PetroQuest Energy Announces First Quarter 2013 Results And Provides Operations And Hedging Update

PetroQuest Energy Announces First Quarter 2013 Results And Provides Operations
                              And Hedging Update

PR Newswire

LAFAYETTE, La., May 7, 2013

LAFAYETTE, La., May 7, 2013 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ)
announced today that the Company recorded net income available to common
stockholders for the quarter ended March 31, 2013 of $2,607,000, or $0.04 per
share, compared to first quarter 2012 net loss to common stockholders of
$18,608,000, or $0.30 per share. The 2012 period included a non-cash ceiling
test impairment of $20,111,000.

Discretionary cash flow for the first quarter of 2013 was $18,632,000, as
compared to $19,648,000 for the comparable 2012 period. 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 first quarter of 2013 were $35,976,000, as
compared to $35,997,000 in the first quarter of 2012. Production for the first
quarter of 2013 was 8,255,580 Mcfe, as compared to 8,170,100 Mcfe in the first
quarter of 2012. Pro forma for the Fayetteville asset divestiture in December
2012, production during the first quarter of 2013 was 7% higher than the
comparable 2012 period. 

Oil and NGL volumes comprised approximately 22% of the Company's total
production during the first quarter of 2013 as compared to 18% in the 2012
period. The increased percentage of liquids production was due to a 79%
increase in NGL production since the first quarter of 2012. Stated on an Mcfe
basis, unit prices received during the first quarter of 2013 were 1% lower
than the comparable 2012 period.

Lease operating expenses ("LOE") for the first quarter of 2013 totaled
$9,719,000, as compared to $9,665,000 in the first quarter of 2012. LOE per
Mcfe was $1.18 in each of the first quarters of 2013 and 2012.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties
for the first quarter of 2013 was $1.53 per Mcfe as compared to $1.83 per Mcfe
in the first quarter of 2012. The decline in the DD&A rate was primarily the
result of non-cash ceiling test impairments recorded during 2012.

General and administrative expenses during the first quarter of 2013 totaled
$4,716,000, as compared to $5,579,000 during the 2012 period. Included in
first quarter 2013 and 2012 general and administrative expenses were non-cash
stock compensation costs totaling $556,000 and $1,923,000, respectively.

Interest expense for the first quarter of 2013 increased to $2,864,000, as
compared to $2,270,000 in the first quarter of 2012. The increase in interest
expense was the result of increased borrowings outstanding under the Company's
credit facility. During March 2013, the Company's bank group completed its
semi-annual redetermination of the borrowing base under the credit facility
and increased the borrowing base from $130,000,000 to $150,000,000. The
Company had $60,000,000 of borrowings outstanding at March 31, 2013.

Capital expenditures during the first quarter of 2013 totaled $32,043,000 and
consisted of leasing and seismic costs of $5,649,000, drilling capital of
$21,831,000 and capitalized overhead and interest of $4,563,000. The Company
expects its capital expenditures in the second quarter of 2013 to be
substantially less than the first quarter and reaffirms its full year 2013
capital expenditures guidance within a range of $80,000,000 to $100,000,000.

The following table sets forth certain information with respect to the oil and
gas operations of the Company for the three-month periods ended March 31, 2013
and 2012:

                           Three Months Ended March 31,
                           2013                      2012
Production:
Oil (Bbls)                 125,723                   141,275
Gas (Mcf) ^(1)             6,436,595                 6,729,315
Ngl (Mcfe)                 1,064,647                 593,135
Total Production (Mcfe)    8,255,580                 8,170,100
^(1)
Total Daily Production    91,729                    89,781
(Mcfe) ^(1)
Sales:
Total oil sales            $                 $        
                           13,144,310               15,508,957
Total gas sales            16,723,032                15,279,953
Total ngl sales            6,108,946                 5,208,105
Total oil and gas sales    $                 $        
                           35,976,288               35,997,015
Average sales prices:
Oil (per Bbl)              $             $            
                           104.55                   109.78
Gas (per Mcf)              2.60                      2.27
Ngl (per Mcfe)             5.74                      8.78
Per Mcfe                   4.36                      4.41

(1) First quarter 2012 production includes 462,500 Mcf (5.1 MMcfe/d) from
    Fayetteville Shale assets divested in December 2012

The above sales and average sales prices include increases (reductions) to
revenue related to the settlement of gas hedges of $532,000 and $2,155,000 and
oil hedges of ($145,000) and ($53,000) for the three months ended March 31,
2013 and 2012, respectively.

