Filed by Abraxas Petroleum Corporation
(Commission File No. 0-19118)
Pursuant to Rule 425 Under the Securities Act of 1933,
as amended,
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934,
as amended.
Subject Company: Grey Wolf Exploration Inc.
(no Commission File No.)
NEWS RELEASE
ABRAXAS REPORTS IMPROVED SECOND QUARTER FINANCIAL RESULTS
AND OPERATIONAL UPDATE
SAN ANTONIO, TX (August 13, 2001) - Abraxas Petroleum Corporation (AMEX:ABP)
today announced that successful drilling, cost effective operations, and
improved prices all contributed to Abraxas meeting analysts'guidance results.
For the quarter ended Jue 30, 2001, a 75% improvement, compared to the prior
year period, in both cash flow (after interest) and losses resulted in $.28 cash
flow per share and $.05 net loss per share. The Company is also working
aggressively to both restructure its debt to bring interest costs down and
improve its balance sheet as well as continue to reduce operating costs. All of
which augurs well for Abraxas' future. Bob Watson, Company CEO, commented, "In
south Texas we drilled a successful offset to our previously announced Dimon #1
well confirming our 3D seismic interpretation and setting up additional offset
locations. This well, the Pettus #3, is currently producing at 3 MMcfe per day
with 3000# of flowing tubing pressure."
Watson commented on other U.S. operations, "In west Texas two Montoya wells are
now producing from our drilling agreement with EOG Resources, Inc. (NYSE:EOG)
and two more wells are expected to be drilling in the second half. On our 100%
owned Oates S.W. Montoya play, 3D seismic has been interpreted and one or two
old well bores have been identified as re-entry candidates to test the Montoya
and Devonian formations in this field at a much lower cost than drilling new
wells. Operations will commence on the first of these re-entry candidates
shortly. In Wyoming, the interpretation of our 3D seismic survey is complete and
four zones have been identified that are potentially productive in our Brooks
Draw area. Permitting has begun on two vertical wells that will allow us to
confirm the 3D seismic interpretation and test multiple zones."
On Canadian operations, Mr. Watson stated, "Based on our 3D seismic acquired
over the winter, over 50 locations have been identified in our core areas of
Caroline and Pouce Coupe. Drilling has commenced in both areas since break-up in
June and we have successfully drilled and evaluated 4 wells, with 2 wells
currently drilling. Operations have been slowed by an extremely wet summer in
Alberta but the first of these wells is expected to be on production in each of
these areas shortly. In Ladyfern, we were successful in a recent lease sale in
acquiring additional acreage within our 3D seismic survey that could add up to 2
additional locations to the 4 locations planned for this winter drilling season.
Firm capacity has been contracted for on a planned pipeline expansion in
anticipation of our drilling program this winter."
As previously announced, Abraxas commenced its tender on August 1 for the
remaining shares of its 48.3% owned Canadian subsidiary Grey Wolf Exploration
Inc. (TSE:GWX). The tender will expire on September 5, 2001, unless extended or
withdrawn. The Company also completed approximately $10 million of asset sales
in Canada during the quarter and in the third quarter expects to close on
another approximate $10 million of non-core asset sales in Canada. These asset
sales combined with the tender for Grey Wolf are another step in the
restructuring of the Company's balance sheet that will improve liquidity and
earnings going forward and allow Abraxas to continue to improve its cost
structure while focusing on its portfolio of drilling projects in its core
areas. For the balance of 2001, the Company expects to continue its successful
exploitation activities in the United States and in Canada and looks forward to
its winter drilling program in the Ladyfern area. At the same time the Company
will continue to review ways to improve its balance sheet and pare costs in
order to maintain liquidity and enhance shareholder value.
Abraxas invites your participation in a conference call on Tuesday, August 14th,
at 10:30 am CDT to discuss the contents of this release and respond to
questions. Please call 1-800-289-0436 between 10:20 and 10:30 am CDT,
confirmation code 456060, 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 456060, approximately 12:30 pm CDT Tuesday, August 14th,
through 5:00 pm CDT Tuesday, August 21st.
THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO EXCHANGE THE SECURITIES OF ABRAXAS FOR THE SECURITIES OF GREY WOLF. ANY
SUCH OFFER OR SOLICITATION WILL BE SUBJECT TO CERTAIN CUSTOMARY CONDITIONS AND
WILL BE MADE ONLY BY ABRAXAS' PROSPECTUS AND OTHER EXCHANGE OFFER MATERIALS,
WHICH HAVE BEEN FILED WITH THE SEC AND HAVE BEEN MAILED TO GREY WOLF'S
STOCKHOLDERS. GREY WOLF'S STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS BECAUSE
THEY CONTAIN IMPORTANT INFORMATION ABOUT THE OFFER. THE DOCUMENTS ARE ALSO
AVAILABLE AT NO CHARGE FROM THE SEC'S WEB SITE, WWW.SEC.GOV, AND FROM ABRAXAS
PETROLEUM CORPORATION AT 500 NORTH LOOP 1604 EAST, SUITE 100, SAN ANTONIO, TEXAS
78232.
Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas
exploration and production company that also processes natural gas. It operates
in Texas, Wyoming and western Canada. For additional information about the
Company, please visit our web site, www.abraxaspetroleum.com, for the most
current and updated information. The web site is updated daily in order to
comply with the SEC Regulation FD (Fair Disclosure).
