Abraxas Petroleum Corp., the financially troubled oil and natural gas producer, posted a profit in the first three months of this year despite the dire straits much of the oil and gas industry finds itself in.
The San Antonio-based company, which operates 571 oil wells around the U.S. as of the end of last year, posted a $41.4 million profit in the first quarter of this year on $15.7 million in revenue.
The company reported a $25 million loss in the same period last year.
Abraxas said disruptions stemming from the COVID-19 pandemic caused it to file its annual 2019 report and first-quarter earnings report late this year.
Abraxas’ first-quarter revenue took a hit compared with last year, when the company generated $34.5 million.
But before the pandemic struck and drove oil prices down sharply, Abraxas entered into a multiyear contracts to sell oil at a fixed price. Those contracts brought in $75 million, keeping the company above water.
“Most oil companies, they would enter into some sort of hedge to protect them in case the price goes down,” said Ed Hirs, an energy economics lecturer at the University of Houston. “For companies exposed to the Eagle Ford or Permian … it’s really important to them they protect against downside price movement.”
But Abraxas, which has 65 full-time employees, is more than $200 million in debt and likely will be pressured to spend any extra cash to pay down debts to two different lenders.
A spokesperson for Abraxas did not immediately respond to a request for comment.
In mid-March, Abraxas announced it was terminating employees and making salary cuts that would reduce its general and administration expenses by 40 percent. The company also said it won’t drill new wells while market conditions are poor.
Six of the company’s 10 board members resigned amid the cost-cutting initiative earlier this year.
During the first three months…