PetroQuest Energy, Inc. (the "Company") today announced a loss to
common stockholders for the quarter ended March 31, 2018 of
$2,212,000, or $0.09 per share, compared to first quarter 2017 loss
to common stockholders of $4,918,000, or $0.23 per share.
Discretionary cash flow for the first quarter of
2018 was $9,394,000, as compared to $9,206,000 for the comparable
2017 period. See the attached schedule for a reconciliation
of net cash flow provided by operating activities to discretionary
cash flow.
Production for the first quarter of 2018 was 6.1
Bcfe (67.8 MMcfe/d), compared to 5.2 Bcfe (58.1 MMcfe/d) for the
comparable period of 2017. The increase in production as
compared to the first quarter of 2017 was due primarily to
the Company's East Texas drilling program throughout 2017 and its
Thunder Bayou recompletion in the first quarter of 2017. On
January 31, 2018, however, the Company sold its Gulf of Mexico
properties, which contributed approximately 4.7 MMcfe/d to first
quarter 2018 production, as compared to 15.5 MMcfe/d in the first
quarter of 2017. Stated on an Mcfe basis, unit prices including the
effects of hedges for the first quarter of 2018 were $4.08
per Mcfe, as compared to $3.98 per Mcfe in the first quarter of
2017. Oil and gas sales during the first quarter of 2018 were
$24,917,000, as compared to $20,772,000 in the first quarter of
2017.
Lease operating expenses (“LOE”) for the first
quarter of 2018 decreased to $7,040,000, as compared to $7,076,000
in the first quarter of 2017. On a per unit basis LOE per Mcfe was
$1.15 for the first quarter of 2018, as compared to $1.35 in the
first quarter of 2017. The decrease in per unit lease operating
expenses for the three months ended March 31, 2018 is
primarily a result of the divestiture of the Company's Gulf of
Mexico assets in January 2018 which had a higher per unit rate as
compared to the Company's onshore properties.
Depreciation, depletion and amortization
(“DD&A”) on oil and gas properties for the first quarter of
2018 was $1.06 per Mcfe, as compared to $1.15 per Mcfe in the first
quarter of 2017. The decrease in the per unit DD&A rate
for the three months ended March 31, 2018 is primarily the
result of the Company's Gulf of Mexico divestiture in January
2018.
Interest expense for the first quarter of 2018
was $7,481,000, as compared to $7,258,000 in the first quarter of
2017. During the three month period ended March 31, 2018,
capitalized interest totaled $421,000, as compared to $305,000
during the 2017 period.
Production taxes for the first quarter of 2018
totaled $1,227,000, as compared to $308,000 in the first quarter of
2017. The increase in production taxes during the 2018 period
is primarily the result of increases in production and pricing as
well as the expiration of a two-year severance tax exemption on the
Company's Thunder Bayou well in June 2017.
General and administrative expenses for the
first quarter of 2018 totaled $3,300,000, as compared to $3,153,000
during the comparable 2017 periods. Capitalized general and
administrative expenses for the first quarter of 2018 totaled
$1,430,000, as compared to $1,334,000 during the
comparable 2017 period.
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, 2018 and
2017:
| |
Three Months Ended March 31, |
| |
2018 |
|
2017 |
| Production: |
|
|
|
| Oil
(Bbls) |
100,175 |
|
|
132,678 |
|
| Gas
(Mcf) |
4,604,021 |
|
|
3,524,966 |
|
| Ngl
(Mcfe) |
897,103 |
|
|
904,206 |
|
| Total
Production (Mcfe) |
6,102,174 |
|
|
5,225,240 |
|
| Avg.
