UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 3, 2005
Date of Report (Date of earliest event reported)
ABRAXAS PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 0-19118 74-2584033
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(210) 490-4788
(Address of principal executive offices and Registrant's telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets
On February 28, 2005, Abraxas Petroleum Corporation substantially divested
its investment in Grey Wolf Exploration, Inc. Pursuant to an Underwriting
Agreement, the underwriters purchased 17,800,000 common shares of Grey Wolf
capital stock from Grey Wolf (the "Treasury Shares"), and 9,100,000 shares of
Grey Wolf common stock owned by Abraxas (the "Secondary Shares") from Abraxas at
a purchase price of CDN $2.80 per share.
Abraxas also granted to the underwriters an over-allotment option to
purchase from Abraxas, at the underwriters' election, up to an additional
3,902,360 shares of Grey Wolf common stock held by Abraxas (the "Option
Shares"). The over-allotment option may be exercised in whole or in part at any
one time prior to 5:00 p.m., Calgary time, on the day that is thirty calendar
days after the closing date for the IPO. Grey Wolf utilized the proceeds from
the sale of the Treasury Shares to re-pay and terminate its $35 million term
loan and re-pay $1 million in inter-company debt to Abraxas. Abraxas utilized
the $1million received from Grey Wolf and the proceeds received from the sale of
the Secondary Shares to re-pay outstanding debt under its $25 million bridge
loan. After consummation of the offering, Abraxas' remaining debt under the
bridge loan was $5.4 million, before the sale of the 3,902,360 Option Shares.
Item 9.01 Financial Statements and Exhibits
(b) Pro forma financial information
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The pro forma financial data presented below is unaudited and has been
derived from our consolidated financial statements and from unaudited historical
and pro forma consolidated financial data. The pro forma financial information
presented below for the year ended December 31, 2003 and for the nine months
ended September 30, 2004 reflects consolidated statement of operations data
relating to Abraxas and gives effect to:
o the exclusion of Grey Wolf from Abraxas' statement of operations;
o the consummation of the October 2004 financial restructuring; and
o the exclusion of the January 2003 financial restructuring.
The pro forma condensed balance sheet reflects the consolidated balance
sheet data relating to Abraxas and gives effect to:
o the exclusion of balance sheet data relating to Grey Wolf as of
September 30, 2004.
o the impact of the Grey Wolf IPO on February 28, 2005 including the
effect of the sale of the 3,902,360 Option Shares.
Grey Wolf, through which we conducted our Canadian operations and held our
properties and assets located in Canada, is excluded from the pro forma results
due to the consummation of Grey Wolf's initial public offering on February 28,
2005. Approximately 87% of the Company's investment in Grey Wolf was divested
and the Company plans to divest the remaining 13% of its investment over the
next several months. The accompanying pro forma financial information is
presented as if the Secondary Shares and the Option Shares (representing 100% of
Abraxas' investment in Grey Wolf) has been divested.
The pro forma information set forth below is not necessarily indicative of
the results that actually would have been achieved if the Grey Wolf operations
had not been part of Abraxas' operations or the refinancing had been consummated
as of the dates indicated.
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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Year Ended
December 31, 2003
Historical
Abraxas
Petroleum Financing
Corporation Grey Wolf Transaction Pro Forma
-------------- ------------- ------------- -------------
(dollars in thousands, except per share data)
Revenues:
Oil and gas production revenues...... $38,105 $(8,395) (1) $ -- $29,710
Gas processing revenues.............. 133 (133) (1) -- --
Rig revenues......................... 663 -- -- 663
Other................................ 118 (111) (1) -- 7
-------------- ------------- ------------- -------------
Total revenues................ 39,019 (8,639) 30,380
Operating costs and expenses:
Lease operating and production taxes. 9,599 (1,257) (1) -- 8,342
Depreciation, depletion and
Amortization.................... 10,803 (3,195) (1) -- 7,608
Rig operations....................... 609 -- -- 609
General and administrative........... 5,360 (1,365) (1) -- 3,995
Stock-based compensation............. 1,106 -- -- 1,106
-------------- ------------- ------------- -------------
Total operating expenses...... 27,477 (5,817) -- 21,660
-------------- ------------- ------------- -------------
Operating income (loss)................ 11,542 (2,822) 8,720
Other (income) expense: --
Interest income...................... (30) -- -- (30)
Amortization of deferred (2)
financing fees.................. 1,678 (48) (1) (1,630) (2) 2,260
2,260
(16,323) (3)
Interest expense.................... 16,955 (632) (1) 15,150 (3) 15,150
Financing costs........................ 4,406 -- -- 4,406 (4)
Gain of sale of foreign subsidiary..... (68,933) -- -- (68,933)
Other.................................. 774 (674) (1) -- 100
-------------- ------------- ------------- -------------
Income (loss) from operations before 56,692 (1,468) 543 55,767
income tax...........................
