Exhibit 99.1
ABRAXAS PETROLEUM CORPORATION
www.abraxaspetroleum.com
500 N. Loop 1604 East, Suite 100, San Antonio, Texas 78232
Office: 210.490.4788 Exec/Acctg Fax: 210.490.8816
NEWS RELEASE
Abraxas Reports Second Quarter 2006 Results with
Five Consecutive Quarters of Production Growth including a
41% Increase in Daily Production over Second Quarter 2005
SAN ANTONIO (Aug. 8, 2006) - Abraxas Petroleum Corporation (AMEX:ABP) today
reported financial and operating results for the quarter and six months ended
June 30, 2006 and provided an operational update.
Daily production from the second quarter of 2006 increased 5% over the first
quarter of 2006 marking five consecutive quarters of production growth.
Results for the quarter ended June 30, 2006 included:
o Production of 2.0 Bcfe, a 41% increase over Q2 2005;
o Revenue of $13.3 million, a 38% increase over Q2 2005;
o EBITDA (a) of $9.4 million, a 61% increase over Q2 2005; and
o Cash flow (a) of $5.3 million, a 117% increase over Q2 2005.
Results for the six months ended June 30, 2006 included:
o Production of 3.8 Bcfe, a 42% increase over the same six-month period
of 2005;
o Revenue of $26.6 million, a 53% increase over the same six-month period
of 2005;
o EBITDA (a) of $18.6 million, a 82% increase over the same six-month
period of 2005; and
o Cash flow (a) of $10.6 million, a 184% increase over the same six-month
period of 2005.
(a) see reconciliation of non-GAAP financial measures below.
Net earnings in the second quarter of 2006 were $983,000, or $0.02 per share,
compared to a net loss in the same quarter of 2005 of $37,000, or less than
($0.01) per share, from continuing operations. Net earnings for the six months
ended June 30, 2006 were $2.2 million, or $0.05 per share, as compared to a net
loss during the same six-month period of 2005 of $973,000, or ($0.03) per share,
from continuing operations. Continuing operations represent financial and
operating results from operations in the U.S. only as all of Grey Wolf
Exploration Inc.'s historical performance and results are treated as
discontinued operations as a result of the sale of Grey Wolf shares owned by
Abraxas in Grey Wolf's initial public offering that closed on February 28, 2005.
Abraxas currently owns less than 1% of the outstanding capital stock of Grey
Wolf.
As anticipated, basis differentials during the quarter narrowed closer to
historical ranges. The Company realized an oil differential of less than $1.30
and a gas differential of 20% to NYMEX (L3D) during the second quarter of 2006,
compared to $1.95 and 30%, respectively, that the Company realized during the
first quarter of 2006.
"I am very pleased to announce that we have increased production from 14.2
MMcfepd to 21.4 MMcfepd since the first quarter of 2005. This 51% increase in
production has been achieved exclusively through the drill bit, as we continue
to explore and exploit the many opportunities that we have identified on our
existing leasehold. As a result, we believe we are well positioned to meet our
2006 production guidance," commented Bob Watson, Abraxas' President and CEO.
Operations
In South Texas, the Simek-Cook #1 was recently completed in the Wilcox formation
and placed on-line at approximately 1.0 MMcfepd.
In the Oates SW Field of West Texas, completion operations continue on the
Hudgins #37-1H, a horizontal Devonian re-entry, and the La Escalera #5-1, a
Lower Wolfcamp test. The La Escalera #2 is currently shut-in after the Atoka
formation was deemed not commercial; this well will be evaluated for other
potentially productive zones.
In Wyoming, some of the accumulated oil in inventory at the end of the first
quarter was sold during the second quarter, whereas the remainder will be sold
during the third quarter. The Company continues to monitor production rates on
the four vertical wells drilled in late 2005, while analyzing the different
fracture treatments employed.
Abraxas owns a 100% working interest in all of the above-mentioned wells.
Conference Call
Abraxas invites you to participate in a conference call on Tuesday, August 8th,
at 2:00 p.m. CT to discuss the contents of this release and respond to
questions. Please dial 1.866.203.3436, passcode 33204543, 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 the section
entitled "Event Calendar". In addition to the audio webcast replay, a podcast
and transcript of the conference call will be posted on the "Event Calendar"
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
exploitation and production company with operations in Texas and Wyoming.
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/Director of Corporate Development
Direct Telephone 210.757.9835
Main Telephone 210.490.4788
bstuckey@abraxaspetroleum.com
www.abraxaspetroleum.com
ABRAXAS PETROLEUM CORPORATION
QUARTER-END RESULTS
(UNAUDITED)
Three Months Ended Six Months Ended
(In thousands except per share data) June 30, June 30,
------------------------------------ ------------------------------
2006 2005 2006 2005
---------------- ---------------- -------------- ------------
Financial results:
- -------------------------------------------------
Revenues $ 13,304 $ 9,627 $ 26,609 $ 17,449
EBITDA (a) 9,432 5,841 18,589 10,221
Cash flow (a) 5,342 2,460 10,554 3,717
Earnings (loss) from continuing operations 983 (37) 2,203 (973)
Earnings (loss) per share from continuing
operations - basic $ 0.02 $ 0.00 $ 0.05 $ (0.03)
Weighted average shares outstanding 42,569 37,821 42,524 37,216
Production per day:
------------------------------------------------
Crude oil (Bbl) 559 535 539 555
Natural gas (Mcf) 18,080 12,024 17,684 11,388
Mcfe 21,431 15,234 20,917 14,716
Realized prices (net of hedge impact):
- -------------------------------------------------
Crude oil (Bbl) $ 66.09 $ 49.43 $ 62.97 $ 48.25
Natural gas (Mcf) 5.78 6.33 6.14 5.83
Price per Mcfe 6.60 6.73 6.81 6.33
Expenses:
- -------------------------------------------------
Lease operating ($ per Mcfe) $ 0.94 $ 1.15 $ 0.92 $ 1.11
Production taxes (% of revenue) 7% 10% 8% 11%
General and administrative, excluding
stock-based compensation ($ per Mcfe) 0.48 0.79 0.54 0.77
Cash interest ($ per Mcfe) 2.10 2.44 2.12 2.44
D/D/A ($ per Mcfe) 1.92 1.31 1.88 1.32
- -------------------------------------------------
(a) See reconciliation of non-GAAP financial measures below.
