PetroQuest Energy Announces 2015 Year-End And Fourth Quarter Results

Mar 02, 2016, 16:28 ET from PetroQuest Energy, Inc.

LAFAYETTE, La., March 2, 2016 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ) announced today a net loss to common stockholders for the quarter ended December 31, 2015 of $(64,744,000), or $(0.98) per share, compared to fourth quarter 2014 net income available to common stockholders of $1,745,000, or $0.02  per share.  For the year ended December 31, 2015, the Company reported a net loss to common stockholders of $(299,977,000), or $(4.61) per share, compared to net income available to common shareholders of $26,051,000, or $0.39 per share, for the year ended December 31, 2014. The three and twelve months ended December 31, 2015 included ceiling test write-downs totaling $51,944,000 and $266,562,000, respectively.

Discretionary cash flow for the fourth quarter of 2015 was $3,239,000 as compared to $26,382,000 for the comparable 2014 period.  For the year ended December 31, 2015, discretionary cash flow was $26,092,000 compared to $126,461,000 for 2014. 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 2015 were $23,096,000 as compared to $47,988,000 in the fourth quarter of 2014.  For the year ended December 31, 2015, oil and gas sales decreased 48% to $115,969,000 as compared to $225,021,000 for the year ended December 31, 2014. Production for the year ended December 31, 2015 was 21% lower than 2014.  The decrease in production was due primarily to the divestiture of our Arkoma assets in June 2015 and normal production declines at our Gulf Coast fields. Stated on an Mcfe basis, unit prices received during the fourth quarter and the year ended December 31, 2015 were lower by 19% and 35%, respectively, as compared to the prices received during the comparable 2014 periods.

Lease operating expenses during 2015 totaled $40,130,000, a 17% reduction from 2014. Lease operating expenses for the fourth quarter of 2015 were $1.19 per Mcfe as compared to $0.99 per Mcfe in the fourth quarter of 2014. Lease operating expenses for the year ended December 31, 2015 were $1.17 per Mcfe as compared to $1.12 for the year ended December 31, 2014. The increase in per unit lease operating expenses during the 2015 periods are primarily due to the Arkoma sale in June 2015, which included properties with a lower relative per unit cost, as well as normal production declines and downtime at certain of the Company's Gulf Coast fields.

Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the fourth quarter of 2015 was $1.57 per Mcfe as compared to $2.05 per Mcfe in the fourth quarter of 2014.  For the year ended December 31, 2015, DD&A on oil and gas properties decreased to $1.82 per Mcfe from $1.99 per Mcfe for the comparable period of 2014. The decrease in the per unit DD&A rate during the 2015 periods is primarily the result of the 2015 non-cash ceiling test write-downs totaling $51,944,000 and $266,562,000 in the fourth quarter and year ended December 31, 2015, respectively.

Interest expense for the fourth quarter of 2015 was $8,770,000, as compared to $7,215,000 in the fourth quarter of 2014. For the year ended December 31, 2015, interest expense was $33,766,000 compared to $29,281,000 for 2014. The increase in interest expense during the 2015 periods was the result of lower capitalized interest on the Company's reduced unevaluated property balance, which was primarily the result of the Arkoma sale in June 2015.

General and administrative expenses during 2015 totaled $20.8 million, an approximate 10% reduction from 2014. Fourth quarter of 2015 general and administrative expense was $391,000 higher than the comparable 2014 period.  For the year ended December 31, 2015, general and administrative expenses were $2,093,000 lower than 2014. The decline in general and administrative expense during the 2015 period was primarily the result of lower employee related costs including stock compensation expense.

Production taxes for the fourth quarter of 2015 totaled $167,000, as compared to $1,249,000 in the fourth quarter of 2014. For the year ended December 31, 2015, production taxes were $2,470,000, as compared to $5,927,000 for the comparable period of 2014. The decrease in total production taxes for the 2015 periods was primarily due to lower commodity prices for our production during the 2015 periods as compared to the 2014 periods, as well as certain severance tax refunds in East Texas.

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, 2015 and 2014:

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014 (1)

2015

2014 (1)

Production:

Oil (Bbls)

106,990

159,998

528,529

802,509

Gas (Mcf)

5,023,288

7,994,417

25,501,851

31,027,671

Ngl (Mcfe)

1,028,847

2,295,516

5,487,239

7,482,310

Total Production (Mcfe)

6,694,075

11,249,921

34,160,264

43,325,035

         Daily Production (MMcfe)

72.8

122.3

93.6

118.7

Sales:

Total oil sales

$      4,918,298

$    13,896,729

$      26,532,240

$       78,176,377

Total gas sales

15,755,693

27,143,468

75,070,130

114,613,267

Total ngl sales

2,422,460

6,947,208

14,367,024

32,231,090

Total oil and gas sales

$    23,096,451

$    47,987,405

$    115,969,394

$    225,020,734

Average sales prices:

Oil (per Bbl)

$             45.97

$             86.86

$               50.20

$               97.41

Gas (per Mcf)

3.14

3.40

2.94

3.69

Ngl (per Mcfe)

2.35

3.03

2.62

4.31

Per Mcfe

3.45

4.27

3.39

5.19

(1) Production and related oil and gas revenues associated with the Arkoma assets sold during June 2015 totaled 4.6 Bcfe and  $12.8 million, respectively, during the fourth quarter of 2014 and 16.4 Bcfe and $56.7 million, respectively, for the annual 2014 period.

