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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from: to:
Commission file number: 019020
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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 3000,
LAFAYETTE, LOUISIANA 70508
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code: (337) 232-7028
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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As of May 9, 2001, there were 32,331,657 shares of the Registrant's
Common Stock, par value $.001 per share, outstanding.
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PETROQUEST ENERGY, INC.
Table of Contents
Part I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 2001 and December 31, 2000........................................................ 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and 2000.................................................. 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and 2000................................................. 5
Notes to Consolidated Financial Statements........................................................ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................... 11
Part II. Other Information
Item 1. Legal Proceedings................................................................................. 11
Item 2. Changes in Securities and Use of Proceeds......................................................... 11
Item 3. Defaults upon Senior Securities................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders.............................................. 11
Item 5. Other Information................................................................................. 11
Item 6. Exhibits and Reports on Form 8-K.................................................................. 12
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PETROQUEST ENERGY, INC.
Consolidated Balance Sheets
(Amounts in Thousands)
March 31, December 31,
2001 2000
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,424 $ 7,549
Oil and gas revenue receivable 7,365 5,148
Joint interest billing receivable 5,593 10,151
Other current assets 579 1,432
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Total current assets 17,961 24,280
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Oil and gas properties:
Oil and gas properties, full cost method 102,929 85,443
Unevaluated oil and gas properties 14,353 12,431
Accumulated depreciation, depletion and amortization (44,826) (41,530)
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Oil and gas properties, net 72,456 56,344
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Plugging and abandonment escrow 555 495
Other assets, net of accumulated depreciation and amortization
of $1,019 and $558, respectively 1,651 1,953
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Total Assets $ 92,623 $ 83,072
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 26,421 $ 18,893
Advances from co-owners 3,801 7,297
Current portion of long-term debt 145 7,873
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Total current liabilities 30,367 34,063
Commitments and contingencies -- --
Current portion of long-term debt expected to be refinanced 7,500 --
Long-term debt 6,695 6,804
Other liabilities 2,017 749
Stockholders' equity:
Common stock, $.001 par value; authorized 75,000
shares; issued and outstanding 30,617 and 30,256
shares, respectively 31 30
Paid-in capital 62,710 62,290
Other comprehensive income 25 --
Accumulated deficit (16,722) (20,864)
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Total stockholders' equity 46,044 41,456
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Total liabilities and stockholders' equity $ 92,623 $ 83,072
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See accompanying Notes to Consolidated Financial Statements.
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PETROQUEST ENERGY, INC.
Consolidated Statements of Operations
(unaudited)
(Amounts in Thousands, Except Per Share Data)
Three Months Ended
March 31,
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2001 2000
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Revenues:
Oil and gas sales $ 12,345 $ 3,099
Interest and other income 208 $ 52
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12,553 3,151
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Expenses:
Lease operating expenses 1,248 603
Production taxes 262 173
Depreciation, depletion and amortization 3,342 1,100
General and administrative 661 646
Interest expense 466 --
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5,979 2,522
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Income from operations 6,574 629
Income tax expense 2,433 --
Net income $ 4,141 $ 629
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Earnings per common share:
Basic $ 0.14 $ 0.03
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Diluted $ 0.13 $ 0.02
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Weighted average number of common shares:
Basic 30,505 24,048
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Diluted 32,714 25,514
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See accompanying Notes to Consolidated Financial Statements.
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PETROQUEST ENERGY, INC.
