Petroquest Energy announced on March 28, 2016, the company has increased its production guidance for the first quarter of 2016 to approximately 81-82 MMcfe per day.
This is approximately a 12% increase on the low end of the guidance from the initial projections of 72-76 MMcfe per day. The midpoint of the guidance would also indicate a 12% increase in production over fourth quarter 2015 actuals production.
The production is expected to be split 73% gas, 11% oil, and 16% NGLs. Initial projections formed the split at 74% gas, 6% oil, and 16% NGLs. The increased production is largely a result of better than expected performance from Cotton Valley and Thunder Bayou acreage.
Petroquest still projects capital expenditures in the range of $20-25 million for 2016, which is a 70% decrease year over year from 2015.
“To be able to increase production guidance without an increase in capital investment underscores the quality of our producing assets,” said Charles T. Goodson, Chairman, Chief Executive Officer and President.
“Our most recent Cotton Valley wells along with Thunder Bayou continue to outperform our expectations and were the primary drivers for our better than expected first quarter production rate.
“We have participated in over 600 horizontal wells in a number of resource trends targeting both shales and tight sands. This experience, primarily gained in the Woodford Shale where we have been a leader with our partner, has allowed us to quickly achieve top tier results in the Cotton Valley as evidenced by the consistent improvement in EURs and rates over the last few years. Well performance improvements in the Cotton Valley have coincided with reduced costs on an absolute and a per lateral foot basis. While declining service costs and access to premium equipment have contributed to our success in lowering well costs, our team’s execution, leveraging our experience as a horizontal driller, has certainly had a meaningful impact to cost reduction results.”
Oil & Gas 360® utilized a net asset value calculation based on an EV/Production multiple for the current Petroquest value assuming the market has already factored in the midrange of guidance. Using this multiple, the value of the stock has the potential to increase from $0.53 to $0.87, a 64% increase. PQ stock closed on March 30, 2016, at $0.61, a 15% increase from the closing price of $0.53 on March 24, 2016.
