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Gold/Mining/Energy : PetroQuest Energy, Inc (PQUE and T.PQU)
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To: Ronald J. Clark who wrote (48)5/19/1997 8:22:00 PM
From: Ed Ajootian   of 686
 
Ron,

The 113 mboe of production was a bummer, a full 13% under the estimate
they provided us 2 weeks after the quarter had ended! This now throws
into question whether their estimate of 25,000 mboe of of new production
coming from the latest wells, is also 13% too high. Guess we'll find
out in August.

At $.09 cash flow, if you annualize that and then put a market-average
6 muliple on the annualized number you get $2.28 per share, which is
right around where the price is now. So with the new production coming
on line this quarter you could say this thing is a bit undervalued at
this point. Not enough to warrant a buy IMO but FWIW I have stopped
dumping my position.

I figure now that they got all the bad news out they should be putting
something out on Canada any day. This should rally the troops.

In retrospect their foray into Canada is what killed this company. Look
at the annual report. On pg. 13 they show the cost of their properties
by country and it shows that they have invested about C$17 mm in each country
to date. Then flip to pg. 18 and it shows that of the C$2.7 mm of income
they got in '96 from O&G production, C$2.6 of it came from the US and
only $.1 of it came from Canada! It will be a big relief to see Wildhay
off the books, no matter what they get for it.
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