PetroQuest Energy announces entry into Louisiana Oil focused joint venture

June 30, 2014

PetroQuest Energy, Inc. (NYSE: PQ) today announced that it has entered into an oil focused joint venture in Louisiana with Midstates Petroleum Company, Inc. (NYSE: MPO) (the "JV").  Under the terms of the JV, the Company has acquired a 50% interest in Midstates' Fleetwood project for an aggregate purchase price of $24 million. The purchase price is comprised of $10 million in cash ($3 million paid at closing and $7 million due in January 2015) and $14 million in future drilling, completion and lease acquisition costs.  The Company plans to drill two wells within the project area during 2014.

The assets acquired under the JV include an average 37% working interest in an approximately 30,000 acre leasehold position in Louisiana.  In addition, the Company obtained exclusive rights, along with Midstates, to a 200 square mile proprietary 3D survey which has generated several conventional and shallow non-conventional oil focused prospects.  The Company will serve as operator of all but one of the drilling projects, and will work closely with Midstates to develop these Lower Oligocene and Eocene oil reservoirs.

The Company expects to spud its first prospect "Widgeon" in August of 2014 with a 25% working interest.  The Company plans to utilize horizontal drilling to develop the oil-focused Cockfield formation that has been successfully tested through 13 nearby vertical wells. The Company expects these 13 vertical wells will ultimately produce on average approximately 80,000 barrels of oil per well.

In addition, the Company expects to participate in a four way anticline Lower Wilcox prospect "Mallard" in October of 2014.  The Company estimates unrisked reserve potential of 1,885 MBoe in this test (25% WI).

Operations Update

The Company recently completed its PQ #12 (NRI - 80%) horizontal Cotton Valley well. The PQ #12 well achieved a maximum 24-hour gross rate of 8,450 Mcf of gas, 530 barrels of natural gas liquids and 39 barrels of oil.  The initial rate of PQ #12 now represents the highest initial rate from a Company drilled horizontal Cotton Valley well, exceeding the previous record rate established by PQ #10 which was reported in June 2014.

Additional completion operations are ongoing in the Company's Woodford Shale and Cotton Valley formations and are expected to be reported in the upcoming earnings release.

Source: PetroQuest Energy, Inc., 2014.