UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
August 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 August 13, 2003.
Item 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On August 13, 2003, Abraxas issued a press release announcing its results of
operations and financial condition for the fiscal quarter ended August 2, 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: August 13, 2003
Exhibit 99.1
NEWS RELEASE
ABRAXAS REPORTS 2003 SECOND QUARTER FINANCIAL RESULTS
First Full Quarter After Canadian Property Sales
SAN ANTONIO, TX (August 13, 2003) - Abraxas Petroleum Corporation (AMEX:ABP)
today reported results for the second quarter of 2003, the first full quarter
impacted by the sale of its Canadian subsidiaries and related financial
transactions completed in January 2003. Significant results of the quarter and
items that impacted Q2 results include:
o $2.3 million loss for Q2 2003 ($0.07 per share) compared to $95.7
million loss in Q2 2002 ($3.19 per share);
o Cash flow* for the quarter totaled $4.1 million;
o EBITDA* of $5.0 million;
o Q2 2003 includes $757,000 of non-cash stock based compensation expense;
o Q2 2003 results include $930,000 of cash interest expense and $2.9
million of non-cash interest costs;
o Natural gas price realization was $5.11 per Mcf in 2003 compared to
$2.44 per Mcf in 2002; and
o 2002 results include the impact of oil and gas properties sold
subsequent to Q2 2002.
* See attached Reconciliation of Non-GAAP Financial
Measures.
The second quarter of 2003 represents the first full quarter of operations since
the sale of the Company's Canadian subsidiaries in January 2003 and the related
financial transactions also concluded in January. While downsizing the Company
with the property sales, the 2003 Q2 results reflect the corresponding
reductions in debt and interest costs, including a significant portion of the
Company's future interest costs being paid in additional notes as opposed to
cash.
Second Quarter Operations Update:
The Company believes that the effect of property sales, including the sale of
the Company's Canadian subsidiaries in January 2003, make year-to-year
comparisons not meaningful. A comparison to Q1 2003 shows second quarter
production declined from 20.1 MMcfepd to 18.1 MMcfepd, which was in line with
Company projections and guidance. This decline was expected due to natural
declines and seasonal delays associated with spring breakup in Canada. Lease
operating costs and G&A costs, at $1.25 and $.75 respectively per Mcfe, remain
within the Company's projections on an annual basis.
The Company incurred $5.6 million in capital costs for the second quarter,
related to the drilling of five wells. Two wells were drilled during the quarter
on Canadian acreage, one in the Peace River Arch area of western Alberta,
currently awaiting tie-in, and the second in the Caroline area of southwestern
Alberta. The Caroline well was drilled pursuant to a farmout agreement with
PrimeWest Energy, Inc., the buyer of the Company's former Canadian subsidiaries
in January 2003. This latest well has been drilled and is currently awaiting
completion. In U.S. operations, three wells spudded during the quarter, one in
south Texas and two in west Texas. The south Texas well was placed on production
late in Q2 with both west Texas wells still in drilling operations. An EOG
operated Montoya well spudded in Q1, with Abraxas holding a 20% working
interest, was placed on production late in the second quarter and is currently
producing about 4.5 MMcf per day.
Key quarterly results are summarized below:
(Amounts in thousands)
2003 2002
---- ----
Revenues $8,430 $14,235
Operating Income (Loss) 1,927 (115,879)
Net Income (Loss) (2,346) (95,690)
Earnings (Loss) Per Share (.07) (3.19)
EBITDA * 4,985 9,226
Average Oil Price (after hedge) 28.53 23.47
Average Gas Price (after hedge) 5.11 2.44
Total Assets 122,069 188,497
* See attached Reconciliation of Non-GAAP Financial Measures.
Abraxas invites your participation in a conference call on Friday, August 15, at
10:00 am CDT to discuss the contents of this release and respond to questions.
Please call 1-888-855-5428 between 9:50 and 10:00 am CDT, passcode code 475788,
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 code 475788,
beginning at 1:00 pm CDT on August 15, 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 Six Months
(In thousands except per share data) Ended June 30, Ended June 30,
2003 2002(1) 2003 2002(1)
---- ------- ---- -------
Operations Data:
Revenues $8,430 $14,235 $21,541 $26,042
Cash Flow(Before Working Capital Changes)(2) 4,055 702 12,133 (1,598)
Net Income(Loss)(3) (2,346) (95,690) 60,356 (104,389)
Net Income(Loss) Per Share (.07) (3.19) 1.73 (3.48)
Weighted Ave. Shares Outstanding 35.6 30.0 30.0
34.9
Production:
Crude Oil (BPD) 636 826 681 825
NGL (BPD) 676 141 717
58
Natural Gas (MCFPD) 13,977 17,885 45,254
46,350
MMCFEPD 18.1 55.4 22.8 54.5
Prices (net of hedge impact):
Crude Oil ($/BBL) $28.53 $23.47 $31.03 $20.08
NGL's ($/BBL) 22.10 17.73 15.11
24.64
Natural Gas ($/MCF) 5.11 2.44 2.33
5.12
Price per MCFE 5.00 2.61 5.09 2.44
Expenses:
Lease Operating ($/MCFE) $1.25 $.67 $.74
$1.16
General & Administrative ($/MCFE) .75 .29 .32
.64
Cash Interest ($/MCFE) .57 1.74 .58 1.74
Total Interest ($/MCFE) 2.32 1.74 2.27 1.74
D/D/A ($/MCFE) 1.39 1.81 1.32 1.61
(1) 2002 Results include impact from Canadian operations sold in January, 2003.
