Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported
financial and operating results for the three months ended
September 30, 2017.
Financial and Operating Results for the
Three Months Ended September 30, 2017
The three months ended September 30, 2017 resulted in:
- Production of 805 MBoe (8,745
Boepd)
- Revenue of $24.7 million
- Net loss of $0.8 million, or $0.00 per
share
- Adjusted net income(a) (excluding
certain non-cash items) of $6.1 million, or $0.04 per share
- EBITDA(a) of $15.7 million
- Adjusted EBITDA per bank loan covenants
of $15.9 million(a)
(a) See reconciliation of non-GAAP financial
measures below.
Operational Update
Delaware Basin
In Ward County, the Company successfully completed the Caprito
83-304H, targeting the Wolfcamp A2 formation. Abraxas is flowing
back the well using a more conservative choke management protocol.
Abraxas completed 10 stages on the Caprito 83-404H before being
impacted by a mechanical issue. Abraxas remedied the issue and the
remaining 17 stages on the well are now scheduled to be completed
in mid-December 2017. Abraxas owns a 100% working interest in the
Caprito 83-304H and 83-404H.
Abraxas recently drilled and cased the Caprito 82-101H and
82-202H, in which the Company owns a 100% and 57.1% working
interest, respectively. These wells are scheduled for a November
completion. Abraxas recently set surface casing on all four wells
on the Company’s 660’ downspacing test at Caprito. The four-well
downspacing test will consist of two Wolfcamp A2 wells, the Caprito
99-301H and Caprito 99-311H, and two Wolfcamp A1 wells, the Caprito
99-202H and Caprito 99-211H. With success, Abraxas’ well spacing
will move from four wells per section to the industry norm of up to
eight wells per section in the Wolfcamp A1 and A2. Abraxas will
hold a 57.8% working interest in the Caprito 99-301H, Caprito
99-311H, Caprito 99-202H and Caprito 99-211H.
Williston Basin
In McKenzie County, North Dakota, Abraxas is currently
completing the Yellowstone 2H-4HR three-well pad, in which the
Company owns a 52% working interest. Abraxas is currently drilling
the Yellowstone 5H-7H wells in which the company owns a 52% working
interest.
South Texas
In Atascosa County, Texas, Abraxas recently completed and began
the flowback of the Shut Eye 1H. Abraxas owns a 100% working
interest in the Shut Eye 1H.
Production Update
Production for the third quarter of 2017 averaged 8,745 boepd
(5,270 barrels of oil per day, 12,006 mcf of natural gas per day,
1,474 barrels of NGLs per day). As previously announced, storms and
related midstream issues resulted in 350 Boepd of curtailed
production during the quarter. Despite these issues, August
production of 9,325 Boepd approximated Abraxas’ originally
forecasted exit rate of 9,500 Boepd.
Borrowing Base
Abraxas’ Borrowing Base was recently redetermined to $135
million. Abraxas exited the quarter ended September 30, 2017 with
$64 million drawn on this line of credit with $0.8 million in cash
providing pro forma liquidity of approximately $72 million.
Guidance and Capital Budget
As a result of the mechanical issues encountered on the Caprito
83-404H, first production from the well is likely to be delayed to
January 2018. Moreover, Abraxas continues to implement a more
conservative flowback protocol in an effort to enhance the
productivity and ultimate recovery of the Company’s wells primarily
in the Delaware Basin. This results in a longer than anticipated
flowback period before first oil is achieved from each well. For
instance, 386,294 barrels of water were pumped during the Caprito
83-304H completion. It took approximately 15 days and the
production of 13,500 barrels of load water before the Caprito
83-304H produced its first barrel of oil. As a result, Abraxas
believes the Company will witness a slower than anticipated fourth
quarter ramp. Abraxas continues to anticipate a December 2017 exit
rate of 10,750 Boepd. However, with the slower ramp in anticipated
volumes earlier in the quarter, Abraxas anticipates fourth quarter
2017 volumes to average between 9,500-10,000 Boepd. Abraxas' 2017
Capital Expenditure budget remains unchanged at $120 million.
