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 Third Quarter 2006 Results with
Six Consecutive Quarters of Production Growth including a
25% Increase in Daily Production over Third Quarter 2005
SAN ANTONIO (Nov. 6, 2006) - Abraxas Petroleum Corporation (AMEX:ABP) today
reported financial and operating results for the quarter and nine months ended
September 30, 2006 and provided an operational update.
Daily production from the third quarter of 2006 increased 3% over the second
quarter of 2006 marking six consecutive quarters of production growth.
Results for the quarter ended September 30, 2006 included:
o Production of 2.0 Bcfe, a 25% increase over Q3 2005;
o Realized gas price of $5.43, a 33% decrease from Q3 2005 realized price
of $8.15;
o Revenue of $13.2 million, a 7% decrease from Q3 2005;
o EBITDA (a) of $9.3 million, an 8% decrease from Q3 2005; and
o Cash flow (a) of $4.8 million, a 23% decrease from Q3 2005.
Results for the nine months ended September 30, 2006 included:
o Production of 5.8 Bcfe, a 36% increase over the same nine-month period
of 2005;
o Revenue of $39.8 million, a 26% increase over the same nine-month
period of 2005;
o EBITDA (a) of $27.9 million, a 38% increase over the same nine-month
period of 2005; and
o Cash flow (a) of $15.4 million, a 53% increase over the same nine-month
period of 2005.
(a) see reconciliation of non-GAAP financial measures below.
Net earnings in the third quarter of 2006 were $589,000, or $0.01 per share,
compared to net earnings in the same quarter of 2005 of $3.8 million, or $0.09
per share, from continuing operations. Net earnings for the nine months ended
September 30, 2006 were $2.8 million, or $0.07 per share, as compared to net
earnings during the same nine-month period of 2005 of $2.8 million, or $0.07 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.
"I am pleased to announce that we continue to deliver our shareholders quarter
over quarter production growth. We have achieved a 29% CAGR (compounded annual
growth rate) since the first quarter of 2005. All of the production increases
have 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. Looking forward to 2007, we are currently in the process of preparing
our capital expenditure budget and plan to announce the same in conjunction with
our 2007 production and cost guidance before the end of November," commented Bob
Watson, Abraxas' President and CEO.
Operations
In the Oates SW Field of West Texas:
o The La Escalera #5-1, a Lower Wolfcamp test, is scheduled to be
fracture stimulated during the 4th quarter;
o The Hudgins #37-1H, a horizontal Devonian re-entry, has been placed on
gas lift to further evaluate its natural productive capabilities; and
o The Manzanita State #1H, a horizontal Devonian re-entry, has been
cleaned out and the lateral is currently scheduled to begin drilling in
early 2007.
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
Monday, November 6th, at 2:00 p.m. CT to discuss the contents of this release
and respond to questions. Please dial 1.800.510.9691, passcode 34022891, 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
Investor Relations section. 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
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 Nine Months Ended
(In thousands except per share data) September 30, September 30,
------------------------------------ ------------------------------
2006 2005 2006 2005
---------------- ---------------- -------------- -------------
Financial results:
- -------------------------------------------------
Revenues S 13,216 $ 14,164 $ 39,825 $ 31,613
EBITDA (a) 9,264 10,028 27,854 20,249
Cash flow (a) 4,851 6,336 15,406 10,053
Earnings from continuing operations 589 3,783 2,792 2,810
Earnings per share from continuing operations -
basic $ 0.01 $ 0.09 $ 0.07 $ 0.07
Weighted average shares outstanding - basic 42,584 40,962 42,550 38,478
Production per day:
- -------------------------------------------------
Crude oil (Bbl) 567 487 549 532
Natural gas (Mcf) 18,752 14,848 18,044 12,554
Mcfe 22,157 17,769 21,335 15,745
Realized prices (net of hedge impact):
- -------------------------------------------------
Crude oil (Bbl) $ 66.62 $ 60.24 $ 64.24 $ 51.95
Natural gas (Mcf) 5.43 8.15 5.89 6.75
Price per Mcfe 6.30 8.46 6.63 7.14
Expenses:
- -------------------------------------------------
Lease operating ($ per Mcfe) $ 0.92 $ 1.10 $ 0.92 $ 1.11
Production taxes (% of revenue) 7.9% 8.5% 7.8% 9.6%
General and administrative, excluding
stock-based compensation ($ per Mcfe) 0.41 0.58 0.50 0.70
Cash interest ($ per Mcfe) 2.16 2.24 2.14 2.36
D/D/A ($ per Mcfe) 1.78 1.29 1.85 1.31
- -------------------------------------------------
(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) September 30, 2006 December 31, 2005
------------------------ -----------------------
Cash $ 1,029 $ 42
