Abraxas Petroleum Corporation (NASDAQ:AXAS) today reported financial and operating results for the three and twelve months ended December 31, 2018.
Financial Highlights for the Three Months Ended December 31, 2018
The three months ended December 31, 2018 resulted in:
- Production of 965 MBoe (10,493 Boepd)
- Revenue of $36.0 million
- Net income of $55.8 million, or $ 0.34 per share
- Adjusted net income(a) (excluding certain non-cash items) of $4.1 million, or $ 0.02 per share
- EBITDA(a) of $20.1 million
- Adjusted EBITDA per bank loan covenants of $20.1 million(a)
| (a) | See reconciliation of non-GAAP financial measures below. | ||
Financial Highlights for the Twelve Months Ended December 31, 2018
The twelve months ended December 31, 2018 resulted in:
- Production of 3.6 MMBoe (9,809 Boepd)
- Revenue of $149.2 million
- Net income of $57.8 million, or $ 0.35 per share
- Adjusted net income(a) (excluding certain non-cash items) of $30.7 million, or $ 0.19 per share
- EBITDA(a) of $83.9 million
- Adjusted EBITDA per bank loan covenants of $84.2 million(a)
| (a) | See reconciliation of non-GAAP financial measures below. | ||
Operational Highlights for the Three Months Ended December 31, 2018:
Williston Basin, North Dakota
Western North Dakota has experienced one of the coldest winters on record. Abraxas has experienced several days when all surface work was shut down due to temperatures and wind chill that put personnel safety and equipment reliability in jeopardy. The Ravin NE Pad is still under production restriction due to a natural gas pipeline installation delay requiring the flaring of all gas production from this pad. The pipeline is scheduled to be in service within the next two weeks at which point we are expecting normal production operations to be resumed. The Abraxas Raven Rig#1 is scheduled to be started up within the next several months to begin drilling operations on the six well Jore Extension Pad.
Delaware Basin, West Texas
In the Delaware Basin of West Texas, the Company has successfully drilled, completed and started flowback on the two well Creosote Pad in Ward County, where Abraxas now owns an approximate 95% working interest. The Wolfcamp A-1 and A-2 were targeted with a 26 stage fracture treatment (frac) in 5,000’ laterals. The one well Hackberry pad has been successfully drilled and a 26 stage fracture treatment in the Wolfcamp A-1 is scheduled to start next Monday. Abraxas owns an approximate 75% working interest in this 5,000’ lateral well located in Winkler County. The Company is currently drilling a two well pad, Woodberry, in which we own a 100% working interest. The Woodberry Pad adjoins our Caprito block in Ward County.
Year End 2018 Reserves
The Company’s total proved reserves at December 31, 2018 were 67.2 million barrels of oil equivalent (MMBOE), an increase of 2.8% over year end 2017 after production of 3.6 MMBOE and property divestitures of 3.8 MMBOE. The SEC PV10 (a non-GAAP measure) was approximately $689 million. SEC pricing was $65.56 per barrel for oil and $3.03 per mcf for gas. Proved developed reserves were 24.6 MMBOE, or 37% of the total. Oil represented 63% of total proved reserves, natural gas 22%, and natural gas liquids 15%.
A summary of the Company’s estimated proved reserves at year-end 2018, which were prepared in accordance with Securities and Exchange Commission (“SEC”) guidelines by LaRoche Petroleum Consultants, Ltd. (“LaRoche”), an independent petroleum engineering firm, are shown in the table below.
