-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VD9YNNupOUE+Y8lWUGrSwhPDsy5E0kPi/Nd/nvckvjlP4n9Y3DxA29uwDNeY3npF XDwmzgTel3VMDfQMu9qp+Q== 0000950134-99-004399.txt : 19990518 0000950134-99-004399.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950134-99-004399 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROQUEST ENERGY INC CENTRAL INDEX KEY: 0000872248 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 980115468 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19020 FILM NUMBER: 99627335 BUSINESS ADDRESS: STREET 1: 625 E KALISTE SALOOM ROAD SUITE 400 CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3182327028 MAIL ADDRESS: STREET 1: 600 595 HOWE ST STREET 2: VANCOUVER BRITISH COLUMBIA CITY: CANADA V6C 2T5 STATE: A1 FORMER COMPANY: FORMER CONFORMED NAME: OPTIMA PETROLEUM CORP DATE OF NAME CHANGE: 19950726 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1999 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to: Commission file number: 019020 ------------------------ PETROQUEST ENERGY, INC. (Exact name of registrant as specified in its charter) DELAWARE 98-0115468 (State of Incorporation) (I.R.S. Employer Identification No.) 625 E. KALISTE SALOOM RD., LAFAYETTE, LOUISIANA 70508 (Address of principal executive offices) (Zip code) ------------------------ Registrant's telephone number, including area code: (318) 232-7028 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ As of May 17, 1999 there were 18,537,347 shares of the Registrant's Common Stock, par value $.001 per share, outstanding. 2 PETROQUEST ENERGY, INC. INDEX
Page Part I Item 1. Financial Statements: Consolidated Balance Sheets as of March 31, 1999 and December 31,1998....................................... 3 Consolidated Statements of Operations for the three-month periods ended March 31, 1999 and 1998.................................... 4 Consolidated Statements of Stockholders' Equity............... 5 Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 1998.............................. 6 Notes to Consolidated Financial Statements.................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 10 Part II Item 3. Quantitative and Qualitative disclosures about market risk...... 14 Item 4. Submission of matters to a vote of security holders............. 14 Item 5 Other Information............................................... 15 Item 6. Exhibits and Reports on Form 8-K................................ 15
2 3 PETROQUEST ENERGY, INC. Consolidated Balance Sheets (amounts in thousands)
March 31, December 31, ASSETS 1999 1998 ------ ------------ ------------ (Unaudited) Current Assets: Cash $ 1,448 $ 1,081 Accounts Receivable 2,718 1,016 Other Current Assets 78 177 ------------ ------------ Total Current Assets 4,244 2,274 ------------ ------------ Oil and Gas Properties Oil and Gas Properties, Full Cost Method 45,858 42,755 Unevaluated Oil and Gas Properties 5,387 5,747 Accumulated Depreciation, Depletion and Amortization (31,942) (31,079) ------------ ------------ Net Oil and Gas Properties 19,303 17,423 Plugging and Abandonment Escrow 94 221 Other Assets 316 148 ------------ ------------ $ 23,957 $ 20,066 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable & Accrued Liabilities $ 5,280 $ 2,330 Current Portion of Long-Term Debt 2,300 2,400 ------------ ------------ Total Current Liabilities 7,580 4,730 ------------ ------------ Accounts Payable to be Refinanced 2,004 -- Long-term Debt 800 1,300 Other Liabilities 700 700 Stockholders' Equity Common Stock 19 19 Paid-in Capital 43,795 43,795 Accumulated Deficit (30,941) (30,478) ------------ ------------ Total Stockholders' Equity 12,873 13,336 ------------ ------------ $ 23,957 $ 20,066 ============ ============
The accompanying notes are an integral part of these statements. 3 4 PETROQUEST ENERGY, INC. Consolidated Statements of Operations (Unaudited) (amounts in thousands, except per share amounts)
Three Months Ended March 31, ------------------------------ 1999 1998 ------------ ------------ Revenues: Oil and Gas Sales $ 1,217 $ 600 Interest Income 20 67 ------------ ------------ 1,237 667 ------------ ------------ Expenses: Lease Operating Expenses 408 236 Production Taxes 64 66 Depreciation, Depletion and Amortization 886 610 General and Administrative Expenses 283 270 Interest Expense 69 -- Foreign Exchange (Gain)/Loss (10) 172 ------------ ------------ 1,770 1,354 ------------ ------------ Net Loss $ (463) $ (687) ============ ============ Loss Per Common Share Basic $ (0.02) $ (0.06) ============ ============ Diluted $ (0.02) $ (0.06) ============ ============ Average shares outstanding 18,537,347 11,002,346 ============ ============ Average shares outstanding assuming dilution 18,537,347 11,002,346 ============ ============
