Abraxas Reports $63 Million Gain in 2003 First Quarter Including Gain on Sale of Canadian Subsidiaries.Energy Editors/Business Editors SAN ANTONIO--(BUSINESS WIRE)--May 13, 2003 Abraxas A`brax´as n. 1. A mystical word used as a charm and engraved on gems among the ancients; also, a gem stone thus engraved. Petroleum Corporation ("Abraxas") (AMEX AMEX See: American Stock Exchange :ABP 1. (networking) ABP - Alternating bit protocol. 2. ABP - Microsoft Address Book Provider. ) today reported results for the first quarter of 2003, including the impact of the sale of its Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. subsidiaries and the benefits of the financial transactions completed on January January: see month. 23, 2003. Quarterly Highlights: -- $62.7 million in income for Q1 2003 ($1.83 per share) compared to $8.7 million loss in Q1 2002 (-$.29 per share); -- $67.0 gain on sale of Canadian subsidiaries in Q1 2003; -- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $6.1 million from recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operations for Q1 2003 (see reconciliation of non-GAAP financial measures in tables), vs. $1.5 million in Q1 2002; -- Q1 2003 includes $873,000 of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from operations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Canadian subsidiaries which were sold compared to a loss of $1.4 million related to sold operations in Q1 2002; -- Non-recurring financing costs of $3.6 million in Q1 2003; -- Revenues in Q1 2003 doubled Q1 2002, $9.8 million versus $4.6 million; -- Q1 2003 natural gas price realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. was $5.29 per Mcf compared to $2.27 per Mcf in Q1 2002; and -- Production averaged 20.1 MMcfepd, up 5% from Q4 2002. The Company announced on January 24, 2003 the successful completion of several transactions that dramatically changed its operations and financial results in the first quarter of 2003. The details of those transactions are as follows: -- The closing of the sale of the capital stock of its wholly-owned subsidiaries Canadian Abraxas Petroleum Limited ("Canadian Abraxas") and Grey Wolf Exploration Inc., referred to herein as Old Grey Wolf, to a Canadian royalty trust royalty trust An ownership interest in certain assets, generally crude oil or gas production and real estate. Unlike the usual corporate organization, a trust arrangement permits income and tax benefits to flow through to the individual owners. for approximately $138 million. After the sale of these subsidiaries, the Company retained some producing assets and significant non-producing assets in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of which were contributed to a new wholly-owned Canadian subsidiary, Grey Wolf Exploration Inc., or New Grey Wolf; -- The closing of a new senior secured credit facility consisting of a term-loan facility of $4.2 million and a revolving-credit facility of up to $50 million with an initial borrowing base of $45.5 million, of which $42.5 million was used to fund the exchange offer described below with the remaining availability to be used to fund the continued development of our existing crude oil and natural gas properties; -- The closing of an exchange offer in which Abraxas paid $264 in cash and issued $610 principal amount of new 11 1/2 % Secured Notes due 2007, Series A, and 31.36 shares of Abraxas common stock for each $1,000 in principal amount of the outstanding 11 1/2 % Senior Secured Notes due 2004, Series A, and 11 1/2 % Senior Notes due 2004, Series D, issued by Abraxas and Canadian Abraxas, which were tendered and accepted in the exchange offer. An aggregate of $179.9 million in principal amount of the notes were tendered in the exchange offer and the remaining $11 million of notes not tendered were redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. ; -- The redemption of Abraxas' 12 7/8 % Senior Secured Notes due 2003, principal amount of $63.5 million, plus accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. interest; and -- The repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of Old Grey Wolf's senior secured credit facility with Mirant Mirant Services LLC, an Atlanta-based energy company, produces and sells electricity in the United States, the Caribbean, and the Philippines. The company was spun-off from parent, Southern Company, on April 2, 2001. Canada Energy Capital Ltd. in the amount of approximately $46.3 million. First Quarter Operations Update: While production, year over year, declined in the first quarter, some U.S. assets divested in the second quarter of last year impacted 2002 results, but not Q1 of 2003. Compared to production in Q4 of 2002, first quarter production increased from 19.2 MMcfepd to 20.1 MMcfepd, or 5%. This increase was primarily caused by new production from wells drilled late in 2002. During the first quarter, the Company spent $4.4 million on capital expenditures to participate in the drilling of 8 new wells (6 in Canada). Of those 8 wells, 1 is currently drilling, 5 wells are awaiting completion