AXAS Abraxas Petroleum Corporation (CE)

Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and nine months ended September 30, 2019.

Financial Highlights for the Three Months Ended September 30, 2019:

The three months ended September 30, 2019 resulted in:

• Production of 9,899 Boepd (up 3% vs 2Q19)
• Revenue of $31.5 million (down 9% vs 2Q19)
• Net income of $17.0 million, or $ 0.10 per share (up 45% vs 2Q19)
• Adjusted net income (excluding certain non-cash items)(a) of $ 3.8 million, or $ 0.02 per share (down 10% vs 2Q19)
• EBITDA(a) of $20.0 million (up 1% vs 2Q19)

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

Operational Highlights for the Three Months Ended September 30, 2019:

Delaware Basin, West Texas

In Ward County, the two-well Greasewood NE Pad was successfully fracked with 64 stages between the two wells and recently began flowback. These wells, in which the Company owns a 100 percent interest, have approximately 4,800-foot laterals, one in the Third Bone Spring and the other in the Wolfcamp B. On our slow flowback protocol, the wells combined are currently producing over 1,000 barrels of oil and 1.2 million cubic feet of gas per day (1,200 barrels of oil equivalent per day). We expect them to reach peak rate in December 2019. As previously discussed, we have only three gross (2.5 net) wells to drill in the Delaware Basin next year to maintain 100 percent held-by production status across all of our leasehold in both the Bakken and the Delaware.

Abraxas management and board of directors are carefully weighing the important objectives of free cash flow generation, debt reduction, and production growth. A final decision on the capital budget for 2020 will be made at a later date. Company management and board of directors are also considering operating and overhead cost efficiencies that could be realized in connection with the 2020 capital budget.

Subsequent to quarter end, the Company has closed the two previously announced divestitures of non-core assets for total proceeds of $7.9 million. One sale represents a complete exit from South Texas and the other was small non-operated position in Reeves County, Texas. All of the proceeds were used to pay down borrowings under the Company's reserve-based loan.

Conference Call

Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its third quarter 2019 earnings conference call at 3 PM ET on Monday, November 18, 2019. To participate in the conference call, please dial 844.347.1028 and enter the passcode 5486613. 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 18, 2019 by dialing 855.859.2056 and entering the passcode 5486613 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, and Rocky Mountain 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

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Financial Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

31,536

 

 

$

41,625

 

 

$

100,870

 

 

$

113,171

 

Net income

 

 

17,041

 

 

 

1,777

 

 

 

3,264

 

 

 

2,002

 

Net income per share - basic

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

Net income per share - diluted

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

Capital expenditures - acquisitions(a)

 

 

-

 

 

 

14,635

 

 

 

-

 

 

 

36,404

 

Capital expenditures - drilling and completion(a)

 

 

25,417

 

 

 

36,974

 

 

 

85,797

 

 

 

91,326

 

Total net capital expenditures(a)

 

 

25,417

 

 

 

51,609

 

 

 

85,797

 

 

 

127,730

 

EBITDA(a)

 

 

19,999

 

 

 

22,252

 

 

 

59,436

 

 

 

63,740

 

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

 

 

3,797

 

 

 

8,617

 

 

 

10,597

 

 

 

26,642

 

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

 

$

0.02

 

 

$

0.05

 

 

$

0.06

 

 

$

0.16

 

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

 

$

0.02

 

 

$

0.05

 

 

$

0.06

 

 

$

0.16

 

Liquidity(a)

 

 

16,389

 

 

 

53,750

 

 

 

16,389

 

 

 

53,750

 

Weighted average shares outstanding - basic

 

 

166,572

 

 

 

165,392

 

 

 

166,046

 

 

 

165,083

 

Weighted average shares outstanding - diluted

 

 

169,599

 

 

 

167,629

 

 

 

166,493

 

 

 

167,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production from Continuing Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil per day (Bblpd)

 

 

6,519

 

 

 

6,542

 

 

 

6,851

 

 

 

6,025

 

Natural gas per day (Mcfpd)

 

 

10,892

 

 

 

12,797

 

 

 

11,181

 

 

 

12,754

 

Natural gas liquids per day (Bblpd)

 

 

1,565

 

 

 

1,395

 

 

 

1,397

 

 

 

1,428

 

Crude oil equivalent per day (Boepd)

 

 

9,899

 

 

 

