PetroQuest Energy Announces Sale of Gulf of Mexico Assets; 2017 Estimated Proved Oil and Gas Reserves and Production
February 01 2018 - 5:00PM
PetroQuest Energy, Inc. (NYSE:PQ) today announced the sale of
its Gulf of Mexico properties (the “Sold Assets”) on January 31,
2018, but effective as of December 1, 2017. As a result of the
sale, the Company has eliminated an approximate $35.4 million
undiscounted abandonment liability from its long-term
obligations. The Company received no proceeds from the sale
of these properties and is required to contribute $3.75 million
towards future abandonment costs. In connection with the
sale, the Company expects to receive a cash refund of approximately
$10.3 million related to a depositary account that served to
collateralize a portion of the Company’s offshore bonds. All of the
Company’s production is now derived from assets located onshore
Louisiana and Texas.
During the fourth quarter of 2017, the Sold
Assets produced approximately 26.1 MMcfe/d (21% oil, 75% gas, 4%
NGL). Production from the Sold Assets has declined over the
last 60 days as a result of natural declines. The Company
estimates net daily production for January 2018 to be approximately
13.8 MMcfe/d (24% oil, 71% gas and 5% NGL), or 47% below the fourth
quarter 2017 rate.
As of December 31, 2017, the Company’s estimated
proved reserves attributable to the Sold Assets totaled
approximately 11 Bcfe (100% proved developed) with estimated
pre-tax discounted future net cash flows (PV-10) of approximately
($2.4) million, using SEC pricing ($2.98/Mcf for natural gas and
$51.34/Bbl for oil).
The following tables set forth information about
the Company’s estimated proved reserves, including proforma for the
divestiture of the Sold Assets:
2017 Estimated Proved
Reserves
Category |
|
2017 |
|
2016 |
|
% Change |
Proved Reserves
(BCFE) |
|
156 |
|
115 |
|
36 |
% |
PV-10 ($MM)* |
|
127 |
|
67 |
|
90 |
% |
*Excludes value of hedges in
place
2017 Estimated Proved Reserves –
Proforma GOM Sale
Category |
|
2017 |
|
2017 PF - GOM Sale |
PDP (Bcfe) |
|
68 |
|
63 |
PDNP (Bcfe) |
|
8 |
|
2 |
PUD (Bcfe) |
|
80 |
|
80 |
Total Proved
Reserves (Bcfe) |
|
156 |
|
145 |
Natural Gas |
|
80% |
|
81% |
Oil |
|
7% |
|
6% |
NGL |
|
13% |
|
13% |
PV-10
($MM)* |
|
127 |
|
130 |
*Excludes value of hedges in
place
Including the Sold Assets, the Company estimates
that its 2017 production was approximately 27.6 Bcfe, or 75.6 MMcfe
per day. Estimated fourth quarter 2017 production, including the
Sold Assets, totaled approximately 8.6 Bcfe, or 93.7 MMcfe per day,
compared to guidance of 91-95 MMcfe/d. Estimated production
for 2017 was 17% higher than 2016 and estimated fourth quarter 2017
production was 87% higher than the year-ago quarter.
Based upon estimated 2017 production, the
Company estimates that it achieved a 247% reserve replacement ratio
during 2017 and expects that its all-in finding and development
costs during 2017 to be approximately $0.70/Mcfe.
The Company expects to provide first quarter
2018 guidance metrics and 2018 capital expenditure guidance and
plans in connection with its 2017 year-end earnings release in
early March 2018.
Management’s Comment“After
completing the sale of our Gulf of Mexico properties, we have
eliminated a considerable long-term abandonment liability and have
substantially reduced our exposure to future regulatory,
environmental, surety and weather risks inherent in offshore
operations. In addition, the sale will increase our net
liquidity by $6.5 million and allow us to focus our attention on
developing our onshore assets in East Texas and in the Louisiana
Austin Chalk trend,” said Charles T. Goodson, Chairman, Chief
Executive Officer and President. “While our production and reserve
profiles will experience near-term reductions after this
divestiture, we believe that this transaction will ultimately drive
value creation.”
Non-GAAP Financial MeasurePV-10
is the estimated future net cash flows from estimated proved
reserves discounted at an annual rate of 10% before giving effect
to income taxes. Standardized measure is the after-tax
estimated future net cash flows from estimated proved reserves
discounted at an annual rate of 10%, determined in accordance with
GAAP. Management believes PV-10 is useful to investors as it
is based on prices, costs and discount factors which are consistent
from company to company, while the standardized measure is
dependent on the unique tax situation of each individual
company. As a result, the Company believes that investors can
use PV-10 as a basis for comparison of the relative size and value
of the Company’s reserves to other companies. The Company
also understands that securities analysts and rating agencies use
PV-10 in similar ways. PV-10 cannot be currently reconciled
to the standardized measure of discounted future net cash flows
because final income tax information for 2017 is not yet
available. The Company will provide the reconciliation of SEC
priced, proved PV-10 to standardized measure in its Form 10-K for
the year ended December 31, 2017.
Forward-Looking StatementsThis 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 and significantly depressed oil prices since the end of
2014; 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 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; less than 25% 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.
For further information, contact: Matt Quantz, Manager -
Corporate Communications(337) 232-7028, www.petroquest.com