PetroQuest's 2024 chapter 11 centered on lender-backed DIP financing and a court-supervised 363 sale of East Texas assets, with interim and final approvals that funded the sale process. The Bidding Procedures Order set a January 2025 auction and sale hearing, and the Sale Order selected Nexus Energy as the successful bidder with AGIS Energy as the back-up bidder; later filings reported the assets closed to AGIS. A separate Litigation Asset Sale Order covered the Sanare judgment and related claims, with a credit-bid purchase price allocated across those claims. After the asset dispositions, the debtors moved to dismiss and the court entered a dismissal order on October 30, 2025, preserving prior orders.
Company background and asset footprint. PetroQuest was an independent oil and gas company headquartered in Lafayette, Louisiana, with operations in Texas and Louisiana and a focus on exploration, development, acquisition, and production. The company entered the East Texas Cotton Valley through a Chevron joint venture in 2003 and expanded development programs over time. A 2016 joint venture covered about 6,400 gross acres in East Texas and contemplated up to 47 horizontal wells, with partner participation in drilling and completion costs. Marketing materials later described roughly 28,600 net acres, more than 170 potential drilling locations, and about $52 million in next-12-month cash flow. PetroQuest also divested Midcontinent assets in a reported $280 million transaction as it shifted its focus to Texas and Louisiana operations. The First Day Declaration describes the remaining core operating assets at filing as East Texas leasehold and producing properties in Panola County, Texas, with smaller de minimis assets that included an offshore overriding royalty interest, a single well in Oklahoma, and a processing platform in Louisiana.
Oil and Gas 360 described the Cotton Valley assets as tight sands with seven productive benches, and noted an internal estimate of a 57% internal rate of return at $3.75 per Mcf gas and a $6.8 million well cost, with expected well costs declining to about $6.0 million. The same coverage said PetroQuest entered East Texas through acquisition and a joint venture and developed about 50,000 gross acres that were largely undeveloped at the time.
The same source described the Cotton Valley sands as more permeable than many unconventional shale plays and emphasized the seven-bench structure as a driver of horizontal development and multi-bench targeting in the East Texas program.
The 2016 joint venture announcement said a partner group acquired about 20% working interest in the Cotton Valley program and paid about $12 million in participation fees over the first 12 months. The partners were expected to pay about 24% of drilling and completion costs for their 20% stake. The first well was scheduled to spud in December 2016, and the 2017 drilling target was eight to 10 gross wells. PetroQuest also stated that for the initial joint venture well it expected to pay about 69% of drilling and completion costs while retaining a 75% working interest.
The joint venture announcement also described a continuation election after the seventh well and an option for an existing 5% working interest partner to participate in up to eight wells, paying about 7% of drilling and completion costs. The company said additional potential partners could increase the working interest sold by up to 5% on the same terms.
Market positioning and public trading history. PetroQuest previously traded on the NYSE under the ticker PQ and later on the OTC Markets under ticker PQUE. MacroTrends reported the company was delisted from the NYSE in May 2018 after its market capitalization fell below the $15 million listing threshold.
Selected East Texas asset context.
Hart Energy reported that PetroQuest retained Detring Energy Advisors to market its Panola County leasehold and producing properties, describing the package as gas-weighted production across multiple landing targets in the Cotton Valley formation. The marketing summary also cited approximately 28,600 net acres and more than 170 highly economic locations, along with about $52 million in next-12-month cash flow.
Prior bankruptcy (2018-2019) and post-emergence structure. PetroQuest first filed chapter 11 in late 2018 in the Southern District of Texas. Reporting at the time described a restructuring support agreement with secured noteholders and a plan that targeted the elimination of about $204.5 million of debt, after the company skipped a $14.2 million interest payment to preserve liquidity. The plan was confirmed on January 31, 2019 and the company emerged on February 11, 2019. Court and company announcements around emergence cited the elimination of about $295 million in debt and preferred equity, a post-restructuring debt balance of , and a cash balance of . The post-emergence capital structure included and a first lien term loan. Public reports also noted of Class A common stock outstanding and a board composed of management and directors appointed by major shareholders.