Consolidated Statements of Cash Flows
(unaudited)
(Amounts in Thousands)
Three Months Ended
March 31,
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2001 2000
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Cash flows from operating activities:
Net income $ 4,141 $ 629
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred tax expense 2,433 --
Depreciation, depletion and amortization 3,342 1,100
Amortization of debt issuance costs 416 --
Stock based compensation -- 56
Derivative mark to market (55) --
Changes in working capital accounts:
Accounts receivable (2,216) 288
Joint interest billing receivable 4,558 841
Other assets (350) (18)
Accounts payable and accrued liabilities 4,772 909
Advances from co-owners (3,496) (3,157)
Plugging and abandonment escrow (60) (60)
Other (42) (35)
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Net cash provided by operating activities 13,443 553
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Cash flows from investing activities:
Investment in oil and gas properties (16,653) (2,236)
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Net cash used in investing activities (16,653) (2,236)
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Cash flows from investing activities:
Exercise of options and warrants 422 116
Proceeds from borrowings 1,000 3,100
Repayment of debt (1,337) (2,772)
Issue of common stock -- (54)
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Net cash provided by financing activities 85 390
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Net decrease in cash and cash equivalents (3,125) (1,293)
Cash balance and cash equivalent, beginning of period $ 7,549 $ 3,006
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Cash balance and cash equivalent, end of period $ 4,424 $ 1,713
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 271 $ 77
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Income taxes $ -- $ --
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See accompanying Notes to Consolidated Financial Statements.
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PETROQUEST ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
The consolidated financial information for the three month periods ended March
31, 2001 and 2000, respectively, have been prepared by the Company and was not
audited by its independent public accountants. In the opinion of management, all
adjustments have been made to present fairly the financial position, results of
operations, and cash flows of the Company at March 31, 2001 and for all reported
periods. Results of operations for the interim periods presented are not
necessarily indicative of the operating results for the full year or any future
periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted. These consolidated
financial statements should be read in conjunction with the financial statements
and related notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000.
Unless the context otherwise indicates, any references in this Quarterly Report
on Form 10-Q to the "Company" refer to PetroQuest Energy, Inc. (Delaware) and
its wholly-owned consolidated subsidiaries, PetroQuest Energy, L.L.C. (a single
member Louisiana limited liability company) and PetroQuest Oil & Gas, L.L.C. (a
single member Louisiana limited liability company).
Certain reclassifications of prior year amounts have been made to conform with
the current year presentation.
NOTE 2 EARNINGS PER SHARE
Basic earnings per common share was computed based on the weighted average
number of common shares issued and outstanding during the relevant periods.
Diluted earnings per common share was computed based on the weighted average
number of common shares issued and outstanding plus all potentially dilutive
common shares that would have been outstanding in the relevant periods assuming
the issuance of common shares for stock options and warrants through the
application of the treasury stock method. There were no antidilutive shares for
the three-month periods ended March 31, 2001 and March 31, 2000, respectively.
NOTE 3 LONG-TERM DEBT
On May 11, 2001, the Company and its subsidiary PetroQuest Energy, L.L.C., (the
"Borrower") amended its existing credit agreement with Hibernia National Bank to
increase its existing $50 million revolving credit facility to $100 million,
increase the borrowing base from $14.3 million to $36 million, and add lenders
to the facility. The borrowing base availability is $26.4 million as of May 11,
2001 and is subject to quarterly reductions initially set at $4 million
commencing July 31, 2001. Outstanding balances on the revolving credit facility
bear interest at either the prime rate or the Eurodollar rate plus a margin
(based on a sliding scale of 1.375% to 2.125% depending on borrowing base
usage). The credit facility matures on June 30, 2004. In addition, the credit
facility allows the Borrower to use up to $10 million of the borrowing base for
letters of credit for fees of 2% per annum.
At March 31, 2001, $6,000,000 of the existing credit facility with Hibernia
National Bank was outstanding and classified as long-term debt. Also, a
$3,000,000 letter of credit was outstanding at March 31, 2001. The unused
portion of the existing credit facility at March 31, 2001 was $5,300,000.
On March 31, 2001, $7,500,000 was outstanding on the bridge facility with EnCap
Energy Capital Fund III, L.P., which matures on September 18, 2001, subject to
two extensions of thirty days each. However, the outstanding balance was
classified as long-term debt as the Company intends to pay off the debt by
drawing on the amended credit facility. The loan carries a fixed interest rate
of 10%, and is secured by a second mortgage on substantially all of the
Borrower's oil and gas properties.