The accompanying notes are an integral part of these statements. 4 5 PETROQUEST ENERGY, INC. Consolidated Statements of Stockholders' Equity (Unaudited) (amounts in thousands)
Total Common Paid-In Accumulated Stockholders' Stock Capital Deficit Equity ------------ ------------ ------------ ------------ December 31, 1998 $ 19 $ 43,795 $ (30,478) $ 13,336 Net Loss -- -- (463) (463) ------------ ------------ ------------ ------------ March 31, 1999 $ 19 $ 43,795 $ (30,941) $ 12,873 ============ ============ ============ ============
The accompanying notes are an integral part of these statements. 5 6 PETROQUEST ENERGY, INC. Consolidated Statements of Cash Flows (Unaudited) (amounts in thousands)
Three Months Ended March 31, ------------------------- 1999 1998 ---------- ---------- Cash Flows from Operating Activities: Net (Loss) $ (463) $ (687) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation, Depletion and Amortization 886 610 Changes in Working Capital Accounts: Accounts Receivable (1,702) 245 Other Current Assets 99 -- Loan Receivable -- (594) Accounts Payable & Accrued Liabilities 2,950 (145) Plugging and Abandonment Escrow 127 499 Other (191) (42) ---------- ---------- Net Cash Provided By (Used in) Operating Activities 1,706 (114) ---------- ---------- Cash flows from Investing Activities: Investment in Oil and Gas Properties (2,743) (325) ---------- ---------- Net Cash (Used in) Investing Activities (2,743) (325) ---------- ---------- Cash Flows from Financing Activities: Proceeds from Borrowings 2,004 -- Repayment of Debt (600) (1) ---------- ---------- Net Cash Provided by Financing Activities 1,404 (1) ---------- ---------- Net Increase (Decrease) in Cash 367 (440) Cash Balance Beginning of Period 1,081 3,955 ---------- ---------- Cash Balance End of Period $ 1,448 $ 3,515 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 69 $ 2 ========== ==========
The accompanying notes are an integral part of these statements. 6 7 PETROQUEST ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - INTERIM FINANCIAL STATEMENTS - The consolidated financial statements of PetroQuest Energy, Inc. (the "Company") at March 31, 1999 and for the three-month periods then ended are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The financial statements reflect the results of the Company and its predecessor entity, Optima Petroleum Corporation ("Optima"), for all periods presented. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. The results of operations for the three-month period ended March 31, 1999 are not necessarily indicative of future financial results. Certain prior period amounts have been reclassified to conform to current period presentation. NOTE 2 - MERGER OF OPTIMA (U.S.) ENERGY CORPORATION - On September 1, 1998, the Company completed its transaction to merge its wholly owned subsidiary Optima Energy (U.S.) Corporation with American Explorer, L.L.C. (American). Concurrent with the transaction, the Company became a Delaware corporation and converted each share of Optima no par value common stock into one share of the Company's $.001 par value common stock and changed its name from Optima Petroleum Corporation to PetroQuest Energy, Inc. American conducted oil and natural gas exploration activities in the Gulf Coast Region. Under the terms of the transaction, American merged with the Company in exchange for 7,335,001 shares of the Company's common stock, issued to the three former members of American, representing about 40% of the post acquisition shares outstanding. Additionally, the Company issued 1,667,001 contingent stock rights exchangeable for common shares should the market share price of the Company's common stock exceed $5 per share for 20 consecutive trading days during the three year term of the rights. The rights terminate on September 1, 2001. The transaction was treated as a purchase for accounting purposes. No value was assigned to the contingent stock rights. The purchase price of approximately $10.6 million was allocated to the assets and liabilities based on estimated fair value. The operating results of American have been consolidated in the Company's statement of operations since September 1, 1998. The following summarized unaudited income statement data reflects the impact the transaction would have had on the Company's results of operations for the three months ended March 31, 1999 and 1998 had the transaction occurred January 1, 1998. 7 8
Proforma Results for the Three Months Ended March 31, --------------------------------- 1999 1998 ---- ---- (Unaudited) Revenues $ 1,237 $ 2,315 ============= ============= Net Loss $ (463) $ (1,110) ============= ============= Loss per common share: Basic $ (0.02) $ (0.06) ============= ============= Diluted $ (0.02) $ (0.06) ============= =============
