8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 30, 2009

PETROQUEST ENERGY, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	001-32681	72-1440714
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

400 E. Kaliste Saloom Rd., Suite 6000 Lafayette, Louisiana	70508
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (337) 232-7028

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On September 30, 2009, PetroQuest Energy, Inc., a Delaware corporation (the “Company”), PetroQuest Energy, L.L.C. and TDC Energy LLC entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which amends the Credit Agreement dated as of October 2, 2008, as amended by the First Amendment to Credit Agreement dated as of March 24, 2009 (collectively, the “Credit Agreement”), with JPMorgan Chase Bank, N.A., Calyon New York Branch, Bank of America, N.A., Wells Fargo Bank, N.A. and Whitney National Bank. Pursuant to the Second Amendment, the Borrowing Base (as defined in the Credit Agreement), was decreased from $130 million to $100 million effective October 1, 2009. The Borrowing Base is based upon the valuation as of January 1 and July 1 of each year of the reserves attributable to the Company’s oil and gas properties and other credit factors deemed relevant by the lenders. The next Borrowing Base re-determination is scheduled to occur by March 31, 2010; however, the Company or the lenders may request two additional borrowing base re-determinations each year. As of September 30, 2009, the Company had $100 million of borrowings outstanding on the revolving credit facility, and was in compliance with the financial covenants under the Credit Agreement. The Company estimates that its cash balance as of September 30, 2009 was approximately $80 million.

The Second Amendment deleted an affirmative covenant requiring the Company to maintain at all times Liquidity (as defined in the Credit Agreement) of at least $10,000,000. The Second Amendment also modified the negative covenant regarding the Sale of Properties to remove the requirement that the consideration received for certain permissible sales or other dispositions of Oil and Gas Property (as defined in the Credit Agreement) consist only of cash and to specifically provide that such consideration could consist of asset exchanges pursuant to Section 1031 of Internal Revenue Code of 1986, as amended.

The foregoing description of the Second Amendment is not complete and is qualified by reference to the complete document, which is attached hereto as Exhibit 10.1 to this Form 8-K, and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On October 1, 2009, the Company issued a press release updating its borrowing base (as set forth in the Second Amendment), increasing third quarter 2009 production guidance and updating operating activities and hedging transactions. The press release is filed as Exhibit 99.1 to this Form 8-K, and is incorporated herein by reference.

In accordance with General Instructions B.2 and B.6 of Form 8-K, the foregoing information, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number		Description of Exhibit
	10.1	Second Amendment to Credit Agreement dated as of September 30, 2009, among PetroQuest Energy, Inc., PetroQuest Energy, L.L.C., TDC Energy LLC, JPMorgan Chase Bank, N.A., Calyon New York Branch, Bank of America, N.A., Wells Fargo Bank, N.A. and Whitney National Bank.
	99.1	Press Release dated October 1, 2009.

[Signature page follows]

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 1, 2009

PETROQUEST ENERGY, INC.
 

/s/ J. Bond Clement 

J. Bond Clement 

Senior Vice President — Chief Accounting Officer 

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
	10.1	Second Amendment to Credit Agreement dated as of September 30, 2009, among PetroQuest Energy, Inc., PetroQuest Energy, L.L.C., TDC Energy LLC, JPMorgan Chase Bank, N.A., Calyon New York Branch, Bank of America, N.A., Wells Fargo Bank, N.A. and Whitney National Bank.
	99.1	Press Release dated October 1, 2009.

EX-10.1

Exhibit 10.1

EXECUTION VERSION

SECOND AMENDMENT TO

CREDIT AGREEMENT

dated as of

September 30, 2009

among

PETROQUEST ENERGY, INC.,
as Parent,

PETROQUEST ENERGY, L.L.C.,
as Borrower,

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,

and

The Lenders Party Hereto

CALYON NEW YORK BRANCH,
as Syndication Agent,

and

BANK OF AMERICA, N.A.,
as Documentation Agent

J.P. MORGAN SECURITIES INC. and CALYON NEW YORK BRANCH
Co-Lead Arrangers

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second Amendment”) dated as of September 30, 2009, is among PETROQUEST ENERGY, INC., a Delaware corporation, as the Parent, PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company, as the Borrower, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CALYON NEW YORK BRANCH, as Syndication Agent, and BANK OF AMERICA, N.A., as Documentation Agent, and the Lenders party hereto.

R E C I T A L S

A. The Parent, the Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of October 2, 2008, as amended by that certain First Amendment to Credit Agreement dated as of March 24, 2009 (as amended, the “Credit Agreement”), pursuant to which the Lenders have made certain loans to and extensions of credit for the account of the Borrower.

B. The Borrower has requested and the Lenders have agreed to amend certain provisions of the Credit Agreement in order to clarify certain provisions contained therein.

C. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms. Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement. Unless otherwise indicated, all article and section references in this Second Amendment refer to articles and sections of the Credit Agreement.

Section 2. Amendments to Credit Agreement.

2.1 Amendments to Section 1.02.

(a) The definition of “Agreement” is hereby deleted and replaced in its entirety to read as follows:

“Agreement” means this Credit Agreement, as amended by the First Amendment and as further amended by the Second Amendment, as the same may from time to time be amended, modified, supplemented or restated.

(b) The definition of “Second Amendment” is hereby added where alphabetically appropriate to read as follows:

“Second Amendment” means the Second Amendment to Credit Agreement dated as of September 30, 2009 among the Parent, the Borrower, the Administrative Agent, the Syndication Agent, the Documentation Agent and the Lenders party thereto.

2.2 Amendment to Article VIII. Article VIII is hereby amended by deleting Section 8.18 in its entirety.

2.3 Amendment to Section 9.12(d). Section 9.12(d) is hereby amended in its entirety to read as follows:

(d) the sale or other disposition (including Casualty Events) of any Oil and Gas Property or any interest therein or any of its Subsidiaries (other than the Borrower) owning Oil and Gas Properties; provided that with respect to this clause (d), (1) the consideration received in respect of such sale or other disposition (including without limitation, asset exchanges under Section 1031 of the Code) shall be equal to or greater than the fair market value of the Oil and Gas Property, interest therein or Subsidiary subject of such sale or other disposition (as reasonably determined by its board of directors and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of its Responsible Officer certifying to that effect), (2) if such sale or other disposition of Oil and Gas Property or Subsidiary owning Oil and Gas Properties under this clause (d) (together with any transfers or dispositions under clause (b)) included in the most recently delivered Reserve Report during any period between two successive Scheduled Redetermination Dates has a fair market value in excess of five percent (5%) of the Borrowing Base as then in effect (as determined by the Administrative Agent), individually or in the aggregate, the Borrowing Base shall be reduced, effective immediately upon such sale or disposition, by an amount equal to the value, if any, attributed to such Property in the Borrowing Base based on the most recently delivered Reserve Report and (3) if any such sale or other disposition is of a Subsidiary owning Oil and Gas Properties, such sale or other disposition shall include all the Equity Interests of such Subsidiary; and

2.4 Redetermination of Borrowing Base. For the period from and including October 1, 2009 to but excluding the next Redetermination Date, the amount of the Borrowing Base shall be $100,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 8.13(c), Section 8.16 and Section 9.12(d).

Section 3. Conditions Precedent. This Second Amendment shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02 of the Credit Agreement):

3.1 The Administrative Agent shall have received from the Required Lenders, the Borrower and each Guarantor, counterparts (in such number as may be requested by the Administrative Agent) of this Second Amendment signed on behalf of such Persons.

3.2 The Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative Agent may reasonably request.

3.3 No Default or Event of Default shall have occurred and be continuing, after giving effect to the terms of this Second Amendment.

2

The Administrative Agent is hereby authorized and directed to declare this Second Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 3 or the waiver of such conditions as permitted hereby. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 4. Miscellaneous.

4.1 Confirmation. The provisions of the Credit Agreement, as amended by this Second Amendment, shall remain in full force and effect following the effectiveness of this Second Amendment.

4.2 Ratification and Affirmation; Representations and Warranties. Each of the Borrower and each Guarantor hereby (a) ratifies and affirms its respective obligations under, and acknowledges, renews and extends its respective continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect, except as expressly amended hereby, notwithstanding the amendments contained herein and (b) represents and warrants to the Lenders that, as of the date hereof, after giving effect to the terms of this Second Amendment: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct as of such specified earlier date, (ii) no Default has occurred and is continuing and (iii) no Material Adverse Effect shall have occurred.

4.3 Loan Document. This Second Amendment is a “Loan Document” as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto.

4.4 Counterparts. This Second Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Second Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

4.5 NO ORAL AGREEMENT. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY SEPARATE LETTER AGREEMENTS WITH RESPECT TO FEES PAYABLE TO THE ADMINISTRATIVE AGENT CONSTITUTE THE ENTIRE CONTRACT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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4.6 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

4.7 Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with this Second Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

4.8 Severability. Any provision of this Second Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

4.9 Successors and Assigns. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and its respective successors and assigns.

[SIGNATURES BEGIN NEXT PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed as of the date first written above.

