10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:                    to:                    

Commission file number: 001-32681

_________________________________________________________________

PETROQUEST ENERGY, INC.

(Exact name of registrant as specified in its charter)

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

DELAWARE	72-1440714
(State of Incorporation)	(I.R.S. 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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of August 1, 2014 there were 66,093,733 shares of the registrant’s common stock, par value $.001 per share, outstanding.

PETROQUEST ENERGY, INC.

Table of Contents

	Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013	1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013	2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013	3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013	4
Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	21
Item 4. Controls and Procedures	23
Part II. Other Information
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3. Defaults upon Senior Securities	25
Item 4. Mine Safety Disclosures	25
Item 5. Other Information	25
Item 6. Exhibits	26

PETROQUEST ENERGY, INC.

Consolidated Balance Sheets

(Amounts in Thousands)

	June 30, 2014			December 31, 2013
	(unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	30,901		$	9,153
Revenue receivable	26,113			26,568
Joint interest billing receivable	17,967			26,556
Derivative asset	22			521
Prepaid drilling costs	343			477
Other current assets	7,532			8,132
Total current assets	82,878			71,407
Property and equipment:
Oil and gas properties:
Oil and gas properties, full cost method	2,111,889			2,035,899
Unevaluated oil and gas properties	126,571			98,387
Accumulated depreciation, depletion and amortization	(1,594,875		)	(1,553,044		)
Oil and gas properties, net	643,585			581,242
Other property and equipment	14,511			13,993
Accumulated depreciation of other property and equipment	(9,571		)	(8,901		)
Total property and equipment	648,525			586,334
Derivative asset	164			—
Other assets, net of accumulated depreciation and amortization of $6,753 and $5,689, respectively	8,017			9,449
Total assets	$	739,584		$	667,190
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable to vendors	$	42,730		$	47,341
Advances from co-owners	16,407			969
Oil and gas revenue payable	35,676			22,664
Accrued interest and preferred stock dividend	12,780			12,909
Asset retirement obligation	2,959			3,113
Derivative liability	3,840			1,617
Accrued acquisition cost	14,000			—
Other accrued liabilities	11,738			8,924
Total current liabilities	140,130			97,537
Bank debt	72,500			75,000
10% Senior Notes	350,000			350,000
Asset retirement obligation	46,893			45,423
Accrued acquisition cost	10,000			—
Other long-term liability	220			135
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; authorized 5,000 shares; issued and outstanding 1,495 shares	1			1
Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding 64,179 and 63,664 shares, respectively	64			64
Paid-in capital	284,380			280,711
Accumulated other comprehensive loss	(3,654		)	(1,096		)
Accumulated deficit	(160,950		)	(180,585		)
Total stockholders’ equity	119,841			99,095
Total liabilities and stockholders’ equity	$	739,584		$	667,190

See accompanying Notes to Consolidated Financial Statements.

1

PETROQUEST ENERGY, INC.

Consolidated Statements of Operations

(unaudited)

(Amounts in Thousands, Except Per Share Data)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2014		2013			2014		2013
Revenues:
Oil and gas sales	$	60,581	$	38,076		$	120,547	$	74,052
Expenses:
Lease operating expenses	12,168		8,837			24,426		18,556
Production taxes	1,492		1,481			2,969		2,509
Depreciation, depletion and amortization	21,702		14,536			42,130		27,407
General and administrative	6,467		6,351			12,709		11,067
Accretion of asset retirement obligation	708		328			1,499		660
Interest expense	7,380		3,116			15,016		5,980
	49,917		34,649			98,749		66,179
Other income:
Other income	215		88			404		315
Derivative income	—		594			—		157
	215		682			404		472
Income from operations	10,879		4,109			22,202		8,345
Income tax benefit	—		(840		)	—		(491		)
Net income	10,879		4,949			22,202		8,836
Preferred stock dividend	1,287		1,287			2,567		2,567
Income available to common stockholders	$	9,592	$	3,662		$	19,635	$	6,269
Earnings per common share:
Basic
Net income per share	$	0.15	$	0.06		$	0.30	$	0.10
Diluted
Net income per share	$	0.15	$	0.06		$	0.30	$	0.10
Weighted average number of common shares:
Basic	64,103		62,963			63,940		62,899
Diluted	64,167		63,130			63,996		63,084

See accompanying Notes to Consolidated Financial Statements.

2

PETROQUEST ENERGY, INC.

Consolidated Statements of Comprehensive Income

(unaudited)

(Amounts in Thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014			2013
Net income	$	10,879	$	4,949	$	22,202		$	8,836
Change in fair value of derivative instruments, accounted for as hedges, net of income tax expense of $0, $840, $0, and $531, respectively	860		4,807		(2,558		)	897
Comprehensive income	$	11,739	$	9,756	$	19,644		$	9,733

See accompanying Notes to Consolidated Financial Statements.

3

PETROQUEST ENERGY, INC.

Consolidated Statements of Cash Flows

(unaudited)

(Amounts in Thousands)

	Six Months Ended
	June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	22,202		$	8,836
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax expense benefit	—			(491		)
Depreciation, depletion and amortization	42,130			27,407
Accretion of asset retirement obligation	1,499			660
Share-based compensation expense	2,716			1,780
Amortization costs and other	1,094			406
Non-cash derivative income	—			(157		)
Payments to settle asset retirement obligations	(1,149		)	(94		)
Changes in working capital accounts:
Revenue receivable	455			3,735
Prepaid drilling costs	134			(801		)
Joint interest billing receivable	8,589			10,314
Accounts payable and accrued liabilities	8,614			(19,195		)
Advances from co-owners	15,438			(8,548		)
Other	1,022			(3,237		)
Net cash provided by operating activities	102,744			20,615
Cash flows from investing activities:
Investment in oil and gas properties	(76,993		)	(52,740		)
Investment in other property and equipment	(468		)	(257		)
Deposit on acquisition	—			(5,000		)
Sale of oil and gas properties	371			18,914
Sale of unevaluated oil and gas properties	229			—
Net cash used in investing activities	(76,861		)	(39,083		)
Cash flows from financing activities:
Net proceeds for share based compensation	1,039			20
Deferred financing costs	(109		)	(774		)
Payment of preferred stock dividend	(2,565		)	(2,569		)
Proceeds from bank borrowings	10,000			40,000
Repayment of bank borrowings	(12,500		)	(25,000		)
Net cash provided by (used in) financing activities	(4,135		)	11,677
Net increase (decrease) in cash and cash equivalents	21,748			(6,791		)
Cash and cash equivalents, beginning of period	9,153			14,904
Cash and cash equivalents, end of period	$	30,901		$	8,113
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	18,700		$	8,321
Income taxes	$	—		$	40

See accompanying Notes to Consolidated Financial Statements.

4

PETROQUEST ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Basis of Presentation

The consolidated financial information for the three and six month periods ended June 30, 2014 and 2013, has been prepared by the Company and was not audited by its independent registered public accountants. In the opinion of management, all normal and recurring adjustments have been made to present fairly the financial position, results of operations, and cash flows of the Company at June 30, 2014 and for all reported periods. Results of operations for the interim periods presented are not necessarily indicative of the operating results for the full year or any future periods.

The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Certain prior year amounts have been reclassified to conform to current year presentations.

Unless the context otherwise indicates, any references in this Quarterly Report on Form 10-Q to “PetroQuest,” the “Company,” "we," or "us" refer to PetroQuest Energy, Inc. (Delaware) and its wholly-owned consolidated subsidiaries, PetroQuest Energy, L.L.C. (a single member Louisiana limited liability company), PetroQuest Oil & Gas, L.L.C. (a single member Louisiana limited liability company), TDC Energy LLC (a single member Louisiana limited liability company) and Pittrans, Inc. (an Oklahoma corporation).

Note 2—Acquisitions

Gulf of Mexico Acquisition:

On July 3, 2013, the Company acquired certain shallow water Gulf of Mexico shelf oil and gas properties (the “Acquired Assets”), for an aggregate cash purchase price of $188.8 million, reflecting an effective date of January 1, 2013 (collectively, the "Gulf of Mexico Acquisition"). The Acquired Assets included 16 wells located on seven platforms.

The aggregate cash purchase price of the Gulf of Mexico Acquisition was financed with the net proceeds from the sale of $200 million in principal amount of the Company's 10% Senior Notes due 2017 (the "New Notes").  In connection with the transaction, the Company recorded $5.0 million of deferred financing costs related to the New Notes and incurred $4.0 million of acquisition-related costs, including $2.6 million related to a bridge commitment fee, which were recognized as general and administrative expenses.

The Gulf of Mexico Acquisition was accounted for under the purchase method of accounting, which involves determining the fair value of the assets acquired and liabilities assumed. The fair value of proved and unevaluated oil and gas properties was estimated using the income approach based on estimated reserve quantities, costs to produce and develop reserves, and forward prices for oil and gas, which represent Level 2 and Level 3 inputs. Asset retirement obligations were determined in accordance with applicable accounting standards.

The following table summarizes the acquisition date fair values of the net assets acquired (in thousands):

Oil and gas properties	$	192,067
Unevaluated oil and gas properties	12,033
Asset retirement obligations	(15,319		)
Net assets acquired	$	188,781

The following unaudited summary pro forma financial information for the three and six month periods ended June 30, 2013 has been prepared to give effect to the Gulf of Mexico Acquisition as if it had occurred on January 1, 2012. The pro forma financial information is not necessarily indicative of the results that might have occurred had the transaction taken place on January 1, 2012 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma financial information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors. Amounts in thousands, except per share amounts.

5

	Three Months Ended		Six Months Ended
	June 30, 2013		June 30, 2013
Revenues	$	55,155	$	106,907
Income from operations	6,346		11,169
Income available to common stockholders	5,899		9,093
Basic earnings per share	0.09		0.14
Diluted earnings per share	0.09		0.14

Fleetwood Joint Venture:

In June 2014, we entered into a joint venture in Louisiana for an aggregate purchase price of $24 million. The assets acquired under the joint venture include an average 37% working interest in an approximately 30,000 acre leasehold position in Louisiana and exclusive rights, along with our joint venture partner, to a 200 square mile proprietary 3D survey which has generated several conventional and shallow non-conventional oil focused prospects.

The purchase price was comprised of $10 million in cash ($3 million paid in July 2014 and $7 million due in January 2015) and $14 million in cash funding for future drilling, completion and lease acquisition costs. If the $14 million in drilling, completion and lease acquisition costs is not fully funded by December 31, 2015, any remaining balance becomes payable at the election of our joint venture partner.

Amounts payable with regard to the joint venture are reflected as accrued acquisition costs in the Consolidated Balance Sheet. The amounts payable related to the $14 million discussed above are classified as current and long term based on the current exploration and development plans under the joint venture. All of the costs associated with the joint venture are considered unevaluated at June 30, 2014.

Note 3—Convertible Preferred Stock

The Company has 1,495,000 shares of 6.875% Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred Stock”) outstanding.

The following is a summary of certain terms of the Series B Preferred Stock:

Dividends. The Series B Preferred Stock accumulates dividends at an annual rate of 6.875% for each share of Series B Preferred Stock. Dividends are cumulative from the date of first issuance and, to the extent payment of dividends is not prohibited by the Company’s debt agreements, assets are legally available to pay dividends and the Company’s board of directors or an authorized committee of the board declares a dividend payable, the Company pays dividends in cash, every quarter.

Mandatory conversion. The Company may, at its option, cause shares of the Series B Preferred Stock to be automatically converted at the applicable conversion rate, but only if the closing sale price of the Company’s common stock for 20 trading days within a period of 30 consecutive trading days ending on the trading day immediately preceding the date the Company gives the conversion notice equals or exceeds 130% of the conversion price in effect on each such trading day.

Conversion rights. Each share of Series B Preferred Stock may be converted at any time, at the option of the holder, into 3.4433 shares of the Company’s common stock (which is based on an initial conversion price of approximately $14.52 per share of common stock, subject to adjustment) plus cash in lieu of fractional shares, subject to the Company’s right to settle all or a portion of any such conversion in cash or shares of the Company’s common stock. If the Company elects to settle all or any portion of its conversion obligation in cash, the conversion value and the number of shares of the Company’s common stock it will deliver upon conversion (if any) will be based upon a 20 trading day averaging period.

Upon any conversion, the holder will not receive any cash payment representing accumulated and unpaid dividends on the Series B Preferred Stock, whether or not in arrears, except in limited circumstances. The conversion rate is equal to $50 divided by the conversion price at the time. The conversion price is subject to adjustment upon the occurrence of certain events. The conversion price on the conversion date and the number of shares of the Company’s common stock, as applicable, to be delivered upon conversion may be adjusted if certain events occur.

6

Note 4—Earnings Per Share

A reconciliation between the basic and diluted earnings per share computations (in thousands, except per share amounts) is as follows:

For the Three Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	9,592		64,103
Attributable to participating securities	(273		)
BASIC EPS	$	9,319		64,103	$	0.15
Net income available to common stockholders	$	9,592		64,103
Effect of dilutive securities:
Stock options	—			64
Attributable to participating securities	(273		)	—
DILUTED EPS	$	9,319		64,167	$	0.15
For the Six Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	19,635		63,940
Attributable to participating securities	(571		)
BASIC EPS	$	19,064		63,940	$	0.30
Net income available to common stockholders	$	19,635		63,940
Effect of dilutive securities:
Stock options	—			56
Attributable to participating securities	(571		)	—
DILUTED EPS	$	19,064		63,996	$	0.30
For the Three Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	3,662		62,963
Attributable to participating securities	(87		)
BASIC EPS	$	3,575		62,963	$	0.06
Net income available to common stockholders	$	3,662		62,963
Effect of dilutive securities:
Stock options	—			167
Attributable to participating securities	(87		)	—
DILUTED EPS	$	3,575		63,130	$	0.06
For the Six Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	6,269		62,899
Attributable to participating securities	(163		)
BASIC EPS	$	6,106		62,899	$	0.10
Net income available to common stockholders	$	6,269		62,899
Effect of dilutive securities:
Stock options	—			185
Attributable to participating securities	(163		)	—
DILUTED EPS	$	6,106		63,084	$	0.10

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Common shares issuable upon the assumed conversion of the Series B Preferred Stock totaling 5,148,000 shares were not included in the computation of diluted earnings per share for any of the 2013 and 2014 periods presented because the inclusion would have been anti-dilutive. Options to purchase 937,800 and 1,060,700 shares of common stock were outstanding during the three and six month periods ended June 30, 2014, respectively, and were not included in the computation of diluted earnings per share because the options' exercise prices were in excess of the average market price of the common shares.

