ABRAXAS PETROLEUM CORPORATION
www.abraxaspetroleum.com
Exhibit 99.1
NEWS RELEASE
Abraxas Reports $100 Million in Revenue for 2008
SAN ANTONIO (February 17, 2009) – Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and twelve months ended December 31, 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 twelve months ended December 31, 2008 resulted in:
· | Production of 237 MBoe (649 Boepd); |
· | Revenue of $16.9 million ($25.8 million including cash distributions); |
· | EBITDA(a) of $8.7 million ($17.6 million including cash distributions); |
· | Cash flow(a) of $8.6 million ($17.5 million including cash distributions); |
· | Net loss of $22.6 million, or $0.46 per share ($13.7 million including cash distributions, or $0.28 per share); and |
· | Adjusted net income(a) of $4.0 million, or $0.08 per share ($12.8 million including cash distributions, or $0.26 per share), excluding certain non-cash items. |
On a stand-alone basis for the year ended December 31, 2008, adjusted net income, excluding certain non-cash items, excludes the loss attributable to the ceiling-test impairment of $19.1 million and the loss on sale of assets to the Partnership of $7.4 million.
Comparing Abraxas Petroleum’s 2008 results on a stand-alone basis to the last seven months of 2007 after the Partnership was formed, daily production for 2008 was 11% higher than 2007 and revenue, EBITDA and cash flow were 49%, 134% and 23% higher than 2007 on an annualized basis, respectively.
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 twelve months ended December 31, 2008 resulted in:
· | Production of 1,607 MBoe (4,391 Boepd), a 43% increase over 2007; |
· | Revenue of $100.3 million, a 108% increase over 2007; |
· | EBITDA(a) of $57.6 million, a 76% increase over 2007; |
· | Cash flow(a) of $47.8 million, a 92% increase over 2007; |
· | Net loss of $52.4 million, or $1.07 per share; and |
· | Adjusted net income(a) of $42.8 million, or $0.87 per share, excluding certain non-cash items. |
(a) | See reconciliation of non-GAAP financial measures below. |
18803 Meisner Drive
San Antonio, Texas 78258
Phone: 210.490.4788 Fax: 210.918.6675
On a consolidated basis, adjusted net income, excluding certain non-cash items, for the year ended December 31, 2008 was $42.8 million, or $0.87 per share, compared to adjusted net income, excluding certain non-cash items, of $3.6 million or $0.08 per share during 2007. For the year ended December 31, 2008, adjusted net income, excluding certain non-cash items, excludes unrealized gains on derivative contracts of $37.9 million, the loss attributable to the ceiling-test impairment of $116.4 million, the loss attributable to the minority interest that exceeded the minority interest equity capital in the Partnership of $9.3 million and the loss on sale of assets to the Partnership of $7.4 million. For the year ended December 31, 2007, adjusted net income, excluding certain non-cash items, excludes unrealized losses on derivative contracts of $6.3 million and the gain on sale of assets to the Partnership of $59.4 million.
Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and attributable to the hedging activity of the Partnership and do 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. Commodity prices declined dramatically during the fourth quarter of 2008. As a result, the mark-to-market valuation of the Partnership’s commodity derivative contracts increased approximately $60 million during the fourth quarter and on December 31, 2008, the mark-to-market valuation was $39.2 million.
Abraxas records the costs to explore, exploit and develop its oil and gas properties using the full-cost method of accounting and all amounts are included in its “full-cost pool”. The ceiling-test impairment of $116.4 million is a direct result of low commodity prices at December 31, 2008 which are used to calculate the PV10, or present value, discounted 10%, of Abraxas’ proved reserves. In accordance with accounting principles generally accepted in the United States of America (GAAP), if the PV10 is lower than the full-cost pool, the difference must be recorded as an impairment which results in a non-cash charge to earnings and thus, a reduction in shareholder’s equity. As previously announced, in December 2008, the Securities and Exchange Commission (“SEC”) issued new regulations for oil and gas reserve reporting which go into effect for the calendar year 2009. One of the key elements of the new regulations relate to the commodity prices which are used to calculate reserves and PV10. The new regulations require using an average price based upon the prior 12-month period rather than the current regulations which utilize commodity prices on the last day of the year. If the new regulations had been in effect at year-end 2008, Abraxas would not have recorded a ceiling-test impairment. Prior to the new regulations taking effect at year-end 2009, if commodity prices continue to decline during 2009, Abraxas may be subject to further ceiling-test impairments in 2009.
