I have posted a new profile on PetroQuest Energy to our website. It is one of the companies on my "Watch List" that I believe now has a clear path to strong production growth.
In 2016, PetroQuest sold some producing assets to shore up the balance sheet. They also better aligned their debt and got better terms. The big news is the recent re-completion of their Thunder Bayou well which ramped quickly up to ~61,000 Mcfepd and had a better gas/oil ratio than anticipated. PQ has a 37% interest in this "Monster Well".
Q4 production was 50.376 Mcfepd. Thunder Bayou + 10 new horizontal wells in their East Texas Cotton Valley play should push production over 100,000 Mcfepd by year-end.
My valuation is $5.50/share, compared to First Call's price target of $4.79. Roth Capital rates PQ a BUY with a $7.00 valuation.
Read the profile.
PetroQuest Energy (PQ)
PetroQuest Energy (PQ)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PetroQuest Energy (PQ)
Do you know the terms on the preferred. The dividends are suspended, do they have to start paying dividends at some time?
Re: PetroQuest Energy (PQ)
From the annual report:
Our liquidity position has been negatively impacted by the prolonged decline in commodity prices that began in late 2014. In response,
we executed the following actions during 2015 and 2016 aimed at preserving liquidity, reducing overall debt levels and extending debt maturities:
• Completed the Oklahoma Divestitures for $292.6 million;
• Reduced our 2016 capital expenditures by 75% as compared to 2015 capital expenditures of approximately $65 million;
• Completed two debt exchanges reducing debt maturing in 2017 from $350 million to $22.7 million;
• Reduced total debt 32% from $425 million at December 31, 2014 to $290.3 million at December 31, 2016;
• Entered into a new $50 million Multidraw Term Loan Agreement maturing in 2020;
• Suspended the quarterly dividend on our outstanding Series B Preferred Stock saving $5.1 million annually; and
• Secured a new drilling joint venture in East Texas.
In addition to extending the maturity on approximately $113.0 million of debt due in 2017 to 2021, our September 2016 debt exchange
permits us to reduce our cash interest expense on $243.5 million of debt from 10% cash to 1% cash and 9% payment-in-kind for the first three
semi-annual interest payments, which is expected to provide us with more than $30 million of cash interest savings during 2017 and 2018. To
enhance our liquidity and provide capital to refinance the remaining 10% Senior Notes due 2017 (the "2017 Notes"), in October 2016, we entered
into a new $50 million Multidraw Term Loan Agreement (the "Multidraw Term Loan Agreement") maturing in 2020, that replaced our prior
bank credit facility which had no borrowing base on the date of termination. We currently have a more favorable outlook on oil and gas prices for
2017 than prices experienced in 2016. We have recently recompleted our Thunder Bayou well in South Louisiana into a larger sand package and
commenced the East Texas joint venture drilling program where we expect to drill eight to ten gross wells during 2017. As a result, we expect to
begin growing production during 2017 as compared to 2016.
Our liquidity position has been negatively impacted by the prolonged decline in commodity prices that began in late 2014. In response,
we executed the following actions during 2015 and 2016 aimed at preserving liquidity, reducing overall debt levels and extending debt maturities:
• Completed the Oklahoma Divestitures for $292.6 million;
• Reduced our 2016 capital expenditures by 75% as compared to 2015 capital expenditures of approximately $65 million;
• Completed two debt exchanges reducing debt maturing in 2017 from $350 million to $22.7 million;
• Reduced total debt 32% from $425 million at December 31, 2014 to $290.3 million at December 31, 2016;
• Entered into a new $50 million Multidraw Term Loan Agreement maturing in 2020;
• Suspended the quarterly dividend on our outstanding Series B Preferred Stock saving $5.1 million annually; and
• Secured a new drilling joint venture in East Texas.
In addition to extending the maturity on approximately $113.0 million of debt due in 2017 to 2021, our September 2016 debt exchange
permits us to reduce our cash interest expense on $243.5 million of debt from 10% cash to 1% cash and 9% payment-in-kind for the first three
semi-annual interest payments, which is expected to provide us with more than $30 million of cash interest savings during 2017 and 2018. To
enhance our liquidity and provide capital to refinance the remaining 10% Senior Notes due 2017 (the "2017 Notes"), in October 2016, we entered
into a new $50 million Multidraw Term Loan Agreement (the "Multidraw Term Loan Agreement") maturing in 2020, that replaced our prior
bank credit facility which had no borrowing base on the date of termination. We currently have a more favorable outlook on oil and gas prices for
2017 than prices experienced in 2016. We have recently recompleted our Thunder Bayou well in South Louisiana into a larger sand package and
commenced the East Texas joint venture drilling program where we expect to drill eight to ten gross wells during 2017. As a result, we expect to
begin growing production during 2017 as compared to 2016.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PetroQuest Energy (PQ)
Convertible Preferred Stock
The Company has 1,495,000 shares of 6.875% Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred
Stock”) outstanding.
The following is a summary of certain terms of the Series B Preferred Stock:
Dividends. The Series B Preferred Stock accumulates dividends at an annual rate of 6.875% for each share of Series B Preferred Stock.
Dividends are cumulative from the date of first issuance and, to the extent payment of dividends is not prohibited by the Company’s debt
agreements, assets are legally available to pay dividends and the Company’s board of directors or an authorized committee of the board declares a
dividend payable, the Company pays dividends in cash, every quarter.
