714            6,475          4,699
taxes
Depreciation,
depletion, and       7,260            5,971            19,545         16,189
amortization
Impairment           158              11,761           2,135          13,067
General and
administrative
(including
stock-based         2,410          2,267          7,737        6,572  
compensation of
$520, $413,
$1,662 and
$1,612)
                    17,934         28,529         53,989       58,659 
Operating            11,161           (11,359  )       17,796         (9,158 )
income (loss)
                                                                    
Other (income)
expense:
Interest income      (1      )        (1       )       (2      )      (3     )
Interest             1,110            1,596            3,577          4,061
expense
Amortization of
deferred             344              311              1,020          607
financing fees
Loss (gain) on
derivative           2,124            84               3,832          (782   )
contracts -
realized
Loss (gain) on
derivative           4,490            5,267            (2,374  )      (4,153 )
contracts -
unrealized
Earnings from
equity method        —                (282     )       —              (2,316 )
investment
Other               (96     )       —              5            42     
                    7,971          6,975          6,058        (2,544 )
Net income
(loss) before     $  3,190         $  (18,334  )    $  11,738       $ (6,614 )
income tax
Income tax          —              310            87           310    
expense
Net income        $  3,190        $  (18,644  )    $  11,651      $ (6,924 )
(loss)
                                                                    
Net income
(loss) per        $  0.03         $  (0.20    )    $  0.13        $ (0.08  )
common share -
basic
Net income
(loss) per        $  0.03         $  (0.20    )    $  0.12        $ (0.08  )
common share -
diluted
                                                                    
Weighted
average shares
outstanding:
Basic                92,475           91,898           92,435         91,866
Diluted              93,542           91,898           93,375         91,866
                                                                             

                        ABRAXAS PETROLEUM CORPORATION

                RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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 (loss) 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 (loss) calculated in accordance with GAAP is
the most directly comparable measure to discretionary cash flow; therefore,
operating income (loss) is utilized as the starting point for the
discretionary cash flow reconciliation.

Discretionary cash flow is defined as operating income (loss) plus
depreciation, depletion and amortization expenses, non-cash expenses and
impairments, cash portion of other income (expense) less cash interest.
Adjusted discretionary cash flow is defined as discretionary cash flow, plus
gas derivative monetization and cash flow from Raven Drilling’s operations.
Accounting rules do not permit the inclusion of the net income (loss) and
other components of Raven Drilling’s operations to be included in our
consolidated results of operations and cash flow, instead, the results of
Raven Drilling’s operations are credited to the full cost pool. Accordingly,
for purposes of Adjusted Discretionary cash flow, Raven Drilling’s cash flow
is added back. The following table provides a reconciliation of discretionary
cash flow and adjusted discretionary cash flow to operating income (loss) for
the periods presented.

                                                    
                            Three Months Ended         Nine Months Ended
(In thousands)
                            September 30,              September 30,
                             2013      2012        2013      2012   
Operating income (loss)     $ 11,161     $ (11,359 )   $ 17,796     $ (9,158 )
Depreciation, depletion       7,260        5,971         19,545       16,189
and amortization
Impairment                    158          11,761        2,135        13,067
Stock-based compensation      520          413           1,662        1,612
Realized gain (loss) on       (2,124 )     (84     )     (3,832 )     782
derivative contracts
Cash interest               (955   )   (1,476  )   (3,086 )   (3,705 )
Discretionary cash flow    $ 16,020   $ 5,226     $ 34,220   $ 18,787 
Gas derivative                —            —             —            12,364
monetization
Cash flow from Raven        1,065     1,526      3,782     2,545  
Drilling operations
Adjusted Discretionary     $ 17,085   $ 6,752     $ 38,002   $ 33,696 
cash flow
                                                                             

EBITDA is defined as net income (loss) plus interest expense, depreciation,
depletion and amortization expenses, deferred income taxes and other non-cash
items. Adjusted EBITDA includes all of the components of EBITDA plus Raven
Drilling’s EBITDA. Accounting rules do not permit the inclusion of the net
income (loss) and other components of Raven Drilling’s operations to be
included in our consolidated results of operations, instead, the results of
Raven Drilling’s operations are credited to the full cost pool. Accordingly,
for purposes of Adjusted EBITDA, Raven Drilling’s EBITDA is added back.
Adjusted EBITDA does not include approximately $12.4 million from the
monetization of our gas hedges settled in the first quarter 2012, which is
allowed in EBITDA for purposes of our credit facility covenants. The following
table provides a reconciliation of EBITDA and Adjusted EBITDA to net income
(loss) for the periods presented.

                                                    
                            Three Months Ended         Nine Months Ended
(In thousands)
                            September 30,              September 30,
                             2013      2012       2013          2012   
Net income (loss)           $ 3,190      $ (18,644 )   $ 11,651     $ (6,924 )
Net interest expense          1,109        1,595         3,575        4,058
Income tax expense            —            310           87           310
Depreciation, depletion       7,260        5,971         19,545       16,189
and amortization
Amortization of deferred      344          311           1,020        607
financing fees
Stock-based compensation      520          413           1,662        1,612
Impairment                    158          11,761        2,135        13,067
Unrealized (gain) loss on     4,490        5,267         (2,374 )     (4,153 )
derivative contracts
Realized (gain) loss on
interest derivative           —            (946    )     —            214
contract
Earnings from equity          —            (282    )     —            (2,316 )
method investment
Other non-cash items        (96    )   —          5         42     
EBITDA                     $ 16,975   $ 5,756     $ 37,306   $ 22,706 
Raven Drilling EBITDA       1,140     1,600      4,006     2,694  
Adjusted EBITDA            $ 18,115   $ 7,356     $ 41,312   $ 25,400 
                                                                             

This release also includes a discussion of “adjusted net income (loss),
excluding certain non-cash items,” which is a non-GAAP financial measure as
defined under SEC rules. The following table provides a reconciliation of
adjusted net income (loss), excluding ceiling test impairment and unrealized
changes in derivative contracts and net income (loss) related to Raven
Drilling, LLC capitalized to the full cost pool, to net income (loss) for the
periods presented. Management believes that net income (loss) calculated in
accordance with GAAP is the most directly comparable measure to adjusted net
income (loss), excluding certain non-cash items.

                                                    
                               Three Months Ended      Nine Months Ended
(In thousands)
                               September 30,           September 30,
                                2013    2012        2013      2012   
                                                                    
Net income (loss)              $ 3,190   $ (18,644 )   $ 11,651     $ (6,924 )
Impairment                       158       11,761        2,135        13,067
Net income related to Raven      593       1,069         2,390        1,632
Drilling
Unrealized (gain) loss on
derivative                     4,490   5,267      (2,374 )   (4,153 )

contracts
Adjusted net income (loss),
excluding certain non-cash    $ 8,431  $ (547    )  $ 13,802   $ 3,622  
items
Net income (loss) per share   $ 0.03   $ (0.20   )  $ 0.12     $ (0.08  )
– diluted
Adjusted net income (loss),
excluding certain non-cash    $ 0.09   $ (0.01   )  $ 0.15     $ 0.04   
items, per share – diluted
                                                                    

Contact:

Abraxas Petroleum Corporation
Geoffrey King, 210-490-4788
Vice President – Chief Financial Officer
gking@abraxaspetroleum.com
www.abraxaspetroleum.com
 
Press spacebar to pause and continue. Press esc to stop.