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
May 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 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12, DISCLOSURE
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION)
Registrant is furnishing its press release dated May 13, 2003, which
announces the Registrant's financial results for the quarter ended March 31,
2003, in Exhibit 99.1 hereto. The information contained in this Item 9 is
furnished pursuant to Item 12 of Form 8-K, Results of Operations and Financial
Condition, and is included under Item 9 in accordance with SEC Release No.
34-47583. This information and Exhibit 99.1 hereto are being furnished and shall
not be deemed "filed" for purposes of Section 18 of, or otherwise regarded as
filed under, the Securities Exchange Act of 1934, as amended.
The following exhibits are filed as part of this report:
NUMBER DOCUMENT
99.1.1 Press release dated May 13, 2003
6
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: May 13, 2003
Exhibit 99.1
NEWS RELEASE
ABRAXAS REPORTS $63 MILLION GAIN IN 2003 FIRST QUARTER
INCLUDING GAIN ON SALE OF CANADIAN SUBSIDIARIES
SAN ANTONIO, TX (May 13, 2003) - Abraxas Petroleum Corporation ("Abraxas")
(AMEX:ABP) today reported results for the first quarter of 2003, including the
impact of the sale of its Canadian subsidiaries and the benefits of the
financial transactions completed on January 23, 2003.
Quarterly Highlights:
o $62.7 million in income for Q1 2003 ($1.83 per share) compared to $8.7
million loss in Q1 2002 (-$.29 per share);
o $67.0 gain on sale of Canadian subsidiaries in Q1 2003;
o EBITDA of $6.1 million from recurring operations for Q1 2003 (see
reconciliation of non-GAAP financial measures in tables), vs. $1.5
million in Q1 2002;
o Q1 2003 includes $873,000 of operating income from operations relating
to the Canadian subsidiaries which were sold compared to a loss of $1.4
million related to sold operations in Q1 2002;
o Non-recurring financing costs of $3.6 million in Q1 2003;
o Revenues in Q1 2003 doubled Q1 2002, $9.8 million versus $4.6 million;
o Q1 2003 natural gas price realization was $5.29 per Mcf compared to
$2.27 per Mcf in Q1 2002; and
o Production averaged 20.1 MMcfepd, up 5% from Q4 2002.
The Company announced on January 24, 2003 the successful completion of several
transactions that dramatically changed its operations and financial results in
the first quarter of 2003. The details of those transactions are as follows:
o The closing of the sale of the capital stock of its wholly-owned
subsidiaries Canadian Abraxas Petroleum Limited ("Canadian Abraxas") and
Grey Wolf Exploration Inc., referred to herein as Old Grey Wolf, to a
Canadian royalty trust for approximately $138 million. After the sale of
these subsidiaries, the Company retained some producing assets and
significant non-producing assets in Canada which were contributed to a
new wholly- owned Canadian subsidiary, Grey Wolf Exploration Inc., or
New Grey Wolf;
o The closing of a new senior secured credit facility consisting of a
term-loan facility of $4.2 million and a revolving-credit facility of up
to $50 million with an initial borrowing base of $45.5 million, of which
$42.5 million was used to fund the exchange offer described below with
the remaining availability to be used to fund the continued development
of our existing crude oil and natural gas properties;
o The closing of an exchange offer in which Abraxas paid $264 in cash and
issued $610 principal amount of new 11 1/2 % Secured Notes due 2007,
Series A, and 31.36 shares of Abraxas common stock for each $1,000 in
principal amount of the outstanding 11 1/2 % Senior Secured Notes due
2004, Series A, and 11 1/2 % Senior Notes due 2004, Series D, issued by
Abraxas and Canadian Abraxas, which were tendered and accepted in the
exchange offer. An aggregate of $179.9 million in principal amount of
the notes were tendered in the exchange offer and the remaining $11
million of notes not tendered were redeemed;
o The redemption of Abraxas' 12? % Senior Secured Notes due 2003,
principal amount of $63.5 million, plus accrued interest; and
o The repayment of Old Grey Wolf's senior secured credit facility with
Mirant Canada Energy Capital Ltd. in the amount of approximately $46.3
million.
