Abraxas Reports 2003 Third Quarter Financial Results; 9% Production Increase from Q2 Achieved.Energy Editors/Business Editors SAN ANTONIO--(BUSINESS WIRE)--Nov. 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 (AMEX AMEX See: American Stock Exchange :ABP 1. (networking) ABP - Alternating bit protocol. 2. ABP - Microsoft Address Book Provider. ) today reported results for the third quarter of 2003. Significant results of the quarter and items that impacted Q3 include:
-- $2.7 million loss for Q3 2003 ($.08 per share) compared to
$8.4 million loss in Q3 2002 ($.28 per share);
-- Equivalent gas production increased from 1.6 Bcfe in Q2 2003
to 1.8 Bcfe in the current quarter, an increase of 9.4%;
-- Continuing cash flow(a) for the quarter totaled $3.8 million
compared to ($3.0) in the third quarter of 2002;
-- Continuing EBITDA(a) of $4.8 million, compared to $5.6 million
in the 2002 period;
-- Realized natural gas price of $4.50 per Mcf compared to $2.08
in Q3 2002;
-- Cash interest expense of $964,000 in Q3 2003 compared to $8.6
million in Q3 2002;
-- Debt reduced from $295 million at September 30, 2002 to $159
million ($177 million carrying value) at September 30, 2003;
and
-- Net non-continuing costs of $731,000 impacted 2003 results.
(a) See attached Reconciliation of Non-GAAP Financial Measures.
Third Quarter Financial Results: Revenues totaled $8.4 million for the third quarter of 2003 compared to $11.1 million for the similar quarter in 2002. The 2002 period results included production from the 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. assets sold by the Company in January January: see month. 2003 (see the May 13, 2003 press release detailing the series of transactions concluded in January that significantly impacted the Company going forward). The Company realized $4.50 per Mcf for its Q3 2003 natural gas production compared to $2.08 per Mcf in the 2002 period. The Company produced 1.8 Bcfe of natural gas during this quarter compared to 4.2 Bcfe in the third quarter of last year, which included the Canadian assets. Compared to a similar asset base, third quarter of 2003 production represented a 9.4% increase from Q2 levels, as a result of ongoing development activities. Continuing cash flow for the quarter totaled $3.8 million compared to negative $3.0 million in the third quarter of 2002. Higher price realizations coupled with the significant reduction in cash interest costs resulted in this improvement over 2002 even with the smaller asset base. The Company's debt position at September September: see month. 30, 2003 was $159 million ($177 million carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. ) compared to $295 million at September 30, 2002. Only $41 million of the Company's current debt carries a cash pay interest burden while the entire $295 million in 2002 was cash interest bearing. Several non-recurring and in some cases 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) impacted the third quarter results. Stock based compensation expense (a gain in this period) of $326,000 (non-cash) resulted from re-priced option accounting rules. This amount was a partial recovery of $756,000 in expense that was booked earlier in 2003. During the quarter the Company incurred non-recurring costs of $581,000 associated with ongoing financing activities. An additional gain of $298,000 was booked in the third quarter related to the sale of the Canadian subsidiaries in January of this year. The gain for the third quarter was related to post-closing adjustments to the sale. "Other" expense in Q3 included $674,000 related to the settlement of a dispute with a joint venture partner in a Canadian project. The settlement also included the transfer of certain rights on some Canadian unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy acreage owned by the Company to the partner for $674,000 cash, which reduced the Company's full cost pool. The overall settlement was cash neutral to the Company but, as a result of the structure, there was a negative impact on earnings but a positive impact on the balance sheet with debt reduction from sale proceeds. Third Quarter Operations Update: During the quarter the Company spent $6.3 million on capital expenditures related to operations in both west Texas and the province of Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. , 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 . On U.S. operations a total of $3.6 million was invested related to the drilling of one new well and completion and testing activities on previously drilled wells. Production from U.S. properties increased 8.4% from the second quarter as a result of this continuing development. Three new operated wells and three PrimeWest operated wells (with the Company's interest carried cost free under a farmout agreement) were spudded in Canada during the third quarter with a total of $2.7 million invested in those activities as well as completion and testing of previously drilled wells. Canadian production increased 16% from Q2 as new production has come online during Q3, as well as stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. production in the Company's Ladyfern area resulting from installation of additional compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. facilities. Key quarterly results are summarized below:
Amounts (In $000s)
---------------------------
2003 2002
---- ----
Revenues $8,430 $11,061
Operating Income 2,694 490
Net Income (Loss) (2,702) (8,438)
Earnings (Loss) Per Share
(Basic) (.08) (.28)
EBITDA (a) 4,786 5,576
Average Oil Price (after hedge) 29.52 27.19
Average Gas Price (after hedge) 4.50 2.08
Total Assets at September 30 124,203 183,893
(a) See attached Reconciliation of Non-GAAP Financial Measures.
