UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 5, 2015

Date of Report (Date of earliest event reported)
ABRAXAS PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
0-16071
74-2584033
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)
18803 Meisner Drive
San Antonio, Texas 78258
(210) 490-4788
(Address of principal executive offices and Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02 Results of Operations and Financial Condition
On March 5, 2015 Abraxas issued a press release announcing its 2014 results. The full text of the news release is attached hereto.

The information in this Report (including Exhibit 99.1) is furnished pursuant to Item 7.01 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of the Section. The information in this Report will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

Item 9.01 Financial Statements and Exhibits.
(d)    Exhibits.
99.1
News Release



2


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By: /s/ Geoffrey R. KIng    
Geoffrey R. King
Vice President - CFO

Dated: March 5, 2015




3



ABRAXAS PETROLEUM CORPORATION
www.abraxaspetroleum.com



Exhibit 99.1
NEWS RELEASE

Abraxas Announces 2014 Results

SAN ANTONIO (March 4, 2015) – Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and twelve months ended December 31, 2014.

On October 31, 2014 we closed on the sale of our interest in Canadian Abraxas Petroleum, ULC ("Canadian Abraxas"), a wholly-owned Canadian subsidiary of Abraxas Petroleum Corporation. As a result of the disposal of Canadian Abraxas, the results of operations of Canadian Abraxas are reflected in our Financial Statements and in this document as “Discontinued Operations” and our remaining operations are referred to in our Financial Statements and in this document as “Continuing Operations” or “Continued Operations.” Unless otherwise noted, all disclosures are for continuing operations.

Financial and Operating Results for the Three Months Ended December 31, 2014
The three months ended December 31, 2014 resulted in:
•
Production of 624 MBoe (6,785 Boepd); 626 MBoe (6,808 Boepd) inclusive of discontinued Canadian operations
•
Revenue of $34.2 million inclusive of realized hedge settlements
•
Adjusted EBITDA(a) of $20.6 million inclusive of Raven Drilling
•
Adjusted discretionary cash flow(a) of $20.0 million inclusive of Raven Drilling
•
Net income of $30.1 million, or $0.29 per share
•
Adjusted net income(a), excluding certain non-cash items and inclusive of Raven Drilling of $6.1 million, or $0.06 per share

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

Net income for the three months ended December 31, 2014 was $30.1 million, or $0.29 per share, compared to net income of $27.0 million, or $0.29 per share, for the three months ended December 31, 2013.

Adjusted net income, excluding certain non-cash items, for the three months ended December 31, 2014 was $6.1 million, or $0.06 per share, compared to an adjusted net loss, excluding certain non-cash items, of $1.4 million or $0.01 per share for the three months ended December 31, 2013. For the three months ended December 31, 2014 and 2013, adjusted net income excludes the unrealized gain on derivative contracts of $23.0 million and of $0.2 million, respectively. Included in adjusted net income is the net income for the quarters ended December 31, 2014 and December 31, 2013 from our subsidiary, Raven Drilling, LLC of $0.8 million and $0.3 million, respectively.

Financial and Operating Results for the Twelve Months Ended December 31, 2014
The twelve months ended December 31, 2014 resulted in:
•
Production of 2.1 MMBoe (5,720 Boepd); 2.1 MMBoe (5,776 Boepd) inclusive of discontinued Canadian operations
•
Revenue of $134.1 million inclusive of realized hedge settlements
•
Adjusted EBITDA(a) of $91.5 million inclusive of Raven Drilling
•
Adjusted discretionary cash flow(a) of $89.2 million inclusive of Raven Drilling
•
Net income of $63.3 million, or $0.64 per share
•
Adjusted net income(a), excluding certain non-cash items and inclusive of Raven Drilling of $39.8 million, or $0.40 per share

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



Net income for the twelve months ended December 31, 2014 was $63.3 million, or $0.64 per share, compared to net income of $38.6 million, or $0.42 per share, for the twelve months ended December 31, 2013.