Year-End 2018 SEC Proved Reserves | ||||||||||
| Reserve Category |
Oil |
Gas |
NGL |
Total |
PV-10 ($ in | |||||
| Proved Developed | 13,586 | 43,271 | 3,804 | 24,602 | 381,879 | |||||
| Proved Undeveloped | 28,651 | 46,473 | 6,230 | 42,626 | 307,418 | |||||
| Total | 42,237 | 89,744 | 10,034 | 67,228 | 689,297 | |||||
| Note: PV-10 is a non-GAAP financial measure. See "Non-GAAP Financial Measures." | ||||||||||
A reconciliation of proved reserves from the end of 2017 is shown below.
| Oil Equivalents | |||
| (Mboe) | |||
| Proved Reserves at December 31, 2017 | 65,351 | ||
| Revision to previous estimates | (6,570 | ) | |
| Extensions and discoveries | 14,979 | ||
| Purchases of minerals in place | 877 | ||
| Sales of minerals in place | (3,829 | ) | |
| Production | (3,580 | ) | |
| Proved Reserves at December 31, 2018 | 67,228 | ||
In addition, total probable reserves at year end 2018 were approximately 107 MMBOE an increase of 34 MMBOE or 47% over year end 2017. A number of these probable reserves would qualify as proved undeveloped (PUD) from an engineering standpoint, but cannot be included as proved due to the SEC rules as to timing and capital availability. The SEC PV10 of these probable reserves was approximately $461 million.
Divestiture Activities
The marketing process for the North Dakota assets by Petrie Partners has begun, and a number of parties have expressed interest and/or are evaluating the opportunity. Although it’s too early to speculate on the outcome of this process, the Company is encouraged with the interest and activity to date. Abraxas expects to be in a position to offer more substantive commentary on the marketing efforts in the near future and will provide feedback at that time.
Comments
Bob Watson, CEO, commented, “Our ongoing drilling and completion operation in the Delaware Basin has been successful in proving up more locations than we can technically book as proved undeveloped under the current SEC rules, but it has been pleasing nonetheless. Our employees in North Dakota have done an excellent job in keeping production up under very harsh conditions. We appreciate their efforts.”
Conference Call
Abraxas Petroleum Corporation (NASDAQ:AXAS) will host its fourth quarter and year end 2018 earnings conference call at 3 PM ET on Thursday March 14, 2019. To participate in the conference call, please dial 844.347.1028 and enter the passcode 9495807. Additionally, a live listen only webcast of the conference call can be accessed under the investor relations section of the Abraxas website at www.abraxaspetroleum.com. A replay of the conference call will be available through April 13, 2019 by dialing 855.859.2056 and entering the passcode 9495807 or can be accessed under the investor relations section of the Abraxas website.
Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Permian Basin, Rocky Mountain, and South Texas regions of the United States.
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’ filings with the Securities and Exchange Commission during the past 12 months.
| ABRAXAS PETROLEUM CORPORATION | ||||||||||||||||
| CONSOLIDATED | ||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||
Three Months Ended |
Twelve Months Ended | |||||||||||||||
| (In thousands except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Financial Results: | ||||||||||||||||
| Revenue | $ | 35,996 | $ | 29,588 | $ | 149,167 | $ | 86,264 | ||||||||
| Net income (loss) | 55,819 | (4,109 | ) | 57,821 | 16,006 | |||||||||||
| Net income (loss) per share - basic | $ | 0.34 | $ | (0.02 | ) | $ | 0.35 | $ | 0.10 | |||||||