Income tax expense (benefit):.......... 377 (377) (1) -- --
Cumulative effect of accounting change. 395 -- -- 395
-------------- ------------- ------------- -------------
Net income............................. $55,920 $(1,091) $ 543 $55,372
============== ============= ============= =============
Weighted average common shares:
Basic.............................. 35,364,363 35,364,363
-------------- -------------
Diluted............................ 36,076,291 36,076,291
-------------- -------------
Net income per share:
Basic.............................. $ 1.58 $ 1.57
-------------- -------------
Diluted............................ $ 1.55 $ 1.54
-------------- -------------
--------------
See notes to unaudited pro forma financial information.
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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2004
Historical
Abraxas
Petroleum Financing
Corporation Grey Wolf Transaction Pro Forma
-------------- --------------- --------------- --------------
(dollars in thousands, except per share data)
Revenues:
Oil and gas production revenues $34,249 $(10,075) (1) $ -- $24,174
Rig revenues................. 518 -- -- 518
Other........................ 218 (209) (1) -- 9
-------------- --------------- --------------- ------------
Total revenues...... 34,985 (10,284) -- 24,701
Operating costs and expenses:
Lease operating and production taxes 9,318 (2,602) (1) -- 6,716
Depreciation, depletion and
Amortization............ 9,398 (3,996) (1) -- 5,402
Rig operation................ 442 -- -- 442
General and administrative... 4,813 (1,054) (1) -- 3,759
Stock-based compensation..... 1,122 -- -- 1,122
-------------- --------------- --------------- ------------
Total operating expenses 25,093 (7,652) -- 17,441
-------------- --------------- --------------- ------------
Operating income (loss)...... 9,892 (2,632) -- 7,260
Other (income) expense:
Interest income.............. (12) (5) (1) -- (7)
(13,416) (3)
Interest expense............. 13,700 (284) (1) 11,363 (3) 11,363
Amortization of deferred (1,380) (2)
financing fees.......... 1,380 -- 1,695 (2) 1,695
Financing cost............... 1,641 -- -- 1,641
Other........................ 11 -- -- 11
-------------- --------------- --------------- ------------
Net income (loss)........... $(6,828) $ (2,353) $ 1,738 $(7,443)
Weighted average common shares:
Basic........................ 36,164,268 36,164,268
-------------- ------------
Diluted...................... 36,164,268 36,164,268
-------------- ------------
Net loss per share:
Basic........................ $(0.19) $ (0.21)
-------------- ------------
Diluted...................... $(0.19) $ (0.21)
-------------- ------------
See notes to unaudited pro forma financial information.
