-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DhxEoBktQnHpSuiZsCQi2qLLACOlhRLn2y1KG4YOU5bUShWZHEVk8vIbO8soHSO6 nbJLnU59w82lY8nsVl5T6g== 0000950129-04-007870.txt : 20041019 0000950129-04-007870.hdr.sgml : 20041019 20041019165208 ACCESSION NUMBER: 0000950129-04-007870 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041019 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041019 DATE AS OF CHANGE: 20041019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROQUEST ENERGY INC CENTRAL INDEX KEY: 0000872248 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721440714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19020 FILM NUMBER: 041085790 BUSINESS ADDRESS: STREET 1: 400 E KALISTE SALOOM RD SUITE 6000 CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3372327028 MAIL ADDRESS: STREET 1: 400 E KALISTE SALOOM RD SUITE 6000 CITY: LAFAYETTE STATE: LA ZIP: 70508 FORMER COMPANY: FORMER CONFORMED NAME: OPTIMA PETROLEUM CORP DATE OF NAME CHANGE: 19950726 8-K 1 h19182e8vk.txt PETROQUEST ENERGY, INC. - DATED 10/19/2004 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): October 19, 2004 -------------------- 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: 0-019020 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: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT On October 14, 2004, PetroQuest Energy, Inc. (the "Company") announced the acquisition of interests in certain natural gas properties located in Oklahoma for $13.5 million. This press release is filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference. On October 14, 2004, the Company entered into the Fourth Amendment to Amended and Restated Credit Agreement with Bank One, N.A., as agent for the lenders. The amendment increases the borrowing base on the Company's existing revolving credit facility from $25 million to $38 million, and increases the monthly reductions in borrowing base capacity from $1.5 million per month to $2 million per month for the months of February, March and April 2005. The credit facility's maturity date remains May 14, 2006. Additionally, on October 14, 2004, the Company amended its subordinated term credit facility with Macquarie Bank Limited increasing the debt threshold covenant from $45 million to $60 million. The facility's maturity date remains November 30, 2006. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired: NONE (b) Pro Forma Financial Information: NONE (c) Exhibits: 10.1 Fourth Amendment to Amended and Restated Credit Agreement dated as of October 14, 2004 by and between PetroQuest Energy, LLC, PetroQuest Energy, Inc. and Bank One, N.A., individually as a lender and an agent. 10.2 Third Amendment to Second Lien Secured Credit Agreement dated as of October 14, 2004 by and between PetroQuest Energy, LLC, PetroQuest Energy, Inc., and Macquarie Bank Limited, as administrative agent for the lenders. 99.1 Press Release dated October 14, 2004. 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: October 19, 2004 By: /s/ Daniel G. Fournerat ------------------------------------- Daniel G. Fournerat Senior Vice President, General Counsel and Secretary 3 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.1 Fourth Amendment to Amended and Restated Credit Agreement dated as of October 14, 2004 by and between PetroQuest Energy, LLC, PetroQuest Energy, Inc. and Bank One, N.A., individually as a lender and an agent. 10.2 Third Amendment to Second Lien Secured Credit Agreement dated as of October 14, 2004 by and between PetroQuest Energy, LLC, PetroQuest Energy, Inc., and Macquarie Bank Limited, as administrative agent for the lenders. 99.1 Press Release dated October 14, 2004.
EX-10.1 2 h19182exv10w1.txt 4TH AMEND.TO AMENDED & RESTATED CREDIT AGREEMENT EXHIBIT 10.1 FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "Amendment") is made and entered into effective as of October 14, 2004, by and among PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company ("Borrower"); PETROQUEST ENERGY, INC., a Delaware corporation ("Guarantor"); BANK ONE, NA, a national banking association, (individually as a lender and as agent, ("Bank One"). R E C I T A L S: WHEREAS, Borrower, Guarantor, Bank One and Union Bank of California entered into an Amended and Restated Credit Agreement dated May 14, 2003 (which as the same may have been and be amended from time to time is herein called the ("Credit Agreement"), pursuant to which Borrower amended and restated a previously existing credit facility dated May 11, 2001; and WHEREAS, Union Bank of California has, by Assignment dated December 23, 2003, assigned and conveyed to Bank One all of its interest in the Credit Agreement; and WHEREAS, Borrower, Guarantor and Bank One desire to amend the Credit Agreement as herein set forth. NOW THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Except as otherwise provided below, unless the context hereof indicates otherwise, all capitalized terms used herein shall have the same meaning as such capitalized terms are defined in the Credit Agreement. (a) The following defined terms set