Financial reporting around the 2018 case highlighted operating pressure. Financier Worldwide reported Q3 2018 oil and gas sales of $20.8 million versus about $28.2 million in Q3 2017, along with a Q3 2018 loss of $5 million. The same source reported that second lien secured notes had 81.83% holder support and second lien PIK notes had 84.76% support for the restructuring, and that the plan contemplated paying $50 million in principal plus accrued interest on prepetition term loans.
Financier Worldwide also described the second lien secured senior notes and second lien senior secured PIK notes as 10% coupon securities due 2021 and reported that those classes were part of the restructuring support.
GlobeNewswire listed the post-emergence board as Neal P. Goldman, Charles T. Goodson, John "Brad" Juneau, Harry Quarls, and David I. Rainey and stated the company expected its stock to trade on the OTC Pink Market.
2018 reserves and production metrics cited at emergence.
| Metric | Value |
|---|
| Proved reserves (12/31/2018) | 130.3 Bcfe (about 82% gas, 5% oil, 13% NGLs) |
| Proved developed | 47% of proved reserves |
| 2018 production | 21.4 Bcfe (about 58.7 MMcfe per day) |
| Q4 2018 production | 4.6 Bcfe (about 50.4 MMcfe per day) |
Oil & Gas Journal reported that the year-end 2018 reserves were 130.3 Bcfe with a mix of 82% gas, 5% oil, and 13% natural gas liquids. Rigzone reported a production mix of 75% natural gas, 9% oil, and 16% NGLs and noted 2018 production levels consistent with the post-emergence disclosures.
GlobeNewswire said the company expected its stock to trade on the OTC Pink Market, and OTC Markets lists PetroQuest under ticker PQUE.
Patriot Natural Gas litigation and failed asset sale. PetroQuest agreed to sell East Texas oil and gas assets to Patriot Natural Gas for $115 million, including 30 horizontal wells. After signing, Patriot identified casing pressure issues and environmental defects and terminated the agreement. Litigation followed. A bench trial in June 2024 led to a verdict in Patriot's favor, and a subsequent settlement awarded the escrowed $12 million deposit plus about $3.6 million in attorneys' fees and about $481,000 in damages.
Sanare Energy judgment as a litigation asset. In separate litigation, Sanare Energy Partners disputed assignments involving offshore assets and a federal lease in the Gulf of Mexico. The Fifth Circuit affirmed a judgment for PetroQuest, and the final judgment amount of $8,037,243.80 later appeared in the bankruptcy sale documents. Court filings in the 2024 case treated this judgment as a saleable litigation asset in a separate auction process.
The First Day Declaration tied the chapter 11 filing to an inability to service debt, mounting plugging and abandonment liabilities, and litigation-related pressures, alongside commodity-price conditions and the need to preserve value through a controlled sale process. Delaware Bankruptcy Blog similarly cited operating costs, debt service, legal expenses, and declining commodity prices as contributors to the filing.
Prepetition capital structure and liquidity at the 2024 filing. The First Day Declaration shows PetroQuest entered the 2024 chapter 11 with a secured term loan administered by Wells Fargo Bank, N.A. The reported outstanding balance was $104,452,458.82 and the facility was secured by a first-priority lien on substantially all assets. The filings also describe roughly $11 million of unsecured obligations, including trade payables, royalty payments, and plugging and abandonment liabilities. Liquidity was thin. Cash and cash equivalents were about $1.5 million at filing, and only about $550,000 was available for operations after reserving for royalty-payment suspense obligations. Coverage reported total debt of about $115.5 million, split between about $104.5 million secured and about $11 million unsecured.
