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On Jun 27, Zacks Investment Research upgraded PetroQuest Energy Inc. (PQ - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This oil and natural gas exploration and production company delivered positive earnings surprises in the first quarter of 2013 reversing the trend of negative surprises in the previous two quarters. PetroQuest Energy has witnessed an upward revision in earnings estimates on the back of strong first quarter results.

PetroQuest Energy’s first quarter 2013 earnings per share came in at 4 cents, surpassing the Zacks Consensus Estimate by 100%. PetroQuest Energy continues to perform well with its daily production touching 91,729 thousand cubic feet equivalent (Mcfe), reflecting an increase of 2.2% from the prior-year quarter.

Strategic acquisitions play a vital role in PetroQuest Energy’s overall performance.  Inorganic assets contributed nearly 33.0% of total revenues in the first quarter of 2013. In Jun 2013, the company decided to acquire some shallow water Gulf of Mexico assets, which will further boost the top-line.

PetroQuest Energy continues to develop its existing properties through strategic capital investments. The development of the La Cantera prospect in the Gulf Coast region where PetroQuest Energy acquired seismic data opens up new production opportunities for the company.

For 2013, the company plans to make capital investment in the range of $80 million to $100 million. This expenditure will increase the production capabilities of the company.

The Zacks Consensus Estimate for 2013 increased 42.9% in the last 60 days to 30 cents per share as 4 out of 5 estimates were revised higher.

Other Stocks to Consider

Besides PetroQuest Energy other operators in the industry with a favorable Zacks Rank are Oasis Petroleum Inc. (OAS - Snapshot Report), Sanchez Energy Corporation (SN - Snapshot Report) and Sandridge Mississippian Trust II . All these companies presently carry a Zacks Rank #1 (Strong Buy).

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