PetroQuest Energy, Inc. (the "Company") today announced a loss to
common stockholders for the quarter ended September 30, 2017
of $3,085,000, or $0.15 per share, compared to third quarter 2016
loss to common stockholders of $23,306,000, or $1.31 per share. For
the first nine months of 2017, the Company reported a loss to
common stockholders of $11,387,000, or $0.54 per share, compared to
a loss to common stockholders of $86,586,000, or $4.97 per share,
for the 2016 period. The losses during the quarter and nine months
ended September 30, 2016 included non-cash ceiling test write-downs
totaling $8,665,000 and $40,304,000, respectively.
Discretionary cash flow for the third quarter of
2017 was $13,741,000, as compared to $207,000 for the comparable
2016 period. For the first nine months of 2017, discretionary
cash flow was $34,332,000, as compared to $(2,994,000) for the
first nine months of 2016. 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 2017 was 7.5
Bcfe, compared to 5.2 Bcfe for the comparable period of 2016. For
the first nine months of 2017, production was 19.0 Bcfe, compared
to 18.9 Bcfe for the comparable period of 2016. Production during
the third quarter increased 18% from the previous quarter and was
63% higher than production in December 2016.
Stated on an Mcfe basis, unit prices including
the effects of hedges for the third quarter of 2017 were
$3.77 per Mcfe, as compared to $3.27 per Mcfe in the third
quarter of 2016. For the first nine months of 2017, unit prices
including the effects of hedges, were $3.85 per Mcfe, as compared
to $2.66 per Mcfe for the first nine months of 2016.
Oil and gas sales during the third quarter of
2017 were $28,184,000, as compared to $17,094,000 in the third
quarter of 2016. For the first nine months of 2017, oil and gas
sales were $73,207,000 as compared to oil and gas sales of
$50,238,000 for the first nine months of 2016.
Lease operating expenses (“LOE”) for the third
quarter of 2017 increased to $8,863,000, as compared to $6,857,000
in the third quarter of 2016. However, on a per unit basis LOE per
Mcfe was $1.19 for the third quarter of 2017, as compared to $1.31
in the third quarter of 2016. For the first nine months of 2017,
lease operating expenses were $1.21 per Mcfe compared to $1.16 per
Mcfe in the first nine months of 2016.
Depreciation, depletion and amortization
(“DD&A”) on oil and gas properties for the third quarter of
2017 was $1.16 per Mcfe, as compared to $1.12 per Mcfe in the third
quarter of 2016. For the first nine months of 2017, DD&A on oil
and gas properties was $1.13 per Mcfe compared to $1.21 per Mcfe
for the comparable period of 2016. The decrease in the per unit
DD&A rate during the first nine months of 2017 is primarily the
result of ceiling test write-downs during 2016 and the success of
our East Texas drilling program.
Interest expense for the third quarter of 2017
decreased to $7,371,000, as compared to $7,737,000 in the third
quarter of 2016. During the three month period ended
September 30, 2017, capitalized interest totaled $338,000, as
compared to $167,000 during the 2016 period. For the first nine
months of 2017, interest expense was $21,776,000, compared to
$22,497,000 for the comparable period of 2016. During the nine
month period ended September 30, 2017, capitalized interest
totaled $1,046,000, as compared to $722,000 during the 2016 period.
Capitalized interest was higher during the 2017 periods as a result
of an increase in unevaluated properties.
Production taxes for the third quarter of 2017
totaled $1,112,000, as compared to $319,000 in the third quarter of
2016. For the first nine months of 2017, production taxes
were $1,990,000 compared to $609,000 for the comparable period of
2016. The increase in production taxes during the 2017 periods is
primarily the result of increases in production and pricing as well
as the expiration of a two-year severance tax exemption on our
Thunder Bayou well in June 2017.
General and administrative expenses during the
quarter and nine months ended September 30, 2017 totaled $3,341,000
and $10,808,000, respectively, as compared to $8,827,000 and
$21,297,000 during the comparable 2016 periods. Capitalized general
and administrative expenses during the quarter and nine
months ended September 30, 2017 totaled $1,310,000, and
$4,654,000, respectively, as compared to expenses of
$1,268,000 and $4,347,000 during the comparable 2016 periods.
The decrease in general and administrative expenses during the
first nine months of 2017 as compared to the comparable period in
2016 is primarily due to $10,073,000 of costs related to the
Company's debt exchanges in 2016 as well as reduction in staff
levels.