Options to purchase 1,265,500 and 1,277,600 shares of common stock were outstanding during the three and six months ended June 30, 2013, respectively, and were not included in the computation of diluted earnings per share because the options' exercise prices were in excess of the average market price of the common shares.

Note 5—Long-Term Debt

On August 19, 2010, the Company issued $150 million in principal amount of its 10% Senior Notes due 2017 (the “Existing Notes”). On July 3, 2013, the Company issued an additional $200 million in principal amount of its 10% Senior Notes due 2017 (the "New Notes" and together with the Existing Notes, the "Notes"). The New Notes were issued at a price equal to 100% of face value plus accrued interest from March 1, 2013. The New Notes have terms that, subject to certain exceptions, are substantially identical to the Existing Notes. The net proceeds from the offering were used to finance the $188.8 million aggregate cash purchase price of the Gulf of Mexico Acquisition, which also closed on July 3, 2013. The Notes are guaranteed by certain of PetroQuest's subsidiaries. The subsidiary guarantors are 100% owned by PetroQuest and all guarantees are full and unconditional and joint and several. PetroQuest has no independent assets or operations and the subsidiaries not providing guarantees are minor, as defined by the rules of the Securities and Exchange Commission (the "SEC").

The Notes have numerous covenants including restrictions on liens, incurrence of indebtedness, asset sales, dividend payments and other restricted payments. Interest is payable semi-annually on March 1 and September 1. At June 30, 2014, $11.7 million had been accrued in connection with the September 1, 2014 interest payment and the Company was in compliance with all of the covenants contained in the Notes.

The Company and PetroQuest Energy, L.L.C. (the “Borrower”) have a Credit Agreement (as amended, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., Capital One, N.A., IberiaBank, Bank of America, N.A. and The Bank of Nova Scotia. The Credit Agreement provides the Company with a $300 million revolving credit facility that permits borrowings based on the commitments of the lenders and the available borrowing base as determined in accordance with the Credit Agreement. The Credit Agreement also allows the Company to use up to $25 million of the borrowing base for letters of credit. The Credit Agreement matures on October 3, 2016. As of June 30, 2014 the Company had $72.5 million of borrowings outstanding under (and no letters of credit issued pursuant to) the Credit Agreement.

The borrowing base under the Credit Agreement is based upon the valuation of the reserves attributable to the Company’s oil and gas properties as of January 1 and July 1 of each year. In connection with the most recent redetermination, the borrowing base was reaffirmed at $200 million (subject to the aggregate commitments of the lenders then in effect) effective March 31, 2014. The aggregate commitments of the lenders is currently $150 million and can be increased to up to $300 million by either adding new lenders or increasing the commitments of existing lenders, subject to certain conditions. The next borrowing base redetermination is scheduled to occur by September 30, 2014. The Company or the lenders may request two additional borrowing base re-determinations each year. Each time the borrowing base is to be re-determined, the administrative agent under the Credit Agreement will propose a new borrowing base as it deems appropriate in its sole discretion, which must be approved by all lenders if the borrowing base is to be increased, or by lenders holding two-thirds of the amounts outstanding under the Credit Agreement if the borrowing base remains the same or is reduced.

The Credit Agreement is secured by a first priority lien on substantially all of the assets of the Company and its subsidiaries, including a lien on all equipment and at least 80% of the aggregate total value of the Borrower’s oil and gas properties. Outstanding balances under the Credit Agreement bear interest at the alternate base rate (“ABR”) plus a margin (based on a sliding scale of 0.5% to 1.5% depending on total commitments) or the adjusted LIBO rate (“Eurodollar”) plus a margin (based on a sliding scale of 1.5% to 2.5% depending on total commitments). The alternate base rate is equal to the highest of (i) the JPMorgan Chase prime rate, (ii) the Federal Funds Effective Rate plus 0.5% or (iii) the adjusted LIBO rate plus 1%. For the purposes of the definition of alternative base rate only, the adjusted LIBO rate is equal to the rate at which dollar deposits of $5,000,000 with a one month maturity are offered by the principal London office of JPMorgan Chase Bank, N.A. in immediately available funds in the London interbank market. For all other purposes, the adjusted LIBO rate is equal to the rate at which Eurodollar deposits in the London interbank market for one, two, three or six months (as selected by the Company) are quoted, as adjusted for statutory reserve requirements for Eurocurrency liabilities. Outstanding letters of credit are charged a participation fee at a per annum rate equal to the margin applicable to Eurodollar loans, a fronting fee and customary administrative fees. In addition, the Company pays commitment fees based on a sliding scale of 0.375% to 0.5% depending on total commitments.

The Company and its subsidiaries are subject to certain restrictive financial covenants under the Credit Agreement, including a maximum ratio of total debt to EBITDAX, determined on a rolling four quarter basis, of 3.5 to 1.0 and a minimum ratio of

8

consolidated current assets to consolidated current liabilities of 1.0 to 1.0, all as defined in the Credit Agreement. The Credit Agreement also includes customary restrictions with respect to debt, liens, dividends, distributions and redemptions, investments, loans and advances, nature of business, international operations and foreign subsidiaries, leases, sale or discount of receivables, mergers or consolidations, sales of properties, transactions with affiliates, negative pledge agreements, gas imbalances and swap agreements. However, the Credit Agreement permits the Company to repurchase up to $10 million of the Company’s common stock during the term of the Credit Agreement, so long as after giving effect to such repurchase the Borrower’s Liquidity (as defined therein) is greater than 20% of the total commitments of the lenders at such time. As of June 30, 2014, the Company was in compliance with all of the covenants contained in the Credit Agreement.

Note 6—Asset Retirement Obligation

The following table describes the changes to the Company’s asset retirement obligation liability (in thousands):

	Six Months Ended June 30,
	2014			2013
Asset retirement obligation, beginning of period	$	48,536		$	27,260
Liabilities incurred	224			498
Liabilities settled	(1,149		)	(94		)
Accretion expense	1,499			660
Revisions in estimated cash flows	742			986
Asset retirement obligation, end of period	49,852			29,310
Less: current portion of asset retirement obligation	(2,959		)	(3,823		)
Long-term asset retirement obligation	$	46,893		$	25,487

Note 7—Derivative Instruments

The Company seeks to reduce its exposure to commodity price volatility by hedging a portion of its production through commodity derivative instruments. When the conditions for hedge accounting are met, the Company may designate its commodity derivatives as cash flow hedges. The changes in fair value of derivative instruments that qualify for hedge accounting treatment are recorded in other comprehensive income (loss) until the hedged oil or natural gas quantities are produced. If a derivative does not qualify for hedge accounting treatment, the changes in the fair value of the derivative are recorded in the income statement as derivative income (expense). At June 30, 2014, all of the Company's derivative instruments were designated as effective cash flow hedges.

Oil and gas sales include reductions related to the settlement of gas hedges of $2,170,000 and $877,000 and oil hedges of $672,000 and $1,000 for the three months endedJune 30, 2014 and 2013, respectively. For the six month periods ended June 30, 2014 and 2013, oil and gas sales include reductions related to the settlement of gas hedges of $5,139,000 and $345,000 and oil hedges of $1,106,000 and $146,000, respectively.

As of June 30, 2014, the Company had entered into the following commodity derivative instruments:

Production Period	Instrument Type	Daily Volumes	Weighted Average Price
Natural Gas:
July - December 2014	Swap	45,000 Mmbtu	$4.14
2015	Swap	5,000 Mmbtu	$4.32
Crude Oil:
July - December 2014	Swap (LLS)	650 Bbls	$101.05
July - December 2014	Swap (WTI)	350 Bbls	$93.26
Pentane:
July - December 2014	Swap	100 Bbls	$91.58

LLS - Louisiana Light Sweet

WTI - West Texas Intermediate

At June 30, 2014, the Company had recognized an accumulated other comprehensive loss of approximately $3.7 million related to the estimated fair value of its effective cash flow hedges. Based on estimated future commodity prices as of June 30,

9

2014, the Company would reclassify approximately $2.4 million, net of taxes, of accumulated other comprehensive loss into earnings during the next 12 months. These losses are expected to be reclassified to oil and gas sales based on the schedule of oil and gas volumes stipulated in the derivative contracts.

Derivatives designated as hedging instruments:

All of the Company’s swap contracts are designated as effective cash flow hedges under ASC Topic 815-20-25. The following tables reflect the fair value of the Company’s effective cash flow hedges in the consolidated financial statements (in thousands):

Effect of Cash Flow Hedges on the Consolidated Balance Sheet at June 30, 2014 and December 31, 2013:

	Commodity Derivatives
Period	Balance Sheet Location	Fair Value
June 30, 2014	Derivative asset	$	186
June 30, 2014	Derivative liability	$	(3,840	)
December 31, 2013	Derivative asset	$	521
December 31, 2013	Derivative liability	$	(1,617	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Other Comprehensive Income		Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	860	Oil and gas sales	$	(2,842	)
Commodity Derivatives at June 30, 2013	$	4,807	Oil and gas sales	$	(878	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013 :

Instrument	Amount of Gain (Loss) Recognized in Other Comprehensive Income			Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	(2,558	)	Oil and gas sales	$	(6,245	)
Commodity Derivatives at June 30, 2013	$	897		Oil and gas sales	$	(491	)

Derivatives not designated as hedging instruments:

During 2013, the Company utilized a three-way collar contract that was not designated as an effective cash flow hedge and therefore the changes in fair value on this derivative were recorded as derivative income in the statement of operations. This contract expired on December 31, 2013. The following tables reflect the fair value of this contract in the consolidated financial statements (in thousands):

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	594

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	157

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Note 8 – Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

• Level 1: valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority;

• Level 2: valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability;

• Level 3: valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the lowest priority.

The Company classifies its commodity derivatives based upon the data used to determine fair value. The Company’s derivative instruments at June 30, 2014 were in the form of swaps based on NYMEX pricing for oil and natural gas and OPIS Mt. Bellevue pricing for natural gas liquids. The fair value of these derivatives is derived using an independent third-party’s valuation model that utilizes market-corroborated inputs that are observable over the term of the derivative contract. The Company’s fair value calculations also incorporate an estimate of the counterparties’ default risk for derivative assets and an estimate of the Company’s default risk for derivative liabilities. As a result, the Company designates its commodity derivatives as Level 2 in the fair value hierarchy.

The following table summarizes the net valuation of the Company’s derivatives subject to fair value measurement on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements Using
Instrument	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Commodity Derivatives:
At June 30, 2014	$	—	$	(3,654	)	$	—
At December 31, 2013	$	—	$	(1,096	)	$	—

The fair value of the Company's cash and cash equivalents and variable-rate bank debt approximated book value at June 30, 2014 and December 31, 2013. The fair value of the Notes was approximately $371 million and $364 million as of June 30, 2014 and December 31, 2013, respectively, as compared to the book value of $350 million as of each date. The fair value of the Notes was determined based upon a market quote provided by an independent broker, which represents a Level 2 input.

Note 9—Income Taxes

The Company typically provides for income taxes at a statutory rate of 35% adjusted for permanent differences expected to be realized, primarily statutory depletion, non-deductible stock compensation expenses and state income taxes. As a result of ceiling test write-downs recognized in prior periods, the Company has incurred a cumulative three year loss. Because of the impact the cumulative loss has on the determination of the recoverability of deferred tax assets through future earnings, the Company assessed the realizability of its deferred tax assets based on the future reversals of existing deferred tax liabilities. Accordingly, the Company established a valuation allowance for a portion of the deferred tax asset. The valuation allowance was $38.1 million as of June 30, 2014.

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Note 10 - Other Comprehensive Income

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of March 31, 2014	($2,834)		($1,680)		($4,514)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(1,982	)			(1,982	)
Income tax effect	737		(737	)	—
Net of tax	(1,245	)	(737	)	(1,982	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	2,842				2,842
Income tax effect	(1,057	)	1,057		—
Net of tax	1,785		1,057		2,842
Net other comprehensive income	540		320		860
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of December 31, 2013	($688)		($408)		($1,096)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(8,803	)			(8,803	)
Income tax effect	3,275		(3,275	)	—
Net of tax	(5,528	)	(3,275	)	(8,803	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	6,245				6,245
Income tax effect	(2,323	)	2,323		—
Net of tax	3,922		2,323		6,245
Net other comprehensive loss	(1,606	)	(952	)	(2,558	)
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

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The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of March 31, 2013	($2,128)		($1,261)	($3,389)
Other comprehensive income before reclassifications:
Change in fair value of derivatives	4,769		—	4,769
Income tax effect	(1,774	)	934	(840	)
Net of tax	2,995		934	3,929
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	878		—	878
Income tax effect	(327	)	327	—
Net of tax	551		327	878
Net other comprehensive income	3,546		1,261	4,807
Balance as of June 30, 2013	$1,418		$0	$1,418

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of December 31, 2012	$521		$0	$521
Other comprehensive income before reclassifications:
Change in fair value of derivatives	406		—	406
Income tax effect	183		—	183
Net of tax	589		—	589
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	491		—	491
Income tax effect	(183	)	—	(183	)
Net of tax	308		—	308
Net other comprehensive income	897		—	897
Balance as of June 30, 2013	$1,418		$0	$1,418

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Note 11 - Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements.  The core principle of ASU 2014-09 is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods and or services.  The standard is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years.  Early application is not permitted.  Entities can choose to apply the standard using either a full retrospective approach or a modified retrospective approach, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  We are currently evaluating the effect that this new standard will have on our consolidated financial statements and related disclosures.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's MD&A contained in the Form 10-K for the fiscal year ended December 31, 2013 (the "2013 10-K") and in conjunction with the consolidated financial statements included in this Form 10-Q and in the 2013 10-K.

PetroQuest Energy, Inc. is an independent oil and gas company incorporated in the State of Delaware with primary operations in Oklahoma, Texas, and the Gulf Coast Basin. We seek to grow our production, proved reserves, cash flow and earnings at low finding and development costs through a balanced mix of exploration, development and acquisition activities. From the commencement of our operations in 1985 through 2002, we were focused exclusively in the Gulf Coast Basin with onshore properties principally in southern Louisiana and offshore properties in the shallow waters of the Gulf of Mexico shelf. During 2003, we began the implementation of our strategic goal of diversifying our reserves and production into longer life and lower risk onshore properties. As part of the strategic shift to diversify our asset portfolio and lower our geographic and geologic risk profile, we refocused our opportunity selection processes to reduce our average working interest in higher risk projects, shift capital to higher probability of success onshore wells and mitigate the risks associated with individual wells by expanding our drilling program across multiple basins.