| Net income (loss) per share - diluted | $ | 0.33 | $ | (0.02 | ) | $ | 0.34 | $ | 0.10 | |||||||
| Capital expenditures - acquisitions | 5,061 | 31,409 | 41,465 | 31,409 | ||||||||||||
| Capital expenditures - drilling and completion | 38,905 | 12,306 | 130,231 | 103,669 | ||||||||||||
| Total capital expenditures | 43,966 | 43,715 | 171,696 | 135,078 | ||||||||||||
| EBITDA(a) | 20,116 | 17,589 | 83,856 | 53,139 | ||||||||||||
| Adjusted net income, excluding certain non-cash items(a) | 4,081 | 7,149 | 30,723 | 20,305 | ||||||||||||
| Adjusted net income, excluding certain non-cash items, per share - basic(a) | $ | 0.02 | $ | 0.04 | $ | 0.19 | $ | 0.13 | ||||||||
| Adjusted net income, excluding certain non-cash items, per share - diluted(a) | $ | 0.02 | $ | 0.04 | $ | 0.18 | $ | 0.12 | ||||||||
| Liquidity(a) | 20,617 | 52,368 | 20,617 | 52,368 | ||||||||||||
| Weighted average shares outstanding - basic | 165,843 | 164,411 | 165,635 | 161,141 | ||||||||||||
| Weighted average shares outstanding - diluted | 167,829 | 166,519 | 167,689 | 162,844 | ||||||||||||
| Production from Continuing Operations: | ||||||||||||||||
| Crude oil per day (Bblpd) | 7,206 | 5,325 | 6,323 | 4,311 | ||||||||||||
| Natural gas per day (Mcfpd) | 12,010 | 12,334 | 12,567 | 10,655 | ||||||||||||
| Natural gas liquids per day (Bblpd) | 1,285 | 1,407 | 1,392 | 1,304 | ||||||||||||
| Crude oil equivalent per day (Boepd) | 10,493 | 8,788 | 9,809 | 7,391 | ||||||||||||
| Crude oil equivalent (Mboe) | 965 | 808 | 3,580 | 2,698 | ||||||||||||
| Realized Prices, net of realized hedging activity: | ||||||||||||||||
| Crude oil ($ per Bbl) | $ | 45.16 | $ | 49.86 | $ | 57.51 | $ | 48.24 | ||||||||
| Natural gas ($ per Mcf) | 1.78 | 1.78 | 1.71 | 1.81 | ||||||||||||
| Natural gas liquids ($ per Bbl) | 13.00 | 16.59 | 16.28 | 11.99 | ||||||||||||
| Crude oil equivalent ($ per Boe) | 34.65 | 35.37 | 36.31 | 32.86 | ||||||||||||
| Expenses: | ||||||||||||||||
| Lease operating ($ per Boe) | $ | 7.54 | $ | 4.41 | $ | 6.79 | $ | 5.63 | ||||||||
| Production taxes (% of oil and gas revenue) | 8.0 | % | 8.1 | % | 8.1 | % | 8.4 | % | ||||||||
| General and administrative, excluding stock-based compensation ($ per Boe) | $ | 3.30 | $ | 5.99 | $ | 2.70 | $ | 4.83 | ||||||||
| Cash interest ($ per Boe) | 2.50 | 1.19 | 1.97 | 0.93 | ||||||||||||
| Depreciation, depletion and amortization ($ per Boe) | 13.38 | 10.59 | 11.94 | 9.72 | ||||||||||||
| (a) See reconciliation of non-GAAP financial measures below. |
| ABRAXAS PETROLEUM CORPORATION | ||||||||
| CONSOLIDATED | ||||||||
| BALANCE SHEET DATA | ||||||||
| (In thousands) | December 31, | December 31, | ||||||
| Cash | $ | 867 | $ | 1,618 | ||||
| Working capital | (13,632 | ) | (34,361 | ) | ||||
| Property and equipment - net | 363,218 | 237,767 | ||||||
| Total assets | 425,890 | 273,806 | ||||||
| Long-term debt - less current maturities | 183,091 | 87,354 | ||||||
| Stockholders' equity | 166,510 | 106,308 | ||||||
| Common shares outstanding | 166,714 | 165,890 | ||||||
| Working capital per bank loan covenants(a) | (22,351 | ) | (23,262 | ) | ||||
| (a) Excludes current maturities of long-term debt and current derivative assets and liabilities in accordance with our bank loan covenants. This working capital calculation excludes the unused commitment amount which is included for our current ratio calculation. As of December 31, 2018, the Company was in violation of its current ratio covenant under its credit facility and a waiver was obtained. |
| ABRAXAS PETROLEUM CORPORATION | ||||||||||||
