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
November 4, 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 November 4, 2015 Abraxas issued a press release announcing its Third Quarter 2015 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: November 4, 2015




3



ABRAXAS PETROLEUM CORPORATION
www.abraxaspetroleum.com



Exhibit 99.1
NEWS RELEASE

Abraxas Announces Third Quarter 2015 Results

SAN ANTONIO (November 4, 2015) – Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and nine months ended September 30, 2015.

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 September 30, 2015
The three months ended September 30, 2015 resulted in:
•
Production of 552 MBoe (6,004 Boepd)
•
Revenue of $17.8 million inclusive of realized hedge settlements
•
Adjusted EBITDA(a) of $10.0 million inclusive of Raven Drilling
•
Adjusted discretionary cash flow(a) of $9.2 million inclusive of Raven Drilling
•
Net loss of $52.4 million, or $0.50 per share
•
Adjusted net loss(a), excluding certain non-cash items and inclusive of Raven Drilling of $2.7 million, or $(0.03) per share

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

Net loss for the three months ended September 30, 2015 was $52.4 million, or $0.50 per share, compared to net income of $25.4 million, or $0.24 per share, for the three months ended September 30, 2014.

Adjusted net loss, excluding certain non-cash items, for the three months ended September 30, 2015 was $2.7 million, or $(0.03) per share, compared to an adjusted net income, excluding certain non-cash items, of $16.1 million or $0.15 per share for the three months ended September 30, 2014. For the three months ended September 30, 2015 and 2014, adjusted net income (loss) excludes the unrealized gain on derivative contracts of $10.5 million and $10.0 million, respectively. Included in adjusted net income (loss) is the net income for the quarters ended September 30, 2015 and September 30, 2014 from our subsidiary, Raven Drilling, LLC of $0.2 million and $0.6 million, respectively. For the three months ended September 30, 2015 adjusted net loss excludes the loss attributable to the ceiling test impairment of $59.9 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 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, 2014 were $91.16 per barrel compared to $45.09 on September 30, 2015; therefore, the mark-to-market valuation changed considerably period to period.

Comments
Bob Watson, Abraxas' President and CEO commented, “Our focus on driving down cash expenses benefited our financials as lease operating expenses (LOE) came in below the low end of the range at $9.48/Boe.   We continue to look for ways to optimize the portfolio and drive costs out of the business, which with success will allow us to maintain solid operating margins despite the distressed commodity price environment.”


“Despite significant shut in time associated with the postponed Bakken fracs and gas capture issues, our production steadied late in the third quarter. Looking into the fourth quarter, we will benefit from the addition of high margin barrels following the successful completion of three additional wells in the Bakken/Three Forks. Furthermore, the planned third party infrastructure expansion in the Bakken scheduled for the fourth quarter, should eliminate the volatile production performance we experienced in 2015.  We look forward to updating the street with updated 2015 guidance when we achieve stabilized rates from our new completions.”


Conference Call
Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its third quarter 2015 earnings conference call at 11 AM ET on November 4, 2015. To participate in the conference call, please dial 888.680.0892 and enter the passcode 94482371. 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 2, 2015 by dialing 888.286.8010 and entering the passcode 31071155 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 September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Financial Results:
 
 
 
 
 
 
 
 
Revenues
 
$
16,077

 
$
43,874

 
$
53,682

 
$
102,584

Adjusted EBITDA(a)    
 
10,043

 
31,804

 
35,189

 
70,861

Adjusted discretionary cash flow(a)   
 
9,161

 
31,342

 
32,711

 
69,171

Capital expenditures
 
12,931

 
44,733

 
52,614

 
137,462

Net income (loss)
 
(52,372
)
 
25,399

 
(59,691
)
 
33,137

Net income (loss) per share – basic
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.34

Net income (loss) per share – diluted
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.33

Adjusted net income (loss), excluding certain non-cash items(a)
 
(2,726
)
 
16,124

 
(4,031
)
 
33,749

Adjusted net income (loss), excluding certain non-cash items(a) , per share – basic
 
$
(0.03
)
 
$
0.15

 
$
(0.04
)
 
$
0.35

Adjusted net income (loss), excluding certain non-cash items(a), per share – diluted
 
$
(0.03
)
 
$
0.15

 
$
(0.04
)
 
$
0.34

Weighted average shares outstanding – basic
 
104,614

 
104,408

 
104,561

 
96,742

Weighted average shares outstanding – diluted
 
104,614

 
107,671

 
104,561

 
99,531

 
 