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 $0.375 per unit for the fourth quarter of 2008. The distribution was made on February 13, 2008 to unitholders of record at the close of business on February 6, 2008. Abraxas Petroleum owns approximately 47% of the outstanding units and received $2.0 million in cash distributions from its ownership interest in Abraxas Energy for the fourth quarter of 2008. For 2008, Abraxas Petroleum received a total of $8.9 million in cash distributions from its ownership interest in Abraxas Energy.
Operational Update
South Texas:
· | In DeWitt County, the Nordheim #2H, a horizontal Edwards well which came on-line at 6 MMcfpd naturally from the first section of the lateral was choked back to 3 MMcfpd due to low commodity prices and to monitor pressures and production data. This well has not been stimulated and an additional six sections of lateral remain behind pipe. Abraxas Petroleum owns a 75% working interest in this well. |
West Texas:
· | In Coke County, the Millican Reef #2A was drilled to a total depth of 6,700’, completed in the Strawn formation, and placed on production at commercial rates. This well will be stimulated when commodity prices increase or service costs come down. Abraxas Petroleum owns a 92% working interest in this well. |
Wyoming:
· | In Brooks Draw, the Turner sandstone tested commercial rates of oil and gas before being shut-in for construction of surface production facilities. The Lakeside #1H was drilled to a total measured depth of approximately 12,500’, including a 3,800’ lateral in the Turner sandstone, and successfully completed with a seven stage fracture stimulation. It is anticipated that construction of the surface facilities will be completed within ten days, after which production testing will commence. Abraxas Petroleum owns a 100% working interest in this well. |
Drilling and re-completion activity continues on a number of non-operated wells principally located in the Rocky Mountain and Mid-Continent regions of the U.S. On average, Abraxas Energy owns a relatively small working interest in these wells.
“2008 can be summarized as a year of extreme volatility, especially with respect to commodity prices and the collapse of the capital markets. Oil prices started the year at $100 per barrel before climbing to $145 in July, then falling precipitously to $44 per barrel by the end of December, a 70% decline in less than six months. For Abraxas, 2008 was a great year - we generated $100 million in revenue and drilled or participated in 50 new wells, with a 100% success rate. A number of these wells were placed on-line during the fourth quarter; therefore, the first quarter of 2009 should reflect the full impact from these wells. In addition, we expect the Lakeside #1H to be on production later this month. 2009 (or at least the first half) will be about planning as we continue to prioritize our project inventory 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 no debt (on a stand-alone basis, excluding the mortgage on our office building) and 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 Thursday, February 19, 2009, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the contents of this release and respond to questions. Please dial 1.888.679.8040, passcode 76561186, 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, the Mid-Continent and the Rocky Mountains. 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 the Partnership.
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.
FOR MORE INFORMATION CONTACT:
Barbara M. Stuckey/Vice President - Corporate Development
Telephone 210.490.4788
bstuckey@abraxaspetroleum.com
www.abraxaspetroleum.com
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 $84.23 per barrel of oil and $8.27 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
(In thousands except per share data): | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
Financial Results: | ||||||||||||
Revenues | $ | 14,471 | $ | 12,070 | $ | 100,310 | $ | 48,309 | ||||
EBITDA(a) | 9,983 | 7,430 | 57,569 | 32,737 | ||||||||
Cash flow(a) | 7,502 | 6,889 | 47,831 | 24,880 | ||||||||
