PetroQuest Energy Announces Sale Of Fayetteville Assets, And Updates Operating Activities, Fourth Quarter Production Guidance

PetroQuest Energy Announces Sale Of Fayetteville Assets, And Updates Operating
    Activities, Fourth Quarter Production Guidance And 2013 Hedge Position

PR Newswire

LAFAYETTE, La., Jan. 7, 2013

LAFAYETTE, La., Jan. 7, 2013 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE:
PQ) announced that on December 31, 2012, the Company completed the sale of its
Fayetteville Shale assets (100% non-operated) located in Arkansas for net
proceeds of approximately $9.2 million, subject to customary post-closing
adjustments. The Company estimates that operating cash flow generated from
its Fayetteville assets during 2012 totaled approximately $1.3 million on
average daily production of approximately 5 MMcf/d. As of September 30, 2012,
the Company estimated that proved reserves associated with the Fayetteville
assets totaled approximately 11 Bcf with an estimated discounted net cash flow
(PV-10) of $5.5 million using SEC pricing [$2.83/Mcf and $94.97/barrel]. The
sale will not impact the current borrowing base of $130 million under the
Company's credit facility.

Operations Update
In the Gulf Coast, the Company recently installed downstream compression
equipment at its La Cantera field to expand the takeaway capacity. As a
result, the Company has increased its total daily gross production to
approximately 82,000 Mmcfe (21% liquids). The Company continues to adjust its
downstream compression and modify certain facility equipment to further
optimize the takeaway and processing capacity from this field. Additional
capacity is expected to be available during the second quarter of 2013. At
that time, the Company expects to increase the natural gas liquids recoveries
from the Thibodeaux #1 and Broussard Estates #2 wells.

The Company expects to spud its third well at La Cantera, the Broussard
Estates #3 (WI - 24%), later this week. This well will test the 200 feet of
potential pay sands encountered at a shallower depth in the Broussard Estates
#2 well, as well as target the upper Cris R section that was found to be
productive in the first two wells. This well is expected to cost
approximately 60% less than the previous two La Cantera wells due to the
sidetrack procedure savings. The Company expects first production to be in the
second quarter contingent on additional takeaway capacity. Once the third
well is online, the field is expected to be producing at a gross daily rate of
approximately 120,000 – 130,000 Mmcfe (28% liquids).

In addition, the Company expects to receive the 70 square mile 3-D seismic
survey, which includes coverage over its Thunder Bayou prospect, located
approximately two miles north of the La Cantera discovery, later this month
and plans to spud the initial well during the second quarter of 2013.
Additionally, the Company's onshore South Louisiana oil prospect, Overlake (WI
– 22%), has spud and is expected to reach total depth in the first quarter of
2013.

In northern Oklahoma, the Company has established production from two
additional operated Mississippian Lime wells. The Company's PQML #9 (Pawnee
County - NRI - 35%) and PQML #8 (Kay County - NRI - 20%) wells achieved
maximum 24 hour gross daily rates of 1,291 Boe (87% oil) and 74 Boe (100%
oil), respectively. In addition, the Company has established production from
one non-operated well – 486 Boe (67% oil) in Kay County and one non-operated
well – 147 Boe (67% oil) in Grant County. The Company's PQML #6 (Kay County –
NRI 37%), PQML #10 (Kay County – NRI40%) and PQML #11 (Pawnee County – NRI
31%) wells have been completed and are in various stages of flowing back. The
Company is currently drilling its initial operated wells in Grant County.

The Company continues to be encouraged by its results in theMississippian
Lime trend. After now having drilled and completed 11 operated wells, the
Company believes that it has enough data to support investing additional
capital in the form of a 3-D seismic survey. The Company believes that a 3-D
seismic analysis of its Mississippian Lime acreage will further enhance its
understanding of the trend and help identify the best
developmentopportunities. The Company plans to participate in a 3-D seismic
survey over its Pawnee acreage during the second quarter of 2013 and is
currently evaluating options for its Kay and Grant County acreage.

In the Woodford, the Company recently commenced production from four
additional liquids rich Woodford wells. This group of wells had an average
lateral length of 4,955 feet and achieved an average maximum 24 hour gross
rate of 3,627 Mcf of gas and 255 barrels of natural gas liquids. In addition,
the Company is currently completing eight additional liquids rich Woodford
wells.

Production Guidance Update
The Company projects its fourth quarter 2012 production will average between
96 and 97 Mmcfe per day. The Company is planning to provide its 2013
production and capital expenditure guidance as well as its 2012 estimated
proved reserves during the first week of February.

Hedging Update
The Company recently initiated the following commodity hedging transaction:

                   Instrument
Production Period  Type        Daily Volumes  Price
Gas:
2013               Swap        5,000 Mmbtu    $4.00

After executing the above transaction, the Company has approximately 5.5 Bcf
of gas volumes hedged for 2013.

Management's Comment
"We are pleased to complete the sale of our non-operated Fayetteville assets,
which enables us to further strengthen our balance sheet while increasing our
focus on growing our liquids production from our core assets in the
Mississippian Lime, Woodford, East Texas and Gulf Coast Basin," said Charles
T. Goodson, Chairman, Chief Executive Officer and President. "We have a
strong track record of utilizing seismic data in the Gulf Coast and the
Woodford to significantly improve our drilling success. We believe that
obtaining seismic data over our Mississippian acreage is the next logical step
in our development plan and we expect the data will be extremely beneficial in
reducing the variability of well results."

Non-GAAP Financial Measure
PV-10 is the estimated future cash flow from estimated proved reserves
discounted at an annual rate of 10% before giving effect to income taxes.
Standardized measure is the after-tax estimated future cash flows from
estimated proved reserves discounted at an annual rate of 10%, determined in
accordance with GAAP. Management believes PV-10 is useful to investors as it
is based on prices, costs and discount factors which are consistent from
company to company, while the standardized measure is dependent on the unique
tax situation of each individual company. As a result, the Company believes
that investors can use PV-10 as a basis for comparison of the relative size
and value of reserves to other companies in different basins. The Company
also understands that securities analysts and rating agencies use PV-10 in
similar ways. PV-10, as presented herein, cannot be reconciled to the
standardized measure of discounted future cash flows becausefinal income tax
information for 2012 is not yet available. 

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"

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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