| CONSOLIDATED | ||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||
| Twelve Months Ended December 31, | ||||||||||||
| (In thousands except per share data) | 2018 | 2017 | 2016 | |||||||||
| Revenues: | ||||||||||||
| Oil | $ | 132,904 | $ | 73,584 | $ | 50,965 | ||||||
| Gas | 7,854 | 6,898 | 3,978 | |||||||||
| Natural gas liquids | 8,272 | 5,707 | 1,550 | |||||||||
| Other | 137 | 75 | 62 | |||||||||
| 149,167 | 86,264 | 56,555 | ||||||||||
| Operating costs and expenses: | ||||||||||||
| Lease operating | 24,300 | 15,197 | 18,205 | |||||||||
| Production and ad valorem taxes | 12,023 | 7,228 | 5,454 | |||||||||
| Rig expense | - | - | 664 | |||||||||
| Depreciation, depletion, amortization and accretion | 43,275 | 26,677 | 24,922 | |||||||||
| Impairment | - | - | 67,626 | |||||||||
| General and administrative (including stock-based compensation of $2,366, $3,238 and $3,194 respectively) | 12,041 | 16,276 | 13,562 | |||||||||
| 91,639 | 65,378 | 130,433 | ||||||||||
| Operating income (loss) | 57,528 | 20,886 | (73,878 | ) | ||||||||
| Other (income) expense: | ||||||||||||
| Interest income | (1 | ) | (1 | ) | (1 | ) | ||||||
| Interest expense | 7,053 | 2,497 | 3,828 | |||||||||
| Amortization of deferred financing fees | 440 | 423 | 1,019 | |||||||||
| (Gain) loss on derivative contracts | (8,060 | ) | 1,849 | 18,028 | ||||||||
| Loss (gain) on sale of non-oil and gas assets | 181 | (102 | ) | (374 | ) | |||||||
| Other | 94 | 214 | - | |||||||||
| (293 | ) | 4,880 | 22,500 | |||||||||
| Income (loss) before income tax | 57,821 | 16,006 | (96,378 | ) | ||||||||
| Income tax (expense) benefit | - | - | - | |||||||||
| Net income (loss) | $ | 57,821 | $ | 16,006 | $ | (96,378 | ) | |||||
| Net income (loss) per common share - basic | $ | 0.35 | $ | 0.10 | $ | (0.79 | ) | |||||
| Net income (loss) per common share - diluted | $ | 0.34 | $ | 0.10 | $ | (0.79 | ) | |||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 165,635 | 161,141 | 122,132 | |||||||||
| Diluted | 167,689 | 162,844 | 122,132 | |||||||||
ABRAXAS PETROLEUM CORPORATION
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
To fully assess Abraxas’ operating results, management believes that, although not prescribed under generally accepted accounting principles ("GAAP") in the United States of America, EBITDA is an appropriate measure of Abraxas' ability to satisfy capital expenditure obligations and working capital requirements. EBITDA is defined as net income plus interest expense, deferred income taxes, depreciation, depletion and amortization expenses, impairments, unrealized gains and losses on derivative contracts, and stock-based compensation. EBITDA is a non-GAAP financial measure as defined under SEC rules. 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. EBITDA excludes some, but not all items that affect net income and may vary among companies. The EBITDA presented below may not be comparable to similarly titled measures of other companies.
We have also disclosed Adjusted EBITDA per bank loan covenants. Adjusted EBITDA per bank loan covenants is a non-GAAP financial measure as defined under SEC rules. Our management believes that information regarding Adjusted EBITDA per bank loan covenants is material to an understanding of our financial condition and liquidity. Adjusted EBITDA per bank loan covenants 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. Adjusted EBITDA per bank loan covenants presented below may not be comparable to similarly titled measures of other companies.
The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net income for the periods presented.
