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Abraxas Announces Third Quarter Results

Unrealized gains or losses on derivative contracts are based on mark-to-market valuations which are non-cash in nature and may fluctuate drastically 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 record an unrealized gain or loss based on the calculated value difference from the previous period-end valuation. For example, NYMEX oil prices on September 28, 2012 were $92.19 per barrel compared to $84.96 on June 30, 2012.

Conference Call

Abraxas invites you to participate in a conference call on Monday, November 12, 2012 at 10:30 a.m. CT (11:30 a.m. ET) to discuss the contents of this release and respond to questions. Please dial 1.888.679.8033 passcode 90153817 #, 10 minutes before the scheduled start time, if you would like to participate in the call. The conference call will also be webcast live on the Internet and can be accessed directly on the Company’s website at www.abraxaspetroleum.com under Investor Relations. In addition to the audio webcast replay, a transcript of the conference call will be posted on the Investor Relations section of the Company’s website approximately 24 hours after the conclusion of the call and will be accessible for at least 60 days.

Abraxas Petroleum Corporation is a San Antonio-based oil and gas exploration and production company with operations across the Rocky Mountain, Mid-Continent, Permian Basin and onshore Gulf Coast regions of the United States and in the province of Alberta, Canada.

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,
  2012       2011     2012       2011  
Financial Results:
Revenues $ 17,170 $ 17,666 $ 49,501 $ 48,170
EBITDA (a) 5,756 9,607 22,706 23,762
Discretionary cash flow (a) 5,226 8,140 18,787 18,417
Net income (loss) (18,644 ) 20,085 (6,924 ) 19,003
Net income (loss) per share – basic $ (0.20 ) $ 0.22 $ (0.08 ) $ 0.21
Adjusted net income (loss) (a) (547 ) 3,635 3,622 5,572
Adjusted net income (loss) per share (a) – basic $ (0.01 ) $ 0.04 $ 0.04 $ 0.06
Weighted average shares outstanding – basic 91,898 91,509 91,866 89,663
 
Production:
Crude oil per day (Bopd) 1,775 1,663 1,707 1,451
Natural gas per day (Mcfpd) 11,569 11,826 11,122 11,674
Natural gas liquids per day (Bblpd) 323 95 292 66
Crude oil equivalent per day (Boepd) 4,027 3,729 3,853 3,462
Crude oil equivalent (MBoe) 370.5 343.1 1,055.6 945.1
Crude oil equivalent per day (Boepd) (b) 4,177 4,055 4,088 3,858
Crude oil equivalent (MBoe) (b) 384.3 373.1 1,120.2 1053.3
 
Realized Prices, net of realized hedging activity:
Crude oil ($ per Bbl) $ 73.88 $ 77.87 $ 71.92 $ 75.70
Natural gas ($ per Mcf) 2.92 5.61 4.55 5.65
Natural gas liquids ($ per Bbl) 31.69 50.20 37.04 50.24
Crude oil equivalent ($ per Boe) 43.51 53.80 47.80 51.73
 
Expenses:
Lease operating ($ per Boe) $ 18.40 $ 16.53 $ 17.18 $ 16.14
Production taxes (% of oil and gas revenue) 10.0 % 8.8 % 9.5 % 8.8 %
General and administrative, excluding stock-based compensation ($ per Boe)

5.00

4.75

4.70

5.98

Cash interest ($ per Boe) 3.98 2.53 3.51 3.79

Depreciation, depletion and amortization ($ per Boe)

16.12

12.13

15.34

12.03

(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, 2012 December 31, 2011
 
Cash $ 2,615 $
Working capital (a) 9,127 (14,404 )
Property and equipment – net 204,625 179,552
Total assets 250,128 241,150
 
Long-term debt 145,616 126,258
Stockholders’ equity 57,905 62,651
Common shares outstanding 92,389 92,261

(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,
  2012       2011     2012       2011  
 
Revenues:
Oil and gas production revenues $ 17,146 $ 17,665 $ 49,459 $ 48,165
Other   24     1     42     5  
17,170 17,666 49,501 48,170
Operating costs and expenses:
Lease operating 6,816 5,670 18,132 15,251
Production taxes 1,714 1,549 4,699 4,229
Depreciation, depletion, and amortization 5,971 4,161 16,189 11,371
Impairment 11,761 13,067
General and administrative (including stock-based compensation of $413, $430, $1,612 and $1,499)  

2,267

   

2,061

   

6,572

   

7,153

 
  28,529     13,441     58,659     38,004  
Operating income (loss) (11,359 ) 4,225 (9,158 ) 10,166
 
Other (income) expense:
Interest income (1 ) (2 ) (3 ) (6 )
Interest expense 1,596 983 4,061 3,924
Amortization of deferred financing fees 311 245 607 1,515
Loss (gain) on derivative contracts (unrealized of $5,267, $(16,450), $(4,153), $(13,431)) 5,351 (16,641 ) (4,935 ) (12,394 )
Equity in (income) loss of joint venture (282 ) (546 ) (2,316 ) (2,064 )
Other       101     42     188  
  6,975     (15,860 )   (2,544 )   (8,837 )
Net income (loss) before income tax (18,334 ) 20,085 (6,614 ) 19,003
Income tax expense   310         310      
Net income (loss) $ (18,644 ) $ 20,085   $ (6,924 ) $ 19,003  
 
Net income (loss) per common share - basic $ (0.20 ) $ 0.22   $ (0.08 ) $ 0.21  
Net income (loss) per common share - diluted $ (0.20 ) $ 0.21   $ (0.08 ) $ 0.21  
 
Weighted average shares outstanding:
Basic 91,898 91,509 91,866 89,663
Diluted 91,898 93,616 91,866 92,160
 

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; therefore, operating income is utilized as the starting point for the discretionary cash flow reconciliation.

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