forth in Article I of the Credit Agreement are hereby amended as follows: "Borrowing Base Reduction Amount" means (a) $1,500,000 for each of December 1, 2004 and January 1, 2005; (b) for each month commencing February 1, 2005 until the next semi-annual Borrowing Base redetermination pursuant to Section 2.2.2, $2,000,000, and (c) for each month thereafter, such amount as designated by the Required Lenders in a notice to Borrower from time to time in connection with each successive scheduled semi-annual Borrowing Base redetermination pursuant to Section 2.2.2 or successive unscheduled Borrowing Base redetermination pursuant to Section 2.2.3.; provided however, if the Required Lenders fail to timely designate a new Borrowing Base Reduction Amount, then the Borrowing Base Reduction Amount most recently in effect will continue in effect until the Required Lenders designate a new Borrowing Base Reduction Amount." "Guarantor" means individually and collectively (i) PetroQuest Energy, Inc., a Delaware corporation; (ii) Pittrans, Inc., an Oklahoma corporation; and (iii) their respective successors and assigns. "Required Lenders" means (i) Lenders having 100% of the Aggregate Commitment if there are only two or fewer Lenders; or (ii) Lenders in the aggregate having at least 66?% of the Aggregate Commitment if there are more than two or more Lenders or, (iii) if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 66?% of the aggregate unpaid principal amount of the outstanding Advances. (b) Article I of the Credit Agreement is hereby amended by adding the following new defined terms and their definitions in proper alphabetical sequence as follows: "SJM Acquisition Agreement" means that certain Purchase and Sale Agreement among SJM Inc., William W. Rush, Michael R. Coast and Roy M. Teel, Jr., as Sellers, and Borrower, as Buyer, as amended and supplemented by supplement and amendment to the Purchase and Sale Agreement dated October 14, 2004 regarding the purchase by Borrower of Oil & Gas Properties located in Pittsburg, Atoka, McIntosh and McClain Counties , Oklahoma and the purchase of all of the issued and outstanding shares of Pittrans. "Pittrans" means Pittrans, Inc., an Oklahoma corporation, which after Closing, pursuant to the SJM Acquisition Agreement, will be a Wholly Owned Subsidiary of Borrower. 2. Amendments to the Credit Agreement. The Credit Agreement is, effective the date hereof, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, hereby amended as follows: (a) Section 2.2.1 Borrowing Base, of the Credit Agreement is hereby amended by deleting the section in its entirety and substituting the following: "2.2.1 Effective October 14, 2004 to the date as of which the Borrowing Base is next redetermined pursuant to Section 2.2.2, the Borrowing Base shall be $38,000,000.00." (b) A new Section 5.30 SJM Acquisition Agreement is hereby added to the Credit Agreement as follows: "5.30 SJM Acquisition Agreement. The transactions contemplated by the SJM Acquisition Agreement have or will close as contemplated therein and neither Borrower, Guarantor, nor any other party thereto has waived nor shall waive, or in any way amend, without the prior consent of the Agent, the terms of the SJM Acquisition Agreement, including any condition to the obligations to close as so set forth therein. A true, correct and complete copy of the SJM Acquisition Agreement (including all exhibits, schedules and amendments thereto) has been delivered to Agent and a true, correct and complete copy of each document and instrument delivered at closing of the Acquisition will be delivered to the Agent on the closing date thereof. Neither Borrower, Guarantor, nor any other party thereto is in default under the SJM Acquisition Agreement or any document or instrument to be delivered in connection with the SJM Acquisition Agreement executed in connection therewith. The representations and warranties made by each of the parties in the SJM Acquisition Agreement and any other document or instrument will be true and correct (except for changes expressly provided for therein or herein) on and as of the closing date as though made on and as of such date." 3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall become effective when, and only when, the Agent and Lenders shall have received counterparts of this Amendment executed by Borrower and Guarantor and Section 2 hereof shall become effective when, and only when, the Agent and Lenders shall have additionally received all of the following documents, each document (unless otherwise indicated) being dated the date of receipt thereof by Lender (which date shall be the same for all such documents), in form and substance satisfactory to the Lender: (a) Counterparts of this Amendment duly executed by Borrower, Guarantor and Lenders; (b) A copy of the resolutions approving this Amendment, and authorizing the transactions contemplated herein or therein duly adopted by the Managers of Borrower, accompanied by a certificate of the duly authorized Secretary of Borrower, that such copy is