Adjusted net income, excluding certain non-cash items, for the twelve months ended December 31, 2014 was $39.8 million, or $0.40 per share, compared to an adjusted net income, excluding certain non-cash items, of $13.6 million or $0.15 per share for the twelve months ended December 31, 2013. For the twelve months ended December 31, 2014 and 2013, adjusted net income excludes the unrealized gain on derivative contracts of $24.9 million and $2.6 million, respectively. Included in adjusted net income for the years ended December 31, 2014 and December 31, 2013 is the net income from our subsidiary, Raven Drilling, LLC of $2.8 million and $2.7 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 December 31, 2013 were $98.42 per barrel compared to $53.27 on December 31, 2014; therefore, the mark-to-market valuation changed considerably period to period.

Comments
Bob Watson, Abraxas' President and CEO commented, "After a tremendous 2014 for Abraxas, we now enter a very tumultuous 2015 from a commodity price perspective.  We remain focused on preserving our abundant liquidity and strong balance sheet, which we endeavor to use to our advantage in a distressed environment.   We are also blessed with an attractive asset base that presents numerous opportunities to expand our capital program should commodity prices and service costs dictate.   Although we significantly reduced LOE costs on a $/Boe basis in 2014, we look to continue that trend in 2015 by optimizing our operations in the current downturn.   We look forward to updating the market on the results of some of these efforts in the near future."
























Conference Call
Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its fourth quarter and full year 2014 earnings conference call at 11 AM ET on March 5, 2015. To participate in the conference call, please dial 888.713.4199 and enter the passcode 21930439. 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 5, 2015 by dialing 888.286.8010 and entering the passcode 67742028 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.

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.

FOR MORE INFORMATION CONTACT:
Geoffrey King/Vice President – Chief Financial Officer
Telephone 210.490.4788
gking@abraxaspetroleum.com
www.abraxaspetroleum.com




























ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED

FINANCIAL HIGHLIGHTS

(In thousands except per share data)
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Financial Results:
 
 
 
 
 
 
 
 
Revenues
 
$
31,192

 
$
22,198

 
$
133,776

 
$
92,324

Adjusted EBITDA(a)    
 
20,597

 
8,885

 
91,458

 
50,654

Adjusted discretionary cash flow(a)   
 
20,043

 
7,960

 
89,214

 
46,421

Net income
 
30,132

 
26,996

 
63,269

 
38,647

Net income per share – basic
 
$
0.29

 
$
0.29

 
$
0.64

 
$
0.42

Net income per share – diluted
 
$
0.28

 
$
0.29

 
$
0.62

 
$
0.41

Adjusted net income (loss), excluding certain non-cash items(a)
 
6,088

 
(1,384
)
 
39,837

 
13,634

Adjusted net income (loss), excluding certain non-cash items(a) , per share – basic
 
$
0.06

 
$
(0.01
)
 
$
0.40

 
$
0.15

Adjusted net income (loss), excluding certain non-cash items(a), per share – diluted
 
$
0.06

 
$
(0.01
)
 
$
0.39

 
$
0.15

Weighted average shares outstanding – basic
 
104,419

 
92,502

 
98,835

 
92,451

Weighted average shares outstanding – diluted
 
106,937

 
94,035

 
101,468

 
93,538

 
 
 
 
 
 
 
 
 
Production from Continuing Operations:
 
 
 
 
 
 
 
 
Crude oil per day (Bblpd)
 
4,560

 
2,331

 
3,819

 
2,272

Natural gas per day (Mcfpd)
 
9,027

 
7,563

 
7,994

 
9,159

Natural gas liquids per day (Bblpd)
 
720

 
415

 
568

 
402

Crude oil equivalent per day (Boepd)
 
6,785

 
4,007

 
5,720

 
4,201

Crude oil equivalent (MBoe)
 
624

 
369

 
2,088

 
1,533

 
 
 
 
 
 
 
 
 
Production inclusive of Discontinued Operations(b):
:
 
 
 
 
 
 
 
 
Crude oil per day (Bblpd)
 
4,574

 
2,375

 
3,851

 
2,329

Natural gas per day (Mcfpd)
 
9,076

 
7,738

 
8,122

 
9,373

Natural gas liquids per day (Bblpd)
 
721

 
420

 
571

 
407

Crude oil equivalent per day (Boepd)
 
6,808

 
4,084

 
5,776

 
4,298

Crude oil equivalent (MBoe)
 
626

 
376

 
2,108

 
1,569

 
 


