August 6, 2018 - 4:01 PM EDT
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PetroQuest Energy Announces Second Quarter 2018 Results

LAFAYETTE, La., Aug. 06, 2018 (GLOBE NEWSWIRE) -- PetroQuest Energy, Inc. (the "Company") today announced a loss to common stockholders for the quarter ended June 30, 2018 of $2,611,000, or $0.10 per share, compared to second quarter 2017 loss to common stockholders of $3,385,000, or $0.16 per share. For the first six months of 2018, the Company reported a loss of $4,823,000, or $0.19 per share, compared to a loss of $8,303,000, or $0.39 per share, for the 2017 period.

Discretionary cash flow for the second quarter of 2018 was $5,183,000, as compared to $11,384,000 for the comparable 2017 period.  For the first six months of 2018, discretionary cash flow was $14,577,000, as compared to $20,590,000 for the first six months of 2017.  See the attached schedule for a reconciliation of net cash flow provided by (used in) operating activities to discretionary cash flow.

Production for the second quarter of 2018 was 5.6 Bcfe (61.5 MMcfe/d), compared to 6.3 Bcfe (69.5 MMcfe/d) for the comparable period of 2017. The decrease in production during the second quarter 2018 period is due primarily to the sale of our Gulf of Mexico assets in January 2018 and normal production declines at our legacy Gulf Coast and East Texas fields.

For the first six months of 2018, production was 11.7 Bcfe (64.6 MMcfe/d), compared to 11.5 Bcfe (63.8 MMcfe/d) for the comparable period of 2017.

Stated on an Mcfe basis, unit prices including the effects of hedges for the second quarter of 2018 were $3.85 per Mcfe, as compared to $3.83 per Mcfe in the second quarter of 2017.  For the first six months of 2018, unit prices including the effects of hedges were $3.97 per Mcfe, as compared to $3.90 per Mcfe for the first six months of 2017.

Oil and gas sales during the second quarter of 2018 were $21,561,000, as compared to $24,251,000 in the second quarter of 2017.  For the first six months of 2018, oil and gas sales were $46,478,000 as compared to $45,023,000 for the first six months of 2017.

Lease operating expenses (“LOE”) for the second quarter of 2018 decreased to $4,972,000, as compared to $7,113,000 in the second quarter of 2017. On a per unit basis LOE per Mcfe was $0.89 for the second quarter of 2018, as compared to $1.12 in the second quarter of 2017.  Lease operating expenses for the first six months of 2018 decreased to $12,012,000, as compared to $14,189,000 in the first six months of 2017. For the first six months of 2018, per unit lease operating expenses were $1.03 per Mcfe compared to $1.23 per Mcfe in the first six months of 2017. The decreases in per unit lease operating expenses for the 2018 periods are primarily a result of the divestiture of the Company's Gulf of Mexico assets in January 2018 which had a higher per unit rate as compared to the Company's onshore properties.

Depreciation, depletion and amortization (“DD&A”) on oil and gas properties for the second quarter of 2018 was $1.06 per Mcfe, as compared to $1.07 per Mcfe in the second quarter of 2017. For the first six months of 2018, DD&A on oil and gas properties was $1.06 per Mcfe compared to $1.10 per Mcfe for the comparable period of 2017.

Interest expense for the second quarter of 2018 was $7,636,000, as compared to $7,147,000 in the second quarter of 2017. During the three month period ended June 30, 2018, capitalized interest totaled $436,000, as compared to $403,000 during the 2017 period. For the first six months of 2018, interest expense was $15,117,000, compared to $14,405,000 for the comparable period of 2017. During the six month period ended June 30, 2018, capitalized interest totaled $857,000, as compared to $708,000 during the 2017 period.