NOTE 3 - EARNINGS PER SHARE - Basic net income per share of common stock was calculated by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the periods. For both periods, all options were excluded from the computation of diluted loss per share because they were antidilutive. The contingent stock rights assigned in connection with the merger are excluded from the calculation of diluted earnings per share. NOTE 4 - LONG-TERM DEBT - In April 1999, the Company's borrowing base was redetermined and set at $3,350,000. It reduces $150,000 on May 1, 1999 and June 1, 1999. Beginning July 1, 1999 and continuing on the first day of each month thereafter, the borrowing base shall be reduced by $250,000. The next redetermination is scheduled for August 1, 1999. Interest under the loan is payable monthly at prime plus 1/2% (8 1/4 at March 31, 1999). On April 21, 1999, the Company entered into a loan agreement for non-recourse financing to fund completion, flow line and facility costs of its High Island Block 494 property. The property is security for the loan. Interest is payable at 12% and the lender receives a 2 1/2% overriding royalty interest in the property. For the first two production months, all of the cash flow from the property will be dedicated to payment of principal and interest on the loan. Subsequently, 85% of the cash flow from the property (assuming certain production levels) will be dedicated to debt service. At March 31, 1999, $2,004,000 of vendor payables related to the completion, flow line and facilities of the well at High Island 494 are classified as long-term since they were subsequently funded through this facility. NOTE 5 - NEW ACCOUNTING STANDARDS - In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 130 establishes standards for reporting and display of comprehensive income in the financial statements. Comprehensive income is the total of net income and all other non-owner changes in equity. SFAS No. 131 requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. SFAS Nos. 130 and 131 are effective for 1998. The Company adopted these standards in 1998 with no effect on the Company's financial statements, financial position or results of operations. 8 9 In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Statement establishes accounting and reporting standards that require every derivative instrument (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 1999 and must be applied to (a) derivative instruments and (b) certain derivative instruments embedded in hybrid contracts that were issued, acquired, or substantively modified after December 31, 1997 (and, at the company's election, before January 1, 1998). Because the Company does not currently use derivative instruments, the adoption of SFAS No. 133 will not impact the Company's financial statements. NOTE 6 - RELATED PARTY TRANSACTIONS - In conjunction with the merger discussed at Note 2, the employees and consultants of Optima were terminated. American had no employees. It was managed and its properties (and certain of Optima's properties) were operated by American Explorer, Inc. (AEI), a corporation owned by two officers of the Company and former members of American. From September 1, 1998 through December 31, 1998, the Company's properties were operated by AEI and certain management functions were performed by AEI. The officers of AEI are also the officers of the Company. AEI charged the Company a management fee to cover its costs of services for the Company ($600,000 for the four months ended December 31, 1998). At December 31, 1998, the Company owed AEI approximately $1,053,000. This amount is included in Accounts Payable. Effective January 1, 1999, the Company assumed the operating and management functions from AEI, whose employees became employees of the Company. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL PetroQuest Energy, Inc. is an independent oil and gas company engaged in the development, exploration, acquisition and operation of oil and gas properties onshore and offshore in the Gulf Coast Region. The Company and its predecessors have been active in this area since 1986, which gives the Company extensive geophysical, technical and operational expertise in this area. The Company's business strategy is to increase production, cash flow and reserves through exploration, development and acquisition of properties located in the Gulf Coast Region. MERGER OF OPTIMA (U.S.) ENERGY CORPORATION - On September 1, 1998, the Company completed the transaction to merge its wholly owned subsidiary Optima Energy (U.S.) Corporation with American Explorer, L.L.C. (American). Concurrent with the transaction, the Company became a Delaware corporation and converted each share of Optima no par value common stock into one share of the Company's $.001 par value