and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. tie-in tie-in n. One thing that is related to or connected with another. Noun 1. tie-in - a fastener that serves to join or connect; "the walls are held together with metal links placed in the wet mortar during construction" , 1 well is on production and 1 well was plugged and abandoned. Additionally, 1 well drilled in the fourth quarter of 2002 was placed on production during the first quarter of 2003 and one well was re-entered, drilled horizontally and placed on production during the quarter. The Company expects that the 5 wells awaiting completion and/or tie-in (4 in Canada) will be placed on production this summer, increasing the Company's production rates at that time. The Company also announced that Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the E. Logue, Dean and Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. E. Brown Chair of the Michael F. Price College of Business The Michael F. Price College of Business at the University of Oklahoma is one of the most distinguished business schools in the country. The College of Business was established in 1917 and currently has over 3,200 students. at the University of Oklahoma University of Oklahoma, abbreviated OU, is a coeducational public research university located in the U.S. state of Oklahoma. Founded in 1890, it existed in Oklahoma Territory near Indian Territory 17 years before the two became the state of Oklahoma. , has joined the Company's Board of Directors to complete the term of a recently resigned director. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Bob Watson
(2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing the Company with the sale of Old Grey Wolf and Canadian Abraxas, the corresponding reductions in debt and interest costs have positioned us to utilize our improved liquidity, accelerate development on the significant remaining assets we have and take advantage of the dramatically improved commodity markets that currently exist. The addition of a director to our Board with the experience and qualifications of someone like Dennis Logue will only benefit management as well as all of the stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. in Abraxas." Key quarterly results are summarized below:
(Amounts in thousands)
----------------------
2003 2002
-------- ---------
Revenues $9,836 $4,616
Operating Income (Loss) 3,707 (729)
Net Income (Loss) 62,702 (8,699)
Earnings (Loss) Per Share (Basic) 1.83 (.29)
EBITDA 6,093 (a) 1,524
Average Oil Price (after hedge) 33.33 16.37
Average Gas Price (after hedge) 5.29 2.27
Total Assets - at March 31 $117,674 $309,294
(a) Excludes $67.0 million gain related to the sale of the Company's
Canadian subsidiaries concluded in January of 2003, $36,000 of
non-cash stock based compensation expense, $873,000 earnings from
discontinued operations and $395,000 in non-cash expense related
to the cumulative effect of accounting change. See reconciliation
of Non-GAAP Financial Measures below.
Abraxas invites your participation in a conference call on Wednesday Wednesday: see week. , May 14th, at 1:30 pm CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT to discuss the contents of this release and respond to questions. Please call 1-800-946-0785 between 1:20 and 1:30 pm CDT, passcode code 293496, 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, passcode code 293496, beginning approximately 4:30 pm CDT Wednesday, May 14th, through 5:00 pm CDT Wednesday, May 21st. Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploitation and production company. The Company operates in Texas, Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. and western Canada
Western Canada, commonly referred to as the West . Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 and our ability to sell certain assets in a timely manner to support liquidity needs. 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 securities values are highly volatile and may be influenced by economic and other factors beyond the Company's control. In the context of forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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.
ABRAXAS PETROLEUM CORPORATION
QUARTER-END RESULTS
(UNAUDITED)
Three Months
(In thousands except per share data) Ended March 31,
Production and Pricing Information 2003 2002
Revenues $9,836 $4,616
Cash Flow (Before Working Capital Changes) (1):
Recurring (2) 5,384 (4,678)
Non-Recurring (2,416) (4,678)
Net Income(Loss) 62,702 (8,699)
Net Income(Loss) Per Share 1.83 (.29)
Weighted Ave. Shares Outstanding (millions) 34.2 30.0
Production:
Crude Oil (BPD) 700 751
NGL (BPD) 44 24
Natural Gas (MCFPD) 15,626 16,286
MMCFEPD 20.1 20.9
Prices (net of hedge impact):
Crude Oil ($/BBL) $33.33 $16.37
NGL's ($/BBL) 26.28 11.55
Natural Gas ($/MCF) 5.29 2.27
Price per MCFE 5.34 2.70
Expenses:
Lease Operating, including prod. taxes ($/MCFE) $1.30 $1.00
General & Administrative ($/MCFE) .68 .58
Cash Interest ($/MCFE) (3) .39 3.32
Total Interest ($/MCFE) 2.72 3.32
D/D/A ($/MCFE) 1.30 1.20
(1) See reconciliation of non-GAAP financial measures below.
