PetroQuest Energy, Inc. (NYSE:PQ) announced today a net loss to
common stockholders for the quarter ended December 31, 2017 of
$389,000, or $0.02 per share, compared to fourth quarter 2016 net
loss to common stockholders of $9,659,000, or $0.46 per
share. For the year ended December 31, 2017, the Company
reported a net loss to common stockholders of $11,776,000, or $0.55
per share, compared to net loss to common shareholders of
$96,245,000, or $5.24 per share, for the year ended
December 31, 2016. The year ended December 31, 2016 included a
ceiling test write-down of $40,304,000.
Discretionary cash flow for the fourth quarter
of 2017 was $16,880,000 as compared to $3,591,000 for the
comparable 2016 period. For the year ended December 31,
2017, discretionary cash flow was $51,212,000 compared to $597,000
for 2016. 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 fourth quarter of
2017 were $35,080,000 as compared to $16,429,000 in the fourth
quarter of 2016. For the year ended December 31, 2017,
oil and gas sales increased 62% to $108,287,000 as compared to
$66,667,000 for the year ended December 31, 2016. Production
for the year ended December 31, 2017 was 17% higher than 2016.
Stated on an Mcfe basis, unit prices received during the fourth
quarter and the year ended December 31, 2017 were 16% and 38%
higher, respectively, as compared to the prices received during the
comparable 2016 periods.
Lease operating expenses during 2017 totaled
$33,162,000 as compared to $28,508,000 in 2016. Lease operating
expenses for the fourth quarter of 2017 were $1.18 per Mcfe as
compared to $1.43 per Mcfe in the fourth quarter of 2016. Lease
operating expenses for the year ended December 31, 2017 were $1.20
per Mcfe as compared to $1.21 for the year ended December 31,
2016.
Depreciation, depletion and amortization
(“DD&A”) on oil and gas properties for the fourth quarter of
2017 was $1.19 per Mcfe as compared to $1.11 per Mcfe in the fourth
quarter of 2016. For the year ended December 31, 2017,
DD&A on oil and gas properties decreased to $1.15 per Mcfe from
$1.19 per Mcfe for 2016.
Interest expense for the fourth quarter of 2017
was $7,060,000, as compared to $7,522,000 in the fourth quarter of
2016. For the year ended December 31, 2017, interest expense
was $28,836,000 compared to $30,019,000 for 2016.
Fourth quarter of 2017 general and
administrative expense was $309,000 higher than the comparable 2016
period. For the year ended December 31, 2017, general
and administrative expense was $10,180,000 lower than 2016. The
decrease in general and administrative expense during the 2017
annual period was primarily the result of the inclusion of costs
associated with the Company's two debt exchanges in 2016.
Production taxes for the fourth quarter of 2017
totaled $1,312,000, as compared to $(255,000) in the fourth quarter
of 2016. For the year ended December 31, 2017, production
taxes were $3,302,000, as compared to $354,000 for 2016. Production
taxes during 2016 included $1,292,000 of production tax
refunds on certain of our East Texas wells that qualified for a gas
tax credit. In addition, the two-year severance tax exemption
on our Thunder Bayou well expired in June 2017.
The following table sets forth certain information with respect
to the oil and gas operations of the Company for the three and
twelve months ended December 31, 2017 and 2016:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Production: |
|
|
|
|
|
|
|
Oil
(Bbls) |
168,327 |
|
|
124,728 |
|
|
591,558 |
|
|
502,201 |
|
Gas
(Mcf) |
6,392,489 |
|
|
3,146,172 |
|
|
19,610,964 |
|
|
16,616,578 |
|
Ngl
(Mcfe) |
1,184,611 |
|
|
740,163 |
|
|
4,452,817 |
|
|
3,870,947 |
|
Total
Production (Mcfe) |
8,587,062 |
|
|
4,634,703 |
|
|
27,613,129 |
|
|
23,500,731 |
|
Daily Production
(MMcfe) |
93.3 |
|
|
50.4 |
|
|
75.7 |
|
|
64.4 |
|
Sales: |
|
|
|
|
|
|
|
Total oil
sales |
$ |
9,980,269 |
|
|
$ |
5,938,353 |
|
|
$ |
31,258,109 |
|
|
$ |
20,613,964 |
|
Total gas
sales |
20,080,820 |
|
|
8,517,819 |
|
|
60,922,072 |
|
|
37,962,622 |
|
Total ngl
sales |
5,019,200 |
|
|
1,972,424 |
|
|
16,107,068 |
|
|
8,090,292 |
|
Total oil
and gas sales |
$ |
35,080,289 |
|
|
$ |
16,428,596 |
|
|
$ |
108,287,249 |
|
|
$ |
66,666,878 |
|
Average sales
prices: |
|
|
|
|
|
|
|
Oil (per
Bbl) |
$ |
59.29 |
|
|
$ |
47.61 |
|
|
$ |
52.84 |
|
|
$ |
41.05 |
|
Gas (per
Mcf) |
3.14 |
|
|
2.71 |
|
|
3.11 |
|
|
2.28 |
|
Ngl (per
Mcfe) |
4.24 |
|
|
2.66 |
|
|
3.62 |
|
|
2.09 |
|
Per
Mcfe |
4.09 |
|
|
3.54 |
|
|
3.92 |
|
|
2.84 |
|
The above sales and average sales prices include increases
(reductions) to revenue related to the settlement of gas hedges of
$1,057,000 and $(232,000) for the three months ended
December 31, 2017 and 2016, respectively. The above sales and
average sales prices include increases to revenue related to the
settlement of gas hedges of $1,461,000 and $1,811,000 for the
twelve months ended December 31, 2017 and 2016,
respectively.