common stock and changed its name from Optima Petroleum Corporation to PetroQuest Energy, Inc. American conducted oil and natural gas exploration activities in the Gulf Coast Region. Under the terms of the transaction, American merged with the Company in exchange for 7,335,001 shares of the Company's common stock, issued to the three former members of American, representing about 40% of the post acquisition shares outstanding. Additionally, the Company issued 1,667,001 contingent stock rights exchangeable for common shares should the market share price of the Company's common stock exceed $5 per share for 20 consecutive trading days during the three year term of the rights. The rights terminate on September 1, 2001. The transaction was treated as a purchase for accounting purposes. No value was assigned to the contingent stock rights. The purchase price of approximately $10.6 million was allocated to the assets and liabilities based on estimated fair value. The purchase price allocation is preliminary and subject to final review. The operating results of American have been consolidated in the Company's statement of operations since September 1, 1998. RESULTS OF OPERATIONS The following table sets forth certain operating information with respect to the oil and gas operations of the Company for the three-month periods ended March 31, 1999 and 1998. 10 11
Three Months Ended March 31, -------------------------- 1999 1998 ---------- ---------- Production: Oil (Bbls) 22,765 22,292 Gas (Mcf) 510,095 102,107 Total Production (Mcfe) 646,685 235,859 Sales: Total oil sales $ 237,977 $ 329,490 Total gas sales $ 959,454 $ 253,268 Average sales prices: Oil (per Bbl) $ 10.45 $ 14.78 Gas (per Mcf) $ 1.88 $ 2.48 Per Mcfe $ 1.85 $ 2.47
The net loss totaled $463,000 and $687,000 for the quarters ended March 31, 1999 and 1998, respectively. The reduced loss in 1999 is the result of the addition of the American properties partially offset by a decline in product prices. On a thousand cubic feet equivalent (Mcfe) basis, first quarter 1999 production volumes increased 175% over first quarter 1998 production volumes. This is due to the merger with American and the addition of the CL&F #12 in the Turtle Bayou Field. The CL&F #12 was a discovery in the fourth quarter of 1998 which commenced production in December 1998. The properties previously owned by American produced 341,000 Mcfe during this quarter and the CL&F #12 produced 88,000 Mcfe. Oil and gas sales during the first quarter of 1999 increased 103% to $1,200,000, as compared to first quarter 1998 revenues of $600,000. The production increases discussed above were partially offset by decreased product prices. Prices received during the first quarter of 1999 averaged $10.45 per barrel of oil and $1.88 per Mcf of gas, as compared to averages of $14.78 per barrel and $2.48 per Mcf received in the 1998 period. Stated on a Mcfe basis, unit prices received during the first quarter of 1999 were 25% lower than the prices received during the comparable 1998 period. Operating expenses for the first quarter of 1999 increased to $408,000 from $236,000 during the first quarter of 1998 due primarily to the American merger and the addition of the related properties. On a Mcfe basis, operating expenses decreased from $1.00 per Mcfe in 1998 to $0.63 in 1999. General and administrative expenses during the first quarter of 1999 totaled $283,000 as compared to expenses of $270,000 during the 1998 quarter. Not included in the 1999 amount is $373,000 which was capitalized as related directly to the acquisition, exploration and development effort. Total general and administrative costs increased in 1999 due to the additional staffing levels related to the generation and operation of properties. Interest expense increased due to the addition of the debt associated with the American merger. 11 12 Depreciation, depletion and amortization ("DD&A") expense for the three months ended March 31, 1999 increased 45% from the 1998 period. This resulted from the additions to property cost on the balance sheet for the American properties. On a Mcfe basis, which reflects the changes in production, the DD&A rate for the first three months of 1999 was $1.37 per Mcfe compared to $2.54 per Mcfe for the same period in 1998. LIQUIDITY AND CAPITAL RESOURCES Working Capital and Cash Flow. Working capital (before considering the current portion of debt) decreased from $0.1 million deficit at December 31, 1998 to $1 million at March 31, 1999. This was caused primarily by funds expended for principal payments on debt and oil and gas properties. In April 1999, the Company's borrowing base of its reducing revolving line of credit was redetermined and set at $3,350,000. It reduces $150,000 on May 1, 1999 and June 1, 1999. Based on the loan