Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported
financial and operating results for the three and six months ended
June 30, 2019.
Financial Highlights for the Three Months
Ended June 30, 2019
The three months ended June 30, 2019 resulted in:
- Production of 871 MBoe (9,572 Boepd)
- Revenue of $34.8 million
- Net income of $11.7 million, or $0.07 per share
- Adjusted net income (excluding certain non-cash items)(a) of
$4.2 million, or $0.02 per share
- EBITDA(a) of $19.8 million
- Adjusted EBITDA per bank loan covenants(a) of $19.8
million
(a) See reconciliation of non-GAAP financial
measures below.
Operational Highlights for the Three
Months Ended June 30, 2019:
Production (sales) for the quarter ended June 30, 2019 averaged
9,572 barrels of oil equivalent per day (Boepd) down 12 percent
from the average for the quarter ended March 31, 2019.
Approximately 71 percent was crude oil compared to 67 percent in
the first quarter. Seven new wells were placed on production during
the second quarter. Production was negatively impacted by the
shut-in of wells in North Dakota to accommodate the fracing of our
Lillibridge NW pad. We are close to restoring production on all
wells on this pad and have used the opportunity to perform
maintenance operations on older pad wells with the goal of
enhancing production moving forward. Realized production was also
impacted by the Company’s monetization of roughly 350 net Boepd of
non-operated Bakken assets during the quarter, and roughly 650 net
Boepd of shut-in natural gas volumes in West Texas during the
quarter due to low natural gas prices realizations in the
region.
Williston Basin, North Dakota
In North Dakota, the four-well Lillibridge NW pad (in which
Abraxas owns an approximate average 33 percent working interest)
was successfully completed and placed on production. This four well
pad has averaged 745 Boepd per well over its first month of
production and continues to increase following the Company’s choke
management protocol.
Raven Rig #1 has commenced drilling operations on the Abraxas
six-well Jore Fed Extension pad, in which Abraxas owns an
approximate average 90 percent working interest. Timing of first
production from this pad will depend on weather, oil prices, and
gas takeaway capacity.
Delaware Basin, West Texas
Operations in the Delaware Basin of West Texas continue to
proceed smoothly. In Winkler County Abraxas successfully brought
online the Hackberry #201H (5,000-foot lateral in the Wolfcamp
A-1), in which the Company owns a 75 percent working interest. In
Ward County, the two-well Woodberry pad (5,000-foot laterals in the
Wolfcamp A-1 and 3rd Bone Spring) have been completed and are
beginning their flowback with encouraging initial production rates.
Both wells were drilled and completed under budget.
On the Greasewood pad, in which Abraxas owns a 100 percent
working interest, two 5,000-foot laterals in the Third Bone Spring
and the Wolfcamp B are drilling the lateral sections with frac
operations scheduled to commence in September. As the Greasewood
wells represent the last remaining obligation wells for the Company
for 2019, upon completion, the rig will be released giving the
Company time to work on production optimization on the twenty plus
producing wells in the area.
Response to Saltstone Capital Management
Letter
Abraxas welcomes open communications with its shareholders and
considers input that may advance the Company’s goal of enhancing
shareholder value. While it is the Company’s policy not to comment
on specific discussions with shareholders, it is important to note
that members of the Senior Management and Board of Directors of
Abraxas have held multiple discussions with Saltstone to better
understand their views.
While we expect communications with Saltstone may continue, the
Company is focused on evaluating and, if deemed appropriate,
executing strategies to enhance value for all Abraxas shareholders.
The Board has and will continue to explore a wide range of
potential avenues to increase Abraxas stockholder value. No
decision has been made with regards to any alternatives, and there
can be no assurance that this ongoing assessment process will
result in any transaction or transactions.
