PetroQuest Energy Inc. (NYSE: PQ) has provided its fourth-quarter 2015 results, along with updates regarding the company’s operations, reduced borrowing base, and 6.875% Series B preferred stock.
The company’s fourth-quarter 2015 production averaged approximately 72.5 MMcfe per day (75% gas, 15% NGL, and 10% oil), as compared to the previously announced guidance of 67–73 MMcfe per day. As of Dec. 31, 2015, PetroQuest had $148 million in cash and no borrowings outstanding under its credit facility.
In East Texas, PetroQuest recently completed its PQ #19 (NRI – 65%) horizontal Cotton Valley well. The well has achieved a maximum 24-hour gross rate of 7,853 Mcf of gas, 581 barrels of natural gas liquids, and 43 barrels of oil. In addition, the company completed its PQ #20 (NRI – 69%) approximately one week ago and the well is in the initial stage of flowback. The PQ #20 well was drilled in a company record of 19 days and cost approximately $3.9 million to drill and complete.
PetroQuest has suspended its 2016 Cotton Valley drilling program with the completion of its PQ #20 well. However, the company will continue to monitor commodity prices and will reassess its 2016 Cotton Valley drilling program during the second half of the year.
On the Gulf Coast, PetroQuest's Thunder Bayou well is currently flowing at approximately 28 MMcfe/d (NRI – 37%) and its production profile continues to perform in line with the company's original expectations. In addition, PetroQuest expects to recomplete into the upper section of the Cris R-2 formation (154 net feet of pay) during the first half of 2016. The company expects this recompletion to increase the well's current production rate and is forecasted to cost approximately $800,000 (WI – 50%).
Borrowing Base Redetermination
The company's bank group has completed an interim redetermination of the borrowing base under the company's credit facility. As a result, PetroQuest's $55 million borrowing base has been revised to $42 million, subject to the aggregate commitments of the bank group, which was also revised to $42 million, and the company's compliance with the financial covenants under the credit facility. The next redetermination of the borrowing base is scheduled to occur on or around March 31. The cCompany is currently in compliance with the financial covenants under the credit facility.
6.875% Series B Preferred Stock Update
The company has 1,495,000 shares of its 6.875% Series B cumulative convertible perpetual preferred stock outstanding. As required by the terms of the recent amendment to the company's credit facility and consistent with PetroQuest's continued focus on preserving liquidity, the company will suspend the quarterly cash dividend on its Series B preferred stock beginning with the dividend payment due on April 15. Suspension of the dividends on the Series B preferred stock will save approximately $5.1 million annually.