PetroQuest Energy Announces Third Quarter 2009 Results
- Press Release
- Source: PetroQuest Energy, Inc.
- On 5:30 am EST, Tuesday November 3, 2009
LAFAYETTE, La., Nov. 3 /PRNewswire-FirstCall/ -- PetroQuest Energy, Inc. (NYSE: PQ - News) announced today net income available to common stockholders for the quarter ended September 30, 2009 of $4,453,000, or $0.07 per share, compared to third quarter 2008 net income available to common stockholders of $16,758,000, or $0.32 per share. For the first nine months of 2009, the Company reported net loss available to common stockholders of $54,758,000, or $1.03 per share, compared to net income available to common stockholders of $52,694,000, or $1.01 per share, for the first nine months of 2008. The net loss for the 2009 period was primarily the result of a non-cash ceiling test writedown of $103.6 million recorded during the first quarter of 2009.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| PQ | 5.84 | -0.06 |
Discretionary cash flow for the third quarter of 2009 was $33,762,000, as compared to $58,728,000 for the comparable 2008 period. For the first nine months of 2009, discretionary cash flow was $110,018,000. Discretionary cash flow for the first nine months of 2008 was $188,310,000. 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 2009 and 2008 was 8.0 Bcfe. Production for the first nine months of 2009 was 26.6 Bcfe, which was 9% higher than production for the comparable period of 2008. Stated on an Mcfe basis, unit prices received during the third quarter and the first nine months of 2009 were 34% and 38% lower, respectively, than the comparable 2008 periods. Oil and gas sales during the third quarter of 2009 decreased 35% to $50,182,000 as compared to $76,987,000 in the third quarter of 2008. For the first nine months of 2009, oil and gas sales decreased 32% to $164,792,000 from $242,420,000 in the first nine months of 2008.
Lease operating expenses for the third quarter of 2009 decreased to $1.21 per Mcfe as compared to $1.46 per Mcfe in the third quarter of 2008. For the first nine months of 2009, lease operating expenses per Mcfe decreased 17% to $1.09 from $1.31 in the comparable period of 2008. The declines are primarily due to the Company's cost reduction efforts combined with lower services and materials costs.
Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the third quarter of 2009 was $2.21 per Mcfe as compared to $4.16 per Mcfe in the third quarter of 2008. For the first nine months of 2009, DD&A decreased 34% to $2.52 per Mcfe from $3.84 per Mcfe for the comparable period of 2008. The declines in DD&A are primarily the result of the non-cash ceiling test write-downs of our proved oil and gas properties during 2008 and the first quarter of 2009.
General and administrative expenses decreased $1,578,000 and $4,872,000 for the third quarter and nine months ended September 30, 2009, as compared to the respective 2008 periods. The decreases during the 2009 periods are primarily due to lower employee related costs.
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, 2009 and 2008:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Production:
Oil (Bbls) 137,077 137,929 450,676 504,509
Gas (Mcf) 7,169,167 7,214,427 23,944,666 21,322,903
Total Production
(Mcfe) 7,991,629 8,042,001 26,648,722 24,349,957
MMcfe/d 87 87 98 89
Sales:
Total oil sales $10,324,647 $15,695,498 $29,028,227 $53,362,415
Total gas sales 39,857,782 61,291,924 135,764,007 189,057,801
---------- ---------- ----------- -----------
Total oil and gas
sales $50,182,429 $76,987,422 $164,792,234 $242,420,216
=========== =========== ============ ============
Average sales
prices:
Oil (per Bbl) $75.32 $113.79 $64.41 $105.77
Gas (per Mcf) 5.56 8.50 5.67 8.87
Per Mcfe 6.28 9.57 6.18 9.96
The above sales and average sales prices include additions (reductions) related to the settlement of gas hedges of $20,996,000 and ($3,925,000) and the settlement of oil hedges of $1,167,000 and ($1,567,000) for the three months ended September 30, 2009 and 2008, respectively. The above sales and average sales prices include additions (reductions) related to the settlement of gas hedges of $57,415,000 and ($11,538,000) and the settlement of oil hedges of $4,682,000 and ($4,504,000) for the nine months ended September 30, 2009 and 2008, respectively.