Net income (loss) | (56,479) | (2,793) | (52,403) | 56,702 | ||||||||
Net income (loss) per share – basic | $ | (1.15) | $ | (0.06) | $ | (1.07) | $ | 1.22 | ||||
Adjusted net income, excluding certain non-cash items(a) | 21,996 | 5,897 | 42,822 | 3,551 | ||||||||
Adjusted net income, excluding certain non-cash items(a), per share – basic | $ | 0.45 | $ | 0.12 | $ | 0.87 | $ | 0.08 | ||||
Weighted average shares outstanding – basic | 49,161 | 48,804 | 49,005 | 46,337 | ||||||||
Production: | ||||||||||||
Crude oil per day (Bopd) | 1,593 | 539 | 1,502 | 540 | ||||||||
Natural gas per day (Mcfpd) | 16,063 | 13,407 | 17,330 | 15,254 | ||||||||
Crude oil equivalent per day (Boepd) | 4,270 | 2,774 | 4,391 | 3,082 | ||||||||
Crude oil equivalent (MBoe) | 393 | 255 | 1,607 | 1,125 | ||||||||
Realized Prices, net of realized hedging activity: | ||||||||||||
Crude oil ($ per Bbl) | $ | 67.36 | $ | 77.93 | $ | 81.35 | $ | 65.30 | ||||
Natural gas ($ per Mcf) | 5.85 | 6.78 | 7.11 | 6.46 | ||||||||
Crude oil equivalent ($ per Boe) | 47.11 | 47.94 | 55.89 | 43.41 | ||||||||
Expenses: | ||||||||||||
Lease operating ($ per Boe) | $ | 12.62 | $ | 6.41 | $ | 10.91 | $ | 6.60 | ||||
Production taxes (% of oil and gas revenue) | 12.6% | 6.8% | 9.2% | 8.2% | ||||||||
General and administrative, excluding stock-based compensation ($ per Boe) | 4.02 | 9.61 | 3.56 | 4.84 | ||||||||
Cash interest ($ per Boe) | 6.32 | 2.12 | 6.06 | 6.99 | ||||||||
Depreciation, depletion and amortization ($ per Boe) | 16.39 | 13.42 | 14.53 | 12.71 |
(a) | See reconciliation of non-GAAP financial measures below. |
BALANCE SHEET DATA
(In thousands) | December 31, 2008 | December 31, 2007 | |||
Cash | $ | 1,924 | $ | 18,936 | |
Working capital (a) | (5,698) | 13,844 | |||
Property and equipment – net | 160,308 | 117,027 | |||
Total assets | 211,839 | 147,119 | |||
Long-term debt | 130,835 | 45,900 | |||
Stockholders’ equity | 4,658 | 55,847 | |||
Common shares outstanding | 49,622 | 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 July 1, 2009, and current derivative assets and liabilities. |
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
FINANCIAL HIGHLIGHTS
(In thousands except per share data): | Three Months Ended December 31, 2008 | ||||||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||||||
Financial Results: | |||||||||||||||
Revenues | $ | 2,673 | $ | 11,798 | $ | — | $ | 14,471 | |||||||
EBITDA(a) | 378 | 9,605 | — | 9,983 | |||||||||||
Cash flow(a) | 297 | 7,205 | — | 7,502 | |||||||||||
Net income (loss) | (27,507) | (41,516) | 12,544 | (b) | (56,479) | ||||||||||
Net loss per share – basic | (1.15) | ||||||||||||||
Adjusted net income (loss), excluding certain non-cash items(a) | (976) | 995 | 21,977 | (c) | 21,996 | ||||||||||
Adjusted net income, excluding certain non-cash items(a), per share – basic | 0.45 | ||||||||||||||
Weighted average shares outstanding – basic | 49,161 | ||||||||||||||
Production: | |||||||||||||||
Crude oil per day (Bopd) | 311 | 1,282 | — | 1,593 | |||||||||||
Natural gas per day (Mcfpd) | 2,137 | 13,926 | — | 16,063 | |||||||||||
Crude oil equivalent per day (Boepd) | 667 | 3,603 | — | 4,270 | |||||||||||
Crude oil equivalent (MBoe) | 61 | 332 | — | 393 | |||||||||||
Realized Prices, net of realized hedging activity: | |||||||||||||||
Crude oil ($ per Bbl) | $ | 50.98 | $ | 71.33 | $ | — | $ | 67.36 | |||||||
Natural gas ($ per Mcf) | 4.95 | 5.98 | — | 5.85 | |||||||||||
Crude oil equivalent ($ per Boe) | 39.60 | 48.50 | — | 47.11 | |||||||||||
Expenses: | |||||||||||||||
Lease operating ($ per Boe) | $ | 14.11 | $ | 12.34 | $ | — | $ | 12.62 | |||||||
Production taxes (% of oil and gas revenue) | 12.1% | 12.7% | — | 12.6% | |||||||||||
General and administrative, excluding stock-based compensation ($ per Boe) | 15.02 | 1.99 | — | 4.02 | |||||||||||
Cash interest ($ per Boe) | 1.33 | 7.24 | — | 6.32 | |||||||||||
Depreciation, depletion and amortization ($ per Boe) | 16.49 | 16.68 | — | 16.39 |
(a) | See reconciliation of non-GAAP financial measures below. |
(b) | Minority interest (53% of the Partnership’s net income for the period). |
