PetroQuest Energy, Inc. (PQ) announced today that the Company’s fourth quarter 2015 production averaged approximately 72.5 MMcfe per day (75% gas, 15% NGL and 10% oil), as compared to the previously announced guidance of 67-73 MMcfe per day. At December 31, 2015, the Company had $148 million in cash and no borrowings outstanding under its credit facility. The Company is planning to provide its 2016 production and capital expenditure guidance as well as its 2015 estimated proved reserves during the third week of February.

Operations Update

In East Texas, the Company recently completed its PQ #19 (NRI – 65%) horizontal Cotton Valley well. The well has achieved a maximum 24-hour gross rate of 7,853 Mcf of gas, 581 barrels of natural gas liquids and 43 barrels of oil. In addition, the Company completed its PQ #20 (NRI – 69%) approximately one week ago and the well is in the initial stage of flowback.  The PQ #20 well was drilled in a Company record 19 days and cost approximately $3.9 million to drill and complete.

The Company has suspended its 2016 Cotton Valley drilling program with the completion of its PQ #20 well. However, the Company will continue to monitor commodity prices and will reassess its 2016 Cotton Valley drilling program during the second half of the year.

In the Gulf Coast, the Company’s Thunder Bayou well is currently flowing at approximately 28 MMcfe/d (NRI-37%) and its production profile continues to perform in-line with the Company’s original expectations. In addition, the Company expects to recomplete into the upper section of the Cris R-2 formation (154 net feet of pay) during the first half of 2016. The Company expects this recompletion to significantly increase the well’s current production rate and is forecasted to cost approximately $800,000 (WI-50%).

Borrowing Base Update

The Company’s bank group has completed an interim re-determination of the borrowing base under the Company’s credit facility.  As a result, the Company’s $55 million borrowing base has been revised to $42 million, subject to the aggregate commitments of the bank group, which was also revised to $42 million, and the Company’s compliance with the financial covenants under the credit facility. The next re-determination of the borrowing base is scheduled to occur on or around March 31, 2016. The Company is currently in compliance with the financial covenants under the credit facility.

6.875% Series B Preferred Stock Update

The Company has 1,495,000 shares of its 6.875% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) outstanding.  As required by the terms of the recent amendment to the Company’s credit facility and consistent with the Company’s continued focus on preserving liquidity, the Company will suspend the quarterly cash dividend on its Series B Preferred Stock beginning with the dividend payment due on April 15, 2016.  Suspension of the dividends on the Series B Preferred Stock will save approximately $5.1 million annually.

The Company plans to periodically re-evaluate the dividend payment policy, subject to the terms of the Company’s credit facility.  Under the terms of the Series B Preferred Stock, any unpaid dividends will accumulate.  If the Company fails to pay six quarterly dividends on the Series B Preferred Stock, whether or not consecutive, holders of the Series B Preferred Stock, voting as a single class, will have the right to elect two additional directors to the Company’s Board of Directors until all accumulated and unpaid dividends on the Series B Preferred Stock are paid in full.

The suspension of the Series B Preferred Stock quarterly cash dividends does not affect the Company’s business operations and does not cause an event of default under any of its debt agreements.

Management’s Comment

“We recently launched an exchange offer and consent solicitation with respect to our 10% Senior Notes due in September 2017 and will provide an update on participation later this week after the early tender date,” said Charles T. Goodson, Chairman, Chief Executive Officer and President. “This exchange is expected to extend the maturity on the majority of our debt to 2021 as well as significantly reduce our annual fixed charges.”

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 Texas, Oklahoma, 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.

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