PetroQuest Energy Announces First Quarter 2010 Results
LAFAYETTE, La., May 5 /PRNewswire-FirstCall/ -- PetroQuest Energy, Inc. (NYSE: PQ) announced today that the Company recorded net income available to common stockholders for the quarter ended March 31, 2010 of $29,717,000, or $0.46 per share, compared to first quarter 2009 net loss available to common stockholders of $66,957,000, or $1.36 per share. During the first quarter of 2009, the Company recorded a non-cash ceiling test write-down of approximately $103,582,000.
Discretionary cash flow for the first quarter of 2010 was $40,764,000, as compared to $38,468,000 for the comparable 2009 period. 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 first quarter of 2010 were $47,545,000, as compared to $59,234,000 in the first quarter of 2009. Production for the first quarter of 2010 was 7,727,709 Mcfe, as compared to 10,096,080 Mcfe in the first quarter of 2009. The decrease in production for the first quarter of 2010, as compared to the first quarter of 2009, is primarily attributable to the 84% reduction in capital spending throughout 2009, which also facilitated the repayment of $101 million of bank debt.
Average daily production for the first quarter of 2010 increased by approximately 5%, as compared to the daily production rate during the fourth quarter of 2009. Approximately 51% of the Company's first quarter 2010 production was from long-lived areas. Stated on an Mcfe basis, unit prices received during the first quarter of 2010 were 5% higher than the comparable 2009 period.
In January 2010, the Company recorded a gain relative to a $9,000,000 cash settlement received from a lawsuit filed by the Company in 2008 relating to disputed interests in certain oil and gas assets purchased in 2007. The gain was reduced by approximately $800,000 of costs incurred by the Company directly related to the settlement. In addition to the cash proceeds received, the Company was assigned additional working interests in certain producing properties. The Company recorded an additional $4,164,000 gain representing the estimated fair market value of those interests as of the effective date of the settlement. Net cash proceeds received from the settlement are expected to be used to fund a portion of the Company's 2010 capital budget.
Interest expense for the first quarter of 2010 decreased to $1,810,000, as compared to $3,176,000 in the first quarter of 2009. The decrease in interest expense is primarily due to the repayment of $120,000,000 of bank debt throughout 2009 and the first quarter of 2010.
Lease operating expenses ("LOE") for the first quarter of 2010 decreased to $9,695,000, as compared to $11,133,000 in the first quarter of 2009. LOE per Mcfe was $1.25 in the first quarter of 2010, as compared to $1.10 in the first quarter of 2009. The decrease in lease operating expenses is primarily due to lower insurance costs in the 2010 period, as well as the overall decline in production volumes.
Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the first quarter of 2010 was $1.91 per Mcfe as compared to $3.12 per Mcfe in the first quarter of 2009. The decline in DD&A is primarily the result of the non-cash ceiling test write-down of a substantial portion of the Company's proved oil and gas properties during 2009.
General and administrative expenses during the first quarter of 2010 totaled $4,509,000, as compared to expenses of $4,825,000 during the 2009 period. The decrease in general and administrative expenses is primarily due to lower non-cash stock compensation expenses and the reclassification of certain costs directly associated with the legal settlement.
The following table sets forth certain information with respect to the oil and gas operations of the Company for the three-month periods ended March 31, 2010 and 2009:
Three Months Ended |
||||
March 31, |
||||
2010 |
2009 |
|||
Production: |
||||
Oil (Bbls) |
144,641 |
174,811 |
||
Gas (Mcf) |
6,859,863 |
9,047,214 |
||
Total Production (Mcfe) |
7,727,709 |
10,096,080 |
||
Total Daily Production (MMcfe/d) |
85.9 |
112.2 |
||
Sales: |
||||
Total oil sales |
$ 11,377,113 |
$ 9,279,283 |
||
Total gas sales |
36,167,631 |
49,954,858 |
||
Total oil and gas sales |
47,544,744 |
59,234,141 |
||
Average sales prices: |
||||
Oil (per Bbl) |
$ 78.66 |
$ 53.08 |
||
Gas (per Mcf) |
5.27 |
5.52 |
||
Per Mcfe |
6.15 |
5.87 |
||
The above sales and average sales prices include increases related to gas hedges of $1,531,000 and $13,978,000 and oil hedges of zero and $2,045,000 for the three months ended March 31, 2010 and 2009, respectively.
