Abraxas Petroleum Corporation (AMEX:ABP) today reported financial
and operating results for the three months ended March 31, 2008 and
provided an operational update. For financial reporting purposes,
results are consolidated and include Abraxas Petroleum Corporation
and its subsidiaries (�Abraxas Petroleum� or �ABP�), and Abraxas
Energy Partners, L.P. and its subsidiaries (�Abraxas Energy�, �ABE�
or the �Partnership�). Abraxas Petroleum owns 47% of the
Partnership and records minority interest for the portion that it
does not own. On a consolidated basis, the three months ended March
31, 2008 resulted in: Production of 366.6 MBoe (4,029 Boepd);
Revenue(a) of $21.3 million; EBITDA(a)(b) of $14.3 million; Cash
flow(a)(b) of $12.1 million; Net loss of $9.0 million, or $0.18 per
share; and Net income (excluding non-cash mark-to-market hedge
accounting) of $3.3 million, or $0.07 per share. On a stand-alone
basis for Abraxas Petroleum (which exclude the results of Abraxas
Energy), the three months ended March 31, 2008 resulted in:
Production of 46.3 MBoe (509 Boepd); Revenue of $3.4 million ($5.5
million including cash distributions); EBITDA(b) of $1.3 million
($3.5 million including cash distributions); Cash flow(b) of $1.4
million ($3.5 million including cash distributions); and Net income
of $0.5 million, or $0.01 per share ($2.7 million including cash
distributions, or $0.05 per share). (a) Excludes unrealized hedge
impact. (b) See reconciliation of non-GAAP financial measures
below. Abraxas Petroleum will receive $2.1 million in cash
distributions on or about May 15, 2008 from the Partnership, which
is attributable to the first quarter of 2008, based on its current
ownership of approximately 5.36 million units, or 47% of the
Partnership. This cash distribution increased 6.6% over the prior
quarter due to a corresponding increase in distributions per unit.
Cash distributions received from the Partnership, together with
cash on hand, cash flow from operations and availability under our
credit facility, are the sources of liquidity for Abraxas
Petroleum. On a consolidated basis, net income excluding non-cash
mark-to-market hedge accounting for the quarter ended March 31,
2008 was $3.3 million, or $0.07 per share, compared to a net loss
of $859,000, or $0.02 per share during the same quarter of 2007.
Net income (loss) excluding non-cash mark-to-market hedge
accounting excludes unrealized hedge gains or losses that are based
on mark-to-market valuations which are non-cash in nature. The
unrealized hedge loss for the quarter ended March 31, 2008 is
attributable to the hedges entered into by the Partnership and does
not impact Abraxas Petroleum on a stand-alone basis. Operations
South Texas: In Karnes County, the Gisler #1, an exploratory well
targeting the Wilcox formation, was drilled, completed and placed
on-line in March 2008 at 3.2 MMcfepd. The well was subsequently
fracture stimulated and is currently producing at a gross rate of
3.5 MMcfepd. Abraxas Petroleum owns a 63% working interest in this
well. In Lavaca County, the Henson #3H, a horizontal development
well targeting the Edwards formation, was drilled to an approximate
total measured depth of 17,550�, including a 3,500� lateral. The
multi-stage fracture stimulation is scheduled for later this month.
Abraxas Energy owns a 75% working interest in this well. In DeWitt
County, the Nordheim #2H (referred to as the #1H in a previous
release), a horizontal development well targeting the Edwards
formation, is currently scheduled to spud within the next 30 days.
Abraxas Petroleum owns a 75% working interest in this well, after
selling a 25% working interest to a partner. West Texas: In Midland
County, the Beulah Coleman #13, a development well targeting the
Devonian and Spraberry formations, is currently drilling below
7,200�. The total depth of the well is projected to be
approximately 11,700�. Abraxas Petroleum owns a 100% working
interest in this well. In Wyoming, we currently anticipate
receiving approval on at least two of our drilling permits during
the second quarter of 2008 provided these proposed locations are
not within the breeding and nesting sites of certain protected
wildlife species. Drilling and re-completion activity continues on
numerous non-operated wells on the properties acquired from St.
