PetroQuest Energy Inc. Q4 2007 Earning Call Transcript

Feb.25.08 | About: PetroQuest Energy (PQ)

PetroQuest Energy Inc. (NYSE:PQ)

Q4 2007 Earnings Call

February 20, 2008 9:30 am ET

Executives

Charlie Goodson - Chairman, President and CEO

Mike Aldridge - CFO

Todd Zehnder - VP, Corporate Communications

Analysts

Robert Lynd - Simons & Company

Kim Pacanovsky - Ferris, Baker Watts

Michael Bodino - Coker & Palmer

Steve Berman - Pritchard Capital

Stephen Beck - Jefferies

Ron Mills - Johnson Rice

Richard Tullis - Capital One Southcoast

Operator

Good morning. My name is Vonda, and I will be your conference operator today. At this time, I would like to welcome everyone to the PetroQuest Energy fourth quarter and year-end conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instruction) Thank you. Mr. Zehnder, you may begin your conference.

Todd Zehnder

Thank you, Vonda. Good morning, everybody. We'd like to welcome you once again to our fourth quarter and year-end conference call and webcast. Participating with me today are Charlie Goodson, our Chairman, CEO and President and Mike Aldridge, CFO. As you come to expect, we'd like to make our Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made today regarding PetroQuest's business, which are not historical facts are forward-looking statements that involve risks and uncertainties. For discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "risk factors" in the company's annual report on form 10-K for the year ended December 31, 2006.

With that, Charlie we will get this started.

Charlie Goodson

Good morning. During the fourth quarter we produced 7.9 Bcfe or 85.3 million cubic feet of gas equivalent per day, which was a 23% increase over production in comparable quarter of 2006. Approximately 33% in the production came from our long-life basins versus 27% in the third quarter of 2007.

Revenues were $67 million with product price realizations averaging $85.44 per barrel of oil, and $7.35 per Mcf of gas. Net income available to shareholders was $10.8 million and net income per share was $0.22.

For the year we produced 31.4 Bcfe, resulting in revenue of $264 million in net income of $0.79 per share, all of which are company records. With these results, we recorded our eighth consecutive year of positive net income.

Also our production has grown at a compound annual growth rate of 39% over nine years. We’ve ended the year with 156.5 Bcfe of proved reserves, which is also a new company record. 61% of the reserves are in long-life basins, with 91% being gas. On a percentage basis, proved developed reserves are approximately 69%.

Now let’s move onto operations. Our active drilling program in the Arkoma basin, continued in the fourth quarter, we drilled six horizontal Woodford shale wells during the quarter, four which were operated, and we have continued our 100% success rate in all Woodford wells drilled today. The average initial production rate, for these four operating wells was 3.2 million cubic feet per day. And we recently initiated production from our 11th horizontal well, and it's producing at approximately 2 million cubic feet per day, as it cleans up.

Drilling continues in the Woodford shale, and we have finished our drilling of our 12th and 13th operated Woodford wells. We plan on adding a third rig by April 2008.

Production from Oklahoma averaged approximately 15 million cubic feet equivalent per day, during the fourth quarter of 2007, up 25% from the third quarter of 2007. In addition to growing production, the successful implementation of our Woodford drilling program allowed us to increase Oklahoma reserves by 91%. To further develop and maintain our momentum we are forecasting spending approximately $86 million, which represents 40% of our 2008 budget in Oklahoma.

We participated in the drilling completion of 12 successful horizontal Fayetteville Shale wells during the fourth quarter. The initial production rates have averaged less than 1 million cubic feet a day up to 3 million cubic feet per day. Since the commissioning of our Fayetteville shale play in late 2007, we participated in the drilling of 44 gross wells maintaining a 100% success rate.

The average drilling and completion cost per well has averaged approximately $2.1 million and we currently have 70 producing wells, with our working interest ranging from approximately 1% to 34%.

We are very pleased with the results of Fayetteville and Woodford shale programs, where our current net production is just under 20 million cubic feet per day. We feel that we are meeting, and in most cases exceeding our initial economic expectations.

Moving on to East Texas, during the fourth quarter, we drilled 10 wells in East Texas all of which were successful. Drilling activity in Carthage is ongoing, and we are currently working on various facility projects in order to increase production. As previously discussed, the [Gilette] well, the first well in our weekly prospect has exceeded our pre-drill expectations. The well is currently flowing at approximately 800 barrels of oil per day, and 350,000 cubic feet of gas per day.