 
 
 
 
 
 
 
Production from Continuing Operations:
 
 
 
 
 
 
 
 
Crude oil per day (Bblpd)
 
3,967

 
4,743

 
4,030

 
3,570

Natural gas per day (Mcfpd)
 
8,154

 
9,086

 
8,229

 
7,645

Natural gas liquids per day (Bblpd)
 
678

 
752

 
618

 
517

Crude oil equivalent per day (Boepd)
 
6,004

 
7,010

 
6,020

 
5,361

Crude oil equivalent (MBoe)
 
552

 
645

 
1,643

 
1,463

 
 
 
 
 
 
 
 
 
Realized Prices, net of realized hedging activity:
 
 
 
 
 
 
 
 
Crude oil ($ per Bbl)
 
$
43.81

 
$
86.81

 
$
49.15

 
$
88.24

Natural gas ($ per Mcf)
 
2.02

 
3.86

 
2.39

 
4.21

Natural gas liquids ($ per Bbl)
 
5.07

 
32.11

 
9.32

 
36.25

Crude oil equivalent ($ per Boe)
 
32.26

 
67.19

 
37.12

 
68.26

 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Lease operating ($ per Boe)
 
$
9.48

 
$
11.06

 
$
10.83

 
$
12.55

Production taxes (% of oil and gas revenue)
 
9.8%
 
8.5%
 
9.8%
 
8.6%
General and administrative, excluding stock-based compensation ($ per Boe)
 
3.29

 
2.79

 
3.71

 
4.01

Cash interest ($ per Boe)
 
1.53

 
0.63

 
1.43

 
1.03

Depreciation, depletion and amortization
($ per Boe)
 
18.40

 
21.45

 
18.89

 
20.80


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







BALANCE SHEET DATA




(In thousands)
September 30, 2015
 
December 31, 2014
 
 
 
 
Cash
$
—
 
 
 
$
3,772
 
 
Working capital (a)    
(21,463)
 
 
 
(52,832)
 
 
Property and equipment – net
284,420
 
 
 
322,879
 
 
Total assets
322,423
 
 
 
374,899
 
 
 
 
 
 
Long-term debt
124,991
 
 
 
76,554
 
 
Stockholders’ equity
151,058
 
 
 
207,495
 
 
Common shares outstanding
106,346
 
 
 
106,187
 
 
(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)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Oil and gas production
 
$
16,075

 
$
43,865

 
$
53,658

 
$
102,521

 
Other
 
2

 
9

 
24

 
63

 
 
 
16,077

 
43,874

 
53,682

 
102,584

 
Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Lease operating
 
5,236

 
7,131

 
17,806

 
18,361

 
Production and ad valorem taxes
 
1,569

 
3,744

 
5,255

 
8,786

 
Depreciation, depletion, and amortization
 
10,165

 
13,836

 
31,044

 
30,441

 
Impairment
 
59,891

 
—

 
59,891

 
—

 
General and administrative (including stock-based compensation of $835, $582, $3,085, and $2,050, respectively)
 
2,654

 
2,379

 
9,190

 
7,915

 
 
 
79,515

 
27,090

 
123,186

 
65,503

 
Operating (loss) income
 
(63,438
)
 
16,784

 
(69,504
)
 
37,081

 
 
 
 
 
 
 
 
 
 
 
Other (income) expense:
 
 
 
 
 
 
 
 
 
Interest income
 
—

 
—

 
(1
)
 
(1
)
 
Interest expense
 
992

 
548

 
2,784

 
1,927

 
Amortization of deferred financing fees
 
161

 
150

 
481

 
779

 
(Gain) loss on derivative contracts - realized
 
(1,745
)
 
534

 
(6,899
)
 
2,624

 
(Gain) on derivative contracts - unrealized
 
(10,474
)
 
(9,979
)
 
(6,198
)
 
(1,899
)
 
Other
 
—

 
(8
)
 
—

 
(8
)
 
 
 
(11,066
)
 
(8,755
)
 
(9,833
)
 
3,422

 
(Loss) income from continuing operations before income tax
 
(52,372
)
 
25,539

 
(59,671
)
 
33,659

 
Income tax (expense) benefit
 
—

 
—

 
—

 
—

 
Net (loss) income from continuing operations
 
(52,372
)
 
25,539

 
(59,671
)
 
33,659

 
Net loss from discontinued operations - net of tax
 
—

 
(140
)
 
(20
)
 
(522
)
 
Net (loss) income
 
$
(52,372
)
 
$
25,399

 
$
(59,691
)
 
$
33,137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income per common share - basic
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.35

 
Discontinued operations
 
$
—

 
$
—

 
$
—

 
$
(0.01
)
 
Net (loss) income per common share - basic
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
Net (loss) income per common share - diluted
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.34

 
Discontinued operations
 
$
—

 
$
—

 
$
—

 
$
(0.01
)
 
Net (loss) income per common share - diluted
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
 
104,614

 
104,408

 
104,561

 
96,742

 
Diluted
 
104,614

 
107,671

 
104,561

 
99,531

 





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 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 (loss) for the periods presented.