Note: The above results exclude impact from Grey Wolf Exploration Inc.
BALANCE SHEET DATA
(In thousands) June 30, 2006 December 31, 2005
------------------------ -----------------------
Cash $ 52 $ 42
Working capital (deficit) (5,479) (4,880)
Property and equipment - net 116,661 105,248
Total assets 131,559 121,866
Long-term debt 136,633 129,527
Stockholders' equity (deficit) (20,858) (23,701)
Common shares outstanding 42,596 42,007
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share data) Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ --------------------------------
2006 2005 (a) 2006 2005 (a)
------------------- ---------------- ----------------- --------------
Revenues:
Oil and gas production revenues ................ $ 12,869 $ 9,336 $ 25,795 $ 16,861
Rig revenues ................................... 429 283 805 579
Other ......................................... 6 8 9 9
------------------- ---------------- ----------------- --------------
13,304 9,627 26,609 17,449
Operating costs and expenses:
Lease operating ................................ 1,835 1,595 3,488 2,965
Production taxes ............................... 881 927 2,050 1,835
Depreciation, depletion, and amortization ...... 3,737 1,817 7,136 3,515
Rig operations ................................. 219 166 430 384
General and administrative (including stock-
based compensation of $199, $16, $370
and $41) ..................................... 1,136 1,114 2,422 2,085
------------------- ---------------- ----------------- --------------
7,808 5,619 15,526 10,784
------------------- ---------------- ----------------- --------------
Operating income .................................. 5,496 4,008 11,083 6,665
Other (income) expense:
Interest income ................................ - - (1) (1)
Interest expense ............................... 4,115 3,407 8,086 6,541
Amortization of deferred financing fees ........ 398 403 795 854
Other .......................................... - 235 - 244
------------------- ---------------- ----------------- --------------
4,513 4,045 8,880 7,638
------------------- ---------------- ----------------- --------------
Earnings (loss) from continuing operations ........ 983 (37) 2,203 (973)
Net income (loss) from discontinued operations
(net of $6,060 income tax expense in 2005)...... - (27) - 12,894
------------------- ---------------- ----------------- --------------
Net earnings (loss) ............................ $ 983 $ (64) $ 2,203 $ 11,921
=================== ================ ================= ==============
Basic earnings (loss) per common share:
Net earnings (loss) from continuing $ 0.02 $ - $ 0.05 $ (0.03)
operations...................................
Discontinued operations .................... - - - 0.35
------------------- ---------------- ----------------- --------------
Net earnings (loss) per common share - basic ... $ 0.02 $ - $ 0.05 $ 0.32
=================== ================ ================= ==============
Diluted earnings (loss) per common share:
Net earnings (loss) from continuing $ 0.02 $ - $ 0.05 $ (0.03)
operations...................................
Discontinued operations .................... - - - 0.35
------------------- ---------------- ----------------- --------------
Net earnings (loss) per common share - diluted $ 0.02 $ - $ 0.05 $ 0.32
Weighted average shares outstanding:
Basic ....................................... 42,569 37,821 42,524 37,216
Diluted .................................... 44,073 39,435 44,119 37,216
(a) Reflects retrospective adoption of SFAS 123R.
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 to cash flow and EBITDA; therefore, operating income (loss)
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, 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 Ended Six Months Ended
(In thousands) June 30, June 30,
---------------------------------- --------------------------------
2006 2005 2006 2005
---------------- -------------- ------------- ---------------
Operating income $ 5,496 $ 4,008 $ 11,083 $ 6,665
Depletion, depreciation and amortization 3,737 1,817 7,136 3,515
Stock-based compensation 199 16 370 41
Cash portion of other expense - - - (9)
Cash interest (4,090) (3,381) (8,035) (6,495)
- -----------------------------------------------------------------------------------------------------------------
Cash Flow $ 5,342 $ 2,460 $ 10,554 $ 3,717
- -----------------------------------------------------------------------------------------------------------------
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 - see consolidated statements of
operations for a reconciliation of net income (loss) to operating income (loss).
(In thousands) Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- --------------------------------
2006 2005 2006 2005
----------------- ------------- ------------- ---------------
Operating income $ 5,496 $ 4,008 $ 11,083 $ 6,665
Depletion, depreciation and amortization 3,737 1,817 7,136 3,515
Stock-based compensation 199 16 370 41
- -----------------------------------------------------------------------------------------------------------------
EBITDA $ 9,432 $ 5,841 $ 18,589 $ 10,221
- -----------------------------------------------------------------------------------------------------------------
Note: The above cash flow and EBITDA reconciliations exclude impact from
Grey Wolf Exploration Inc.