We recently purchased an additional 50% working interest and assumed operator-ship in the entire project. We now have approximately 85%. Current plans call for us to begin drilling our next well within 60 days and we expect to drill a total of four wells in this area during 2008.

Drilling activity in Carthage is ongoing, and we anticipate the continuation of our positive results during 2008. Along with our operated drilling program in the Carthage Field, we also have a 50% interest in a non-operated Travis Peak drilling program, which continues to maintain a 100% success rate. This activity will further increase our reserve production growth in East Texas area, where we exit the year producing approximately 80 million cubic feet of gas per day.

Moving on to the Gulf Coast, our Brittas Bay prospect was logged, and found approximately 35 feet of net productive sands. Well it's currently being completed and it is expected to begin producing in approximately two months, at approximately 5 million cubic feet equivalent per day. We have approximately 27% net revenue interest in this well.

We're currently drilling our Pelican Point well, and expect to have results in the well in approximately one to two weeks; we have a 25% working interest in this well. And we will once again have a very active drilling program in 2008 in South Louisiana, and we have a good balance of development exploration projects.

At this time I'll turn it over to Mike.

Mike Aldridge

Thank you, Charles. Our drilling capital budget for 2008 is approximately $200 million to $220 million of which we plan on funding out of our internally generated cash flow. We currently have a borrowing base of $80 million of which we had borrowed nothing as of December 31st, and we had approximately $70 million of cash as of December 31st.

Our current plans call for producing between 86 and 92 million cubic feet equivalent per day, net to the company, for the first quarter of 2008 and between 94 and 100 million cubic feet equivalent per day, net to the company for the ended December 31st, 2008.

We also put out our cost guidance today, and will continue to be a low cost operator, especially as we continue to transition into our long life basin. We currently have approximately 12.3 Bcf of our 2008 production hedged at an average floor price of $7.62 on an Mcfe basis. We will continue to see the opportunistic times to add to our existing hedging position in order to minimize the effect of price volatility.

With that, I'll turn it back over to Charles.

Charles Goodson

Looking back at 2007 we are very pleased with our record production reserve growth. As stated earlier, our Arkoma basin results have not only met but exceeded our expectations. Evidence of this fact is that we doubled our reserves, compared to the prior year, and are forecasting another increase in excess of 100% in 2008.

We'll continue to grow the company in 2008 to the drilling activities and selective acquisitions, and companywide we are confident in our ability to grow reserves in excess of 30% during 2008, with the drill bit alone.

With that we will open it up for questions.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from the line of Robert Lynd with [Simons & Company].

Robert Lynd - Simons & Company

Good morning.

Charles Goodson

Good morning

Mike Aldridge

Good morning.

Robert Lynd - Simons & Company

Can you walk us through your 2008 production guidance assumptions? How much of that growth is being driven by unconventional, how much is from the Gulf Coast?

Charlie Goodson

Well, we have currently modeled about 45% of our production for 2008 is coming from the unconventional areas, which is up from about, I'd say I think we averaged 28% to 30% of the full year. So on just the growth piece, Robert, I think it's going to be hard for us to segregate that out but you can see that we're growing production, mid-point has us just around 15% absolute growth and we've got transition from 30% roughly to 45% of the production coming from the East Texas, Oklahoma and Arkansas.

Robert Lynd - Simons & Company

Okay and with Arkansas, given that you don't operate there, how much is that contributing to the guidance and how are you modeling that internally?

Mike Aldridge

Hey, Robert, Mike Aldridge. We are looking at probably about 5% of our '08 production coming from that Arkansas area, and basically, we are just steadily laying that growth in over a year.

Robert Lynd - Simons & Company

Okay. And then just moving on to the Woodford and the well that you included in the announcement of 2 million a day was that announced previously in your operations update?

Charlie Goodson

No.

Robert Lynd - Simons & Company

So this is a new well for the recent to we are around 2 million a day.

Mike Aldridge

Right.

Robert Lynd - Simons & Company

Okay. Can you give me what your total average initial production rate is for the Woodford bit horizontal?

