PETROQUEST ENERGY INC LAFAYETTE, La., May 4, 2015 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE: PQ) today announced a net loss to common stockholders for the quarter ended March 31, 2015 of ($122,240,000), or ($1.89) per share, compared to first quarter 2014 net income available to common stockholders of $10,043,000, or $0.15 per share. During the first quarter of 2015, the Company recorded a non-cash ceiling test write-down of $108,911,000 as a result of the impact of lower commodity prices on its net discounted cash flows from its proved reserves.
Discretionary cash flow for the first quarter of 2015 was $10,606,000, as compared to $34,488,000 for the comparable 2014 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 2015 were $33,451,000, as compared to $59,966,000 in the first quarter of 2014. Production for the first quarter of 2015 was 10,375,330 Mcfe, as compared to 9,769,110 Mcfe in the first quarter of 2014. Stated on an Mcfe basis, unit prices received during the first quarter of 2015 were 48% lower than the comparable 2014 period.
Lease operating expenses ("LOE") for the first quarter of 2015 totaled $10,902,000, as compared to $12,258,000 in the first quarter of 2014. LOE per Mcfe was $1.05 in the first quarter of 2015, as compared to $1.25 in the first quarter of 2014. The decrease in total and per unit lease operating expenses is primarily the result of increased production from the Company's onshore properties which typically incur lower per unit lease operating expenses as well as the divestment of our Eagle Ford properties during September 2014.
Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the first quarter of 2015 was $1.96 per Mcfe as compared to $2.06 per Mcfe in the first quarter of 2014. The decrease in the per unit DD&A rate is primarily the result of the Company's successful drilling programs in its Carthage and Oklahoma fields, which have a lower cost per unit as compared to the overall amortization base.
General and administrative expenses during the first quarter of 2015 totaled $5,339,000, as compared to $6,242,000 during the 2014 period. The decrease in general and administrative expenses is primarily due to lower employee related costs including share based compensation during the 2015 period. Included in first quarter 2015 and 2014 general and administrative expenses were share based compensation costs of $1,519,000 and $1,762,000, respectively.
Interest expense for the first quarter of 2015 increased to $7,874,000, as compared to $7,636,000 in the first quarter of 2014. The increase in interest expense was primarily the result of increased borrowings under the Company's revolving credit facility.
The following table sets forth certain information with respect to our oil and gas operations for the periods noted. These historical results are not necessarily indicative of results to be expected in future periods.
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Production:
Oil (Bbls) 147,214 242,283
Gas (Mcf) 7,915,504 7,184,130
Ngl (Mcfe) 1,576,540 1,131,282
Total Production (Mcfe) 10,375,330 9,769,110
Avg. Daily Production
(MMcfe/D) 115.3 108.5
Sales:
Total oil sales $6,952,900 $24,140,656
Total gas sales 21,650,095 29,557,335
Total ngl sales 4,848,046 6,268,406
--------- ---------
Total oil and gas sales $33,451,041 $59,966,397
=========== ===========
Average sales prices:
Oil (per Bbl) $47.23 $99.64
Gas (per Mcf) 2.74 4.11
Ngl (per Mcfe) 3.08 5.54
Per Mcfe 3.22 6.14
The above sales and average sales prices include increases (decreases) to revenue related to the settlement of gas hedges of $2,324,000 and ($2,969,000), Ngl hedges of $21,000 and zero and oil hedges of $27,000 and ($434,000) for the three months ended March 31, 2015 and 2014, respectively.