Daily Production (MMcfe/d) |
67.8 |
|
|
58.1 |
|
| Sales: |
|
|
|
| Total oil
sales |
$ |
6,321,857 |
|
|
$ |
6,871,409 |
|
| Total gas
sales |
14,884,113 |
|
|
10,662,342 |
|
| Total ngl
sales |
3,711,475 |
|
|
3,238,546 |
|
| Total oil
gas and NGL sales |
$ |
24,917,445 |
|
|
$ |
20,772,297 |
|
| Average sales
prices: |
|
|
|
| Oil (per
Bbl) |
$ |
63.11 |
|
|
$ |
51.79 |
|
| Gas (per
Mcf) |
3.23 |
|
|
3.02 |
|
| Ngl (per
Mcfe) |
4.14 |
|
|
3.58 |
|
| Per
Mcfe |
4.08 |
|
|
3.98 |
|
The above sales and average sales prices include
increases (decreases) to revenues related to the settlement of gas
hedges of $804,000 and $(321,000) for the three months ended
March 31, 2018 and 2017, respectively. The above sales
and average sales prices include decreases to revenue related to
the settlement of oil hedges of $264,000 and $0 for the three
months ended March 31, 2018 and 2017, respectively.
The following provides guidance for the second
quarter of 2018:
| |
Guidance for |
| Description |
2nd
Quarter 2018 |
| |
|
| Production volumes
(MMcfe/d) |
55 -
58 |
| |
|
| Percent Gas |
76% |
| Percent Oil |
9% |
| Percent NGL |
15% |
| |
|
| Expenses: |
|
| Lease operating
expenses (per Mcfe) |
$1.05
- $1.15 |
| Production taxes (per
Mcfe) |
$0.20
- $0.25 |
| Depreciation, depletion
and amortization (per Mcfe) |
$1.05
- $1.15 |
| General and
administrative (in millions)* |
$3.5 -
$3.9 |
| Interest expense (in
millions) |
$7.6 -
$7.8 |
| |
|
| * Includes non-cash
stock compensation estimate of approximately $0.4 million |
|
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 Texas and Louisiana. PetroQuest’s common
stock trades on the OTCQX market under the symbol PQUE.
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; our indebtedness and
the significant amount of cash required to service our
indebtedness; our estimate of the sufficiency of our existing
capital sources to fund our exploration and development activities
and service our indebtedness, including availability under our
multi-draw term loan facility; our ability to raise additional
capital to fund cash requirements for future operations; limits on
our growth and our ability to finance our operations and serve our
indebtedness; our ability to fund and execute our Cotton Valley and
Austin Chalk development programs as planned; our ability to
increase recoveries in the Austin Chalk formation and to increase
our overall oil production as planned; our estimates with respect
to fracked Austin Chalk wells in Louisiana, including production
EURs and costs; our estimates with respect to production, reserve
replacement ratio and finding and development costs; our receipt of
a cash refund with respect to our offshore bonds and the timing and
amount of the same; our responsibility for offshore decommissioning
liabilities for offshore interests we no longer own; 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;
fund our capital needs and respond to changing conditions imposed
by our multi-draw term loan facility and restrictive debt
covenants; approximately 46% 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 common stock price; and the limited
trading market for our common stock. 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) |
| |
March 31, 2018 |
|
December 31, 2017 |
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash
equivalents |
$ |