Case reporting emphasized the short-term liquidity squeeze. The Delaware Bankruptcy Blog said the company had $1.5 million in cash but only about $550,000 available for operations after reserving amounts for royalty obligations, and reported a $14.2 million DIP financing package from secured lenders. Cole Schotz reported that the first day declaration, signed by CFO Angelle Perret, stated the company intended to sell its East Texas assets while in chapter 11 and listed secured debt around $104.5 million with roughly $11 million in unsecured claims.
The First Day Declaration also described the operational footprint at filing: 16 employees, a small field presence in East Texas and South Louisiana, and the remaining personnel based in Lafayette, Louisiana. The declaration described the term loan as originating as a $50 million exit facility after the 2019 case and being amended multiple times, including a September 2024 amendment that added a $2 million bridge loan to fund the prepetition marketing process.
Capital structure at filing.
| Category | Amount | Notes |
|---|
| Secured term loan | $104,452,458.82 | Wells Fargo Bank, N.A. administrative agent |
| Unsecured obligations | Approximately $11 million | Trade payables, royalty payments, plugging and abandonment liabilities |
| Total reported debt | Approximately $115.5 million | Reported in case coverage |
| Cash and cash equivalents | Approximately $1.5 million | About $550,000 available after reserves |
DIP financing and cash collateral framework. The DIP Motion sought approval of a DIP facility totaling $14,194,401.18, consisting of up to $1.695 million in new money and a $12.499 million roll-up of prepetition term loan obligations. The DIP was structured as a pro rata facility for prepetition lenders, with Computershare Trust Company, N.A. as DIP agent. The DIP pricing terms included an 8% interest rate (10% default), a 2% upfront fee, a 0.5% unused commitment fee (per annum, paid monthly), and a 2% exit fee. The maturity date was defined as the earliest of 110 days after the petition date, the effective date of a plan, conversion or dismissal, a sale of substantially all assets, or acceleration after an event of default. The DIP Motion also included budget controls, weekly reporting, and a 115% trailing one-week disbursement cap.
Interim DIP approval. Coverage of the Interim DIP Order cited a new money draw of $847,500 to avoid near-term cash exhaustion, and the court docket reflects the same interim authorization as part of the final DIP structure. The interim financing was approved by Judge Craig T. Goldblatt as part of first-day relief.
Cole Schotz reported that the interim financing request was unopposed and approved alongside other first-day motions, and that the company projected it would exhaust cash early the following week without access to the interim facility.
DIP protections and lender stipulations. The DIP framework also included a carve-out for U.S. Trustee fees and professional fees, a 75-day challenge period for parties in interest to challenge lender stipulations, and adequate protection in the form of replacement liens and superpriority claims. The Final DIP Order preserved those protections and included a defined process for termination events and notices.
The Final DIP Order described adequate protection packages for prepetition lenders that included replacement liens on postpetition assets, superpriority claims junior only to the DIP and carve-out, and adequate protection payments that included interest and professional fee reimbursement. The final order included waivers of section 506(c) surcharges and section 552(b) equities-of-the-case arguments, subject to the carve-out.
DIP facility summary.
| Term | Detail |
|---|
| Total commitment | $14,194,401.18 |
| New money | $1,695,000 |
| Roll-up | $12,499,401.18 |
| Interest rate | 8% (10% default) |
| Upfront fee | 2% |
| Unused commitment fee | 0.5% per annum, paid monthly |
| Exit fee | 2% |
| Maturity trigger | Earliest of 110 days postpetition, plan effective date, conversion, dismissal, or sale of substantially all assets |
The Final DIP Order details the interim and final roll-up mechanics, authorizing an interim DIP loan of $847,500 and an interim roll-up of $2,057,005.50, followed by a final roll-up amount of $10,442,395.68 with the same $847,500 new money amount.