BORROWER:	PETROQUEST ENERGY, L.L.C.
	/s/ W. Todd Zehnder W. Todd Zehnder
	Executive Vice President, Chief Financial Officer and Treasurer
PARENT:	PETROQUEST ENERGY, INC.
	/s/ W. Todd Zehnder W. Todd Zehnder
	Executive Vice President, Chief Financial Officer and Treasurer
GUARANTOR:	TDC ENERGY, LLC
	/s/ W. Todd Zehnder W. Todd Zehnder
	Executive Vice President, Chief Financial Officer and Treasurer

[Signature Page to Second Amendment]

ADMINISTRATIVE AGENT:	JPMORGAN CHASE BANK, N.A.
AND LENDER	individually, as a Lender, as Administrative Agent and as Issuing Bank
	By:	/s/ Jo Linda Papadakis Name: Jo Linda Papadakis
		Title:   Vice President

[Signature Page to Second Amendment]

SYNDICATION AGENT:	CALYON NEW YORK BRANCH
AND LENDER
	By:	/s/ Page Dillehunt Name: Page Dillehunt
		Title:   Managing Director
	By:	/s/ Michael Willis Name: Michael Willis
		Title:   Managing Director

[Signature Page to Second Amendment]

DOCUMENTATION AGENT:	BANK OF AMERICA, N.A.
AND LENDER
	By:	/s/ Sandra M. Serie Name: Sandra M. Serie
		Title:   Vice President

[Signature Page to Second Amendment]

LENDER:	WELLS FARGO BANK, N.A.
	By:	/s/ Douglas L. McDowell Name: Douglas L. McDowell
		Title:   Vice President, Senior Portfolio Manager

[Signature Page to Second Amendment]

LENDER:	WHITNEY NATIONAL BANK
	By:	/s/ William Jochetz Name: William Jochetz
		Title:    Officer

[Signature Page to Second Amendment]

EX-99.1

Exhibit 99.1

NEWS RELEASE

For further information, contact:	Matt Quantz, Manager — Corporate Communications
	(337) 232-7028, www.petroquest.com

PETROQUEST ENERGY PROVIDES UPDATE ON BORROWING BASE
REDETERMINATION, INCREASES THIRD QUARTER 2009 PRODUCTION GUIDANCE,
UPDATES OPERATING ACTIVITIES AND HEDGING PROGRAM

LAFAYETTE, LA — October 1, 2009 — PetroQuest Energy, Inc. (NYSE: PQ) announced today that the Company’s bank group has completed its semi-annual re-determination of its borrowing base under its credit facility. As a result, the Company’s borrowing base has been revised to $100 million. The Company currently has $100 million of borrowings outstanding on its revolving credit facility and is in compliance with the financial covenants under the credit facility.

Production Guidance Update

The Company is increasing its third quarter 2009 production guidance to approximately 85 — 87 MMcfe per day from its previously issued guidance of 80 — 85 MMcfe per day.

Operations Update

The Company has contracted a rig for its Woodford operated drilling program and expects to drill two Woodford wells during the fourth quarter of 2009. In addition, the Company has two operated Woodford wells that are waiting to be completed. The timing of completing the four Woodford wells will be dependent on prevailing commodity prices.

In the Gulf Coast Basin, the Company is currently drilling its Whistling Straits prospect at its Turtle Bayou field. The 18,500 foot well is expected to reach total depth during the fourth quarter of 2009.

Hedging Update

The Company initiated the following commodity hedging transaction during August 2009:

	Instrument
Production Period	Type	Daily Volumes	Price
Natural Gas:
Jan — Dec 2010	Costless Collar	10,000 Mmbtu	$	5.50 – $6.01

After executing the above transaction, the Company has approximately 7.3 Bcfe of volumes hedged for 2010 with an average floor of $5.75 per Mcf.

Management’s Comment

“Approximately one year ago, we anticipated a precipitous drop in commodity prices and decided to shift our attention from a growth mode to building liquidity and strengthening our balance sheet,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “Today, with our significant working capital surplus, including approximately $80 million in cash, we have substantially improved the financial position of the Company. We are now in position to re-initiate drilling activities and take advantage of a low service cost environment that will capture the anticipated higher commodity prices in 2010.”

About the Company

PetroQuest Energy, Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in the Arkoma Basin, East Texas, South Louisiana and the shallow waters of the Gulf of Mexico. PetroQuest’s common stock trades on the New York Stock Exchange under the ticker PQ.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our ability to find oil and natural gas reserves that are economically recoverable, the volatility of oil and natural gas prices and the significant price decline since June 30, 2008, the uncertain economic conditions in the United States and globally, the decline in the values of our properties that have resulted in and may in the future result in additional ceiling test write-downs or reductions in the borrowing base under our bank credit facility, our ability to replace reserves and sustain production, our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions or dispositions and in projecting future rates of production or future reserves, the timing of development expenditures and drilling of wells, hurricanes and other natural disasters, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports PetroQuest has filed with the Securities and Exchange Commission. PetroQuest undertakes no duty to update or revise these forward-looking statements.