a true and correct copy of the resolutions duly adopted by the Managers of Borrower, and that such resolutions constitute all the resolutions adopted with respect to such transactions, and have not been amended, modified or revoked in any respect and are in full force and effect as of the date hereof; (c) A copy of the resolutions approving this Amendment, and authorizing the transactions contemplated herein or therein duly adopted by the Board of Directors of Guarantor, accompanied by a certificate of the duly authorized Secretary of Guarantor, that such copy is a true and correct copy of the resolutions duly adopted by the Board of Directors of Guarantor, and that such resolutions constitute all the resolutions adopted with respect to such transactions, and have not been amended, modified or revoked in any respect and are in full force and effect as of the date hereof; (d) Mortgages, executed by the Borrower, in a form satisfactory to the Agent, the Lenders and their counsel with respect to the Properties purchased by Borrower pursuant to the SJM Acquisition Agreement and described therein, which are part of the Collateral, and such other agreements, documents and instruments as may be necessary and appropriate, in form and substance satisfactory to the Agent and the Lenders, executed and delivered by the Borrower, as mortgagor or assignor, in favor of the Agent, ratably for the benefit of the Lenders, in order to create and perfect the Lender Liens in and to all Collateral described therein; (e) The Pledge Agreement, executed by Borrower, in a form satisfactory to the Agent, the Lenders and their counsel, with respect to the shares of Pittrans along with one or more certificates evidencing such shares having attached thereto duly executed stock powers and any financing statements related thereto. (f) A Guaranty, executed by Pittrans, in a form satisfactory to the Agent, the Lenders, and their counsel; (g) There shall not have been, in the sole judgment of Lenders, any material adverse change in the financial condition, business or operations of Borrower or Guarantor; (h) Payment of a fees as set forth in the Fee Letter executed by Borrower in connection with this Amendment; (i) Payment by Borrower of the fees and expenses of counsel to Lenders in connection with the preparation and negotiation of this Amendment and all documents and instruments contemplated hereby; and (j) The execution and delivery of such additional documents and instruments which the Agent and its counsel may deem necessary to effectuate this Amendment or any document executed and delivered to Lenders in connection herewith or therewith. 4. Representations and Warranties of Borrower. Borrower represents and warrants as follows: (a) Borrower and Guarantor are each duly authorized and empowered to execute, deliver and perform this Amendment and all other instruments referred to or mentioned herein to which it is a party, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken. This Amendment, when executed and delivered, will constitute valid and binding obligations of Borrower and Guarantor, as the case may be, enforceable against such party in accordance with its terms. This Amendment does not violate any provisions of the Articles of Organization or limited liability agreement of Borrower, the Certificate of Incorporation or By-Laws of Guarantor, or any contract, agreement, law or regulation to which either Borrower or Guarantor is subject, and does not require the consent or approval of any regulatory authority or governmental body of the United States or any state; (b) After giving affect to this Amendment, the representations and warranties contained in the Credit Agreement, as amended hereby, and any other Loan Documents executed in connection herewith or therewith are true, correct and complete on and as of the date hereof as though made on and as of the date hereof; (c) After giving affect to this Amendment, no event has occurred and is continuing which constitutes a Default or Unmatured Default; and (d) When duly executed and delivered, each of this Amendment and the Credit Agreement will be legal and binding obligations of Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by equitable principles of general application. 5. Reference to and Effect on the Loan Documents. (a) Upon the effectiveness of Section 2 hereof, on and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference in the Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except as specifically amended above, the Credit Agreement and the Note(s), and all other instruments securing or guaranteeing Borrower's obligations to Lenders, including the Collateral Documents, as amended (collectively, the "Security Instruments") shall remain in full force and effect and are hereby ratified and confirmed. Without limiting the generality of the foregoing, the Security Instruments and all collateral described therein do and shall continue to secure the payment of all obligations of Borrower and Guarantor under the Credit Agreement and the Note(s), as amended hereby, and under the other Security Instruments. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Lender under any of the Security Instruments, nor constitute a waiver of any provision of any of the Security Instruments. 6. Waiver. As additional consideration for the execution, delivery and performance of this Amendment by the parties hereto and to induce Lenders to enter into this Amendment, Borrower and Guarantor each warrants and represents to Lenders that no facts, events, statuses or conditions exist or have existed which, either now or with the passage of time or giving of notice, or both, constitute or will constitute a basis for any claim or cause of action against Lenders or any defense to (i) the payment of any obligations and indebtedness under the Note(s) and/or the Security Instruments, or (ii) the performance of any of its obligations with respect to the Note(s) and/or the Security Instruments, and in the event any such facts, events, statuses or conditions exist or have existed, Borrower unconditionally and irrevocably waives any and all claims and causes of action against Lenders and any defenses to its payment and performance obligations in respect to the Note(s) and the Security Instruments. 7. Costs and Expenses. Borrower agrees to pay on demand all costs and expenses of Lenders in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including the reasonable fees and out-of-pocket expenses of counsel for Lenders. In addition, Borrower shall pay any and all fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder, and agrees to save Lenders harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omitting to pay such fees. 8. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 9. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas. 10. Final Agreement. THIS WRITTEN AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES 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. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed in multiple counterparts, each of which is an original instrument for all purposes, all as of the day and year first above written. "BORROWER" PETROQUEST ENERGY, L.L.C. By: /s/ Michael O. Aldridge -------------------------------------- Michael O. Aldridge, Chief Financial Officer "GUARANTOR" PETROQUEST ENERGY, INC. By: /s/ Michael O. Aldridge -------------------------------------- Michael O. Aldridge, Chief Financial Officer "LENDERS" BANK ONE, NA, As the Agent, a Lender and LC Issuer By: /s/ Charles Kingswell-Smith -------------------------------------- Charles Kingswell-Smith Managing Director EX-10.2 3 h19182exv10w2.txt 3RD AMEND. TO SECOND LIEN SECURED CREDIT AGREEMENT EXHIBIT 10.2 THIRD AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT THIS THIRD AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT (this "Amendment") is entered into as of October 14, 2004, among PetroQuest Energy, L.L.C., a Louisiana limited liability company ("Borrower"); PetroQuest Energy, Inc., a Delaware corporation ("Guarantor"); each of the Lenders from time to time party hereto; and Macquarie Bank Limited, a bank incorporated in accordance with the laws of Australia (in its individual capacity, "MBL"), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "Administrative Agent"). Capitalized terms used but not defined in this Amendment have the meaning given them in the Credit Agreement (defined below). Except as noted in this Amendment, all references to sections, exhibits and schedules refer to sections in and exhibits and schedules to the Credit Agreement. BACKGROUND A. Borrower and the Lenders have previously entered into a Second Lien Secured Credit Agreement dated November 6, 2003 (as amended, the "Credit Agreement") for the purpose of making available to Borrower a second lien, secured term loan on a non-revolving basis. B. The Borrower has requested that the Lenders amend the Credit Agreement pursuant to the terms and conditions of this Amendment to make certain modifications to the Credit Agreement in connection with Borrower's acquisition of the SJM Property (defined below). AGREEMENTS In consideration of the mutual covenants of Borrower and the Lenders set forth in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by each of the parties, Borrower and the Lenders agree as follows: 1. Amendments to Credit Agreement. (a) Additional Definitions. The Credit Agreement is amended to include each of the following additional definitions in alphabetical order: "SJM Property" means the Leases and all other Real Property described on Exhibit A-2 to the Third Amendment. "SJM Purchase Agreement" means the Purchase and Sale Agreement dated August 27, 2004 between Borrower, as buyer, and SJM Inc., as seller, as supplemented and amended by the Supplement and Amendment to Purchase and Sale Agreement dated October 14, 2004, together with all documents executed and delivered in connection with the transaction contemplated by that agreement. "Third Amendment" means the Third Amendment to Credit Agreement dated October 14, 2004 among Borrrower, Guarantor, Administrative Agent and the Lenders party to the Credit Agreement." (b) Modifications to Credit Agreement. Section 7.11 of the Credit Agreement is deleted in its entirety and replaced with the following: Section 7.11 Debt Threshold. Borrower shall not permit the total Outstanding Debt to exceed sixty million dollars ($60,000,000). 