August 1, 2016 - 4:07 PM EDT
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PetroQuest Energy Announces Second Quarter 2016 Results

LAFAYETTE, La., Aug. 1, 2016 /PRNewswire/ -- PetroQuest Energy, Inc. (the "Company") today announced a loss available to common stockholders for the quarter ended June 30, 2016 of $24,143,000, or $1.38 per share, compared to second quarter 2015 loss available to common stockholders of $61,083,000, or $3.77 per share. For the first six months of 2016, the Company reported a loss available to common stockholders of $63,280,000, or $3.67 per share, compared to a loss available to common stockholders of $183,323,000, or $11.31 per share, for the 2015 period. The losses during the quarter and six months ended June 30, 2016 and June 30, 2015 included non-cash ceiling test write-downs totaling $12,782,000 and $31,639,000, respectively, and $65,495,000 and $174,406,000, respectively.

Discretionary cash flow for the second quarter of 2016 was $(991,000), as compared to $7,257,000 for the comparable 2015 period.  For the first six months of 2016, discretionary cash flow was $(3,201,000), as compared to $17,863,000, for the first six months of 2015. See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.

Production for the second quarter of 2016 was 6.0 Bcfe, compared to 9.7 Bcfe for the comparable period of 2015. For the first six months of 2016, production was 13.6 Bcfe, compared to 20.0 Bcfe for the comparable period of 2015. The reduction in production volumes during the 2016 periods is primarily attributable to the sale of the Company's Arkoma assets in June of 2015 and April of 2016 as well as substantially reduced capital spending as compared to 2015.

Stated on an Mcfe basis, unit prices including the effects of hedges for the second quarter of 2016 were $2.64  per Mcfe, as compared to $3.37 per Mcfe in the second quarter of 2015. For the first six months of 2016, unit prices including the effects of hedges, were $2.43 per Mcfe, as compared to $3.29 per Mcfe for the first six months of 2015.

Oil and gas sales during the second quarter of 2016 were $15,824,000, as compared to $32,550,000 in the second quarter of 2015. For the first six months of 2016, oil and gas sales were $33,144,000 as compared to oil and gas sales of $66,001,000 for the first six months of 2015.

Lease operating expenses ("LOE") for the second quarter of 2016 decreased to $6,864,000, as compared to $11,191,000 in the second quarter of 2015.  Lease operating expenses decreased during the three months ended June 30, 2016 primarily as result of the Company's 2015 Oklahoma divestiture. LOE per Mcfe was $1.14 for the second quarter of 2016, as compared to $1.16 in the second quarter of 2015. For the first six months of 2016, lease operating expenses were $1.10 per Mcfe compared to $1.10 per Mcfe in the first six months of 2015.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the second quarter of 2016 was $1.17 per Mcfe, as compared to $1.86 per Mcfe in the second quarter of 2015. For the first six months of 2016, DD&A on oil and gas properties was $1.24 per Mcfe compared to $1.91 per Mcfe for the comparable period of 2015. The decrease in the per unit DD&A rate during the 2016 periods is primarily the result of ceiling test write-downs during the second half of 2015 totaling $92,156,000.

Interest expense for the second quarter of 2016 decreased to $6,503,000, as compared to $8,596,000 in the second quarter of 2015. During the three month period ended June 30, 2016, capitalized interest totaled $247,000, as compared to $1,379,000 during the 2015 period. For the first six months of 2016, interest expense was $14,760,000, compared to $16,470,000 for the comparable period of 2015. During the six month period ended June 30, 2016, capitalized interest totaled $555,000, as compared to $3,376,000 during the 2015 period. The decrease in interest expense during the 2016 periods is primarily attributable a lower debt balance after the completion of the Company's debt exchange in February 2016 as well as the repayment of the Company's bank debt in June 2015.  

