UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 5, 2013
PETROQUEST ENERGY, INC.
(Exact name of registrant as specified in its charter)
| | |
| DELAWARE | | 72-1440714 |
(State of Incorporation) | | (I.R.S. Employer Identification No.) |
| |
400 E. Kaliste Saloom Rd., Suite 6000 Lafayette, Louisiana | | 70508 |
| (Address of Principal Executive Offices) | | (Zip Code) |
Commission File Number: 001-32681
Registrant’s telephone number, including area code: (337) 232-7028
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
LAFAYETTE, LA – November 5, 2013—PetroQuest Energy, Inc. (NYSE: PQ) today announced results for the third quarter ended September 30, 2013, which include the effect of its acquisition of certain shallow water Gulf of Mexico assets (the “Acquired Assets”) for an adjusted purchase price of approximately $188 million on July 3, 2013. The following bullets compare certain of the Company’s third quarter 2013 results to those of the second quarter of 2013 highlighting the impact of the acquisition:
| | • | Oil production increased 90% |
| | • | Discretionary cash flow increased 35% |
| | • | Total production increased 25% |
| | • | Oil revenue up 97% and total oil and gas revenue up 46% |
Net income available to common stockholders for the quarter ended September 30, 2013 totaled $383,000, or $0.01 per share, compared to third quarter 2012 net loss available to common stockholders of $38,639,000, or $0.62 per share. For the first nine months of 2013, the Company reported net income available to common stockholders of $6,652,000, or $0.10 per share, compared to net loss available to common stockholders of $111,767,000, or $1.79 per share, for the first nine months of 2012. Net loss for the three and nine month 2012 periods included ceiling test writedowns totaling $35,391,000 and $108,987,000, respectively.
Discretionary cash flow for the third quarter of 2013 was $26,717,000, as compared to $17,339,000 for the comparable 2012 period. Net cash flow provided by operating activities totaled $12,294,000 and $25,408,000 during the third quarters of 2013 and 2012, respectively. For the first nine months of 2013, discretionary cash flow was $65,158,000. Discretionary cash flow for the first nine months of 2012 was $57,055,000. Net cash flow provided by operating activities totaled $32,909,000 and $67,676,000 during the first nine months of 2013 and 2012, respectively. See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.
Production for the third quarter of 2013 was 10.9 Bcfe, a 28% increase from the 8.5 Bcfe produced during the comparable period of 2012. Oil and natural gas liquids production for the third quarter of 2013 increased 79% and 39%, respectively, from the comparable period of 2012. Oil and natural gas liquids production was approximately 23% of the total production for the third quarter of 2013 as compared to 19% for the year-ago quarter. For the first nine months of 2013, production was 27.8 Bcfe compared to 25.1 Bcfe for the comparable period of 2012.
Stated on an Mcfe basis, unit prices received during the third quarter and the first nine months of 2013 were 28% and 13% higher, respectively, than the comparable 2012 periods. Oil and gas sales during the third quarter of 2013 increased 64% to $55,578,000, as compared to $33,913,000 in the third quarter of 2012. For the first nine months of 2013, oil and gas sales increased 26% to $129,630,000 from $103,286,000 in the first nine months of 2012.
Lease operating expenses for the third quarter of 2013 were $1.16 per Mcfe as compared to $1.13 per Mcfe in the third quarter of 2012. For the first nine months of 2013, lease operating expenses per Mcfe were $1.12 as compared to $1.13 in the comparable period of 2012.
Depreciation, depletion and amortization (“DD&A”) on oil and gas properties for the third quarter of 2013 was $2.03 per Mcfe as compared to $1.73 per Mcfe in the third quarter of 2012. The increase in DD&A is primarily the result of the impact of the purchase price of the Acquired Assets. For the first nine months of 2013, DD&A per Mcfe was $1.76 as compared to $1.80 per Mcfe for the comparable period of 2012.
Interest expense for the third quarter of 2013 increased to $8,071,000, as compared to $2,338,000 in the third quarter of 2012. For the first nine months of 2013, interest expense was $14,051,000, compared to $7,021,000 for the comparable period of 2012. The increase in interest expense was the result of the issuance of $200 million of 10% senior notes due 2017, which were used to finance the purchase of the Acquired Assets.
