Abraxas Reports Third Quarter 2008 Results
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SAN ANTONIO--(BUSINESS WIRE)--
Abraxas Petroleum Corporation (NASDAQ: AXAS) today reported financial and operating results for the three and nine months ended September 30, 2008 and provided an operational update.
Herein, we refer to Abraxas Petroleum Corporation and its subsidiaries as "Abraxas Petroleum" or "AXAS" and Abraxas Energy Partners, L.P. and its subsidiaries as "Abraxas Energy", "AXLP" or the "Partnership."
On a stand-alone basis for Abraxas Petroleum (which exclude the results of Abraxas Energy), the three months ended September 30, 2008 resulted in:
-- Production of 60.6 MBoe (658 Boepd);
-- Revenue of $4.9 million ($7.3 million including cash
distributions);
-- EBITDA(a) of $2.7 million ($5.1 million including cash
distributions);
-- Cash flow(a) of $2.7 million ($5.0 million including cash
distributions); and
-- Net income of $1.5 million, or $0.03 per share ($3.9 million
including cash distributions, or $0.08 per share).
For financial reporting purposes, results are consolidated and include Abraxas Petroleum and Abraxas Energy. Abraxas Petroleum owns 47% of the Partnership and records minority interest for the portion that it does not own. On a consolidated basis, the three months ended September 30, 2008 resulted in:
-- Production of 417.0 MBoe (4,532 Boepd);
-- Revenue of $29.2 million;
-- EBITDA(a) of $20.1 million;
-- Cash flow(a) of $17.6 million;
-- Net income of $70.8 million, or $1.44 per share; and
-- Adjusted net income of $2.8 million, or $0.06 per share,
excluding the non-minority interest share of the non-cash
change in derivative fair value in the amount of $39.7 million
and the gain attributable to the minority interest loss that
exceeded the minority interest equity capital in the
Partnership in Q2 2008 the amount of $28.2 million.
(a) See reconciliation of non-GAAP financial measures below.
On a consolidated basis, adjusted net income, excluding the non-cash change in derivative fair value and the gain associated with the minority interest loss in Q2 2008, for the quarter ended September 30, 2008 was $2.8 million, or $0.06 per share, compared to adjusted net income, excluding the non-cash change in derivative fair value, of $2.7 million or $0.05 per share during the same quarter of 2007. Adjusted net income excluding the non-cash change in derivative fair value excludes the unrealized gains or losses on derivative contracts that are based on mark-to-market valuations which are non-cash in nature. The unrealized gain on derivative contracts for the quarter ended September 30, 2008 is attributable to the hedging activity of the Partnership and does not impact Abraxas Petroleum on a stand-alone basis. These unrealized gains or losses on derivative contracts are non-cash items and may fluctuate drastically period to period. During the third quarter of 2008, Abraxas Energy recorded a non-cash change in derivative fair value of $84.1 million.
Cash Distribution from Affiliate
Abraxas Energy Partners, L.P., the master limited partnership formed by Abraxas Petroleum in May 2007, declared a cash distribution of $0.44 per unit for the third quarter of 2008. The distribution was approximately 1% higher than the Partnership's distribution for the second quarter of 2008 of $0.4375 per unit. The distribution will be made on or about November 14, 2008 to unitholders of record at the close of business on November 7, 2008. Abraxas Petroleum owns approximately 47% of the outstanding units and will receive $2.4 million in cash distributions from its ownership interest in Abraxas Energy for the third quarter of 2008.
Operations
Wyoming:
-- In Brooks Draw, the Lakeside #1H, a horizontal well targeting
the Turner sandstone was drilled to a total measured depth of
approximately 12,500', including a 3,800' lateral. A liner
with eight isolation packers has been set in the lateral
section after oil and gas were encountered while drilling and
a multi-stage fracture stimulation will be scheduled in the
fourth quarter of 2008 after fluid sensitivity study results
are received and evaluated. Abraxas Petroleum owns a 100%
working interest in this well.