The following initiates guidance for the second quarter of 2013:

                                                      Guidance for
Description                                           2nd Quarter 2013
Production volumes (MMcfe/d)                          92 - 97
Percent Gas                                           77%
Percent Oil                                           8%
Percent NGL                                           15%
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) ^(1)       $5.5 - $6.0
 Interest expense (in millions)                      $2.8 - $3.0

(1) Includes non-cash stock compensation estimate of $1.2 mm

Operations Update
In the Gulf Coast, the Company's third well at its La Cantera field, the
Broussard Estates #3 (NRI -17%), has reached total depth of 18,035 feet. The
well has been completed in the upper section of the Cris R-2 (Lobe A) and is
in the process of being tied back to the Company's production facilities. The
Company's mid-stream partner is currently installing a four mile pipeline to
the north, which is expected to be in service by late May. Once the pipeline
is operational, production is planned to commence from the Broussard Estates
#3 well at a gross daily rate of 35,000 Mcfe per day (21% liquids) increasing
the total La Cantera gross production from the three wells to approximately
110,000 – 120,000 Mcfe per day (21 % liquids). The Company is planning
additional processing capacity to be in service during the fourth quarter
which is expected to increase natural gas liquids recovery efficiencies and
bring the total La Cantera gross daily production to 120,000 – 130,000 Mcfe
per day (28% liquids).

The Company has received a 70 square mile 3D seismic survey, which includes
coverage over its Thunder Bayou prospect, located approximately two miles
north of the La Cantera discovery. In addition to enhancing the
interpretation of the Thunder Bayou prospect, the 3-D seismic shoot has also
identified multiple potential prospects that the Company is beginning to
evaluate. The unitization process for the Company's Thunder Bayou prospect
has commenced and the Company expects to spud this well during the second half
of 2013.

The Company's near term oil focused prospects, Sawgrass and Tokay, are
expected to spud in early June and the fourth quarter of 2013, respectively.
The Company's Overlake prospect was recently logged and determined to be
commercially non-productive.

In East Texas, the Company recently completed its PQ#9 horizontal Cotton
Valley well. The 4,273 foot lateral well (NRI - 76%) established a 24 hour
max rate of 6,353 Mcf of gas and 458 barrels of natural gas liquids from 11 of
the 14 stages. The Company expects to complete the remaining three stages in
approximately two weeks. The Company continues to identify future drilling
locations and currently has numerous 100% and 50% working interest wells
available for future development.

In the Woodford, the Company recently commenced production from two additional
liquids rich Woodford wells (NRI –35%) at an average max 24 hour rate of 3,331
Mcf of gas and 351 barrels of natural gas liquids. These wells were part of an
eight well pad that established a total max 24 hour rate of 29,072 Mcf of gas
and 1,911 barrels of natural gas liquids. The Company has three wells in the
early stages of flowback with one operated rig running in the trend. The
Company continues to realize cost savings and estimates that its current well
cost is approximately $4.0 - $4.2 million. In addition, the Company continues
to acquire additional acreage in the liquids portion of the trend and
estimates that its total JV Woodford acreage position is in excess of 60,000
acres.

In northern Oklahoma,the Company's PQML #13 well in Grant County established
a max 24 hour rate of 95 Boe (84 % oil). The well is in the initial
production stage and is exhibiting inconsistent flow rates that the Company is
attempting to resolve by optimizing the artificial lift system. In addition,
the Company's PQML #14 well in Grant County was recently completed and is in
the early stages of flowback. The Company has commenced 3D seismic surveys in
Kay and Pawnee Counties and expects to receive the data from these areas in
June and September, respectively. Once the seismic data has been interpreted
and integrated with well results drilled to date, the Company expects to
resume drilling activities utilizing a significantly enhanced geologic model
in this oil focused area.

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

                      Instrument
Production Period     Type             Daily Volumes  Price
Gas:
July 2013 - Dec 2013  Costless Collar  5,000 Mmbtu    $4.00 - $4.75

The Company has approximately 14 Bcf of gas hedged for 2013. Based on the
mid-point of 2013 production guidance, the Company estimates it has hedged 52%
of its 2013 estimated gas production at an average floor price of $3.60/Mcf
and an average ceiling price of $3.93/Mcf.

Management Statement
"We are excited about our near term Gulf Coast inventory where, in addition to
our high impact Thunder Bayou prospect, we have identified several new
potential targets in this prolific mini-basin," said Charles T. Goodson,
Chairman, Chief Executive Officer and President. "Our Woodford liquids rich
asset, with its advantageous joint venture cost structure, provides us a
vehicle to deliver outstanding rates of return on a repeatable basis. The
combination of high-impact Gulf Coast projects and our deep inventory of
repeatable resource potential from our Woodford and East Texas assets provide
us a balanced platform to replicate recent growth. Excluding the Fayetteville
assets sold in December 2012, we have now grown production six consecutive
quarters and expect further growth in the second quarter of 2013."

