EXHIBIT 99.1
NEWS RELEASE
ABRAXAS ANNOUNCES Q4 AND YEAR 2003 FINANCIAL RESULTS
SAN ANTONIO, TX (March 9, 2004) - Abraxas Petroleum Corporation (AMEX:ABP) today
reported financial and operating results for the fourth quarter and the
year-ended December 31, 2003. With production of 7.9 Bcfe for the year
generating revenues of $39.0 million, the Company realized net income of $55.9
million ($1.55 per share on a dilutive basis). Not including the gain of $68.9
million the Company realized from the sale of its Canadian subsidiaries in
January of 2003, continuing operations showed a net loss of $13.0 million ($0.36
per share). This compares to a loss of $118.5 million ($3.95 per share) in 2002.
Abraxas lost $1.7 million ($.05 per share) in Q4 2003 compared to a loss of $5.7
million ($0.19 per share) in the same quarter of 2002.
In January of 2003, the Company completed a series of financial transactions
that ultimately reduced the Company's debt from approximately $300 million at
December 31, 2002 to approximately $168 million (with debt at face value) at
December 31, 2003 and reduced cash interest costs from approximately $34 million
in 2002 to approximately $4 million in 2003. Subsequent to year-end 2003, the
Company amended its senior credit agreement, increasing its size, reducing its
costs, and providing additional operational flexibility.
The most significant operating items affecting 2003 results included:
o Capital spending of approximately $18 million during 2003 participating
in 24 wells with a 95% success rate;
o Continuation of development activities that resulted in replacing 218%
of 2003 production and increasing reserves 15.9 Bcfe (prior to
production) from year-end 2002 at a finding and development cost of
$1.15 per Mcfe;
o Realized price per Mcfe of $4.81 in 2003 compared to $2.73 for 2002; and
o Daily production rates increasing by 26% from the beginning of 2003 (on
retained assets) to December 31, 2003.
The Company also issued the following details related to its year-end reserves
to clarify its previous announcement on March 2, 2004:
Bcfe %
Proved Developed Producing 56.7 46.7
Proved Developed Non-Producing 9.6 8.0
----- -----
Total Proved Developed 66.3 54.7
Proved Undeveloped 54.8 45.3
----- -----
Total Proved 121.1 100.0
In addition, the Company announced its current hedge positions, which include a
series of price floors for approximately 40% of its projected production through
September 2004. These floors, comprised of a combination of oil and natural gas
contracts over these months, provide a floor of approximately $22.50 per barrel
for the oil contracts and $4.21 per Mcf for the natural gas contracts. These
instruments do not restrict the Company from receiving any prices above these
floor levels.
Abraxas CEO, Bob Watson, commented, "2003 was an eventful year for Abraxas as we
completed several transactions in January resulting in significant impact on our
balance sheet and our operations going forward. Our retained assets in Canada,
coupled with our growing inventory of U.S. projects allowed us to continue our
development success and demonstrate a meaningful increase in production and
reserves as we exited 2003. As we entered 2004, the Company participated in the
drilling of two horizontal wells in the Ladyfern area of British Columbia. These
wells have recently been tested at a combined rate of 11.1 MMcfpd 1.4 MMcfpd net
to our interest with initial production expected by the end of March. We look
forward to continuing this development success in 2004 and beyond. Our new
amended credit facility provides further flexibility in managing our assets and
maximizing value to our shareholders. We realize there is still more work ahead
to improve our balance sheet in 2004 enabling us to continue to reduce debt and
to accelerate development of assets, which now include over 170 identified
projects that represent potential reserves not currently booked in our year-end
reserve total. With the continuing strength of the commodity markets and our
improving operational outlook, 2004 looks like a continued year of growth for
Abraxas."