Mary Land & Exploration Company in January 2008. These
properties are principally located in the Rockies and Mid-Continent
regions of the U.S. On average, Abraxas Energy owns a relatively
small working interest in these wells. �During the first quarter
our production levels increased each month despite weather related
issues and we expect that trend to continue throughout 2008 as we
continue to ramp up our drilling activity. Our March production (on
a stand-alone basis) averaged 634 Boepd, a 9% increase over the
last seven months of 2007, and our April production (on a
stand-alone basis) averaged approximately 700 Boepd. On a
stand-alone basis, we have zero debt and no commodity price hedges
in place which allows us to fully participate in the run-up in
commodity prices over the past several months. After forming the
Partnership in May 2007 and resulting GAAP accounting treatment
which prescribes the presentation of our reported financial results
on a consolidated basis, we endeavored to provide investors a
manner in which to evaluate Abraxas Petroleum on a stand-alone
basis. The attached financial statements include operating and
financial results of the consolidated entity as well as on a
stand-alone basis for both Abraxas Petroleum and Abraxas Energy �
please read �Basis of Presentation� for a detailed explanation. We
will continue to present our financials in this manner to provide
the investment community a transparent representation of our
operating results and financial position,� commented Bob Watson,
Abraxas� President and CEO. Conference Call Abraxas invites you to
participate in a conference call on Tuesday, May 13, 2008, at 2:00
p.m. CT to discuss the contents of this release and respond to
questions. Please dial 1-888-679-8034, passcode 55710960, 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 podcast and 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 crude
oil and natural gas exploration and production company with
operations principally in Texas and Wyoming. Abraxas Petroleum
Corporation also owns a 47% interest in an upstream master limited
partnership, Abraxas Energy Partners, L.P., which entitles Abraxas
Petroleum Corporation to receive its proportionate share of cash
distributions made by Abraxas Energy Partners, L.P. 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 natural
gas and crude oil. In addition, Abraxas� future natural gas and
crude oil 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 BASIS OF PRESENTATION For
financial reporting purposes, accounting principles generally
accepted in the United States of America (GAAP) require Abraxas
Petroleum to consolidate (and incorporate) the financial results of
Abraxas Energy and its subsidiaries into Abraxas Petroleum�s
financial results. While this presentation may be proper under
GAAP, it can be confusing to the investment community. As a result,
all operating and financial results are presented herein on a
consolidated basis and on a stand-alone basis for the current
period. The stand-alone results include ABP without ABE, which
reflect operating and financial results of Abraxas Petroleum and
its subsidiaries on a stand-alone basis and ABE, which reflect
operating and financial results of Abraxas Energy and its
subsidiaries on a stand-alone basis. The consolidating entries
column reflects adjustments to the stand-alone presentations in the
consolidation treatment under GAAP. Abraxas Energy has
approximately 85% of its projected oil and gas production from its
net proved developed producing reserves hedged with NYMEX-based
fixed priced swaps through December 2011 at volume weighted average
prices of $84.54 per barrel of oil and $8.32 per Mcf of gas. As
commodity prices fluctuate, the hedges are valued against current
market prices at the end of each reporting period in accordance
with Statement of Financial Accounting Standards No. 133,
�Accounting for Derivative Instruments and Hedging Activities,� as
amended and interpreted, and require Abraxas Energy to either
record an unrealized hedge gain or loss based on the calculated
value difference from the previous period end valuation. These
unrealized hedge gains or losses are non-cash items and may
fluctuate drastically period to period. During the first quarter of
2008, Abraxas Energy recorded a non-cash unrealized hedge loss of
$26.1 million. ABRAXAS PETROLEUM CORPORATION CONSOLIDATED FINANCIAL
HIGHLIGHTS (UNAUDITED) (In thousands except per share data): �
Three Months Ended March 31, 2008 � 2007 � Financial Results:
Revenues(a) $ 21,287 $ 11,780 EBITDA(a)(b) 14,322 7,503 Cash
flow(a)(b) 12,072 3,393 Net loss (8,991 ) (988 ) Net loss per share
� basic $ (0.18 ) $ (0.02 ) Net income (loss) excluding non-cash
mark-to-market hedge accounting 3,317 (859 ) Net income (loss)
excluding non-cash mark-to-market hedge accounting per share �
basic $ 0.07 $ (0.02 ) Weighted average shares outstanding � basic
48,872 42,681 � Production: Crude oil per day (Bopd) 1,274 557
Natural gas per day (Mcfpd) 16,528 16,127 Crude oil equivalents per
day (Boepd) 4,029 3,245 Crude oil equivalents (Boe) 366,646 292,074
� Realized Prices, net of realized hedge impact: Crude oil ($ per
Bbl) $ 83.19 $ 54.63 Natural gas ($ per Mcf) 7.53 6.00 � Expenses:
Lease operating ($ per Boe) $ 9.00 $ 6.47 Production taxes (% of
oil and gas revenue) 8.7 % 9.3 % General and administrative,
excluding stock-based compensation ($ per Boe) 4.24 3.92 Cash
interest ($ per Boe) 6.14 14.07 Depreciation, depletion and
amortization($ per Boe) 13.89 12.51 (a) Excludes unrealized hedge
impact. (b) See reconciliation of non-GAAP financial measures
below. BALANCE SHEET DATA (In thousands) March 31, 2008 December
31, 2007 � Cash $ 6,571 $ 18,936 Working capital (deficit) (2,046)
(a) 11,348 Property and equipment � net 249,792 117,027 Total
assets 274,412 147,119 � Long-term debt 115,600 45,900
Stockholders� equity 47,265 55,847 Common shares outstanding 49,054
49,021 (a) Excludes $50.0 million of debt outstanding under the
Partnership�s Subordinated Credit Facility due January 31, 2009.
