Woodford Shale Joint Development Agreement

6 Months Ended

Jun. 30, 2011

Woodford Shale Joint Development Agreement [Abstract]

Woodford Shale Joint Development Agreement

Note 9 — Woodford Shale Joint Development Agreement

In May 2010, PetroQuest Energy, L.L.C. entered into a joint development agreement with WSGP Gas Producing LLC (WSGP), a subsidiary of NextEra Energy Resources, LLC, whereby WSGP acquired 50% of the Company’s Woodford proved undeveloped reserves as well as the right to earn 50% of the Company’s undeveloped Woodford acreage position through a two phase drilling program. The Company received $57.4 million in cash at closing, net of $2.6 million in fees incurred in relation to the transaction, and recorded a long-term receivable for an additional $14 million to be received on November 30, 2011. The Company recorded the total consideration of approximately $71 million as an adjustment to capitalized costs with no gain or loss recognized. If certain production performance metrics are achieved, the Company will receive an additional $14 million during the drilling program. Additionally, WSGP will fund a share of the future drilling costs under a drilling program.