General and administrative expenses during the quarter and six months ended June 30, 2016 totaled $3,871,000 and $12,470,000, respectively, as compared to $6,519,000 and $11,858,000 during the comparable 2015 periods. Capitalized general and administrative costs during the quarter and six months  ended June 30, 2016 totaled $1,634,000, and $3,188,000, respectively, as compared to costs of $2,357,000  and $4,597,000 during the comparable 2015 periods. The decrease in general and administrative expenses during the quarter ended June 30, 2016 is primarily due to lower employee related costs. General and administrative expenses for the six month 2016 period included $4.8 million in costs related to the Company's debt exchange in February 2016.

The following table sets forth certain information with respect to the oil and gas operations of the Company for the three and six month periods ended June 30, 2016 and 2015:


Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Production:








Oil (Bbls)

114,319


151,223


254,308


298,437

Gas (Mcf)

4,272,820


7,167,270


9,820,297


15,082,774

Ngl (Mcfe)

1,045,858


1,584,284


2,292,490


3,160,826

Total Production (Mcfe)

6,004,592


9,658,892


13,638,635


20,034,222

Avg. Daily Production (MMcfe/d)

66.0


106.1


74.9


110.7

Sales:








Total oil sales

$   4,936,757


$   8,587,332


$   9,295,501


$ 15,540,233

Total gas sales

8,853,527


19,927,230


19,571,735


41,577,325

Total ngl sales

2,034,342


4,035,571


4,277,104


8,883,616

Total oil and gas sales

$ 15,824,626


$ 32,550,133


$ 33,144,340


$ 66,001,174

Average sales prices:








Oil (per Bbl)

$          43.18


$          56.79


$          36.55


$          52.07

Gas (per Mcf)

2.07


2.78


1.99


2.76

Ngl (per Mcfe)

1.95


2.55


1.87


2.81

Per Mcfe

2.64


3.37


2.43


3.29

The above sales and average sales prices include increases (decreases) to revenues related to the settlement of gas hedges of $1,155,000 and $4,181,000, oil hedges of zero and ($288,000) and Ngl hedges of zero and $136,000 for the three months ended June 30, 2016 and 2015, respectively.  The above sales and average sales prices include increase (decreases) to revenues related to the settlement of gas hedges of $2,187,000  and $6,505,000, oil hedges of zero and ($261,000), and Ngl hedges of zero and $157,000 for the six months ended June 30, 2016 and 2015, respectively.

The following provides guidance for the third quarter of 2016:


Guidance for

Description

3rd Quarter 2016



Production volumes (MMcfe/d)

52-56



Percent Gas

70 %

Percent Oil

13 %

Percent NGL

17 %



Expenses:


Lease operating expenses (per Mcfe)

$1.25 - $1.35

Production taxes (per Mcfe)

$0.04 - $0.07

Depreciation, depletion and amortization (per Mcfe)

$1.20 - $1.30

General and administrative (in millions)*

$3.5 - $3.9

Interest expense (in millions)

$6.3 - $6.7





* Includes non-cash stock compensation estimate of approximately $0.5 million

Balance Sheet/Liquidity Update
The Company continues to analyze a variety of options to address its liquidity needs, to extend the maturity on its 2017 Notes, and to reduce its overall financial leverage while maintaining a focus on reducing costs and preserving liquidity.  To assist the Board of Directors and management team in evaluating these options, the Company has retained Jefferies LLC and Seaport Global as its financial advisors and Porter Hedges LLP as its legal advisor.

Management's Comment
"Our second quarter 2016 results reflect the impact of our cost cutting efforts. When compared to the second quarter of 2015, we realized an approximately 36% reduction in cash costs, or nearly $11 million," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "We continue to work on capturing additional cost savings throughout our organization.  In addition, we have retained advisors to assist us in evaluating certain high-priority projects, most notably extending the maturity on our remaining 2017 Notes."

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.