General and administrative expenses increased $3,169,000 and $2,658,000 for the third quarter and nine months ended September 30, 2013, as compared to the respective 2012 periods. General and administrative expenses for the 2013 periods included approximately $2,900,000 in acquisition costs related to the purchase of the Acquired Assets. In addition, during the third quarter of 2013, the Company recognized approximately $1,000,000 in general and administrative expenses associated with benefits due under the compensation agreements of the Company’s Executive Vice President & General Counsel, who passed away unexpectedly in September 2013.
Production taxes for the third quarter of 2013 totaled $1,248,000, as compared to $880,000 in the third quarter of 2012. For the first nine months of 2013, production taxes were $3,757,000 compared to $112,000 for the comparable period of 2012. Production taxes during 2012 were lower as a result of recording a receivable of $2,717,000 during the second quarter of 2012 for refunds relative to production taxes previously paid on Oklahoma horizontal wells.
The following table sets forth certain information with respect to the oil and gas operations of the Company for the three-and nine-month periods ended September 30, 2013 and 2012:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Production: | | | | | | | | | | | | | | | | |
Oil (Bbls) | | | 219,402 | | | | 122,645 | | | | 460,822 | | | | 379,958 | |
Gas (Mcf) | | | 8,351,200 | | | | 6,888,569 | | | | 21,519,550 | | | | 20,563,350 | |
Ngl (Mcfe) | | | 1,238,719 | | | | 894,138 | | | | 3,560,179 | | | | 2,250,569 | |
Total Production (Mcfe) | | | 10,906,331 | | | | 8,518,577 | | | | 27,844,661 | | | | 25,093,667 | |
Total Daily Production (MMcfe) | | | 118.5 | | | | 92.6 | | | | 102.0 | | | | 91.6 | |
Sales: | | | | | | | | | | | | | | | | |
Total oil sales | | $ | 23,663,415 | | | $ | 13,287,548 | | | $ | 48,831,937 | | | $ | 41,627,602 | |
Total gas sales | | | 25,009,383 | | | | 15,583,994 | | | | 61,980,015 | | | | 46,321,605 | |
Total ngl sales | | | 6,905,048 | | | | 5,041,274 | | | | 18,818,166 | | | | 15,336,515 | |
| | | | | | | | | | | | | | | | |
Total oil and gas sales | | $ | 55,577,846 | | | $ | 33,912,816 | | | $ | 129,630,118 | | | $ | 103,285,722 | |
| | | | | | | | | | | | | | | | |
Average sales prices: | | | | | | | | | | | | | | | | |
Oil (per Bbl) | | $ | 107.85 | | | $ | 108.34 | | | $ | 105.97 | | | $ | 109.56 | |
Gas (per Mcf) | | | 2.99 | | | | 2.26 | | | | 2.88 | | | | 2.25 | |
Ngl (per Mcfe) | | | 5.57 | | | | 5.64 | | | | 5.29 | | | | 6.81 | |
Per Mcfe | | | 5.10 | | | | 3.98 | | | | 4.66 | | | | 4.12 | |
The above sales and average sales prices include increases (decreases) to revenue related to the settlement of gas hedges of $767,000 and $1,482,000, Ngl hedges of $5,000 and $312,000 and oil hedges of ($538,000) and $491,000 for the three months ended September 30, 2013 and 2012, respectively. The above sales and average sales prices include increases (reductions) to revenue related to the settlement of gas hedges of $422,000 and $6,867,000, Ngl hedges of $5,000 and $544,000, and oil hedges of ($684,000) and $853,000 for the nine months ended September 30, 2013 and 2012, respectively.
The following initiates guidance for the fourth quarter of 2013:
| | |
| | | Guidance for |
| Description | | 4th Quarter
2013 |
Production volumes (MMcfe/d) | | 110 – 120 |
Percent Gas | | 75% |
Percent Oil | | 14% |
Percent NGL | | 11% |
Expenses: | | |
Lease operating expenses (per Mcfe) | | $1.15 – $1.25 |
Production taxes (per Mcfe) | | $0.10 – $0.15 |
Depreciation, depletion and amortization (per Mcfe) | | $2.00 – $2.10 |
General and administrative (in millions)* | | $5.0 – $6.0 |
Interest expense (in millions) | | $7.5 – $8.0 |
2013 Capital Expenditures (in millions)** | | $100 – $110 |
| * | Includes non-cash stock compensation estimate of $1.1 million |
| ** | Excludes acquisition costs for the Acquired Assets |
Production volumes forecasted for the fourth quarter have been negatively impacted by maintenance on one of the three producing La Cantera wells, downtime due to Tropical Storm Karen in October and downstream third party pipeline work at West Delta 89. Production from La Cantera has been fully restored and the pipeline work at West Delta 89 has been completed.
