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 May 4, 2015 - 4:06 PM EDT
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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.


Three Months Ended March 31,


2015

2014

Production:



Oil (Bbls)

147,214


242,283


Gas (Mcf)

7,915,504


7,184,130


Ngl (Mcfe)

1,576,540


1,131,282


Total Production (Mcfe)

10,375,330


9,769,110


Avg. Daily Production (MMcfe/D)

115.3


108.5


Sales:



Total oil sales

$

6,952,900


$

24,140,656


Total gas sales

21,650,095


29,557,335


Total ngl sales

4,848,046


6,268,406


Total oil and gas sales

$

33,451,041


$

59,966,397


Average sales prices:



Oil (per Bbl)

$

47.23


$

99.64


Gas (per Mcf)

2.74


4.11


Ngl (per Mcfe)

3.08


5.54


Per Mcfe

3.22


6.14


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:                                                       


Guidance for

Description

2nd Quarter 2015



Production volumes (MMcfe/d)

125 - 131



Percent Gas

76%

Percent Oil

8%

Percent NGL

16%



Expenses:


Lease operating expenses (per Mcfe)

$1.05 - $1.15

Production taxes (per Mcfe)

$0.08 - $0.12

Depreciation, depletion and amortization (per Mcfe)

$1.65 - $1.75

General and administrative (in millions)*

$5.0 - $5.5

Interest expense (in millions)

$7.6 - $8.1





* Includes non-cash stock compensation estimate of $1.6 million

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.

Click here for more information: "http://www.petroquest.com/news.html?=BizID=1690&1=1"

 


PETROQUEST ENERGY, INC.

Consolidated Balance Sheets

(Amounts in Thousands)



March 31, 2015


December 31, 2014

ASSETS




Current assets:




Cash and cash equivalents

$

14,209



$

18,243


Revenue receivable

13,691



16,485


Joint interest billing receivable

32,202



46,778


Derivative asset

11,121



8,631


Prepaid drilling costs

1,033



847


Other current assets

6,684



5,566


Total current assets

78,940



96,550


Property and equipment:




Oil and gas properties:




Oil and gas properties, full cost method

2,270,360



2,222,753


Unevaluated oil and gas properties

88,762



109,119


Accumulated depreciation, depletion and amortization

(1,777,246)



(1,648,060)


Oil and gas properties, net

581,876



683,812


Other property and equipment

15,033



14,953


Accumulated depreciation of other property and equipment

(10,649)



(10,313)


Total property and equipment

586,260



688,452


Derivative asset

192




Other assets, net of accumulated depreciation and amortization of $8,426 and $7,847, respectively

5,563



5,893


Total assets

$

670,955



$

790,895


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable to vendors

$

88,057



$

102,954


Advances from co-owners

35,001



12,819


Oil and gas revenue payable

20,849



22,333


Accrued interest and preferred stock dividend

4,113



12,764


Asset retirement obligation

1,910



2,756


Derivative liability

138




Accrued acquisition costs

8,238



17,690


Other accrued liabilities

5,990



5,394


Total current liabilities

164,296



176,710


Bank debt

85,000



75,000


10% Senior Notes

350,000



350,000


Asset retirement obligation

53,448



52,214


Other long-term liability

447



62


Commitments and contingencies




Stockholders' equity:




Preferred stock, $.001 par value; authorized 5,000 shares; issued and outstanding 1,495 shares

1



1


Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding 64,815 and 64,721 shares, respectively

65



65


Paid-in capital

287,454



285,957


Accumulated other comprehensive income

7,018



5,420


Accumulated deficit

(276,774)



(154,534)


Total stockholders' equity

17,764



136,909


Total liabilities and stockholders' equity

$

670,955



$

790,895


 

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Data)



Three Months Ended


March 31,


2015


2014

Revenues:




Oil and gas sales

$

33,451



$

59,966


Expenses:




Lease operating expenses

10,902



12,258


Production taxes

956



1,477


Depreciation, depletion and amortization

20,654



20,428


Ceiling test write-down

108,911




General and administrative

5,339



6,242


Accretion of asset retirement obligation

859



791


Interest expense

7,874



7,636



155,495



48,832


Other income:




Other income

157



189


Income (loss) from operations

(121,887)



11,323


Income tax benefit

(927)




Net income (loss)

(120,960)



11,323


Preferred stock dividend

1,280



1,280


Income (loss) available to common stockholders

$

(122,240)



$

10,043


Earnings per common share:




Basic




Net income (loss) per share

$

(1.89)



$

0.15


Diluted




Net income (loss) per share

$

(1.89)



$

0.15


Weighted average number of common shares:




Basic

64,774



63,846


Diluted

64,774



63,902


 

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)



Three Months Ended


March 31,


2015


2014

Cash flows from operating activities:




Net income (loss)

$

(120,960)



$

11,323


Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Deferred tax benefit

(927)




Depreciation, depletion and amortization

20,654



20,428


Ceiling test writedown

108,911




Accretion of asset retirement obligation

859



791


Share-based compensation expense

1,478



1,389


Amortization costs and other

591



557


Payments to settle asset retirement obligations

(894)



(718)


Changes in working capital accounts:




Revenue receivable

2,794



2,464


Prepaid drilling and pipe costs

(186)



(43)


Joint interest billing receivable

14,439



2,684


Accounts payable and accrued liabilities

(24,561)



246


Advances from co-owners

22,182



6,033


Other

(1,149)



135


Net cash provided by operating activities

23,231



45,289


Cash flows used in investing activities:




Investment in oil and gas properties

(36,033)



(41,792)


Investment in other property and equipment

(80)



(205)


Net cash used in investing activities

(36,113)



(41,997)


Cash flows provided by (used in) financing activities:




Net proceeds for share based compensation

405



911


Deferred financing costs

(273)



(81)


Payment of preferred stock dividend

(1,284)



(1,284)


Proceeds from bank borrowings

15,000



5,000


Repayment of bank borrowings

(5,000)



(5,000)


Net cash provided by (used in) financing activities

8,848



(454)


Net increase (decrease) in cash and cash equivalents

(4,034)



2,838


Cash and cash equivalents, beginning of period

18,243



9,153


Cash and cash equivalents, end of period

$

14,209



$

11,991


Supplemental disclosure of cash flow information:




Cash paid during the period for:




Interest

$

17,943



$

18,131


Income taxes

$

20



$


 

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)



Three Months Ended


March 31,


2015


2014

Net income (loss)

$

(120,960)



$

11,323


Reconciling items:




      Deferred tax benefit

(927)




      Depreciation, depletion and amortization

20,654



20,428


Ceiling test writedown

108,911




      Accretion of asset retirement obligation

859



791


      Non-cash share based compensation expense

1,478



1,389


      Amortization costs and other

591



557


Discretionary cash flow

10,606



34,488


      Changes in working capital accounts

13,519



11,519


      Settlement of asset retirement obligations

(894)



(718)


Net cash flow provided by operating activities

$

23,231



$

45,289




Note: 

Management believes that discretionary cash flow is relevant and useful information, which is commonly used by analysts, investors and other interested parties in the oil and gas industry as a financial indicator of an oil and gas company's ability to generate cash used to internally fund exploration and development activities and to service debt.  Discretionary cash flow is not a measure of financial performance prepared in accordance with generally accepted accounting principles ("GAAP") and should not be considered in isolation or as an alternative to net cash flow provided by operating activities.  In addition, since discretionary cash flow is not a term defined by GAAP, it might not be comparable to similarly titled measures used by other companies.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/petroquest-energy-announces-first-quarter-2015-results-and-provides-operations-update-300077004.html

SOURCE PetroQuest Energy, Inc.


Source: PR Newswire (May 4, 2015 - 4:06 PM EDT)

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