ABRAXAS PETROLEUM CORPORATION CONSOLIDATING FINANCIAL HIGHLIGHTS
(UNAUDITED) (In thousands except per share data): � Three Months
Ended March 31, 2008 � ABP without ABE � ABE � Consolidating
Entries Consolidated Financial Results: Revenues(a) $ 3,354 $
17,933 $ � $ 21,287 EBITDA(a)(b) 1,329 12,993 � 14,322 Cash
flow(a)(b) 1,406 10,666 � 12,072 Net income (loss) 543 (20,200 )
10,666 (c) (8,991 ) Net loss per share � basic $ (0.18 ) Net income
(loss) excluding non-cash mark-to-market hedge accounting 543 5,875
(3,101 ) (d) 3,317 Net income excluding non-cash mark-to-market
hedge accounting per share � basic $ 0.07 Weighted average shares
outstanding � basic 48,872 � Production: Crude oil per day (Bopd)
223 1,051 � 1,274 Natural gas per day (Mcfpd) 1,714 14,814 � 16,528
Crude oil equivalents per day (Boepd) 509 3,520 � 4,029 Crude oil
equivalents (Boe) 46,321 320,325 � 366,646 � Realized Prices, net
of realized hedge impact: Crude oil ($ per Bbl) $ 92.46 $ 81.22 $ �
$ 83.19 Natural gas ($ per Mcf) 7.49 7.54 � 7.53 � Expenses: Lease
operating ($ per Boe) $ 11.35 $ 8.66 $ � $ 9.00 Production taxes (%
of oil and gas revenue) 8.2 % 8.8 % � 8.7 % General and
administrative, excluding stock-based compensation ($ per Boe)
22.43 1.60 � 4.24 Cash interest (income) ($ per Boe) (1.66 ) 7.26 �
6.14 Depreciation, depletion and amortization($ per Boe) 12.74
14.06 � 13.89 (a) Excludes unrealized hedge impact. (b) See
reconciliation of non-GAAP financial measures below. (c) Minority
interest (53% of the Partnership�s net loss for the period). (d)
Minority interest (53% of the Partnership�s net income for the
period excluding non-cash mark-to-market hedge accounting). Note:
The financial results presented above of ABP without ABE for the
three months ended March 31, 2008 do not include cash distributions
received from the Partnership. BALANCE SHEET DATA (In thousands)
March 31, 2008 ABP without ABE � ABE Consolidating Entries
Consolidated � Cash $ 5,439 $ 1,132 $ � $ 6,571 Working capital
(deficit) 2,128 (4,174 ) (a) � (2,046 ) (a) Property and equipment
� net 30,907 218,885 � 249,792 Total assets 75,682 231,502 (32,772
) (b) 274,412 � Long-term debt � 115,600 � 115,600 Stockholders�
equity (deficit) 58,445 25,081 (36,261 ) (b) 47,265 Common shares
outstanding 49,054 (a) Excludes $50.0 million of debt outstanding
under the Partnership�s Subordinated Credit Facility due January
31, 2009. (b) Minority interest share of basis in Partnership.