(2) See attached Reconciliation of Non-GAAP Financial Measures.
(3) Net loss for 2002 includes a $116 million proved property impairment due to
lower realized prices at period end.
Balance Sheet Data (In $000s)
June 30, 2003 December 31, 2002
Cash $2,099 $4,882
Working Capital (Deficit)(1) (3,537) (2,109)
Plant/Property/Equipment, Net 106,597 150,394
Total Assets 122,069 181,425
Long-Term Debt 176,646 236,943
Shareholders Equity (Deficit) (69,542) (142,254)
Common Shares Outstanding (Millions) 35.6 30.1
(1) 12/31/2002 working capital excludes current portion of long-term debt
of $63.5 million.
Abraxas Petroleum Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
------------------- ----------------- ----------------- -------------------
Revenue:
Oil and gas production revenues ................... $ 8,261 $ 13,143 $ 21,033 $ 24,029
$
Gas processing revenues ........................... - 741 132 1,411
Rig revenues ...................................... 158 193 339 344
Other ............................................ 11 158 37 258
------------------- ----------------- ----------------- -------------------
8,430 14,235 21,541 26,042
Operating costs and expenses:
Lease operating and production taxes .............. 2,066 3,353 4,792 7,262
Depreciation, depletion, and amortization ......... 2,301 9,110 5,443 15,924
Proved property impairment......................... - 115,995 - 115,995
Rig operations .................................... 148 175 314 296
General and administrative ........................ 1,231 1,481 2,627 3,179
General and administrative (Stock-based
compensation) ................................... 757 - 792 -
------------------- ----------------- ----------------- -------------------
6,503 130,114 13,968 142,656
------------------- ----------------- ----------------- -------------------
Operating income (loss) .............................. 1,927 (115,879) 7,573 (116,614)
Other (income) expense:
Interest income ................................... (7) (8) (17) (41)
Interest expense .................................. 3,846 8,761 9,010 17,174
Amortization of deferred financing fee ............ 434 431 811 858
Financing cost..................................... - - 3,601 -
Gain on sale of foreign subsidiaries............... - - (66,960) -
Other expense ..................................... - - - -
------------------- ----------------- ----------------- -------------------
4,273 9,184 (53,555) 17,991
------------------- ----------------- ----------------- -------------------
Earnings (loss) before cumulative effect of
accounting change and taxes .................... (2,346) (125,063) 61,128 (134,605)
Cumulative effect of accounting change................ - - (395) -
Income tax (expense) benefit.......................... - 29,373 (377) 30,216
------------------- ----------------- ----------------- -------------------
Net earnings (loss)................................ $ (2,346) $ (95,690) $ 60,356 $ (104,389)
=================== ================= ================= ===================
Basic earnings (loss) per common share:
Net earnings (loss)............................. $ (0.07) $ (3.19) $ 1.74 $ (3.48)
Cumulative effect of accounting change.......... - - (0.01) -
------------------- ----------------- ----------------- -------------------
Net earnings (loss) per common share - basic....... $ (0.07) $ (3.19) $ 1.73 $ (3.48)
=================== ================= ================= ===================
Diluted earnings (loss) per common share:
Net earnings (loss)............................. $ (0.07) $ (3.19) $ 1.72 $ (3.48)
Cumulative effect of accounting change.......... - - (0.01) -
------------------- ----------------- ----------------- -------------------
Net earnings (loss) per common share - diluted..... $ (0.07) $ (3.19) $ 1.71 $ (3.48)
=================== ================= ================= ===================
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 June 30, Six Months Ended June 30,
2002 2003 2002 2003
Operating income (loss) $(115,879) $1,927 $(116,614) $7,573
Depletion, depreciation and amortization 9,110 2,301 15,924 5,443
Non-cash stock based comp. expense - 757 - 793
Proved Property Impairment 115,995 - 115,995 -
Cash interest (8,523) (930) (16,903) (1,676)
Cash Flow $702 $4,055 $ (1,598) $12,133
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 June 30, Six Months Ended June 30,
2002 2003 2002 2003
Operating income (loss) $(115,879) $1,927 $(116,614) $7,573
Depletion, depreciation and amortization 9,110 2,301 15,924 5,443
Proved Property Impairment 115,995 - 115,995 -
Non-cash stock based comp. expense - 757 - 793
EBITDA $9,226 $4,985 $15,305 $13,809