Conference Call
Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its second
quarter 2019 earnings conference call at 4 PM ET on Thursday,
August 8, 2019. To participate in the conference call, please dial
844.347.1028 and enter the passcode 8808839. 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 September 8, 2019 by dialing 855.859.2056 and
entering the passcode 8808839 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
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands except
per share data)
2019
2018
2019
2018
Financial Results:
Revenue
$
34,820
$
30,916
$
69,334
$
71,546
Net income (loss)
11,678
(10,554
)
(13,777
)
225
Net income (loss) per share - basic
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Net income (loss) per share - diluted
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Capital expenditures - acquisitions
-
7,476
-
21,769
Capital expenditures - drilling and
completion
33,922
37,290
63,897
54,352
Total capital expenditures
33,922
44,766
63,897
76,121
EBITDA(a)
19,754
14,472
39,436
41,487
Adjusted net income, excluding certain
non-cash items(a)
4,152
3,151
6,799
18,024
Adjusted net income, excluding certain
non-cash items, per share - basic(a)
$
0.02
$
0.02
$
0.04
$
0.11
Adjusted net income, excluding certain
non-cash items, per share - diluted(a)
$
0.02
$
0.02
$
0.04
$
0.11
Liquidity(a)
34,250
63,632
34,250
63,632
Weighted average shares outstanding -
basic
166,491
165,162
165,727
164,812
Weighted average shares outstanding -
diluted
167,349
165,162
165,727
167,715
Production from Continuing Operations:
Crude oil per day (Bblpd)
6,791
4,821
7,020
5,763
Natural gas per day (Mcfpd)
9,883
12,290
11,328
12,732
Natural gas liquids per day (Bblpd)
1,134
1,318
1,311
1,445
Crude oil equivalent per day (Boepd)
9,572
8,188
10,219
9,330
Crude oil equivalent (Mboe)
871
745
1,850
1,689
Realized Prices, net of realized hedging
activity:
Crude oil ($ per Bbl)
$
52.20
$
48.81
$
49.79
$
51.40
Natural gas ($ per Mcf)
0.45
1.44
0.92
1.73
Natural gas liquids ($ per Bbl)
2.57
15.29
5.57
15.51
Crude oil equivalent ($ per Boe)
37.81
33.36
35.93
36.51
Expenses:
Lease operating ($ per Boe)
$
9.26
$
7.69
$
8.54
$
6.10
Production taxes (% of oil and gas
revenue)
8.4
%
8.0
%
8.7
%
7.8
%
General and administrative, excluding
stock-based compensation ($ per Boe)
$
2.51
$
2.93
$
2.45
$
2.56
Cash interest ($ per Boe)
3.17
2.00
3.10
1.59
Depreciation, depletion and amortization,
excluding accretion ($ per Boe)
13.87
11.68
13.81
11.15
(a) See reconciliation of
non-GAAP financial measures below.
ABRAXAS PETROLEUM
CORPORATION
CONSOLIDATED
BALANCE SHEET DATA
(In
thousands)
June 30, 2019
December 31, 2018
Cash
$
-
$
867
Working capital
(35,889
)
(13,632
)
Property and equipment - net
381,250
363,218
Total assets
419,348
425,890
Long-term debt - less current
maturities
185,953
183,091
Stockholders' equity
154,028
166,510
Common shares outstanding
168,452
166,714
Working capital per bank loan
covenants(a)
(28,347
)
(22,351
)
(a) Excludes current maturities of
long-term debt and current derivative assets and liabilities in
accordance with our bank loan covenants. This working capital
calculation excludes the unused commitment amount which is included
for our current ratio calculation.
