• Abraxas reported production growth which again topped upward revised estimates.
• The company remains profitable with low production costs.
• With a clean balance sheet and healthy operating margins, the company has the ability to weather sustained commodity weakness. Seeking Alpha Elephant analysis- Abraxas appears well-positioned to handle a prolonged slump in oil prices. I had mentioned before that its breakeven point for maintaining steady production would be $47 oil in 2015, $52 oil in 2016 and $56 oil in 2017 based on its hedges and cost profile. However, it is important to calculate its hedges properly. Abraxas has 21% of projected 2015 oil volume hedged.
• The December corporate update presentation appears to show that 78% of 2015 oil production is hedged.
• However, the label for that graph notes that it is based on end of 2013 PDP.
• That means the production levels in the graph are based on wells that were already producing at the end of 2013.
• It does not include additional wells brought into production since then, which would account for 73% of projected actual 2015 volumes, thus accounting for the difference in hedging calculations.
• Abraxas appears well-positioned to handle a prolonged slump in oil prices. I had mentioned before that its breakeven point for maintaining steady production would be $47 oil in 2015, $52 oil in 2016 and $56 oil in 2017 based on its hedges and cost profile. However, it is important to calculate its hedges properly. Abraxas Petroleum should have breakeven cashflow at $47 per barrel oil in 2015 due to its hedges.
• Breakeven would be $52 per barrel in 2016 and $56 per barrel in 2017 based on existing hedges, steady state production and $60 million in capital expenditures.
• Unhedged breakeven point is $59 per barrel if Abraxas wants to maintain production levels.
• Debt has been reduced significantly since last year and appears quite manageable given Abraxas's reduced capital expenditure budget.
• $85 per barrel oil would result in around $55 million in free cash flow in 2015, and would likely allow for a significant expansion in its capital budget.
Abraxas Petroleum (NASDAQ:AXAS) is an oil and natural gas company that primarily focuses on the Bakken, Eagle Ford and Permian regions. It recently announced an update in which slashed its 2015 capital expenditure budget from $200 million to $54 million in light of falling oil prices. It also mentioned that a capital budget of $60 million per year should be sufficient to maintain 2015 average volumes of 7,200 to 7,300 BOEPD. This article aims to look at its cash flow at current prices as well as its breakeven point for steady state production and the effect of its hedges.
The Current Situation
Abraxas Petroleum is expected to generate $106 million in revenues at $55 per barrel WTI oil. This assumes a $9 per barrel differential, as well as $4.00/MMBtu natural gas and $35 per barrel natural gas liquids.
Abraxas reported earnings in-line with market estimates posting EPS of $0.15. Total production continues to impress, with a 48% year-over-year increase. The company has been guiding low and delivering solid results that beat production estimates. Even with its production guidance revised up toward the end of the quarter, production beat even the high-side estimate with crude oil equivalent per day of 7,076. Lease operating expenses dropped $1.16 per barrel or 9%, which help add to a stronger bottom line. The company also expects this number to fall as low as $10 per barrel in 4Q14. Being able to cut production expenses, even by $1-$2 is incredibly important at a time when the price of oil remains so uncertain.
Most the industry has high debt. ◾The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 163.3% when compared to the same quarter one year prior, rising from $102.05 million to $268.75 million.
◾The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that DNR's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
◾DNR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.58%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter
buy or cry all next year. Did your mommy make many lists? You will be sorry for missing the oil plays.
SCHINZO, only trash bashes 24/4 with out a reason. First, I thought he was a kittle kid. Now I think he is mentally challenged and does not understand lies and deception. He knows plant material manufacturing will most likely go through Caliber if sponsored by DOD and DARPA. CMB Fraunhofer consultant may become a great sales person for us. He knows the contract between us and who gets the technology and patents. CMB is also providing API (plant material ) for Brazil I believe. The government has deep pockets and will do things right. We are all tied together in one way or another. I hope Plantform, Novici, GSK, Caliber all do well because in one way or another it leads back to IBIO. CHeers. Less
ZMAP is the front runner with DARPA. The major question you should be asking your self is "do you own enough" ? EBOLA is not going away any time soon. Its mutating and many irons need to be in the fire. Plant antibodies will be the future.
amateur hour at IBIO..... He is hoping Robert lied. He does not have a clue as to what he post half the time. He is vengeful like a little kid.
How about the counter suit? They have nerve.......... Frivolous suits are against the law. They are dealing with a government epidemic company designed for defense contracts at one time. All hands on deck should have been the lawyers clue.
Caliber is also. Emergent was one of the three manufacturers contacted..2012 contract with Barda... ... Emergent is small,Right. Did you get that far with your DD? I think they are very busy right now. Under the contract, BARDA may issue service task orders for requirements such as CBRN advanced development, pandemic influenza vaccine surge production, facility readiness, and other activities including bulk manufacturing, formulation, filling and finishing, storage, and shipping.
As a designated Center, Emergent is also expected to provide as options under the contract:
• Manufacturing and delivery of an influenza vaccine in the event of a pandemic,
• Core advanced development and manufacturing services to other commercial partners under contract with the U.S. government for the development of biopharmaceuticals against CBRN threats, and
• A workforce development training program to enhance and maintain the U.S.-based ability to produce identified medical countermeasures.
He is actually helping the stock today. He knows plant material manufacturing will most likely go through Caliber if sponsored by DOD and DARPA. CMB Fraunhofer consultant may become a great sales person for us. He knows the contract between us and who gets the technology and patents. CMB is also providing API (plant material ) for Brazil I believe. The government has deep pockets and will do things right. We are all tied together in one way or another. I hope Plantform, Novici, GSK, Caliber all do well because in one way or another it leads back to IBIO. CHeers.
OK shorty go back to your whole and keep up the good work. I will have your money going long now in no time. Get caught with the rally? I think in general terms he is right as there are several positive movements in the macro. Including 5% GDP this last quarter. The industry may or may not go down more. I am betting this is a good entry