Three Months Ended |
Twelve Months Ended | ||||||||||||||
| (In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income (loss) | $ | 55,819 | $ | (4,109 | ) | $ | 57,821 | $ | 16,006 | ||||||
| Net interest expense | 2,409 | 959 | 7,052 | 2,496 | |||||||||||
| Depreciation, depletion, amortization and accretion | 13,034 | 8,673 | 43,275 | 26,677 | |||||||||||
| Amortization of deferred financing fees | 120 | 69 | 440 | 423 | |||||||||||
| Stock-based compensation | 472 | 739 | 2,366 | 3,238 | |||||||||||
| Unrealized (gain) loss on derivative contracts | (51,738 | ) | 11,258 | (27,098 | ) | 4,299 | |||||||||
| EBITDA | $ | 20,116 | $ | 17,589 | $ | 83,856 | $ | 53,139 | |||||||
| EBITDA | $ | 20,116 | $ | 17,589 | $ | 83,856 | $ | 53,139 | |||||||
| Expenses related to equity offering/loan amendments/permitted acquisitions | 8 | 164 | 325 | 4,856 | |||||||||||
| Adjusted EBITDA per bank loan covenants | $ | 20,124 | $ | 17,753 | $ | 84,181 | $ | 57,995 | |||||||
This release also includes a discussion of “adjusted net income, excluding certain non-cash items,” which is also a non-GAAP financial measure as defined under SEC rules. The following table provides a reconciliation of adjusted net income, excluding ceiling test impairment and unrealized changes in derivative contracts. Management believes that net income calculated in accordance with GAAP is the most directly comparable measure to adjusted net income, excluding certain non-cash items. The calculation of adjusted net income, excluding certain non-cash items presented below may not be comparable to similarly titled measures of other companies.
Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and may fluctuate drastically from period to period. As commodity prices fluctuate, these derivative contracts are valued against current market prices at the end of each reporting period in accordance with Accounting Standards Codification 815: Derivatives and Hedging as amended and interpreted, which requires Abraxas to record a gain or loss based on the calculated value difference from the previous period-end valuation for open contracts. For example, NYMEX oil prices on December 29, 2017 were $60.42 per barrel compared to $45.41 on December 31, 2018; therefore, the mark-to-market valuation changed considerably from period to period.
Three Months Ended |
Twelve Months Ended | ||||||||||||||
| (In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income (loss) | $ | 55,819 | $ | (4,109 | ) | $ | 57,821 | $ | 16,006 | ||||||
| Unrealized (gain) loss on derivative contracts | (51,738 | ) | 11,258 | (27,098 | ) | 4,299 | |||||||||
| Adjusted net income, excluding certain non-cash items | $ | 4,081 | $ | 7,149 | $ | 30,723 | $ | 20,305 | |||||||
| Net income per share - basic | $ | 0.34 | $ | (0.02 | ) | $ | 0.35 | $ | 0.10 | ||||||
| Net income per share - diluted | $ | 0.33 | $ | (0.02 | ) | $ | 0.34 | $ | 0.10 | ||||||
| Adjusted net income, excluding certain non-cash items, per share - basic | $ | 0.02 | $ | 0.04 | $ | 0.19 | $ | 0.13 | |||||||
| Adjusted net income, excluding certain non-cash items, per share - diluted | $ | 0.02 | $ | 0.04 | $ | 0.18 | $ | 0.12 | |||||||
Liquidity is calculated by adding the net funds available under our revolving credit facility and cash and cash equivalents. We use liquidity as an indicator of the Company's ability to fund development and exploration activities. However, this measurement has limitations. This measurement can vary from year-to-year for the Company and can vary among companies based on what is or is not included in the measurement on a company's financial statements. This measurement is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our SEC filings and posted on our website.
| (In thousands) |
December 31, |
December 31, | ||||||
| Borrowing base | $ | 200,000 | $ | 135,000 | ||||
| Cash and cash equivalents | 867 | 1,618 | ||||||
| Revolving credit facility- outstanding borrowings | (180,000 | ) | (84,000 | ) | ||||
| Outstanding letters of credit | (250 | ) | (250 | ) | ||||
| Liquidity | $ | 20,617 | $ | 52,368 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190313005815/en/
Contacts:
Vice President - Chief Financial Officer
Telephone
210.490.4788
sharris@abraxaspetroleum.com
www.abraxaspetroleum.com