We have successfully diversified into onshore, longer life basins in Oklahoma and Texas through a combination of selective acquisitions and drilling activity. Beginning in 2003 with our acquisition of the Carthage Field in East Texas through 2013, we have invested the majority of our capital into growing our longer life assets. During the ten year period ended December 31, 2013, we have realized a 95% drilling success rate on 918 gross wells drilled. Comparing 2013 metrics with those in 2003, the year we implemented our diversification strategy, we have grown production by 294% and estimated proved reserves by 262%. At June 30, 2014, 86% of our estimated proved reserves and 55% of our second quarter of 2014 production were derived from our longer life assets.

We are focused on growing our reserves and production through a balanced drilling budget with an increased emphasis on growing our oil and natural gas liquids production.  In May 2010, we entered into the Woodford joint development agreement ("JDA"), which provided us with $85 million in cash during 2010 and 2011, along with a drilling carry that we have utilized since May 2010 to enhance economic returns by reducing our share of capital expenditures in the Woodford Shale and Mississippian Lime. Under the terms of the JDA, as amended, we will pay 25% of the cost to drill and complete wells and receive a 50% ownership interest. The drilling carry is subject to extensions in one year intervals and as of June 30, 2014, approximately $45.2 million remained available.

During 2013, we closed the Gulf of Mexico Acquisition (discussed below) which significantly enhanced our 2013 production. As a result of our drilling programs in each of our operating areas, as well as the Gulf of Mexico Acquisition, we set Company records in 2013 for estimated proved reserves at year end and total production, including a 36% increase in oil and natural gas liquids production from 2012.

Gulf of Mexico Acquisition

On July 3, 2013, we closed the Gulf of Mexico Acquisition for an aggregate cash purchase price of $188.8 million, reflecting an effective date of January 1, 2013. The Gulf of Mexico Acquisition was financed with the issuance of an additional $200 million in aggregate principal amount of our 10% Senior Notes due 2017. The acquired assets included 16 gross wells located on seven platforms.

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During 2013, the Gulf of Mexico Acquisition contributed 4.5 Bcfe of production, including 235,000 barrels ("bbls") of oil, and added 30.5 Bcfe of estimated proved reserves as of December 31, 2013. During the first half of 2014, the Gulf of Mexico Acquisition assets produced 4.8 Bcfe, including 283,000 barrels of oil. As a result of the Gulf of Mexico Acquisition, our acreage position in the Gulf Coast Basin increased 23% to 46,801 net acres. See "Note 2 - Acquisition" in Item 1. Financial Statements for additional details related to this transaction.

We believe the Gulf of Mexico Acquisition represents both a strategic and transformative transaction for us. This transaction builds upon our existing strategy of utilizing free cash flow from our shorter life, Gulf Coast Basin assets to develop our longer-life resource assets. As evidenced by the larger percentage of our production and estimated proved reserves now located in our longer lived basins, we have successfully leveraged our Gulf Coast free cash flow to help fund our substantial diversification efforts over the past several years.

Fleetwood Joint Venture

In June 2014, we entered into a joint venture in Louisiana for an aggregate purchase price of $24 million. The assets acquired under the joint venture include an average 37% working interest in an approximately 30,000 acre leasehold position in Louisiana and exclusive rights, along with our joint venture partner, to a 200 square mile proprietary 3D survey which has generated several conventional and shallow non-conventional oil focused prospects.

The purchase price was comprised of $10 million in cash ($3 million paid in July 2014 and $7 million due in January 2015) and $14 million in cash funding for future drilling, completion and lease acquisition costs. If the $14 million in drilling, completion and lease acquisition costs is not fully funded by December 31, 2015, any remaining balance becomes payable at the election of our joint venture partner.

Critical Accounting Policies

Reserve Estimates

Our estimates of proved oil and gas reserves constitute those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. At the end of each year, our proved reserves are estimated by independent petroleum engineers in accordance with guidelines established by the SEC. These estimates, however, represent projections based on geologic and engineering data. Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that are difficult to measure. The accuracy of any reserve estimate is a function of the quantity and quality of available data, engineering and geological interpretation and professional judgment. Estimates of economically recoverable oil and gas reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effect of regulations by governmental agencies, and assumptions governing future oil and gas prices, future operating costs, severance taxes, development costs and workover costs. The future drilling costs associated with reserves assigned to proved undeveloped locations may ultimately increase to the extent that these reserves may be later determined to be uneconomic. Any significant variance in the assumptions could materially affect the estimated quantity and value of the reserves, which could affect the carrying value of our oil and gas properties and/or the rate of depletion of such oil and gas properties.

Disclosure requirements under Staff Accounting Bulletin 113 (“SAB 113”) include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes. The rules also allow companies the option to disclose probable and possible reserves in addition to the existing requirement to disclose proved reserves. The disclosure requirements also require companies to report the independence and qualifications of third party preparers of reserves and file reports when a third party is relied upon to prepare reserves estimates. Pricing is based on a 12-month average price using beginning of the month pricing during the 12-month period prior to the ending date of the balance sheet to report oil and natural gas reserves. In addition, the 12-month average will also be used to measure ceiling test impairments and to compute depreciation, depletion and amortization.

Full Cost Method of Accounting

We use the full cost method of accounting for our investments in oil and gas properties. Under this method, all acquisition, exploration and development costs, including certain related employee costs, incurred for the purpose of exploring for and developing oil and natural gas are capitalized. Acquisition costs include costs incurred to purchase, lease or otherwise acquire property. Exploration costs include the costs of drilling exploratory wells, including those in progress and geological and geophysical service costs in exploration activities. Development costs include the costs of drilling development wells and costs of completions, platforms, facilities and pipelines. Costs associated with production and general corporate activities are expensed

15

in the period incurred. Sales of oil and gas properties, whether or not being amortized currently, are accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas.

The costs associated with unevaluated properties are not initially included in the amortization base and primarily relate to ongoing exploration activities, unevaluated leasehold acreage and delay rentals, seismic data and capitalized interest. These costs are either transferred to the amortization base with the costs of drilling the related well or when the properties are determined to be impaired.

We compute the provision for depletion of oil and gas properties using the unit-of-production method based upon production and estimates of proved reserve quantities. Unevaluated costs and related carrying costs are excluded from the amortization base until the properties associated with these costs are evaluated. In addition to costs associated with evaluated properties, the amortization base includes estimated future development costs related to non-producing reserves. Our depletion expense is affected by the estimates of future development costs, unevaluated costs and proved reserves, and changes in these estimates could have an impact on our future earnings.

We capitalize certain internal costs that are directly identified with acquisition, exploration and development activities. The capitalized internal costs include salaries, employee benefits, costs of consulting services and other related expenses and do not include costs related to production, general corporate overhead or similar activities. We also capitalize a portion of the interest costs incurred on our debt. Capitalized interest is calculated using the amount of our unevaluated properties and our effective borrowing rate.

Capitalized costs of oil and gas properties, net of accumulated DD&A and related deferred taxes, are limited to the estimated future net cash flows from proved oil and gas reserves, including the effect of cash flow hedges in place, discounted at 10 percent, plus the lower of cost or fair value of unproved properties, as adjusted for related income tax effects (the full cost ceiling). If capitalized costs exceed the full cost ceiling, the excess is charged to write-down of oil and gas properties in the quarter in which the excess occurs.

Given the volatility of oil and gas prices, it is probable that our estimate of discounted future net cash flows from proved oil and gas reserves will change in the near term. If oil or gas prices decline, even for only a short period of time, or if we have downward revisions to our estimated proved reserves, it is possible that further write-downs of oil and gas properties could occur in the future.

Future Abandonment Costs

Future abandonment costs include costs to dismantle and relocate or dispose of our production platforms, gathering systems, wells and related structures and restoration costs of land and seabed. We develop estimates of these costs for each of our properties based upon the type of production structure, depth of water, reservoir characteristics, depth of the reservoir, market demand for equipment, currently available procedures and consultations with construction and engineering consultants. Because these costs typically extend many years into the future, estimating these future costs is difficult and requires management to make estimates and judgments that are subject to future revisions based upon numerous factors, including changing technology, the timing of estimated costs, the impact of future inflation on current cost estimates and the political and regulatory environment.

Derivative Instruments

We seek to reduce our exposure to commodity price volatility by hedging a portion of our production through commodity derivative instruments. The estimated fair values of our commodity derivative instruments are recorded in the consolidated balance sheet. The changes in fair value of those derivative instruments that qualify for hedge accounting treatment are recorded in other comprehensive income (loss) until the hedged oil and natural gas quantities are produced. If a hedge becomes ineffective because the hedged production does not occur, or the hedge otherwise does not qualify for hedge accounting treatment, the changes in the fair value of the derivative are recorded in the income statement as derivative income (expense).

Our hedges are specifically referenced to NYMEX prices for oil and natural gas and OPIS Mt. Bellevue pricing for natural gas liquids. We evaluate the effectiveness of our hedges at the time we enter the contracts, and periodically over the life of the contracts, by analyzing the correlation between NYMEX and OPIS prices and the posted prices we receive from our designated production. Through this analysis, we are able to determine if a high correlation exists between the prices received for the designated production and the NYMEX or OPIS prices at which the hedges will be settled. At June 30, 2014, our derivative instruments were designated as effective cash flow hedges.

Estimating the fair value of derivative instruments requires valuation calculations incorporating estimates of future NYMEX or OPIS prices, discount rates and price movements. As a result, we calculate the fair value of our commodity derivatives using an independent third-party’s valuation model that utilizes market-corroborated inputs that are observable over the term of the derivative contract. Our fair value calculations also incorporate an estimate of the counterparties’ default risk for derivative assets and an estimate of our default risk for derivative liabilities.

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Results of Operations

The following table sets forth certain information with respect to our oil and gas operations for the periods noted. These historical results are not necessarily indicative of results to be expected in future periods.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Production:
Oil (Bbls)	230,214		115,697		472,497		241,420
Gas (Mcf)	7,695,979		6,731,754		14,880,109		13,168,349
Ngl (Mcfe)	1,658,276		1,256,814		2,789,558		2,321,461
Total Production (Mcfe)	10,735,539		8,682,750		20,504,649		16,938,330
Sales:
Total oil sales	$	23,468,058	$	12,024,212	$	47,608,714	$	25,168,522
Total gas sales	28,802,856		20,247,600		58,360,191		36,970,632
Total ngl sales	8,310,268		5,804,172		14,578,674		11,913,118
Total oil and gas sales	$	60,581,182	$	38,075,984	$	120,547,579	$	74,052,272
Average sales prices:
Oil (per Bbl)	$	101.94	$	103.93	$	100.76	$	104.25
Gas (per Mcf)	3.74		3.01		3.92		2.81
Ngl (per Mcfe)	5.01		4.62		5.23		5.13
Per Mcfe	5.64		4.39		5.88		4.37

The above sales and average sales prices include reductions to revenue related to the settlement of gas hedges of $2,170,000 and $877,000 and oil hedges of $672,000 and $1,000 for the three months endedJune 30, 2014 and 2013, respectively. The above sales and average sales prices include reductions to revenue related to the settlement of gas hedges of $5,139,000 and $345,000 and oil hedges of $1,106,000 and $146,000 for the six months endedJune 30, 2014 and 2013, respectively.

Net income available to common stockholders totaled $9,592,000 and $3,662,000 for the quarters ended June 30, 2014 and 2013, respectively, while net income available to common stockholders totaled $19,635,000 and $6,269,000 for the six months ended June 30, 2014 and 2013, respectively. The primary fluctuations were as follows:

Production Total production increased24% and 21% during the three and six month periods ended June 30, 2014, respectively, as compared to the 2013 periods. Gas production during the three and six month periods ended June 30, 2014increased14% and 13%, respectively, from the comparable periods in 2013. The increase in gas production was primarily the result of added production from the wells acquired in the Gulf of Mexico Acquisition, which closed on July 3, 2013. Additionally, gas production increased as a result of the successful drilling programs in our La Cantera field and our liquids rich Woodford acreage. Partially offsetting these increases were decreases in gas production due to normal production declines at our dry gas Oklahoma fields as well as certain of our legacy Gulf of Mexico fields. As a result of an anticipated full year of production from the wells acquired in the Gulf of Mexico Acquisition and increased drilling activity planned for 2014, we expect our average daily gas production in 2014 to increase as compared to 2013.

Oil production during the three and six month periods ended June 30, 2014increased99% and 96%, respectively, from the 2013 periods due primarily to added production from the wells acquired in the Gulf of Mexico Acquisition as well as the continued success of our La Cantera field. Partially offsetting these increases were decreases as a result of continued normal production declines in certain of our legacy Gulf of Mexico fields. As a result of an anticipated full year of production from the wells acquired in the Gulf of Mexico Acquisition, we expect our average daily oil production to be significantly higher during 2014 as compared to 2013.

Natural gas liquids ("Ngl") production during the three and six month periods ended June 30, 2014increased32% and 20% from the respective 2013 periods due to the successful drilling program in the liquids rich western flank of our Oklahoma acreage position and in our La Cantera field. Additionally, Ngl production increased as a result of added production from the wells acquired in the Gulf of Mexico Acquisition. Partially offsetting these increases were decreases as a result of normal production declines at our legacy Gulf of Mexico and Oklahoma fields. As a result of the increase in drilling activity planned for 2014 as well as an

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anticipated full year of production from the wells acquired in the Gulf of Mexico Acquisition, we expect our daily Ngl production for 2014 to increase significantly as compared to 2013.

Prices Including the effects of our hedges, average gas prices per Mcf for the three and six month periods ended June 30, 2014 were $3.74 and $3.92 as compared to $3.01 and $2.81 for the respective 2013 periods. Average oil prices per Bbl for the three and six months ended June 30, 2014 were $101.94 and $100.76 as compared to $103.93 and $104.25 for the respective 2013 periods and average Ngl prices per Mcfe were $5.01 and $5.23 for the three and six months ended June 30, 2014, as compared to $4.62 and $5.13 for the respective 2013 periods. Stated on an Mcfe basis, unit prices received during the three and six months ended June 30, 2014 were 28% and 35%higher, respectively, than the prices received during the comparable 2013 periods.

Revenue Including the effects of hedges, oil and gas sales during the three months endedJune 30, 2014increased59% to $60,581,000, as compared to oil and gas sales of $38,076,000 during the 2013 period. Including the effects of hedges, oil and gas sales during the six months endedJune 30, 2014increased63% to $120,547,000, as compared to oil and gas sales of $74,052,000 during the 2013 period. These increases were primarily the result of higher average realized prices for our production during 2014 as well as increased production as discussed above.