South Texas:
-- In DeWitt County, the Nordheim #2H, a horizontal development
well targeting the Edwards formation was drilled to a total
measured depth of approximately 17,100', including a 3,000'
lateral. A liner with seven isolation packers has been set in
the lateral section after encouraging indications of gas were
encountered while drilling and a multi-stage fracture
stimulation will be scheduled in the fourth quarter of 2008
pending availability of frac sand and completion of pipeline
hookup. Abraxas Petroleum owns a 75% working interest in this
well.
-- In Lavaca County, the Henson #2H, a horizontal Edwards well,
was recently re-completed with a multi-stage fracture
stimulation and is currently recovering frac fluid. Abraxas
Energy owns a 75% working interest in this well.
-- In Bee County, the Muckleroy #1, a re-entry well was
successfully cleaned out to 9,500', completed in the Wilcox
sand, and is currently producing nominal amounts of gas.
Abraxas Petroleum owns a 100% working interest in this well.
West Texas:
-- In Midland County, the Beulah Coleman #13, a development well
targeting the Devonian and Spraberry formations was fracture
stimulated in the Devonian and is currently making commercial
quantities of oil and gas. Abraxas Petroleum owns a 100%
working interest in this well.
-- In Scurry County, three wells of the four-well program on our
Huddleston lease have been drilled to total depths of
approximately 3,500', completed in the Clearfork / Glorietta
formations and each well is currently producing 10 - 25
barrels of oil per day while recovering frac fluid. The fourth
well is expected to reach total depth this week. Abraxas
Petroleum owns a 100% working interest in each of these wells.
-- In Coke County, a three-well program in our Millican Reef Unit
targeting the Strawn formation commenced drilling last week.
Abraxas Petroleum owns a 92% working interest in each of these
wells.
Drilling and re-completion activity continues on numerous non-operated wells on the properties acquired from St. Mary Land & Exploration Company in January 2008. These properties are principally located in the Rockies and Mid-Continent regions of the U.S. On average, Abraxas Energy owns a relatively small working interest in these wells.
"Although our third quarter production was negatively impacted by shut-ins associated with Hurricane Gustav and Ike, we were very active from an operational stand-point and the impact from those projects will be partially reflected in the fourth quarter with the full impact coming in the first quarter of 2009, as we experienced unexpected delays in certain services, such as frac sand, which delayed completions on several key wells drilled during the third quarter. We look forward to sharing the results of these projects as they are known together with the issuance of guidance after the more impactful wells have been brought on-line. While we cannot ignore what has occurred in the markets over the past few months, including a staggering decline in commodity prices and unprecedented turmoil in the equity and credit markets, these events have caused us to re-evaluate our future capital spending and we have chosen to be conservative and reduce our capital spending. For 2009, we are in the process of prioritizing our projects inventory and formulating a budget based on our assumptions about future commodity prices and service costs. We remain committed to our long-term business strategy and are very pleased to have a large inventory of projects to choose from. As promised, we continue to provide a transparent presentation of our financial and operating results detailing the results of the consolidated entity as well as on a stand-alone basis for both Abraxas Petroleum and Abraxas Energy - please read `Basis of Presentation' for a detailed explanation," commented Bob Watson, Abraxas' President and CEO.
Conference Call
Abraxas invites you to participate in a conference call on Wednesday, November 12, 2008, at 3:00 p.m. CT (4:00 p.m. ET) to discuss the contents of this release and respond to questions. Please dial 1.888.679.8018, passcode 63089596, 10 minutes before the scheduled start time, if you would like to participate in the call. The conference call will also be webcast live on the Internet and can be accessed directly on the Company's website at www.abraxaspetroleum.com under Investor Relations. In addition to the audio webcast replay, a podcast and transcript of the conference call will be posted on the Investor Relations section of the Company's website approximately 24 hours after the conclusion of the call, and will be accessible for at least 60 days.
