PetroQuest Energy Announces Third Quarter 2012 Results

Nov 07, 2012, 05:30 ET from PetroQuest Energy, Inc.

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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