axas20220331

axas20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______

COMMISSION FILE NUMBER: 001-16071

ABRAXAS PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		74-2584033
(State of Incorporation)		(I.R.S. Employer Identification No.)

18803 Meisner Drive, San Antonio, TX 78258

(Address of principal executive offices) (Zip Code)

210-490-4788

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $.01 per share	AXAS	OTCQX

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Sec 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the issuer’s common stock outstanding as of May 13, 2022 was 8,421,910.

	•	our indebtedness and the significant amount of cash required to service our indebtedness;

	•	the proximity, capacity, cost and availability of pipelines and other transportation facilities;

PART I


ITEM 1 -	Financial Statements
	Condensed Consolidated Balance Sheets - March 31, 2022 (unaudited) and December 31, 2021	6
	Condensed Consolidated Statements of Operations – (unaudited) Three Months Ended March 31, 2022 and 2021	8
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) Three Months Ended March 31, 2022 and 2021	9
	Condensed Consolidated Statements of Cash Flows – (unaudited) Three Months Ended March 31, 2022 and 2021	10
	Notes to Condensed Consolidated Financial Statements - (unaudited)	11

ITEM 2 -	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

ITEM 3 -	Quantitative and Qualitative Disclosures about Market Risk	34

ITEM 4 -	Controls and Procedures	34

PART II
OTHER INFORMATION

ITEM 1 -	Legal Proceedings	35
ITEM 1A -	Risk Factors	35
ITEM 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	35
ITEM 3 -	Defaults Upon Senior Securities	35
ITEM 4 -	Mine Safety Disclosure	35
ITEM 5 -	Other Information	35
ITEM 6 -	Exhibits	35
	Signatures	36

	*March 31,*			*December 31,*
	*2022*			*2021*
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	9,406		$	10,034
Accounts receivable:
Joint owners, net		118			1,117
Oil and gas production sales		7,397			12,280
Other		—			150
Total accounts receivable		7,515			13,547

Other current assets		1,258			498
Total current assets		18,179			24,079

Property and equipment:
Proved oil and gas properties, full cost method		1,122,292			1,165,707
Other property and equipment		31,370			39,337
Total		1,153,662			1,205,044
Less accumulated depreciation, depletion, amortization and impairment		(1,093,971	)		(1,099,075	)
Total property and equipment, net		59,691			105,969

Operating lease right-of-use assets		6			173
Other assets		255			255
Total assets	$	78,131		$	130,476

	*Three Months Ended March 31,*
	*2022*			*2021*
Revenues:
Oil and gas production revenues
Oil	$	10,291		$	13,925
Gas		1,131			1,670
Natural gas liquids		758			1,069
Other		5			6
Total revenue		12,185			16,670
Operating costs and expenses:
Lease operating		2,573			4,380
Production and ad valorem taxes		1,139			1,385
Rig expense		106			116
Depreciation, depletion, amortization and accretion		1,580			3,897
General and administrative (including stock-based compensation of $187 and $311, respectively)		1,918			2,049
Total operating cost and expenses		7,316			11,827
Operating income		4,869			4,843

Other (income) expense:
Interest income		—			(5	)
Interest expense		70			6,023
Gain on sale of oil and gas assets		(29,359	)		—
Loss on sale of non-oil and gas assets		669			—
Amortization of deferred financing fees		—			1,201
Debt forgiveness		(6,645	)		(1,384	)
Loss (gain) on derivative contracts		—			22,698
Total other (income) expense		(35,265	)		28,533
Income (loss) before income tax		40,134			(23,690	)

Net income (loss)		40,134			(23,690	)
Accretion of preferred stock		1,983			—
Net income (loss) attributable to common stock	$	38,151		$	(23,690	)

Net income (loss) per common share - basic	$	4.53		$	(2.83	)
Net income (loss) per common share - diluted	$	4.53		$	(2.83	)

Weighted average shares outstanding:
Basic		8,422			8,382
Diluted		8,422			8,382

									*Additional*
	*Common Stock*				*Preferred Stock*				*Paid in*		*Accumulated*
	*Shares*		*Amount*		*Shares*		*Amount*		*Capital*		*Deficit*			*Total*
Balance at December 31, 2021		8,421,910	$	84	$	-	$	-	$	430,422	$	(547,094	)	$	(116,588	)
Net income		-		-		-		-		-		38,151			38,151
Issuance of Preferred Stock		-		-		685,505		7		137,094		-			137,101
Accretion of Preferred Stock		-		-		-		-		1,983		-			1,983
Stock-based compensation		-		-		-		-		187		-			187
Balance at March 31, 2022		8,421,910	$	84		685,505	$	7	$	569,686	$	(508,943	)	$	60,834

									Additional
	Common Stock				Preferred Stock				Paid in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at December 31, 2020		8,421,910	$	84		-	$	-	$	429,476	$	(502,527	)	$	(72,967	)
Net loss		-		-		-		-		-		(23,690	)		(23,690	)
Stock-based compensation		-		-		-		-		311		-			311
Balance at March 31, 2021		8,421,910	$	84		-	$	-	$	429,787	$	(526,217	)	$	(96,346	)