As a result of fina80l 2003 financial results and current market conditions,
Abraxas has updated its operating and financial guidance for year 2004 as
follows:
Production:
Bcfe (approximately 80% gas) 8 - 9
Price Differentials (Pre Hedge):
$ Per Bbl 0.86
$ Per Mcf 0.64
Lifting Costs, $ Per Mcfe 1.29
G&A, $ Per Mcfe 0.60
Capital Expenditures ($ Millions) 10.00
The Company estimated January 2004 production at approximately 22.8 Mcfe per
day.
Abraxas invites your participation in a conference call on Wednesday, March
10th, at 9:00 am CT to discuss the contents of this release and respond to
questions. Please call 1-800-946-0719 between 8:50 am and 9:00 am CT,
confirmation code 786241, if you would like to participate in the call. There
will be a replay of the conference call available by calling 1-888-203-1112,
confirmation code 786241, beginning approximately 11:00 am CT Wednesday, March
10th, through midnight CT Tuesday, March 16th.
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas
exploitation and production company. The Company operates in Texas, Wyoming and
western Canada.
Safe Harbor for forward-looking statement: Statements in this release looking
forward in time involve known and unknown risks and uncertainties, which may
cause the Company's 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 the
Company for crude oil and natural gas. In addition, the Company's future crude
oil and natural gas production is highly dependent upon the Company's level of
success in acquiring or finding additional reserves. Further, the Company
operates in an industry sector where the value of securities is highly volatile
and may be influenced by economic and other factors beyond the Company's
control. In the context of forward-looking information provided for in this
release, reference is made to the discussion of risk factors detailed in the
Company's filing with the Securities and Exchange Commission during the past 12
months.
FOR MORE INFORMATION CONTACT:
Janice Herndon/Manager Corp. Communications
Telephone 210.490.4788
jherndon@abraxaspetroleum.com
www.abraxaspetroleum.com
ABRAXAS PETROLEUM CORPORATION
YEAR-END RESULTS
Three Months Twelve Months
(In thousands except per share data) Ended December 31, Ended December 31,
2003 2002(1) 2003 2002(1)
---- ------- ---- -------
Operations Data:
Revenues $9,048 $17,217 $39,019 $54,320
EBITDA 4,858 10,748 23,451 31,629
Cash Flow (Before Working Capital Changes) 3,459 1,256 13,923 (3,597)
Net Income(Loss) (1,734) (5,700) 55,920 (3) (118,527)(2)
Net Income(Loss) Per Share (Basic) (.05) (.19) 1.58 (3.95)
Weighted Ave. Shares Outstanding 35.8 30.0 35.4 30.0
Production:
Crude Oil (BPD) 781 834 689 801
NGL (BPD) 64 649 102 663
Natural Gas (MCFPD) 16,523 40,877 16,957 42,336
MMCFEPD 21.6 49.8 21.7 51.1
Prices (net of hedge impact):
Crude Oil ($/BBL) $29.73 $30.16 $30.32 $24.34
NGL's ($/BBL) 25.49 22.26 24.47 17.94
Natural Gas ($/MCF) 4.30 3.47 4.78 2.55
Price per MCFE 4.44 3.65 4.81 2.73
Expenses:
Lease Operating ($/MCFE) $1.23 $.88 $1.21 $.82
General & Administrative ($/MCFE) .82 .50 .67 .37
Cash Interest ($/MCFE) .54 1.82 .55 1.83
Total Interest ($/MCFE) 2.06 1.82 2.14 1.83
D/D/A ($/MCFE) 1.48 1.21 1.33 1.42
(1) 2002 Results include impact from Canadian operations sold in January,
2003
(2) Net loss for 2002 includes a $116 million proved property impairment
due to lower realized prices at period end
(3) Includes gain on sale of Canadian subsidiaries of $68.9 million
Balance Sheet Data (In $000s)
December 31, 2003 December 31, 2002
Cash $493 $4,882
Working Capital (Deficit) (2,444) (65,609)
Plant/Property/Equipment, Net 111,563 150,394
Total Assets 126,437 181,425
Long-Term Debt 184,649 236,943
Shareholders Equity (Deficit) (72,203) (142,254)
Common Shares Outstanding (Millions) 35.9 30.0
ABRAXAS PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31
----------------------------------------------------------
2001 2002 2003
----------------------------------------------------------
(In thousands except per share data)
Revenues:
Oil and gas production revenues ......................... $ 73,201 $ 50,862 $ 38,105
Gas processing revenues.................................. 2,438 2,420 133
Rig revenues ............................................ 756 635 663
Other .................................................. 848 403 118