Charlie Goodson

As far as an average for the first 11 wells?

Robert Lynd - Simons & Company

Yeah. Around that.

Charlie Goodson

It is probably -- we can get it for you Robert. I mean we are looking at a slew of them right here, it's going to be somewhere between 25 and 30.

Robert Lynd - Simons & Company

Okay.

Charlie Goodson

But we'll get back to you by the end of the call.

Robert Lynd - Simons & Company

Okay. And just to follow-up with that. The most recent two wells, a little below -- well they are below the previous four well average? Were these mechanical issue here or frac issue or is it just --- were they drilled in a similar area that might not be as productive as the previous four wells.

Charlie Goodson

I think that this is a statistical play that -- we're going to have areas that don't produce initial rates as high. They end up with better EUR's, and we have other wells that have greater initial rates and have lower EUR. So having drilled the 11 wells and brought them on, they have steadily increased and have basically initial flow rates but -- and they’re in various areas. So I think it's too early draw any conclusions from the good or the bad. We are just very excited about everything that's happened out there so far, and certainly, this is no cost for alarm. We're not going to have the next 10 wells that come in at 2 million. That I can assure you. Every well that we drill out there, has performed differently. How far we got out, one lateral was 2500 feet, one lateral was 3500 feet. I think as we get into developmental drilling where we're going to drill the next five wells per section, or the next three or the next seven, all under 3D, you're going to see -- then you can really lay in some specifics on what you're expecting on every well out there.

Robert Lynd - Simons & Company

Right. I appreciate that, Charlie. And you're still standing by roughly 3 Bcf a well, or 4.5 million D&C?

Charlie Goodson

Yes.

Robert Lynd - Simons & Company

Okay.

Todd Zehnder

And Robert, just for some color, I mean both of these wells even though they're pretty new production data, they're between 2.5 and 3 Bcf in early production declines.

Robert Lynd - Simons & Company

Thanks Todd. That's all I had, guys.

Todd Zehnder

Right.

Operator

Your next question comes from the line of Kim Pacanovsky with Ferris, Baker Watts.

Kim Pacanovsky - Ferris, Baker Watts

Good morning everyone.

Todd Zehnder

Good morning.

Charlie Goodson

Good morning.

Kim Pacanovsky - Ferris, Baker Watts

What were the rates on the non-operated Woodford wells?

Charlie Goodson

You know, Kim, we haven't gotten -- I don't think we've seen that data yet. We are not operating yet and so until it gets turned to sales, we haven't seen it. We'll get back to you on it though.

Kim Pacanovsky - Ferris, Baker Watts

Alright. And can you remind me if your partner is again on this well?

Charlie Goodson

I think one of those was a new field operated well and one was a private company in the basin.

Kim Pacanovsky - Ferris, Baker Watts

Okay, great. And for the guidance for the lease operating expense in the first quarter you have that going up slightly, is there is some workover activity or something going on in the Gulf that's a responsible for that?

Mike Aldridge

Well, we got a no claims bonus from our insured in the fourth quarter, which had the impact of depressing LOEs and so as we normalized back to a more historical rate that’s all it is.

Kim Pacanovsky - Ferris, Baker Watts

Great, okay. And also on the interest expense, that came in surprisingly well, I mean it's still at the 148 in the [10.375%] senior notes out there, responsible for that?

Mike Aldridge

Well, I think fact that we did the convertible preferred at the end of the year and we just didn’t anticipate this higher level of borrowing on our senior facility in ’08.

Todd Zehnder

I think probably also when the Fayetteville acquisition came in later in the third quarter and into the fourth quarter that all not valuated. At this point we have no reserves or minimal reserve associated with it. So the amount of interest that we’re actually capitalizing as versus expense is going to change our model a little bit.

Kim Pacanovsky - Ferris, Baker Watts

Oh, okay, all right.

Todd Zehnder

So the interest occurred is probably about the same as which we had in the model, we should the classification of how much is going to property, and how is going for P&L.

Kim Pacanovsky - Ferris, Baker Watts

Okay, all right, that’s the ticket. Okay, great, good job guys, thank you.

Todd Zehnder

Thank you.

Mike Aldridge

Thanks.

Operator

Your next question comes from the line of Michael Bodino with Coker & Palmer.

Michael Bodino - Coker & Palmer

Good morning guys.