For 2018, Abraxas anticipates capital expenditures of $90
million to approximate cash flow. The current capital expenditure
budget anticipates the completion of ten gross, five net wells in
the Bakken/Three Forks. Also in the Bakken/Three Forks, Abraxas
anticipates drilling an additional four gross, two net wells that
will be completed in 2018. In the Delaware Basin, Abraxas
anticipates completing ten gross, seven net wells targeting the
Wolfcamp/Bone Spring. Abraxas forecasts this will lead to
production of 10,000 - 12,000 Boepd or approximately 44% growth at
the midpoint of guidance. Abraxas expects to continue to materially
decrease lease operating expenses (“LOE”) with the divestiture of
numerous higher cost properties in 2017 and continued cost control.
The 2018 capital expenditure budget is subject to change depending
upon a number of factors, including the availability of drilling
equipment and personnel, economic and industry conditions at the
time of drilling, prevailing and anticipated prices for oil and
gas, the availability of sufficient capital resources for drilling
prospects, our financial results, the availability of leases on
reasonable terms and our ability to obtain permits for drilling
locations.
4Q17E
2018E Low
High Low
High Production Total (Boepd) 9,500
10,000 10,000 12,000 % Oil 63% 66% % NGL 14% 12% % Natural Gas 23%
22%
Operating Costs LOE ($/Boe) $4.00 $5.00 $4.00
$6.00 Production Tax (% Rev) 8.0% 9.0% 8.0% 9.0% Cash G&A ($mm)
$4.0 $5.0 $8.5 $12.5
CAPEX ($mm) $30 $90
2018E
Net CAPEX
($mm)
Basin/Region Delaware Basin $51.0 Bakken $33.8
Facilities/ Other
$5.2 Total $90.0
Comments
Bob Watson, President and CEO of Abraxas, commented, "We are
disappointed we ran into a mechanical issue on the Caprito 83-404H,
but are excited to get back on the well and finish the completion.
The returns during drilling, higher than anticipated pressures
encountered when stimulating the Wolfcamp B and preliminary
flowback volumes when remediating the well are all quite
encouraging. Despite the delay we still expect to achieve our
originally guided 2017 exit rate of 10,750 Boepd in December.
"Over the course of 2017, we achieved critical mass from our
production base, continued to focus our portfolio via the
divestiture of numerous non-core assets and progressed on
consolidating our acreage position in Ward County all while
maintaining a solid balance sheet. The results of these efforts can
already be seen in our financial statements. Differentials for oil,
gas and NGLs improved considerably during the quarter as our
production base shifted towards West Texas. With the divestiture of
numerous high LOE non-core legacy properties, our per unit costs
also improved with LOE averaging $5.11/Boe during the quarter. To
put that number in context, our LOE in 2012 averaged $17.26 for the
year. We expect per unit costs associated with LOE and G&A to
materially improve once again in 2018 as our production base gains
scale and we focus on our core development properties in Bakken and
Wolfcamp. The results of this focus are seen, and will continue to
be seen, in our overall operating margins and profitability. We
endeavor to continue to focus the portfolio via the divestiture of
non-core assets while redeploying this capital to grow our highest
return opportunity set primarily in the Delaware Basin. We look
forward to continuing to deliver on these efforts in 2018."
Conference Call
Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its third
quarter 2017 earnings conference call at 11 AM ET on November 9,
2017. To participate in the conference call, please dial
844.347.1028 and enter the passcode 98656347. 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 through December 7, 2017 by dialing 855.859.2056 and
entering the passcode 98656347 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 Permian Basin, Rocky Mountain, and South Texas 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.
