PetroQuest Energy Announces First Quarter 2015 Results And Provides Operations Update

LAFAYETTE, La., May 4, 2015 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ) today announced a net loss to common stockholders for the quarter ended March 31, 2015 of ($122,240,000), or ($1.89) per share, compared to first quarter 2014 net income available to common stockholders of $10,043,000, or $0.15 per share. During the first quarter of 2015, the Company recorded a non-cash ceiling test write-down of  $108,911,000 as a result of the impact of lower commodity prices on its net discounted cash flows from its proved reserves.

Discretionary cash flow for the first quarter of 2015 was $10,606,000, as compared to $34,488,000 for the comparable 2014 period.  See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.

Oil and gas sales during the first quarter of 2015 were $33,451,000, as compared to $59,966,000 in the first quarter of 2014. Production for the first quarter of 2015 was 10,375,330 Mcfe, as compared to 9,769,110 Mcfe in the first quarter of 2014.  Stated on an Mcfe basis, unit prices received during the first quarter of 2015 were 48% lower than the comparable 2014 period.

Lease operating expenses ("LOE") for the first quarter of 2015 totaled $10,902,000, as compared to $12,258,000 in the first quarter of 2014. LOE per Mcfe was $1.05 in the first quarter of 2015, as compared to $1.25 in the first quarter of 2014. The decrease in total and per unit lease operating expenses is primarily the result of increased production from the Company's onshore properties which typically incur lower per unit lease operating expenses as well as the divestment of our Eagle Ford properties during September 2014.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the first quarter of 2015 was $1.96 per Mcfe as compared to $2.06 per Mcfe in the first quarter of 2014. The decrease in the per unit DD&A rate is primarily the result of the Company's successful drilling programs in its Carthage and Oklahoma fields, which have a lower cost per unit as compared to the overall amortization base.

General and administrative expenses during the first quarter of 2015 totaled $5,339,000, as compared to $6,242,000 during the 2014 period. The decrease in general and administrative expenses is primarily due to lower employee related costs including share based compensation during the 2015 period. Included in first quarter 2015 and 2014 general and administrative expenses were share based compensation costs of $1,519,000 and $1,762,000, respectively.

Interest expense for the first quarter of 2015 increased to $7,874,000, as compared to $7,636,000 in the first quarter of 2014. The increase in interest expense was primarily the result of increased borrowings under the Company's revolving credit facility.

The following table sets forth certain information with respect to our oil and gas operations for the periods noted. These historical results are not necessarily indicative of results to be expected in future periods.

The above sales and average sales prices include increases (decreases) to revenue related to the settlement of gas hedges of $2,324,000 and ($2,969,000), Ngl hedges of $21,000 and zero and oil hedges of $27,000 and ($434,000) for the three months ended March 31, 2015 and 2014, respectively.

The following initiates guidance for the second quarter of 2015:                                                       

Operations Update

In East Texas, the Company recently completed its PQ #18 horizontal Cotton Valley well (NRI - 38%) and will begin flowback this week.  The Company's previously reported PQ #16 (NRI - 77%) and #17 wells (NRI - 77%), which achieved maximum 24-hour rates of 16.7 MMcfe/d and 14.2 MMcfe/d, respectively, have realized 30 day average production rates of 16.0 MMcfe/d and 13.7 MMcfe/d, respectively.  The initial and 30 day average rates for the 2015 wells are 36% and 29% higher than the respective average rates of the six wells drilled during 2014.

The Company's PQ #18 well is the last well scheduled in its 2015 Cotton Valley program. Based upon the success of the 2014 and 2015 drilling programs the Company will monitor commodity prices and service costs to determine an optimal time to re-initiate its Cotton Valley drilling program.

In the Gulf Coast, the Company's Thunder Bayou facility project is in the final stages of construction. Adverse weather has slightly delayed the initiation of production and the Company now expects production to commence in approximately two to three weeks at a gross rate of approximately 38,000 Mcfe/d (NRI - 37%).

The Company's Pintail and Merganser  prospects in its Fleetwood joint venture have reached total depth and have been determined to be non-commercial. The Company's total net cost for these two wells was approximately $1.6 million. Based upon improving oil prices and a lower service cost environment, the Company is evaluating its initial horizontal Widgeon prospect test (WI - 50%), which will target the liquids rich Cockfield tight sand formation, during the second half of 2015.

In the Woodford, the Company recently established production on nine wells in its West Relay field.  These wells (average NRI – 15%) achieved an average per well maximum 24-hour gross rate of approximately 2,000 Mcf of gas and 360 barrels of natural gas liquids. The Company continues to run one rig in the wet gas area and expects to complete eight wells during the second quarter. In addition, the Company has recently begun completing eight dry gas wells (NRI – 14%) in its Hoss field, which should have first production in approximately four weeks.

Management Statement

"Our second quarter daily production guidance represents the highest production run rate in the Company's history," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "This record production profile coupled with a minimal capex program in the back half of 2015 should provide free cash flow generation later this year and allow us to achieve our 2015 goals of growing production while maintaining our liquidity position."

About the Company

PetroQuest Energy, Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in the Arkoma Basin, Texas, Louisiana and the shallow waters of the Gulf of Mexico.  PetroQuest's common stock trades on the New York Stock Exchange under the ticker PQ.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.   All statements other than statements of historical fact included in this news release are forward-looking statements. Although PetroQuest believes that the expectations reflected in these forward-looking statements are reasonable, these statements are based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. Actual results may vary significantly from those anticipated due to many factors, including the volatility of oil and natural gas prices and significantly depressed oil prices since the end of 2014, our estimate of the sufficiency of our existing capital sources, including availability under our senior secured bank credit facility and the result of any borrowing base redetermination, our ability to raise additional capital to fund cash requirements for future operations, the effects of a financial downturn or negative credit market conditions on our liquidity, business and financial condition, the declines in the values of our properties that have resulted in and may in the future result in additional ceiling test write-downs, our ability to replace reserves and sustain production, our ability to find oil and natural gas reserves that are economically recoverable, the uncertainties involved in prospect development and property acquisitions or dispositions and in projecting future rates of production or future reserves, our ability to realize the anticipated benefits from our joint ventures, the timing of development expenditures and drilling of wells, hurricanes, tropical storms and other natural disasters, changes in laws and regulations as they relate to our operations, including our fracking operations or our operations in the Gulf of Mexico, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports PetroQuest has filed with the SEC. PetroQuest undertakes no duty to update or revise these forward-looking statements.

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SOURCE PetroQuest Energy, Inc.