(2) Recurring cash flow excludes cash interest costs of $1.6 million
related to debt extinguished at 1/23/03 and $2.6 million of
non-cash interest expense booked related to the Company's new
notes issued in January of 2003, also excludes $3.6 million in
non-recurring financing costs incurred in January of 2003 related
to the exchange of notes.
(3) Includes interest expense of $709,000 related to the Company's new
senior credit revolving facility only.
Balance Sheet (In $000s)
March 31, 2003 December 31, 2002
(unaudited)
Cash $2,510 $557
Working Capital (Deficit) (1,869) (49,997)
Property/Equipment, Net 100,959 95,926
Total Assets 117,674 181,425
Long-Term Debt 173,735 190,979
Shareholders Equity (Deficit) (70,201) (142,254)
Common Shares Outstanding (Millions) 35.6 30.0
Abraxas Petroleum Condensed
Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
Three Months Ended
March 31,
-------------------
2003 2002
-------------------
Revenue:
Oil and gas production revenues $9,653 $4,461
Rig revenues 181 151
Other 2 4
--------- ---------
9,836 4,616
Operating costs and expenses:
Lease operating and production taxes 2,347 1,878
Depreciation, depletion and amortization 2,350 2,253
Rig operations 166 121
General and administrative 1,230 1,093
General and administrative (stock-based
compensation) 36 -
--------- ---------
6,129 5,345
--------- ---------
Operating income (loss) 3,707 (729)
Other (income) expense
Interest income (10) (33)
Interest expense 4,523 6,235
Amortization of deferred financing fees 329 331
Financing cost 3,601 -
--------- ---------
8,443 6,533
--------- ---------
Earnings (loss) from continuing operations
before cumulative effect of accounting
change (4,736) (7,262)
Earnings (loss) from discontinued operations:
Earnings (loss) from discontinued
operations 873 (1,437)
Gain on sale of foreign subsidiaries 66,960 -
--------- ---------
Net earnings from discontinued operations 67,833 (1,437)
Cumulative effect of accounting change (395) -
--------- ---------
Net earnings (loss) $62,702 $(8,699)
========= =========
Basic earnings (loss) per common share:
Net earnings (loss) from continuing
operations $(0.14) $(0.24)
Earnings (loss) from discontinued operations 1.98 (0.05)
Cumulative effect of accounting change (0.01) -
--------- ---------
Net earnings (loss) per common - basic $1.83 $(0.29)
========= =========
Diluted earnings (loss) per common share:
Net earnings (loss) from continuing
operations $(0.14) $(0.24)
Earnings (loss) from discontinued operations 1.97 (0.05)
Cumulative effect of accounting change (0.01) -
--------- ---------
Net earnings (loss) per common share -
diluted $1.82 $(0.29)
========= =========
Reconciliation of Non-GAAP Financial Measures To fully assess Abraxas' operating results, management believes that, although not prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), cash flow and EBITDA are appropriate measures of Abraxas' ability to satisfy capital expenditure obligations and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , depreciation and amortization expense, non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) , and cash interest. The following table provides a reconciliation of cash flow to operating income (loss) for the periods presented.
Three Months Ended March 31,
2003 2002
Operating income (loss) $3,707 $(729)
Depletion, depreciation and
amortization 2,350 2,253
Non-cash stock based comp. expense 36 -
Cash interest (709)(a) (6,202)
Recurring Cash Flow (deficit) $5,384 $(4,678)
(a) Includes interest expense of $709,000 related to the Company's
new senior credit revolving facility only.
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 Ended March 31,
2003 2002
Operating income (loss) $3,707 $(729)
Depletion, depreciation and
amortization 2,350 2,253
Non-cash stock based comp. expense 36 -
EBITDA $6,093 $1,524
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