PetroQuest Energy Updates Its Operating Activities, Borrowing Base Redetermination And Third Quarter Production Guidance

      PetroQuest Energy Updates Its Operating Activities, Borrowing Base
            Redetermination And Third Quarter Production Guidance

PR Newswire

LAFAYETTE, La., Oct. 30, 2012

LAFAYETTE, La., Oct. 30, 2012 /PRNewswire/ -- PetroQuest Energy, Inc. (NYSE:
PQ) announced today that it recently commenced production from its Broussard
Estates #2 well (NRI - 17%) at its La Cantera prospect. The well is currently
flowing at a gross daily rate of approximately 36,500 Mcf of gas, 800 barrels
of oil, and 1,700 barrels of natural gas liquids. Including production from
the initial discovery well, the La Cantera field is currently flowing at a
pipeline restricted gross rate of approximately 53,000 Mcf of gas, 1,100
barrels of oil and 2,400 barrels of natural gas liquids per day. The Company
is evaluating options to expand downstream pipeline capacity, which is
expected to increase production from the two wells to a combined daily gross
rate of approximately 69,000 Mcf of gas, 1,500 barrels of oil, and 3,100
barrels of natural gas liquids.

After evaluating production data,logs and sidewall cores of the Thibodeaux #1
and Broussard Estates #2 wells, the Company and its partners are in the
planning stages for a third well, the Broussard Estates #3 (WI – 24%), at its
La Cantera prospect. The Broussard Estates #3 would be a sidetrack out of an
existing wellbore, which is expected to lower the estimated well cost by 60%,
as compared to the cost of each of the first two wells. The well is
tentatively planned for the first quarter of 2013 to test the 200 feet of
potential pay sands encountered at a shallower depth in the Broussard Estates
#2 well, as well as to target the upper Cris R section that was found to be
productive in the first two wells, which would accelerate the development of
the estimated proved reserves currently booked by approximately 5 years and
deliver a third high flow rate well. As of September 30, 2012, the Company
had booked 105 Bcfe of gross proved reserves from the two producing wells with
estimated gross discounted pre-tax cash flow ("Gross PV10") of $264 million,
using SEC pricing in effect at September 30, 2012. Success on the third well
could result in additional proved reserve bookings.

The Company is planning to spud the initial well at its Thunder Bayou
prospect, which is located approximately two miles north of La Cantera, during
the second quarter of 2013. The well is expected to target the sand packages
encountered in the discoveries at La Cantera. New seismic data, planned for
delivery in January 2013 could identify additional targets. The Company is
evaluating various pipeline options to significantly increase capacity from
the area.

In northern Oklahoma, the Company has completed seven additional Mississippian
Lime wells. The Company's PQML #5 (NRI - 39%) and PQML #7 (NRI - 38%) wells in
Pawnee County achieved maximum 24 hour gross daily rates of 451 Boe (73% oil)
and 227 Boe (67 % oil), respectively. The Company's PQML #3 (NRI - 41%) and
PQML #4 (NRI - 40%) wells in Pawnee County have been online for approximately
100 days. To date, these two wells have produced large volumes of water and
have not established consistent daily oil rates. The Company is currently
attempting to isolate certain perforated intervals that could be in
communication with the water bearing Arbuckle zone in order to mitigate the
high water production and establish oil production. In addition, the Company
has recently completed two wells in Kay County and one non-operated well in
Grant County all of which are in the early stages of flowback.

In the Woodford, the Company recently commenced production from eight
additional liquids rich Woodford wells. This group of wells had an average
lateral length of 4,700 feet and achieved an average maximum 24 hour gross
rate of 1,989 Mcf of gas and 254 barrels of natural gas liquids. As of
September 30, 2012, the Company had completed 22 wells in the liquids rich
section of the Woodford. In addition, the Company is currently completing
five liquids rich Woodford wells.

In East Texas, the Company recently completed two operated horizontal Cotton
Valley wells. The following is a summary of the results:

                                                  24 Hour
Well Number NRI Initial Sales Lateral Length      Gross Rate    24 Hour
                Date          (ft.)                             Gross NGL Rate
                                                  (Mcf/d)       (Bbls/d)
PQ/CVX #7   39% 8/22/12       3,802               6,488      +  440
PQ #8       76% 8/21/12       2,822               3,592      +  277

The Company is currently planning locations for its 2013 drilling program.
Net production from the field during the third quarter of 2012 totaled 17.6
MMcfe per day, a 68% increase from the third quarter of 2011.

