Abraxas Reports First Quarter 2006 Results with Four Consecutive Quarters of Production Growth including a 44% Increase in Daily Production over First Quarter 2005.SAN ANTONIO San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. -- 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 financial and operating results for the quarter ended March 31, 2006 and provided an operational update. The fourth consecutive quarter of production growth resulted in: --Production of 1.8 Bcfe, a 44% increase over Q1 2005; --Revenue of $13.3 million, a 70% increase over Q1 2005; --EBITDA (a) of $9.2 million, a 109% increase over Q1 2005; --Cash flow (a) of $5.2 million, a 314% increase over Q1 2005; and --Net income of $1.2 million, a 230% increase over Q1 2005 (b). (a) see reconciliation of non-GAAP financial measures below. (b) from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . Net income in the first quarter of 2006, from continuing operations, of $1.2 million, or $0.03 per share, compares to a net loss in the same quarter of 2005 of $936,000, or ($0.02) 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 from the sale of Grey Wolf shares owned by Abraxas in its initial public offering that closed on February February: see month. 28, 2005, are treated as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Abraxas currently owns less than 1% of the outstanding capital stock of Grey Wolf. Even though the Company anticipates that the basis differentials for oil and gas may return to historical ranges during the remainder of 2006, the Company's financial results for the quarter were negatively impacted by abnormally ab·nor·mal adj. Not typical, usual, or regular; not normal; deviant. [Alteration (influenced by ab-1) of obsolete anormal, from Medieval Latin high basis differentials, namely 33% for natural gas in West Texas and $25 per barrel of oil in 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. . Consequently, our adjusted guidance for 2006 differentials to NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). (L3D L3D Lemmings 3D (computer game) ) is as follows:
Gas 15%
Oil $2.00
In addition, the Company has further adjusted its previously issued 2006 guidance for depreciation, 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 and amortization (D/D/A) from $1.50 per Mcfe to $1.80 per Mcfe as a result of the December December: see month. 31, 2005 reserve report prepared by DeGolyer and MacNaughton, which reflects the increase in future estimated drilling costs for proved undeveloped reserves that has occurred across the industry during the past year. The Company previously did not adjust the guidance sufficiently to reflect the full impact of the increase in future estimated drilling costs. Operations In South Texas, a drilling rig has been secured to drill two wells. The rig is scheduled to move onto the first location later this month, after which the rig will be released to drill a well for another operator in the region, and then return to Abraxas for the second well. The first well, located in DeWitt County DeWitt County is the name of several counties in the United States:
See Wilcox (surname) Other
v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. depth of 8,900'. The second well, located in Karnes Karnes is the name of several places:
In West Texas, a drilling rig has been secured to drill at least one well in the Oates SW Field. The rig is currently drilling below 2,000' on a vertical well to test the Lower Wolfcamp formation at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 12,500'. Elsewhere in the Oates SW Field, the horizontal segment of a Devonian re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the is currently drilling through 800' of the planned 1,600' lateral lateral /lat·er·al/ (-il) 1. denoting a position farther from the median plane or midline of the body or a structure. 2. pertaining to a side. lat·er·al adj. 1. , with a third-party workover rig. Abraxas owns a 100% working interest in both of these wells. In Brooks Brooks , Gwendolyn Elizabeth 1917-2000. American poet known for her verse detailing the dreams and struggles of African Americans. An early volume of poems, Annie Allen (1949), was awarded a Pulitzer Prize. Noun 1. Draw, Wyoming, production testing is nearly complete on the four wells drilled in late 2005. The wells are currently producing from eight commingled zones at a combined rate of 80-100 barrels of oil per day. One zone, which has been perforated per·fo·ra·ted adj. Pierced with one or more holes. and fracture fracture, breaking of a bone. A simple fracture is one in which there is no contact of the broken bone with the outer air, i.e., the overlying tissues are intact. In a comminuted fracture the bone is splintered. stimulated, remains to be tested and commingled. The Company plans to produce these four wells in the current configuration and analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. the different fracture treatments employed before completing additional zones, of which four remain. The Company's current net production is approximately 22 MMcfepd. "We feel quite fortunate to have been able to secure the two drilling rigs in Texas given the current environment of the service industry, which remains unable to meet the increased demands of E&P companies. Our continued increase in production (44% since Q1 2005) is an ongoing testament to the quality of our asset base and the ability of our technical team to execute when given the capability to spend capital dollars, just as the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. of the drilling rigs further provides us the opportunity to increase production as we continue through 2006. Even though the production rates from the Wyoming wells are not as high as we had initially hoped, we are encouraged that the production remains fairly stable. We continue to be very intrigued by the potential of this oil resource play and believe in time, it will prove to be an economic venture. Meanwhile, in the Oates SW Field of West Texas, we have seen encouraging gas shows in the horizontal lateral of the Devonian re-entry and while we have just begun drilling the Lower Wolfcamp test well, we feel confident in the amplitude amplitude (ăm`plĭt  d'), in physics, maximum displacement from a zero value or rest position. anomalies interpreted from the 3-D
seismic," commented Bob Watson
Abraxas invites you to participate in a conference call on Monday Monday: see week. , May 8th, at 10:30 a.m. CT to discuss the contents of this release and respond to questions. Please dial 1-866-825-1692, passcode 10785664, 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and can be accessed directly on the Company's website at www.abraxaspetroleum.com under the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Event Calendar". In addition to the audio webcast replay, a podcast (iPOD broadCAST) An audio broadcast that has been converted to an MP3 file or other audio file format for playback in a digital music player or computer. The "pod" in podcast was coined from "iPod," the predominant portable, digital music player, and although podcasts are and transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record 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 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 statements 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 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 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 Abraxas' 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 Abraxas' filings with the Securities and Exchange Commission during the past 12 months.
