8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
August 5, 2010

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)

Commission File Number: 001-32681

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

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

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement

On August 5, 2010, PetroQuest Energy, Inc., a Delaware corporation (the “Company”), PetroQuest Energy, L.L.C. and TDC Energy LLC entered into the Third Amendment to Credit Agreement (the “Third Amendment”), which amends the Credit Agreement dated as of October 2, 2008, as amended by the First Amendment to Credit Agreement dated as of March 24, 2009 and the Second Amendment dated as of September 30, 2009 (collectively, the “Credit Agreement”), with JPMorgan Chase Bank, N.A., Credit Agricole Corporate and Investment Bank, Bank of America, N.A., Wells Fargo Bank, N.A. and Whitney National Bank. The Third Amendment permits the Company to issue up to $200 million in debt to refinance its 10⅜% Senior Notes due 2012 (the “2012 Notes”) and excludes the 2012 Notes from the calculation of total indebtedness for the purpose of determining the Company’s compliance with the ratio of total debt to EBITDAX negative covenant for a period of 60 days after the issuance of such refinancing debt. If a mandatory prepayment is required under the Credit Agreement as a result of redetermination or adjustment of the Borrowing Base (as defined in the Credit Agreement), the Third Amendment permits the Company to, among other things, (i) provide additional assets not evaluated in the most recent Reserve Report (as defined in the Credit Agreement) as collateral satisfactory to the administrative agent and the Required Lenders (as defined in the Credit Agreement) and (ii) make any mandatory prepayment in three equal installments within 60, 90 and 120 days from the date of receipt of the New Borrowing Base Notice (as defined in the Credit Agreement). Prior to the Third Amendment, the Company was not permitted to provide additional assets as collateral and any mandatory prepayment was required to be made in one installment within 45 days from the date of receipt of the New Borrowing Base Notice.

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

Item 8.01 Other Events

On August 5, 2010, the Company issued a news release announcing that it has commenced a cash tender offer (the “Tender Offer”) for any and all of its outstanding $150,000,000 aggregate principal amount of its 2012 Notes. In conjunction with the Tender Offer, the Company is soliciting consents from holders of the 2012 Notes to effect certain proposed amendments to the indenture governing the 2012 Notes, including elimination of substantially all of the restrictive covenants. The news release is filed as Exhibit 99.1 to this Form 8-K, and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:

10.1	Third Amendment to Credit Agreement dated as of August 5, 2010, among PetroQuest Energy, Inc., PetroQuest Energy, L.L.C., TDC Energy LLC, JPMorgan Chase Bank, N.A., Credit Agricole Corporate and Investment Bank, Bank of America, N.A., Wells Fargo Bank, N.A. and Whitney National Bank.
99.1	News Release dated August 5, 2010.

2

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, 2010	By:	/s/ J. Bond Clement
		J. Bond Clement
		Executive Vice President, Chief Financial Officer and Treasurer

3

EX-10.1

Exhibit 10.1

EXECUTION VERSION

THIRD AMENDMENT TO

CREDIT AGREEMENT
dated as of

August 5, 2010
among
PETROQUEST ENERGY, INC.,

as Parent,

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

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

and

The Lenders Party Hereto

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

as Syndication Agent,
and

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

J.P. MORGAN SECURITIES INC. and CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
Co-Lead Arrangers

THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”) dated as of August 5, 2010, is among PETROQUEST ENERGY, INC., a Delaware corporation, as the Parent, PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company, as the Borrower, JPMORGAN CHASE BANK, N.A., as Administrative Agent, and the Lenders party hereto.

R E C I T A L S

     A. The Parent, the Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of October 2, 2008, as amended by that certain First Amendment to Credit Agreement dated as of March 24, 2009 and that certain Second Amendment to Credit Agreement dated as of September 30, 2009 (as amended, the “Credit Agreement”), pursuant to which the Lenders have made certain loans to and extensions of credit for the account of the Borrower.

     B. The Borrower has notified the Administrative Agent that it plans to issue up to $200,000,000 of new Debt the proceeds of which new Debt shall be used to prepay the Senior Notes and for general corporate purposes. The Borrower has provided to the Administrative Agent a copy of the preliminary prospectus supplement with respect to the proposed issuance of such new Debt (the “Senior Notes Refinancing Debt Preliminary Prospectus Supplement”).

     C. The Borrower has requested that certain provisions of the Credit Agreement be amended in order to accommodate the foregoing transaction, and the Required Lenders have agreed to such amendments.

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

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

Section 2. Amendments to Credit Agreement.

