PetroQuest Energy Announces Third Quarter 2012 Results

LAFAYETTE, La., Nov. 7, 2012 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ) announced today net loss available to common stockholders for the quarter ended September 30, 2012 of  $38,639,000, or $0.62 per share, compared to third quarter 2011 net income available to common stockholders of $3,727,000, or $0.06 per share. For the first nine months of 2012, the Company reported net loss available to common stockholders of $111,767,000, or $1.79 per share, compared to net income available to common stockholders of $2,579,000, or $0.04 per share, for the first nine months of 2011. Net loss for the three and nine month 2012 periods included ceiling test writedowns totaling $35,391,000 and $108,987,000, respectively.

Discretionary cash flow for the third quarter of 2012 was $17,339,000, as compared to $21,099,000 for the comparable 2011 period. For the first nine months of 2012, discretionary cash flow was $57,055,000. Discretionary cash flow for the first nine months of 2011 was $73,219,000. See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.

Production for the third quarter of 2012 was 8.5 Bcfe, a 15% increase from the 7.4 Bcfe produced during the comparable period of 2011. Natural gas liquids production for the third quarter of 2012 increased 53% from the comparable period of 2011. For the first nine months of 2012, production was 25.1 Bcfe , compared to 22.2 Bcfe  for the comparable period of 2011.  Approximately 77% of the Company's third quarter 2012 production was from long-lived basins. 

Stated on an Mcfe basis, unit prices received during the third quarter and the first nine months of 2012 were 24% and 25% lower, respectively, than the comparable 2011 periods. Oil and gas sales during the third quarter of 2012 decreased 13% to $33,913,000, as compared to $38,980,000 in the third quarter of 2011. For the first nine months of 2012, oil and gas sales decreased 16% to $103,286,000 from $122,446,000 in the first nine months of 2011. 

Lease operating expenses for the third quarter of 2012 were $1.13 per Mcfe as compared to $1.39 per Mcfe in the third quarter of 2011. For the first nine months of 2012, lease operating expenses per Mcfe decreased 17% to $1.13 from $1.36 in the comparable period of 2011.  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 third quarter of 2012 was $1.73  per Mcfe as compared to $1.94 per Mcfe in the third quarter of 2011.  For the first nine months of 2012, DD&A per Mcfe decreased 6% to $1.80 per Mcfe from $1.92 per Mcfe for the comparable period of 2011. The decrease in DD&A during the third quarter of 2012, as compared to the third quarter of 2011, was primarily the result of the ceiling test write-downs recorded during the 2012 periods.

Interest expense for the third quarter of 2012 increased to $2,338,000, as compared to $2,299,000 in the third quarter of 2011. For the first nine months of 2012, interest expense was $7,021,000, compared to $7,248,000 for the comparable period of 2011.

General and administrative expenses increased $973,000 and $3,873,000 for the third quarter and nine months ended September 30, 2012, as compared to the respective 2011 periods.  The increases during the 2012 periods are primarily due to higher employee related expenses, including non-cash share-based compensation costs totaling $5,609,000 during the first nine months of 2012 as compared to $2,985,000 during the 2011 period.

Production taxes for the third quarter of 2012 totaled $880,000, as compared to $1,446,000 in the third quarter of 2011.  For the first nine months of 2012, production taxes were $112,000 compared to $2,070,000 for the comparable period of 2011.  Production taxes for the nine month 2012 period 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-and nine-month periods ended September 30, 2012 and 2011:


Three Months Ended September 30,


Nine Months Ended September 30,


2012


2011


2012


2011

Production:












   Oil (Bbls)


122,645


130,144




379,958


445,457


   Gas (Mcf)


6,888,569


6,073,776




20,563,350


17,847,061


   Ngl (Mcfe)


894,138


584,786




2,250,569


1,658,323


   Total Production (Mcfe)


8,518,577


7,439,426




25,093,667


22,178,126


   Total Daily Production (Mmcfe)


92.6


80.9




91.6


81.2


Sales:












   Total oil sales


$13,287,548


$13,508,377




$41,627,602


$46,403,861


   Total gas sales


15,583,994


19,865,595




46,321,605


60,481,702


   Total ngl sales


5,041,274


5,606,335




15,336,515


15,560,225


   Total oil and gas sales


$33,912,816


$38,980,307




$103,285,722


$122,445,788


Average sales prices:












   Oil (per Bbl)


$108.34


$103.80




$109.56


$104.17


   Gas (per Mcf)


2.26


3.27




2.25


3.39


   Ngl (per Mcfe)


5.64


9.59




6.81


9.38


   Per Mcfe


3.98


5.24




4.12


5.52


 

The above sales and average sales prices include increases to revenue related to the settlement of gas hedges of $1,482,000 and $478,000, oil hedges of $491,000 and $178,000 and Ngl hedges of $312,000 and zero for the three months ended September 30, 2012 and 2011, respectively. The above sales and average sales prices include increases (reductions) to revenue related to the settlement of gas hedges of $6,867,000 and $864,000, oil hedges of $853,000 and ($211,000) and Ngl hedges of $544,000 and zero for the nine months ended September 30, 2012 and 2011, respectively.

The following initiates guidance for the fourth quarter of 2012:


Guidance for

Description

4th Quarter 2012



Production volumes (MMcfe/d)

94 - 98



Percent Gas

77%

Percent Oil

9%

Percent NGL

14%



Expenses:


Lease operating expenses (per Mcfe)

$1.05 - $1.15

Production taxes (per Mcfe)

$0.10 - $0.15

Depreciation, depletion and amortization (per Mcfe)

$1.60 - $1.70

General and administrative (in millions)*

$5.5 - $6.0

Interest expense (in millions)

$2.6 - $2.9



  2012 Capital Expenditures (in millions)

$130 - $135



* Includes non-cash stock compensation estimate of $1.4 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, 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)

 


September 30,

2012


December 31,

2011

ASSETS




Current assets:




Cash and cash equivalents

$

5,703



$

22,263


Revenue receivable

15,719



15,860


Joint interest billing receivable

26,641



47,445


Derivative asset

955



6,418


Prepaid drilling costs

2,482



2,900


Drilling pipe inventory

1,597



4,070


Other current assets

2,962



2,965


Total current assets

56,059



101,921


Property and equipment:




Oil and gas properties:




Oil and gas properties, full cost method

1,707,498



1,600,546


Unevaluated oil and gas properties

78,828



70,408


Accumulated depreciation, depletion and amortization

(1,420,630)



(1,265,603)


Oil and gas properties, net

365,696



405,351


Gas gathering assets

4,177



4,177


Accumulated depreciation and amortization of gas gathering assets

(2,017)



(1,794)


Total property and equipment

367,856



407,734


Other assets, net of accumulated depreciation and amortization of $9,259 and $8,066, respectively

8,133



6,511


Total assets

$

432,048



$

516,166


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable to vendors

$

56,424



$

50,750


Advances from co-owners

25,065



33,867


Oil and gas revenue payable

14,533



13,764


Accrued interest and preferred stock dividend

2,417



6,167


Derivative liability

426




Asset retirement obligation

1,034



3,110


Other accrued liabilities

5,657



8,250


Total current liabilities

105,556



115,908


Bank debt

35,000




10% Senior Notes

150,000



150,000


Asset retirement obligation

29,241



27,317


Derivative liability

289




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 62,720 and 62,148 shares, respectively

63



62


Paid-in capital

275,375



270,606


Accumulated other comprehensive income

600



4,031


Accumulated deficit

(164,077)



(52,310)


Total stockholders' equity

111,962



222,390


Total liabilities and stockholders' equity

$

432,048



$

516,166


 

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(unaudited)

(Amounts in Thousands, Except Per Share Data)

 


Three Months Ended September 30,


Nine Months Ended September 30,


2012


2011


2012


2011

Revenues:






Oil and gas sales

$

33,913


$

38,980


$

103,286


$

122,446

Gas gathering revenue

38


49


119


161


33,951


39,029


103,405


122,607

Expenses:






Lease operating expenses

9,658


10,376


28,408


30,085

Production taxes

880


1,446


112


2,070

Depreciation, depletion and amortization

15,032


14,696


46,024


43,415

Ceiling test write-down

35,391



108,987


18,907

General and administrative

5,963


4,990


17,541


13,668

Accretion of asset retirement obligation

525


433


1,542


1,612

Interest expense

2,338


2,299


7,021


7,248


69,787


34,240


209,635


117,005

Other income (expense):






Other income (expense)

257


(40)


529


237

Derivative expense

(340)



(715)



(83)


(40)


(186)


237

Income (loss) from operations

(35,919)


4,749


(106,416)


5,839

Income tax expense (benefit)

1,435


(265)


1,496


(594)

Net income (loss)

(37,354)


5,014


(107,912)


6,433

Preferred stock dividend

1,285


1,287


3,855


3,854

Net income (loss)  available to common stockholders

$

(38,639)


$

3,727


$

(111,767)


$

2,579

Earnings per common share:






Basic






Net income (loss) per share

$

(0.62)


$

0.06


$

(1.79)


$

0.04

Diluted






Net income (loss) per share

$

(0.62)


$

0.06


$

(1.79)


$

0.04

Weighted average number of common shares:






Basic

62,492


62,041


62,356


61,876

Diluted

62,492


62,415


62,356


62,278

 

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(unaudited)

(Amounts in Thousands)

 


Nine Months Ended September 30,


2012


2011

Cash flows from operating activities:




Net income (loss)

$

(107,912)


$

6,433

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




Deferred tax expense (benefit)

1,496


(594)

Depreciation, depletion and amortization

46,024


43,415

Ceiling test writedown

108,987


18,907

Accretion of asset retirement obligation

1,542


1,612

Share based compensation expense

5,609


2,985

Amortization costs and other

594


461

Non-cash derivative expense

715


Payments to settle asset retirement obligations

(2,519)


(551)

Changes in working capital accounts:




Revenue receivable

141


8,087

Prepaid drilling and pipe costs

2,891


3,164

Joint interest billing receivable

20,312


(34,646)

Accounts payable and accrued liabilities

1,464


26,914

Advances from co-owners

(8,802)


17,926

Other

(2,866)


(3,000)

Net cash provided by operating activities

67,676


91,113

Cash flows used in investing activities:




Investment in oil and gas properties

(121,428)


(141,687)

Sale of oil and gas properties

837


Sale of unevaluated oil and gas properties

6,083


14,461

Net cash used in investing activities

(114,508)


(127,226)

Cash flows used in financing activities:




Net payments for share based compensation

(840)


(977)

Deferred financing costs

(33)


(24)

Payment of preferred stock dividend

(3,855)


(3,854)

Proceeds from bank borrowings

72,500


22,000

Repayment of bank borrowings

(37,500)


(22,000)

Net cash provided by (used in) financing activities

30,272


(4,855)

Net decrease in cash and cash equivalents

(16,560)


(40,968)

Cash and cash equivalents, beginning of period

22,263


63,237

Cash and cash equivalents, end of period

$

5,703


$

22,269

Supplemental disclosure of cash flow information:




Cash paid during the period for:




Interest

$

15,628


$

15,870

Income taxes

$

15


$

51

 

PETROQUEST ENERGY, INC.

Non-GAAP Disclosure Reconciliation

(Amounts In Thousands)

 


Three Months Ended

Nine Months Ended


September 30,

September 30,


2012

2011

2012

2011

Net income (loss)

$

(37,354)


$

5,014


$

(107,912)


$

6,433






Reconciling items:





Deferred tax expense (benefit)

1,435


(265)


1,496


(594)

Depreciation, depletion and amortization

15,032


14,696


46,024


43,415

Ceiling test writedown

35,391



108,987


18,907

Accretion of asset retirement obligation

525


433


1,542


1,612

Share based compensation expense

1,771


1,068


5,609


2,985

Amortization expense and other

539


153


1,309


461

Discretionary cash flow

17,339


21,099


57,055


73,219

Changes in working capital accounts

8,138


10,161


13,140


18,445

Settlement of asset retirement obligations

(69)


(38)


(2,519)


(551)






Net cash provided by operating activities

$

25,408


$

31,222


$

67,676


$

91,113

 

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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