PetroQuest Energy Announces First Quarter 2014 Results And Provides Operations And Hedging Update

PetroQuest Energy Announces First Quarter 2014 Results And Provides Operations
                              And Hedging Update

PR Newswire

LAFAYETTE, La., May 6, 2014

LAFAYETTE, La., May 6, 2014 /PRNewswire/ --PetroQuest Energy, Inc. (NYSE: PQ)
today announced results for the first quarter of 2014. The following compares
certain first quarter 2014 metrics to those of the first quarter of 2013,
highlighting the Company's recent growth driven by its acquisition of certain
Gulf of Mexico assets in July 2013 ("Gulf of Mexico Acquisition") as well as
stronger natural gas prices:

  oOil production increased 93%
  oNet income increased 285%
  oDiscretionary cash flow increased 85%
  oOil and gas revenues up 67%

Net income available to common stockholders for the quarter ended March 31,
2014 was $10,043,000, or $0.15 per share, compared to first quarter 2013 net
income available to common stockholders of $2,607,000, or $0.04 per share. Net
income for the first quarter of 2014 exceeded net income for the entire year
ended December 31, 2013.

Discretionary cash flow for the first quarter of 2014 was $34,488,000, as
compared to $18,632,000 for the comparable 2013 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 2014 were $59,966,000, as
compared to $35,976,000 in the first quarter of 2013. Production for the first
quarter of 2014 was 9,769,110 Mcfe, as compared to 8,255,580 Mcfe in the first
quarter of 2013. 

Oil and NGL volumes comprised approximately 26% of the Company's total
production during the first quarter of 2014 as compared to 22% during the
first quarter of 2013. Included in the increase in liquids production was a
93% increase in oil production since the first quarter of 2013. Stated on an
Mcfe basis, unit prices received during the first quarter of 2014 were 41%
higher than the comparable 2013 period, including a 58% increase in realized
natural gas prices.

Lease operating expenses ("LOE") for the first quarter of 2014 totaled
$12,258,000, as compared to $9,719,000 in the first quarter of 2013. LOE per
Mcfe was $1.25 in the first quarter of 2014, as compared to $1.18 in the first
quarter of 2013.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties
for the first quarter of 2014 was $2.06 per Mcfe as compared to $1.53 per Mcfe
in the first quarter of 2013. Theincreasein the per unit DD&A rate is
primarily the result of the Gulf of Mexico Acquisition, which had a higher
cost per unit as compared to the Company's overall amortization base.

General and administrative expenses during the first quarter of 2014 totaled
$6,242,000, as compared to $4,716,000 during the 2013 period. The increase in
general and administrative costs is primarily due to higher employee related
costs including share based compensation during the 2014 period. Included in
first quarter 2014 and 2013 general and administrative expenses were share
based compensation costs of $1,762,000 and $698,000, respectively.

Interest expense for the first quarter of 2014 increased to $7,636,000, as
compared to $2,864,000 in the first quarter of 2013. The increase in interest
expense was primarily the result of the issuance of $200 million of 10% senior
notes due 2017 in July 2013 to finance the Gulf of Mexico Acquisition.

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, 2014
and 2013:

                                 Three Months Ended March 31,
                                 2014             2013
Production:
Oil (Bbls)                       242,283          125,723
Gas (Mcf)                        7,184,130        6,436,595
Ngl (Mcfe)                       1,131,282        1,064,647
Total Production (Mcfe)          9,769,110        8,255,580
Average Daily Production (MMcfe) 108.5            91.7
Sales:
Total oil sales                  $ 24,140,656     $ 13,144,310
Total gas sales                  29,557,335       16,723,032
Total ngl sales                  6,268,406        6,108,946
Total oil and gas sales          $ 59,966,397     $ 35,976,288
Average sales prices:
Oil (per Bbl)                    $     99.64 $    104.55
Gas (per Mcf)                    4.11             2.60
Ngl (per Mcfe)                   5.54             5.74
Per Mcfe                         6.14             4.36

The above sales and average sales prices include increases (reductions) to
revenue related to the settlement of gas hedges of ($2,969,000) and $532,000
and oil hedges of ($434,000) and ($145,000) for the three months ended March
31, 2014 and 2013, respectively.