Expenses Lease operating expenses for the three and six months ended June 30, 2014 totaled $12,168,000 and $24,426,000, respectively, as compared to $8,837,000 and $18,556,000 during the respective 2013 periods. Per unit lease operating expenses totaled $1.13 and $1.19 per Mcfe, respectively, during the three and six month periods ended June 30, 2014 as compared to $1.02 and $1.10 per Mcfe during the respective 2013 periods. The increase in per unit lease operating expenses is primarily due to an increase in expensed workovers during the 2014 periods as compared to the 2013 periods. As a result of the Gulf of Mexico Acquisition, we expect an increase in the overall amount of lease operating expenses during the remainder of 2014, but we expect per unit lease operating expenses to generally approximate per unit amounts in 2013.

Production taxes for the three and six months ended June 30, 2014 totaled $1,492,000 and $2,969,000, respectively, as compared to $1,481,000 and $2,509,000, respectively, during the 2013 periods. Per unit production taxes totaled $0.14 per Mcfe during each of the three and six month periods ended June 30, 2014 as compared to $0.17 and $0.15 per Mcfe during the respective 2013 periods. The increase in total production taxes was primarily due to higher commodity prices for our production during the 2014 periods as compared to the 2013 periods.

General and administrative expenses during the three and six months ended June 30, 2014 totaled $6,467,000 and $12,709,000, respectively, as compared to $6,351,000 and $11,067,000 during the 2013 periods. General and administrative expenses increased15% during the six months ended June 30, 2014 as compared to the comparable period of 2013 primarily due to higher employee related costs including share-based compensation during the 2014 periods. Included in general and administrative expenses for the three and six month periods ended June 30, 2014 were share-based compensation costs of $1,972,000 and $3,734,000, respectively, compared to $1,367,000 and $2,065,000, respectively, during the 2013 periods. We capitalized $3,590,000 and $7,969,000, respectively, of general and administrative costs during the three and six month periods ended June 30, 2014 compared to $3,045,000 and $6,156,000, respectively, during the 2013 periods.

Depreciation, depletion and amortization (“DD&A”) expense on oil and gas properties for the three and six months ended June 30, 2014 totaled $21,357,000, or $1.99 per Mcfe, and $41,460,000, or $2.02 per Mcfe, respectively, as compared to $14,259,000, or $1.64 per Mcfe, and $26,870,000, or $1.59 per Mcfe, respectively, during the comparable 2013 periods. The increase in the per unit DD&A rate is primarily the result of the Gulf of Mexico Acquisition, which had a higher cost per unit as compared to our overall amortization base. We expect our DD&A rate to remain consistent with the 2014 second quarter rate for the remainder of 2014.

Interest expense, net of amounts capitalized on unevaluated properties, totaled $7,380,000 and $15,016,000 during the three and six months ended June 30, 2014, respectively, as compared to $3,116,000 and $5,980,000, respectively, during the 2013 periods. During the three and six month periods ended June 30, 2014, our capitalized interest totaled $2,456,000 and $4,623,000, respectively, as compared to $1,316,000 and $2,768,000, respectively, during the 2013 periods. The increase in interest expense was a result of the issuance of $200 million of 10% senior notes due 2017, which were used to finance the Gulf of Mexico Acquisition. As a result, we expect interest expense during 2014 to be higher than 2013.

Income tax benefit during the three and six months ended June 30, 2014 was zero as compared to $840,000 and $491,000, respectively, during the 2013 periods. We typically provide for income taxes at a statutory rate of 35% adjusted for permanent differences expected to be realized, primarily statutory depletion, non-deductible stock compensation expenses and state income taxes.

As a result of ceiling test write-downs recognized in prior periods, we have incurred a cumulative three-year loss. Because of the impact the cumulative loss has on the determination of the recoverability of deferred tax assets through future earnings, we assessed

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the realizability of our deferred tax assets based on the future reversals of existing deferred tax liabilities. Accordingly, we established a valuation allowance for a portion of our deferred tax asset. The valuation allowance was $38,090,000 as of June 30, 2014.

Liquidity and Capital Resources

We have financed our acquisition, exploration and development activities principally through cash flow from operations, bank borrowings, other credit facilities, issuances of equity and debt securities, joint ventures and sales of assets. At June 30, 2014 we had a working capital deficit of approximately $57.3 million as compared to a working capital deficit of approximately $26.1 million as of December 31, 2013. Appoximately $14 million of the deficit increase is attributable to our Fleetwood joint venture. Since we operate the majority of our drilling activities, we have the ability to reduce our capital expenditures to manage our working capital deficit and liquidity position. To the extent our capital expenditures during the remainder of 2014 exceed our cash flow and cash on hand, we plan to utilize available borrowings under the bank credit facility or proceeds from the potential sale of assets to fund a portion of our drilling budget.

Prices for oil and natural gas are subject to many factors beyond our control such as weather, the overall condition of the global financial markets and economies, relatively minor changes in the outlook of supply and demand, and the actions of the Organization of Petroleum Exporting Countries ("OPEC"). Oil and natural gas prices have a significant impact on our cash flows available for capital expenditures and our ability to borrow and raise additional capital. The amount we can borrow under our bank credit facility is subject to periodic re-determination based in part on changing expectations of future prices. Lower prices may also reduce the amount of oil and natural gas that we can economically produce. Lower prices and/or lower production may decrease revenues, cash flows and the borrowing base under the bank credit facility, thus reducing the amount of financial resources available to meet our capital requirements. Lower prices and reduced cash flow may also make it difficult to incur debt, including under our bank credit facility, because of the restrictive covenants in the indenture governing the Notes. See “Source of Capital: Debt” below. Our ability to comply with the covenants in our debt agreements is dependent upon the success of our exploration and development program and upon factors beyond our control, such as oil and natural gas prices.

Source of Capital: Operations

Net cash flow from operations increased from $20.6 million during the six months ended June 30, 2013 to $102.7 million during the 2014 period. The increase in operating cash flow during 2014 as compared to 2013 is primarily attributable to increases in oil and gas revenues as well as the timing of payment of payables and receipt of advances from co-owners based on operational activity.

Source of Capital: Debt

On August 19, 2010, we issued $150 million in principal amount of 10% Senior Notes due 2017 (the “ Existing Notes”). On July 3, 2013, we issued an additional $200 million in principal amount of 10% Senior Notes due 2017 (the "New Notes" and together with the Existing Notes, the "Notes"). The New Notes were issued at a price equal to 100% of face value plus accrued interest from March 1, 2013. The New Notes have terms that, subject to certain exceptions, are substantially identical to the Existing Notes. The net proceeds from the offering were used to finance the $188.8 million aggregate cash purchase price of the Gulf of Mexico Acquisition, which also closed on July 3, 2013. The Notes have numerous covenants including restrictions on liens, incurrence of indebtedness, asset sales, dividend payments and other restricted payments. Interest is payable semi-annually on March 1 and September 1. At June 30, 2014, $11.7 million had been accrued in connection with the September 1, 2014 interest payment and we were in compliance with all of the covenants contained in the Notes.

We have a Credit Agreement (as amended, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., Capital One, N.A., IberiaBank, Bank of America, N.A. and The Bank of Nova Scotia. The Credit Agreement provides us with a $300 million revolving credit facility that permits borrowings based on the commitments of the lenders and the available borrowing base as determined in accordance with the Credit Agreement. The Credit Agreement also allows us to use up to $25 million of the borrowing base for letters of credit. Our Credit Agreement matures on October 3, 2016. As of June 30, 2014 we had $72.5 million of borrowings outstanding under (and no letters of credit issued pursuant to) the Credit Agreement.

The borrowing base under the Credit Agreement is based upon the valuation of the reserves attributable to our oil and gas properties as of January 1 and July 1 of each year. In connection with the most recent redetermination, the borrowing base was reaffirmed at $200 million (subject to the aggregate commitments of the lenders then in effect) effective March 31, 2014. The aggregate commitments of the lenders is currently $150 million and can be increased to up to $300 million by either adding new lenders or increasing the commitments of existing lenders, subject to certain conditions.

The next borrowing base redetermination is scheduled to occur by September 30, 2014. We or the lenders may request two additional borrowing base re-determinations each year. Each time the borrowing base is to be re-determined, the administrative agent under the Credit Agreement will propose a new borrowing base as it deems appropriate in its sole discretion, which must

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be approved by all lenders if the borrowing base is to be increased, or by lenders holding two-thirds of the amounts outstanding under the Credit Agreement if the borrowing base remains the same or is reduced.

The Credit Agreement is secured by a first priority lien on substantially all of our assets, including a lien on all equipment and at least 80% of the aggregate total value of our oil and gas properties. Outstanding balances under the Credit Agreement bear interest at the alternate base rate (“ABR”) plus a margin (based on a sliding scale of 0.5% to 1.5% depending on total commitments) or the adjusted LIBO rate (“Eurodollar”) plus a margin (based on a sliding scale of 1.5% to 2.5% depending on total commitments). The alternate base rate is equal to the highest of (i) the JPMorgan Chase prime rate, (ii) the Federal Funds Effective Rate plus 0.5% or (iii) the adjusted LIBO rate plus 1%. For the purposes of the definition of alternative base rate only, the adjusted LIBO rate is equal to the rate at which dollar deposits of $5,000,000 with a one month maturity are offered by the principal London office of JPMorgan Chase Bank, N.A. in immediately available funds in the London interbank market. For all other purposes, the adjusted LIBO rate is equal to the rate at which Eurodollar deposits in the London interbank market for one, two, three or six months (as selected by us) are quoted, as adjusted for statutory reserve requirements for Eurocurrency liabilities. Outstanding letters of credit are charged a participation fee at a per annum rate equal to the margin applicable to Eurodollar loans, a fronting fee and customary administrative fees. In addition, we pay commitment fees based on a sliding scale of 0.375% to 0.5% depending on total commitments.

We are subject to certain restrictive financial covenants under the Credit Agreement, including a maximum ratio of total debt to EBITDAX, determined on a rolling four quarter basis, of 3.5 to 1.0 and a minimum ratio of consolidated current assets to consolidated current liabilities of 1.0 to 1.0, all as defined in the Credit Agreement. The Credit Agreement also includes customary restrictions with respect to debt, liens, dividends, distributions and redemptions, investments, loans and advances, nature of business, international operations and foreign subsidiaries, leases, sale or discount of receivables, mergers or consolidations, sales of properties, transactions with affiliates, negative pledge agreements, gas imbalances and swap agreements. However, the Credit Agreement permits us to repurchase up to $10 million of our common stock during the term of the Credit Agreement, so long as after giving effect to such repurchase our Liquidity (as defined therein) is greater than 20% of the total commitments of the lenders at such time. As of June 30, 2014, we were in compliance with all of the covenants contained in the Credit Agreement.

Source of Capital: Issuance of Securities

Our shelf registration statement allows us to publicly offer and sell up to $350 million of any combination of debt securities, shares of common and preferred stock, depositary shares and warrants. The registration statement does not provide any assurance that we will or could sell any such securities.

Source of Capital: Joint Ventures

In May 2010, we entered into a joint development agreement with WSGP Gas Producing, LLC ("WSGP"), a subsidiary of NextEra Energy Resources, LLC, whereby WSGP acquired approximately 29 Bcfe of our Woodford proved undeveloped reserves as well as the right to earn 50% of our undeveloped Woodford acreage position through a two phase drilling program. We received approximately $57.4 million in cash at closing, net of $2.6 million in transaction fees, and an additional $14 million in each of 2011 and 2012. In addition, since May 2010, WSGP has funded a share of our drilling costs under a drilling program, which we refer to as the drilling carry. As of June 30, 2014, approximately $45.2 million of drilling carry remained available.

Source of Capital: Divestitures

We do not budget property divestitures; however, we are continuously evaluating our property base to determine if there are assets in our portfolio that no longer meet our strategic objectives. From time to time we may divest certain non-strategic assets in order to provide liquidity to strengthen our balance sheet or capital to be reinvested in higher rate of return projects. We are currently exploring divestment opportunities for our South Texas assets. We cannot assure you that we will be able to sell any of our assets in the future.

In January 2013, we sold 50% of our saltwater disposal systems and related surface assets in the Woodford for net proceeds of approximately $10 million. In December 2013, we sold our non-operated Wyoming assets for a cash purchase price of $1.0 million.

Use of Capital: Exploration and Development

Our 2014 capital budget, which includes capitalized interest and general and administrative costs, is expected to range between $170 million and $180 million, of which $104.2 million was incurred during the first six months of 2014. Because we operate the majority of our drilling activities, we expect to be able to control the timing of a substantial portion of our capital investments. During the six months ended June 30, 2014, we funded our capital expenditures with cash flow from operations and cash on hand. To the extent our capital expenditures during the remainder of 2014 exceed our cash flow and cash on hand, we plan to utilize available borrowings under the bank credit facility or proceeds from the potential sale of assets to fund a portion of our drilling budget.

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Use of Capital: Acquisitions

On July 3, 2013, we closed the Gulf of Mexico Acquisition for an aggregate cash purchase price of $188.8 million. The acquired assets include 16 gross wells located on 7 platforms.

In June 2014, we entered into a joint venture in Louisiana for an aggregate purchase price of $24 million. The purchase price is comprised of $10 million in cash ($3 million paid in July 2014 and $7 million due in January 2015) and $14 million in cash funding for future drilling, completion and lease acquisition costs.  We plan to drill two wells within the project area during 2014 and expect to operate the majority of the drilling projects associated with the joint venture.

We expect to finance our future acquisition activities, if consummated, through cash on hand or available borrowings under our bank credit facility. We may also utilize sales of equity or debt securities, sales of properties or assets or joint venture arrangements with industry partners, if necessary. We cannot assure you that such additional financings will be available on acceptable terms, if at all.

Disclosure Regarding Forward Looking Statements

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in and incorporated by reference into this Form 10-Q are forward-looking statements. When used in this Form 10-Q, the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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 integrate our recently completed acquisitions with our operations and realize the anticipated benefits from the acquisitions, any unexpected costs or delays in connection with the acquisitions, our ability to find oil and natural gas reserves that are economically recoverable, the volatility of oil and natural gas prices, our ability to realize the anticipated benefits from the Fleetwood joint venture, the uncertain economic conditions in the United States and globally, the declines in the values of our properties that have resulted 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 as well as the risks, trends and uncertainties discuss under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q. The Company undertakes no duty to update or revise these forward-looking statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We experience market risks primarily in two areas: commodity prices and interest rates. Because our properties are located within the United States, we do not believe that our business operations are exposed to significant foreign currency exchange risks.