Charlie Goodson

Good morning Mike.

Mike Aldridge

Good morning.

Michael Bodino - Coker & Palmer

Hey, I had three quick questions. Number one, can you give us any insight to the cost trends that you are seeing in the Fayetteville and Woodford Shale place?

Charlie Goodson

The Fayetteville, Michael is kind of hard right now, I mean this is not operated and the trend that we are seeing, because we are so new to it. I think what we can say is we’re pretty encouraged the average drilling complete costs that we have seen in our wells that is $2.1 million. I think being that we are just -- from the standpoint that we are not operating we are relatively new to the trend. It is hard for us to say where they’re trending.

In Woodford, I would tell you that we are hearing is, that the rig cost has flattened to where we are actually seen some stable rate I think that the other services, like when it comes to pressure pumping and other ancillary services are still tight and I wouldn't say that they are increasing at the pace they did in the last couple of years. So I think that we are pretty comfortable and saying that in today's market we are still able to drill these things for roughly $4 million to $4.5 million on average.

Michael Bodino - Coker & Palmer

Okay. Any thoughts on maybe going out and increasing lateral length on some of the wells, or are you comfortable with the current configuration of the wells?

Charlie Goodson

Once we have 3D and I would say probably the initial well in a section very well might not be the longer lateral, we're very comfortable with the 3000 feet and the EUR's they give us in well cost and but once we are moving into more a development stage, certainly I think that we're going to look at what's been tried, what seems have worked and certainly are not beyond doing something like that.

Michael Bodino - Coker & Palmer

Okay. One other question I had Charlie, is there any update on the midstream asset sales process. Can you provide that and that's all I have for today?

Charlie Goodson

We are still going through process at this point in time.

Michael Bodino - Coker & Palmer

Is there timeline associated with that or just ongoing?

Todd Zehnder

We should probably be able to announce something to the market within by the end of the first quarter I would say.

Michael Bodino - Coker & Palmer

Thank you.

Todd Zehnder

Sure.

Operator

Your next question comes from the line of Steve Berman with Pritchard Capital.

Steve Berman - Pritchard Capital

Good morning. A couple of questions. The 33% of production in the fourth quarter for long live, was that the average for the quarter and if it was, do you have an exit rate?

Charlie Goodson

That was the average of the quarter Steve. We haven't calculated that on an exit rate, but I presume that it is probably somewhere right around there, because we were somewhere between 35 million and 40 million between the long live. So it may have been a little bit higher, may have been more towards the 45%.

Steve Berman - Pritchard Capital

Right. In the 45% for '08, that's an average for…

Charlie Goodson

That's the full year average, correct. So what we were saying there is, we kind of anticipate being in that 50% number of production, being long live by the end of 2008, which was, if you guys remember back in '03, '04 when we laid out the goals, that was the number we wanted to be at 50% production and we also wanted to be at about 75% of our reserves in long live areas.

And as we sit here and look at the model, and things change with discoveries and acquisitions and all the things that we look at, but if we sit here and look at the model, we can very well be at those two magical numbers by the end of '08.

Steve Berman - Pritchard Capital

Great. The question for Mike or you Todd. The diluted share count did not include the underlying stock for the convert you did. Can you talk about that and what you're seeing in 2008 as far as the diluted share count goes?

Todd Zehnder

Yeah. And the answer is because they were anti-diluted, using FAS 128 earnings per share calculation, they came out anti-diluted, so we don't include it in the diluted share count. Looking at '08, right now we anticipate our diluted share counts to be about 54.8 million shares for the year.

Steve Berman - Pritchard Capital

All right. And any further thoughts here on going back in on La Cantera, as far as if and when, anything you could address about that type?

Charlie Goodson

We are going to have a partner meeting fairly soon and since we do have a number of partners in it, I really want to call back and let all of them have their say, before we say anything as far as when the next well will be drilled.

Steve Berman - Pritchard Capital

Okay. Fair enough, Thanks guys.

Charlie Goodson

Sure, thank you.

Operator

Your next question comes from the line of Stephen Beck with Jefferies

Stephen Beck - Jefferies

Good morning, guys.

Mike Aldridge

Good morning.

Stephen Beck - Jefferies

Hoping, that maybe you could walk us through, how you’d get to the 30% or greater reserve target, some of moving the pieces. how you're getting there?

