PetroQuest Energy, Inc. (NYSE:PQ)

Natural Gas Play

If unrest escalates in middle east oil companies will move up, with increased drilling projects in 2012 for pq it increases possible discoveries and enhances the company to be bought.

Oil supply and demand curve is permanently bullish. Demand from China and India and depletion in Saudi Arabia make all oil plays alpha positive to the S&P.

This is a great play on the emerging gas shale industry.

I'm only picking this because it is a profitable oil and natural gas commodity play.

Buying low in one of the most sure sectors. I have made money for years off of PQ's highs and lows. Now is buying time.

Smaller than CHK, but another company with solid management that stands to make huge gains as natural gas demand and prices rise.

PQ is selling for a discount to its book value. In addition, with proven reserves and reduction in debt since the first of the year; gives this gem a great buy in opportunity at current price levels.

This is a fantastic small cap play in the energy sector that will rebound nicely. They’ve had a nice run up this year when the chips were down due to sound management decisions.
Sales are increasing = profits. PQ has restarted its drilling program = opportunity. JP Morgan has given them an outstanding price target of $12 - implying over a 100% upside from current share price. Shares are currently being “heavily” accumulated by financial institutions= BUY. Reminder – the JP Morgan Blessing to BUY.

This is a well run company w/ a history of overcoming challenges. There areas of operation are in some that consider the best regions in the lower 48. 2010 will be a new beginning and a great year for this small cap driller/explorer.

This is a no brainier pick– You’ll be crying tears of joy all the way to the bank.

More info and insight into the company

Catalysts include the near-term drilling and completions of four Woodford Shale wells and the results of a Gulf Coast exploration well. The company has acreage in East Texas that is 14 miles from CHK’s recently announced 9.4MMcfepd Bossier Shale well, so PQ has potential in the Bossier as well as the Haynesville.

Re-starting Woodford drilling. PQ re-started its drilling program in the Woodford two weeks ago. During 4Q09, PQ plans to drill and complete two wells and complete another two wells that it drilled last year. The well it is currently drilling was AFE’d at $4.1 MM. The company’s current plan is to continue utilizing 1 rig in 2010 to drill 8 wells, and PQ might add a second rig during 1H10.

Approaching TD at Whistling Straits. PQ is currently drilling its Whistling Straits prospect and is close to TD. Whistling Straits is high risk, with an expected chance of success of 25-30%. However, the dryhole cost of the well is $1.9MM net to PQ with un-risked net reserves of ~25 Bcfe and the potential to add ~10 MMcfepd of net production.

Rights to Haynesville uncertain but not to the Bossier. PQ has 23,900 net acres in southeast Panola County, Texas, and it has rights to the Bossier Shale on all of this acreage. PetroQuest’s acreage is 14 miles northwest of CHK’s Bossier Shale well that had an IP rate of 9.4 MMcfepd. The company has rights to the Haynesville on at least 1,100 net acres and possibly more depending on its partnership with CVX. Based on other operators’ publicly disclosed maps, PQ’s acreage appears to be on the edge of both the Bossier and Haynesville Shale plays. JPM gives PQ no credit for Bossier potential and value PQ’s Haynesville potential at ~$1/share.

Compelling valuation. JPM's $12 price target implies 100% upside from the current share price compared to the group's median upside potential of 26%.

Thesis. PQ currently is trading at a discount valuation to the group. The group is trading at 78% of our NAV, and PQ is trading at 48% of NAV. The market perceives greater risk in the name, but the company’s 2009 cash build-up and equity offering have greatly improved its liquidity and debt metrics. Operationally, the company’s two gas shale plays (Woodford and Fayetteville) have shown steadily improving results. PQ expects to keep its Gulf Coast/Gulf of Mexico production flat and could get a boost with successful exploration from that region.

Energy pick and TMF "Stock of the Day" for my profile. Small explorer/driller should rebound nicely as the economy turns around and energy starts to be in higher demand. With the future pointing towards alternate fuels, natural gas should also become a higher demand item. So these guys should be a reasonable small cap choice. Am thinking this is a good one for a high risk tolerance.

bull

$10 a share

It's very wise to stop exploration on a market with low oils prices and high exploration costs.

As soon as these two elements significantly change, they're ready to speed up business...faster than most others.

Get on and enjoy the ride back up!!!

Domestic natural gas play

Domestic Natural Gas and Oil

Natgas is the clean fuel of the future in the USA. I belive in Boone Pickens
plan.

Oil is at a low... look at it this way, if my pick doesn't work then im not spending much on gas. Win win if you ask me

growth stock

should get to lower 30s.

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