Exploration & Production | Quarterly / Earnings Reports | First Quarter (1Q) Update

Abraxas Surpasses 1Q Guidance; Tags 4,189 BOE/d

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   |    Thursday,May 08,2014

Abraxas Petroleum Corporation reported financial and operating results for the three months ended March 31, 2014.

Highlights:

• Production of 377 MBoe (4,189 Boepd)
• Revenue of $25.9 million
• Adjusted EBITDA of $16.1 million inclusive of Raven Drilling
• Adjusted discretionary cash flow of $15.6 million inclusive of Raven Drilling
• Net income of $4.7 million, or $0.05 per share
• Adjusted net income, excluding certain non-cash items and inclusive of Raven Drilling of $6.3 million, or $0.07 per share

Bob Watson, Abraxas’ President and CEO, commented, "The first quarter of 2014 meaningfully surpassed our initial expectations and guidance. Importantly, lease operating expenses per Boe of production showed considerable improvement despite incurring the remaining costs on the Nordheim 2H work-over. We expect this trend of lower lease operating expenses per Boe of production to continue for the remainder of 2014. Our financial position remains the strongest in our corporate history. Leverage remains low and cash flow growth is meaningfully accelerating on the back of high margin, oil weighted production growth. Looking into the second quarter of 2014, the addition of three 76% working interest wells in the Bakken and four 100% working interest wells in the Eagle Ford promises to bring a step change in production and cash flow growth to Abraxas."

Net income for the three months ended March 31, 2014 was $4.7 million, or $0.05 per share, compared to a net income of $0.6 million, or $0.01 per share, for the three months ended March 31, 2013.

Adjusted net income, excluding certain non-cash items, for the three months ended March 31, 2014 was $6.3 million, or $0.07 per share, compared to an adjusted net income, excluding certain non-cash items, of $2.3 million or $0.02 per share for the three months ended March 31, 2013. For the three months ended March 31, 2014 and 2013, adjusted net income excludes the unrealized loss on derivative contracts of $0.9 million and $0.6 million, respectively. Included in adjusted net income for the quarters ended March 31, 2014 and March 31, 2013 is the net income from our subsidiary, Raven Drilling, LLC of $0.6 million and $1.1 million, respectively.

Pursuant to SEC Regulation S-X, no income is recognized for Raven Drilling, LLC. Contractual drilling services performed in connection with properties in which Abraxas holds an ownership interest cannot be recognized as income, rather it is credited to the full cost pool and recognized through lower amortization as reserves are produced.

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, and require Abraxas to either record an unrealized gain or loss based on the calculated value difference from the previous period-end valuation. For example, NYMEX oil prices on March 31, 2013 were $97.23 per barrel compared to $101.58 on March 31, 2014; therefore, the mark-to-market valuation changed considerably period to period.