Charlie Goodson

Well, I mean what we do is, as we take our CapEx and we allocate it to every project that we plan on drilling, and we come up with reserve estimates for all basins and we obviously are have to back out our production that we've given guidance on. So, when we sit here and present to the Board what we think we are going to do in '08, the model was suggesting and we had our business plan suggesting that we are very comfortable that we would be able to grow just from the drill bit, if we don't forecast what we are going to do from an acquisition standpoint. Just from the drill bit that we are going to be able to grow reserves by baseline of 30%.

Mike Aldridge

Well now, obviously Stephen, and we are spending more money this year than ever before in the longer life repeatable lower risk basin. And so, this obviously, gives us a greater level of confidence and a higher probability of success relative to our traditional Gulf Coast drilling.

Stephen Beck - Jefferies

Can you quantify or give a sense of how much is from the different long lived areas?

Charlie Goodson

No we don't get into that detail until the end of the year Stephen.

Stephen Beck - Jefferies

Sure, I had to ask. In the Woodford, last time I looked you had approximately 27,000 net acres. Any change to that?

Charlie Goodson

It continues to go up. It's not going down, and we have a number of brokers and they constantly picking up acreage. We're looking at private acquisitions out there for the most part and third, every time we drill a well, through the pooling process, we increase our interest typically on these sections. So it is increasing and I'd say, probably by the end of the first quarter we'll probably be updating that number.

Stephen Beck - Jefferies

Okay. I know that you provide production volumes by long live versus Gulf Coast. Would you be able to breakout the production volumes by area, for the long live production?

Charlie Goodson

In our latest presentation we have Stephen I don't have that right in front of me but I believe the long live production may be skewed a little bit more toward --, I mean 45% of our annual production is forecasted to be out of the Arkoma and East Texas and I'm thinking of probably about 25% of that is going to be coming from Arkoma and roughly 20% from East Texas. But in our latest management presentation on the website we have that.

Stephen Beck - Jefferies

Do you break it out specifically like for the Woodford?

Charlie Goodson

Well not the Woodford versus the Coal, but Mike said earlier, that he's forecasting about 5% to come from Arkansas.

Stephen Beck - Jefferies

Okay.

Charlie Goodson

So that leave you 20% in Okalahoma.

Stephen Beck - Jefferies

Sure. And then I guess the last question for me is, any change to your acreage position in the Fayetteville.

Todd Zehnder

It continues to increase. We haven't made a significant acquisition, notable enough to go out and press release it, but again, I'd say that by the end of the first quarter we will be updating the market as to what we currently own.

Stephen Beck - Jefferies

Okay, great. Thank you.

Todd Zehnder

Thanks.

Operator

Your next question comes from the line of Ron Mills with Johnson Rice

Charlie Goodson

Good morning, Ron.

Ron Mills - Johnson Rice

Good morning. Just on both the Woodford and Fayetteville, in the Woodford you plan on drilling roughly 30 wells this year up from 10 in '07. How many of those wells are -- do you expect to be operated versus non-op?

Charlie Goodson

Well that's really -- we are forecasting between 25 and 30 operated wells. And so with that tells you, we've got two wells that are running, those are going to run for the full year, and we have the third rig being procured as we speak. So if you can keep the drilling days around where we have recently, you can drill somewhere between, call it plus or minus ten wells a year, quite possibly with a rig eight to ten, and you bring a third rig in. You are somewhere around 25 or so -- 25 to 30.

Mike Aldridge

And on top of that, Ron, we currently projected about six outside operated Woodford wells for the year. Obviously, that number can go up with increased activity.

Ron Mills - Johnson Rice

Okay. And then can you walk through the same math in the Fayetteville, because I think in the Fayetteville, you plan on going from roughly ten horizontal wells last year to plus or minus 70 wells this year, that those are all non-operated -- I understand, but how do you -- is that based on AFE's and proposals that have already coming across your desk or how do you get there based on, which areas that operator's going to drill, which include both 100% for them in acres that you share?

