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Abraxas Petroleum Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2011 04:11PM

Abraxas Petroleum Corp. (AXAS) filed Quarterly Report for the period ended 2011-06-30. Abraxas Petroleum Corp. has a market cap of $270.1 million; its shares were traded at around $3.09 with and P/S ratio of 4.6.



Highlight of Business Operations:

averaged $4.27 per MMBtu for the first six months of 2011 compared to $4.72 for the same period of 2010. Prices closed on June 30, 2011 at $95.42 per Bbl of oil and $4.28 per MMBtu of gas. The realized prices that we receive for our production differ from NYMEX futures and spot market prices, principally due to:

During the first six months of 2011, differentials averaged ($7.23) per Bbl of oil and ($0.52) per Mcf of gas as compared to ($7.31) per Bbl of oil and ($0.36) per Mcf of gas during the first six months of 2010. Increases in the differential between the benchmark prices for oil and gas and the wellhead price we receive have in the past and could in the future significantly reduce our revenues and cash flow from operations.

Lease Operating Expenses (“LOE”). LOE for the three months ended June 30, 2011 increased to $5.6 million from $5.0 million for the same period in 2010. The increase in LOE was due to higher operating cost offset by LOE related to the properties sold. LOE related to properties sold were $331,000 in the three months ended June 30, 2010. LOE per Boe for the three months ended June 30, 2011 was $18.16 compared to $13.63 for the same period of 2010. The increase per Boe was due to higher cost and lower sales volumes for the three months ended June 30, 2011 as compared to the same period of 2010.

Depreciation, Depletion and Amortization (“DD&A”) Expenses. DD&A expense for the three months ended June 30, 2011 decreased to $3.8 million from $4.4 million for the same period of 2010. The decrease was primarily the result of decreased production volumes for the quarter ended June 30, 2011 as compared to the same period of 2010, the contribution of properties to Blue Eagle and the divestiture of non-core properties, offset by an increase to the depletion base from an increase in future development costs as determined by the December 31, 2010 reserve report. DD&A per Boe for the three months ended June 30, 2011 was $12.26 compared to $11.98 in 2010. The increase per Boe was primarily due to a higher depletion rate on our Canadian reserves.

(Gain) loss) on derivative contracts. We account for derivative contract gains and losses based on realized and unrealized amounts. The realized derivative gains or losses are determined by actual derivative settlements during the period. Unrealized gains and losses are based on the periodic mark to market valuation of derivative contracts in place. Our derivative contract transactions do not qualify for hedge accounting as prescribed by ASC 815; therefore, fluctuations in the market value of the derivative contracts are recognized in earnings during the current period. Our derivative contracts consist of commodity swaps and interest rate swaps. The estimated value of our derivative contracts was a liability of approximately $8.9 million as of June 30, 2011. When our derivative contract prices are higher than prevailing market prices, we incur realized and unrealized gains and conversely, when our derivative contract prices are lower than prevailing market prices, we incur realized and unrealized losses. For the three months ended June 30, 2011, we realized a loss on our derivative contracts of $1.1 million, which included a realized loss of $522,000 on our commodity swaps and a realized loss of $591,000 on our interest rate

swap and we incurred an unrealized gain of $8.0 million on our derivative contracts, which included an unrealized gain of $7.7 million on our commodity swaps and an unrealized gain of $291,000 on our interest rate swap. For the three months ended June 30, 2010, we realized a gain on our derivative contracts of $609,000, which included a realized gain of $1.2 million on our commodity swaps and a realized loss of $569,000 on our interest rate swap and we incurred an unrealized gain of $5.9 million, which included an unrealized gain of $6.6 million on our commodity swaps and an unrealized loss of $611,000 on our interest rate swap.

Read the The complete Report



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