The following initiates guidance for the second quarter of
2014:

                                                      Guidance for
Description                                           2nd Quarter 2014
Production volumes (MMcfe/d)                          116 - 120
Percent Gas                                           70%
Percent Oil                                           14%
Percent NGL                                           16%
Expenses:
 Lease operating expenses (per Mcfe)                 $1.15 - $1.25
 Production taxes (per Mcfe)                         $0.15 - $0.20
 Depreciation, depletion and amortization (per Mcfe) $2.05 - $2.15
 General and administrative (in millions) ^(1)       $6.0 - $6.5
 Interest expense (in millions)                      $7.5 - $8.0
^(1)Includes non-cash stock compensation estimate of $1.3 mm

Operations Update

In the Woodford, the Company recently established production on three wells in
its West Relay field. These three wells (average NRI – 31%) achieved an
average per well maximum 24-hour gross rate of 3,476 Mcf of gas and 528
barrels of natural gas liquids. In addition, the Company recently completed
two additional wells (NRI – 35%), which are in the early stages of flowback
and has commenced drilling on a three well pad (NRI – 30%). The company
expects first production from all five wells to be established at the end of
this month. The Company plans to add a second rig to its West Relay program in
July.

Substantial improvement has been made on drilling time in the liquids rich
Woodford shale. The Company's initial six wells in West Relay averaged 14
drilling days per well, while the most recent seven wells averaged 10 days per
well. This compares to the average drilling time of the last 10 wells in the
Company's North Relay field of 15 days.

In East Texas, the Company expects to commence completion operations on a two
well (PQ #10 & PQ #11 – NRI - 41%) horizontal Cotton Valley pad this week. In
addition, the Company expects to complete its PQ #12 well (WI - 100%) in a
couple of weeks; has recently reached total depth on its PQ #13 well (WI -
100%) and expects to spud its PQ#14 (WI -100%) and PQ#15 (WI – 55%) wells
before month end. The Company has two rigs running in the trend and expects to
drill six gross wells during 2014.

In the Gulf Coast, the Company recently completed its Thunder Bayou sell-down
program and has reached its goal of an approximate 50% working interest in the
project. The Company has completed the surface location work and has
contracted a rig with an estimated June 1, 2014 spud date.

The Company recently commenced drilling its Eagle Crest prospect located in
Assumption Parish. The well is currently drilling at 7,000 feet towards a
proposed total depth of 10,700 feet. The Company has an approximate 50%
working interest in this oil focused prospect.

Hedging Update

The Company recently initiated the following commodity hedging transaction:

                      Instrument
Production Period     Type        Daily Volumes  Price
Oil:
July 2014 - Dec 2014  Swap        250 Bbls       $100.90 ^(1)
^(1)^ LLS Index

Management Statement

"Our decision to focus within our three core areas has resulted in significant
increases in production, reserves, cash flow and earnings," said Charles T.
Goodson, Chairman, Chief Executive Officer and President. "Our latest results
in the liquids rich Woodford reinforces our belief that this recently acquired
35,000 acre position provides us with a substantial inventory of predictable
and low-risk rich gas drilling locations. When combined with our East Texas
and high impact Gulf Coast Basin drilling activities, this year's capital
program is expected to deliver record results as we work toward our goal of
making 2014 a transformational year for the Company."

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, 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 integrate our acquisitions with our
operations and realize the anticipated benefits from the acquisitions, any
unexpected costs or delays in connection with the integration of the
acquisitions, our ability to find oil and natural gas reserves that are
economically recoverable, the volatility of oil and natural gas prices, 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 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, 2014       December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents           $      11,991  $          
                                                         9,153
Revenue receivable                  24,104               26,568
Joint interest billing receivable   23,872               26,556
Derivative asset                    27                   521
Prepaid drilling costs              520                  477
Other current assets                8,176                8,132
Total current assets                68,690               71,407
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost   2,068,266            2,035,899
method
Unevaluated oil and gas properties  102,707              98,387
Accumulated depreciation, depletion (1,573,147)          (1,553,044)
and amortization
Oil and gas properties, net         597,826              581,242
Other property and equipment        14,251               13,993
Accumulated depreciation of other   (9,226)              (8,901)
property and equipment
Total property and equipment        602,851              586,334
Other assets, net of accumulated
depreciation and amortization of    8,783                9,449
$6,216 and $5,689, respectively
Total assets                        $     680,324   $        
                                                         667,190
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable to vendors         $      42,713  $         
                                                         47,341
Advances from co-owners             7,002                969
Oil and gas revenue payable         29,710               22,664
Accrued interest and preferred      4,224                12,909
stock dividend
Asset retirement obligation         3,390                3,113
Derivative liability                4,541                1,617
Other accrued liabilities           9,810                8,924
Total current liabilities           101,390              97,537
Bank debt                           75,000               75,000
10% Senior Notes                    350,000              350,000
Asset retirement obligation         45,780               45,423
Other long-term liability           180                  135
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   64                   64
and outstanding 64,035 and 63,664
shares, respectively
Paid-in capital                     282,965              280,711
Accumulated other comprehensive     (4,514)              (1,096)
loss
Accumulated deficit                 (170,542)            (180,585)
Total stockholders' equity          107,974              99,095
Total liabilities and stockholders' $     680,324   $        
equity                                                   667,190

