LAFAYETTE, LA – February 14, 2007 - PetroQuest Energy, Inc.
(NYSE: PQ) announced today net income for the quarter ended December 31, 2006
of $311,000 or $0.01 per share, compared to fourth quarter 2005 net income of
$8,320,000 or $0.17 per share. Net cash flow provided by operating activities
before working capital changes for the fourth quarter of 2006 was $26,542,000,
as compared to $27,709,000 for the comparable 2005 period. For the year
ended December 31, 2006, the Company reported net income of $23,986,000 or $0.49
per share compared to net income of $21,417,000 or $0.44 per share for the year
ended December 31, 2005. For the year ended December 31, 2006, net cash
flow provided by operating activities before working capital changes was $132,752,000,
compared to $83,183,000 for the comparable 2005 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 2006 increased 15% to $43,668,000
as compared to $38,044,000 in the fourth quarter of 2005. For the year
ended December 31, 2006, oil and gas sales increased 61% to $193,861,000 as compared
to $120,552,000 in the year ended December 31, 2005. Production for the
fourth quarter and year ended December 31, 2006 was 49% and 60% higher, respectively,
than production for the comparable periods of 2005. Stated on an Mcfe basis,
unit prices received during the fourth quarter and the year ended December 31,
2006 were 23% lower and flat, respectively, as compared to the prices received
during the comparable 2005 periods.
Lease operating expenses for the fourth quarter
of 2006 were $1.57 per Mcfe as compared to $1.29 per Mcfe in the fourth quarter
of 2005. For
the year ended December 31, 2006, lease operating expenses increased 3% to $1.35
per Mcfe from $1.31 per Mcfe in the comparable period of 2005. Increased
unit costs during the current quarter were primarily the result of the extended
shut-in of the Ship Shoal 72 field and the corresponding costs to restore service
to the main field pipeline. In addition, depreciation, depletion and amortization
(“DD&A”) on oil and gas properties for the fourth quarter of
2006 was $3.45 per Mcfe as compared to $2.97 per Mcfe in the fourth quarter of
2005. For the year ended December 31, 2006, DD&A on oil and gas properties
increased 22% to $3.23 per Mcfe from $2.65 per Mcfe for the comparable period
of 2005. The increase in DD&A during the current year is primarily
due to increased costs to drill for, develop and acquire oil and gas reserves.
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, 2006 and 2005:
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Production:
Oil (Bbls) 145,725 128,832 694,724 665,400
Gas (Mcf) 5,504,418 3,510,543 21,528,323 12,058,377
Total Production
(Mcfe) 6,378,768 4,283,535 25,696,667 16,050,777
Sales:
Total oil sales $7,576,140 $6,115,775 $42,317,332 $30,446,897
Total gas sales 36,091,717 31,928,556 151,544,026 90,105,054
Total oil and gas
sales 43,667,857 38,044,331 193,861,358 120,551,951
Average sales prices:
Oil (per Bbl) $51.99 $47.47 $60.91 $45.76
Gas (per Mcf) 6.56 9.10 7.04 7.47
Per Mcfe 6.85 8.88 7.54 7.51
The above sales and average sales prices include increases (reductions) related
to gas hedges of $3,502,000 and ($7,600,000) and oil hedges of ($496,000) and
($1,543,000) for the three months ended December 31, 2006 and 2005, respectively. The
above sales and average sales prices include increases (reductions) related to
gas hedges of $9,634,000 and ($10,242,000) and oil hedges of ($2,785,000) and
($5,572,000) for the year ended December 31, 2006 and 2005, respectively.
The following updates guidance for the first quarter of 2007:
Guidance for
Description 1st Quarter 2007
Production volumes (MMcfe/d) 79 - 84
Percent gas 70%
Expenses:
Lease operating expenses (per Mcfe) $1.05 - $1.15
Production taxes (per Mcfe) $0.30 - $0.34
Depreciation, depletion and
amortization (per Mcfe) $3.40 - $3.50
General and administrative
(in millions) $5.5 - $6.0
Interest expense (in millions) $3.5 - $4.0
Effective tax rate (all deferred) 37%
The following updates guidance for the full year of 2007:
Guidance for
Description Full Year 2007
Production volumes (MMcfe/d) 79 - 85
Percent gas 75%
Expenses:
Lease operating expenses (per Mcfe) $1.10 - $1.20
Production taxes (per Mcfe) $0.33 - $0.37
Depreciation, depletion and
amortization (per Mcfe) $3.50 - $3.60
General and administrative
(in millions) $21 - $22
Interest expense (in millions) $16 - $17
Effective tax rate (all deferred) 37%
Operations Update
As previously announced, the Company began producing its first horizontal
Woodford Shale well earlier this month at a rate of approximately 3.5 MMcfe per
day. Production tubing has been installed in the well and it is expected
to begin producing today at approximately 3 MMcfe per day.
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 press 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.
PETROQUEST ENERGY, INC.