The following initiates guidance for the second quarter of 2015:
Guidance for
Description 2nd Quarter 2015
----------------
Production volumes (MMcfe/d) 125 - 131
Percent Gas 76%
Percent Oil 8%
Percent NGL 16%
Expenses:
Lease operating expenses (per Mcfe) $1.05 - $1.15
Production taxes (per Mcfe) $0.08 - $0.12
Depreciation, depletion and
amortization (per Mcfe) $1.65 - $1.75
General and administrative (in
millions)* $5.0 - $5.5
Interest expense (in millions) $7.6 - $8.1
* Includes non-cash stock compensation estimate of $1.6
million
Operations Update
In East Texas, the Company recently completed its PQ #18 horizontal Cotton Valley well (NRI - 38%) and will begin flowback this week. The Company's previously reported PQ #16 (NRI - 77%) and #17 wells (NRI - 77%), which achieved maximum 24-hour rates of 16.7 MMcfe/d and 14.2 MMcfe/d, respectively, have realized 30 day average production rates of 16.0 MMcfe/d and 13.7 MMcfe/d, respectively. The initial and 30 day average rates for the 2015 wells are 36% and 29% higher than the respective average rates of the six wells drilled during 2014.
The Company's PQ #18 well is the last well scheduled in its 2015 Cotton Valley program. Based upon the success of the 2014 and 2015 drilling programs the Company will monitor commodity prices and service costs to determine an optimal time to re-initiate its Cotton Valley drilling program.
In the Gulf Coast, the Company's Thunder Bayou facility project is in the final stages of construction. Adverse weather has slightly delayed the initiation of production and the Company now expects production to commence in approximately two to three weeks at a gross rate of approximately 38,000 Mcfe/d (NRI - 37%).
The Company's Pintail and Merganser prospects in its Fleetwood joint venture have reached total depth and have been determined to be non-commercial. The Company's total net cost for these two wells was approximately $1.6 million. Based upon improving oil prices and a lower service cost environment, the Company is evaluating its initial horizontal Widgeon prospect test (WI - 50%), which will target the liquids rich Cockfield tight sand formation, during the second half of 2015.
In the Woodford, the Company recently established production on nine wells in its West Relay field. These wells (average NRI - 15%) achieved an average per well maximum 24-hour gross rate of approximately 2,000 Mcf of gas and 360 barrels of natural gas liquids. The Company continues to run one rig in the wet gas area and expects to complete eight wells during the second quarter. In addition, the Company has recently begun completing eight dry gas wells (NRI - 14%) in its Hoss field, which should have first production in approximately four weeks.
Management Statement
"Our second quarter daily production guidance represents the highest production run rate in the Company's history," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "This record production profile coupled with a minimal capex program in the back half of 2015 should provide free cash flow generation later this year and allow us to achieve our 2015 goals of growing production while maintaining our liquidity position."
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, 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 the volatility of oil and natural gas prices and significantly depressed oil prices since the end of 2014, 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, 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)
March 31, 2015 December 31, 2014
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $14,209 $18,243
Revenue receivable 13,691 16,485
Joint interest billing receivable 32,202 46,778
Derivative asset 11,121 8,631
Prepaid drilling costs 1,033 847
Other current assets 6,684 5,566
----- -----
Total current assets 78,940 96,550
------ ------
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost method 2,270,360 2,222,753
Unevaluated oil and gas properties 88,762 109,119
Accumulated depreciation, depletion and
amortization (1,777,246) (1,648,060)
---------- ----------
Oil and gas properties, net 581,876 683,812
Other property and equipment 15,033 14,953
Accumulated depreciation of other property
and equipment (10,649) (10,313)
------- -------
Total property and equipment 586,260 688,452
Derivative asset 192 -
Other assets, net of accumulated depreciation
and amortization of $8,426 and $7,847,
respectively 5,563 5,893
----- -----
Total assets $670,955 $790,895
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors $88,057 $102,954
Advances from co-owners 35,001 12,819
Oil and gas revenue payable 20,849 22,333
Accrued interest and preferred stock dividend 4,113 12,764
Asset retirement obligation 1,910 2,756
Derivative liability 138 -
Accrued acquisition costs 8,238 17,690
Other accrued liabilities 5,990 5,394
----- -----
Total current liabilities 164,296 176,710
Bank debt 85,000 75,000
10% Senior Notes 350,000 350,000
Asset retirement obligation 53,448 52,214
Other long-term liability 447 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
64,815 and 64,721 shares, respectively 65 65
Paid-in capital 287,454 285,957
Accumulated other comprehensive income 7,018 5,420
Accumulated deficit (276,774) (154,534)
-------- --------
Total stockholders' equity 17,764 136,909
------ -------
Total liabilities and stockholders' equity $670,955 $790,895
======== ========
PETROQUEST ENERGY, INC.