In connection with an amendment to the Company's bank credit facility, which was terminated in October, 2016, prohibiting the
Company from declaring or paying dividends on the Series B Preferred Stock, the Company suspended the quarterly
cash dividend on it Series B Preferred Stock beginning with the dividend payment due on April 15, 2016. Under the terms of the Series B
Preferred Stock, any unpaid dividends will accumulate. As of December 31, 2016, the Company has deferred three quarterly dividends and has
accrued a $5.1 million payable related to the three deferred quarterly dividends and the quarterly dividend that was payable on January 15, 2017,
which is included in other long-term liabilities on the Consolidated Balance Sheet. If the Company fails to pay six quarterly dividends on the
Series B Preferred Stock, whether or not consecutive, holders of the Series B Preferred Stock, voting as a single class, will have the right to elect
two additional directors to the Company's Board of Directors until all accumulated and unpaid dividends on the Series B Preferred Stock are paid
in full. The Multidraw Term Loan Agreement (see Note 9) currently restricts the Company from paying cash dividends on the Series B Preferred
Stock.
Mandatory conversion. The Company may, at its option, cause shares of the Series B Preferred Stock to be automatically converted at
the applicable conversion rate, but only if the closing sale price of the Company’s common stock for 20 trading days within a period of 30
consecutive trading days ending on the trading day immediately preceding the date the Company gives the conversion notice equals or exceeds
130% of the conversion price in effect on each such trading day.
Conversion rights. Each share of Series B Preferred Stock may be converted at any time, at the option of the holder, into 0.8608 shares
of the Company’s common stock (which is based on an initial conversion price of approximately $58.08 per share of common stock, subject to
further adjustment) plus cash in lieu of fractional shares, subject to the Company’s right to settle all or a portion of any such conversion in cash or
shares of the Company’s common stock. If the Company elects to settle all or any portion of its conversion obligation in cash, the conversion
value and the number of shares of the Company’s common stock it will deliver upon conversion (if any) will be based upon a 20 trading day
averaging period.
Upon any conversion, the holder will not receive any cash payment representing accumulated and unpaid dividends on the Series B
Preferred Stock, whether or not in arrears, except in limited circumstances. The conversion rate is equal to $50 divided by the conversion price at
the time. The conversion price is subject to adjustment upon the occurrence of certain events. The conversion price on the conversion date and the
number of shares of the Company’s common stock, as applicable, to be delivered upon conversion may be adjusted if certain events occur.
-------------------------
You can find this stuff yourself in the Annual Report.
The Company has 1,495,000 shares of 6.875% Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred
Stock”) outstanding.
The following is a summary of certain terms of the Series B Preferred Stock:
Dividends. The Series B Preferred Stock accumulates dividends at an annual rate of 6.875% for each share of Series B Preferred Stock.
Dividends are cumulative from the date of first issuance and, to the extent payment of dividends is not prohibited by the Company’s debt
agreements, assets are legally available to pay dividends and the Company’s board of directors or an authorized committee of the board declares a
dividend payable, the Company pays dividends in cash, every quarter.
In connection with an amendment to the Company's bank credit facility, which was terminated in October, 2016, prohibiting the
Company from declaring or paying dividends on the Series B Preferred Stock, the Company suspended the quarterly
cash dividend on it Series B Preferred Stock beginning with the dividend payment due on April 15, 2016. Under the terms of the Series B
Preferred Stock, any unpaid dividends will accumulate. As of December 31, 2016, the Company has deferred three quarterly dividends and has
accrued a $5.1 million payable related to the three deferred quarterly dividends and the quarterly dividend that was payable on January 15, 2017,
which is included in other long-term liabilities on the Consolidated Balance Sheet. If the Company fails to pay six quarterly dividends on the
Series B Preferred Stock, whether or not consecutive, holders of the Series B Preferred Stock, voting as a single class, will have the right to elect
two additional directors to the Company's Board of Directors until all accumulated and unpaid dividends on the Series B Preferred Stock are paid
in full. The Multidraw Term Loan Agreement (see Note 9) currently restricts the Company from paying cash dividends on the Series B Preferred
Stock.
Mandatory conversion. The Company may, at its option, cause shares of the Series B Preferred Stock to be automatically converted at
the applicable conversion rate, but only if the closing sale price of the Company’s common stock for 20 trading days within a period of 30
consecutive trading days ending on the trading day immediately preceding the date the Company gives the conversion notice equals or exceeds
130% of the conversion price in effect on each such trading day.
Conversion rights. Each share of Series B Preferred Stock may be converted at any time, at the option of the holder, into 0.8608 shares
of the Company’s common stock (which is based on an initial conversion price of approximately $58.08 per share of common stock, subject to
further adjustment) plus cash in lieu of fractional shares, subject to the Company’s right to settle all or a portion of any such conversion in cash or
shares of the Company’s common stock. If the Company elects to settle all or any portion of its conversion obligation in cash, the conversion
value and the number of shares of the Company’s common stock it will deliver upon conversion (if any) will be based upon a 20 trading day
averaging period.
Upon any conversion, the holder will not receive any cash payment representing accumulated and unpaid dividends on the Series B
Preferred Stock, whether or not in arrears, except in limited circumstances. The conversion rate is equal to $50 divided by the conversion price at
the time. The conversion price is subject to adjustment upon the occurrence of certain events. The conversion price on the conversion date and the
number of shares of the Company’s common stock, as applicable, to be delivered upon conversion may be adjusted if certain events occur.
-------------------------
You can find this stuff yourself in the Annual Report.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PetroQuest Energy (PQ)
Thanks. It may be a reasonable bet if you trust the management.
Re: PetroQuest Energy (PQ)
Can you give us any reason that we should not trust PQ management?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group