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. 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:
Chris Williford/CFO and Executive Vice President
Telephone 210.490.4788
cwilliford@abraxaspetroleum.com
www.abraxaspetroleum.com
ABRAXAS PETROLEUM CORPORATION
QUARTER-END RESULTS
(UNAUDITED)
Three Months Six Months
(In thousands except per share data) Ended June 30, Ended June 30,
2001 2000 2001 2000
---- ---- ---- ----
Operations Data:
Revenues $21,116 $16,287 $50,202 $33,004
Cash Flow (Before Working Capital Changes)* 6,636 3,791 20,739 5,977
Net Income(Loss)* (1,274) (5,413) (1,019) (12,240)
Net Income(Loss) Per Share* (.05) (.24) (.004) (.54)
Weighted Ave. Shares Outstanding 23.6 22.7 23.1 22.6
Production:
Crude Oil (BPD) 1,347 1,773 1,408 1,812
NGL (BPD) 723 900 795 903
Natural Gas (MCFPD) 49,776 56,135 50,588 57,957
MMCFEPD 62.2 72.2 63.9 74.2
Prices (net of hedge losses):
Crude Oil ($/BBL) $25.32 $15.98 $26.31 $15.85
NGL's ($/BBL) 24.10 19.72 26.46 20.62
Natural Gas ($/MCF) 3.41 2.21 4.14 2.13
Price per MCFE 3.56 2.36 4.18 2.32
Expenses:
Lease Operating ($/MCFE) $.77 $.66 $.80 $.66
General & Administrative ($/MCFE) .28 .25 .32 .23
Interest ($/MCFE) 1.38 1.16 1.35 1.14
D/D/A ($/MCFE) 1.46 1.30 1.48 1.29
*YTD 6/30/2000 proforma for comparability purposes, excludes a one time
significant gain of $34.0 million related to the company's sale of equity
method investment.
Balance Sheet Data (In $000s)
June 30, 2001 December 31, 2000
Working Capital (Deficit)** $(9,326) $(13,829)
Plant/Property/Equipment, Net 305,889 304,784
Total Assets 328,823 335,560
Long-Term Debt 271,709 266,441
Shareholders Equity (Deficit)*** (16,989) (6,503)
Common Shares Outstanding (Millions) 26.0 22.6
**YTD 6/30/2001, excludes current liability related to hedge
accounting of $5.3 million less related deferred tax asset
of $1.0 million
*** YTD 6/30/2001 includes an Other Comprehensive Income net
charge of ($6.0) million related to hedge accounting
adopted in 2001.
Abraxas Petroleum Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2001 2000 2001 2000
------------------- ----------------- ----------------- -------------------
(In thousands except per share data)
Revenue:
Oil and gas production revenues ................... $ 20,127 $ 15,501 $ 48,376 $ 31,127
$
Gas processing revenues ........................... 498 645 934 1,402
Rig revenues ...................................... 225 119 408 250
Other ............................................ 266 22 484 225
------------------- ----------------- ----------------- -------------------
21,116 16,287 50,202 33,004
Operating costs and expenses:
Lease operating and production taxes .............. 4,332 4,301 9,191 8,930
Depreciation, depletion, and amortization ......... 8,288 8,518 17,129 17,466
Rig operations .................................... 191 196 344 384
General and administrative ........................ 1,575 1,643 3,684 3,082
General and administrative (Stock-based
compensation) ................................... (2,332) - (1,401) -
------------------- ----------------- ----------------- -------------------
12,054 14,658 28,947 29,862
------------------- ----------------- ----------------- -------------------
Operating income ..................................... 9,062 1,629 21,255 3,142
Other (income) expense:
Interest income ................................... (12) (267) (28) (327)
Amortization of deferred financing fee ............ 455 508 910 1,015
Interest expense .................................. 7,829 7,892 15,610 15,665
Gain on sale of equity investment.................. - - - (33,983)
Other expense ..................................... - - 16 436
------------------- ----------------- ----------------- -------------------
8,272 8,133 16,508 (17,194)
------------------- ----------------- ----------------- -------------------
Net income (loss) from operations before taxes and
extraordinary item ............................. 790 (6,504) 4,747 20,336
Income tax expense (benefit).......................... 1,509 31 4,285 (296)
Minority interest in income of consolidated foreign
subsidiary ........................................ 555 204 1,481 215
------------------- ----------------- ----------------- -------------------
Net income (loss) before extraordinary item ...... (1,274) (6,739) (1,019) 20,417
Extraordinary item:
Debt extinguishment and restructure................ - 1,326 - 1,326
------------------- ----------------- ----------------- -------------------
Net income (loss) ................................ $ (1,274) $ (5,413) $ (1,019) $ 21,743
=================== ================= ================= ===================
Earnings (loss) per common share:
Net Income (loss) before extraordinary item... $ (0.05) $ (0.30) $ (0.04) $ 0.90
Extraordinary item ........................... - 0.06 - 0.06
------------------- ----------------- ----------------- -------------------
Net income (loss) per common share ................ $ (0.05) $ (0.24) $ (0.04) $ 0.96
=================== ================= ================= ===================
Earnings (loss) per common share assuming dilution:
Net Income (loss) before extraordinary item... $ (0.05) $ (0.30) $ (0.04) $ 0.43
Extraordinary item ........................... - 0.06 - 0.03
------------------- ----------------- ----------------- -------------------
Net income (loss) per common share ................ $ (0.05) $ (0.24) $ (0.04) $ 0.46
=================== ================= ================= ===================