14,178 |
|
|
$ |
15,655 |
|
| Revenue receivable |
7,847 |
|
|
15,340 |
|
| Joint interest billing
receivable |
3,024 |
|
|
6,597 |
|
| Other receivable |
6,000 |
|
|
7,750 |
|
| Derivative asset |
— |
|
|
1,174 |
|
| Deposit for surety
bonds |
11,100 |
|
|
8,300 |
|
| Other current
assets |
1,960 |
|
|
2,125 |
|
| Total current
assets |
44,109 |
|
|
56,941 |
|
| Property and
equipment: |
|
|
|
| Oil and gas
properties: |
|
|
|
| Oil and gas properties,
full cost method |
1,351,048 |
|
|
1,369,861 |
|
| Unevaluated oil and gas
properties |
16,918 |
|
|
21,854 |
|
| Accumulated
depreciation, depletion and amortization |
(1,285,640 |
) |
|
(1,285,660 |
) |
| Oil and gas properties,
net |
82,326 |
|
|
106,055 |
|
| Other property and
equipment |
9,451 |
|
|
9,353 |
|
| Accumulated
depreciation of other property and equipment |
(8,894 |
) |
|
(8,843 |
) |
| Total property and
equipment |
82,883 |
|
|
106,565 |
|
| Other assets |
792 |
|
|
792 |
|
| Total assets |
$ |
127,784 |
|
|
$ |
164,298 |
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
| Current
liabilities: |
|
|
|
| Accounts payable to
vendors |
$ |
15,382 |
|
|
$ |
32,148 |
|
| Advances from
co-owners |
1,181 |
|
|
1,730 |
|
| Oil and gas revenue
payable |
18,451 |
|
|
19,344 |
|
| Accrued interest |
4,689 |
|
|
1,724 |
|
| Asset retirement
obligation |
938 |
|
|
687 |
|
| Derivative
liability |
718 |
|
|
731 |
|
| Other accrued
liabilities |
11,318 |
|
|
6,476 |
|
| Total current
liabilities |
52,677 |
|
|
62,840 |
|
| Multi-draw Term
Loan |
28,131 |
|
|
27,963 |
|
| 10% Senior Secured
Notes due 2021 |
9,788 |
|
|
9,821 |
|
| 10% Senior Secured PIK
Notes due 2021 |
274,563 |
|
|
271,577 |
|
| Asset retirement
obligation |
2,304 |
|
|
30,623 |
|
| Preferred stock
dividend payable |
11,563 |
|
|
10,278 |
|
| Other long-term
liabilities |
567 |
|
|
131 |
|
| 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 25,550 and
25,521 shares, respectively |
26 |
|
|
26 |
|
| Paid-in capital |
313,637 |
|
|
313,244 |
|
| Accumulated other
comprehensive income (loss) |
(718 |
) |
|
278 |
|
| Accumulated
deficit |
(564,755 |
) |
|
(562,484 |
) |
| Total stockholders’
equity |
(251,809 |
) |
|
(248,935 |
) |
| Total liabilities and
stockholders’ equity |
$ |
127,784 |
|
|
$ |
164,298 |
|
| |
|
|
|
|
|
|
|
| PETROQUEST ENERGY, INC.Consolidated
Statements of Operations(Amounts in Thousands, Except Per Share
Data) |
| |
|
|
Three Months Ended |
|
|
March 31, 2018 |
|
March 31, 2017 |
| Revenues: |
|
|
|
| Oil and gas sales |
$ |
24,917 |
|
|
$ |
20,772 |
|
| |
|
|
|
| Expenses: |
|
|
|
| Lease operating
expenses |
7,040 |
|
|
7,076 |
|
| Production taxes |
1,227 |
|
|
308 |
|
| Depreciation, depletion
and amortization |
6,505 |
|
|
6,117 |
|
| General and
administrative |
3,300 |
|
|
3,153 |
|
| Accretion of asset
retirement obligation |
198 |
|
|
547 |
|
| Interest expense |
7,481 |
|
|
7,258 |
|
| |
25,751 |
|
|
24,459 |
|
| Other income: |
|
|
|
| Other income |
13 |
|
|
54 |
|
| Loss from
operations |
(821 |
) |
|
(3,633 |
) |
| Income tax expense |
106 |
|
|
— |
|
| Net loss |
(927 |
) |
|
(3,633 |
) |
| Preferred stock
dividend |
1,285 |
|
|
1,285 |
|
| Loss available to
common stockholders |
$ |
(2,212 |
) |
|
$ |
(4,918 |
) |
| Loss per common
share: |
|
|
|
| Basic |
|
|
|
| Net loss per share |
$ |
(0.09 |
) |
|
$ |
(0.23 |
) |
| Diluted |
|
|
|