ABRAXAS PETROLEUM CORPORATION
QUARTER-END RESULTS
(UNAUDITED)
Three Months Ended
(In thousands except per share data) March 31,
-------------------
2006 2005
--------- ---------
Financial Results:
--------------------------------------------
Revenues $ 13,305 $ 7,822
EBITDA (a) 9,157 4,380
Cash Flow (Before Working Capital
Changes) (a) 5,210 1,257
Net Income (loss) from continuing operations 1,220 (936)
Income (loss) Per Share from continuing
operations - Basic $ 0.03 $ (0.02)
Weighted Average Shares Outstanding
(Millions) 42.5 36.6
Production Per Day:
--------------------------------------------
Crude Oil (Bbl/d) 519 575
Natural Gas (Mcf/d) 17,284 10,745
Mcfe/d 20,399 14,192
Realized Prices (net of hedge impact):
--------------------------------------------
Crude Oil ($/Bbl) $ 59.57 $ 47.13
Natural Gas ($/Mcf) 6.52 5.26
Price per Mcfe 7.04 5.89
Expenses:
--------------------------------------------
Lease Operating ($/Mcfe) $ 1.54 $ 1.78
General & Administrative ($/Mcfe) 0.61 0.74
Interest ($/Mcfe) 2.16 2.45
D/D/A ($/Mcfe) 1.85 1.33
--------------------------------------------
(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) March 31, 2006 December 31, 2005
---------------- ------------------
Cash $ 43 $ 42
Working Capital (Deficit) (6,062) (4,880)
Plant/Property/Equipment, Net 108,982 105,248
Total Assets 124,852 121,866
Long-Term Debt 129,798 129,527
Stockholders' Equity (Deficit) (21,842) (23,701)
Common Shares Outstanding (Millions) 42.6 42.0
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share data) Three Months Ended
March 31,
------------------------
2006 2005 (a)
--------- --------
Revenues:
Oil and gas production revenues $12,926 $ 7,525
Rig revenues 376 296
Other 3 1
--------- --------
13,305 7,822
Operating costs and expenses:
Lease operating and production taxes 2,822 2,278
Depreciation, depletion, and
amortization 3,399 1,698
Rig operations 211 218
General and administrative (including
stock-based compensation of $171 and
$25) 1,286 971
--------- --------
7,718 5,165
--------- --------
Operating income 5,587 2,657
Other (income) expense:
Interest income (1) (1)
Interest expense 3,971 3,134
Amortization of deferred financing fees 397 451
Other -- 9
--------- --------
4,367 3,593
--------- --------
Income (loss) from continuing operations 1,220 (936)
Net income from discontinued operations
(net of $6,060 income tax expense in
2005) -- 12,921
--------- --------
Net income $ 1,220 $11,985
========= ========
Basic earnings (loss) per common share:
Net earnings (loss) from continuing
operations $ 0.03 $ (0.02)
Discontinued operations -- 0.35
--------- --------
Net income per common share - basic $ 0.03 $ 0.33
========= ========
Diluted earnings (loss) per common share:
Net earnings (loss) from continuing
operations $ 0.03 $ (0.02)
Discontinued operations -- 0.35
--------- --------
Net income per common share - diluted $ 0.03 $ 0.33
========= ========
(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
(In thousands) March 31,
---------------------------
2006 2005
------------- ------------
Operating income $ 5,587 $ 2,657
Depletion, depreciation and
amortization 3,399 1,698
Stock-based compensation 171 25
Cash portion of other expense (0) (9)
Cash interest (3,947) (3,114)
---------------------------------------------------------------
Cash Flow $ 5,210 $ 1,257
---------------------------------------------------------------
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).
Three Months Ended
(In thousands) March 31,
----------------------------
2006 2005
-------------- ------------
Operating income $ 5,587 $ 2,657
Depletion, depreciation and
amortization 3,399 1,698
Stock-based compensation 171 25
-----------------------------------------------------------------
EBITDA $ 9,157 $ 4,380
-----------------------------------------------------------------
Note: The above cash flow and EBITDA reconciliations exclude impact
from Grey Wolf Exploration Inc.
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