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 the Company 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 indebtedness and the significant amount of cash required to service our indebtedness; our ability to improve our liquidity position and refinance or restructure our indebtedness, including our remaining 2017 Notes; the potential need to sell assets or seek bankruptcy protection; our estimate of the sufficiency of our existing capital sources, including availability under our bank credit facility and the result of any borrowing base redetermination; our ability to post additional collateral to satisfy our offshore decommissioning obligations; our ability to hedge future production to reduce our exposure to price volatility in the current commodity pricing market; ceiling test write-downs resulting, and that could result in the future, from lower oil and natural gas prices; our ability to raise additional capital to fund cash requirements for future operations; limits on our growth and our ability to finance our operations, fund our capital needs and respond to changing conditions imposed by our bank credit facility and restrictive debt covenants; our ability to find, develop and produce oil and natural gas reserves that are economically recoverable and to replace reserves and sustain production; approximately 50% of our production being exposed to the additional risk of severe weather, including hurricanes, tropical storms and flooding, and natural disasters; losses and liabilities from uninsured or underinsured drilling and operating activities; changes in laws and governmental regulations as they relate to our operations; the operating hazards attendant to the oil and gas business; the volatility of our stock price; and our ability to meet the continued listing standards of the New York Stock Exchange with respect to our common stock or to cure any deficiency with respect thereto. In particular, careful consideration should be given to cautionary statements made in the various reports the Company has filed with the SEC. The Company undertakes no duty to update or revise these forward-looking statements.

PETROQUEST ENERGY, INC.

Consolidated Balance Sheets

(Amounts in Thousands)



June 30,
2016


December 31,
2015

ASSETS




Current assets:




Cash and cash equivalents

$     68,896


$   148,013

Revenue receivable

6,452


6,476

Joint interest billing receivable

18,560


49,374

Derivative asset


1,508

Other current assets

5,219


3,874

Total current assets

99,127


209,245

Property and equipment:




Oil and gas properties:




Oil and gas properties, full cost method

1,318,737


1,310,891

Unevaluated oil and gas properties

6,000


12,516

Accumulated depreciation, depletion and amortization

(1,223,051)


(1,157,455)

    Oil and gas properties, net

101,686


165,952

Other property and equipment

11,257


11,229

Accumulated depreciation of other property and equipment

(10,020)


(8,737)

Total property and equipment

102,923


168,444

Other assets, net of accumulated amortization of $4,005 and $3,842, respectively

6,674


1,630

Total assets

$   208,724


$   379,319

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable to vendors

$     54,379


$     97,999

Advances from co-owners

577


16,118

Oil and gas revenue payable

29,386


18,911

Accrued interest and preferred stock dividend

9,938


12,795

Asset retirement obligation

1,496


6,015

Derivative liability

473


Accrued acquisition cost


4,409

Other accrued liabilities

3,131


2,537

Total current liabilities

99,380


158,784

10% Senior Unsecured Notes due 2017

134,766


347,008

10% Senior Secured Notes due 2021

156,524


Asset retirement obligation

39,986


36,541

Other long-term liabilities

2,670


53

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 17,548 and 16,411 shares, respectively

18


16

Paid-in capital

293,595


290,432

Accumulated other comprehensive (loss) income

(473)


947

Accumulated deficit

(517,743)


(454,463)

Total stockholders' equity

(224,602)


(163,067)

Total liabilities and stockholders' equity

$   208,724


$   379,319

 

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Data)



Three Months Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015

Revenues:








Oil and gas sales

$  15,824


$  32,550


$  33,144


$    66,001

Expenses:








Lease operating expenses

6,864


11,191


15,041


22,093

Production taxes

(48)


948


290


1,904

Depreciation, depletion and amortization

7,193


18,345


17,331


38,999

Ceiling test write-down

12,782


65,495


31,639


174,406

General and administrative

3,871


6,519


12,470


11,858

Accretion of asset retirement obligation

618


823


1,226


1,682

Interest expense

6,503


8,596


14,760


16,470


37,783


111,917


92,757


267,412









Other income (expense):








Gain on sale of oil and gas properties


21,531



21,531

Other income

(424)