2. Exhibits and Schedules. The following new exhibit attached to this Amendment is made a part of the Credit Agreement for all purposes: Exhibit A-2 - SJM Property 3. Conditions to Effectiveness. This Amendment will become effective upon the satisfaction of each of the following conditions: (a) Borrower and Guarantor, as applicable, will execute and deliver to the Administrative Agent the following documents: (i) this Amendment; (ii) a Mortgage covering the SJM Property; and (iii) a Pledge Agreement covering all of the outstanding capital stock of Pittrans, Inc.; (iv) all other agreements, instruments, certificates, financing statements and other documents necessary or convenient, in the sole and absolute discretion of the Lenders, to give effect to the transaction contemplated by this Amendment; (b) to the extent not previously received, Lenders have obtained a report prepared by a consultant acceptable to Lenders confirming (i) Borrower's and Operator's compliance, in all material respects, with all applicable Laws and regulatory requirements and (ii) that Borrower or Operator have all necessary material permits and licenses; (c) to the extent not previously determined, an environmental consultant satisfactory to Lenders will investigate Borrower's compliance with all Environmental Laws, the results of which shall be satisfactory to Lenders in their sole discretion; (d) Borrower will deliver to Lenders title opinions or other evidence of title relating to the SJM Properties showing Defensible Title to the SJM Properties vested in Borrower subject only to the Permitted Encumbrances and otherwise satisfactory in form and substance to Lenders, together with a letter from the issuer or issuers of such opinions, if the opinions are not addressed to the Lenders, to the effect that Lenders are authorized to rely on the title opinions; 2 (e) to the extent not previously delivered, Borrower will deliver to Lenders copies of the Basic Documents and all other documents and instruments as Lenders may reasonably request, all of which will be satisfactory, in form and substance, to Lenders; (f) to the extent not previously delivered, Borrower will deliver to Lenders a certificate of insurance evidencing the coverages required under this Agreement and the Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies and the Administrative Agent has been named as loss payee with respect to property loss insurance; (g) no Material Adverse Effect has occurred; (h) except for the obligations listed (or, with the consent of Lenders, summarized) on Schedule 9.2(n), there are no unpaid bills for improvements or services to the Properties that could give rise to mechanic's or materialmen's liens or any other similar encumbrance arising by operation of applicable law; (i) the representations in each of the Loan Documents of Borrower and each other Person are true, complete and correct in all material respects; (j) Lenders are satisfied, in their sole discretion, with the results of its due diligence examination of Borrower, and the SJM Properties, including, Borrower's proposed development of the SJM Properties, satisfactory information regarding existing Hydrocarbon sales, and all aspects of Borrower's existing and contemplated Hydrocarbon marketing activities; (k) no suit or other proceeding is pending or threatened before any court or governmental agency seeking to restrain, enjoin or prohibit or declare illegal, or seeking damages from Borrower in connection with the transactions contemplated in this Agreement (or the operations contemplated as part of those transactions) or alleging the breach of any material contract; (l) to the extent it has not done so previously, Borrower has reimbursed Lenders for all Related Costs for which invoices have been presented; (m) each of the Operating Agreements affecting the SJM Properties will be satisfactory in form and substance to Lenders in their sole and absolute discretion; (n) each of the documents executed and delivered by Borrower or Guarantor in connection with any amendments or supplements to the Senior Credit Facility will be satisfactory in form and substance to Lenders in their sole and absolute discretion; (o) Borrower shall have prepared and submitted to Lenders a fifteen (15) month Annual Operating Budget for the further development of the Properties, and the budget is satisfactory in form and substance to Lenders in their sole and absolute discretion; and 3 (p) Lenders will be satisfied in their sole and absolute discretion with Borrower's Hydrocarbon hedging program with respect to the SJM Properties. 