Production taxes for the second quarter of 2018 totaled $334,000, as compared to $570,000 in the second quarter of 2017.  For the first six months of 2018, production taxes totaled $1,561,000, as compared to $878,000 for the comparable period of 2017. Production taxes for the second quarter of 2018 included a refund of $681,000 related to the Company's Cotton Valley assets. The increase in production taxes during the six month 2018 period was primarily the result of the expiration of a two-year severance tax exemption on the Company's Thunder Bayou well in June 2017.

General and administrative expenses during the quarter and six months ended June 30, 2018 totaled $4,004,000 and $7,304,000, respectively, as compared to $4,314,000 and $7,467,000 during the comparable 2017 periods. Capitalized general and administrative expenses during the quarter and six months ended June 30, 2018 totaled $1,636,000 and $3,066,000, respectively, as compared to capitalized expenses of $2,010,000 and $3,344,000, respectively, during the comparable 2017 periods.

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, 2018 and 2017:

    
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Production:       
Oil (Bbls)84,879  147,723  185,054  280,401 
Gas (Mcf)4,186,629  4,357,390  8,790,650  7,882,356 
Ngl (Mcfe)901,151  1,080,100  1,798,254  1,984,306 
Total Production (Mcfe)5,597,054  6,323,828  11,699,228  11,549,068 
            
Avg.Daily Production(MMcfe/d)61.5  69.5  64.6  63.8 
            
Sales:       
Total oil sales$5,659,813  $7,299,518  $11,981,670  $14,170,927 
Total gas sales11,825,143  13,750,945  26,709,256  24,413,287 
Total ngl sales4,076,079  3,200,165  7,787,554  6,438,711 
Total oil and gas sales$21,561,035  $24,250,628  $46,478,480  $45,022,925 
Average sales prices:       
Oil (per Bbl)$66.68  $49.41  $64.75  $50.54 
Gas (per Mcf)2.82  3.16  3.04  3.10 
Ngl (per Mcfe)4.52  2.96  4.33  3.24 
Per Mcfe3.85  3.83  3.97  3.90 
            

The above sales and average sales prices include increases (decreases) to revenues related to the settlement of gas hedges of $0 and $108,000 for the three months ended June 30, 2018 and 2017, respectively.  The above sales and average sales prices include increases (decreases) to revenues related to the settlement of gas hedges of $805,000 and $(214,000) for the six months ended June 30, 2018 and 2017, respectively. The above sales and average sales prices include decreases to revenue related to the settlement of oil hedges of $307,000 and $0 for the three months ended June 30, 2018 and 2017, respectively.  The above sales and average sales prices include decreases to revenue related to the settlement of oil hedges of $571,000 and $0 for the six months ended June 30, 2018 and 2017, respectively.

The following provides guidance for the third quarter of 2018:

  
 Guidance for
Description3rd Quarter 2018
  
Production volumes (MMcfe/d)51-55
  
Percent Gas75%
Percent Oil10%
Percent NGL15%
  
Expenses: 
Lease operating expenses (per Mcfe)$1.00 - $1.10
Production taxes (per Mcfe)$0.20 - $0.25
Depreciation, depletion and amortization (per Mcfe)$1.05 - $1.15
General and administrative (in millions)*$3.8 - $4.2
Interest expense (in millions)$7.6 - $7.8
  
* Includes non-cash share based compensation estimate of approximately $0.1 million 
  

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 Texas and Louisiana. PetroQuest’s common stock trades on the OTCQX market under the symbol PQUE.