| Net loss per share |
$ |
(0.09 |
) |
|
$ |
(0.23 |
) |
| Weighted average number
of common shares: |
|
|
|
| Basic |
25,540 |
|
|
21,208 |
|
| Diluted |
25,540 |
|
|
21,208 |
|
| |
|
|
|
|
|
| PETROQUEST ENERGY, INC.Consolidated
Statements of Cash Flows(Amounts in Thousands) |
| |
|
|
Three Months Ended |
|
|
March 31, 2018 |
|
March 31, 2017 |
| Cash flows from
operating activities: |
|
|
|
| Net loss |
$ |
(927 |
) |
|
$ |
(3,633 |
) |
| Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
| Deferred tax
expense |
106 |
|
|
— |
|
| Depreciation, depletion
and amortization |
6,505 |
|
|
6,117 |
|
| Accretion of asset
retirement obligation |
198 |
|
|
547 |
|
| Share-based
compensation expense |
340 |
|
|
425 |
|
| Non-cash interest
expense on PIK Notes |
2,961 |
|
|
5,512 |
|
| Amortization costs and
other |
211 |
|
|
238 |
|
| Payments to settle
asset retirement obligations |
(3 |
) |
|
(402 |
) |
| Changes in working
capital accounts: |
|
|
|
| Revenue receivable |
7,493 |
|
|
1,025 |
|
| Joint interest billing
receivable |
3,016 |
|
|
460 |
|
| Accounts payable and
accrued liabilities |
(11,583 |
) |
|
3,037 |
|
| Advances from
co-owners |
(549 |
) |
|
1,549 |
|
| Deposit for surety
bonds |
(2,800 |
) |
|
— |
|
| Other |
112 |
|
|
(1,462 |
) |
| Net cash provided by
operating activities |
5,080 |
|
|
13,413 |
|
| Cash flows used in
investing activities: |
|
|
|
| Investment in oil and
gas properties |
(5,810 |
) |
|
(10,898 |
) |
| Investment in other
property and equipment |
(98 |
) |
|
(16 |
) |
| Sale of unevaluated oil
and gas properties |
1,750 |
|
|
— |
|
| Sale of oil and gas
properties |
(2,405 |
) |
|
— |
|
| Net cash used in
investing activities |
(6,563 |
) |
|
(10,914 |
) |
| Cash flows used in
financing activities: |
|
|
|
| Net proceeds from share
based compensation |
43 |
|
|
40 |
|
| Deferred financing
costs |
(26 |
) |
|
(10 |
) |
| Redemption of 2017
Notes |
— |
|
|
(22,650 |
) |
| Costs incurred to
redeem 2021 Notes |
(11 |
) |
|
— |
|
| Proceeds from
borrowings |
— |
|
|
20,000 |
|
| Net cash used in
financing activities |
6 |
|
|
(2,620 |
) |
| Net decrease in cash
and cash equivalents |
(1,477 |
) |
|
(121 |
) |
| Cash and cash
equivalents, beginning of period |
15,655 |
|
|
28,312 |
|
| Cash and cash
equivalents, end of period |
$ |
14,178 |
|
|
$ |
28,191 |
|
| Supplemental disclosure
of cash flow information: |
|
|
|
| Cash paid during the
period for: |
|
|
|
| Interest |
$ |
1,789 |
|
|
$ |
2,975 |
|
| PETROQUEST ENERGY, INC.Non-GAAP
Disclosure Reconciliation(Amounts In Thousands) |
| |
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
| Net loss |
$ |
(927 |
) |
|
$ |
(3,633 |
) |
| Reconciling items: |
|
|
|
| Deferred
tax expense |
106 |
|
|
— |
|
|
Depreciation, depletion and amortization |
6,505 |
|
|
6,117 |
|
| Accretion
of asset retirement obligation |
198 |
|
|
547 |
|
| Non-cash
share based compensation expense |
340 |
|
|
425 |
|
| Non-cash
PIK Interest |
2,961 |
|
|
5,512 |
|
|
Amortization costs and other |
211 |
|
|
238 |
|
| Discretionary cash
flow |
9,394 |
|
|
9,206 |
|
| Changes
in working capital accounts |
(4,311 |
) |
|
4,609 |
|
|
Settlement of asset retirement obligations |
(3 |
) |
|
(402 |
) |
| Net cash flow provided
by operating activities |
$ |
5,080 |
|
|
$ |
13,413 |
|
| |
|
|
|
|
|
|
|
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