Petroquest (PQ) at Howard Weil

Petroquest Energy

Historically a drill bit company.

Petroquest made a decision in 2003 to embark on long reserve life assets strategy, and started making acquisitions.

Acreage cost in Woodford Shale is under a $1000 an acre and $1200 in the Fayetville shale.

Company has stable of developmental prospects that will last for years.

Three core areas: Woodford Shale (27,000 acres), Fayetteville Shale (18,000 acres), and East Texas.

Woodford Shale – last well drilled by company was one of the most economic to date.

Forty percent of reserves are Gulf Coast off shore, which is where the company started. By 2009 it will only be 30%.

Pelican Point prospect – first production in May 2008, initial production will be 20,000 mcfe per day. Eight more prospects nearby with six more to drill in 2008.

Financials

30% growth in reserves expected based on estimated cash flow -

Valuation

Petroquest trades at 3.3 times 2007 cash flow and 3.1 times 2008 cash flow.

Drilling program for 2008 – 140-150 wells at a cost of $200-220 million.

Hedging program- 30-50% hedged is goal.