(c) | Minority interest (53% of the Partnership’s net income for the period including the loss attributable to the minority interest that exceeded the minority interest equity capital in the Partnership). |
Note: The financial results presented above of AXAS without AXLP for the three months ended December 31, 2008 do not include cash distributions received from the Partnership in the amount of $2.0 million attributable to the fourth quarter of 2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
FINANCIAL HIGHLIGHTS
(In thousands except per share data): | Twelve Months Ended December 31, 2008 | ||||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||||
Financial Results: | |||||||||||||
Revenues | $ | 16,919 | $ | 83,391 | $ | — | $ | 100,310 | |||||
EBITDA(a) | 8,697 | 48,872 | — | 57,569 | |||||||||
Cash flow(a) | 8,634 | 39,197 | — | 47,831 | |||||||||
Net income (loss) | (22,576) | (43,327) | 13,500 | (b) | (52,403) | ||||||||
Net loss per share – basic | $ | (1.07) | |||||||||||
Adjusted net income, excluding certain non-cash items(a) | 3,955 | 15,934 | 22,933 | (c) | 42,822 | ||||||||
Adjusted net income, excluding certain non-cash items(a), per share – basic | $ | 0.87 | |||||||||||
Weighted average shares outstanding – basic | 49,005 | ||||||||||||
Production: | |||||||||||||
Crude oil per day (Bopd) | 267 | 1,235 | — | 1,502 | |||||||||
Natural gas per day (Mcfpd) | 2,290 | 15,040 | — | 17,330 | |||||||||
Crude oil equivalent per day (Boepd) | 649 | 3,742 | — | 4,391 | |||||||||
Crude oil equivalent (Mboe) | 237 | 1,370 | — | 1,607 | |||||||||
Realized Prices, net of realized hedging activity: | |||||||||||||
Crude oil ($ per Bbl) | $ | 91.59 | $ | 79.14 | $ | — | $ | 81.35 | |||||
Natural gas ($ per Mcf) | 8.04 | 6.97 | — | 7.11 | |||||||||
Crude oil equivalent ($ per Boe) | 66.10 | 54.12 | — | 55.89 | |||||||||
Expenses: | |||||||||||||
Lease operating ($ per Boe) | $ | 12.33 | $ | 10.67 | $ | — | $ | 10.91 | |||||
Production taxes (% of oil and gas revenue) | 7.2% | 9.6% | — | 9.2% | |||||||||
General and administrative, excluding stock-based compensation ($ per Boe) | 13.93 | 1.76 | — | 3.56 | |||||||||
Cash interest (income) ($ per Boe) | 0.27 | 7.06 | — | 6.06 | |||||||||
Depreciation, depletion and amortization ($ per Boe) | 14.24 | 14.65 | — | 14.53 |
(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 including the loss attributable to the minority interest that exceeded the minority interest equity capital in the Partnership). |
Note: The financial results presented above of AXAS without AXLP for the twelve months ended December 31, 2008 do not include cash distributions received from the Partnership in the amount of $8.9 million attributable to 2008.
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
BALANCE SHEET DATA
(In thousands) | December 31, 2008 | |||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | |||||||||
Cash | $ | — | $ | 1,924 | $ | — | $ | 1,924 | ||||
Working capital (a) | (11,271) | 5,573 | — | (5,698) | ||||||||
Property and equipment – net | 41,291 | 119,017 | — | 160,308 | ||||||||
Total assets | 65,731 | 169,240 | (23,132) | (b) | 211,839 | |||||||
Long-term debt | 5,235 | 125,600 | — | 130,835 | ||||||||
Stockholders’ equity (deficit) | 36,132 | (12,492) | (18,982) | (b) | 4,658 | |||||||
Common shares outstanding | 49,622 | |||||||||||
(a) | Excludes current maturities of long-term debt, including $40.0 million of debt outstanding under the Partnership’s Subordinated Credit Facility due July 1, 2009, and current derivative assets and liabilities. |
(b) | Includes the minority interest share of basis in the Partnership and a portion of the losses attributable to the minority interest that exceed the minority interest equity capital in the Partnership. |
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands except per share data) | Year Ended December 31, | |||||||||
2008 | 2007 | 2006 | ||||||||
Revenues: | ||||||||||
Oil and gas production revenues | $ | 99,084 | $ | 46,906 | $ | 49,448 | ||||
Rig revenues | 1,210 | 1,396 | 1,613 | |||||||
Other | 16 | 7 | 16 | |||||||
100,310 | 48,309 | 51,077 | ||||||||
Operating costs and expenses: | ||||||||||