DIP protections summary.
| Protection | Detail |
|---|
| Challenge period | 75 days from entry of the interim order |
| Carve-out | U.S. Trustee fees and professional fees; $50,000 post-trigger cap |
| Adequate protection | Replacement liens, superpriority claims, interest and fee reimbursement |
| Budget controls | Weekly reporting and 115% trailing one-week variance cap |
Royalty and revenue-interest payments. As an oil and gas producer, PetroQuest sought first-day relief to maintain royalty and revenue-interest payments. The Interim Royalty Order authorized capped prepetition payments of $200,000 for royalty payments, $280,000 for revenue interest disbursements, and $10,000 for certain other obligations. The Final Royalty Order increased the caps to $1,550,000 for royalty payments and $750,000 for revenue interest disbursements while maintaining the $10,000 cap for other obligations.
Royalty and revenue-interest payment caps.
| Category | Interim cap | Final cap |
|---|
| Royalty payments | $200,000 | $1,550,000 |
| Revenue interest disbursements | $280,000 | $750,000 |
| Other related obligations | $10,000 | $10,000 |
East Texas asset sale process. The Bidding Procedures Order set the sale process for the East Texas assets on a court-approved schedule with a January 15, 2025 bid deadline, a January 21 auction date, and a January 29 sale hearing. The order capped stalking-horse expense reimbursement at $400,000 and stated that any break-up fee would require separate court approval. The auction was held on January 27, 2025 and produced five qualified bids. Nexus Energy LLC was selected as the successful bidder and AGIS Energy, Inc. as the back-up bidder. The Sale Order attached to the winning purchase agreement stated a base purchase price of $20.6 million, required a 10% deposit, and included customary working-capital and revenue adjustments as well as the assumption of specified liabilities.
The bidding procedures order also set contract assumption and cure notice processes, including deadlines for cure objections and adequate assurance objections tied to the notice of successful bidder.
Closing outcomes. Later case filings reported that the East Texas assets closed to AGIS on April 11, 2025. A separate deal announcement described a sale of substantially all East Texas assets for $20 million plus additional compensation for post-closing transition work.
East Texas sale timeline.
| Date | Milestone |
|---|
| November 21, 2024 | Sale Motion filed |
| December 12, 2024 | Bidding procedures order entered |
| January 15, 2025 | Bid deadline |
| January 21, 2025 | Scheduled auction date |
| January 27, 2025 | Auction held; five qualified bids |
| January 29, 2025 | Sale hearing |
| February 3, 2025 | Sale order entered |
| April 11, 2025 | East Texas assets closed to AGIS |
Private sale authority for de minimis assets. The court entered a Private Sale Order authorizing a private sale process for certain de minimis oil and gas assets, with sale terms to be disclosed through notice and transfers approved on a free-and-clear basis.
Litigation asset sale process. The litigation-asset sale focused on PetroQuest's claims and judgments, including the Sanare judgment. The Litigation Bidding Procedures Order set an April 24, 2025 bid deadline, an April 28 auction commencement, and a May 6 sale hearing. The order required a 20% bid deposit for cash bids, prohibited break-up fees and expense reimbursements, and allowed secured parties to credit bid without a cash deposit. The Litigation Sale Motion cited collection uncertainty and litigation cost as reasons to sell the litigation assets rather than continue enforcement efforts.
Bidding procedures required minimum bid increments of at least 10% of the applicable starting bid and confirmed that secured parties could credit bid without posting a cash deposit, while cash bids remained subject to the 20% deposit requirement.
Litigation asset sale consideration. The Litigation Asset Sale Order approved a $350,000 credit bid by prepetition lenders, with the purchase price allocated across specific claims. The allocation included $250,000 to the Sanare judgment, $50,000 to the Vermilion claim, and $50,000 to the Banks claims. The court filings also identified BRUCE Financial Holdings Inc. as the back-up bidder. The sale closed on June 23, 2025.