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations principally in Texas and Wyoming. Abraxas Petroleum Corporation also owns a 47% interest in an upstream master limited partnership, Abraxas Energy Partners, L.P., which entitles Abraxas Petroleum Corporation to receive its proportionate share of cash distributions made by Abraxas Energy Partners, L.P.
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 natural gas and crude oil. In addition, Abraxas' future natural gas and crude oil 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
BASIS OF PRESENTATION
For financial reporting purposes, accounting principles generally accepted in the United States of America (GAAP) require Abraxas Petroleum to consolidate (and incorporate) the financial results of Abraxas Energy and its subsidiaries into Abraxas Petroleum's financial results because Abraxas Petroleum owns a significant percentage of the Partnership and controls its general partner. While this presentation may be proper under GAAP, it can be confusing to the investment community. As a result, all operating and financial results are presented herein on a consolidated basis and on a stand-alone basis for the current period. The stand-alone results include AXAS without AXLP, which reflect operating and financial results of Abraxas Petroleum and its subsidiaries on a stand-alone basis and AXLP, which reflect operating and financial results of Abraxas Energy and its subsidiaries on a stand-alone basis. The consolidating entries column reflects adjustments to the stand-alone presentations in the consolidation treatment under GAAP.
Abraxas Energy has approximately 85% of its projected oil and gas production from its net proved developed producing reserves hedged with NYMEX-based fixed priced swaps through December 2011 at volume weighted average prices of $84.54 per barrel of oil and $8.32 per Mcf of gas. As commodity prices fluctuate, these derivative contracts are valued against current market prices at the end of each reporting period in accordance with Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted, and require Abraxas Energy to either record an unrealized gain or loss based on the calculated value difference from the previous period end valuation.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(In thousands except per share Three Months Ended Nine Months Ended
data): September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
---------- ------- --------- -------
Financial Results:
---------------------------------
Revenues $29,246 $11,404 $85,839 $36,238
EBITDA (a) 20,131 7,463 61,174 23,860
Cash flow (a) 17,583 6,960 53,877 16,544
Net income 70,755 2,998 4,076 59,495
Net income per share - basic $ 1.44 $ 0.06 $ 0.08 $ 1.31
Adjusted net income, excluding
non-cash change in derivative
fair value and gain associated
with minority interest 2,812 2,672 11,854 58,312
Adjusted net income, excluding
non-cash change in derivative
fair value and gain associated
with minority interest, per
share - basic $ 0.06 $ 0.05 $ 0.24 $ 1.28
Weighted average shares
outstanding - basic 49,043 48,814 48,955 45,524
Production:
---------------------------------
Crude oil per day (Bopd) 1,519 522 1,472 540
Natural gas per day (Mcfpd) 18,077 15,317 17,756 15,876
Crude oil equivalent per day
(Boepd) 4,532 3,075 4,432 3,186
Crude oil equivalent (MBoe) 417.0 282.9 1,214.2 869.7
Realized Prices, net of realized
hedging activity:
---------------------------------
Crude oil ($ per Bbl) $ 84.02 $ 67.98 $ 86.43 $ 61.05
Natural gas ($ per Mcf) 6.69 6.58 7.49 6.37
Crude oil equivalent ($ per Boe) 54.84 44.30 58.73 42.08
Expenses:
---------------------------------
Lease operating ($ per Boe) $ 11.60 $ 6.97 $ 10.36 $ 6.66
Production taxes (% of oil and
gas revenue) 9.2% 7.5% 8.6% 8.6%
General and administrative,
excluding stock-based
compensation ($ per Boe) 3.28 3.37 3.41 3.44
Cash interest ($ per Boe) 6.11 1.78 6.01 8.41
Depreciation, depletion and
amortization
($ per Boe) 13.92 12.77 13.92 12.50
---------------------------------
(a) See reconciliation of non-GAAP financial measures below.