The following initiates guidance for the second quarter of 2010:
Guidance for |
||
Description |
2nd Quarter 2010 |
|
Production volumes (MMcfe/d) |
82 - 87 |
|
Percent gas |
88% |
|
Expenses: |
||
Lease operating expenses (per Mcfe) |
$1.20 - $1.30 |
|
Production taxes (per Mcfe) |
$0.25 - $0.30 |
|
Depreciation, depletion and amortization (per Mcfe) |
$2.00 - $2.10 |
|
General and administrative (in millions) |
$4.8 - $5.3 |
|
Interest expense (in millions) |
$1.5 - $2.0 |
|
The following updates guidance for the full year of 2010:
Guidance for |
||
Description |
Full Year 2010 |
|
Production volumes (MMcfe/d) |
82 - 90 |
|
Percent gas |
89% |
|
Expenses: |
||
Lease operating expenses (per Mcfe) |
$1.20 - $1.30 |
|
Production taxes (per Mcfe) |
$0.25 - $0.30 |
|
Depreciation, depletion and amortization (per Mcfe) |
$2.05 - $2.15 |
|
General and administrative (in millions) |
$18 - $20 |
|
Interest expense (in millions) |
$7 - $8 |
|
2010 Capital Expenditures (in millions) |
$110 - $130 |
|
Management Statement
"We continue to build momentum in the Woodford, where we expect to commence production from three operated wells in May and begin completion operation on two additional wells in June," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "With over 50% of our 2010 drilling capital allocated to our Woodford shale play, we are excited about the potential for continued growth from this core asset. We remain committed to aligning our cash flow with capital spending so we have adjusted our 2010 budget accordingly to reflect the impact of lower estimated natural gas prices."
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, East Texas, South Louisiana and the shallow waters of the Gulf of Mexico. PetroQuest 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, 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.
PETROQUEST ENERGY, INC. Consolidated Balance Sheets (Amounts in Thousands) (unaudited) |
|||
March 31, |
December 31, |
||
2010 |
2009 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 27,386 |
$ 20,772 |
|
Revenue receivable |
15,874 |
16,457 |
|
Joint interest billing receivable |
12,273 |
11,792 |
|
Hedging asset |
13,256 |
2,796 |
|
Prepaid drilling costs |
1,263 |
2,383 |
|
Drilling pipe inventory |
17,541 |
19,297 |
|
Other current assets |
3,850 |
1,619 |
|
Total current assets |
91,443 |
75,116 |
|
Property and equipment: |
|||
Oil and gas properties: |
|||
Oil and gas properties, full cost method |
1,323,572 |
1,296,177 |
|
Unevaluated oil and gas properties |
114,165 |
108,079 |
|
Accumulated depreciation, depletion and amortization |
(1,097,117) |
(1,082,381) |
|
Oil and gas properties, net |
340,620 |
321,875 |
|
Gas gathering assets |
4,177 |
4,848 |
|
Accumulated depreciation and amortization of gas gathering assets |
(1,273) |
(1,198) |
|
Total property and equipment |
343,524 |
325,525 |
|
Other assets, net of accumulated depreciation and amortization |
|||
of $8,832 and $8,342, respectively |
9,245 |
9,818 |
|
Total assets |
$ 444,212 |
$ 410,459 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable to vendors |
$ 31,875 |
$ 27,113 |
|
Advances from co-owners |
6,767 |
3,662 |
|
Oil and gas revenue payable |
10,669 |
7,886 |
|
Accrued interest and preferred stock dividend |
6,907 |
3,133 |
|
Asset retirement obligation |
7,177 |
4,517 |
|
Other accrued liabilities |
4,103 |
4,106 |
|
Total current liabilities |
67,498 |
50,417 |
|
Bank debt |
10,000 |
29,000 |
|
10 3/8% Senior Notes |
149,339 |
149,267 |
|
Asset retirement obligation |
16,907 |
19,399 |
|
Other liabilities |
316 |
271 |
|
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 61,418 and 61,177 |
|||
shares, respectively |
61 |
61 |
|
Paid-in capital |
261,742 |
259,981 |
|
Accumulated other comprehensive income |
8,337 |
1,768 |
|
Accumulated deficit |
(69,989) |
(99,706) |
|
Total stockholders' equity |
200,152 |
162,105 |
|
Total liabilities and stockholders' equity |
$ 444,212 |
$ 410,459 |
|
PETROQUEST ENERGY, INC. Consolidated Statements of Operations (unaudited) (Amounts in Thousands, Except Per Share Data) |
|||
Three Months Ended |
|||
March 31, |
|||
2010 |
2009 |
||
Revenues: |
|||
Oil and gas sales |
$ 47,545 |
$ 59,234 |
|
Gas gathering revenue |
69 |
215 |
|
47,614 |
59,449 |
||
Expenses: |
|||