First Quarter Operations Update:
While production, year over year, declined in the first quarter, some U.S.
assets divested in the second quarter of last year impacted 2002 results, but
not Q1 of 2003. Compared to production in Q4 of 2002, first quarter production
increased from 19.2 MMcfepd to 20.1 MMcfepd, or 5%. This increase was primarily
caused by new production from wells drilled late in 2002.
During the first quarter, the Company spent $4.4 million on capital expenditures
to participate in the drilling of 8 new wells (6 in Canada). Of those 8 wells, 1
is currently drilling, 5 wells are awaiting completion and/or tie-in, 1 well is
on production and 1 well was plugged and abandoned. Additionally, 1 well drilled
in the fourth quarter of 2002 was placed on production during the first quarter
of 2003 and one well was re-entered, drilled horizontally and placed on
production during the quarter. The Company expects that the 5 wells awaiting
completion and/or tie-in (4 in Canada) will be placed on production this summer,
increasing the Company's production rates at that time.
The Company also announced that Dennis E. Logue, Dean and Fred E. Brown Chair of
the Michael F. Price College of Business at the University of Oklahoma, has
joined the Company's Board of Directors to complete the term of a recently
resigned director.
CEO Bob Watson commented, "The first quarter of 2003 results begin to reflect
the impact of the transactions Abraxas concluded in January. While downsizing
the Company with the sale of Old Grey Wolf and Canadian Abraxas, the
corresponding reductions in debt and interest costs have positioned us to
utilize our improved liquidity, accelerate development on the significant
remaining assets we have and take advantage of the dramatically improved
commodity markets that currently exist. The addition of a director to our Board
with the experience and qualifications of someone like Dennis Logue will only
benefit management as well as all of the stakeholders in Abraxas."
Key quarterly results are summarized below:
(Amounts in thousands)
2003 2002
---- ----
Revenues $9,836 $4,616
Operating Income (Loss) 3,707 (729)
Net Income (Loss) 62,702 (8,699)
Earnings (Loss) Per Share (Basic) 1.83 (.29)
EBITDA 6,093 * 1,524
Average Oil Price (after hedge) 33.33 16.37
Average Gas Price (after hedge) 5.29 2.27
Total Assets - at March 31 $117,674 $309,294
* Excludes $67.0 million gain related to the sale
of the Company's Canadian subsidiaries concluded
in January of 2003, $36,000 of non-cash stock
based compensation expense, $873,000 earnings
from discontinued operations and $395,000 in
non-cash expense related to the cumulative effect
of accounting change. See reconciliation of
Non-GAAP Financial Measures below.
Abraxas invites your participation in a conference call on Wednesday, May 14th,
at 1:30 pm CDT to discuss the contents of this release and respond to questions.
Please call 1-800-946-0785 between 1:20 and 1:30 pm CDT, passcode code 293496,
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 293496,
beginning approximately 4:30 pm CDT Wednesday, May 14th, through 5:00 pm CDT
Wednesday, May 21st.
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
(In thousands except per share data) Ended March 31,
Production and Pricing Information 2003 2002
Revenues $9,836 $4,616
Cash Flow (Before Working Capital Changes) (1):
Recurring (2) 5,384 (4,678)
Non-Recurring (2,416) (4,678)
Net Income(Loss) 62,702 (8,699)
Net Income(Loss) Per Share 1.83 (.29)
Weighted Ave. Shares Outstanding (millions) 34.2 30.0
Production:
Crude Oil (BPD) 700 751
NGL (BPD) 44 24
Natural Gas (MCFPD) 15,626 16,286
MMCFEPD 20.1 20.9
Prices (net of hedge impact):
Crude Oil ($/BBL) $33.33 $16.37
NGL's ($/BBL) 26.28 11.55
Natural Gas ($/MCF) 5.29 2.27
Price per MCFE 5.34 2.70
Expenses:
Lease Operating, including prod. taxes ($/MCFE) $1.30 $1.00
General & Administrative ($/MCFE) .68 .58
Cash Interest ($/MCFE) (3) .39 3.32
Total Interest ($/MCFE) 2.72 3.32
D/D/A ($/MCFE) 1.30 1.20
(1) See reconciliation of non-GAAP financial measures below.