Commodity Price Risk

Our revenues are derived from the sale of our crude oil, natural gas and natural gas liquids production. Based on projected sales volumes for the remainder of 2014, a 10% change in the prices we receive for our crude oil, natural gas and natural gas liquids production would have an approximate $4.6 million impact on our revenues.

We seek to reduce our exposure to commodity price volatility by hedging a portion of production through commodity derivative instruments. In the settlement of a typical hedge transaction, we will have the right to receive from the counterparties to the hedge the excess of the fixed price specified in the hedge over a floating price based on a market index multiplied by the quantity hedged. If the floating price exceeds the fixed price, we are required to pay the counterparties this difference multiplied by the quantity hedged. During the three and six months ended June 30, 2014, we paid $2.8 million and $6.2 million, respectively, to the counterparties to our derivative instruments in connection with net hedge settlements.

We are required to pay the difference between the floating price and the fixed price (when the floating price exceeds the fixed price) regardless of whether we have sufficient production to cover the quantities specified in the hedge. Significant reductions in production at times when the floating price exceeds the fixed price could require us to make payments under the hedge agreements even though such payments are not offset by sales of production. Hedging will also prevent us from receiving the full advantage of increases in oil or gas prices above the fixed amount specified in the hedge.

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Our Credit Agreement requires that the counterparties to our hedge contracts be lenders under the Credit Agreement or, if not a lender under the Credit Agreement, rated A/A2 or higher by S&P or Moody’s. Currently, the counterparties to our existing hedge contracts are lenders under the Credit Agreement.

As of June 30, 2014, we had entered into the following commodity derivative instruments:

Production Period	Instrument Type	Daily Volumes	Weighted Average Price
Natural Gas:
July - December 2014	Swap	45,000 Mmbtu	$4.14
2015	Swap	5,000 Mmbtu	$4.32
Crude Oil:
July - December 2014	Swap (LLS)	650 Bbls	$101.05
July - December 2014	Swap (WTI)	350 Bbls	$93.26
Pentane:
July - December 2014	Swap	100 Bbls	$91.58

LLS - Louisiana Light Sweet

WTI - West Texas Intermediate

After executing the above transactions, the Company has approximately 8.3 Bcf of gas volumes at an average price of $4.14 per Mcf, 184,000 barrels of oil volumes at an average price of $98.33, and 18,400 barrels of pentane volumes at an average price of $91.58 hedged for the remainder 2014. Additionally, the Company has approximately 1.8 Bcf of gas volumes at $4.32 per Mcf hedged for 2015. For further discussion of our commodity derivative instruments, please see Item 1, Note 7 "Derivative Insruments" in this Form 10-Q.

Interest Rate Risk

Debt outstanding under our bank credit facility is subject to a floating interest rate and represents 17% of our total debt as of June 30, 2014. Based upon an analysis, utilizing the actual interest rate in effect and balances outstanding as of June 30, 2014, and assuming a 10% increase in interest rates and no change in the amount of debt outstanding, the potential effect on interest expense for the remainder of 2014 is $0.1 million.

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Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, completed an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded:

i. that the Company’s disclosure controls and procedures are designed to ensure (a) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (b) that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure; and

ii. that the Company's disclosure controls and procedures are effective.

Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II

Item 1. LEGAL PROCEEDINGS

NONE.

Item 1A. RISK FACTORS

For information regarding risks, uncertainties and assumptions, please see Part I, Item 1A of our 2013 10-K. Except as disclosed below, there are no material changes from risk factors previously disclosed in our 2013 10-K and our quarterly report on Form 10-Q for the quarter ended March 31, 2014.

Oil and natural gas prices are volatile, and an extended decline in the prices of oil and natural gas would likely have a material adverse effect on our financial condition, liquidity, ability to meet our financial obligations and results of operations.

Our future financial condition, revenues, results of operations, profitability and future growth, and the carrying value of our oil and natural gas properties depend primarily on the prices we receive for our oil and natural gas production. Our ability to maintain or increase our borrowing capacity and to obtain additional capital on attractive terms also substantially depends upon oil and natural gas prices. Historically, the markets for oil and natural gas have been volatile. For example, for the four years ended December 31, 2013, the NYMEX-WTI oil price ranged from a high of $113.93 per Bbl to a low of $68.01 per Bbl, while the NYMEX-Henry Hub natural gas price ranged from a high of $6.01 per MMBtu to a low of $1.91 per MMBtu. These markets will likely continue to be volatile in the future. The prices we will receive for our production, and the levels of our production, will depend on numerous factors beyond our control.

These factors include:

• relatively minor changes in the supply of or the demand for oil and natural gas;

• the condition of the United States and worldwide economies;

• market uncertainty;

• the level of consumer product demand;

• weather conditions in the United States, such as hurricanes;

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• the actions of OPEC;

• domestic and foreign governmental regulation and taxes, including price controls adopted by the Federal Energy Regulatory Commission;

• political conditions or hostilities in oil and natural gas producing regions, including the Middle East and South America;

• the price and level of foreign imports of oil and natural gas; and

• the price and availability of alternate fuel sources.

We cannot predict future oil and natural gas prices and such prices may decline further. An extended decline in oil and natural gas prices may adversely affect our financial condition, liquidity, ability to meet our financial obligations and results of operations. Lower prices have reduced and may further reduce the amount of oil and natural gas that we can produce economically and has required and may require us to record ceiling test write-downs and may cause our estimated proved reserves at December 31, 2014 to decline compared to our estimated proved reserves at December 31, 2013. Substantially all of our oil and natural gas sales are made in the spot market or pursuant to contracts based on spot market prices. Our sales are not made pursuant to long-term fixed price contracts.

To attempt to reduce our price risk, we periodically enter into hedging transactions with respect to a portion of our expected future production. We cannot assure you that such transactions will reduce the risk or minimize the effect of any decline in oil or natural gas prices. Any substantial or extended decline in the prices of or demand for oil or natural gas would have a material adverse effect on our financial condition, liquidity, ability to meet our financial obligations and results of operations.

Our outstanding indebtedness may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our debt.

As of June 30, 2014, the aggregate amount of our outstanding indebtedness, net of cash on hand, was $391.6 million. We have $77.5 million of additional availability under our bank credit facility, subject, however, to limitations on incurrence of indebtedness under the indenture governing our 10% senior notes due 2017, which we refer to as our 10% notes. In addition, we may also incur additional indebtedness in the future. Our high level of debt could have important consequences for you, including the following:

• it may be more difficult for us to satisfy our obligations with respect to our outstanding indebtedness, including our 10% notes, and any failure to comply with the obligations of any of our debt agreements, including financial and other restrictive covenants, could result in an event of default under the agreements governing such indebtedness;

• the covenants contained in our debt agreements limit our ability to borrow money in the future for acquisitions, capital expenditures or to meet our operating expenses or other general corporate obligations and may limit our flexibility in operating our business;

• we will need to use a substantial portion of our cash flows to pay interest on our debt, approximately $35 million per year for interest on our 10% notes alone, and to pay quarterly dividends, if declared by our Board of Directors, on our Series B Preferred Stock of approximately $5.1 million per year, which will reduce the amount of money we have for operations, capital expenditures, expansion, acquisitions or general corporate or other business activities;

• the amount of our interest expense may increase because certain of our borrowings in the future may be at variable rates of interest, which, if interest rates increase, could result in higher interest expense;

• we may have a higher level of debt than some of our competitors, which may put us at a competitive disadvantage;

• we may be more vulnerable to economic downturns and adverse developments in our industry or the economy in general, especially extended or further declines in oil and natural gas prices; and

• our debt level could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.

Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as economic conditions and governmental regulation. We cannot be certain that our cash flow from operations will be sufficient to allow us to pay the principal and interest on our debt, including our 10% notes, and meet our other obligations. If we do not have enough cash to service our debt, we may be required to refinance all or part of our existing debt, including our 10% notes, sell assets, borrow

24

more money or raise equity. We may not be able to refinance our debt, sell assets, borrow more money or raise equity on terms acceptable to us, if at all.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended June 30, 2014.

	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Maximum Number (or Approximate Dollar Value) of Shares that May be Purchased Under the Plans or Programs
April 1 - April 30, 2014	1,323	$	5.66	—	—
May 1 - May 31, 2014	—	—		—	—
June 1 - June 30, 2014	—	—		—	—
Total	1,323	$	5.66	—	—

 ________________________

(1) All shares repurchased were surrendered by employees to pay tax withholding upon the vesting of restricted stock awards.

Item 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

NONE.

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Item 6. EXHIBITS

Exhibit 31.1, Certification of Chief Executive Officer pursuant to Rule 13-a-14(a)/Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.

Exhibit 31.2, Certification of Chief Financial Officer pursuant to Rule 13-a-14(a)/Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.

Exhibit 32.1, Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2, Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS, XBRL Instance Document

Exhibit 101.SCH, XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL, XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF, XBRL Taxonomy Definitions Linkbase Document

Exhibit 101.LAB, XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE, XBRL Taxonomy Extension Presentation Linkbase Document

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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 thereunto duly authorized.

		PETROQUEST ENERGY, INC.
Date:	August 5, 2014	/s/ J. Bond Clement
		J. Bond Clement Executive Vice President, Chief Financial Officer (Authorized Officer and Principal Financial and Accounting Officer)

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EX-31.1

EXHIBIT 31.1

I, Charles T. Goodson, certify that:

1. I have reviewed this Form 10-Q of PetroQuest Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Charles T. Goodson                            

Charles T. Goodson

Chief Executive Officer

August 5, 2014

EX-31.2

EXHIBIT 31.2

I, J. Bond Clement, certify that:

1. I have reviewed this Form 10-Q of PetroQuest Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ J. Bond Clement                        

J. Bond Clement

Chief Financial Officer

August 5, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PetroQuest Energy, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2014 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Charles T. Goodson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Charles T. Goodson

Charles T. Goodson

Chief Executive Officer

August 5, 2014

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PetroQuest Energy, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2014 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, J. Bond Clement, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ J. Bond Clement

J. Bond Clement

Chief Financial Officer

August 5, 2014

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Fair Value Measurements (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Net valuation of the Company's derivatives subject to fair value measurement on a recurring basis
Estimated fair value of the Notes	$ 371,000,000	$ 364,000,000
Book value of notes	350,000,000	350,000,000
Quoted Prices in Active Markets (Level 1)
Derivatives, Fair Value [Line Items]
Commodity derivatives at fair value	0	0
Significant Other Observable Inputs (Level 2)
Derivatives, Fair Value [Line Items]
Commodity derivatives at fair value	(3,654,000)	(1,096,000)
Significant Unobservable Inputs (Level 3)
Derivatives, Fair Value [Line Items]
Commodity derivatives at fair value	$ 0	$ 0

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Asset Retirement Obligation (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Changes to the Company's asset retirement obligation liability
Asset retirement obligation, beginning of period	$ 48,536	$ 27,260
Liabilities incurred	224	498
Liabilities settled	(1,149)	(94)
Accretion expense	1,499	660
Revisions in estimated cash flows	742	986
Asset retirement obligation, end of period	49,852	29,310
Less: current portion of asset retirement obligation	(2,959)	(3,823)	(3,113)
Long-term asset retirement obligation	$ 46,893	$ 25,487	$ 45,423

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Acquisitions (Details) (USD $)	0 Months Ended	6 Months Ended				0 Months Ended		0 Months Ended
	Jul. 03, 2013	Jun. 30, 2014	Jun. 30, 2013	Aug. 19, 2010 Ten Percent Senior Notes	Jul. 03, 2013 Gulf of Mexico Acquisition well platform	Jul. 03, 2013 Gulf of Mexico Acquisition General and Administrative Expense Bridge Loan [Member]	Jul. 03, 2013 Ten Percent Senior Notes Senior Notes [Member]	Jul. 03, 2013 Ten Percent Senior Notes Gulf of Mexico Acquisition
Business Acquisition [Line Items]
Purchase price								$ 188,800,000
Number of wells acquired					16
Number of platforms purchased					7
Principal amount	200,000,000			150,000,000			200,000,000
Interest rate of Senior Notes				10.00%			10.00%
Payments of financing costs	5,000,000	109,000	774,000
Acquisition-related costs	$ 4,000,000					$ 2,600,000

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Derivative Instruments (Details 3) (Not Designated as Hedging Instrument, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Not Designated as Hedging Instrument
Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations
Amount of Unrealized Loss Recognized in Other Income Expense	$ 0	$ 594	$ 0	$ 157

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Acquisitions

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Acquisitions

Acquisitions

Gulf of Mexico Acquisition:

On July 3, 2013, the Company acquired certain shallow water Gulf of Mexico shelf oil and gas properties (the “Acquired Assets”), for an aggregate cash purchase price of $188.8 million, reflecting an effective date of January 1, 2013 (collectively, the "Gulf of Mexico Acquisition"). The Acquired Assets included 16 wells located on seven platforms.

The aggregate cash purchase price of the Gulf of Mexico Acquisition was financed with the net proceeds from the sale of $200 million in principal amount of the Company's 10% Senior Notes due 2017 (the "New Notes").  In connection with the transaction, the Company recorded $5.0 million of deferred financing costs related to the New Notes and incurred $4.0 million of acquisition-related costs, including $2.6 million related to a bridge commitment fee, which were recognized as general and administrative expenses.

The Gulf of Mexico Acquisition was accounted for under the purchase method of accounting, which involves determining the fair value of the assets acquired and liabilities assumed. The fair value of proved and unevaluated oil and gas properties was estimated using the income approach based on estimated reserve quantities, costs to produce and develop reserves, and forward prices for oil and gas, which represent Level 2 and Level 3 inputs. Asset retirement obligations were determined in accordance with applicable accounting standards.

The following table summarizes the acquisition date fair values of the net assets acquired (in thousands):

Oil and gas properties	$	192,067
Unevaluated oil and gas properties	12,033
Asset retirement obligations	(15,319		)
Net assets acquired	$	188,781

The following unaudited summary pro forma financial information for the three and six month periods ended June 30, 2013 has been prepared to give effect to the Gulf of Mexico Acquisition as if it had occurred on January 1, 2012. The pro forma financial information is not necessarily indicative of the results that might have occurred had the transaction taken place on January 1, 2012 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma financial information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors. Amounts in thousands, except per share amounts.

