Production of 1.6 Bcfe for the quarter generated: -- Revenue of $14.2 million; -- EBITDA (a) of $10.0 million; -- Cash flow (a) of $6.3 million; and -- Net income of $3.8 million or $0.09 per share from continuing operations, excluding non-cash stock-based compensation expense. (a) See reconciliation of non-GAAP financial measures below
This compares to a net loss from continuing operations, excluding non-cash stock-based compensation expense, of $1.6 million or $0.04 per share for the same quarter of 2004. Continuing operations represent financial and operating results from operations in the U.S. only as all of Grey Wolf Exploration Inc.'s ("Grey Wolf") historical performance and results from the sale of Grey Wolf shares owned by Abraxas in its initial public offering that closed on February 28, 2005, are treated as discontinued operations.
As a result of the elimination of our capital expenditure limitations (due to previous debt covenant restrictions), a significant item related to third quarter 2005 results included capital expenditures of $11.2 million compared to $1.3 million in the third quarter of 2004. These capital expenditures enabled sequential quarterly production to increase 17% and together with realized natural gas and crude oil prices of $8.15 per Mcf and $60.24 per barrel, contributed to a 47% increase in revenue from second quarter of 2005.
During the third quarter, a non-cash expense of $7.1 million, related to stock-based compensation, significantly impacted our net earnings. The non-cash stock-based compensation expense captured the 187% appreciation in Abraxas' stock price from June 30, 2005 to September 30, 2005, as it relates solely to options granted to employees, which were previously re-priced in 2003. Including non-cash stock-based compensation expense, Abraxas' reported net loss for the quarter of $3.3 million or $0.08 per share from continuing operations. This compares to a net loss from continuing operations of $3.0 million or $0.08 per share for the same quarter of 2004, which included $1.4 million of non-cash stock-based compensation expense.
In Brooks Draw, Wyoming, completion operations are currently underway on all four wells drilled during the quarter. In the Oates SW Field of West Texas, the initial Wolfcamp re-entry, La Escalera #2, is still recovering fluid after the fracture stimulation while re-entry operations on the initial Woodford test, Hudgins 11-1, are steadily progressing below 10,000'.
"Increasing production through the quarter is largely attributable to the Oates SW Devonian horizontal well that came on-line during the quarter at 5.2 MMcfepd and the impact of a full quarter of production from the horizontal Edwards wells drilled in South Texas earlier in the year. We expect production growth to continue through the fourth quarter of 2005 and into 2006 as the Wyoming and West Texas wells are brought on-line. To date, the completions in Wyoming have gone well and we look forward to definitive results once multiple zones in each well are perforated and fracture stimulated. The Wolfcamp re-entry has taken longer than anticipated; however, we consistently have gas returns with the unloading fluid," commented Bob Watson, Abraxas' President and CEO.
Watson added with regard to the non-cash stock-based compensation expense, "While our shareholders experienced a 187% increase in share price from the end of the second quarter to the end of the third quarter, this appreciation, unfortunately, due to accounting rules for re-priced options, rendered a $7.1 million expense for Abraxas. This expense is non-cash and has no impact on our daily operations or our cash flow."
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