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On April 21, 1999, the Company entered into a loan agreement for non-recourse
financing to fund completion, flow line and facility costs of its High Island
Block 494 property. The property is security for the loan. Interest is payable
at 12% and the lender receives a 2 1/2% overriding royalty interest in the
property. The loan agreement requires 85% of the net cash flow from the property
(assuming production levels of 12.5 MMcf/day) is dedicated to debt service. At
March 31, 2001, $840,456 remains outstanding under this loan.
NOTE 4 NEW ACCOUNTING STANDARDS
On January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, as amended (SFAS 133) pertaining to the accounting
for derivative instruments and hedging activities. SFAS 133 requires an entity
to recognize all of its derivatives as either assets or liabilities on its
balance sheet and measure those instruments at fair value. If the conditions
specified in SFAS 133 are met, those instruments may be designated as hedges.
Changes in the value of hedge instruments would not impact earnings, except to
the extent that the instrument is not effective as a hedge. At January 1, 2001,
the Company recognized a liability of $609,295 before tax, related to costless
collars; the cumulative catch-up adjustment was recorded as a charge to other
comprehensive income.
The Company incurred a $158,968 charge to oil and gas revenues
during the first quarter as a result of the settlement of costless collars. As
of March 31, 2001, the fair value of the open collar contracts was an asset of
$94,105. During the quarter, the Company recognized $54,850 in other income
related to the collars. The remaining adjustment to the fair value of the
collars was recorded in other comprehensive income.
As of March 31, 2001, the Company had open costless collar contracts
with third parties whereby minimum floor prices and maximum ceiling prices are
contracted and applied to related contract volumes. These agreements in effect
for the remainder of 2001 are for gas volume of 6,000 MMBtu per day at (a
weighted average) a ceiling price of $8.93 and floor price of $4.00. The Company
had no open oil hedging contracts at March 31, 2001.
NOTE 5 EQUITY
Other Comprehensive Income
The following table (in thousands) presents a recap of the Company's
comprehensive income for the three-month period ended March 31, 2001:
Net income $ 4,141
Cumulative effect of change in accounting principle, net of taxes (383)
Change in fair value of derivative instruments, net of taxes 408
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Comprehensive income $ 4,166
Common Stock Issue Rights
Pursuant to the September 1, 1998 merger and reorganization (the
"Merger"), the Company issued to the original owners (the "Original Owners") of
American Explorer L.L.C. and their respective affiliates, certain of whom
currently serve as officers and directors of the Company, 7,335,001 shares of
Company Common Stock, par value $.001 per share (the "Common Stock"), and
1,667,001 Contingent Stock Issue Rights (the "CSIRs"). The CSIRs entitle the
holders to receive an additional 1,667,001 shares of Common Stock at such time
within three years of the anniversary date of the issuance of the CSIRs as the
trading price for the Common Stock closes at $5.00 or higher for 20 consecutive
trading days. On May 3, 2001 the Common Stock closed higher than $5.00 for the
twentieth consecutive trading day, and 1,667,001 shares of Common Stock were
issued under the terms of the CSIRs.