(2) Recurring cash flow excludes cash interest costs of $1.6 million
related to debt extinguished at 1/23/03 and $2.6 million of non-cash
interest expense booked related to the Company's new notes issued in
January of 2003, also excludes $3.6 million in non-recurring financing
costs incurred in January of 2003 related to the exchange of notes.
(3) Includes interest expense of $709,000 related to the Company's new
senior credit revolving facility only.
Balance Sheet (In $000s)
March 31, 2003 December 31, 2002
(unaudited)
Cash $2,510 $557
Working Capital (Deficit) (1,869) (49,997)
Property/Equipment, Net 100,959 95,926
Total Assets 117,674 181,425
Long-Term Debt 173,735 190,979
Shareholders Equity (Deficit) (70,201) (142,254)
Common Shares Outstanding (Millions) 35.6 30.0
Abraxas Petroleum Condensed
Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
Three Months Ended
March 31,
-----------------------------------
2003 2002
---------------- ----------------
Revenue:
Oil and gas production revenues.................................. $ 9,653 $ 4,461
Rig revenues..................................................... 181 151
Other............................................................ 2 4
-------------- -----------------
9,836 4,616
Operating costs and expenses:
Lease operating and production taxes............................. 2,347 1,878
Depreciation, depletion and amortization......................... 2,350 2,253
Rig operations................................................... 166 121
General and administrative...................................... 1,230 1,093
General and administrative (stock-based compensation)........... 36 -
--------------- -----------------
6,129 5,345
--------------- -----------------
Operating income (loss)............................................. 3,707 (729)
Other (income) expense
Interest income.................................................. (10) (33)
Interest expense................................................. 4,523 6,235
Amortization of deferred financing fees.......................... 329 331
Financing cost................................................... 3,601 -
-------------- -----------------
8,443 6,533
-------------- -----------------
Earnings (loss) from continuing operations before cumulative effect
of accounting change............................................. (4,736) (7,262)
Earnings (loss) from discontinued operations:
Earnings (loss) from discontinued operations.................... 873 (1,437)
Gain on sale of foreign subsidiaries............................. 66,960 -
-------------- -----------------
Net earnings from discontinued operations........................... 67,833 (1,437)
Cumulative effect of accounting change.............................. (395) -
-------------- -----------------
Net earnings (loss)................................................. $ 62,702 $ (8,699)
============== =================
Basic earnings (loss) per common share:
Net earnings (loss) from continuing operations................... $ (0.14) $ (0.24)
Earnings (loss) from discontinued operations..................... 1.98 (0.05)
Cumulative effect of accounting change........................... (0.01) -
-------------- -----------------
Net earnings (loss) per common - basic.............................. $ 1.83 $ (0.29)
============== =================
Diluted earnings (loss) per common share:
Net earnings (loss) from continuing operations................... $ (0.14) $ (0.24)
Earnings (loss) from discontinued operations..................... 1.97 (0.05)
Cumulative effect of accounting change........................... (0.01) -
-------------- -----------------
Net earnings (loss) per common share - diluted...................... $ 1.82 $ (0.29)
============== =================
Reconciliation of Non-GAAP Financial Measures
To fully assess Abraxas' operating results, management believes that, although
not prescribed under generally accepted accounting principles ("GAAP"), 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, and cash interest. The following table
provides a reconciliation of cash flow to operating income (loss) for the
periods presented.
Three Months Ended March 31,
2003 2002
Operating income (loss) $3,707 $(729)
Depletion, depreciation and amortization 2,350 2,253
Non-cash stock based comp. expense 36 --
Cash interest (709)* (6,202)
Recurring Cash Flow (deficit) $5,384 $(4,678)
* Includes interest expense of $709,000 related to the Company's new
senior credit revolving facility only.
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 March 31,
2003 2002
Operating income (loss) $3,707 $(729)
Depletion, depreciation and amortization 2,350 2,253
Non-cash stock based comp. expense 36 --
EBITDA $6,093 $1,524