PetroQuest Energy, Inc. (NYSE:PQ) announced the sale of its Gulf of Mexico properties on January 31, 2018, but effective as of December 1, 2017. As a result of the sale, the company has eliminated an approximate $35.4 million undiscounted abandonment liability from its long-term obligations.
As quoted in the press release:
The Company received no proceeds from the sale of these properties and is required to contribute $3.75 million towards future abandonment costs. In connection with the sale, the Company expects to receive a cash refund of approximately $10.3 million related to a depositary account that served to collateralize a portion of the Company’s offshore bonds. All of the Company’s production is now derived from assets located onshore Louisiana and Texas.
During the fourth quarter of 2017, the Sold Assets produced approximately 26.1 MMcfe/d (21% oil, 75% gas, 4% NGL). Production from the Sold Assets has declined over the last 60 days as a result of natural declines. The Company estimates net daily production for January 2018 to be approximately 13.8 MMcfe/d (24% oil, 71% gas and 5% NGL), or 47% below the fourth quarter 2017 rate.
As of December 31, 2017, the Company’s estimated proved reserves attributable to the Sold Assets totaled approximately 11 Bcfe (100% proved developed) with estimated pre-tax discounted future net cash flows (PV-10) of approximately ($2.4) million, using SEC pricing ($2.98/Mcf for natural gas and $51.34/Bbl for oil).
Including the Sold Assets, the Company estimates that its 2017 production was approximately 27.6 Bcfe, or 75.6 MMcfe per day. Estimated fourth quarter 2017 production, including the Sold Assets, totaled approximately 8.6 Bcfe, or 93.7 MMcfe per day, compared to guidance of 91-95 MMcfe/d. Estimated production for 2017 was 17% higher than 2016 and estimated fourth quarter 2017 production was 87% higher than the year-ago quarter.
Based upon estimated 2017 production, the Company estimates that it achieved a 247% reserve replacement ratio during 2017 and expects that its all-in finding and development costs during 2017 to be approximately $0.70/Mcfe.
The Company expects to provide first quarter 2018 guidance metrics and 2018 capital expenditure guidance and plans in connection with its 2017 year-end earnings release in early March 2018.