Consolidated Statements of Income
(Unaudited)
(Amounts In Thousands, Except Per Share Data)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Revenues:
Oil and gas sales $43,667 $38,044 $193,861 $120,552
Gas gathering revenue and
other income 1,937 2,652 6,683 4,042
45,604 40,696 200,544 124,594
Expenses:
Lease operating expenses 9,997 5,524 34,735 20,972
Production taxes 2,022 1,547 6,576 3,764
Depreciation, depletion and
amortization 22,864 13,208 85,858 43,747
Gas gathering costs 995 751 3,637 1,246
General and administrative 5,062 2,268 15,122 7,347
Accretion of asset
retirement obligation 373 424 1,513 1,253
Interest expense 3,758 3,230 14,513 12,371
45,071 26,952 161,954 89,454
Income from operations 533 13,744 38,590 33,894
Income tax expense 222 5,424 14,604 12,477
Net income $311 $8,320 $23,986 $21,417
Earnings per common share:
Basic $0.01 $0.18 $0.50 $0.46
Diluted $0.01 $0.17 $0.49 $0.44
Weighted average number of common
shares:
Basic 47,780 47,307 47,537 46,714
Diluted 49,284 48,712 48,936 48,242
PETROQUEST ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
(Amounts in Thousands)
December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $4,795 $6,703
Revenue receivable 21,767 22,492
Joint interest billing
receivable 20,072 17,567
Hedging asset 10,527 ---
Other current assets 7,029 3,441
Total current assets 64,190 50,203
Property and equipment:
Oil and gas properties:
Oil and gas properties,
full cost method 695,116 523,212
Unevaluated oil and gas
properties 51,567 52,745
Accumulated depreciation,
depletion and
amortization (314,869) (210,774)
Oil and gas
properties, net 431,814 365,183
Gas gathering assets 19,072 10,861
Accumulated depreciation and
amortization of gas gathering
assets (3,562) (1,055)
Total property and equipment 447,324 374,989
Other assets, net of accumulated
depreciation and amortization
of $11,719 and $10,353,
respectively 6,776 6,278
Total assets $518,290 $431,470
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to vendors $32,049 $41,462
Advances from co-owners 13,391 5,874
Oil and gas revenue payable 6,935 8,090
Hedging liability --- 15,987
Asset retirement obligation 9,028 2,350
Other accrued liabilities 10,678 8,192
Total current liabilities 72,081 81,955
Bank debt 47,000 10,000
10 3/8% Senior Notes 148,537 148,340
Asset retirement obligation 11,211 19,257
Deferred income taxes 49,646 27,139
Other liabilities 104 242
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par
value; authorized 75,000
shares; issued and
outstanding 47,788 and
47,325 shares, respectively 48 47
Paid-in capital 124,552 117,441
Accumulated other
comprehensive income (loss) 6,632 (7,444)
Retained earnings 58,479 34,493
Total stockholders' equity 189,711 144,537
Total liabilities and stockholders'
equity $518,290 $431,470
PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in Thousands)
Year Ended December 31,
2006 2005 2004
Cash flows from operating activities:
Net income $23,986 $21,417 $16,348
Adjustments to
reconcile net income
to net cash
provided by
operating activities:
Deferred tax expense 14,604 12,477 8,511
Amortization of debt
issuance costs 943 1,390 1,678
Compensation expense --- 213 272
Depreciation,
depletion and
amortization 85,858 43,747 35,435
Derivative mark to
market --- --- (218)
Write-off of debt
issuance costs --- 2,575 ---
Amortization of bond
discount 197 111 ---
Share-based
compensation expense 5,651 --- ---
Accretion of asset
retirement
obligation 1,513 1,253 833
Changes in working capital accounts:
Revenue receivable 725 (13,100) (2,871)
Joint interest billing
receivable (2,505) (13,912) (1,080)
Accounts payable and accrued
liabilities (13,552) 14,255 12,521
Other assets (1,743) (448) (619)
Advances from co-owners 7,517 3,609 (487)
Other (3,572) (397) (13)
Net cash provided by operating
activities 119,622 73,190 70,310
Cash flows from investing activities:
Investment in oil and gas
properties (175,529) (171,980) (80,142)
Sale of oil and gas
properties 22,023 --- ---
Investment in gas gathering
assets (6,363) (10,861) ---
Net cash used in investing activities (159,869) (182,841) (80,142)
Cash flows from financing activities:
Proceeds from exercise of
options and warrants 1,460 972 170
Proceeds from bank borrowings 48,000 44,500 39,000
Repayment of bank borrowings (11,000) (73,000) (28,000)
Proceeds from issuance of 10
3/8% senior notes --- 148,229 ---
Deferred financing costs (121) (5,876) (588)
Net cash provided by financing
activities 38,339 114,825 10,582
Net increase (decrease) in
cash and cash equivalents (1,908) 5,174 750
Cash and cash equivalents at
beginning of period 6,703 1,529 779
Cash and cash equivalents at
end of period $4,795 $6,703 $1,529
Supplemental disclosure of cash
flow information
Cash paid during the period for:
Interest $17,572 $9,628 $1,752
Income taxes $--- $75 $---
PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts In Thousands)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Net cash flow provided by operating
activities $7,776 $9,813 $119,622 $73,190
Changes in working capital accounts 18,766 17,896 13,130 9,993
Net cash flow provided by operating
activities before working capital
changes $26,542 $27,709 $132,752 $83,183
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.