2014 Guidance
The Company reiterates its previously issued production and capital expenditure guidance for 2014. The Company expects to provide updated guidance, including detailed cost guidance for 2014, in connection with the announcement of its final 2013 proved reserves.
Operations Update
In the Gulf Coast, the Company’s Tokay prospect located at its Ship Shoal 72 field has reached total depth. The Company has an approximate 80% net revenue interest in the well, which encountered six separate pay intervals and logged a total of 209 net feet of pay. The well was recently completed and is expected to achieve a maximum 24 hour gross production rate of 400—600 Bbls of oil per day.
The Company expects to spud its Sawgrass prospect in approximately three weeks. This liquids rich onshore prospect is located in Terrebonne Parish, LA and is expected to reach total depth at the end of the year. The Company has an approximate 57% working interest in this well.
The Company continues to move forward with finalizing drilling plans for its Thunder Bayou prospect, located approximately two miles north of its La Cantera discovery. The Company is in discussions with potential partners to determine the final participation levels in the project and is evaluating drilling rigs and related service providers with expectations to spud this potentially high impact well near the end of the year or in early January 2014. The Company expects to have an approximate 50% working interest in the Thunder Bayou prospect.
During the third quarter, the operator experienced a substantial delay in receiving final regulatory approvals to commence production from two oil wells (NRI—18%) at Ship Shoal 238. The Company originally expected production to commence in mid-August. However, final permits were not received until mid-September and production was initiated at the end of September at a 24 hour gross rate of approximately 1,400 Boe/d (90% oil), limited by the need for additional facility modifications. The Company is in the process of upgrading the topside production equipment on the non-operated host platform. Once work is completed in approximately four weeks, the Company expects the total gross production rate from these two wells will increase to its original estimate of approximately 3,000 Boe/d (90% oil).
At West Delta 89, the Company previously forecasted two recompletions to be online by the end of August 2013. During September, the Company successfully completed the first of the two scheduled recompletions. While performing the second recompletion, the Company encountered a down-hole obstruction which has significantly delayed the commencement of production from the larger of the two recompletions. The Company expects to finish the recompletion within two weeks and initiate production which was previously scheduled for September.
In the Woodford, the Company has commenced drilling on its first pad on the recently acquired rich gas acreage on the western portion of its leasehold position. The five well pad (avg NRI-39%) is expected to be completed in late January 2014 as part of the expected 50 gross well Woodford drilling campaign for 2014. The Company continues to successfully add to its rich gas acreage position and has now acquired in excess of 25,000 net JV acres during 2013, bringing its total rich gas acreage to approximately 30,000 net JV acres.
In East Texas, the Company is actively preparing for a significant increase to its horizontal Cotton Valley program. Permitting and drilling location preparation have commenced at several of the proposed 2014 sites. The Company expects to take delivery of an operated rig in January of 2014 with drilling to commence shortly thereafter. The Company expects to drill 8 to 10 horizontal Cotton Valley wells in 2014 compared to one well in 2013.
In the Mississippian Lime, the Company recently commenced its Pawnee County 3-D seismic survey. The Company expects to receive this data set in late January 2014. The future development plans will be decided after thoroughly analyzing well results with the Kay and Pawnee seismic data packages. In addition, the Company is currently participating in a non-operated Mississippian Lime well in Kay County and is monitoring industry Woodford Shale drilling results in the area.
Hedging Update
The Company recently initiated the following commodity hedging transactions:
| | | | | | | | | | | | |
| | | Instrument | | | | | | | |
Production Period | | Type | | | Daily Volumes | | | Price | |
Oil: | | | | | | | | | | | | |
Sept 13 – Dec 13 | | | Swap | | | | 100 Bbls | | | $ | 106.85 | (1) |
2014 | | | Swap | | | | 200 Bbls | | | $ | 101.00 | (2) |
2014 | | | Swap | | | | 100 Bbls | | | $ | 102.15 | (2) |
Jan 14 – June 14 | | | Swap | | | | 200 Bbls | | | $ | 101.30 | (2) |
Gas: | | | | | | | | | | | | |
2014 | | | Swap | | | | 10,000 Mmbtu | | | $ | 4.00 | |
NGL: | | | | | | | | | | | | |
Sept 13 – Dec 13 | | | Swap | | | | 150 Bbls | | | $ | 92.42 | (3) |
The Company has approximately 124,000 barrels of oil, 4.1 Bcf of gas and 14,000 barrels of NGLs hedged for the remainder of 2013 at an average floor price of $102.45 /Bbl, $3.63/Mcf and $92.42/Bbl, respectively. In addition, the Company has approximately 310,000 barrels of oil and 7.3 Bcf of gas hedged for 2014 at an average floor price of $97.91/Bbl and $4.04/Mcf, respectively.
