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PetroQuest Energy Inc. Reports Operating Results (10-Q)

August 05, 2010 | About:
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10qk

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PetroQuest Energy Inc. (PQ) filed Quarterly Report for the period ended 2010-06-30.

Petroquest Energy Inc. has a market cap of $416.9 million; its shares were traded at around $6.6 with a P/E ratio of 14.7 and P/S ratio of 1.9. PQ is in the portfolios of NWQ Managers of NWQ Investment Management Co, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

The above sales and average sales prices include additions related to the settlement of gas hedges of $4,756,000 and $22,441,000 and the settlement of oil hedges of zero and $1,470,000 for the three months ended June 30, 2010 and 2009, respectively. The above sales and average sales prices include additions related to the settlement of gas hedges of $6,287,000 and $36,419,000 and the settlement of oil hedges of zero and $3,515,000 for the six months ended June 30, 2010 and 2009, respectively.

Prices Including the effects of our hedges, average gas prices per Mcf for the three and six month periods ended June 30, 2010 were $4.67 and $4.98, respectively, as compared to $5.95 and $5.72 for the respective 2009 periods. Average oil prices per Bbl for the three and six months ended June 30, 2010 were $77.20 and $77.90, respectively, as compared to $67.90 and $59.64, respectively, for the 2009 periods. Stated on an Mcfe basis, unit prices received during the quarter and six months ended June 30, 2010 were 12% and 3% lower than the prices received during the comparable 2009 periods.

Expenses Lease operating expenses for the three month period ended June 30, 2010 increased to $9,020,000 as compared to $8,373,000 during the 2009 period primarily as a result of unanticipated maintenance costs. Per unit lease operating expenses totaled $1.23 per Mcfe during the three month period ended June 30, 2010 as compared to $0.98 per Mcfe during the 2009 period. Lease operating expenses for the six month period ended June 30, 2010 decreased to $18,715,000 as compared to $19,506,000 during the 2009 period. Per unit lease operating expenses totaled $1.24 per Mcfe during the six month period ended June 30, 2010 as compared to $1.05 per Mcfe during the 2009 period. Although per unit lease operating expenses increased, absolute lease operating expenses during the first six months of 2010 decreased as compared to the 2009 period primarily due to the overall reduction in produced volumes, as well as lower insurance costs. We expect that lease operating expenses during 2010 will generally approximate lease operating expenses during 2009.

Production taxes during the quarter and six months ended June 30, 2010 totaled $1,599,000 and $2,947,000, respectively, as compared to $846,000 and $3,020,000 during the 2009 periods. Production taxes during the second quarter of 2009 included approximately $570,000 of production tax refunds for several Oklahoma horizontal wells.

Depreciation, depletion and amortization (DD&A) expense on oil and gas properties for the three and six months ended June 30, 2010 totaled $13,483,000, or $1.84 per Mcfe, and $28,219,000, or $1.87 per Mcfe, respectively, as compared to $18,087,000, or $2.11 per Mcfe, and $49,625,000, or $2.66 per Mcfe, during the comparable 2009 periods. The decline in our DD&A per Mcfe was primarily the result of the ceiling test write-downs of a substantial portion of our proved oil and gas properties during 2009 as a result of lower commodity prices, the impact of the joint development agreement, as well as reserve additions during 2010 from our Woodford operations. We expect DD&A per Mcfe for the remainder of 2010 to generally approximate the second quarter of 2010 rate.

Interest expense, net of amounts capitalized on unevaluated properties, totaled $2,379,000 and $4,189,000 during the quarter and six months ended June 30, 2010 as compared to $3,388,000 and $6,564,000 during the 2009 periods. We capitalized $2,083,000 and $4,723,000 of interest during three and six month periods of 2010 and $2,208,000 and $4,237,000 during the 2009 periods. We have reduced the outstanding borrowings under our bank credit facility from $130 million at June 30, 2009 to zero at June 30, 2010. As a result, we anticipate interest expense to be lower in 2010.

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