EX-99 2 ye2004earnings.txt Exhibit 99.1 Abraxas Petroleum Corporation 500 N. Loop 1604 East, Suite 100, San Antonio, Texas 78232 P.O. Box 701007, San Antonio, Texas 78270-1007 Office: 210.490.4788 Exec/Acctg Fax: 210.490.8816 NEWS RELEASE Abraxas Reports Fourth Quarter and Full-Year 2004 Results SAN ANTONIO (March 23, 2005) - Abraxas Petroleum Corporation ("Abraxas") (AMEX:ABP) today reported financial and operating results for the fourth quarter and year-ended December 31, 2004. As a result of the Grey Wolf Exploration Inc. ("Grey Wolf") initial public offering ("IPO") that closed on February 28, 2005, the information herein represents financial and operating results from operations in the U.S. only as all of Grey Wolf's historical performance is treated as a discontinued operation. Production of 5.8 Bcfe for the year generated revenues of $33.9 million and net income of $7.8 million or $0.22 per share from continuing operations. This compares to a net loss from continuing operations of $14.1 million or $0.40 per share for the prior year ended December 31, 2003. Abraxas posted net income of $17.0 million ($0.47 per share) in the fourth quarter of 2004 compared to a loss of $3.4 million ($0.10 per share) in the same quarter of 2003 from continuing operations. The net income in the fourth quarter of 2004 (and full-year 2004) included a $12.6 million gain on redemption of debt booked as a result of the refinancing completed in October of 2004 and an income tax benefit of $6.1 million related to the gain on the sale of the Grey Wolf shares that Abraxas owned. The actual gain on the sale of the Grey Wolf shares will be booked in the first quarter of 2005 and will include a similar income tax expense of $6.1 million. The most significant items related to 2004 results included: o Restricted capital spending of $9.3 million during 2004, over half of which was spent in the fourth quarter, compared to $9.2 million in 2003; o Daily production rates declined a modest 6% amid capital restrictions; o Realized price per Mcfe of $5.72 in 2004 compared to $4.82 in 2003; o Global refinancing completed in October; and o Preparation for expanded budget in 2005. Subsequent to year-end, as a result of the secondary shares sold by Abraxas in the Grey Wolf IPO, outstanding indebtedness under Abraxas' $25 million bridge loan was reduced to approximately $5 million. "For Abraxas, 2004 was a year of preparation - for a stronger balance sheet and an expanded capital budget. So far, in 2005, we have significantly reduced the leverage on our balance sheet to a manageable level through the Grey Wolf IPO, and kicked off our capital development program with 6 wells in various stages of drilling and completion," commented Bob Watson, Abraxas' President and CEO. Abraxas invites your participation in a conference call on Thursday, March 24th, at 10:00 a.m. CT to discuss the contents of this release and respond to questions. Please call 1.800.500.0177 between 9:50 a.m. and 10:00 a.m. CT, confirmation code 764281, 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, confirmation code 764281, beginning approximately 1:00 p.m. CT, March 24th, through midnight CT, March 31st. 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 crude oil and natural gas. In addition, Abraxas' future crude oil and natural gas 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' filing 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 AND YEAR-END RESULTS Three Months Ended Twelve Months Ended (In thousands except per share data) December 31, December 31, -------------------------------- ----------------------------- 2004 2003 2004 2003 --------------- ------------- ------------ ----------- Financial Results: ----------------------------------------------------- Revenues $ 9,153 $ 7,187 $ 33,854 $ 30,380 EBITDA (a) 5,707 3,843 19,490 17,434 Cash Flow (Before Working Capital Changes) (a) 2,148 2,513 10,099 9,291 Net Income (Loss) from continuing operations 17,025 (3,431) 7,844 (14,104) Income (Loss) Per Share from continuing operations - Basic 0.47 (0.10) 0.22 (0.40) Weighted Average Shares Outstanding 36.3 35.8 36.2 35.4 Production Per Day: ----------------------------------------------------- Crude Oil (Bbl/d) 595 605 602 603 NGL (Bbl/d) 24 27 24 26 Natural Gas (Mcf/d) 11,100 13,413 12,030 13,098 Mcfe/d 14,815 17,203 15,789 16,872 Realized Prices (net of hedge impact): ----------------------------------------------------- Crude Oil ($/Bbl) $46.81 $29.99 $40.12 $ 30.43 NGL ($/Bbl) 31.27 21.32 26.32 20.46 Natural Gas ($/Mcf) 6.14 4.29 5.45 4.77 Price per Mcfe 6.53 4.43 5.72 4.82 Expenses: ----------------------------------------------------- Lease Operating ($/Mcfe) $1.36 $1.23 $1.48 $1.35 General & Administrative ($/Mcfe) 1.00 0.78 0.89 0.65 Cash Interest ($/Mcfe) 2.51 0.63 1.32 0.59 Total Interest ($/Mcfe) 3.26 2.65 3.09 2.65 D/D/A ($/Mcfe) 1.33 1.23 1.25 1.24 -----------------------------------------------------------------------------------------------------------------------
(a) See reconciliation of non-GAAP financial measures below Note: The above quarterly and yearly results exclude impact from Grey Wolf Exploration Inc.