Borrowing Base Update
The Company’s lenders have completed their semi-annual redetermination of the borrowing base under the revolving credit facility. The bank group reaffirmed the Company’s recently increased borrowing base of $200 million, subject to the aggregate commitments of the lenders, which presently total $150 million at the Company’s request. The next re-determination of the borrowing base is expected to occur on or before March 31, 2014.
Management Statement
“Our Tokay discovery builds upon our recent Gulf Coast successes and reinforces our strategic vision that successful Gulf Coast exploitation activities, combined with our fully developed, producing Gulf of Mexico acquisition, will generate substantial free cash flow to be deployed to develop of our onshore assets,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “The minor start up issues that we have experienced have no impact on reservoir quality, reserve estimates or our outlook on our 2014 liquids production profile, which we are forecasting to average approximately 3,000 barrels of oil per day and 3,800 barrels of NGLs per day, and we expect to have the acquired Gulf of Mexico assets fully integrated in short order.”
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, Wyoming, Texas, South Louisiana and the shallow waters of the Gulf of Mexico. 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. 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 integrate our recently completed acquisitions with our operations and realize we anticipate benefits from the acquisitions, any unexpected costs or delays in connection with the acquistions, our ability to find oil and natural gas reserves that are economically recoverable, the volatility of oil and natural gas prices and significantly depressed natural gas prices since the middle of 2008, the uncertain economic conditions in the United States and globally, the declines in the values of our properties that have resulted in and may in the future result in additional 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 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, changes in laws and regulations as they relate to our operations, including our fracing operations in shale plays or our operations in the Gulf of Mexico, 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.
Click here for more information: “http://www.petroquest.com/news.html?=BizID=1690&1=1”
PETROQUEST ENERGY, INC.
Consolidated Balance Sheets
(Amounts in Thousands)
| | | | | | | | |
| | | September 30, 2013 | | | December 31, 2012 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 19,409 | | | $ | 14,904 | |
Revenue receivable | | | 31,561 | | | | 17,742 | |
Joint interest billing receivable | | | 27,212 | | | | 42,595 | |
Other receivable | | | — | | | | 9,208 | |
Derivative asset | | | 2,323 | | | | 830 | |
Prepaid drilling costs | | | 963 | | | | 1,698 | |
Other current assets | | | 7,411 | | | | 2,607 | |
| | | | | | | | |
Total current assets | | | 88,879 | | | | 89,584 | |
| | | | | | | | |
Property and equipment: | | | | | | | | |
Oil and gas properties: | | | | | | | | |
Oil and gas properties, full cost method | | | 2,003,907 | | | | 1,734,477 | |
Unevaluated oil and gas properties | | | 87,117 | | | | 71,713 | |
Accumulated depreciation, depletion and amortization | | | (1,530,928 | ) | | | (1,472,244 | ) |
| | | | | | | | |
Oil and gas properties, net | | | 560,096 | | | | 333,946 | |
Other property and equipment | | | 13,340 | | | | 12,370 | |
Accumulated depreciation of other property and equipment | | | (8,512 | ) | | | (7,607 | ) |
| | | | | | | | |
Total property and equipment | | | 564,924 | | | | 338,709 | |
Derivative asset | | | 305 | | | | — | |
Other assets, net of accumulated depreciation and amortization of $5,166 and $4,240, respectively | | | 9,783 | | | | 5,110 | |
| | | | | | | | |
Total assets | | $ | 663,891 | | | $ | 433,403 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable to vendors | | $ | 31,353 | | | $ | 58,960 | |
Advances from co-owners | | | 7,144 | | | | 20,459 | |
Oil and gas revenue payable | | | 45,438 | | | | 26,175 | |
Accrued interest and preferred stock dividend | | | 4,175 | | | | 6,190 | |
Asset retirement obligation | | | 1,502 | | | | 2,351 | |
Derivative liability | | | 525 | | | | 233 | |
Other accrued liabilities | | | 9,616 | | | | 6,535 | |
| | | | | | | | |
Total current liabilities | | | 99,753 | | | | 120,903 | |
| | | | | | | | |
Bank debt | | | 75,000 | | | | 50,000 | |
10% Senior Notes | | | 350,000 | | | | 150,000 | |
Asset retirement obligation | | | 41,350 | | | | 24,909 | |
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 63,353 and 62,768 shares, respectively | | | 63 | | | | 63 | |
Paid-in capital | | | 279,260 | | | | 276,534 | |
Accumulated other comprehensive income | | | 1,340 | | | | 521 | |
Accumulated deficit | | | (182,876 | ) | | | (189,528 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 97,788 | | | | 87,591 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 663,891 | | | $ | 433,403 | |
| | | | | | | | |
PETROQUEST ENERGY, INC.
