Exploration & Production | Quarterly / Earnings Reports | Second Quarter (2Q) Update
PetroQuest Sustains Growth at Drilling Programs in 2Q
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PetroQuest Energy, Inc. has reported results for the second quarter of 2014.
The following compares certain second quarter 2014 metrics to those of the second quarter of 2013, highlighting the Company's continued growth driven by its successful drilling programs in Oklahoma and Texas, its acquisition of certain Gulf of Mexico assets in July 2013 and stronger natural gas prices:
- Oil production increased 99%
- NGL production increased 32% (up 47% from first quarter 2014)
- Net income increased 162%
- Fourth consecutive quarter of discretionary cash flow growth; increased 77%
- Oil and gas revenues up 59%
Operations Update
PetroQuest has updated its E&P segments, which can be accessed below:
PetroQuest's Cotton Valley Ops Surpass Pre-Drill Estimates
PetroQuest Marks Highest Woodford Activity To-Date; Details Results
PetroQuest Drills On at Gulf Coast Thunder Bayou Project
Charles T. Goodson, Chairman, Chief Executive Officer and President, commented: "We are extremely excited about our 2014 Cotton Valley results to date, which have significantly exceeded our pre-drill expectations in terms of IP rates and estimated ultimate recoveries. As a result of this performance, we are initiating efforts to begin planning a significantly more active drilling program in 2015. Additionally, ongoing execution in our Woodford and Gulf Coast basins has us positioned to continue the recent growth in all of our core basins."
Financial Results
Net income available to common stockholders for the quarter ended June 30, 2014 was $9,592,000, or $0.15 per share, compared to second quarter 2013 net income available to common stockholders of $3,662,000, or $0.06 per share. For the first six months of 2014, the Company reported net income available to common stockholders of $19,635,000, or $0.30 per share, compared to net income available to common stockholders of $6,269,000, or $0.10 per share, for the 2013 period.
Discretionary cash flow for the second quarter of 2014 was $35,153,000, as compared to $19,809,000 for the comparable 2013 period. For the first six months of 2014, discretionary cash flow was $69,641,000, as compared to discretionary cash flow of $38,441,000 for the first six months of 2013. See the attached schedule for a reconciliation of net cash flow provided by operating activities to discretionary cash flow.
Production for the second quarter of 2014 was 10.7 Bcfe, compared to 8.7 Bcfe for the comparable period of 2013. For the first six months of 2014, production was 20.5 Bcfe, compared to 16.9 Bcfe for the comparable period of 2013. Oil and NGL volumes made up approximately 28% of second quarter 2014 production as compared to 22% in the second quarter of 2013.
Stated on an Mcfe basis, unit prices including the effects of hedges for the second quarter of 2014 were $5.64 per Mcfe, as compared to $4.39 per Mcfe in the second quarter of 2013. For the first six months of 2014, unit prices including the effects of hedges, were $5.88 per Mcfe, as compared to $4.37 per Mcfe for the first six months of 2013. Oil and gas sales during the second quarter of 2014 were $60,581,000, as compared to $38,076,000 in the second quarter of 2013. For the first six months of 2014, oil and gas sales were $120,547,000 compared to oil and gas sales of $74,052,000 for the first six months of 2013.
Lease operating expenses ("LOE") for the second quarter of 2014 increased to $12,168,000, as compared to $8,837,000 in the second quarter of 2013. LOE per Mcfe was $1.13 for the second quarter of 2014, as compared to $1.02 in the second quarter of 2013. For the first six months of 2014, lease operating expenses increased to $1.19 per Mcfe from $1.10 per Mcfe in the comparable period of 2013. The increase in per unit lease operating expenses is primarily due to an increase in expensed workovers during the 2014 periods as compared to the 2013 periods.
Depreciation, depletion and amortization ("DD&A") on oil and gas properties for the second quarter of 2014 was $1.99 per Mcfe, as compared to $1.64 per Mcfe in the second quarter of 2013. For the first six months of 2014, DD&A on oil and gas properties was $2.02 per Mcfe compared to $1.59 per Mcfe for the comparable period of 2013. The increase in the per unit DD&A rate is primarily the result of the Gulf of Mexico Acquisition, which had a higher cost per unit as compared to our overall amortization base.
Interest expense for the second quarter of 2014 increased to $7,380,000, as compared to $3,116,000 in the second quarter of 2013. For the first six months of 2014, interest expense was $15,016,000, compared to $5,980,000 for the comparable period of 2013. The increase in interest expense was primarily the result of the issuance of $200 million of 10% senior notes due 2017 in July 2013 to finance the Gulf of Mexico Acquisition.
General and administrative expenses during the quarter and six months ended June 30, 2014 totaled $6,467,000 and $12,709,000, respectively, as compared to expenses of $6,351,000 and $11,067,000 during the comparable 2013 periods. General and administrative expenses included non-cash share based compensation expenses of $1,327,000 and $1,240,000 during the second quarters of 2014 and 2013, respectively, and $2,716,000 and $1,796,000 for the respective six month periods ended June 30, 2014 and 2013.