	*Number of Shares*			*Weighted Average Option Exercise Price Per Share*		*Weighted Average Grant Date Fair Value Per Share*
Outstanding, December 31, 2021		55		$	53.79	$	36.95
Cancelled/Forfeited		(44	)	$	55.79	$	38.05
Expired		(4	)	$	40.43	$	29.23
Balance, March 31, 2022		7		$	48.84	$	34.41

	*Number of Shares (thousands)*			*Weighted Average Grant Date Fair Value Per Share*
Unvested, December 31, 2021		14		$	27.97
Vested/Released		(14	)		27.97
Unvested, March 31, 2022	$	-		$	-

	*Three Months Ended*
	*March 31,*
	*2022*		*2021*
Options	$	-	$	(22	)
Restricted stock		108		199
Performance shares		79		134
	$	187	$	311

	*March 31,*			*December 31,*
	*2022*			*2021*
	(Unaudited)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	7,916		$	4,678
Joint interest oil and gas production payable		3,570			13,347
Accrued interest		4			477
Accrued expenses		337			347
Right of use liability		6			40
Derivative liabilities - short-term		—			442
Termination of derivative contracts		—			8,022
Current maturities of long-term debt		314			212,688
Total current liabilities		12,147			240,041

Long-term debt – less current maturities		2,125			2,205
Operating lease right-of-use liabilities		-			110
Future site restoration		3,025			4,708
Total liabilities		17,297			247,064

Commitments and contingencies (Note 9)

Stockholders’ Equity:
Preferred stock, par value $0.01 per share – authorized 1,000,000 shares; 685,505 and -0- shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		7			—
Common stock, par value $0.01 per share, authorized 20,000,000 shares; 8,421,910 issued and outstanding at March 31, 2022 and December 31, 2021		84			84
Additional paid-in capital		569,686			430,422
Accumulated deficit		(508,943	)		(547,094	)
Total stockholders' equity (deficit)		60,834			(116,588	)
Total liabilities and stockholders’ equity (deficit)	$	78,131		$	130,476

	*March 31, 2022*			*December 31, 2021*
Beginning future site restoration obligation	$	4,708		$	7,360
New wells placed on production and other		-			1
Deletions related to property sales		(1,725	)		(2,845	)
Deletions related to plugging costs		.			(342	)
Accretion expense		42			330
Revisions and other		-			204
Ending future site restoration obligation	$	3,025		$	4,708

	*Three Months Ended March 31,*
	*2022*						*2021*
	*Oil*		*Gas*		*NGL*		*Oil*		*Gas*		*NGL*
Operating Regions:
Permian/Delaware Basin	$	10,291	$	1,131	$	758	$	7,166	$	1,114	$	269
Rocky Mountain	$	-	$	-	$	-	$	6,759	$	556	$	800

	*March 31, 2022*			*December 31, 2021*

First Lien Credit Facility	$	-		$	71,400
Second Lien Credit Facility		-			134,907
Exit fee - Second Lien Credit Facility		-			10,000
Real estate lien note		2,439			2,515
Total long term debt		2,439			218,822
Less current maturities		(314	)		(212,688	)
		2,125			6,134
Deferred financing fees and debt issuance cost, net		-			(3,929	)
Total long-term debt, net of deferred financing fees and debt issuance costs	$	2,125		$	2,205

*Fair Value of Derivative Contracts as December 31, 2021*
	*Asset Derivatives*			*Liability Derivatives*
Derivatives not designated as hedging instruments	*Balance Sheet Location*	*Fair Value*		*Balance Sheet Location*	*Fair Value*
Commodity price derivatives	Derivatives – current	$	-	Derivatives – current	$	442
Commodity price derivatives	Derivatives – long-term		-	Derivatives – long-term		-
		$	-		$	442

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2021
Liabilities:
NYMEX fixed price derivative contracts	$	—	$	442	$	—	$	442
Total Liabilities	$	—	$	442	$	-	$	442

	*Three Months Ended March 31, 2022*		*Three Months Ended March 31, 2021*
Operating lease cost	$	6	$	26
Short-term lease expense (1)	$	220	$	500
Total lease expense	$	226	$	526

Short-term lease costs (2)	$	-	$	-

	(1)	Short-term lease expense represents expense related to leases with a contract term of 12 months or less.
	(2)	These short-term lease costs are related to leases with a contract term of 12 months or less which are related to drilling rigs and are capitalized as part of natural gas and oil properties on our balance sheet.

	*March 31, 2022*
Operating lease ROU assets	$	6
Operating lease liability - current	$	6
Operating lease liabilities - long-term	$	-

	*March 31, 2022*
Weighted Average Remaining Lease Term (in years)		0.8
Weighted Average Discount Rate		6	%

	*Operating Leases*
Remainder of 2022	$	6
2023		—
2024		—
2025		—
2026		—
Thereafter		—
Total lease payments		6
Less imputed interest		—
Total lease liability	$	6

SEC Form 10-Q filed by Abraxas Petroleum Corporation