PetroQuest Energy Announces Third Quarter 2012 Results

            PetroQuest Energy Announces Third Quarter 2012 Results

PR Newswire

LAFAYETTE, La., Nov. 7, 2012

LAFAYETTE, La., Nov. 7, 2012 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE:
PQ) announced today net loss available to common stockholders for the quarter
ended September 30, 2012 of $38,639,000, or $0.62 per share, compared to
third quarter 2011 net income available to common stockholders of $3,727,000,
or $0.06 per share. For the first nine months of 2012, the Company reported
net loss available to common stockholders of $111,767,000, or $1.79 per share,
compared to net income available to common stockholders of $2,579,000, or
$0.04 per share, for the first nine months of 2011. Net loss for the three and
nine month 2012 periods included ceiling test writedowns totaling $35,391,000
and $108,987,000, respectively.

Discretionary cash flow for the third quarter of 2012 was $17,339,000, as
compared to $21,099,000 for the comparable 2011 period. For the first nine
months of 2012, discretionary cash flow was $57,055,000. Discretionary cash
flow for the first nine months of 2011 was $73,219,000. See the attached
schedule for a reconciliation of net cash flow provided by operating
activities to discretionary cash flow.

Production for the third quarter of 2012 was 8.5 Bcfe, a 15% increase from the
7.4 Bcfe produced during the comparable period of 2011. Natural gas liquids
production for the third quarter of 2012 increased 53% from the comparable
period of 2011. For the first nine months of 2012, production was 25.1 Bcfe ,
compared to 22.2 Bcfe for the comparable period of 2011. Approximately 77%
of the Company's third quarter 2012 production was from long-lived basins.

Stated on an Mcfe basis, unit prices received during the third quarter and the
first nine months of 2012 were 24% and 25% lower, respectively, than the
comparable 2011 periods. Oil and gas sales during the third quarter of 2012
decreased 13% to $33,913,000, as compared to $38,980,000 in the third quarter
of 2011. For the first nine months of 2012, oil and gas sales decreased 16% to
$103,286,000 from $122,446,000 in the first nine months of 2011.

Lease operating expenses for the third quarter of 2012 were $1.13 per Mcfe as
compared to $1.39 per Mcfe in the third quarter of 2011. For the first nine
months of 2012, lease operating expenses per Mcfe decreased 17% to $1.13 from
$1.36 in the comparable period of 2011. Per unit lease operating expenses
decreased primarily due to the overall increase in produced volumes.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties
for the third quarter of 2012 was $1.73 per Mcfe as compared to $1.94 per
Mcfe in the third quarter of 2011. For the first nine months of 2012, DD&A
per Mcfe decreased 6% to $1.80 per Mcfe from $1.92 per Mcfe for the comparable
period of 2011. The decrease in DD&A during the third quarter of 2012, as
compared to the third quarter of 2011, was primarily the result of the ceiling
test write-downs recorded during the 2012 periods.

Interest expense for the third quarter of 2012 increased to $2,338,000, as
compared to $2,299,000 in the third quarter of 2011. For the first nine months
of 2012, interest expense was $7,021,000, compared to $7,248,000 for the
comparable period of 2011.

General and administrative expenses increased $973,000 and $3,873,000 for the
third quarter and nine months ended September 30, 2012, as compared to the
respective 2011 periods. The increases during the 2012 periods are primarily
due to higher employee related expenses, including non-cash share-based
compensation costs totaling $5,609,000 during the first nine months of 2012 as
compared to $2,985,000 during the 2011 period.

Production taxes for the third quarter of 2012 totaled $880,000, as compared
to $1,446,000 in the third quarter of 2011. For the first nine months of
2012, production taxes were $112,000 compared to $2,070,000 for the comparable
period of 2011. Production taxes for the nine month 2012 period decreased due
to a receivable of $2,717,000 recorded in June 2012 related to severance tax
refunds expected to be received over the next three years.

The following table sets forth certain information with respect to the oil and
gas operations of the Company for the three-and nine-month periods ended
September 30, 2012 and 2011:

                 Three Months Ended September  Nine Months Ended September 30,
                 30,
                 2012            2011          2012              2011
Production:
 Oil (Bbls)      122,645       130,144         379,958         445,457
 Gas (Mcf)       6,888,569     6,073,776       20,563,350      17,847,061
 Ngl (Mcfe)      894,138       584,786         2,250,569       1,658,323
 Total
Production         8,518,577     7,439,426       25,093,667      22,178,126
(Mcfe)
 Total Daily
Production         92.6          80.9            91.6            81.2
(Mmcfe)
Sales:
 Total oil       $13,287,548   $13,508,377     $41,627,602     $46,403,861
sales
 Total gas       15,583,994    19,865,595      46,321,605      60,481,702
sales
 Total ngl       5,041,274     5,606,335       15,336,515      15,560,225
sales
 Total oil and   $33,912,816   $38,980,307     $103,285,722    $122,445,788
gas sales
Average sales
prices:
 Oil (per Bbl)   $108.34       $103.80         $109.56         $104.17
 Gas (per Mcf)   2.26          3.27            2.25            3.39
 Ngl (per        5.64          9.59            6.81            9.38
Mcfe)
 Per Mcfe        3.98          5.24            4.12            5.52