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Data)
                                       Three Months Ended,
                                       March 31, 2014      March 31, 2013
Revenues:
Oil and gas sales                      $      59,966  $      35,976
Expenses:
Lease operating expenses               12,258              9,719
Production taxes                       1,477               1,028
Depreciation, depletion and            20,428              12,871
amortization
General and administrative             6,242               4,716
Accretion of asset retirement          791                 332
obligation
Interest expense                       7,636               2,864
                                       48,832              31,530
Other income (expense):
Other income                           189                 227
Derivative expense                     —                   (437)
                                       189                 (210)
Income from operations                 11,323              4,236
Income tax expense                     —                   349
Net income                             11,323              3,887
Preferred stock dividend               1,280               1,280
Net income available to common         $      10,043  $       2,607
stockholders
Earnings per common share:
Basic
Net income per share                   $            $       
                                       0.15                0.04
Diluted
Net income per share                   $            $       
                                       0.15                0.04
Weighted average number of common
shares:
Basic                                  63,846              62,834
Diluted                                63,902              63,029

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)
                                      Three Months Ended,
                                      March 31, 2014       March 31, 2013
Cash flows from operating activities:
Net income                            $      11,323   $       3,887
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deferred tax expense                  —                    349
Depreciation, depletion and           20,428               12,871
amortization
Accretion of asset retirement         791                  332
obligation
Share based compensation expense      1,389                556
Amortization costs and other          557                  200
Non-cash derivative expense           —                    437
Payments to settle asset retirement   (718)                (72)
obligations
Changes in working capital accounts:
Revenue receivable                    2,464                2,592
Prepaid drilling and pipe costs       (43)                 778
Joint interest billing receivable     2,684                6,331
Accounts payable and accrued          246                  (27,344)
liabilities
Advances from co-owners               6,033                10,742
Other                                 135                  (2,539)
Net cash provided by operating        45,289               9,120
activities
Cash flows used in investing
activities:
Investment in oil and gas properties  (41,792)             (31,275)
Investment in other property and      (205)                (49)
equipment
Sale of oil and gas properties        —                    19,652
Net cash used in investing activities (41,997)             (11,672)
Cash flows used in financing
activities:
Net proceeds (payments) for share     911                  (84)
based compensation
Deferred financing costs              (81)                 (21)
Payment of preferred stock dividend   (1,284)              (1,284)
Proceeds from bank borrowings         5,000                25,000
Repayment of bank borrowings          (5,000)              (15,000)
Net cash provided by (used in)        (454)                8,611
financing activities
Net increase in cash and cash         2,838                6,059
equivalents
Cash and cash equivalents, beginning  9,153                14,904
of period
Cash and cash equivalents, end of     $      11,991   $      20,963
period
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest                              $      18,131   $       7,845
Income taxes                          $         —  $        
                                                           41

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)
                                                  Three Months Ended
                                                  March 31,
                                                  2014       2013
Net income                                        $ 11,323   $ 3,887
Reconciling items:
 Deferred tax expense                       -          349
 Depreciation, depletion and amortization    20,428     12,871
 Accretion of asset retirement obligation    791        332
 Share based compensation expense            1,389      556
 Non-cash derivative expense                 -          437
 Amortization costs and other                557        200
Discretionary cash flow                           34,488     18,632
 Changes in working capital accounts         11,519     (9,440)
 Settlement of asset retirement obligations  (718)      (72)
Net cash flow provided by operating activities    $ 45,289   $ 9,120

      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, (337) 232-7028,
www.petroquest.com
 
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