First Quarter 2018 Guidance
|
Guidance for |
Description |
1st Quarter 2018 |
|
|
Production volumes
(MMcfe/d) |
64 - 68 |
|
|
Percent Gas |
76% |
Percent Oil |
9% |
Percent NGL |
15% |
|
|
|
|
Expenses: |
|
Lease operating
expenses (per Mcfe) |
$1.00 - $1.10 |
Production taxes (per
Mcfe) |
$0.20 - $0.25 |
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 $0.4 million |
|
** Includes PIK
interest of approximately $3.0 million |
|
The Company is continuing to evaluate various
joint venture structures in connection with planning its 2018
Cotton Valley drilling program. As a result, the Company
expects to provide its 2018 capital expenditures guidance in
conjunction with its first quarter 2018 earnings press release.
Management’s Comment“Our fourth
quarter 2017 results represent the culmination of a tremendous year
as we accomplished numerous corporate goals including nearly
doubling our fourth quarter 2016 production rate and growing our
proved reserves and PV-10 by 35% and 89%, respectively,” said
Charles T. Goodson, Chairman, Chief Executive Officer and
President. “In addition, we established a 25,000 gross acre
position in an area that we believe will ultimately be determined
to be in the core of the Louisiana Austin Chalk oil trend.
Our current plans call for us to spud our initial horizontal Austin
Chalk well during the second quarter of 2018 and we are continuing
to evaluate various joint venture structures in connection with our
2018 Cotton Valley development plan.”
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 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; 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 multi-draw term
loan facility; 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;
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; approximately 51% 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) |
|
|
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
15,655 |
|
|
$ |
28,312 |
|
Revenue receivable |
15,340 |
|
|
10,294 |
|
Joint interest billing
receivable |
6,597 |
|
|
7,632 |
|
Other receivable |
7,750 |
|
|
— |
|
Derivative asset |
1,174 |
|
|
— |
|
Deposit for surety
bonds |
8,300 |
|
|
— |
|
Other current
assets |
2,125 |
|
|
2,353 |
|
Total current
assets |
56,941 |
|
|
48,591 |
|
Property and
equipment: |
|
|
|
Oil and gas
properties: |
|
|
|
Oil and gas properties,
full cost method |
1,369,861 |
|
|
1,323,333 |
|
Unevaluated oil and gas
properties |
21,854 |
|
|
9,015 |
|
Accumulated
depreciation, depletion and amortization |
(1,285,660 |
) |
|
(1,243,286 |
) |
Oil and gas properties,
net |
106,055 |
|
|
89,062 |
|
Other property and
equipment |
9,353 |
|
|
10,951 |
|
Accumulated
depreciation of other property and equipment |
(8,843 |
) |
|
(10,109 |
) |
Total property and
equipment |
106,565 |
|
|
89,904 |
|
Other assets, net of
accumulated amortization of $0 and $4,385, respectively |
792 |
|
|
6,365 |
|
Total assets |
$ |
164,298 |
|
|
$ |
144,860 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable to
vendors |
$ |
36,179 |
|
|
$ |
25,265 |
|
Advances from
co-owners |
1,730 |
|
|
2,330 |
|
Oil and gas revenue
payable |
19,344 |
|
|
22,146 |
|
Accrued interest |
1,724 |
|
|
2,047 |
|
Asset retirement
obligation |
687 |
|
|
4,160 |
|
Derivative
liability |
731 |
|
|
3,947 |
|
10% Senior Unsecured