	Three Months Ended		Six Months Ended
	June 30, 2013		June 30, 2013
Revenues	$	55,155	$	106,907
Income from operations	6,346		11,169
Income available to common stockholders	5,899		9,093
Basic earnings per share	0.09		0.14
Diluted earnings per share	0.09		0.14

Fleetwood Joint Venture:

In June 2014, we entered into a joint venture in Louisiana for an aggregate purchase price of $24 million. The assets acquired under the joint venture include an average 37% working interest in an approximately 30,000 acre leasehold position in Louisiana and exclusive rights, along with our joint venture partner, to a 200 square mile proprietary 3D survey which has generated several conventional and shallow non-conventional oil focused prospects.

The purchase price was comprised of $10 million in cash ($3 million paid in July 2014 and $7 million due in January 2015) and $14 million in cash funding for future drilling, completion and lease acquisition costs. If the $14 million in drilling, completion and lease acquisition costs is not fully funded by December 31, 2015, any remaining balance becomes payable at the election of our joint venture partner.

Amounts payable with regard to the joint venture are reflected as accrued acquisition costs in the Consolidated Balance Sheet. The amounts payable related to the $14 million discussed above are classified as current and long term based on the current exploration and development plans under the joint venture. All of the costs associated with the joint venture are considered unevaluated at June 30, 2014.

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Convertible Preferred Stock (Details) (USD $)	6 Months Ended
	Jun. 30, 2014 Rate	Dec. 31, 2013
Equity [Abstract]
Preferred stock, shares outstanding	1,495,000	1,495,000
Series B cumulative convertible perpetual preferred stock interest rate	6.875%
Number of trading days	20 days
Number of consecutive trading days	30 days
Closing price as percentage of conversion price	130.00%
Series B Preferred Stock converted into common stock (in shares)	3.4433
Initial conversion price of common stock (in usd per share)	$ 14.52
Applicable settlement terms	If the Company elects to settle all or any portion of its conversion obligation in cash, the conversion value and the number of shares of the Company’s common stock it will deliver upon conversion (if any) will be based upon a 20 trading day averaging period.
Conversion rate numerator for Preferred Stock	$ 50

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Acquisitions (Fleetwood Joint Venture) (Details) (Fleetwood Joint Venture, Louisiana, USD $) In Millions, unless otherwise specified	1 Months Ended
	Jun. 30, 2014 sqmi acre	Jul. 31, 2014 Subsequent Event
Business Acquisition [Line Items]
Purchase price	$ 24
Average working interest in leasehold position	37.00%
Acres acquired in leasehold position	30,000
Square miles of proprietary 3D survey	200
Cash portion of acquisition	10.0	3.0
Cash payment in January 2015	7
Cash funding for future drilling	$ 14

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
A reconciliation between basic and diluted earnings per share computations
Income available to common stockholders	$ 9,592	$ 3,662	$ 19,635	$ 6,269
Attributable to participating securities	(273)	(87)	(571)	(163)
Net income or loss available to common stockholders, Loss (excluding income attributable to participating securities)	9,319	3,575	19,064	6,106
Net loss available to common stockholders (in shares)	64,103	62,963	63,940	62,899
Stock options, Effect of dilutive securities		0		0
Net loss available to common stockholders, Per Share Amount	$ 0.15	$ 0.06	$ 0.30	$ 0.10
Stock options, effect of dilutive securities, (in shares)	64	167	56	185
Dilutive Securities, Effect on Basic Earnings Per Share, Restricted Stock	(273)	(87)	(571)	(163)
Restricted stock, effect of dilutive securities (in shares)	0	0	0	0
DILUTED EPS, Loss	$ 9,319	$ 3,575	$ 19,064	$ 6,106
DILUTED EPS, Shares	64,167	63,130	63,996	63,084
DILUTED EPS, Per Share Amount	$ 0.15	$ 0.06	$ 0.30	$ 0.10

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Earnings Per Share (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Convertible preferred stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,148,000	5,148,000	5,148,000	5,148,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	937,800	1,265,500	1,060,700	1,277,600

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Basis of Presentation

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial information for the three and six month periods ended June 30, 2014 and 2013, has been prepared by the Company and was not audited by its independent registered public accountants. In the opinion of management, all normal and recurring adjustments have been made to present fairly the financial position, results of operations, and cash flows of the Company at June 30, 2014 and for all reported periods. Results of operations for the interim periods presented are not necessarily indicative of the operating results for the full year or any future periods.

The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Certain prior year amounts have been reclassified to conform to current year presentations.

Unless the context otherwise indicates, any references in this Quarterly Report on Form 10-Q to “PetroQuest,” the “Company,” "we," or "us" refer to PetroQuest Energy, Inc. (Delaware) and its wholly-owned consolidated subsidiaries, PetroQuest Energy, L.L.C. (a single member Louisiana limited liability company), PetroQuest Oil & Gas, L.L.C. (a single member Louisiana limited liability company), TDC Energy LLC (a single member Louisiana limited liability company) and Pittrans, Inc. (an Oklahoma corporation).

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Long-Term Debt (Details) (USD $)	6 Months Ended			6 Months Ended				6 Months Ended			0 Months Ended
	Jun. 30, 2014 Rate	Mar. 31, 2014	Jul. 03, 2013	Jun. 30, 2014 Maximum [Member] Rate	Jun. 30, 2014 Minimum [Member] Rate	Aug. 19, 2010 10% Senior Notes	Jun. 30, 2014 Letters of credit [Member]	Jun. 30, 2014 Federal Funds Effective Rate [Member] Rate	Jun. 30, 2014 Adjusted London Inter Bank Offer Rate [Member] Maximum [Member] Rate	Jun. 30, 2014 Adjusted London Inter Bank Offer Rate [Member] Minimum [Member] Rate	Jul. 03, 2013 Ten Percent Senior Notes Gulf of Mexico Acquisition	Jul. 03, 2013 Ten Percent Senior Notes Senior Notes [Member]
Long-Term Debt (Textual) [Abstract]
Principal amount			$ 200,000,000			$ 150,000,000						$ 200,000,000
Interest rate of Senior Notes						10.00%						10.00%
Purchase price											188,800,000
Adjusted LIBO rate is equal to the rate at which dollar deposits	11,700,000
Revolving credit facility	300,000,000						25,000,000
Borrowings outstanding under the Credit Agreement	72,500,000
Current borrowing base		200,000,000
Aggregate commitments of the lenders	150,000,000
At least secured percentage value of oil and gas properties	80.00%
Adjusted LIBO rate	1.00%			1.50%	0.50%			0.50%	2.50%	1.50%
Accrued in connection with the interest payment	5,000,000
Commitment fees on a sliding scale				0.50%	0.375%
Maximum ratio of total debt to EBITDAX				3.5	1.0
Repurchase Company's common stock				$ 10,000,000
Borrower's Liquidity					20.00%
Long Term Debt (Additional Textual) [Abstract]
Agreement bear interest at the alternate base rate	Agreement bear interest at the alternate base rate (“ABR”) plus a margin (based on a sliding scale of 0.5% to 1.5% depending on total commitments) or the adjusted LIBO rate (“Eurodollar”) plus a margin (based on a sliding scale of 1.5% to 2.5% depending on total commitments). The alternate base rate is equal to the highest of (i) the JPMorgan Chase prime rate, (ii) the Federal Funds Effective Rate plus 0.5% or (iii) the adjusted LIBO rate plus 1%.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Income Taxes (Textual) [Abstract]
Income taxes at a statutory rate	35.00%
Cumulative loss period	3 years
Valuation allowance	$ 38.1

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 30,901	$ 9,153
Revenue receivable	26,113	26,568
Joint interest billing receivable	17,967	26,556
Derivative asset	22	521
Prepaid drilling costs	343	477
Other current assets	7,532	8,132
Total current assets	82,878	71,407
Oil and gas properties:
Oil and gas properties, full cost method	2,111,889	2,035,899
Unevaluated oil and gas properties	126,571	98,387
Accumulated depreciation, depletion and amortization	(1,594,875)	(1,553,044)
Oil and gas properties, net	643,585	581,242
Other property and equipment	14,511	13,993
Accumulated depreciation of other property and equipment	9,571	8,901
Total property and equipment	648,525	586,334
Derivative asset	164	0
Other assets, net of accumulated depreciation and amortization of $6,753 and $5,689, respectively	8,017	9,449
Total assets	739,584	667,190
Current liabilities:
Accounts payable to vendors	42,730	47,341
Advances from co-owners	16,407	969
Oil and gas revenue payable	35,676	22,664
Accrued interest and preferred stock dividend	12,780	12,909
Asset retirement obligation	2,959	3,113
Derivative liability	3,840	1,617
Accrued acquisition cost	14,000	0
Other accrued liabilities	11,738	8,924
Total current liabilities	140,130	97,537
Bank debt	72,500	75,000
10% Senior Notes	350,000	350,000
Asset retirement obligation	46,893	45,423
Accrued acquisition cost	10,000	0
Other long-term liability	220	135
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; authorized 5,000 shares; issued and outstanding 1,495 shares	1	1
Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding 64,179 and 63,664 shares, respectively	64	64
Paid-in capital	284,380	280,711
Accumulated other comprehensive loss	(3,654)	(1,096)
Accumulated deficit	(160,950)	(180,585)
Total stockholders’ equity	119,841	99,095
Total liabilities and stockholders’ equity	$ 739,584	$ 667,190

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Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net of income taxes	$ 0	$ 840	$ 0	$ 531

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Derivative Instruments (Details 1) (Commodity Contract [Member], Designated as Hedging Instrument, USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Hedge Asset [Member]
Derivatives, Fair Value [Line Items]
Derivative asset	$ 186	$ 521
Hedge Liability [Member]
Derivatives, Fair Value [Line Items]
Derivative liability	$ (3,840)	$ (1,617)

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Oil and gas contracts

As of June 30, 2014, the Company had entered into the following commodity derivative instruments:

Production Period	Instrument Type	Daily Volumes	Weighted Average Price
Natural Gas:
July - December 2014	Swap	45,000 Mmbtu	$4.14
2015	Swap	5,000 Mmbtu	$4.32
Crude Oil:
July - December 2014	Swap (LLS)	650 Bbls	$101.05
July - December 2014	Swap (WTI)	350 Bbls	$93.26
Pentane:
July - December 2014	Swap	100 Bbls	$91.58

Effect of Cash Flow Hedges on the Consolidated Balance Sheet

Effect of Cash Flow Hedges on the Consolidated Balance Sheet at June 30, 2014 and December 31, 2013:

	Commodity Derivatives
Period	Balance Sheet Location	Fair Value
June 30, 2014	Derivative asset	$	186
June 30, 2014	Derivative liability	$	(3,840	)
December 31, 2013	Derivative asset	$	521
December 31, 2013	Derivative liability	$	(1,617	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Other Comprehensive Income		Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	860	Oil and gas sales	$	(2,842	)
Commodity Derivatives at June 30, 2013	$	4,807	Oil and gas sales	$	(878	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013 :

Instrument	Amount of Gain (Loss) Recognized in Other Comprehensive Income			Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	(2,558	)	Oil and gas sales	$	(6,245	)
Commodity Derivatives at June 30, 2013	$	897		Oil and gas sales	$	(491	)

Effect of Non-designated Derivative Instruments

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	594

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	157

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Derivative Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain Recognized in Other Comprehensive Income	$ 860	$ 4,807	$ (2,558)	$ 897
Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain Recognized in Other Comprehensive Income	860	4,807	(2,558)	897
Oil and Gas Sales | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Reclassified into Income	$ (2,842)	$ (878)	$ (6,245)	$ (491)

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of March 31, 2014	($2,834)		($1,680)		($4,514)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(1,982	)			(1,982	)
Income tax effect	737		(737	)	—
Net of tax	(1,245	)	(737	)	(1,982	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	2,842				2,842
Income tax effect	(1,057	)	1,057		—
Net of tax	1,785		1,057		2,842
Net other comprehensive income	540		320		860
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of December 31, 2013	($688)		($408)		($1,096)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(8,803	)			(8,803	)
Income tax effect	3,275		(3,275	)	—
Net of tax	(5,528	)	(3,275	)	(8,803	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	6,245				6,245
Income tax effect	(2,323	)	2,323		—
Net of tax	3,922		2,323		6,245
Net other comprehensive loss	(1,606	)	(952	)	(2,558	)
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of March 31, 2013	($2,128)		($1,261)	($3,389)
Other comprehensive income before reclassifications:
Change in fair value of derivatives	4,769		—	4,769
Income tax effect	(1,774	)	934	(840	)
Net of tax	2,995		934	3,929
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	878		—	878
Income tax effect	(327	)	327	—
Net of tax	551		327	878
Net other comprehensive income	3,546		1,261	4,807
Balance as of June 30, 2013	$1,418		$0	$1,418

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of December 31, 2012	$521		$0	$521
Other comprehensive income before reclassifications:
Change in fair value of derivatives	406		—	406
Income tax effect	183		—	183
Net of tax	589		—	589
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	491		—	491
Income tax effect	(183	)	—	(183	)
Net of tax	308		—	308
Net other comprehensive income	897		—	897
Balance as of June 30, 2013	$1,418		$0	$1,418

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 22,202	$ 8,836
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax expense benefit	0	(491)
Depreciation, depletion and amortization	42,130	27,407
Accretion of asset retirement obligation	1,499	660
Share-based compensation expense	2,716	1,780
Amortization costs and other	1,094	406
Non-cash derivative income	0	(157)
Payments to settle asset retirement obligations	(1,149)	(94)
Changes in working capital accounts:
Revenue receivable	455	3,735
Prepaid drilling costs	134	(801)
Joint interest billing receivable	8,589	10,314
Accounts payable and accrued liabilities	8,614	(19,195)
Advances from co-owners	15,438	(8,548)
Other	1,022	(3,237)
Net cash provided by operating activities	102,744	20,615
Cash flows from investing activities:
Investment in oil and gas properties	(76,993)	(52,740)
Investment in other property and equipment	(468)	(257)
Deposit on acquisition	0	(5,000)
Sale of oil and gas properties	371	18,914
Sale of unevaluated oil and gas properties	229	0
Net cash used in investing activities	(76,861)	(39,083)
Cash flows from financing activities:
Net proceeds for share based compensation	1,039	20
Deferred financing costs	(109)	(774)
Payment of preferred stock dividend	(2,565)	(2,569)
Proceeds from bank borrowings	10,000	40,000
Repayment of bank borrowings	(12,500)	(25,000)
Net cash provided by (used in) financing activities	(4,135)	11,677
Net increase (decrease) in cash and cash equivalents	21,748	(6,791)
Cash and cash equivalents, beginning of period	9,153	14,904
Cash and cash equivalents, end of period	30,901	8,113
Cash paid during the period for:
Interest	18,700	8,321
Income taxes	$ 0	$ 40

