UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
November 13, 2003
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State of other jurisdiction of incorporation)
0-19118 74-2584033
(Commission File Number) (I.R.S. Employer Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
210-490-4788
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
--------------- ----------------------
99.1 Press Release dated November 13, 2003.
Item 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 13, 2003, Abraxas issued a press release announcing its results of
operations and financial condition for the fiscal quarter ended September 30,
2003. The full text of the press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference. In accordance with SEC Release No. 33-8176,
the information contained in such press release shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such a filing.
The following information is being furnished pursuant to Item 12 "Disclosure of
Results of Operations and Financial Condition." The Company's press release
contains non-GAAP financial measures. Generally, a non-GAAP financial measure is
a numerical measure of a company's performance, financial position, or cash
flows that either excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and presented in
accordance with United States generally accepted accounting principles, or GAAP.
Pursuant to the requirements of Regulation G, the Company has provided
quantitative reconciliations within the press release of the non-GAAP financial
measures to the most directly comparable GAAP financial measures.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By: /s/Chris Williford
-------------------
Chris Williford
Executive Vice President, Chief Financial
Officer and Treasurer
Dated: November 13, 2003
NEWS RELEASE
ABRAXAS REPORTS 2003 THIRD QUARTER FINANCIAL RESULTS
9% PRODUCTION INCREASE FROM Q2 ACHIEVED
SAN ANTONIO, TX (November 13, 2003) - Abraxas Petroleum Corporation (AMEX:ABP)
today reported results for the third quarter of 2003. Significant results of the
quarter and items that impacted Q3 include:
o $2.7 million loss for Q3 2003 ($.08 per share) compared to $8.4
million loss in Q3 2002 ($.28 per share);
o Equivalent gas production increased from 1.6 Bcfe in Q2 2003 to 1.8
Bcfe in the current quarter, an increase of 9.4%;
o Continuing cash flow* for the quarter totaled $3.8 million compared
to ($3.0) in the third quarter of 2002;
o Continuing EBITDA* of $4.8 million, compared to $5.6 million in the
2002 period;
o Realized natural gas price of $4.50 per Mcf compared to $2.08 in Q3
2002;
o Cash interest expense of $964,000 in Q3 2003 compared to $8.6
million in Q3 2002;
o Debt reduced from $295 million at September 30, 2002 to $159
million ($177 million carrying value) at September 30, 2003; and
o Net non-continuing costs of $731,000 impacted 2003 results.
*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 assets sold by the Company in January 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 30, 2003 was $159 million ($177 million carrying value)
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 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 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, Canada. 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 production in the
Company's Ladyfern area resulting from installation of additional compression
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 * 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
* See attached Reconciliation of Non-GAAP Financial Measures.
Abraxas invites your participation in a conference call on Friday, November 14,
at 10:30 am CST 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 and production company. The Company operates in Texas, Wyoming and
western Canada.
Safe Harbor for forward-looking statement: 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 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.
FOR MORE INFORMATION CONTACT:
Janice Herndon/Manager Corp. Communications
Telephone 210-490-4788
jherndon@abraxaspetroleum.com
www.abraxaspetroleum.com
ABRAXAS PETROLEUM CORPORATION
QUARTER-END RESULTS
(UNAUDITED)
Three Months Nine Months
(In thousands except per share data) Ended September 30, Ended September 30,
2003 2002(1) 2003 2002(1)
---- ------- ---- -------
Operations Data:
Revenues $8,430 $11,061 $29,971 $37,103
Continuing Cash Flow(2) 3,822 (2,967) 15,955 (4,565)
Net Income(Loss)(3) (2,702) (8,438) 57,654 (112,827)
Net Income(Loss) Per Share (.08) (.28) 1.63 (3.76)
Weighted Ave. Shares Outstanding 35.8 30.0 35.2 30.0
Production:
Crude Oil (BPD) 613 720 740 789
NGL (BPD) 64 570 129 668
Natural Gas (MCFPD) 15,566 38,055 19,215 42,828
MMCFEPD 19.6 45.8 24.4 51.6
Prices (net of hedge impact):
Crude Oil ($/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
(1) 2002 Results include impact from Canadian operations sold in January, 2003.
(2) See reconciliation of non-GAAP financial measures below.
(3) 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 Ended Sept. 30, Nine Months 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 Ended Sept. 30, Nine Months 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