BALANCE SHEET DATA
(In thousands) September 30, 2008 December 31, 2007
------------------ -----------------
Cash $ 6,073 $ 18,936
Working capital 1,728(a) 11,348
Property and equipment -
net 272,938 117,027
Total assets 300,152 147,119
Long-term debt 130,545 45,900
Stockholders' equity 61,026 55,847
Common shares outstanding 49,258 49,021
(a) Excludes current maturities of long-term debt, including $40.0
million of debt outstanding under the Partnership's
Subordinated Credit Facility due January 31, 2009, and current
derivative assets and liabilities.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(In thousands except
per share data): Three Months Ended September 30, 2008
----------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- ------- ------------- ------------
Financial Results:
-----------------------
Revenues $ 4,913 $24,333 $ -- $ 29,246
EBITDA(a) 2,714 17,417 -- 20,131
Cash flow(a) 2,652 14,931 -- 17,583
Net income (loss) 1,518 86,859 (17,622)(b) 70,755
Net income per share -
basic 1.44
Adjusted net income
(loss), excluding non- (c)
cash change in
derivative fair value
and gain associated
with minority
interest 1,518 2,745 (1,451) 2,812
Adjusted net income,
excluding non-cash
change in
derivative fair value
and gain associated
with minority
interest,
per share - basic $ 0.06
Weighted average shares
outstanding - basic 49,043
Production:
-----------------------
Crude oil per day
(Bopd) 255 1,264 -- 1,519
Natural gas per day
(Mcfpd) 2,417 15,660 -- 18,077
Crude oil equivalent
per day (Boepd) 658 3,874 -- 4,532
Crude oil equivalent
(MBoe) 60.6 356.4 -- 417.0
Realized Prices, net of
realized hedging
activity:
-----------------------
Crude oil ($ per Bbl) $111.82 $ 78.40 $ -- $ 84.02
Natural gas ($ per Mcf) 8.76 6.37 -- 6.69
Crude oil equivalent ($
per Boe) 75.57 51.31 -- 54.84
Expenses:
-----------------------
Lease operating ($ per
Boe) $ 15.44 $ 10.95 $ -- $ 11.60
Production taxes (% of
oil and gas revenue) 7.6% 9.6% -- 9.2%
General and
administrative,
excluding stock-based
compensation ($ per
Boe) 11.20 1.93 -- 3.28
Cash interest ($ per
Boe) 1.02 6.98 -- 6.11
Depreciation, depletion
and amortization
($ per Boe) 14.08 13.90 -- 13.92
-----------------------
(a) See reconciliation of non-GAAP financial measures below.
(b) Minority interest (53% of the Partnership's net income for the
period) and the gains attributable to the minority interest
loss that exceeded the minority interest equity capital in
the Partnership in Q2 2008.
(c) Minority interest (53% of the Partnership's net income for the
period excluding the non-cash change in derivative fair
value).
Note: The financial results presented above of AXAS without AXLP
for the three months ended September 30, 2008 do not include cash
distributions received from the Partnership in the amount of $2.4
million attributable to the third quarter of 2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(In thousands except per
share data): Nine Months Ended September 30, 2008
---------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- ------- ------------- ------------
Financial Results:
------------------------
Revenues $14,246 $71,593 $ -- $ 85,839
EBITDA(a) 8,319 52,855 -- 61,174
Cash flow(a) 8,337 45,540 -- 53,877
Net income (loss) 4,931 (1,811) 956(b) 4,076
Net income per share -
basic $ 0.08
Adjusted net income (c)
(loss), excluding
non-cash change in
derivative fair value 4,931 14,667 (7,744) 11,854
Adjusted net income,
excluding non-cash
change in derivative
fair value, per share
- basic $ 0.24
Weighted average shares
outstanding - basic 48,955
Production:
------------------------
Crude oil per day (Bopd) 252 1,220 -- 1,472
Natural gas per day
(Mcfpd) 2,342 15,414 -- 17,756
Crude oil equivalent per
day (Boepd) 643 3,789 -- 4,432
Crude oil equivalent
(Mboe) 176.1 1,038.1 -- 1,214.2
Realized Prices, net of
realized hedging
activity:
------------------------
Crude oil ($ per Bbl) $108.38 $ 81.89 $ -- $ 86.43
Natural gas ($ per Mcf) 8.99 7.26 -- 7.49
Crude oil equivalent ($
per Boe) 75.33 55.91 -- 58.73
Expenses:
------------------------
Lease operating ($ per
Boe) $ 11.71 $ 10.13 $ -- $ 10.36
Production taxes (% of
oil and gas revenue) 6.3% 9.0% -- 8.6%
General and
administrative,
excluding stock-based
compensation ($ per
Boe) 13.55 1.69 -- 3.41
Cash interest (income)
($ per Boe) (0.10) 7.05 -- 6.01
Depreciation, depletion
and amortization
($ per Boe) 13.45 14.00 -- 13.92
------------------------
(a) See reconciliation of non-GAAP financial measures below.
