PetroQuest Energy Announces First Quarter 2016 Results

LAFAYETTE, La., May 2, 2016 /PRNewswire/ — PetroQuest Energy, Inc. (the “Company”) today announced a net loss to common stockholders for the quarter ended March 31, 2016 of $39,137,000, or $0.58 per share, compared to first quarter 2015 net loss to common stockholders of $122,240,000, or $1.89 per share. The net losses for the first quarters of 2016 and 2015 included non-cash ceiling test write-downs totaling $18,857,000 and $108,911,000, respectively.

Discretionary cash flow for the first quarter of 2016 was $(2,210,000), as compared to $10,606,000 for the comparable 2015 period.  See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.

Production for the first quarter of 2016 was 7.6 Bcfe, compared to 10.4 Bcfe for the comparable period of 2015. The reduction in production volumes during the 2016 period is primarily attributable to the sale of the Company’s Arkoma assets in June 2015.

Stated on an Mcfe basis, unit prices including the effects of hedges for the first quarter of 2016 were $2.27  per Mcfe, as compared to $3.22 per Mcfe in the first quarter of 2015. Oil and gas sales during the first quarter of 2016 were $17,320,000, as compared to $33,451,000 in the first quarter of 2015.

Lease operating expenses (“LOE”) for the first quarter of 2016 decreased to $8,177,000, as compared to $10,902,000 in the first quarter of 2015.  LOE per Mcfe was $1.07 for the first quarter of 2016, as compared to $1.05 in the first quarter of 2015. Per unit lease operating expenses increased during the 2016 quarter as a result of the Oklahoma sale in June 2015, which included gas properties that had lower per unit operating costs.

Depreciation, depletion and amortization (“DD&A”) on oil and gas properties for the first quarter of 2016 was $1.30 per Mcfe, as compared to $1.96 per Mcfe in the first quarter of 2015. The decrease in the per unit DD&A rate during the 2016 period is primarily the result of ceiling test write-downs throughout 2015.

Interest expense for the first quarter of 2016 increased to $8,257,000, as compared to $7,874,000 in the first quarter of 2015. During the three month period ended March 31, 2016, capitalized interest totaled $309,000, as compared to $1,998,000 during the 2015 period. Capitalized interest was lower during the 2016 period as a result of the decline in the Company’s unevaluated property balance due to the Oklahoma sale in 2015. The increase in interest expense during the 2016 period is primarily attributable to reduced capitalized interest, as well as approximately $400,000 of deferred financing costs that were written off in connection with the Company’s debt exchange in February 2016.

General and administrative expenses during the three months ended March 31, 2016 totaled $8,599,000, as compared to expenses of $5,339,000 during the comparable 2015 period. The increase in general and administrative expenses during the three months ended March 31, 2016 is primarily due to $4,740,000 of costs related to the issuance of the Company’s 2021 Notes in February 2016.

The following table sets forth certain information with respect to the oil and gas operations of the Company for the three month periods ended March 31, 2016 and 2015:

The above sales and average sales prices include increases to revenue related to the settlement of gas hedges of $1,032,000and $2,324,000, oil hedges of $0 and $27,000 and Ngl hedges of  $0 and $21,000 for the three months ended March 31, 2016 and 2015, respectively.

The following provides guidance for the second quarter of 2016:

Operations Update

In the Gulf Coast, the Company’s Thunder Bayou well is currently flowing at approximately 30 MMcfe/d (NRI-37%) and its production profile continues to exceed the Company’s original expectations. Based on continued outperformance in the lowest interval, the Company now expects to recomplete into the upper section of the Cris R-2 formation (154 net feet of pay) during the third quarter of 2016. The Company’s second quarter production guidance incorporates anticipated declines at Thunder Bayou relative to the timing of the third quarter recompletion.  In the Gulf of Mexico, the Company expects to commence a three well recompletion program at its Ship Shoal 72 field at the end of second quarter.  The Company estimates this program  will cost approximately $600,000 and contribute approximately 3 MMcfe/d of production during the third quarter of 2016.

Borrowing Base Update

The Company currently has no borrowings outstanding under its Credit Facility and is undergoing a borrowing base redetermination.  Due in part to the April 2016 sale of the East Hoss assets in Oklahoma, the Company expects that the borrowing base and aggregate commitments under the Credit Facility will be reduced.  Until the ongoing borrowing base redetermination is complete, the Company has agreed to not request any borrowings or issue any letters of credit pursuant to the Credit Facility.

Management’s Comment

“During the first quarter we took several positive steps, building upon efforts started with our June 2015 Woodford sale, aimed at repairing our balance sheet,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “The debt exchange reduced fixed charges, improved our leverage profile and extended debt maturities, while the recent non-core asset sales increased cash on hand.”

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 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.