Lease operating expenses |
9,695 |
11,133 |
|
Production taxes |
1,348 |
2,174 |
|
Depreciation, depletion and amortization |
14,984 |
31,819 |
|
Ceiling test writedown |
- |
103,582 |
|
Gas gathering costs |
11 |
79 |
|
General and administrative |
4,509 |
4,825 |
|
Accretion of asset retirement obligation |
468 |
652 |
|
Interest expense |
1,810 |
3,176 |
|
32,825 |
157,440 |
||
Gain on legal settlement |
12,400 |
- |
|
Gain on sale of assets |
- |
485 |
|
Other expense |
(83) |
(2,970) |
|
Income (loss) from operations |
27,106 |
(100,476) |
|
Income tax benefit |
(3,891) |
(34,799) |
|
Net income (loss) |
30,997 |
(65,677) |
|
Preferred stock dividend |
1,280 |
1,280 |
|
Net income (loss) available to common stockholders |
$ 29,717 |
$ (66,957) |
|
Earnings per common share: |
|||
Basic |
|||
Net income (loss) per share |
$ 0.47 |
$ (1.36) |
|
Diluted |
|||
Net income (loss) per share |
$ 0.46 |
$ (1.36) |
|
Weighted average number of common shares: |
|||
Basic |
61,243 |
49,346 |
|
Diluted |
67,382 |
49,346 |
|
PETROQUEST ENERGY, INC. Consolidated Statements of Cash Flows (unaudited) (Amounts in Thousands) |
|||
Three Months Ended |
|||
March 31, |
|||
2010 |
2009 |
||
Cash flows from operating activities: |
|||
Net income (loss) |
$ 30,997 |
$ (65,677) |
|
Adjustments to reconcile net income (loss) to net cash provided by |
|||
operating activities: |
|||
Deferred tax benefit |
(3,891) |
(34,799) |
|
Depreciation, depletion and amortization |
14,984 |
31,819 |
|
Ceiling test writedown |
- |
103,582 |
|
Non-cash gain on legal settlement |
(4,164) |
- |
|
Gain on sale of assets |
- |
(485) |
|
Accretion of asset retirement obligation |
468 |
652 |
|
Amortization of debt issuance costs |
316 |
307 |
|
Amortization of bond discount |
72 |
64 |
|
Inventory impairment |
- |
825 |
|
Share based compensation expense |
1,982 |
2,180 |
|
Payments to settle asset retirement obligations |
(517) |
(46) |
|
Changes in working capital accounts: |
|||
Revenue receivable |
583 |
9,297 |
|
Joint interest billing receivable |
(481) |
1,021 |
|
Accounts payable and accrued liabilities |
8,624 |
(28,321) |
|
Advances from co-owners |
3,105 |
(2,605) |
|
Other |
630 |
3,168 |
|
Net cash provided by operating activities |
52,708 |
20,982 |
|
Cash flows from investing activities: |
|||
Investment in oil and gas properties |
(25,587) |
(17,805) |
|
Investment in gas gathering assets |
- |
(7) |
|
Proceeds from sale of oil and gas properties |
- |
711 |
|
Net cash used in investing activities |
(25,587) |
(17,101) |
|
Cash flows from financing activities: |
|||
Net payments for share based compensation |
(221) |
(42) |
|
Deferred financing costs |
(2) |
(35) |
|
Payment of preferred stock dividend |
(1,284) |
(1,284) |
|
Repayment of bank borrowings |
(19,000) |
- |
|
Net cash used in financing activities |
(20,507) |
(1,361) |
|
Net increase in cash and cash equivalents |
6,614 |
2,520 |
|
Cash and cash equivalents, beginning of period |
20,772 |
23,964 |
|
Cash and cash equivalents, end of period |
$ 27,386 |
$ 26,484 |
|
Supplemental disclosure of cash flow information: |
|||
Cash paid during the period for: |
|||
Interest |
$ 171 |
$ 1,324 |
|
Income taxes |
$ - |
$ - |
|
PETROQUEST ENERGY, INC. Non-GAAP Disclosure Reconciliation (Amounts In Thousands) |
|||
Three Months Ended |
|||
March 31, |
|||
2010 |
2009 |
||
Net income (loss) |
$ 30,997 |
$ (65,677) |
|
Reconciling items: |
|||
Deferred tax benefit |
(3,891) |
(34,799) |
|
Gain on sale of assets |
- |
(485) |
|
Non-cash gain on legal settlement |
(4,164) |
- |
|
Depreciation, depletion and amortization |
14,984 |
31,819 |
|
Ceiling test writedown |
- |
103,582 |
|
Accretion of asset retirement obligation |
468 |
652 |
|
Share based compensation expense |
1,982 |
2,180 |
|
Amortization expense and other |
388 |
371 |
|
Inventory impairment |
- |
825 |
|
Discretionary cash flow |
40,764 |
38,468 |
|
Changes in working capital accounts |
12,461 |
(17,440) |
|
Settlement of asset retirement obligations |
(517) |
(46) |
|
Net cash flow provided by operating activities |
$ 52,708 |
$ 20,982 |
|
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. |
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SOURCE PetroQuest Energy, Inc.
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