In April 2001, the Original Owners of American Explorer L.L.C. entered into an
agreement with an officer of the Company whereby the Original Owners granted to
the officer an option to acquire, at a fixed price, certain of the original
shares the Original Owners were issued in the Merger. As the fixed price of the
April grant was below the market price as of the date of grant,
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the Company will recognize non-cash compensation expense over the three-year
vesting period of the option. In addition, the Original Owners granted to the
officer an interest in a portion of the Common Stock issuable pursuant to the
CSIRs, if any, that might be issued. This agreement is similar to agreements
previously entered into with two other officers of the Company. Non-cash
compensation expense will be recognized for the Common Stock issuable pursuant
to the CSIRs granted to the three officers over the three-year vesting period
based on the fair value of the Common Stock issuable pursuant to the CSIRs in
May 2001, when the Common Stock issuable pursuant to the CSIRs was issued to the
Original Owners.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
PetroQuest Energy, Inc. is an independent oil and gas company engaged in the
exploration, development, acquisition and operation of oil and gas properties
onshore and offshore in the Gulf Coast Region. The Company and its predecessors
have been active in this area since 1986, which gives the Company extensive
geophysical, technical and operational expertise in this area.
The Company's business strategy is to increase production, cash flow and
reserves through exploration, development and acquisition of properties located
in the Gulf Coast Region. At March 31, 2001, the Company operated 77% of all
producing wells in which it participated. For the three months ended March 31,
2001, approximately 41% of the Company's equivalent production was oil and 59%
was gas.
RESULTS OF OPERATIONS
The following table sets forth certain operating information with respect to the
oil and gas operations of the Company for the periods noted.
Three Months Ended
March 31,
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2001 2000
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Production:
Oil (Bbls) 139,080 34,230
Gas (Mcf) 1,190,478 831,019
Total Production (Mcfe) 2,024,958 1,036,399
Sales:
Total oil sales $3,894,810 $ 939,123
Total gas sales 8,450,214 2,159,633
Average sales prices:
Oil (per Bbl) $ 28.00 $ 27.44
Gas (per Mcf) 7.10 2.60
Per Mcfe 6.10 2.99
Net income totaled $4,141,000 and $629,000 for the quarters ended March 31, 2001
and 2000, respectively. The positive results are attributable to the following
components:
PRODUCTION. Oil produced in 2001 increased 306% over the first quarter ended
March 31, 2000. Natural gas produced in 2001 increased 43% over the first
quarter ended March 31, 2000. On a Mcfe basis, production for the first quarter
ended March 31, 2001 increased 95% over the same period in 2000.
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The increase in 2001 production volumes, as compared to 2000, was due primarily
to two new onshore wells and four new offshore wells that were not producing in
2000.
PRICES. Average oil prices per Bbl for the first quarter ended March 31, 2001
were $28.00 as compared to $27.44 for the same period in 2000. Average gas per
Mcf prices were $7.10 for the first quarter ended March 31, 2001, as compared to
$2.60 for the same period in 2000. Stated on a Mcfe basis, unit prices received
during the first quarter of 2001 were 104% higher than the prices received
during the comparable 2000 period.
REVENUE. Oil and gas sales during the first quarter of 2001 increased 298% to
$12,345,000, as compared to first quarter 2000 revenues of $3,099,000. The
strong rise in product prices coupled with the growth in production volumes
resulted in significant increases in revenue.
EXPENSES. Lease operating expenses for the first quarter of 2001 increased to
$1,248,000 from $603,000 during the first quarter of 2000. The increase for the
three months ended March 31, 2001 as compared to the same period in 2000 is
primarily due to the 95% increase in production on a Mcfe basis. On a Mcfe
basis, lease operating expenses for the first quarter increased from $0.58 per
Mcfe in 2000 to $0.62 in 2001. This increase is due to initial high operating
costs per Mcfe at the recently acquired Ship Shoal Field.
General and administrative expenses during the first quarter of 2001 totaled
$661,000 as compared to expenses of $646,000 during the 2000 quarter, net of
amounts capitalized of $622,000 and $551,000, respectively. The increase in
general and administrative expenses is primarily due to a 77% increase in
staffing levels related to the generation of prospects, exploration for oil and
gas reserves and operation of properties.