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Accumulated depreciation and amortization	$ 6,753	$ 5,689
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	1,495,000	1,495,000
Preferred stock, shares outstanding	1,495,000	1,495,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	64,179,000	63,664,000
Common stock, shares outstanding	64,179,000	63,664,000

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Other Comprehensive Income

Other Comprehensive Income

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of March 31, 2014	($2,834)		($1,680)		($4,514)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(1,982	)			(1,982	)
Income tax effect	737		(737	)	—
Net of tax	(1,245	)	(737	)	(1,982	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	2,842				2,842
Income tax effect	(1,057	)	1,057		—
Net of tax	1,785		1,057		2,842
Net other comprehensive income	540		320		860
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2014 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance		Total
Balance as of December 31, 2013	($688)		($408)		($1,096)
Other comprehensive loss before reclassifications:
Change in fair value of derivatives	(8,803	)			(8,803	)
Income tax effect	3,275		(3,275	)	—
Net of tax	(5,528	)	(3,275	)	(8,803	)
Amounts reclassified from accumulated other comprehensive loss:
Oil and gas sales	6,245				6,245
Income tax effect	(2,323	)	2,323		—
Net of tax	3,922		2,323		6,245
Net other comprehensive loss	(1,606	)	(952	)	(2,558	)
Balance as of June 30, 2014	($2,294)		($1,360)		($3,654)

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the three month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of March 31, 2013	($2,128)		($1,261)	($3,389)
Other comprehensive income before reclassifications:
Change in fair value of derivatives	4,769		—	4,769
Income tax effect	(1,774	)	934	(840	)
Net of tax	2,995		934	3,929
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	878		—	878
Income tax effect	(327	)	327	—
Net of tax	551		327	878
Net other comprehensive income	3,546		1,261	4,807
Balance as of June 30, 2013	$1,418		$0	$1,418

The following table represents the changes in accumulated other comprehensive income (loss), net of tax, for the six month period ended June 30, 2013 (in thousands):

	Gains and Losses on Cash Flow Hedges		Change in Valuation Allowance	Total
Balance as of December 31, 2012	$521		$0	$521
Other comprehensive income before reclassifications:
Change in fair value of derivatives	406		—	406
Income tax effect	183		—	183
Net of tax	589		—	589
Amounts reclassified from accumulated other comprehensive income:
Oil and gas sales	491		—	491
Income tax effect	(183	)	—	(183	)
Net of tax	308		—	308
Net other comprehensive income	897		—	897
Balance as of June 30, 2013	$1,418		$0	$1,418

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	PETROQUEST ENERGY INC
Entity Central Index Key	0000872248
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		66,093,733

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Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2014

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements.  The core principle of ASU 2014-09 is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods and or services.  The standard is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years.  Early application is not permitted.  Entities can choose to apply the standard using either a full retrospective approach or a modified retrospective approach, with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  We are currently evaluating the effect that this new standard will have on our consolidated financial statements and related disclosures.

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Oil and gas sales	$ 60,581	$ 38,076	$ 120,547	$ 74,052
Expenses:
Lease operating expenses	12,168	8,837	24,426	18,556
Production taxes	1,492	1,481	2,969	2,509
Depreciation, depletion and amortization	21,702	14,536	42,130	27,407
General and administrative	6,467	6,351	12,709	11,067
Accretion of asset retirement obligation	708	328	1,499	660
Interest expense	7,380	3,116	15,016	5,980
Costs and Expenses	49,917	34,649	98,749	66,179
Other income:
Other income	215	88	404	315
Derivative income	0	594	0	157
Other Income (Expense), Net	215	682	404	472
Income from operations	10,879	4,109	22,202	8,345
Income tax benefit	0	(840)	0	(491)
Net income	10,879	4,949	22,202	8,836
Preferred stock dividend	1,287	1,287	2,567	2,567
Income available to common stockholders	$ 9,592	$ 3,662	$ 19,635	$ 6,269
Basic
Net income (loss) per share (in usd per share)	$ 0.15	$ 0.06	$ 0.30	$ 0.10
Diluted
Net income (loss) per share (in usd per share)	$ 0.15	$ 0.06	$ 0.30	$ 0.10
Weighted average number of common shares:
Basic (shares)	64,103	62,963	63,940	62,899
Diluted (shares)	64,167	63,130	63,996	63,084

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Long-Term Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

On August 19, 2010, the Company issued $150 million in principal amount of its 10% Senior Notes due 2017 (the “Existing Notes”). On July 3, 2013, the Company issued an additional $200 million in principal amount of its 10% Senior Notes due 2017 (the "New Notes" and together with the Existing Notes, the "Notes"). The New Notes were issued at a price equal to 100% of face value plus accrued interest from March 1, 2013. The New Notes have terms that, subject to certain exceptions, are substantially identical to the Existing Notes. The net proceeds from the offering were used to finance the $188.8 million aggregate cash purchase price of the Gulf of Mexico Acquisition, which also closed on July 3, 2013. The Notes are guaranteed by certain of PetroQuest's subsidiaries. The subsidiary guarantors are 100% owned by PetroQuest and all guarantees are full and unconditional and joint and several. PetroQuest has no independent assets or operations and the subsidiaries not providing guarantees are minor, as defined by the rules of the Securities and Exchange Commission (the "SEC").

The Notes have numerous covenants including restrictions on liens, incurrence of indebtedness, asset sales, dividend payments and other restricted payments. Interest is payable semi-annually on March 1 and September 1. At June 30, 2014, $11.7 million had been accrued in connection with the September 1, 2014 interest payment and the Company was in compliance with all of the covenants contained in the Notes.

The Company and PetroQuest Energy, L.L.C. (the “Borrower”) have a Credit Agreement (as amended, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., Capital One, N.A., IberiaBank, Bank of America, N.A. and The Bank of Nova Scotia. The Credit Agreement provides the Company with a $300 million revolving credit facility that permits borrowings based on the commitments of the lenders and the available borrowing base as determined in accordance with the Credit Agreement. The Credit Agreement also allows the Company to use up to $25 million of the borrowing base for letters of credit. The Credit Agreement matures on October 3, 2016. As of June 30, 2014 the Company had $72.5 million of borrowings outstanding under (and no letters of credit issued pursuant to) the Credit Agreement.

The borrowing base under the Credit Agreement is based upon the valuation of the reserves attributable to the Company’s oil and gas properties as of January 1 and July 1 of each year. In connection with the most recent redetermination, the borrowing base was reaffirmed at $200 million (subject to the aggregate commitments of the lenders then in effect) effective March 31, 2014. The aggregate commitments of the lenders is currently $150 million and can be increased to up to $300 million by either adding new lenders or increasing the commitments of existing lenders, subject to certain conditions. The next borrowing base redetermination is scheduled to occur by September 30, 2014. The Company or the lenders may request two additional borrowing base re-determinations each year. Each time the borrowing base is to be re-determined, the administrative agent under the Credit Agreement will propose a new borrowing base as it deems appropriate in its sole discretion, which must be approved by all lenders if the borrowing base is to be increased, or by lenders holding two-thirds of the amounts outstanding under the Credit Agreement if the borrowing base remains the same or is reduced.

The Credit Agreement is secured by a first priority lien on substantially all of the assets of the Company and its subsidiaries, including a lien on all equipment and at least 80% of the aggregate total value of the Borrower’s oil and gas properties. Outstanding balances under the Credit Agreement bear interest at the alternate base rate (“ABR”) plus a margin (based on a sliding scale of 0.5% to 1.5% depending on total commitments) or the adjusted LIBO rate (“Eurodollar”) plus a margin (based on a sliding scale of 1.5% to 2.5% depending on total commitments). The alternate base rate is equal to the highest of (i) the JPMorgan Chase prime rate, (ii) the Federal Funds Effective Rate plus 0.5% or (iii) the adjusted LIBO rate plus 1%. For the purposes of the definition of alternative base rate only, the adjusted LIBO rate is equal to the rate at which dollar deposits of $5,000,000 with a one month maturity are offered by the principal London office of JPMorgan Chase Bank, N.A. in immediately available funds in the London interbank market. For all other purposes, the adjusted LIBO rate is equal to the rate at which Eurodollar deposits in the London interbank market for one, two, three or six months (as selected by the Company) are quoted, as adjusted for statutory reserve requirements for Eurocurrency liabilities. Outstanding letters of credit are charged a participation fee at a per annum rate equal to the margin applicable to Eurodollar loans, a fronting fee and customary administrative fees. In addition, the Company pays commitment fees based on a sliding scale of 0.375% to 0.5% depending on total commitments.

The Company and its subsidiaries are subject to certain restrictive financial covenants under the Credit Agreement, including a maximum ratio of total debt to EBITDAX, determined on a rolling four quarter basis, of 3.5 to 1.0 and a minimum ratio of consolidated current assets to consolidated current liabilities of 1.0 to 1.0, all as defined in the Credit Agreement. The Credit Agreement also includes customary restrictions with respect to debt, liens, dividends, distributions and redemptions, investments, loans and advances, nature of business, international operations and foreign subsidiaries, leases, sale or discount of receivables, mergers or consolidations, sales of properties, transactions with affiliates, negative pledge agreements, gas imbalances and swap agreements. However, the Credit Agreement permits the Company to repurchase up to $10 million of the Company’s common stock during the term of the Credit Agreement, so long as after giving effect to such repurchase the Borrower’s Liquidity (as defined therein) is greater than 20% of the total commitments of the lenders at such time. As of June 30, 2014, the Company was in compliance with all of the covenants contained in the Credit Agreement.

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

A reconciliation between the basic and diluted earnings per share computations (in thousands, except per share amounts) is as follows:

For the Three Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	9,592		64,103
Attributable to participating securities	(273		)
BASIC EPS	$	9,319		64,103	$	0.15
Net income available to common stockholders	$	9,592		64,103
Effect of dilutive securities:
Stock options	—			64
Attributable to participating securities	(273		)	—
DILUTED EPS	$	9,319		64,167	$	0.15
For the Six Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	19,635		63,940
Attributable to participating securities	(571		)
BASIC EPS	$	19,064		63,940	$	0.30
Net income available to common stockholders	$	19,635		63,940
Effect of dilutive securities:
Stock options	—			56
Attributable to participating securities	(571		)	—
DILUTED EPS	$	19,064		63,996	$	0.30
For the Three Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	3,662		62,963
Attributable to participating securities	(87		)
BASIC EPS	$	3,575		62,963	$	0.06
Net income available to common stockholders	$	3,662		62,963
Effect of dilutive securities:
Stock options	—			167
Attributable to participating securities	(87		)	—
DILUTED EPS	$	3,575		63,130	$	0.06
For the Six Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	6,269		62,899
Attributable to participating securities	(163		)
BASIC EPS	$	6,106		62,899	$	0.10
Net income available to common stockholders	$	6,269		62,899
Effect of dilutive securities:
Stock options	—			185
Attributable to participating securities	(163		)	—
DILUTED EPS	$	6,106		63,084	$	0.10

Common shares issuable upon the assumed conversion of the Series B Preferred Stock totaling 5,148,000 shares were not included in the computation of diluted earnings per share for any of the 2013 and 2014 periods presented because the inclusion would have been anti-dilutive. Options to purchase 937,800 and 1,060,700 shares of common stock were outstanding during the three and six month periods ended June 30, 2014, respectively, and were not included in the computation of diluted earnings per share because the options' exercise prices were in excess of the average market price of the common shares.

Options to purchase 1,265,500 and 1,277,600 shares of common stock were outstanding during the three and six months ended June 30, 2013, respectively, and were not included in the computation of diluted earnings per share because the options' exercise prices were in excess of the average market price of the common shares.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Net valuation of the Company's derivatives subject to fair value measurement on a recurring basis

The following table summarizes the net valuation of the Company’s derivatives subject to fair value measurement on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements Using
Instrument	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Commodity Derivatives:
At June 30, 2014	$	—	$	(3,654	)	$	—
At December 31, 2013	$	—	$	(1,096	)	$	—

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the acquisition date fair values of the net assets acquired (in thousands):

Oil and gas properties	$	192,067
Unevaluated oil and gas properties	12,033
Asset retirement obligations	(15,319		)
Net assets acquired	$	188,781

Pro Forma Financial Information

The following unaudited summary pro forma financial information for the three and six month periods ended June 30, 2013 has been prepared to give effect to the Gulf of Mexico Acquisition as if it had occurred on January 1, 2012. The pro forma financial information is not necessarily indicative of the results that might have occurred had the transaction taken place on January 1, 2012 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma financial information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors. Amounts in thousands, except per share amounts.

	Three Months Ended		Six Months Ended
	June 30, 2013		June 30, 2013
Revenues	$	55,155	$	106,907
Income from operations	6,346		11,169
Income available to common stockholders	5,899		9,093
Basic earnings per share	0.09		0.14
Diluted earnings per share	0.09		0.14

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Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

• Level 1: valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority;

• Level 2: valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability;

• Level 3: valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the lowest priority.

The Company classifies its commodity derivatives based upon the data used to determine fair value. The Company’s derivative instruments at June 30, 2014 were in the form of swaps based on NYMEX pricing for oil and natural gas and OPIS Mt. Bellevue pricing for natural gas liquids. The fair value of these derivatives is derived using an independent third-party’s valuation model that utilizes market-corroborated inputs that are observable over the term of the derivative contract. The Company’s fair value calculations also incorporate an estimate of the counterparties’ default risk for derivative assets and an estimate of the Company’s default risk for derivative liabilities. As a result, the Company designates its commodity derivatives as Level 2 in the fair value hierarchy.

The following table summarizes the net valuation of the Company’s derivatives subject to fair value measurement on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements Using
Instrument	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Commodity Derivatives:
At June 30, 2014	$	—	$	(3,654	)	$	—
At December 31, 2013	$	—	$	(1,096	)	$	—

The fair value of the Company's cash and cash equivalents and variable-rate bank debt approximated book value at June 30, 2014 and December 31, 2013. The fair value of the Notes was approximately $371 million and $364 million as of June 30, 2014 and December 31, 2013, respectively, as compared to the book value of $350 million as of each date. The fair value of the Notes was determined based upon a market quote provided by an independent broker, which represents a Level 2 input.