balance at March 31, 1999, $50,000 of principal payments will be required during the second quarter assuming no additional draws under the line. Thereafter, the line will reduce $250,000 per month until the next redetermination at August 1, 1999. On April 21, 1999, the Company entered into a loan agreement for non-recourse financing to fund completion, flow line and facility costs of its High Island Block 494 property. Interest is payable at 12% and the lender receives a 2 1/2% overriding royalty interest in the property which is security for the loan. For the first two production months, all of the cash flow from the property will be dedicated to payment of principal and interest on the loan. Subsequently, 85% of the cash flow from the property (assuming certain production levels) will be dedicated to debt service. Net cash flow from operations before working capital changes increased for the first quarter of 1999 to $423,000 compared to negative $77,000 for 1998. This was the result of the addition of the American properties and the CL&F #12 discovery in the Turtle Bayou Field. The Company's liquidity has been adversely affected by declines in prices received for sales of oil and gas production. In order to fund its cash requirements for continued oil and gas exploration activities, operations and debt service, the Company plans to raise private capital and to fund a substantial portion of its anticipated capital expenditures through drilling ventures with industry partners; however, there can be no assurance that such plans will be successful. Private capital may involve the sale of equity, which will dilute current stockholders. If the Company is unable to obtain additional financing, it could be forced to delay or even abandon some of its exploration and development opportunities. Furthermore, the Company may be required to sell some of its producing properties in order to provide needed liquidity. On May 5, 1999 the Company received notice from the Nasdaq Stock Market, Inc. ("Nasdaq") that because it does not meet the $1.00 per share closing bid standard as required by Nasdaq, it will no longer be listed for trading on that system. The Company was immediately eligible for trading in the over-the-counter market on an electronic bulletin board established for securities that do not meet the Nasdaq listing requirements. The Company intends to request the Nasdaq Listing and Hearing Review Council review this decision. However, this request and potential review will not operate to stay the Nasdaq decision and there can be no assurances the Company will be successful in its appeal. The Company's listing on the Toronto Stock Exchange was not affected. 12 13 Year 2000 Compliance. During 1998, the Company's executive management and Board of Directors implemented a program to identify, evaluate and address the Company's Year 2000 ("Y2K") risks to ensure that all its Information Technology ("IT") Systems and Non-IT Systems will be able to process dates from and after January 1, 2000 without critical systems failure. In addition to evaluating its own systems, the Company will also assess the Y2K risks associated with its significant customers and suppliers. The Company is currently evaluating its IT Systems for Y2K compliance. As part of this evaluation, the Company has contracted third-party consultants to assist in the identification and replacement of non-compliant IT Systems. During 1998, the Company began modification of IT Systems for Y2K compliance. The modifications are planned to be completed in the second quarter of 1999. The Non-IT Systems are currently being assessed to determine which systems would be affected by Y2K issues. Once assessment is completed, any necessary replacements or modifications will be performed. Management believes that any Non-IT issues will be minor and should be corrected by first quarter of 1999. The assessment of third parties has the primary purpose of determining any disruptions in operations due to non-compliance by an outside organization. This will be determined by contacting the Company's suppliers and customers to determine their level of Y2K compliance and the steps they are taking towards compliance. These assessment and corrective measures are scheduled for completion during the second quarter of 1999. Total costs incurred to-date and estimated remaining costs for consultants software and hardware applications for Y2K compliance is approximately $35,000. The Company does not separately account for the internal costs incurred for its Y2K Compliance efforts. The costs of these projects and the dates on which the Company plans to complete modifications and replacements are based on managements' best estimates, the estimates of third-party specialists assisting the Company, the