 
 
 


 
 
Realized Prices, net of realized hedging activity:
 
 
 
 
 
 
 
 
Crude oil ($ per Bbl)
 
$
70.11

 
$
79.42

 
$
82.79

 
$
85.95

Natural gas ($ per Mcf)
 
3.70

 
3.58

 
4.07

 
3.27

Natural gas liquids ($ per Bbl)
 
22.99

 
38.27

 
32.02

 
34.32

Crude oil equivalent ($ per Boe)
 
54.49

 
56.94

 
64.14

 
56.90

 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Lease operating ($ per Boe)
 
$
12.04

 
$
17.94

 
$
12.39

 
$
15.13

Production taxes (% of oil and gas revenue)
 
8.6%
 
8.9%
 
8.6%
 
9.1%
General and administrative, excluding stock-based compensation ($ per Boe)
 
7.71

 
11.97

 
5.11

 
6.45

Cash interest ($ per Boe)
 
0.81

 
2.31

 
0.96

 
2.57

Depreciation, depletion and amortization
($ per Boe)
 
20.34

 
18.39

 
20.66

 
16.69


(a)    See reconciliation of non-GAAP financial measures below.
(b)
Includes Canadian Abraxas Petroleum ULC's production which was sold effective October 31, 2014 and is now considered discontinued operations.


BALANCE SHEET DATA


(In thousands)
December 31, 2014
 
December 31, 2013
 
 
 
 
Cash
$3,772
 
 
$5,205
 
Working capital (a)    
(52,835)
 
 
(38,401)
 
Property and equipment – net
322,879
 
 
180,645
 
Total assets
374,900
 
 
223,650
 
 
 
 
 
Long-term debt
76,554
 
 
41,790
 
Stockholders’ equity
207,493
 
 
86,906
 
Common shares outstanding
106,187
 
 
92,906
 
(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 except per share data)
 
Twelve Months Ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
Oil and gas production
 
$
133,701

 
$
92,268

 
$
65,590

Other
 
75

 
56

 
74

 
 
133,776

 
92,324

 
65,664

Operating costs and expenses:
 
 
 
 
 
 
Lease operating
 
25,875

 
23,205

 
22,578

Production and ad valorem taxes
 
11,462

 
8,437

 
6,588

Depreciation, depletion, and amortization
 
43,139

 
25,588

 
20,953

General and administrative (including stock-based compensation of $2,703, $2,114, and $2,091, respectively)
 
13,378

 
11,997

 
10,013

 
 
93,854

 
69,227

 
60,132

Operating income
 
39,922

 
23,097

 
5,532

 
 
 
 
 
 
 
Other (income) expense:
 
 
 
 
 
 
Interest income
 
(2
)
 
(3
)
 
(4
)
Interest expense
 
2,570

 
4,556

 
5,503

Amortization of deferred financing fees
 
934

 
1,367

 
937

(Gain) on sale of properties
 
—

 
(33,377
)
 
—

(Gain) loss on derivative contracts - realized
 
(361
)
 
5,035

 
459

(Gain) on derivative contracts - unrealized
 
(24,876
)
 
(2,561
)
 
(2,669
)
Earnings from equity method investment
 
—

 
—

 
(2,207
)
Other
 
(7
)
 
539

 
97

 
 
(21,742
)
 
(24,444
)
 
2,116

Net income before income tax
 
61,664

 
47,541

 
3,416

Income tax (benefit) expense
 
(287
)
 
700

 
310

Net income from continuing operations
 
$
61,951

 
$
46,841

 
$
3,106

Net income (loss) from discontinued operations - net of tax
 
$
1,318

 
$
(8,194
)
 
$
(21,897
)
Net income (loss)
 
63,269

 
38,647

 
(18,791
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per common share - basic
 
 
 
 
 
 
Continuing operations
 
$
0.63

 
$
0.51

 
$
0.04

Discontinued operations
 
$
0.01

 
$
(0.09
)
 
$
(0.24
)
Net income per common share - basic
 
$
0.64

 
$
0.42

 
$
(0.20
)
 
 
 
 
 
 
 
Net income (loss) per common share - diluted
 
 
 
 
 
 
Continuing operations
 
$
0.61

 
$
0.50

 
$
0.04

Discontinued operations
 
$
0.01

 
$
(0.09
)
 
$
(0.24
)
Net income per common share - diluted
 
$
0.62

 
$
0.41

 
$
(0.20
)
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
Basic
 
98,835

 
92,451

 
91,914

Diluted
 
101,468

 
93,538

 
91,914






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 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. Adjusted discretionary cash flow is defined as discretionary cash flow, plus cash flow from Raven Drilling’s operations. Accounting rules do not permit the inclusion of the net income 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 for the periods presented.