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, 2017 and 2016:
| |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| |
2017 |
|
2016 |
|
2017 |
|
|
2016 |
| Production: |
|
|
|
|
|
|
|
|
|
|
|
| Oil
(Bbls) |
142,830 |
|
|
123,165 |
|
|
423,231 |
|
|
377,473 |
|
| Gas
(Mcf) |
5,336,119 |
|
|
3,650,109 |
|
|
13,218,475 |
|
|
13,470,406 |
|
| Ngl
(Mcfe) |
1,283,900 |
|
|
838,294 |
|
|
3,268,206 |
|
|
3,130,784 |
|
| Total
Production (Mcfe) |
7,476,999 |
|
|
5,227,393 |
|
|
19,026,067 |
|
|
18,866,028 |
|
| Avg.
Daily Production (MMcfe/d) |
81.3 |
|
|
56.8 |
|
|
69.7 |
|
|
69.1 |
|
| Sales: |
|
|
|
|
|
|
|
| Total oil
sales |
$ |
7,106,913 |
|
|
$ |
5,380,110 |
|
|
$ |
21,277,840 |
|
|
$ |
14,675,611 |
|
| Total gas
sales |
16,427,965 |
|
|
9,873,068 |
|
|
40,841,252 |
|
|
29,444,803 |
|
| Total ngl
sales |
4,649,157 |
|
|
1,840,764 |
|
|
11,087,868 |
|
|
6,117,868 |
|
| Total oil
gas and NGL sales |
$ |
28,184,035 |
|
|
$ |
17,093,942 |
|
|
$ |
73,206,960 |
|
|
$ |
50,238,282 |
|
| Average sales
prices: |
|
|
|
|
|
|
|
| Oil (per
Bbl) |
$ |
49.76 |
|
|
$ |
43.68 |
|
|
$ |
50.27 |
|
|
$ |
38.88 |
|
| Gas (per
Mcf) |
3.08 |
|
|
2.70 |
|
|
3.09 |
|
|
2.19 |
|
| Ngl (per
Mcfe) |
3.62 |
|
|
2.20 |
|
|
3.39 |
|
|
1.95 |
|
| Per
Mcfe |
3.77 |
|
|
3.27 |
|
|
3.85 |
|
|
2.66 |
|
The above sales and average sales prices include
increases (decreases) to revenues related to the settlement of gas
hedges of $618,000 and $(144,000) for the three months ended
September 30, 2017 and 2016, respectively. The above
sales and average sales prices include increases to revenues
related to the settlement of gas hedges of $404,000 and $2,043,000
for the nine months ended September 30, 2017 and 2016,
respectively.
The following provides guidance for the fourth
quarter of 2017:
| |
Guidance for |
| Description |
4th Quarter 2017 |
| |
|
| Production volumes
(MMcfe/d) |
91-95 |
| |
|
| Percent Gas |
76 |
% |
| Percent Oil |
11 |
% |
| Percent NGL |
13 |
% |
| |
|
| Expenses: |
|
| Lease operating
expenses (per Mcfe) |
$1.05 - $1.10 |
| Production taxes (per
Mcfe) |
$0.12 - $0.17 |
| Depreciation, depletion
and amortization (per Mcfe) |
$1.10 - $1.20 |
| General and
administrative (in millions)* |
$3.4 - $3.9 |
| Interest expense (in
millions)** |
$7.3 - $7.5 |
| |
|
| |
|
| * Includes non-cash
stock compensation estimate of approximately $0.3 million |
|
| ** Includes non-cash
interest expense of approximately $6.0 million |
|
| |
|
In early October 2017, the Company’s net daily
production rate exceeded 100 MMcfe thereby achieving the previously
stated goal of doubling production from the fourth quarter of
2016. The production guidance for the fourth quarter of 2017
takes into consideration the deferral of completions on two drilled
Cotton Valley wells into 2018 in order to better align the
Company’s 2017 capital budget with estimated cash flow. In
addition, guidance reflects approximately one month of expected
downtime at West Delta 89 in the fourth quarter due to third party
pipeline maintenance and downtime for all of the Company’s Gulf of
Mexico fields for a portion of October as a result of Hurricane
Nate. The mid-point of the Company’s current fourth
quarter 2017 production guidance would represent an approximate 86%
increase from the average daily production during the fourth
quarter of 2016 and would be the highest quarterly production since
the second quarter of 2015 when the Company sold the majority of
its Woodford Shale assets.
Cotton Valley InventorySince
the beginning of 2017, the Company has increased the acreage held
within its Joint Venture area from approximately 6,000 net acres to
nearly 8,200 net acres. As a result of the nearly 40% growth
in acreage, as well as the results from the 2017 drilling program,
the Company is increasing its drilling inventory within its entire
Cotton Valley acreage position from 601 gross locations to 838
gross locations.
