Exploration & Production | Quarterly / Earnings Reports | Second Quarter (2Q) Update
Abraxas' Oil-Weighted Ops Balance Out Tough Quarter
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Abraxas Petroleum Corporation reported financial and operating results for the three months ended June 30, 2014.
Highlights:
- Production of 454 MBoe (4,987 Boepd)
- Revenue of $33.6 million
- Adjusted EBITDA of $22.9 million inclusive of Raven Drilling
- Adjusted discretionary cash flow of $22.2 million inclusive of Raven Drilling
- Net income of $3.0 million, or $0.03 per share
- Adjusted net income, excluding certain non-cash items and inclusive of Raven Drilling of $11.0 million, or $0.11 per share
Bob Watson, Abraxas’ President and CEO, commented, "Our financials continue to benefit from robust oil weighted production growth and lower expenses on a per Boe basis. Together with the strong commodity price environment we have been experiencing, we expect our margins to continue to improve. Although we cannot control the volatility in the markets, we continue to focus on what we can control - executing operationally, growing production and maintaining a pristine balance sheet."
Net income for the three months ended June 30, 2014 was $3.0 million, or $0.03 per share, compared to a net income of $7.9 million, or $0.08 per share, for the three months ended June 30, 2013.
Adjusted net income, excluding certain non-cash items, for the three months ended June 30, 2014 was $11.0 million, or $0.11 per share, compared to an adjusted net income, excluding certain non-cash items, of $3.0 million or $0.03 per share for the three months ended June 30, 2013. For the three months ended June 30, 2014 and 2013, adjusted net income excludes the unrealized gain (loss) on derivative contracts of $(7.1) million and $7.5 million, respectively. Included in adjusted net income for the quarters ended June 30, 2014 and June 30, 2013 is the net income from our subsidiary, Raven Drilling, LLC of $0.8 million and $0.7 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 June 30, 2013 were $96.56 per barrel compared to $105.37 on June 30, 2014; therefore, the mark-to-market valuation changed considerably period to period.