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 our ability to identify, evaluate and complete any alternative or transaction with respect to our capital structure and to refinance or restructure our indebtedness or improve our liquidity position; the impact of the announcement of our review of such alternatives or transactions on our business, including our financial and operating results, or our employees, suppliers and customers; the potential need to seek bankruptcy protection; our indebtedness and the significant amount of cash required to service our indebtedness, including the August 15, 2018 cash interest payment on our second lien senior secured notes due 2021; our estimate of the sufficiency of our existing capital sources, including availability under our multi-draw term loan facility, to fund our exploration and development activities and to service our indebtedness, including the August 15, 2018 cash interest payment on our second lien senior secured notes due 2021; the volatility of oil and natural gas prices; our receipt of a cash refund with respect to our offshore bonds and the timing and amount of the same; our ability to hedge future production to reduce our exposure to price volatility in the current commodity pricing market; our ability to raise additional capital to fund cash requirements for future operations and to service our indebtedness; our ability to fund and execute our Cotton Valley and Austin Chalk development programs as planned; our ability to increase recoveries in the Austin Chalk formation and to increase our overall oil production as planned; our estimates with respect to fracked Austin Chalk wells in Louisiana, including production, EURs and costs; our estimates with respect to production, reserve replacement ratio and finding and development costs; our responsibility for offshore decommissioning liabilities for offshore interests we no longer own; our ability to find, develop and produce oil and natural gas reserves that are economically recoverable and to replace reserves and sustain and/or increase production; ceiling test write-downs resulting, and that could result in the future, from lower oil and natural gas prices; our ability to fund our capital needs and respond to changing conditions imposed by our multi-draw term loan facility and restrictive debt covenants; approximately 43% 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 common stock price; and the limited trading market for our common stock. 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. In particular, careful consideration should be given to cautionary statements made in the various reports PetroQuest has filed with the Securities and Exchange Commission. PetroQuest undertakes no duty to update or revise these forward-looking statements.

    
PETROQUEST ENERGY, INC.
Consolidated Balance Sheets  (Amounts in Thousands)
    
 June 30, 2018 December 31, 2017
ASSETS   
Current assets:   
Cash and cash equivalents$5,792  $15,655 
Revenue receivable7,860  15,340 
Joint interest billing receivable2,277  6,597 
Other receivable4,822  7,750 
Derivative asset  1,174 
Deposit for surety bonds12,300  8,300 
Other current assets1,813  2,125 
Total current assets34,864  56,941 
Property and equipment:   
Oil and gas properties:   
Oil and gas properties, full cost method1,352,355  1,369,861 
Unevaluated oil and gas properties17,997  21,854 
Accumulated depreciation, depletion and amortization(1,291,462) (1,285,660)
Oil and gas properties, net78,890  106,055 
Other property and equipment9,253  9,353 
Accumulated depreciation of other property and equipment(8,947) (8,843)
Total property and equipment79,196  106,565 
Other assets792  792 
Total assets$114,852  $164,298 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable to vendors$6,581  $32,148 
Advances from co-owners613  1,730 
Oil and gas revenue payable9,778  19,344 
Accrued interest11,057  1,724 
Asset retirement obligation877  687 
Derivative liability  731 
Other accrued liabilities9,865  6,476 
Total current liabilities38,771  62,840 
Multi-draw Term Loan30,808  27,963 
10% Senior Secured Notes due 20219,744  9,821 
10% Senior Secured PIK Notes due 2021274,591  271,577 
Asset retirement obligation2,301  30,623 
Preferred stock dividend payable12,848  10,278 
Other long-term liabilities36  131 
Stockholders’ equity:   
Preferred stock, $.001 par value; authorized 5,000 shares; issued and outstanding 1,495 shares1  1 
Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding 25,587 and 25,521 shares, respectively26  26 
Paid-in capital313,893  313,244 
Accumulated other comprehensive income (loss)(802) 278 
Accumulated deficit(567,365) (562,484)
Total stockholders’ equity(254,247) (248,935)
Total liabilities and stockholders’ equity$114,852  $164,298 
        


    
PETROQUEST ENERGY, INC.
Consolidated Statements of Operations
(Amounts in Thousands, Except Per Share Data)
    
