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Abraxas Reports Third Quarter 2011 Results

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 its oil and gas. In addition, Abraxas’ future oil and gas production is highly dependent upon Abraxas’ level of success in acquiring or finding additional reserves. Further, Abraxas operates in an industry 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 in this release, reference is made to the discussion of risk factors detailed in Abraxas’ filings with the Securities and Exchange Commission (“SEC”) during the past 12 months.

ABRAXAS PETROLEUM CORPORATION
 
FINANCIAL HIGHLIGHTS

(UNAUDITED)

   
(In thousands except per share data) Three Months Ended

September 30,

Nine Months EndedSeptember 30,
2011     2010   2011     2010  
Financial Results:
Revenues $ 18,020 $ 13,969 $ 49,016 $ 45,004
EBITDA (a) 9,607 6,524 23,762 21,870
Discretionary cash flow (a) 8,140 3,810 18,417 13,696
Net income (loss) 20,085 (856 ) 19,003 15,627
Net income (loss) per share – basic $ 0.22 $ (0.01 ) $ 0.21 $ 0.21
Adjusted net income (loss) (a) 3,635 (1,188 ) 5,572 (2,341 )
Adjusted net income (loss) per share (a) – basic $ 0.04 $ (0.02 ) $ 0.06 $ (0.03 )
Weighted average shares outstanding – basic 91,509 75,972 89,663 75,893
 
Production:
Crude oil per day (Bopd) 1,663 1,350 1,451 1,366
Natural gas per day (Mcfpd) 11,826 14,879 11,674 15,572
Natural gas liquids per day (Bblpd) 95 45 66 28
Crude oil equivalent per day (Boepd) 3,729 3,875 3,462 3,989
Crude oil equivalent (MBoe) 343.1 356.5 945.1 1,088.9
Crude oil equivalent per day (Boepd) (b) 4,055 3,875 3,858 3,989
Crude oil equivalent (MBoe) (b) 373.1 356.5 1,053.3 1,088.9
 
Realized Prices, net of realized hedging activity:
Crude oil ($ per Bbl) $ 77.87 $ 66.20 $ 75.70 $ 66.87
Natural gas ($ per Mcf) 5.61 4.69 5.65 4.97
Natural gas liquids ($ per Bbl) 50.20 32.95 50.24 37.56
Crude oil equivalent ($ per Boe) 53.80 41.46 51.73 42.55
 
Expenses:
Lease operating ($ per Boe) $ 16.74 $ 14.77 $ 16.26 $ 13.68
Production taxes (% of oil and gas revenue) 8.8 % 9.4 % 8.8 % 10.2 %
General and administrative, excluding stock-based compensation ($ per Boe)

4.75

4.87

5.98

4.79

Cash interest ($ per Boe) 2.53 6.01 3.79 5.93
Depreciation, depletion and amortization($ per Boe)

12.13

10.72

12.03

11.48

(a) See reconciliation of non-GAAP financial measures below.
(b) Includes Abraxas’ equity interest in Blue Eagle’s production.
 

BALANCE SHEET DATA

 
(In thousands)   September 30, 2011   December 31, 2010
 
Cash $ 14 $ 99
Working capital (a) (19,654 ) (5,948 )
Property and equipment – net 158,458 117,248
Total assets 213,795 182,909
 
Long-term debt 101,888 140,940
Stockholders’ equity (deficit) 67,397 (14,976 )
Common shares outstanding 92,161 76,428
 

(a) Excludes current maturities of long-term debt and current derivative assets and liabilities.

 
ABRAXAS PETROLEUM CORPORATION
 
STATEMENTS OF OPERATIONS

(UNAUDITED)

 
(In thousands except per share data)   Three Months Ended September 30,   Nine Months Ended September 30,
  2011     2010   2011     2010  
 
Revenues:
Oil and gas production revenues $ 17,665 $ 13,709 $ 48,165 $ 44,218
Rig revenues 354 259 846 779
Other 1   1   5   7  
18,020 13,969 49,016 45,004
Operating costs and expenses:
Lease operating 5,742 5,266 15,364 14,893
Production taxes 1,549 1,292 4,229 4,519
Depreciation, depletion, and amortization 4,161 3,821 11,371 12,495
Rig operations 282 223 733 613
General and administrative (including stock-based compensation of $430, $358, $1,499 and $1,205)

2,061

 

2,094

 

7,153

 

6,426

 
13,795   12,696   38,850   38,946  
Operating income 4,225 1,273 10,166 6,058
 
Other (income) expense:
Interest income (2 ) (2 ) (6 ) (6 )
Interest expense 983 2,271 3,924 6,857
Amortization of deferred financing fees 245 515 1,515 1,837
Loss (gain) on derivative contracts (unrealized of $(16,450), $(332), $(13,431) and $(17,968))

(16,641

)

(831

)

(12,394

)

(18,358

)

Equity in (income) loss of joint venture (546 ) 237 (2,064 ) 237
Other 101   (61 ) 188   (136 )
(15,860 ) 2,129   (8,837 ) (9,569 )
Net income (loss) $ 20,085   $ (856 ) $ 19,003   $ 15,627  
 
Net income (loss) per common share - basic $ 0.22   $ (0.01 ) $ 0.21   $ 0.21  
Net income (loss) per common share - diluted $ 0.21   $ (0.01 ) $ 0.21   $ 0.20  
 
Weighted average shares outstanding:
Basic 91,509 75,972 89,663 75,893
Diluted 93,616 75,972 92,160 77,119
 

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"), discretionary cash flow and EBITDA are appropriate measures of Abraxas' ability to satisfy capital expenditure obligations and working capital requirements. Discretionary cash flow and EBITDA are non-GAAP financial measures as defined under SEC rules. Abraxas' discretionary 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 discretionary cash flow and EBITDA exclude some, but not all items that affect net income and may vary among companies, the discretionary cash flow and EBITDA presented below may not be comparable to similarly titled measures of other companies. Management believes that operating income calculated in accordance with GAAP is the most directly comparable measure to discretionary cash flow and EBITDA; therefore, operating income is utilized as the starting point for these reconciliations.

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