Abraxas Announces 2012 Results

SAN ANTONIO--(BUSINESS WIRE)-- Abraxas Petroleum Corporation (NAS: AXAS) today reported financial and operating results for the three and twelve months ended December 31, 2012.

Financial and Operating Results for the Three Months ended December 31, 2012


The three months ended December 31, 2012 resulted in:

  • Production of 382 MBoe (4,147 Boepd)
  • Revenue of $19.1 million
  • Adjusted EBITDA(a) of $6.6 million inclusive of Raven Drilling
  • Adjusted Discretionary cash flow(a) of $5.2 million inclusive of Raven Drilling
  • Net loss of $11.9 million, or $0.13 per share
  • Adjusted net loss, excluding certain non-cash items and inclusive of Raven Drilling(a) of $3.2 million, or $0.03 per share

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

Net loss for the three months ended December 31, 2012 was $11.9 million, or $0.13 per share, compared to a net loss of $5.3 million, or $0.06 per share, for the three months ended December 31, 2011.

Adjusted net loss, excluding certain non-cash items, for the three months ended December 31, 2012 was $3.2 million, or $0.03 per share, compared to adjusted net income, excluding certain non-cash items, of $0.7 million or $0.01 per share for the year ended December 31, 2011. For the three months ended December 31, 2012 and 2011, adjusted net income excludes the unrealized loss on derivative contracts of $1.5 million and $6.0 million, respectively. Also excluded is a full cost impairment on Canadian assets of $6.7 million for the three months ended December 31, 2012. Included in adjusted net income for the quarter ended December 31, 2012 is the net income from our subsidiary, Raven Drilling, LLC of $0.5 million.

Financial and Operating Results for the Twelve Months ended December 31, 2012

The twelve months ended December 31, 2012 resulted in:

  • Production of 1.4 MMBoe (3,926 Boepd), excluding Abraxas' equity interest in Blue Eagle's production (which was dissolved on August 31, 2012)
  • Production of 1.5 MMBoe (4,103 Boepd), inclusive of Abraxas' equity interest in Blue Eagle's production (which was dissolved on August 31, 2012)
  • Revenue of $68.6 million
  • Adjusted EBITDA(a) of $32.0 million inclusive of Raven Drilling
  • Adjusted Discretionary cash flow(a) of $38.9 million inclusive of Raven Drilling
  • Net loss of $18.8 million, or $0.20 per share
  • Adjusted net income, excluding certain non-cash items and inclusive of Raven Drilling(a) of $0.4 million, or $0.01 per share

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

Net loss for the year ended December 31, 2012 was $18.8 million, or $0.20 per share, compared to a net income of $13.7 million, or $0.15 per share, for the year ended December 31, 2011.

Adjusted net income, excluding certain non-cash items, for the year ended December 31, 2012 was $0.4 million, or $0.01 per share, compared to adjusted net income, excluding certain non-cash items, of $6.3 million or $0.07 per share for the year ended December 31, 2011. For the years ended December 31, 2012 and 2011, adjusted net income excludes the unrealized gain on derivative contracts of $2.7 million and $7.5 million, respectively. Also excluded is a full cost impairment on Canadian assets of $19.8 million for the year ended December 31, 2012. Included in adjusted net income for the year ended December 31, 2012 is the net income from our subsidiary, Raven Drilling, LLC of $2.1 million.

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 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 December 31, 2011 were $98.83 per barrel compared to $91.82 on December 31, 2012; therefore, the mark-to-market valuation changed considerably period to period.

Comments

Bob Watson, Abraxas' President and CEO commented, "Abraxas made great strides in 2012 improving its financial position. We reduced our outstanding borrowings by approximately $22 million by divesting our Alberta Basin properties and Nordheim Eagle Ford holdings. Although we are comfortable with our current liquidity and leverage position, we endeavor to monetize additional non-core assets and redeploy those proceeds into our core operated positions, primarily in the Bakken/Three Forks and Eagle Ford. Moreover, we are successfully executing on our plans to refocus our portfolio and drive visible growth, as evidenced by approximately 95% of our 2013 estimated capital expenditures being dedicated to our core oil development areas in the Eagle Ford and Bakken/Three Forks plays. We look forward to updating the market as we continue to deliver on our stated goals."