(b) Minority interest (53% of the Partnership's net loss for the
period).
(c) Minority interest (53% of the Partnership's net income for the
period excluding the non-cash change in derivative fair
value).
Note: The financial results presented above of AXAS without AXLP
for the nine months ended September 30, 2008 do not include cash
distributions received from the Partnership in the amount of $6.8
million attributable to the first, second and third quarters of
2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
BALANCE SHEET DATA
(UNAUDITED)
(In thousands) September 30, 2008
-----------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- ------- -------------- ------------
Cash $ 5,056 $1,017 $ -- $ 6,073
Working capital (a) (7,643) 9,371 -- 1,728
Property and equipment
- net 54,900 218,038 -- 272,938
Total assets 100,709 233,477 (34,034)(b) 300,152
Long-term debt 4,945 125,600 -- 130,545
Stockholders' equity (b)
(deficit) 63,528 33,757 (36,259) 61,026
Common shares
outstanding 49,258
(a) Excludes current maturities of long-term debt, including $40.0
million of debt outstanding under the Partnership's
Subordinated Credit Facility due January 31, 2009, and current
derivative assets and liabilities.
(b) Includes the minority interest share of basis in the
Partnership.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share Three Months Ended Nine Months Ended
data) September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Oil and gas production
revenues $ 28,910 $ 10,959 $ 84,856 $ 35,151
Rig revenues 333 443 968 1,082
Other 3 2 15 5
-------- -------- -------- --------
29,246 11,404 85,839 36,238
Operating costs and expenses:
Lease operating 4,837 1,971 12,580 5,792
Production taxes 2,670 819 7,299 3,023
Depreciation, depletion, and
amortization 5,806 3,611 16,904 10,867
Rig operations 241 199 644 572
General and administrative
(including stock-based
compensation of $400, $204,
$1,297 and $748) 1,767 1,156 5,439 3,739
-------- -------- -------- --------
15,321 7,756 42,866 23,993
-------- -------- -------- --------
Operating income 13,925 3,648 42,973 12,245
Other (income) expense:
Interest income (47) (167) (174) (234)
Interest expense 3,033 699 8,171 7,634
Amortization of deferred
financing fees 281 62 748 609
Loss (gain) on derivative
contracts (unrealized of
$(84,114), $(690), $16,478
and $(2,506)) (78,069) (2,263) 30,024 (3,953)
Loss on debt extinguishment -- -- -- 6,455
Gain on sale of assets -- -- -- (59,335)
Other 350 -- 1,084 --
-------- -------- -------- --------
(74,452) (1,669) 39,853 (48,824)
-------- -------- -------- --------
Income before income tax and
minority interest 88,377 5,317 3,120 61,069
Income tax expense -- -- -- 715
-------- -------- -------- --------
Income before minority interest 88,377 5,317 3,120 60,354
Minority interest (a) (17,622) (2,319) 956 (859)
-------- -------- -------- --------
Net income $ 70,755 $ 2,998 $ 4,076 $ 59,495
======== ======== ======== ========
-------- -------- -------- --------
Net income per common share -
basic $ 1.44 $ 0.06 $ 0.08 $ 1.31
======== ======== ======== ========
Net income per common share -
diluted $ 1.43 $ 0.06 $ 0.08 $ 1.30
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 49,043 48,814 48,955 45,524
Diluted 49,398 48,941 49,424 45,870
(a) Includes the minority interest share (53%) of the net income
(loss) of the Partnership and includes any gains attributable
to the minority interest loss that exceeded the minority
interest equity capital in the Partnership in Q2 2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per
share data) Three Months Ended September 30, 2008
---------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- --------- ------------- ------------
Revenues:
Oil and gas
production revenues $4,577 $ 24,333 $ -- $ 28,910
Rig revenues 333 -- -- 333
Other 3 -- -- 3
-------- --------- ------------- ------------
4,913 24,333 -- 29,246
Operating costs and
expenses:
Lease operating 935 3,902 -- 4,837
Production taxes 345 2,325 -- 2,670
Depreciation,
depletion, and
amortization 853 4,953 -- 5,806
Rig operations 241 -- -- 241
General and
administrative
(including stock-
based
compensation of $250
and $150) 928 839 -- 1,767
-------- --------- ------------- ------------
3,302 12,019 -- 15,321
-------- --------- ------------- ------------
Operating income 1,611 12,314 -- 13,925
Other (income) expense:
Interest income (45) (2) -- (47)
Interest expense 119 2,914 -- 3,033
Amortization of
deferred financing
fees 10 271 -- 281
Loss (gain) on
derivative contracts
(unrealized of $0
and $(84,114)) -- (78,069) -- (78,069)
Other 9 341 -- 350
-------- --------- ------------- ------------
93 (74,545) -- (74,452)
-------- --------- ------------- ------------
Income before minority
interest 1,518 86,859 -- 88,377
-------- --------- ------------- ------------
Minority interest (a) -- -- (17,622) (17,622)
-------- --------- ------------- ------------
Net income (loss) $1,518 $ 86,859 $(17,622) $ 70,755
======== ========= ============= ============
$ 1.44
------------
Net income per common
share - basic $ 1.43
------------
Net income per common
share - diluted
============
Weighted average shares
outstanding:
Basic 49,043
Diluted 49,398
(a) Includes the minority interest share (53%) of the net income of
the Partnership and includes any gains attributable to the
minority interest loss that exceeded the minority interest
equity capital in the Partnership in Q2 2008.
Note: The financial results presented above of AXAS without AXLP
for the three months ended September 30, 2008 do not include cash
distributions received from the Partnership in the amount of $2.4
million attributable to the third quarter of 2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per
share data) Nine Months Ended September 30, 2008
--------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- -------- ------------- ------------
Revenues:
Oil and gas production
revenues $13,263 $71,593 $ -- $ 84,856
Rig revenues 968 -- -- 968
Other 15 -- -- 15
-------- -------- ------------- ------------
14,246 71,593 -- 85,839
Operating costs and
expenses:
Lease operating 2,062 10,518 -- 12,580
Production taxes 835 6,464 -- 7,299
Depreciation,
depletion, and
amortization 2,368 14,536 -- 16,904
Rig operations 644 -- -- 644
General and
administrative
(including stock-
based
compensation of $924
and $373) 3,310 2,129 -- 5,439
-------- -------- ------------- ------------
9,219 33,647 -- 42,866
-------- -------- ------------- ------------
Operating income 5,027 37,946 -- 42,973
Other (income) expense:
Interest income (156) (18) -- (174)
Interest expense 190 7,981 -- 8,171
Amortization of
deferred financing
fees 30 718 -- 748
Loss (gain) on
derivative contracts
unrealized of $0 and
$16,478) -- 30,024 -- 30,024
Other 32 1,052 -- 1,084
-------- -------- ------------- ------------
96 39,757 -- 39,853
-------- -------- ------------- ------------
Income (loss) before
minority interest 4,931 (1,811) -- 3,120
-------- -------- ------------- ------------
Minority interest (a) -- -- 956 956
-------- -------- ------------- ------------
Net income (loss) $ 4,931 $(1,811) $ 956 $ 4,076
======== ======== ============= ============
------------
Net income per common
share - basic $ $0.08
------------
Net income per common
share - diluted $ $0.08
============
Weighted average shares
outstanding:
Basic 48,955
Diluted 49,424
(a) Includes the minority interest share (53%) of the net loss of
the Partnership.