Depreciation, depletion and amortization ("DD&A") expense for the three months
ended March 31, 2001 increased 204% from the 2000 period. The rise in DD&A is
primarily due to increased production from bringing new wells on-line since the
first quarter of 2000. On a Mcfe basis, which reflects the changes in
production, the DD&A rate for the quarter of 2001 was $1.65 per Mcfe compared to
$1.06 per Mcfe for the same period in 2000. The increase for the first three
months of 2001 as compared to the same period for 2000 is due primarily to the
significant capital and future development costs related to the Company's
offshore projects.
Interest expense, net of amounts capitalized, increased $466,000 during the
first quarter 2001 as compared to first quarter 2000. The increase is the result
of an increase in debt levels at the end of 2000 and into 2001 resulting from
property acquisitions and a higher capital budget, which has been partially
funded by borrowings. The Company capitalized $300,000 and $97,000 of interest
during the three months ended March 31, 2001 and 2000, respectively.
Income tax expense of $2,433,000 was recognized during the first quarter of 2001
as compared to no provision being recorded in the first quarter of 2000. The
increase is the result of the Company fully reversing the valuation allowance on
the deferred tax asset during 2000. The Company provides for income taxes at a
statutory rate of 37%.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AND CASH FLOW
The Company has financed its exploration and development activities to date
principally through bank borrowings, cash flow from operations, and private
placements of Common Stock. Net cash flow from operations before working capital
changes increased from $1,729,000 in 2000 to $10,277,000 in 2001. Operations in
2001 improved because of better product prices and increased production as the
result of successful exploration and development activities. However, working
capital (before considering debt) decreased from $(1.9) million in 2000 to
($12.2) million in 2001. This was caused primarily by significant capital
expenditures related to the Company's active exploration and development in the
first quarter of 2001.
On May 11, 2001, the Company and its subsidiary PetroQuest Energy, L.L.C., (the
"Borrower") amended its existing credit agreement with Hibernia National Bank to
increase its existing $50 million revolving credit facility to $100 million,
increase the borrowing base from $14.3 million to $36 million, and add lenders
to the facility. The borrowing base availability is $26.4 million as of May 11,
2001 and is subject to quarterly reductions initially set at $4 million
commencing July 31, 2001. Outstanding balances on the revolving credit facility
bear interest at either the prime rate or the Eurodollar rate plus a margin
(based on a sliding scale of 1.375% to 2.125% depending on
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borrowing base usage). The credit facility matures on June 30, 2004. In
addition, the credit facility allows the Borrower to use up to $10 million of
the borrowing base for letters of credit for fees of 2% per annum.
At March 31, 2001, $6,000,000 of the existing credit facility with Hibernia
National Bank was outstanding and classified as long-term debt. Also, a
$3,000,000 letter of credit was outstanding at March 31, 2001. The unused
portion of the existing credit facility at March 31, 2001 was $5,300,000.
On March 31, 2001, $7,500,000 was outstanding on the bridge facility with Encap
Energy Capital Fund III, L.P., which matures on September 18, 2001, subject to
two extensions of thirty days each. However, the outstanding balance was
classified as long-term debt as the Company intends to pay off the debt by
drawing on the amended credit facility. The loan carries a fixed interest rate
of 10%, and is secured by a second mortgage on substantially all of the
Borrower's oil and gas properties.
On April 21, 1999, the Company entered into a loan agreement for non-recourse
financing to fund completion, flow line and facility costs of its High Island
Block 494 property. The property is security for the loan. Interest is payable
at 12% and the lender receives a 2 1/2% overriding royalty interest in the
property. The loan agreement requires 85% of the net cash flow from the property
(assuming production levels of 12.5 MMcf/day) is dedicated to debt service. At
March 31, 2001, $840,456 remains outstanding under this loan.
The Company has budgeted for capital expenditures for 2001 and has an
exploration and development program for the year 2001 which will require
significant capital. Our budget for direct capital for new projects in 2001 is
approximately $45,000,000 of which approximately $17,000,000 has been incurred.