About the CompanyPetroQuest
Energy, Inc. is an independent energy company engaged in the
exploration, development, acquisition and production of oil and
natural gas reserves in the 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 the Company 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
indebtedness and the significant amount of cash required to service
our indebtedness; our estimate of the sufficiency of our existing
capital sources, including availability under our new multi-draw
term loan facility; our ability to post additional collateral to
satisfy our offshore decommissioning obligations; our ability to
execute our 2017 drilling and recompletion program as planned and
to increase our production; our ability to hedge future production
to reduce our exposure to price volatility in the current commodity
pricing market; our ability to find, develop and produce oil and
natural gas reserves that are economically recoverable and to
replace reserves and sustain and/or increase production; ceiling
test write-downs resulting, and that could result in the future,
from lower oil and natural gas prices; our ability to raise
additional capital to fund cash requirements for future operations;
limits on our growth and our ability to finance our operations,
fund our capital needs and respond to changing conditions imposed
by our multi-draw term loan facility and restrictive debt
covenants; more than 50% of our production being exposed to the
additional risk of severe weather, including hurricanes, tropical
storms and flooding, and natural disasters; losses and liabilities
from uninsured or underinsured drilling and operating activities;
changes in laws and governmental regulations as they relate to our
operations; the operating hazards attendant to the oil and gas
business; the volatility of our stock price; and our ability to
meet the continued listing standards of the New York Stock Exchange
with respect to our common stock or to cure any deficiency with
respect thereto. In particular, careful consideration should be
given to cautionary statements made in the various reports the
Company has filed with the SEC. The Company undertakes no duty to
update or revise these forward-looking statements.
| |
| PETROQUEST ENERGY, INC. |
| Consolidated Balance Sheets |
| (Amounts in Thousands) |
|
|
| |
September 30,2017 |
|
December 31,2016 |
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash
equivalents |
$ |
18,064 |
|
|
$ |
28,312 |
|
| Revenue receivable |
10,096 |
|
|
10,294 |
|
| Joint interest billing
receivable |
5,369 |
|
|
7,632 |
|
| Derivative asset |
765 |
|
|
— |
|
| Other current
assets |
3,469 |
|
|
2,353 |
|
| Total current
assets |
37,763 |
|
|
48,591 |
|
| Property and
equipment: |
|
|
|
| Oil and gas
properties: |
|
|
|
| Oil and gas properties,
full cost method |
1,365,792 |
|
|
1,323,333 |
|
| Unevaluated oil and gas
properties |
14,921 |
|
|
9,015 |
|
| Accumulated
depreciation, depletion and amortization |
(1,266,954 |
) |
|
(1,243,286 |
) |
| Oil and gas properties,
net |
113,759 |
|
|
89,062 |
|
| Other property and
equipment |
9,351 |
|
|
10,951 |
|
| Accumulated
depreciation of other property and equipment |
(8,749 |
) |
|
(10,109 |
) |
| Total property and
equipment |
114,361 |
|
|
89,904 |
|
| Other assets |
7,402 |
|
|
6,365 |
|
| Total assets |
$ |
159,526 |
|
|
$ |
144,860 |
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
| Current
liabilities: |
|
|
|
| Accounts payable to
vendors |
$ |
38,240 |
|
|
$ |
25,265 |
|
| Advances from
co-owners |
2,754 |
|
|
2,330 |
|
| Oil and gas revenue