Consolidated Statements of Operations
(Amounts in Thousands, Except Per Share Data)
Three Months Ended
March 31,
---------
2015 2014
---- ----
Revenues:
Oil and gas sales $33,451 $59,966
Expenses:
Lease operating expenses 10,902 12,258
Production taxes 956 1,477
Depreciation, depletion and
amortization 20,654 20,428
Ceiling test write-down 108,911 -
General and administrative 5,339 6,242
Accretion of asset retirement
obligation 859 791
Interest expense 7,874 7,636
----- -----
155,495 48,832
------- ------
Other income:
Other income 157 189
--- ---
Income (loss) from operations (121,887) 11,323
Income tax benefit (927) -
---- ---
Net income (loss) (120,960) 11,323
Preferred stock dividend 1,280 1,280
----- -----
Income (loss) available to common
stockholders $(122,240) $10,043
========= =======
Earnings per common share:
Basic
Net income (loss) per share $(1.89) $0.15
====== =====
Diluted
Net income (loss) per share $(1.89) $0.15
====== =====
Weighted average number of common shares:
Basic 64,774 63,846
====== ======
Diluted 64,774 63,902
====== ======
PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(Amounts in Thousands)
Three Months Ended
March 31,
---------
2015 2014
---- ----
Cash flows from operating activities:
Net income (loss) $(120,960) $11,323
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Deferred tax benefit (927) -
Depreciation, depletion and
amortization 20,654 20,428
Ceiling test writedown 108,911 -
Accretion of asset retirement
obligation 859 791
Share-based compensation
expense 1,478 1,389
Amortization costs and other 591 557
Payments to settle asset
retirement obligations (894) (718)
Changes in working capital accounts:
Revenue receivable 2,794 2,464
Prepaid drilling and pipe
costs (186) (43)
Joint interest billing
receivable 14,439 2,684
Accounts payable and accrued
liabilities (24,561) 246
Advances from co-owners 22,182 6,033
Other (1,149) 135
------ ---
Net cash provided by operating
activities 23,231 45,289
------ ------
Cash flows used in investing activities:
Investment in oil and gas
properties (36,033) (41,792)
Investment in other property
and equipment (80) (205)
Net cash used in investing
activities (36,113) (41,997)
------- -------
Cash flows provided by (used in) financing
activities:
Net proceeds for share based
compensation 405 911
Deferred financing costs (273) (81)
Payment of preferred stock
dividend (1,284) (1,284)
Proceeds from bank borrowings 15,000 5,000
Repayment of bank borrowings (5,000) (5,000)
------ ------
Net cash provided by (used in)
financing activities 8,848 (454)
----- ----
Net increase (decrease) in
cash and cash equivalents (4,034) 2,838
Cash and cash equivalents,
beginning of period 18,243 9,153
------ -----
Cash and cash equivalents, end
of period $14,209 $11,991
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $17,943 $18,131
======= =======
Income taxes $20 $ -
=== === ===
PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts In Thousands)
Three Months Ended
March 31,
---------
2015 2014
---- ----
Net income
(loss) $(120,960) $11,323
Reconciling items:
Deferred tax
benefit (927) -
Depreciation,
depletion and
amortization 20,654 20,428
Ceiling test
writedown 108,911 -
Accretion of
asset
retirement
obligation 859 791
Non-cash
share based
compensation
expense 1,478 1,389
Amortization
costs and
other 591 557
--- ---
Discretionary
cash flow 10,606 34,488
Changes in
working
capital
accounts 13,519 11,519
Settlement of
asset
retirement
obligations (894) (718)
Net cash flow
provided by
operating
activities $23,231 $45,289
======= =======
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.