Lease operating | 17,536 | 7,427 | 7,291 | |||||||
Production taxes | 9,099 | 3,827 | 4,485 | |||||||
Depreciation, depletion, and amortization | 23,343 | 14,292 | 14,939 | |||||||
Ceiling-test impairment | 116,366 | — | — | |||||||
Rig operations | 856 | 801 | 819 | |||||||
General and administrative (including stock-based compensation of $1,404, $996, $998) | 7,127 | 6,438 | 5,160 | |||||||
174,327 | 32,785 | 32,694 | ||||||||
Operating income (loss) | (74,017) | 15,524 | 18,383 | |||||||
Other (income) expense: | ||||||||||
Interest income | (187) | (408) | (29) | |||||||
Interest expense | 10,496 | 8,392 | 16,767 | |||||||
Amortization of deferred financing fees | 1,028 | 671 | 1,591 | |||||||
Loss (gain) on derivative contracts (unrealized of $(37,860), $6,288, $(81)) | (28,333) | 4,363 | (646) | |||||||
Loss on debt extinguishment | — | 6,455 | — | |||||||
Financing fees | 359 | — | — | |||||||
Loss (gain) on sale of assets | 7,386 | (59,439) | — | |||||||
Other | 1,137 | 347 | — | |||||||
(8,114) | (39,619) | 17,683 | ||||||||
Income (loss) before income tax and minority interest | (65,903) | 55,143 | 700 | |||||||
Income tax expense | — | (283) | — | |||||||
Income (loss) before minority interest | (65,903) | 54,860 | 700 | |||||||
Minority interest (a) | 13,500 | 1,842 | — | |||||||
Net income (loss) | $ | (52,403) | $ | 56,702 | $ | 700 | ||||
Net income (loss) per common share - basic | $ | (1.07) | $ | 1.22 | $ | 0.02 | ||||
Net income (loss) per common share - diluted | $ | (1.07) | $ | 1.19 | $ | 0.02 | ||||
Weighted average shares outstanding: | ||||||||||
Basic | 49,005 | 46,337 | 42,579 | |||||||
Diluted | 49,005 | 47,593 | 43,862 |
(a) | Includes the minority interest share (53%) of the net loss of the Partnership but excludes any losses attributable to the minority interest that exceed the minority interest equity capital in the Partnership. |
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATING
STATEMENTS OF OPERATIONS
(In thousands except per share data) | |||||||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||||||
Revenues: | |||||||||||||||
Oil and gas production revenues | $ | 15,693 | $ | 83,391 | $ | — | $ | 99,084 | |||||||
Rig revenues | 1,210 | — | — | 1,210 | |||||||||||
Other | 16 | — | — | 16 | |||||||||||
16,919 | 83,391 | — | 100,310 | ||||||||||||
Operating costs and expenses: | |||||||||||||||
Lease operating | 2,928 | 14,608 | — | 17,536 | |||||||||||
Production taxes | 1,130 | 7,969 | — | 9,099 | |||||||||||
Depreciation, depletion, and amortization | 3,380 | 20,063 | (100) | 23,343 | |||||||||||
Ceiling-test impairment | 19,145 | 97,121 | 100 | 116,366 | |||||||||||
Rig operations | 856 | — | — | 856 | |||||||||||
General and administrative (including stock-based compensation of $1,162 and $242) | 4,470 | 2,657 | — | 7,127 | |||||||||||
31,909 | 142,418 | — | 174,327 | ||||||||||||
Operating loss | (14,990) | (59,027) | — | (74,017) | |||||||||||
Other (income) expense: | |||||||||||||||
Interest income | (165) | (22) | — | (187) | |||||||||||
Interest expense | 293 | 10,203 | — | 10,496 | |||||||||||
Amortization of deferred financing fees | 40 | 988 | — | 1,028 | |||||||||||
Loss (gain) on derivative contracts (unrealized of $0 and $(37,860)) | — | (28,333) | — | (28,333) | |||||||||||
Financing fees | — | 359 | — | 359 | |||||||||||
Loss (gain) on sale of assets | 7,386 | — | — | 7,386 | |||||||||||
Other | 32 | 1,105 | — | 1,137 | |||||||||||
7,586 | (15,700) | — | (8,114) | ||||||||||||
Loss before minority interest | (22,576) | (43,327) | — | (65,903) | |||||||||||
Minority interest (a) | — | — | 13,500 | 13,500 | |||||||||||
Net income (loss) | $ | (22,576) | $ | (43,327) | $ | 13,500 | $ | (52,403) | |||||||
Net loss per common share – basic | $ | (1.07) | |||||||||||||
Net loss per common share – diluted | $ | (1.07) | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 49,005 | ||||||||||||||
Diluted | 49,005 |
(a) | Includes the minority interest share (53%) of the net loss of the Partnership but excludes the losses attributable to the minority interest that exceed the minority interest equity capital in the Partnership. |