modification plans of third-parties and other factors. There can be no guarantee that these estimates will be achieved and actual results could differ materially from those plans. Based on preliminary risk assessments, the Company believes the most likely Y2K related failure would be a temporary disruption in certain materials and services provided by third-parties, which would not be expected to have a material adverse effect on the Company's financial condition or results of operations. If during its assessment it is determined that Y2K related failure would have a material adverse effect on the Company, contingency plans will be developed. There can be no assurance that the Company will not be materially adversely affected by Y2K problems. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS This Report includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Report that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including drilling of wells, reserve estimates, future production of oil and gas, future cash flows and other such matters are 13 14 forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such forward-looking statements are subject to certain risks, uncertainties and other factors, many of which are beyond the control of the Company, which could cause actual results to differ materially from those currently anticipated. These factors include, without limitation, the numerous uncertainties inherent in estimating quantities of proven oil and gas reserves and in projecting future rates of production and timing of development expenditures which may vary significantly from reserves and production estimates; the results of exploratory and developmental drilling; operating hazards attendant to the oil and gas business, including downhole drilling and completion risks that are generally not recoverable from third parties or insurance; actions or inactions of third-party operators of the Company's properties; lease and rig availability; the successful identification, acquisition and development of properties; changes in the price received for oil and/or gas which may effect results of operations and cash flows; the demand for and supply of gas and oil; the weather; pipeline capacity; general economic conditions; governmental regulation; changes in interest rates; the Company's ability to find and retain skilled personnel; labor relations; Year 2000 compliance by the Company and third parties; competitors of the Company having greater resources than those of the Company; or other unanticipated external developments materially impacting the Company's operational and financial performance. Readers are cautioned that any such statements are not guarantees of future performance and the Company can give no assurances that actual results or developments will not differ materially from those projected in the forward-looking statements. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this Report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. PART II Item 3. DISCLOSURE ABOUT MARKET RISKS The Company's indebtedness under its line of credit is variable rate financing. The Company believes that its exposure to market risk relating to interest rate risk is not material. The Company believes that its business operations are not exposed to market risks relating to foreign currency exchange risk or equity price risk. Price Risk The Company's revenues are derived from the sale of its crude oil and natural gas production. Based on projected annual sales volumes for the remaining nine months of 1999, a 10% decline in the prices the Company receives for its crude oil and natural gas production would have an approximate $600,000 impact on the Company's revenues. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 14 15 Item 5 OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27.1 Financial data schedule (b) The Company filed a Form 8-K on May 7, 1999 reporting that its securities ceased trading on the NASDAQ Stock Market effective on the close of business, Wednesday, May 5, 1999. The Company's stock was immediately eligible to trade on the OTC Bulletin Board and its listing on the Toronto Stock Exchange was not affected. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PETROQUEST ENERGY, INC. Date: May 17, 1999 By: /s/ Robert R. Brooksher ----------------------------------- Robert R. Brooksher Chief Financial Officer and Secretary (Authorized Officer and Principal Financial Officer) 15 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,448,000 0 2,718,000 0 0 4,244,000 51,245,000 31,942,000 23,957,000 7,580,000 2,804,000 0 0 19,000 12,854,000 23,957,000 1,217,000 1,237,000 0 408,000 1,293,000 0 69,000 (463,000) 0 (463,000) 0 0 0 (463,000) (.02) (.02)
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