In South Texas, the Company completed two operated Eagle Ford Shale wells (PQ
#4 and PQ #5 - NRI 35%) located in La Salle County. The wells achieved an
average 24 hour maximum gross daily production rate of 415 BOE (92% oil).

Borrowing Base Redetermination

The Company's lenders have completed their semi-annual redetermination of the
borrowing base under the revolving credit facility. The bank group elected to
increase the Company's borrowing base from $125 million to $130 million,
subject to the aggregate commitments of the lenders, which presently total
$100 million at the Company's request. The next re-determination of the
borrowing base is expected to occur on or before March 31, 2013.

Production Guidance Update

The Company estimates that between 0.1 and 0.2 Bcfe of net production was
deferred from the third quarter of 2012 as a result of down-time caused by
Hurricane Isaac. No damage occurred at any of the Company's Gulf Coast
properties and all production has been restored to pre-storm levels. In
addition, as a result of extended third party pipeline downtime, the Company
experienced a delay in initiating production from the second La Cantera well
and the La Cantera field has been flowing at restricted production rates since
the pipeline became operational. As a result, the Company expects its third
quarter 2012 production to be slightly above 92 Mmcfe per day, which is within
the range of its previously issued production guidance.

Management's Comment

"We are excited about our near and long-term high impact opportunities in
South Louisiana and the Gulf of Mexico. First to occur is our Overlake oil
project expected in the next several weeks, followed by a planned third well
at La Cantera, and a low risk liquids rich prospect in South Louisiana. If
successful, these projects will deliver rates of return in excess of 100%,"
said Charles T. Goodson, Chairman, Chief Executive Officer and President. "In
early 2013 the 3D data over the Thunder Bayou prospect is expected to be
delivered and our plans are to begin testing the prospect by mid-year. If the
third well at La Cantera and the test well at Thunder Bayou are successful we
expect to have significant additional reserve bookings, and gross production
from this project area could be in excess of 120 MMcfe/d.

From 2007 through 2011, we deployed $267 million in capital to our Gulf Coast
properties, representing 29% of our total capital spend during that period.
In return, our Gulf Coast assets have generated $547 million in cash flow from
2007 through 2011. Our high impact and high rate of return inventory should
be significantly accretive to our Gulf Coast free cash flow. In the
Midcontinent we have transitioned our reserve and production growth to the
liquids rich portion of the Woodford. In the Mississippian Lime, we are
encouraged by the early results to date, as the wells where we have
established consistent production have realized an average initial rate of 415
Boe/d (73% oil). We anticipate continued activity to determine the optimal
development plan as we believe our acreage position will provide us an oil
focused resource platform. Finally, our legacy core assets in the Cotton
Valley continue to generate compelling returns and should improve with
stronger gas prices."

Non-GAAP Financial Measure

Gross PV-10 is the estimated future cash flow from estimated proved reserves
discounted at an annual rate of 10% before giving effect to income taxes.
Standardized measure is the after-tax estimated future cash flows from
estimated proved reserves discounted at an annual rate of 10%, determined in
accordance with GAAP. Management believes PV-10 is useful to investors as it
is based on prices, costs and discount factors which are consistent from
company to company, while the standardized measure is dependent on the unique
tax situation of each individual company. As a result, the Company believes
that investors can use PV-10 as a basis for comparison of the relative size
and value of reserves to other companies in different basins. The Company
also understands that securities analysts and rating agencies use PV-10 in
similar ways. PV-10 on a gross basis, as presented herein, cannot be
reconciled to the standardized measure of discounted future cash flows
becausethe Company is not aware of the unique tax situation of each
individual Company participating in the wells. 

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, Wyoming, 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
significantly depressed natural gas prices since the middle of 2008, the
uncertain economic conditions in the United States and globally, the declines
in the values of our properties that have resulted in and may in the future
result in additional ceiling test write-downs, 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 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, changes in laws
and regulations as they relate to our operations, including our fracing
operations in shale plays or our operations in the Gulf of Mexico, 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.

Click here for more information:
"http://www.petroquest.com/news.html?=BizID=1690&1=1"

SOURCE PetroQuest Energy, Inc.

Website: http://www.petroquest.com
Contact: Matt Quantz, Manager - Corporate Communications, +1-337-232-7028,
www.petroquest.com
 
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