Note: The financial results presented above of AXAS without AXLP
for the nine months ended September 30, 2008 do not include cash
distributions received from the Partnership in the amount of $6.8
million attributable to the first, second and third quarters of
2008.
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. Cash flow
and EBITDA are non-GAAP financial measures as defined under SEC
rules. Abraxas' 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 cash flow and EBITDA exclude some, but
not all items that affect net income and may vary among companies,
the cash flow and EBITDA presented below may not be comparable to
similarly titled measures of other companies. Management believes
that operating income calculated in accordance with GAAP is the most
directly comparable measure to cash flow and EBITDA; therefore,
operating income is utilized as the starting point for these
reconciliations.
Cash flow is defined as operating income (loss) plus depletion,
depreciation and amortization expenses, non-cash expenses and cash
portion of other income (expense) and cash interest. The following
table provides a reconciliation of cash flow to operating income for
the periods presented.
CONSOLIDATED
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- -------- --------
Operating income $ 13,925 $ 3,648 $ 42,973 $ 12,245
Depreciation, depletion and
amortization 5,806 3,611 16,904 10,867
Stock-based compensation 400 204 1,297 748
Cash interest (2,548) (503) (7,297) (7,316)
----------------------------------------------------------------------
Cash flow $ 17,583 $ 6,960 $ 53,877 $ 16,544
----------------------------------------------------------------------
CONSOLIDATING
Three Months Ended September 30,
(In thousands) 2008
----------------------------------
AXAS without AXLP Consolidated
AXLP
------------ ------- -------------
Operating income $1,611 $12,314 $ 13,925
Depreciation, depletion, and
amortization 853 4,953 5,806
Stock-based compensation 250 150 400
Cash interest (62) (2,486) (2,548)
----------------------------------------------------------------------
Cash flow $2,652 $14,931 $ 17,583
----------------------------------------------------------------------
Nine Months Ended September 30,
(In thousands) 2008
----------------------------------
AXAS without AXLP Consolidated
AXLP
------------ ------- -------------
Operating income $5,027 $37,946 $ 42,973
Depreciation, depletion, and
amortization 2,368 14,536 16,904
Stock-based compensation 924 373 1,297
Cash interest 18 (7,315) (7,297)
----------------------------------------------------------------------
Cash flow $8,337 $45,540 $ 53,877
----------------------------------------------------------------------
EBITDA is defined as net income (loss) plus interest expense,
depletion, depreciation and amortization expenses, deferred income
taxes and other non-cash items. The following table provides a
reconciliation of EBITDA to operating income for the periods
presented - see consolidated statements of operations for a
reconciliation of net income (loss) to operating income.
CONSOLIDATED
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- ------- -------- --------
Operating income $ 13,925 $ 3,648 $ 42,973 $ 12,245
Depreciation, depletion and
amortization 5,806 3,611 16,904 10,867
Stock-based compensation 400 204 1,297 748
----------------------------------------------------------------------
EBITDA $ 20,131 $ 7,463 $ 61,174 $ 23,860
----------------------------------------------------------------------
CONSOLIDATING
(In thousands) Three Months Ended September 30, 2008
-------------------------------------
AXAS without AXLP Consolidated
AXLP
------------- --------- -------------
Operating income $ 1,611 $ 12,314 $ 13,925
Depreciation, depletion, and
amortization 853 4,953 5,806
Stock-based compensation 250 150 400
----------------------------------------------------------------------
EBITDA $ 2,714 $ 17,417 $ 20,131
----------------------------------------------------------------------
(In thousands) Nine Months Ended September 30, 2008
-------------------------------------
AXAS without AXLP Consolidated
AXLP
------------- --------- -------------
Operating income $ 5,027 $ 37,946 $ 42,973
Depreciation, depletion, and
amortization 2,368 14,536 16,904
Stock-based compensation 924 373 1,297
----------------------------------------------------------------------
EBITDA $ 8,319 $ 52,855 $ 61,174
----------------------------------------------------------------------
This release also includes a discussion of "adjusted net income
(loss), excluding non-cash change in derivative fair value and
loss associated with minority interest", which is a non-GAAP
financial measure as defined under SEC rules. The following table
provides a reconciliation of adjusted net income (loss), excluding
non-cash change in derivative fair value and loss associated with
minority interest, 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 non-cash change in
derivative fair value and loss associated with minority interest.
