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PetroQuest Energy Announces 2012 Year-End and Fourth Quarter Results; Updates Woodford Activity and Hedging

PetroQuest Energy Announces 2012 Year-End and Fourth Quarter Results; Updates
                        Woodford Activity and Hedging

PR Newswire

LAFAYETTE, La., Feb. 28, 2013

LAFAYETTE, La., Feb. 28, 2013 /PRNewswire/ --PetroQuest Energy, Inc. (NYSE:
PQ) announced today a net loss available to common stockholders for the
quarter ended December 31, 2012 of $25,451,000, or $0.41 per share, compared
to fourth quarter 2011 net income available to common stockholders of
$2,830,000, or $0.04 per share. For the year ended December 31, 2012, the
Company reported a net loss available to common shareholders of $137,218,000,
or $2.20 per share, compared to net income available to common shareholders of
$5,409,000, or $0.08 per share, for the year ended December 31, 2011. Net loss
for the three and twelve months ended December 31, 2012 included ceiling test
writedowns totaling $28,113,000 and $137,100,000, respectively.

Discretionary cash flow for the fourth quarter of 2012 was $20,393,000 as
compared to $20,176,000 for the comparable 2011 period. For the year ended
December 31, 2012, discretionary cash flow was $77,448,000 compared to
$93,395,000 for 2011. See the attached schedule for a reconciliation of net
cash flow provided by operating activities to discretionary cash flow.

Oil and gas sales during the fourth quarter of 2012 were $38,147,000 as
compared to $38,040,000 in the fourth quarter of 2011. For the year ended
December 31, 2012, oil and gas sales decreased 12% to $141,433,000 as compared
to $160,486,000 for the year ended December 31, 2011. Production for the
fourth quarter and year ended December 31, 2012 was higher by 11% and 13%,
respectively, than production for the comparable periods of 2011. Stated on
an Mcfe basis, unit prices received during the fourth quarter and the year
ended December 31, 2012 were lower by 9% and 22%, respectively, as compared to
the prices received during the comparable 2011 periods.

Lease operating expenses for the fourth quarter of 2012 were $1.18 per Mcfe as
compared to $1.06 per Mcfe in the fourth quarter of 2011. For the year ended
December 31, 2012, lease operating expenses totaled $1.15 per Mcfe as compared
to $1.28 per Mcfe in 2011. For the year ended December 31, 2012, 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 fourth quarter of 2012 was $1.61 per Mcfe as compared to $1.81 per
Mcfe in the fourth quarter of 2011. For the year ended December 31, 2012,
DD&A on oil and gas properties decreased to $1.75 per Mcfe from $1.89 per Mcfe
for the comparable period of 2011. The decrease in DD&A for the year ended
December 31, 2012 was primarily the result of the non-cash ceiling test
write-downs recorded throughout 2012.

Interest expense for the fourth quarter of 2012 increased to $2,787,000, as
compared to $2,400,000 in the fourth quarter of 2011. For the year ended
December 31, 2012, interest expense was $9,808,000, compared to $9,648,000 for
2011.

Fourth quarter of 2012 general and administrative expenses were $1,352,000
lower than the comparable 2011 period. Fourth quarter 2011 costs included
higher incentive compensation expenses than the 2012 period. For the year
ended December 31, 2012, general and administrative expenses were $2,521,000
higher than 2011. The increase in general and administrative expenses for the
year ended 2012 was primarily due to higher non-cash share-based compensation
costs totaling $6,910,000 in 2012 versus $4,833,000 in 2011.

Production taxes for the fourth quarter of 2012 totaled $773,000, as compared
to $1,030,000 in the fourth quarter of 2011. For the year ended December 31,
2012, production taxes were $885,000, as compared to $3,100,000 for the
comparable period of 2011. Production taxes for the year ended December 31,
2012 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-month periods and years ended
December 31, 2012 and 2011:

                     Three Months Ended December 31, Year Ended December 31,
                     2012            2011            2012         2011
Production:
 Oil (Bbls)       140,632         126,639         520,590      572,096
 Gas (Mcf)        6,902,878       6,615,872       27,466,228   24,462,933
 Ngl (Mcfe)       1,116,205       629,523         3,366,774    2,287,846
 Total Production 8,862,875       8,005,229       33,956,542   30,183,355
(Mcfe)
 Total Daily      96.3            87.0            92.8         82.7
Production (Mmcfe)
Sales:
 Total oil sales  $15,008,184     $13,660,565     $56,635,786  $60,064,426
 Total gas sales  17,213,657      18,182,671      63,535,262   78,664,373
 Total ngl sales  5,925,721       6,196,692       21,262,236   21,756,917
 Total oil and    $38,147,562     $38,039,928     $141,433,284 $160,485,716
gas sales
Average sales
prices:
 Oil (per Bbl)    $106.72         $107.87         $108.79      $104.99
 Gas (per Mcf)    2.49            2.75            2.31         3.22
 Ngl (per Mcfe)   5.31            9.84            6.32         9.51
 Per Mcfe         4.3             4.75            4.17         5.32



The above sales and average sales prices include increases (reductions) to
revenue related to the settlement of gas hedges of $(21,000) and $1,745,000
and oil hedges of $676,000 and $19,000 and ngl hedges of $178,000 and $0 for
the quarters ended December 31, 2012, and 2011, respectively. The above sales
and average sales prices include increases (reductions) to revenue related to
the settlement of gas hedges of $6,846,000 and $2,609,000 and oil hedges of
$1,529,000 and $(192,000) and ngl hedges of $722,000 and $0 for the years
ended December 31, 2012 and 2011, respectively.