The above sales and average sales prices include increases to revenue related
to the settlement of gas hedges of $1,482,000 and $478,000, oil hedges of
$491,000 and $178,000 and Ngl hedges of $312,000 and zero for the three months
ended September 30, 2012 and 2011, respectively. The above sales and average
sales prices include increases (reductions) to revenue related to the
settlement of gas hedges of $6,867,000 and $864,000, oil hedges of $853,000
and ($211,000) and Ngl hedges of $544,000 and zero for the nine months ended
September 30, 2012 and 2011, respectively.

The following initiates guidance for the fourth quarter of 2012:

                                                              Guidance for
Description                                                   4th Quarter 2012
Production volumes (MMcfe/d)                                  94 - 98
Percent Gas                                                   77%
Percent Oil                                                   9%
Percent NGL                                                   14%
Expenses:
Lease operating expenses (per Mcfe)                           $1.05 - $1.15
Production taxes (per Mcfe)                                   $0.10 - $0.15
Depreciation, depletion and amortization (per Mcfe)           $1.60 - $1.70
General and administrative (in millions)*                     $5.5 - $6.0
Interest expense (in millions)                                $2.6 - $2.9
 2012 Capital Expenditures (in millions)                     $130 - $135
* Includes non-cash stock compensation estimate of $1.4
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 the Arkoma Basin, Wyoming, Texas, South 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. These forward-looking statements
are subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected. Among those risks, trends
and uncertainties are our ability to find oil and natural gas reserves that
are economically recoverable, the volatility of oil and natural gas prices and
significantly depressed natural gas prices since the middle of 2008, the
uncertain economic conditions in the United States and globally, 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 estimate of the sufficiency of our existing
capital sources, our ability to raise additional capital to fund cash
requirements for future operations, the uncertainties involved in prospect
development and property acquisitions or dispositions and in projecting future
rates of production or future reserves, the timing of development expenditures
and drilling of wells, hurricanes and other natural disasters, changes in laws
and regulations as they relate to our operations, including our fracing
operations in shale plays 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 Securities and Exchange
Commission. 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)


                                                   September30,  December31,

                                                   2012           2011
ASSETS
Current assets:
Cash and cash equivalents                          $   5,703      $  22,263
Revenue receivable                                 15,719         15,860
Joint interest billing receivable                  26,641         47,445
Derivative asset                                   955            6,418
Prepaid drilling costs                             2,482          2,900
Drilling pipe inventory                            1,597          4,070
Other current assets                               2,962          2,965
Total current assets                               56,059         101,921
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost method           1,707,498      1,600,546
Unevaluated oil and gas properties                 78,828         70,408
Accumulated depreciation, depletion and            (1,420,630)    (1,265,603)
amortization
Oil and gas properties, net                        365,696        405,351
Gas gathering assets                               4,177          4,177
Accumulated depreciation and amortization of gas   (2,017)        (1,794)
gathering assets
Total property and equipment                       367,856        407,734
Other assets, net of accumulated depreciation and  8,133          6,511
amortization of $9,259 and $8,066, respectively
Total assets                                       $   432,048    $  516,166
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors                        $   56,424     $  50,750
Advances from co-owners                            25,065         33,867
Oil and gas revenue payable                        14,533         13,764
Accrued interest and preferred stock dividend      2,417          6,167
Derivative liability                               426            —
Asset retirement obligation                        1,034          3,110
Other accrued liabilities                          5,657          8,250
Total current liabilities                          105,556        115,908
Bank debt                                          35,000         —
10% Senior Notes                                   150,000        150,000
Asset retirement obligation                        29,241         27,317
Derivative liability                               289            —
Deferred income taxes                              —              551
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; authorized 5,000 1              1
shares; issued and outstanding 1,495 shares
Common stock, $.001 par value; authorized 150,000
shares; issued and outstanding 62,720 and 62,148   63             62
shares, respectively
Paid-in capital                                    275,375        270,606
Accumulated other comprehensive income             600            4,031
Accumulated deficit                                (164,077)      (52,310)
Total stockholders' equity                         111,962        222,390
Total liabilities and stockholders' equity         $   432,048    $  516,166



PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(unaudited)

(Amounts in Thousands, Except Per Share Data)