 Three Months Ended Six Months Ended
 June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Revenues:       
Oil and gas sales$21,561  $24,251  $46,478  $45,023 
Expenses:       
Lease operating expenses4,972  7,113  12,012  14,189 
Production taxes334  570  1,561  878 
Depreciation, depletion and amortization6,023  6,841  12,528  12,958 
General and administrative4,004  4,314  7,304  7,467 
Accretion of asset retirement obligation42  553  240  1,100 
Interest expense7,636  7,147  15,117  14,405 
 23,011  26,538  48,762  50,997 
Other income:       
Other income (expense)178  (2) 191  52 
Derivative expense(54)   (54)  
 124  (2) 137  52 
Loss from operations(1,326) (2,289) (2,147) (5,922)
Income tax expense (benefit)  (189) 106  (189)
Net loss(1,326) (2,100) (2,253) (5,733)
Preferred stock dividend1,285  1,285  2,570  2,570 
Loss available to common stockholders$(2,611) $(3,385) $(4,823) $(8,303)
Loss per common share:       
Basic       
Net loss per share$(0.10) $(0.16) $(0.19) $(0.39)
Diluted       
Net loss per share$(0.10) $(0.16) $(0.19) $(0.39)
Weighted average number of common shares:       
Basic25,568  21,215  25,554  21,212 
Diluted25,568  21,215  25,554  21,212 
            


  
PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(Amounts in Thousands)
  
 Six Months Ended
 June 30, 2018 June 30, 2017
Cash flows from operating activities:   
Net loss$(2,253) $(5,733)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Deferred tax expense (benefit)106  (189)
Depreciation, depletion and amortization12,528  12,958 
Accretion of asset retirement obligation240  1,100 
Share-based compensation expense593  825 
Non-cash interest expense on PIK Notes2,961  11,179 
Amortization costs and other402  450 
Payments to settle asset retirement obligations(75) (1,357)
Changes in working capital accounts:   
Revenue receivable7,480  689 
Joint interest billing receivable4,078  2,239 
Accounts payable and accrued liabilities(24,104) (8,368)
Advances from co-owners(1,117) 2,215 
Deposit for surety bonds(4,000)  
Other242  (2,314)
Net cash (used in) provided by operating activities(2,919) 13,694 
Cash flows used in investing activities:   
Investment in oil and gas properties(9,785) (21,661)
Investment in other property and equipment(136) (37)
Sale of unevaluated oil and gas properties2,928   
Sale of oil and gas properties(2,428) 2,207 
Net cash used in investing activities(9,421) (19,491)
Cash flows provided by (used in) financing activities:   
Net proceeds from share based compensation43  32 
Deferred financing costs(55) (125)
Redemption of 2017 Notes  (22,650)
Costs incurred to redeem 2021 Notes(11)  
Proceeds from borrowings2,500  20,000 
Net cash provided by (used in) financing activities2,477  (2,743)
Net decrease in cash and cash equivalents(9,863) (8,540)
Cash and cash equivalents, beginning of period15,655  28,312 
Cash and cash equivalents, end of period$5,792  $19,772 
Supplemental disclosure of cash flow information:   
Cash paid during the period for:   
Interest$3,304  $3,743 
        


   
 PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts In Thousands)
   
 Three Months EndedSix Months Ended
 June 30,June 30,
 2018 20172018 2017
Net loss$(1,326) $(2,100)$(2,253) $(5,733)
Reconciling items:      
Deferred tax expense (benefit)  (189)106  (189)
Depreciation, depletion and amortization6,023  6,841 12,528  12,958 
Accretion of asset retirement obligation42  553 240  1,100 
Non-cash share based compensation expense253  400 593  825 
Non-cash PIK Interest  5,667 2,961  11,179 
Amortization costs and other191  212 402  450 
Discretionary cash flow5,183  11,384 14,577  20,590 
Changes in working capital accounts(13,110) (10,148)(17,421) (5,539)
Settlement of asset retirement obligations(72) (955)(75) (1,357)
Net cash flow provided by (used in) operating activities$(7,999) $281 $(2,919) $13,694 
               

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.

      
For further information, contact:    Matt Quantz, Manager – Corporate Communications
     (337) 232-7028, www.petroquest.com

 

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Source: GlobeNewswire (August 6, 2018 - 4:01 PM EDT)

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