The following initiates guidance for the first quarter of 2013:

                                                      Guidance for
Description                                           1st Quarter 2013
Production volumes (MMcfe/d)                          87 - 92
Percent Gas                                           80%
Percent Oil                                           9%
Percent NGL                                           11%
Expenses:
 Lease operating expenses (per Mcfe)                 $1.15 - $1.25
 Production taxes (per Mcfe)                         $0.10 - $0.15
 Depreciation, depletion and amortization (per Mcfe) $1.50 - $1.60
 General and administrative (in millions)*           $5.5 - $6.0
 Interest expense (in millions)                      $2.6 - $2.9
* Includes non-cash stock compensation estimate of $1.4 million



The following initiates guidance for 2013:

                                                      Guidance for
Description                                           2013
Production volumes (MMcfe/d)                          90 - 95
Percent Gas                                           80%
Percent Oil                                           8%
Percent NGL                                           12%
Expenses:
 Lease operating expenses (per Mcfe)                 $1.15 - $1.25
 Production taxes (per Mcfe)                         $0.10 - $0.15
 Depreciation, depletion and amortization (per Mcfe) $1.50 - $1.60
 General and administrative (in millions)*           $21 - $23
 Interest expense (in millions)                      $10 - $12
2013 Capital Expenditures (in millions)               $80 - $100
* Includes non-cash stock compensation estimate of $4.5 million



Woodford Update

In the Woodford, the Company recently completed eight wells in the liquids
rich area of its leasehold position. Six of these wells have established
maximum 24 hour gross rates and two wells remain in the initial production
stage. The six well group had an average lateral length of 5,360 feet and
achieved a maximum 24 hour gross daily rate of 3,738 Mcf of gas and 201
barrels of natural gas liquids. The Company continues to realize cost savings
in the trend due to increased drilling efficiencies and lower service costs.
The Company estimates that its cost to drill and complete these recent wells
was approximately 10% - 15% lower than its 2012 average Woodford well cost.
The Company is continuing to achieve ongoing cost savings. In addition, the
Company recently closed an additional acreage acquisition in the liquids rich
portion of the trend bringing the total acreage acquired since November of
2012 to approximately 7,000 acres. The Company estimates that its total JV
Woodford acreage position is in excess of 60,000 acres.

Hedging Update

The Company recently initiated the following commodity hedging transactions:

                  Instrument
Production Period Type       Daily Volumes Price
Gas:
Mar 13 - Dec 13   Swap       5,000 MMbtu   $3.50
2014              Swap       10,000 MMbtu  $4.08



After executing the above transactions, the Company has approximately 3.7 Bcf
of gas hedged for 2014. In addition, the Company has approximately 84,000
barrels of oil and 10.3 Bcf of gas hedged for 2013. Based on the mid-point of
2013 production guidance, the Company estimates it has hedged 38% of its 2013
estimated gas production at an average price of $3.48/Mcf.

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)
                                           December 31       December 31
                                           2012              2011
ASSETS
Current assets:
Cash and cash equivalents                  $     14,904 $     22,263
Revenue receivable                         17,742            15,860
Joint interest billing receivable          42,595            47,445
Other receivable                           9,208             —
Derivative asset                           830               6,418
Prepaid drilling costs                     1,698             2,900
Drilling pipe inventory                    707               4,070
Other current assets                       1,900             2,965
Total current assets                       89,584            101,921
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost method   1,734,477         1,600,546
Unevaluated oil and gas properties         71,713            70,408
Accumulated depreciation, depletion and    (1,472,244)       (1,265,603)
amortization
Oil and gas properties, net                333,946           405,351
Other property and equipment               12,370            10,627
Accumulated depreciation of other property (7,607)           (6,414)
and equipment
Total property and equipment               338,709           409,564
Other assets, net of accumulated
amortization of $4,240 and $3,446,         5,110             4,681
respectively
Total assets                               $    433,403  $    516,166
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors                $     58,960 $     50,750
Advances from co-owners                    20,459            33,867
Oil and gas revenue payable                26,175            13,764
Accrued interest and preferred stock       6,190             6,167
dividend
Asset retirement obligation                2,351             3,110
Derivative liability                       233               —
Other accrued liabilities                  6,535             8,250
Total current liabilities                  120,903           115,908
Bank debt                                  50,000            —
10% Senior Notes                           150,000           150,000
Asset retirement obligation                24,909            27,317
Deferred income taxes                      —                 551
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value;
authorized 5,000 shares; issued and        1                 1
outstanding 1,495 shares
Common stock, $.001 par value; authorized
150,000 shares; issued and outstanding     63                62
62,768 and 62,148 shares, respectively
Paid-in capital                            276,534           270,606
Accumulated other comprehensive income     521               4,031
Accumulated deficit                        (189,528)         (52,310)
Total stockholders' equity                 87,591            222,390
Total liabilities and stockholders' equity $    433,403  $    516,166



PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Data)
                           Three Months Ended         Years Ended

                           December 31,               December 31,
                           2012          2011         2012        2011
Revenues:
Oil and gas sales          $  38,147    $ 38,040    $  141,433 $ 160,486
Gas gathering revenue      39            53           158         214
                           38,186        38,093       141,591     160,700
Expenses:
Lease operating expenses   10,482        8,486        38,890      38,571
Production taxes           773           1,030        885         3,100
Depreciation, depletion    14,665        14,828       60,689      58,243
and amortization
Ceiling test write-down    28,113        —            137,100     18,907
General and administrative 5,416         6,768        22,957      20,436
Accretion of asset         536           437          2,078       2,049
retirement obligation
Interest expense           2,787         2,400        9,808       9,648
                           62,772        33,949       272,407     150,954
Other income (expense):
Other income (expense)     77            (1,245)      606         (1,008)
Derivative income          482           —            (233)       —
(expense)
                           559           (1,245)      373         (1,008)
Income (loss) from         (24,027)      2,899        (130,443)   8,738
operations
Income tax expense         140           (1,216)      1,636       (1,810)
(benefit)
Net income (loss)          (24,167)      4,115        (132,079)   10,548
Preferred stock dividend   1,284         1,285        5,139       5,139
Net income (loss)
available to common        $ (25,451)    $  2,830   $ (137,218) $   5,409
stockholders
Earnings per common share:
Basic
Net income (loss) per      $   (0.41) $   0.04  $        $    
share                                                 (2.20)     0.08
Diluted
Net income (loss) per      $   (0.41) $   0.04  $        $    
share                                                 (2.20)     0.08
Weighted average number of
common shares:
Basic                      62,764        62,115       62,459      61,937
Diluted                    62,764        62,462       62,459      62,325



PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)
                                            December 31      December 31
                                            2012             2011
Cash flows from operating activities:
Net income (loss)                           $   (132,079)  $     10,548
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Deferred tax expense (benefit)              1,636            (1,810)
Depreciation, depletion and amortization    60,689           58,243
Ceiling test writedown                      137,100          18,907
Accretion of asset retirement obligation    2,078            2,049
Share based compensation expense            6,910            4,833
Amortization costs and other                881              625
Non-cash derivative expense                 233              —
Payments to settle asset retirement         (2,627)          (905)
obligations
Changes in working capital accounts:
Revenue receivable                          (1,882)          (2,474)
Prepaid drilling and pipe costs             4,479            5,530
Joint interest billing receivable           3,981            (35,252)
Accounts payable and accrued liabilities    20,916           34,599
Advances from co-owners                     (13,408)         25,904
Other                                       (316)            (2,907)
Net cash provided by operating activities   88,591           117,890
Cash flows used in investing activities:
Investment in oil and gas properties        (147,771)        (194,536)
Investment in other property and equipment (1,743)          —
Sale of oil and gas properties              837              14,000
Sale of unevaluated oil and gas properties  8,889            28,461
Net cash used in investing activities       (139,788)        (152,075)
Cash flows used in financing activities:
Net payments for share based compensation   (981)            (1,133)
Deferred financing costs                    (42)             (517)
Payment of preferred stock dividend         (5,139)          (5,139)
Proceeds from bank borrowings               102,500          22,000
Repayment of bank borrowings                (52,500)         (22,000)
Net cash provided by (used in) financing    43,838           (6,789)
activities
Net decrease in cash and cash equivalents   (7,359)          (40,974)
Cash and cash equivalents, beginning of     22,263           63,237
period
Cash and cash equivalents, end of period    $14,904          $22,263
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest                                    $16,026          $16,017
Income taxes                                $105             $51



PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)
                                     Three Months Ended  Years Ended
                                     December 31,        December 31,
                                     2012       2011     2012        2011
Net income (loss)                    $ (24,167) $ 4,115 $ (132,079) $ 10,548
Reconciling items:
 Deferred tax expense (benefit) 140        (1,216)  1,636       (1,810)
 Depreciation, depletion and    14,665     14,828   60,689      58,243
amortization
 Ceiling test writedown         28,113     —        137,100     18,907
 Accretion of asset retirement  536        437      2,078       2,049
obligation
 Share based compensation       1,301      1,848    6,910       4,833
expense
 Non-cash derivative (income)   (482)      —        233         —
expense
 Amortization expense and other 287        164      881         625
Discretionary cash flow              20,393     20,176   77,448      93,395
 Changes in working capital     630        6,955    13,770      25,400
accounts
 Settlement of asset retirement (108)      (354)    (2,627)     (905)
obligations
Net cash provided by operating       $20,915    $26,777  $88,591     $117,890
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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