                         Three Months Ended    Nine Months Ended September
                         September 30,         30,
                         2012        2011      2012            2011
Revenues:
Oil and gas sales        $ 33,913    $ 38,980  $  103,286      $  122,446
Gas gathering revenue    38          49        119             161
                         33,951      39,029    103,405         122,607
Expenses:
Lease operating expenses 9,658       10,376    28,408          30,085
Production taxes         880         1,446     112             2,070
Depreciation, depletion  15,032      14,696    46,024          43,415
and amortization
Ceiling test write-down  35,391      —         108,987         18,907
General and              5,963       4,990     17,541          13,668
administrative
Accretion of asset       525         433       1,542           1,612
retirement obligation
Interest expense         2,338       2,299     7,021           7,248
                         69,787      34,240    209,635         117,005
Other income (expense):
Other income (expense)   257         (40)      529             237
Derivative expense       (340)       —         (715)           —
                         (83)        (40)      (186)           237
Income (loss) from       (35,919)    4,749     (106,416)       5,839
operations
Income tax expense       1,435       (265)     1,496           (594)
(benefit)
Net income (loss)        (37,354)    5,014     (107,912)       6,433
Preferred stock dividend 1,285       1,287     3,855           3,854
Net income (loss)
available to common      $ (38,639)  $ 3,727   $  (111,767)    $  2,579
stockholders
Earnings per common
share:
Basic
Net income (loss) per    $ (0.62)    $ 0.06    $  (1.79)       $  0.04
share
Diluted
Net income (loss) per    $ (0.62)    $ 0.06    $  (1.79)       $  0.04
share
Weighted average number
of common shares:
Basic                    62,492      62,041    62,356          61,876
Diluted                  62,492      62,415    62,356          62,278



PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(unaudited)

(Amounts in Thousands)


                                               Nine Months Ended September 30,
                                               2012            2011
Cash flows from operating activities:
Net income (loss)                              $  (107,912)    $   6,433
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Deferred tax expense (benefit)                 1,496           (594)
Depreciation, depletion and amortization       46,024          43,415
Ceiling test writedown                         108,987         18,907
Accretion of asset retirement obligation       1,542           1,612
Share based compensation expense               5,609           2,985
Amortization costs and other                   594             461
Non-cash derivative expense                    715             —
Payments to settle asset retirement            (2,519)         (551)
obligations
Changes in working capital accounts:
Revenue receivable                             141             8,087
Prepaid drilling and pipe costs                2,891           3,164
Joint interest billing receivable              20,312          (34,646)
Accounts payable and accrued liabilities       1,464           26,914
Advances from co-owners                        (8,802)         17,926
Other                                          (2,866)         (3,000)
Net cash provided by operating activities      67,676          91,113
Cash flows used in investing activities:
Investment in oil and gas properties           (121,428)       (141,687)
Sale of oil and gas properties                 837             —
Sale of unevaluated oil and gas properties     6,083           14,461
Net cash used in investing activities          (114,508)       (127,226)
Cash flows used in financing activities:
Net payments for share based compensation      (840)           (977)
Deferred financing costs                       (33)            (24)
Payment of preferred stock dividend            (3,855)         (3,854)
Proceeds from bank borrowings                  72,500          22,000
Repayment of bank borrowings                   (37,500)        (22,000)
Net cash provided by (used in) financing       30,272          (4,855)
activities
Net decrease in cash and cash equivalents      (16,560)        (40,968)
Cash and cash equivalents, beginning of period 22,263          63,237
Cash and cash equivalents, end of period       $  5,703        $   22,269
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest                                       $  15,628       $   15,870
Income taxes                                   $  15           $   51



PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)


                                  Three Months Ended    Nine Months Ended
                                  September 30,         September 30,
                                  2012       2011      2012         2011
Net income (loss)                 $ (37,354)  $ 5,014   $ (107,912)  $ 6,433
Reconciling items:
Deferred tax expense (benefit)    1,435       (265)     1,496        (594)
Depreciation, depletion and       15,032      14,696    46,024       43,415
amortization
Ceiling test writedown            35,391      —         108,987      18,907
Accretion of asset retirement     525         433       1,542        1,612
obligation
Share based compensation expense  1,771       1,068     5,609        2,985
Amortization expense and other    539         153       1,309        461
Discretionary cash flow           17,339      21,099    57,055       73,219
Changes in working capital        8,138       10,161    13,140       18,445
accounts
Settlement of asset retirement    (69)        (38)      (2,519)      (551)
obligations
Net cash provided by operating    $ 25,408    $ 31,222  $ 67,676     $ 91,113
activities



      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.
Note: 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.



SOURCE PetroQuest Energy, Inc.

Website: http://www.petroquest.com
Contact: Matt Quantz, Manager - Corporate Communications, +1-337-232-7028,
www.petroquest.com
 
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