PetroQuest Energy's bank group has completed its semi-annual re-determination of its borrowing base under its credit facility. As a result, the Company's borrowing base has been revised to $100 million. The Company currently has $100 million of borrowings outstanding on its revolving credit facility and is in compliance with the financial covenants under the credit facility.
Production Guidance Update
The Company is increasing its third quarter 2009 production guidance to approximately 85 - 87 MMcfe per day from its previously issued guidance of 80 - 85 MMcfe per day.
The Company has contracted a rig for its Woodford operated drilling program and expects to drill two Woodford wells during the fourth quarter of 2009. In addition, the Company has two operated Woodford wells that are waiting to be completed. The timing of completing the four Woodford wells will be dependent on prevailing commodity prices.
In the Gulf Coast Basin, the Company is currently drilling its Whistling Straits prospect at its Turtle Bayou field. The 18,500 foot well is expected to reach total depth during the fourth quarter of 2009.
The Company initiated the following commodity hedging transaction during August 2009:
Production Period Instrument Type Daily Volumes Price
----------------- --------------- ------------- -----
Jan - Dec 2010 Costless Collar 10,000 Mmbtu $5.50 - $6.01
After executing the above transaction, the Company has approximately 7.3 Bcfe of volumes hedged for 2010 with an average floor of $5.75 per Mcf.
"Today, with our significant working capital surplus, including approximately $80 million in cash, we have substantially improved the financial position of the Company. We are now in position to re-initiate drilling activities and take advantage of a low service cost environment that will capture the anticipated higher commodity prices in 2010."
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