ABRAXAS PETROLEUM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (In thousands except per share data) � Three Months
Ended March 31, 2008 � 2007 � Revenues: Oil and gas production
revenues $ 21,863 $ 11,532 Realized hedge loss (883 ) (81 )
Unrealized hedge loss (26,075 ) (129 ) Rig revenues 306 328 Other 1
� 1 � (4,788 ) 11,651 Operating costs and expenses: Lease operating
3,301 1,889 Production taxes 1,901 1,073 Depreciation, depletion,
and amortization 5,094 3,655 Rig operations 210 171 General and
administrative (including stock- based compensation of $246 and
$172) 1,799 � 1,316 � 12,305 � 8,104 � Operating income (loss)
(17,093 ) 3,547 � Other (income) expense: Interest income (96 ) (14
) Interest expense 2,466 4,151 Amortization of deferred financing
fees 194 � 398 � 2,564 � 4,535 � Loss before minority interest
(19,657 ) (988 ) Minority interest 10,666 � � � Net loss $ (8,991 )
$ (988 ) � � Net loss per common share - basic $ (0.18 ) $ (0.02 )
Net loss per common share - diluted $ (0.18 ) $ (0.02 ) � Weighted
average shares outstanding: Basic 48,872 42,681 Diluted 48,872
42,681 ABRAXAS PETROLEUM CORPORATION CONSOLIDATING STATEMENTS OF
OPERATIONS (UNAUDITED) (In thousands except per share data) � Three
Months Ended March 31, 2008 ABP without ABE � ABE � Consolidating
Entries � Consolidated Revenues: � Oil and gas production revenues
$ 3,047 $ 18,816 $ � $ 21,863 Realized hedge loss � (883 ) � (883 )
Unrealized hedge loss � (26,075 ) � (26,075 ) Rig revenues 306 � �
306 Other � 1 � � � � � � � 1 � 3,354 (8,142 ) � (4,788 ) Operating
costs and expenses: Lease operating 526 2,775 � 3,301 Production
taxes 250 1,651 � 1,901 Depreciation, depletion, and amortization
591 4,503 � 5,094 Rig operations 210 � � 210 General and
administrative (including stock- based compensation of $246 and $0)
� 1,285 � � 514 � � � � 1,799 � � 2,862 � � 9,443 � � � � 12,305 �
Operating income (loss) 492 (17,585 ) � (17,093 ) � Other (income)
expense: Interest income (83 ) (13 ) � (96 ) Interest expense 22
2,444 � 2,466 Amortization of deferred financing fees � 10 � � 184
� � � 194 � (51 ) � 2,615 � � � � 2,564 � Income (loss) before
minority interest � 543 � � (20,200 ) � � � (19,657 ) Minority
interest � � � � � � � 10,666 � 10,666 � Net income (loss) $ 543 �
$ (20,200 ) $ 10,666 $ (8,991 ) � Net loss per common share - basic
$ (0.18 ) Net loss per common share - diluted $ (0.18 ) � Weighted
average shares outstanding: Basic 48,872 Diluted 48,872 Note: The
financial results presented above of ABP without ABE for the three
months ended March 31, 2008 do not include cash distributions
received from the Partnership. ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED 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. Cash flow
and EBITDA are non-GAAP financial measures as defined under SEC
rules. Abraxas' 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 cash flow and EBITDA exclude some,
but not all items that affect net income and may vary among
companies, the 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 cash flow and
EBITDA; therefore, operating income is utilized as the starting
point for these reconciliations. Cash flow is defined as operating
income (loss) plus depletion, depreciation and amortization
expenses, non-cash expenses, unrealized (gains) losses on hedges
and cash portion of other income (expense) and cash interest. The
following table provides a reconciliation of cash flow to operating
income for the periods presented. (In thousands) Three Months Ended
March 31, 2008 � 2007 � Operating income (loss) $ (17,093 ) $ 3,547
Unrealized hedge loss 26,075 129 Depreciation, depletion, and
amortization 5,094 3,655 Stock-based compensation 246 172 Cash
interest (2,250 ) � (4,110 ) Cash flow $ 12,072 � � $ 3,393 �
EBITDA is defined as net income (loss) plus interest expense,
depletion, depreciation and amortization expenses, deferred income
taxes and other non-cash items. The following table provides a
reconciliation of EBITDA to operating income for the periods
presented � see consolidated statements of operations for a
reconciliation of net income to operating income. (In thousands)