------------------- -------------- -----------------
77,243 54,320 39,019
Operating costs and expenses:
Lease operating and production taxes .................... 18,616 15,240 9,599
Depreciation, depletion, and amortization ............... 32,484 26,539 10,803
Proved property impairment .............................. 2,638 115,993 -
Rig operations .......................................... 702 567 609
General and administrative .............................. 6,445 6,884 5,360
Stock-based compensation................................. (2,767) - 1,106
------------------- -------------- ----------------
58,118 165,223 27,477
------------------- -------------- ----------------
Operating income (loss)..................................... 19,125 (110,903) 11,542
Other (income) expense:
Interest income ......................................... (78) (92) (30)
Amortization of deferred financing fees ................. 2,268 2,095 1,678
Interest expense ........................................ 31,523 34,150 16,955
Financing costs.......................................... - 967 4,406
Loss on sale of equity investment ....................... 845 - -
Gain on sale of foreign subsidiaries..................... - - (68,933)
Other ................................................... 207 201 774
------------------- --------------- ----------------
34,765 37,321 (45,150)
------------------- --------------- ----------------
Income (loss) before cumulative effect of accounting change
and taxes................................................ (15,640) (148,224) 56,692
Income tax expense (benefit):
Current ................................................. 505 - -
Deferred ................................................ 1,897 (29,697) 377
Minority interest in income of foreign subsidiary (2001
prior to purchase)....................................... 1,676 - -
Cumulative effect of accounting change...................... - - 395
------------------- --------------- ----------------
Net income (loss)........................................ $ (19,718) $ (118,527) $ 55,920
=================== =============== ================
Basic earnings (loss)per common share:
Net earnings (loss)................................... $ (0.76) $ (3.95) $ 1.59
Cumulative effect of accounting change................ - - (0.01)
------------------- --------------- ----------------
Net income (loss) per common share - basic .............. $ (0.76) $ (3.95) $ 1.58
=================== =============== ================
Diluted earnings (loss) per common share:
Net earnings (loss)................................... $ (0.76) $ (3.95) $ 1.56
Cumulative effect of accounting change................ - - (0.01)
------------------- --------------- ----------------
Net income (loss) per common share - diluted............ $ (0.76) $ (3.95) $ 1.55
=================== =============== ================
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 (loss) calculated in accordance with GAAP is the most directly
comparable measure most similar to cash flow and EBITDA.
Cash flow is defined as operating income (loss) plus depletion, depreciation and
amortization expense, non-cash expenses, cash gains (losses) on the settlement
of non-hedge derivatives and cash portion of other income (expense) and cash
interest. The following table provides a reconciliation of cash flow to
operating income (loss) for the periods presented.
Three Months Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
------ ---- ---- ----
Operating income (loss) $1,275 $5,221 $11,542 $(110,903)
Depletion, depreciation and amortization 2,943 5,529 10,803 26,539
Non-cash stock based comp. expense 640 - 1,106 -
Proved Property Impairment - (2) - 115,993
Financing Costs (224) (967) (4,406) (967)
Other Expense (102) (201) (774) (201)
Cash interest (1,073) (8,324) (4,348) (34,058)
Cash Flow $3,459 $1,256 $13,923 $(3,597)
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 (loss) for the periods presented.
Three Months Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
---- ---- ---- ----
Operating income (loss) $1,275 $5,221 $11,542 $(110,903)
Depletion, depreciation and amortization 2,943 5,529 10,803 26,539
Proved Property Impairment - (2) - 115,993
Non-cash stock based comp. expense 640 - 1,106 -
EBITDA $4,858 $10,748 $23,451 $31,629