PetroQuest Repays Debt, Continues Growth in Woodford Shale
PetroQuest Energy completed four operated horizontal wells in the Woodford Shale during the fourth quarter of 2009.
In addition to the above completions, the Company has reached total depth on its thirty-third horizontal Woodford well and is commencing completion activities. The Company currently has one operated rig working in the basin and estimates that its current net production from its Oklahoma properties is approximately 30 MMcfe per day.
In East Texas, the Company expects to participate in its first horizontal Cotton Valley well during the first quarter of 2010. Depending upon the results of the initial well, the Company is planning to participate in additional wells during 2010 in addition to planned Travis Peak activity. The Company estimates that its current net production from its East Texas properties is approximately 10 MMcfe per day.
In the Gulf Coast, the Company expects to spud its Sugarloaf prospect during the first quarter of 2010. The Company has a 30% working interest in this prospect targeting significant oil potential.
Capital Expenditures Update
The Company currently expects its 2009 direct capital expenditures to total approximately $60 million versus its previous guidance of $65 - $75 million. The reduced capital expenditure budget is the result of the deferral of several capital projects from the fourth quarter of 2009. In addition, the Company's capital expenditures on its non-operated Fayetteville Shale assets were less than expected.
Production Guidance Update
During the fourth quarter of 2009, the Company experienced a prolonged unanticipated shut-in at its Pelican Point well due to third party pipeline issues downstream of the well. In addition, several Gulf Coast properties were shut-in for Hurricane Ida. As a result of these shut-ins and the previously mentioned capital deferred to 2010, the Company is revising its fourth quarter 2009 production guidance to approximately 81-83 MMcfe per day from its previously issued guidance of 83-88 MMcfe per day. Despite the revised fourth quarter production guidance, the Company expects to achieve its previously issued full-year 2009 production guidance of 90-100 MMcfe per day. The Company estimates that its current net production is approximately 90 MMcfe per day and 51% of its current net production is from its long-lived assets.
In December 2009, the Company repaid an additional $20 million of bank debt. With this payment, the Company has repaid $101 million of bank debt during 2009. At December 31, 2009, the Company had $29 million of borrowings outstanding on its $100 million revolving credit facility. The Company estimates a year-end cash balance of approximately $20 million.
"We are pleased with our decision in 2009 to repay $101 million of revolver debt, and are excited to be resuming our growth story in 2010," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "With the deliberate pullback in our capital expenditures during 2009, we believe these Woodford wells and other planned activity will mark the fourth quarter of 2009 as the low point in our production base. We continue to demonstrate our ability to operate as the low cost leader in the Woodford trend through our current well cost estimates of $4.1 - $4.4 million. This cost structure, combined with a 6 MMcf average initial production rate on our last 15 wells, generate returns that are competitive with other major shale plays."