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Asset Retirement Obligation

6 Months Ended

Jun. 30, 2014

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation

Asset Retirement Obligation

The following table describes the changes to the Company’s asset retirement obligation liability (in thousands):

	Six Months Ended June 30,
	2014			2013
Asset retirement obligation, beginning of period	$	48,536		$	27,260
Liabilities incurred	224			498
Liabilities settled	(1,149		)	(94		)
Accretion expense	1,499			660
Revisions in estimated cash flows	742			986
Asset retirement obligation, end of period	49,852			29,310
Less: current portion of asset retirement obligation	(2,959		)	(3,823		)
Long-term asset retirement obligation	$	46,893		$	25,487

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Derivative Instruments

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company seeks to reduce its exposure to commodity price volatility by hedging a portion of its production through commodity derivative instruments. When the conditions for hedge accounting are met, the Company may designate its commodity derivatives as cash flow hedges. The changes in fair value of derivative instruments that qualify for hedge accounting treatment are recorded in other comprehensive income (loss) until the hedged oil or natural gas quantities are produced. If a derivative does not qualify for hedge accounting treatment, the changes in the fair value of the derivative are recorded in the income statement as derivative income (expense). At June 30, 2014, all of the Company's derivative instruments were designated as effective cash flow hedges.

Oil and gas sales include reductions related to the settlement of gas hedges of $2,170,000 and $877,000 and oil hedges of $672,000 and $1,000 for the three months endedJune 30, 2014 and 2013, respectively. For the six month periods ended June 30, 2014 and 2013, oil and gas sales include reductions related to the settlement of gas hedges of $5,139,000 and $345,000 and oil hedges of $1,106,000 and $146,000, respectively.

As of June 30, 2014, the Company had entered into the following commodity derivative instruments:

Production Period	Instrument Type	Daily Volumes	Weighted Average Price
Natural Gas:
July - December 2014	Swap	45,000 Mmbtu	$4.14
2015	Swap	5,000 Mmbtu	$4.32
Crude Oil:
July - December 2014	Swap (LLS)	650 Bbls	$101.05
July - December 2014	Swap (WTI)	350 Bbls	$93.26
Pentane:
July - December 2014	Swap	100 Bbls	$91.58

LLS - Louisiana Light Sweet

WTI - West Texas Intermediate

At June 30, 2014, the Company had recognized an accumulated other comprehensive loss of approximately $3.7 million related to the estimated fair value of its effective cash flow hedges. Based on estimated future commodity prices as of June 30, 2014, the Company would reclassify approximately $2.4 million, net of taxes, of accumulated other comprehensive loss into earnings during the next 12 months. These losses are expected to be reclassified to oil and gas sales based on the schedule of oil and gas volumes stipulated in the derivative contracts.

Derivatives designated as hedging instruments:

All of the Company’s swap contracts are designated as effective cash flow hedges under ASC Topic 815-20-25. The following tables reflect the fair value of the Company’s effective cash flow hedges in the consolidated financial statements (in thousands):

Effect of Cash Flow Hedges on the Consolidated Balance Sheet at June 30, 2014 and December 31, 2013:

	Commodity Derivatives
Period	Balance Sheet Location	Fair Value
June 30, 2014	Derivative asset	$	186
June 30, 2014	Derivative liability	$	(3,840	)
December 31, 2013	Derivative asset	$	521
December 31, 2013	Derivative liability	$	(1,617	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Other Comprehensive Income		Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	860	Oil and gas sales	$	(2,842	)
Commodity Derivatives at June 30, 2013	$	4,807	Oil and gas sales	$	(878	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013 :

Instrument	Amount of Gain (Loss) Recognized in Other Comprehensive Income			Location of Loss Reclassified into Income	Amount of Loss Reclassified into Income
Commodity Derivatives at June 30, 2014	$	(2,558	)	Oil and gas sales	$	(6,245	)
Commodity Derivatives at June 30, 2013	$	897		Oil and gas sales	$	(491	)

Derivatives not designated as hedging instruments:

During 2013, the Company utilized a three-way collar contract that was not designated as an effective cash flow hedge and therefore the changes in fair value on this derivative were recorded as derivative income in the statement of operations. This contract expired on December 31, 2013. The following tables reflect the fair value of this contract in the consolidated financial statements (in thousands):

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the three months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	594

Effect of Non-designated Derivative Instruments on the Consolidated Statement of Operations for the six months ended June 30, 2014 and 2013:

Instrument	Amount of Gain Recognized in Derivative Income
Commodity Derivatives at June 30, 2014	$	—
Commodity Derivatives at June 30, 2013	$	157

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Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company typically provides for income taxes at a statutory rate of 35% adjusted for permanent differences expected to be realized, primarily statutory depletion, non-deductible stock compensation expenses and state income taxes. As a result of ceiling test write-downs recognized in prior periods, the Company has incurred a cumulative three year loss. Because of the impact the cumulative loss has on the determination of the recoverability of deferred tax assets through future earnings, the Company assessed the realizability of its deferred tax assets based on the future reversals of existing deferred tax liabilities. Accordingly, the Company established a valuation allowance for a portion of the deferred tax asset. The valuation allowance was $38.1 million as of June 30, 2014.

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Derivative Instruments (Details) (USD $)	6 Months Ended
	Jun. 30, 2014 bbl
Swap LLS [Member] | Production Period April through December 2014 [Member] | Crude Oil [Member]
Oil and gas contracts
Daily Volumes	650
Weighted Average Price	$ 101.05
Swap [Member] | Production Period April through December 2014 [Member] | Natural Gas [Member]
Oil and gas contracts
Daily Volumes	45,000
Weighted Average Price	$ 4.14
Swap [Member] | Production Period April through December 2014 [Member] | Pentane [Member]
Oil and gas contracts
Daily Volumes	100
Weighted Average Price	$ 91.58
Swap [Member] | Production Period Year 2015 [Member] | Natural Gas [Member]
Oil and gas contracts
Daily Volumes	5,000
Weighted Average Price	$ 4.32
Swap WTI [Member] | Production Period April through December 2014 [Member] | Crude Oil [Member]
Oil and gas contracts
Daily Volumes	350
Weighted Average Price	$ 93.26

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Asset Retirement Obligation (Tables)

6 Months Ended

Jun. 30, 2014

Asset Retirement Obligation Disclosure [Abstract]

Changes to the Company's asset retirement obligation liability

The following table describes the changes to the Company’s asset retirement obligation liability (in thousands):

	Six Months Ended June 30,
	2014			2013
Asset retirement obligation, beginning of period	$	48,536		$	27,260
Liabilities incurred	224			498
Liabilities settled	(1,149		)	(94		)
Accretion expense	1,499			660
Revisions in estimated cash flows	742			986
Asset retirement obligation, end of period	49,852			29,310
Less: current portion of asset retirement obligation	(2,959		)	(3,823		)
Long-term asset retirement obligation	$	46,893		$	25,487

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Acquisitions (Schedule of Assets Acquired and Liabilities Assumed) (Details) (Gulf of Mexico Acquisition, USD $) In Thousands, unless otherwise specified	Jul. 03, 2013
Gulf of Mexico Acquisition
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Oil and gas properties	$ 192,067
Unevaluated oil and gas properties	12,033
Asset retirement obligations	(15,319)
Oil and gas properties	$ 188,781

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Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accumulated other Comprehensive Income [Roll Forward]
Balance, beginning of period	$ (4,514)	$ (3,389)	$ (1,096)	$ 521
Change in fair value of derivatives	(1,982)	4,769	(8,803)	406
Income tax effect	0	(840)	0	183
Other comprehensive loss before reclassifications	(1,982)	3,929	(8,803)	589
Oil and gas sales	2,842	878	6,245	491
Income tax effect	0	0	0	(183)
Amounts reclassified from accumulated other comprehensive income (loss)	2,842	878	6,245	308
Net other comprehensive loss	860	4,807	(2,558)	897
Balance, end of period	(3,654)	1,418	(3,654)	1,418
Gains and Losses on Cash Flow Hedges
Accumulated other Comprehensive Income [Roll Forward]
Balance, beginning of period	(2,834)	(2,128)	(688)	521
Change in fair value of derivatives	(1,982)	4,769	(8,803)	406
Income tax effect	737	(1,774)	3,275	183
Other comprehensive loss before reclassifications	(1,245)	2,995	(5,528)	589
Oil and gas sales	2,842	878	6,245	491
Income tax effect	(1,057)	(327)	(2,323)	(183)
Amounts reclassified from accumulated other comprehensive income (loss)	1,785	551	3,922	308
Net other comprehensive loss	540	3,546	(1,606)	897
Balance, end of period	(2,294)	1,418	(2,294)	1,418
Change in Valuation Allowance
Accumulated other Comprehensive Income [Roll Forward]
Balance, beginning of period	(1,680)	(1,261)	(408)	0
Change in fair value of derivatives		0		0
Income tax effect	(737)	934	(3,275)	0
Other comprehensive loss before reclassifications	(737)	934	(3,275)	0
Oil and gas sales		0		0
Income tax effect	1,057	327	2,323	0
Amounts reclassified from accumulated other comprehensive income (loss)	1,057	327	2,323	0
Net other comprehensive loss	320	1,261	(952)	0
Balance, end of period	$ (1,360)	$ 0	$ (1,360)	$ 0

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 10,879	$ 4,949	$ 22,202	$ 8,836
Change in fair value of derivative instruments, accounted for as hedges, net of income tax expense of $0, $840, $0, and $531, respectively	860	4,807	(2,558)	897
Comprehensive income	$ 11,739	$ 9,756	$ 19,644	$ 9,733

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Convertible Preferred Stock

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Convertible Preferred Stock

Convertible Preferred Stock

The Company has 1,495,000 shares of 6.875% Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred Stock”) outstanding.

The following is a summary of certain terms of the Series B Preferred Stock:

Dividends. The Series B Preferred Stock accumulates dividends at an annual rate of 6.875% for each share of Series B Preferred Stock. Dividends are cumulative from the date of first issuance and, to the extent payment of dividends is not prohibited by the Company’s debt agreements, assets are legally available to pay dividends and the Company’s board of directors or an authorized committee of the board declares a dividend payable, the Company pays dividends in cash, every quarter.

Mandatory conversion. The Company may, at its option, cause shares of the Series B Preferred Stock to be automatically converted at the applicable conversion rate, but only if the closing sale price of the Company’s common stock for 20 trading days within a period of 30 consecutive trading days ending on the trading day immediately preceding the date the Company gives the conversion notice equals or exceeds 130% of the conversion price in effect on each such trading day.

Conversion rights. Each share of Series B Preferred Stock may be converted at any time, at the option of the holder, into 3.4433 shares of the Company’s common stock (which is based on an initial conversion price of approximately $14.52 per share of common stock, subject to adjustment) plus cash in lieu of fractional shares, subject to the Company’s right to settle all or a portion of any such conversion in cash or shares of the Company’s common stock. If the Company elects to settle all or any portion of its conversion obligation in cash, the conversion value and the number of shares of the Company’s common stock it will deliver upon conversion (if any) will be based upon a 20 trading day averaging period.

Upon any conversion, the holder will not receive any cash payment representing accumulated and unpaid dividends on the Series B Preferred Stock, whether or not in arrears, except in limited circumstances. The conversion rate is equal to $50 divided by the conversion price at the time. The conversion price is subject to adjustment upon the occurrence of certain events. The conversion price on the conversion date and the number of shares of the Company’s common stock, as applicable, to be delivered upon conversion may be adjusted if certain events occur.

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Acquisitions (Pro Forma) (Details) (Gulf of Mexico Acquisition, USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Gulf of Mexico Acquisition
Business Acquisition [Line Items]
Revenues	$ 55,155	$ 106,907
Income from operations	6,346	11,169
Income available to common stockholders	$ 5,899	$ 9,093
Basic earnings per share (in dollars per share)	$ 0.09	$ 0.14
Diluted earnings per share (in dollars per share)	$ 0.09	$ 0.14

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Derivative Instruments (Details Textual) (USD $)	6 Months Ended						3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2014 Gas hedges [Member]	Jun. 30, 2013 Gas hedges [Member]	Jun. 30, 2014 Gas hedges [Member]	Jun. 30, 2013 Gas hedges [Member]	Jun. 30, 2014 Crude Oil [Member]	Jun. 30, 2013 Crude Oil [Member]	Jun. 30, 2014 Crude Oil [Member]	Jun. 30, 2013 Crude Oil [Member]
Derivatives, Fair Value [Line Items]
Gain or loss recognized in oil and gas contracts							$ (2,170,000)	$ (877,000)	$ (5,139,000)	$ (345,000)	$ (672,000)	$ (1,000)	$ (1,106,000)	$ (146,000)
Accumulated other comprehensive loss	(3,654,000)	(4,514,000)	(1,096,000)	1,418,000	(3,389,000)	521,000
Realization of gain, net of taxes	$ (2,400,000)

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

A reconciliation between basic and diluted earnings per share computations

A reconciliation between the basic and diluted earnings per share computations (in thousands, except per share amounts) is as follows:

For the Three Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	9,592		64,103
Attributable to participating securities	(273		)
BASIC EPS	$	9,319		64,103	$	0.15
Net income available to common stockholders	$	9,592		64,103
Effect of dilutive securities:
Stock options	—			64
Attributable to participating securities	(273		)	—
DILUTED EPS	$	9,319		64,167	$	0.15
For the Six Months Ended June 30, 2014	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	19,635		63,940
Attributable to participating securities	(571		)
BASIC EPS	$	19,064		63,940	$	0.30
Net income available to common stockholders	$	19,635		63,940
Effect of dilutive securities:
Stock options	—			56
Attributable to participating securities	(571		)	—
DILUTED EPS	$	19,064		63,996	$	0.30
For the Three Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	3,662		62,963
Attributable to participating securities	(87		)
BASIC EPS	$	3,575		62,963	$	0.06
Net income available to common stockholders	$	3,662		62,963
Effect of dilutive securities:
Stock options	—			167
Attributable to participating securities	(87		)	—
DILUTED EPS	$	3,575		63,130	$	0.06
For the Six Months Ended June 30, 2013	Income (Numerator)			Shares (Denominator)	Per Share Amount
Net income available to common stockholders	$	6,269		62,899
Attributable to participating securities	(163		)
BASIC EPS	$	6,106		62,899	$	0.10
Net income available to common stockholders	$	6,269		62,899
Effect of dilutive securities:
Stock options	—			185
Attributable to participating securities	(163		)	—
DILUTED EPS	$	6,106		63,084	$	0.10