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)
                                     March 31, 2013        December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents            $           $         
                                      20,963               14,904
Revenue receivable                   15,150                17,742
Joint interest billing receivable    36,264                42,595
Other receivable                     —                     9,208
Derivative asset                     —                     830
Prepaid drilling costs               874                   1,698
Drilling pipe inventory              753                   707
Other current assets                 4,549                 1,900
Total current assets                 78,553                89,584
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost    1,768,031             1,734,477
method
Unevaluated oil and gas properties   70,203                71,713
Accumulated depreciation, depletion  (1,495,299)           (1,472,244)
and amortization
Oil and gas properties, net          342,935               333,946
Other property and equipment         12,419                12,370
Accumulated depreciation of other    (7,867)               (7,607)
property and equipment
Total property and equipment         347,487               338,709
Other assets, net of accumulated
depreciation and amortization of     4,761                 5,110
$4,441 and $4,240, respectively
Total assets                         $           $         
                                     430,801               433,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors          $           $         
                                      38,947               58,960
Advances from co-owners              31,201                20,459
Oil and gas revenue payable          23,195                26,175
Accrued interest and preferred stock 2,456                 6,190
dividend
Asset retirement obligation          3,845                 2,351
Derivative liability                 3,807                 233
Other accrued liabilities            5,678                 6,535
Total current liabilities            109,129               120,903
Bank debt                            60,000                50,000
10% Senior Notes                     150,000               150,000
Asset retirement obligation          24,661                24,909
Derivative liability                 251                   —
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    63                    63
and outstanding 62,907 and 62,768
shares, respectively
Paid-in capital                      277,006               276,534
Accumulated other comprehensive      (3,389)               521
income (loss)
Accumulated deficit                  (186,921)             (189,528)
Total stockholders' equity           86,760                87,591
Total liabilities and stockholders'  $           $         
equity                               430,801               433,403



PETROQUEST ENERGY, INC.
Consolidated Statements of Operations
(Amounts in Thousands, Except Per Share Data)
                                     Three Months Ended,
                                     March 31, 2013       March 31, 2012
Revenues:
Oil and gas sales                    $      35,976  $      35,997
Gas gathering revenue                33                   44
                                     36,009               36,041
Expenses:
Lease operating expenses             9,719                9,665
Production taxes                     1,028                1,149
Depreciation, depletion and          12,871               15,230
amortization
Ceiling test write-down              —                    20,111
General and administrative           4,716                5,579
Accretion of asset retirement        332                  500
obligation
Interest expense                     2,864                2,270
                                     31,530               54,504
Other income (expense):
Other income                         194                  149
Derivative expense                   (437)                —
                                     (243)                149
Income (loss) from operations        4,236                (18,314)
Income tax expense (benefit)         349                  (988)
Net income (loss)                    3,887                (17,326)
Preferred stock dividend             1,280                1,282
Net income (loss) available to       $       2,607 $      (18,608)
common stockholders
Earnings per common share:
Basic
Net income (loss) per share          $             $       
                                     0.04                (0.30)
Diluted
Net income (loss) per share          $             $       
                                     0.04                (0.30)
Weighted average number of common
shares:
Basic                                62,834               62,216
Diluted                              63,029               62,216



PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(Amounts in Thousands)
                                       Three Months Ended,
                                       March 31, 2013      March 31, 2012
Cash flows from operating activities:
Net income (loss)                      $             $     
                                       3,887              (17,326)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Deferred tax expense (benefit)         349                 (988)
Depreciation, depletion and            12,871              15,230
amortization
Ceiling test writedown                 —                   20,111
Accretion of asset retirement          332                 500
obligation
Share based compensation expense       556                 1,923
Amortization costs and other           200                 198
Non-cash derivative expense            437                 —
Payments to settle asset retirement    (72)                (782)
obligations
Changes in working capital accounts:
Revenue receivable                     2,592               734
Prepaid drilling and pipe costs        778                 2,317
Joint interest billing receivable      6,331               (6,121)
Accounts payable and accrued           (27,344)            10,502
liabilities
Advances from co-owners                10,742              (12,619)
Other                                  (2,539)             272
Net cash provided by operating         9,120               13,951
activities
Cash flows used in investing
activities:
Investment in oil and gas properties   (31,275)            (33,396)
Investment in other property and       (49)                —
equipment
Sale of oil and gas properties         19,652              —
Net cash used in investing activities  (11,672)            (33,396)
Cash flows used in financing
activities:
Net payments for share based           (234)               (390)
compensation
Issuance of common stock under ESPP    150                 —
Deferred financing costs               (21)                (1)
Payment of preferred stock dividend    (1,284)             (1,284)
Proceeds from bank borrowings          25,000              30,000
Repayment of bank borrowings           (15,000)            (20,000)
Net cash provided by financing         8,611               8,325
activities
Net increase (decrease) in cash and    6,059               (11,120)
cash equivalents
Cash and cash equivalents, beginning   14,904              22,263
of period
Cash and cash equivalents, end of      $      20,963 $      11,143
period
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest                               $             $      
                                       7,845              7,619
Income taxes                           $          $         
                                       41                  15



PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts In Thousands)
                                               Three Months Ended
                                               March 31,
                                               2013             2012
Net income (loss)                              $     3,887 $   (17,326)
Reconciling items:
 Deferred tax expense (benefit)           349              (988)
 Depreciation, depletion and              12,871           15,230
amortization
 Ceiling test writedown                   -                20,111
 Accretion of asset retirement            332              500
obligation
 Share based compensation expense         556              1,923
 Non-cash derivative expense              437              -
 Amortization costs and other             200              198
Discretionary cash flow                        18,632           19,648
 Changes in working capital accounts      (9,440)          (4,915)
 Settlement of asset retirement           (72)             (782)
obligations
Net cash flow provided by operating            $     9,120 $   13,951
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
Note: 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.



SOURCE PetroQuest Energy, Inc.

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