Todd Zehnder

It's a combination of a few things, AFEs and meetings of partners and so forth or probably our best driver, it is all non-operated as you said. I would tell that that is probably the softest number in the presentation, and it's the hardest for us to forecast because we announced that we drilled 12 wells in the fourth quarter and we've already drilled 44. So, what that tells you is, we've already drilled 30 wells in the Fayetteville in 2008 that probably spud at the end of '07 that we were actually completed in '08. So, the 60 to 80 is our best estimate, but we're probably going to end up exceeding that, just looking at where the first quarter is coming in.

Ron Mills - Johnson Rice

Were those is primarily vertical?

Todd Zehnder

No. Majority of those are horizontal. Let's say, 41 of the 44 that we've drilled and complete -- that we drilled so far, not all the things completed, 41 of the 44 have been horizontal.

Charlie Goodson

Ron at those partners meetings I do give a sight six mark projected drill schedule, so we do have some basis but like Todd said, we see activity leaning towards increasing rather than decreasing.

Ron Mills - Johnson Rice

Okay. And just to clarify Todd, you completed 12 wells as of year-end and you say you have completed another 30 wells so far this year?

Todd Zehnder

No, not all of those have been completed. They have been finished the drilling phase though.

Ron Mills - Johnson Rice

Understand. And then, in terms of the weekly prospect, with that well I think it came on at 1,800 barrel a day, it was producing 1,100 or 1,200 barrels a day a couple of months ago, and now it's 100 barrels a day. Does that fit kind of the reserve curve that you all were expecting and then how quickly do you think you can get those other four wells drilled. Would it be just one rig and back-to-back…

Todd Zehnder

Well real quick, a point of clarification. When we announced the first, the test rate, and where there were flowing for those few days as compared to where we are now there is one major difference, we had a ESP which is an Electric Submersible Pump in the bottom of the hole that we that we were running, a couple of months ago that we have elected not to run right now. So this is just natural flowing, no assistance from anything in the well bore, to get some production data and just see what the well is going to do naturally and get some true production data. And first of all, it's not like this well has fallen off from a reservoir standpoint in the first couple of weeks or months, whatever we are looking at here. I would tell you that from a production data standpoint it is holding up to where we thought, we are still obviously very excited its well at north of our original expectations. When we ran the analysis, this was more of a 300 to 400 barrel a day IP rate type formation.

And answer to your second question when we spud the well typically it should be completed in about 45 days not as much facilities work as we had to do in the first well, so you should see from spud to sale, it could be as early as 75 days.

Charlie Goodson

And we will use the same rig, Ron, and probably looking at spudding our next well out there, mid March or so.

Ron Mills - Johnson Rice

And then on, that kind of flows is still where you can drill that incremental three or four wells this year?

Todd Zehnder

Yes.

Ron Mills - Johnson Rice

Okay. And then thanks, that’s all from me. I appreciate it thanks.

Charlie Goodson

Yeah I would like add one thing Ron that we are anticipating those kinds of flow rates in our model for the next wells. This is -- we feel like this one was abnormal at this point in time and we love to be wrong but this point in time, our other wells are forecasted to have substantially lower rates than this.

Ron Mills - Johnson Rice

Okay. All right guys. Thanks.

Charlie Goodson

Thanks.

Operator

(Operator Instruction) Your next question comes from the line of Richard Tullis with Capital One Southcoast.

Richard Tullis - Capital One Southcoast

Good morning.

Charlie Goodson

Good morning, Richard.

Richard Tullis - Capital One Southcoast

I think most of my question have been asked and answered already, but just had a couple of more. Jumping back over to the weekly. What are your expectations for the next couple of wells, Charlie? As far as flow rates and UR's cost.

Charlie Goodson

250 barrels per day, those are the -- that is the typical Buda well in this area, that we've seen, and so, obviously we were very exited about this first one, but our model basically layers in 250 barrels a day.

Richard Tullis - Capital One Southcoast

Okay. Where does that get you to, as far as the EUR?

Todd Zehnder

About 300,000 as we've run economics on 300,000 barrels.

Richard Tullis - Capital One Southcoast

Okay. What's the status on the 12th and 13th Woodford wells, where are they right now in the pipeline?

Todd Zehnder

They've actually both been TD’s at this point and we have now spud 14 and 15 as of this week. We are currently set to frac number 12 -- or actually number 13, I think we are going to frac before number 12, but that is going to be here in about 10 days. We are set to frac number 13, number 12 is delayed because we are going to do a -- we are going to frac it and its neighbor at around the same time. So we're forecasting that well to be frac around April 15.

