EX-99 2 earningsreleaseq205.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 Second Quarter 2005 Results with 23% Revenue and 9% Production Growth over First Quarter 2005 SAN ANTONIO (Aug. 10, 2005) - Abraxas Petroleum Corporation ("Abraxas") (AMEX:ABP) today reported financial and operating results for the quarter and six months ended June 30, 2005. Production of 1.4 Bcfe for the quarter generated revenue of $9.6 million and net income of $305,000 or $0.01 per share from continuing operations. This compares to a net loss from continuing operations of $444,000 or $0.01 per share for the same quarter of 2004. Continuing operations represent financial and operating results from operations in the U.S. only as all of Grey Wolf Exploration Inc.'s ("Grey Wolf") historical performance and results from the sale of Grey Wolf shares owned by Abraxas in its initial public offering that closed on February 28, 2005, are treated as discontinued operations. As a result of the elimination of our capital expenditure limitations, a significant item related to the second quarter of 2005 results included capital expenditures of $8.8 million compared to $1.3 million in the second quarter of 2004. These capital expenditures enabled sequential quarterly production to increase 9% and contributed to a 23% increase in revenue from first quarter of 2005 and should further contribute to additional increases in production during the third quarter. "Increasing production through the quarter is attributable to the two Edwards horizontal wells that came on-line late in the quarter plus our continuing efforts to sustain and increase production on more mature fields through low-risk, low-cost re-completion programs. We expect production growth to continue through the 2nd half of 2005 as newly drilled or re-completed wells come on-line. Two wells are currently being completed in the Oates SW Field of West Texas, both of which have shown indications of commercial gas production during completion operations, and we expect to spud a well in Wyoming this week. Three significant events occurred subsequent to the end of the 2nd quarter that we expect to positively impact our results going forward - the third Edwards horizontal well came on-line, our strategic acquisition in West Texas and the closing of our $12 million private placement of equity. Combined with rising production and strong commodity prices, these events should allow us to accelerate our capital development program for the remainder of 2005 and into 2006, provided we do not experience significant delays in procuring equipment or crews," commented Bob Watson, Abraxas' President and CEO. A general increase in field operating costs experienced by the entire industry together with increased general and administrative costs ("G&A"), primarily associated with Sarbanes-Oxley related expenses, have impacted Abraxas' actual per unit costs. Based on these factors, our adjusted guidance for 2005 direct lifting costs and G&A is as follows (direct lifting costs do not include production taxes that are approximately 10% of revenue): Direct Lifting Costs $1.10 per Mcfe G&A $0.75 per Mcfe As a result of the recent private placement of equity, Abraxas' capital expenditure budget for 2005 is under review and an expanded budget will be presented to the board of directors next month for approval. Abraxas invites your participation in a conference call on Thursday, August 11th, at 10:00 a.m. CT to discuss the contents of this release and respond to questions. Please call 1.800.946.0782 between 9:50 a.m. and 10:00 a.m. CT, confirmation code 7301461, 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 7301461, beginning approximately 1:00 p.m. CT, August 11th, through midnight CT, August 17th. 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-END RESULTS (UNAUDITED) Three Months Ended Six Months Ended (In thousands except per share data) June 30, June 30, ----------------------------------- ------------------------------ 2005 2004 2005 2004 ---------------- --------------- --------------- ------------- Financial Results: ----------------------------------------------- Revenues $9,627 $8,504 $17,449 $16,464 EBITDA (a) 5,841 4,350 10,221 8,828 Cash Flow (Before Working Capital Changes) (a) 2,460 2,593 3,717 4,251 Net Income (Loss) from continuing operations 305 (444) (1,209) (6,199) Income (Loss) Per Share from continuing operations - Basic $0.01 $(0.01) $(0.03) $(0.17) Weighted Average Shares Outstanding 37.8 36.2 37.2 36.1 Production Per Day: ----------------------------------------------- Crude Oil (Bbl/d) 535 609 555 614 NGL (Bbl/d) - 25 - 25 Natural Gas (Mcf/d) 12,024 12,443 11,388 12,631 Mcfe/d 15,234 16,242 14,716 16,463 Realized Prices (net of hedge impact): ----------------------------------------------- Crude Oil ($/Bbl) $49.43 $37.29 $48.25 $35.72 NGL ($/Bbl) - 23.19 - 23.37 Natural Gas ($/Mcf) (b) 6.33 5.52 5.83 5.25 Price per Mcfe 6.73 5.67 6.33 5.39 Expenses: ----------------------------------------------- Lease Operating ($/Mcfe) $1.82 $1.57 $1.80 $1.54 General & Administrative ($/Mcfe) 0.79 1.16 0.77 0.92 Cash Interest ($/Mcfe) 2.44 0.78 2.44 1.00 Total Interest ($/Mcfe) 2.44 2.83 2.44 3.02 D/D/A ($/Mcfe) 1.31 1.23 1.32 1.22 -----------------------------------------------
(a) See reconciliation of non-GAAP financial measures below (b) Includes deductions of $0.01 per Mcf in Q2 2005, $0.02 per Mcf in Q2 2004, $0.25 per Mcf in 1st half 2005 and $0.06 per Mcf in 1st half 2004 related to non-cash hedge accounting impact Note: The above quarterly results exclude impact from Grey Wolf Exploration Inc.