Abraxas invites your participation in a conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November November: see month. 14, at 10:30 am CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. to discuss the contents of this release and respond to questions. Please call 1-800-967-7135 between 10:20 am and 10:30 am CST, passcode 692906, 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 692906, beginning at 1:30 pm CST on November 14, 2003 Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploitation Exploitation See also Opportunism. Barnum, P. T. (1810–1891) circus impressario famous for his saying, “Never give a sucker an even break.” [Am. Hist. 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 With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. 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 Nine Months
(In thousands Ended Ended
except per share data) September 30, September 30,
2003 2002(a) 2003 2002(a)
---- ------- ---- -------
Operations Data:
Revenues $8,430 $11,061 $29,971 $37,103
Continuing Cash Flow(b) 3,822 (2,967) 15,955 (4,565)
Net Income(Loss)(c) (2,702) (8,438) 57,654 (112,827)
Net Income(Loss) Per Share (.08) (.28) 1.63 (3.76)
Weighted Ave. Shares Outstanding 35.8 30.0 35.2 30.0
Production:
Crude Oil (BPD) 613 720 740 789
NGL (BPD) 64 570 129 668
Natural Gas (MCFPD) 15,566 38,055 19,215 42,828
MMCFEPD 19.6 45.8 24.4 51.6
Prices (net of hedge impact):
Crude Oil ($/BBL) $29.52 $27.19 $30.55 $22.27
NGL's ($/BBL) 22.72 20.04 24.27 16.53
Natural Gas ($/MCF) 4.50 2.08 4.93 2.25
Price per MCFE 4.57 2.40 4.93 2.43
Expenses:
Lease Operating ($/MCFE) $1.31 $.93 $1.21 $.80
General & Administrative ($/MCFE) .63 .33 .63 .33
Cash Interest ($/MCFE) .53 2.05 .56 1.83
Total Interest ($/MCFE) 2.16 2.05 2.17 1.83
D/D/A ($/MCFE) 1.34 1.21 1.32 1.49
(a) 2002 Results include impact from Canadian operations sold in
January, 2003.
(b) See reconciliation of non-GAAP financial measures below.
(c) Net loss for 2002 includes a $116 million proved property
impairment due to lower realized prices at June 30, 2002.
Balance Sheet Data (In $000s)
September 30, 2003 December 31, 2002
Cash $2,428 $4,882
Working Capital (Deficit) (9,287) (65,609)
Plant/Property/Equipment, Net 110,376 150,394
Total Assets 124,203 181,425
Long-Term Debt 177,012 236,943
Shareholders Equity (Deficit) (72,464) (142,254)
Common Shares Outstanding (Millions) 35.8 30.0
Abraxas Petroleum Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------ ------ ------ ------
(In thousands except per share data)
Revenue:
Oil and gas production
revenues $8,244 $10,129 $29,277 $34,158
Gas processing revenues -- 522 132 1,933
Rig revenues 156 169 495 513
Other 30 241 67 499
------- ------- -------- --------
8,430 11,061 29,971 37,103
Operating costs and expenses:
Lease operating and
production taxes 2,372 3,943 7,164 11,205
Depreciation, depletion, and
amortization 2,418 5,086 7,861 21,010
Proved property impairment -- -- -- 115,995
Rig operations 129 143 443 439
General and administrative 1,143 1,399 3,769 4,578
General and administrative
(Stock-based compensation) (326) -- 467 --
------ ------- -------- --------
5,736 10,571 19,704 153,227
------ ------- -------- --------
Operating income (loss) 2,694 490 10,267 (116,124)
Other (income) expense:
Interest income (5) (15) (22) (56)
Interest expense 3,911 8,616 12,921 25,790
Amortization of deferred
financing fees 433 425 1,244 1,283
Financing cost 581 -- 4,182 --
Gain on sale of foreign
subsidiaries (298) -- (67,258) --
Other (income) expense 774 -- 774 --
------ ------- -------- --------
5,396 9,026 (48,159) 27,017
------ ------- -------- --------
Earnings (loss) before
cumulative effect of
accounting change and taxes (2,702) (8,536) 58,426 (143,141)
Cumulative effect of
accounting change -- -- (395) --
Income tax expense (benefit) -- (98) (377) (30,314)
------- ------- ------- ---------
Net earnings (loss) $(2,702) $(8,438) $57,654 $(112,827)
======= ======= ======= =========
Basic earnings (loss) per
common share:
Net earnings (loss) (0.08) (0.28) 1.64 (3.76)
Cumulative effect of
accounting change -- -- (0.01) --
------ ------- -------- --------
Net earnings (loss) per common
share - basic $(0.08) $(0.28) $1.63 $(3.76)
====== ======= ======== ========
Diluted earnings (loss) per
common share:
Net earnings (loss) (0.08) (0.28) 1.61 (3.76)
Cumulative effect of
accounting change -- -- (0.01) --
------ ------- -------- --------
Net earnings (loss) per
common share - diluted $(0.08) $(0.28) $1.60 $(3.76)
====== ======= ======== ========
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 Nine Months
Ended Sept. 30 Ended Sept. 30
2003 2002 2003 2002
Operating income (loss) $2,694 $490 $10,267 $(116,124)
Depletion, depreciation and
amortization 2,418 5,086 7,861 21,010
Non-cash stock based comp. expense 326 -- 467 --
Proved Property Impairment -- -- -- 115,995
Cash interest (964) (8,601) (2,640) (25,734)
Cash Flow $3,822 $(3,025) $15,955 $(4,853)
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 Nine Months
Ended Sept. 30, Ended Sept. 30
2003 2002 2003 2002
Operating income (loss) $2,694 $490 $10,267 $(116,124)
Depletion, depreciation and
amortization 2,418 5,086 7,861 21,010
Proved Property Impairment -- -- -- 115,995
Non-cash stock based comp. expense (326) -- 467 --
EBITDA $4,786 $5,576 $18,595 $20,881
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