Richard Tullis - Capital One Southcoast

Any horizontal plans for east Texas '08?

Charlie Goodson

Well, the Buda wells?

Richard Tullis - Capital One Southcoast

Yeah, yeah.

Charlie Goodson

They are all horizontals.

Richard Tullis - Capital One Southcoast

Anything beyond that?

Charlie Goodson

Nothing at this point in time.

Richard Tullis - Capital One Southcoast

Okay. What's your current company production?

Mike Aldridge

We got the guidance out there, 86 and 92 for the first quarter.

Richard Tullis - Capital One Southcoast

Okay.

Mike Aldridge

It out there.

Richard Tullis - Capital One Southcoast

I think that's it for me today, guys. Thanks a bunch.

Charlie Goodson

Appreciate it.

Operator

You do have a follow-up question from Stephen Beck with Jefferies.

Stephen Beck - Jefferies

Hi, guys. A couple of quick ones, just wanted to follow-up. Can you tell us what the latest Woodford’s costs, the drilling complete?

Todd Zehnder

The last two were both around a $4.5 million, just a little bit over $4.5 million.

Stephen Beck - Jefferies

Okay.

Todd Zehnder

And they have laterals in the three that are -- yeah, one was right at 3000 feet, the other was at 3700 feet.

Stephen Beck - Jefferies

And lastly, what kind of drilling days are you looking at your latest Woodfords?

Todd Zehnder

They are still within the same average. Last one we TD'd was 32 days, one before that was higher, because it was in a more complicated area. It was up near 50, but I would still say that we are probably around the 35 to 40 on average, days to drill, which yields these lower cost wells we've been referring to for the last six months.

Stephen Beck - Jefferies

Great. Thanks a lot, Todd.

Todd Zehnder

Sure, appreciate it.

Operator

And do you have a follow up question from Ron Mills with Johnson Rice.

Ron Mills - Johnson Rice

Hey, Charlie, with the Pelican Point well, it sounds like you still have another one to two weeks of -- have there been any drilling difficulties on that or it is just …

Charlie Goodson

Yeah, we’ve sidetrack the well, but that’s --basically about it, nothing difference any other 19,000 foot well that we typically drill. There is a lot of problems that go about doing that four miles away from you and but I wouldn't say anything out of the ordinary and we anticipate having it down within two weeks.

Ron Mills - Johnson Rice

And then if you look at the Gulf Coast program, do you have a sense as to what's coming up next or are you going to focus on some of your lower risk wells next or…?

Charlie Goodson

Yeah I think certainly Pelican Point and then there is probably a 12 Bcf well and we are looking at a well at Turtle Bayou, that's north of Etouffee, called Whistling Straights, it's about closing in on, it's north of 35 Bcf and then some 10 to 15 type Bcf wells and when La Cantera is drilled in 2008 that's still in the range of a 100 Bcf. If that is not drilled in 2008 we have others in our program both onshore and offshore we can substitute.

So it's going to be -- it's probably 8 to 10 wells in South Louisiana offshore and we have such an inventory that we can move things around depending on rig rates and where we want to increase production and where we want to spend money. It's probably about as flexible it's ever been.

Ron Mills - Johnson Rice

And by drilling those 8 to 10 wells does that give you the sense, Pelican Point type of discovery would allow for probably some pretty nice production goals but from a risk adjusted basis that you would be able to maintain your Gulf Coast levels if not slightly increase them with that drilling program?

Todd Zehnder

That's kind of -- I see that's a reasonable goal on our behalf, Ron, when we have only finished 25% of the capital. If we can keep the Gulf Coast reserves flat, they grow a little bit with the big discovery, we will be pretty pleased with that.

Ron Mills - Johnson Rice

Okay. Thanks guys.

Todd Zehnder

Sir, I appreciate it.

Operator

At this time there are no further questions. Are there any closing remarks?

Todd Zehnder

No. Thank you all very much for the conference call here and attending it, and we look forward to obviously a very, very positive 2008. Thank you very much.

Charlie Goodson

Thanks Todd.

Operator

This concludes today's PetroQuest Energy fourth quarter and yearend conference call. You may now disconnect.

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