SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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):
February 19, 2004 (February 19, 2004)
PETROQUEST ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
1-9020 76-1440714
(Commission File Number) (IRS Employer
Identification No.)
400 E. Kaliste Saloom Road, Suite 6000, Lafayette, Louisiana 70508
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code (337) 232-7028
Not Applicable
(Former name or former address, if changed since last report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a. Financial Statement of Business Acquired
None.
b. Pro Forma Financial Information
None.
c. Exhibits
None.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
PetroQuest Energy, Inc. (NASDAQ: PQUE) 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 for the fourth quarter of 2003 was $16,295,000
as compared to $2,453,000 for the comparable 2002 period. 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 was $33,163,000 and net cash flow provided by operating
activities before working capital changes was $32,915,000. Net cash flow
provided by operating activities and net cash flow provided by operating
activities before working capital changes for the year ended December 31, 2002
were $29,178,000 and $32,813,000, respectively. 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.
2
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:
Natural
Oil 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.
3
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 Form 8-K 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.
4
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
======== ======== ======== ========
5
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.
[SIGNATURE PAGE FOLLOWS]
6
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 hereunto duly authorized.
Date: February 19, 2004 PETROQUEST ENERGY, INC.
By: /s/ DANIEL G. FOURNERAT
---------------------------------------
Daniel G. Fournerat
Senior Vice President, General Counsel
and Secretary
7