10,070

 

 

 

10,112

 

 

 

9,579

 

Crude oil equivalent (Mboe)

 

 

911

 

 

 

926

 

 

 

2,760

 

 

 

2,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized Prices, net of realized hedging activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil ($ per Bbl)

 

$

50.13

 

 

$

50.36

 

 

$

49.90

 

 

$

51.02

 

Natural gas ($ per Mcf)

 

 

0.23

 

 

 

1.61

 

 

 

0.69

 

 

 

1.69

 

Natural gas liquids ($ per Bbl)

 

 

0.42

 

 

 

20.86

 

 

 

3.63

 

 

 

17.27

 

Crude oil equivalent ($ per Boe)

 

 

33.33

 

 

 

37.66

 

 

 

35.07

 

 

 

36.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating ($ per Boe)

 

$

6.20

 

 

$

7.26

 

 

$

7.77

 

 

$

6.51

 

Production taxes (% of oil and gas revenue)

 

 

7.9

%

 

 

8.6

%

 

 

8.4

%

 

 

8.1

%

General and administrative, excluding stock-based compensation ($ per Boe)

 

$

2.45

 

 

$

2.33

 

 

$

2.45

 

 

$

2.48

 

Cash interest ($ per Boe)

 

 

3.21

 

 

 

2.11

 

 

 

3.14

 

 

 

1.78

 

Depreciation, depletion and amortization, excluding accretion ($ per Boe)

 

 

13.72

 

 

 

11.89

 

 

 

13.78

 

 

 

11.41

 

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

ABRAXAS PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEET DATA

 

(In thousands)

 

September 30, 2019

 

 

December 31, 2018

 

Cash

 

$

7,139

 

 

$

867

 

Working capital

 

 

(15,554

)

 

 

(13,632

)

Property and equipment - net

 

 

386,336

 

 

 

363,218

 

Total assets

 

 

441,024

 

 

 

425,890

 

 

 

 

 

 

 

 

 

 

Long-term debt - less current maturities

 

 

200,883

 

 

 

183,091

 

Stockholders' equity

 

 

171,573

 

 

 

166,510

 

Common shares outstanding

 

 

168,400

 

 

 

166,714

 

 

 

 

 

 

 

 

 

 

Working capital per bank loan covenants(a)

 

 

(14,106

)

 

 

(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

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil

 

$

31,228

 

 

$

37,039

 

 

$

97,355

 

 

$

100,505

 

Gas

 

 

226

 

 

 

1,897

 

 

 

2,107

 

 

 

5,882

 

Natural gas liquids

 

 

61

 

 

 

2,677

 

 

 

1,382

 

 

 

6,735

 

Other

 

 

21

 

 

 

12

 

 

 

26

 

 

 

49

 

 

 

 

31,536

 

 

 

41,625

 

 

 

100,870

 

 

 

113,171

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating

 

 

5,647

 

 

 

6,724

 

 

 

21,447

 

 

 

17,023

 

Production and ad valorem taxes

 

 

2,495

 

 

 

3,569

 

 

 

8,519

 

 

 

9,167

 

Rig expense

 

 

-

 

 

 

-

 

 

 

672

 

 

 

-

 

Depreciation, depletion, amortization and accretion

 

 

12,605

 

 

 

11,142

 

 

 

38,367

 

 

 

30,241

 

General and administrative (including stock-based compensation of $504, $428, $1,398, and $1,894 respectively)

 

 

2,736

 

 

 

2,586

 

 

 

8,169

 

 

 

8,379

 

Total operating cost and expenses

 

 

23,483

 

 

 

24,021

 

 

 

77,174

 

 

 

64,810

 

Operating income

 

 

8,053

 

 

 

17,604

 

 

 

23,696

 

 

 

48,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(27

)

 

 

-

 

 

 

(50

)

 

 

(1

)

Interest expense

 

 

2,951

 

 

 

1,952

 

 

 

8,706

 

 

 

4,644

 

Amortization of deferred financing fees

 

 

169

 

 

 

113

 

 

 

418

 

 

 

320

 

(Gain) Loss on derivative contracts

 

 

(12,081

)

 

 

13,568

 

 

 

11,358

 

 

 

41,215

 

Loss on sale of non-oil and gas assets

 

 

-

 

 

 

194

 

 

 

-

 

 

 

181

 

Total other (income) expense

 

