LAFAYETTE, La., March 05, 2018 (GLOBE NEWSWIRE) -- 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 Company PetroQuest 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

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