(In thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Operating income (loss)
 
$
(63,438
)
 
$
16,784

 
$
(69,504
)
 
$
37,081

Depreciation, depletion and amortization
 
10,165

 
13,836

 
31,044

 
30,441

Impairment
 
59,891

 
—

 
59,891

 
—

Stock-based compensation
 
835

 
582

 
3,085

 
2,050

Realized gain (loss) on derivative contracts (a)
 
1,745

 
(534
)
 
7,346

 
(2,624
)
Cash interest
 
(847
)
 
(406
)
 
(2,357
)
 
(1,506
)
Discretionary cash flow
 
$
8,351

 
$
30,262

 
$
29,505

 
$
65,442

Cash flow from Raven Drilling operations
 
810

 
1,080

 
3,206

 
3,729

Adjusted discretionary cash flow
 
$
9,161

 
$
31,342

 
$
32,711

 
$
69,171


(a) Realized gain (loss) on derivative contracts does not include a loss of $0.4 million for the nine months ended 2015
related to the monetization of the July-December 2015 fixed price oil swaps. The monetization resulted in cash proceeds of
$4.6 million.


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 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 (loss) for the periods presented.

(In thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Net income (loss)
 
$
(52,372
)
 
$
25,399

 
$
(59,691
)
 
$
33,137

Net interest expense
 
992

 
548

 
2,783

 
1,926

Depreciation, depletion and amortization
 
10,165

 
13,836

 
31,044

 
30,441

Amortization of deferred financing fees
 
161

 
150

 
481

 
779

Stock-based compensation
 
835

 
582

 
3,085

 
2,050

Impairment
 
59,891

 
—

 
59,891

 
—

Unrealized (gain) on derivative contracts
 
(10,474
)
 
(9,979
)
 
(6,198
)
 
(1,899
)
Realized loss on derivative monetization
 
—

 
—

 
447

 
—

Loss from discontinued operations
 
—

 
140

 
20

 
522

Other non cash items
 
—

 
(8
)
 
—

 
(8
)
EBITDA
 
$
9,198

 
$
30,668

 
$
31,862

 
$
66,948

Raven Drilling EBITDA
 
845

 
1,136

 
3,327

 
3,913

Adjusted EBITDA
 
$
10,043

 
$
31,804

 
$
35,189

 
$
70,861

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA
 
$
9,198

 
$
30,668

 
$
31,862

 
$
66,948

Monetized derivative contracts
 
—

 
—

 
4,610

 
—

Adjusted EBITDA per bank covenants
 
$
9,198

 
$
30,668

 
$
36,472

 
$
66,948

 
 
 
 
 
 
 
 
 

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 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.

(In thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(52,372
)
 
$
25,399

 
$
(59,691
)
 
$
33,137

Impairment
 
59,891

 
—

 
59,891

 
—

Net income related to Raven Drilling
 
229

 
564

 
1,500

 
1,989

Unrealized (gain) on derivative contracts
 
(10,474
)
 
(9,979
)
 
(6,198
)
 
(1,899
)
Realized loss on derivative monetization
 
—

 
—

 
447

 
—

Loss from discontinued operations
 
—

 
140

 
20

 
522

Adjusted net income (loss), excluding certain non-cash items
 
$
(2,726
)
 
$
16,124

 
$
(4,031
)
 
$
33,749

Adjusted net income (loss), excluding certain non-cash items, per share – basic
 
$
(0.03
)
 
$
0.15

 
$
(0.04
)
 
$
0.35

Adjusted net income (loss), excluding certain non-cash items, per share – diluted
 
$
(0.03
)
 
$
0.15

 
$
(0.04
)
 
$
0.34

Net income (loss) per share – basic
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.34

Net income (loss) per share – diluted
 
$
(0.50
)
 
$
0.24

 
$
(0.57
)
 
$
0.33


 

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