     2.1 Amendments to Section 1.02.

     (a) The definition of “Agreement” is hereby amended and restated as follows:

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

          (b) The definition of “Permitted Refinancing Debt” is hereby amended by restating clause (a) thereof as follows:

“(a) such new Debt (i) if such new Debt refinances the Senior Notes and is issued on or before May 15, 2011, is in an aggregate principal amount not in excess of $200,000,000, or (ii) otherwise, is in an aggregate principal amount not in excess of the sum of (x) the aggregate principal amount then outstanding of the Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) and (y) an amount necessary to pay any fees and expenses including premiums, related to such exchange or refinancing;”

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

     “Third Amendment” means the Third Amendment to Credit Agreement dated as of August 5, 2010 among the Parent, the Borrower, the Administrative Agent and the Lenders party thereto.

     2.2 Amendment to Section 3.04(c). Section 3.04(c)(ii) is hereby amended and restated as follows:

“(ii) Upon any redetermination of or adjustment to the amount of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing Base, then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, (B) within 60 days of such redetermination or adjustment, provide Engineering Reports on additional Oil and Gas Properties not evaluated in the most recent Reserve Report having a loan value, as determined by the Required Lenders, equal to at least such deficiency, and (C) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral pursuant to clause (A) or (C) above in three (3) successive installments, each in an amount equal to one-third of such excess, due 60, 90 and 120 days, respectively, from the date of its receipt of the New Borrowing Base Notice; provided that all payments required to be made pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.”

     2.3 Amendment to Section 8.14(a). Section 8.14(a) is hereby amended and restated as follows:

“(a) In connection with each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain

2

whether the Mortgaged Properties represent at least 85% of the total value of the Oil and Gas Properties evaluated in the most recently completed Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent at least 85% of such total value, then the Borrower shall, and shall cause the Borrower’s Subsidiaries to, grant, within thirty (30) days of delivery of the certificate required under Section 8.12(c) or on the date of the delivery of the additional Engineering Reports under Section 3.04(c)(ii)(B), to the Administrative Agent as security for the Indebtedness a first-priority Lien interest (provided that Excepted Liens of the type described in clauses (a) to (d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least 85% of such total value. All such Liens will be created and perfected by and in accordance with the provisions of deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes.”

     2.4 Amendment to Section 9.01(a). Section 9.01(a) is hereby amended by adding the following proviso at the end thereof:

“ provided that, upon the issuance of any Permitted Refinancing Debt regarding the Senior Notes, the Senior Notes shall be excluded from the calculation of Total Debt, for purposes of calculating the financial ratio under this Section 9.01(a), for a period of sixty (60) days from and after the date of such issuance.”

     2.5 Amendment to Section 9.04(b). Section 9.04(b) is hereby amended and restated as follows:

“Redemption of Senior Notes; Amendment of Senior Indenture. The Parent will not, and will not permit any of its Subsidiaries to, prior to the date that is ninety-one (91) days after the Maturity Date: (i) call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) the Senior Notes or any Permitted Refinancing Debt in respect thereof; provided that the Borrower and/or the Parent may prepay the Senior Notes with the proceeds of any Permitted Refinancing Debt or with the net cash proceeds of any sale of Equity Interests (other than Disqualified Capital Stock) of the Parent, including any repayment by a call of such Senior Notes prior to May 15, 2011, following the completion of a tender offer which is substantially concurrent with the incurrence of such Permitted Refinancing Debt; or (ii) amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to, any of the

3

terms of the Senior Notes, any Permitted Refinancing Debt or the Senior Indenture if the effect thereof would be to shorten its maturity or average life or increase the amount of any payment of principal thereof or increase the rate or shorten any period for payment of interest thereon.”

Section 3. Acknowledgments. The Administrative Agent hereby agrees and acknowledges that pursuant to clause (e) of the proviso in the definition of the term “Permitted Refinancing Debt,” the terms and documentation described in the Senior Notes Refinancing Debt Preliminary Prospectus Supplement are satisfactory to the Administrative Agent. The Lenders hereby acknowledge and agree that as provided in the proviso in the definition of the term “Maturity Date,” upon the prepayment of the Senior Notes with the proceeds of Permitted Refinancing Debt, in accordance with the terms of the Credit Agreement, as amended hereby, the Maturity Date shall be October 2, 2013.

Section 4. Conditions Precedent. This Third Amendment shall not become effective until the Administrative Agent shall have received from the Required Lenders, the Borrower and each Guarantor, counterparts (in such number as may be requested by the Administrative Agent) of this Third Amendment signed on behalf of such Persons.