Litigation asset sale table.
| Asset | Referenced amount | Allocation in credit bid |
|---|
| Sanare judgment | $8,037,243.80 | $250,000 |
| Vermilion claim | About $624,000 | $50,000 |
| Banks claims | At least $519,833.72 | $50,000 |
| Total credit bid | $350,000 | $350,000 |
Wind-down and dismissal. After the asset sales, the debtors filed a Motion to Dismiss rather than convert the cases to chapter 7. The motion described completed dispositions, limited unencumbered funds, and a wind-down reserve funded from prepetition lenders' cash collateral under a budget administered by debtors' counsel. The Dismissal Order, entered October 30, 2025, preserved prior orders including the final DIP order and sale orders, directed the claims agent to take steps toward closing the claims register, and retained jurisdiction for enforcement and interpretation of prior orders.
The dismissal order provided for immediate effectiveness with the stay waived. It also authorized the claims agent to complete final claims register steps and terminate the claims and noticing role after those tasks, while maintaining jurisdiction for enforcement of prior orders.
The court entered an omnibus final fee order on October 20, 2025 before dismissal.
Professional fees and advisors. The Omnibus Final Fee Order approved aggregate final fees and expenses of $2,526,488.69. The largest share went to debtor counsel Cole Schotz P.C. at $1,668,078.39. Eisner Advisory Group, LLC received $580,823.47 as financial advisor, Porter Hedges LLP received $262,877.23 as special counsel, and Stretto received $14,709.60 for claims and noticing services.
| Professional | Amount |
|---|
| Cole Schotz P.C. (debtor counsel) | $1,668,078.39 |
| Eisner Advisory Group, LLC (financial advisor) | $580,823.47 |
| Porter Hedges LLP (special counsel) | $262,877.23 |
| Stretto (claims and noticing agent) | $14,709.60 |
| Total | $2,526,488.69 |
Key case timeline.
What was PetroQuest Energy?
PetroQuest Energy, Inc. was an independent oil and gas company based in Lafayette, Louisiana with operations in Texas and Louisiana. The company focused on exploration, development, acquisition, and production of oil and gas properties, and court filings in 2024 listed 16 employees and remaining core assets in East Texas.
Why did PetroQuest file chapter 11 in 2024?
The First Day Declaration and case reporting tied the filing to liquidity constraints, debt service obligations under a $104.5 million secured term loan, and legal expenses tied to litigation. The failure of a $115 million asset sale to Patriot Natural Gas and the resulting judgment and settlement added cash pressure, and the company had limited available cash at filing. The filing allowed PetroQuest to pursue an orderly sale of its East Texas assets and a separate sale of litigation assets.
When did PetroQuest last restructure before 2024?
PetroQuest previously filed chapter 11 in late 2018 in the Southern District of Texas and emerged in February 2019. The plan eliminated about $295 million in debt and preferred equity and left the company with about $130 million of debt and approximately $23 million in cash at emergence.
What was the DIP financing structure?
The DIP facility totaled $14.194 million and included $1.695 million of new money and a $12.499 million roll-up of prepetition term loan debt. Pricing terms included an 8% interest rate (10% default), a 2% upfront fee, a 0.5% unused commitment fee, and a 2% exit fee. The interim order authorized a $847,500 draw soon after the petition date.
How were the East Texas assets sold?
The court approved bidding procedures that led to a January 27, 2025 auction with five qualified bids. Nexus Energy LLC was selected as the successful bidder and AGIS Energy, Inc. as the back-up bidder, with a base purchase price of $20.6 million and a 10% deposit requirement. The assets ultimately closed to AGIS on April 11, 2025, and a later announcement described a $20 million sale plus additional compensation for transition work.
What happened to the Sanare judgment?
PetroQuest held an $8,037,243.80 judgment against Sanare Energy Partners from offshore contract litigation. The judgment and related claims were sold to prepetition lenders through a separate litigation-asset sale for a $350,000 credit bid, with $250,000 of the bid allocated to the Sanare judgment.
How were the cases resolved?
After the asset sales, the debtors moved to dismiss the cases rather than convert them to chapter 7. The dismissal order preserved prior orders, including the DIP and sale orders, and retained jurisdiction for enforcement of those orders.
Who is the claims agent for PetroQuest Energy?
Stretto serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
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