BALANCE SHEET DATA (In thousands) December 31, 2004 December 31, 2003 ------------------------- ------------------------ Cash $1,284 $- Working Capital (Deficit) (b) (3,857) (2,023) Plant/Property/Equipment, Net 78,077 76,021 Total Assets 152,685 126,437 Long-Term Debt 126,425 184,649 Shareholders Equity (Deficit) (53,464) (72,203) Common Shares Outstanding (Millions) 36.5 35.9 (b) Continuing operations only
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) Year Ended December 31 ---------------------------------------------------------- 2002 2003 2004 ------------------ ------------------ ------------------- Revenues: Oil and gas production revenues .................... $20,835 $29,710 $33,073 Rig revenues ....................................... 635 663 771 Other ............................................. 71 7 10 ------------------ ------------------ ------------------- 21,541 30,380 33,854 Operating costs and expenses: Lease operating and production taxes ............... 7,639 8,342 8,567 Depreciation, depletion, and amortization .......... 9,194 7,608 7,213 Proved property impairment ......................... 28,178 - - Rig operations ..................................... 567 609 671 General and administrative ......................... 4,045 3,995 5,126 Stock-based compensation............................ - 1,106 1,305 ------------------ ------------------ ------------------- 49,623 21,660 22,882 ------------------ ------------------ ------------------- Operating income (loss)................................ (28,082) 8,720 10,972 Other (income) expense: Interest income .................................... (92) (30) (10) Amortization of deferred financing fees ............ 1,325 1,630 1,848 Interest expense ................................... 24,689 16,323 17,867 Financing costs..................................... 967 4,406 1,657 Gain on debt redemption ............................ - - (12,561) Other .............................................. 201 100 387 ------------------ ------------------ ------------------- 27,090 22,429 9,188 ------------------ ------------------ ------------------- Income (loss) from continuing operations before cumulative effect of accounting change.............. (55,172) (13,709) 1,784 Cumulative effect of accounting change ................ - 395 - ------------------ ------------------ ------------------- Net income (loss) from continuing operations before income tax ......................................... (55,172) (14,104) 1,784 Deferred income tax benefit............................ - - (6,060) ------------------ ------------------ ------------------- Net income (loss) from continuing operations .......... (55,172) (14,104) 7,844 Net income (loss) from discontinued operations......... (63,355) 70,024 3,323 ------------------ ------------------ ------------------- Net income (loss)................................... $(118,527) $55,920 $11,167 ================== ================== =================== Basic earnings (loss) per common share: Net earnings (loss) from continuing operations... $(1.84) $(0.39) $0.22 Discontinued operations (loss).................. (2.11) 1.98 0.09 Cumulative effect of accounting change........... - (0.01) - ------------------ ------------------ ------------------- Net income (loss) per common share - basic ......... $(3.95) $1.58 $0.31 ================== ================== =================== Diluted earnings (loss) per common share: Net earnings (loss) from continuing operations... $(1.84) $(0.38) $0.20 Discontinued operations (loss).................. (2.11) 1.94 0.09 Cumulative effect of accounting change........... - (0.01) - ------------------ ------------------ ------------------- Net income (loss) per common share - diluted....... $(3.95) $1.55 $0.29 ================== ================== ===================
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 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.
(In thousands) Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------------- ------------------------------- 2004 2003 2004 2003 -------------- --------------- ------------- -------------- Operating income (loss) $3,712 $1,263 $10,972 $8,720 Depletion, depreciation and amortization 1,811 1,940 7,213 7,608 Non-cash stock based compensation expense 184 640 1,305 1,106 Financing costs (16) (224) (1,657) (4,406) Cash portion of other expense (126) (102) (126) (100) Cash interest (3,417) (1,004) (7,608) (3,637) ------------------------------------------------------------------------------------------------------------------- Cash Flow $2,148 $2,513 $10,099 $9,291 -------------------------------------------------------------------------------------------------------------------
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 Twelve Months Ended December 31, December 31, ---------------------------------- ------------------------------- 2004 2003 2004 2003 -------------- ---------------- ------------- ------------- Operating income (loss) $3,712 $1,263 $10,972 $8,720 Depletion, depreciation and amortization 1,811 1,940 7,213 7,608 Non-cash stock based compensation expense 184 640 1,305 1,106 ------------------------------------------------------------------------------------------------------------------- EBITDA $5,707 $3,843 $19,490 $17,434 --------------------------------------------------------------------------------------------------------------------
Note:The above cash flow and EBITDA reconciliations exclude impact from Grey Wolf Exploration Inc.