     The Administrative Agent is hereby authorized and directed to declare this Third Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 5. Miscellaneous.

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

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

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

4

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

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

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

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

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

     5.9 Successors and Assigns. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

[SIGNATURES BEGIN NEXT PAGE]

5

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

BORROWER:	PETROQUEST ENERGY, L.L.C.
	/s/ J. Bond Clement
	J. Bond Clement
	Executive Vice President, Chief Financial Officer and Treasurer
PARENT:	PETROQUEST ENERGY, INC.
	/s/ J. Bond Clement
	J. Bond Clement
	Executive Vice President, Chief Financial Officer and Treasurer
GUARANTOR:	TDC ENERGY, LLC
	/s/ J. Bond Clement
	J. Bond Clement
	Executive Vice President, Chief Financial Officer and Treasurer

Signature Page to Third Amendment

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

Signature Page to Third Amendment

LENDER:	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
	By:	/s/ Tom Byargeen
		Name:	Tom Byargeen
		Title:	Managing Director
	By:	/s/ Sharada Manne
		Name:	Sharada Manne
		Title:	Director

Signature Page to Third Amendment

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

Signature Page to Third Amendment

LENDER:	WELLS FARGO BANK, N.A.
	By:	/s/ Scott Hodges
		Name:	Scott Hodges
		Title:	Director

Signature Page to Third Amendment

LENDER:	WHITNEY NATIONAL BANK
	By:	/s/ John B. Lane
		Name:	John B. Lane
		Title:	Senior Vice President

Signature Page to Third Amendment

EX-99.1

Exhibit 99.1

NEWS RELEASE

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

PETROQUEST ENERGY COMMENCES TENDER OFFER
FOR ITS 10³/8% SENIOR NOTES DUE 2012

LAFAYETTE, LA — August 5, 2010 — PetroQuest Energy, Inc. (NYSE: PQ) announced today that it is commencing a cash tender offer (the “Tender Offer”) and consent solicitation (the “Consent Solicitation,” and together with the Tender Offer, the “Offer”) for any and all of its $150 million aggregate principal amount of 10³/8% Senior Notes due 2012 (CUSIP No. 71674P AB6) (the “Notes”). The Tender Offer and Consent Solicitation are described in the Offer to Purchase and Consent Solicitation Statement dated August 5, 2010 (the “Offer to Purchase”). The Offer will expire at 11:59 p.m., New York City time, on September 1, 2010, unless extended (such date and time, as the same may be extended, the “Expiration Date”).

Holders who validly tender (and do not validly withdraw) their Notes and provide their consents to the proposed amendments to the indenture governing the Notes prior to 5:00 p.m., New York City time, on August 18, 2010 (such date and time, as the same may be extended, the “Consent Date”), will receive total consideration equal to $1,028.44 per $1,000 principal amount of the Notes, which includes a consent payment of $2.50 per $1,000 principal amount of the Notes, plus any accrued and unpaid interest on the Notes up to, but not including, the payment date for such Notes accepted for purchase. The Offer contemplates an early settlement option for holders whose Notes are validly tendered prior to the Consent Date and accepted for purchase.

Holders who tender (and do not validly withdraw) their Notes after the Consent Date and prior to the Expiration Date will be entitled to receive consideration equal to $1,025.94 per $1,000 principal amount of the Notes, plus any accrued and unpaid interest on the Notes up to, but not including, the payment date for such Notes accepted for purchase. Holders of Notes tendered after the Consent Date will not receive a consent payment.

The closing of the Offer will be conditioned, among other things, on financing as set forth in the Offer to Purchase and the receipt of the required consents as set forth in the Offer to Purchase to amend and supplement the indenture governing the Notes in connection with the Consent Solicitation and the execution of a supplemental indenture effecting such amendments by the applicable parties.

The Company has engaged J.P. Morgan Securities Inc. as Dealer Manager and Solicitation Agent for the Offer. Persons with questions regarding the Offer should contact J.P. Morgan Securities Inc. at (800) 245-8812 (toll free) or (212) 270-3994 (collect). Requests for copies of the Offer to Purchase or other tender offer materials may be directed to MacKenzie Partners, Inc., the Information Agent, at (800) 322-2885 (toll free) or (212) 929-5500 (collect).

This news release does not constitute an offer to purchase the Notes or a solicitation of consents to amend the related indenture. The Offer is made solely pursuant to the Offer to Purchase. The Offer is not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

About the Company

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

Forward-Looking Statements

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

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