The above sales and average sales prices include increases to revenue related to the settlement of gas hedges of $5,832,000 and $565,000, oil hedges of $606,000 and $2,128,000, and Ngl hedges of $182,000 and $268,000 for the three months ended December 31, 2015 and 2014, respectively. The above sales and average sales prices include increases (reductions) to revenue related to the settlement of gas hedges of $15,940,000 and ($4,237,000), oil hedges of $644,000 and $897,000, and Ngl hedges of $530,000 and $296,000 for the twelve months ended December 31, 2015 and 2014, respectively.

Guidance

The following initiates guidance for the first quarter of 2016:

Guidance for

Description

1st Quarter 2016

Production volumes (MMcfe/d)

72 - 76

Percent Gas

74 %

Percent Oil

6 %

Percent NGL

20 %

Expenses:

Lease operating expenses (per Mcfe)

$1.20 - $1.30

Production taxes (per Mcfe)

$0.06 - $0.10

Depreciation, depletion and amortization (per Mcfe)

$1.35 - $1.45

General and administrative (in millions)*

$3.6 - $4.0

Interest expense (in millions)

$7.8 - $8.2

* Includes non-cash stock compensation estimate of $0.6 million

Management's Comment

"Our 2016 business plan is focused on preserving liquidity and strengthening our balance sheet.  To this end we are working toward reducing 2016 cash costs by 25%, assessing additional deleveraging and maturity extension options relative to our remaining 2017 notes and evaluating additional asset sale opportunities and joint venture structures," said Charles T. Goodson, Chairman, Chief Executive Officer and President.

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 Texas, Oklahoma, 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.   All statements other than statements of historical fact included in this news release are forward-looking statements. Although PetroQuest believes that the expectations reflected in these forward-looking statements are reasonable, these statements are based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. Actual results may vary significantly from those anticipated due to many factors, including our ability to pay dividends on our Series B Preferred Stock, our ability to satisfy the continued listing standards of the New York Stock Exchange with respect to our common stock or to cure any continued listing standard deficiency with respect thereto, the volatility of oil and natural gas prices and significantly depressed oil prices since the end of 2014, our ability to hedge future production to reduce our exposure to price volatility in the current commodity pricing market, our ability to post additional collateral to satisfy our offshore decommissioning obligations, our ability to reduce leverage or refinance our remaining senior notes due 2017, our estimate of the sufficiency of our existing capital sources, including availability under our senior secured bank credit facility and the result of any borrowing base redetermination, our ability to raise additional capital to fund cash requirements for future operations, the effects of a financial downturn or negative credit market conditions on our liquidity, business and financial condition, 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 ability to find oil and natural gas reserves that are economically recoverable, the uncertainties involved in prospect development and property acquisitions or dispositions and in projecting future rates of production or future reserves, our ability to realize the anticipated benefits from our joint ventures or divestitures, the timing of development expenditures and drilling of wells, hurricanes, tropical storms and other natural disasters, changes in laws and regulations as they relate to our operations, including our fracking 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 SEC. 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, 2015

December 31, 2014

ASSETS

Current assets:

Cash and cash equivalents

$     148,013

$       18,243

Revenue receivable

6,476

16,485

Joint interest billing receivable

49,374

46,778

Derivative asset

1,508

8,631

Other current assets

3,874

6,413

Total current assets

209,245

96,550

Property and equipment:

Oil and gas properties:

Oil and gas properties, full cost method

1,310,891

2,222,753

Unevaluated oil and gas properties

12,516

109,119

Accumulated depreciation, depletion and amortization

(1,157,455)

(1,648,060)

          Oil and gas properties, net

165,952

683,812

Other property and equipment

11,229

14,953

Accumulated depreciation of other property and equipment

(8,737)

(10,313)

Total property and equipment

168,444

688,452

Other assets, net of accumulated amortization of $3,842 and $3,448, respectively

1,630

1,106

Total assets

$     379,319

$     786,108

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable to vendors

$       97,999

$     102,954

Advances from co-owners

16,118

12,819

Oil and gas revenue payable

18,911

22,333

Accrued interest and preferred stock dividend

12,795

12,764

Asset retirement obligation

6,015

2,756

Accrued acquisition costs

4,409

17,690

Other accrued liabilities

2,585

5,394

Total current liabilities

158,832

176,710

Bank debt

75,000

10% Senior Notes

347,008

345,213

Asset retirement obligation

36,541

52,214

Other long-term liability

53

62

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 65,641 and 64,721 shares, respectively

