Wednesday February 20, 2008
LAFAYETTE, La., Feb. 20 -- PetroQuest Energy, Inc. (NYSE: PQ) announced today net income available to common shareholders for the quarter ended December 31, 2007 of $10,837,000, or $0.22 per share, compared to fourth quarter 2006 net income available to common shareholders of $311,000 or $0.01 per share. Net cash flow provided by operating activities before working capital changes for the fourth quarter of 2007 was $45,631,000, as compared to $26,290,000 for the comparable 2006 period. For the year ended December 31, 2007, the Company reported net income available to common shareholders of $39,245,000, or $0.79 per share, compared to net income available to common shareholders of $23,986,000, or $0.49 per share, for the year ended December 31, 2006. For the year ended December 31, 2007, net cash flow provided by operating activities before working capital changes was $190,122,000, compared to $132,500,000 for the comparable 2006 period. See the attached schedule for a reconciliation of net cash flow provided by operating activities to net cash flow provided by operating activities before working capital changes.
Oil and gas sales during the fourth quarter of 2007 increased 50% to $65,521,000 as compared to $43,668,000 in the fourth quarter of 2006. For the year ended December 31, 2007, oil and gas sales increased 32% to $256,223,000 as compared to $193,861,000 in the year ended December 31, 2006. Production for the fourth quarter and year ended December 31, 2007 was 23% and 22% higher, respectively, than production for the comparable periods of 2006. Stated on an Mcfe basis, unit prices received during the fourth quarter and the year ended December 31, 2007 were 22% higher and 8%higher, respectively, as compared to the prices received during the comparable 2006 periods.
Lease operating expenses for the fourth quarter of 2007 were $0.99 per Mcfe as compared to $1.57 per Mcfe in the fourth quarter of 2006. For the year ended December 31, 2007, lease operating expenses decreased 24% to $1.02 per Mcfe from $1.35 per Mcfe in the comparable period of 2006. Decreased unit costs were primarily the result of higher production in the 2007 periods and the absence of operating expenses related to certain higher cost Gulf of Mexico properties that were sold in November 2006.
Depreciation, depletion and amortization (“DD&A”) on oil and gas properties for the fourth quarter of 2007 was $3.76 per Mcfe as compared to $3.83 during the third quarter of 2007 and $3.45 per Mcfe in the fourth quarter of 2006. For the year ended December 31, 2007, DD&A on oil and gas properties increased 15% to $3.70 per Mcfe from $3.23 per Mcfe for the comparable period of 2006. The increases in DD&A are primarily due to increased costs to drill for, develop and acquire oil and gas reserves, and the costs of six non-commercial wells drilled in the Gulf Coast Basin during 2007.
General and administrative expenses increased $46,000 and $6,040,000 for the fourth quarter and year ended December 31, 2007, as compared to the respective 2006 periods. The increase during the twelve-month period is primarily due to non-cash share-based compensation expense related to SFAS 123(R), which increased approximately $4,167,000 during the twelve months ended December 31, 2007 as compared to the 2006 period. Additional increases are due to the 31% increase in staffing during 2007 as our operational activity has increased in our longer-lived areas.
The following table sets forth certain information with respect to the oil and gas operations of the Company for the three-month periods and years ended December 31, 2007 and 2006:
The above sales and average sales prices include increases (reductions) related to gas hedges of $2,506,000 and $3,502,000 and oil hedges of ($946,000) and ($496,000) for the three months ended December 31, 2007 and 2006, respectively. The above sales and average sales prices include increases (reductions) related to gas hedges of $10,713,000 and $9,634,000 and oil hedges of ($791,000) and ($2,785,000) for the year ended December 31, 2007 and 2006, respectively.
The following updates guidance for the first quarter of 2008:
The following updates guidance for the full year of 2008:
Operations Update
The Company initiated production from its eleventh operated horizontal Woodford Shale well, and it had an initial production rate of approximately 2 MMcfe per day.
The Company’s Pelican Point prospect is currently drilling and is expected to reach total depth in approximately two weeks. The Company has a 28% working interest in the well.
Hedging Update
The Company initiated the following commodity hedging transaction in February 2008:
After executing the above transaction, the Company has approximately 12.3 Bcfe of hedges for 2008.
Management Statement
“We are very pleased to once again post record production, revenues, earnings and cash flows in 2007, and we are forecasting another company record year for production in 2008,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “Based upon our continued transition into long-lived basins, along with our outlook on commodity prices and production, we expect a record year of absolute reserve growth in excess of 30% from the drill bit alone in 2008.”
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, declines in the values of our properties resulting in ceiling test write-downs, 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, 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.
Note: Management believes that net cash flow provided by operating activities before working capital changes 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. Net cash flow provided by operating activities before working capital changes 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 net cash flow provided by operating activities before working capital changes is not a term defined by GAAP, it might not be comparable to similarly titled measures used by other companies.