40


(327)


197


(424)


21,571


(327)


21,728









Loss from operations

(22,383)


(57,796)


(59,940)


(179,683)

Income tax expense

475


2,000


561


1,073

Net loss

(22,858)


(59,796)


(60,501)


(180,756)

Preferred stock dividend

1,285


1,287


2,779


2,567

Loss available to common stockholders

$ (24,143)


$ (61,083)


$ (63,280)


$ (183,323)

Loss per common share:








Basic








Net loss per share

$     (1.38)


$     (3.77)


$     (3.67)


$     (11.31)

Diluted








Net loss per share

$     (1.38)


$     (3.77)


$     (3.67)


$     (11.31)

Weighted average number of common shares:








Basic

17,539


16,223


17,248


16,208

Diluted

17,539


16,223


17,248


16,208

 

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)



Six Months Ended


June 30,


2016


2015

Cash flows from operating activities:




Net loss

$ (60,501)


$ (180,756)

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




Deferred tax expense

561


1,073

Depreciation, depletion and amortization

17,331


38,999

Ceiling test writedown

31,639


174,406

Accretion of asset retirement obligation

1,226


1,682

Share-based compensation expense

925


2,828

Amortization costs and other

810


1,162

Payments to settle asset retirement obligations

(2,515)


(1,186)

Gain on sale of oil and gas properties


(21,531)

Costs incurred to issue 2021 Notes

4,808


Changes in working capital accounts:




Revenue receivable

24


8,735

Joint interest billing receivable

30,814


(1,171)

Accounts payable and accrued liabilities

(31,260)


(36,051)

Advances from co-owners

(15,541)


17,846

Other

(4,387)


(410)

Net cash (used in) provided by operating activities

(26,066)


5,626

Cash flows provided by investing activities:




Investment in oil and gas properties

(18,166)


(62,451)

Investment in other property and equipment

(28)


(134)

Sale of oil and gas properties

24,909


257,698

Net cash provided by investing activities

6,715


195,113

Cash flows used in financing activities:




Net proceeds for share based compensation

52


432

Deferred financing costs

(100)


(829)

Payment of preferred stock dividend

(1,284)


(2,569)

Redemption of 2017 Notes

(53,626)


Costs incurred to issue 2021 Notes

(4,808)


Proceeds from bank borrowings


70,000

Repayment of bank borrowings


(145,000)

Net cash used in financing activities

(59,766)


(77,966)

Net (decrease) increase in cash and cash equivalents

(79,117)


122,773

Cash and cash equivalents, beginning of period

148,013


18,243

Cash and cash equivalents, end of period

$  68,896


$  141,016

Supplemental disclosure of cash flow information:




Cash paid during the period for:




Interest

$  16,783


$    18,626

Income taxes

$         —


$          (26)

 

 

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)



Three Months Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015

Net loss

$ (22,858)


$ (59,796)


$ (60,501)


$ (180,756)

Reconciling items:








Deferred tax expense

475


2,000


561


1,073

Depreciation, depletion and amortization

7,193


18,345


17,331


38,999

Ceiling test writedown

12,782


65,495


31,639


174,406

Gain on Asset Sale


(21,531)



(21,531)

Accretion of asset retirement obligation

618


823


1,226


1,682

Non-cash share based compensation expense

483


1,350


925


2,828

Amortization costs and other

248


571


810


1,162

Costs incurred to issue 2021 Notes

68



4,808


Discretionary cash flow

(991)


7,257


(3,201)


17,863

Changes in working capital accounts

3,166


(24,570)


(20,350)


(11,051)

Settlement of asset retirement obligations

(2,051)


(292)


(2,515)


(1,186)

Net cash flow provided by (used in) operating activities

$       124


$ (17,605)


$ (26,066)


$      5,626



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-second-quarter-2016-results-300307123.html

SOURCE PetroQuest Energy, Inc.


Source: PR Newswire (August 1, 2016 - 4:07 PM EDT)

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