ABRAXAS PETROLEUM
CORPORATION CONSOLIDATED FINANCIAL
HIGHLIGHTS (In thousands except per share data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Financial
Results: Revenues $ 24,722 $ 13,976 $ 56,676 $ 34,548 Net income
(loss) (770 ) (3,260 ) 20,115 (91,077 ) Net income (loss) per share
– basic 0.00 (0.02 ) 0.13 (0.77 ) Net income (loss) per share –
diluted 0.00 (0.02 ) 0.12 (0.77 ) Capital expenditures 50,910
18,966 91,363 24,632 EBITDA(a) 15,698 5,312 35,550 14,536 Adjusted
net income (loss), excluding certain non-cash items(a) 6,103 (2,938
) 13,156 (9,569 ) Adjusted net income (loss), excluding certain
non-cash items(a), per share – basic $ 0.04 $ (0.02 ) $ 0.08 $
(0.08 ) Adjusted net income (loss), excluding certain non-cash
items(a), per share – diluted $ 0.04 $ (0.02 ) $ 0.08 $ (0.08 )
Liquidity(a) 51,569 39,750 51,569 39,750 Weighted average shares
outstanding – basic 163,508 133,546 160,031 118,274 Weighted
average shares outstanding – diluted 163,508 133,546 161,597
118,274 Production from Continuing Operations: Crude oil per
day (Bblpd) 5,270 3,629 3,969 3,356 Natural gas per day (Mcfpd)
12,006 8,321 10,089 8,145 Natural gas liquids per day (Bblpd) 1,474
939 1,269 873 Crude oil equivalent per day (Boepd) 8,745 5,955
6,920 5,586 Crude oil equivalent (MBoe) 805 548 1,889 1,531
Realized Prices, net of realized hedging activity: Crude oil ($ per
Bbl) $ 46.88 $ 34.92 $ 47.51 $ 37.97 Natural gas ($ per Mcf) 1.72
1.32 1.82 1.10 Natural gas liquids ($ per Bbl) 11.03 2.83 10.27
2.90 Crude oil equivalent ($ per Boe) 32.47 23.58 31.78 24.86
Expenses: Lease operating ($ per Boe) $ 5.08 $ 8.40 $ 6.16 $
8.89 Production taxes (% of oil and gas revenue) 8.3 % 8.6 % 8.5 %
10.4 % General and administrative, excluding stock-based
compensation ($ per Boe) $ 5.35 $ 3.64 $ 4.34 $ 3.81 Cash interest
($ per Boe) 0.94 1.55 0.81 1.94
Depreciation, depletion and amortization
($ per Boe)
9.79 11.63 9.35 11.72
(a) See reconciliation of non-GAAP
financial measures below.
BALANCE SHEET DATA
(In thousands) September 30, 2017 December 31, 2016
Cash $ 819 $ — Working capital (20,475 ) (7,178 ) Property and
equipment – net 204,493 136,311 Total assets 226,605 161,648
Long-term debt 67,421 96,616 Stockholders’ equity 109,677 18,505
Common shares outstanding 165,890 135,094 Working capital
per bank loan covenants (a) (18,651 ) (4,064 ) (a)
Excludes current maturities of long-term debt and current
derivative assets and liabilities in accordance with our bank loan
covenants.
ABRAXAS
PETROLEUM CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands except per share data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Revenues:
Oil $ 21,339 $ 12,713 $ 48,153 $ 31,380 Gas 1,873 1,014 4,918 2,444
Natural gas liquids 1,495 245
3,559 693 24,707 13,972 56,630 34,517 Other
15 4 46 31
24,722 13,976 56,676 34,548 Operating costs and expenses: Lease
operating 4,089 4,599 11,628 13,609 Production and ad valorem taxes
2,045 1,200 4,823 3,602 Rig expense — 192 — 534 Depreciation,
depletion, and amortization 7,877 6,371 17,666 17,932 Impairment —
3,806 — 67,626 General and administrative (including stock-based
compensation of $750, $768, $2,499, and $2,410 respectively)
5,057 2,760 10,692 8,238
19,068 18,928 44,809
111,541 Operating income (loss) 5,654 (4,952 )
11,867 (76,993 ) Other (income) expense: Interest income — —
(1 ) (1 ) Interest expense 868 960 1,876 3,350 Amortization of
deferred financing fees 100 151 354 763 (Gain) loss on derivative
contracts 5,456 (2,429 ) (10,375 ) 10,346 (Gain) on sale of non-oil
and gas assets — (374 ) (102 )
(374 ) 6,424 (1,692 ) (8,248 )
14,084 Income (loss) before income tax (770 ) (3,260 )
20,115 (91,077 ) Income tax benefit — —
— — Net income (loss) $ (770 ) $ (3,260
) $ 20,115 $ (91,077 ) Net income (loss) per
common share - basic $ 0.00 $ (0.02 ) $ 0.13 $ (0.77 ) Net
income (loss) per common share - diluted $ 0.00 $ (0.02 ) $ 0.12 $
(0.77 ) Weighted average shares outstanding: Basic 163,508
133,546 160,031 118,274 Diluted 163,508 133,546 161,597 118,274
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") in the United States of America, EBITDA is an
appropriate measure of Abraxas' ability to satisfy capital
expenditure obligations and working capital requirements. EBITDA is
a non-GAAP financial measure as defined under SEC rules. 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. EBITDA
excludes some, but not all items that affect net income and may
vary among companies. The EBITDA presented below may not be
comparable to similarly titled measures of other companies.
