Abraxas Announces 2011 Results and Provides an Operational Update

Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and twelve months ended December 31, 2011 and provided an operational update.

Financial and Operating Results

Including Abraxas’ equity interest in Blue Eagle’s production, the twelve months ended December 31, 2011 resulted in:

Production of 1.4 MMBoe (3,762 Boepd), of which 45% was oil or natural gas liquids

The twelve months ended December 31, 2011 resulted in:

Production of 1.3 MMBoe (3,484 Boepd), excluding Abraxas’ equity interest in Blue Eagle’s production
Revenue of $64.6 million
EBITDA(a) of $31.5 million
Discretionary cash flow(a) of $24.7 million
Net income of $13.7 million, or $0.15 per share
Adjusted net income(a) of $6.3 million, or $0.07 per share, excluding certain non-cash items

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

Net income for the year ended December 31, 2011 was $13.7 million, or $0.15 per share, compared to a net income of $1.8 million, or $0.02 per share, for the year ended December 31, 2010.

Adjusted net income, excluding certain non-cash items, for the year ended December 31, 2011 was $6.3 million, or $0.07 per share, compared to adjusted net loss, excluding certain non-cash items, of $3.7 million or $0.05 per share for the year ended December 31, 2010. For the year ended December 31, 2011, adjusted net income excludes the unrealized gains on derivative contracts of $7.5 million. For the year ended December 31, 2010, adjusted net loss excludes the ceiling test impairment of $4.8 million and unrealized gains on derivative contracts of $10.3 million.

Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and may fluctuate drastically 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, 2011 were $98.83 per barrel compared to $79.20 on September 30, 2011; therefore, the mark-to-market valuation changed considerably period to period.

Operational Update

Rocky Mountain – North Dakota / Montana