Sterne Agee: Clarity on PetroQuest's Joint Venture

According to a research report published today by Sterne Agee, PetroQuest Energy

will begin utilizing $92 million from Phase 2's proceeds in both the Woodford Shale and the Mississippi Lime. In the report, Sterne Agee commented, “The amended JV states that PetroQuest will pay 25% of well costs for a 50% working interest in both plays. It was previously paying 20% of well costs for a 50% working interest in the Woodford Shale, so the company is essentially taking a haircut on the terms to confirm Phase 2 will happen, and to allow the $92 million in drilling carries to be applied to both plays.” Sterne Agee maintains its Buy rating and $10 PT on PetroQuest Energy, which closed yesterday at $6.21.