Working capital (deficit) (3,223) (4,880)
Property and equipment - net 103,902 105,248
Total assets 118,331 121,866
Long-term debt 126,077 129,527
Stockholders' equity (deficit) (20,335) (23,701)
Common shares outstanding 42,603 42,007
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share data) Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ --------------------------------
2006 2005 (a) 2006 2005 (a)
------------------- ---------------- ----------------- --------------
Revenues:
Oil and gas production revenues ................ $ 12,847 $ 13,829 $ 38,642 $ 30,690
Rig revenues ................................... 363 330 1,168 909
Other ......................................... 6 5 15 14
------------------- ---------------- ----------------- --------------
13,216 14,164 39,825 31,613
Operating costs and expenses:
Lease operating ................................ 1,882 1,799 5,370 4,763
Production taxes ............................... 1,047 1,208 3,097 3,044
Depreciation, depletion, and amortization ...... 3,631 2,107 10,767 5,622
Rig operations ................................. 178 176 608 560
General and administrative (including stock-
based compensation of $207, $16, $578
and $57) ..................................... 1,052 969 3,474 3,054
------------------- ---------------- ----------------- --------------
7,790 6,259 23,316 17,043
------------------- ---------------- ----------------- --------------
Operating income .................................. 5,426 7,905 16,509 14,570
Other (income) expense:
Interest income ................................ (1) (11) (2) (12)
Interest expense ............................... 4,440 3,700 12,526 10,241
Amortization of deferred financing fees ........ 398 403 1,193 1,257
Other .......................................... - 30 - 274
------------------- ---------------- ----------------- --------------
4,837 4,122 13,717 11,760
------------------- ---------------- ----------------- --------------
Earnings from continuing operations ............... 589 3,783 2,792 2,810
Net income from discontinued operations (net of
$6,060 income tax expense in 2005).............. - - - 12,894
------------------- ---------------- ----------------- --------------
Net earnings ................................... $ 589 $ 3,783 $ 2,792 $ 15,704
=================== ================ ================= ==============
Basic earnings per common share:
Net earnings from continuing operations...... $ 0.01 $ 0.09 $ 0.07 $ 0.07
Discontinued operations .................... - - - 0.34
------------------- ---------------- ----------------- --------------
Net earnings per common share - basic .......... $ 0.01 $ 0.09 $ 0.07 $ 0.41
=================== ================ ================= ==============
Diluted earnings per common share:
Net earnings from continuing operations...... $ 0.01 $ 0.09 $ 0.06 $ 0.07
Discontinued operations .................... - - - 0.32
------------------- ---------------- ----------------- --------------
Net earnings per common share - diluted ....... $ 0.01 $ 0.09 $ 0.06 $ 0.39
=================== ================ ================= ==============
Weighted average shares outstanding:
Basic ....................................... 42,584 40,962 42,550 38,478
Diluted .................................... 43,911 42,833 44,045 40,141
(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 Nine Months Ended
(In thousands) September 30, September 30,
---------------------------------- --------------------------------
2006 2005 2006 2005
---------------- -------------- ------------- ----------------
Operating income $ 5,426 $ 7,905 $ 16,509 $ 14,570
Depletion, depreciation and amortization
3,631 2,107 10,767 5,622
Stock-based compensation 207 16 578 57
Cash portion of other expense - (30) - (39)
Cash interest (4,413) (3,662) (12,448) (10,157)
- -----------------------------------------------------------------------------------------------------------------
Cash Flow $ 4,851 $ 6,336 $ 15,406 $ 10,053
- -----------------------------------------------------------------------------------------------------------------
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 Nine Months Ended
September 30, September 30,
---------------------------------- --------------------------------
2006 2005 2006 2005
----------------- ------------- ------------- ---------------
Operating income $ 5,426 $ 7,905 $ 16,509 $ 14,570
Depletion, depreciation and amortization 3,631 2,107 10,767 5,622
Stock-based compensation 207 16 578 57
- -----------------------------------------------------------------------------------------------------------------
EBITDA $ 9,264 $ 10,028 $ 27,854 $ 20,249
- -----------------------------------------------------------------------------------------------------------------
Note: The above cash flow and EBITDA reconciliations exclude impact from Grey
Wolf Exploration Inc.