The following initiates guidance for the fourth quarter of 2009:
Guidance for
Description 4th Quarter 2009
----------- ----------------
Production volumes (MMcfe/d) 83 - 88
Percent gas 88%
Expenses:
Lease operating expenses (per Mcfe) $1.25 - $1.35
Production taxes (per Mcfe) $0.20 - $0.25
Depreciation, depletion and amortization (per
Mcfe) $2.30 - $2.40
General and administrative (in millions) $4.5 - $5.0
Interest expense (in millions) $2.8 - $3.1
2009 Direct Capital Expenditures (in millions) $65 - $75
Operations Update
As previously announced, the Company has resumed its Woodford operated drilling program and is currently drilling its 31st Woodford operated well. Once drilled, the Company will commence operations on the 32nd Woodford operated well. In addition, the Company expects to commence completion operations on two previously drilled Woodford operated wells (7,245 foot lateral & 4,392 foot lateral) during November.
The Company participated in six gross (0.65 net) non-operated wells in the Fayetteville shale during the third quarter of 2009. The Company currently has one non-operated rig working in the trend.
In the Gulf Coast, the Company's Whistling Straits prospect was drilled to total depth and has been determined to be commercially non-productive. The Company has a 24% working interest in this well and estimates its share of the cost to test this prospect was approximately $1.7 million.
Liquidity Update
During October 2009, the Company repaid $51 million of bank debt. The Company currently has $49 million of borrowing outstanding under its credit facility and approximately $36 million of cash on hand. As previously disclosed, the Company's borrowing base is currently $100 million.
Hedging Update
The Company initiated the following commodity hedging transaction during October 2009:
Production Period Type Daily Volumes Price
----------------- ---- ------------- -----
Natural Gas:
Jan - Dec 2010 Costless Collar 10,000 Mmbtu $6.00 - $6.45
After executing the above transaction, the Company has approximately 11 Bcfe of production volumes hedged for 2010 with an average floor of $5.83 per Mcf.
Management Statement
"After spending the majority of 2009 focusing on strengthening our balance sheet, we are now in position and are very excited to re-initiate our Woodford operated drilling program," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "After analyzing the performance of our last seventeen Woodford operated wells, I am more confident than ever that we will be able to deliver top-tier results that will be competitive with any other shale play."
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 the significant price decline since June 30, 2008, the uncertain economic conditions in the United States and globally, the decline in the values of our properties that have resulted in and may in the future result in additional ceiling test write-downs or reductions in the borrowing base under our bank credit facility, 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 estimating quantities of proved oil and natural gas reserves, 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
(unaudited)
(Amounts in Thousands)
September December
30, 2009 31, 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $81,204 $23,964
Revenue receivable 10,928 20,074
Joint interest billing receivable 10,298 24,259
Hedging asset 15,120 40,571
Prepaid drilling costs 3,174 11,523
Drilling pipe inventory 19,058 25,898
Other current assets 3,048 1,530
----- -----
Total current assets 142,830 147,819
------- -------
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost
method 1,261,688 1,225,304
Unevaluated oil and gas properties 113,529 119,847
Accumulated depreciation,
depletion and amortization (1,007,281) (832,290)
---------- --------
Oil and gas properties, net 367,936 512,861
Gas gathering assets 4,648 4,644
Accumulated depreciation and amortization
of gas gathering assets (1,124) (900)
------ ----
Total property and equipment 371,460 516,605
------- -------
Other assets, net of accumulated
depreciation and amortization
of $7,803 and $6,237, respectively 5,057 5,825
----- -----
Total assets $519,347 $670,249
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors $19,836 $70,643
Advances from co-owners 4,249 5,349
Oil and gas revenue payable 5,780 15,305
Accrued interest and preferred stock
dividend 6,969 3,696
Asset retirement obligation 4,307 8,590
Other accrued liabilities 2,533 4,094
----- -----
Total current liabilities 43,674 107,677
Bank debt 100,000 130,000
10 3/8% Senior Notes 149,197 148,998
Asset retirement obligation 16,938 17,043
Deferred income taxes - 28,845
Other liabilities 1,289 199
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
61,146 and 49,319 shares, respectively 61 49
Paid-in capital 258,421 216,253
Accumulated other comprehensive income 8,900 25,560
Accumulated deficit (59,134) (4,376)
------- ------
Total stockholders' equity 208,249 237,487
------- -------
Total liabilities and stockholders' equity $519,347 $670,249
======== ========
PETROQUEST ENERGY, INC.