Notes due 2017 |
— |
|
|
22,568 |
|
Other accrued
liabilities |
2,445 |
|
|
3,938 |
|
Total current
liabilities |
62,840 |
|
|
86,401 |
|
Multi-draw Term
Loan |
27,963 |
|
|
7,249 |
|
10% Senior Secured
Notes due 2021 |
9,821 |
|
|
15,228 |
|
10% Senior Secured PIK
Notes due 2021 |
271,577 |
|
|
248,600 |
|
Asset retirement
obligation |
30,623 |
|
|
32,450 |
|
Other long-term
liabilities |
10,409 |
|
|
6,027 |
|
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 25,521 and
21,197 shares, respectively |
26 |
|
|
21 |
|
Paid-in capital |
313,244 |
|
|
304,341 |
|
Accumulated other
comprehensive income (loss) |
278 |
|
|
(4,750 |
) |
Accumulated
deficit |
(562,484 |
) |
|
(550,708 |
) |
Total stockholders’
equity |
(248,935 |
) |
|
(251,095 |
) |
Total liabilities and
stockholders’ equity |
$ |
164,298 |
|
|
$ |
144,860 |
|
|
|
|
|
|
|
|
|
PETROQUEST ENERGY, INC.Consolidated Statements of
Operations (Amounts in Thousands, Except Per Share Data) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales |
$ |
35,080 |
|
|
$ |
16,429 |
|
|
$ |
108,287 |
|
|
$ |
66,667 |
|
Expenses: |
|
|
|
|
|
|
|
Lease operating
expenses |
10,110 |
|
|
6,610 |
|
|
33,162 |
|
|
28,508 |
|
Production taxes |
1,312 |
|
|
(255 |
) |
|
3,302 |
|
|
354 |
|
Depreciation, depletion and amortization |
10,300 |
|
|
5,359 |
|
|
32,053 |
|
|
28,720 |
|
Ceiling test
write-down |
— |
|
|
— |
|
|
— |
|
|
40,304 |
|
General and
administrative |
5,052 |
|
|
4,743 |
|
|
15,860 |
|
|
26,040 |
|
Accretion of asset
retirement obligation |
581 |
|
|
619 |
|
|
2,252 |
|
|
2,515 |
|
Interest expense |
7,060 |
|
|
7,522 |
|
|
28,836 |
|
|
30,019 |
|
|
34,415 |
|
|
24,598 |
|
|
115,465 |
|
|
156,460 |
|
Other expense |
(444 |
) |
|
(205 |
) |
|
(408 |
) |
|
(560 |
) |
Income (loss) |
221 |
|
|
(8,374 |
) |
|
(7,586 |
) |
|
(90,353 |
) |
Income tax expense
(benefit) |
(675 |
) |
|
— |
|
|
(949 |
) |
|
543 |
|
Net income (loss) |
896 |
|
|
(8,374 |
) |
|
(6,637 |
) |
|
(90,896 |
) |
Preferred stock
dividend |
1,285 |
|
|
1,285 |
|
|
5,139 |
|
|
5,349 |
|
Net loss available to
common stockholders |
$ |
(389 |
) |
|
$ |
(9,659 |
) |
|
$ |
(11,776 |
) |
|
$ |
(96,245 |
) |
Loss per common
share: |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Net loss per share |
$ |
(0.02 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.55 |
) |
|
$ |
(5.24 |
) |
Diluted |
|
|
|
|
|
|
|
Net loss per share |
$ |
(0.02 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.55 |
) |
|
$ |
(5.24 |
) |
Weighted average number
of common shares: |
|
|
|
|
|
|
|
Basic |
21,662 |
|
|
21,161 |
|
|
21,330 |
|
|
18,354 |
|
Diluted |
21,662 |
|
|
21,161 |
|
|
21,330 |
|
|
18,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PETROQUEST ENERGY, INC.Consolidated Statements of Cash
Flows(Amounts in Thousands) |
|
|
Year Ended December 31, |
|
2017 |
|
2016 |
Cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(6,637 |
) |
|
$ |
(90,896 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
Deferred
tax expense (benefit) |
(949 |
) |
|
543 |
|
Depreciation, depletion and amortization |
32,053 |
|
|
28,720 |
|
Ceiling
test writedown |
— |
|
|
40,304 |
|
Accretion
of asset retirement obligation |
2,252 |
|
|
2,515 |
|
Share
based compensation expense |
1,447 |
|
|
1,444 |
|
Amortization costs and other |
554 |
|
|
2,106 |
|
Non-cash
