Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Abraxas Petroleum Corp.'s Surprise Profit Sends Stock Soaring

What happened

Shares of Abraxas Petroleum (NASDAQ: AXAS  ) soared 16% by 11 a.m. EDT on Wednesday after the company reported expectation-beating fourth-quarter results.

So what

Despite a challenging operating environment, Abraxas shocked the analyst community by reporting profit during the fourth quarter, ending a string of seven consecutive losing quarters. While the company earned a slim $1 million, or $0.01 per share, after adjustments, that was better than the $0.01 per-share loss that analysts had expected. Fueling the company's stronger-than-expected results was the fact that cash operating expenses came in toward the lower end of management's guidance range, while production came in at the midpoint of the forecast, even though capital spending was 21% lower than than budgeted.

An oil pump at sunset.

Image source: Getty Images.

As a result of its improving operations, and a recent equity offering, Abraxas sees even better things ahead for 2017. Not only does the company have the financial wherewithal to more than double its budget for capital expenditures this year, but it is pursuing several cost-effective bolt-on acquisition opportunities in the Delaware Basin that could expand its ability to grow.

While Abraxas says that it is working on some compelling acquisition opportunities, good deals in the Basin are becoming harder to find. Several notable drillers, including Concho Resources (NYSE: CXO  ) , have started to grow more vocal about surging acreage prices. For example, after paying less than $30,000 per acre for land in early 2016, Concho needed to pay more than $40,000 per acre by midyear. Meanwhile, other deals have been above $45,000, to as much as $58,500, over the past few months.

Now what

Abraxas seems to have finally turned the corner. Not only has it strengthened its balance sheet, but it has started making money again. That said, the company appears to be getting aggressive with spending, evidenced by the significant budget expansion and plans to make more land deals, which could come back to bite it if oil continues its recent trek back below $50 a barrel.

10 stocks we like better than Abraxas Petroleum
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Abraxas Petroleum wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4008381, ~/Articles/ArticleHandler.aspx, 3/27/2017 2:24:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
Change down DOW 20549.9 -46.9 -0.2%
Change down S&P 500 2338.7 -5.2 -0.2%
Change up NASD 5836.7 8.0 0.1%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/27/2017 2:08 PM
AXAS $1.91 Down -0.11 -5.45%
Abraxas Petroleum CAPS Rating: **
CXO $124.42 Down -0.76 -0.61%
Concho Resources CAPS Rating: **