CONSOLIDATED
Three Months Ended Nine Months Ended
(In thousands) September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- ------ ------- -------
Net income $70,755 $2,998 $ 4,076 $59,495
Gain associated with minority
interest (28,241)(a) -- -- --
Loss (gain) on unrealized
derivative contracts (39,702)(b) (326) 7,778(b) (1,183)
----------------------------------------------------------------------
Adjusted net income, excluding
non-cash change in
derivative fair value and gain
associated with minority
interest $ 2,812 $2,672 $11,854 $58,312
----------------------------------------------------------------------
Net income per share - basic 1.44 0.06 0.08 1.31
----------------------------------------------------------------------
Adjusted net income, excluding
non-cash change in
derivative fair value and gain
associated with minority
interest, per share - basic $ 0.06 $ 0.05 $ 0.24 $ 1.28
----------------------------------------------------------------------
(a) Gain attributable to the minority interest loss in Q2 2008
that exceeded the minority interest equity capital in the
Partnership.
(b) Abraxas' share (47%) of the Partnership's unrealized loss
(gain) on derivative contracts for the period.
CONSOLIDATING
(In thousands) Three Months Ended September 30, 2008
-----------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- -------- ------------- ------------
Net income (loss) $ 1,518 $ 86,859 $(17,622)(a) $ 70,755
Gain associated with
minority interest -- -- (28,241)(b) (28,241)
Loss (gain) on
unrealized derivative
contracts -- (84,114) 44,412(c) (39,702)
----------------------------------------------------------------------
Adjusted net income
(loss), excluding
non-cash change in
derivative fair value
and gain
associated with
minority interest $ 1,518 $ 2,745 $ (1,451) $ 2,812
----------------------------------------------------------------------
Net income per share -
basic $ 1.44
----------------------------------------------------------------------
Adjusted net income,
excluding non-cash
change in
derivative fair value
and gain associated
with minority
interest, per share
- basic $ 0.06
----------------------------------------------------------------------
(In thousands) Nine Months Ended September 30, 2008
-----------------------------------------------
AXAS AXLP Consolidating Consolidated
without Entries
AXLP
-------- -------- ------------- ------------
Net income (loss) $ 4,931 $(1,811) $ 956(a) $ 4,076
Loss (gain) on
unrealized derivative
contracts -- 16,478 (8,700)(c) 7,778
----------------------------------------------------------------------
Adjusted net income
(loss), excluding
non-cash change in
derivative fair
value $ 4,931 $ 14,667 $ (7,744) $ 11,854
----------------------------------------------------------------------
Net income per share -
basic $ 0.08
----------------------------------------------------------------------
Adjusted net income,
excluding
non-cash change in
derivative fair
value, per share -
basic $ 0.24
----------------------------------------------------------------------
(a) Minority interest (53% of the Partnership's net income (loss)
for the period).
(b) Gain attributable to the minority interest loss in Q2 2008 that
exceeded the minority interest equity capital in the
Partnership.
(c) Minority interest share (53%) of the Partnership's unrealized
loss (gain) on derivative contracts for the period.
Source: Abraxas Petroleum Corporation
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