Note: The financial results presented above of AXAS without AXLP for the twelve months ended December 31, 2008 do not include cash distributions received from the Partnership in the amount of $8.9 million attributable to 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 impairments, 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 | |||||||||||
(In thousands) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
Operating income (loss) | $ | (116,990) | $ | 3,280 | $ | (74,017) | $ | 15,524 | |||
Depreciation, depletion and amortization | 6,439 | 3,424 | 23,343 | 14,292 | |||||||
Ceiling-test impairment | 116,366 | — | 116,366 | — | |||||||
Stock-based compensation | 108 | 248 | 1,404 | 996 | |||||||
Realized gain (loss) on derivative contracts | 4,060 | 478 | (9,527) | 1,925 | |||||||
Cash interest | (2,481) | (541) | (9,738) | (7,857) | |||||||
Cash flow | $ | 7,502 | $ | 6,889 | $ | 47,831 | $ | 24,880 |
CONSOLIDATING | |||||||||||
(In thousands) | Three Months Ended December 31, 2008 | ||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||
Operating loss | $ | (20,017) | $ | (96,973) | $ | — | $ | (116,990) | |||
Depreciation, depletion and amortization | 1,012 | 5,527 | (100) | 6,439 | |||||||
Ceiling-test impairment | 19,145 | 97,121 | 100 | 116,366 | |||||||
Stock-based compensation | 238 | (130) | — | 108 | |||||||
Realized gain (loss) on derivative contracts | — | 4,060 | — | 4,060 | |||||||
Cash interest | (81) | (2,400) | — | (2,481) | |||||||
Cash flow | $ | 297 | $ | 7,205 | $ | — | $ | 7,502 |
(In thousands) | Twelve Months Ended December 31, 2008 | ||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||
Operating loss | $ | (14,990) | $ | (59,027) | $ | — | $ | (74,017) | |||
Depreciation, depletion and amortization | 3,380 | 20,063 | (100) | 23,343 | |||||||
Ceiling-test impairment | 19,145 | 97,121 | 100 | 116,366 | |||||||
Stock-based compensation | 1,162 | 242 | — | 1,404 | |||||||
Realized gain (loss) on derivative contracts | — | (9,527) | — | (9,527) | |||||||
Cash interest | (63) | (9,675) | — | (9,738) | |||||||
Cash flow | $ | 8,634 | $ | 39,197 | $ | — | $ | 47,831 |
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 | |||||||||||
(In thousands) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
Operating income (loss) | $ | (116,990) | $ | 3,280 | $ | (74,017) | $ | 15,524 | |||
Depreciation, depletion and amortization | 6,439 | 3,424 | 23,343 | 14,292 | |||||||
Ceiling-test impairment | 116,366 | — | 116,366 | — | |||||||
Stock-based compensation | 108 | 248 | 1,404 | 996 | |||||||
Realized gain (loss) on derivative contracts | 4,060 | 478 | (9,527) | 1,925 | |||||||
EBITDA | $ | 9,983 | $ | 7,430 | $ | 57,569 | $ | 32,737 |
CONSOLIDATING | |||||||||||
(In thousands) | Three Months Ended December 31, 2008 | ||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||
Operating loss | $ | (20,017) | $ | (96,973) | $ | — | $ | (116,990) | |||
Depreciation, depletion and amortization | 1,012 | 5,527 | (100) | 6,439 | |||||||
Ceiling-test impairment | 19,145 | 97,121 | 100 | 116,366 | |||||||
Stock-based compensation | 238 | (130) | — | 108 | |||||||
Realized gain (loss) on derivative contracts | — | 4,060 | — | 4,060 | |||||||
EBITDA | $ | 378 | $ | 9,605 | $ | — | $ | 9,983 |
(In thousands) | Twelve Months Ended December 31, 2008 | ||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | ||||||||
Operating loss | $ | (14,990) | $ | (59,027) | $ | — | $ | (74,017) | |||
Depreciation, depletion and amortization | 3,380 | 20,063 | (100) | 23,343 | |||||||
Ceiling-test impairment | 19,145 | 97,121 | 100 | 116,366 | |||||||
Stock-based compensation | 1,162 | 242 | — | 1,404 | |||||||
Realized gain (loss) on derivative contracts | — | (9,527) | — | (9,527) | |||||||
EBITDA | $ | 8,697 | $ | 48,872 | $ | — | $ | 57,569 |
This release also includes a discussion of “adjusted net income (loss), excluding certain non-cash items”, 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, loss associated with minority interest, gain on sale of assets and loss on ceiling-test impairment, 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 certain non-cash items.