4. Conditions Precedent to Making of Advances. In addition to the conditions set forth in Section 3 above, the making of any additional Advance under the Term Loan shall be subject to the following conditions: (a) no Material Adverse Change has occurred and is continuing; (b) all representations and warranties of Borrower and Guarantor set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects as of the date of the Advance except to the extent such representations and warranties are expressly limited to an earlier date, in which case the representations and warranties shall be true and correct as of such specified earlier date; (c) Borrower shall have delivered an Advance Request to the Administrative Agent in accordance with Section 2.2. Such Advance Request must be accompanied by copies of all approved AFEs included in the Annual Operating Budget as well as other supporting documentation satisfactory to Lenders evidencing the amount to be Advanced. Each AFE previously approved by Lenders in writing or other project description from the Annual Operating Budget delivered to Lender in conjunction with an Advance Request will detail all amounts Advanced to date by Lenders under that AFE or project description and the amount requested under the Advance Request. Notwithstanding anything to the contrary herein, Lenders shall not Advance any amount with respect to any specific activity included in the Annual Operating Budget that exceeds the amount included for such Well or project in the Annual Operating Budget inclusive of any amount included in the "Cost-Overrun" line-item of that Annual Operating Budget. (d) the hedging requirements required by Section 6.17 shall be in full force and effect; (e) no Event of Default has occurred or is continuing and no circumstance exists which but for the lapse of time or notice from the Lenders or both would become an Event of Default; and (f) the SJM Purchase Agreement will be in form and substance satisfactory to Lenders in their sole and absolute discretion, and the transactions contemplated by that agreement will have closed (conditioned only on the payment of the purchase price specified in that agreement) on terms satisfactory to Lenders in their sole and absolute discretion. 5. Reaffirmation of Representations and Warranties. To induce the Lenders to enter into this Amendment, Borrower and Guarantor each hereby reaffirms, as of the date hereof, its respective representations and warranties contained in Article IV of the Credit Agreement and in all other documents executed pursuant thereto, and additionally represents and warrants as follows: 4 (a) the execution and delivery of this Amendment and the performance by Borrower and Guarantor of their respective obligations under this Amendment are within such company's power, have been duly authorized by all necessary company action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the Charter Documents of Borrower or Guarantor or of any agreement binding upon either of them; and (b) this Amendment represents the legal, valid and binding obligations of each of Borrower and Guarantor enforceable against each of them in accordance with its terms and subject only to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally. 6. Ratification of Liens and Security Interests. Borrower hereby acknowledges and ratifies the existence and priority of the Liens granted by Borrower in favor of any of the Lenders or the Administrative Agent for the benefit of the Lenders in and to the Collateral and represents, warrants and covenants that such liens and security interests are valid, existing and in full force and effect. 7. Miscellaneous. This Amendment supersedes all prior agreements (written or oral) between Borrower and the Lenders with regard to the subject matters hereof. This Amendment is a Loan Document. Except as affected by this Amendment, the Loan Documents are unchanged and continue in full force and effect. However, in the event of any inconsistency between the terms of the Credit Agreement as amended by this Agreement and any other Loan Document, the terms of the Credit Agreement will control and the other document will be deemed to be amended to conform to the terms of the Credit Agreement. All references to the Credit Agreement will refer to the Credit Agreement as amended by this Amendment. All references to the Collateral will include, without limitation, the Collateral acquired or to be acquired pursuant to the SJM Purchase Agreement. Borrower agrees that all Loan Documents to which it is a party (whether as an original signatory or by assumption of the Obligations) remain in full force and effect and continue to evidence its legal, valid and binding obligations enforceable in accordance with their terms (as the same are affected by this Amendment or are amended in connection with this Amendment). Borrower releases Administrative Agent and each of the Lenders from any liability for actions or failures to act in connection with the Loan Documents prior to the date of this Amendment. Any course of dealing among Borrower, Administrative Agent, any of the Lenders or any other Person will not be deemed to have altered or amended the Credit Agreement or affected either Borrower's or the Lenders' right to enforce the Credit Agreement as written. This Amendment will be binding upon and inure to the benefit of each of the undersigned and their respective successors and permitted assigns. 