(In thousands)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
Operating income
 
$
2,842

 
$
1,969

 
$
39,922

 
$
23,097

Depreciation, depletion and amortization
 
12,698

 
6,781

 
43,139

 
25,588

Stock-based compensation
 
653

 
452

 
2,703

 
2,114

Realized gain (loss) on derivative contracts
 
2,984

 
(1,203
)
 
361

 
(5,035
)
Cash interest
 
(503
)
 
(852
)
 
(2,009
)
 
(3,938
)
Discretionary cash flow
 
$
18,674

 
$
7,147

 
$
84,116

 
$
41,826

Cash flow from Raven Drilling operations
 
1,369

 
813

 
5,098

 
4,595

Adjusted discretionary cash flow
 
$
20,043

 
$
7,960

 
$
89,214

 
$
46,421




EBITDA is defined as net income 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 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. The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net income for the periods presented.

(In thousands)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
Net income
 
$
30,132

 
$
26,996

 
$
63,269

 
$
38,647

Net interest expense
 
643

 
997

 
2,568

 
4,553

Income tax (benefit) expense
 
(287
)
 
614

 
(287
)
 
700

Depreciation, depletion and amortization
 
12,698

 
6,781

 
43,139

 
25,588

Amortization of deferred financing fees
 
155

 
347

 
934

 
1,367

Stock-based compensation
 
653

 
452

 
2,703

 
2,114

Unrealized (gain) on derivative contracts
 
(22,977
)
 
(187
)
 
(24,876
)
 
(2,561
)
Other non-cash items
 
—

 
534

 
(7
)
 
539

(Gain) loss on sale of discontinuing operations
 
(1,840
)
 
4,843

 
(1,318
)
 
8,194

(Gain) on sale of properties
 
—

 
(33,377
)
 
—

 
(33,377
)
EBITDA
 
$
19,177

 
$
8,000

 
$
86,125

 
$
45,764

Raven Drilling EBITDA
 
1,420

 
885

 
5,333

 
4,890

Adjusted EBITDA
 
$
20,597

 
$
8,885

 
$
91,458

 
$
50,654


This release also includes a discussion of “adjusted net income, 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, excluding ceiling test impairment and unrealized changes in derivative contracts and net income related to Raven Drilling, LLC capitalized to the full cost pool, to net income for the periods presented. Management believes that net income calculated in accordance with GAAP is the most directly comparable measure to adjusted net income, excluding certain non-cash items.

(In thousands)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Net income
 
$
30,132

 
$
26,996

 
$
63,269

 
$
38,647

Net income related to Raven Drilling
 
773

 
341

 
2,762

 
2,731

Unrealized (gain) on derivative contracts
 
(22,977
)
 
(187
)
 
(24,876
)
 
(2,561
)
(Gain) loss on sale of discontinuing operations
 
(1,840
)
 
4,843

 
(1,318
)
 
8,194

(Gain) on sale of properties
 
—

 
(33,377
)
 
—

 
(33,377
)
Adjusted net income (loss), excluding certain non-cash items
 
$
6,088

 
$
(1,384
)
 
$
39,837

 
$
13,634

Adjusted net income (loss), excluding certain non-cash items, per share – basic
 
$
0.06

 
$
(0.01
)
 
$
0.40

 
$
0.15

Adjusted net income (loss), excluding certain non-cash items, per share – diluted
 
$
0.06

 
$
(0.01
)
 
$
0.39

 
$
0.15

Net income per share – basic
 
$
0.29

 
$
0.29

 
$
0.64

 
$
0.42

Net income per share – diluted
 
$
0.28

 
$
0.29

 
$
0.62

 
$
0.41


 

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