Consolidated Statements of Operations
(unaudited)
(Amounts in Thousands, Except Per Share Data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30,
2013 | | | September 30,
2012 | | | September 30,
2013 | | | September 30,
2012 | |
Revenues: | | | | | | | | | | | | | | | | |
Oil and gas sales | | $ | 55,578 | | | $ | 33,913 | | | $ | 129,630 | | | $ | 103,286 | |
Gas gathering revenue | | | 9 | | | | 38 | | | | 68 | | | | 119 | |
| | | | | | | | | | | | | | | | |
| | | 55,587 | | | | 33,951 | | | | 129,698 | | | | 103,405 | |
| | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
Lease operating expenses | | | 12,652 | | | | 9,658 | | | | 31,208 | | | | 28,408 | |
Production taxes | | | 1,248 | | | | 880 | | | | 3,757 | | | | 112 | |
Depreciation, depletion and amortization | | | 22,475 | | | | 15,032 | | | | 49,882 | | | | 46,024 | |
Ceiling test write-down | | | — | | | | 35,391 | | | | — | | | | 108,987 | |
General and administrative | | | 9,132 | | | | 5,963 | | | | 20,199 | | | | 17,541 | |
Accretion of asset retirement obligation | | | 543 | | | | 525 | | | | 1,203 | | | | 1,542 | |
Interest expense | | | 8,071 | | | | 2,338 | | | | 14,051 | | | | 7,021 | |
| | | | | | | | | | | | | | | | |
| | | 54,121 | | | | 69,787 | | | | 120,300 | | | | 209,635 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Other income | | | 176 | | | | 257 | | | | 432 | | | | 529 | |
Derivative income (expense) | | | 45 | | | | (340 | ) | | | 202 | | | | (715 | ) |
| | | | | | | | | | | | | | | | |
| | | 221 | | | | (83 | ) | | | 634 | | | | (186 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 1,687 | | | | (35,919 | ) | | | 10,032 | | | | (106,416 | ) |
Income tax expense (benefit) | | | 17 | | | | 1,435 | | | | (474 | ) | | | 1,496 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | | 1,670 | | | | (37,354 | ) | | | 10,506 | | | | (107,912 | ) |
Preferred stock dividend | | | 1,287 | | | | 1,285 | | | | 3,854 | | | | 3,855 | |
| | | | | | | | | | | | | | | | |
Net income (loss) available to common stockholders | | $ | 383 | | | $ | (38,639 | ) | | $ | 6,652 | | | $ | (111,767 | ) |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | 0.01 | | | $ | (0.62 | ) | | $ | 0.10 | | | $ | (1.79 | ) |
| | | | | | | | | | | | | | | | |
Diluted | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | 0.01 | | | $ | (0.62 | ) | | $ | 0.10 | | | $ | (1.79 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of common shares: | | | | | | | | | | | | | | | | |
Basic | | | 63,096 | | | | 62,492 | | | | 62,936 | | | | 62,356 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 63,242 | | | | 62,492 | | | | 63,105 | | | | 62,356 | |
| | | | | | | | | | | | | | | | |
PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(unaudited)
(Amounts in Thousands)
| | | | | | | | |
| | | Nine Months Ended | |
| | | September 30, 2013 | | | September 30, 2012 | |
Cash flows from operating activities: | | | | | | | | |
Net income (loss) | | $ | 10,506 | | | $ | (107,912 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | |
Deferred tax expense (benefit) | | | (474 | ) | | | 1,496 | |
Depreciation, depletion and amortization | | | 49,882 | | | | 46,024 | |
Ceiling test writedown | | | — | | | | 108,987 | |
Accretion of asset retirement obligation | | | 1,203 | | | | 1,542 | |
Share based compensation expense | | | 3,105 | | | | 5,609 | |
Amortization costs and other | | | 1,138 | | | | 594 | |
Non-cash derivative (income) expense | | | (202 | ) | | | 715 | |
Payments to settle asset retirement obligations | | | (2,415 | ) | | | (2,519 | ) |
Changes in working capital accounts: | | | | | | | | |
Revenue receivable | | | (13,819 | ) | | | 141 | |