PIK interest |
22,895 |
|
|
5,722 |
|
Payments
to settle asset retirement obligations |
(3,364 |
) |
|
(3,169 |
) |
Costs
incurred to issue 2021 Notes and 2021 PIK Notes |
— |
|
|
10,139 |
|
Gain on
extinguishment of debt |
(403 |
) |
|
— |
|
Changes in working
capital accounts: |
|
|
|
Revenue
receivable |
(5,046 |
) |
|
(3,818 |
) |
Joint
interest billing receivable |
610 |
|
|
41,400 |
|
Accounts
payable and accrued liabilities |
2,970 |
|
|
(72,760 |
) |
Advances
from co-owners |
(600 |
) |
|
(13,788 |
) |
Other |
(1,629 |
) |
|
(5,060 |
) |
Net cash provided by
(used in) operating activities |
44,153 |
|
|
(56,598 |
) |
Cash flows (used in)
provided by investing activities: |
|
|
|
Investment in oil and gas properties |
(64,613 |
) |
|
(30,366 |
) |
Investment in other property and equipment |
(54 |
) |
|
(24 |
) |
Sale of
oil and gas properties |
10,707 |
|
|
25,482 |
|
Net cash used in
investing activities |
(53,960 |
) |
|
(4,908 |
) |
Cash flows used in
financing activities: |
|
|
|
Net
payments for share based compensation |
(26 |
) |
|
11 |
|
Deferred
financing costs |
(174 |
) |
|
(3,156 |
) |
Payment
of preferred stock dividend |
— |
|
|
(1,285 |
) |
Proceeds
from borrowings |
20,000 |
|
|
10,000 |
|
Redemption of 2017 Notes |
(22,650 |
) |
|
(53,626 |
) |
Costs
incurred to issue 2021 Notes and 2021 PIK Notes |
— |
|
|
(10,139 |
) |
Net cash used in
financing activities |
(2,850 |
) |
|
(58,195 |
) |
Net decrease in cash
and cash equivalents |
(12,657 |
) |
|
(119,701 |
) |
Cash and cash
equivalents, beginning of period |
28,312 |
|
|
148,013 |
|
Cash and cash
equivalents, end of period |
$ |
15,655 |
|
|
$ |
28,312 |
|
Supplemental disclosure
of cash flow information: |
|
|
|
Cash paid
(received) during the period for: |
|
|
|
Interest |
$ |
7,432 |
|
|
$ |
33,206 |
|
Income
taxes |
$ |
(94 |
) |
|
$ |
(18 |
) |
|
|
|
|
|
|
|
|
PETROQUEST ENERGY, INC.Non-GAAP Disclosure
Reconciliation(Amounts In Thousands) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income (loss) |
$ |
896 |
|
|
$ |
(8,374 |
) |
|
$ |
(6,637 |
) |
|
$ |
(90,896 |
) |
Reconciling items: |
|
|
|
|
|
|
|
Deferred tax
expense (benefit) |
(675 |
) |
|
— |
|
|
(949 |
) |
|
543 |
|
Depreciation,
depletion and amortization |
10,300 |
|
|
5,359 |
|
|
32,053 |
|
|
28,720 |
|
Ceiling test
write-down |
— |
|
|
— |
|
|
— |
|
|
40,304 |
|
Accretion of
asset retirement obligation |
581 |
|
|
619 |
|
|
2,252 |
|
|
2,515 |
|
Non-cash share
based compensation expense |
266 |
|
|
83 |
|
|
1,447 |
|
|
1,444 |
|
Costs incurred
to issue 2021 Notes and 2021 PIK Notes |
— |
|
|
66 |
|
|
— |
|
|
10,139 |
|
Non-cash PIK
interest |
5,922 |
|
|
5,722 |
|
|
22,895 |
|
|
5,722 |
|
Amortization
costs and other |
(7 |
) |
|
116 |
|
|
554 |
|
|
2,106 |
|
Gain on
extinguishment of debt |
(403 |
) |
|
— |
|
|
(403 |
) |
|
— |
|
Discretionary cash
flow |
16,880 |
|
|
3,591 |
|
|
51,212 |
|
|
597 |
|
Changes in
working capital accounts |
(6,968 |
) |
|
(8,167 |
) |
|
(3,695 |
) |
|
(54,026 |
) |
Settlement of
asset retirement obligations |
(1,087 |
) |
|
(285 |
) |
|
(3,364 |
) |
|
(3,169 |
) |
Net cash flow provided
by (used in) operating activities |
$ |
8,825 |
|
|
$ |
(4,861 |
) |
|
$ |
44,153 |
|
|
$ |
(56,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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