CONSOLIDATED | |||||||||||
(In thousands) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
2008 | 2007 | 2008 | 2007 | ||||||||
Net income (loss) | $ | (56,479) | $ | (2,793) | $ | (52,403) | $ | 56,702 | |||
Loss associated with minority interest (a) | 9,333 | — | 9,333 | — | |||||||
Loss (gain) on unrealized derivative contracts (b) | (54,610) | 8,794 | (37,860) | 6,288 | |||||||
Loss (gain) on sale of assets (c) | 7,386 | (104) | 7,386 | (59,439) | |||||||
Loss on ceiling-test impairment (d) | 116,366 | — | 116,366 | — | |||||||
Adjusted net income, excluding certain non-cash items | $ | 21,996 | $ | 5,897 | $ | 42,822 | $ | 3,551 | |||
Net income (loss) per share – basic | (1.15) | (0.06) | (1.07) | 1.22 | |||||||
Adjusted net income, excluding certain non-cash items, per share – basic | $ | 0.45 | $ | 0.12 | $ | 0.87 | $ | 0.08 |
(a) | Loss attributable to the minority interest that exceeded the minority interest equity capital in the Partnership. |
(b) | Unrealized loss (gain) on derivative contracts for the period. |
(c) | Loss (gain) on sale of assets sold to the Partnership in May-07. |
(d) | Loss attributable to the ceiling-test impairment. |
CONSOLIDATING | ||||||||||||
(In thousands) | Three Months Ended December 31, 2008 | |||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | |||||||||
Net income (loss) | $ | (27,507) | $ | (41,516) | $ | 12,544 | (a) | $ | (56,479) | |||
Loss associated with minority interest | — | — | 9,333 | (b) | 9,333 | |||||||
Loss (gain) on unrealized derivative contracts | — | (54,610) | — | (54,610) | ||||||||
Loss (gain) on sale of assets | 7,386 | — | — | 7,386 | ||||||||
Loss on ceiling-test impairment | 19,145 | 97,121 | 100 | (c) | 116,366 | |||||||
Adjusted net income (loss), excluding certain non-cash items | $ | (976) | $ | 995 | $ | 21,977 | $ | 21,996 | ||||
Net loss per share – basic | $ | (1.15) | ||||||||||
Adjusted net income, excluding certain non- cash items, per share – basic | $ | 0.45 |
(In thousands) | Twelve Months Ended December 31, 2008 | |||||||||||
AXAS without AXLP | AXLP | Consolidating Entries | Consolidated | |||||||||
Net income (loss) | $ | (22,576) | $ | (43,327) | $ | 13,500 | (a) | $ | (52,403) | |||
Loss associated with minority interest | — | — | 9,333 | (b) | 9,333 | |||||||
Loss (gain) on unrealized derivative contracts | — | (37,860) | — | (37,860) | ||||||||
Loss (gain) on sale of assets | 7,386 | — | — | 7,386 | ||||||||
Loss on ceiling-test impairment | 19,145 | 97,121 | 100 | (c) | 116,366 | |||||||
Adjusted net income, excluding certain non- cash items | $ | 3,955 | $ | 15,934 | $ | 22,933 | $ | 42,822 | ||||
Net loss per share – basic | $ | (1.07) | ||||||||||
Adjusted net income, excluding certain non- cash items, per share – basic | $ | 0.87 |
(a) | Minority interest (53% of the Partnership’s net loss for the period). |
(b) | Loss attributable to the minority interest that exceeded the minority interest equity capital in the Partnership. |
(c) | Difference in depreciation, depletion and amortization when calculated separately by entity and as a consolidated entity. |