 

(8,988

)

 

 

15,827

 

 

 

20,432

 

 

 

46,359

 

Income (loss) before income tax

 

 

17,041

 

 

 

1,777

 

 

 

3,264

 

 

 

2,002

 

Income tax (expense) benefit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income

 

$

17,041

 

 

$

1,777

 

 

$

3,264

 

 

$

2,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - basic

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share - diluted

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

166,572

 

 

 

165,392

 

 

 

166,046

 

 

 

165,083

 

Diluted

 

 

169,599

 

 

 

167,629

 

 

 

166,493

 

 

 

167,865

 

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

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

17,041

 

 

$

1,777

 

 

$

3,264

 

 

$

2,002

 

Net interest expense

 

 

2,924

 

 

 

1,952

 

 

 

8,656

 

 

 

4,643

 

Depreciation, depletion, amortization and accretion

 

 

12,605

 

 

 

11,142

 

 

 

38,367

 

 

 

30,241

 

Amortization of deferred financing fees

 

 

169

 

 

 

113

 

 

 

418

 

 

 

320

 

Stock-based compensation

 

 

504

 

 

 

428

 

 

 

1,398

 

 

 

1,894

 

Unrealized (gain) loss on derivative contracts

 

 

(13,244

)

 

 

6,840

 

 

 

7,333

 

 

 

24,640

 

EBITDA

 

$

19,999

 

 

$

22,252

 

 

$

59,436

 

 

$

63,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

19,999

 

 

$

22,252

 

 

$

59,436

 

 

$

63,740

 

Expenses related to equity offering/loan amendments/permitted acquisitions

 

 

28

 

 

 

105

 

 

 

92

 

 

 

317

 

Adjusted EBITDA per bank loan covenants

 

$

20,027

 

 

$

22,357

 

 

$

59,528

 

 

$

64,057

 

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 September 28, 2018 were $73.25 per barrel compared to $54.07 on September 30, 2019; therefore, the mark-to-market valuation changed from period to period.

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

17,041

 

 

$

1,777

 

 

$

3,264

 

 

$

2,002

 

Unrealized (gain) loss on derivative contracts

 

 

(13,244

)

 

 

6,840

 

 

 

7,333

 

 

 

24,640

 

Adjusted net income, excluding certain non-cash items

 

$

3,797

 

 

$

8,617

 

 

$

10,597

 

 

$

26,642

 

Net income per share - basic

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

Net income per share - diluted

 

$

0.10

 

 

$

0.01

 

 

$

0.02

 

 

$

0.01

 

Adjusted net income, excluding certain non-cash items, per share - basic

 

$

0.02

 

 

$

0.05

 

 

$

0.06

 

 

$

0.16

 

Adjusted net income, excluding certain non-cash items, per share - diluted

 

$

0.02

 

 

$

0.05

 

 

$

0.06

 

 

$

0.16

 

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, 2019

 

 

September 30, 2018

 

Borrowing base

 

$

207,500

 

 

$

200,000

 

Cash and cash equivalents

 

 

7,139

 

 

 

-

 

Revolving credit facility- outstanding borrowings

 

 

(198,000

)

 

 

(146,000

)

Outstanding letters of credit

 

 

(250

)

 

 

(250

)

Liquidity

 

$

16,389

 

 

$

53,750

 

Net capital expenditures is calculated by removing capital expenditures related to changes in accounts payable from period to period and settlements of asset retirement obligations. The following table provides a reconciliation of capital expenditures shown in the investing activities section of the condensed consolidated statement of cash flows to net capital expenditures applicable to our 2019 capital budget.

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Capital expenditures as shown on statement of cash flows

 

$

26,044

 

 

$

59,172

 

 

$

89,621

 

 

$

132,989

 

(Decrease) in accounts payable related to capital expenditures

 

 

(197

)

 

 

(6,092

)

 

 

(3,445

)

 

 

(3,823

)

(Decrease) in asset retirement obligations

 

 

(430

)

 

 

(1,471

)

 

 

(379

)

 

 

(1,436

)

Net capital expenditures

 

$

25,417

 

 

$

51,609

 

 

$

85,797

 

 

$

127,730

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191113005812/en/

Steven P. Harris Vice President - Chief Financial Officer Telephone 210.490.4788 sharris@abraxaspetroleum.com www.abraxaspetroleum.com