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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
As of September 30, 2004
Historical
Abraxas
Petroleum Financing Grey Wolf - Grey Wolf
Corporation Transaction Exploration IPO Pro Forma
Assets:
Cash......................... $ 3,601 $ -- $ (707) (1) $ -- $ 2,894
Accounts receivable.......... 4,804 -- (859) (1) -- 3,947
Other........................ 1,282 -- (212) -- 1,070
-------------- ---------------- -------------- ------------- ---------------
Total current assets......... 9,687 -- (1,776) -- 7,911
Net property and equipment... 114,233 -- (38,745) (1) -- 75,488
(4,853) (2)
Deferred financing fees...... 4,853 11,300 (2) -- (1,683) (7) 9,617
Other assets................. 294 -- -- -- 294
-------------- ---------------- --------------- ------------- ---------------
Total assets................. $ 129,067 $ 6,447 $ (40,521) $ (1,683) $ 93,310
============== ================ =============== ============= ===============
Liabilities and stockholders
equity(deficit):
Current Liabilities:
Accounts payable............. $ 5,820 $ -- (1,988) (1) $ -- $ 3,832
Other current liabilities.... 7,354 (5,492) (3) -- -- 1,862
-------------- ---------------- -------------- ------------- ---------------
Total current liabilities.... 13,174 (5,492) (1,988) -- 5,694
Long-term debt:
Secured notes due 2007....... 143,154 (143,154) (4) -- -- --
Existing credit facility..... 47,362 (47,362) (4) -- -- --
New notes due 2009........... -- 125,000 (4) -- (3,000) (6) 122,000
Bridge facility.............. -- 25,000 (4) -- (25,000) (6) --
-------------- ---------------- -------------- ------------- ---------------
Total............................. 190,516 (40,516) -- (28,000) 122,000
Other liabilities............ 1,764 -- (898) (1) -- 866
Stockholders' equity (deficit):
Common stock................. 364 -- -- -- 364
Additional paid-in capital... 143,076 35,000 (5) (33,813) (1) -- 144,263
Accumulated deficit.......... (220,527) 17,455 (2,573) (1) 26,317 (6) (179,328)
Accumulated other
comprehensive
income adjustment...... 1,249 -- (1,249) (1) -- --
Treasury stock............... (549) -- -- -- (549)
-------------- ---------------- -------------- ------------- ---------------
Total stockholders' equity
(deficit) $ (76,387) $ 52,455 $ (37,635) $ 26,317 (35,250)
-------------- ---------------- -------------- ------------- ---------------
Total liabilities and
stockholders' equity
(deficit)............ $ 129,067 $ 6,447 $ (40,521) $ (1,683) $ 93,310
============== ================ ============== ============= ===============
--------------
See notes to unaudited pro forma financial information.
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NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Notes to the Unaudited Pro Forma Condensed Consolidated Statements of
Operations:
1. Adjust for Grey Wolf operations for the year ended December 31, 2003
and nine months ended September 30, 2004.
2. Reverse recorded amortization of deferred financing fees associated
with retired debt and record amortization of deferred financing fees
related to the new debt. The amortization period for the deferred
financing fees related to the transaction is 60 months.
3. Reverse recorded interest expense associated with retired debt and
record interest expense on new debt, interest on the notes is
calculated at an assumed annual rate of 9.72%. Interest on the Bridge
Facility is calculated at an assumed annual rate of 12.0%.
4. Financing costs relate to debt retired with this transaction. Had the
described transaction actually occurred at the beginning of the period
presented, these costs would not have been incurred.
There is no current deferred income tax expense reflected in the pro forma
statements due to net operating loss carryforwards.
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet:
1. Remove balance sheet of Grey Wolf at September 30, 2004.
2. Reverse deferred financing fees related to retired debt and record
deferred financing fees related to new debt. Deferred financing fees
related to the retired debt were charged to expenses as of October 28,
2004.
3. Remove accrued interest related to retired debt
4. Remove retired debt and record notes and bridge facility.
5. Record dividend distribution from Grey Wolf.
6. Proceeds to Abraxas from the Grey Wolf IPO, assuming the sale of the
secondary shares and the option shares, utilized to reduce existing
debt.
7. Remove deferred financing fees related to reduced debt.
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(c) Exhibits
10.1 Underwriting Agreement dated February 18, 2005 among Grey Wolf Exploration
Inc., an Alberta corporation, Abraxas Petroleum Corporation, CIBC World Markets
Inc., BMO Nesbitt Burns Inc., GMP Securities Ltd., and Canaccord Capital
Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Abraxas Petroleum Corporation
By: ______________________________________________
Chris Williford
Executive Vice President, Chief Financial
Officer and Treasurer
Dated: March 3, 2005
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