2014

PetroQuest Energy Announces 2013 Year-End And Fourth Quarter Results

LAFAYETTE, La., Feb. 27, 2014 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ) announced today net income available to common stockholders for the quarter ended December 31, 2013 of $2,291,000, or $0.04 per share, compared to fourth quarter 2012 net loss available to common stockholders of $25,451,000, or $0.41  per share.  For the year ended December 31, 2013, the Company reported net income available to common shareholders of $8,943,000, or $0.14 per share, compared to net loss available to common shareholders of $137,218,000, or $2.20 per share, for the year ended December 31, 2012. 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.

During July 2013, the Company closed the acquisition of certain properties located in the Gulf of Mexico (the "Gulf of Mexico Acquisition") for an adjusted purchase price of approximately $189 million.  These properties contributed 4.5 Bcfe to the Company's 2013 production.  The acquisition was financed through the issuance of $200 million of 10% senior notes due 2017.

Discretionary cash flow for the fourth quarter of 2013 was $27,898,000 as compared to $20,393,000 for the comparable 2012 period.  For the year ended December 31, 2013, discretionary cash flow was $93,056,000 compared to $77,448,000 for 2012. 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 2013 were $53,174,000 as compared to $38,147,000 in the fourth quarter of 2012.  For the year ended December 31, 2013, oil and gas sales increased 29% to $182,804,000 as compared to $141,433,000 for the year ended December 31, 2012.   Production for the fourth quarter and year ended December 31, 2013 was higher by 15% and 12%, respectively, than production for the comparable periods of 2012.  Stated on an Mcfe basis, unit prices received during the fourth quarter and the year ended December 31, 2012 were higher by 21% and 15%, respectively, as compared to the prices received during the comparable 2012 periods.

Lease operating expenses for the fourth quarter of 2013 were $1.23 per Mcfe as compared to $1.18 per Mcfe in the fourth quarter of 2012. Lease operating expenses totaled $1.15 per Mcfe for each of the years ended December 31, 2013 and 2012.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the fourth quarter of 2013 was $2.07 per Mcfe as compared to $1.61 per Mcfe in the fourth quarter of 2012.  For the year ended December 31, 2013, DD&A on oil and gas properties increased to $1.82 per Mcfe from $1.75 per Mcfe for the comparable period of 2012.  DD&A on oil and gas properties was higher in the 2013 periods as a result of the Gulf of Mexico Acquisition.

Interest expense for the fourth quarter of 2013 increased to $7,835,000, as compared to $2,787,000 in the fourth quarter of 2012. For the year ended December 31, 2013, interest expense was $21,886,000 compared to $9,808,000 for 2012. The increase in interest expense was primarily a result of the debt incurred to finance the Gulf of Mexico Acquisition.  

Fourth quarter of 2013 general and administrative expense was $897,000 higher than the comparable 2012 period. The fourth quarter 2013 costs included higher employee related compensation expenses and approximately $200,000 of costs related to the Gulf of Mexico Acquisition. For the year ended December 31, 2013, general and administrative expenses were $3,555,000 higher than 2012.  The increase in general and administrative expenses for the year ended December 31, 2013 was due to approximately $4 million of transaction-related costs associated with the Gulf of Mexico Acquisition. 

Production taxes for the fourth quarter of 2013 totaled $193,000, as compared to $773,000 in the fourth quarter of 2012. The decrease in production taxes for the fourth quarter of 2013 is primarily due to production tax refunds received from Texas. For the year ended December 31, 2013, production taxes were $3,950,000, as compared to $885,000 for the comparable period of 2012.  Production taxes for the 2012 period included refunds of severance taxes paid on Oklahoma horizontal wells. 

The following table sets forth certain information with respect to the oil and gas operations of the Company for the three and twelve months ended December 31, 2013 and 2012:


Three Months Ended
December 31,

Year Ended

December 31,


2013

2012

2013

2012

Production:





   Oil (Bbls)

220,158

140,632

680,980

520,590

   Gas (Mcf)

7,706,293

6,902,878

29,225,843

27,466,228

   Ngl (Mcfe)

1,194,044

1,116,205

4,754,223

3,366,774

   Total Production

   (Mcfe) 

10,221,285

8,862,875

38,065,946

33,956,542

   Total Daily
Production (MMcfe)

111.1

96.3

104.3

92.8






Sales:





  Total oil sales

$   21,644,128

$   15,008,184

$  70,476,065

$          56,635,786

  Total gas sales

25,469,355

17,213,657

87,449,370

63,535,262

  Total ngl sales

6,060,077

5,925,721

24,878,243

21,262,236

  Total oil and gas sales

$   53,173,560

$   38,147,562

$182,803,678

$        141,433,284






Average sales prices:





  Oil (per Bbl)

$            98.31

$          106.72

$         103.49

$                 108.79

  Gas (per Mcf)

3.31

2.49

2.99

2.31

  Ngl (per Mcfe)

5.08

5.31

5.23

6.32

  Per Mcfe

5.20

4.30

4.80

4.17






The above sales and average sales prices include increases (reductions) to revenue related to the settlement of gas hedges of $676,000 and $(21,000), oil hedges of $452,000 and $676,000 and ngl hedges of $56,000 and $178,000  for the quarters ended December 31, 2013, and 2012, respectively.  The above sales and average sales prices include increases (reductions) to revenue related to the settlement of gas hedges of $1,098,0000 and $6,846,000, oil hedges of $(232,000) and $1,529,000 and ngl hedges of $61,000 and $722,000 for the years ended December 31, 2013 and 2012, respectively.

The following initiates guidance for the first quarter of 2014:


Guidance for

Description

1st Quarter 2014



Production volumes (MMcfe/d)

112 - 117



Percent Gas

73%

Percent Oil

14%

Percent NGL

13%



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)*

$6.0 - $6.5

Interest expense (in millions)

$7.5 - $8.0





* Includes non-cash stock compensation estimate of $1.4 million



The following initiates guidance for 2014:


Guidance for

Description

2014



Production volumes (MMcfe/d)

125 - 140



Percent Gas

70%

Percent Oil

13%

Percent NGL

17%



Expenses:


Lease operating expenses (per Mcfe)

$1.10 - $1.20

Production taxes (per Mcfe)

$0.15 - $0.20

Depreciation, depletion and amortization (per Mcfe)

$1.95 - $2.05

General and administrative (in millions)*

$24 - $26

Interest expense (in millions)

$30 - $32



2014 Capital Expenditures (in millions)

$140 - $150



* Includes non-cash stock compensation estimate of $5.1 million





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)



December 31, 2013


December 31, 2012

ASSETS




Current assets:




Cash and cash equivalents

$                                          9,153


$                                 14,904

Revenue receivable

26,568


17,742

Joint interest billing receivable

26,556


42,238

Other receivable


9,208

Derivative asset

521


830

Prepaid drilling costs

477


1,698

Other current assets

8,132


2,964

Total current assets

71,407


89,584

Property and equipment:




Oil and gas properties:




Oil and gas properties, full cost method

2,035,899


1,734,477

Unevaluated oil and gas properties

98,387


71,713

Accumulated depreciation, depletion and amortization

(1,553,044)


(1,472,244)

Oil and gas properties, net

581,242


333,946

Other property and equipment

13,993


12,370

Accumulated depreciation of other property and equipment

(8,901)


(7,607)

Total property and equipment

586,334


338,709

Other assets, net of accumulated amortization of $5,689 and $4,240, respectively

9,449


5,110

Total assets

$                                      667,190


$                               433,403

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable to vendors

$                                        47,341


$                                 58,960

Advances from co-owners

969


20,459

Oil and gas revenue payable

22,664


26,175

Accrued interest and preferred stock dividend

12,909


6,190

Asset retirement obligation

3,113


2,351

Derivative liability

1,617


233

Other accrued liabilities

8,924


6,535

Total current liabilities

97,537


120,903

Bank debt

75,000


50,000

10% Senior Notes

350,000


150,000

Asset retirement obligation

45,423


24,909

Other long-term liability

135


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 63,664 and 62,768 shares, respectively

64


63

Paid-in capital

280,711


276,534

Accumulated other comprehensive income (loss)

(1,096)


521

Accumulated deficit

(180,585)


(189,528)

Total stockholders' equity

99,095


87,591

Total liabilities and stockholders' equity

$                                      667,190


$                               433,403





 

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Data)






Three Months Ended,


Three Months Ended,


Twelve Months Ended


Twelve Months Ended


December 31, 2013


December 31, 2012


December 31, 2013


December 31, 2012

Revenues:








Oil and gas sales

$                             53,174


$                   38,147


$                182,804


$              141,433

Gas gathering revenue

(2)


39


66


158


53,172


38,186


182,870


141,591

Expenses:








Lease operating expenses

12,535


10,482


43,743


38,890

Production taxes

193


773


3,950


885

Depreciation, depletion and amortization

21,563


14,665


71,445


60,689

Ceiling test write-down


28,113



137,100

General and administrative

6,313


5,416


26,512


22,957

Accretion of asset retirement obligation

550


536


1,753


2,078

Interest expense

7,835


2,787


21,886


9,808


48,989


62,772


169,289


272,407

Other income (expense):








Other income 

156


77


588


606

Derivative income (expense)

31


482


233


(233)


187


559


821


373

Income (loss) from operations

4,370


(24,027)


14,402


(130,443)

Income tax expense 

794


140


320


1,636

Net income (loss)

3,576


(24,167)


14,082


(132,079)

Preferred stock dividend

1,285


1,284


5,139


5,139

Net income (loss) available to common stockholders

$                               2,291


$                 (25,451)


$                    8,943


$             (137,218)

Earnings per common share:








Basic








Net income (loss) per share

$                                  0.04


$                      (0.41)


$                       0.14


$                    (2.20)

Diluted








Net income (loss) per share

$                                  0.04


$                      (0.41)


$                       0.14


$                    (2.20)

Weighted average number of common shares:








Basic

63,475


62,764


63,054


62,459

Diluted

63,588


62,764


63,208


62,459









 

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)



Twelve Months Ended, 


Twelve Months Ended, 


December 31, 2013


December 31, 2012

Cash flows from operating activities:




Net income (loss)

$                            14,082


$                  (132,079)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Deferred tax expense 

320


1,636

Depreciation, depletion and amortization

71,445


60,689

Ceiling test writedown


137,100

Accretion of asset retirement obligation

1,753


2,078

Share based compensation expense

4,216


6,910

Amortization costs and other

1,473


881

Non-cash derivative expense (benefit)

(233)


233

Payments to settle asset retirement obligations

(3,335)


(2,627)

Changes in working capital accounts:




Revenue receivable

(8,826)


(1,882)

Prepaid drilling and pipe costs

1,221


4,479

Joint interest billing receivable

15,685


3,981

Accounts payable and accrued liabilities

(12,865)


20,916

Advances from co-owners

(19,490)


(13,408)

Other

(5,592)


(316)

Net cash provided by operating activities

59,854


88,591

Cash flows used in investing activities:




Investment in oil and gas properties

(298,824)


(147,771)

Investment in other property and equipment

(1,679)


(1,743)

Sale of oil and gas properties

19,913


837

Sale of unevaluated oil and gas properties

487


8,889

Net cash used in investing activities

(280,103)


(139,788)

Cash flows used in financing activities:




Net payments for share based compensation

(38)


(981)

Deferred financing costs

(320)


(42)

Payment of preferred stock dividend

(5,139)


(5,139)

Proceeds from bank borrowings

73,000


102,500

Repayment of bank borrowings

(48,000)


(52,500)

Proceeds from issuance of 10% Senior Notes

200,000


Costs associated with issuance of 10% Senior Notes

(5,005)


Net cash provided by financing activities

214,498


43,838

Net decrease in cash and cash equivalents

(5,751)


(7,359)

Cash and cash equivalents, beginning of period

14,904


22,263

Cash and cash equivalents, end of period

$                              9,153


$                      14,904

Supplemental disclosure of cash flow information:




Cash paid during the period for:




Interest

$                            20,101


$                      16,026

Income taxes

$                                    12


$                           105





 

 

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)



Three Months Ended

Years Ended


December 31,

December 31,


2013

2012

2013

2012

Net income (loss)

$               3,576

$          (24,167)

$       14,082

$        (132,079)






Reconciling items:





      Deferred tax expense 

794

140

320

1,636

      Depreciation, depletion and amortization

21,563

14,665

71,445

60,689

      Ceiling test writedown

-

28,113

-

137,100

      Accretion of asset retirement obligation

550

536

1,753

2,078

      Share based compensation expense

1,111

1,301

4,216

6,910

      Non-cash derivative (income) expense

(31)

(482)

(233)

233

      Amortization expense and other

335

287

1,473

881

Discretionary cash flow

27,898

20,393

93,056

77,448

      Changes in working capital accounts

(168)

630

(30,002)

13,770

      Settlement of asset retirement obligations

(920)

(108)

(3,335)

(2,627)






Net cash provided by operating activities

26,810

$20,915

$59,719

$88,591








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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