payable |
18,440 |
|
|
22,146 |
|
| Accrued interest |
1,631 |
|
|
2,047 |
|
| Asset retirement
obligation |
1,630 |
|
|
4,160 |
|
| Derivative
liability |
283 |
|
|
3,947 |
|
| 10% Senior Unsecured
Notes due 2017 |
— |
|
|
22,568 |
|
| Other accrued
liabilities |
538 |
|
|
3,938 |
|
| Total current
liabilities |
63,516 |
|
|
86,401 |
|
| Multi-draw Term
Loan |
27,788 |
|
|
7,249 |
|
| 10% Senior Secured
Notes due 2021 |
14,932 |
|
|
15,228 |
|
| 10% Senior Secured PIK
Notes due 2021 |
265,631 |
|
|
248,600 |
|
| Asset retirement
obligation |
34,330 |
|
|
32,450 |
|
| Other long-term
liabilities |
9,533 |
|
|
6,027 |
|
| 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 21,235 and
21,197 shares, respectively |
21 |
|
|
21 |
|
| Paid-in capital |
305,566 |
|
|
304,341 |
|
| Accumulated other
comprehensive income (loss) |
303 |
|
|
(4,750 |
) |
| Accumulated
deficit |
(562,095 |
) |
|
(550,708 |
) |
| Total stockholders’
equity |
(256,204 |
) |
|
(251,095 |
) |
| Total liabilities and
stockholders’ equity |
$ |
159,526 |
|
|
$ |
144,860 |
|
|
|
| PETROQUEST ENERGY, INC. |
| Consolidated Statements of Operations |
| (Amounts in Thousands, Except Per Share Data) |
| |
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30,2017 |
|
September 30,2016 |
|
September 30,2017 |
|
September 30,2016 |
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Oil and gas sales |
$ |
28,184 |
|
|
$ |
17,094 |
|
|
$ |
73,207 |
|
|
$ |
50,238 |
|
| |
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
| Lease operating
expenses |
8,863 |
|
|
6,857 |
|
|
23,052 |
|
|
21,898 |
|
| Production taxes |
1,112 |
|
|
319 |
|
|
1,990 |
|
|
609 |
|
| Depreciation, depletion
and amortization |
8,795 |
|
|
6,030 |
|
|
21,753 |
|
|
23,361 |
|
| Ceiling test
write-down |
— |
|
|
8,665 |
|
|
— |
|
|
40,304 |
|
| General and
administrative |
3,341 |
|
|
8,827 |
|
|
10,808 |
|
|
21,297 |
|
| Accretion of asset
retirement obligation |
571 |
|
|
670 |
|
|
1,671 |
|
|
1,896 |
|
| Interest expense |
7,371 |
|
|
7,737 |
|
|
21,776 |
|
|
22,497 |
|
| |
30,053 |
|
|
39,105 |
|
|
81,050 |
|
|
131,862 |
|
| Other income: |
|
|
|
|
|
|
|
| Other income
(expense) |
(16 |
) |
|
(28 |
) |
|
36 |
|
|
(355 |
) |
| Loss from
operations |
(1,885 |
) |
|
(22,039 |
) |
|
(7,807 |
) |
|
(81,979 |
) |
| Income tax expense
(benefit) |
(84 |
) |
|
(18 |
) |
|
(274 |
) |
|
543 |
|
| Net loss |
(1,801 |
) |
|
(22,021 |
) |
|
(7,533 |
) |
|
(82,522 |
) |
| Preferred stock
dividend |
1,284 |
|
|
1,285 |
|
|
3,854 |
|
|
4,064 |
|
| Loss available to
common stockholders |
$ |
(3,085 |
) |
|
$ |
(23,306 |
) |
|
$ |
(11,387 |
) |
|
$ |
(86,586 |
) |
| Loss per common
share: |
|
|
|
|
|
|
|
| Basic |
|
|
|
|
|
|
|
| Net loss per share |
$ |
(0.15 |
) |
|
$ |
(1.31 |
) |
|
$ |
(0.54 |
) |
|
$ |
(4.97 |
) |
| Diluted |
|
|
|
|
|
|
|
| Net loss per share |
$ |
(0.15 |
) |
|
$ |
(1.31 |
) |
|
$ |
(0.54 |
) |
|
$ |
(4.97 |
) |
| Weighted average number
of common shares: |
|
|
|
|
|
|
|
| Basic |
21,230 |
|
|
17,736 |
|
|
21,222 |
|
|
17,412 |
|
| Diluted |
21,230 |
|
|
17,736 |
|
|
21,222 |
|
|
17,412 |
|
|
|
|
|
| PETROQUEST ENERGY, INC. |
| Consolidated Statements of Cash Flows |
| (Amounts in Thousands) |
|
|
| |
Nine Months Ended |
| |
September 30, 2017 |
|
September 30, 2016 |
| Cash flows from
operating activities: |
|
|
|
|
|
|
|
| Net loss |
$ |
(7,533 |
) |
|
$ |
(82,522 |
) |
| Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
| Deferred tax (benefit)
expense |
(274 |
) |
|
543 |
|
| Depreciation, depletion
and amortization |
21,753 |
|
|
23,361 |
|
| Ceiling test
