PetroQuest Energy Announces 2003 Year-End and Fourth Quarter Results and Year-End Reserves LAFAYETTE, La., Feb. 19 /PRNewswire-FirstCall/ -- PetroQuest Energy, Inc. (Nasdaq: PQUE - News) announced today net income for the quarter ended December 31, 2003 of $2,116,000 or $0.05 per share, compared to fourth quarter 2002 net income of $1,466,000 or $0.03 per share. Net cash flow provided by operating activities before working capital changes for the fourth quarter of 2003 was $10,079,000, as compared to $10,984,000 for the comparable 2002 period. For the year ended December 31, 2003, the Company reported net income of $3,640,000 or $0.08 per share. Net income for the year ended December 31, 2003 includes an after tax gain of $849,000 for the cumulative effect of a change in accounting principle related to the adoption of Statement of Accounting Standards No. 143, "Accounting for Asset Retirement Obligations." The Company reported net income of $2,307,000 or $0.06 per share for the year ended December 31, 2002. For the year ended December 31, 2003, net cash flow provided by operating activities before working capital changes was $32,915,000, compared to $32,813,000 for the comparable 2002 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 2003 decreased 14% to $12,896,000 as compared to $15,056,000 in the fourth quarter of 2002. For the year ended December 31, 2003, sales were $47,910,000 compared to $48,141,000 in the year ended December 31, 2002. Stated on an Mcfe basis, unit prices received during the fourth quarter and the year ended December 31, 2003 were 11% and 37% higher, respectively, than the prices received during the comparable 2002 periods. 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, 2003 and 2002: Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 Production: Oil (Bbls) 160,326 240,380 744,575 929,181 Gas (Mcf) 1,708,833 2,001,427 5,192,760 7,765,142 Total Production (Mcfe) 2,670,789 3,443,707 9,660,210 13,340,228 Sales: Total oil sales $4,395,057 $6,562,031 $21,196,246 $23,294,514 Total gas sales $8,501,110 $8,494,108 $26,713,611 $24,846,723 Average sales prices: (Including hedges) Oil (per Bbl) $27.41 $27.30 $28.47 $25.07 Gas (per Mcf) $4.97 $4.24 $5.14 $3.20 Per Mcfe $4.83 $4.37 $4.96 $3.61 The Company ended 2003 with proved oil and gas reserves of 83.3 Bcfe and a reserve replacement rate of 251%. This represents an increase of 21% over 2002 year-end proved reserves of 68.7 Bcfe. The following sets forth an analysis of the Company's estimated quantities of net proved oil and gas reserves: Oil Natural Gas (MBbls) (MMcf) Proved reserves as of December 31, 2002 5,258 37,137 Revisions of previous estimates (369) (7,935) Extensions, discoveries and other additions 83 6,830 Purchase of producing properties 217 28,410 Sale of producing properties (200) (1,456) Production (744) (5,193) Proved reserves as of December 31, 2003 4,245 57,793 At December 31, 2003, the Company's independent petroleum engineers estimated the net present value, excluding income taxes, of these reserves at $214 million, using prices in effect as of year-end 2003 and discounted 10%. This compares to $166 million at December 31, 2002 using prices in effect as of year-end 2002. These amounts include a reduction for estimated plugging and abandonment costs that will also be reflected as a liability on PetroQuest's balance sheet at December 31, 2003, in accordance with Statement of Financial Accounting Standards No. 143. The following initiates guidance for the first quarter of 2004: Guidance for Description 1st Quarter 2004 Production volumes (MMcfe/d) 32.5 - 34.5 Percent gas 65% Expenses: Lease operating expenses (per Mcfe) $0.75 - $0.85 Production taxes (per Mcfe) $0.13 - $0.15 Depreciation, depletion and amortization (per Mcfe) $2.50 - $2.60 General and administrative (in millions) $1.25 - $1.45 Interest expense (in millions) $.7 - $.8 Effective tax rate (all deferred) 35% PetroQuest Energy, Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in East Texas, South Louisiana and the shallow waters of the Gulf of Mexico. 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 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 and in projecting future rates of production, the timing of development expenditures and drilling of wells, 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 Operations (unaudited) (Amounts In Thousands, Except Per Share Data) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 Revenues: Oil and gas sales $12,896 $15,056 $47,910 $48,141 Interest and other income 670 30 778 97 13,566 15,086 48,688 48,238 Expenses: Lease operating expenses 1,948 2,748 9,449 9,988 Production taxes 261 173 884 614 Depreciation, depletion and amortization 6,549 8,559 27,098 28,196 General and administrative 925 1,251 4,444 5,009 Accretion of asset retirement obligation 237 --- 682 --- Interest expense 296 25 579 278 Derivative expense (92) 29 1,071 558 10,124 12,785 44,207 44,643 Income from operations 3,442 2,301 4,481 3,595 Income tax expense 1,326 835 1,690 1,288 Income before cumulative effect of change in accounting principle $2,116 $1,466 $2,791 $2,307 Cumulative effect of change in accounting principle --- --- 849 --- Net income $2,116 $1,466 $3,640 $2,307 Earnings per common share: Basic Income before cumulative effect of change in accounting principle $0.05 $0.04 $0.06 $0.06 Cumulative effect of change in accounting principle --- --- 0.02 --- Net income $0.05 $0.04 $0.08 $0.06 Diluted Income before cumulative effect of change in accounting principle $0.05 $0.03 $0.06 $0.06 Cumulative effect of change in accounting principle --- --- 0.02 --- Net income $0.05 $0.03 $0.08 $0.06 Weighted average number of common shares: Basic 44,536 41,005 43,661 37,871 Diluted 44,969 42,920 44,181 39,997 PETROQUEST ENERGY, INC. Non-GAAP Disclosure Reconciliation (Amounts In Thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 Net cash flow provided by operating activities $16,295 $2,453 $33,163 $29,178 Changes in working capital accounts (6,216) 8,531 (248) 3,635 Net cash flow provided by operations before working capital changes $10,079 $10,984 $32,915 $32,813 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.   Contact: PetroQuest Energy Inc. Robert R. Brooksher, 337/232-7028