Prepaid drilling and pipe costs | | | 735 | | | | 2,891 | |
Joint interest billing receivable | | | 13,612 | | | | 20,312 | |
Accounts payable and accrued liabilities | | | (11,781 | ) | | | 1,464 | |
Advances from co-owners | | | (13,315 | ) | | | (8,802 | ) |
Other | | | (5,266 | ) | | | (2,866 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 32,909 | | | | 67,676 | |
| | | | | | | | |
Cash flows used in investing activities: | | | | | | | | |
Investment in oil and gas properties | | | (261,707 | ) | | | (121,428 | ) |
Investment in other property and equipment | | | (970 | ) | | | — | |
Sale of oil and gas properties | | | 18,915 | | | | 837 | |
Sale of unevaluated oil and gas properties | | | — | | | | 6,083 | |
| | | | | | | | |
Net cash used in investing activities | | | (243,762 | ) | | | (114,508 | ) |
| | | | | | | | |
Cash flows provided by financing activities: | | | | | | | | |
Net payments for share based compensation plans | | | (379 | ) | | | (840 | ) |
Deferred financing costs | | | (487 | ) | | | (33 | ) |
Payment of preferred stock dividend | | | (3,854 | ) | | | (3,855 | ) |
Proceeds from issuance of 10% Senior Notes | | | 200,000 | | | | — | |
Deferred financing costs of 10% Senior Notes | | | (4,922 | ) | | | — | |
Proceeds from bank borrowings | | | 62,000 | | | | 72,500 | |
Repayment of bank borrowings | | | (37,000 | ) | | | (37,500 | ) |
| | | | | | | | |
Net cash provided by financing activities | | | 215,358 | | | | 30,272 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 4,505 | | | | (16,560 | ) |
Cash and cash equivalents, beginning of period | | | 14,904 | | | | 22,263 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 19,409 | | | $ | 5,703 | |
| | | | | | | | |
Supplemental disclosure of cash flow information: | | | | | | | | |
Cash paid during the period for: | | | | | | | | |
Interest | | $ | 19,479 | | | $ | 15,628 | |
| | | | | | | | |
Income taxes | | $ | 11 | | | $ | 15 | |
| | | | | | | | |
PETROQUEST ENERGY, INC.
Non-GAAP Disclosure Reconciliation
(Amounts In Thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Net income (loss) | | $ | 1,670 | | | $ | (37,354 | ) | | $ | 10,506 | | | $ | (107,912 | ) |
Reconciling items: | | | | | | | | | | | | | | | | |
Deferred tax expense (benefit) | | | 17 | | | | 1,435 | | | | (474 | ) | | | 1,496 | |
Depreciation, depletion and amortization | | | 22,475 | | | | 15,032 | | | | 49,882 | | | | 46,024 | |
Ceiling test writedown | | | — | | | | 35,391 | | | | — | | | | 108,987 | |
Non-cash derivative (income) expense | | | (45 | ) | | | 340 | | | | (202 | ) | | | 715 | |
Accretion of asset retirement obligation | | | 543 | | | | 525 | | | | 1,203 | | | | 1,542 | |
Share based compensation expense | | | 1,325 | | | | 1,771 | | | | 3,105 | | | | 5,609 | |
Amortization expense and other | | | 732 | | | | 199 | | | | 1,138 | | | | 594 | |
| | | | | | | | | | | | | | | | |
Discretionary cash flow | | | 26,717 | | | | 17,339 | | | | 65,158 | | | | 57,055 | |
| | | | | | | | | | | | | | | | |
Changes in working capital accounts | | | (12,102 | ) | | | 8,138 | | | | (29,834 | ) | | | 13,140 | |
Settlement of asset retirement obligations | | | (2,321 | ) | | | (69 | ) | | | (2,415 | ) | | | (2,519 | ) |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | $ | 12,294 | | | $ | 25,408 | | | $ | 32,909 | | | $ | 67,676 | |
| | | | | | | | | | | | | | | | |
| 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. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | |
| | | PETROQUEST ENERGY, INC. |
| | |
| Date: November 5, 2013 | | By: | | /s/ J. Bond Clement |
| | | | |
| | | | J. Bond Clement |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