8. Form. Each agreement, document, instrument or other writing to be furnished to Administrative Agent or the Lenders under any provision of this Amendment must be in form and substance satisfactory to the Lenders and their respective counsel. 9. Multiple Counterparts. This Amendment may be executed in more than one counterpart, each of which shall be deemed an original, and all of which constitute, collectively, one instrument; but, in making proof of this instrument, it shall not be necessary to produce or account for more than one such counterpart. It shall not be necessary for each of the parties to 5 execute the same counterpart of this Amendment so long as each of them executes a counterpart of this Amendment. 10. Governing Law. This Amendment and all transactions provided for in this Amendment will be governed by, interpreted and construed under and enforced pursuant to the laws of the State of Texas, without regard to its conflicts of laws provisions. 11. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED BY OR IN CONNECTION WITH THIS AMENDMENT, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. [SIGNATURES BEGIN ON THE FOLLOWING PAGE] 6 This Amendment is executed as of the date set forth in the preamble to this Amendment. BORROWER: PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company By: /s/ Michael O. Aldridge ---------------------------------------- Michael O. Aldridge Treasurer GUARANTOR: PETROQUEST ENERGY, INC., a Delaware corporation By: /s/ Michael O. Aldridge ---------------------------------------- Michael O. Aldridge Treasurer LENDERS: MACQUARIE BANK LIMITED, a bank incorporated in accordance with the laws of Australia By: /s/ Nicholas O'Kane ----------------------------------------- Printed Name: Nicholas O'Kane ------------------------------- Title: Executive Director -------------------------------------- By: /s/ Thomas Cullinan ----------------------------------------- Printed Name: Thomas Cullinan ------------------------------- Title: Attorney -------------------------------------- EX-99.1 4 h19182exv99w1.txt PRESS RELEASE DATED OCTOBER 14, 2004 EXHIBIT 99.1 [PETROQUEST LOGO] NEWS RELEASE IMMEDIATE RELEASE For further information, contact: Robert R. Brooksher, Vice President - Corporate Communications (337) 232-7028 PETROQUEST ENERGY ACQUIRES ARKOMA BASIN NATURAL GAS RESERVES Lafayette, Louisiana - October 14, 2004 - PetroQuest Energy, Inc. (NASDAQ: PQUE) today announced that the Company has acquired from a private company its interest in natural gas properties located in the Arkoma Basin of Oklahoma for approximately $13.5 million. The Company expects to allocate approximately $2 million of the purchase price to unevaluated acreage. In this transaction, PetroQuest estimates it is acquiring approximately 8.8 Bcf of proved reserves, of which 47% are proved developed producing and 100% are natural gas. Development costs for the proved undeveloped reserves are estimated at $0.74 per Mcf. The acquisition will initially add approximately 1.5 MMcf per day to the Company's production. The purchase was funded by PetroQuest's revolver under its senior bank credit facility, the borrowing base of which was increased from $25 million to $38 million. The acquisition of the properties is subject to a 12.5% election to participate by the Company's partners in an area of mutual interest, which includes the acquired properties. "This acquisition expands our existing operations in the Arkoma Basin, adding approximately 6,000 net acres adjacent to our current acreage position and approximately 28 miles of pipeline and infrastructure in Pittsburg County, Oklahoma. This brings our total ownership to over 12,000 net acres and 36 miles of pipeline in the area. The reserve to production ratio of the properties acquired is approximately 16 years based on current production, which will increase PetroQuest's overall reserve to production ratio," said Charles T. Goodson, Chairman, Chief Executive Officer and President. "We are excited about the activity in this core area having drilled and completed 10 wells since May 2004. We plan to add a second rig and drill approximately 50 horizontal coalbed methane wells in the Hartshorne Coal Formation by the end of 2005 on our acreage position. Also, we have identified thus far approximately 25 probable and possible reserve locations, including coalbed methane and other prospective horizons." 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. This press 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 estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions and in projecting future rates of production, the timing of development expenditures and drilling of wells, 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. -----END PRIVACY-ENHANCED MESSAGE-----