EBITDA is defined as net income (loss) plus interest expense,
deferred income taxes, depreciation, depletion and amortization
expenses, impairments, unrealized gains and losses on derivative
contracts, and stock-based compensation. The following table
provides a reconciliation of EBITDA to net income (loss) for the
periods presented.
We have also disclosed Adjusted EBITDA per bank loan covenants.
Adjusted EBITDA per bank loan covenants is a non-GAAP financial
measure as defined under SEC rules. Our management believes that
information regarding Adjusted EBITDA per bank loan covenants is
material to an understanding of our financial condition and
liquidity. Adjusted EBITDA per bank loan covenants 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. Adjusted EBITDA per bank
loan covenants presented below may not be comparable to similarly
titled measures of other companies.
(In thousands)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Net income (loss) $
(770 ) $ (3,260 ) $ 20,115 $ (91,077 ) Net interest expense 868 960
1,875 3,349 Depreciation, depletion and amortization 7,877 6,371
17,666 17,932 Amortization of deferred financing fees 100 151 354
763 Impairment — 3,806 — 67,626 Stock-based compensation 750 768
2,499 2,410 Unrealized (gain) loss on derivative contracts
6,873 (3,484 )
(6,959 ) 13,533 EBITDA $
15,698 $ 5,312 $ 35,550
$ 14,536 EBITDA $ 15,698 $ 5,312 $ 35,550 $
14,536 Realized loss on derivative monetization — — — 349 Monetized
derivative contracts — — — 14,370 Expenses related to equity
offering/loan amendments/permitted acquisitions
199 82 4,692
1,747 Adjusted EBITDA per bank
loan covenants $ 15,897 $ 5,394
$ 40,242 $ 31,002
This release also includes a discussion of “adjusted net income
(loss), excluding certain non-cash items,” which is also 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. 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. The
calculation of adjusted net income (loss), excluding certain non
cash items presented below may not be comparable to similarly
titled measures of other companies.
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, which requires Abraxas to 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, 2016 were $48.24 per barrel compared
to $51.67 on September 30, 2017; therefore, the mark-to-market
valuation changed considerably from period to period.
(In thousands)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017 2016 Net income (loss) $
(770 ) $ (3,260 ) $ 20,115 $ (91,077 ) Impairment — 3,806 — 67,626
Unrealized (gain) loss on derivative contracts 6,873 (3,484 )
(6,959 ) 13,533 Realized loss on derivative monetization
— — —
349 Adjusted net income (loss),
excluding certain non-cash items $ 6,103
$ (2,938 ) $ 13,156 $ (9,569 )
Net income (loss) per share – basic $ 0.00
$ (0.02 ) $ 0.13 $ (0.77 ) Net
income (loss) per share – diluted $ 0.00
$ (0.02 ) $ 0.12 $ (0.77 )
Adjusted net income (loss), excluding certain non-cash items, per
share – basic $ 0.04 $ (0.02 ) $
0.08 $ (0.08 ) Adjusted net income (loss),
excluding certain non-cash items, per share – diluted
$ 0.04 $ (0.02 ) $ 0.08 $
(0.08 )
Liquidity is calculated by adding the net funds available under
our revolving credit facility and cash and cash equivalents. We use
liquidity as an indicator of the Company's ability to fund
development and exploration activities. However, this measurement
has limitations. This measurement can vary from year-to-year for
the Company and can vary among companies based on what is or is not
included in the measurement on a company's financial statements.
This measurement is provided in addition to, and not as an
alternative for, and should be read in conjunction with, the
information contained in our financial statements prepared in
accordance with GAAP (including the notes), included in our SEC
filings and posted on our website.
(In thousands) September 30, 2017
September 30, 2016 Borrowing base $ 115,000 $ 130,000 Cash
and cash equivalents 819 — Revolving credit facility - outstanding
borrowings (64,000 ) (90,000 ) Outstanding letters of credit
(250 ) (250 ) Liquidity
$ 51,569 $ 39,750
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107006669/en/
Abraxas Petroleum CorporationGeoffrey King, 210-490-4788Vice
President – Chief Financial Officergking@abraxaspetroleum.comwww.abraxaspetroleum.com
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