Management believes the cash flows from operations and additional borrowing
capacity will be sufficient in the near term to fund exploration and development
activities. In the future, our exploration activities could require additional
financings, which may include sales of additional equity or debt securities,
additional bank borrowings, or joint venture arrangements with industry
partners. There can be no assurances that such additional financings will be
available on acceptable terms, if at all. If the Company is unable to obtain
additional financing, it could be forced to delay or even abandon some of its
exploration and development opportunities.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Form 10-Q contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical facts
included in and incorporated by reference into this Form 10-Q are
forward-looking statements. 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 the Company's estimate of the sufficiency of its existing
capital sources, its 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 and in projecting future rates
of production, the timing of development expenditures 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 the Company
has filed with the Securities and Exchange Commission. The Company undertakes no
duty to update or revise these forward-looking statements.
When used in the Form 10-Q, the words, "expect," "anticipate," "intend," "plan,"
"believe," "seek," "estimate" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. Because these forward-looking statements involve risks
and uncertainties, actual results could differ materially from those expressed
or implied by these forward-looking statements for a number of important
reasons, including those discussed under "Management's Discussions and Analysis
of Financial Condition and Results of Operations", and elsewhere in this Form
10-Q.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company experiences market risks primarily in two areas: interest rates and
commodity prices. The Company believes that its business operations are not
exposed to significant market risks relating to foreign currency exchange risk.
The Company's revenues are derived from the sale of its crude oil and natural
gas production. Based on projected annual sales volumes for the remaining nine
months of 2001, a 10% decline in the prices the Company receives for its crude
oil and natural gas production would have an approximate $4.9 million impact on
the Company's revenues.
In a typical hedge transaction, the Company will have the right to receive from
the counterparts to the hedge, the excess of the fixed price specified in the
hedge over a floating price based on a market index, multiplied by the quantity
hedged. If the floating price exceeds the fixed price, the Company is required
to pay the counterparts this difference multiplied by the quantity hedged. The
Company is required to pay the difference between the floating price and the
fixed price (when the floating price exceeds the fixed price) regardless of
whether the Company has sufficient production to cover the quantities specified
in the hedge. Significant reductions in production at times when the floating
price exceeds the fixed price could require the Company to make payments under
the hedge agreements even though such payments are not offset by sales of
production. Hedging will also prevent the Company from receiving the full
advantage of increases in oil or gas prices above the fixed amount specified in
the hedge. As of March 31, 2001, the Company had open collar contracts with
third parties whereby minimum floor prices and maximum ceiling prices are
contracted and applied to related contract volumes. These agreements in effect
for the remainder of 2001 are for gas volume of 6,000 MMBtu per day at (a
weighted average) a ceiling price of $8.93 and floor price of $4.00. The Company
had no open oil hedging contracts at March 31, 2001. At March 31, 2001, the
Company recognized an asset of $94,105 related to these costless collars.
The Company also evaluated the potential effect that reasonably possible near
term changes may have on the Company's facility. Debt outstanding under the
facility is subject to a floating interest rate and represents approximately 42%
of the Company's total debt as of March 31, 2001. Based upon an analysis,
utilizing the actual interest rate in effect and balances outstanding as of
March 31, 2001 and assuming a 10% increase in interest rates and no changes in
the amount of debt outstanding, the potential effect on interest expense for the
remaining nine months of 2001 is approximately $357,000.
PART II
Item 1. LEGAL PROCEEDINGS
NONE.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE.
Item 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
Item 5. OTHER INFORMATION
On March 12, 2001, Dalton F. Smith, III was appointed as Vice
President -- Business Development & Land for the Company. His primary
responsibilities will include identification and pursuit of new exploration
ventures and property acquisitions, the development and maintenance of key
industry relationships, and oversight of the Company's land management
activities.
