2014

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

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 (Mcfe)

8,862,875

8,005,229

33,956,542

30,183,355

    Total Daily Production (Mmcfe)

96.3

87.0

92.8

82.7

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 gas sales

$38,147,562

$38,039,928

$141,433,284

$160,485,716

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 amortization

(1,472,244)

(1,265,603)

Oil and gas properties, net

333,946

405,351

Other property and equipment

12,370

10,627

Accumulated depreciation of other property and equipment

(7,607)

(6,414)

Total property and equipment

338,709

409,564

Other assets, net of accumulated amortization of $4,240 and $3,446, respectively

5,110

4,681

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 dividend

6,190

6,167

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 outstanding 1,495 shares

1

1

Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding 62,768 and 62,148 shares, respectively

63

62

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

December 31,


Years Ended

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 and amortization

14,665

14,828


60,689

58,243

Ceiling test write-down

28,113


137,100

18,907

General and administrative

5,416

6,768


22,957

20,436

Accretion of asset retirement obligation

536

437


2,078

2,049

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 (expense)

482


(233)


559

(1,245)


373

(1,008)

Income (loss) from operations

(24,027)

2,899


(130,443)

8,738

Income tax expense (benefit)

140

(1,216)


1,636

(1,810)

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 stockholders

$ (25,451)

$    2,830


$ (137,218)

$      5,409

Earnings per common share:






Basic






Net income (loss) per share

$      (0.41)

$      0.04


$        (2.20)

$         0.08

Diluted






Net income (loss) per share

$      (0.41)

$      0.04


$        (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 obligations

(2,627)


(905)

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 activities

43,838


(6,789)

Net decrease in cash and cash equivalents

(7,359)


(40,974)

Cash and cash equivalents, beginning of period

22,263


63,237

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 amortization

14,665

14,828

60,689

58,243

      Ceiling test writedown

28,113

137,100

18,907

      Accretion of asset retirement obligation

536

437

2,078

2,049

      Share based compensation expense

1,301

1,848

6,910

4,833

      Non-cash derivative (income) expense

(482)

233

      Amortization expense and other

287

164

881

625

Discretionary cash flow

20,393

20,176

77,448

93,395

      Changes in working capital accounts

630

6,955

13,770

25,400

      Settlement of asset retirement obligations

(108)

(354)

(2,627)

(905)






Net cash provided by operating activities

$20,915

$26,777

$88,591

$117,890






 

Note:

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.  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.



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