66

65

Paid-in capital

290,382

285,957

Accumulated other comprehensive income

947

5,420

Accumulated deficit

(454,511)

(154,534)

Total stockholders' equity

(163,115)

136,909

Total liabilities and stockholders' equity

$     379,319

$     786,108

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

 (Amounts in Thousands, Except Per Share Data)

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

Revenues:

Oil and gas sales

$  23,096

$ 47,988

$  115,969

$ 225,021

Expenses:

Lease operating expenses

7,967

11,152

40,130

48,597

Production taxes

167

1,249

2,470

5,927

Depreciation, depletion and amortization

10,811

23,394

63,497

87,818

Ceiling test write-down

51,944

266,562

General and administrative

4,233

3,842

20,777

22,870

Accretion of asset retirement obligation

752

735

3,259

2,958

Interest expense

8,770

7,215

33,766

29,281

84,644

47,587

430,461

197,451

Other income:

Gain on sale of assets

(422)

21,937

Other income

105

77

390

679

(317)

77

22,327

679

Income (loss) from operations

(61,865)

478

(292,165)

28,249

Income tax expense (benefit)

1,594

(2,552)

2,673

(2,941)

Net income (loss)

(63,459)

3,030

(294,838)

31,190

Preferred stock dividend

1,285

1,285

5,139

5,139

Net income (loss) available to common stockholders

$ (64,744)

$   1,745

$ (299,977)

$   26,051

Earnings per common share:

Basic

Net income (loss) per share

$    (0.98)

$    0.02

$      (4.61)

$      0.39

Diluted

Net income (loss) per share

$    (0.98)

$    0.02

$      (4.61)

$      0.39

Weighted average number of common shares:

Basic

65,382

64,593

65,022

64,204

Diluted

65,382

65,298

65,022

64,225

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(Amounts in Thousands)

Year Ended

December 31,

2015

2014

Cash flows from operating activities:

Net income (loss)

$ (294,838)

$  31,190

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

Deferred tax expense (benefit)

2,673

(2,941)

Depreciation, depletion and amortization

63,497

87,818

Ceiling test write-down

266,562

Accretion of asset retirement obligation

3,259

2,958

Gain on sale of assets

(21,937)

Share based compensation expense

4,617

5,248

Amortization costs and other

2,259

2,188

Payments to settle asset retirement obligations

(2,776)

(3,623)

Changes in working capital accounts:

Revenue receivable

10,009

10,083

Prepaid drilling and pipe costs

(370)

Joint interest billing receivable

223

(20,276)

Accounts payable and accrued liabilities

(9,352)

50,243

Advances from co-owners

3,299

11,850

Other

2,610

3,840

Net cash provided by operating activities

30,105

178,208

Cash flows provided by (used in) investing activities:

Investment in oil and gas properties

(90,218)

(174,633)

Investment in other property and equipment

(454)

(926)

Sale of oil and gas properties

271,769

11,908

Net cash provided by (used in) investing activities

181,097

(163,651)

Cash flows provided by (used in) financing activities:

Net payments for share based compensation

(199)

(75)

Deferred financing costs

(1,094)

(253)

Payment of preferred stock dividend

(5,139)

(5,139)

Proceeds from bank borrowings

70,000

17,500

Repayment of bank borrowings

(145,000)

(17,500)

Net cash provided by (used in) financing activities

(81,432)

(5,467)

Net increase (decrease) in cash and cash equivalents

129,770

9,090

Cash and cash equivalents, beginning of period

18,243

9,153

Cash and cash equivalents, end of period

$  148,013

$  18,243

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Interest

$    36,217

$  37,174

Income taxes

$           —

$       270

 

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

Net income (loss)

$ (63,459)

$   3,030

$ (294,838)

$   31,190

Reconciling items:

Deferred tax expense (benefit)

1,594

(2,552)

2,673

(2,941)

Depreciation, depletion and amortization

10,811

23,394

63,497

87,818

Ceiling test write-down

51,944

266,562

(Gain) loss on sale of assets

422

(21,937)

Accretion of asset retirement obligation

752

735

3,259

2,958

Non-cash share based compensation expense

595

1,223

4,617

5,248

Amortization costs and other

580

552

2,259

2,188

Discretionary cash flow

3,239

26,382

26,092

126,461

Changes in working capital accounts

3,837

26,686

6,789

55,370

Settlement of asset retirement obligations

(950)

(721)

(2,776)

(3,623)

Net cash flow provided by operating activities

$    6,126

$ 52,347

$    30,105

$ 178,208

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.



RELATED LINKS

http://www.petroquest.com