writedown |
— |
|
|
40,304 |
|
| Accretion of asset
retirement obligation |
1,671 |
|
|
1,896 |
|
| Share-based
compensation expense |
1,181 |
|
|
1,361 |
|
| Non-cash interest
expense on PIK Notes |
16,973 |
|
|
— |
|
| Amortization costs and
other |
561 |
|
|
1,990 |
|
| Payments to settle
asset retirement obligations |
(2,277 |
) |
|
(2,884 |
) |
| Costs incurred to issue
2021 Notes |
— |
|
|
10,073 |
|
| Changes in working
capital accounts: |
|
|
|
| Revenue receivable |
198 |
|
|
(5,374 |
) |
| Joint interest billing
receivable |
1,935 |
|
|
26,800 |
|
| Accounts payable and
accrued liabilities |
2,292 |
|
|
(45,904 |
) |
| Advances from
co-owners |
424 |
|
|
(15,741 |
) |
| Other |
(1,576 |
) |
|
(5,640 |
) |
| Net cash provided by
(used in) operating activities |
35,328 |
|
|
(51,737 |
) |
| Cash flows (used in)
provided by investing activities: |
|
|
|
| Investment in oil and
gas properties |
(44,941 |
) |
|
(22,084 |
) |
| Investment in other
property and equipment |
(52 |
) |
|
(23 |
) |
| Sale of oil and gas
properties |
2,207 |
|
|
24,832 |
|
| Net cash (used in)
provided by investing activities |
(42,786 |
) |
|
2,725 |
|
| Cash flows used in
financing activities: |
|
|
|
| Net proceeds from share
based compensation |
16 |
|
|
130 |
|
| Deferred financing
costs |
(156 |
) |
|
(373 |
) |
| Payment of preferred
stock dividend |
— |
|
|
(1,285 |
) |
| Redemption of 2017
Notes |
(22,650 |
) |
|
(53,626 |
) |
| Costs incurred to issue
2021 Notes |
— |
|
|
(10,073 |
) |
| Proceeds from
borrowings |
20,000 |
|
|
— |
|
| Net cash used in
financing activities |
(2,790 |
) |
|
(65,227 |
) |
| Net decrease in cash
and cash equivalents |
(10,248 |
) |
|
(114,239 |
) |
| Cash and cash
equivalents, beginning of period |
28,312 |
|
|
148,013 |
|
| Cash and cash
equivalents, end of period |
$ |
18,064 |
|
|
$ |
33,774 |
|
| Supplemental disclosure
of cash flow information: |
|
|
|
| Cash paid during the
period for: |
|
|
|
| Interest |
$ |
5,717 |
|
|
$ |
33,114 |
|
| Income taxes |
$ |
(95 |
) |
|
$ |
(18 |
) |
|
|
| |
| PETROQUEST ENERGY, INC. |
| Non-GAAP Disclosure Reconciliation |
| (Amounts In Thousands) |
|
|
| |
Three Months Ended |
Nine Months Ended |
| |
September 30, |
September 30, |
| |
2017 |
|
2016 |
2017 |
|
2016 |
| Net loss |
$ |
(1,801 |
) |
|
$ |
(22,021 |
) |
$ |
(7,533 |
) |
|
$ |
(82,522 |
) |
| Reconciling items: |
|
|
|
|
|
|
| Deferred
tax expense (benefit) |
(85 |
) |
|
(18 |
) |
(274 |
) |
|
543 |
|
|
Depreciation, depletion and amortization |
8,795 |
|
|
6,030 |
|
21,753 |
|
|
23,361 |
|
| Ceiling
test writedown |
— |
|
|
8,665 |
|
— |
|
|
40,304 |
|
| Accretion
of asset retirement obligation |
571 |
|
|
670 |
|
1,671 |
|
|
1,896 |
|
| Non-cash
share based compensation expense |
356 |
|
|
436 |
|
1,181 |
|
|
1,361 |
|
| Non-cash
PIK Interest |
5,794 |
|
|
— |
|
16,973 |
|
|
— |
|
|
Amortization costs and other |
111 |
|
|
1,180 |
|
561 |
|
|
1,990 |
|
| Costs
incurred to issue 2021 Notes |
— |
|
|
5,265 |
|
— |
|
|
10,073 |
|
| Discretionary cash
flow |
13,741 |
|
|
207 |
|
34,332 |
|
|
(2,994 |
) |
| Changes
in working capital accounts |
8,812 |
|
|
(25,509 |
) |
3,273 |
|
|
(45,859 |
) |
|
Settlement of asset retirement obligations |
(920 |
) |
|
(369 |
) |
(2,277 |
) |
|
(2,884 |
) |
| Net cash flow provided
by (used in) operating activities |
$ |
21,633 |
|
|
$ |
(25,671 |
) |
$ |
35,328 |
|
|
$ |
(51,737 |
) |
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.
For further information, contact:Matt Quantz,
Manager – Corporate Communications(337) 232-7028,
www.petroquest.com