IBD看好PetroQuest Energy

6/16

IBD报导，在03年年底，PetroQuest Energy(代號:PQ) 决定降低在墨西哥湾，包括浅水水域的风险投资的数量，以便减少此海岸的风险资产数量。不同于墨西哥湾的是，内陆井是港储备必不可少的一部分，因此毫无疑问公司的运营将继续保持利好。Johnson Rice的分析师Ron Mills表示：“生产量更加稳定，不会产生大的波动，这对于公司来说是一个利好消息。” PetroQuest Energy目前专注于在三个领域里的开发：东得克萨斯州，俄克拉何马州以及阿肯色州的两大非传统叶岩地区。Ron Mills认为，Newfield Exploration是这些地区最大的运营商，而PetroQuest Energy则相对较小。开采业务仍然在Fayetteville叶岩地区进行，每天创造3.3 mcfe净产量，同比上涨10% 。

Domestic Oil Driller Sticks To The Tried-And-True And Avoids Risk
Friday June 13, 6:18 pm ET
Marilyn Alva

Should it bet the bank on high-risk wells that might pay off with a gusher -- but that run out of steam fast?

Or is it better to opt for low-risk concepts that keep going and going?

For PetroQuest Energy (NYSE:PQ - News), the choice was clear.

In late 2003, the E&P firm decided to dial down the volume of risky ventures in the Gulf Coast -- including shallow waters -- in favor of less risky projects away from the coast.

Unlike the Gulf Shore, inland wells are known to harbor reserves. So there's not as much guess work.

And they produce much longer, so they'd smooth the ups and downs of PetroQuest's production on the Gulf of Mexico.

"It's been a great idea for them," said Johnson Rice analyst Ron Mills. "Now production can grow more steadily, without the volatility."

Focus Of Attention

PetroQuest is focusing its new development work in three general areas: East Texas and two unconventional shale plays -- the Woodford Shale in the Arkoma Basin of Oklahoma and the Fayetteville Shale in Arkansas.

The company's goal is to have 75% of its reserves and 50% of production come from inland areas.

Chief Executive Charles Goodson told analysts in a May 21 conference call that the firm can achieve that goal by year-end. Some observers don't see that happening until 2009, however.

At the end of 2007, 60% of reserves and nearly 30% of production came from these longer producing areas.

Cash flow from Gulf Coast projects, meanwhile, is mostly funneled inland.

Only 25% of PetroQuest's 2008 capital budget will go to the Gulf Coast, which includes south Louisiana and shallow water offshore.

The firm recently raised its drilling budget from $230 million to $260 million, thanks in large part to higher gas prices.

About 85% of PetroQuest's production comes from natural gas.

In the first quarter, 38% of output came from inland areas vs. 23% in the same quarter last year.

First-quarter production reached 7.89 billion cubic feet of gas equivalent a day, up from 7.69 billion last year. Of that, 6.72 billion was from natural gas. The rest was oil.

Total revenue rose 20% to $76.8 million.

Earnings grew 27% to 28 cents a share.

Higher commodity prices were a key part of the equation. Average realized gas prices in the first quarter were $8.41 per million cubic feet gas equivalent (mcfe) vs. $7.28 in last year's same quarter. Oil prices were $94.08 per barrel vs. $60 last year.

Analysts tracked by Thomson Reuters estimates that full-year profit will rise 68% over last year to $1.33 a share. Analysts expect 9% profit growth in 2009 and 21% in 2010.

Meanwhile, PetroQuest is on track to grow reserves by 30% "with the drill bit" in 2008, Goodson said in the conference call with analysts.

He and other execs were unavailable to comment for this story.

Successful leasing activity is especially paying off in the Woodford Shale, where PetroQuest has more than 31,000 net acres.

It completed its 13th horizontal well in the first quarter, which now averages 4.6 mcfe a day.

"As we sit here today, we are producing approximately 27 mcfe per day of Woodford gas ... and have another four to six wells that should reach total depth in the second quarter," Goodson told analysts.

Growth in the Woodford Shale could be substantial.

Johnson Rice's Mills says the biggest operator there, the much larger Newfield Exploration (NYSE:NFX - News), counts the play as one of its biggest growth engines.

Given that PetroQuest is a much smaller firm, Mills said PetroQuest is "one of the most levered companies to the Woodford Shale."

Drilling also continues in the Fayetteville Shale, where net production is 3.3 mcfe per day, up 10% from last year.

Wells in East Texas sandstone reservoirs are showing promise as drilling activity accelerates.

Even as it reduces its average working interest in Gulf Coast Basin wells, PetroQuest continues to benefit from drilling there.

New Discovery

In early March, PetroQuest announced a sizeable discovery from a well at Pelican point 14 Southeast Louisiana.

"This discovery should further help PetroQuest have a breakout reserve year," wrote Michael Bodino of Coker & Palmer.

For a small firm, one good hit like that "can materially move the needle," UBS Securities' Andrew Coleman told clients in an initiation report on April 16.

"The challenge for management is to keep production growing while cash generated in the Gulf Coast is redeployed to PetroQuest's onshore plays," he wrote.

Company execs don't rule out expansion into other inland shale fields via a small acquisition or new acreage. But they won't likely stray too far from home.

"The farther you get away from Lafayette, La., the more dependent you are on capable personnel," Goodson said in the call after an analyst mentioned shale plays in Canada that "people are talking about."