ABRAXAS PETROLEUM
CORPORATION
CONSOLIDATED
STATEMENTS OF
OPERATIONS
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands except
per share data)
2019
2018
2019
2018
Revenues:
Oil
$
34,146
$
27,472
$
66,127
$
63,466
Gas
408
1,608
1,881
3,985
Natural gas liquids
265
1,835
1,321
4,058
Other
1
1
5
37
34,820
30,916
69,334
71,546
Operating costs and expenses:
Lease operating
8,066
5,730
15,800
10,299
Production and ad valorem taxes
2,926
2,485
6,024
5,598
Rig expense
-
-
672
-
Depreciation, depletion, amortization and
accretion
12,188
8,839
25,762
19,099
General and administrative (including
stock-based compensation of $521, $879, $894, and $1,466
respectively)
2,705
3,065
5,433
5,793
25,885
20,119
53,691
40,789
Operating income
8,935
10,797
15,643
30,757
Other (income) expense:
Interest expense
2,765
1,492
5,732
2,691
Amortization of deferred financing
fees
128
111
249
207
(Gain) loss on derivative contracts
(5,636
)
19,763
23,439
27,646
(Gain) on sale of non-oil and gas
assets
-
(15
)
-
(12
)
(2,743
)
21,351
29,420
30,532
Income (loss) before income tax
11,678
(10,554
)
(13,777
)
225
Income tax (expense) benefit
-
-
-
-
Net income (loss)
$
11,678
$
(10,554
)
$
(13,777
)
$
225
Net income (loss) per common share -
basic
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Net income (loss) per common share -
diluted
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Weighted average shares outstanding:
Basic
166,491
165,162
165,727
164,812
Diluted
167,349
165,162
165,727
167,715
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
defined as net income or loss plus interest expense, deferred
income taxes, depreciation, depletion and amortization expenses,
impairments, unrealized gains and losses on derivative contracts,
and stock-based compensation. 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 or loss and may vary among companies. The
EBITDA presented below may not be comparable to similarly titled
measures of other companies.
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.
The following table provides a reconciliation of EBITDA and
Adjusted EBITDA per bank loan covenants to net income or loss for
the periods presented.
Three Months Ended June 30,
Six Months Ended June 30,
(In
thousands)
2019
2018
2019
2018
Net income (loss)
$
11,678
$
(10,554
)
$
(13,777
)
$
225
Net interest expense
2,765
1,492
5,732
2,691
Depreciation, depletion, amortization and
accretion
12,188
8,839
25,762
19,099
Amortization of deferred financing
fees
128
111
249
207
Stock-based compensation
521
879
894
1,466
Unrealized (gain) loss on derivative
contracts
(7,526
)
13,705
20,576
17,799
EBITDA
$
19,754
$
14,472
$
39,436
$
41,487
EBITDA
$
19,754
$
14,472
$
39,436
$
41,487
Expenses related to equity offering/loan
amendments/permitted acquisitions
8
9
64
212
Adjusted EBITDA per bank loan
covenants
$
19,762
$
14,481
$
39,500
$
41,699
This release also includes a discussion of “adjusted net income,
excluding certain non-cash items,” which is also a non-GAAP
financial measure as defined under SEC rules. Adjusted net income,
excluding certain non-cash items, is defined as net income or loss
plus ceiling test impairment (if any) and is adjusted for
unrealized changes in derivative contracts. The following table
provides a reconciliation of net income or loss to adjusted net
income, excluding certain non-cash items. Management believes that
net income or loss calculated in accordance with GAAP is the most
directly comparable measure to adjusted net income, excluding
certain non-cash items. The calculation of adjusted net income,
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 a gain
or loss based on the calculated value difference from the previous
period-end valuation for open contracts. For example, NYMEX oil
prices on June 30, 2018 were $74.15 per barrel compared to $58.47
on June 30, 2019; therefore, the mark-to-market valuation changed
from period to period.
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands except
per share data)
2019
2018
2019
2018
Net income (loss)
$
11,678
$
(10,554
)
$
(13,777
)
$
225
Unrealized (gain) loss on derivative
contracts
(7,526
)
13,705
20,576
17,799
Adjusted net income, excluding certain
non-cash items
$
4,152
$
3,151
$
6,799
$
18,024
Net income (loss) per share - basic
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Net income (loss) per share - diluted
$
0.07
$
(0.06
)
$
(0.08
)
$
0.00
Adjusted net income, excluding certain
non-cash items, per share - basic
$
0.02
$
0.02
$
0.04
$
0.11
Adjusted net income, excluding certain
non-cash items, per share - diluted
$
0.02
$
0.02
$
0.04
$
0.11
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)
June 30, 2019
June 30, 2018
Borrowing base
$
217,500
$
175,000
Cash and cash equivalents
-
882
Revolving credit facility- outstanding
borrowings
(183,000
)
(112,000
)
Outstanding letters of credit
(250
)
(250
)
Liquidity
$
34,250
$
63,632
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005765/en/
Steven P. Harris Vice President - Chief Financial Officer
Telephone 210.490.4788 sharris@abraxaspetroleum.com www.abraxaspetroleum.com
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