BALANCE SHEET DATA (In thousands) June 30, 2005 December 31, 2004 ------------------------- ------------------------ Cash $ - $ 1,284 Working Capital (Deficit) (c) (5,137) (3,857) Plant/Property/Equipment, Net 92,002 78,077 Total Assets 106,009 152,685 Long-Term Debt 136,277 126,425 Shareholders Equity (Deficit) (43,244) (53,464) Common Shares Outstanding (Millions) 37.8 36.5 (c) Continuing operations only
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------------------------ -------------------------------- 2005 2004 2005 2004 ------------------- ---------------- ----------------- -------------- Revenues: Oil and gas production revenues ................ $9,336 $8,373 $16,861 $16,156 Rig revenues ................................... 283 129 579 304 Other ......................................... 8 2 9 4 ------------------- ---------------- ----------------- -------------- 9,627 8,504 17,449 16,464 Operating costs and expenses: Lease operating and production taxes ........... 2,522 2,319 4,800 4,607 Depreciation, depletion, and amortization ...... 1,817 1,819 3,515 3,658 Rig operations ................................. 166 123 384 268 General and administrative ..................... 1,098 1,712 2,044 2,761 Stock-based compensation........................ (326) (2,316) 277 (253) ------------------- ---------------- ----------------- -------------- 5,277 3,657 11,020 11,041 ------------------- ---------------- ----------------- -------------- Operating income .................................. 4,350 4,847 6,429 5,423 Other (income) expense: Interest income ................................ - (1) (1) (5) Interest expense ............................... 3,407 4,223 6,541 9,131 Amortization of deferred financing fees ........ 403 467 854 912 Financing costs ................................ - 602 - 1,573 Other .......................................... 235 - 244 11 ------------------- ---------------- ----------------- ------------- 4,045 5,291 7,638 11,622 ------------------- ---------------- ----------------- -------------- Earnings (loss) from continuing operations ........ 305 (444) (1,209) (6,199) Net income from discontinued operations (net of $6,060 income tax expense in 2005).............. (27) 816 10,704 1,014 ------------------- ---------------- ----------------- -------------- Net income (loss)............................... $278 $372 $9,495 $ (5,185) =================== ================ ================= ============== Basic earnings (loss) per common share: Net earnings (loss) from continuing operations................................... $0.01 $(0.01) $(0.03) $(0.17) Discontinued operations .................... - 0.02 0.29 0.03 ------------------- ---------------- ----------------- -------------- Net income (loss) per common share - basic ..... $0.01 $ 0.01 $ 0.26 $(0.14) =================== ================ ================= ============== Diluted earnings (loss) per common share: Net earnings (loss) from continuing operations................................... $0.01 $(0.01) $(0.03) $(0.17) Discontinued operations .................... - 0.02 0.29 0.03 ------------------- ---------------- ----------------- -------------- Net income (loss) per common share - diluted... $0.01 $ 0.01 $ 0.26 $(0.14) =================== ================ ================= ==============
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 Six Months Ended June 30, June 30, ---------------------------------- ---------------------------- 2005 2004 2005 2004 ---------------- -------------- ------------- ------------- Operating income (loss) $4,350 $4,847 $6,429 $5,423 Depletion, depreciation and amortization 1,817 1,819 3,515 3,658 Non-cash stock based compensation expense (benefit) (326) (2,316) 277 (253) Financing costs - (602) - (1,573) Cash portion of other expense - - (9) - Cash interest (3,381) (1,155) (6,495) (3,004) ------------------------------------------------------------------------------------------------------------- Cash Flow $2,460 $2,593 $3,717 $4,251 -------------------------------------------------------------------------------------------------------------
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 Six Months Ended June 30, June 30, ---------------------------------- ---------------------------- 2005 2004 2005 2004 ----------------- ------------- ------------- ------------ Operating income (loss) $4,350 $4,847 $6,429 $5,423 Depletion, depreciation and amortization 1,817 1,819 3,515 3,658 Non-cash stock based compensation expense (benefit) (326) (2,316) 277 (253) ------------------------------------------------------------------------------------------------------------- EBITDA $5,841 $4,350 $10,221 $8,828 ------------------------------------------------------------------------------------------------------------- Note: The above cash flow and EBITDA reconciliations exclude impact from Grey Wolf Exploration Inc.