Conference Call

Abraxas Petroleum Corporation (NAS: AXAS) will host its fourth quarter and full year 2012 earnings conference call at 11 AM ET on March 15, 2013. To participate in the conference call, please dial 888.680.0869 and enter the passcode 76135921. 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 April 12, 2013 by dialing 888.286.8010 and entering the passcode 16895316 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, 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 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

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012   2011 2012 2011
Financial Results (In thousands except per share data):  
Revenues $ 19,069 $ 16,453 $ 68,573 $ 64,622
Adjusted EBITDA(a) 6,617 7,742 44,381 31,504
Adjusted Discretionary cash flow(a) 5,207 6,298 38,902 24,714
Net income (loss) (11,867 ) (5,260 ) (18,791 ) 13,743
Net income (loss) per share - basic $ (0.13 ) $ (0.06 ) $ (0.20 ) $ 0.15
Adjusted net income (loss), excluding certain non-cash items(a)

(3,174

)

695

448

6,267

Adjusted net income (loss), excluding certain non-cash items(a), per share - basic

$

(0.03

)

$

0.01

$

0.01

$

0.07

Weighted average shares outstanding - basic 92,148 91,590 91,914 90,151
 
Production:
Crude oil per day (Bopd) 1,910 1,564 1,758 1,479
Natural gas per day (Mcfpd) 11,410 11,248 11,194 11,567
Natural gas liquids (Bblpd) 335 111 303 77
Crude oil equivalent per day (Boepd) 4,147 3,549 3,926 3,484
Crude oil equivalent (MBoe) 382 327 1,437 1,272
Crude oil equivalent per day (Boepd) (b) 4,147 3,749 4,103 3,762
Crude oil equivalent (MBoe) (b) 382 345 1,502 1,373
 
Realized Prices, net of realized hedging activity:
Crude oil ($ per Bbl) $ 77.74 $ 77.23 $ 73.51 $ 76.11
Natural gas ($ per Mcf) 2.90 5.58 4.13 5.64
Natural gas liquids ($ per Bbl) 35.35 49.77 36.57 50.07
Crude oil equivalent ($ per Boe) 46.66 53.28 47.50 52.13
 
Expenses:
Lease operating ($ per Boe) $ 17.49 $ 19.38 $ 17.26 $ 16.97
Production taxes (% of oil and gas revenue) 10.1 % 9.3 % 9.7 % 8.9 %
General and administrative, excluding stock-based compensation ($ per Boe)

9.59

5.49

6.00

5.85

Cash interest ($ per Boe) 3.50 2.62 3.51 3.49

Depreciation, depletion and amortization ($ per Boe)

17.90

14.77

16.02

12.73

 

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

(b) Includes Abraxas' equity interest in Blue Eagle's production.

 
   

BALANCE SHEET DATA

 
(In thousands) December 31, 2012 December 31, 2011
 
Cash $ 2,061 $
Working capital (a) (27,391 ) (14,404 )
Property and equipment - net 212,832 179,552
Total assets 240,607 241,150
 
Long-term debt 124,101 126,258
Stockholders' equity (deficit) 46,700 62,651
Common shares outstanding 92,733 92,261
 

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

 
 

ABRAXAS PETROLEUM CORPORATION

CONSOLIDATED

 


STATEMENTS OF OPERATIONS

 
(In thousands except per share data) Year Ended December 31,
2012   2011   2010
 
Revenues:
Oil and gas production $ 68,499 $ 64,615 $ 58,050
Other 74   7   10  
68,573 64,622 58,060
Operating costs and expenses:
Lease operating 24,806 21,581 19,475
Production and ad valorem taxes 6,613 5,766 5,910
Depreciation, depletion, and amortization 23,016 16,194 16,212
Ceiling test impairment 19,774 4,787
General and administrative (including stock-based compensation of $2,091, $1,987, and $1,560)

10,712

 

9,433

 

8,869

 
84,921   52,974   55,253  
Operating income (loss) (16,348 ) 11,648 2,807
 
Other (income) expense:
Interest income (4 ) (7 ) (8 )
Interest expense 5,520 4,898 9,106
Amortization of deferred financing fees 937 1,762 2,479
Loss (gain) on derivative contracts - realized 459 676 (526 )
(Gain) loss on derivative contracts - unrealized (2,669 ) (7,476 ) (10,285 )
Equity in (income) loss of joint venture (2,207 ) (2,187 ) 473
Other 97   316   (119 )
2,133   (2,018 ) 1,120  
Income (loss) before income tax (18,481 ) 13,666 1,687
Income tax benefit (expense) (310 ) 77   79  
Net income (loss) $ (18,791 ) $ 13,743   $ 1,766  
     
Net income (loss) per common share - basic $ (0.20 ) $ 0.15   $ 0.02  
Net income (loss) per common share - diluted $ (0.20 ) $ 0.15   $ 0.02  
 
Weighted average shares outstanding:
Basic 91,914 90,151 75,923
Diluted 91,914 92,244 77,224
 

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 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 operations. Accounting rules do not permit the inclusion of the net income and other components of Raven Drillings operations to be included in our consolidated results of operations and cash flow, instead, the results of Raven Drillings 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.

   
(In thousands)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012   2011 2012   2011
Operating income (loss) $ (7,190 ) $ 1,482 $ (16,348 ) $ 11,648
Depreciation, depletion and amortization 6,828 4,823 23,016 16,194
Ceiling test impairment 6,707 19,774
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