Tuesday May 6, 2008
LAFAYETTE, LA – May 6, 2008 - PetroQuest Energy, Inc. (NYSE: PQ) announced today that the Company recorded net income available to common shareholders for the quarter ended March 31, 2008 of $14,161,000, or $0.28 per share, compared to first quarter 2007 net income available to common shareholders of $10,814,000, or $0.22 per share. Net cash flow provided by operating activities before working capital changes for the first quarter of 2008 was $56,959,000, as compared to $48,241,000 for the comparable 2007 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. Net income available to common shareholders and net cash flow from operations before working capital changes during the first quarter of 2008 increased 31% and 18%, respectively, as compared to the first quarter of 2007.
Oil and gas sales during the first quarter of 2008 increased 21% to $74,819,000 as compared to $61,884,000 in the first quarter of 2007. Production for the first quarter of 2008 was 7.9 Bcfe and was 3% higher than production for the comparable period of 2007. Approximately 38% of the Company’s first quarter 2008 production was from long-lived areas, as compared to approximately 23% during the first quarter of 2007. Stated on an Mcfe basis, unit prices received during the first quarter of 2008 were 18% higher than the comparable 2007 period.
Lease operating expenses for the first quarter of 2008 increased to $1.29 per Mcfe as compared to $0.90 per Mcfe in the first quarter of 2007. The increase is primarily due to $1.6 million of unscheduled major maintenance expenses incurred during the quarter. In addition, depreciation, depletion and amortization (“DD&A”) on oil and gas properties for the first quarter of 2008 was $3.68 per Mcfe as compared to $3.48 per Mcfe in the first quarter of 2007. The increase in DD&A is primarily due to increased costs to drill for, develop and acquire oil and gas reserves during 2007. However, DD&A decreased 2% from $3.76 per Mcfe in the fourth quarter of 2007 as a result of first quarter 2008 drilling success. General and administrative expenses during the first quarter of 2008 were $5,167,000 as compared to $5,180,000 in the first quarter of 2007.
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, 2008 and 2007:
The above sales and average sales prices include increases (reductions) related to gas hedges of $174,000 and $2,523,000 and oil hedges of ($816,000) and $210,000 for the three months ended March 31, 2008 and 2007, respectively.
The following initiates guidance for the second quarter of 2008:
The following updates guidance for the full year of 2008:
Operations Update
As previously announced, the Company completed its thirteenth operated horizontal well in the Woodford Shale during the first quarter of 2008. With an initial production rate in excess of 6 MMcf per day, the well has averaged approximately 4.6 MMcf per day for seven weeks. The Company recently completed its twelfth and fourteenth horizontal Woodford wells with initial production rates of 4.6 MMcf per day and 6.3 MMcf per day, respectively. The Company currently has three operated rigs working, and is continuing to add acreage to its Woodford leasehold position that is currently in excess of 31,000 net acres.
Drilling continues in the Fayetteville Shale where the Company currently has six non-operated rigs working. The Company’s current net production in the Fayetteville Shale is approximately 3.3 MMcf per day, which is an increase of 10% from the exit rate of the first quarter of 2008. The Company expects to participate in 80-100 gross wells during 2008.
In East Texas, the Company recently completed its third well in the Palmer prospect, which logged approximately 50 feet of net pay in the lower Cotton Valley lime and is currently flowing at approximately 2.5 MMcfe per day. Additionally, the Company is drilling its second horizontal well in the Weekley prospect targeting oil in the Buda objective. The Company expects the well to reach its total depth in approximately two weeks.
In the Gulf Coast Basin, the Company initiated production from its Pelican Point prospect over the weekend and the well is expected to flow approximately 20 MMcfe per day. The Company has an approximate 22% net revenue interest in the well.
Hedging Update
During April 2008, the Company initiated a commodity hedging transaction in the form of a costless collar. The following sets forth the transaction details:
After executing the above transaction, the Company has approximately 3.7 Bcfe of hedges for 2009, in addition to the 11.4 Bcfe of hedges for the remainder of 2008.
Management Statement
“We are very excited to once again post Company record numbers in earnings and cash flow,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “With record production forecasted and higher commodity prices, we are increasing our drilling capital expenditure guidance to $230 million to $260 million, which will accelerate our transition into our long-lived basins.”
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 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.
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Non-GAAP Disclosure Reconciliation
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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.
Source: PetroQuest Energy, Inc.