Three Months Ended March 31, 2008 � 2007 � Operating income (loss)
$ (17,093 ) $ 3,547 Unrealized hedge loss 26,075 129 Depreciation,
depletion, and amortization 5,094 3,655 Stock-based compensation
246 � � 172 EBITDA $ 14,322 � � $ 7,503 This release also includes
a discussion of �net income (loss) excluding non-cash
mark-to-market hedge accounting�, which is a non-GAAP financial
measure as defined under SEC rules. The following table provides a
reconciliation of net income (loss) excluding non-cash
mark-to-market hedge accounting 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 net income (loss) excluding non-cash mark-to-market
hedge accounting. (In thousands) � Three Months Ended March 31,
2008 2007 � Net loss $ (8,991 ) $ (988 ) Unrealized hedge loss
12,308 � (a) 129 � Net income (loss) excluding non-cash
mark-to-market hedge accounting $ 3,317 � � $ (859 ) Net loss per
share � basic $ (0.18 ) � $ (0.02 ) Net income (loss) excluding
non-cash mark-to-market hedge accounting per share � basic $ 0.07 �
� $ (0.02 ) (a) Abraxas� share (47%) of the Partnership�s
unrealized hedge loss for the period. ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING 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. Cash flow
and EBITDA are non-GAAP financial measures as defined under SEC
rules. Abraxas' 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 cash flow and EBITDA exclude some,
but not all items that affect net income and may vary among
companies, the 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 cash flow and
EBITDA; therefore, operating income is utilized as the starting
point for these reconciliations. Cash flow is defined as operating
income (loss) plus depletion, depreciation and amortization
expenses, non-cash expenses, unrealized (gains) losses on hedges
and cash portion of other income (expense) and cash interest. The
following table provides a reconciliation of cash flow to operating
income for the periods presented. (In thousands) � Three Months
Ended March 31, 2008 ABP without ABE � ABE � � Consolidated �
Operating income (loss) $ 492 $ (17,585 ) $ (17,093 ) Unrealized
hedge loss � 26,075 26,075 Depreciation, depletion, and
amortization 591 4,503 5,094 Stock-based compensation 246 � 246
Cash interest � 77 � (2,327 ) � � (2,250 ) Cash flow � $ 1,406 � $
10,666 � � $ 12,072 � EBITDA is defined as net income (loss) plus
interest expense, depletion, depreciation and amortization
expenses, deferred income taxes and other non-cash items. The
following table provides a reconciliation of EBITDA to operating
income for the periods presented � see consolidated statements of
operations for a reconciliation of net income to operating income.
(In thousands) � Three Months Ended March 31, 2008 ABE without ABE
� ABE � � Consolidated � Operating income (loss) $ 492 $ (17,585 )
$ (17,093 ) Unrealized hedge loss � 26,075 26,075 Depreciation,
depletion, and amortization 591 4,503 5,094 Stock-based
compensation � 246 � � � � � 246 � EBITDA � $ 1,329 � $ 12,993 � �
$ 14,322 � This release also includes a discussion of �net income
(loss) excluding non-cash mark-to-market hedge accounting�, which
is a non-GAAP financial measure as defined under SEC rules. The
following table provides a reconciliation of net income (loss)
excluding non-cash mark-to-market hedge accounting 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 net income (loss) excluding non-cash
mark-to-market hedge accounting. (In thousands) � Three Months
Ended March 31, 2008 ABP without ABE � ABE � Consolidating Entries
Consolidated � Net income (loss) $ 543 $ (20,200 ) $ 10,666 (a) $
(8,991 ) Unrealized hedge loss � � � 26,075 � � � (13,767 ) (b) �
12,308 � Net income excluding non-cash mark-to-market hedge
accounting � $ 543 � $ 5,875 � � $ (3,101 ) � $ 3,317 � Net loss
per share � basic � � � � � � � � � � $ (0.18 ) Net income
excluding non-cash mark-to-market hedge accounting per share �
basic � � � � � � � � � � $ 0.07 � (a) Minority interest (53% of
the Partnership�s net loss for the period). (b) Minority interest
share (53%) of the Partnership�s unrealized hedge loss for the
period.
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