Consolidated Statements of Income
(unaudited)
(Amounts in Thousands, Except Per Share Data)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues:
Oil and gas sales $50,182 $76,987 $164,792 $242,420
Gas gathering revenue 72 1,288 172 5,274
------ ------ ------- -------
50,254 78,275 164,964 247,694
------ ------ ------- -------
Expenses:
Lease operating expenses 9,665 11,721 29,171 31,818
Production taxes 176 3,060 3,196 9,489
Depreciation, depletion
and amortization 17,936 33,982 68,129 96,109
Ceiling test writedown - 19,380 103,582 19,380
Gas gathering costs 14 441 181 2,215
General and administrative 4,142 5,720 13,164 18,036
Accretion of asset
retirement obligation 580 346 1,704 894
Interest expense 3,531 1,609 10,095 6,498
----- ----- ------ -----
36,044 76,259 229,222 184,439
------ ------ ------- -------
Gain on sale of assets - 26,677 485 26,677
Other income (expense) (594) 154 (5,903) 427
----- ----- ------ -----
Income (loss) from operations 13,616 28,847 (69,676) 90,359
Income tax expense
(benefit) 7,876 10,802 (18,772) 33,810
----- ------ ------- ------
Net income (loss) 5,740 18,045 (50,904) 56,549
Preferred stock dividend 1,287 1,287 3,854 3,855
----- ----- ----- -----
Net income (loss) available to
common stockholders $4,453 $16,758 $(54,758) $52,694
====== ======= ======== =======
Earnings per common share:
Basic
Net income (loss) per share $0.07 $0.33 $(1.03) $1.05
===== ===== ====== =====
Diluted
Net income (loss) per share $0.07 $0.32 $(1.03) $1.01
===== ===== ====== =====
Weighted average number of common
shares:
Basic 61,126 49,248 53,411 48,862
====== ====== ====== ======
Diluted 61,656 55,976 53,411 55,745
====== ====== ====== ======
PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(unaudited)
(Amounts in Thousands)
Nine Months Ended
September 30,
-------------
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $(50,904) $56,549
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Deferred tax expense (benefit) (18,772) 33,810
Depreciation, depletion and amortization 68,129 96,109
Ceiling test writedown 103,582 19,380
Gain on sale of assets (485) (26,677)
Accretion of asset retirement obligation 1,704 894
Pipe inventory impairment 903 -
Share based compensation expense 4,734 7,190
Amortization costs and other 1,127 1,055
Payments to settle asset retirement obligations (1,547) (16,775)
Changes in working capital accounts:
Revenue receivable 9,146 4,207
Joint interest billing receivable 13,431 (1,534)
Prepaid drilling and pipe costs 14,286 (33,706)
Accounts payable and accrued liabilities (55,701) 35,884
Advances from co-owners (1,100) 9,734
Other (1,894) (201)
------ ----
Net cash provided by operating activities 86,639 185,919
------ -------
Cash flows from investing activities:
Investment in oil and gas properties (37,759) (280,090)
Investment in gas gathering assets (4) (5,653)
Proceeds from sale of gas gathering assets,
net of expenses - 40,105
Proceeds from sale of oil and gas
properties 4,852 1,975
----- -----
Net cash used in investing activities (32,911) (243,663)
------- --------
Cash flows from financing activities:
Net proceeds from (payments for) share
based compensation (332) 1,634
Deferred financing costs (82) (132)
Net proceeds from common stock offering 37,778 -
Payment of preferred stock dividend (3,852) (4,154)
Repayment of bank borrowings (30,000) (78,000)
Proceeds from bank borrowings - 128,000
------ -------
Net cash provided by financing activities 3,512 47,348
----- ------
Net increase (decrease) in cash and cash
equivalents 57,240 (10,396)
Cash and cash equivalents, beginning of period 23,964 16,909
------ ------
Cash and cash equivalents, end of period $81,204 $6,513
======= ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $12,045 $9,499
======= ======
Income taxes $205 $-
====== =====
PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $5,740 $18,045 $(50,904) $56,549
Reconciling items:
Deferred tax expense
(benefit) 7,876 10,802 (18,772) 33,810
Gain on sale of assets - (26,677) (485) (26,677)
Depreciation,
depletion and
amortization 17,936 33,982 68,129 96,109
Ceiling test writedown - 19,380 103,582 19,380
Accretion of asset
retirement obligation 580 346 1,704 894
Share based
compensation expense 1,209 2,519 4,734 7,190
Amortization expense
and other 421 331 2,030 1,055
----- ----- ----- -----
Discretionary cash flow 33,762 58,728 110,018 188,310
------ ------ ------- -------
Changes in working
capital accounts 8,339 26,482 (21,832) 14,384
Settlement of asset
retirement
obligations (956) (10,085) (1,547) (16,775)
----- -------- ------- --------
Net cash provided by
operating activities $41,145 $75,125 $86,639 $185,919
======= ======= ======= ========
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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