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On April 20, 2001, Daniel G. Fournerat was appointed as the
Company's Senior Vice President and General Counsel. Mr. Fournerat has served as
the Company's outside counsel and as a member of the Company's board of
directors since September 1998. Prior to joining the Company, Mr. Fournerat
practiced law since 1977 with the Lafayette, Louisiana law firm of Onebane,
Bernard, Torian, Diaz, McNamera & Abel specializing in an oil and gas
transactional practice.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Employment Agreement dated April 20, 2001 between PetroQuest Energy,
Inc. and Daniel G. Fournerat.
10.2 Termination Agreement dated April 20, 2001 between PetroQuest Energy,
Inc. and Daniel G. Fournerat.
10.3 Amended and Restated Credit Agreement dated as of May 11, 2001, by and
among PetroQuest Energy, L.L.C., a Louisiana limited liability company,
PetroQuest Energy, Inc., a Delaware corporation, and Hibernia National
Bank, and the Financial Institutions named therein as Lenders, and
Hibernia National Bank as Administrative Agent.
10.4 Revolving Note dated May 11, 2001 in the principal amount of
$50,000,000.00 payable to Hibernia National Bank.
10.5 Revolving Note dated May 11, 2001 in the principal amount of
$25,000,000.00 payable to Union Bank of California, N.A.
10.6 Revolving Note dated May 11, 2001 in the principal amount of
$25,000,000.00 payable to Royal Bank of Canada.
10.7 Commercial Guaranty made as of May 11, 2001, by PetroQuest Energy,
Inc., a Delaware corporation, in favor of Hibernia National Bank.
10.8 Subordination Agreement effective as of May 11, 2001, by and among
Hibernia National Bank, EnCap Energy Capital Fund III, L.P., PetroQuest
Energy, L.L.C., a Louisiana limited liability company, and PetroQuest
Energy, Inc., a Delaware corporation.
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on January 8, 2001, amending
its report on Form 8-K filed on December 27, 2000 relating to the acquisition of
assets and the beginning of a new credit facility.
The Company filed a report on Form 8-K on January 10, 2001
announcing the voluntary delisting of the Company's common stock from the
Toronto Stock Exchange.
The Company filed a report on Form 8-K on March 1, 2001, amending
its report on Form 8-K filed on December 27, 2000 relating to the acquisition of
assets and the beginning of a new credit facility.
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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: May 15, 2001 By: /s/ Michael O. Aldridge
------------------------ ------------------------------------------
Michael O. Aldridge
Chief Financial Officer and Secretary
(Authorized Officer and Principal
Financial and Accounting Officer)
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.1 Employment Agreement dated April 20, 2001 between PetroQuest Energy,
Inc. and Daniel G. Fournerat.
10.2 Termination Agreement dated April 20, 2001 between PetroQuest Energy,
Inc. and Daniel G. Fournerat.
10.3 Amended and Restated Credit Agreement dated as of May 11, 2001, by and
among PetroQuest Energy, L.L.C., a Louisiana limited liability company,
PetroQuest Energy, Inc., a Delaware corporation, and Hibernia National
Bank, and the Financial Institutions named therein as Lenders, and
Hibernia National Bank as Administrative Agent.
10.4 Revolving Note dated May 11, 2001 in the principal amount of
$50,000,000.00 payable to Hibernia National Bank.
10.5 Revolving Note dated May 11, 2001 in the principal amount of
$25,000,000.00 payable to Union Bank of California, N.A.
10.6 Revolving Note dated May 11, 2001 in the principal amount of
$25,000,000.00 payable to Royal Bank of Canada.
10.7 Commercial Guaranty made as of May 11, 2001, by PetroQuest Energy,
Inc., a Delaware corporation, in favor of Hibernia National Bank.
10.8 Subordination Agreement effective as of May 11, 2001, by and among
Hibernia National Bank, EnCap Energy Capital Fund III, L.P., PetroQuest
Energy, L.L.C., a Louisiana limited liability company, and PetroQuest
Energy, Inc., a Delaware corporation.
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